MASTER SERVICE AGREEMENT
FOR INFORMATION TECHNOLOGY SERVICES
BETWEEN
ADVANTICA RESTAURANT GROUP, INC.
AND
AFFILIATED COMPUTER SERVICES, INC.
JANUARY 25, 2000
TABLE OF CONTENTS
PAGE
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BACKGROUND AND OBJECTIVES......................................................1
ARTICLE 1......................................................................2
DEFINITIONS..................................................................2
Section 1.1 Certain Definitions..........................................2
Section 1.2 Other Definitions............................................7
ARTICLE 2......................................................................7
MASTER AGREEMENT............................................................7
Section 2.1 Master Agreement.............................................7
Section 2.2 Master Schedules.............................................7
Section 2.3 Interpretation and Precedence................................7
Section 2.4 No Implied Agreement.........................................8
ARTICLE 3......................................................................8
TERM........................................................................8
Section 3.1 Term.........................................................8
Section 3.2 Renewal Term.................................................8
ARTICLE 4......................................................................8
SERVICES....................................................................8
Section 4.1 General; Service Agreements..................................8
Section 4.2 Migration Services...........................................9
Section 4.3 Specialized Services or Products............................12
Section 4.4 Third Party Services........................................12
Section 4.5 Resources...................................................12
Section 4.6 Cooperation.................................................13
Section 4.7 Affiliates..................................................13
Section 4.8 Changes in Law and Regulations..............................13
Section 4.9 Licenses and Permits........................................14
Section 4.10 Dedicated/Partitioned Environment...........................14
Section 4.11 Services Non-exclusive......................................14
Section 4.12 Correction of Errors........................................15
Section 4.13 Technical Change Control....................................15
Section 4.14 Contract Change Control.....................................16
Section 4.15 System Change Benchmarking..................................17
Section 4.16 Subcontracting..............................................17
ARTICLE 5.....................................................................18
SERVICE LEVELS.............................................................18
Section 5.1 Service Level Agreements....................................18
Section 5.2 Review of Service Levels....................................19
Section 5.3 Measurement and Monitoring Tools; Reporting.................19
Section 5.4 Failure to Meet Service Levels..............................19
Section 5.5 Performance Standards.......................................20
Section 5.6 Benchmarking................................................20
Section 5.7 Advantica Satisfaction Surveys..............................21
Section 5.8 Value Initiatives and Periodic IT Review....................21
ARTICLE 6.....................................................................22
TRANSFERS OF EQUIPMENT, FACILITIES AND THIRD PARTY CONTRACTS...............22
Section 6.1 Assumption of Equipment Leases..............................22
Section 6.2 Use of Advantica Facilities and Equipment...................22
Section 6.3 Third Party Contracts.......................................23
Section 6.4 Agency......................................................24
ARTICLE 7.....................................................................24
PERSONNEL..................................................................24
Section 7.1 Offers and Terms of Employment..............................24
Section 7.2 Key Transferred Employees...................................25
Section 7.3 Key Supplier Positions......................................25
Section 7.4 Supplier Employees Assigned to Advantica Account............25
Section 7.5 Supplier Personnel..........................................26
ARTICLE 8.....................................................................26
INTELLECTUAL PROPERTY RIGHTS AND OBLIGATIONS...............................26
Section 8.1 Advantica Software..........................................26
Section 8.2 Supplier Software...........................................26
Section 8.3 Third Party Software........................................27
Section 8.4 Work Product................................................27
Section 8.5 Use of Concepts, Know-how and Methods.......................28
Section 8.6 Non-Infringement............................................28
Section 8.7 Viruses.....................................................28
Section 8.8 Disabling Code..............................................28
ARTICLE 9.....................................................................28
CONFIDENTIALITY............................................................28
Section 9.1 Definitions............. ...................................28
Section 9.2 Rights, Restrictions and Obligations of the Receiving Party.30
Section 9.3 Rights and Remedies of the Disclosing Party.................31
Section 9.4 Nondisclosure Agreements....................................32
Section 9.5 Ownership of Advantica Data.................................32
Section 9.6 Return of Data..............................................32
Section 9.7 Security....................................................32
Section 9.8 Destroyed or Lost Data......................................33
ARTICLE 10....................................................................34
ACCOUNT MANAGEMENT.........................................................34
Section 10.1 Relationship Executives and Project Executives............34
Section 10.2 Joint Operating Committee and Executive Committee.........34
Section 10.3 Advantica Office Space at Supplier Facilities.............34
Section 10.4 Meetings..................................................34
Section 10.5 Reports...................................................35
Section 10.6 Procedures Manual.........................................35
ARTICLE 11....................................................................36
AUDITS.....................................................................36
Section 11.1 Audit Rights..............................................36
Section 11.2 Payments..................................................37
Section 11.3 Supplier Audits...........................................37
Section 11.4 Survival..................................................37
ARTICLE 12....................................................................37
INSURANCE; RISK OF LOSS....................................................37
Section 12.1 Required Insurance Coverages..............................37
Section 12.2 General Insurance Requirements............................38
Section 12.3 Risk of Loss..............................................39
ARTICLE 13....................................................................39
CHARGES....................................................................39
Section 13.1 Charges...................................................39
Section 13.2 Pass-Through Expenses.....................................39
Section 13.3 Taxes.....................................................40
Section 13.4 Charges Pursuant to Change Control Procedures.............41
Section 13.5 Most Favored Customer.....................................41
ARTICLE 14....................................................................42
INVOICING AND PAYMENT......................................................42
Section 14.1 Invoices..................................................42
Section 14.2 Payment...................................................42
Section 14.3 Proration.................................................43
Section 14.4 Refunds...................................................43
Section 14.5 Setoff and Withholding....................................43
ARTICLE 15....................................................................44
CERTAIN REPRESENTATIONS AND WARRANTIES.....................................44
Section 15.1 Mutual Representations and Warranties.....................44
Section 15.2 Supplier Representations and Warranties...................44
Section 15.3 RFP and Due Diligence Assistance..........................45
ARTICLE 16....................................................................46
INDEMNIFICATION............................................................46
Section 16.1 Indemnification by Supplier...............................46
Section 16.2 Indemnification by Advantica..............................47
Section 16.3 Mutual Indemnification....................................48
Section 16.4 Intellectual Property Indemnification.....................48
Section 16.5 Indemnification Procedures................................49
Section 16.6 Subrogation...............................................50
ARTICLE 17....................................................................50
LIMITATIONS ON LIABILITY...................................................50
Section 17.1 General Intent............................................50
Section 17.2 Limit on Types of Damages Recoverable.....................50
Section 17.3 Limit on Amount of Direct Damages Recoverable.............50
Section 17.4 Force Majeure.............................................52
Section 17.5 Actions of Other Party....................................53
ARTICLE 18....................................................................53
TERMINATION................................................................53
Section 18.1 Termination for Cause.....................................53
Section 18.2 Termination for Convenience...............................55
Section 18.3 Termination for Insolvency................................56
Section 18.4 Termination Upon Force Majeure Event......................56
Section 18.5 Extension of Expiration or Termination Effective Date.....56
Section 18.6 Effect of Termination.....................................57
Section 18.7 Termination/Expiration Assistance.........................57
Section 18.8 Purchase or Lease of Equipment............................57
Section 18.9 Supplier Software License.................................58
Section 18.10 Third Party Contracts.....................................58
Section 18.11 Offers to Supplier Employees..............................58
ARTICLE 19....................................................................59
DISPUTE RESOLUTION.........................................................59
Section 19.1 General...................................................59
Section 19.2 Informal Dispute Resolution...............................59
Section 19.3 Arbitration...............................................59
Section 19.4 Applicable Law............................................60
Section 19.5 Jurisdiction and Venue....................................60
Section 19.6 Equitable Remedies........................................61
ARTICLE 20....................................................................61
MISCELLANEOUS..............................................................61
Section 20.1 Interpretation............................................61
Section 20.2 Binding Nature and Assignment.............................62
Section 20.3 Expenses..................................................62
Section 20.4 Amendment and Waiver......................................62
Section 20.5 Further Assurances; Consents and Approvals................62
Section 20.6 Publicity.................................................62
Section 20.7 Severability..............................................63
Section 20.8 Entire Agreement..........................................63
Section 20.9 Notices...................................................63
Section 20.10 Survival..................................................64
Section 20.11 Independent Contractors...................................64
Section 20.12 Third Party Beneficiaries.................................64
Section 20.13 Counterparts..............................................64
SCHEDULES
Schedule A......Form of Service Agreement
Schedule B......Form of Service Level Agreement
Schedule C......Corporate Service Level Credits and Termination Events
Schedule D......Account Management and Governance Overview
MASTER AGREEMENT FOR INFORMATION TECHNOLOGY SERVICES
THIS MASTER AGREEMENT FOR INFORMATION TECHNOLOGY SERVICES (the "Master
Agreement") is made, between Advantica Restaurant Group, Inc., a Delaware
corporation ("Advantica"), and Affiliated Computer Services, Inc., a Delaware
corporation ("Supplier").
BACKGROUND AND OBJECTIVES
This Master Agreement is entered into in connection with Advantica's
decision to contract with Supplier for Supplier's provision of information
technology services related to Advantica's business operations. This Master
Agreement sets forth the general terms and conditions governing the contractual
relationship between Advantica and Supplier. It is the intent of Advantica and
Supplier that they will, upon entering into this Master Agreement, enter into
one or more Service Agreements pursuant to this Master Agreement and may, from
time to time in the future, enter into one or more Value Initiative Agreements
or additional Service Agreements setting forth the specific terms and conditions
applicable to specific Value Initiatives or Services to be contracted for by
Advantica and Supplier.
Supplier is an established provider of a broad range of information
technology services. By entering into this Master Agreement and each Service
Agreement, Supplier represents that it has, and will have, the skills,
qualifications, expertise and experience necessary to perform and manage the
services described in each such Service Agreement in an efficient,
cost-effective manner with a high degree of quality and responsiveness and has
performed and continues to perform the same and similar services for other
customers in such manner.
Advantica's objectives in entering into this Master Agreement include
obtaining (i) high quality information technology services and systems in the
areas described in this Master Agreement and related Service Agreements provided
in a cost-effective manner; (ii) a flexible relationship with Supplier under
which Supplier will be highly responsive to the requests of Advantica and to
changes in technology and methods for providing information technology services,
including accommodation of significant changes in volumes of operations, new
generations of technology and improved methods of monitoring, measuring and
achieving increased levels of service; (iii) continuous improvement in services
and reduction of Advantica's associated costs in each area of Services performed
by Supplier; and (iv) consistent and effective management of the relationship
between Supplier and Advantica. Supplier will thoroughly review and analyze
Advantica's needs and requirements for each information technology area
described in each Service Agreement. Supplier fully understands Advantica's
objectives in entering into this Master Agreement and, with respect to the
Services, each Service Agreement. Based on such review and understanding,
Supplier represents to Advantica that Supplier currently has the capability to
achieve those objectives.
On the basis of the foregoing, Advantica desires to engage Supplier to
perform the services described in each Service Agreement entered into pursuant
to this Master Agreement.
The foregoing provisions set forth the background under which Advantica
is entering into this Master Agreement and any Service Agreements and are
intended to be a general introduction to this Master Agreement and such Service
Agreements. They are not intended to expand the scope of the parties' express
obligations under this Master Agreement or any Service Agreement or to alter the
plain meaning of the terms and conditions of this Master Agreement or any
Service Agreement. However, to the extent the terms and conditions of this
Master Agreement or any Service Agreement do not address a particular
circumstance or are otherwise unclear or ambiguous, such terms and conditions
are to be interpreted and construed consistent with the foregoing provisions.
ARTICLE 1
DEFINITIONS
SECTION 1.1 CERTAIN DEFINITIONS
In this Master Agreement, the following terms shall have the indicated
meanings:
"ADVANTICA" means Advantica Restaurant Group, Inc. and each of its
Affiliates.
"ADVANTICA DATA" means all Advantica information, whether in written or
electronic form.
"ADVANTICA EQUIPMENT" has the meaning given in Section 6.2(a).
"ADVANTICA FACILITIES" has the meaning given in Section 6.2(a).
"ADVANTICA SOFTWARE" means any Software owned by Advantica and used in
conjunction with any of the Services.
"AFFILIATE" means, with respect to any specified person or entity, any
other person or entity that directly, or indirectly through one or more
intermediaries, Controls or is Controlled by, or is under common Control with,
the specified person or entity. For purposes of this Master Agreement, an
"Affiliate" of Advantica includes any business unit or division of Advantica
(including discrete restaurant "concepts").
"BUSINESS DAY" means any day during which Advantica is generally
conducting business in its corporate offices.
"CHANGE OF CONTROL" means the transfer of the Control of a Party from
the person(s), entity or entities who hold such Control on the Effective Date of
this Master Agreement or the applicable Service Agreement Effective Date to one
or more other persons or entities, but shall not include a transfer of the
Control of a Party to an Affiliate of such Party.
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"CHANGE CONTROL DOCUMENT" has the meaning given in Section 4.14(c).
"CHANGE CONTROL PROCEDURES" has the meaning given in Section 4.14(a).
"CHARGES" has the meaning given in Section 13.1.
"COMMERCIALLY REASONABLE EFFORTS" means, with respect to any objective,
a level of effort to achieve such objective equal to or exceeding the higher of
(i) the level of effort to achieve the same or similar objectives used by
Advantica or any third party providing such services for Advantica immediately
before the applicable Service Agreement Effective Date, or (ii) the level of
effort to achieve the same or similar objectives used by other sophisticated
outsourcing companies providing services similar to the Services, and in any
event a prompt and diligent effort, made in a professional and workmanlike
manner, using properly trained and qualified individuals.
"CONFIDENTIAL INFORMATION" has the meaning given in Section 9.1(b).
"CONFIDENTIAL MATERIALS" has the meaning given in Section 9.1(c).
"CONTRACT YEAR" with respect to a Service Agreement, means each annual
period beginning on the Service Agreement Effective Date or the Service
Commencement Date as defined within a Service Agreement.
"CONTROL" and its derivatives means the possession, direct or indirect,
of the power to direct or cause the direction of the management and policies of
a person or entity, whether through the ownership of voting securities, by
contract, or otherwise.
"CORPORATE SERVICE LEVEL CREDITS" has the meaning given in Section
5.4(a).
"DISCLOSING PARTY" has the meaning given in Section 9.1(a).
"EFFECTIVE DATE" means the date of execution of this Master Agreement.
"EQUIPMENT" means the computer, communications and other equipment
owned or leased by Supplier and used by Supplier to provide the Services.
Equipment includes, without limitation, all associated accessories and
peripheral devices used in the provision of Services.
"EXECUTIVE COMMITTEE" has the meaning given in Section 10.2(b).
"FORCE MAJEURE EVENTS" has the meaning given in Section 17.4(a).
"JOINT OPERATING COMMITTEE" has the meaning given in Section 10.2(a).
"KEY SUPPLIER POSITIONS" has the meaning given in Section 7.3(a).
"LOSSES" means all losses, liabilities, damages and claims, and all
related costs and expenses (including any and all reasonable legal fees and
reasonable costs of investigation,
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litigation, settlement, judgment, appeal, interest and penalties) incurred by an
indemnified party hereunder in connection with an indemnified third party claim.
"MASTER AGREEMENT" means this Master Agreement For Information
Technology Services, all Master Schedules, and, when the meaning so requires,
all Service Agreements.
"MASTER SCHEDULE(S)" has the meaning given in Section 2.2.
"MATERIAL SUBCONTRACT" has the meaning given in Section 4.16(a).
"MIGRATION COMPLETION DATE" means the date a migration is completed in
accordance with a Migration Plan.
"MIGRATION MILESTONES" has the meaning given in Section 4.2(b).
"MIGRATION PLAN" has the meaning given in Section 4.2(c).
"MIGRATION SERVICES" has the meaning given in Section 4.2(c).
"MIGRATION SOW" has the meaning given in Section 4.2(a).
"NOTICE OF ASSUMPTION OF DEFENSE" has the meaning given in Section
16.5(a).
"PARTIES" means Advantica and Supplier, and "PARTY" means either one of
them.
"PASS-THROUGH EXPENSES" means the actual invoiced amounts (excluding
any Supplier profit, administrative fee or overhead charges unless expressly
provided for in the applicable Service Agreement) charged to Supplier by third
parties that Advantica has agreed to pay directly or for which Advantica has
agreed to reimburse Supplier.
"PERFORMANCE STANDARDS" has the meaning given in Section 5.5(a).
"PRELIMINARY MIGRATION PLAN" is a preliminary plan for migration of
Services to be included as part of a Service Agreement, as described in Section
4.2(b).
"PROCEDURES MANUAL" has the meaning given in Section 10.6(a).
"PROJECT EXECUTIVE" has the meaning given in Section 10.1.
"RECEIVING PARTY" has the meaning given in Section 9.1(a).
"REPORTS" means, collectively, single or periodic reports relating to
the Services that are provided by Supplier to Advantica under any Service
Agreement, as defined in Section 10.5.
"RULES" has the meaning given in Section 19.3(a).
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"SCHEDULES" means any schedule, exhibit, agreement or other document
either (i) attached to this Master Agreement, (ii) attached to Service
Agreements, or (iii) executed by the Parties at any time hereafter, if such
document states that it is a schedule to this Master Agreement or any Service
Agreement.
"SERVICE AGREEMENT" has the meaning given in Section 2.1.
"SERVICE AGREEMENT EFFECTIVE DATE" means the date on which a Service
Agreement is executed by both Parties or as otherwise provided in the applicable
Service Agreement.
"SERVICE COMMENCEMENT DATE" means the date that Supplier begins
providing Services under a Service Agreement.
"SERVICE AGREEMENT TERM" means the term of the applicable Service
Agreement, as defined in each Service Agreement.
"SERVICE LEVEL" has the meaning given in Section 5.1.
"SERVICE LEVEL AGREEMENT" has the meaning given in Section 5.1.
"SERVICE CREDITS," means, collectively, Service Level Credits and
Corporate Service Level Credits.
"SERVICE LEVEL CREDITS" has the meaning given in Section 5.4(a).
"SERVICES" has the meaning given in Section 4.1.
"SIMILARLY SITUATED SUPPLIER CUSTOMERS" has the meaning given in
Section 13.5.
"SOFTWARE" means any computer software that relates to Services
provided under a Service Agreement, and includes any Advantica Software,
Supplier Software and Third Party Software.
"SUPPLIER ENVIRONMENT" has the meaning given in Section 15.2(f).
"SUPPLIER FACILITIES" means the facilities owned or leased by Supplier
and from which the Supplier will provide any Services as specifically identified
in a Services Agreement.
"SUPPLIER PERSONNEL" means employees of Supplier and its subcontractors
assigned to performing Services.
"SUPPLIER SOFTWARE" means any Software owned by Supplier and used in
conjunction with any of the Services.
"SYSTEM CHANGE" has the meaning given in Section 4.15.
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"TERM" has the meaning given in Section 3.1. When used herein in the
context of a Service Agreement, "Term" refers to the applicable Service
Agreement Term.
"TERMINATION/EXPIRATION ASSISTANCE" has the meaning given in Section
18.7(a).
"THIRD PARTY CONSENTS" has the meaning given in Sections 6.3(c).
"THIRD PARTY CONTRACTS" means any contract that is a Third Party
Software License or Third Party Service Contract.
"THIRD PARTY SERVICE CONTRACTS" means, collectively, (i) the agreements
between Advantica and a third party pursuant to which the third party is
providing to Advantica immediately before a Service Agreement Effective Date any
services included within the Services, and (ii) the agreements between Supplier
and a third party pursuant to which the third party is providing to Advantica or
Supplier at any time during the applicable Service Agreement Term any services
included within the Services.
"THIRD PARTY SOFTWARE" means any Software that is owned by a person
other than Supplier or Advantica and used to provide the Services.
"THIRD PARTY SOFTWARE LICENSE" means a license agreement that
authorizes Advantica or Supplier to use Third Party Software.
"TRANSFERRED EMPLOYEE" has the meaning given in Section 7.1(b).
"TRANSFERRED EQUIPMENT" has the meaning given in Section 6.1.
"UNIDENTIFIED THIRD PARTY CONTRACT" has the meaning given in Section
6.3(d).
"VALUE INITIATIVES" has the meaning given in Section 5.8.
"VALUE INITIATIVE AGREEMENT" has the meaning given in Section 5.8.
"VIRUS" shall mean files, programs or program code designed to affix
themselves to, bury themselves within or send instructions to, other files,
programs or program code in order to cause malfunctions, errors or destruction
or corruption of data when affixed or at a later time.
"YEAR 2000 COMPLIANT" means that the subject Software or Supplier
Environment, and any items or services related thereto, as the case may be, will
be Year 2000 compliant, meaning the subject Software or Supplier Environment
will continue to function without delay, interruption or error; and
functionality and accuracy (both logical and mathematical) will not be affected
as a result of the run date or the dates being processed in the twentieth or
twenty-first century, including the advent of the year 2000, or from the extra
day occurring in any leap year.
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SECTION 1.2 OTHER DEFINITIONS
Other terms used in this Master Agreement, the Master Schedules and the
Service Agreements are defined where they first appear and have the respective
meanings there indicated.
ARTICLE 2
MASTER AGREEMENT
SECTION 2.1 MASTER AGREEMENT
This Master Agreement contains general contractual terms for Services
to be provided to Advantica by Supplier. Services will be provided by Supplier
pursuant to Service Agreements entered into by Advantica and Supplier.
Generally, the Parties intend to enter into separate Service Agreements for
discrete Services. Each "Service Agreement" shall describe the Services covered
by the Service Agreement, the provisions for payment, the term for performance,
applicable Service Levels, and other provisions that are specific to the Service
Agreement. A form of Service Agreement is attached hereto as Master Schedule A.
No Service Agreement Term shall extend beyond the Term of this Master Agreement.
Except as otherwise expressly set forth in this Master Agreement, the
obligations of the Parties under this Master Agreement during the Term shall be
suspended during any period in which no Service Agreement is in effect.
SECTION 2.2 MASTER SCHEDULES
Attached to this Master Agreement are schedules (the "Master
Schedules") that contain specific provisions that apply to the Services
generally or provide a form to be used in preparation of Service Agreements. The
Master Schedules shall apply to all Service Agreements unless the Parties
expressly agree otherwise.
SECTION 2.3 INTERPRETATION AND PRECEDENCE
This Master Agreement, the Master Schedules, the Service Agreements,
and the Service Level Agreements and other Schedules that may be added to the
Service Agreements are to be interpreted so that all of the provisions are given
as full effect as possible. In the event of a conflict between this Master
Agreement or a Master Schedule and any Service Agreement, the order of
precedence shall be first, the Service Agreement; second, any exhibit or
Schedule to the Service Agreement; third, this Master Agreement; and fourth, any
Master Schedule. All of the terms of this Master Agreement shall apply to each
Service Agreement except to the extent negated or contradicted by the express
terms of a Service Agreement or any Schedule to a Service Agreement.
SECTION 2.4 NO IMPLIED AGREEMENT
Except as expressly required in a Service Agreement, nothing in this
Master Agreement requires Advantica to purchase products or services from
Supplier. Advantica may request information, proposals, or competitive bids from
third parties on the same or different terms than as provided in this Master
Agreement.
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ARTICLE 3
TERM
SECTION 3.1 TERM
The term of this Master Agreement (the "Term") shall begin as of the
Effective Date and shall continue for a period of ten (10) years thereafter,
unless earlier terminated in accordance with the provisions of this Master
Agreement.
Each Service Agreement shall set forth the applicable Service Agreement
Term.
SECTION 3.2 RENEWAL TERM
Advantica shall have the option to renew each Service Agreement for two
(1) year terms by delivering written notice of such renewal to Supplier at least
ninety (90) days before expiration of the final applicable Contract Year under
each Service Agreement. Except as may be expressly provided otherwise in a
Service Agreement, all of the terms of this Master Agreement and the applicable
Service Agreement shall continue to apply without change during any renewal
period. "Service Agreement Term" shall refer to both the original term of the
applicable Service Agreement and any renewal thereof.
ARTICLE 4
SERVICES
SECTION 4.1 GENERAL; SERVICE AGREEMENTS
During the Term of this Master Agreement, regardless of whether one or
more Service Agreements are in effect, Supplier shall cooperate with Advantica
in providing proposals for information technology services reasonably requested
by Advantica from time to time. Pricing proposed by Supplier for such services
shall be commercially reasonable and, to the extent that an Advantica request
includes a request for specific third party products or services to be provided
directly to Advantica, such products and services will be treated as
Pass-Through Expenses. Supplier shall use Commercially Reasonable Efforts to
provide proposals at the earliest date practicable and in any event within
twenty (20) Business Days of the date a request is received.
Throughout each Service Agreement Term, Supplier shall provide the
services described in the Service Agreements, as such Service Agreements may be
amended and supplemented from time to time by written amendments thereto or
pursuant to the Change Control Procedures (collectively, the "Services"). There
may be services, functions, responsibilities or tasks not specifically described
in this Master Agreement that are required for the proper performance and
provision of the Services and that are an inherent part of, or a necessary
sub-part included within the Services. If such services, functions,
responsibilities and tasks are determined to be required for the proper
performance and provision of the Services or are an inherent part, or a
necessary subpart included within, the Services, such functions,
responsibilities and tasks shall be deemed
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to be implied by and included within the scope of the Services to the same
extent and in the same manner as if specifically described in the applicable
Service Agreement. Supplier shall provide the Services in accordance with all of
the terms of this Master Agreement, the Master Schedules, and the applicable
Service Agreement.
The specific Services to be supplied by Supplier to Advantica, the
compensation to be paid and other related matters shall be expressed in each
Service Agreement prepared from time to time by Supplier in response to a
request by Advantica for such Services. Each Service Agreement shall incorporate
by reference, and shall be subject to, the terms and conditions of this Master
Agreement. No Services shall be provided by Supplier unless and until the
appropriate Service Agreement has been duly signed and delivered by an
authorized officer of Advantica. Each Service Agreement shall generally be in
the form, and shall contain the information and terms, described in Master
Schedule A attached hereto.
As of the Effective Date of this Master Agreement, Advantica and
Supplier are entering into the following Service Agreements:
Service Agreement No. 1....Migration Services
Service Agreement No. 2....Operations Management Services
Service Agreement No. 3....Applications Development and Maintenance
Services
Service Agreement No. 4....Desktop Management Services
Supplier shall use reasonable good faith efforts to competitively
purchase goods and services from authorized minority-owned enterprises and
historically underutilized businesses in connection with the Services provided
to Advantica.
SECTION 4.2 MIGRATION SERVICES
(a) If any migration of Services is to occur under a Service Agreement
(other than under Service Agreement No. 1 executed by the Parties
contemporaneously with this Master Agreement), Supplier shall be responsible for
preparing for Advantica's approval a statement of work for the migration project
(a "Migration SOW"), including a Preliminary Migration Plan, in order to assure
an orderly transition of the Services (and, if necessary, the Equipment and
Software). The Migration SOW shall be considered a "Change Control Document" and
will be developed in accordance with the Change Control Procedures. After any
Migration Completion Date pertaining to particular Services, Supplier shall
obtain Advantica's written consent prior to any subsequent migration of such
Services. Any such subsequent migration of Services initiated by Supplier must
be approved by Advantica and shall be conducted by Supplier at its sole expense
pursuant to a Migration Plan prepared by Supplier and approved by Advantica.
Supplier shall proactively identify and communicate with Advantica any
circumstances that would require a migration of any Services and will identify
viable alternatives for migration strategies. Charges for the Migration Services
shall be set forth in the agreed Migration SOW and shall be determined in
accordance with Section 13.4 (Charges Pursuant to Change Control Procedures).
(b) Supplier shall prepare and submit to Advantica, as part of a
Service Agreement, a "Preliminary Migration Plan" that describes (i) the general
Migration Services to be provided, (ii) the purpose of the migration and how the
migration will address the business needs of Advantica,
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(iii) the major steps involved to complete the migration, (iv) a responsibility
matrix designating the respective responsibilities of Advantica and Supplier and
any Advantica resources required in connection with the Migration Services, (v)
any staff transfers, additions, or reassignments associated with the migration,
(vi) the risk involved with the migration and the steps to be taken to reduce
the risk involved, including any contingency plans; and (vii) the milestones for
completion of the applicable Migration Services (the "Migration Milestones") and
the dates and time schedule for the applicable migration. Supplier acknowledges
that, if requested by Advantica, a Migration Plan must recognize as a Migration
Milestone any date identified by Advantica that relates to the closing or sale
of any Advantica Facilities or restaurants. Further, Supplier shall provide a
schedule of approximate costs associated with the Services that relate to the
closing or sale of any Advantica Facilities or restaurants and the acquisition
or opening of new Advantica Facilities or restaurants. Such schedule(s) shall be
provided on or before 5:00 p.m. EST/EDT on the thirtieth (30th) day after
Supplier first receives notice from Advantica of such a closing, sale,
acquisition or opening.
(c) Within thirty (30) days following Advantica's acceptance of a
Preliminary Migration Plan, Supplier shall submit for Advantica's approval a
final plan (the "Migration Plan") for the migration of the Services. The
Migration Plan shall state in detail the specific steps for the timing and
migration methodology that will be used by Supplier consistent with the
provisions of the Preliminary Migration Plan. Except as may be implemented in
accordance with the Preliminary Migration Plan, the Migration Plan must be
approved by Advantica prior to implementation of any part of such Plan. As part
of the Services, Supplier shall perform all functions and services, including
the functions and services described in the Migration Plan necessary to
accomplish the migration to the Supplier as identified in the Migration Plan
(the "Migration Services"). Supplier shall perform the Migration Services
without causing a disruption to Advantica's business or production environment.
(d) Supplier acknowledges that Advantica may from time to time during a
Service Agreement Term engage in internal and third party discussions and
analysis activities related to the potential sale of multiple Advantica
restaurants operating under one or more single brands or marketing concepts or
the potential acquisition of multiple restaurants operating under one or more
single brand names or marketing concepts. In connection with any such potential
divestiture or acquisition, Supplier shall, upon Advantica's request and at no
additional charge to Advantica (other than Advantica's reimbursement of Supplier
for travel-related expenses authorized by Advantica), assist Advantica in
analyzing the cost, timing and business impact of any such divestiture or
acquisition, including performing such "due diligence" investigation and
activities as would be reasonably required to enable Supplier to prepare a
Migration SOW for such divestiture or acquisition with respect to each
applicable Service Agreement then in effect. If requested by Advantica, Supplier
shall provide the results of such investigation to Advantica and will discuss
with Advantica all relevant information obtained by Supplier. Supplier's
obligations to perform Migration Services in connection with any such
divestiture or acquisition shall be subject to the Parties' agreement to a
Migration SOW.
(e) Except as otherwise provided in a Service Agreement, as Advantica
closes or opens Advantica restaurants in the ordinary course of its business
(i.e., excluding any divestiture or acquisition of a restaurant concept subject
to a Migration SOW) Supplier shall, as part of the Services and at no additional
charge to Advantica, have primary responsibility for disposing of
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and de-installing or acquiring and installing all Equipment, Software and other
assets related to the Services provided by Supplier, including coordination with
third parties as required.
(f) Each Migration Plan shall include a migration acceptance test for
each Service that is migrated that will ensure a complete and satisfactory
migration of Services. Supplier shall perform a post-migration review within
thirty (30) days of completion of the migration to ensure stabilization of the
migrated environment.
(g) As part of the Migration Services, and if requested by Advantica,
Supplier shall provide (i) parallel operation/testing environments and (ii) a
training environment for the Supplier Environment using test data prepared by
Supplier. Subject to Advantica approval and where testing with data
representative of the production environment is necessary, Supplier may use a
copy of such Advantica production data; provided, however, that such test data
shall not contain actual client names or addresses to the extent that the same
is prohibited by statutory or regulatory requirements.
(h) Supplier shall be excused if the failure to meet the applicable
Migration Milestone results directly from a Force Majeure Event, as described in
Section 17.4 (Force Majeure), or Advantica's acts, omissions or breach of this
Master Agreement or the applicable Service Agreement, subject to the provisions
of Section 17.5 (Actions of Other Party). During the period Supplier is
providing Migration Services Supplier shall maintain a "critical path analysis"
for the particular migration project that will indicate the impact on the
migration project time schedule for any occurrences of acts, omissions or
breaches by Advantica, Force Majeure Events, or acts, omissions or breaches of
obligations by Supplier or third parties. Supplier's critical path analysis
shall be provided to and reviewed with Advantica as reasonably requested by
Advantica during the particular migration project. If a Migration Milestone is
missed as a result of a Force Majeure Event or as result of Advantica's acts,
omissions or breach of this Master Agreement or a Service Agreement, subject to
the provisions of Section 17.5 (Actions of Other Party), the Migration
Milestones time schedule shall be adjusted by the Parties by the time period
indicated in the critical path analysis in order to account for the delay caused
by such events.
(i) A breach of any Preliminary Migration Plan or Migration Plan shall
constitute a breach of the applicable Service Agreement. Unless otherwise
expressly provided in a Service Agreement, Preliminary Migration Plan or
Migration Plan, all of Supplier's obligations contained in this Master Agreement
and the applicable Service Agreement shall continue to apply during the
applicable migration of Services.
SECTION 4.3 SPECIALIZED SERVICES OR PRODUCTS
From time to time Advantica may request that Supplier use Commercially
Reasonable Efforts to obtain products or specialized services that may be
available from a third party supplier and that Supplier make such products or
specialized services available to Advantica at prices more favorable than would
otherwise be available to Advantica directly. Supplier shall notify Advantica
from time to time of relationships Supplier may have with such third party
suppliers that may be of benefit to Advantica in this respect.
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SECTION 4.4 THIRD PARTY SERVICES
Notwithstanding any request made to Supplier or the submission of any
proposal by Supplier pursuant to Section 4.1 (General; Service Agreements) or
5.8 (Value Initiative Agreements), Advantica shall have the right to contract
with one or more third parties to perform any services which are in addition to,
or outside the scope of, the Services. If Advantica contracts with a third party
to perform any such service, Supplier shall cooperate with Advantica and such
third party to the extent reasonably required by Advantica, including provision
of (i) written requirements, standards, and procedures for Advantica systems
operations maintained by Supplier so that the enhancements or developments of
such third party may be operated by Supplier, (ii) assistance and support
services to such third party at the rates specified in the applicable Service
Agreement, and (iii) access to the technical environment managed or operated by
Supplier or any Services as necessary for such third parties to perform their
work. Advantica shall require such third parties to comply with Supplier's
reasonable requirements regarding operations, standards, and security. Supplier
shall be obligated to support and maintain such service provider's work product
at Advantica's request, provided the service provider complies with any written
requirements, standards, and policies for system operations provided to
Advantica by Supplier.
SECTION 4.5 RESOURCES
Except as otherwise expressly provided in a Service Agreement, Supplier
shall provide, at its expense, all of the facilities, personnel, Equipment,
Software, services and other resources necessary to provide the Services.
Supplier shall not implement any action or decision regarding such resources
that would have an adverse effect on the Services (including, without
limitation, changes in Equipment, Software and systems configurations), Service
Levels, the amounts payable to Supplier under any Service Agreement or other
Advantica costs and expenses without Advantica's prior written consent, which
consent may be withheld in Advantica's sole discretion. No consent on behalf of
Advantica shall be binding on Advantica unless granted in writing by Advantica's
Project Executive (or authorized designee) or an officer of Advantica.
Supplier will provide and have on site, its Project Executive prior to
the commencement and for the duration of the applicable Service Agreement Term,
and will timely provide additional trained and qualified personnel as necessary
or appropriate to facilitate and ensure the timely and proper definition,
provision, performance and delivery of the Services in accordance with this
Master Agreement and each Service Agreement.
SECTION 4.6 COOPERATION
As part of the Services, Supplier agrees to use Commercially Reasonable
Efforts to comply with Advantica requests for cooperation and assistance for
Advantica and its third party service providers in connection with special
projects whether or not such projects are within the scope of the Services.
SECTION 4.7 AFFILIATES
Throughout the Term, Supplier shall provide the Services to Advantica
and to those present and future Affiliates of Advantica as Advantica may
designate from time to time, all in
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accordance with the terms and conditions of this Master Agreement and the
designated Service Agreement(s). Advantica and Supplier shall each have all of
the same rights and obligations with respect to Services provided to Advantica
Affiliates as they do with respect to Services provided to Advantica; provided,
however, that each Party reserves the right to separately negotiate the terms on
which Services would be provided to an Affiliate of Advantica not using the
Services as of any Service Agreement Effective Date if Advantica requests that
Supplier incur new financial obligations for Advantica or Affiliate assets or
liabilities (e.g., equipment, software transfer or upgrade fees, license or
lease obligations) in connection with providing such Services.
If at any time during any Service Agreement Term Advantica sells or
otherwise transfers ownership of an Affiliate to a third party or an Affiliate
makes an acquisition or opens a new Facility, Supplier shall (i) continue to
provide the Services to any transferred Affiliate if requested by Advantica,
(ii) will provide the Services to any new or newly acquired Facility if
requested by Advantica and will provide both (i) and (ii) above, on the terms
and conditions set forth in this Master Agreement and the applicable Service
Agreement. Supplier shall cooperate with Advantica, such Affiliate and any new
service provider to ensure an uninterrupted transition to the new service
provider in the case of a sale or transfer of ownership of an Affiliate.
Advantica shall be responsible for any special fees charged by a Third
Party Software licensor as a result of Supplier using such Third Party Software
to provide Services to an Affiliate not using the applicable Services as of a
Service Agreement Effective Date or to a successor in accordance with this
Section 4.7 or allowing such Affiliate or successor access to such Third Party
Software.
SECTION 4.8 CHANGES IN LAW AND REGULATIONS
As part of the Services, Supplier shall identify the impact, if any, of
changes in applicable legislative enactments and regulations on the Services.
Supplier shall notify Advantica of such changes and shall work with Advantica to
identify the impact of such changes on how Advantica uses the Services.
Advantica shall notify Supplier of such changes in applicable legislative
enactments and regulations that Advantica becomes aware of in the ordinary
course of its business. Supplier shall promptly make any resulting modifications
to the Services as reasonably necessary as a result of such changes through the
Change Control Procedures. Supplier shall be responsible for, and shall pay for,
the cost of any such changes relating to Supplier's business. Advantica shall be
responsible for the cost of any such changes relating to Advantica's business to
the extent such changes require computer resources in excess of the computer
resources otherwise provided by Supplier as part of the Services. Supplier shall
be responsible for any fines and penalties imposed on Advantica or Supplier
arising from any noncompliance by Supplier, its subcontractors or agents with
the laws and regulations in respect of the Services. Advantica shall be
responsible for any fines and penalties imposed on Advantica or Supplier
relating to Supplier's provision of the Services which arise from Advantica's
failure to comply with laws and regulations to the extent advised of the
necessity of such compliance by Supplier pursuant to this Section 4.8.
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SECTION 4.9 LICENSES AND PERMITS
As part of the Services, Supplier shall be responsible for obtaining
all applicable governmental or regulatory licenses, authorizations, and permits
required in connection with the performance of Services and to otherwise carry
out its obligations under each Service Agreement and shall have financial
responsibility for, and shall pay, all fees and taxes associated with such
licenses, authorizations, and permits.
SECTION 4.10 DEDICATED ENVIRONMENT
During any time Services are performed at the Advantica Facilities,
Supplier shall provide the Services using hardware, software and related
resources dedicated solely to supporting Advantica. Unless otherwise expressly
provided in a Service Agreement, all Services provided from the Supplier's
Facilities shall be provided using dedicated Equipment and Software. Supplier
shall not provide any Services from a shared or partitioned processing
environment unless specifically approved in writing by Advantica.
SECTION 4.11 SERVICES NON-EXCLUSIVE
(a) Except as shall be expressly set forth in a Service Agreement,
Advantica may obtain the Services during the Term from Supplier or, at
Advantica's option exercised from time to time during the Term, Advantica may
obtain any or all of the Services from a third party or provide them internally.
Advantica shall have no obligation to obtain from Supplier any services that are
not included within the definition of Services. Any Services that are limited to
specific locations under a Service Agreement apply only to such locations.
(b) If Advantica elects to obtain any categories of Services from a
third party, or elects to provide any categories of Services internally in
accordance with Section 4.11(a), Advantica shall so notify Supplier at least
forty-five (45) days in advance of the date such third party or Advantica will
begin to provide such Services. Supplier shall cooperate with Advantica and
Advantica's contractors to allow the proper performance of any services (whether
or not included within the definition of Services) being provided internally by
Advantica or by such third party contractors. Such cooperation shall include,
without limitation, provision of (i) written requirements, standards and
procedures for Advantica systems operations maintained by Supplier so that the
enhancements or developments of such third party may be operated by Supplier,
(ii) assistance and support services to such third party at commercially
reasonable rates, and (iii) access to the technology environment used by
Supplier to provide the Services (subject to reasonable confidentiality and
security restrictions) or any Services as necessary for such third parties to
perform their work.
SECTION 4.12 CORRECTION OF ERRORS
Supplier shall promptly correct any errors or inaccuracies in Advantica
Data or Reports if such errors or inaccuracies were caused by Supplier. If the
error or inaccuracy can be corrected utilizing Supplier's existing resource
level for the Services or if the error or inaccuracy was caused by Supplier,
such corrections shall be provided at no charge to Advantica and Supplier shall
be responsible for any interest or penalties incurred by Advantica as a result
of such errors.
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Otherwise, any charges for such corrections shall be in accordance with the
applicable Service Agreement or, if not addressed in the applicable Service
Agreement, at Supplier's then-current standard rate for all Supplier customer
accounts comparable to Advantica. Corrections and reruns shall be reported in
daily, weekly and monthly reports defined by Advantica and produced by Supplier.
SECTION 4.13 TECHNICAL CHANGE CONTROL
Supplier shall implement any changes in the technical environment and
systems used to provide the Services in accordance with the applicable Service
Agreement, and any applicable Procedures Manual, and the recommendations of any
provider of Third Party Software. Until such Procedures Manual is finalized,
Supplier shall follow Advantica's existing procedures or instructions for the
implementation of technical changes. Notwithstanding anything to the contrary in
the Service Agreement, the Procedures Manual, or Advantica's existing
procedures:
(a) Supplier shall not make any change that adversely affects the
functions or performance of, or decreases the operational efficiency of, the
Services, including without limitation the implementation of technological
changes, without first obtaining Advantica's approval, which may be withheld in
its sole discretion. Notwithstanding the foregoing, Supplier may make temporary
changes required by an emergency but shall, if reasonably practicable, contact
appropriate Advantica personnel to obtain prior approval. Supplier shall
promptly document and report such emergency changes to Advantica.
(b) Supplier shall move programs from development and test environments
to production environments in a controlled and documented manner as described in
the Procedures Manual.
(c) Supplier shall not install any Equipment or Software upgrade within
the Advantica environments unless such installation is in accordance with the
terms of the Procedures Manual or the Change Control Procedures. If Supplier
advises Advantica that, due to a change in the technical environment, Supplier
may no longer be able to achieve one or more Service Levels unless an upgrade is
authorized and Supplier provides documentation of Supplier's position acceptable
to Advantica, Supplier shall not be subject to subsequent Service Level Credits
otherwise owed under a Service Level Agreement to the extent Advantica does not
approve such upgrade and Supplier demonstrates that the applicable Service Level
failure was a direct result of the failure to install the upgrade requested by
Supplier. In such event, however, Supplier shall use Commercially Reasonable
Efforts to meet the applicable Service Level notwithstanding that the upgrade
has not been installed. Such Commercially Reasonable Efforts shall include
further discussions by Supplier with the applicable Third Party provider to
determine if other alternatives are available and any such other alternatives
shall be discussed with Advantica. At such time thereafter as Advantica
requests, Supplier will install the previously requested upgrade. When Supplier
advises Advantica of any proposed upgrade under this Section 4.13(c) Supplier
shall be responsible for advising Advantica of all other upgrades or other
changes that would result from or would be incidental to the upgrade.
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SECTION 4.14 CONTRACT CHANGE CONTROL
(a) From time to time during the Term Advantica or Supplier may propose
changes in or additions to the Services or other aspects of this Agreement or a
Service Agreement. Subject to clause (e) below, all such changes shall be
implemented pursuant to the procedures set forth in this Section (the "Change
Control Procedures").
(b) Any change to this Master Agreement must be approved by the
Relationship Executive of each Party and memorialized in a written amendment
that specifically identifies this Master Agreement, the section of this
Agreement that is the subject of the amendment, and the new provision.
(c) If Advantica desires to propose a change in or addition to the
Services under a Service Agreement, it shall deliver a written notice to the
Supplier Project Executive describing the proposal. Supplier shall respond to
such proposal as promptly as reasonably possible by preparing at Supplier's
expense and delivering to the Advantica Project Executive a written document
("Change Control Document"), indicating: (i) the effect of the proposal, if any,
on the amounts payable by Advantica hereunder (which effect shall be determined
in the manner set forth in Section 13.4 (Charges Pursuant to Change Control
Procedures) and the manner in which such effect was calculated; (ii) the effect
of the proposal, if any, on Service Levels with a full explanation acceptable to
Advantica; (iii) the anticipated time schedule for implementing the proposal;
and (iv) any other information requested in the proposal or reasonably necessary
for Advantica to make an informed decision regarding the proposal. If Supplier
desires to propose a change in or addition to the Services or other aspects of
this Agreement, it may do so by preparing at its expense and delivering a Change
Control Document to the Advantica Project Executive. A Change Control Document,
once submitted to Advantica, shall constitute an offer by Supplier to implement
the proposal described therein on the terms set forth therein, and shall be
irrevocable for a minimum of thirty (30) days.
(d) No change in or addition to the Services or any other aspect of
this Agreement shall become effective without the written approval of the
Advantica Project Executive (or, if necessary, an Advantica officer with the
appropriate level of signature authority). If Advantica elects to accept the
offer set forth in the Change Control Document, as evidenced by the written
approval of the Advantica Project Executive, any changes in or additions to the
Services described in the Change Control Document shall thereafter be deemed
"Services," any other changes described in the Change Control Document shall be
deemed to have amended this Master Agreement, and the Parties shall agree on any
further modifications to this Master Agreement required to reflect the Change
Control Document.
(e) Routine changes made in the ordinary course of Supplier's provision
of the Services that are performed within the then-existing resources used to
provide the Services and that do not affect Service Levels (such as changes to
operating procedures, schedules and Equipment configurations) shall be made at
no additional cost to Advantica and shall be made and documented in accordance
with the Procedures Manual.
SECTION 4.15 SYSTEM CHANGE BENCHMARKING
Each time, if any, that Supplier initiates a material change in the
operating environment in which Supplier is operating Software (a "System
Change"), Supplier shall perform a comparison,
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at a reasonable and mutually agreed level of detail, between the amount of
resources required by the Software to perform a representative sample of the
data processing then being performed for Advantica immediately prior to the
System Change and immediately after the System Change. Advantica shall not be
required to pay for increased resource usage due to a System Change unless
requested by or approved by Advantica. If, following a System Change, Supplier
contends that increased resource usage has resulted from increased Advantica
usage and not from the System Change, Advantica shall only pay for increased
usage as to the extent Supplier is able to demonstrate to Advantica that
increased usage is not due to the System Change and is due to Advantica usage.
Any such demonstration shall utilize the same representative sample as used in
the comparison above.
The parties acknowledge that upgrades to existing operating systems
Software operated by Supplier shall not be deemed a System Change provided
Supplier uses all Commercially Reasonable Efforts to minimize any increased
processing utilization; however, for example, new or replacement operating
systems Software implementation would be deemed a System Change unless such
implementation is directed by Advantica.
SECTION 4.16 SUBCONTRACTING
(a) Supplier shall not delegate or subcontract any of its material
obligations under this Master Agreement or any Service Agreement without
Advantica's prior written consent, which may be withheld in Advantica's sole
discretion. Notwithstanding the preceding sentence, but subject to clause (c)
below, Supplier may use, in the ordinary course of business, third party service
providers or products pursuant to subcontracts which, when combined with any
related subcontracts, involve the payment of no more than $100,000 in any twelve
month period. A subcontract involving the payment of more than $100,000 in any
twelve-month period shall be a "Material Subcontract." Notwithstanding any other
provision in this Section 4.16, all subcontractors shall be required to execute
documents binding the subcontractor to confidentiality and non-disclosure
agreements that are at least as protective as this Agreement with respect to
confidentiality of Advantica Confidential Information under Article 9.
(b) If Supplier desires to enter into a Material Subcontract, it shall
submit to Advantica in writing a proposal specifying (i) the specific tasks
Supplier proposes to subcontract, (ii) the reason for having a subcontractor
perform such tasks instead of Supplier, (iii) the identity and qualifications of
the proposed subcontractor and (iv) any other information reasonably requested
by Advantica or relevant to Advantica's approval of the subcontractor. If
Advantica approves of the use of such subcontractor, Supplier shall include in
such subcontract provisions (A) naming Advantica as an intended third-party
beneficiary, (B) substantially similar to Article 11 (Audits), Section 5.5
(Performance Standards) and Article 9 (Confidentiality), and (C) any other
provisions necessary for Supplier to fulfill its obligations under this Master
Agreement or any Service Agreement (including without limitation, clause (c)
below), and provide Advantica with a copy of each Material Subcontract. Such
subcontract provisions shall also include the option of Advantica to assume each
Material Subcontract in the event Advantica terminates this Master Agreement or
a Service Agreement. In addition, Supplier shall not disclose any Advantica
Confidential Information to such subcontractor until such subcontractor has
agreed in writing to assume the obligations described in Article 9
(Confidentiality).
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(c) Advantica may revoke approval of a subcontractor previously
approved, or object to Supplier's use of a subcontractor for which Advantica's
approval was not required pursuant to the clause (a) above, if a subcontractor
is acquired or otherwise becomes affiliated with a competitor of Advantica, the
subcontractor's performance has been materially deficient, good faith doubt
exists concerning the subcontractor's ability to render future performance, or
there have been material misrepresentations by or concerning the subcontractor.
Upon such revocation or objection, Supplier shall remove such subcontractor from
performing the Services.
(d) Supplier shall remain liable for obligations performed by
subcontractors to the same extent as if a Supplier employee had performed such
obligations, and for purposes of this Master Agreement such work shall be deemed
work performed by Supplier. If a subcontractor breaches a Material Subcontract,
or is alleged to have breached a Material Subcontract, Supplier shall notify
Advantica and provide Advantica with such information relating to the alleged
breach as Advantica may reasonably request. Any breach of a Material Subcontract
shall constitute a breach of this Master Agreement or the applicable Service
Agreement.
(e) At no time shall Supplier retain individual independent contractors
for provision of the Services in excess of twenty-five percent (25%) of the
number of personnel involved in providing the Services under each Service
Agreement, without the prior approval of Advantica.
ARTICLE 5
SERVICE LEVELS
SECTION 5.1 SERVICE LEVEL AGREEMENTS
Concurrently with entering into each Service Agreement, Advantica and
Supplier will enter into an agreement (a "Service Level Agreement") that
specifically relates to such Service Agreement and contains quantitative levels
of performance ("Service Levels") for certain specified Services. Each Service
Level Agreement will be in a form similar to the form attached hereto as Master
Schedule B. With respect to each Service that has an associated Service Level,
Supplier shall provide such Service throughout the applicable Service Agreement
Term in a manner that meets or exceeds the associated Service Level.
SECTION 5.2 REVIEW OF SERVICE LEVELS
Within six (6) months after the initiation of Services under a Service
Agreement and every six months thereafter, the parties shall jointly review the
Service Levels and adjust them to reflect any improved performance capabilities
associated with advances in the technology and methods used to perform the
Services. The Parties acknowledge that they expect the Service Levels identified
in the Service Level Agreements to generally improve continuously throughout the
Service Agreement Term of the respective Service Agreements. Throughout each
Service Agreement Term, Supplier shall identify and notify Advantica of
commercially reasonable methods of improving the Service Levels.
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SECTION 5.3 MEASUREMENT AND MONITORING TOOLS; REPORTING
As part of the Services throughout the Term, and at no additional cost
to Advantica, Supplier shall implement any measurement and monitoring tools and
procedures necessary to measure its performance of the Services and compare such
performance to that required by the Service Level Agreements. Upon Advantica's
request, Supplier shall provide Advantica or its auditors with any information
and access to the measurement and monitoring tools necessary to verify
compliance by Supplier with the Service Level Agreements. Supplier shall provide
such documentation to Advantica as shall be necessary to allow verification of
Supplier's compliance with the Service Levels. Service Level reports will be
provided to Advantica at the same time that Supplier delivers its invoice for
Charges to Advantica.
SECTION 5.4 FAILURE TO MEET SERVICE LEVELS
(a) Supplier acknowledges that its failure to meet one or more Service
Levels may have a material adverse effect on the business and operations of
Advantica. Accordingly, if Supplier fails to meet a Service Level for reasons
other than those specified in Section 5.4(c) below, Advantica shall have the
option, but not the obligation, to recover the applicable amount specified in
each Service Level Agreement ("Service Level Credits"). If Supplier fails to
meet Service Levels under certain circumstances described in Master Schedule C,
Advantica shall have the option, but not the obligation, to recover the
applicable amounts specified in Master Schedule C (the "Corporate Service Level
Credits"). Supplier shall remit Service Credits to Advantica within thirty (30)
days after the end of the month in which such failure occurred, or, at
Advantica's option, Supplier shall deduct the Service Credits from the next
succeeding invoice or other amounts due to Supplier. Regardless of whether
Advantica exercises its option to recover Service Credits with respect to any
failure, Advantica shall also have any remedies available to Advantica under
this Master Agreement or any Service Agreement, at law or in equity, including
the right to terminate this Master Agreement or any Service Agreement for cause.
(b) Each time Supplier fails to meet a Service Level, Supplier shall:
(i) promptly, but in any event within five (5) Business Days, investigate the
root cause(s) of the failure and deliver to Advantica a written report
identifying such root cause(s) in the form requested by Advantica or as
specified in a Service Agreement; (ii) use all Commercially Reasonable Efforts
to correct the problem and to begin meeting such Service Level as soon as
practicable; and (iii) at Advantica's request, advise Advantica of the status of
such corrective efforts. All Service Levels and applicable Service Credits
remain in effect notwithstanding Supplier's use of Commercially Reasonable
Efforts to correct any performance problem.
(c) If any failure to meet a Service Level is directly and solely
attributable to (i) a Force Majeure Event, or (ii) actions or omissions of
Advantica or a breach by Advantica of this Master Agreement or a Service
Agreement as described in Section 17.5 of this Master Agreement, Advantica shall
not be entitled to a Service Credit.
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SECTION 5.5 PERFORMANCE STANDARDS
(a) With respect to any Service or obligation which does not have an
associated Service Level, Supplier shall perform such Service or obligation with
a level of accuracy, quality, completeness, timeliness, responsiveness and cost
efficiency that meets or exceeds the higher of (i) the level of performance by
Advantica or any third party providing such services for Advantica immediately
before the applicable Service Agreement Effective Date, or (ii) the standards of
other sophisticated outsourcing companies providing services similar to the
Services, and in any event using prompt and diligent efforts in a professional
and workmanlike manner and using properly trained and qualified individuals
("Performance Standards"). Each time Supplier fails to meet any Performance
Standards, Supplier shall: (i) promptly investigate the root cause(s); (ii) use
all Commercially Reasonable Efforts to correct the problem and to begin
performing such obligation in the required manner as soon as practicable, but in
any event within thirty (30) days of such failure; and (iii) advise Advantica on
a regular basis of the status of such corrective efforts. All Performance
Standards remain in effect notwithstanding Supplier's use of Commercially
Reasonable Efforts to correct any performance problem.
(b) Regardless of whether there exists an associated Service Level,
Supplier shall (i) perform all Services and obligations promptly, diligently and
in a workmanlike and professional manner, using qualified individuals, and (ii)
use all Commercially Reasonable Efforts to perform the Services and obligations
in the manner which reduces charges payable by Advantica hereunder to the
minimum amount reasonably practicable while still meeting required levels of
quality and performance.
SECTION 5.6 BENCHMARKING
If a Service Agreement provides for periodic benchmarking with respect
to Service Levels or charges under the Service Agreement, the Parties shall
cooperate in good faith to perform the benchmarking procedures described in such
Service Agreement.
SECTION 5.7 ADVANTICA SATISFACTION SURVEYS
Upon the request of Advantica and as part of the Services, Supplier (or
if Advantica elects, a third party selected by Advantica) shall, if requested by
Advantica, conduct Advantica satisfaction surveys as approved by Advantica for
affected end-users of the Services as designated by Advantica. This survey shall
be of the content and scope reasonably determined by Advantica, administered in
accordance with the procedures agreed upon by Advantica and Supplier, and not to
exceed two (2) surveys each Contract Year. Notwithstanding the foregoing, with
respect to Service Agreements No. 2 through No. 4 entered into by Advantica and
Supplier as of the Effective Date, the form of end user survey will be agreed to
by Parties during the migration period described in Service Agreement No. 1, the
surveys for Contract Year 1 will not exceed 200 end users for each such Service
Agreement, and the surveys will be conducted quarterly for Contract Year 1 and
annually for Contract Years after Contract Year 1.
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SECTION 5.8 VALUE INITIATIVES AND PERIODIC IT REVIEW
During the Term of this Master Agreement it is the intention of
Supplier and Advantica to cooperate in good faith to identify opportunities for
Supplier to propose Supplier Services to Advantica for the purpose of creating
technology-enabled business value for the benefit of Advantica ("Value
Initiatives"). Periodically, but at least annually, Supplier and Advantica
executives shall meet for a review of Advantica's information technology
requirements as well as reporting and recommendations of Supplier as to the
quality of Services performance by Supplier and continuous improvement in such
performance. Advantica may periodically cause an independent organization to
conduct an information technology review of Advantica's operations to assist
Advantica and Supplier in their assessment and review, including a review of
available benchmarking and best practices information. The cost of such review
will be shared equally by Advantica and Supplier.
If Advantica agrees with Supplier to contract for implementation of a
Value Initiative, Supplier and Advantica will negotiate in good faith to
determine the pecuniary value of Supplier's contribution to achievement of the
applicable business objectives, the method of measuring and tracking such value
and the period over which it will be measured and tracked, and the basis for
compensating Supplier for the applicable Supplier Services. The principles on
which these negotiations will be based will include, among others, the degree to
which the applicable Supplier Services contribute to achievement of the business
objectives and the value of the at-risk investment of resources Supplier is
willing to make to achieve such business objectives. Generally, it is the intent
of Supplier and Advantica that Supplier' compensation for such Supplier Services
will be contingent upon successful achievement of the business objectives and
will be equivalent to Supplier's proportionate value contribution over a
specific period (generally up to one (1) year). The terms and conditions agreed
to by Supplier and Advantica with respect to each Value Initiative will be set
forth by the Parties in an agreement (a "Value Initiative Agreement").
ARTICLE 6
TRANSFERS OF EQUIPMENT, FACILITIES AND THIRD PARTY CONTRACTS
SECTION 6.1 ASSUMPTION OF EQUIPMENT LEASES
If specified in a Service Agreement, Advantica shall assign, and
Supplier shall assume, Advantica's obligations under the applicable leases for
certain equipment that is used to provide the Services as described in the
Services Agreement or Advantica may sell equipment owned by it to Supplier (the
"Transferred Equipment"). Supplier shall obtain consents to such assignments and
releases of Advantica's liability under such leases as promptly as practicable.
The Service Agreement shall state the other terms and conditions applicable to
the Transferred Equipment. Any assignment of Advantica's interests in the
Transferred Equipment is made "AS IS, WHERE IS," WITHOUT WARRANTIES OF ANY KIND
(EXCEPT AS EXPRESSLY STATED IN SUCH SERVICE AGREEMENT), AND SPECIFICALLY WITHOUT
ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
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SECTION 6.2 USE OF ADVANTICA FACILITIES AND EQUIPMENT
(a) During the Term of a Service Agreement, Advantica shall make
available to Supplier furnished space in Advantica's office facilities as
reasonably determined by Advantica to be suitable for Supplier to carry out
functions associated with the Services (the "Advantica Facilities") and certain
Equipment identified in each Service Agreement that will continue to be owned by
Advantica (the "Advantica Equipment").
(b) Supplier shall: (i) use the space in the Advantica Facilities for
the sole purpose of providing the Services; (ii) comply with the leases and
other agreements applicable to the Advantica Facilities; (iii) comply with all
policies and procedures governing access to and use of Advantica Facilities; and
(iv) return such space to Advantica in the same condition it was in on the
Service Agreement Effective Date, ordinary wear and tear excepted. Except to the
extent included in the Services and Charges described in the applicable Service
Agreement (e.g., supplies and consumables used in providing the Services),
Advantica shall provide the Advantica Facilities and access to normal office
resources (e.g., fax, telephone and copier support) at no charge to Supplier.
Supplier shall remain responsible for any required long distance charges, copier
paper and all other expenses incurred by Supplier's on-site account management
team. Advantica may, at its option, provide, and Supplier will manage, personal
computers for Supplier's on-site account management team.
(c) Supplier shall: (i) use the Advantica Equipment for the sole
purpose of providing the Services; (ii) comply with any directions from
Advantica concerning the location of the Advantica Equipment; (iii) provide, or
arrange for third parties to provide, maintenance of the Advantica Equipment;
and (iv) return such equipment to Advantica in the same condition it was in on
the Service Agreement Effective Date, ordinary wear and tear excepted.
SECTION 6.3 THIRD PARTY CONTRACTS
(a) Each Service Agreement shall provide for the treatment of all Third Party
Contracts, as follows: (i) all or certain of the Third Party Contracts may be
assigned by Advantica to Supplier, (ii) all or certain of the Third Party
Contracts may be retained by Advantica and, as necessary, any required Third
Party Consents shall be obtained by Advantica, Supplier or both, as specified in
the Service Agreement, and (iii) the respective financial, operational and other
obligations of the Parties with respect to the Third Party Contracts shall be
set forth in the Service Agreement. As used in Section 6.3(a)(ii), "Third Party
Consents" refer to consents granted by Third Parties as necessary to permit
Supplier to either access and operate the subject Equipment or Software or to
otherwise enjoy the benefit of Advantica's rights under the Third Party Contract
in order to perform Supplier's obligations under a Service Agreement.
Regardless of whether a Third Party Consent is obtained with respect to
any Third Party Service Contract assigned or to be assigned to Supplier, unless
otherwise provided in a Service Agreement, on and after each Service Agreement
Effective Date Supplier shall fulfill all of the payment and other obligations
formerly imposed on Advantica under such Third Party Contracts to the extent
such obligations arise on or after the applicable Service Agreement Effective
Date. If any such Third Party Consent cannot be obtained, Supplier shall
identify and adopt, at its
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expense, subject to Advantica's prior approval, such alternative approaches as
are necessary to provide the Services without such Third Party Consent.
(b) Subject to obtaining any required Third Party Consents, as of the
applicable Service Commencement Date Advantica shall grant to Supplier, for the
sole purpose of providing the Services, the same rights of access to, and use
of, the Third Party Contracts used by Advantica immediately before the
applicable Service Commencement Date.
(c) On or before the applicable Service Agreement Effective Date, in
the event the Service Agreement requires Supplier to assume any Third Party
Contract, Supplier shall obtain from each third party to a Third Party Contract
existing on the applicable Service Agreement Effective Date any required
consents by such third party to (i) the assignment to and assumption by Supplier
of Third Party Contracts, and (ii) a complete release of Advantica with respect
to all obligations arising under such Third Party Contracts on and after the
applicable Service Agreement Effective Date (collectively, the "Third Party
Consents"). Supplier shall pay all transfer, upgrade and other fees necessary to
obtain any Third Party Consents with respect to Third Party Contracts, and
Advantica's liability for any such payments is only to Supplier as expressly set
forth in the applicable Service Agreement; provided that, Advantica shall be
responsible for any such fees imposed by the Third Party for any Advantica
Affiliates not receiving Services as of the applicable Service Agreement
Effective Date. Unless otherwise specified in a Service Agreement, any assigned
Third Party Contract shall include the right of Advantica to re-acquire the
rights under the Third Party Contract upon any termination or expiration of a
Service Agreement.
(d) With respect to any Third Party Contract which both (i) is not
identified in a Service Agreement and (ii) was not made known to Supplier during
the due diligence and negotiations preceding the execution of a Service
Agreement (an "Unidentified Third Party Contract"), the following shall apply:
(A) the Unidentified Third Party Contract shall be added to the appropriate
Service Agreement as soon as it has been identified; (B) Supplier shall obtain
any required Third Party Consents with respect to any Unidentified Third Party
Contract that is a Third Party Service Contract as soon as possible after it has
been identified; and (C) Advantica shall pay all transfers, upgrade and other
fees necessary to obtain such Third Party Consent with respect to the
Unidentified Third Party Contracts. During the Term, Advantica shall either
retain financial responsibility for license, maintenance or other financial
obligations with respect to such Unidentified Third Party Contracts or Supplier
shall charge such amounts to Advantica on a Pass-Through Expense basis.
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SECTION 6.4 AGENCY
If and to the extent expressly provided in a Service Agreement,
Advantica appoints Supplier as its agent, for the limited purposes of
administering, managing, operating and paying under the Third Party Contracts to
which Advantica is a party in connection with the Services contemplated by a
Service Agreement, such agency of Supplier is limited, in that Supplier may not
enter into oral or written agreements with any individual or business entity for
or in the name of Advantica or its Affiliates, without the prior express written
approval of Advantica. Supplier shall not cancel, substitute, terminate, change
or add to any Third Party Contracts without Advantica's prior written consent,
which consent may be withheld in Advantica's sole discretion.
Upon Advantica's request, Supplier will provide to Advantica all
information and documentation related to its activities as Advantica's agent
with regard to such Third Party Contracts. Supplier shall notify Advantica
immediately at any time that Supplier becomes aware that any party to a Third
Party Contract has breached or intends to breach a Third Party Contract.
Advantica may terminate or provide additional restrictions on Supplier's agency
appointment with respect to any Third Party Contract to which Advantica is a
party upon written notice to Supplier.
ARTICLE 7
PERSONNEL
SECTION 7.1 OFFERS AND TERMS OF EMPLOYMENT
(a) Each Service Agreement will specify the employees of Advantica or
any existing outsourcing suppliers to whom Supplier shall offer employment, if
any.
(b) Supplier shall give each such employee who accepts such offer (a
"Transferred Employee") full credit under all Supplier seniority-based benefits
plans (including, without limitation, vacation, 401(k), retirement and employee
stock purchase plans) for years of service at Advantica or elsewhere to the same
extent that Advantica had given credit for that employee's years of service. Any
pre-existing condition limitations and waiting periods under Supplier benefit
plans shall be waived for all Transferred Employees. Supplier shall grant each
Transferred Employee the same rights and opportunities for advancement as
comparable employees currently employed by Supplier.
SECTION 7.2 KEY TRANSFERRED EMPLOYEES
A Service Agreement may designate certain Transferred Employees (the
"Key Transferred Employees") who are critical to providing the Services. Unless
consented to by Advantica, Supplier shall not, for the period set forth next to
such Key Transferred Employee's name in the Service Agreement, either (i)
terminate the employment of such Key Transferred Employee except for cause, or
(ii) transfer such Key Transferred Employee from the Advantica account.
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SECTION 7.3 KEY SUPPLIER POSITIONS
(a) A Service Agreement may designate certain Supplier personnel
positions (the "Key Supplier Positions") which are critical to providing the
Services throughout the applicable Service Agreement Term. Advantica may change
or update the Key Supplier Positions from time to time during the Term, provided
that, unless otherwise agreed by the parties, the number of Key Supplier
Positions shall not exceed the number listed in the applicable Service
Agreement. Supplier shall cause the personnel filling the Key Supplier Positions
to devote full time and effort to the provision of the Services.
(b) The individuals who will fill the Key Supplier Positions on the
Service Commencement Date shall be listed in the applicable Service Agreement as
of the applicable Service Agreement Effective Date, to the extent known. From
the date an individual first fills a Key Supplier Position until completion of
the period set forth next to such Key Supplier Position in such Service
Agreement, Supplier shall notify Advantica reasonably in advance of any decision
by Supplier to (i) terminate the employment of any individual originally or
subsequently filling such Key Supplier Position except for cause, or (ii)
transfer such individual from such Key Supplier Position. In any such case,
Supplier shall reasonably consider any concerns expressed by Advantica with
respect to such proposed action. In no event shall Supplier transfer an
individual from a Key Supplier Position to the account of a competitor of
Advantica during the applicable Service Agreement Term.
(c) Before assigning an individual to fill a Key Supplier Position,
Supplier shall notify Advantica of the proposed assignment, shall introduce the
individual to appropriate Advantica representatives as designated by Advantica's
Project Executive and Relationship Executive, and shall provide Advantica with a
resume and such other information as Advantica may reasonably request. If
Advantica objects to the proposed assignment within fifteen (15) days after
being notified thereof, Supplier shall discuss such objections with Advantica
and attempt to resolve them on a mutually agreeable basis. If Advantica
continues to object to the proposed assignment, Supplier shall not assign the
individual to that position and shall propose another individual to fill the Key
Supplier Position within ten (10) Business Days.
SECTION 7.4 SUPPLIER EMPLOYEES ASSIGNED TO ADVANTICA ACCOUNT
(a) Under any Service Agreement, Advantica shall have the right to
notify Supplier if Advantica determines that the continued assignment to the
Advantica account of any Supplier employee is not in the best interests of
Advantica. Upon receipt of such notice, Supplier shall have a reasonable time
period, not to exceed five (5) days, to investigate the matters stated therein,
discuss its findings with Advantica and attempt to resolve such matters in a
manner acceptable to Advantica.
(b) If Supplier fails to meet the Performance Standards or Service
Levels persistently or continuously and if Advantica reasonably believes such
failure is attributable in whole or in part to Supplier's reassignment,
movement, or other changes in the human resources allocated by Advantica to the
performance and delivery of the Services and/or to the Supplier subcontractors
assigned to the Advantica service team, Advantica will notify Supplier of such
belief. Upon receipt of such notice from Advantica, Supplier (i) will promptly
provide to Advantica a report setting forth Supplier's position regarding the
matters raised by Advantica in its notice; (ii) will
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meet with Advantica to discuss the matters raised by Advantica in its notice and
Supplier's positions with regard to such matters; and (iii) will diligently work
to eliminate with respect to the Services any such Supplier human resource
practices and/or processes identified and agreed to by the Parties as adversely
impacting the performance and delivery of the Services by Supplier.
(c) Further, at Advantica's written request, Supplier shall promptly
remove any Supplier Employee, including the Supplier's Project Executive, from
the Advantica account so requested by Advantica and, if appropriate or
necessary, replace such Supplier Employee with a suitable replacement in a
prudent manner so as not to interrupt or adversely affect the Services
SECTION 7.5 SUPPLIER PERSONNEL
Supplier employees shall remain employees of Supplier at all times and
shall not be deemed employees of Advantica for any purpose. Supplier shall have
sole responsibility for all salaries, wages and benefits of Supplier employees.
ARTICLE 8
INTELLECTUAL PROPERTY RIGHTS AND OBLIGATIONS
SECTION 8.1 ADVANTICA SOFTWARE
Each Service Agreement shall identify the Advantica Software, if any,
that Supplier is authorized to use to perform the Services and specify the
rights of Supplier to use the Advantica Software.
SECTION 8.2 SUPPLIER SOFTWARE
Each Service Agreement will identify any Supplier Software that will be
used to provide the Services. Supplier shall install, operate and maintain at
its expense any Supplier Software needed to provide the Services. Without
Advantica's written consent, Supplier shall not use in performing the Services
any Supplier Software that is not commercially available to Advantica. As of the
applicable Service Agreement Effective Date, Supplier grants to Advantica and
its contractors and subcontractors, to the extent necessary or desirable for
Advantica or such contractors and subcontractors to perform any Services
permitted by this Master Agreement or any Service Agreement, a worldwide,
royalty free, nonexclusive license during the applicable Service Agreement Term
to use Supplier Software for the sole benefit of Advantica. Except for the
foregoing license, Supplier retains all right, title and interest in and to the
Supplier Software.
SECTION 8.3 THIRD PARTY SOFTWARE
Each Service Agreement shall identify any Third Party Software, and,
unless otherwise stated in such Service Agreement, Supplier shall, to the extent
necessary or appropriate to provide the Services: (i) maintain licenses and
maintenance agreements for Third Party Software Licenses used by Advantica on
the Service Agreement Effective Date; (ii) upgrade, enhance, and implement new
versions of Third Party Software used by Advantica on the Service Agreement
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Effective Date; (iii) obtain licensed authorization for use and disclosure of
Third Party Software by and to Supplier's employees or agents; (iv) install
fixes, modifications, releases or versions of Third Party Software which are
identified by the licensor of Third Party Software as required to make the Third
Party Software Year 2000 Compliant; and (v) if directed by Advantica, replace or
add to Third Party Software used by Advantica on the Service Agreement Effective
Date. Supplier shall not use in performing the Services any Third Party Software
unless such Third Party Software was commercially available to Advantica when
selected.
SECTION 8.4 WORK PRODUCT
Supplier shall be the sole and exclusive owner of all work product
owned by it as of each applicable Service Agreement Effective Date. Advantica
shall be the sole and exclusive owner of any reports, manuals (including any
Procedures Manual) and other work product prepared by Supplier pursuant to a
Service Agreement and of any enhancements to and modifications of Advantica
Software implemented pursuant to a Service Agreement. In addition, as between
Advantica and Supplier, Advantica shall be the sole and exclusive owner of any
enhancements to and modifications of Third Party Software implemented pursuant
to a Service Agreement. All work product described in the preceding two (2)
sentences shall be considered works for hire owned by Advantica. If any such
work product is not considered a work made for hire under applicable law,
Supplier hereby irrevocably assigns to Advantica, without further consideration,
all of Supplier's right, title and interest in and to such work product.
Supplier shall execute any documents and take any other actions reasonably
requested by Advantica to accomplish the purposes of this Section. If for any
reason Advantica fails to obtain ownership of the work product and such
ownership is vested in Supplier or its employees or agents, Supplier agrees to
(i) promptly and legally transfer such work product to Advantica wherever
possible and (ii) wherever not possible, promptly grant to Advantica or obtain
and promptly act on the right to grant to Advantica, a perpetual, exclusive,
royalty-free and world-wide license to use the work product for any purpose, and
to assign and sublicense its license rights. The Parties' rights, if any, in
Software developed outside the scope of the Services shall be determined
pursuant to the Contract Change Control Procedures.
SECTION 8.5 USE OF CONCEPTS, KNOW-HOW AND METHODS
Nothing in this Master Agreement or any Service Agreement shall
restrict a Party from the use of any ideas, concepts, know-how, methods or
techniques relating to information technology services that such Party,
individually or jointly, develops or discloses under this Master Agreement or
any Service Agreement or obtains from third parties, except to the extent that
such use infringes the other Party's patent rights, copyrights or other
intellectual property rights or involves a disclosure or use of the other
Party's Confidential Information.
SECTION 8.6 NON-INFRINGEMENT
Supplier shall perform its obligations under this Master Agreement and
all Service Agreements in a manner that does not infringe, or constitute an
infringement or misappropriation of, any patent, copyright, trademark, trade
secret or other proprietary rights of any third party. Supplier represents that,
to its knowledge, the Supplier Software and Third Party Software and
27
the Services performed by Supplier do not, and will not, infringe any patent,
copyright, trade secret or any other intellectual property interest owned or
controlled by any other person.
SECTION 8.7 VIRUSES
Supplier shall use all Commercially Reasonable Efforts to ensure that
no Viruses are coded or introduced into the systems used to provide the
Services. If a Virus is introduced into the systems used to provide the
Services, Supplier shall eliminate the Virus and mitigate any losses of
operational efficiency or data caused by the Virus.
SECTION 8.8 DISABLING CODE
Supplier shall not insert into any Software any code that would have
the effect of disabling any Software, Equipment or Services. With respect to any
disabling code that may be part of the Software, Supplier shall not invoke such
disabling code at any time (whether during or after the Term) for any reason. If
at any time the licensor of any Third Party Software shall invoke or threaten to
invoke any disabling code in Third Party Software licensed to Supplier that
could adversely affect the Services, Supplier shall use its best efforts to
preclude such action on the part of such licensor. Advantica acknowledges that
Supplier's "best efforts" in this case may include provision of a temporary
work-around for up to sixty (60) days.
ARTICLE 9
CONFIDENTIALITY
SECTION 9.1 DEFINITIONS
(a) "Disclosing Party" means the Party furnishing Confidential
Information and "Receiving Party" means the Party receiving the Confidential
Information disclosed by the Disclosing Party.
(b) "Confidential Information" means information designated as
confidential or which ought to be considered as confidential from its nature or
from the circumstances surrounding its disclosure. Confidential Information
includes, without limiting the generality of the foregoing, Supplier Software,
Advantica Data, Advantica Software, the terms of this Master Agreement, and
information:
(i) relating to the Disclosing Party's software or hardware
products or services, or to its research and development projects or plans;
(ii) relating to the Disclosing Party's business, policies,
strategies, operations, finances, plans or opportunities, including the identity
of, or particulars about, the Disclosing Party's clients or suppliers; and
(iii) marked or otherwise identified as confidential, restricted,
secret or proprietary, including, without limiting the generality of the
foregoing, information acquired by inspection or oral disclosure provided such
information was identified as confidential at the time
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of disclosure or inspection and is confirmed in writing with ten (10) Business
Days after the disclosure or inspection; and
Notwithstanding the foregoing, Confidential Information does not include
information that the Receiving Party can establish:
(A) has become generally available to the public or commonly
known in either Party's business other than as a result of a breach by the
Receiving Party of any obligation to the Disclosing Party;
(B) was known to the Receiving Party prior to disclosure to
the Receiving Party by the Disclosing Party by reason other than having been
previously disclosed in confidence to the Receiving Party;
(C) was disclosed to the Receiving Party on a non-confidential
basis by a third party who did not owe an obligation of confidence to the
Disclosing Party with respect to the disclosed information;
(D) was independently developed by the Receiving Party
without any recourse to any part of the Confidential Information; or
(E) in the case of Advantica, any information related to the
Services which Advantica determines in good faith to be necessary or appropriate
in connection with any requests by Advantica for information or proposals from
other service providers, including, without limitation, information of an
operational, technical or financial nature related to Advantica which Advantica
desires to make available to such service providers (excluding, however,
Supplier's pricing for the Services).
(c) "Confidential Materials" means the part of any tangible media upon
or within which any part of the Confidential Information is recorded or
reproduced in any form, excluding any storage device which forms a part of
computer hardware.
SECTION 9.2 RIGHTS, RESTRICTIONS AND OBLIGATIONS OF THE RECEIVING PARTY
(a) During the Term, the Receiving Party may:
(i) disclose Confidential Information received from the
Disclosing Party only to its subcontractors, agents, representatives, advisors,
employees, officers and directors and Affiliates who have a need to know such
information exclusively for the purpose of executing its obligations or
exercising its rights under this Master Agreement or any Service Agreement;
provided that the Disclosing Party may, on a case by case basis, require that
the Receiving Party obtain its written consent prior to disclosure of certain
categories of Confidential Information to such parties;
(ii) reproduce the Confidential Information received from the
Disclosing Party only as required to execute its obligations or exercise its
rights under this Master Agreement or any Service Agreement;
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(iii) disclose Confidential Information as required by law,
provided the Receiving Party gives the Disclosing Party prompt notice prior to
such disclosure to allow the Disclosing Party to make a reasonable effort to
obtain a protective order or otherwise protect the confidentiality of such
information; and
(iv) disclose Confidential Information which pertains to the
terms of this Master Agreement, any Service Agreement or Advantica's information
technology operations which may be necessary in order for potential bidders to
respond to any future Advantica request for proposal for all or part of the
Services (excluding, however, Supplier's pricing for Services).
(b) Except as otherwise specifically provided in this Master Agreement
or any Service Agreement, the Receiving Party shall not during the Term and
after expiration or earlier termination hereof:
(i) disclose, in whole or in part, any Confidential
Information received directly or indirectly from the Disclosing Party; or
(ii) sell, rent, lease, transfer, encumber, pledge, reproduce,
publish, transmit, translate, modify, reverse engineer, compile, disassemble or
otherwise use the Confidential Information in whole or in part.
(c) The Receiving Party shall exercise the same care in preventing
unauthorized disclosure or use of the Confidential Information that it takes to
protect its own information of a similar nature, but in no event less than
reasonable care. Reasonable care includes, without limiting the generality of
the foregoing:
(i) informing its subcontractors, agents, representatives,
advisors, directors, officers, employees and Affiliates and, where applicable,
their directors, officers and employees, of the confidential nature of the
Confidential Information and the terms of this Master Agreement, directing them
to comply with these terms, and obtaining their written acknowledgment that they
have been so informed and directed, and their written undertaking to abide by
these terms; and
(ii) notifying the Disclosing Party immediately upon discovery
of any loss, unauthorized disclosure or use of Confidential Information, or any
other breach of this Article by the Receiving Party, and assisting the
Disclosing Party in every reasonable way to help the Disclosing Party regain
possession of the Confidential Information and to prevent further unauthorized
disclosure or use.
(d) The Receiving Party acknowledges that:
(i) the Disclosing Party possesses and will continue to
possess Confidential Information that has been created, discovered or developed
by or on behalf of the Disclosing Party, or otherwise provided to the Disclosing
Party by third parties, which information has commercial value and is not in the
public domain;
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(ii) unauthorized use or disclosure of Confidential
Information is likely to cause injury not readily measurable in monetary
damages, and therefore irreparable;
(iii) in the event of an unauthorized use or disclosure of
Confidential Information, the Disclosing Party shall be entitled, without
waiving any other rights or remedies, to such injunctive or equitable relief as
may be deemed proper by a court of competent jurisdiction;
(iv) subject to the rights expressly granted to the Receiving
Party in this Master Agreement or in any Service Agreement, the Disclosing Party
and its licensors retain all right, title and interest in and to the
Confidential Information, including without limiting the generality of the
foregoing, title to all Confidential Materials regardless of whether provided by
or on behalf of the Disclosing Party or created by the Receiving party; and
(v) any disclosure by the subcontractors, agents,
representatives, advisors, directors, officers and employees and Affiliates of
the Receiving Party and, where applicable, their directors, officers and
employees shall be deemed to be disclosure by the Receiving Party and the
Receiving Party shall be liable for any such disclosure as if the Receiving
Party had disclosed the Confidential Information.
SECTION 9.3 RIGHTS AND REMEDIES OF THE DISCLOSING PARTY
(a) Immediately upon the Disclosing Party's request, and at the
expiration or earlier termination of this Master Agreement or any applicable
Service Agreement, the Receiving Party shall:
(i) return all Confidential Materials, including, without
limitation, all originals, copies, reproductions and summaries of Confidential
Information; and
(ii) destroy all copies of Confidential Information in its
possession, power or control, which are present on magnetic media, optical disk,
volatile memory or other storage device, in a manner that assures the
Confidential Information is rendered unrecoverable.
Upon completion of those tasks an officer of the Receiving Party shall provide
written confirmation to the Disclosing Party that the requirements of this
Section have been complied with.
(b) The Disclosing Party may visit the Receiving Party's premises, upon
reasonable prior notice and during normal business hours, to review the
Receiving Party's compliance with the terms of this Section.
SECTION 9.4 NONDISCLOSURE AGREEMENTS
Supplier shall, at Advantica's request made from time to time during
the Term, cause Supplier Personnel designated by Advantica to sign nondisclosure
agreements reasonably proposed by Advantica.
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SECTION 9.5 OWNERSHIP OF ADVANTICA DATA
All Advantica Data shall remain the property of Advantica. The
Advantica Data shall not be (i) used by Supplier other than in connection with
providing the Services, (ii) disclosed, sold, assigned, leased or otherwise
provided to third parties by Supplier, or (iii) commercially exploited by or on
behalf of Supplier, its employees or agents.
SECTION 9.6 RETURN OF DATA
At no cost to Advantica, Supplier shall upon (i) request by Advantica
at any time, and (ii) the cessation of all Termination/Expiration Assistance,
promptly return to Advantica, in the format and on the media in use as of the
date of request, all or any requested portion of the Advantica Data. Archival
tapes containing any Advantica Data shall be used by Supplier solely for back-up
purposes.
SECTION 9.7 SECURITY
(a) Supplier will comply with the written security procedures that are
in effect during the Term of this Master Agreement and any Service Agreement for
the security of Advantica's Facilities and Advantica Data, as such procedures
are created or modified by Advantica from time to time. The applicable policy or
policies may be included in each applicable Service Agreement.
(b) (i) Since Supplier personnel may, by nature of the Services, have
the ability to defeat systems security provisions on devices specified in each
applicable Service Agreement containing both attorney-client privileged material
or attorney work product, but such personnel have no need to actually access
such data in order to perform Services, Supplier covenants that, in addition to
the other provisions of this Article 9, Supplier shall inform Advantica whenever
access is sought by Supplier, its employees, agents, or contractors to the data
files on such devices. Supplier shall not, and Supplier's employees and
contractors shall not, access such Advantica Data, and Supplier waives any claim
that, as to Supplier, Advantica, by any act contemplated or permitted under this
Master Agreement or any Service Agreement, has waived any privileges to which it
is otherwise entitled by virtue of the access required for performing the
Services.
(ii) Since Supplier personnel may, by nature of the Services, have
the ability to defeat systems security provisions on devices specified in each
applicable Service Agreement containing Advantica's financial data that, if
utilized or disclosed could lead to violations of the applicable securities
laws, Supplier covenants that, in addition to the other provisions of this
Article 9, (1) neither Supplier nor its employees or contractors shall access or
disclose any Advantica financial data, and (2) Supplier employees and
contractors who have the ability to obtain access to the data files on such
devices containing Advantica Data which includes such financial data will not
trade in any Advantica security for the period of time from the close of any
fiscal quarter or Advantica fiscal year until at least one day after the release
by Advantica of its quarterly or annual financial reports to the public (or such
other period which Advantica imposes upon the Advantica employees who have
permitted access to such Advantica Data).
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(c) Supplier shall indemnify Advantica and hold Advantica harmless from
any loss resulting from a breach by Supplier, or its employees, agents, or
contractors under this Section 9.7.
SECTION 9.8 DESTROYED OR LOST DATA
Supplier will not delete or destroy any Advantica Data or media on
which Advantica Data resides without prior authorization from Advantica.
Supplier will maintain and provide to Advantica one or more Reports that
identify the Advantica Data or media that have been destroyed. In the event any
Advantica Data is lost or destroyed due to any act or omission of Supplier,
including any breach of the security procedures described in this Article 9 and
any Service Agreement, Supplier shall be responsible for the prompt regeneration
or replacement of such Advantica Data. Supplier shall prioritize this effort so
that the loss of Advantica Data will not have an adverse effect upon Advantica's
business or the Services. Advantica agrees to cooperate with Supplier to provide
any available information, files or raw data needed for the regeneration of the
Advantica Data. If Supplier fails to regenerate the lost or destroyed Advantica
Data within the time reasonably set by Advantica, then Advantica may obtain data
reconstruction services from a third party, and Supplier shall cooperate with
such third party as requested by Advantica. In addition to any other damages
incurred by Advantica, Supplier will be responsible for the actual costs
incurred by Advantica for the reconstruction of Advantica Data by a third party.
In the event it is determined that Advantica Data has been lost or destroyed as
a result of the willful conduct of Supplier or its employees, contractors or
agents, Advantica may terminate the applicable Service Agreement or this Master
Agreement for cause pursuant to Section 18.1.
ARTICLE 10
ACCOUNT MANAGEMENT
SECTION 10.1 RELATIONSHIP EXECUTIVES AND PROJECT EXECUTIVES
On or before the Effective Date, and from time to time thereafter
during the Term, Advantica and Supplier shall each designate an individual as
its relationship executive (the "Relationship Executive"). A Party's
Relationship Executive shall be authorized to act as the primary contact for
such Party with respect to all matters relating to this Master Agreement.
In addition, each Party shall designate individuals who will be
directly responsible for its performance under each Service Agreement (each a
"Project Executive"). Supplier shall ensure that Supplier's Project Executive
has the authority necessary to allow such Project Executive to make prompt
decisions with respect to the Services.
SECTION 10.2 JOINT OPERATING COMMITTEE AND EXECUTIVE COMMITTEE
(a) On or before the Effective Date, the Parties shall form a joint
committee (the "Joint Operating Committee"). The Joint Operating Committee shall
take the actions and assume oversight of those matters described in the Account
Management and Governance Overview attached hereto as Master Schedule D.
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(b) On or before the Effective Date, the Parties shall form a joint
committee (the "Executive Committee") as described in the Account Management and
Governance Overview attached hereto as Master Schedule D. The Joint Operating
Committee shall report to the Executive Committee and the Executive Committee
shall take the actions and assume oversight of these matters described in Master
Schedule D.
SECTION 10.3 ADVANTICA OFFICE SPACE AT SUPPLIER FACILITIES
Supplier shall provide to Advantica without charge on an exclusive
basis furnished office space at any Supplier Facilities used to provide Services
for the occasional use of the Advantica Relationship Executive, Project
Executives or their designees when visiting such Supplier Facilities. The
Advantica Relationship Executive, Project Executives, or their designees shall
comply with all policies and procedures governing access to and use of such
Supplier Facilities and shall leave such space in the same condition it was in
immediately before they used the space, ordinary wear and tear excepted.
SECTION 10.4 MEETINGS
Throughout the Term, the Parties shall hold those meetings and review
the items described in Master Schedule D and in any Service Agreement.
SECTION 10.5 REPORTS
Supplier shall prepare and deliver to Advantica the reports described
in each Service Agreement ("Reports") by the respective deadlines specified in
each Service Agreement. At no charge to Advantica, Supplier shall modify the
Reports or provide additional Reports as reasonably requested by Advantica from
time to time. Supplier's Project Executive shall provide a regular monthly
status report to Advantica no later than by the 15th of the following month.
SECTION 10.6 PROCEDURES MANUAL
(a) Within thirty (30) days after the commencement of Services under
any Service Agreement or within such other time period specified in the
applicable Service Agreement in cases where no existing procedures manual can be
provided to Supplier by Advantica, Supplier shall deliver to Advantica for
review and comment a draft of a manual (the "Procedures Manual") describing in
detail how Supplier shall perform the Services, the Equipment and Software used
to provide the Services, and the documentation (such as, for example, operations
manuals, user guides, forms of Service Level reports, call lists, escalation
procedures, emergency procedures, and requests for approvals or information)
which provides further information regarding the Services. The Procedures Manual
shall describe the activities Supplier proposes to undertake in order to provide
the Services, including, where appropriate, those direction, supervision,
monitoring, quality assurance, staffing, reporting, planning and overseeing
activities normally undertaken at facilities that provide services of the type
Supplier shall provide under this Agreement, and further including acceptance
testing and quality assurance procedures approved by Advantica. The Procedures
Manual shall be based on the Advantica procedures manual in use immediately
before the commencement of Services under such Service Agreement
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if such procedures manual exists and can be provided by Advantica. Supplier
shall incorporate any reasonable comments and suggestions made by Advantica and
shall deliver a revised Procedures Manual within fifteen (15) days after receipt
of Advantica's comments. The final Procedures Manual shall be subject to
Advantica's approval.
(b) Supplier shall update the Procedures Manual throughout the
applicable Service Agreement Term to reflect changes in the Services and the
procedures and resources used to provide the Services. Updates to the Procedures
Manual shall also be provided to Advantica for review, comment and approval.
Supplier shall update and deliver to Advantica for approval portions of the
Procedures Manual relating to any material operational change in the Services
within fifteen (15) days of such change.
(c) Supplier shall perform the Services in accordance with the
then-current version of the Procedures Manual. The Procedures Manual shall be
for operational purposes only, and shall not constitute a contractual document.
Accordingly, in the event of a conflict between the provisions of this Agreement
and a Procedures Manual, the provisions of this Agreement shall control, and
Advantica's acceptance of the Procedures Manual shall not be deemed a waiver of
any rights of Advantica.
ARTICLE 11
AUDITS
SECTION 11.1 RECORD KEEPING AND AUDIT RIGHTS
(a) Supplier shall maintain complete and accurate records and
supporting documentation of and for (i) all financial transactions (including
amounts billed to and amounts paid by Advantica) under all Service Agreements
throughout each Service Agreement Term, and (ii) all non-financial transactions
under all Service Agreements, sufficient to permit a complete audit of such
financial and non-financial transactions in accordance with this Section 11.1.
Such records shall include data and documentation of third party charges
invoiced to and paid by Supplier. Supplier shall retain such records throughout
the Term (including any records received by Supplier from Advantica or
Advantica's previous Supplier prior to the applicable Service Agreement
Effective Date.)
(b) Supplier shall provide Advantica, at Advantica's request, with
paper and electronic copies of documents and information reasonably necessary to
verify Supplier's compliance with this Master Agreement and each Service
Agreement. Advantica and its authorized agents and representatives shall have
access to such records for audit purposes during normal business hours during
the Term and thereafter for the period during which Supplier is required to
maintain such records. Supplier shall, at no additional cost to Advantica,
provide to Advantica, Advantica's internal and external auditors, inspectors,
regulators and such other representatives as Advantica may designate from time
to time access at reasonable times and upon forty-eight (48) hours advance
notice (unless circumstances reasonably preclude such notice) to (i) the parts
of any facility at which Supplier is providing the Services and the Supplier
Environment, (ii) Supplier Personnel providing the Services and the Supplier
Environment, and (iii) all data and records relating to the Services, for the
purpose of performing audits and inspections of Advantica and its business, to
verify the integrity of Advantica Data, to examine
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the systems that process, store, support and transmit that data, and to examine
Supplier's charges and performance of the Services under this Master Agreement
and any Service Agreement. The foregoing audit rights shall include, without
limitation, audits (A) of practices and procedures, (B) of systems, (C) of
general controls and security practices and procedures, (D) of disaster recovery
and backup procedures, (E) of the efficiency (in accordance with Section 5.6
(Benchmarking) and costs (to the extent Services may be being provided by
Supplier on a Pass-Through Expense basis) and procurement practices of Supplier
in performing the Services (e.g., pursuant to Section 13.2 hereof, (F) of
Charges under any Service Agreement, (G) necessary to enable Advantica to meet
applicable regulatory requirements, and (H) for any other reasonable purpose as
determined by Advantica. Supplier shall provide full cooperation to such
auditors, inspectors, regulators and representatives, including the installation
and operation of audit software. Upon termination or expiration of this Master
Agreement and any Service Agreement, Advantica and Supplier shall mutually agree
as to any records or documentation of which Supplier may retain one archive
copy.
(c) Notwithstanding the foregoing, if Advantica has reason to suspect
any malfeasance or dishonest acts on the part of Supplier, or other significant
or non-routine problems, Advantica shall be entitled to undertake such audit of
Supplier as Advantica reasonably deems appropriate without the foregoing notice
or other restrictions. If in any audit Advantica determines that material
operational problems or financial issues exist, Supplier shall reimburse
Advantica for any costs incurred in such audit and Advantica may conduct a
follow-up audit when reasonably deemed appropriate by Advantica. Supplier shall
respond promptly to any conclusions and recommendations reported as part of an
audit and the applicable Joint Operating Committee will establish and monitor
Supplier's schedule for implementation of such recommendations.
SECTION 11.2 PAYMENTS
If an audit reveals that Supplier has overcharged Advantica for
Services during the audited period in an amount equal to or in excess of three
percent (3%) of the payments made to Supplier during the last twelve-month
period, Supplier shall reimburse Advantica for the cost of the audit in addition
to the amount of any overcharges that are due Advantica. If the audit reveals
that Supplier has overcharged Advantica in an amount equal to or in excess of
ten percent (10%) of the payments made to Supplier during the last twelve-month
period, Supplier shall pay an additional amount equal to one hundred percent
(100%) of the overcharged amount. The calculation of overcharges shall be
calculated based upon each Service Agreement, and not on a cumulative basis.
Supplier shall pay such amount to Advantica within thirty (30) days following
Advantica's written request.
SECTION 11.3 SUPPLIER AUDITS
Supplier shall make available promptly to Advantica, at no additional
charge, the results of any internal or external review or audit conducted by
Supplier, its Affiliates, or their respective contractors, agents or
representatives, relating to Supplier's operating practices and procedures to
the extent relevant to the Services.
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SECTION 11.4 SURVIVAL
This Article shall survive the expiration or earlier termination of the
Term and shall continue to the fifth (5th) anniversary of the last day Supplier
provides any Termination/Expiration Assistance.
ARTICLE 12
INSURANCE; RISK OF LOSS
SECTION 12.1 REQUIRED INSURANCE COVERAGES
Throughout the Term Supplier shall maintain in force, at minimum, the
insurance coverages described below. All subcontractors must comply with
required insurance requirements as set forth in Section 12.1. Any exceptions
must be approved by Advantica. Additional insurance coverage(s) may be required
under a Service Agreement.
(a) Commercial General Liability Insurance, including Products/Complete
Operations and Advertising Injury coverage, with a minimum combined single limit
of $1 million per occurrence and minimum general aggregate limit of $2 million;
(b) Umbrella Liability Insurance, including Products/Complete
Operations and Advertising Injury coverage, with a minimum limit of $25 million
per occurrence and minimum aggregate amount of $25 million;
(c) Worker's Compensation Insurance or any alternative plan or coverage
as permitted or required by applicable law; provided that Advantica acknowledges
that Supplier is a non-subscriber to the Texas Worker's Compensation Act, but
maintains an ERISA qualified plan of benefits;
(d) Comprehensive Computer Processor/Computer Consultant Professional
Liability Insurance covering the liability for financial loss due to error,
omission or negligence of Supplier as described in the Master Service Agreement
and any Service Agreement with a minimum amount of $20 million;
(e) Automotive Liability Insurance covering use of all owned, non-owned
and hired automobiles with a minimum combined single limit of $1 million per
occurrence for bodily injury and property damage liability;
(f) "All Risk" Property Insurance in an amount equal to the replacement
value of the Equipment; and
(g) Employee Dishonesty and Computer Fraud Insurance for loss arising
out of or in connection with fraudulent or dishonest acts committed by the
employees of Supplier, acting alone or in collusion with others, in a minimum
amount of $10 million per loss.
Supplier shall maintain in full force and effect, during each Service
Agreement Term and for a period of one (1) year thereafter, the Comprehensive
Computer Processor/Computer
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Consultant Professional Liability Insurance in satisfaction of its obligation
pursuant to Section 12.1(d). If for any reason such policy insurer cancels or
fails to renew such policy, Supplier shall immediately purchase a replacement
policy containing substantially the same terms as such policy and including a
Prior Acts Coverage Endorsement effective from the Master Agreement Effective
Date.
SECTION 12.2 GENERAL INSURANCE REQUIREMENTS
All insurance policies Supplier is required to carry pursuant to this
Article shall: (i) be primary as to Supplier's negligence and non-contributing
with respect to any other insurance or self-insurance Advantica may maintain;
(ii) name Advantica, its Affiliates, subsidiaries and their respective officers,
directors and employees as additional insureds, as such parties' interests may
appear with respect to this Master Agreement; (iii) be provided by reputable and
financially responsible insurance carriers with a Best's minimum rating of "A-"
(or any future equivalent) and minimum Best's financial performance rating of
"6" (or any other future equivalent); (iv) require the insurer to notify
Advantica in writing at least forty-five (45) days in advance of cancellation or
modification; and (v) include a waiver of all rights of subrogation against
Advantica and its Affiliates. Supplier shall cause its insurers to issue to
Advantica on or before the Effective Date and each policy renewal date
certificates of insurance evidencing that the coverages and policy endorsements
required by this Article are in effect.
SECTION 12.3 RISK OF LOSS
As of the Effective Date, each Party shall be responsible for risk of
loss of, and damage to, any Equipment, Software or other materials in its
possession or under its control.
ARTICLE 13
CHARGES
SECTION 13.1 CHARGES
Subject to the other provisions of this Master Agreement, Advantica
shall pay to Supplier the amounts set forth in each Service Agreement as payment
in full for the Services under such Service Agreement performed by Supplier
during the Term (the "Charges"). Except as otherwise expressly set forth in this
Master Agreement, Advantica shall not be obligated to pay any amounts to
Supplier for its performance of the Services and its other obligations under
this Master Agreement other than the amounts set forth in the Service
Agreements. Without limiting the foregoing, Advantica shall not be required to
reimburse Supplier for any expenses Supplier incurs in performing the Services
and such obligations, including, without limitation, travel and lodging,
document reproduction and shipping. If a Service Agreement Term is renewed
pursuant to the applicable terms of such Service Agreement, the Charges set
forth in such Service Agreement for the last applicable Contract Year or, if
applicable, the price designated in the Service Agreement, shall apply during
the renewal period(s).
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SECTION 13.2 PASS-THROUGH EXPENSES
(a) Supplier shall review for accuracy each third party invoice for any
Pass-Through Expenses and shall pay when due to such third party all valid
amounts set forth on such invoice. Supplier shall include the amount of such
payment on its next invoice to Advantica and shall include with such invoice a
copy of the third party invoice. Supplier shall not charge Advantica any xxxx-up
or administrative fee with respect to such Pass-Through Expenses unless
expressly permitted in a Service Agreement. Pass-Through Expenses must be
approved in advance by Advantica's Project Executive.
(b) Supplier shall use all Commercially Reasonable Efforts to minimize
the amount of Pass-Through Expenses. With respect to materials or services paid
for on a Pass-Through Expenses basis, Advantica shall have the right to: (i)
obtain such materials or services directly from a third party; (ii) designate
the third party source for such materials or services; (iii) designate the
particular materials or services Supplier shall obtain; (iv) require Supplier to
identify and consider multiple sources for such materials or services; (v)
review and approve the Pass-Through Expense for such materials or services
before Supplier enters into a subcontract for such materials or services; and
(vi) reject or require discontinuance of any third party providing pass-through
materials or services pertaining to the Services.
SECTION 13.3 TAXES
(a) Each Party shall pay any real property taxes or personal property
taxes on property it either owns or leases from a third party or any other
taxes, fees or costs related to equipment or the lease of equipment, including
any property taxes attributable to Advantica Facilities used by Supplier to
provide the Services. Taxes payable on any Transferred Equipment shall be
prorated as of the Service Agreement Effective Date of the applicable Service
Agreement based on the number of days in the applicable tax period, with
Advantica paying the taxes allocable to the period before the Service Agreement
Effective Date and Supplier paying the taxes allocable to the period on and
after the Service Agreement Effective Date. If Supplier owes money to Advantica
pursuant to such proration, Supplier shall pay such amount to Advantica by
corporate check on the Service Agreement Effective Date. If Advantica owes money
to Supplier pursuant to such proration, Advantica shall pay such amount to
Supplier by corporate check on or before the date Supplier must pay the next
installment of the applicable tax. If Advantica purchases any Equipment from
Supplier on the expiration or earlier termination of a Service Agreement
pursuant to Section 18.8 (Purchase of Equipment), personal property taxes on
such Equipment shall be prorated and paid in a similar manner, with Supplier
paying the taxes allocable to the period before the date Advantica purchases the
Equipment and Advantica paying the taxes allocable to the period on and after
such date.
A Service Agreement may provide, with respect to certain equipment
leases, that applicable taxes will be paid on a regularly scheduled basis.
(b) Supplier shall pay any sales, use, excise, value-added, services,
consumption, and other taxes and duties imposed on any goods and services
acquired, used or consumed by Supplier in connection with the Services
(including any taxes applicable to the acquisition of the Transferred Equipment,
but excluding any taxes applicable to Pass-Through Expenses). Advantica shall
pay any sales, use, excise, value-added, services, consumption and other taxes
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and duties imposed on its acquisition of Equipment from Supplier on the
expiration or earlier termination of a Service Agreement pursuant to Section
18.8 (Purchase of Equipment).
(c) Advantica shall pay when due any sales, use, excise, value-added,
services, consumption, or other tax imposed by any taxing jurisdiction as of the
Service Agreement Effective Date on the provision of the Services or any
component thereof, as the rate of such tax may change from time to time during
the applicable Service Agreement Term. Furthermore, Advantica will be liable for
any interest or penalties associated with late payment of any such taxes,
however, if Supplier is responsible for collecting and remitting such taxes and
fails to timely remit payments, Supplier will be liable for any interest or
penalties associated with late payment of any such taxes. At Advantica's option,
unless not legally permissible, Advantica shall either pay such taxes directly
to the appropriate taxing authority or Advantica shall pay such taxes to
Supplier as invoiced and Supplier shall remit such payments to the appropriate
taxing authority. Supplier shall be responsible for properly calculating and
invoicing applicable taxes on the Services.
If any taxing jurisdiction imposes after the Service Agreement
Effective Date a new sales, use, excise, value-added, services, consumption, or
other tax on the provision of the Services or any component thereof, the Parties
shall cooperate in attempting to reduce the amount of such tax to the maximum
extent feasible. Advantica shall be liable for any such new tax which is imposed
on the Charges for the provision of the Services, or any component thereof, as
well as such new tax on Pass-Through Expenses. Supplier shall be liable for any
such new tax which is imposed on any charges (other than Pass-Through Expenses)
incurred in order to provide the Services. If any taxes applicable to the
Services are imposed on Advantica during a Service Agreement Term as a result of
Supplier's migration of Services to a location other than the initial location
of Supplier's Facility under the applicable Service Agreement, Supplier shall
have full responsibility for payment of all such taxes.
(d) The Parties shall cooperate with each other to enable the Parties
to determine accurately their respective tax liabilities and to reduce such
liabilities to the extent permitted by law. Supplier invoices to Advantica shall
separately state the amount of any taxes Supplier is collecting from Advantica.
Each Party shall provide to the other any resale certificates, exemption
certificates, information regarding out-of-state or out-of-country sales or use
of Equipment and services, and such other similar information as the other Party
may reasonably request.
SECTION 13.4 CHARGES PURSUANT TO CHANGE CONTROL PROCEDURES
(a) If either Advantica or Supplier proposes a change in or addition to
the Services pursuant to the Change Control Procedures, the charge for such
change or addition shall be determined in the manner set forth in this Section.
(b) To the extent the proposed change or addition can be accommodated
within the existing level of resources then being used by Supplier to provide
the Services and without degradation to existing Service Levels (unless
otherwise agreed by Advantica in writing), the Charges payable by Advantica
under the applicable Service Agreement shall not be increased. To the extent the
proposed change or addition will lower Supplier's cost to provide the Services
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thereafter, the applicable charges payable by Advantica shall be equitably
adjusted to reflect such projected cost savings.
(c) To the extent the proposed change or addition will require the
addition or subtraction of resources for which a pricing metric exists under
this Master Agreement, the resulting change to the Charges payable by Advantica
hereunder shall be calculated in accordance with that pricing metric.
SECTION 13.5 MOST FAVORED CUSTOMER
Charges payable from time to time by Advantica under each Service
Agreement shall not exceed those then paid by other Similarly Situated Supplier
Customers (as defined below) under contracts signed before or after the
Effective Date of the applicable Service Agreement to whom Supplier provides
services similar in type and scope to the Services described in such Service
Agreement. If the prices charged to another Similarly Situated Supplier Customer
are, considering the foregoing, lower than the charges to Advantica under all
then-current Service Agreements, then the Charges to Advantica shall be
equitably adjusted to provide Advantica the benefit of such lower Charges,
retroactive to the first date on which such lower Charges to the other Similarly
Situated Supplier Customer first became effective. Within thirty (30) days after
the beginning of each Contract Year, a Supplier officer with executive
responsibility for systems outsourcing and operations services shall certify in
writing to Advantica that Supplier's charges to Advantica comply with this
Section, and shall provide to Advantica's auditors the information reasonably
necessary for Advantica to verify such compliance. The auditors shall inform
Advantica and Supplier whether Supplier's Charges comply with this Section, but
shall keep in strict confidence all information necessary to provide such
verification. For the purposes of this Agreement, a "Similarly Situated Supplier
Customer" will mean a customer of Supplier engaged in retail food service
operations entering into an agreement with Supplier having similar term and
volume commitments and resource requirements.
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ARTICLE 14
INVOICING AND PAYMENT
SECTION 14.1 INVOICES
Supplier shall issue to Advantica, on a monthly basis in arrears, one
(1) consolidated invoice for all amounts due under all Service Agreements then
in effect with respect to Services rendered in the previous month; provided,
however, if Advantica requests, Supplier will provide a separate invoice to FRD
Acquisition Co. in an amount requested by Advantica and such amount shall be
credited against Advantica's consolidated invoice. Each Advantica consolidated
invoice shall separately state Charges for each category of Service,
reimbursable expenses and taxes payable, and shall otherwise be in such detail
as Advantica may require for its internal accounting needs (including, without
limitation, any chargeback requirements), as specified by Advantica from time to
time. Each Service Agreement invoice shall include any calculations used to
establish the Charges. Invoices shall be in the form and provide such detail as
specified in the sample invoice form as required by the applicable Service
Agreement. Supplier shall deliver each invoice (one paper copy and one
electronic version) to the appropriate Advantica Project Executive. If
out-of-scope Services are provided under a Service Agreement, Supplier will
invoice the applicable charges in a separate invoice.
SECTION 14.2 PAYMENT
(a) Subject to Section 14.5 (Setoff and Withholding), each invoice
delivered pursuant to Section 14.1 shall be due and payable within thirty (30)
days after the date such invoice is received by the applicable Advantica Project
Executive. Any amount due under any Service Agreement for which a payment date
is not otherwise specified shall be due and payable within forty-five (45) days
after receipt of the invoice for such amount.
(b) To the extent Advantica is entitled to a credit pursuant to this
Master Agreement or any Service Agreement, Supplier shall provide Advantica with
such credit on the first invoice delivered after such credit is earned. If the
amount of any credit on an invoice exceeds the amount owing to Supplier
reflected on such invoice, Supplier shall pay the balance of the credit to
Advantica within thirty (30) days after the invoice date. If no further amounts
are payable to Supplier under this Master Agreement, Supplier shall pay the
amount of the credit to Advantica within thirty (30) days after the credit is
earned.
SECTION 14.3 PRORATION
All periodic charges under this Master Agreement (excluding charges
based upon actual usage or consumption of Services) shall be computed on a
calendar month basis and shall be prorated for any partial month.
SECTION 14.4 REFUNDS; LATE PAYMENTS
If either Party should receive a refund, credit or other rebate for
goods or services paid for by the other Party, the recipient of such refund,
credit or rebate shall promptly notify the other Party and shall pay such
amount, with interest at the prime rate of Citibank of New York, to the
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other Party (or, if applicable, provide a credit on the next delivered invoice)
within thirty (30) days after receipt thereof. Interest shall be calculated from
the date thirty (30) days after such refund, credit or rebate was received.
Payments not paid by the applicable due date shall bear interest at the
prime rate of Citibank of New York.
SECTION 14.5 SETOFF AND WITHHOLDING
(a) Notwithstanding any other provision of this Master Agreement, a
Party who is owed any amount by the other Party may, at its option, set off that
amount as a credit against any amounts it otherwise owes to the other Party.
(b) If Advantica disputes in good faith any portion of an invoice,
Advantica shall pay the undisputed dollar amount of such invoice when due and
may, at its option, withhold the disputed portion pending resolution of the
dispute by mutual agreement or pursuant to Article 19 (Dispute Resolution). If
Advantica withholds any payment pursuant to this Section 14.5(b), Advantica
shall notify Supplier of the basis for such withholding in accordance with
Section 20.9 (Notices). Upon resolution of the dispute, Advantica shall pay to
Supplier such portion, if any, of the disputed amount determined to be owing to
Supplier.
ARTICLE 15
CERTAIN REPRESENTATIONS AND WARRANTIES
SECTION 15.1 MUTUAL REPRESENTATIONS AND WARRANTIES
Each Party represents and warrants that, as of the Effective Date and
each Service Agreement Effective Date:
(a) It is a corporation duly incorporated, validly existing and is in
good standing under the laws of the state in which it is incorporated, and is
good standing in each other jurisdiction where the failure to be in good
standing would have a material adverse effect on its business or its ability to
perform its obligations under this Master Agreement or any Service Agreement.
(b) It has all necessary corporate power and authority to own, lease
and operate its assets and to carry on its business as presently conducted and
as it will be conducted pursuant to this Master Agreement and any Service
Agreement.
(c) It has all necessary corporate power and authority to enter into
this Master Agreement and each Service Agreement and to perform its obligations
thereunder, and the execution and delivery of this Master Agreement and each
Service Agreement and the consummation of this transactions contemplated thereby
have been duly authorized by all necessary corporate actions on its part.
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(d) This Master Agreement and each Service Agreement constitutes a
legal, valid and binding obligation of such Party, enforceable against it in
accordance with its terms.
SECTION 15.2 SUPPLIER REPRESENTATIONS AND WARRANTIES
As of the Effective Date and continuing throughout the Term and each
Service Agreement Term, Supplier represents and warrants to Advantica that:
(a) It has not violated and it will not violate any applicable laws or
regulation or any Advantica policies regarding the offering of unlawful
inducement in connection with this Master Agreement or any Service Agreement.
(b) It has and shall have the right and authority to use the Supplier
Software and Third Party Software to provide Services during each Service
Agreement Term and to grant to Advantica the licenses to the Supplier Software
described in each Service Agreement.
(c) It is not a party to, and is not bound or affected by or subject
to, any instrument, agreement, charter or by-law provision, law, rule,
regulation, judgment or order which would be contravened or breached as a result
of the execution of this Master Agreement, consummation of the transactions
contemplated by this Master Agreement, or execution of any Service Agreement.
(d) It is not the subject of any pending or threatened litigation
(including claims subject to arbitration) related to the Services being provided
by Supplier arising from an outsourcing relationship similar to the relationship
contemplated by this Master Agreement or any Service Agreement and involving a
claim against Supplier in an amount in excess of $500,000 and Supplier will
notify Advantica immediately in the event Supplier becomes the subject of any
such litigation.
(e) Supplier (a) has, and each of the Supplier employees and
subcontractors that it will use to provide and perform the Services has, the
necessary knowledge, skills, experience, qualifications, rights and resources to
provide and perform the Services in accordance with the Agreement; (b) it has
successfully provided and performed the Services or services that are
substantially equivalent to the Services for other customers of Supplier; and
(c) the services will be performed in a diligent, professional and workmanlike
manner using properly trained and qualified individuals, and at a minimum, in
accordance with industry standards applicable to the performance of such
Services.
(f) All Supplier Software and the computing environment operated
managed or maintained by Supplier (including all hardware, peripherals, Supplier
Software and Third Party Software) (the "Supplier Environment") is, and shall
remain throughout each Service Agreement Term, Year 2000 Compliant; provided
that, with respect to Equipment and Software provided by Advantica to Supplier,
Supplier warrants only that any such Equipment or Software that is Year 2000
Compliant when received by Supplier will continue to be Year 2000 Compliant,
unless the failure to continue as Year 2000 Compliant is the fault of the
manufacturer or licensor of the Equipment or Software. Upon Advantica's request,
Supplier shall provide to Advantica such internal and external information and
analyses as are available to fully advise Advantica of the status and compliance
efforts of Supplier with respect to Supplier's Year 2000 compliance
44
program. In addition, Supplier warrants that Supplier can verify Year 2000
compliance through test results or demonstrations. Further, Supplier will
provide Advantica with a certificate of Year 2000 compliance and/or other
evidence thereof.
SECTION 15.3 RFP AND DUE DILIGENCE ASSISTANCE
If at any time during the Term Advantica elects to issue a request for
proposals to one or more services providers for the provision of all or any part
of the Services, Supplier shall cooperate with Advantica by (i) providing to
Advantica and such third party providers reasonable access to personnel and
information relevant to such request for proposals, and (ii) participating in a
reasonable due diligence process for the benefit of Advantica and such third
party providers in connection with the request for proposals. Supplier's
obligations pursuant to this Section 15.3 are subject to (i) the agreement of
Advantica and such third party providers to reasonable security and
confidentiality restrictions, generally in accordance with Article 9
(Confidentiality) of this Master Agreement, and (ii) the condition that such
activities shall not disrupt or adversely affect Supplier's normal business.
ARTICLE 16
INDEMNIFICATION
SECTION 16.1 INDEMNIFICATION BY SUPPLIER
Supplier shall indemnify, defend and hold harmless Advantica, its
Affiliates, and their respective officers, directors, employees, agents,
successors and assigns, from and against all Losses arising from, in connection
with or relating to, third party allegations of any of the following:
(a) Supplier's failure to perform any obligations required to be
performed by it under any of the Third Party Contracts on or after the date
Supplier becomes responsible for such obligations in accordance with the
applicable Service Agreement;
(b) acts or omissions of Supplier Personnel located in any Advantica
Facility;
(c) any claims arising out of or related to occurrences for which
damages are recoverable under insurance policies Supplier is required to
maintain pursuant to Article 12 (Insurance; Risk of Loss);
(d) Supplier's breach of its obligations with respect to Advantica's
Confidential Information;
(e) any claims relating in any way to selection of the Transferred
Employees or Supplier's offers of employment, and any claims by or on behalf of
Transferred Employees that arise from or relate in any way to their employment
with Supplier or to the termination of their employment with Supplier, including
any claims by Transferred Employees against Advantica based on a theory of joint
employer liability or similar theory;
45
(f) any claims of Supplier's subcontractors;
(g) the untruthfulness or inaccuracy of any representation or
warranty made by Supplier in this Master Agreement or in any Service Agreement;
(h) any amounts, including without limitation, taxes, interest and
penalties assessed against Advantica which are obligations of Supplier under
this Master Agreement or any Service Agreement;
(i) personal injuries, death or damage to tangible personal or real
property of third parties including employees of Supplier, its contractors and
subcontractors caused by the negligence or willful misconduct of Supplier;
provided that Supplier will have no obligation under this clause, to the extent
the claim arises out of or in connection with the negligence or willful
misconduct of Advantica;
(j) any claims for a breach of software licenses related to the
Services, committed by Advantica or any of its subcontractors or any employee of
Advantica and its subcontractors that is not the result of Advantica failing to
perform its obligations under this Master Agreement or any Service Agreement;
(k) any environmental claim arising as a result of the Services with
respect to the Supplier Environment or the Advantica corporate facilities or
restaurant locations to the extent Supplier or its subcontractors has caused the
environmental damage or violation of the environmental laws or regulations from
which the claim arises;
(l) any claims directly attributable to Supplier's decision to request
that Advantica cancel, substitute, terminate, change, add or breach any Third
Party Contract and Advantica's assent to and compliance with such decision and
any Losses incurred by Advantica associated with such decision by Supplier and
compliance by Advantica; and
(m) any claims for penalties, interest and other charges imposed by a
taxing authority (except the actual taxes payable by Advantica under the terms
of this Master Agreement or any Service Agreement) arising out or resulting from
Supplier issuing an incorrect invoice or other information provided to Advantica
in writing regarding its charges to Advantica for the Services.
In the event and to the extent that a claim is made against an
indemnitee by an employee of Supplier, its contractors or subcontractors
providing services, products and/or software hereunder, the Parties agree that
Supplier shall indemnify and hold harmless the indemnitee to the same extent as
if the claim was made by a non-employee of Supplier, its contractors or
subcontractors. Supplier's indemnification hereunder shall be primary and
immediate. Accordingly, in addition to other provisions herein, and in order to
render the Parties' intent and this indemnification agreement fully enforceable,
Supplier, in an indemnification claim hereunder, expressly and without
reservation waives any defense or immunity it may have under any applicable
workers' compensation law(s) or any other statute or judicial decision
disallowing or limiting such indemnification and consents to a cause of action
for indemnity. This waiver and consent to indemnification is made irrespective
of and specifically waiving any defense or immunity under any statute or
judicial decision.
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SECTION 16.2 INDEMNIFICATION BY ADVANTICA
Advantica shall indemnify, defend and hold harmless Supplier, its
Affiliates and their respective officers, directors, employees, agents,
successors and assigns, from and against all Losses arising from, in connection
with or relating to, third party allegations of any of the following:
(a) Advantica's failure to perform any obligations required to be
performed by it under any of the Third Party Contracts before each applicable
date that Supplier assumed responsibility for such obligations, as provided in
the Service Agreement;
(b) Any claims by or on behalf of employees of Advantica, if any, hired
by Supplier that arise from or relate in any way to their employment with
Advantica for the period prior to the date hired by Supplier;
(c) Advantica's breach of its obligations with respect to Supplier's
Confidential Information;
(d) acts or omissions of Advantica personnel located in any Supplier
Facility;
(e) the untruthfulness or inaccuracy of any representation or warranty
made by Advantica in this Master Agreement or in any Service Agreement;
(f) any amounts, including without limitation, taxes, interest and
penalties assessed against Supplier which are obligations of Advantica under
this Master Agreement or any Service Agreement; and
(g) personal injuries, death or damage to tangible personal or real
property of third parties including employees of Advantica, its contractors
subcontractors caused by the negligence or willful misconduct of Advantica;
provided that Advantica will have no obligation under this clause to the extent
the claims arise out of or in connection with the negligence or willful
misconduct of Supplier.
SECTION 16.3 MUTUAL INDEMNIFICATION
Each Party shall indemnify, defend and hold harmless the other Party,
the other Party's Affiliates, and their respective officers, directors,
employees, agents, successors and assigns, from and against all Losses arising
from: (i) death of or injury to any agent, employee, invitee, visitor or other
person to the extent caused by the conduct of the indemnitor, its Affiliates, or
their respective agents, employees or contractors; and (ii) any violation of law
by the indemnitor, whether before, on or after the Effective Date.
SECTION 16.4 INTELLECTUAL PROPERTY INDEMNIFICATION
Advantica and Supplier each agree to defend the other against any action (either
jointly or severally) to the extent that such action is based on a claim that
the Advantica Software, in the
47
case of Advantica, and the Supplier Software or the Services in the case of
Supplier, or the Confidential Information provided by the indemnitor, or any
part thereof, (a) infringes (directly or in a contributory manner) on any
patent, copyright or trademark, maskwork or other intellectual property right,
(b) constitutes unfair competition under applicable law, or (c) constitutes an
unlawful disclosure, use or misappropriation of another party's trade secret.
The indemnitor will bear the expense of such defense and pay any damages and
attorneys' fees that are attributable to such claim finally awarded by a court
of competent jurisdiction. If any Software or Confidential Information becomes
the subject of a claim under this Section, or in the indemnitor's opinion is
likely to become the subject of such a claim, then the indemnitor may, at its
option, (a) modify the Software or Confidential Information to make it
noninfringing or cure any claimed misuse of another's trade secret, provided
such modification does not adversely affect the functionality of the Software,
or (b) procure for the indemnitee the right to continue using the Software or
Confidential Information pursuant to the applicable Service Agreement, or (c)
replace the Software with substantially equivalent Software that is
noninfringing or that is free of claimed misuse of another's trade secret. Any
costs associated with implementing any of the above alternatives shall be borne
by the indemnitor.
With respect to any Software provided or developed by a Party pursuant
to a Service Agreement, such Party shall have no liability to the other Party
under such Service Agreement (a) to the extent that any claim of infringement is
based upon the use of the Software in connection or in combination with
equipment, devices or Software not supplied by that Party or used in a manner
for which the Software was not designed, (b) for infringements that arise solely
as a result of the implementation by that Party of functionality requirements
presented by the other Party where there is no non-infringing alternative to
such implementation, and the other Party has been so advised by that Party prior
to implementation, and (c) for maintenance, modifications, updates, enhancements
and improvements to the Software made by any party other than that Party.
SECTION 16.5 INDEMNIFICATION PROCEDURES
(a) Promptly after receipt by an indemnitee of any written claim or
notice of any action giving rise to a claim for indemnification by the
indemnitee, the indemnitee shall so notify the indemnitor and shall provide
copies of such claim or any documents relating to the action. No failure to so
notify an indemnitor shall relieve the indemnitor of its obligations under this
Master Agreement except to the extent that the failure or delay is prejudicial.
Within thirty (30) days following receipt of such written notice, but in any
event no later than ten (10) days before the deadline for any responsive
pleading, the indemnitor shall notify the indemnitee in writing (a "Notice of
Assumption of Defense") if the indemnitor elects to assume control of the
defense and settlement of such claim or action.
(b) If the indemnitor delivers a Notice of Assumption of Defense with
respect to a claim within the required period, the indemnitor shall have sole
control over the defense and settlement of such claim; provided, however, that
(i) the indemnitee shall be entitled to participate in the defense of such claim
and to employ counsel at its own expense to assist in the handling of such claim
and (ii) the indemnitor shall obtain the prior written approval of the
indemnitee before entering into any settlement of such claim or ceasing to
defend against such claim. After the indemnitor has delivered a timely Notice of
Assumption of Defense relating to
48
any claim, the indemnitor shall not be liable to the indemnitee for any legal
expenses incurred by such indemnitee in connection with the defense of such
claim; provided, that the indemnitor shall pay for separate counsel for the
indemnitee to the extent that conflicts or potential conflicts of interest
between the Parties so require. In addition, the indemnitor shall not be
required to indemnify the indemnitee for any amount paid by such indemnitee in
the settlement of any claim for which the indemnitor has delivered a timely
Notice of Assumption of Defense if such amount was agreed to without prior
written consent of the indemnitor, which shall not be unreasonably withheld or
delayed in the case of monetary claims. An indemnitor may withhold consent to
settlement of claims of infringement affecting its proprietary rights in its
sole discretion.
(c) If the indemnitor does not deliver a Notice of Assumption of
Defense relating to a claim within the required notice period, the indemnitee
shall have the right to defend the claim in such a manner as it may deem
appropriate, at the cost and expense of the indemnitor. The indemnitor shall
promptly reimburse the indemnitee for all such costs and expenses upon written
request therefor.
SECTION 16.6 SUBROGATION
In the event an indemnitor indemnifies an indemnitee pursuant to this
Article, the indemnitor shall, upon payment in full of such indemnity, be
subrogated to all of the rights of the indemnitee with respect to the claim to
which such indemnity relates.
ARTICLE 17
LIMITATIONS ON LIABILITY
SECTION 17.1 GENERAL INTENT
Subject only to the limitations set forth in this Article, a Party who
breaches any of its obligations under this Master Agreement or any Service
Agreement shall be liable to the other for any damages actually incurred by the
other as a result of such breach.
SECTION 17.2 LIMIT ON TYPES OF DAMAGES RECOVERABLE
(a) EXCEPT AS SET FORTH IN CLAUSE (B) BELOW, NEITHER PARTY SHALL BE
LIABLE FOR INDIRECT, CONSEQUENTIAL, EXEMPLARY OR PUNITIVE DAMAGES, REGARDLESS OF
THE FORM OF ACTION, WHETHER IN CONTRACT, TORT OR OTHERWISE, AND EVEN IF SUCH
PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
(b) The exclusion set forth in clause (a) shall not apply to Losses or
damages attributable to (i) Losses otherwise recoverable by an indemnitee
pursuant to Article 16 (Indemnification), (ii) a Party's willful breach of its
obligations with respect to the other Party's Confidential Information, (iii) a
Party's willful misconduct, or (iv) abandonment by Supplier or any Supplier
subcontractor of any material obligations under this Master Agreement or any
Service Agreement.
49
SECTION 17.3 LIMIT ON AMOUNT OF DIRECT DAMAGES RECOVERABLE
(a) Supplier's liability to Advantica for any breach arising out of or
resulting from Supplier's or its subcontractors' performance or non-performance
of the Services or obligations under this Master Agreement or any Service
Agreement shall be, subject to the exclusions set forth in Section 17.2(b) and
Section 17.3(c), limited to direct damages incurred by Advantica equal, in the
aggregate, to the actual Charges to Advantica for Services provided under all
Service Agreements during the twelve (12) months immediately preceding the first
such event (or, if the first such event giving rise to liability occurs during
the first twelve (12) months after the applicable Service Agreement Service
Commencement Date, the total Charges estimated to be payable to Supplier
pursuant to all such Service Agreements during such 12-month period).
(b) Advantica's liability to Supplier for any breach arising out of or
resulting from Advantica's performance or non-performance of its obligations
under this Master Agreement or any Service Agreement shall be limited in all
cases to direct damages which in the aggregate shall not exceed any amounts
payable by Advantica for Services rendered by Supplier in accordance with this
Master Agreement and any applicable Service Agreement plus the amount, if any,
payable by Advantica upon a termination of the applicable Service Agreement(s)
pursuant to Section 18.2 (Termination for Convenience).
(c) The foregoing limitations shall not apply to Losses or damages
attributable to (i) Losses otherwise recoverable by an indemnitee pursuant to
Article 16 (Indemnification), except those contemplated under Section 16.1(e),
(f) and (g), (ii) a Party's willful breach of its obligations with respect to
the other Party's Confidential Information, (iii) a Party's willful acts or
willful misconduct, (iv) abandonment by Supplier or any Supplier subcontractor
of any material obligations under this Master Agreement or any Service
Agreement, or (v) amounts payable to Advantica as credits against Charges.
(d) The following shall be considered direct damages and neither party
shall assert that they are consequential damages to the extent they result from
a Party's failure to fulfill its obligations in accordance with any Service
Agreement:
(i) costs of recreating or reloading any of Advantica's
lost or damaged information;
(ii) costs of implementing a workaround in respect of a
failure to provide the Services;
(iii) costs of replacing lost or damaged Equipment and
Software or other materials;
(iv) costs and expenses incurred to correct errors in
software maintenance and enhancements provided as part of the Services;
(v) costs and expenses incurred to procure the Services
from an alternate source; and
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(vi) straight time, overtime, or related expenses incurred by
Advantica, including overhead allocations of Advantica for Advantica's
employees, wages and salaries of additional employees, travel expenses, overtime
expenses, telecommunication charges, and similar charges, due to the failure of
Supplier to provide the Services or incurred in connection with (i) through (v)
above.
(d) Each Party shall have a duty to use reasonable efforts to mitigate
damages for which the other Party is liable.
SECTION 17.4 FORCE MAJEURE
(a) Subject to clause (d) below, neither Party shall be liable for any
failure or delay in the performance of its obligations under this Master
Agreement or any Service Agreement, if any, to the extent such failure or delay
both:
(i) is caused, directly or indirectly, without fault by such
Party, by: fire, flood, earthquake, elements of nature or acts of God; labor
disruptions or strikes; acts of war, terrorism, riots, civil disorders,
rebellions or revolutions; quarantines, embargoes and other similar governmental
action; or any other similar cause beyond the reasonable control of such party;
and
(ii) could not have been prevented by reasonable precautions
and cannot reasonably be circumvented by the non-performing Party through the
use of alternate sources, work-around plans or other means (including, in the
case of Supplier, compliance with Supplier's obligations with respect to the
provision of any disaster recovery services as set forth in any Service
Agreement).
Events meeting both of the criteria set forth in clauses (i) and (ii) above are
referred to collectively as "Force Majeure Events." The Parties expressly
acknowledge that, except as otherwise expressly provided in a Service Agreement,
Force Majeure Events do not include third party non-performance or the failure
of an individual component or group of components (including but not limited to,
hardware and software) used in delivery of the Services. The Parties further
agree that Force Majeure Events do not include those events, circumstances or
constraints that prevent a contracted product or service from qualifying as Year
2000 Compliant.
(b) Subject to clause (d) below, upon the occurrence of a Force Majeure
Event, the non-performing Party shall be excused from any further performance or
observance of the affected obligation(s) for as long as such circumstances
prevail and such Party continues to attempt to recommence performance or
observance whenever and to whatever extent possible without delay. Any Party so
delayed in its performance will immediately notify the other by telephone or by
the most timely means otherwise available (to be confirmed in writing within two
(2) Business Days of the inception of such delay) and describe in reasonable
detail the circumstances causing such delay.
(c) If a Force Majeure Event causes a material failure or delay in the
performance of any Services for more than two (2) consecutive days, Advantica
may, at its option, and in addition to any rights Advantica may have pursuant to
Section 18.4 (Termination Upon Force
51
Majeure Event), procure such Services from an alternate source until Supplier is
again able to provide such Services, and Supplier shall be liable for all
payments made and costs incurred by Advantica required to obtain the Services
from such alternate source during such period. Advantica shall continue to pay
Supplier the Charges established hereunder during such period, but Supplier
shall not be entitled to any additional payments as a result of the Force
Majeure Event.
(d) Notwithstanding any other provision of this Section, a Force
Majeure Event shall not relieve Supplier of its obligation to implement
successfully all of the Services relating to disaster recovery services that are
included in any Service Agreement within the time period described in such
Service Agreement.
SECTION 17.5 ACTIONS OF OTHER PARTY
Neither Party shall be liable for any failure or delay in the
performance of its obligations under this Master Agreement or any Service
Agreement if and to the extent such failure or delay is caused by the actions or
omissions of the other Party or breaches of this Master Agreement or a Service
Agreement by the other Party provided that the Party which is unable to perform
has provided the other Party with reasonable notice of such non-performance and
has used Commercially Reasonable Efforts to perform notwithstanding the actions,
omissions or breaches of the other Party.
Supplier acknowledges that Supplier is relying on Supplier's own
expertise and due diligence investigation and not the accuracy or completeness
of information provided by Advantica as the basis for Supplier's obligations or
pricing set forth in a Service Agreement or Supplier's decision to enter into a
Service Agreement with Advantica unless and except to the extent expressly set
forth in a Service Agreement. Accordingly, Supplier shall not be entitled to
assert that Advantica has committed any act, omission or breach as a result of
information provided or not provided by Advantica in connection with any
Supplier due diligence investigation or otherwise in connection with a Service
Agreement. No statement made by Advantica shall be deemed a representation or
warranty of Advantica unless set forth in this Master Agreement or a Service
Agreement expressly as a representation or warranty of Advantica.
ARTICLE 18
TERMINATION
SECTION 18.1 TERMINATION FOR CAUSE
(a) Advantica shall have the option, but not the obligation, to
terminate any Service Agreement, or one or more categories of Services under a
Service Agreement, for cause:
(i) for a material breach of such Service Agreement by
Supplier that is not cured by Supplier within ten (10) days of the date on which
Advantica provides written notice of such breach, in accordance with Section
20.9; provided, however, if a material breach of such Service Agreement by
Supplier occurs that Supplier, using Commercially Reasonable Efforts, is
52
unable to cure in such 10-day period but Supplier submits a written plan to
Advantica within such 10-day period to cure such breach at the earliest date
practicable (but no later than within thirty (30) days of the date on which
Advantica provides written notice of such breach) and the Supplier's plan
(including the timing of the cure set forth in the plan) is accepted by
Advantica in writing, the cure period for such breach shall be extended to the
date set forth in the plan;
(ii) for a material breach of such Service Agreement by
Supplier that is not reasonably subject to cure within thirty (30) days after
its occurrence or that is not reasonably subject to cure within the ten (10)
days after its occurrence if Supplier advises Advantica that Supplier will not
provide a corrective plan to Advantica pursuant to Section 18.1(a)(i);
(iii) if it is determined by Advantica, that there exists a
series of non-material or persistent breaches of a Service Agreement by Supplier
that, in the aggregate, have a significant adverse impact on the Services or
Advantica's business provided however that Supplier will have ten (10) Business
Days in which to cure such non-material breaches following Notice by Advantica
prior to any such termination;
(iv) for any Service Level Termination Event defined in
any Service Level Agreement or any Corporate Service Level Termination Event
defined in Master Schedule C;
(v) immediately upon failure by Supplier to provide any
Services pertaining to disaster recovery services under any Service Agreement;
(vi) upon Supplier's failure to satisfactorily complete a
migration under a Service Agreement by the scheduled Migration Completion Date;
(vii) upon Supplier's failure to provide adequate assurance of
performance within five (5) days of Supplier's receipt of Advantica's demand for
such assurances;
(viii) upon termination of this Master Agreement for any
reason; or
(ix) upon any Change of Control of Supplier or any sale of all
or substantially all the assets of Supplier which Change of Control or sale of
assets involves or results in any one or more of the following events: (A)
Supplier is Controlled by or all or substantially all of its assets are sold to
International Business Machines Corporation or Systems Management Specialists
Corporation or any Affiliate of either such company; (B) Supplier is Controlled
by or all or substantially all of its assets are sold to a competitor of
Advantica; or (C) within six (6) months following the effective date of the
Change of Control or sale of assets any one of the individuals then filling the
following Supplier management positions (or the functional equivalent of such
positions), other than as a result of a bona fide promotion, is replaced by
another individual: President - Retail Solutions, President - Commercial
Outsourcing, President - Technology Solutions Group, and Supplier's Project
Executive position.
(b) Advantica shall have the option, but not the obligation, to
terminate this Master Agreement and all Service Agreements for cause:
53
(i) for any Corporate Service Level Termination Event
defined in Master Schedule C;
(ii) at any time if Advantica has terminated one or more
Service Agreements for cause; or
(iii) upon any Change of Control of Supplier or any sale of
all or substantially all the assets of Supplier which Change of Control or sale
of assets involves or results in any one or more of the following events: (A)
Supplier is Controlled by or all or substantially all of its assets are sold to
International Business Machines Corporation or Systems Management Specialists
Corporation or any Affiliate of either such company; (B) Supplier is Controlled
by or all or substantially all of its assets are sold to a competitor of
Advantica; or (C) within six (6) months following the effective date of the
Change of Control or sale of assets any one of the individuals then filling the
following Supplier management positions (or the functional equivalent of such
positions) other than as a result of a bona fide promotion, is replaced by
another individual: President - Retail Solutions, President - Commercial
Outsourcing, President - Technology Solutions Group, and Supplier's Project
Executive position.
(c) Advantica shall have the option, but not the obligation, to
terminate this Master Agreement without cause at any time if no Services are
being provided by Supplier under a Service Agreement.
(d) Advantica shall exercise its termination option by delivering to
Supplier written notice of such termination identifying the scope of the
termination and the termination date.
(e) Supplier shall have the option, but not the obligation, to
terminate a Service Agreement only if Advantica fails to pay when due undisputed
amounts (including, without limitation, amounts determined pursuant to Article
19 (Dispute Resolution) to be owing to Supplier) Advantica owes to Supplier
under such Service Agreement and Advantica fails to cure such failure within
thirty (30) days after receipt from Supplier of written notice specifically
stating that Supplier is exercising its rights under this Section 18.1(d).
Supplier hereby waives any rights it may have under this Master Agreement or any
Service Agreement, at law or in equity, to terminate this Master Agreement or
any Service Agreement for any reason other than that set forth in the
immediately preceding sentence. Supplier shall exercise its termination option
by delivering to Advantica written notice of such termination identifying the
termination date, which shall be at least thirty (30) days from the date such
termination notice is delivered to Advantica.
SECTION 18.2 TERMINATION FOR CONVENIENCE
(a) Advantica shall have the option, but not the obligation, to
terminate for convenience this Master Agreement or, from time to time, one or
more Service Agreements or one or more categories of Services under a Service
Agreement. Advantica shall exercise its termination option by delivering to
Supplier written notice of such termination identifying the scope of the
termination and the termination date (which shall be at least ninety (90) days
after the date of such notice). In connection with any such termination, (i)
Advantica shall have no liability to Supplier for amounts in excess of the
normal Charges through the date of termination
54
except for payment of the termination fee, if any, described in the applicable
Service Agreement, and (ii) Supplier shall use Commercially Reasonable Efforts
to reduce any costs associated with any such termination. Any termination fee
negotiated with respect to any Service Agreement entered into by the Parties
after the Effective Date shall be equivalent to agreed unamortized investments
made by Supplier in connection with a Service Agreement or other specified
reimbursable costs and shall not include any reimbursements for lost profits.
(b) If a purported termination for cause by Advantica under Section
18.1 (Termination for Cause) is determined pursuant to Article 19 (Dispute
Resolution) not to be a proper termination for cause, such termination shall be
deemed a termination for convenience subject to this Section.
SECTION 18.3 TERMINATION FOR INSOLVENCY
Advantica shall have the option, but not the obligation, to terminate
this Master Agreement in its entirety (including all Service Agreements) without
payment of any termination fees if Supplier (i) becomes insolvent or is unable
to meet its debts as they mature, (ii) files a voluntary petition in bankruptcy
or seeks reorganization or to effect a plan or other arrangement with creditors,
(iii) files an answer or other pleading admitting, or fails to deny or contest,
the material allegations of an involuntary petition filed against it pursuant to
any applicable statute relating to bankruptcy, arrangement or reorganization,
(iv) shall be adjudicated a bankrupt or shall make an assignment for the benefit
of its creditors generally, (v) shall apply for, consent to or acquiesce in the
appointment of any receiver or trustee for all or a substantial part of its
property, or (vi) any such receiver or trustee shall be appointed and shall not
be discharged within thirty (30) days after the date of such appointment.
SECTION 18.4 TERMINATION UPON FORCE MAJEURE EVENT
Advantica shall have the option, but not the obligation, to terminate
this Master Agreement or, from time to time, one or more affected Service
Agreements or categories of Services, if Supplier fails to perform any Services
in any material respect because of the occurrence of a Force Majeure Event and:
(a) subject to clause (b) below, Supplier does not cure such failure
within five (5) days after the occurrence of the Force Majeure Event; or
(b) such failure is not reasonably subject to cure within five (5) days
after such occurrence.
Advantica shall exercise its termination option by delivering to Supplier
written notice of such termination identifying the termination date.
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SECTION 18.5 EXTENSION OF EXPIRATION OR TERMINATION EFFECTIVE DATE
Advantica may, at its option, extend any expiration date or the
termination date it has specified pursuant to this Article one or more times,
provided that the total of all such extensions shall not exceed one (1) year and
any such extension shall be for a period of at least ninety (90) days. In such
event, the Services shall be provided pursuant to and on the terms and
conditions set forth in this Master Agreement and each applicable Service
Agreement.
SECTION 18.6 EFFECT OF TERMINATION
Termination of this Master Agreement or any Service Agreement or
categories of Services for any reason under this Article shall not affect (i)
any liabilities or obligations of either Party arising before such termination
or out of the events causing such termination, or (ii) any damages or other
remedies to which a Party may be entitled under this Master Agreement or any
Service Agreement, at law or in equity, arising from any breaches of such
liabilities or obligations.
SECTION 18.7 TERMINATION/EXPIRATION ASSISTANCE
(a) Upon Advantica's delivery to Supplier of any written notice of
breach or termination of this Master Agreement or any Service Agreement,
Supplier shall provide to Advantica or Advantica's designee the assistance
reasonably requested by Advantica to facilitate the orderly transfer of the
Services to Advantica or its designee, including, without limitation, the
assistance described in the applicable Service Agreement(s)
("Termination/Expiration Assistance"). Advantica may also request that Supplier
begin providing Termination/Expiration Assistance at any time within the
six-month period prior to expiration of any Service Agreement Term.
(b) The Termination/Expiration Assistance described in each Service
Agreement shall be provided to Advantica at no additional cost (except as may be
set forth in each Service Agreement).
(c) Supplier acknowledges that, if it were to breach, or threaten to
breach, its obligation to provide Advantica with Termination/Expiration
Assistance, Advantica would be irreparably harmed. In such circumstances,
Advantica shall be entitled to proceed directly to a court of competent
jurisdiction and obtain such injunctive, declaratory or other injunctive relief
as may be reasonably necessary to prevent such breach, without the requirement
of posting any bond.
SECTION 18.8 PURCHASE OR LEASE OF EQUIPMENT
Upon expiration or termination of any Service Agreement, Advantica
shall have the option, but not the obligation, to purchase any Equipment owned
by Supplier and used by Supplier primarily to provide the Services provided
under such Service Agreement. The purchase price for any Equipment purchased by
Advantica shall be its net book value (provided the amount booked by Supplier
for depreciation is limited to Supplier's direct purchase cost for the
Equipment). Advantica shall pay the purchase price to Supplier concurrently with
Supplier's
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delivery to Advantica of the Equipment and a xxxx of sale acceptable to
Advantica. In addition, Advantica shall have the option, but not the obligation,
to assume any lease of Equipment leased by Supplier and used by Supplier
primarily to provide the Services.
SECTION 18.9 SUPPLIER SOFTWARE LICENSE
Upon expiration or earlier termination of any Service Agreement,
Supplier shall grant to Advantica a worldwide, royalty-free, nonexclusive
license to Advantica or its designee to use, copy, maintain, modify, enhance and
create derivative works of Supplier Software used to provide the applicable
Services at the end of the Service Agreement, and Supplier shall offer to
maintain such Supplier Software on terms at least as favorable as those offered
to other Supplier customers. The scope of any such license grant will be for the
sole purpose of supporting Advantica's technology requirements covered by the
Service Agreement that has been terminated and any such Supplier Software or
derivative works thereof may be used only by Advantica or by a third party on
Advantica's behalf for such purpose. If for any reason any Supplier Software is
not available to Advantica or such designee or cannot be licensed to Advantica
or such designee at the expiration or earlier termination of the Term, Supplier
shall procure at its expense a license for substitute Software with
substantially equivalent functionality and shall pay for all reasonable
conversion costs. All references in this section to Advantica shall include
Advantica's designee.
SECTION 18.10 THIRD PARTY CONTRACTS
Upon expiration or earlier termination of any Service Agreement,
Supplier shall, at Advantica's request, and to the extent permitted by the
applicable Third Party Contract and any applicable Third Party Consent, assign
to Advantica or its designee any Third Party Software Licenses and any Third
Party Service Contracts used to provide Services to Advantica on a dedicated
basis at the end of the Term. Concurrently with such assignment, Advantica shall
deliver to Supplier a corporate check payable to Supplier equal to the amount,
if any, of pre-payments made by Supplier pursuant to such Third Party Software
Licenses and Third Party Service Contracts attributable to the period after such
assignment. All references in this section to Advantica shall include
Advantica's designee.
SECTION 18.11 OFFERS TO SUPPLIER EMPLOYEES
Beginning upon delivery by Advantica to Supplier of a written notice of
breach or termination of this Master Agreement or a Service Agreement, or during
the six-month period prior to expiration of any Service Agreement Term, if
Advantica desires to offer employment to Supplier employees, Supplier shall not
interfere with Advantica's efforts, shall not enforce any restrictions imposed
on such employees by agreement or policy (i.e., employment contract or covenant)
which would interfere with Advantica's efforts, and shall provide Advantica
access to such employees for the purposes of interviews, evaluations and
recruitment. Further, promptly after Advantica sends Supplier written notice of
the termination or expiration, Supplier agrees to supply Advantica with the
names and compensation scales of Supplier's employees performing Services for
Advantica. Any such employment by Advantica would not be effective until
termination or expiration of this Master Agreement or the applicable Service
Agreement.
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ARTICLE 19
DISPUTE RESOLUTION
SECTION 19.1 GENERAL
Any dispute or controversy between the parties with respect to the
interpretation or application of any provision of this Master Agreement or the
performance by Supplier or Advantica of their respective obligations hereunder
shall be resolved as provided in this Article.
SECTION 19.2 INFORMAL DISPUTE RESOLUTION
The Parties may, by mutual agreement, attempt to resolve their dispute
informally in the following manner:
(a) Either Party may submit the dispute to the applicable Joint
Operating Committee, which shall meet as often as the Parties reasonably deem
necessary to gather and analyze any information relevant to the resolution of
the dispute. The applicable Joint Operating Committee shall negotiate in good
faith in an effort to resolve the dispute.
(b) If the applicable Joint Operating Committee determines in good
faith that resolution through continued discussions by such Joint Operating
Committee does not appear likely, the matter shall be referred to the Executive
Committee to negotiate a resolution of the dispute.
(c) During the course of negotiations, all reasonable requests made by
one Party to the other for non-privileged information, reasonably related to the
dispute, shall be honored in order that each of the Parties may be fully advised
of the other's position.
(d) The specific format for the discussions shall be determined at the
discretion of the applicable Joint Operating Committee or the Executive
Committee, but may include the preparation of agreed upon statements of fact or
written statements of position.
(e) Proposals and information exchanged during the informal proceedings
described in this Article between the Parties shall be privileged, confidential
and without prejudice to a Party's legal position in any formal proceedings. All
such proposals and information, as well as any conduct during such proceedings,
shall be considered settlement discussions and proposals, and shall be
inadmissible in any subsequent proceedings.
(f) Notwithstanding this Section, either Party may commence formal
dispute resolution proceedings pursuant to Section 19.3 (Arbitration) without
first observing the procedures set forth in this Section.
SECTION 19.3 ARBITRATION
(a) Except as set forth in clause (b) below, any controversy or claim
arising out of or relating to this Master Agreement or any Service Agreement, or
any alleged breach hereof, including any controversy regarding the arbitrability
of any dispute, shall be settled at the request
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of either Party by binding arbitration in Spartanburg, South Carolina before and
in accordance with the then existing Commercial Arbitration Rules of the
American Arbitration Association (the "Rules"). In any dispute in which the
amount in controversy is less than Two Hundred Fifty Thousand Dollars
($250,000), there shall be one (1) arbitrator agreed to by the Parties or, if
the Parties are unable to agree within thirty (30) days after demand for
arbitration is made, selected in accordance with the Rules. In all other cases
there shall be three (3) arbitrators, one (1) of whom shall be selected by
Advantica within thirty (30) days after demand for arbitration is made, one (1)
of whom shall be selected by Supplier within thirty (30) days after demand for
arbitration is made, and one (1) of whom shall be selected by the two
Party-appointed arbitrators within thirty (30) days after their selection. If
one or more arbitrator(s) is not selected within the time period stated in the
preceding sentence, such arbitrator(s) shall be selected pursuant to Rule 13 of
the Rules. Any arbitrator(s) proposed by the American Arbitration Association
shall have at least ten (10) years of experience in complex, commercial
technology engagements in the area that is generally the same as the technology
issue that is the subject of the dispute. Each Party shall pay its own
attorneys' fees and one-half (1/2) of the other arbitration costs, subject to
final apportionment by the arbitrators. The arbitrators shall apply the law set
forth herein to govern this Master Agreement and any Service Agreement and shall
have the power to award any remedy available at law or in equity; provided,
however, that the arbitrators shall have no power to amend this Master Agreement
or any Service Agreement. Any award rendered pursuant to such arbitration shall
be final and binding on the Parties, and judgment on such award may be entered
in any court having jurisdiction thereof. A party may recover its attorneys'
fees incurred in any such enforcement action.
(b) Notwithstanding clause (a) above, either Party may request a court
of competent jurisdiction to grant provisional injunctive relief to such Party
until an arbitrator can render an award on the matter in question and such award
can be confirmed by a court having jurisdiction thereof.
SECTION 19.4 APPLICABLE LAW
All questions concerning the validity, interpretation and performance
of this Master Agreement and any Service Agreement shall be governed by and
decided in accordance with the laws of the State of South Carolina.
SECTION 19.5 JURISDICTION AND VENUE
The Parties hereby submit and consent to the exclusive jurisdiction of
any state or federal court located within Spartanburg or Xxxxxxxx County, South
Carolina and irrevocably agree that all actions or proceedings relating to this
Master Agreement and any Service Agreement, other than any action or proceeding
required by this Article to be submitted to arbitration, shall be litigated in
such courts, and each of the Parties waives any objection which it may have
based on improper venue or FORUM NON CONVENIENS to the conduct of any such
action or proceeding in such court. Nothing in this Section shall affect the
obligation of the Parties with respect to the arbitration of disputes pursuant
to Section 19.3.
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SECTION 19.6 EQUITABLE REMEDIES
The Parties agree that in the event of any breach or threatened breach
of any provision of this Master Agreement or any Service Agreement concerning
(i) Confidential Information, (ii) intellectual property rights or (iii) other
matters for which equitable rights may be granted, money damages would be an
inadequate remedy. Accordingly, such provisions may be enforced by the
preliminary or permanent, mandatory or prohibitory injunction or other order of
a court of competent jurisdiction.
ARTICLE 20
MISCELLANEOUS
SECTION 20.1 INTERPRETATION
(a) In this Master Agreement and in any Service Agreement, words
importing the singular number include the plural and vice versa and words
importing gender include all genders. The word "person" includes, subject to the
context in which it appears, an individual, partnership, association,
corporation, trustee, executor, administrator or legal representative.
(b) The division of this Master Agreement, any Master Schedules and any
Service Agreement into Articles, Sections, subsections and Schedules and the
insertion of any captions or headings are for convenience of reference only and
shall not affect its construction or interpretation.
(c) In this Master Agreement and in any Service Agreement, unless
otherwise specifically provided:
(i) In the computation of a period of time from a specified
date to a later specified date, the word "from" means "from and including" and
the words "to" and "until" each mean "to but excluding."
(ii) References to a specified Article, Section, subsection,
Schedule or other subdivision shall be construed as references to that specified
Article, Section, subsection, Schedule or other subdivision of this Master
Agreement or the applicable Service Agreement, unless the context otherwise
requires.
(iii) The word "dollar" and the symbol "$" refer to United
States dollars.
(iv) References to "days" means calendar days unless "business
days" are specified.
(v) The term "including" means "including, without
limitation," or "including, but not limited to."
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(d) The Parties are sophisticated and have been represented by counsel
during the negotiation of this Master Agreement and each Service Agreement. As a
result, the Parties believe the presumption of any laws or rules relating to the
interpretation of contracts against the drafter thereof should not apply, and
hereby waive any such presumption.
SECTION 20.2 BINDING NATURE AND ASSIGNMENT
Neither Party may assign, voluntarily or by operation of law, any of
its rights or obligations under this Master Agreement without the prior written
consent of the other Party; provided, that Advantica may assign its rights and
obligations under this Master Agreement or any Service Agreement to an
Affiliate, or to an entity which effects a merger transaction involving
Advantica or otherwise acquires all or substantially all of the capital stock or
assets of Advantica. Subject to the foregoing, this Master Agreement and each
Service Agreement shall be binding on the Parties and their respective
successors and assigns.
SECTION 20.3 EXPENSES
In this Master Agreement and each Service Agreement, unless otherwise
specifically provided, all costs and expenses (including the fees and
disbursements of legal counsel) incurred in connection with this Master
Agreement or the applicable Service Agreement, and the completion of the
transactions contemplated by this Master Agreement or the applicable Service
Agreement shall be paid by the Party incurring such expenses.
SECTION 20.4 AMENDMENT AND WAIVER
No supplement, modification, amendment or waiver of this Master
Agreement or any Service Agreement shall be binding unless executed in writing
by the Party against whom enforcement of such supplement, modification,
amendment or waiver is sought. No waiver of any of the provisions of this Master
Agreement or any Service Agreement shall constitute a waiver of any other
provision (whether or not similar) nor shall such waiver constitute a continuing
waiver unless otherwise expressly provided.
SECTION 20.5 FURTHER ASSURANCES; CONSENTS AND APPROVALS
Each party shall provide such further documents or instruments required
by the other Party as may be reasonably necessary or desirable to give effect to
this Agreement and to carry out its provisions. Whenever this Master Agreement
or any Service Agreement requires or contemplates any action, consent or
approval, such Party shall act reasonably and in good faith and (unless the
Agreement expressly allows exercise of a Party's sole discretion) shall not
unreasonably withhold or delay such action, consent or approval.
SECTION 20.6 PUBLICITY
All media releases, public announcements and other disclosures by
either Party relating to this Master Agreement or any Service Agreement or the
subject matter hereof, including promotional or marketing materials, but
excluding announcements intended solely for internal distribution or to meet
legal or regulatory requirements, shall be coordinated with and approved
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by the other Party prior to release. No license or right, either directly or by
implication, is granted to Supplier to use Advantica's name or any of
Advantica's trade names, trademarks, service marks, slogans, logos or designs
for any advertising, promotional or other purpose which is not material to
Supplier's performance under this Master Agreement without the prior, written
permission of Advantica.
SECTION 20.7 SEVERABILITY
Any provision in this Master Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions or affecting the validity or enforceability of such
provision in any other jurisdiction.
SECTION 20.8 ENTIRE AGREEMENT
This Master Agreement and each of the Service Agreements thereto,
including the Schedules thereto, constitute the entire agreement between the
Parties pertaining to the subject matter hereof and supersede all prior and
contemporaneous agreements, understandings, negotiations and discussions,
whether oral or written, of the Parties pertaining to the subject matter hereof.
SECTION 20.9 NOTICES
Any notice, demand or other communication required or permitted to be
given under this Master Agreement or any Service Agreement shall be in writing
and shall be deemed delivered to a Party (i) when delivered by hand or courier,
(ii) when sent by confirmed facsimile with a copy sent by another means
specified in this Section, or (iii) six (6) days after the date of mailing if
mailed by United States certified mail, return receipt requested, postage
prepaid, in each case to the address of such Party set forth below (or at such
other address as the Party may from time to specify by notice delivered in the
foregoing manner):
If to Supplier, to: President and Chief Executive Officer
Affiliated Computer Services, Inc.
0000 X. Xxxxxxx Xxxx
Xxxxxx, Xxxxx 00000
With a Copy to: Executive Vice President, General Counsel
and Secretary
Affiliated Computer Services, Inc.
0000 X. Xxxxxxx Xxxx
Xxxxxx, Xxxxx 00000
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If to Advantica, to: Chief Information Officer
Advantica Restaurant Group, Inc.
000 X. Xxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
With a Copy to: General Counsel
Advantica Restaurant Group, Inc.
000 X. Xxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
SECTION 20.10 SURVIVAL
Any provision of this Master Agreement or of any Service Agreement
which contemplates performance or observance subsequent to any termination or
expiration of this Master Agreement or of any Service Agreement, including,
without limitation, Section 8.4 (Work Product), Section 8.5 (Use of Concepts,
Know-how and Methods), Article 9 (Confidentiality), Article 11 (Audits), Section
13.3 (Taxes), Article 16 (Indemnification), Article 17 (Limitations on
Liability), Sections 18.7 through 18.11, inclusive (Termination) and Article 19
(Dispute Resolution) shall survive expiration or termination of this Master
Agreement or any Service Agreement.
SECTION 20.11 INDEPENDENT CONTRACTORS
Supplier shall perform its obligations under this Master Agreement and
all Service Agreements as an independent contractor of Advantica. Nothing herein
shall be deemed to constitute Supplier and Advantica as partners, joint
venturers, or principal and agent. Supplier has no authority to represent
Advantica as to any matters, except as expressly authorized in this Master
Agreement or in a Service Agreement. Advantica shall have no liability for the
acts or omissions of Supplier's employees or subcontractors.
SECTION 20.12 THIRD PARTY BENEFICIARIES
Except as set forth in Article 16 (Indemnification) of this Master
Agreement, nothing in this Master Agreement or in any Service Agreement, express
or implied, is intended to confer on rights, benefits, remedies, obligations or
liabilities on any person (including, without limitation, any employees of the
Parties) other than the Parties or their respective successors or permitted
assigns.
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SECTION 20.13 COUNTERPARTS
This Master Agreement and each Service Agreement may be executed in one
or more counterparts, each of which shall be deemed an original but all of which
taken together shall constitute one and the same instrument.
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IN WITNESS WHEREOF the Parties have executed this Master Agreement as
of the day and year first above written.
ADVANTICA RESTAURANT GROUP, INC. AFFILIATED COMPUTER SERVICES, INC.
By: /s/ Xxxxx Xxxxxx By: /s/ A. Xxxxx Xxxxxxx
-------------------------- ----------------------------
Name: Xxxxx Xxxxxx Name: A. Xxxxx Xxxxxxx
Its: CIO Its: President -- Retail
