EXHIBIT 10.29
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MASTER SERVICES AGREEMENT
AMONG
NUEVO ENERGY COMPANY
AND
TORCH ENERGY ADVISORS INCORPORATED,
TORCH OPERATING COMPANY
TORCH ENERGY MARKETING, INC.,
AND
NOVISTAR, INC.
EFFECTIVE AS OF JANUARY 1, 1999
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MASTER SERVICES AGREEMENT
This Master Services Agreement (the "Master Agreement") is entered into
among Nuevo Energy Company ("Nuevo"), and Torch Energy Advisors Incorporated
("TEAI"), Torch Operating Company ("TOC"), Torch Energy Marketing, Inc.
("TEMI"), and Novistar, Inc. ("Novistar") (TEAI, TOC, TEMI, and Novistar are
herein referred to individually as a "Torch Party" and collectively as "Torch,"
and each Torch Party and Nuevo are herein individually referred to as a "Party"
and collectively referred to as the "Parties"), effective as of January 1, 1999
(the "Effective Date").
For and in consideration of the mutual promises and covenants contained
herein, and other good and valuable consideration the receipt, sufficiency, and
adequacy of which are hereby acknowledged, the Parties hereby agree as follows:
BACKGROUND AND PURPOSE
Certain Torch Parties currently provide certain administrative, operations,
and marketing services to Nuevo pursuant to an Agreement for Contract Operations
between Nuevo and TOC dated November 11, 1991 (the "Operations Agreement"), and
an Amended and Restated Administrative Services Agreement between Nuevo and TEAI
dated January 1, 1996 (the "Restated Agreement"), and the Marketing
Authorization Letter dated April 1, 1996, as amended (the "Marketing
Agreement").
This Master Agreement sets forth the general terms and conditions
applicable to each Service Agreement entered into pursuant to this Master
Agreement. The Parties may, from time to time in the future, enter into one or
more additional Service Agreements setting forth the specific terms and
conditions applicable to specific services to be contracted for by Nuevo and one
or more Torch Parties. The terms of this Master Agreement shall apply to any
such Service Agreement, except as expressly provided otherwise in the Service
Agreement.
ARTICLE 1
DEFINITIONS
SECTION 1.1 CERTAIN DEFINITIONS
In this Master Agreement and in each Service Agreement the following terms
shall have the indicated meanings:
"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.
"BUSINESS DAY" means any day during which Bank of America, NT&SA or its
successor is generally conducting business.
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"Business Records" means a Party's originals and copies of any and all
contracts, leases, accounting, marketing or engineering documents, reports,
analyses, summaries, written subjective evaluations, invoices, bank records,
checks, statements, invoices, receipts, correspondence, vouchers and all other
business records relating to the business operations of such Party, but in any
event excluding documents that constitute another Party's originals and copies
of any and all contracts, leases, accounting, marketing or engineering
documents, reports, analyses, summaries, written subjective evaluations,
invoices, bank records, checks, statements, invoices, receipts, correspondence,
vouchers and all other business records relating to the business operations of
such Party.
"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, Work Product, 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 customers; 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 of disclosure or inspection.
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; or
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(D) was independently developed by the Receiving Party without any
reference to any part of the Confidential Information.
"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.
"CONTRACT EXECUTIVE" means the individual representatives of Torch and Nuevo
who are assigned the primary responsibility of managing a Service Agreement as
described in Section 10.1.1.
"CONTRACT YEAR" with respect to a Service Agreement, means each annual period
beginning on the Service Agreement Effective Date unless defined otherwise
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.
"DATA" means all Business Records stored in digital format on magnetic,
optical or other media.
"DISCLOSING PARTY" means the Party furnishing Confidential Information or
Confidential Materials.
"EFFECTIVE DATE" means the date of this Master Agreement.
"INDEMNITEES" shall mean, with respect to a Party entitled to indemnification
hereunder, such Party and its Affiliates, officers, directors, employees,
agents, successors, and assigns.
"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, litigation, settlement, judgment, appeal, interest and
penalties) incurred by an indemnified party hereunder in connection with an
indemnified claim.
"MASTER AGREEMENT" means this Master Agreement, all Schedules hereto and, when
the meaning so requires, all Service Agreements.
"PASS-THROUGH EXPENSES" means the actual invoiced amounts (excluding any Torch
Party's profit, administrative fee or overhead charges) charged to the Torch
Party by third parties that Nuevo has agreed to pay directly or for which Nuevo
has agreed to reimburse the Torch Party.
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"PERFORMANCE DEPOSIT" means a payment by Nuevo to a Torch Party in an
amount equal to the highest month's base fees earned by the Torch Party under an
agreement being terminated under Article 16.
"RECEIVING PARTY" means the Party receiving the Confidential Information or
Confidential Materials disclosed by the Disclosing Party.
"SCHEDULES" means any schedule attached to this Master Agreement or to a
Service Agreement, if such document is initialed by Nuevo and the applicable
Torch Party(ies) and states that it is a schedule to such agreement.
"SERVICE AGREEMENT" means any Service Agreement entered into between Nuevo
and a Torch Party(ies) pursuant to Section 2.1.
"SERVICE AGREEMENT EFFECTIVE DATE" means the date indicated in the Service
Agreement as the date upon which such agreement becomes effective.
"SERVICE AGREEMENT TERM" means the term of the applicable Service
Agreement, as defined in each Service Agreement.
"SERVICE CREDITS" means any Service Level Credits issued pursuant to a
Service Agreement.
"SERVICES" means the services provided by Torch Party(ies) to Nuevo
pursuant to Section 4.1, the Service Agreements or any Change Order (as
defined).
"TERM" means the Term of this Master Agreement as provided in Article 3.
When used herein in the context of a Service Agreement, "Term" refers to the
applicable Service Agreement Term.
SECTION 1.2 OTHER DEFINITIONS
Other terms used in this Master Agreement, the Service Agreements any
Change Orders 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 Nuevo under each Service Agreement by the Torch Party(ies) thereto.
Separate Service Agreements may be entered into for discrete Services. Each
Service Agreement shall describe the Services covered by the Service Agreement,
the provisions for payment, the term for
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performance, applicable Service Levels, and any other provisions that are
specific to the Service Agreement. 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 a Party under this Master Agreement, except for unsatisfied
obligations under Article 7, shall be suspended during any period in which no
Service Agreement or Change Order is in effect with respect to such Party.
SECTION 2.2 INTERPRETATION AND PRECEDENCE
This Master Agreement, the Service Agreements, any Change Orders and
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 among this Master Agreement or any Service Agreement or any Change
Order, the order of precedence shall be first, any Change Order(s), second the
Service Agreement, third, any attachment or Schedule to the Service Agreement;
and fourth, this Master Agreement. All of the terms of this Master Agreement
shall apply to each Service Agreement or Change Order except to the extent
negated or contradicted by the express terms of a Service Agreement or any
Schedule to a Service Agreement or any Change Order.
SECTION 2.3 NO IMPLIED AGREEMENT
Except as expressly required in a Service Agreement or Change Order,
nothing in this Master Agreement requires Nuevo to purchase products or services
from a Torch Party or requires a Torch Party to provide products or services to
Nuevo. Nuevo may request information, proposals, or competitive bids from third
parties on the same or different terms than as provided in this Master
Agreement.
SECTION 2.4 AGREED TERMINATION OF PRIOR AGREEMENTS
The Parties hereby agree that the Operations Agreement and the Restated
Agreement and the Marketing Agreement (collectively the "Prior Agreements") are
terminated as of the effective date of this Master Agreement and the Parties
further agree that no termination fees shall be due as a result of such
terminations. The Parties further agree that all of the indemnification
provisions contained in the Prior Agreements shall survive the termination of
the Prior Agreements, and shall apply to any and all claims for indemnification
based upon events occurring prior to the Effective Date of this Agreement. All
indemnification claims among the Parties based upon events occurring on or after
the Effective Date shall be governed by the indemnification provisions of this
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 with respect to a Party, for so long as any
Service Agreement is in effect with respect to such Party unless earlier
terminated or renewed 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
Each Service Agreement shall automatically renew for additional one (1)
year terms unless written notice of termination is given by a Party to the
Service Agreement at least one hundred and eighty (180) days prior to the
expiration of the Service Agreement Term or any renewal term. All of the terms
of this Master Agreement and the applicable Service Agreement and Change Orders
shall continue to apply without change during any renewal period.
ARTICLE 4
SERVICES
SECTION 4.1 GENERAL; SERVICE AGREEMENTS
Throughout each Service Agreement Term, each Party shall perform such
obligations as it may have under the Services Agreements, as such Service
Agreements may be amended and supplemented from time to time by written
amendments thereto or pursuant to the Change Order Procedures. Each Party shall
perform its obligations in accordance with all of the terms of this Master
Agreement, and the Service Agreements and Change Orders, to which it is a party.
The specific Services to be supplied by a Torch Party to Nuevo, the
compensation to be paid and other related matters shall be expressed in Service
Agreements and Change Orders. Each Service Agreement and each Change Order
shall incorporate by reference, and shall be subject to, the terms and
conditions of this Master Agreement, except as expressly provided otherwise in
the Service Agreement or Change Order. No Torch Party shall have an obligation
to provide any services, and no amounts will become due from Nuevo, unless and
until the appropriate Service Agreement has been duly signed and delivered by
authorized officers of Nuevo and of the applicable Torch Party(ies). The
Parties further agree that, while the applicable Service Agreement is in effect,
any service (other than those services identified in Schedule 4.1, which may be
amended if and when a Service Agreement is terminated) that was customarily and
routinely performed by a Torch Party for Nuevo, at no additional charge,
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during the year prior to the Effective Date, but not included in the Services
Schedules to the applicable Service Agreement, shall be performed by the Torch
Party and will be presumed to be covered by the base charges in the applicable
Service Agreement.
Although the Service Agreements will be entered into among Nuevo and the
individual Torch Parties (TEAI, TOC, TEMI, and Novistar), Torch agrees that no
Torch Party shall be relieved of its obligation to provide Services under a
Service Agreement, nor will Nuevo be subject to additional charges, by reason of
such Torch Party making use of personnel or equipment belonging to a Torch Party
other than the Torch Party(ies) with whom the Service Agreement was entered
into.
Except as expressly provided in this Master Agreement, a Torch Party shall
have no liability to Nuevo with respect to (i) any Service Agreement (unless the
Torch Party is a party thereto); (ii) any Change Order (unless the Torch Party
is a party thereto); (iii) any act (or failure to act) by another Torch Party.
As to each Torch Party, for so long as such Torch Party is an Affiliate of TEAI,
TEAI hereby guarantees to Nuevo performance of such Torch Party's obligations,
and satisfaction of such Torch Party's liabilities, under each Service Agreement
to which it is a party.
SECTION 4.2 OUT-OF-SCOPE SERVICES
Notwithstanding any request made to Torch or the submission of any proposal
by Torch pursuant to Section 4.3, Nuevo shall have the right to contract with a
third party to perform any services which are in addition to, or outside the
scope of, the Services. If Nuevo contracts with a third party to perform any
such service, Torch shall cooperate with Nuevo and such third party to the
extent reasonably required for the provision of services by such third party, at
Nuevo's expense and only to the extent specified in a Change Order (as defined),
except to the extent included specifically in the scope of the Services.
The Parties acknowledge and agree that neither this Master Agreement nor
the Service Agreements shall apply to any properties not located in the United
States, or its territorial waters, owned or operated by Nuevo, except as
expressly provided to the contrary in a Service Agreement.
SECTION 4.3 CHANGE ORDER PROCEDURE
(a) From time to time during the Term, Nuevo or Torch Party(ies) may
propose changes in or additions to the Services or other aspects of this Master
Agreement or a Service Agreement. No such changes shall be effective or binding
on the Parties unless a written change order (a "Change Order") is signed by
authorized representatives of both Nuevo and the Torch Party(ies) to be bound
thereby. Subject to clause (e) below, all such Change Orders shall be
implemented pursuant to the procedures set forth in this Section 4.3 (the
"Change Order Procedures").
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(b) Any change to any of Articles 1 through 18 of this Master Agreement
must be approved by a Management Board member of each Party and memorialized in
a written amendment that specifically identifies this Master Agreement, the
section of this Master Agreement that is the subject of the amendment, and the
new provision.
(c) If Nuevo desires to propose a change in or addition to the Services
under a Service Agreement, it shall deliver at Nuevo's expense a written notice
to the applicable Torch Party Contract Executive describing the proposal. The
applicable Torch Party may (but is not required to) respond to such a proposal
and if the Torch Party does respond it shall do so at such Torch Party's expense
(except as otherwise agreed in writing) by delivering to the Nuevo Contract
Executive a written proposal ("Change Order Proposal"), indicating: (i) charges
to Nuevo that would be incurred under the proposal; (ii) the effect of the
proposal, if any, on Service Levels; (iii) the anticipated time schedule for
implementing the proposal; and (iv) any other information agreed upon by the
Parties. If a Torch Party desires to propose a change in or addition to the
Services or other aspects of this Master Agreement or a Service Agreement, it
may do so by preparing at its expense and delivering a Change Order Proposal to
the Nuevo Contract Executive.
(d) No change in or addition to the Services or any other aspect of a
Service Agreement shall become effective without the written approval of the
affected Parties' respective Contract Executives, which approval may be given or
withheld in each Party's sole discretion. If Nuevo and the applicable Torch
Party(ies) agree to the Torch Change Order Proposal, as evidenced by the
signatures of the Nuevo Contract Executive and the applicable Torch Contract
Executive(s), any changes in or additions to the Services described in the
Change Order Proposal shall thereafter be deemed "Services," and other changes
described in the Change Order Proposal shall be deemed to have amended any
applicable Service Agreement, and/or, if applicable, this Master Agreement.
Termination of a Service Agreement shall terminate each Change Order deemed to
have amended such Service Agreement. Termination of this Master Agreement shall
terminate all Change Orders.
(e) Changes made by a Torch Party that do not cause non-compliance with
this Master Agreement, the Service Agreements to which the Torch Party is a
party and the Change Orders to which the Torch Party is a party (including
without limitation changes to operating procedures, schedules and equipment
configurations) need not comply with the procedures set forth in this
Section 4.3, provided that they do not involve any additional cost to any Party.
SECTION 4.4 RESOURCES
Except as otherwise expressly provided in a Service Agreement, Torch shall
provide, at its expense, all of the facilities, personnel, equipment, software,
services and other resources necessary to provide the Services and comply with
the Service Levels.
SECTION 4.5 LICENSES AND PERMITS
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Each Party shall be responsible for obtaining all applicable licenses,
authorizations, and permits required for such Party to perform its obligations
under this Master Agreement and each Service Agreement (or Change Order) to
which it is a party and shall have financial responsibility for, and shall pay,
all fees and taxes associated with such licenses, authorizations, and permits,
except as otherwise expressly provided in this Master Agreement or a Service
Agreement or Change Order.
SECTION 4.6 AFFILIATES
The Services shall be provided by Torch Parties to Nuevo and each of
Nuevo's domestic Affiliates existing on the Effective Date. Upon the written
request of Nuevo, Torch Parties shall provide the Services to those future
Affiliates of Nuevo that are engaged in Nuevo's lines of business existing as of
the Effective Date (such as gathering and downstream gas plants), in accordance
with the provisions of this Master Agreement and the designated Service
Agreement(s). If such a request is made by Nuevo, then Nuevo and Torch shall
each have all of the same rights and obligations with respect to Services
provided to such Nuevo Affiliates as they do with respect to Services provided
to Nuevo.
Nothing in this Master Agreement or in the Service Agreements shall be
construed (i) to limit, restrict or otherwise impair Nuevo's ability, acting in
good faith and not to avoid its obligations under this Master Agreement, or the
Service Agreements or the Change Orders, to sell or otherwise transfer ownership
of any Affiliate or any Nuevo assets to any non-Affiliated third party (or to
require a consent of Torch), or (ii) to require Torch to provide Services to
such an Affiliate, or with respect to such assets or to such a third party.
SECTION 4.7 NUEVO RETAINED AUTHORITY
Nuevo shall retain all decision-making authority with respect to Nuevo's
business objectives and strategic direction related to the Services, and each
Torch Party shall reasonably cooperate and comply with Nuevo's prioritization of
tasks included within the scope of the Services; provided, however, that if a
Torch Party determines that Nuevo's prioritization of tasks impairs a Torch
Party's progress toward meeting one or more Service Levels, the Torch Party may
delay implementation of the prioritization pending a review by the Nuevo
Contract Executive, in which event the Torch Party shall promptly notify the
Nuevo Contract Executive of the prioritization's potential to so impair,
whereupon the Nuevo Contract Executive will determine whether the prioritization
shall be implemented and, if the Nuevo Contract Executive determines that the
prioritization shall be implemented, then the prioritization shall be
implemented and there shall be an exemption from compliance with such Service
Level(s) for that instance of impairment.
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ARTICLE 5
SERVICE LEVELS
SECTION 5.1 SERVICE LEVELS
With respect to each Service which has an associated Service Level, while a
Torch Party has an obligation to provide such Service it shall do so in a manner
that satisfies the associated Service Level, subject to any transition period
specified with respect to such Service Level.
SECTION 5.2 REVIEW OF SERVICE LEVELS
Within three (3) months after the initiation of Services under a Service
Agreement and every three (3) months thereafter, the Parties shall jointly
review the Service Levels, which may be modified by mutual agreement. The
Parties agree to confer in good faith concerning ways in which Service Levels
may be improved without imposing additional costs or burdens on any Party;
provided, however, that Service Levels may be adjusted only by written mutual
agreement of the affected Parties.
SECTION 5.3 MEASUREMENT AND MONITORING TOOLS
As part of the Services throughout the Term, and at no additional cost to
Nuevo, each Torch Party shall implement measurement and monitoring tools and
procedures reasonably necessary to measure its performance of the Services and
compare such performance to that required by the Service Levels. Upon Nuevo's
request to a Torch Party the Torch Party shall provide Nuevo or its auditors
with information and access to the measurement and monitoring tools reasonably
necessary to verify compliance by the Torch Party with the Service Levels.
SECTION 5.4 FAILURE TO MEET SERVICE LEVELS
(a) The provisions of this Section 5.4 set forth Nuevo's exclusive
remedies for any failure by a Torch Party to meet a Service Level. The Parties
agree that a Torch Party's failure to meet a Service Level may cause damage to
Nuevo the amount of which would be impracticable or extremely difficult to
determine. The Parties further agree that the remedies provided under this
Section 5.4 are reasonable under the circumstances existing as of the date of
this Master Agreement and any Service Agreement Effective Date. If a Torch Party
fails to meet a Service Level for reasons other than those specified in (i)
and/or (ii) below, Nuevo shall have the right to credits in the applicable
amount specified in each Service Level Agreement ("Service Level Credits") as
liquidated damages. The Torch Party shall deduct the Service Credits from the
next succeeding invoice or other amounts due to the Torch Party. To the extent
any failure to meet a Service Level is attributable to (i) a Force Majeure
Event, or (ii) a failure of Nuevo to perform its obligations under this Master
Agreement or a Service Agreement, such Service Level shall be deemed to have not
been failed.
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(b) Each time a Torch Party fails to meet a Service Level for reasons
other than those specified in Section 5.4(a)(i) through (ii) above, it shall:
(i) promptly investigate the root cause(s) of the failure and report the
cause(s) to Nuevo; (ii) use commercially reasonable efforts to correct the
problem and to begin meeting such Service Level as soon as practicable; and
(iii) at Nuevo's request, advise Nuevo of the status of such corrective efforts.
Service Levels and applicable Service Credits shall not be suspended solely by
reason of the Torch Party's use of commercially reasonable efforts to correct
any performance problem.
SECTION 5.5 PERFORMANCE STANDARDS
With respect to each Service or obligation that does not have an associated
Service Level, the applicable Torch Party (a) with respect to TOC or Novistar in
performing operator responsibilities, shall perform such Service or obligation
as a prudent operator (as set forth in A.A.P.L. Form 610-1989 Model Form
Operating Agreement, Article V Section A "Designation and Responsibilities of
Operation"), (b) other than with respect to TOC or Novistar in performing
operator responsibilities, shall perform such Service or obligation with a level
of accuracy, quality, completeness, timeliness, responsiveness and cost
efficiency that meets or exceeds the performance of other similar outsourcing
companies in providing a substantially similar Service or performing a
substantially similar obligation ("Performance Standards").
SECTION 5.6 BASELINE NUEVO SATISFACTION SURVEY
Upon the request of Nuevo, but not more than once each year, each Torch
Party (or if Nuevo elects, a third party selected by Nuevo but then at Nuevo's
expense) shall, if requested by Nuevo, conduct a baseline Nuevo satisfaction
survey as approved by the Parties, for affected end-users of the Services as
designated by Nuevo. This survey shall be of the content and scope reasonably
determined by the Parties, administered in accordance with the procedures agreed
upon by the Parties.
ARTICLE 6
CHARGES FOR SERVICES
SECTION 6.1 CHARGES IN GENERAL
As the sole consideration for all of the Services to be performed by each
Torch Party under this Master Agreement and any Service Agreement, Nuevo shall
pay to the Torch Party the amounts due to it as set forth in each Service
Agreement to which it is a party and each Change Order to which it is a party as
well as other amounts due to it in connection with matters, identified as at
Nuevo's expense, under this Agreement, Service Agreements or Change Orders.
Except for costs and expenses that this Master Agreement or a Service Agreement
or a Change Order specifies as being Nuevo's responsibility, each Torch Party
shall be solely responsible for, and shall indemnify Nuevo against, all third-
party claims for costs and expenses incurred by such Torch Party pursuant to its
performance under this Master Agreement and the Service Agreements and Change
Orders to which it is a party. Except as otherwise expressly provided in
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this Master Agreement or a Service Agreement or Change Order, or as otherwise
mutually agreed in writing by the Parties, Nuevo will not pay Torch any
additional fees, charges, assessments, or reimbursements.
SECTION 6.2 TAXES INCLUDED
Payment of federal, state, local, foreign, and other taxes based on the
Services shall be the responsibility of the applicable Torch Party; provided,
however, that Nuevo will reimburse the Torch Party for any federal, state,
local, or foreign excise, sales, use, business privilege, gross receipts, value-
added, single business, or other similar tax (excluding federal, state, or local
taxes based on income or profits of the Torch Party, or any franchise taxes
assessed against the Torch Party) based on the Services, except to the extent
that it results from action of the Torch Party not taken in good faith. In
compliance with applicable law, each Party shall reasonably cooperate with the
other in minimizing any applicable tax and, in connection therewith, Nuevo shall
provide Torch any resale certificates, information regarding out-of-state use of
materials, services or sales, or other exemption certificates or information
reasonably requested by Torch.
SECTION 6.3 BENCHMARKING
Nuevo may, not more frequently than annually, at its expense, engage an
independent qualified consultant for the purpose of performing a review of the
costs to Nuevo of the Services, each Torch Party's performance of the Services,
and use by Nuevo and Torch Parties of new technologies and techniques, as
measured by industry norms. Each Torch Party shall reasonably cooperate with
Nuevo and Nuevo's consultant either to the extent specified in a Change Order or
to the extent involving tasks included in the scope of the Services.
SECTION 6.4 OUT-OF-SCOPE SERVICES
Nuevo shall pay for any "out-of-scope services" (i.e., ancillary or other
services that are not a part of Services), in accordance with the terms and
conditions stated in a written Change Order signed by an authorized Nuevo
representative and the applicable Torch Party(ies). Nuevo shall reimburse a
Torch Party for reasonable out-of-pocket expenses incurred by the Torch Party in
the performance of out-of-scope services, such as reasonable travel and living
expenses, provided such expenses are invoiced with reasonable supporting
documentation and subject to any limitations on such expenses set forth in the
Change Order. Torch shall have no obligation to incur such expenses unless
authorized. Torch shall provide invoicing for out-of-scope services with
documentation that references the Nuevo authorizing Change Order, charges and a
reasonable description of what the charges cover. No invoice with respect to
out-of-scope services will be paid and no such services will be provided unless
such services were authorized in advance in writing with a Change Order.
SECTION 6.5 RECORDKEEPING
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Each Torch Party shall maintain accurate records of, and supporting
documentation for, the amounts billed to and payments made by Nuevo to the Torch
Party under this Master Agreement and the Service Agreements and Change Orders,
as specified in the monthly invoice, of such amounts and payments. Such records
shall include data and documentation of third party charges invoiced to and paid
by the Torch Party. The Torch Party shall retain such records in accordance
with a records retention schedule agreed to by the applicable Parties (including
records received by a Torch Party prior to the applicable Service Agreement
Effective Date). A Torch Party shall provide Nuevo, at Nuevo's request, with
paper or electronic copies, as the case may be, of documents and information
reasonably necessary to verify the Torch Party's compliance with this Master
Agreement. Nuevo and its authorized agents and representatives shall have
reasonable access to such records for audit purposes during normal business
hours for the period during which a Torch Party is required to maintain such
records. Upon termination or expiration of this Master Agreement, Nuevo and the
Torch Parties shall mutually agree as to disposition of records or documentation
and the applicable Torch Party may retain one archive copy.
SECTION 6.6 RFP AND DUE DILIGENCE ASSISTANCE
If at any time during the Term Nuevo elects to issue a request for proposal
to one or more service providers for the provision of all or any part of the
Services, Torch Parties shall cooperate with Nuevo to the extent provided in a
Change Order or included within the scope of the Services, by (i) providing to
Nuevo and such third party providers reasonable access to personnel and
information relevant to such request for proposal, and (ii) participating in a
reasonable due diligence process for the benefit of Nuevo and such third party
providers in connection with the request for proposals. A Torch Party's
obligations pursuant to this Section 6.6 are at all times subject to (i) the
condition that Nuevo and such third party providers shall observe security and
confidentiality restrictions reasonably satisfactory to the Torch Party and in
accordance with Article 9 (Confidentiality) of this Master Agreement, and (ii)
the condition that such activities shall not disrupt or adversely affect the
Torch Party's normal business, including but not limited to provision of the
Services.
ARTICLE 7
INVOICING AND PAYMENT
SECTION 7.1 INVOICES
A Torch Party shall issue to Nuevo, on a monthly basis: (i) a consolidated
invoice billing in advance for base charges due, (ii) a consolidated invoice
billing in arrears for variable amounts due other than time and materials
charges, and (iii) a consolidated invoice billing in arrears for time and
materials charges (which shall include detail for each Service Agreement and
remaining balance information for time and materials services included as part
of base changes, substantially in the form of Schedule 7.1 hereto), all with
respect to each Service Agreement. If out-of-scope Services are provided under
one or more Change Orders,
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Torch Party(ies) will invoice the applicable charges in a separate, composite
invoice for such services. Each Torch Party agrees to waive any charges that it
fails to invoice within six months of the time such charges were due to be
invoiced to Nuevo under this Master Agreement, each Service Agreement and any
Change Order.
SECTION 7.2 PAYMENT
(a) Subject to Section 7.5, each invoice for variable amounts delivered
pursuant to Section 7.1 shall be due and payable within thirty (30) days after
the date such invoice is delivered to Nuevo; provided however, that each invoice
for variable amounts with respect to Termination/Expiration Assistance under
Section 16.5 shall be due and payable within ten (10) days after such invoice is
delivered to Nuevo. Subject to Section 7.5, all invoices for fixed amounts
delivered pursuant to Section 7.1 shall be due and payable on the later of five
(5) days after the date such invoice is delivered to Nuevo or the first of the
month in which the Services covered by such invoice are to be provided.
(b) To the extent Nuevo is entitled to a credit from a Torch Party
pursuant to this Master Agreement or any Service Agreement, the Torch Party
shall provide Nuevo with such credit on the first invoice delivered after such
credit is earned. If the amount of any credits on an invoice exceeds the amount
owing to the Torch Party reflected on such invoice, the Torch Party shall pay
the balance of the credit to Nuevo within thirty (30) days after the invoice
date.
SECTION 7.3 PRORATION
All periodic charges under this Master Agreement or the Service Agreements
(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 7.4 REFUNDS
If either Party receives from a third party a refund or other rebate for
goods or services paid for by another Party, such other Party shall be entitled
to receive the same and if it is in an amount that exceeds $100,000, the
recipient of such refund, credit or rebate shall promptly notify the other Party
and shall pay such amount, with interest at the then-current prime rate of
Citibank of New York (or its successor), to the other Party (or, if applicable,
provide a credit on the next delivered invoice) within sixty (60) days after
receipt thereof. Interest shall be calculated beginning from the date sixty
(60) days after such refund or rebate was received.
SECTION 7.5 SETOFF AND WITHHOLDING
(a) Notwithstanding any other provision of this Master Agreement, a Party
who is owed any undisputed amount by the other Party may, at its option, set off
that amount as a credit against any undisputed amounts it otherwise owes to the
other Party.
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(b) If Nuevo reasonably disputes in good faith any portion of an invoice,
Nuevo shall nevertheless pay the full dollar amount of such invoice when due.
If the invoice amounts disputed by Nuevo aggregate more than $1,000,000, then
the disputed amounts will be deposited by the Parties into an escrow account
with a third party escrow agent that shall be a United States National Bank
selected by the Party making the escrow deposit, pending resolution of the
dispute by mutual agreement or pursuant to Article 17 of this Master Agreement.
(c) If Torch reasonably disputes in good faith any request for issuance of
a credit or other claim by Nuevo for reimbursement of any amount, Torch shall
pay or credit the dollar amount due that is not so disputed and may, at its
option, withhold such disputed portion pending resolution of the dispute by
mutual agreement or pursuant to Article 17 of this Master Agreement. If Torch
withholds any payment or credit pursuant to this Section 7.5(c), Torch shall
notify Nuevo of the basis for such withholding in accordance with Section 18.9.
Upon resolution of the dispute, Torch shall pay or credit to Nuevo such portion,
if any, of such disputed amount determined to be owing to Nuevo. If the
disputed amounts withheld by Torch aggregate more than $1,000,000, then the
disputed amounts will be deposited by Torch into an escrow account with a third
party escrow agent that shall be a United States National Bank selected by the
Party making the escrow deposit, pending resolution of the dispute.
ARTICLE 8
INTELLECTUAL PROPERTY RIGHTS AND OBLIGATIONS
SECTION 8.1 OWNERSHIP OF WORK PRODUCT
As used in this Master Agreement, "Work Product" shall mean (i) newly-
developed work product agreed by a Torch Party in advance of commencement of
work by the Torch Party to be treated as "Work Product;" and/or (ii) newly-
developed work product that is a modification of Nuevo field assets, including
without limitation software that is integrated into a field asset. All Work
Product shall be jointly owned by Nuevo and the Torch Party such that either
Nuevo or the Torch Party may use or transfer Work Product as it sees fit without
consent of or payment to the other Party (Nuevo or the Torch Party, as the case
may be); provided, however, that such other Party's Confidential Information may
not, without its consent, be used or transferred as part of the Work Product.
Except as otherwise provided in this Section 8.1, each Torch Party shall be the
exclusive owner of any custom software or other intellectual property prepared
by the Torch Party (or its subcontractors).
SECTION 8.2 NON-INFRINGEMENT
Each Party agrees that it 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 United States patent, or
any copyright, trademark, trade secret or other intellectual property rights of
any third party.
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SECTION 8.3 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 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.
ARTICLE 9
CONFIDENTIALITY AND COMPETITION
SECTION 9.1 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 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 persons;
(ii) reproduce the Confidential Information received from the
Disclosing Party as required to perform its obligations or exercise its rights
under this Master Agreement or any Service Agreement;
(iii) disclose Confidential Information as required by law, provided
the Receiving Party, to the extent practicable, 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 the contents of this Master Agreement, the Service
Agreements and the Change Orders to advisors, financing sources and potential
acquirers or merger partners as reasonably necessary to conduct its business,
provided that such parties agree to be bound by confidentiality provisions
substantially similar to those forth in this Section 9.1.
(b) Except as otherwise specifically provided in this Master Agreement or
any Service Agreement, the Receiving Party shall not either during or after the
Term:
(i) disclose, in whole or in part, any Confidential Information
received directly or indirectly from the Disclosing Party; or
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(ii) sell, rent, lease, transfer, encumber, pledge, reproduce,
publish, transmit, translate, modify, reverse engineer, decompile, 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 directors, officers, employees and Affiliates and,
where applicable, their respective directors, officers and employees, of the
confidential nature of the Confidential Information and the related 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 promptly 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;
(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 an Affiliate of the Receiving Party shall be
deemed to be a disclosure by the Receiving Party.
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SECTION 9.2 RIGHTS AND REMEDIES OF THE DISCLOSING PARTY
(a) 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 9.2 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 Sections 9.1 and 9.2. Nuevo
shall, at Torch's expense, provide access at reasonable times and after
reasonable notice to all records and supporting documentation relating to
Nuevo's compliance with Nuevo's obligation under this Master Agreement to
refrain from: (i) reverse engineering, decompiling, or disassembling Torch
intellectual property; and/or (ii) competing with Torch as a service provider.
(c) In the event of an unauthorized disclosure of Confidential Information
by the Receiving Party, the Disclosing Party shall have the right to: (i) seek
appropriate injunctive relief to prevent any further disclosure where there
exists reasonable grounds to believe that the unauthorized disclosure may
continue; and/or (ii) pursue the dispute resolution procedure pursuant to
Article 17 to recover damages related to the disclosure. Breach of
confidentiality provisions of this Article 9 shall not give rise to a right to
terminate this Agreement except as provided in Section 16.1(f) and in the event
of any termination by a Torch Party under Section 16.1(f) the Torch Parties
shall not be required to provide the Termination/Expiration Assistance specified
in Section 16.5.
SECTION 9.3 NONDISCLOSURE AGREEMENTS
Each Party shall, at another Party's request made from time to time during
the Term, cause its employees who: (i) have access to such other Party's
Confidential Information and (ii) are designated by such other Party, to sign
nondisclosure agreements with terms consistent with this Article 9 reasonably
proposed by such other Party.
SECTION 9.4 OWNERSHIP OF BUSINESS RECORDS AND DATA
Each Party's Business Records and Data shall remain its property. A
Party's Business Records and Data shall not without its consent be: (i) used by
another Party other than in
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connection with satisfying obligations under this Master Agreement, Service
Agreements or Change Orders, (ii) disclosed, sold, assigned, leased or otherwise
provided to third parties by another Party, or (iii) commercially exploited by
or on behalf of another Party.
SECTION 9.5 RETURN OF BUSINESS RECORDS AND DATA
A Party shall upon: (i) request by another Party at any time, at such other
Party's expense, or (ii) the termination of a Service Agreement and the
cessation of all Services and Termination/Expiration Assistance related to the
Service Agreement, promptly return to the other Party, at the other Party's
expense if non-terminated Service Agreement(s) involve a Torch Party's need
therefor, in the format and on the media in use as of the date of request (or if
such media is non-removable then on reasonable alternative media), all (or at
the requesting Party's expense, any reasonably requested portion) of such other
Party's Business Records and Data. Archival tapes containing any Data of Party
shall be used by another Party solely for back-up purposes except as otherwise
agreed.
SECTION 9.6 SECURITY
(a) Each Party will establish and comply with commercially reasonable
security procedures during the Term of this Master Agreement and any Service
Agreement for the security of each other Party's Business Records, Confidential
Information and Data. Each Party may periodically inspect other Parties'
facilities, at reasonable frequencies and reasonable times, to ensure compliance
with this Section 9.6.
(b) Since a Party's personnel may have access to another Party's financial
information and other information that, if utilized or disclosed could lead to
violations of the applicable securities laws, each Party covenants that it (i)
will not trade in securities of another Party in violation of applicable
securities laws and (ii) will implement and will maintain a policy that its
employees will not trade in securities of another Party in violation of any
applicable securities laws.
SECTION 9.7 DESTROYED OR LOST BUSINESS RECORDS OR DATA
Nuevo's Business Records in possession of a Torch Party shall be retained
in accordance with a records retention policy agreed by the Parties. No Party
will otherwise delete or destroy another Party's Business Records or Data
without prior written authorization. In the event any Party's Business Records
or Data is lost or destroyed due to any act or omission of another Party in
breach of the security procedures described in this Article 9 and/or any Service
Agreement, such other Party shall use commercially reasonable efforts (including
necessary third party assistance) to regenerate or replace such Business Records
or Data and the Parties agree to cooperate to provide any available information,
files or raw data needed for the regeneration of the Business Records or Data.
SECTION 9.8 NON-COMPETITION
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Nuevo agrees that it shall not compete with Novistar for the provision of
services, in Novistar's lines of business (as operated on the Effective Date),
to third parties, during the term of any Service Agreement to which Novistar is
a party, and for three years after such term.
ARTICLE 10
MANAGEMENT AND SUBCONTRACTING
SECTION 10.1 CONTRACT EXECUTIVES AND PERSONNEL
SECTION 10.1.1 CONTRACT EXECUTIVES
Each of the Service Agreements shall identify a Contract Executive for each
Party thereto. A Party may designate a Primary Contact and a Secondary Contact
to act as the Project Executive. Where a Primary Contact and a Secondary
Contact have been designated, the other Party shall be entitled to rely upon
approvals, disapprovals and/or instructions provided by the Primary or Secondary
Contact; provided, however, that in the event of a conflict between the
approvals, disapprovals and/or instructions provided by the Primary and
Secondary Contacts, the approvals, disapprovals and/or instructions of the
Primary Contact shall supersede those given by the Secondary Contact. The Nuevo
Contract Executive shall be deemed to have the authority to act on behalf of
Nuevo with respect to all matters relating to the services included in the
applicable Service Agreement, and the Contract Executive for any Torch Party
shall be deemed to have the authority to act on behalf of Torch with respect to
all matters relating to the services included in the applicable Service
Agreement.
SECTION 10.1.2 MINIMUM PROFICIENCY LEVELS
Torch's personnel and the personnel of subcontractors shall have knowledge,
experience, training, and expertise at least equal to good commercial standards
applicable to such personnel for persons of their responsibilities to enable
them to properly perform the duties and responsibilities assigned to them in
connection with the Service Agreements. In addition, the Services shall conform
to industry standards applicable to such Services. All personnel for a Party
shall abide by the workplace rules and regulations of another Party while at
another Party's facility.
SECTION 10.1.3 SPECIALIZED PERSONNEL
Torch agrees that it will, upon Nuevo's request and at Nuevo's expense,
ensure that Torch's on-site personnel and personnel of its subcontractors are
trained, qualified, and available to perform the Services required in work areas
requiring specific health, security, or safety precautions.
SECTION 10.1.4 TORCH SERVICES TO THIRD PARTIES
Nuevo recognizes that Torch personnel providing Services to Nuevo under
this Master Agreement may perform similar services from time to time for other
persons, including
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competitors of Nuevo. This Master Agreement shall not prevent Torch from using
such personnel (or any Torch equipment) for the purpose of performing such
similar services for such other persons provided that: Torch complies with its
obligations concerning Nuevo's Confidential Information.
SECTION 10.2 MANAGEMENT BOARD
The Parties shall establish and maintain a Management Board, which shall be
composed of at least one senior executive of each Party. The representatives
and their positions with each Party shall be designated in a writing signed by
such Party's president. The general responsibilities of the Management Board
shall be: (i) to monitor the general progress of the performance of this Master
Agreement and the Service Agreements; (ii) to analyze and attempt to resolve
Problems referred by the Contract Executives; (iii) subject to the last sentence
of this Section 10.2, to agree to and implement Change Orders (including
material changes in the Services); and (iv) resolve disputed invoice amounts
where possible. The Management Board shall meet no less than quarterly and at
these meetings shall discuss reports prepared by the Contract Executives with
respect to the status of the performance of the Service Agreements and
significant events that have occurred since the previous meeting.
SECTION 10.3 SUBCONTRACTING
Torch shall be solely responsible for paying any subcontractors it uses to
provide Services under this Master Agreement or any Service Agreement or any
Change Order. Subcontracting shall not relieve Torch Parties of obligations
under this Master Agreement or any Service Agreement or any Change Order. Each
Torch Party agrees that it will notify Nuevo whenever a material ongoing
function under a Service Agreement is being outsourced by the Torch Party to a
third party. At no time during the term of a Service Agreement so long as no
notice of termination has been given, however, shall a Torch Party thereto
retain independent contractors or subcontractors for provision of the Services
in excess of thirty percent (30%) of the number of personnel involved in
providing the Services under the Service Agreement, without the prior written
approval of Nuevo. Each Torch Party agrees that upon a request made by Nuevo
based upon a reasonable belief in good faith that the Torch Party is not in
compliance with this Section 10.3, but not more often than once in a calendar
year, the Torch Party shall, at the Torch Party's expense, retain an independent
third party selected by mutual agreement of Nuevo and the Torch Party to audit
that Torch Party's compliance with this Section 10.3, provided that the sole
deliverable to Nuevo from such third party with respect to the audit shall be a
"yes" or "no" answer to the question of whether that Torch Party is in
compliance with this Section 10.3.
SECTION 10.4 HIRING OF EMPLOYEES
Nuevo shall not, during the term of any Service Agreement and for a period
of twelve (12) months thereafter, solicit or hire any person who is an employee
of a Torch Party, except that upon termination of a Service Agreement Nuevo may
extend offers to "Dedicated Employees" (as defined) who are not "Restricted
Employees" (as defined). A "Dedicated Employee" is any
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employee of a Torch Party to the terminating Service Agreement who has worked on
Nuevo matters for more than two-thirds of that person's "Non-overhead" (as
defined) reported time in the Torch Parties' timekeeping system(s) during the
previous 12 months (or during the period since the Effective Date, if such
period is less than 12 months). "Non-overhead" time includes time worked for
Torch clients, for Torch Parties, and/or Torch Parties' business units. A
"Restricted Employee" is an employee, other than an hourly field employee, that
a Torch Party designates as such not to exceed twenty percent of its "Dedicated
Employees" but not to be less than two (2) employees for each Service Agreement.
Upon Nuevo's request following notice of termination under Article 16, a Torch
Party shall provide a list of its Dedicated Employees and its Restricted
Employees, which list shall be binding upon the Torch Party until the Torch
Party notifies Nuevo of a change thereto (but no notice shall affect the status
of an employee as to whom Nuevo has previously delivered to the Torch Party a
written notice pursuant to the next sentence). In the event that Nuevo provides
written notice to Torch specifying by name an employee that Nuevo would like to
hire under the provisions of this Section 10.4, the applicable Torch Party shall
respond promptly in writing to Nuevo indicating (i) whether the employee is a
Dedicated Employee and (ii) whether the employee is a Restricted Employee, and
(iii) if the employee is not a Dedicated Employee or if the employee is a
Restricted Employee, providing to Nuevo, upon request, records reasonably
substantiating the employee's status as such.
A Torch Party shall not, during the term of any Service Agreement and for a
period of twelve (12) months thereafter, solicit or hire any person who is a
Restricted Employee of Nuevo without obtaining the advance written consent of
Nuevo, or if consent is withheld, payment to Nuevo of a hiring fee equal to two
(2) times the annual salary of such Restricted Employee while such Restricted
Employee was employed by Nuevo. A "Restricted Employee" of Nuevo is any
employee of Nuevo other than a clerical employee. In the event that a Torch
Party provides written notice to Nuevo specifying that the Torch Party would
like to hire a specific employee, Nuevo shall respond in writing to Torch within
fifteen (15) days by either: (i) indicating to the Torch Party that the employee
in question is not a Restricted Employee; or (ii) indicating to the Torch Party
that the employee is a Restricted Employee and providing to the Torch Party
records reasonably substantiating the employee's Restricted Employee status.
SECTION 10.5 OFFICE VISITS
When the personnel of a Party work at the site of another Party such other
Party will reasonably cooperate with the visiting Party in providing such
visiting Party with access to working space and facilities. Each Party, whether
a visiting or visited Party, agrees to comply with any applicable laws or
regulations as well as the visited Party's policies of which the visiting Party
has been notified.
ARTICLE 11
AUDITS
SECTION 11.1 AUDIT RIGHTS
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The applicable Torch Party shall maintain records and supporting
documentation of all financial and non-financial transactions under this Master
Agreement and all Service Agreements and all Change Orders, sufficient to
reasonably permit an audit thereof in accordance with this Section 11.1. Each
Torch Party shall, at Nuevo's expense in accordance with a Change Order, provide
access at reasonable times agreed by the Parties: (i) to all such records and
supporting documentation relating to the Services to Nuevo necessary for its
auditors or regulators to examine Torch's charges and performance of the
Services under this Master Agreement and any Service Agreement and to perform
audits and inspections of Nuevo and its business and (ii) to Nuevo's external
auditors, who have signed confidentiality agreements reasonably satisfactory to
Torch, to the systems that process, store, support and transmit Nuevo's Data in
order that its auditors can verify the integrity of Nuevo's Business Records and
Data. Torch Parties shall provide reasonable cooperation to such auditors,
inspectors, regulators and representatives, including the installation and
operation of audit software. The applicable Torch Parties shall, at their own
expense, provide Nuevo with an annual SAS 70 (type II) audit regarding the Torch
Party; provided, however, Nuevo shall be given the opportunity to participate in
determining the scope of the audit.
SECTION 11.2 PAYMENTS
If an audit reveals that a Torch Party has overcharged Nuevo for Services
during any calendar year of the Term within the then-preceding 24 months the
Torch Party promptly shall reimburse the amount of any overcharges.
SECTION 11.3 SURVIVAL
Sections 11.1 through 11.3 shall (i) apply with respect to a Torch Party
while a Service Agreement to which the Torch Party is a party and (ii) continue
to the third (3d) anniversary thereafter, after which time Sections 11.1 through
11.3 shall no longer apply to the Torch Party.
SECTION 11.4 TEAI FINANCIAL STATEMENTS
While a Service Agreement to which a Torch Party is a party remains in
effect, TEAI shall make available to Nuevo at no additional charge TEAI's annual
audited financial statements as well as its quarterly unaudited financial
statements.
ARTICLE 12
INSURANCE; RISK OF LOSS
SECTION 12.1 REQUIRED INSURANCE COVERAGES
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Throughout the Term each Party (except with respect to a coverage
identified as Torch only) shall maintain in force, at minimum, the insurance
coverages described below. Additional insurance coverage(s) may be required
under a Service Agreement.
(a) Commercial General Liability Insurance with a minimum combined single
limit of $3 million per occurrence and minimum general aggregate limit of $5
million;
(b) Umbrella Liability Insurance with a minimum limit of $50 million per
occurrence and minimum aggregate amount of $50 million;
(c) Worker's Compensation Insurance or any alternative plan or coverage as
permitted or required by applicable law and employers liability insurance with a
minimum occurrence limit of $500,000;
(d) Except with respect to Nuevo, Comprehensive Errors and Omissions
Insurance, for Torch only, covering the liability for financial loss due to
error, omission or negligence, by Torch, with a minimum amount of $5 million;
(e) Automotive Liability Insurance covering use of all owned, non-owned
and hired automobiles with a minimum combined single limit of $3 million per
occurrence for bodily injury and property damage liability;
(f) "All Risk" Property Insurance, for Torch only, in an amount equal to
the replacement value of the equipment used to provide the Services;
(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 a Party, acting alone or in collusion with others, in a minimum amount of $5
million per loss.
SECTION 12.2 GENERAL INSURANCE REQUIREMENTS
All insurance policies a Party is required to carry pursuant to this
Article shall: (i) be primary as to its negligence and non-contributing with
respect to any other insurance or self-insurance another Party may maintain;
(ii) name the other Parties, 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 the other Parties 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 each other Party and its Affiliates. Each Party shall
cause its insurers to issue to the other Parties on or before the Effective Date
and each policy renewal date
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certificates of insurance evidencing that the coverages and policy endorsements
required by this Article are in effect.
ARTICLE 13
CERTAIN REPRESENTATIONS AND WARRANTIES
SECTION 13.1 MUTUAL REPRESENTATIONS AND WARRANTIES
Each Party represents and warrants that, as of the Effective Date and
continuing throughout the Term:
(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 in 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 to which it
is a party.
(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 each Service Agreement
to which it is a party.
(c) It has all necessary corporate power and authority to enter into this
Master Agreement and each Service Agreement to which it is a party and to
perform its obligations thereunder, and the execution and delivery of this
Master Agreement and each Service Agreement to which it is a party and the
consummation of this transactions contemplated thereby have been duly authorized
by all necessary corporate actions on its part.
(d) This Master Agreement and each Service Agreement to which it is a
party constitutes a legal, valid and binding obligation of such Party,
enforceable against it in accordance with its terms.
(e) It has not violated and it will not violate any applicable laws or
regulation, or another Party's reasonable policies of which it has been
notified, regarding the offering of unlawful inducement in connection with this
Master Agreement or any Service Agreement.
(f) It has and shall have the right and authority to use any software or
other intellectual property provided by it in connection with the Services.
(g) 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 fully executed
Service Agreement.
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SECTION 13.2 TORCH REPRESENTATIONS AND WARRANTIES
As of the Effective Date and continuing throughout the Term, each Torch
Party represents and warrants to Nuevo that all assets and information systems
owned or leased by Torch and used to provide the Services from and after
December 31, 1999 will be and shall remain Year 2000 Compliant; provided,
however, that Torch shall not be required to bear the cost of replacing or
repairing any of Nuevo's assets to correct any Year 2000 problems with respect
to such assets. In the event that any Torch Party fails to achieve Year 2000
compliance for any assets or information systems owned or leased by the Torch
Party and used to provide Services to Nuevo, and such failure is materially
harmful to Nuevo and remains uncorrected for a period of sixty (60) days after
written notice is provided by Nuevo, then Nuevo may terminate any and all
Service Agreements with such Torch Party that are materially affected by such
failure. Upon any such termination hereunder, Nuevo shall pay to the Torch
Entity a termination fee equal to one-half of the termination for convenience
fee that is applicable to such Service Agreement.
ARTICLE 14
INDEMNIFICATION
SECTION 14.1 GENERAL INDEMNIFICATION
Nuevo shall, except to the extent a Torch Party acts with gross negligence
or willful misconduct, indemnify, defend and hold harmless the Torch Party, the
Torch Party's Affiliates, and their respective officers, directors, employees,
agents, successors and assigns, from and against all Losses to the extent
arising from or in connection with the Torch Party's performance (or non-
performance) of obligations under this Master Agreement, the Service Agreements
and all Change Orders.
SECTION 14.2 INTELLECTUAL PROPERTY INDEMNIFICATION
Nuevo and Each Torch Party agrees to defend the other Parties against any
action to the extent that such action is based on a claim that any software or
other intellectual property provided by the indemnitor or the Confidential
Information provided by the indemnitor: (a) infringes a copyright perfected
under applicable law, (b) infringes a patent granted 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, other intellectual
property or Confidential Information becomes the subject of a claim under this
Section 14.2, 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,
other intellectual property or Confidential Information to make it noninfringing
or cure any claimed misuse of another's trade secret, provided such modification
does not adversely affect functionality used by the indemnitee, or (b) procure
for the indemnitee the right to continue using the software, other intellectual
property or Confidential Information
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pursuant to the applicable Service Agreement, or (c) replace the software or
other intellectual property or Confidential Information with a substantial
equivalent that is noninfringing or that is free of claimed misuse of a trade
secret. Any costs associated with implementing any of the above alternatives
shall be borne by the indemnitor.
SECTION 14.3 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 Article 14 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") of the
extent to which the indemnitor elects to assume control of the defense and
settlement of such claim or action and to such extent, indemnitor shall be
deemed to have waived any right it may have to later assert that it is not
required to indemnify the indemnitee with respect to the claim or action. If no
such notice is given within such 30-day period, the indemnitor shall be deemed
to have waived any right to assume such control. For example, in the event that
the indemnitor notifies the indemnitee that only certain of multiple claims are
covered by this Section 14.3(a) then the indemnitor shall be deemed to have so
waived only with respect to such certain claims.
(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 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.
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The indemnitor shall promptly reimburse the indemnitee for all such costs and
expenses upon written request therefor.
SECTION 14.4 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.
SECTION 14.5 EXPRESS NEGLIGENCE
THE INDEMNIFICATION PROVISIONS PROVIDED FOR IN THIS AGREEMENT SHALL BE
APPLICABLE WHETHER OR NOT THE LOSSES, COSTS, EXPENSES AND DAMAGES IN QUESTION
AROSE SOLELY OR IN PART FROM THE NEGLIGENCE OF ANY INDEMNIFIED PARTY, OTHER THAN
THOSE LOSSES, COSTS, EXPENSES AND DAMAGES ATTRIBUTABLE TO THE GROSS NEGLIGENCE
AND/OR WILLFUL MISCONDUCT OF THE TORCH PARTIES. NUEVO AND THE TORCH PARTIES
ACKNOWLEDGE THAT THIS STATEMENT COMPLIES WITH THE EXPRESS NEGLIGENCE RULE AND IS
CONSPICUOUS.
ARTICLE 15
LIABILITY AND FORCE MAJEURE
SECTION 15.1 LIABILITY
Subject to the limitations set forth in this Article, a Party that breaches
any obligation under this Master Agreement or a Service Agreement or Change
Order (except for any obligation to which a Service Level Credit or other
liquidated damages provision applies, under this Master Agreement or a Service
Agreement or a Change Order) shall be liable to each other Party except that
with respect to TOC or Novistar in performance of operator responsibilities:
(a) if under any joint operating agreement, TOC or Novistar, as the case may be,
shall only be liable for damages attributable to gross negligence or willful
misconduct in the performance of such responsibilities; and (b) if not under any
joint operating agreement, Nuevo shall be deemed to have entered into a joint
operating agreement having the provisions set forth on the attached
Exhibit 15.1 (1).
SECTION 15.2 LIMIT ON TYPES AND AMOUNTS OF DAMAGES RECOVERABLE
(a) EXCEPT AS SET FORTH IN CLAUSE (B) BELOW, NO PARTY SHALL BE LIABLE FOR
CONSEQUENTIAL DAMAGES (INCLUDING WITHOUT LIMITATION DAMAGES FOR LOST REVENUE
AND/OR PROFITS) OR ANY 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.
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(b) The exclusion set forth in clause (a) shall not apply to (i) Losses
otherwise recoverable by an indemnitee pursuant to Article 14 (Indemnification),
(ii) breach by a Party of its obligations for intentional acts with respect to
Confidential Information, or (iii) damages caused by a Party's willful
misconduct.
(c) The total liability under this Master Agreement, Service Agreements
and Change Orders, of each Torch Party to Nuevo shall be limited to three
months' fees under the Service Agreements to which it is a party; provided,
however, that the total aggregate liability of the Torch Parties for gross
negligence or willful misconduct shall be limited to 75 percent of their
aggregate book net worth or $15.0 million, whichever is the greater.
XXXXXXX 00.0 XXXXX XXXXXXX
(a) A Party shall not be liable for any failure or delay in the
performance of its obligations, other than payment obligations, under this
Master Agreement or any Service Agreement or Change Order, if any, to the extent
such failure or delay 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 of third parties; 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.
Events meeting the criteria set forth above are referred to collectively as
"Force Majeure Events." The Parties expressly acknowledge that Majeure Events
do not include third party non-performance except to the extent caused by an
event that would be a Force Majeure Event with respect to a Party; provided,
however, that Force Majeure Events shall include disruptions caused by third
party failures of public utilities, building facilities, communications
facilities or public safety functions.
(b) With respect to a Force Majeure Event, a non-performing Party may
elect by notice to the party owed performance to 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 is commercially
reasonable without delay.
(c) If a Force Majeure Event for which an election under Section 15.3(b)
has been made by a Torch party causes a material failure in performance of
Services for more than ten (10) consecutive business days then the charges to
Nuevo for such affected services shall be suspended and Nuevo may acquire such
services elsewhere at its expense until such failure has been cured. If a
Force Majeure Event for which an election under 15.3(b) has been made excuses a
material failure in performance for more than one hundred and twenty (120)
consecutive days, and if Nuevo has obtained alternative arrangements for the
Services (if such failure is a failure to perform Services), then a performing
party shall be entitled to terminate the applicable Service Agreement, without
any termination fee and effective upon delivery of written notice to the non-
performing party, but only if the Torch Party has not restored the
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affected Services (if such failure is a failure to perform Services) prior to
such notice and such Services remain restored for a period of thirty (30)
consecutive days.
SECTION 15.4 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.
ARTICLE 16
TERMINATION
SECTION 16.1 TERMINATION FOR CAUSE
(a) Each Party to a Service Agreement shall have the option, but not the
obligation, to terminate any Service Agreement for a material breach of such
Service Agreement, including without limitation a material breach of the
Performance Standards applicable thereto, by the other Party that is not cured
by such Party within thirty (30) days of the date on which the non-breaching
Party provides written notice of such breach if the breaching Party fails to
cure such failure within thirty (30) days after delivery to it of written notice
of the non-breaching Party's exercise of rights under this Section 16.1(a);
(b) Nuevo shall have the option within 30 days of a Torch Party's failure
to meet a Service Level that is defined as a Service Level Termination Event in
the Service Agreement, but not the obligation, in lieu of any applicable Service
Level Credits, to terminate any Service Agreement for such failure;
(c) Each Torch Party shall provide notice to Nuevo at least thirty (30)
days in advance of any sale (other than through an initial public offering) of
such Torch Party that would cause a change in control of such Torch Party. Such
notice shall identify the acquirer, and, if Nuevo agrees to non-disclosure
obligations reasonably satisfactory to the acquirer, reasonable descriptions of
the acquirer's line of business and financial condition, and recent litigation
to which it has been a party. Nuevo shall have the option, but not the
obligation, to terminate any Service Agreement to which such Torch Party is a
party if such sale is not an initial public offering and Nuevo demonstrates
before the sale that the sale would result in a reasonable expectation of
substantial harm to its business and either: (1) the acquirer is a direct
competitor of (or the acquisition would cause a conflict of interest with) Nuevo
based upon Nuevo's business as constituted in 1998; or (2) the acquirer has a
substantial history of pursuing meritless litigation or breaching
confidentiality agreements or has a financial condition that would reasonably be
expected to jeopardize the Torch Party's ability to satisfy
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obligations under the Service Agreement; provided, however that in no event may
Nuevo unreasonably withhold consent to a change of control of the Torch Party
(whether by acquisition or otherwise); or
(d) A Party shall exercise its termination option under this Section 16.1
by delivering to the affected Party(ies) written notice of such termination
identifying the scope of the termination and the termination date. If a
purported termination for cause is determined not to have been a proper
termination for cause, such termination shall be treated as a material breach of
this Master Agreement.
(e) Each Torch Party shall have the option, but not the obligation, to
terminate for cause any or all Service Agreements and/or this Master Agreement,
if either (i) Nuevo fails to pay when due amounts Nuevo owes to a Torch Party,
under Service Agreement(s) and/or Change Order(s) and/or this Master Agreement,
if Nuevo fails to cure such failure within thirty (30) days after delivery to
Nuevo of written notice of exercise of rights under this Section 16.1(d); or
(ii) Nuevo fails to comply with its obligations under Section 7.5(b) with
respect to invoice(s) issued in good faith by Torch Party(ies) if Nuevo fails to
cure such failure upon ten (10) days notice.
(f) Each Torch Party shall have the option, but not the obligation, to
terminate for cause any or all Service Agreements and/or this Master Agreement
if: (i) Nuevo's acts or (ii) acts any of its officers through willful
misconduct; or (iii) acts of any of its employees as a result of Nuevo's failure
to take reasonable safeguards; results in a breach of Nuevo's obligations under
Article 9 to any Torch Party with respect to such Party's patents, copyrights,
trademarks, trade secrets or other intellectual property rights and Nuevo fails
to cure such failure within thirty (30) days after delivery to Nuevo of written
notice of exercise of rights under this Section 16.1(f).
SECTION 16.2 TERMINATION FOR CONVENIENCE
Nuevo shall have the option, but not the obligation, to terminate for
convenience this Master Agreement (and all Service Agreements) or, from time to
time, one or more Service Agreements. Nuevo shall exercise its termination
option by delivering to the affected Torch Parties 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 delivery to the Torch
Parties of such notice). In connection with any such termination, each Torch
Party to a Service Agreement being terminated shall be paid a termination fee
equal to the greater of (i) the previous calendar year's fees and incentive it
earned under such Service Agreement (but excluding time and materials fees in
excess of pool amounts) or (ii) the current calendar year's fees it earned under
such Service Agreement annualized to 12 months equivalent together with
estimated incentive fees under such Service Agreement ("current" and "previous"
to be determined with reference to such delivery date). In connection with any
such termination, Nuevo shall be responsible for reasonable severance costs in
accordance with the Torch Party's standard severance policy in effect for the
affected employees of each Torch Party to the terminated agreement except for
each employee who: (i) is retained by Torch; or (ii) Nuevo offers a comparable
position at Nuevo
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that the employee does not accept; or (iii) Nuevo employs for at least 12 months
after such termination.
SECTION 16.3 TERMINATION FOR INSOLVENCY
A Party shall have the option, but not the obligation, to terminate this
Master Agreement in its entirety (including all Service Agreements) without
payment of any applicable termination fees if a Party (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 16.4 EFFECTS OF TERMINATION
Termination or expiration 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 expiration, 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.
Nuevo agrees that in connection with any termination of any Service
Agreement it will reimburse the applicable Torch Party for reasonable severance
costs in accordance with that Torch Party's standard severance policy in effect
for the affected employees (not to exceed three years pay) for each employee of
the Torch Party who is discharged in connection with the termination; provided
however that if Nuevo offers comparable employment for at least one year to such
an employee then Nuevo shall be relieved of such reimbursement obligation.
SECTION 16.5 TERMINATION/EXPIRATION ASSISTANCE
Concurrently with the expiration or termination of this Master Agreement or
any Service Agreement, except on the grounds of a failure of Nuevo to satisfy a
payment obligation, a Torch Party shall, at the request of Nuevo, provide to
Nuevo at Nuevo's expense on a time and materials basis in accordance with the
Torch Party's then-current published pricing, the Termination/Expiration
Assistance provided in this Section 16.5, subject, however, to all other
provisions of this Agreement. Termination/Expiration Assistance to which Nuevo
is entitled under this Agreement may not be withheld by Torch provided that
Nuevo has satisfied and continues to satisfy all of its payment obligations to
each Torch Party and provided that Nuevo
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has paid to each Torch Party, from whom Termination/Expiration assistance is
sought, a "Performance Deposit":
(a) Torch shall deliver to Nuevo all Nuevo Business Records, Nuevo
Confidential Information and Nuevo Confidential Materials, in the
Torch Party's possession, and shall, at Nuevo's request, destroy all
electronic copies thereof not turned over to Nuevo (except for one
archival copy), provided that the Torch Party shall have no obligation
to provide any of its intellectual property, Business Records,
Confidential Information, or any other of its property; and Torch
shall deliver to Nuevo a copy of each Work Product not previously
delivered to Nuevo and in the Torch Party's possession;
(b) The Torch Party shall reasonably cooperate with Nuevo and all of
Nuevo's other service providers and shall use commercially reasonable
efforts to facilitate a smooth transition at the time of
disengagement, with no interruption of Services, no adverse impact on
the provision of Services, no interruption of any services provided by
third parties, and no adverse impact on the provision of services
provided by third parties;
(c) The Torch Party shall take such additional actions and perform such
additional tasks as may be reasonably necessary to facilitate a timely
disengagement in compliance with the provision of this Section 16.5,
including full performance, on or before the date of expiration or
termination of the Term, of all of the Torch Party's obligations under
this Section 16.5.
ARTICLE 17
DISPUTE RESOLUTION
SECTION 17.1 GENERAL
Any dispute or controversy between the Parties with respect to the
interpretation or application of any provision of this Master Agreement, any
Service Agreement, or any Change Order or the performance by a Torch Party or
Nuevo of their respective obligations hereunder or thereunder shall be resolved
as provided in this Article.
SECTION 17.2 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 Management Board, 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
Management Board shall negotiate in good faith in an effort to resolve the
dispute.
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(b) If the Management Board determines in good faith that resolution
through continued discussions by such Management Board does not appear likely,
the matter shall be referred to binding arbitration.
(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 Management Board, 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.
SECTION 17.3 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 of either Party by binding
arbitration in Houston, Texas 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 Nuevo within thirty (30) days after demand for arbitration
is made, one (1) of whom shall be selected by Torch 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. The Party prevailing in arbitration shall
be entitled to recover its reasonable and necessary attorneys' fees and expenses
incurred in the arbitration proceeding.
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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 17.4 CONTINUED PERFORMANCE
Subject to Section 7.5, both Parties shall continue performing their
respective obligations and responsibilities under this Master Agreement and any
Service Agreements and any Change Orders while any dispute, other than a dispute
or dispute(s) with respect to breach of confidentiality obligations.
SECTION 17.5 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 Texas, as such laws are applied to
contracts between Texas residents and without regard to the choice of law rules
of the State of Texas.
SECTION 17.6 JURISDICTION AND VENUE
The Parties hereby submit and consent to the exclusive jurisdiction of any
state or federal court located within Xxxxxx County of the State of Texas 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 17.6 shall affect
the obligation of the Parties with respect to the arbitration of disputes
pursuant to Section 17.3.
SECTION 17.7 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 18
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MISCELLANEOUS
SECTION 18.1 INTERPRETATION
(a) In this Master Agreement and in any Service Agreements and any Change
Orders, 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, and any Service Agreements and
any Change Orders 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 Agreements and in any
Change Orders, 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, or other subdivision of this Master Agreement or
the applicable Service Agreement or the applicable Change Order, 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."
(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 18.2 BINDING NATURE AND ASSIGNMENT
Except as otherwise provided in this Master Agreement, neither Party may
assign any of its rights or obligations under this Master Agreement without the
other Parties' consent. Torch agrees that it shall provide Nuevo 30 days
advance notice of a change of control of a
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Torch Party. Subject to the foregoing, this Master Agreement and each Service
Agreement shall be binding on the Parties and their respective successors and
assigns.
SECTION 18.3 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 18.4 AMENDMENT AND WAIVER
This Master Agreement may not be modified, amended, or in any way altered
except by written document duly executed by both of the Parties hereto in
accordance with Section 4.3. No waiver of any provision of this Master
Agreement, nor of any rights or obligations of any Party hereunder, will be
effective unless in writing and signed by the Party waiving compliance, and such
waiver will be effective only in the specific instance, and for the specific
purpose, stated in such writing. No waiver of breach of, or default under, any
provision of this Master Agreement will be deemed a waiver of any other
provision, or of any subsequent breach or default of the same provision, of this
Master Agreement.
SECTION 18.5 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 Master Agreement and to carry out its provisions.
SECTION 18.6 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 by the other
Party prior to release. No license or right, either directly or by implication,
is granted to Torch to use Nuevo's name or any of Nuevo's trade names,
trademarks, service marks, slogans, logos or designs for any advertising,
promotional or other purpose which is not material to Torch's performance under
this Master Agreement without the prior, written permission of Nuevo.
SECTION 18.7 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
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unenforceability without invalidating the remaining provisions or affecting the
validity or enforceability of such provision in any other jurisdiction.
SECTION 18.8 ENTIRE AGREEMENT
This Master Agreement and each of the Service Agreements thereto, including
the Schedules thereto, and each of the Change Orders, 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 18.9 NOTICES
Except as expressly otherwise stated herein, all notices, requests,
consents, approvals, or other communications provided for, or given under, this
Master Agreement, shall be in writing, and shall be deemed to have been duly
given to a Party if delivered personally, or transmitted by facsimile to such
Party at its telecopier number set forth below, or sent by first class mail or
overnight courier to such Party at its address set forth below, or at such other
telecopier number or address, as the case may be, as shall have been
communicated in writing by such Party to the other Party in accordance with this
Section 18.9. All notices will be deemed given when received in the case of
personal delivery or delivery by mail or overnight courier, or when sent in the
case of transmission by facsimile upon electronic confirmation of receipt.
Notices to Nuevo shall be addressed as follows:
Attention: Xxxxxx Xxxx
Nuevo Energy Company
0000 Xxxxx, Xxxxx 0000
Xxxxxxx, XX 00000-0000
Telephone No.: (000) 000-0000
With a copy to the attention of Nuevo's general counsel at:
Attention: General Counsel
Nuevo Energy Company
0000 Xxxxx, Xxxxx 0000
Xxxxxxx, XX 00000-0000
Telephone No.: (000) 000-0000
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Notices to Torch shall be addressed as follows:
Attention: Xxxxxxx X. Xxxxx, President
Torch Energy Advisors Incorporated
0000 Xxxxx Xx. Xxxxx 0000
Xxxxxxx, XX 00000-0000
Telephone No.: (000) 000-0000
with a copy to the attention of Torch's general counsel at:
Attention: General Counsel
Torch Energy Advisors Incorporated
0000 Xxxxx Xx. Xxxxx 0000
Xxxxxxx, XX 00000-0000
Telephone No.: (800) 324-867
SECTION 18.10 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 shall survive
expiration or termination of this Master Agreement or any Service Agreement.
SECTION 18.11 INDEPENDENT CONTRACTORS
This Master Agreement will not be construed to constitute either Party as a
representative, agent, employee, partner, or joint venturer of the other. Torch
will be an independent contractor for the performance under this Master
Agreement. Torch will not have the authority to enter into any agreement, nor
to assume any liability, on behalf of Nuevo, nor to bind or commit Nuevo in any
manner. Torch's employees who provide Services pursuant to this Master
Agreement or any Service Agreement hereunder or who are located on Nuevo's
premises shall remain employees of Torch, and Torch will have sole
responsibility for such employees including responsibility for payment of
compensation to such personnel. Torch shall be responsible for all aspects of
labor relations with such employees including their hiring, supervision,
evaluation, discipline, firing, wages, benefits, overtime and job and shift
assignments, and all other terms and conditions of their employment, and Nuevo
will have no responsibility therefor. Torch shall defend, indemnify, and hold
harmless the Nuevo Indemnitees from and against any and all claims, liabilities,
Losses, costs, damages, and expenses, including attorney's fees, based upon or
related to a claim that Torch's or its subcontractors' employees are employees
of Nuevo. Notwithstanding the foregoing, however, Torch shall owe a fiduciary
duty to Nuevo with regard to the preservation and protection of all Nuevo funds,
assets, Business Records, Confidential Information and Data that may be in
Torch's possession or control for purposes of facilitating the provision of
Services under this Master Agreement or any Service Agreement.
SECTION 18.12 THIRD PARTY BENEFICIARIES
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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.
SECTION 18.13 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.
SECTION 18.14 DUTY TO ACT REASONABLY
Whenever a provision of this Master Agreement or any Service Agreement
hereunder requires or contemplates any action, consent, or approval (but
excluding any provision that requires or contemplates agreement), the Parties
shall act reasonably and in good faith and (unless the Agreement expressly
allows exercise of a Party's sole, or sole and absolute discretion) may not
unreasonably withhold or delay such action, consent, or approval (but excluding
agreement).
IN WITNESS WHEREOF, the Parties have executed this Master Agreement as of
the day and year first above written.
NUEVO ENERGY COMPANY
By: /s/ Xxxxxx X. Xxxx
____________________________
Xxxxxx X. Xxxx
Xx. Vice President &
Chief Financial Officer
TORCH ENERGY ADVISORS INCORPORATED
By: /s/ Xxxxxxx X. Xxxxx
____________________________
Xxxxxxx X. Xxxxx
Managing Director &
Chief Financial Officer
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TORCH OPERATING COMPANY
By: /s/ Xxxxxxx X. Xxxxx
____________________________
Xxxxxxx X. Xxxxx
Vice President
TORCH ENERGY MARKETING, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
____________________________
Xxxxxxx X. Xxxxxxx
President
NOVISTAR, INC.
By: /s/ Xxxxxxx X. Xxxxx
____________________________
Xxxxxxx X. Xxxxx
President
MASTER SERVICES AGREEMENT -41-
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SCHEDULE 4.1
EXCLUDED SERVICES
MASTER SERVICES AGREEMENT
1. Corporate communications, public relations and investor relations
activities.
2. Acquisitions services, including deal generation, screening, analysis,
evaluation, due diligence, negotiation, closing and final accounting.
3. Divestiture services, including preparation of sales package and/or data
room, bid analysis and screening, sale negotiation, closing and final
accounting.
4. Corporate tax planning and compliance.
5. Land leasing activities, including lease checks, title checks, leasehold
acquisition, farm-ins, right-of-way and permit acquisition, securing title
opinions, acquisition of curative material and maintenance of project files
and land maps.
