EXHIBIT 10.22
INFORMATION TECHNOLOGY SERVICES AGREEMENT
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AMONG
▇▇▇▇▇ SYSTEMS CORPORATION,
CAMBRIDGE TECHNOLOGY PARTNERS, INC.
AND
RYDER TRS, INC.
CONFIDENTIAL
INFORMATION TECHNOLOGY SERVICES AGREEMENT
TABLE OF CONTENTS
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Page
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ARTICLE 1
GENERAL OBLIGATIONS
1.1 Executive Steering Committee..................................... 2
1.2 Program Managers................................................. 2
1.3 Cooperation...................................................... 2
1.4 Service Review Period............................................ 2
1.5 Conduct of Personnel............................................. 3
1.6 Access to Facilities............................................. 3
1.7 Subcontractors................................................... 4
ARTICLE 2
PROGRAM SERVICES
2.1 CPA Account Manager.............................................. 4
2.2 Program Office................................................... 5
2.3 Technology Steering Committee.................................... 6
2.4 Change Control Board............................................. 6
2.5 Change Control Process........................................... 7
2.6 Key Staff........................................................ 9
ARTICLE 3
CAMBRIDGE SERVICES
3.1 Application Development Services................................. 11
3.2 Task Order Process............................................... 12
3.3 Acceptance of Applications....................................... 12
ARTICLE 4
PSC SERVICES
4.1 Transition Services.............................................. 14
4.2 Operations Services.............................................. 14
4.3 [Intentionally Omitted].......................................... 17
4.4 Acceptance Testing and Application Support....................... 17
4.5 Service Levels................................................... 19
4.6 Additional Services.............................................. 20
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4.7 Access to Services from ▇▇▇▇▇ Systems Subsidiaries, Affiliates
and Joint Ventures............................................... 21
4.8 Transfer of Personnel............................................ 21
ARTICLE 5
CLIENT OBLIGATIONS
5.1 Service Exclusivity.............................................. 21
5.2 Client Facilities................................................ 23
5.3 Transition....................................................... 24
5.4 Third Party Software, Equipment and Third Party Services......... 24
5.5 Certain Obligations.............................................. 25
ARTICLE 6
CHARGES AND PAYMENT
6.1 Charges for PSC Services........................................ 25
6.2 Charges for Cambridge Services.................................. 25
6.3 Charges for Additional Services................................. 25
6.4 Risk/Reward Pricing............................................. 25
6.5 Reimbursable Expenses........................................... 26
6.6 Pass-Through Expenses........................................... 26
6.7 Taxes and Tax Planning.......................................... 27
6.8 Pricing Adjustments............................................. 28
6.9 Invoices and Payment............................................ 28
6.10 Audits by Client................................................ 30
6.11 Benchmarking.................................................... 30
6.12 Client Surveys.................................................. 31
6.13 Extraordinary Events............................................ 32
ARTICLE 7
PROPRIETARY RIGHTS
7.1 PSC Work Product................................................. 33
7.2 Cambridge Work Product........................................... 33
7.3 Third-Party Intellectual Property................................ 34
7.4 Pre-Existing Intellectual Property............................... 34
ARTICLE 8
CONFIDENTIALITY
8.1 Ownership of Client Data......................................... 35
8.2 Confidential Information......................................... 35
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8.3 Attorney-Client Privilege........................................ 37
8.4 Internal Audits.................................................. 37
ARTICLE 9
TERM AND TERMINATION
9.1 Initial Term..................................................... 37
9.2 Renewal Terms.................................................... 37
9.3 Termination for Cause............................................ 38
9.4 Termination for Convenience...................................... 40
9.5 Termination in Connection with a Critical Failure................ 41
9.6 Termination for Insolvency....................................... 42
9.7 Termination Assistance........................................... 43
9.8 Survival of Certain Provisions................................... 44
9.9 Termination Within 60 Days....................................... 44
9.10 Termination in Connection with a Change in Control............... 46
ARTICLE 10
WARRANTIES AND CERTAIN COVENANTS
10.1 By ▇▇▇▇▇ Systems................................................. 47
10.2 By Cambridge Technology.......................................... 47
10.3 By Each Party.................................................... 48
10.4 Third Party Warranties........................................... 48
10.5 Warranty Disclaimers............................................. 48
10.6 Certain Covenants................................................ 48
ARTICLE 11
INDEMNITIES
11.1 By ▇▇▇▇▇ Systems................................................. 51
11.2 By Cambridge Technology.......................................... 52
11.3 By Client........................................................ 52
11.4 Intellectual Property............................................ 53
11.5 Indemnification Procedures....................................... 56
11.6 Subrogation...................................................... 57
ARTICLE 12
LIMITATIONS ON LIABILITY AND DAMAGES
12.1 Limitation on Direct Damages..................................... 57
12.2 Limitation on Consequential Damages.............................. 59
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12.3 Mitigation...................................................... 59
12.4 Time to Bring Actions........................................... 59
12.5 Force Majeure................................................... 59
ARTICLE 13
INSURANCE AND RISK OF LOSS
13.1 Insurance....................................................... 59
13.2 Insurance Documentation......................................... 60
13.3 Risk of Loss.................................................... 60
ARTICLE 14
DISPUTE RESOLUTION
14.1 General......................................................... 61
14.2 Management Meetings............................................. 61
14.3 Arbitration..................................................... 62
14.4 Limited Exceptions for Litigation............................... 63
14.5 Continued Performance........................................... 63
ARTICLE 15
DEFINITIONS AND CONSTRUCTION
15.1 Certain Terms................................................... 63
15.2 Captions........................................................ 63
15.3 Priority of Documents........................................... 63
15.4 Severability.................................................... 64
ARTICLE 16
MISCELLANEOUS
16.1 No Hire Commitments............................................. 64
16.2 Publicity....................................................... 64
16.3 Notices......................................................... 64
16.4 Assignment...................................................... 65
16.5 Counterparts.................................................... 65
16.6 Relationship of Parties......................................... 65
16.7 Approvals and Similar Actions................................... 66
16.8 Modification; Waiver............................................ 66
16.9 No Third-Party Beneficiaries.................................... 66
16.10 Governing Law................................................... 66
16.11 Entire Agreement................................................ 66
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Attachments
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A. Request for Proposal
B. Responses to Request for Proposal
C. Technology Standards (To be developed)
D. Operating Procedures Manual (To be developed)
E. Disaster Recovery and Security Plan (To be developed)
F. Sample Customer Satisfaction Survey
G. Enterprise Scope Document
H. Cambridge Methodology
Schedules
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1.1 Members of the Executive Steering Committee
1.4 Principal Assumptions
Part A -- Principal Assumptions
Part B -- Client Review Materials
2.2 Third Party Vendors
2.3 Members of the Technology Steering Committee
2.6 Key Staff
Part A -- ▇▇▇▇▇ Systems
Part B -- Cambridge Technology
3.1 Cambridge Services
* Procedures for Transition Critical Applications
4.1 Transition Plan
4.2 PSC Services
Part A -- Operations Services
(a) Data Center Operations
(b) Network Operations
(c) Help Desk Services
Part B -- Other Third Party Vendors
4.4 Application Support Services
4.8 Transition Employees
5.1 Cambridge Applications and Fees for Program Services
Part A -- Charges for Transition Critical Applications
Part B -- Charges for Cambridge Program Services
5.3 Managed Contracts, Equipment, Software and Services
Part A -- Managed Contracts
Part B -- Managed Equipment and Managed Software
Part C -- RSI Services
6.1 Charges for PSC Services
6.3 Charges for Additional Services
6.4 Risk Reward Pricing and Service Levels
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Part A -- Cambridge Technology
Part B -- ▇▇▇▇▇ Systems
9.4 Early Termination Fees
15.1 Definitions
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INFORMATION TECHNOLOGY SERVICES AGREEMENT
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This Information Technology Services Agreement ("Agreement"), dated as of
January 22, 1998, is between ▇▇▇▇▇ Systems Corporation, a Delaware corporation
("▇▇▇▇▇ Systems"), Cambridge Technology Partners, Inc., a Delaware corporation
("Cambridge Technology") and Ryder TRS, Inc., a Delaware corporation ("Client").
PRELIMINARY STATEMENTS
▇. ▇▇▇▇▇ Systems and Cambridge Technology will provide a solution
intended to meet the requirements set forth in Client's Technology Partnership
Request for Proposal (the "RFP"), attached as Attachment A, as such requirements
have been revised as provided in this Agreement. As set forth in ▇▇▇▇▇ Systems'
and Cambridge Technology's joint Response to Request for Proposal and related
documents attached as Attachment B (the "Response to RFP"), ▇▇▇▇▇ Systems and
Cambridge Technology understand that Client intends to develop a long-term
relationship with a technology provider that shares its technology vision and
zeal to achieve the following objectives:
1. Support the creation of an independent systems environment, except the
RyderFirst/POS Systems including but not limited to the DCM
environment, by the October 1998 time frame.
2. Move from a geographically dispersed and disparate mix of technology
platforms connected over a proprietary network to a single
client/server platform with server clusters and Internet access.
Financial and operational data will reside in a single data
repository.
3. Accomplish the above in a manner that transcends the "building of
systems" and the "renting of trucks" such that Client, ▇▇▇▇▇ Systems
and Cambridge Technology might find ways to leverage their investment
to create value in non-traditional ways (e.g., expand Client's
vertical and horizontal markets).
B. For the reasons set forth above, in the RFP, and in the Response to
RFP, Client desires to replace its current information technology services
provider, Ryder System, Inc. ("RSI") and to engage ▇▇▇▇▇ Systems and Cambridge
Technology as its business and information technology services providers, each
of which will perform certain business and information technology services for
Client, which services are described in detail in this Agreement; and
C. Client desires to have ▇▇▇▇▇ Systems (i) serve as the single point of
contact with respect to the provision of services by ▇▇▇▇▇ Systems and Cambridge
Technology with respect to the business and information technology services to
be provided by such parties under this
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Agreement and (ii) manage the services provided by Cambridge Technology and
Third Party Vendors as set forth in this Agreement.
Accordingly, the parties agree as follows:
ARTICLE 1
GENERAL OBLIGATIONS
1.1 Executive Steering Committee. Each party will designate up to three
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senior executives to participate in the Executive Steering Committee. The
Executive Steering Committee will be chaired by a representative of Client and
will meet semi-annually to review the parties' performance under the Agreement
and to provide general advice and guidance with respect to Client's industry,
business priorities and market opportunities. The individuals initially
designated to serve on the Executive Steering Committee are identified in
Schedule 1.1.
1.2 Program Managers. Each party will designate an individual to serve as
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its "Program Manager" under this Agreement. Each party's Program Manager will
(i) serve as the principal point of accountability for coordinating and managing
that party's obligations under this Agreement, and (ii) be authorized to act for
and on behalf of that party with respect to all matters relating to this
Agreement, subject to the limitations set forth in this Agreement and any other
limitations of which the other parties are notified and to which they agree,
which agreement will not be unreasonably withheld.
1.3 Cooperation. Each party and its Subsidiaries will cooperate with each
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of the other parties and their respective Subsidiaries in connection with their
respective obligations under this Agreement. Such cooperation will include
making available to a party all management decisions, information, approvals and
acceptances that the party reasonably expects to have a material effect on the
obligations to be performed by that party under this Agreement.
1.4 Service Review Period.
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(a) During the period commencing October 13, 1997, ▇▇▇▇▇ Systems and
Cambridge Technology, with Client's assistance, performed a detailed review
of the business and information technology services being provided by
Client Personnel, RSI, and other Third Party Vendors and of Client's
business processes. That review has resulted in the development of the
Principal Assumptions described in Part A of Schedule 1.4. During the
period beginning on the Effective Date and ending 30 days after the later
of (i) the date ▇▇▇▇▇ Systems receives the materials described in Part B of
Section 1.4, or (ii) the Effective Date (the "Service Review Period"),
▇▇▇▇▇ Systems and Cambridge Technology will verify, to the extent
reasonably practicable, that the Principal Assumptions are accurate. Upon
completion of the Service Review Period, the CPA
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Account Manager will deliver a report to Client's Program Manager
describing the results of ▇▇▇▇▇ Systems' and Cambridge Technology's
detailed review. That report will describe any changes to the Principal
Assumptions and any other revisions to the Schedules requested by ▇▇▇▇▇
Systems or Cambridge Technology, all of which changes will be reviewed and
approved through the Change Control Process.
(b) If a party becomes aware of any information during the Service
Review Period (or in Client's case, as a result of its review of the report
described in Section 1.4(a)) or thereafter, which information could
reasonably (i) indicate that a Principal Assumption is incorrect in any
material respect, (ii) result in a material increase or material decrease
in the cost of providing Services, (iii) result in a delay in the
performance of Services, or (iv) have a material impact on the performance
of the Services, then such party will promptly notify the affected party of
such information and the parties will use reasonable efforts to mitigate
the adverse impact of such information or circumstances and, if the
information was not known at the Effective Date, the parties will make an
equitable adjustment to the Schedules, all of which adjustments will be
reviewed and approved through the Change Control Process.
1.5 Conduct of Personnel. While at another party's Facility, each party's
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Personnel will conduct themselves in a businesslike manner and will comply with
the other party's reasonable requests, standard rules and regulations regarding
personal conduct, including all safety and security rules and regulations of
which that party has been notified. Client may, upon giving not less than 30
days' notice to the CPA Account Manager, who will in turn notify the affected
party, require either ▇▇▇▇▇ Systems or Cambridge Technology to reassign, replace
or remove any individual performing services under this Agreement where the
performance of such individual is such that it may, in Client's reasonable
opinion, have a material and adverse impact on the ability of ▇▇▇▇▇ Systems or
Cambridge Technology, as the case may be, to perform its respective obligations
under this Agreement. In addition, Client may, on giving notice to the CPA
Account Manager, require the immediate removal of any PSC Personnel or Cambridge
Technology Personnel who in Client's reasonable opinion have violated any safety
or security rules or regulations of Client, violated any laws or regulations in
the course of performing services under this Agreement, or breached any of the
confidentiality or non-competition provisions of this Agreement. Client may not
request the reassignment, replacement or removal of any individual for reasons
that would be improper under applicable law if Client were such individual's
employer. ▇▇▇▇▇ Systems and Cambridge Technology will each use reasonable
commercial efforts to replace promptly any individual reassigned, replaced or
removed at Client's request.
1.6 Access to Facilities. Each party will grant each other party access
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during normal business hours (and, to the extent reasonably necessary, outside
normal business hours) to that party's Facilities (including appropriate
equipment and systems located at such facilities) as is reasonably necessary for
the other party to perform the activities contemplated by this Agreement,
provided that (i) each party's Personnel will conduct
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themselves as described in Section 1.5, and (ii) no party will make any
structural, mechanical or electrical alterations to another party's Facilities
without the other party's prior approval.
1.7 Subcontractors. Each of ▇▇▇▇▇ Systems and Cambridge Technology may
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engage independent third parties or Affiliates of such party ("subcontractors")
to perform any part of the Services or other obligations to be performed by such
party under this Agreement, provided that:
(a) The CPA Account Manager will obtain Client's prior approval of
any subcontractor (other than an Affiliate of ▇▇▇▇▇ Systems or Cambridge
Technology, as the case may be) that the engaging party reasonably expects,
at the time of the initial engagement, will be paid more than $250,000
during the term of the agreement under which such subcontractor is engaged
or, in the case of multiple agreements with a single subcontractor, during
any 12 month period. Such approval will not be necessary for Affiliates of
▇▇▇▇▇ Systems or Cambridge Technology unless otherwise agreed in the Change
Control Process.
(b) Each party that engages a subcontractor will be fully responsible
for the work and activities of its subcontractors, including the compliance
of such subcontractors with the terms of this Agreement.
ARTICLE 2
PROGRAM SERVICES
2.1 CPA Account Manager.
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(a) ▇▇▇▇▇ Systems will designate an individual to
serve as the CPA Account Manager for ▇▇▇▇▇ Systems and Cambridge Technology
under this Agreement. The CPA Account Manager will (i) serve as the
principal point of contact and accountability to Client for coordinating,
managing, and monitoring the performance of ▇▇▇▇▇ Systems' and Cambridge
Technology's obligations under this Agreement, and (ii) be authorized to
act for and on behalf of ▇▇▇▇▇ Systems and Cambridge Technology with
respect to all matters relating to the Services, subject to the limitations
set forth in this Agreement. However, the CPA Account Manager will have no
authority to amend this Agreement to modify Cambridge Technology's
obligations under this Agreement without the approval of the Cambridge
Program Manager and the Client Account Manager, and the CPA Account Manager
and ▇▇▇▇▇ Systems will have no liability to Client in connection with the
performance or non-performance of the Cambridge Services, provided that
this sentence will not excuse any breach of this Agreement by ▇▇▇▇▇
Systems.
(b) The CPA Account Manager will have general responsibility for
coordinating the planning for and development of Client's Technology Plan,
monitoring
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the implementation of the Technology Plan by the parties and Third Party
Vendors, including monitoring the achievement of project milestones, and
monitoring compliance with Client's standards for delivery and quality of
information technology services.
2.2 Program Office.
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(a) The CPA Account Manager will organize and manage a Program Office
composed of the CPA Account Manager, each party's Program Manager, and such
other persons as the CPA Account Manager and the parties' Program Managers
from time to time agree are appropriate. During the first year of the term
of this Agreement, the Program Office will be staffed by full-time
personnel serving in the roles of CPA Account Manager, Cambridge Program
Manager, PSC Program Manager, Technical Architect, and Vendor Manager, and
additional part-time or full-time personnel as the CPA Account Manager and
the parties' Program Managers agree are appropriate. During the second and
subsequent years of the term of this Agreement, the Program Office will be
staffed by full-time personnel serving in the role of CPA Account Manager,
part-time personnel serving in the roles of Cambridge Program Manager, PSC
Program Manager, Technical Architect and Vendor Manager as set forth in the
staffing plan included as part of Schedules 6.1 and 6.2, and such other
part-time or full-time personnel as the CPA Account Manager and the
parties' Program Managers agree are appropriate.
(b) The Cambridge Program Manager, in addition to the obligations set
forth in Section 1.2, will manage the Cambridge Services, including but not
limited to Cambridge Technology's application development services, and
coordinate the performance of the Cambridge Services with the PSC Program
Manager. The project managers for each application development project
will report to the Cambridge Program Manager, who will manage resources,
planning, and issues relating to such project. The Cambridge Program
Manager will be assigned as Key Staff until the Implementation of all the
Cambridge Applications.
(c) The PSC Program Manager (who may also be the CPA Account
Manager), in addition to the obligations set forth in Section 1.2, will
manage the PSC Services (other than the PSC Program Services, which will be
managed by the CPA Account Manager) and coordinate with the Cambridge
Program Manager.
(d) The Technical Architect will (i) coordinate Client's, Cambridge
Technology's, and ▇▇▇▇▇ Systems' technical efforts across application
development projects and operations, (ii) be responsible for the technical
architecture of the Client Systems, (iii) within 90 days after the
Effective Date, establish and submit for Client's approval, and thereafter
maintain technology standards for the Client Systems, (iv) perform mutually
acceptable technical quality assurance procedures with respect to the
Cambridge Applications at the time of their Acceptance and Implementation
(including, among other things, by coordinating ▇▇▇▇▇ Systems'
participation in the Acceptance
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Testing process), and (v) periodically evaluate the condition of the Client
Systems as compared to the technological state of the art and recommend to
Client refreshment, new or different technologies, or other methods to
optimize the operations of such Client Systems. The Technical Architect
will work with each project manager, technical team leader, and ▇▇▇▇▇
Systems' operations team leader on technical issues. The development of,
and any changes in, the technical architecture and technology standards for
Client will be subject to Client's prior approval, which approval will not
be unreasonably withheld. The Technical Architect will compile such
approved technical architecture and technology standards, and any approved
changes to them, in a Technology Plan.
(e) The Vendor Manager will be the liaison between the parties and
the Third Party Vendors listed on Schedule 2.2, who are delivering the
Financial, Maintenance, and CR/CS Applications. The Vendor Manager will
monitor, coordinate and use diligent efforts to assure the transition of
the RSI Services and the delivery of the Financial, Maintenance, and CR/CS
Applications, coordinate dependencies among Applications, and attempt to
resolve issues that arise between those Third Party Vendors and, as the
case may be, ▇▇▇▇▇ Systems, Cambridge Technology or Client. The Vendor
Manager will not be responsible for managing any Third Party Vendors other
than those identified in Schedule 2.2; such other Third Party Vendors,
identified in Part C of Schedule 4.2, will be managed by the PSC Program
Manager.
2.3 Technology Steering Committee.
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(a) The Client Program Manager will organize a Technology Steering
Committee. Each party will designate up to four senior managers, including
that party's Program Manager, and such other persons as the parties
collectively agree are appropriate to participate in the Technology
Steering Committee. The Client Personnel, PSC Personnel and Cambridge
Personnel initially designated to serve on the Technology Steering
Committee are identified in Schedule 2.3.
(b) The Client Program Manager will chair the Technology Steering
Committee, which will (i) participate in the development of and approve
Client's Technology Plan and budgets, (ii) provide senior-level guidance to
▇▇▇▇▇ Systems and Cambridge Technology on Client's business priorities as
they affect the services to be performed under this Agreement, and (iii)
guide and monitor the work of the Technical Architect. The Technology
Steering Committee will meet at least monthly until the Implementation of
the Initial Systems, and thereafter on a mutually acceptable schedule. All
Changes recommended by the Technology Steering Committee will be subject to
the Change Control Process.
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2.4 Change Control Board.
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(a) The Client Program Manager will organize the Change Control
Board. Each party will designate two management-level employees, including
that party's Program Manager, to participate in the Change Control Board.
(b) The Change Control Board will be chaired by the Client Program
Manager and will meet at least once a week until the Implementation of the
Initial Systems, and thereafter on a schedule to be agreed, for the
purposes of reviewing those Change requests required to be reviewed by the
Change Control Board under Section 2.5(b). If the Change Control Board
cannot agree on a Change request in accordance with the Change Control
Process, then any party may submit the Change request to the dispute
resolution process of Article 14.
(c) The Change Control Board will analyze the effect of each Change
request submitted to it on the Development Schedule, the Development Budget
and the Service Levels and its corresponding effect on the parameters
affecting the performance credits contemplated by Section 6.4, and will
recommend an equitable adjustment deemed necessary to be made to each such
parameter.
2.5 Change Control Process
----------------------
(a) Not later than 30 days after the Effective Date, the CPA Account
Manager will prepare and deliver to Client, for Client's review and
approval, Change Control Procedures to be used by the parties under this
Agreement to control changes in scope, schedule and cost of the Services.
The Change Control Procedures will be one component of the Operating
Procedures Manual and will provide, at a minimum, that (i) all Changes,
including Changes to the Change Control Procedures, will be made pursuant
to the Change Control Procedures, except as may be necessary on an
emergency basis; (ii) no Change which is reasonably expected to materially
or adversely affect the function or performance of any System or result in
a material increase in the charges to Client under this Agreement will be
implemented without Client's approval, except as may be necessary on an
emergency basis; (iii) all Changes, except those made as necessary on an
emergency basis, will be implemented in accordance with a schedule provided
to Client periodically and under circumstances that are reasonably expected
not to interrupt Client's business operations materially; and (iv) the CPA
Account Manager will give Client prompt notice (which may be given orally,
provided that any oral notice is confirmed in writing within five business
days) of any Change made as necessary on an emergency basis.
(b) All Change Orders involving an increase in the charges to Client
or a change in any Implementation Date will be reviewed by the Change
Control Board. All other Change Orders will be reviewed by the CPA Account
Manager in conjunction with
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the Client Program Manager and, as appropriate, the Cambridge Program
Manager. The budgetary and schedule effects of reasonably interrelated
Change Orders will be aggregated to determine whether the CPA Account
Manager or the Change Control Board should review such Change Orders. The
parties will use their reasonable commercial efforts to minimize any
adjustments to the Development Schedule, Development Budget and
Requirements.
(c) Changes to the Requirements, Development Budget, or Development
Schedule w ill be made only by mutual agreement of the affected parties
through the use of a Change Order. All requests for Changes by a party will
be communicated by the requesting party's Program Manager or his or her
designee to the CPA Account Manager, who will be responsible for notifying
the other parties of the requested Change. No party will have any
obligation to implement Changes requested through any other means.
(d) Requests for Change Orders will be submitted for review in
accordance with the Change Control Process described in this Section 2.5,
and will include the following information: (i) a detailed description of
the Change requested, (ii) the business, technical or financial
justification for the Change requested, (iii) the price and capital costs
(if separate), associated with the Change requested, (iv) the projected
schedule impact of the Change requested, and (v) the priority of the Change
requested.
(e) Within five business days (or such longer period as is mutually
agreeable) after receiving a request from Client for a Change Order, the
CPA Account Manager will prepare, with the assistance of ▇▇▇▇▇ Systems and
Cambridge Technology as directed by the CPA Account Manager, and provide to
Client a document summarizing the effect, if any, of the proposed change on
(i) the Development Schedule, including but not limited to Client's
obligations under the Development Schedule, (ii) the functionality and
Requirements of the applicable System to be delivered, and (iii) the
Development Budget. In addition, the CPA Account Manager will inform Client
regarding any other business impact that ▇▇▇▇▇ Systems or Cambridge
Technology believes to be relevant to an evaluation of the Change Order.
In the case of Change requests reviewed by the Change Control Board under
Section 2.5(b), the CPA Account Manager also will forward all such
information to the Change Control Board at the same time it is delivered to
Client. The Change Control Board will review the information and, as the
Change Control Board deems necessary, revise it at the next succeeding
Change Control Board meeting and promptly forward its report on the
proposed Change to Client. Within ten business days or, after
Implementation of the Initial Systems, such longer period as is mutually
agreeable to the parties, after receiving such information (or within ten
business days after receiving the Change Control Board's report, in the
case of a Change request reviewed by the Change Control Board), Client will
approve, reject or withdraw the request for such Change Order. Client's
failure to approve, reject or withdraw the request within the applicable
time period will be deemed a withdrawal of such request.
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(f) Upon submitting a request for a Change Order initiated by ▇▇▇▇▇
Systems or Cambridge Technology, the CPA Account Manager will provide to
Client a document summarizing the effect, if any, on (i) the Development
Schedule, including but not limited to Client's obligations under the
Development Schedule, (ii) the functionality and Requirements of the
applicable System to be delivered, and (iii) the Development Budget. In
addition, the CPA Account Manager will inform Client regarding any other
business impact that ▇▇▇▇▇ Systems or Cambridge Technology believes to be
relevant to an evaluation of the Change Order. In the case of Change
requests reviewed by the Change Control Board under Section 2.5(b), the CPA
Account Manager also will forward all such information to the Change
Control Board at the same time it is delivered to Client. The Change
Control Board will review the information and, as the Change Control Board
deem necessary, revise it at the next succeeding Change Control Board
meeting and promptly forward its report to Client. Within ten business days
after receiving such information (or within ten business days after
receiving the Change Control Board's report, in the case of a Change
request reviewed by the Change Control Board), Client will approve or
reject the requested Change Order. Client's failure to approve or reject
the requested Change Order within the applicable time period will be deemed
a rejection of such request.
(g) If, prior to the Implementation of the Initial Systems, the level
of effort necessary for either of ▇▇▇▇▇ Systems or Cambridge Technology to
fulfill its obligations under this Agreement is increased, or is reasonably
expected by ▇▇▇▇▇ Systems or Cambridge Technology to be increased, by (i)
Client's specification of how any Requirement is to be implemented, (ii)
any change in the scope of ▇▇▇▇▇ Systems' or Cambridge Technology's
obligations under this Agreement directed by Client, (iii) Client's delay
in completion or failure to complete any obligation described in Article 5,
or (iv) Force Majeure, the CPA Account Manager will promptly notify Client
of each such situation or claim and propose an equitable adjustment
therefor in a Change Order.
(h) In any case where no final agreement has been reached on a Change
request but the Client's Account Manager nonetheless orders either or both
of ▇▇▇▇▇ Systems or Cambridge Technology, as the case may be, to carry out
such Change, such party will use its commercially reasonable efforts to
carry out such Change within the time requested by Client at the price and
related terms proposed by ▇▇▇▇▇ Systems or Cambridge Technology, as the
case may be; and in such event, the parameters affecting the performance
credits contemplated by Section 6.4 will be adjusted in accordance with the
response to such Change request by ▇▇▇▇▇ Systems or Cambridge Technology,
as the case may be, and any party may refer the disputed Change request to
the procedures provided in Article 14.
(i) Promptly after approval of a Change Order by Client, the CPA
Account Manager will communicate such approval to each party's Program
Manager. Each party will execute such Change Order and communicate its
requirements to its project teams.
9
Each party will promptly comply with each Change Order executed as provided
in this Section 2.5.
(j) As soon as practicable after the Implementation of the Initial
Systems, the parties will revise the response periods, approval limits and
other mutually satisfactory items set forth in this Section 2.5 and the
Change Control Procedures to reflect an operating, rather than development,
environment.
2.6 Key Staff.
---------
(a) Part A of Schedule 2.6 lists the CPA Account Manager, ▇▇▇▇▇
Systems' Program Manager, other key PSC Personnel, the Cambridge Program
Manager and other key Cambridge Personnel (collectively, the "Key Staff").
The parties may modify or amend such list from time to time, and will amend
such list as appropriate to reflect the replacement of Key Staff and as the
development of the Cambridge Applications and the transition of the RSI
Systems progress.
(b) ▇▇▇▇▇ Systems and Cambridge Technology each may nominate
replacement individuals to serve as Key Staff from time to time, by giving
at least 10 days' notice to the CPA Account Manager, who will in turn
notify Client's Account Manager, provided that no such individual will be
assigned as Key Staff without Client's approval, which approval will not be
withheld unreasonably or for reasons that would be improper under
applicable law if Client were their employer.
(c) ▇▇▇▇▇ Systems and Cambridge Technology will each use reasonable
commercial efforts to ensure that their Key Staff (i) will remain employed
by such party for the first year of this Agreement (or such shorter period
as may be reasonably appropriate in recognition of the services being
performed by a particular individual), (ii) will not be reassigned until
their key tasks are completed without Client's consent, and (iii) will have
as their substantially full-time responsibility, where they are intended to
be full-time, the performance of such party's obligations under this
Agreement. In addition, each of ▇▇▇▇▇ Systems and Cambridge Technology
will use reasonable commercial efforts to cause each of their employees who
are designated as Key Staff for purposes of Section 2.6(d) or (e) to
execute an agreement binding such employee to the restrictions set forth in
Section 2.6(d) or (e), as the case may be, and will advise Client as to
whether such an agreement has been executed. If the CPA Account Manager
informs Client that ▇▇▇▇▇ Systems or Cambridge Technology desires any Key
Staff for a temporary assignment to another site or customer (other than a
Named Competitor) for less than five days and if such temporary assignment
will not materially and adversely affect any Services, in Client's
reasonable judgment, Client will honor such request.
10
(d) ▇▇▇▇▇ Systems will not assign any of its Key Staff to provide
services to or for any Named Competitor during the period that such
employee is performing Services for Client and for two years thereafter.
(e) Cambridge Technology will not assign any of its Key Staff to
provide services to or for a Named Competitor during the period that such
employee is performing Services for Client and for two years thereafter.
The Cambridge Technology project leaders of each Transition Critical
Application will be considered Key Staff with respect to this Section
2.6(e). Part B of Schedule 2.6 lists the individuals who are serving as
project leaders for such Transition Critical Applications as of the
Effective Date.
ARTICLE 3
CAMBRIDGE SERVICES
3.1 Application Development Services.
--------------------------------
(a) Cambridge Technology will develop the Requirements for the
Transition Critical Applications identified in Schedule 5.1 in accordance
with (i) the Enterprise Scope Document, (ii) the technology standards set
forth in the Technology Plan, (iii) other technology standards that may be
mutually agreed to between Cambridge Technology and Client from time to
time and (iv) the Development Budget and Development Schedule contained in
Schedule 5.1.
(b) Each Transition Critical Application will be developed in
accordance with the procedures set forth in Schedule 3.1 as further
detailed by individual Task Orders and accompanying "Statements of Work."
Upon Client's authorization of a Task Order under the process set forth in
Section 3.2, Cambridge Technology will begin development of the Transition
Critical Application covered by the Task Order.
(c) Upon completion of the design phase for each Transition Critical
Application, Client and Cambridge Technology may agree to adjust the
Development Budget based on a better understanding of the Requirements.
Unless an adjustment is the result of additional services or new scope or
functionality (as opposed to a refinement of scope or functionality
described in the Enterprise Scope Document) requested by Client and
implemented through the Change Control Process, the "not to exceed" price
for delivery of all Transition Critical Applications will not be affected.
The parties acknowledge that the Transition Critical Applications are
intended to provide basic functionality similar to the functionality of the
RSI applications they are replacing (as of the date of the Enterprise Scope
Document). Should it be discovered that a basic piece of functionality is
missing from the Requirements of a particular Transition Critical
Application, Cambridge Technology and Client will work together to adjust
the Requirements to include the missing functionality in a way such that
the "not to exceed"
11
price is not affected (e.g., delete new functionality to offset any price
increase associated with adding the missing functionality).
(d) The end date and price set forth in Schedule 5.1 for each
Transition Critical Application are based on the start date stipulated in
that Schedule. If Cambridge Technology has prepared and presented to
Client a Task Order and Statement of Work at least five business days in
advance of the start date for a particular Application, and Client has not
approved and executed such Task Order authorizing commencement of a
Transition Critical Application by such start date, Cambridge Technology
will initiate the Change Control Process detailing any impact to the
Requirements, Development Budget, Development Schedule or overall "not to
exceed" price for the Transition Critical Applications. In no event,
however, will the length of the Development Schedule be extended for a
period longer than the period of Client's delay in approving the Task
Order.
3.2 Task Order Process. Prior to the start date identified in Schedule 5.1
------------------
for each Transition Critical Application, Cambridge Technology and Client will
review, and revise as necessary, the Requirements, Development Budget and
Development Schedule for each Transition Critical Application. If such items are
satisfactory to Client, the Cambridge Program Manager will prepare a Statement
of Work confirming the identified Requirements and a Task Order confirming the
Development Budget for performance of the Statement of Work, payment schedule,
not to exceed expense amount and any special terms applicable to performance of
the Statement of Work. Work will begin under the Task Order upon execution by
Client, ▇▇▇▇▇ Systems and Cambridge Technology. Once the Development Budget has
been confirmed it will be considered a Fixed Price.
3.3 Acceptance of Applications. Acceptance of deliverables will be
--------------------------
conducted in accordance with the following procedures.
(a) Written Deliverables. Cambridge Technology may submit interim
--------------------
drafts of a written deliverable to Client for review. Client agrees to
review each interim draft within five business days after receiving it from
Cambridge Technology or as soon as reasonably practicable thereafter, but
in no event more than ten business days after receiving such interim draft
from Cambridge Technology. When Cambridge Technology delivers a final
written deliverable to Client, Client will have the opportunity to review
the written deliverable for an acceptance period of five business days but
not more than 10 business days or such other period as is stated in the
Statement of Work or the Task Order (the "Acceptance Period"). Client
agrees to notify the CPA Account Manager (who will in turn notify the
Cambridge Program Manager) in writing by the end of the Acceptance Period
either stating that the written deliverable is accepted in the form
delivered by Cambridge Technology or describing in reasonable detail any
deficiencies that must be corrected prior to acceptance of the written
deliverable. If Client does not send a deficiency notice by the end of the
Acceptance Period, the written deliverable will
12
be deemed to be Accepted by Client. If Client sends a timely notice of
deficiencies, Cambridge Technology will correct the described deficiencies
as promptly as possible; provided, however, if Cambridge Technology, upon
providing the CPA Account Manager a detailed justification of its position,
does not believe that Client has identified a deficiency, the parties will
follow the procedures set forth in Article 14. Upon receipt of a corrected
written deliverable from Cambridge Technology, Client will have a
reasonable additional period of time, not to exceed 15 business days, to
review the corrected written deliverable to confirm that the identified
deficiencies have been corrected.
(b) Software Deliverables. At least 30 days prior to the date on
---------------------
which Cambridge Technology is scheduled to deliver any Software deliverable
to Client for testing (or by such other date as the Statement of Work or
Task Order may specify), Cambridge Technology will deliver for Client's
review proposed testing procedures for the Software deliverable as required
by the Task Order. At least 15 days prior to the date on which Cambridge
Technology is scheduled to deliver the Software deliverable to Client (or
by such other date as the Statement of Work or Task Order may specify), the
parties will agree upon the testing procedures for the Software deliverable
(the "Acceptance Test Plan"). The purpose of the Acceptance Test Plan will
be to determine whether the Software deliverable performs the functions
described in its approved specifications and performs the Requirements
without any Defects. As used in this Agreement, "Defect" means a
reproducible failure of a Software deliverable to conform in all material
respects to its specifications and Requirements. Acceptance of Software
deliverables will be conducted in accordance with the following procedures.
(i) The Acceptance Test Period for each Software deliverable
will be specified in the relevant Statement of Work or Task Order.
(ii) Cambridge Technology and Client (in conjunction with ▇▇▇▇▇
Systems, as set forth in Section 4.4) will start to perform Acceptance
Testing on each Software deliverable promptly after receiving
Cambridge Technology's notice that the Software deliverable is ready
for acceptance. Acceptance Testing will be performed as set forth in
the Acceptance Test Plan. If either Client or ▇▇▇▇▇ Systems
determines during the Acceptance Period that the Software deliverable
fails to perform the functions described in its Specifications without
Defects, Client or ▇▇▇▇▇ Systems will promptly send to the CPA Account
Manager (who will in turn deliver the notice to Cambridge Technology)
a notice ("Defect Notice") describing the alleged Defect(s) in
sufficient detail to allow Cambridge Technology to recreate it or
them. The parties will use commercially reasonable efforts to
identify all Defects prior to the end of the Acceptance Test Period.
(iii) Cambridge Technology will correct any Defects in a
Software deliverable promptly after receiving a Defect Notice and
provide the corrections
13
to Client for re-testing. The parties will promptly re-test any corrected
portions of a Software deliverable after receiving the corrections from
Cambridge Technology.
(iv) If there are any remaining uncorrected Defects in the Software
deliverable at the end of the Acceptance Test Period, Client or ▇▇▇▇▇
Systems will provide Cambridge Technology (through the CPA Account Manager)
by the end of the Acceptance Test Period with notice of the final list of
outstanding Defects, describing them in sufficient detail to allow
Cambridge Technology to recreate them (the "Punch List"). Cambridge
Technology will correct any Defects identified on the Punch List promptly
after receiving the Punch List. When all Defects on the Punch List have
been corrected, Cambridge Technology will provide the corrections to
Client. The parties will have 15 days after receipt of the corrections,
unless the parties agree to a different period in writing, to re-test the
corrected Software deliverable to confirm the correction of the Defects
identified on the Punch List and to identify any remaining Defects. If
either Client or ▇▇▇▇▇ Systems determines that any Defects identified in
the Punch List have not been corrected, Client or ▇▇▇▇▇ Systems will
provide Cambridge Technology (through the CPA Account Manager) by the end
of the 15 day re-testing period with notice of a revised Punch List (the
"Revised Punch List"), which may include Defects not identified on the
Punch List. Cambridge Technology will promptly correct any Defects
identified in the Revised Punch List and provide the corrections to Client.
The parties will have a further 15 day period after receipt of the
corrections, unless the parties agree to a different period in writing, to
re-test the corrected Software deliverable to confirm the correction of the
Defects. If either Client or ▇▇▇▇▇ Systems determines as a result of the
re-testing that the Software deliverable still contains one or more
Defects, Client or ▇▇▇▇▇ Systems will so notify the CPA Account Manager,
who will promptly cause Cambridge Technology to perform a root cause
analysis of such Defects and refer the matter to the Technology Steering
Committee. If the Technology Steering Committee is unable to resolve the
matter within 15 days after the matter is submitted to it, any party may
submit the matter to the dispute resolution procedures set forth in Article
14.
(v) Cambridge Technology, ▇▇▇▇▇ Systems, and Client each agrees
to work diligently to achieve Acceptance of Software deliverables at the
earliest possible date.
(c) The Development Schedule will be extended on a day-for-day basis for
each delay caused by Client's failure to comply with its obligations identified
in the Task Order and this Section on a timely basis provided that such delay,
in turn, causes a delay in Cambridge Technology's performance of its obligations
under the Task Order.
14
ARTICLE 4
PSC SERVICES
4.1 Transition Services. ▇▇▇▇▇ Systems will perform the services
-------------------
(including the management of the Transition Critical Services and the Transition
Critical Applications to be performed by Cambridge Technology) described in the
Transition plan attached as Schedule 4.1 (the "Transition Plan") that are
necessary to transition the performance of the RSI Services and other
information technology services to ▇▇▇▇▇ Systems so that ▇▇▇▇▇ Systems may
perform the Operations Services (the "Transition Services") and setting forth a
timetable during which the Transition Services will be performed.
4.2 Operations Services. ▇▇▇▇▇ Systems will perform the services
-------------------
described below and in Schedule 4.2 (collectively, the "Operations Services")
for Client substantially in accordance with the Operating Procedures Manual.
▇▇▇▇▇ Systems and Client acknowledge that Schedule 4.2 is intended to describe
the information technology services performed by or on behalf of Client as of
the Effective Date, other than the Excluded Services described in Schedule 4.2,
and agree that if services other than those described in Schedule 4.2 are
identified after the Effective Date, then Schedule 4.2 will be amended as
appropriate in accordance with the Change Control Process.
(i) Management of Equipment and Software. ▇▇▇▇▇ Systems will operate
------------------------------------
the Managed Equipment and Managed Software and will comply in all material
respects with the applicable operating documentation. In addition, ▇▇▇▇▇
Systems will manage the installation, maintenance and repair of the Managed
Equipment and Managed Software by Third Party Vendors, provided that ▇▇▇▇▇
Systems will install Managed Software and personal computers and similar
Managed Equipment for which vendor assistance is not routinely required.
(ii) Technology Refreshment and Continuous Improvement. ▇▇▇▇▇ Systems
-------------------------------------------------
will recommend refreshment of inadequate and obsolete Managed Equipment and
Managed Software on an annual or more frequent basis. If Client elects not
to refresh inadequate or obsolete Managed Equipment or Managed Software
that is having a material adverse impact on ▇▇▇▇▇ Systems' ability to meet
the Service Levels, an equitable adjustment will be made to the affected
Service Levels. In addition, ▇▇▇▇▇ Systems will use reasonable commercial
efforts to improve continuously the economic and technical effectiveness of
the Client Systems and will suggest improvements to Client's business
processes that could result in improvements to Client's business
operations. To further such efforts, ▇▇▇▇▇ Systems may, but will not be
required to, assign business process reengineering or similar resources to
Client's account.
(iii) Management of Contracts and Vendors. ▇▇▇▇▇ Systems will manage
-----------------------------------
the Managed Contracts and Third Party Vendors, including (A) the
performance, in all material respects, of Client's non-financial
operational obligations under the Managed
15
Contracts (subject to the provisions of Section 6.9 with respect to the
disbursement of amounts payable under the Managed Contracts) from and after
the later of the Effective Date or the date the applicable Required Consent
is granted, and (B) on an annual or more frequent basis, analyzing and
recommending to Client the renegotiation, replacement, or substitution of
Managed Contracts and Third Party Vendors so as to lower Client's costs or
improve the delivery of services to Client under this Agreement.
(iv) Required Consents. ▇▇▇▇▇ Systems will use reasonable commercial
-----------------
efforts on Client's behalf to identify all Required Consents and to obtain
them as soon as practicable after the Effective Date. Client will assist
▇▇▇▇▇ Systems to obtain such Required Consents upon request by ▇▇▇▇▇
Systems. If a Required Consent is not obtained, then, unless and until
such Required Consent is obtained, ▇▇▇▇▇ Systems will determine and adopt,
subject to Client's prior approval, such alternative approaches as are
necessary and sufficient to provide the Operations Services without such
Required Consents.
(v) Safeguarding Client Data. ▇▇▇▇▇ Systems will prepare and deliver
------------------------
to Client, for Client's review and approval, the Disaster Recovery and
Security Plan which will be a component to the Operating Procedures Manual
that sets forth the procedures and physical security measures to be
maintained, after Client's approval of such procedures and physical
security measures, by ▇▇▇▇▇ Systems to protect against the unauthorized
alteration, loss, or destruction of Client's data and information in ▇▇▇▇▇
Systems' possession or under ▇▇▇▇▇ Systems' control.
(vi) Data Archives and Backup. ▇▇▇▇▇ Systems will archive or destroy
------------------------
data and information in accordance with Client's data retention procedure
or, in the absence of such a procedure, ▇▇▇▇▇ Systems' operating procedures
for Client's account as described in the Operating Procedures Manual.
Client may, at its expense, keep backup data and data files in its
possession or under its control; provided that Client provides ▇▇▇▇▇
Systems with prompt access to such backup data and data files whenever
reasonably required by ▇▇▇▇▇ Systems.
(vii) Procurement Services. ▇▇▇▇▇ Systems will license, purchase or
--------------------
lease voice, data and other telecommunications services, Third Party
Software, Equipment or Third Party Services on behalf of Client and for
Client's account (the "Procurement Services"). Client will pay the price
paid by ▇▇▇▇▇ Systems for such Third Party Software, Equipment or Third
Party Services and the fee for such Procurement Services described in
Schedule 6.1. In performing the Procurement Services, ▇▇▇▇▇ Systems will
act as Client's agent; will use reasonable commercial efforts to obtain and
pass through to Client all available discounts; and will assign to Client
or enforce on Client's behalf, subject to the provisions of Section 4.2,
all of ▇▇▇▇▇ Systems' title and rights of approval and acceptance of the
Third Party Software, Equipment or Third Party Services and, in so doing,
▇▇▇▇▇ Systems will carry out Client's reasonable requests with respect to
any Third
16
Party Software, Equipment or Third Party Services that Client reasonably
judges to be deficient, defective or otherwise unacceptable to Client. So
long as ▇▇▇▇▇ Systems has used commercially reasonable efforts to carry out
Client's reasonable requests with respect to any Third Party Software,
Equipment or Third Party Services that is reasonably judged by Client to be
deficient, defective or otherwise unacceptable, Client will reimburse ▇▇▇▇▇
Systems unconditionally for ▇▇▇▇▇ Systems' actual cost for such Third Party
Software, Equipment or Third Party Services, including the cost of freight,
insurance, taxes or other similar charges paid by ▇▇▇▇▇ Systems on Client's
behalf.
(viii) Disaster Recovery. Within 60 days after the Effective Date,
-----------------
▇▇▇▇▇ Systems will develop and submit for Client's approval a Disaster
Recovery and Security Plan for the continued provision of the Operations
Services in the event of a Disaster. Subject to Client's approval of the
disaster recovery plan and all related fees, costs and expenses, such
disaster recovery plan may provide for (i) the provision by a Third Party
Vendor of a "hot site" having equipment and software sufficient to allow
operation during a Disaster of those Applications deemed by Client to be
critical to its operations (the "Critical Applications"), and (ii)
telecommunications network connections reasonably sufficient to support the
operation of Critical Applications and to provide access to Client's wide
area network from the hot site. ▇▇▇▇▇ Systems will, with Client's prior
approval as to scope and schedule, update and test the operability of the
disaster recovery plan annually, and implement the disaster recovery plan
immediately upon the occurrence of a Disaster. All such testing will be
performed in such a manner as to minimize the disruption to Client's
operations.
(ix) Help Desk. ▇▇▇▇▇ Systems will provide the level one, level two
---------
and level three Help Desk Services described in Schedule 4.2.
(x) Procedures. Within 60 days after the Effective Date, ▇▇▇▇▇
----------
Systems will develop and submit for Client's approval an Operating
Procedures Manual which will include the components described in Attachment
D.
(xi) Telephony Services. ▇▇▇▇▇ Systems will provide the management,
------------------
troubleshooting, design and planning services for Client's voice and data
telecommunications services and equipment described in Schedule 4.2.
(xii) Capacity and Resource Planning. ▇▇▇▇▇ Systems will provide the
------------------------------
information technology network and equipment capacity and resource planning
services described in Schedule 4.2.
4.3 [INTENTIONALLY OMITTED]
17
4.4 Acceptance Testing and Application Support.
------------------------------------------
(a) Acceptance Testing. Each of Client and ▇▇▇▇▇ Systems will
------------------
participate in the Acceptance Testing of the Cambridge Applications on
Client's behalf as set forth in this Section 4.4(a).
(i) ▇▇▇▇▇ Systems will assign a number of FTEs to be agreed
between ▇▇▇▇▇ Systems and Cambridge Technology for each Cambridge
Application to assist Cambridge Technology to design and develop the
Acceptance Test Plan for each Cambridge Application, including the
design and development of the User Acceptance Test and the Production
Availability Test
(ii) After Cambridge Technology submits the Acceptance Test Plan
to Client for its approval, ▇▇▇▇▇ Systems will review the Acceptance
Test Plan with Client to ensure that Client's requirements are met. In
addition, ▇▇▇▇▇ Systems will prepare test cases and scenarios for the
User Acceptance Test and, jointly with Client, will conduct the User
Acceptance Test.
(iii) After Client's acceptance of the User Acceptance Test,
▇▇▇▇▇ Systems will prepare, with Cambridge Technology's assistance,
the hardware and software environment for the Production Availability
Test in accordance with a schedule to be mutually agreed between
Client, Cambridge Technology and ▇▇▇▇▇ Systems. ▇▇▇▇▇ Systems will
perform all tests described in the Acceptance Test Plan for the
Production Availability Test, including but not limited to
unstructured testing for each Cambridge Application. Upon
satisfactory completion of the Production Availability Test and the
delivery of all applicable documentation, ▇▇▇▇▇ Systems will review
with Client the results of the Production Availability Test and of
▇▇▇▇▇ Systems' review of the documentation delivered by Cambridge
Technology, and if such results and review are in accordance with the
requirements stated in the applicable Task Order and Acceptance Test
Plan, Client will authorize ▇▇▇▇▇ Systems to notify Cambridge
Technology that the applicable Cambridge Application is accepted for
Implementation.
(iv) Upon accepting a Cambridge Application for Implementation,
▇▇▇▇▇ Systems will become primarily responsible for its installation,
operation and maintenance, provided that Cambridge Technology will
assign a number of FTEs to be agreed between ▇▇▇▇▇ Systems and
Cambridge Technology for each Cambridge Application to assist ▇▇▇▇▇
Systems with the production installation of the Cambridge Application.
Upon completion of such production installation, the Cambridge
Application will be deemed to be Implemented, and ▇▇▇▇▇ Systems will
be solely responsible for the maintenance and operation of such
Cambridge Application.
18
(v) Promptly after the completion of any test identified in an
Acceptance Test Plan, Client or ▇▇▇▇▇ Systems, as the case may be,
will give notice to Cambridge Technology of its belief, if any, that
such test has not been successfully completed, which notice will
specify the reasons for such belief in reasonable detail.
(vi) The PSC Personnel who participate in such Acceptance Testing
will be drawn from the pool of PSC Personnel assigned to perform
Application Support.
(b) Application Support. ▇▇▇▇▇ Systems will provide a pool of PSC
-------------------
Personnel, consisting of the number of FTEs set forth in Section A.5 of
Schedule 6.1, to perform the Application Support Services described in
Schedule 4.4 to support all Applications following their acceptance by
Client by performing Error Corrections and Minor Enhancements. ▇▇▇▇▇
Systems and Client will review the number of FTEs assigned to support the
Applications on a mutually acceptable periodic basis, but at least
annually. To the extent the PSC Personnel are not fully utilized to
perform Error Corrections and Minor Enhancements, ▇▇▇▇▇ Systems will, at
Client's discretion and election, (i) make such PSC Personnel available to
perform Major Enhancements, provided that Client may not increase the
number of FTEs in the application support pool for the sole purpose of
performing Major Enhancements, or (ii) reduce, following 60 days notice,
the number of PSC Personnel assigned to the pool and correspondingly reduce
the charges to Client.
4.5 Service Levels.
--------------
(a) ▇▇▇▇▇ Systems will meet or exceed the Service Levels set forth in
Schedule 6.4 after the mutually acceptable transition period (which will
not be less than 30 days nor more than 90 days) set forth in such Schedule
to the extent ▇▇▇▇▇ Systems has commenced providing the applicable PSC
Services.
(b) As contemplated by the Change Order Process, (i) any Change Order
implementing service or resource additions or reductions requested by
Client and any other Change Order changing the manner in which the
Operations Services are provided by ▇▇▇▇▇ Systems will include an equitable
adjustment to the applicable Service Levels, and (ii) ▇▇▇▇▇ Systems will
review with Client as part of the Change Order Process the anticipated
effect of such reduction, addition, or change on ▇▇▇▇▇ Systems' ability to
meet the applicable Service Levels.
(c) If ▇▇▇▇▇ Systems fails to meet any Service Level, ▇▇▇▇▇ Systems
will (i) promptly investigate and perform a root-cause analysis to identify
the cause of the failure; (ii) provide to Client a report on the causes of
the problem; (iii) correct the problem, to the extent such problem is
within its control, or take appropriate steps to cause the problem to be
corrected to the extent such problem is not within its control; (iv)
19
to the extent within its control, take appropriate preventive measures to
reduce the probability of a recurrence of the problem; (v) take appropriate
actions to mitigate the adverse effects of the problem prior to its
correction; and (vi) periodically advise the Client of the status of
remedial efforts being undertaken with respect to such problems. If ▇▇▇▇▇
Systems fulfills its obligations under this Section 4.5(c), ▇▇▇▇▇ Systems
will have no liability to Client for its failure to meet such Service
Level, except as provided in Sections 6.4 and 9.5 or in connection with a
breach of warranty.
(d) Beginning nine months after the Effective Date, and annually
thereafter, Client and ▇▇▇▇▇ Systems will review the Service Levels and, if
mutually agreed, will adjust the Service Levels to reflect appropriate
changes in circumstances, such as technological advances, changes in
methods used generally to perform similar services, or service or resource
changes requested or approved by Client.
(e) ▇▇▇▇▇ Systems will implement appropriate monitoring tools (to the
extent such tools are not already used by ▇▇▇▇▇ Systems to monitor networks
that they manage, the tools will be approved by Client and will be acquired
at Client's expense) and related procedures necessary to measure and report
▇▇▇▇▇ Systems' compliance with the Service Levels. ▇▇▇▇▇ Systems will
provide Client with (i) a monthly report, in a form and with content
mutually agreed by the parties, and (ii) such other documentation and
information as Client reasonably requests, to verify that the Services are
being performed in compliance with the Service Levels. Upon request, ▇▇▇▇▇
Systems will provide Client and its designees with information and access
to such tools and procedures for purposes of performing an audit of ▇▇▇▇▇
Systems' compliance with the Service Levels and these reporting
requirements.
4.6 Additional Services.
-------------------
(a) At Client's request in a Task Order, ▇▇▇▇▇ Systems will perform
Additional Services, including application development services (which may
include the development of Major Enhancements).
(b) Additional Services will be performed under individual Task
Orders that are approved and issued in accordance with this Section 4.6(b)
and the Change Control Process. Upon identification of a need for
Additional Services, the CPA Account Manager and the Client Program Manager
will coordinate the preparation of a proposed Task Order which will set
forth in reasonable detail the Additional Services to be performed, the
specific hardware, software and third party services to be delivered to
Client while the Additional Services are being performed, the objective
completion criteria to be applied in connection with the Additional
Services, the price, Reimbursable Expenses and Pass-Through Expenses to be
paid by Client for the Additional Services and any hardware, software or
third party services to be delivered to Client in connection with the
Additional Services, a payment schedule, and any other special terms and
20
conditions relating to the Additional Services, including but not limited
to any terms relating to the early termination of the Task Order. The CPA
Account Manager will present the Task Order to Client and the Change
Control Board for their review and approval. ▇▇▇▇▇ Systems will commence
the Additional Services upon execution of the Task Order by Client and
▇▇▇▇▇ Systems.
(c) If Client terminates the Cambridge Program Services or a
particular Cambridge Task Order, ▇▇▇▇▇ Systems will complete the Cambridge
Services as an Additional Service in accordance with mutually acceptable
terms and conditions, including price, of a Task Order to be negotiated in
good faith after the applicable Termination Notice is delivered to
Cambridge. If Client terminates the Cambridge Program Services or an in-
process Cambridge Task Order pursuant to Section 9.3(c), Cambridge
Technology will reimburse Client for amounts paid to ▇▇▇▇▇ Systems in
completing the Cambridge Service that, when added to the amounts previously
paid to Cambridge Technology, are in excess of the price agreed to by
Cambridge Technology and Client for the Cambridge Service as stipulated in
this Agreement or the applicable Task Order. The amount of such payments
made by Cambridge Technology shall be subject to the limitations contained
in Article 12. Nothing contained in this Section 4.6(c) shall relieve
Client from the obligation to mitigate its damages and to act reasonably in
the case of a breach by Cambridge Technology nor shall anything in this
Section 4.6(c) increase Cambridge Technology's liability to Client under
the contract law of Colorado.
4.7 Access to Services from ▇▇▇▇▇ Systems' Subsidiaries, Affiliates, and
--------------------------------------------------------------------
Joint Ventures. Upon request by Client, ▇▇▇▇▇ Systems will provide Client with
--------------
preferential access to the services provided by ▇▇▇▇▇ Systems' Subsidiaries,
Affiliates and joint ventures, including but not limited to HCL ▇▇▇▇▇ Systems,
N.V. and The Doblin Group, Inc., and will use reasonable commercial efforts to
provide Client with preferential access to the services provided by ▇▇▇▇▇
Systems' clients and alliances, in each case subject to mutually satisfactory
terms and conditions to be negotiated in good faith at the time of the request.
4.8 Transfer of Personnel.
---------------------
(a) ▇▇▇▇▇ Systems will offer to employ, subject to ▇▇▇▇▇ Systems'
standard employment practices and policies, each person identified in
Schedule 4.8 that is an employee of Client on the Effective Date. ▇▇▇▇▇
Systems will offer each such person a salary and benefits package,
including disability, health and life insurance coverage, comparable to
that offered to other ▇▇▇▇▇ Systems' employees having similar skills and
experience. ▇▇▇▇▇ Systems will use reasonable commercial efforts to employ
each Transitioned Employee as soon as practicable after the Effective Date.
(b) ▇▇▇▇▇ Systems will have no liability whatsoever arising out of
the employment of any individual identified on Schedule 4.8, whether or not
such individual
21
becomes a Transitioned Employee, with respect to any period prior to the
date on which such person commences employment with ▇▇▇▇▇ Systems. Client
will have no liability whatsoever arising out of the employment of any
Transitioned Employee with respect to any period on or after the date on
which such person commences employment with ▇▇▇▇▇ Systems; provided
however, that Client will retain all responsibility and liability for
compliance with the requirements of Section 4980B of the Internal Revenue
Code of 1986, as amended.
ARTICLE 5
CLIENT OBLIGATIONS
5.1 Service Exclusivity.
-------------------
(a) Client will obtain from ▇▇▇▇▇ Systems all of Client's
requirements for the PSC Program Services, Transition Services, Operations
Services, and Application Support Services. Client hereby appoints ▇▇▇▇▇
Systems as its agent for all matters pertaining to such Operations Services
and Application Support Services, and will, at ▇▇▇▇▇ Systems' request,
notify appropriate third parties of such appointment. However, nothing in
this Agreement authorizes ▇▇▇▇▇ Systems to, and ▇▇▇▇▇ Systems will not,
enter into, amend, terminate, or extend or renew any Managed Contract or
any other agreement or arrangement with any third party or bind Client to
any such agreement or arrangement without Client's prior consent.
The parties contemplate that Client after the Effective Date (1) may
acquire (by merger, consolidation, acquisition of assets or otherwise) a
business function or unit (whether the acquired business function or unit
after the acquisition is a subsidiary, division or other business unit of
Client) or (2) may be acquired (in a merger, consolidation, acquisition of
assets, or otherwise) by an entity (the "Acquirer") with a business
function or unit, that is different from or in addition to the business
functions and units operated by Client at the Effective Date (each, a "New
Business"). To the extent Client or Acquirer uses Systems managed by ▇▇▇▇▇
Systems under this Agreement to provide information technology services to
the New Business, Client or Acquirer, as the case may be, will obtain its
requirements for such services (to the extent such services are reasonably
considered to be PSC Program Services, Operations Services and Application
Support Services as described in the applicable Schedules) from ▇▇▇▇▇
Systems. Nothing in this Agreement, however, will require that Client or
Acquirer (i) use Systems managed by ▇▇▇▇▇ Systems to provide information
technology services to the New Business or to integrate the information
technology systems for any New Business with Systems managed by ▇▇▇▇▇
Systems if Client or Acquirer, as the case may be, determines in its sole
discretion not to do so, or (ii) cancel, modify or terminate any third
party information technology services agreement in effect at the time of
the acquisition of the New Business. For purposes of this section, Client
and Acquirer will not be deemed
22
to be using Systems managed by ▇▇▇▇▇ Systems to provide information
technology services to a New Business if such Systems and the systems in
place at the New Business merely are modified to enable Client or Acquirer,
as the case may be, to pass information between such systems; provided that
▇▇▇▇▇ Systems is not required to manage the interface between such systems;
and provided further that ▇▇▇▇▇ Systems will have no liability to Client or
Acquirer under this Agreement for any degradation in Service Levels or
other performance of the Systems that is caused by the interface between
such systems.
(b) Client will obtain from Cambridge Technology all of the Cambridge
Program Services and the Application Development Services relating to the
Transition Critical Applications that are described in Schedule 5.1
(collectively, the "Transition Critical Services"); provided that if
Cambridge Technology proposes to perform a Transition Critical Service for
a price greater than the Development Budget for such Transition Critical
Service set forth in Schedule 5.1 (provided that such Development Budget
may be adjusted as part of the Change Control Process to reflect any
changes in the scope requested by Client affecting the cost of performing
such Transition Critical Service), then Client may seek third party bids to
perform such Transition Critical Service and has the right to obtain such
Service from third parties.
(c) Client may seek third party bids and has the right to obtain
services from third parties to perform information technology services
other than the PSC Program Services, Transition Services, Operations
Services, Application Support Services or the Transition Critical Services
described in the Schedules.
(d) If Client obtains information technology services from any third
party, ▇▇▇▇▇ Systems will have the right to approve, which approval will
not be unreasonably withheld, the implementation and installation of any
resulting Third Party Software, Equipment or services that ▇▇▇▇▇ Systems
will be required to manage or operate as part of the Operations Services,
prior to becoming responsible for such Third Party Software, Equipment or
services as part of the Operations Services. In any case where no final
agreement has been reached on implementation or installation of such Third
Party Software, Equipment or services but Client's Account Manager
nonetheless requests ▇▇▇▇▇ Systems to implement, install, or operate it or
them, ▇▇▇▇▇ Systems will use its commercially reasonable efforts to carry
out such request at a price and on such other reasonable terms proposed by
▇▇▇▇▇ Systems; and in such event, either of ▇▇▇▇▇ Systems or Client may
refer the disputed request to the procedures provided in Article 14.
5.2 Client Facilities. Commencing on the Effective Date,
-----------------
(a) Client will provide to ▇▇▇▇▇ Systems and Cambridge Technology, at
no charge to ▇▇▇▇▇ Systems or Cambridge Technology, the use of reasonable
space at Client's Facilities in connection with the performance of the
Services, together with parking, office furnishings, telephone equipment
and services, janitorial services, utilities
23
(including air conditioning), and non-dedicated office-related equipment,
supplies and duplicating services at such Client premises as reasonably
required in connection with the performance of the Services. When a portion
of the Client Facilities provided to ▇▇▇▇▇ Systems or Cambridge Technology
is no longer required to perform the Services, ▇▇▇▇▇ Systems and Cambridge
Technology will release such portion to Client in substantially the same
condition as when ▇▇▇▇▇ Systems and Cambridge Technology began using such
portion.
(b) Client will provide storage space for backup data files
sufficient to comply with Client's data and document retention policies.
(c) Client will provide ▇▇▇▇▇ Systems and Cambridge Technology with
access to all Client Facilities 24 hours a day, seven days a week to the
extent reasonably necessary to provide the Services. ▇▇▇▇▇ Systems and
Cambridge Technology will use, and will cause all PSC Personnel and all
Cambridge Personnel to use, Client Facilities solely to provide the
Services and, to the extent reasonably necessary for PSC Personnel and
Cambridge Personnel who are assigned to Client's account, to perform other
routine business activities. To the extent a portion of the Client
Facilities is dedicated to occupancy by ▇▇▇▇▇ Systems or Cambridge
Technology and is lockable (e.g., an office, as opposed to a cubicle, or a
file cabinet), Client will not enter such portion outside normal business
hours without the CPA Account Manager's prior consent, except to perform
facilities-related activities.
5.3 Transition. As part of the technology review described in Section
----------
1.4(a), ▇▇▇▇▇ Systems has developed, with Client's assistance, a detailed list
(which list is attached as Schedule 5.3) of all:
(a) licenses, maintenance agreements, support agreements and other
agreements that will be (i) transferred from RSI to, and assumed by,
Client, or (ii) obtained from Third Party Vendors prior to the completion
of the Transition by Client (the "Managed Contracts") in order to support
the Operations Services (Part A of Schedule 5.3);
(b) Third Party Software and Equipment that will be transferred from
RSI to, or leased, purchased or licensed by, Client (the "Managed
Equipment" and "Managed Software") in order to support the Operations
Services (Part B of Schedule 5.3); and
(c) information technology services, if any, that will continue to be
performed by RSI after the Effective Date and the dates on which such
services will be transitioned to ▇▇▇▇▇ Systems (Part C of Schedule 5.3).
Client will use its reasonable commercial efforts to cause RSI and its
other Third Party Vendors to cooperate with ▇▇▇▇▇ Systems in the performance of
the Transition Services.
24
5.4 Third Party Software, Equipment and Third Party Services.
--------------------------------------------------------
(a) Client will, at Client's expense (including all lease costs,
depreciation, insurance and taxes), purchase, lease or license, and retain
complete financial and legal responsibility for, and provide and make
available to ▇▇▇▇▇ Systems and Cambridge Technology all Third Party
Software, Equipment and Third Party Services that are reasonably necessary
to provide the Services. In addition, Client will, at Client's expense,
provide to ▇▇▇▇▇ Systems and Cambridge Technology, at no charge to ▇▇▇▇▇
Systems or Cambridge Technology, for use by PSC Personnel or Cambridge
Personnel performing Services at Client's Facilities (or such substitute
facilities selected by Client), personal computers, workstations,
terminals, printers and other equipment reasonably required by PSC
Personnel or Cambridge Personnel in connection with the performance of the
Services.
(b) Except as otherwise agreed by Client and ▇▇▇▇▇ Systems in a Task
Order or Change Order, Client will obtain and retain financial and legal
responsibility for all Managed Contracts.
(c) Client will take no action or fail to take any required action
relating to a Required Consent that could reasonably be expected to impair
▇▇▇▇▇ Systems' or Cambridge Technology's ability to perform the Services.
In addition, Client will pay or reimburse ▇▇▇▇▇ Systems or Cambridge
Technology, as the case may be (as Pass-Through Expenses) all fees imposed
by Third Party Vendors in connection with granting Required Consents,
including but not limited to transfer, license, and upgrade fees, and to
obtain rights for ▇▇▇▇▇ Systems or Cambridge Technology to use, or to the
extent necessary, to transfer to ▇▇▇▇▇ Systems or Cambridge Technology, all
Third Party Software and Equipment necessary to perform the Services. ▇▇▇▇▇
Systems will use its reasonable commercial efforts to eliminate or minimize
all such fees.
5.5 Certain Obligations. Client will, at its expense, provide ▇▇▇▇▇
-------------------
Systems and Cambridge Technology with specific advice and interpretive direction
regarding federal, state and local legal and regulatory issues specific to
Client's business that affect the Services to be provided under this Agreement.
25
ARTICLE 6
CHARGES AND PAYMENT
6.1 Charges for PSC Services. Client will pay ▇▇▇▇▇ Systems the amounts
------------------------
set forth in Schedule 6.1 for the PSC Services, at the times and according to
the terms set forth in that Schedule and this Article 6.
6.2 Charges for Cambridge Services. Client will pay Cambridge Technology
-------------------------------
the amounts set forth in Schedule 5.1 for the Cambridge Services, at the times
and according to the terms set forth in that Schedule and this Article 6.
6.3 Charges for Additional Services. Unless otherwise agreed by the
-------------------------------
affected parties, Client will pay ▇▇▇▇▇ Systems or Cambridge Technology, as the
case may be, for Additional Services at such party's then-current commercial
billing rates for services rendered on a time and materials basis less the
discounts set forth in Schedule 6.3.
6.4 Risk/Reward Pricing.
-------------------
(a) Cambridge Technology. Subject to the limitations set forth in
--------------------
Section 6.4(c), Cambridge Technology will issue performance credits to
Client, and Client will pay performance bonuses to Cambridge Technology, in
accordance with, and subject to the limitations set forth in, Part A of
Schedule 6.4.
(b) ▇▇▇▇▇ Systems. Subject to the limitations set forth in Section
-------------
6.4(c), ▇▇▇▇▇ Systems will issue performance credits to Client, and Client
will pay performance bonuses to ▇▇▇▇▇ Systems, in accordance with, and
subject to the limits set forth in, Part B of Schedule 6.4.
(c) Limitation on Credits. ▇▇▇▇▇ Systems will only be obligated to
---------------------
issue credits under Schedule 6.4 and this Section 6.4 to the extent it is
unable to meet the applicable criteria primarily as a result of actions or
failures to act by its Personnel, and not primarily as a result of actions
or failures to act by Client, Cambridge Technology, a third party other
than a subcontractor of ▇▇▇▇▇ Systems, or Force Majeure. Cambridge
Technology will only be obligated to issue credits under Schedule 6.4 and
this Section 6.4 to the extent it is unable to meet the applicable criteria
primarily as a result of actions or failures to act by its Personnel, and
not primarily as a result of actions or failures to act by Client, ▇▇▇▇▇
Systems, a third party other than a subcontractor of Cambridge Technology,
or Force Majeure.
(d) Credits as Sole Remedy. Except as provided in Sections 9.3(a),
----------------------
9.3(b), and 9.5, any performance credits issued in accordance with the
provisions of Schedule 6.4 by ▇▇▇▇▇ Systems or Cambridge Technology, as the
case may be, in accordance with this
26
Section 6.4 will be Client's sole remedy in connection with the Service
Levels, regardless of the form of the claim.
6.5 Reimbursable Expenses. Client will reimburse each of ▇▇▇▇▇ Systems
---------------------
and Cambridge Technology for its respective actual, reasonable out-of-pocket
expenses incurred in connection with their performance of the PSC Services and
the Cambridge Services ("Reimbursable Expenses"), including but not limited to
all reasonable (i) travel and lodging expenses, (ii) telecommunications network
circuit charges, and (iii) reimbursable sales and use taxes. To be reimbursable,
an expense must have been approved (specifically or by category) by Client in
advance and must comply with Client's standard expense reimbursement policy.
Each Change Order and Task Order will set forth an estimate of Reimbursable
Expenses anticipated to be incurred in connection with such Change Order or Task
Order and Client's approval of such Change Order or Task Order will be deemed to
constitute Client's approval to incur Reimbursable Expenses up to the amount set
forth in such Change Order or Task Order. Commencing 90 days after the Effective
Date, ▇▇▇▇▇ Systems will provide Client with a quarterly estimate of
Reimbursable Expenses anticipated to be incurred over the following 90 days.
6.6 Pass-Through Expenses.
---------------------
(a) Client will establish in its or its nominee's name a pass-through
expense account ("Account") with a mutually satisfactory bank for payment
of Pass-Through Expenses (other than fees for the Cambridge Services to be
treated as Pass-Through Expenses) as Client and ▇▇▇▇▇ Systems agree
appropriate.
(b) ▇▇▇▇▇ Systems, as agent for Client, will issue checks from the
Account for Pass-Through Expenses (other than fees for the Cambridge
Services that will be invoiced in accordance with Section 6.9) in the
amount Client approves in accordance with Section 6.6(c). If ▇▇▇▇▇ Systems
pays any person less than the amount to which such person is entitled under
the relevant Managed Contract (unless Client has not approved such amount),
▇▇▇▇▇ Systems will promptly adjust the underpayment by issuing an
additional check from the Account. If ▇▇▇▇▇ Systems pays any person more
than the amount to which such person is entitled under the relevant Managed
Contract and this Agreement, or pays any person not entitled to receive
payment under this Agreement, ▇▇▇▇▇ Systems will take all reasonable steps
to recover the overpayment except that ▇▇▇▇▇ Systems will not be required
to initiate litigation or arbitration to recover any overpayment. ▇▇▇▇▇
Systems will promptly notify the Client if it is unsuccessful in recovering
any overpayment.
(c) ▇▇▇▇▇ Systems will review all invoices for Pass-Through Expenses
to determine whether the charges reflected in such invoices comply in all
material respects with the applicable purchase documentation or contract.
After completing its review, ▇▇▇▇▇ Systems will submit such invoices,
together with ▇▇▇▇▇ Systems' recommendation for payment, nonpayment, or
partial payment, to Client on or about the fifth and twentieth
28
days of the month for Client's review and approval. Client will promptly
review and approve the invoices submitted to it (or advise the CPA Account
Manager that an invoice is not approved, with an explanation of the reasons
for not approving the invoice). Upon approval of an invoice, Client will
fund the Account in an amount sufficient to pay the invoice, and ▇▇▇▇▇
Systems will promptly thereafter pay the invoice (other than invoices from
Cambridge Technology, which will be paid as set forth in Section 6.9) from
the Account as provided in this Section 6.6. In making payments from the
Account, ▇▇▇▇▇ Systems will comply with those financial controls and
procedures of which Client gives ▇▇▇▇▇ Systems notice.
(d) Client will reimburse ▇▇▇▇▇ Systems for all late fees and
interest charges that accrue under the applicable purchase documentation or
contract on any invoiced amounts for which funds are not deposited by
Client in the designated Account at least two business days prior to the
invoice due date, provided that ▇▇▇▇▇ Systems is identified as the
purchaser or payment agent in the applicable purchase documentation.
6.7 Taxes and Tax Planning.
----------------------
(a) Responsibility. Except as set forth in this Section, Client will
--------------
pay, or reimburse ▇▇▇▇▇ Systems for, all taxes and duties levied in
connection with the Services or this Agreement.
(i) Each of ▇▇▇▇▇ Systems or Cambridge Technology, as the case
may be, will pay all sales, use, value-added and similar taxes levied
on any goods or services used or consumed by such party in providing
the PSC Services or the Cambridge Services, as the case may be.
(ii) Each of ▇▇▇▇▇ Systems or Cambridge Technology, as the case
may be, will pay all (A) real and personal property, ad valorem and
similar taxes on real, personal and intangible property such party
owns, leases or licenses, (B) franchise and privilege taxes on such
party's business operations, (C) taxes based on such party's net
income or gross receipts, and (D) payroll and similar taxes related to
such party's Personnel.
(b) Cooperation.
-----------
(i) Each party will cooperate with the other parties in all
reasonable respects to determine and minimize applicable tax
liabilities, including working with the other parties to allocate,
where appropriate, payments made under this Agreement among categories
for (i) taxable goods, services and transactions, (ii) non-taxable
goods, services, and transactions, and (iii) transactions in which
▇▇▇▇▇ Systems acts solely as a payment agent for Client in receiving
goods or services
28
(including leasing and licensing arrangements) that otherwise are non-
taxable or have previously been subjected to tax.
(ii) Each party will provide the other parties with resale
certificates, information regarding out-of-state use of materials,
services or sales, or other exemption certificates or information
reasonably requested by any other party.
(iii) Each party will promptly notify the other parties of, and
coordinate with the other parties the response to and settlement of,
any claim for taxes asserted by applicable authorities for which
liability by the other parties is asserted, it being understood that
with respect to any claim arising out of a form or return signed by a
party, such party will have the right to elect to control the response
to and settlement of the claim.
6.8 Pricing Adjustments. If the Price Index at any anniversary of the
-------------------
Effective Date ("Current Index") is higher than the Price Index on the Effective
Date ("Base Index"), then, effective as of such anniversary, all charges
hereunder (other than Pass-Through Expenses, Reimbursable Expenses and charges
under a fixed-price Statement of Work, Task Order, or Change Order) will be
increased by the percentage that the Current Index increased from the Base
Index, except to the extent otherwise agreed by the parties.
6.9 Invoices and Payment.
--------------------
(a) Cambridge Technology will invoice Client, by submitting invoices
to the CPA Account Manager for processing on or about the 20th day of each
calendar month, for (i) the Cambridge Program Services performed during the
previous month (ii) all Reimbursable Expenses incurred during the previous
month and (iii) the payments due in accordance with the payment schedules
contained in each individual Task Order (collectively, the "Cambridge
Charges").
(b) ▇▇▇▇▇ Systems will invoice Client monthly on or about the 20th
day of each calendar month for (i) the PSC Services to be performed during
the following calendar month, including, to the extent applicable, ▇▇▇▇▇
Systems' good faith estimate of its fees and expenses for any PSC Services
to be provided on a time and materials or similar basis, (ii) the Cambridge
Charges invoiced pursuant to subsection (a) above, (iii) all Reimbursable
Expenses incurred during the previous month, and (iv) an adjustment for any
underpayments or overpayments made in connection with any previous month's
estimated fees or expenses or other applicable correction.
(c) Each party will substantiate its invoices in reasonable detail
(including, on Client's request, copies of any third-party invoices).
Amounts not disputed within 18 months from Client's receipt of an invoice
will be deemed correct.
29
(d) Client will pay all undisputed amounts within 10 days after
receiving the applicable invoice by wire transfer to a bank account
specified by ▇▇▇▇▇ Systems, and will promptly pay ▇▇▇▇▇ Systems any
disputed amounts promptly upon the parties' resolution of such dispute.
Within two business days after receiving funds from Client as payment for
any Cambridge Charges, ▇▇▇▇▇ Systems will transfer such funds to Cambridge
Technology.
(i) Within 45 days after receiving the applicable invoice,
Client will give notice to the CPA Account Manager of any variable
amount due under this Agreement that is reasonably disputed in good
faith by Client, which notice will include a reasonably detailed
explanation of the disputed amount and the grounds for the dispute.
Client's failure to pay amounts disputed in accordance with this
Section 6.9 will not (prior to the resolution of the applicable
dispute) be grounds for a claim of breach or suspension of work by
either ▇▇▇▇▇ Systems or Cambridge Technology unless Client fails to
pursue a resolution of such dispute vigorously within 60 days after
the applicable invoice date in good faith.
(ii) In the event that the aggregate disputed amounts for either
of ▇▇▇▇▇ Systems or Cambridge Technology exceed $100,000, but are less
than $300,000, then Client will pay all such disputed amounts for such
party into escrow in a major United States commercial bank with which
neither party has significant dealings, with interest to be allocated
to the party entitled to the principal upon resolution of the dispute.
In the event that the aggregate disputed amounts for either of ▇▇▇▇▇
Systems or Cambridge Technology exceed $300,000, then Client will pay
all such disputed amounts in excess of $300,000 in accordance with the
terms of this Agreement and will seek reimbursement of such disputed
amounts through good faith negotiation or otherwise in accordance with
Article 14.
(iii) In the event ▇▇▇▇▇ Systems (A) fails to provide the number
of FTEs set forth in the staffing plan for the Application Support
Services (other than for reasons of short-term illness, vacation or
similar routine absences), or (B) fails to perform a portion of the
PSC Program Services or Operations Services, and such failure has an
adverse impact on Client, ▇▇▇▇▇ Systems and Client will negotiate an
equitable reduction to ▇▇▇▇▇ Systems' fees for the unperformed
services.
(e) Late payments will accrue interest at the Designated Interest
Rate from the applicable due date to the date of actual payment by Client.
Overpayments by Client will accrue interest at the Designated Interest Rate
from the date 10 days after a request by Client for reimbursement of or
credit for the overpayment to the date Client is reimbursed or credited the
overpayment.
(f) ▇▇▇▇▇ Systems will offset all credits due to Client under this
Agreement against amounts then owing by Client starting with the oldest
undisputed amounts owed.
30
Any credits owed to Client at the termination or expiration of this
Agreement will be paid to Client in cash by the party owing such credits
within 30 days after termination or expiration.
(g) ▇▇▇▇▇ Systems will credit any overpayments made by Client against
the first invoice issued to Client after discovery of the overpayment to
the extent reasonably practicable.
6.10 Audits by Client.
----------------
(a) At Client's request, but not more often than once per year, each
of ▇▇▇▇▇ Systems and Cambridge Technology will allow Client or its
designated representatives to audit such party's accounting books and
records to the extent necessary to verify such party's charges to Client
for the preceding 12-month period. In the case of Statements of Work and
Task Orders performed by a party on a fixed-price basis, however, the audit
will be limited to the party's Pass-Through Expenses and Reimbursable
Expenses. ▇▇▇▇▇ Systems or Cambridge Technology, as the case may be, will
cooperate with, and comply with all reasonable requests from, Client or its
designated representatives in connection with such audit. Prior to
conducting such audit, Client's designated representatives will execute and
deliver to the party to be audited a confidential information agreement
containing terms reasonably acceptable to such party.
(b) Upon completion of any such audit, Client and ▇▇▇▇▇ Systems or
Cambridge Technology, as the case may be, will review the audit report
together and work in good faith to agree upon (i) any adjustment of charges
to Client (including any credit or reimbursement of any overpayment by
Client) and (ii) any appropriate adjustments to such party's billing
practices. If any such audit discloses overpayments that in the aggregate
equal five percent or more of the amounts that were actually due, as shown
by the audit (or, in the case of audits of Pass-Through Expenses and
Reimbursable Expenses in connection with fixed-price Statements of Work or
Task Orders, five percent or more of such expenses that were actually due,
as shown by the audit), then the audited party will reimburse Client for
the costs of the audit.
6.11 Benchmarking.
------------
(a) ▇▇▇▇▇ Systems will perform an annual internal technology review
to assess the Services and the performance of the Systems then being
managed by ▇▇▇▇▇ Systems. Such review will include comparisons with similar
information technology installations to the extent information about
similar information technology installations are reasonably available.
▇▇▇▇▇ Systems will present the results of such review and any
recommendations for Changes based on such results to the Technology
Steering Committee.
31
(b) Client may initiate at its expense a third-party review of the
Services being performed by ▇▇▇▇▇ Systems, provided, however, that there
will be no more than one such review during any 12-month period during the
term of this Agreement. If Client initiates a third party review, Client
will, within five business days after sending notice of such election,
provide ▇▇▇▇▇ Systems with a list of three unbiased third party
benchmarkers acceptable to Client. ▇▇▇▇▇ Systems will select one of such
third party benchmarkers to be engaged by Client. Client and ▇▇▇▇▇ Systems
will negotiate in good faith to determine jointly the information to be
provided to the benchmarker (the "Benchmark Information") and the scope and
cost of the review, and will (1) review the Benchmark Information and (2)
schedule a meeting to address any issues either party may have with the
Benchmark Information. The parties will cooperate in good faith with the
benchmarker selected by the parties. The benchmarker will review the scope
and level of Services then being provided under this Agreement, the total
number of personnel assigned to perform those Services, and the charges for
the Services and compare the scope and level of Services, the total number
of personnel assigned to perform such Services, and the charges for the
Services against similar services that are performed by other full service
systems integration and information technology outsourcing providers who
compete with ▇▇▇▇▇ Systems in similar markets in a similar period. If the
benchmarker reasonably determines that ▇▇▇▇▇ Systems' performance of the
Services, the number of personnel assigned to perform the Services, or the
charges for the Services are substantially above or below competitive
levels and the Executive Steering Committee agrees with such determination,
then the parties will agree in good faith on an equitable adjustment to the
Services, Service Levels, the number of personnel assigned to provide the
Services under this Agreement, or the charges for the Services (with
respect to Services to be provided in the future); provided, however, that
no adjustment will be made if (i) ▇▇▇▇▇ Systems' performance of the
Services is determined to be less than 5% below, or the number of personnel
assigned to perform the Services or the charges for the Services are
determined to be less than 5% above, competitive levels, or (ii) ▇▇▇▇▇
Systems' performance of the Services is determined to be more than 10%
above, or the number of personnel assigned to perform the Services or the
charges for the Services are determined to be more than 10% below,
competitive levels. If either affected party disputes the auditor's
determination, the parties will resolve the dispute in accordance with
Article 14.
6.12 Client Surveys.
--------------
(a) Baseline Customer Satisfaction Survey. During the 90-day period
-------------------------------------
after the Effective Date, and as part of the Operations Services, ▇▇▇▇▇
Systems will conduct a survey to measure end-user satisfaction with the
Systems at each Client site. The survey will contain questions to be agreed
upon by Client and ▇▇▇▇▇ Systems within 60 days after the Effective Date.
The survey will be administered according to procedures agreed upon by
▇▇▇▇▇ Systems and Client within 60 days after the Effective Date. ▇▇▇▇▇
Systems will promptly share the results of each such survey with Client,
including, without limitation,
32
copies of the user questionnaires completed by any Client Personnel. A
sample Client Satisfaction Survey is attached as Attachment F.
(b) Regular Customer Satisfaction Surveys. At least once every six
-------------------------------------
months during the term of this Agreement during a mutually agreed time
period, and as part of the Operations Services, ▇▇▇▇▇ Systems will conduct
a survey to measure end-user satisfaction with the Systems and ▇▇▇▇▇
Systems' responsiveness to requests for PSC Services at each Client site.
The survey will at a minimum cover at least the following classes of users:
(i) end users of the PSC Services, (ii) senior management of end users, and
(iii) senior managers of Client's information management function. The
survey will contain questions to be agreed upon by Client and ▇▇▇▇▇ Systems
no later than 30 days before the date on which the survey is scheduled to
begin. ▇▇▇▇▇ Systems will promptly share the results of each such survey
with Client, including, without limitation, copies of the user
questionnaires completed by any Client Personnel. The content, scope, and
method of each such survey will be consistent with the baseline customer
survey conducted under Section 6.12(a), and the timing of the surveys will
be subject to mutual agreement. ▇▇▇▇▇ Systems agrees that increasing
customer satisfaction, as measured by such surveys, may be a factor in
determining performance credits under Section 6.4.
6.13 Extraordinary Events. If an Extraordinary Event occurs or is
--------------------
reasonably expected to occur, Client and ▇▇▇▇▇ Systems or Client and Cambridge
Technology, as the case may be, will negotiate in good faith appropriate changes
to the charges assessed or the scope, nature or volume of Services provided
under this Agreement. For purposes of this Agreement, "Extraordinary Event"
means an event or transaction or series of events or transactions relating to
Client's business that results or is reasonably expected to result in a material
increase or decrease of ▇▇▇▇▇ Systems' or Cambridge Technology's cost of
providing the Services or in the resources required to provide the Services. The
term "Extraordinary Events" includes (i) changes to the principal locations
where Client operates; (ii) material changes in products or services of, or in
the users served by, Client; (iii) mergers, annexations, or divestitures of a
material nature involving Client; (iv) changes in the method of service delivery
by Client not contemplated by this Agreement; (v) changes in service priorities;
and (vi) increases or decreases of greater than ten percent in the baseline
volumes set forth in Schedule 6.1 (except to the extent Schedule 5.1 or Part B
of Schedule 6.1 provides for incremental charges in connection with such volume
changes).
ARTICLE 7
PROPRIETARY RIGHTS
7.1 PSC Work Product.
----------------
(a) Subject to Client's payment for the related PSC Services and the
provisions of Section 7.1(b), ▇▇▇▇▇ Systems hereby assigns to Client, to
the maximum
33
extent permitted by applicable law, all right, title and interest in and to
all PSC Work Product, including but not limited to all trade secret,
copyright, patent and other intellectual property rights in and to such PSC
Work Product. ▇▇▇▇▇ Systems will cooperate reasonably with Client in
connection with such assignment, including the execution of documents and
the taking of such further action as may be reasonably requested by Client.
(b) Except as otherwise provided in this Agreement (including ▇▇▇▇▇
Systems' confidentiality obligations under Article 8), ▇▇▇▇▇ Systems may
(1) develop or distribute products or perform services similar to the PSC
Work Product or the PSC Services, or (2) use any concepts, know-how or
techniques developed by ▇▇▇▇▇ Systems as a direct result of developing the
PSC Work Product or performing the PSC Services to develop or distribute
products or to perform services for any other person (provided that ▇▇▇▇▇
Systems may not use any such concepts, know-how or techniques to develop
similar products for the Key Competitors unless such concepts, know-how or
techniques are publicly available without a breach of this Agreement or
generally known in the industry).
7.2 Cambridge Work Product.
----------------------
(a) Subject to Client's payment for the related Cambridge Services
and the provisions of Section 7.2(b), Cambridge Technology hereby assigns
to Client, to the maximum extent permitted by applicable law, all right,
title and interest in and to all Cambridge Work Product, including but not
limited to all trade secret, copyright, patent and other intellectual
property rights in and to such Cambridge Work Product. Cambridge Technology
will cooperate reasonably with Client in connection with such assignment,
including the execution of documents and the taking of such further action
as may be reasonably requested by Client.
(b) Except as otherwise provided in this Agreement (including
Cambridge Technology's confidentiality obligations under Article 8),
Cambridge Technology may (1) develop or distribute products or perform
services similar to the Cambridge Work Product or the Cambridge Services,
or (2) use any concepts, know-how or techniques developed by Cambridge
Technology as a direct result of developing the Cambridge Work Product or
performing the Cambridge Services to develop or distribute products or to
perform services for any other person (provided that Cambridge Technology
may not use any such concepts, know-how or techniques to develop similar
products for the Key Competitors unless such concepts, know-how or
techniques are publicly available without a breach of this Agreement or
generally known in the industry).
7.3 Third-Party Intellectual Property.
---------------------------------
34
(a) Unless authorized to do so by Client or the authorized licensor
of any applicable Third-Party Intellectual Property, neither ▇▇▇▇▇ Systems
nor Cambridge Technology will incorporate into any PSC Work Product or
Cambridge Work Product, as the case may be, or use for the benefit of
Client in connection with the PSC Services or Cambridge Services, as the
case may be, any Third-Party Intellectual Property.
(b) To the extent that ▇▇▇▇▇ Systems or Cambridge Technology is
reasonably expected to use, reproduce or create derivative works of Third-
Party Intellectual Property owned by or licensed to Client to fulfill its
obligations under this Agreement, Client hereby authorizes ▇▇▇▇▇ Systems or
Cambridge Technology, as the case may be, as an independent contractor of
Client, and grants to ▇▇▇▇▇ Systems or Cambridge Technology, as the case
may be, to the extent permitted by any applicable agreement to which Client
is a party, a non-exclusive, non-transferable, royalty-free license, to
use, reproduce and create derivative works of such Third-Party Intellectual
Property to the extent necessary to, and for the sole purpose of,
fulfilling such party's obligations under this Agreement. Client, at no
charge to ▇▇▇▇▇ Systems or Cambridge Technology, as the case may be, and
with ▇▇▇▇▇ Systems' or Cambridge Technology's, as the case may be,
cooperation and assistance, will use commercially reasonable efforts to
obtain any consents from third parties necessary to ▇▇▇▇▇ ▇▇▇▇▇ Systems or
Cambridge Technology these rights.
(c) If (1) ▇▇▇▇▇ Systems or Cambridge Technology, as the case may be,
acquires the right to use, reproduce or create derivative works of any
Third-Party Intellectual Property and (2) the PSC Work Product or Cambridge
Work Product, as the case may be, contemplated by this Agreement to be
developed by such party cannot reasonably be used as contemplated by this
Agreement unless such party can transfer such rights to Client in
accordance with the terms of this Agreement, then such party will obtain
the right to transfer such rights to Client. Subject to the license or
other restrictions imposed by the owner or licensor of that Third-Party
Intellectual Property, none of which will impair Client's use of such PSC
Work Product or Cambridge Work Product, as the case may be, as contemplated
by this Agreement, ▇▇▇▇▇ Systems or Cambridge Technology, as the case may
be, assigns or sublicenses, as the case may be, to Client all rights in and
to all Third-Party Intellectual Property that forms part of a PSC Work
Product or Cambridge Work Product, as the case may be, that are necessary
to allow Client to use that PSC Work Product or Cambridge Work Product as
contemplated by this Agreement upon acceptance of, and payment for, that
PSC Work Product or Cambridge Work Product, as the case may be.
7.4 Pre-Existing Intellectual Property. Unless otherwise agreed in a
----------------------------------
Task Order or an amendment to this Agreement, if ▇▇▇▇▇ Systems or Cambridge
Technology delivers to Client any Pre-Existing Intellectual Property as part of
an Application or System, such party will, and hereby does, grant to Client a
non-exclusive, royalty-free, world-wide, perpetual license to make, have made,
use, reproduce, modify, adapt, such Pre-Existing Intellectual Property provided
that Client will not use such Pre-Existing Intellectual
35
Property to sell service bureau services to third parties who are not
Subsidiaries, Affiliates, or retail dealer or franchisees of Client, or
sublicense any third party to make, have made, use, reproduce, modify, or adapt
such Pre-Existing Intellectual Property (provided that Client may sublicense to
a Subsidiary (for so long as such entity remains a Subsidiary) any of the rights
that Client is permitted to exercise with respect to Pre-Existing Intellectual
Property). ▇▇▇▇▇ Systems or Cambridge Technology, as the case may be, will
advise Client in the relevant Work Order of all Pre-Existing Intellectual
Property to be delivered to Client under the Work Order. ▇▇▇▇▇ Systems and
Cambridge Technology each agree not to license to any Named Competitor any
combination of Pre-Existing Intellectual Property and PSC Work Product or
Cambridge Work Product that performs a substantial portion of any Application
delivered to Client under this Agreement, except to the extent the functionality
embodied in such Pre-Existing Intellectual Property performs functions that are
commonly available in the market.
ARTICLE 8
CONFIDENTIALITY
8.1 Ownership of Client Data. All data and information relating to
------------------------
Client's business operations that is provided by or on behalf of Client to ▇▇▇▇▇
Systems or Cambridge Technology in connection with the Services will remain the
property of Client. Each of ▇▇▇▇▇ Systems and Cambridge Technology will use such
data or information solely in connection with performing the Services.
8.2 Confidential Information.
------------------------
(a) Each party (a "receiving party") agrees that all information
regarding each other party's (a "disclosing party") methodologies,
financial affairs, business activities and plans communicated to the
receiving party will be treated as confidential information ("Confidential
Information"). For purposes of the foregoing, Confidential Information
will not include information that (1) was known by the receiving party
without an obligation of confidentiality prior to its receipt from the
disclosing party, (2) is independently developed by the receiving party
without reliance on Confidential Information, (3) is or becomes publicly
available without a breach of this Agreement by the receiving party, (4) is
disclosed to the receiving party by a third person who is not required to
maintain its confidentiality, or (5) is required to be disclosed by reason
of legal, accounting or regulatory requirements beyond the reasonable
control of the receiving party. The receiving party has the burden of
proving the applicability of the foregoing exceptions.
(b) Each receiving party will use at least the same degree of care,
but no less than a reasonable degree of care, to avoid unauthorized
disclosure or use of each disclosing party's Confidential Information as it
employs with respect to its own Confidential Information of similar
importance.
36
(c) Each receiving party may disclose Confidential Information only
to the other parties to this Agreement and its own officers, directors, and
employees and to its consultants, subcontractors and advisors who
reasonably need to know it. Each receiving party will be responsible to the
disclosing party for any violation of this Agreement by its officers,
directors, employees, consultants, subcontractors or advisors.
(d) No receiving party may print or copy, in whole or in part, any
documents or other media containing a disclosing party's Confidential
Information, other than copies for its officers, directors, employees,
consultants or advisors who are working on the matter, without the prior
consent of the disclosing party.
(e) No receiving party may use a disclosing party's Confidential
Information for competing with the disclosing party or for any purpose not
in furtherance of this Agreement.
(f) Promptly after the earlier of the completion of a receiving
party's obligations under, or the termination of, this Agreement, such
receiving party will return or, with the consent of each disclosing party,
destroy all of that disclosing party's Confidential Information, except for
(i) archive and backup copies that are not readily accessible for use, (ii)
business records required by law to be retained by the receiving party and
(iii) information assigned or licensed to Client under Article 7.
(g) If a receiving party is requested, as part of an administrative
or judicial proceeding, to disclose any of a disclosing party's
Confidential Information, the receiving party will, to the extent permitted
by applicable law, promptly notify the disclosing party of such request and
cooperate with the disclosing party, at the disclosing party's expense, in
seeking a protective order or similar confidential treatment for such
Confidential Information.
(h) Each receiving party agrees that in the event of a breach or
threatened breach by a disclosing party, or any officer, director,
consultant, subcontractor, advisor or employee of such disclosing party, of
the provisions of this Article, the disclosing party will have no adequate
remedy in money damages and, accordingly, will be entitled to seek an
injunction against such breach, in addition to any other legal or equitable
remedies available to the disclosing party.
8.3 Attorney-Client Privilege.
-------------------------
(a) ▇▇▇▇▇ Systems acknowledges that Client may assert that certain
documents, data and databases created by ▇▇▇▇▇ Systems as part of the
Operations Services provided under this Agreement and all communications
related thereto (collectively, "Privileged Work Product") are subject to
certain privileges under
37
applicable law, including the attorney-client privilege, and may seek to
protect such Privileged Work Product from disclosure by Rule 26 of the
Federal Rules of Civil Procedure or other applicable rules or laws.
(b) Client will notify ▇▇▇▇▇ Systems of any Privileged Work Product
to which ▇▇▇▇▇ Systems has or may have access. After ▇▇▇▇▇ Systems receives
such notice, ▇▇▇▇▇ Systems will use reasonable commercial efforts to limit
access to such Privileged Work Product solely to those PSC Personnel for
whom such access is required to fulfill ▇▇▇▇▇ Systems' obligations under
this Agreement.
(c) If ▇▇▇▇▇ Systems is requested to provide any third party with
access to Privileged Work Product, ▇▇▇▇▇ Systems will, to the extent
permitted by applicable law, promptly notify Client and take, at Client's
expense, such reasonable actions as may be requested by Client to resist
providing such access. ▇▇▇▇▇ Systems will have the right, at Client's
expense, to retain independent legal counsel in connection with any such
request. If ▇▇▇▇▇ Systems is ultimately required, pursuant to an order of a
court or other authority reasonably believed by ▇▇▇▇▇ Systems to be of
competent jurisdiction, to disclose Privileged Work Product, ▇▇▇▇▇ Systems
will have no liability under this Agreement in connection with such
disclosure.
8.4 Internal Audits. Each of ▇▇▇▇▇ Systems and Cambridge Technology may
---------------
periodically perform, or cause to be performed, internal compliance reviews of
its activities under this Agreement. The specific findings of these reviews,
whether performed by ▇▇▇▇▇ Systems, Cambridge Technology, or a third person,
will be deemed Privileged Work Product and neither ▇▇▇▇▇ Systems nor Cambridge
Technology will be required to disclose such findings to Client under any
circumstances.
ARTICLE 9
TERM AND TERMINATION
9.1 Initial Term. The term of this Agreement (the "Initial Term") will
------------
begin at 8:00 a.m. Denver, Colorado time on the Effective Date and end at 7:59
a.m. Denver, Colorado time on the fifth anniversary of the Effective Date,
unless extended or earlier terminated in accordance with this Article 9.
9.2 Renewal Terms. The term of this Agreement will be automatically
-------------
extended for additional periods (each, a "Renewal Term") of one year unless
Client or ▇▇▇▇▇ Systems gives notice to the other at least six months prior to
the then-current Termination Date of its intention to allow this Agreement to
expire at the end of the Initial Term or then-current Renewal Term. Fees payable
by Client in connection with the PSC Services and the Cambridge Program Services
will be adjusted during each Renewal Term in accordance with Section 6.8.
38
9.3 Termination for Cause.
---------------------
(a) Client may terminate this Agreement with respect to any one or
more of the major categories of PSC Services (i.e., the Transition
Services, PSC Program Services, Operations Services, or Application Support
Services) or one or more individual Task Orders being performed by ▇▇▇▇▇
Systems if ▇▇▇▇▇ Systems (i) breaches any of its material duties or
material obligations to Client under this Agreement or the applicable Task
Order with respect to such major category of PSC Services, (ii) repeatedly
breaches a particular duty or obligation to Client under this Agreement or
the applicable Task Order with respect to such major category of PSC
Services or Task Order within the immediately preceding 12-month period
which repeated breaches collectively constitute a material breach of this
Agreement, or (iii) contemporaneously breaches a number of its duties or
obligations to Client under this Agreement or the applicable Task Order
with respect to such major category of PSC Services or Task Order which
collectively, based on the number, nature and relationship of such breaches
constitute a material breach of this Agreement, by delivering to ▇▇▇▇▇
Systems a notice of termination for cause (a "Termination Notice") setting
forth the date of termination, which date will not be more than six months
after the date of the Termination Notice, and a description in reasonable
detail of the breach for which Client is terminating this Agreement. Client
will be deemed to terminate this Agreement with respect to the PSC Program
Services upon termination of the last of all other major categories of PSC
Services to be terminated under this Agreement.
(b) If there occurs a Critical Service Level Failure, as that term is
defined in Schedule 6.4, primarily as a result of actions or failures to
act by ▇▇▇▇▇ Systems or PSC Personnel, and not primarily as a result of
actions or failures to act by Client or a third party other than ▇▇▇▇▇
Systems or PSC Personnel, or Force Majeure, Client may give ▇▇▇▇▇ Systems
at least 30 days' prior notice of its intention to terminate this Agreement
with respect to the PSC Services ("Notice Period"). During such Notice
Period, ▇▇▇▇▇ Systems may seek to cure the problems that are causing the
Critical Service Level Failure. If Client is reasonably satisfied that the
problems have been cured within the Notice Period, upon expiration of such
period, Client will rescind its notice. If Client is not reasonably
satisfied that the problems have been cured within the Notice Period, upon
expiration of such period, Client may exercise its right of termination
granted in this paragraph upon notice thereof to ▇▇▇▇▇ Systems during the
90 day period after the Notice Period; provided that the cure period
provided by 9.3(f) will not apply in the event Client exercises such right
of termination.
(c) Client may terminate this Agreement or one or more individual Task
Orders with respect to the Cambridge Services if Cambridge Technology (i)
breaches any of its material duties or material obligations to Client under
39
this Agreement with respect to such Task Order, (ii) repeatedly breaches a
particular duty or obligation to Client under this Agreement with respect
to such Task Order within the immediately preceding 12-month period which
repeated breaches collectively constitute a material breach of this
Agreement, or (iii) contemporaneously breaches a number of its duties or
obligations to Client under this Agreement which collectively, based on the
number, nature and relationship of such breaches constitute a material
breach of this Agreement, by delivering to the CPA Account Manager a notice
of termination for cause (a "Termination Notice") setting forth the date of
termination, which date will not be more than six months after the date of
the Termination Notice, and a description in reasonable detail of the
breach for which Client is terminating this Agreement. The CPA Account
Manager will deliver such Termination Notice to Cambridge Technology within
two business days after receiving it from Client.
(d) ▇▇▇▇▇ Systems may terminate this Agreement with respect to the PSC
Services if Client (i) breaches any of its material duties or material
obligations to ▇▇▇▇▇ Systems under this Agreement, (ii) repeatedly breaches
a particular duty or obligation to ▇▇▇▇▇ Systems within the immediately
preceding 12-month period which breaches collectively constitute a material
breach of this Agreement, or (iii) contemporaneously breaches a number of
its duties or obligations to ▇▇▇▇▇ Systems under this Agreement which
collectively, based on the number, nature and relationship of such breaches
constitute a material breach of this Agreement, by delivering to Client a
notice of termination for cause (a "Termination Notice") setting forth the
date of termination, which date will not be less than 30 days after the
date of the Termination Notice, and a description in reasonable detail of
the breach for which ▇▇▇▇▇ Systems is terminating this Agreement.
(e) Cambridge Technology may terminate this Agreement with respect to
the Cambridge Services if Client (i) breaches any of its material duties or
material obligations to Cambridge Technology under this Agreement, (ii)
repeatedly breaches a particular duty or obligation to Cambridge Technology
within the immediately preceding 12-month period which breaches
collectively constitute a material breach of this Agreement, or (iii)
contemporaneously breaches a number of its duties or obligations to
Cambridge Technology under this Agreement which collectively, based on the
number, nature and relationship of such breaches constitute a material
breach of this Agreement, by delivering to ▇▇▇▇▇ Systems a notice of
termination for cause (a "Termination Notice") setting forth the date of
termination, which date will not be less than 30 days after the date of the
Termination Notice, and a description in reasonable detail of the breach
for which Cambridge Technology is terminating this Agreement. ▇▇▇▇▇ Systems
will deliver such Termination Notice to Client within two business days
after receiving it from Cambridge Technology.
(f) This Agreement will terminate (solely with respect to the
applicable major category of PSC Services or the applicable ▇▇▇▇▇ Systems
Task Order in the case of a termination pursuant to Section 9.3(a) or (b),
or the applicable Cambridge Technology
40
Task Order in the case of a termination pursuant to Section 9.3(c), the PSC
Services in the case of a termination pursuant to Section 9.3(d) or the
Cambridge Services in the case of a termination pursuant to Section 9.3
(e)) on the date (the "Termination Date") set forth in the Termination
Notice unless, the breaching party substantially cures its breach within
(i) 10 days from the date of the Termination Notice in the case of a
party's failure to pay any amount due hereunder, or (ii) the greater of (A)
30 days from the date of the Termination Notice (or such later date set
forth in the Termination Notice) in the case of any other breach that can
reasonably be cured within 30 days, or (B) a reasonable period (but not to
exceed 90 days in any event) in the case of any other breach that the
breaching party demonstrates, to the reasonable satisfaction of the
terminating party, cannot reasonably be cured within 30 days. Upon
receiving the Termination Notice, the breaching party will diligently
proceed to cure the breach specified in the Termination Notice.
9.4 Termination for Convenience.
---------------------------
(a) Termination of the PSC Services or Cambridge Program Services.
-------------------------------------------------------------
(i) On or after the second anniversary of the Effective Date,
Client may terminate this Agreement with respect to either the PSC
Services, the Cambridge Program Services or both for convenience by
delivering to ▇▇▇▇▇ Systems during the 30 day period ending on January
31 or July 31 (A) a notice of termination for convenience (a
"Termination Notice") setting forth the date of termination (the
"Termination Date"), which date will be at least 90 days after the
applicable anniversary and (B) a certified check payable to ▇▇▇▇▇
Systems for the Early Termination Fee which will be computed as set
forth in Schedule 9.4.
(ii) If the Termination Notice and Early Termination Fee are
properly delivered, this Agreement will terminate on the Termination
Date, unless the Termination Notice is revoked not more than 45 days
prior to such date. If Client revokes the Termination Notice, ▇▇▇▇▇
Systems will, within 10 business days, refund the Early Termination
Fee paid by Client to ▇▇▇▇▇ Systems, less any Make-Whole Costs
incurred between the date the Termination Notice was received and the
date the Termination Notice was revoked.
(iii) At least 30 days prior to the Termination Date, ▇▇▇▇▇
Systems will provide to Client an invoice for the estimated Make-Whole
Costs (including any Cambridge Technology estimated Make-Whole Costs).
On the Termination Date, Client will pay ▇▇▇▇▇ Systems the estimated
Make-Whole Costs and all other outstanding amounts payable to ▇▇▇▇▇
Systems under this Agreement. Within 60 days after the Termination
Date, ▇▇▇▇▇ Systems will provide to Client a final invoice for the
Make-Whole Costs (including any Cambridge Technology Make-Whole
Costs), which invoice will reflect any corrections to the estimated
Make-
41
Whole Costs. Within 30 days after such invoice is provided to Client,
Client will pay ▇▇▇▇▇ Systems any additional amount due or ▇▇▇▇▇
Systems or Cambridge Technology, as the case may be, will refund to
Client any amount overpaid by Client. Such payments will not relieve
Client of its obligation to pay any other amounts payable to ▇▇▇▇▇
Systems under this Agreement.
(iv) If an arbitration panel or court of competent authority
determines that a purported termination for cause by Client under
Section 9.3 was not properly a termination for cause, then such
termination will be deemed to be a termination for convenience under
this Section 9.4 and Client will pay to ▇▇▇▇▇ Systems the Early
Termination Fee, Make-Whole Costs (including any Cambridge Technology
Make-Whole Costs) and all other amounts payable to ▇▇▇▇▇ Systems under
this Agreement within 30 days after receiving an invoice therefor. If
such termination occurs prior to two years after the Effective Date,
Client will pay all Make-Whole Costs (including any Cambridge
Technology Make-Whole Costs) determined in accordance with this
Section 9.4 as though the termination occurred two or more years after
the Effective Date under this Section and an Early Termination Fee in
an amount determined as though the termination had occurred under
Section 9.10. Such payment will be Client's sole liability and ▇▇▇▇▇
Systems' and Cambridge Technology's sole recovery with respect to the
termination.
(b) Termination of a Task Order. Client may terminate an individual
---------------------------
Task Order for convenience by providing a 30 day written termination notice
to the CPA Account Manager. Upon receipt of such notice, ▇▇▇▇▇ Systems or
Cambridge Technology, as the case may be, will cease work in an orderly
fashion with respect to such Task Order and turn over all work in process.
Client will be responsible for payment of any amounts described in Schedule
9.4, any amounts described in the applicable Task Order, and all authorized
travel and living expenses incurred..
9.5 Termination in Connection with a Critical Failure. Notwithstanding
-------------------------------------------------
anything in this Agreement to the contrary, if either or both of ▇▇▇▇▇ Systems
or Cambridge Technology fails to perform its respective obligations under this
Agreement (other than primarily as a result of actions or failures to act by
Client) and, as a result, Client is unable to perform the business functions
that are reasonably necessary to rent vehicles to the public ("Critical Business
Functions") at its rental locations that regularly represent more than 50% of
its rental revenue as a result of the unavailability of the Services then being
performed by such parties (excluding any portion of such Services that are being
performed by RSI) for more than 60 consecutive hours, then Client may terminate
this Agreement with respect to either or both the PSC Services or the Cambridge
Services, as the case may be (provided that in no event will the PSC Services be
terminated solely in connection with a failure to perform by Cambridge
Technology and in no event will the Cambridge Services be terminated solely in
connection with a failure to perform by ▇▇▇▇▇ Systems), by providing notice
42
to the CPA Account Manager, ▇▇▇▇▇ Systems and Cambridge Technology. If ▇▇▇▇▇
Systems or Cambridge Technology, as the case may be, does not cure the failure
within two business days following its receipt of the notice (or, if the failure
cannot be cured within such two business day period, provide Client with a work-
around or other solution that permits Client to perform its Critical Business
Functions), then this Agreement will terminate with respect to either the PSC
Services or the Cambridge Services, as the case may be, as of the date specified
in the notice. If Client terminates this Agreement pursuant to this Section 9.5,
such termination will be Client's sole remedy, and neither ▇▇▇▇▇ Systems nor
Cambridge Technology will have any liability for damages or otherwise to Client,
in connection with the unavailability of such Services by ▇▇▇▇▇ Systems or
Cambridge Technology, as the case may be, unless the unavailability of such
Services is primarily the result of ▇▇▇▇▇ Systems' or Cambridge Technology's, as
the case may be, acts or failures to act, in which case this limitation of
liability will not apply to the party at fault.
9.6 Termination for Insolvency.
--------------------------
(a) Either ▇▇▇▇▇ Systems or Cambridge Technology may terminate this
Agreement if Client (i) files for bankruptcy; (ii) becomes or is declared
insolvent or is the subject of any proceedings related to its liquidation,
insolvency or the appointment of a receiver or similar officer for it;
(iii) makes an assignment for the benefit of all or substantially all of
its creditors; (iv) is unable to pay its debts generally as they come due;
or (v) enters into an agreement for the composition, extension, or
readjustment of substantially all of its obligations, by giving notice to
Client of its intention to terminate this Agreement as of a date specified
in the notice which date will not be less than 90 days after the date of
the notice. This Agreement will terminate on the date set forth in the
notice unless (i) the termination event specified in the notice is cured
within such 90 day period, or (ii) Client is not past due with respect to
any amount properly due under this Agreement to either ▇▇▇▇▇ Systems or
Cambridge Technology and otherwise continued to perform its obligations
under this Agreement, including its obligations to make payments under
Article 6.
(b) Client may terminate this Agreement with respect to the Services
to be provided by ▇▇▇▇▇ Systems or Cambridge Technology, as the case may
be, if such party (i) files for bankruptcy; (ii) becomes or is declared
insolvent or is the subject of any proceedings related to its liquidation,
insolvency or the appointment of a receiver or similar officer for it;
(iii) makes an assignment for the benefit of all or substantially all of
its creditors; (iv) is unable to pay its debts generally as they come due;
or (v) enters into an agreement for the composition, extension, or
readjustment of substantially all of its obligations, by giving notice to
▇▇▇▇▇ Systems and Cambridge Technology of its intention to terminate this
Agreement as of a date specified in the notice which date will not be less
than 90 days after the date of the notice. This Agreement will terminate
with respect to the Services to be provided by the applicable party on the
date set forth in the notice.
43
9.7 Termination Assistance.
----------------------
(a) Upon expiration or termination of this Agreement for any reason,
other than termination of this Agreement under Sections 9.6(a) or 9.9,
▇▇▇▇▇ Systems will, at Client's request and subject to the provisions of
this Section 9.7, provide Termination Assistance Services under this
Agreement (the "Termination Assistance Period") for a period of up to six
months.
(b) Client will pay ▇▇▇▇▇ Systems in advance for the services
described in Section 9.7(c) on a time and materials basis at ▇▇▇▇▇ Systems'
then current commercial rates, discounted as set forth in Schedule 6.3, or
another mutually acceptable basis. Client will pay ▇▇▇▇▇ Systems, on the
first day of each month and as a condition to its obligation to provide
such assistance, an amount equal to ▇▇▇▇▇ Systems' reasonable estimate of
the total amount payable to ▇▇▇▇▇ Systems for such assistance for that
month. ▇▇▇▇▇ Systems will invoice Client on or about the fifth day of the
following month for the actual costs incurred by ▇▇▇▇▇ Systems in providing
such assistance. Such invoice will reflect any adjustments necessary
(including a credit or refund of any overpayment by Client) to reconcile
the amounts paid by Client (as estimated by ▇▇▇▇▇ Systems) and the charges
actually incurred.
(c) During the Termination Assistance Period, ▇▇▇▇▇ Systems and
Cambridge Technology will cooperate with Client and its designees and
provide the assistance reasonably requested by Client or its designee to
allow Client's business operations to continue without material
interruption or adverse effect and to facilitate the orderly transfer of
responsibility for the Services then being provided by ▇▇▇▇▇ Systems and
Cambridge Technology to Client or its designees, including the following:
(i) Continuing to perform any or all of the Services then being
performed by ▇▇▇▇▇ Systems and Cambridge Technology.
(ii) Developing, with the assistance of Client or its designees,
a plan for the transition of the Services then being performed by
▇▇▇▇▇ Systems and Cambridge Technology to Client or its designees.
(iii) Providing training for personnel of Client or its
designees in the performance of PSC Services and Cambridge Program
Services then being performed.
(iv) Using reasonable commercial efforts to grant, subject to
reasonable terms and conditions, or to assist Client or its designees
to obtain, a sublicense or other right for Client or its designees to
use any Software owned by or licensed to ▇▇▇▇▇ Systems or Cambridge
Technology that is (A) substantially dedicated to the performance of
the PSC Services or Cambridge Program Services, or (B)
44
reasonably necessary to the performance of the PSC Services or
Cambridge Program Services. In addition, ▇▇▇▇▇ Systems and Cambridge
Technology will use reasonable commercial efforts to provide Client or
its designees with appropriate interface information for Software that
is not commercially available.
(v) Making available to Client or its designees, pursuant to
reasonable terms and conditions, any Equipment owned or leased by
▇▇▇▇▇ Systems that is substantially dedicated to the performance of
the PSC Services. Client may in its discretion purchase any such
equipment owned by ▇▇▇▇▇ Systems at ▇▇▇▇▇ Systems' then-current book
value and, subject to the terms of the applicable lease, may assume
▇▇▇▇▇ Systems' rights and obligations with respect to any such
equipment leased by ▇▇▇▇▇ Systems.
(vi) ▇▇▇▇▇ Systems and Cambridge Technology will use reasonable
commercial efforts to assist Client or its designees to obtain (on a
non-exclusive basis) any third party services then being utilized by
▇▇▇▇▇ Systems and Cambridge Technology in the performance of the PSC
Services and Cambridge Program Services.
(vii) To the extent any part of Client's data or communications
network services are being provided on the Termination Date by ▇▇▇▇▇
Systems using a proprietary network furnished by ▇▇▇▇▇ Systems, ▇▇▇▇▇
Systems will, at Client's request, continue to provide such network
services to Client or its designees, subject to reasonable terms and
conditions, for a period not to exceed 12 months after the Termination
Date.
(d) Upon request by Client, ▇▇▇▇▇ Systems and Cambridge Technology
will provide Client a non-binding estimate of such party's Make-Whole Costs
that would be payable under this Agreement if Client were to terminate this
Agreement within a reasonable period after the date of Client's request.
9.8 Survival of Certain Provisions. The provisions of this Agreement
------------------------------
which by their nature should survive any termination of this Agreement,
including but not limited to Sections 16.1, 16.2, 16.4 and 16.10 and Articles 6,
7, 8, 9, 11, 12 and 14 will survive any expiration or other termination of this
Agreement.
9.9 Termination Within 60 Days.
--------------------------
(a) Client may terminate this Agreement with respect to the PSC
Services and the Cambridge Program Services for its convenience by
delivering to ▇▇▇▇▇ Systems, on any date during the period ending 60 days
after the Effective Date, a notice of termination for convenience (a
"Termination Notice") setting forth the date of termination (the
"Termination Date"), which date, unless otherwise agreed by Client and
▇▇▇▇▇ Systems,
45
will be at least 60 days after the date the Termination Notice is delivered
to ▇▇▇▇▇ Systems.
(b) If Client properly delivers a Termination Notice to ▇▇▇▇▇ Systems
within the 60-day period after the Effective Date, (i) ▇▇▇▇▇ Systems,
Cambridge Technology and Client will develop a reasonable schedule for
reducing the number of PSC and Cambridge Technology Personnel assigned to
Client's account during the period from the date of the Termination Notice
to the Termination Date, and (ii) this Agreement will terminate on the
Termination Date.
(c) At least 30 days prior to the Termination Date, ▇▇▇▇▇ Systems will
provide to Client an invoice for the estimated Make-Whole Costs (which
shall include any Cambridge Make-Whole Costs). On the Termination Date,
Client will pay ▇▇▇▇▇ Systems the estimated Make-Whole Costs and all other
outstanding amounts payable to ▇▇▇▇▇ Systems under this Agreement. Within
60 days after the Termination Date, ▇▇▇▇▇ Systems will provide to Client a
final invoice for the Make-Whole Costs, which invoice will reflect any
corrections to the estimated Make-Whole Costs. Within 30 days after such
invoice is provided to Client, Client will pay ▇▇▇▇▇ Systems any additional
amount due or ▇▇▇▇▇ Systems will refund to Client any amount overpaid by
Client. Such payments will not relieve Client of its obligation to pay any
other amounts payable to ▇▇▇▇▇ Systems or Cambridge Technology under this
Agreement.
(d) Notwithstanding the provisions of Section 6.1 and anything else to
the contrary in this Agreement, Client will pay ▇▇▇▇▇ Systems for the PSC
Services from the Effective Date through the date ▇▇▇▇▇ Systems ceases
providing PSC Services under this Agreement at ▇▇▇▇▇ Systems' commercial
billing rates for services rendered on a time and materials basis at the
undiscounted weekly rates set forth in Schedule 6.3, at the times set forth
in Schedule 6.1. If Client does not deliver a Termination Notice to ▇▇▇▇▇
Systems or otherwise terminate this Agreement within the 60-day period
after the Effective Date, (i) the amounts payable by Client for the PSC
Services on or after the Effective Date will be those established in
Section 6 and other applicable provisions of this Agreement, and (ii) ▇▇▇▇▇
Systems will provide a credit against fees payable by Client under this
Agreement in an amount equal to the excess of (A) the amount Client paid
for the PSC Services from the Effective Date through the end of such 60-day
period, over (B) the amount Client would have been charged for the PSC
Services from the Effective Date through the end of such 60-day period if
the PSC Personnel assigned to Client's account had been providing such PSC
Services at the rates provided in Section 6 and other applicable provisions
of this Agreement, which credit will be applied in three equal installments
against the first three invoices for PSC Services delivered to Client after
the end of such 60-day period.
(e) If the Client's termination of this Agreement under this Section
9.9, includes termination of Task Orders for Application Development
Services, such Task Orders will terminate in accordance with Section
9.4(b).
46
(f) If Client terminates this Agreement under this Section 9.9, (i)
the provisions of Sections 2.6(d) and (e) will not apply to any PSC or
Cambridge Technology Personnel, (ii) ▇▇▇▇▇ Systems' limit of liability to
Client in connection with this Agreement, whether based on contract,
equity, negligence, tort, intentional conduct or otherwise, for any and all
events, acts or omissions relating in any way to this Agreement, other than
any liability under Section 11.1 of this Agreement, will not exceed, in the
aggregate, $1,000,000 and (iii) Cambridge Technology's limit of liability
to Client in connection with this Agreement, whether based on contract,
equity, negligence, tort, intentional conduct or otherwise, for any and all
events, acts or omissions relating in any way to this Agreement, other than
any liability under Section 11.2 of this Agreement, will not exceed, in the
aggregate, one month's fees for the Cambridge Program Services.
9.10 Termination in Connection With a Change in Control.
--------------------------------------------------
(a) During the period commencing 61 days after the Effective Date and
ending two years after the Effective Date, Client may terminate this
Agreement with respect to the PSC Services and the Cambridge Program
Services within 30 days after a Change of Control Event by delivering to
▇▇▇▇▇ Systems during such 30-day period (i) a notice of termination for
change of control (a "Termination Notice") setting forth the date of
termination (the "Termination Date"), which date, unless otherwise agreed
by Client and ▇▇▇▇▇ Systems, will be at least 60 days after the date the
Termination Notice is delivered to ▇▇▇▇▇ Systems, and (ii) a certified
check payable to ▇▇▇▇▇ Systems for an Early Termination Fee in an amount
equal to the excess of (A) the amount that Client would have been charged
for the PSC Services from the Effective Date through the earlier of (1) the
date such Termination Notice is delivered or (2) the date 12 months after
the Effective Date if the PSC Personnel assigned to Client's account had
been providing such PSC Services at ▇▇▇▇▇ Systems' commercial billing rates
for services rendered on a time and materials basis at the undiscounted
monthly rates set forth in Schedule 6.3, over (B) the price actually paid
to ▇▇▇▇▇ Systems on or before such date for such PSC Services. Upon request
by Client, ▇▇▇▇▇ Systems will promptly provide Client with its computation
of the amount of the Early Termination Fee (including any Cambridge
Technology costs).
(b) If such Termination Notice and the Early Termination Fee are
properly delivered to ▇▇▇▇▇ Systems within the 30-day period after the
Change of Control Event, this Agreement will terminate on the Termination
Date.
(c) At least 30 days prior to the Termination Date, ▇▇▇▇▇ Systems will
provide to Client an invoice for the estimated Make-Whole Costs. On the
Termination Date, Client will pay ▇▇▇▇▇ Systems the estimated Make-Whole
Costs (including any Cambridge Technology Make-Whole Costs) and all other
outstanding amounts payable to ▇▇▇▇▇ Systems under this Agreement. Within
60 days after the Termination Date, ▇▇▇▇▇
47
Systems will provide to Client a final invoice for the Make-Whole Costs,
which invoice will reflect any corrections to the estimated Make-Whole
Costs. Within 30 days after such invoice is provided to Client, Client will
pay ▇▇▇▇▇ Systems any additional amount due or ▇▇▇▇▇ Systems will refund to
Client any amount overpaid by Client. Such payments will not relieve Client
of its obligation to pay any other amounts payable to ▇▇▇▇▇ Systems or
Cambridge Technology under this Agreement.
(d) If the Client's termination of this Agreement under this Section
9.10, includes termination of Task Orders for Application Development
Services, such Task Orders will terminate in accordance with Section
9.4(b).
(e) If Client terminates this Agreement under this Section 9.10, (i)
the provisions of Sections 2.6(d) and (e) will not apply to any PSC or
Cambridge Personnel, (ii) ▇▇▇▇▇ Systems' limit of liability to Client in
connection with this Agreement, whether based on contract, equity,
negligence, tort, intentional conduct or otherwise, for any and all events,
acts or omissions relating in any way to this Agreement, other than any
liability under Section 11.1 or 11.4 of this Agreement, will not exceed, in
the aggregate, $2,000,000 (except in connection with ▇▇▇▇▇ Systems' failure
to provide the services described in Section 9.7) and (iii) Cambridge
Technology's limit of liability to Client in connection with this
Agreement, whether based on contract, equity, negligence, tort, intentional
conduct or otherwise, for any and all events, acts or omissions relating in
any way to the Cambridge Program Services provided under this Agreement,
other than any liability under Section 11.2 or 11.4 of this Agreement, will
not exceed, in the aggregate, two month's fees for the Cambridge Program
Services.
ARTICLE 10
WARRANTIES AND CERTAIN COVENANTS
10.1 By ▇▇▇▇▇ Systems. ▇▇▇▇▇ Systems warrants that (i) the PSC Services
----------------
will be performed in a diligent and workmanlike manner, in accordance with good
industry practices, by individuals of suitable training and skill, (ii) in
providing the PSC Services, ▇▇▇▇▇ Systems and PSC Personnel will comply with all
federal, state, and local laws and regulations that apply to, and obtain all
permits and licenses that pertain to, the provision of the PSC Services
generally, and (iii) in providing the PSC Services, ▇▇▇▇▇ Systems and PSC
Personnel will, at no additional charge to Client, comply with all federal,
state, and local laws and regulations specific to Client's business of which
Client gives ▇▇▇▇▇ Systems notice and interpretive direction.
10.2 By Cambridge Technology. Cambridge Technology warrants that (i) the
-----------------------
Cambridge Services will be performed in a diligent and workmanlike manner, in
accordance with good industry practices, by individuals of suitable
48
training and skill, (ii) in providing the Cambridge Services, Cambridge
Technology and Cambridge Personnel will comply with all federal, state, and
local laws and regulations that apply to, and obtain all permits and licenses
that pertain to, the provision of the Cambridge Services generally, and (iii) in
providing the Cambridge Services, Cambridge Technology and Cambridge Personnel
will, at no additional charge to Client, comply with all federal, state, and
local laws and regulations specific to Client's business of which Client gives
Cambridge Technology notice and interpretive direction.
10.3 By Each Party. Each party warrants that:
-------------
(a) it is a corporation duly incorporated, validly existing, and in
good standing under the laws of its state of incorporation,
(b) it has all requisite power and authority to execute, deliver, and
perform its obligations under this Agreement,
(c) the execution, delivery, and performance of this Agreement has
been duly authorized by such party, and
(d) no approval, authorization, or consent of any governmental or
regulatory authority is required to be obtained or made by it in order for
it to enter into and perform its obligations under this Agreement.
10.4 Third Party Warranties. Upon the earlier of a request by Client or
----------------------
the termination of this Agreement, ▇▇▇▇▇ Systems will assign to Client all the
warranty and indemnification rights obtained by ▇▇▇▇▇ Systems from any
manufacturer, supplier or licensor of Third Party Software or Equipment as a
result of performing Procurement Services, except to the extent such rights may
not be assigned. As part of Operations Services, ▇▇▇▇▇ Systems will use
reasonable commercial efforts to enforce, on Client's behalf, any warranty or
indemnification rights with respect to Third Party Software, Managed Equipment
(whether or not assigned or assignable to Client) or Equipment purchased
pursuant to Section 4.2(vii), provided that ▇▇▇▇▇ Systems will have no
obligation to initiate or conduct litigation, arbitration or similar proceedings
to enforce such warranty or indemnification rights. ▇▇▇▇▇ Systems will maintain
appropriate records of each warranty given by suppliers in connection with such
Equipment or Software and deliver to Client any documentation evidencing such
warranty issued by such suppliers. At Client's request, ▇▇▇▇▇ Systems will
provide to Client a copy of each purchase, license, maintenance, support or
similar agreement relating to such Third Party Software, Managed Equipment or
purchased Equipment.
10.5 Warranty Disclaimers. EXCEPT AS SET FORTH IN THIS AGREEMENT, A
--------------------
SCHEDULE, OR A TASK ORDER, NO PARTY MAKES ANY OTHER EXPRESS OR IMPLIED
WARRANTIES TO ANY OTHER PARTY, INCLUDING,
49
BUT NOT LIMITED TO, ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE IN CONNECTION WITH THIS AGREEMENT.
10.6 Certain Covenants.
-----------------
(a) Viruses.
-------
(i) Each Party will use reasonable commercial efforts to
prevent any software viruses or other surreptitious software codes
(collectively, "Virus") from being introduced into the Systems. ▇▇▇▇▇
Systems will evaluate, recommend and maintain up-to-date, subject to
Client's approval, virus detection and removal products to be used in
connection with the Systems, on a mutually satisfactory periodic
basis.
(ii) If a Virus is introduced into a System, each party will use
reasonable commercial efforts to identify and neutralize such Virus
and to mitigate any adverse effect of such Virus, and ▇▇▇▇▇ Systems
will repair or restore, as soon as, and to the extent, reasonably
practicable any data, information or Systems damaged by such Virus.
The priority and intensity of the efforts undertaken by the parties to
identify and neutralize the Virus, and to repair or restore any
affected data, information or systems, will be determined by Client
based on its evaluation of the situation, based on such factors as it
deems appropriate, including but not limited to, the number of sites
affected, the severity of the damage being caused, and the relative
importance of the Systems affected.
(b) Neither ▇▇▇▇▇ Systems nor Cambridge Technology will, without the
prior consent of Client, intentionally introduce into any System or
intentionally invoke any code which is intended to disable or wrongfully
impair or shut down such System.
(c) Cambridge Technology will cause the Cambridge Applications
(including Third Party Intellectual Property that is provided by Cambridge
Technology and incorporated into a Cambridge Application) and ▇▇▇▇▇ Systems
will cause any ▇▇▇▇▇ Applications (including Third Party Intellectual
Property that is provided by ▇▇▇▇▇ Systems and incorporated into a ▇▇▇▇▇
Application) and ▇▇▇▇▇ Modifications, to:
(i) record, store, process, and present calendar dates falling
on or after January 1, 2000, but before December 31, 2099, in the same
manner, and with the same functionality and accuracy, as performed on
or before December 31, 1999;
(ii) require a century indicator on all dates produced therein
as output or results from the operation of such software where the
absence of such an indicator will cause a subsequent failure of the
software or hardware that subsequently processes such output or
results;
50
(iii) not cause an abnormal ending or generate an incorrect
result when performing date calculations involving either a single
century or multiple centuries;
(iv) sort all files in an accurate sequence when sorted by date
and read and write in an accurate sequence when the date is used as
the key for such reading or writing; and
(v) be capable of determining leap years prior to December 31,
2099.
Notwithstanding the foregoing, (A) ▇▇▇▇▇ Systems will have no obligation to
modify any Application (other than a Cambridge Application that has been
accepted by Client (provided that ▇▇▇▇▇ Systems has approved and
participated in the acceptance testing process), a ▇▇▇▇▇ Application, or a
▇▇▇▇▇ Modification (solely with respect to such modification)) or any
portion thereof to satisfy the foregoing requirements, except to the extent
set forth in a Task Order; and (B) Cambridge Technology will have no
obligation to modify any Application (other than a Cambridge Application)
or any portion thereof to satisfy the foregoing requirements, except to the
extent set forth in a Task Order.
(d) ▇▇▇▇▇ Systems will request that each manufacturer or licensor of
Third Party Software and Managed Equipment acknowledge, whether by means of
a response to a specific request or, with respect to mass market software
or hardware, through such manufacturer's or licensor's normal customer
communications methods (e.g., a manufacturer's web site) that such software
or hardware will:
(i) record, store, process, and present calendar dates falling
on or after January 1, 2000, but before December 31, 2099, in the same
manner, and with the same functionality and accuracy, as performed on
or before December 31, 1999;
(ii) require a century indicator on all dates produced therein
as output or results from the operation of such software;
(iii) not cause an abnormal ending or generate an incorrect
result when performing date calculations involving either a single
century or multiple centuries;
(iv) sort all files in an accurate sequence when sorted by date
and read and write in an accurate sequence when the date is used as
the key for such reading or writing; and
(v) be capable of determining leap years prior to December 31,
2099.
51
Neither ▇▇▇▇▇ Systems nor Cambridge Technology will have any liability to
Client for (A) the failure of any Third Party Software or Equipment to
comply with the requirements described in clauses (i) through (v) above, or
(B) either of such party's inability to perform its obligations under this
Agreement as a result of the failure of any Third Party Software or
Equipment to comply with the requirements described in clauses (i) through
(v) above.
ARTICLE 11
INDEMNITIES
11.1 By ▇▇▇▇▇ Systems.
----------------
(a) ▇▇▇▇▇ Systems will indemnify, defend and hold harmless Client and
its officers, directors, employees, agents, successors and assigns (each,
an "indemnitee"), from any and all Losses and threatened Losses arising
from or in connection with any of the following:
(i) ▇▇▇▇▇ Systems' breach of its obligations to Client under
Article 8 of this Agreement;
(ii) the death or bodily injury of any agent, employee,
customer, business invitee, or business visitor or other person caused
by the negligence or willful misconduct of ▇▇▇▇▇ Systems or PSC
Personnel;
(iii) the damage, loss or destruction of any real or tangible
personal property caused by the negligence or willful misconduct of
▇▇▇▇▇ Systems or PSC Personnel; and
(iv) any claim, demand, charge, action, cause of action, or
other proceeding asserted against the indemnitee arising from an act
or omission of ▇▇▇▇▇ Systems or its Subsidiaries or subcontractors in
their respective capacity as an employer of any person.
(b) ▇▇▇▇▇ Systems will indemnify, defend and hold harmless Cambridge
Technology and its officers, directors, employees, agents, successors and
assigns (each, an "indemnitee"), from any and all Losses and threatened
Losses arising from or in connection with any of the following:
(i) ▇▇▇▇▇ Systems' breach of its obligations to Cambridge
Technology under Article 8 of this Agreement;
52
(ii) the death or bodily injury of any agent, employee,
customer, business invitee, or business visitor or other person caused
by the gross negligence or willful misconduct of ▇▇▇▇▇ Systems; or
(iii) the damage, loss or destruction of any real or tangible
personal property caused by the gross negligence or willful misconduct
of ▇▇▇▇▇ Systems.
11.2 By Cambridge Technology.
-----------------------
(a) Cambridge Technology will indemnify, defend and hold harmless
Client and its officers, directors, employees, agents, successors and
assigns (each, an "indemnitee"), from any and all Losses and threatened
Losses arising from or in connection with any of the following:
(i) Cambridge Technology's breach of its obligations to Client
under Article 8 of this Agreement;
(ii) the death or bodily injury of any agent, employee,
customer, business invitee, or business visitor or other person caused
by the negligence or willful misconduct of Cambridge Technology or
Cambridge Personnel;
(iii) the damage, loss or destruction of any real or tangible
personal property caused by the negligence or willful misconduct of
Cambridge Technology or Cambridge Personnel; and
(iv) any claim, demand, charge, action, cause of action, or
other proceeding asserted against the indemnitee arising from an act
or omission of Cambridge Technology or its Subsidiaries or
subcontractors in their respective capacity as an employer of any
person.
(b) Cambridge Technology will indemnify, defend and hold harmless
▇▇▇▇▇ Systems and its officers, directors, employees, agents, successors
and assigns (each, an "indemnitee"), from any and all Losses and threatened
Losses arising from or in connection with any of the following:
(i) Cambridge Technology's breach of its obligations to ▇▇▇▇▇
Systems under Article 8 of this Agreement;
(ii) the death or bodily injury of any agent, employee,
customer, business invitee, or business visitor or other person caused
by the gross negligence or willful misconduct of Cambridge Technology;
and
53
(iii) the damage, loss or destruction of any real or tangible
personal property caused by the gross negligence or willful misconduct
of Cambridge Technology.
11.3 By Client.
---------
(a) Client will indemnify, defend and hold harmless ▇▇▇▇▇ Systems and
its officers, directors, employees, agents, successors and assigns (each,
an "indemnitee"), from any and all Losses and threatened Losses arising
from or in connection with any of the following:
(i) Client's breach of its obligations to ▇▇▇▇▇ Systems under
Article 8 of this Agreement;
(ii) the death or bodily injury of any agent, employee,
customer, business invitee, or business visitor or other person caused
by the negligence or willful misconduct of Client or Client Personnel;
(iii) the damage, loss or destruction of any real or tangible
personal property caused by the negligence or willful misconduct of
Client or Client Personnel; and
(iv) any claim, demand, charge, action, cause of action, or
other proceeding asserted against the indemnitee but resulting from an
act or omission of Client or its Subsidiaries in their respective
capacity as an employer of any person.
(b) Client will indemnify, defend and hold harmless Cambridge
Technology and its officers, directors, employees, agents, successors and
assigns (each, an "indemnitee"), from any and all Losses and threatened
Losses arising from or in connection with any of the following:
(i) Client's breach of its obligations to Cambridge Technology
under Article 8 of this Agreement;
(ii) the death or bodily injury of any agent, employee,
customer, business invitee, or business visitor or other person caused
by the negligence or willful misconduct of Client;
(iii) the damage, loss or destruction of any real or tangible
personal property caused by the negligence or willful misconduct of
Client; and
54
(iv) any claim, demand, charge, action, cause of action, or
other proceeding asserted against the indemnitee but resulting from an
act or omission of Client or its Subsidiaries or subcontractors in
their respective capacity as an employer of any person.
11.4 Intellectual Property.
---------------------
(a) By ▇▇▇▇▇ Systems. ▇▇▇▇▇ Systems will, at its expense, indemnify
----------------
and defend Client, Cambridge Technology, their Affiliates, and their
respective officers, directors, employees, agents, successors and assigns
from any third-party claims (i.e., claims made by a party other than
Cambridge Technology, Client or any of their respective Affiliates) made
against Cambridge Technology, Client, or any of their Affiliates alleging
that (i) PSC Work Product infringes a third person's copyright, or trade
secret enforceable in the United States, (ii) the method chosen and used by
▇▇▇▇▇ Systems to implement the applicable Requirements for the applicable
PSC Work Product infringes a third person's patent issued by the United
States prior to the date the applicable PSC Work Product was delivered to
Client, or (iii) Client's use, in accordance with the terms of this
Agreement, of Third-Party Intellectual Property owned by or licensed (by a
licensor other than by ▇▇▇▇▇ Systems) to Client infringes a third person's
copyright, trade secret or patent enforceable in the United States to the
extent that such infringement is solely the result of ▇▇▇▇▇ Systems'
failure to obtain a Required Consent. ▇▇▇▇▇ Systems will pay any judgments
finally awarded by a court of competent jurisdiction, any settlements of
such third party claims approved by ▇▇▇▇▇ Systems, and reasonable
attorneys' fees incurred prior to giving the Notice of Election arising
from such third party claims.
(b) By Cambridge Technology. Cambridge Technology will, at its
-----------------------
expense, indemnify and defend Client, ▇▇▇▇▇ Systems, their Affiliates, and
their respective officers, directors, employees, agents, successors and
assigns from any third-party claims (i.e., claims made by a party other
than ▇▇▇▇▇ Systems, Client or any of their respective Affiliates) made
against ▇▇▇▇▇ Systems, Client, or any of their Affiliates alleging that (i)
Cambridge Work Product infringes a third person's copyright, or trade
secret enforceable in the United States, (ii) the method chosen and used by
Cambridge Technology to implement the applicable Requirements for the
applicable Cambridge Work Product infringes a third person's patent issued
by the United States prior to the date the applicable Cambridge Work
Product was delivered to Client, or (iii) Client's use, in accordance with
the terms of this Agreement, of Third-Party Intellectual Property owned by
or licensed (by a licensor other than by Cambridge Technology) to Client
infringes a third person's copyright, trade secret or patent enforceable in
the United States to the extent that such infringement is solely the result
of Cambridge Technology's failure to obtain a Required Consent. Cambridge
Technology will pay any judgments finally awarded by a court of competent
jurisdiction, any settlements of such third party claims
55
approved by Cambridge Technology and reasonable attorneys' fees incurred
prior to giving the Notice of Election arising from such third party
claims.
(c) By Client.
---------
(i) Client will, at its expense, defend ▇▇▇▇▇ Systems, its
Subsidiaries and their officers, directors, employees, agents,
successors and assigns, from any claim by a third-party (i.e., a party
other than ▇▇▇▇▇ Systems, Cambridge Technology, Client or any of their
respective Affiliates) brought against ▇▇▇▇▇ Systems or its
Subsidiaries alleging that (i) the functionality set forth in the
Requirements for the applicable PSC Work Product infringes a third
person's patent issued by the United States prior to the date the
applicable PSC Work Product was delivered to Client regardless of the
method of implementation selected, or (ii) ▇▇▇▇▇ Systems' use, in
accordance with the terms of this Agreement, of Third-Party
Intellectual Property owned by or licensed (by a licensor other than
by ▇▇▇▇▇ Systems or its Subsidiaries) to Client infringes a third
person's copyright, trade secret or patent issued in the United States
to the extent that such infringement is solely the result of Client's
failure to obtain a Required Consent. Client will pay any judgments
finally awarded by a court of competent jurisdiction, any settlements
of such third party claims approved by Client, and reasonable
attorneys fees incurred prior to giving the Notice of Election arising
from such third party claims.
(ii) Client will, at its expense, defend Cambridge Technology,
its Subsidiaries and their officers, directors, employees, agents,
successors and assigns, from any claim by a third-party (i.e., a party
other than ▇▇▇▇▇ Systems, Cambridge Technology, Client or any of their
respective Affiliates) brought against Cambridge Technology or its
Subsidiaries alleging that (i) the functionality set forth in the
Requirements for the applicable Cambridge Work Product infringes a
third person's patent issued by the United States prior to the date
the applicable Cambridge Work Product was delivered to Client
regardless of the method of implementation selected, or (ii) Cambridge
Technology's use, in accordance with the terms of this Agreement, of
Third-Party Intellectual Property owned by or licensed (by a licensor
other than by Cambridge Technology or its Subsidiaries) to Client
infringes a third person's copyright, trade secret or patent issued in
the United States to the extent that such infringement is solely the
result of Client's failure to perform its obligations under this
Agreement. Client will pay any judgments finally awarded by a court
of competent jurisdiction, any settlements of such third party claims
approved by Client, and reasonable attorneys fees incurred prior to
giving the Notice of Election arising from such third party claims.
56
(d) By Third Parties. Except as otherwise provided in this Section
----------------
11.4, no party will seek indemnification from any other party from and
against any Losses arising out of or resulting from any third-party claims
brought against such party's use of Third-Party Intellectual Property and
alleging that such use infringes such third party's trademark, copyright,
trade secret or patent. Instead, the affected party will seek
indemnification from the owner or licensor of such Third-Party Intellectual
Property.
(e) Mitigation. Upon receiving notice of an infringement claim, the
----------
indemnitor may, in its sole discretion, (i) modify the allegedly infringing
item to be non-infringing without materially impairing its functionality,
(ii) replace the allegedly infringing item with a non-infringing item of
substantially equivalent functionality, or (iii) if, in the indemnitor's
reasonable discretion, modification or replacement is not commercially
practicable, obtain for the indemnitee the right to continue to use the
item in accordance with the terms of the Agreement. If the indemnitor
elects to modify the allegedly infringing item, (A) the indemnitee will,
without charge, give the indemnitor all reasonable assistance and
information necessary to allow the indemnitor to make such modifications as
promptly as practicable at the indemnitor's expense, and (B) all relevant
test and acceptance criteria and schedules will be revised as appropriate
to reflect such modifications.
(f) Exclusions. Notwithstanding any other provisions of this Section
----------
11.4, the indemnitor will have no liability to the indemnitee for any claim
of infringement based on the use or licensing of any portion of a System
that was:
(i) modified by the indemnitee without the indemnitor's
involvement or approval if the claim reasonably relates only to such
modification by the indemnitee;
(ii) not provided or recommended by the indemnitor to the
indemnitee; or
(iii) due to a combination of non-infringing portions of a
System provided by the indemnitor and infringing portions provided by
the indemnitee or some third party, and such infringement is the
result of such combination.
11.5 Indemnification Procedures. The following procedures will apply to
--------------------------
all claims for indemnification under this Article:
(a) Promptly after receipt by any entity entitled to indemnification
under this Article of notice of the commencement or threatened commencement
of any civil, criminal, administrative, or investigative action or
proceeding involving a claim in respect of which the indemnified party will
seek indemnification, the indemnified party will notify the indemnifying
party of such claim in writing. No failure to so notify the
57
indemnifying party will relieve it of its obligations under this Agreement
except to the extent that it can demonstrate damages attributable to such
failure. Within 15 days following receipt of notice from the indemnified
party relating to any claim, but no later than 10 days before the date on
which any response to a complaint, summons, or other legal process is due,
the indemnifying party will notify the indemnified party in writing if the
indemnifying party elects to assume control of the defense and settlement
of that claim (a "Notice of Election").
(b) If the indemnifying party delivers a Notice of Election relating
to any claim within the required notice period, the indemnifying party will
be entitled to have sole control over the defense and settlement of such
claim; provided, however, that (A) the indemnified party will 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 (B) the
indemnifying party will obtain the prior approval, which approval will not
be unreasonably delayed or withheld, of the indemnified party in respect of
any non-cash aspects of a proposed settlement of such claim from the
indemnified party before entering into any settlement of such claim or
ceasing to defend against such claim. After the indemnifying party has
delivered a Notice of Election relating to any claim in accordance with
Subsection 11.5(a), the indemnifying party will not be liable to the
indemnified party for any legal expenses incurred by such indemnified party
in connection with the defense of that claim. In addition, the
indemnifying party will not be required to indemnify the indemnified party
for any amount paid or payable by such indemnified party in the settlement
of any claim for which the indemnifying party has delivered a timely Notice
of Election if such amount was agreed to without the consent of the
indemnifying party.
(c) If the indemnifying party does not deliver a Notice of Election
relating to any claim within the required notice period, the indemnified
party will have the right to defend the claim in such manner as it may deem
appropriate, at the cost and expense of the indemnifying party. The
indemnifying party will promptly reimburse the indemnified party for all
such costs and expenses, demand for which may be made periodically.
11.6 Subrogation. In the event that an indemnifying party will be obligated
-----------
to indemnify an indemnified party pursuant to this Article 11, the indemnifying
party will, upon payment of such indemnity in full, be subrogated to all rights
of the indemnified party with respect to the claims to which such
indemnification relates.
58
ARTICLE 12
LIMITATIONS ON LIABILITY AND DAMAGES
12.1 Limitation on Direct Damages.
----------------------------
(a) Except as provided in Article 11, ▇▇▇▇▇ Systems will be liable to
Client only for any direct damages, including costs of cover reasonably
incurred by Client and performance credits issued pursuant to Section 6.4,
arising out of ▇▇▇▇▇ Systems' breach of contract, breach of warranty, or
negligence or willful misconduct in the performance of its obligations
under this Agreement; provided, however, that the liability of ▇▇▇▇▇
Systems, whether based on contract, equity, negligence, tort, intentional
conduct or otherwise, for any and all events, acts or omissions relating in
any way to this Agreement (including without limitation breach of warranty
or breach of any obligation to indemnify Client other than as provided in
Article 11) will not exceed, in the aggregate, the greater of (i)
$5,000,000 or (ii) the fees (excluding any Pass-Through Expenses or
Reimbursable Expenses) paid by Client to ▇▇▇▇▇ Systems during the six month
period prior to the date on which the applicable claim arises, reduced, in
either case, by the excess (i.e., in no event will this clause be
interpreted to increase ▇▇▇▇▇ Systems' limit of liability as described in
the preceding clauses) of any performance credits issued pursuant to
Section 6.4 (after excluding any performance credits that have been earned
back by ▇▇▇▇▇ Systems) over the amount of any performance bonuses paid to
▇▇▇▇▇ Systems pursuant to Section 6.4.
(b) Except as provided in Article 11, Cambridge Technology will be
liable to Client only for any direct damages, including costs of cover
reasonably incurred by Client, arising out of Cambridge Technology's breach
of contract, breach of warranty, or negligence or willful misconduct in the
performance of its obligations under this Agreement; provided, however,
that the liability of Cambridge Technology, whether based on contract,
equity, negligence, tort, intentional conduct or otherwise, for any and all
events, acts or omissions relating in any way to this Agreement (including
without limitation breach of warranty or breach of any obligation to
indemnify Client other than as provided in Article 11) will not exceed, in
the aggregate, (i) with respect to the Cambridge Program Services, the fees
(excluding any Pass-Through Expenses or Reimbursable Expenses) paid by
Client to Cambridge Technology (or to the CPA Account Manager for the
benefit of Cambridge Technology) during the six month period prior to the
date on which the applicable claim arises, and (ii) with respect to each
Cambridge Application, the fixed price established for such Cambridge
Application in the applicable Task Orders.
(c) Except as provided in Article 11, Client will be liable to ▇▇▇▇▇
Systems and Cambridge Technology only for any direct damages, including
costs of cover reasonably incurred by ▇▇▇▇▇ Systems or Cambridge
Technology, as the case may be,
59
arising out of Client's breach of contract, breach of warranty, or
negligence or willful misconduct in the performance of its obligations
under this Agreement; provided, however, that the aggregate liability of
Client to ▇▇▇▇▇ Systems and Cambridge Technology, whether based on
contract, equity, negligence, tort, intentional conduct or otherwise, for
any and all events, acts or omissions relating in any way to this Agreement
(including without limitation breach of warranty or breach of any
obligation to indemnify ▇▇▇▇▇ Systems or Cambridge other than as provided
in Article 11) will not exceed, in the aggregate, (i) $5,000,000 with
respect to ▇▇▇▇▇ Systems, and (ii)(A) with respect to the Cambridge Program
Services, the fees (excluding any Pass-Through Expenses or Reimbursable
Expenses) paid by Client to Cambridge Technology (or to the CPA Account
Manager for the benefit of Cambridge Technology) during the six month
period prior to the date on which the applicable claim arises, and (B) with
respect to each Cambridge Application, the fixed price established for such
Cambridge Application in the applicable Task Orders.
(d) ▇▇▇▇▇ Systems will have no liability to Client for any direct,
indirect or other damages arising from the performance of the Cambridge
Services or any other obligations of Cambridge Technology relating to this
Agreement, except to the extent such liability arises from ▇▇▇▇▇ Systems'
breach of contract, breach of warranty, or negligence or willful misconduct
in the performance of its obligations with respect to Cambridge Technology
and the Cambridge Services under this Agreement.
(e) Cambridge Technology will have no liability to Client for any
direct, indirect or other damages arising from the performance of the PSC
Services or any other obligations of ▇▇▇▇▇ Systems relating to this
Agreement.
(f) Except as provided by Sections 6.9 and 11.4, neither ▇▇▇▇▇ Systems
nor Cambridge Technology will have any liability to the other for any
direct, indirect or other damages arising from the performance of any
obligations of the other party relating to this Agreement.
(g) The limitation on Client's liability under clause (c) will not
apply to Client's obligations to pay amounts properly due and owing to
either ▇▇▇▇▇ Systems or Cambridge Technology under this Agreement.
12.2 Limitation on Consequential Damages. No party will be liable for, nor
-----------------------------------
nor will the measure of damages assessed against any other party include, any
indirect, incidental, special, consequential or punitive damages or amounts for
loss of income, data, profits or savings arising out of the liable party's
performance under this Agreement.
60
12.3 Mitigation. Each party will have a duty, and will use reasonable
----------
commercial efforts, to mitigate damages for which any other party may
be responsible under this Agreement.
12.4 Time to Bring Actions. Except for claims for indemnification made
---------------------
under Article 11, no claim may be asserted by any party against any other party
with respect to any event, act or omission which occurred more than two years
prior to the claim being asserted.
12.5 Force Majeure. If any party is prevented, hindered or delayed in the
-------------
performance or observance of any of its obligations hereunder by reason of any
circumstance beyond its reasonable control, including but not limited to fire,
flood, earthquake, elements of nature or acts of God, riots, civil disorders,
rebellions or revolutions in any country ("Force Majeure"), that party will be
excused from any further performance or observance of the obligation(s) so
affected for as long as such circumstances prevail and that party continues to
use all commercially reasonable efforts to recommence performance whenever and
to whatever extent possible without delay. Each party affected by a Force
Majeure event will advise each other party in reasonable detail of the event as
promptly as practicable (including the estimated duration of the event) and keep
each other party reasonably apprised of progress in resolving the event.
ARTICLE 13
INSURANCE AND RISK OF LOSS
13.1 Insurance. At all times while obligated to perform services under
---------
this Agreement, ▇▇▇▇▇ Systems and Cambridge Technology will each maintain in
force, at their respective expense, insurance of the type and in the amounts set
forth below:
(a) statutory workers' compensation insurance in accordance with the
legal requirements of each country, state, territory and locality
exercising jurisdiction over personnel performing Services in such country,
state, territory or locality;
(b) employer's liability insurance with a minimum limit in an amount
not less than $1,000,000 per accident, covering bodily injury by accident,
and $1,000,000 per policy covering bodily injury by disease, including
death;
(c) commercial general liability insurance (including contractual
liability insurance) in an amount not less than $1,000,000 per occurrence
and a $2,000,000 annual aggregate;
61
(d) comprehensive automobile liability insurance with a combined
single limit in an amount not less than $2,000,000 per accident for bodily
injury and property damage liability;
(e) to the extent commercially available to ▇▇▇▇▇ Systems or Cambridge
Technology, as the case may be, in the insurance market, errors and
omissions liability insurance with a per claim and policy aggregate limit
in an amount not less than $1,000,000;
(f) a fidelity bond in an amount not less than $500,000 for the PSC
Personnel having signature authority on the Account identified in Section
6.6; and
(g) umbrella/excess liability in an amount not less than $5,000,000
per occurrence and annual aggregate.
To the extent commercially available to ▇▇▇▇▇ Systems or Cambridge Technology,
as the case may be, in the insurance market, such insurance policies will be
written by reputable insurers reasonably acceptable to Client, preferably by
insurance companies rated at least A by A.M. Best's rating service or
equivalent.
13.2 Insurance Documentation. Upon Client's reasonable request, each of
-----------------------
▇▇▇▇▇ Systems and Cambridge Technology will furnish to Client certificates of
insurance or other appropriate documentation (including evidence of renewal of
insurance) evidencing all coverages referenced in Section 13.1. Such
certificates or other documentation will include a provision whereby the
applicable insurer will give at least 30 days' notice to Client prior to
cancellation or material alteration of the coverage. Each of ▇▇▇▇▇ Systems and
Cambridge Technology will, to the extent reasonably practicable, cause the
applicable insurer to name Client and its Subsidiaries (and such other entities
as the parties may agree) as an additional insured and will furnish Client with
documentation thereof.
13.3 Risk of Loss. Each party will be responsible for risk of loss of, and
------------
damage to, any Equipment, Software or other materials in its possession or under
its control; provided that Client will be responsible for risk of loss of, and
damage to, all Equipment during shipment of such Equipment from (i) its
manufacturer in the case of Equipment purchased by ▇▇▇▇▇ Systems as part of the
Procurement Services or (ii) the location where the RSI Services are being
rendered on the Effective Date to a PSC Facility. In all cases where Client is
responsible for risk of loss under clauses (i) and (ii) of the preceding
sentence, ▇▇▇▇▇ Systems will arrange for appropriate insurance during shipment
and invoice the costs of such insurance to Client as a Pass-Through Expense.
ARTICLE 14
DISPUTE RESOLUTION
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14.1 General. Any dispute between any two or more parties to this
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Agreement, either with respect to the interpretation of any terms of this
Agreement or with respect to the performance by a party of its obligations under
this Agreement, will be resolved as provided in this Article 14. The parties
involved in the dispute will diligently seek to resolve all disputes pursuant to
Section 14.2, without resort to the more formal proceedings described in
Sections 14.3 and 14.4.
14.2 Management Meetings. Prior to the initiation of arbitration or
-------------------
Agreement, litigation under this Agreement, the parties will first attempt to
resolve their disputes as follows:
(a) Upon request of a party, each party involved in the dispute will,
within 10 business days of the request, appoint a senior manager who is not
directly involved in performance of this Agreement or the dispute to meet
with the other party's appointed senior manager to endeavor to resolve such
dispute. These senior managers will meet as often as they reasonably deem
necessary for each party involved in the dispute to gather and furnish to
the other party involved in the dispute all information with respect to the
dispute which the parties involved in the dispute believe to be appropriate
and germane to the resolution of the dispute. All such meetings will take
place in Denver, Colorado, unless the parties agree to a different site.
The senior managers will discuss the dispute and negotiate in good faith in
an effort to resolve the dispute without the necessity of any formal
proceeding. The specific format for these discussions will be left to the
discretion of the senior managers, but may include the preparation of
agreed-upon statements of fact or statements of position.
(b) Each party, whether or not such party is involved in the relevant
dispute, will comply with all reasonable requests made by the other parties
for non-privileged information (as determined by the disclosing party in
its sole discretion) that is reasonably related to the relevant dispute in
order that each party may be fully advised of the other party's position.
(c) If the parties involved in the dispute fail to resolve the dispute
within a time period not more than 30 days set by the senior managers
during their first meeting, the Presidents of each party (or their
respective designees) will meet (in person at a site reasonably selected by
Client's President or by telephone) to endeavor to resolve the dispute
prior to initiating arbitration under Section 14.3.
14.3 Arbitration. Except as provided in Section 14.4, any dispute that
-----------
is not resolved through negotiation pursuant to Section 14.2 will be resolved
exclusively by final and binding arbitration in accordance with the following:
63
(a) Arbitration arising out of a dispute will not be commenced until
10 days after the President of a party to the dispute notifies the
President of the other parties to the dispute that he or she has concluded
in good faith that amicable resolution of the dispute through continued
negotiation does not appear likely.
(b) Except as specified below or otherwise agreed, the arbitration
will be conducted in accordance with the then-current Commercial
Arbitration Rules of the American Arbitration Association. The arbitrators
will be three neutral persons selected by agreement of the parties or,
failing such agreement, in accordance with the AAA Rules. One arbitrator
will be an information technology professional with technical experience;
one arbitrator will be a certified public accountant with a major
international accounting firm with experience in long-term project
contracts; and one arbitrator will be an experienced business attorney with
experience in information technology transactions and contracts. If the
amount in dispute is less than $250,000, the arbitration will be conducted
by a single neutral arbitrator selected in accordance with those Commercial
Arbitration Rules who will be an experienced business attorney with
experience in information technology transactions and contracts.
(c) Any demand for arbitration or any counterclaim will specify in
reasonable detail the facts and legal grounds forming the basis for the
claimant's request for relief, and will include a statement of the total
amount of damages claimed, if any, and any other remedy sought by the
claimant.
(d) The arbitration proceedings will take place in Denver, Colorado,
regardless of which party initiates the arbitration.
(e) The arbitration panel or sole arbitrator may render an award of
monetary damages to any party to the dispute and direct any party or all
parties to the dispute to take or refrain from taking action, or both.
However, the arbitration panel or sole arbitrator may not award monetary
damages or direct any action whose fair market value would be in excess of
the damages allowed pursuant to Article 12.
(f) Judgment upon the award rendered in the arbitration may be entered
in any court of competent jurisdiction.
14.4 Limited Exceptions for Litigation.
---------------------------------
(a) The parties agree that the provisions of Sections 14.2 and 14.3
will not apply when a party to a dispute makes a reasonable determination
in good faith that a breach of the terms of this Agreement by the other
party to the dispute is such that the damages to the determining party
resulting from the breach will be so immediate, so large or severe, and so
incapable of adequate redress after the fact that a temporary restraining
64
order or other immediate injunctive relief is the most appropriate remedy,
and that party seeks such relief.
(b) This Article 14 will not be construed to prevent a party from
instituting, and a party is authorized to institute, litigation solely and
exclusively (i) to toll the expiration of any applicable limitations
period; (ii) to preserve a superior position with respect to other
creditors; (iii) to seek immediate injunctive relief with respect to an
infringement or alleged infringement of such party's intellectual property
rights; (iv) to enforce an arbitration award under Section 14.3; or (v) as
permitted under Section 14.4(a). Subject to the foregoing, this Article 14
will provide the exclusive procedure for resolving disputes under this
Agreement.
(c) Any litigation under this Agreement will be brought in a state or
federal court sitting in Denver, Colorado unless litigation in another
venue is required to protect or preserve a party's property located in that
venue.
14.5 Continued Performance. Each party will continue performing its
---------------------
respective obligations under this Agreement while any dispute submitted to
arbitration or litigation under this Article 14 is being resolved until such
obligations are terminated by the expiration or termination of this Agreement or
by a final and binding arbitral award, order, or judgment to the contrary under
this Article 14.
ARTICLE 15
DEFINITIONS AND CONSTRUCTION
15.1 Certain Terms. Capitalized terms used in this Agreement will have the
-------------
meanings ascribed to such terms in Schedule 15.1.
15.2 Captions. The captions used in this Agreement are for convenience of
--------
reference only and do not constitute a part of this Agreement and will not be
deemed to limit, characterize or in any way affect any provision of this
Agreement, and all provisions of this Agreement will be enforced and construed
as if no captions had been used in this Agreement.
15.3 Priority of Documents. In the event of a conflict among the terms of
---------------------
this Agreement and any Exhibit, Schedule, or Task Order under this Agreement,
such documents will have the following order of precedence: (i) Task Orders,
(ii) Schedules, (iii) this Agreement (excluding Task Orders, Schedules, and
Exhibits), and (iv) Exhibits. The RFP and Response to RFP, attached as Exhibits
A and B, may be used to explain any term or provision of this Agreement, but may
not be used or interpreted in such fashion as to add a term or provision to this
Agreement.
65
15.4 Severability. Whenever possible, each term of this Agreement will be
------------
interpreted in such a manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be prohibited by or invalid
under applicable law, such provision will be deemed restated to reflect the
original intentions of the parties as nearly as possible in accordance with
applicable law, and, if capable of substantial performance, the remaining
provisions of this Agreement will be enforced as if this Agreement was entered
into without the invalid provision.
ARTICLE 16
MISCELLANEOUS
16.1 No Hire Commitments. During the term and, except as provided in
-------------------
Section 9.7, for 12 months thereafter, each party agrees that neither it nor any
of its Affiliates will recruit or hire any person employed then or within the
preceding 12 months by any other party or any of its Affiliates who performed
work in connection with this Agreement without the prior consent of that party.
Upon expiration or termination of this Agreement, Client will have the right,
but not the obligation, to make employment offers to any or all of the
Transitioned Employees who are then in the employ of ▇▇▇▇▇ Systems and the
right, but not the obligation, to make employment offers to the PSC Personnel
who are then providing (or within the previous six months have provided)
services to Client under this Agreement. The decision to make employment offers
shall be within Client's sole discretion, and ▇▇▇▇▇ Systems shall have no
responsibility or liability to Client with respect to such decision.
16.2 Publicity. No party will use any other party's name, trademarks or
---------
service marks or refer to the other party directly or indirectly in any media
release, public announcement or public disclosure relating to this Agreement or
its subject matter to the extent the materials in such media release,
announcement or disclosure have not previously been made publicly available.
This restriction includes, but is not limited to, any promotional or marketing
materials, customer lists or business presentations (but not including any
announcement intended solely for internal distribution by a party or any
disclosure required by legal, accounting or regulatory requirements beyond the
reasonable control of a party) without obtaining consent from the other party
for each such use or release. Notwithstanding the foregoing limitation, any
party may use another party's name (solely for purposes of identifying the party
as a vendor or customer) in any promotional or marketing materials designed for
a particular potential customer, provided such potential customer has signed a
confidentiality agreement requiring it not to disclose the contents of such
promotional or marketing materials to an unaffiliated third party.
16.3 Notices. All consents, notices, requests, demands, and other
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communications to be given or delivered under or by reason of the provisions of
this Agreement will be in writing and will be deemed given when delivered
personally against receipt, on the next business day when sent by overnight
courier, and on the fifth business day after being mailed by certified mail,
return receipt requested, to each party at the following address (or to
66
such other address as that party may have specified by notice given to the other
party pursuant to this provision):
If to ▇▇▇▇▇ Systems: With a copy to:
▇▇▇▇▇ Systems Corporation ▇▇▇▇▇ Systems Corporation
Attn: President Attn: General Counsel
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
If to Cambridge Technology: With a copy to:
Cambridge Technology Partners, Inc. Cambridge Technology Partners, Inc.
Attn: President Attn: General Counsel
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
If to Client: With a copy to:
Ryder TRS, Inc. Ryder TRS, Inc.
Attn: President Attn: General Counsel
▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
16.4 Assignment. This Agreement and all of the provisions hereof will be
----------
binding upon and inure to the benefit of each party and its respective
successors and permitted assigns, but neither this Agreement nor any of the
rights, interests or obligations hereunder will be assigned by any party without
the prior consent of the other parties, except that (i) any party may assign
this Agreement to the surviving entity in connection with the merger,
consolidation, or sale of all or substantially all of the assets of that party;
or (ii) if such a business combination is with a party to which ▇▇▇▇▇ Systems or
Cambridge Technology is then providing services, this Agreement and the relevant
agreements between ▇▇▇▇▇ Systems or Cambridge Technology and such other party
will be amended as appropriate to provide the surviving entity of the business
combination with the benefits of consolidating the agreements.
16.5 Counterparts. This Agreement may be executed in one or more
------------
counterparts all of which taken together will constitute one and the same
instrument.
16.6 Relationship of Parties. ▇▇▇▇▇ Systems and Cambridge Technology, in
-----------------------
furnishing services to Client hereunder, are each acting only as an independent
contractor. Except as otherwise provided herein, neither ▇▇▇▇▇ Systems nor
Cambridge Technology undertakes by this Agreement or otherwise to perform any
obligation of Client or each other, whether regulatory or contractual, or to
assume any responsibility for
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Client's or each other's business or operations, and ▇▇▇▇▇ Systems and Cambridge
Technology, respectively, has the sole right and obligation to supervise,
manage, contract, direct, procure, perform or cause to be performed, all work to
be performed hereunder by such party. In no event will Client be deemed to be an
employer or co-employer of any PSC Personnel or Cambridge Personnel.
16.7 Approvals and Similar Actions. Where agreement, approval,
-----------------------------
acceptance, consent or similar action by any party is required by any provision
of this Agreement, such action will not be unreasonably delayed or withheld
unless otherwise expressly permitted.
16.8 Modification; Waiver. This Agreement may be modified only by a
--------------------
written instrument duly executed by or on behalf of each party whose obligations
are affected by such modification. No delay or omission by any party to exercise
any right or power hereunder will impair such right or power or be construed to
be a waiver thereof. A waiver by any party of any of the obligations to be
performed by any other party or any breach thereof will not be construed to be a
waiver of any succeeding breach thereof or of any other obligation herein
contained.
16.9 No Third-Party Beneficiaries. The parties agree that this
----------------------------
Agreement is for the benefit of the parties hereto and is not intended to confer
any rights or benefits on any third-party, including any employee of any party,
and that there are no third-party beneficiaries to this Agreement or any
specific term of this Agreement.
16.10 Governing Law. The laws of the State of Colorado will govern all
-------------
questions concerning the construction, validity and interpretation of this
Agreement and the performance of the obligations imposed by this Agreement.
16.11 Entire Agreement. This Agreement, including any exhibits,
----------------
schedules, task orders, or appendices hereto or thereto, constitutes the final,
entire and exclusive agreement among the parties with respect to its subject
matter.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be signed and
delivered by their duly authorized representative to be effective as of the
Effective Date first set forth above.
RYDER TRS, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Title: President and Chief Operating Officer
Date: January 22, 1998
CAMBRIDGE TECHNOLOGY PARTNERS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
Date: January 22, 1998
▇▇▇▇▇ SYSTEMS CORPORATION
By: /s/ ▇▇▇▇ ▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇
Title: President and Chief Executive Officer
Date: January 22, 1998
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