EXHIBIT 10.33
MASTER SERVICES AGREEMENT
between each of
STORAGE TECHNOLOGY CORPORATION
and
ELECTRONIC DATA SYSTEMS CORPORATION
and
EDS INFORMATION SERVICES L.L.C.
with an
Agreement Effective Date of
April 1, 2002
Master Services Agreement
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This Master Services Agreement (this "Agreement"), dated as of April 1, 2002
(the "Agreement Effective Date"), is between each of Storage Technology
Corporation, a Delaware corporation ("STK"), Electronic Data Systems
Corporation, a Delaware corporation ("EDS"), and EDS Information Services
L.L.C., a Delaware limited liability company ("EIS").
BACKGROUND
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STK desires to obtain from EDS, and EDS desires to provide to STK, certain
services, resources, expertise, and deliverables as may be mutually agreed upon
by STK and EDS from time to time and documented in separate, written, specific
Authorization Letters (defined below) containing particular information on
prescribed points and customized terms and conditions for each particular
provision of Services (defined below) by EDS.
STK and EDS also desire to establish a mechanism for the execution of such
Authorization Letters and to agree upon: (a) certain standard provisions that
will govern the performance of the activities contemplated by each such
Authorization Letter, and (b) certain terms and conditions particular to the
specified provision of Services.
This Agreement documents the terms and conditions under which STK agrees to
acquire, and EDS agrees to provide, such Services.
Article I. Scope, Term and Authorization Letters
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1.1 Definitions; Scope; Parties; Offshore Services; Non-exclusivity; Prior
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Agreement.
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(a) Definitions. For convenience of reference, the Definitions (Schedule
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1.1(a)), attached hereto and incorporated herein, sets forth the
capitalized terms that are used in this Agreement and identifies the
sections hereof in which the definitions for such terms appear. In
addition, terms that are not defined within the body of this Agreement are
defined in that Schedule. Certain Authorization Letters will contain
defined terms applicable to such Authorization Letter.
(b) Scope.
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(i) General. This Agreement establishes the standard provisions that will apply
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to the services, resources and deliverables to be provided by EDS to STK as
mutually agreed upon from time to time by EDS and STK and confirmed in a
written authorization letter based upon and covering all of the issues
listed in Section 1.3 (each, an "Authorization Letter") (such services,
resources and deliverables as are described in each Authorization Letter
are collectively referred to herein as the "Services"), provided that no
such Authorization letter shall be binding on STK unless and until it has
been signed by an authorized representative of STK.
(ii) Parties.
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(1) Principal Parties. EDS and STK may be referred to in this Agreement
individually as a "Party" and together as the "Parties".
(2) EDS and EDS Subsidiaries.
(a) The obligations of EDS set forth in this Agreement and in each such
Authorization Letter will be performed by EDS, itself and through its
direct wholly owned subsidiaries, including EIS (each an "EDS Subsidiary").
All references to EDS in this Agreement will be deemed to include all such
subsidiaries. Notwithstanding the foregoing, EDS may not use an EDS
subsidiary which is an STK Competitor to perform Services, unless the STK
Executive Representative approves such use in writing.
(b) With respect to Authorization Letters between an EDS Subsidiary and STK or
a Permitted STK Affiliate, the EDS Subsidiary must agree in the
Authorization Letter, among other things, to comply with and be bound by
the terms and conditions of this Agreement to the same extent as if the EDS
Subsidiary were a party hereto.
(c) EDS will remain responsible for compliance by or on behalf of each EDS
Subsidiary with the terms and conditions of this Agreement and the
applicable Authorization Letter(s).
(3) STK Affiliates.
(a) A Permitted STK Affiliate is an STK Affiliate which the STK Executive
Representative designates in writing as being permitted to participate in
this Agreement.
(b) Any Permitted STK Affiliate may utilize this Agreement by executing and
delivering to EDS an Authorization Letter in accordance with this
Agreement.
(c) With respect to Authorization Letters between EDS or an EDS Subsidiary and
a Permitted STK Affiliate, the STK Affiliate must agree in the
Authorization Letter, among other things, to comply with and be bound by
the terms and conditions of this Agreement to the same extent as if the STK
Affiliate were a party hereto, and, unless the context otherwise indicates,
all references to "STK" herein will be deemed to be references to such STK
Affiliate, but only with respect to, for purposes of, and the extent of
such Authorization Letter.
(d) STK will remain responsible for compliance by or on behalf of each
Permitted STK Affiliate with the terms and conditions of this Agreement and
the applicable Authorization Letter(s), provided that the STK Executive
Representative has approved such Authorization Letter in the applicable
section of such Authorization Letter.
(e) EDS and EDS Subsidiaries will not contact, communicate with, make proposals
to, enter into Authorization Letters with, or otherwise contract with
(collectively "Contact") any STK Affiliate for purposes of establishing a
relationship with or providing services, software, or equipment to STK
Affiliate(s), unless the STK Executive Representative has approved in
writing such Contact with the specific STK Affiliate in each instance.
(iii)Offshore Services; Offshore Affiliates.
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If:
(1) a material portion of the Services to be rendered in an Authorization
Letter is to be rendered outside the United States, and/or
(2) an EDS Affiliate or an STK Affiliate is not a U.S. corporation and is a
party to an Authorization Letter,
then the terms of this Agreement must be amended by the Parties to take
into consideration local laws, tax matters, local currencies, and other
matters affected by the offshore aspects of such transaction.
(iv) Non-exclusivity. The Parties acknowledge and agree that except as provided
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in Section 1.6, each Party reserves the right to supply or obtain any
services or products to or from any other client or source during and after
the term of this Agreement.
(v) Prior Agreement.
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(1) Previously, the Parties executed that certain Agreement for Information
Technology Services, dated effective as of April 1, 1999 (the "Prior
Agreement"), pursuant to which EDS had performed certain information
technology services for the benefit of STK. The Parties now desire, by
using this Agreement,
(a) to expand the information technology services and deliverables which EDS
will perform, and
(b) to modify the contracting mechanism by which the Parties agree in writing
to have EDS provide to STK such services and related items to provide more
specificity in the associated contract documents and more flexibility in
the contracting process.
(2) The Parties agree and acknowledge that
(a) the Prior Agreement will govern services/deliverables rendered/delivered
prior to the applicable Services Commencement Date of an Authorization
Letter issued under this Agreement and the payment for such
services/deliverables, but the Prior Agreement shall remain in effect
solely for such purposes,
(b) except as specifically set forth in this Agreement, the Prior Agreement
will not apply in any respect to services/deliverables to be
rendered/delivered after the applicable Services Commencement Date of an
Authorization Letter issued under this Agreement, and
(c) any further services/deliverables to be provided by EDS will be
rendered/delivered under this Agreement to the extent they are specifically
set forth in a valid, written Authorization Letter issued and executed on
or after the Agreement Effective Date.
(3) EDS covenants that EDS has rendered/delivered all services/deliverables
which are due under the Prior Agreement prior to the applicable Services
Commencement Date.
(c) STK Competitors. The list of STK Competitors is attached hereto and
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incorporated herein as Schedule 1.1(c). STK shall have the right to update
the applicable list of STK Competitors with mutually agreeable names
throughout the term of the applicable Authorization Letter.
1.2 Term; Renewal. Unless terminated earlier in accordance with the provisions
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of this Agreement, the term (the "Term") of this Agreement will commence on
the Agreement Effective Date and will expire on April 15, 2012 (the
"Expiration Date"). Thereafter, the term of this Agreement may be extended
by mutual written agreement of the Parties.
1.3 Authorization Letters. All services, resources and deliverables to be
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provided by EDS to STK will be set forth in written Authorization Letters.
No Authorization Letter will become effective until it has been executed by
authorized representatives of each of EDS and STK . Each Authorization
Letter will include, at a minimum, the following:
(a) Incorporate MSA. A reference to this Agreement, which reference will be
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deemed to incorporate all of the provisions of this Agreement;
(b) Term. The Authorization Letter Effective Date, the Services Commencement
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Date, and the term or period of time during which the Services described
therein will be provided ("Authorization Letter Term");
(c) STK Party. The name of the Party (either STK or a Permitted STK Affiliate)
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to whom EDS will be providing the Services and, if such party is a
Permitted STK Affiliate, the notice address for the STK Affiliate and the
STK approval required by Section 1.1(b)(ii)(3)(d) (See Section 1.1(b)(ii)
for specific Agreement terms);
(d) Detailed Statement of Work.
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(i) EDS Responsibilities. A specific description of the particular nature,
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deliverables, and other aspects of the particular Services to be provided
by or on behalf of EDS under the Authorization Letter (including the
location at which such Services are to be provided) and the performance
criteria, standards and milestones applicable to such Services.
(ii) STK Specific Responsibilities. A description of any material
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responsibilities of STK relating to the Authorization Letter, including any
facilities, hardware, software, personnel, design, co-design, development,
co-development, other procurement, or other support, cost, equipment, or
assistance to be provided by or on behalf of STK to EDS.
(iii)Additional Provisions. Any additional provisions applicable to the
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Services to be provided under the Authorization Letter that are either
appropriate or required by this Agreement to be addressed, are not
otherwise set forth in this Agreement, or are permitted exceptions to the
provisions set forth in this Agreement.
(e) Necessary/Restricted Personnel. A list of the Key Positions, if any, for
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the Authorization Letter (See Section 3.2 for specific Agreement terms);
(f) Payments. (See Section 8 for specific Agreement terms.)
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(i) The amounts payable for the Services to be provided under the Authorization
Letter (including, if applicable, the rate(s) for all EDS personnel to be
used in EDS' performance of the Services),
(ii) any related charges or fees (including but not limited to any procurement
of any third party technology, components, or services), and
(iii)the schedule on which such amounts will be invoiced by EDS (or any third
party);
(g) Liability Cap. The applicable Authorization Letter Damages Limit. (See
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Section 11.2(c) for specific Agreement terms.)
(h) Assumed Positions/Eligible Employees. A list of the positions within STK
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which will become positions within EDS and a list of the Eligible
Employees. (See Section 3.4 for specific Agreement terms.)
(i) Knowledge Holders. A list of the Eligible Employees whose Patentable
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Developments conceived after the applicable Services Commencement Date
would be owned by STK under the terms of Section 6.2(d)(i) of this
Agreement.
1.4 Order of Precedence; Changes.
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(a) Order of Precedence. In the event of any express conflict or inconsistency
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between the provisions of an Authorization Letter and the provisions of
this Agreement, the provisions of the Authorization Letter will govern and
control with respect to the interpretation of that Authorization Letter;
provided, however, that the provisions of the Authorization Letter will be
so construed to give effect, first to the terms of and within the
Authorization Letter, and then, second, to the extent necessary to give
effect to the Authorization Letter, the applicable provisions of this
Agreement.
(b) Effect of Changes to Agreement. Any changes or modifications made to this
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Agreement in accordance with Section 12.4 will apply to all Authorization
Letters with effective dates after the effective date of such written
change/modification, unless otherwise specifically set forth in such
change/modification.
(c) Effect of Changes to Authorization Letter. Any changes or modifications
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made to any Authorization Letter will apply only to that Authorization
Letter.
(d) Cross-reference. See also Section 1.11(d) regarding conflicts.
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1.5 Additional Items of Property.
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(a) General. If any additional items of property, whether in the form of
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equipment, Software or otherwise, are required by EDS to perform the
Services or otherwise to meet its obligations under any Authorization
Letter, whether in addition to or in replacement of any then existing
property, the particular Authorization Letter will address such items of
property in detail.
(b) Standards Required. If there are particular items of property which must
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meet certain standards or service levels in order for EDS to provide the
Services reflected in the particular Authorization Letter at the applicable
service levels or performance standards, the detailed requirements must be
specifically set forth in the applicable Authorization Letter. If STK does
not obtain or lease such items of property which meet or exceed such agreed
requirements, then EDS will not be responsible for any direct, adverse
impact on STK, the Services or any applicable performance criteria,
standards or milestones to the extent directly related to STK's failure to
obtain or lease such items of property which meet or exceed such agreed
requirements. Notwithstanding the preceding sentence, EDS will use
Commercially Reasonable Efforts to mitigate such adverse impacts.
1.6 Third Party Services.
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(a) Exclusivity as to Services Provided. Unless otherwise specifically set
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forth in the applicable Authorization Letter, STK shall not have the right
to contract with a third party to perform any services which are clearly
within the scope of an executed Authorization Letter. For the purposes of
this Agreement, any services which are not the subject of an executed
Authorization Letter at any particular time during the term of this
Agreement shall be referred to herein as an "Out of Scope Service."
(b) Cooperation Regarding Third Parties; Charges.
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(i) General. If STK contracts with a third party to perform any Out of Scope
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Services or services which are non-exclusive, to the extent reasonably
required by STK, EDS shall cooperate with STK and such third party,
including provision of
(1) assistance to such third party, and
(2) access to the technical environment managed or operated by EDS or any
Services as necessary for such third parties to perform their work, subject
to
(x) STK's standard, applicable bilateral confidentiality agreement being
executed and delivered by such third party, and
(y) such third party complying with, as applicable, EDS' or STK's physical and
technical security corporate policies.
(ii) EDS' Support. EDS shall be obligated to support and maintain such service
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provider's work product at STK's request if such work product:
(1) was or becomes a supported product as a portion of Services under a
particular Authorization Letter, and
(2) unless otherwise set forth in the applicable Authorization Letter, complies
with the same STK requirements, standards and policies with which EDS must
comply under this Agreement or the applicable Authorization Letter
regarding such supported product.
(iii) Charges.
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(1) EDS shall provide such assistance and access reflected in Section 1.6(b)(i)
at no additional charge and, further, shall provide the support and
maintenance services reflected in Section 1.6(b)(ii) at no additional
charge, unless:
(a) such support and maintenance services are then Out of Scope Services, or
(b) in the event such Services are the subject of an Authorization Letter, if
excess resources are necessary to provide such support and maintenance.
(2) If there are to be additional charges under Section 1.6(b)(iii)(1), then
such charges for such support and maintenance services shall be at the
applicable EDS rates for similar Out of Scope Services, unless otherwise
negotiated.
1.7 Changes in Law and Regulations.
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(a) Notification.
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(i) As part of the Services, EDS shall identify the impact, if any, of changes
in applicable legislative enactments and regulations on the Services or on
the business of EDS of which EDS becomes aware in the normal course of
business, taking into account EDS' national and global market research,
services planning, and other functions and resources. EDS shall notify STK
of such changes and shall work with STK to identify the impact of such
changes on how EDS plans or delivers or how STK uses the affected Services
and the related deliverables.
(ii) If there occur new applicable legislative enactments and regulations on the
Services or upon STK's business of which STK becomes aware in the normal
course of business or due to STK's particular specialization in STK's
product development, manufacturing and sales, then STK shall notify EDS of
such changes in applicable legislative enactments and regulations. In such
cases, EDS and STK will work with each other to identify the impact of such
changes on how EDS plans or delivers or how STK uses the affected Services
and the related deliverables.
(b) Implementation. EDS shall promptly make any resulting modifications to the
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design (unless the Authorization Letter provides that STK has control of
applicable design), development, delivery, and/or documentation of the
affected Services and the related deliverables which are reasonably
confirmed, after detailed analysis and prior communications with STK, as
necessary as a direct result of such legislative or regulatory changes and
which have been documented through the Authorization Letter Change Control
Procedures.
(c) Payment of Costs. EDS shall be responsible for, and shall pay for, the
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cost, including those incurred by STK, of any such changes relating to EDS'
business. STK shall be responsible for the cost, including those incurred
by EDS, of any such changes relating to STK's business and not relating to
EDS' business. STK shall also be responsible for changes in the Services
required as a direct result of such changes to the extent such changes
require resources in excess of the resources otherwise provided by EDS as
part of the Services, unless such changes relate to EDS' business.
(d) Payment of Fines and Penalties. EDS shall be responsible for any fines and
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penalties imposed on STK and its Affiliates or EDS arising from any
noncompliance by EDS, its subcontractors, or agents with the changes in any
laws and regulations for which EDS has the responsibility to comply with
pursuant to this Section 1.7. STK shall be responsible for any fines and
penalties imposed on STK or EDS and its Affiliates arising from any
noncompliance by STK, its contractors or agents with the changes in any
laws and regulations for which STK has the responsibility to comply with
pursuant to this Section 1.7.
(e) Unforeseen Change with Severe Economic Consequences. In the event any
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completely unexpected (i.e. as of the date a particular Authorization
Letter is executed) change in applicable law necessarily (e.g. no waiver,
extension or other remedies are possible under the new legal requirements)
and directly, causes the performance of the affected Services to become
necessarily, permanently and significantly uneconomical to either Party,
then the Parties will negotiate in good faith to:
(i) modify the affected Services, schedule, deliverables, and/or payments
pursuant to the Authorization Letter Change Control Procedures so that they
are no longer uneconomical to either Party (i.e. adjust for the directly,
inevitable, unexpected adverse impacts of such unexpected change in the
applicable law), or
(ii) terminate only the affected Services under the applicable Authorization
Letter and make equitable resulting adjustments to the applicable
provisions of this Agreement and the affected Authorization Letter,
including, without limitation, the applicable termination costs, pursuant
to the Authorization Letter Change Control Procedures.
1.8 Relocation of Software, Equipment or Resources; Shared Environment.
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(a) General. During the time the Services are performed at STK's facilities,
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EDS shall provide the Services using hardware, software and related
resources dedicated solely to supporting STK, unless EDS, pursuant to the
terms and conditions of this Section 1.8, has:
(i) relocated the Services or portions thereof to another facility, or
(ii) STK has approved the use of an STK facility or a portion of an STK facility
for EDS to provide services to EDS clients other than STK.
(b) STK's Request. During the Term, if STK requests, EDS shall provide to STK a
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proposal for the provision of any or all Services using shared or dedicated
Equipment from EDS' facilities or from a facility designated by STK.
(c) EDS' Request.
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(i) Relocatable Services.
(1) Notwithstanding anything to the contrary in this Agreement or in any
Authorization Letter, for those four (4) portions of the Services under
Authorization Letter No. 1 which Services are mainframe monitoring,
software applications maintenance and support, help desk, and systems
administration (the "Relocatable Services"), EDS may, in its sole
discretion, perform the Relocatable Services or any portion thereof from
any location determined by EDS, or relocate any Software or personnel used
by EDS to perform the Relocatable Services; provided however, that any
change in the Relocatable Services location made by EDS in its sole
discretion shall not:
(a) adversely impact EDS' ability to perform its obligations, including,
without limitation, the achievement of any applicable Service Levels,
(b) increase STK's fees or costs (unless EDS agrees to reimburse STK for such
increase in STK's fees and costs),
(c) involve the movement of any equipment or use of or access to any Software
in a manner which would require STK to obtain additional permissions,
rights, or waivers from licensors or lessors, or
(d) adversely impact the way in which STK conducts its business or operations.
(2) EDS and STK will negotiate in good faith any Services pricing reduction or
credits to STK which may result from such relocation of the Relocatable
Services.
(ii) Moving Services Other than Relocatable Services.
(1) In addition to the Relocatable Services, at any time during the term of
this Agreement or the applicable Authorization Letter, with regard to other
portions of the Services that are being performed pursuant to a particular
Authorization Letter, EDS may make proposals to STK for STK's reasonable
consideration for an arrangement under which EDS may perform such other
portions of the Services from another location or relocate any Software or
personnel used by EDS to perform such other portions of the Services.
(2) If STK accepts any such proposal, the Parties will negotiate mutually
agreeable terms and conditions relating to such relocation of such other
portions of the Services and make appropriate modifications to the terms,
including Services pricing or credits to STK which may result from such
relocation, of the applicable Authorization Letter, in accordance with the
Authorization Letter Change Control Procedures, or as an amendment to this
Agreement. If the Parties are unable to negotiate mutually agreeable terms
and conditions within ninety (90) days, then, unless otherwise agreed by
the Parties in writing, the negotiations will cease and STK will be deemed
to have rejected such proposal.
(d) Shared Facilities.
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(i) At any time during the term of this Agreement, with regard to the Services
that are being performed pursuant to a particular Authorization Letter, EDS
may make proposals to STK for STK's reasonable consideration for an
arrangement under which EDS may use all or a portion of the STK facilities
from which EDS is then performing the Services or any portion hereunder to
perform services for other clients of EDS.
(ii) If STK accepts any such proposal, the Parties will negotiate mutually
agreeable terms and conditions relating to EDS' use of such STK facilities
for other EDS clients and make appropriate modifications to the terms,
including Services pricing or credits to STK or charges to EDS which may
result from such use of STK facilities, of the applicable Authorization
Letter in accordance with the Authorization Letter Change Control
Procedures, or as an amendment to this Agreement. If the Parties are unable
to negotiate mutually agreeable terms and conditions within ninety (90)
days, then, unless otherwise agreed by the Parties in writing, the
negotiations will cease and STK will be deemed to have rejected such
proposal.
1.9 Correction of Errors.
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(a) At no cost to STK, EDS shall promptly correct any errors or inaccuracies in
STK Data or Reports caused by EDS.
(b) Unless otherwise set forth in the Applicable Authorization Letter,
(i) EDS shall promptly correct any errors or inaccuracies (other than those
caused by EDS, which are the subject of Section 1.9(a), above) in the STK
Data or Reports (i.e., those caused by STK or as a result of bad or
incorrect STK Data or other incorrect information from STK), and such
corrections:
(1) shall be rendered by EDS at no additional charge to STK to the extent such
corrections are within the scope of the Services set forth in the
applicable Authorization Letter; or
(2) shall be rendered by EDS at no additional charge to STK to the extent such
corrections can be made by EDS without additional resources, provided that
if the rendering of such correction services may reasonably be anticipated
to negatively affect the delivery of Services or the Service Levels, if STK
wishes to have the correction services performed at no additional charge,
STK may re-prioritize the delivery of Services or adjust Service Levels in
a manner so as to give EDS appropriate relief from such Services or Service
Levels.
(ii) If there will be additional charges to STK under this Section 1.9, then EDS
shall obtain STK's prior written approval of the applicable charges before
performing such corrections.
(c) Unless otherwise specifically set forth in the Applicable Authorization
Letter, corrections and reruns shall be reported in daily, weekly and
monthly reports defined by STK and produced by EDS as a portion of the
Services at no additional charge to STK.
1.10 Reports. As a part of the Services and at no additional charge to STK, EDS
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shall prepare and deliver to STK the reports described in each
Authorization Letter ("Reports") by the respective deadlines specified in
each Authorization Letter.
1.11 Procedures Manual.
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Unless the applicable Authorization Letter contains a different process for
creating and changing the applicable Procedures Manual, then the following
shall apply:
(a) Initial Procedures Manual.
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(i) Within forty-five (45) days following the Services Commencement Date of
each Authorization Letter, EDS shall deliver to STK for review and comment
a comprehensive, complete draft of a manual which complies with STK's ISO
certification requirements (the "Procedures Manual"):
(1) describing in detail the activities EDS shall perform to provide the
Services in the applicable Authorization Letter, including, where
appropriate, direction, supervision, monitoring, quality assurance,
staffing, reporting, planning, and testing activities and procedures
normally undertaken at facilities that provide services of the type EDS
shall provide under the applicable Authorization Letter, and
(2) including the documentation (such as, for example, operations manuals, user
guides, forms of Service Level reports, call lists, escalation procedures,
emergency procedures, and requests for approvals or information) which
provides further information regarding the Services, and
(3) is based:
(a) on the STK procedures manual used to provide the particular Services
reflected in such Authorization Letter immediately before the effective
date of each Authorization Letter, if STK desires to have such manual be
used for such purpose, and/or
(b) on the STK procedures used to provide the particular Services reflected in
such Authorization Letter immediately before the effective date of each
Authorization Letter, if STK desires to have such STK procedures used for
such purpose.
(ii) STK shall provide comments on the Procedures Manual to EDS within fifteen
(15) days after STK's receipt. EDS shall incorporate any mutually agreeable
comments and suggestions made by STK and shall deliver a revised Procedures
Manual within fifteen (15) days after receipt of STK's comments.
(iii)The process set forth in Section 1.11(a)(ii) shall be repeated until the
Parties agree upon the contents of the Procedures Manual. If the Parties
are not able to agree upon the contents of the Procedures Manual after
either:
(1) the process set forth in Section 1.11(a)(ii) has been followed a total of
three times, or,
(2) one hundred twenty (120) days after the Authorization Letter Effective
Date,
then the Parties shall proceed to the dispute resolution process set forth
in Article IX.
(b) Updates to Procedures Manual.
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(i) EDS shall update each Procedures Manual for each Authorization Letter
throughout the term of each Authorization Letter to reflect changes in the
Services and the procedures and resources used to provide the Services
within five (5) Business Days after such change is agreed upon through the
applicable procedure ("Change Date").
(ii) STK shall provide comments on the updated Procedures Manual to EDS within
five (5) Business Days after STK's receipt. EDS shall incorporate any
mutually agreeable comments and suggestions made by STK and shall deliver a
revised Procedures Manual within five (5) Business Days after receipt of
STK's comments.
(iii)The process set forth in Section 1.11(b)(ii) shall be repeated until the
Parties agree upon the contents of the Procedures Manual. If the Parties
are not able to agree upon the contents of the Procedures Manual after
either:
(1) the process set forth in Section 1.11(b)(ii) has been followed a total of
three times, or,
(2) thirty (30) days after the Change Date,
then the Parties shall proceed to the dispute resolution process set forth
in Article IX.
(iv) Except for modifications necessitated by emergencies (as may be defined in
the applicable Authorization Letter or Procedures Manual), no change in
then current procedures shall be implemented unless and until the Parties
have agreed upon the updated Procedures Manual.
(c) Effect of Procedures Manual.
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(i) EDS shall use the then-current version of the Procedures Manual as an
operational guide to the performance of the Services.
(ii) Unless otherwise specified in the applicable Authorization Letter, EDS
shall not be in default or material default solely because it failed to
perform the Services in accordance with the Procedures Manual. As such,
unless otherwise expressly specified in the applicable Authorization Letter
that EDS is to perform the Services in accordance with specific sections of
the Procedures Manual or in accordance with the Procedures Manual, the
Procedures Manual shall not constitute a contractual document,
responsibility or obligation of EDS to perform such Services in such a
manner.
(d) Conflicts.
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(i) In the event of a conflict between the provisions of the applicable
Authorization Letter and its Procedures Manual, the provisions of the
Authorization Letter shall control, and STK's and EDS' acceptance of the
Procedures Manual shall not be deemed a waiver of any rights of STK or EDS.
(ii) See also Section 1.4 regarding conflicts.
(e) STK Approvals. Approvals (agreement) by STK under this Section 1.11 of the
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initial Procedures Manual and any updates thereto may be made only by the
STK Authorization Letter Representative in writing.
(f) ISO Certification Requirements. EDS is responsible for compliance of the
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Procedures Manual with the applicable STK ISO certification requirements.
STK will provide EDS with a copy of the applicable STK ISO certification
requirements.
1.12 Technical Change Control. EDS shall implement any changes in the technical
------------------------
environment and systems used to provide the Services only in accordance
with the terms of the applicable Authorization Letter.
1.13 Authorization Letter Change Control Procedures.
----------------------------------------------
Unless the applicable Authorization Letter contains a different process for
creating and changing the applicable Authorization Letter, then the
following shall apply:
(a) Changes.
(i) From time to time during the term of each Authorization Letter, STK or EDS
may propose adjustments, changes or additions (collectively a "Change") to
a particular Authorization Letter, including modifications to the
applicable statement of work. This process should be used for major Changes
in the Services reflected in the applicable Authorization Letter and should
not be used for Out of Scope Services to be provided by EDS outside of the
Services, unless such new services are so closely related to the Services
that the Services could not be provided effectively unless such new
services were also provided, in which case this process should be used for
including such Out of Scope Services into the Services. For Out of Scope
Services which are not so closely related to the Services, an additional
Authorization Letter would be negotiated.
(ii) Small or routine Changes made in the ordinary course of EDS' provision of
the Services that are performed within the then-existing resources used to
provide the Services and that do not materially modify the items (including
but not limited to Services, Service Levels, tasks, responsibilities, fees)
specified in the applicable Authorization Letter shall be made and
documented in accordance with the applicable Authorization Letter.
(b) If either Party desires to propose a major Change to a particular
Authorization Letter, it may do so by preparing and delivering an amendment
to the Authorization Letter ("Authorization Letter Amendment") to the
Authorization Letter Representative of the other Party. If the other Party
is interested in investigating the Change, then the Authorization Letter
Representative shall notify, in writing, the Authorization Letter
Representative of the other Party.
(c) The following matters should be considered by the Parties when preparing an
Authorization Letter Amendment:
(i) any changes in specifications, Services, Service Levels, assignment of
personnel and other resources,
(ii) how and when the Change would be implemented,
(iii)the effect of the proposal, if any, on the amounts payable by STK under
the applicable Authorization Letter,
(iv) any other terms relevant to the Change.
(d) EDS and STK will cooperate with each other in discussing the Change and
exchanging information relevant to evaluating the Change, including without
limitation the scope, nature, equipment, software, staffing,
implementation, timing, and if applicable, any amounts associated with the
Change.
(e) EDS shall, as promptly as reasonably possible, but unless otherwise agreed
by the Parties, in not more than thirty (30) days, prepare at EDS' expense
and deliver to the STK Authorization Letter Representative a revised
Authorization Letter Amendment reflecting the discussions of the Parties.
(f) After the STK Authorization Letter Representative receives the revised
Authorization Letter Amendment from EDS, the STK Authorization Letter
Representative shall notify the EDS Authorization Letter Representative of:
(i) any modifications or clarifications required in the Authorization Letter
Amendment,
(ii) STK's acceptance of the Authorization Letter Amendment, or
(iii) STK's rejection of the Authorization Letter Amendment.
(g) If STK notifies EDS of any modifications or clarifications required in the
Authorization Letter Amendment, then EDS promptly (unless otherwise agreed
by the Parties, in not more than ten (10) days) shall revise the
Authorization Letter Amendment and submit the revised document to STK. The
process described in Section 1.13(f) above shall then follow.
(h) An Authorization Letter Amendment, once submitted to STK, shall constitute
an offer by EDS to implement the proposal described therein on the terms
set forth therein, and shall be irrevocable for a minimum of thirty (30)
days after the latest version is issued by EDS.
(i) No Change to an Authorization Letter shall become effective or be
implemented unless and until such Authorization Letter Amendment has been
executed by the respective, authorized representative of each of the
Parties.
(j) If either STK or EDS proposes a Change pursuant to the Authorization Letter
Change Control Procedures, the charge for such Change shall be determined
in the manner set forth in this Section (j) as follows:
(i) To the extent the proposed change or addition can be accommodated within
the existing level of resources then being used by EDS to provide the
Services under the applicable Authorization Letter and without degradation
to existing Service Levels (unless otherwise agreed by STK in writing), the
charges payable by STK under the applicable Authorization Letter shall not
be increased.
(ii) To the extent the proposed change or addition necessarily will require the
addition or subtraction of resources for which a pricing metric (such
pricing metrics being pre-set charges for adjustments in applicable fees to
be paid to EDS that are expressly reflected in the Authorization Letter)
exists under the applicable Authorization Letter, the resulting change to
the charges payable by STK hereunder shall be calculated in accordance with
that pricing metric.
(iii)Except as set forth in (i) and (ii), above, any other charge adjustment
shall be a mutually agreed charge or fee.
1.14 Service Levels.
--------------
(a) Service Levels; Review of Service Levels.
----------------------------------------
Unless otherwise specifically set forth in the applicable Authorization
Letter:
(i) As a part of the statement of work for each Authorization Letter and with
respect to the Services to be performed pursuant thereto, the Parties will
jointly define and determine the Service Levels that will apply to the
Services in such Authorization Letter. If a Service Level is not to go into
effect on the Services Commencement Date set forth in the application
Authorization Letter, the Authorization Letter must clearly specify when
such Service Level is to go into effect.
(ii) Throughout the term of each Authorization Letter, EDS shall use
Commercially Reasonable Efforts to identify and notify STK of commercially
reasonable methods of improving the Service Levels. Within six (6) months
after the Services Commencement Date of each Authorization Letter and at
least quarterly thereafter, the Parties shall jointly review the Service
Levels and adjust them pursuant to Section 1.13 to reflect any improved
performance capabilities associated with advances in the technology and
methods used to perform the Services.
(b) Measurement and Monitoring Tools. As part of the Services throughout the
---------------------------------
term of each Authorization Letter, and at no additional cost to STK, EDS
shall implement reasonable measurement and monitoring tools and procedures
necessary (collectively the "Monitoring Protocol") to compare EDS' actual
performance of the Services to the Service Levels. Such Monitoring
Protocols are subject to STK's approval.
(c) Failure to Meet Service Levels.
------------------------------
(i) EDS acknowledges that its failure to meet one or more Service Levels may
have a material adverse effect on the business and operations of STK and
that, subject to the provisions of Section 11.2 hereof and the applicable
remedies set forth in the applicable Authorization Letter, STK shall have
any remedies available to STK under this Agreement, at law or in equity,
including, if such failure constitutes a material breach by EDS and EDS
fails to cure such breach as provided in Section 10.1, the right to
terminate this Agreement for material default in accordance with the
provisions of Section 10.1(a).
(ii) Each time EDS fails to meet a Service Level, EDS shall:
(1) promptly investigate the root cause(s) of the failure and deliver to STK a
written report identifying such root cause(s) in the form requested by STK;
(2) and
(a) if such problem was attributable to the fault of EDS, at no additional
charge to STK, promptly correct the problem and begin meeting such Service
Level; or
(b) if such problem was not attributable to the fault of EDS but correction
and/or management of the correction is within the scope of the Services
under the applicable Authorization Letter, then, at no additional charge to
STK, promptly correct the problem and begin meeting such Service Level, or
(c) if such problem was not attributable to the fault of EDS, and correction
and management of the correction is not within the scope of the Services
under the applicable Authorization Letter, cooperate with STK to effect the
correction of such problem and begin meeting such Service Level, and
(3) advise STK of the status of such status and corrective efforts.
(iii)EDS shall not be liable for any failure to meet a Service Level to the
extent that such failure is directly caused by:
(1) a Force Majeure Event; or
(2) the failure of STK to perform the functions and responsibilities of STK as
those functions and responsibilities are specifically identified in the STK
responsibilities in the applicable Authorization Letter, unless such STK
failure is attributable to EDS or such function or responsibility was the
responsibility (to perform and/or manage) of EDS under any Authorization
Letter or another agreement or arrangement with EDS, or
(3) if applicable, the events exempted from liability as specifically set forth
in the applicable Service Level portion of the applicable Authorization
Letter.
1.15 Benchmarking.
------------
(a) In order to determine whether EDS is delivering Services which are, in the
aggregate for each Authorization Letter, comparable in price and quality to
similarly bundled prices, terms and service offerings of other
best-in-class service providers, STK may, at its election and at its own
cost and expense, conduct benchmarking subject to the provisions of this
Section 1.15. Such benchmarking exercises shall compare the Services
provided by EDS for a particular Authorization Letter hereunder and EDS'
charges therefor against similarly bundled prices, terms and service
offerings (including, without limitation, comparable financial and
operational risks inherent in such service offerings) provided by other
best-in-class and similarly situated service providers. In addition, such
benchmarking exercises shall not occur prior to the [CONFIDENTIAL
INFORMATION DELETED] month after the Services Commencement Date of the
applicable Authorization Letter and, subsequent to such initial
benchmarking exercise, no more often than once every [CONFIDENTIAL
INFORMATION DELETED] months for the remainder of the term of the applicable
Authorization Letter.
(b) To the extent that additional resources are reasonably required by EDS to
support the benchmarking exercise, STK shall compensate EDS for such
additional resources at the rates for personnel in the applicable
Authorization Letter. Otherwise, the expenses of the third party
facilitator shall be borne solely by STK, but EDS will provide EDS'
internal personnel resources required to support such benchmarking process
at no additional charge to STK.
(c) Such benchmarking exercise will be facilitated by one or more independent
third parties agreed to by both STK and EDS and will be based upon an
agreement entered into by STK, EDS and the third party facilitator(s). The
Parties agree that no entity that is a competitor of either party and no
entity that would be conflicted by its status as a corporate auditor of
either party will serve as the third party facilitating any benchmarking
exercise hereunder. The following are examples of acceptable third party
facilitators: Compass, ▇▇▇▇▇▇▇▇▇ Research, Gartner Group, Giga Information
Group, and Meta Group. Agreement upon a facilitator shall be contingent
upon such facilitator's agreement to such non-disclosure obligations as may
be reasonably required by each Party, taking into account the highly
sensitive, trade secret nature of the information to which such facilitator
may be provided access.
(d) The facilitator(s) will provide a preliminary (draft) report of the
===========================================================================
benchmarking exercise to the Parties, which report will include the
===========================================================================
methodology used, findings and conclusions and support therefor. The
===========================================================================
Parties will have thirty (30) days to provide comments and questions. The
===========================================================================
facilitator(s) will be required to respond to all of the Parties' comments
===========================================================================
and questions before issuing a "Final Benchmarking Report" (the report of
===========================================================================
the faciltators(s) issued after addressing the comments and questions from
===========================================================================
the Parties concerning the benchmarking exercise and preliminary report
===========================================================================
thereon).
========
(e) If the Final Benchmarking Report identifies no best-in-class and similarly
===========================================================================
situation service provider alternative to EDS with a charge or fee
===========================================================================
advantage to STK of at least [CONFIDENTIAL INFORMATION DELETED]
=================================
improvement, the Authorization Letter will continue in full force and
===========================================================================
effect without any modification or change. If the Final Benchmarking Report
===========================================================================
indicates that a best-in-class and similarly situated service provider
===========================================================================
other than EDS offers a fully comparable aggregate of Services as reflected
===========================================================================
in the applicable Authorization Letter(s) for a charge or fee at least
===========================================================================
[CONFIDENTIAL INFORMATION DELETED] less than the EDS fees or charges under
=======================================
the applicable Authorization Letter(s), the Parties will meet as soon as
===========================================================================
reasonably practicable to discuss the benchmarking report and will
===========================================================================
negotiate in good-faith with regard to any adjustments or modifications to
===========================================================================
the Authorization Letter that either Party believes are appropriate in
===========================================================================
light of such benchmarking report, provided, however, that no such
===========================================================================
adjustment or modification shall be made unless mutually agreed upon in
===========================================================================
writing by the Parties.
=======================
(f) If the Parties are unable to reach an agreement on appropriate adjustments
===========================================================================
or modifications to the applicable Authorization Letter pursuant to Section
===========================================================================
1.15(e) within ninety(90) days after the receipt of the Final Benchmarking
===========================================================================
Report, then STK will have the option, but not the obligation, to terminate
===========================================================================
the affected Authorization Letter(s) subject to the terms of this Section
===========================================================================
1.15(f). In order for STK to exercise its termination option STK would
===========================================================================
deliver to EDS written notice of such termination identifying the effective
===========================================================================
termination date (which would be at least sixty (60) days after the date of
===========================================================================
such notice). In connection with any such termination:
======================================================
(i) STK shall have no liability to EDS for amounts in excess of:
============================================================
(1) the EDS fees or charges specified in the affected Authorization Letter up
===========================================================================
to the effective date of termination, and
=========================================
(2) an amount which is equal to [CONFIDENTIAL INFORMATION DELETED] of the
============================= ======
Termination Fee reflected in the affected Authorization Letter.
===============================================================
(ii) The Parties acknowledge and agree that:
=======================================
(1) such termination will only be for the affected Authorization Letter(s) and,
===========================================================================
at STK's option, any portions of other Authorization Letters which are
===========================================================================
expressly tied to the benchmarked Authorization Letter,
=======================================================
(2) except as set forth in Section 1.15(f)(ii)(1), all other then outstanding
===========================================================================
Authorization Letters and this Agreement shall not be affected by such
===========================================================================
termination and shall remain in full force and effect in accordance with
===========================================================================
their respective terms and conditions; provided, however, that in the event
===========================================================================
such termination of an Authorization Letter directly impacts another
===========================================================================
Authorization Letter, as reflected in Section 1.15(e)(ii)(1) above, the
===========================================================================
Parties will negotiate mutually agreeable adjustments in the EDS charges
===========================================================================
for the remaining portion of the impacted Authorization Letter, , and
=====================================================================
(3) the Parties may, in the applicable Authorization Letter(s), mutually agree
===========================================================================
to modify the percentage reflected herein as to the termination amount to
===========================================================================
be paid pursuant to this Section 1.15(f).
========================================
Article II. Relationship Management
-----------------------
2.1 Authorization Letter Representatives.
------------------------------------
(a) EDS Authorization Letter Representatives.
(i) During the term of each Authorization Letter, EDS will provide an
individual for each Authorization Letter who will be primarily dedicated to
STK's account with respect to that Authorization Letter and who, at STK's
request, will maintain an office at STK's facilities located in Louisville,
Colorado (the "EDS Authorization Letter Representative").
(ii) Each EDS Authorization Letter Representative:
(1) will be reasonably acceptable to STK,
(2) will be the primary contact for STK in dealing with EDS under the
applicable Authorization Letter,
(3) will have overall responsibility for managing and coordinating the delivery
of the Services, under the applicable Authorization Letter;
(4) will meet regularly with the applicable STK Authorization Letter
Representative, and
(5) will have the power and authority to make decisions with respect to actions
to be taken by EDS in the ordinary course of day-to-day management of STK's
account with respect to the applicable Authorization Letter.
(b) STK Authorization Letter Representatives.
(i) During the term of each Authorization Letter, STK will provide an
individual for each Authorization Letter (the "STK Authorization Letter
Representative").
(ii) Each STK Authorization Letter Representative:
(1) will be the primary contact for EDS in dealing with STK under the
applicable Authorization Letter,
(2) will meet regularly with the applicable EDS Authorization Letter
Representative, and
(3) will have the power and authority to make decisions with respect to actions
to be taken by STK in the ordinary course of day-to-day business with
respect to the applicable Authorization Letter.
2.2 Executive Representatives.
-------------------------
(a) STK Executive Representative.
(i) During the term of this Agreement, STK will designate a senior level
individual who will be authorized to act as STK's primary contact for EDS
in dealing with STK under this Agreement and who will have the power and
authority to make decisions with respect to actions to be taken by STK
under this Agreement (the "STK Executive Representative"). The initial STK
Executive Representative is ▇▇▇ ▇▇▇▇▇▇.
(ii) The STK Executive Representative may designate in writing:
(1) an additional STK employee or consultant to be the STK Authorization Letter
Representative under each particular Authorization Letter, and
(2) a reasonable number of additional STK employees or consultants (provided
any such consultant has been given appropriate agency or other authority to
act on behalf of STK) to be points of contact for EDS with respect to
particular matters of expertise relating to one or more Authorization
Letters.
(b) EDS Executive Representative.
(i) During the term of this Agreement, EDS will designate a senior level
individual who will be authorized to act as EDS' primary contact for STK in
dealing with STK under this Agreement and who will have the power and
authority to make decisions with respect to actions to be taken by EDS
under this Agreement (the "EDS Executive Representative"). The initial EDS
Executive Representative is ▇▇▇▇ O'Hair.
(ii) The EDS Executive Representative may designate in writing:
(1) an additional EDS employee to be the EDS Authorization Letter
Representative under each particular Authorization Letter, and
(2) a reasonable number of additional EDS employees to be points of contact for
STK with respect to particular matters of expertise relating to one or more
Authorization Letters.
2.3 Authorization Letter Committees; Relationship Committee.
-------------------------------------------------------
(a) Promptly after the Authorization Letter Effective Date of each
Authorization Letter, the Parties shall form a committee with respect to
that Authorization Letter (the "Authorization Letter Committee"). The name,
scope, goals, membership, meeting schedule and related processes shall be
as set forth in each applicable Authorization Letter.
(b) Each Authorization Letter Committee may appoint subcommittees to deal with
specific issues and establish scope, goals, membership, meeting schedule
and related processes for such committees.
(c) Within fifteen (15) days after the Agreement Effective Date, the Parties
shall form a committee (the "Relationship Committee"). The respective
Executive Representatives shall be members of the Relationship Committee
and shall each appoint two additional members. The name, scope, goals,
membership, meeting schedule and related processes shall be determined by
the Relationship Committee at the first meeting.
2.4 Reliance on Instructions. In performing its obligations under this
--------------------------
Agreement and all Authorization Letters, each Party will be entitled to
rely upon any routine instructions, authorizations, approvals or other
information provided to such party by the other party's representative (STK
Executive Representative, STK Authorization Letter Representative(s), EDS
Executive Representative, or EDS Authorization Letter Representative, as
applicable) or, as to areas of competency specifically identified by the
such representative, by any other personnel of such Party identified by the
Party's Executive Representative, from time to time, as having authority to
provide the same on behalf of STK in such person's area of competency,
unless:
(a) the other Party knew of any error, incorrectness or inaccuracy in such
instructions, authorizations, approvals or other information; or
(b) otherwise specifically set forth in the applicable Authorization Letter or
Procedures Manual.
Article III. Personnel
---------
3.1 Use and Replacement of Personnel.
--------------------------------
(a) Removal of EDS Employees from STK Account. Under any Authorization Letter,
-----------------------------------------
STK shall have the right to notify EDS if STK determines in good faith that
the continued assignment to the STK account of any EDS employee is not in
the best interests of STK. Upon receipt of such notice, EDS shall have a
reasonable time period, not to exceed five (5) days, to investigate the
matters stated therein, discuss its findings with STK and attempt to
resolve such matters in a manner acceptable to STK. If STK continues to
request the replacement of such individual after such period, EDS shall
remove the individual from the STK account. Nothing in this Section shall
be deemed to require EDS to terminate the employment of such individual.
When replacing such an individual, EDS shall locate and assign individuals
who have qualifications and skills acceptable to STK.
(b) Key EDS Positions
-----------------
Unless otherwise specifically set forth in the applicable Authorization
Letter:
(i) Each Authorization Letter will designate certain EDS personnel positions
(the "Key EDS Positions"), if any, which are critical to providing the
Services throughout the term of such Authorization Letter. By mutual
agreement, the Parties may change or update the Key EDS Positions from time
to time during the term of the Authorization Letter (utilizing the
applicable Authorization Letter Change Control Procedures), provided that,
unless otherwise agreed by the parties in the applicable Authorization
Letter, the number of Key EDS Positions on each Authorization Letter shall
not exceed four. EDS shall cause the personnel filling the Key EDS
Positions to devote substantially full time and effort to the provision of
the Services while such EDS personnel are filling a Key EDS Position.
(ii) The individuals who will fill the Key EDS Positions will be listed in the
appropriate exhibit to the applicable Authorization Letter, and the Parties
acknowledge that, if no position is reflected in conjunction with the
individual's name in the exhibit to the applicable Authorization Letter,
the position held by such individual as of the applicable Services
Commencement Date will be deemed to be a Key EDS Position. EDS shall not,
from the date an individual first fills a Key EDS Position until completion
of the period set forth next to such Key EDS Position in the appropriate
schedule transfer such individual from such Key EDS Position, unless EDS
and STK, after good faith consultation with the other, determine that the
individual should no longer continue in the Key EDS Position. EDS agrees
that it will not assign any EDS Employee filling a Key EDS Position to
provide services to any of the STK Competitors during such employee's
assignment to a Key EDS Position or for a period of two (2) years
thereafter.
(iii) Before assigning an individual to fill a Key EDS Position,
(1) EDS promptly:
(a) shall notify STK of the proposed assignment,
(b) shall introduce the individual to appropriate STK personnel designated by
the STK Executive Representative or the STK Authorization Letter
Representative, and
(c) shall provide STK with a resume and such other information as STK may
reasonably request.
(2) If STK objects in good faith to the proposed assignment within fifteen (15)
days after being notified thereof, EDS promptly shall discuss such
objections with STK and attempt to resolve them on a mutually agreeable
basis. If STK continues to object to the proposed assignment, EDS shall not
assign the individual to that position and promptly shall propose another
individual to fill the Key EDS Position with appropriate qualifications and
skills.
(iv) The prior individual in an Key EDS Position will train the replacement
individual for that Key EDS Position.
(v) As other employees are assigned to the Key EDS Positions in accordance with
the provisions of this Agreement, the exhibit setting forth the list of
employees in those positions [see (ii) above] shall be updated to include
such individuals' names, or if this is not effected, such names shall be
deemed to have been added to such Schedule.
(c) All personnel whom EDS designates to provide services to STK under this
Agreement shall be employees of EDS, its subsidiaries or permitted
subcontractors. These personnel shall not be construed to be employees of
STK and no joint employment relationship is intended.
3.2 Use of Subsidiaries and Subcontractors.
--------------------------------------
(a) EDS shall not subcontract with any individual or entity for personnel
resources to perform any of EDS' obligations related to the Services as
described in the appropriate Authorization Letter attached to this
Agreement without STK's prior written consent, which consent may not be
unreasonably withheld. Reasonable bases for withholding consent, include,
without limitation:
(i) the subcontractor is an STK Competitor,
(ii) the subcontractor does not have an acceptable reputation in the industry
for quality and/or reliability or STK has one or more specific instances
where STK or its subcontractors previously used such subcontractor and STK
or its subcontractor was not satisfied with the quality or reliability,
(iii)the subcontractor does not have sufficient resources to perform the
services the subcontractor is to perform,
(iv) the subcontractor's financial profile is not acceptable, or
(iv) the percentage of subcontracting is greater than 25% of the headcount
resources of the applicable portion of the Services.
(b) EDS will remain responsible for the compliance by or on behalf of each of
its subcontractors with the terms and conditions of this Agreement and the
applicable Authorization Letters.
(c) With respect to any confidential information of STK, EDS will not disclose
or permit access to any subcontractor (affiliated or unaffiliated) unless
and until such subcontractor has agreed in writing to protect the
confidentiality of such confidential information in the manner required by
Section 7.5 and then disclose or permit access only to the extent necessary
for such subcontractor to perform those Services subcontracted to it. EDS
will provide to STK copies of such confidentiality agreements.
3.3 Hiring of Employees. Except as set forth in Section 10.7 (Offers to
--------------------
Employees), during the Term, STK shall not directly or indirectly solicit
the employment of any EDS employees providing the Services. Except as set
forth in Section 3.4, during the Term, while EDS is providing any
Termination/Expiration Assistance under the terms of this Agreement, and
for a period of twelve (12) months thereafter, EDS shall not directly or
indirectly solicit the employment of any STK employees.
3.4 STK Personnel to be Hired by EDS. Each Authorization Letter will reflect if
--------------------------------
any employees of STK are to be hired by EDS as a result of the Services
that would be performed in each such Authorization Letter and the manner in
which each such hiring of employees would occur. In the event the Parties
do not address the manner in which such employees would be hired by EDS,
the following provisions shall apply:
(a) Eligible Employees; New EDS Employees
(i) Each Authorization Letter will contain a Schedule, which lists the STK
positions which will be assumed by EDS ("Assumed Position"). An "Eligible
Employee" is an employee of STK who is in an Assumed Position and on the
STK payroll the business day before the applicable Authorization Letter
Services Commencement Date. Within seven (7) days after the applicable
Authorization Letter Effective Date, EDS will offer employment to each
Eligible Employee, with such offer of employment to be effective on the
applicable Authorization Letter Services Commencement Date. Each Eligible
Employee will remain an employee of STK until his or her effective date of
employment with EDS. For any Eligible Employee who is on a leave of absence
approved by STK as of the date the offers by EDS are made following the
Authorization Letter Effective Date and before the Services Commencement
Date, EDS also will offer employment to each such Eligible Employee upon
his or her return to active employment with STK, provided, however, that
the Eligible Employee's return to active employment is within one hundred
thirty (130) days following the applicable Authorization Letter Services
Commencement Date. Each Eligible Employee will remain an employee of STK
until his or her effective date of employment with EDS. EDS shall have no
obligation to employ an Eligible Employee who is not on the STK payroll and
actively employed by STK on the last business day before his or her
effective date of employment with EDS.
(ii) The Parties agree that the value of the "Targeted Total Compensation" (as
defined below) that these Eligible Employees, in the aggregate, will be
initially offered from EDS, commencing on their effective date of
employment with EDS, constitutes a "Comparable Job" as defined below. An
Eligible Employee who accepts EDS' offer of employment hereunder will be
deemed to be a "New EDS Employee" for purposes of this Agreement and for
the applicable Authorization Letter. STK will terminate each New EDS
Employee on the day before the applicable Authorization Letter Services
Commencement Date.
(iii) "Comparable Job" defined:
(1) If the Eligible Employee has been employed by STK at least twelve (12)
months, a Comparable Job is one that provides the Eligible Employee with
Targeted Total Compensation, which means the Eligible Employee's actual
base salary, targeted commissions and targeted bonuses, exclusive of fringe
benefits and equity awards, equal to at least 90% of the Eligible
Employee's actual base salary, targeted commissions, and targeted bonuses,
exclusive of any fringe benefits and equity awards, at STK during the most
recent completed calendar year or the last twelve (12) months in STK's
discretion, and the Eligible Employee will not be required to commute to a
location more than fifty (50) miles farther than he or she was commuting to
STK at the time of such offer.
(2) if the Eligible Employee has worked for STK less than twelve (12) months, a
Comparable Job is one that provides the Eligible Employee with Targeted
Total Compensation equal to at least 90% of the Eligible Employee's
annualized base salary, targeted commissions, and targeted bonuses at STK,
exclusive of any fringe benefits and equity awards, and the Eligible
Employee will not be required to commute to a location more than fifty (50)
miles farther than he or she was commuting to STK at the time of such
offer.
(iv) Severance Benefits
(1) During the 6-month period following a New EDS Employee's start date with
EDS, if EDS terminates the New EDS Employee's employment with EDS, EDS
shall provide such employee with severance benefits equal to the greater
of:
(a) the severance benefits provided to similarly situated EDS employees under
the EDS severance policy in effect when the New EDS Employee is terminated
from EDS, and
(b) the severance benefits provided to similarly situated employees under the
STK severance policy in effect as of the date of the applicable
Authorization Letter Services Commencement Date;
provided that:
-------------
(x) the terms of the applicable EDS severance policy shall determine the
eligibility of the New EDS Employee for these benefits, and
(y) if the New EDS Employee is eligible for benefits under the applicable EDS
severance policy, eligibility for benefits under the STK severance policy
shall be assumed for purposes of making calculation in this Section
3.4(a)(iv)(1).
(2) After the 6-month period following the New EDS Employee's start date with
EDS, EDS shall provide the New EDS Employee with severance benefits equal
to those provided to similarly situated EDS employees under the EDS
severance policy in effect when such employee is terminated from EDS.
(3) For purposes of eligibility, vesting and benefit accrual under the
applicable EDS severance policies, each New EDS Employee shall be given one
year's credit for each year of his or her service with STK.
(4) For each New EDS Employee, if any, who is terminated from EDS during the
6-month period following the New EDS Employee's start date with EDS, STK
agrees to reimburse EDS for any and all severance benefits that EDS is
obligated to pay to the New EDS Employee under Section 3.4(a)(iv)(1) to the
extent that those benefits are greater than those to which the New EDS
Employee would be entitled to receive under the EDS severance policy in
effect when such employee is terminated from EDS. With respect to each
Authorization Letter, the sum of all of STK's obligations under the
previous sentence for all such New EDS Employees under that Authorization
Letter shall not exceed the Authorization Letter Severance Cap and STK
shall have no obligation to EDS regarding any New EDS Employee who is
terminated more than 6-months following his or her start date with EDS.
(5) The "Authorization Letter Severance Cap" will be:
(a) with respect to Authorization Letter No. 1 and Authorization Letter No. 2,
$100,000 for the two Authorization Letters combined, and
(b) with respect to each subsequent, applicable Authorization Letter involving
Eligible Employees, shall be specified in such Authorization Letter.
Article IV. STK's Role
----------
4.1 STK's Role.
----------
(a) During the term of this Agreement and in connection with EDS' performance
of its obligations hereunder, STK will, at its own cost and expense, have
the obligations to EDS, and retain the responsibilities, specifically
described in each Authorization Letter.
(b) STK acknowledges and agrees that EDS' ability to perform the Services in
accordance with this Agreement may be dependent upon STK's timely
performance of those obligations assigned to STK hereunder and under each
Authorization Letter, but only:
(i) if such EDS obligation is directly dependent upon the performance of the
particular STK's obligation at issue,
(ii) to the extent such failure of STK to meet such STK obligation affects such
EDS obligation, and
(iii)if EDS promptly notifies STK of STK's failure to so perform, which in some
cases may be after EDS performs a root cause analysis.
(c) Unless otherwise specifically permitted in such Authorization Letter,
despite any such failure of STK to meet such obligation, EDS shall continue
to perform such Services and strive to meet such EDS obligations, provided,
however, that it is acknowledged and agreed that, in such situations, EDS
might only be able to provide such Services at correspondingly reduced
levels, including correspondingly reduced Service Levels, but only:
(i) if such EDS obligation is directly dependent upon the performance of the
particular STK's obligation at issue,
(ii) to the extent such failure of STK to meet such STK obligation affects such
EDS obligation, and
(iii)if EDS promptly notifies STK of STK's failure to so perform, which in some
cases may be after EDS performs a root cause analysis.
Article V. Representations, Warranties and Additional Covenants
----------------------------------------------------
5.1 Mutual Representations, Warranties and Covenants. Each Party represents,
--------------------------------------------------
warrants and covenants to each other that:
(a) As of the Agreement Effective Date, it is a corporation duly incorporated,
validly existing and is in good standing under the laws of the state in
which it is incorporated, and is in good standing in each other
jurisdiction where the failure to be in good standing would have a material
adverse effect on its business or its ability to perform its obligations
under this Agreement or any Authorization Letter.
(b) It has now and will have throughout the term of this Agreement all
necessary corporate power and authority to own, lease and operate its
assets and to carry on its business as presently conducted and as it will
be conducted pursuant to this Agreement without any approval from, notice
to, or waiver of subordination of right by, any third party.
(c) It has all necessary corporate power and authority to enter into this
Agreement and to perform its obligations hereunder, and the execution and
delivery of this Agreement and the consummation of this transactions
contemplated thereby have been duly authorized by all necessary corporate
actions on its part.
(d) This Agreement constitutes and will constitute a legal, valid and binding
obligation of such Party, fully enforceable against it in accordance with
its terms.
(e) Each of the Parties covenants that it shall use all Commercially Reasonable
Efforts so that no Viruses are coded, introduced or permitted to be coded
or introduced into any of the systems, equipment, or software which are
used to provide the Services, are used to store STK Data, or are the
subject of the Services. If a Virus is coded or permitted to be introduced
into the systems used to provide the Services, then EDS and STK shall
perform their respective tasks as specified in the then-applicable
Authorization Letter(s) and this Agreement to diagnose and eliminate the
Virus, mitigate any losses of operational efficiency caused by the Virus,
and repair any damage to data caused by the Virus.
5.2 EDS Representations, Warranties and Covenants.
---------------------------------------------
EDS represents, warrants and covenants to and with STK, STK Affiliates and
their respective officers, directors, successors, representatives, and
agents that:
(a) As of the Agreement Effective Date, it has not violated any applicable laws
or regulation or any STK policies (of which it has had written notice,
including publication on the STK intranet available to all STK employees);
(b) It is not a party to, and is not bound or affected by or subject to, any
instrument, agreement, charter or by-law provision, law, rule, regulation,
judgment, subordination requirement, or order which would be contravened or
breached in any way as a result of the execution of this Agreement or
consummation of the transactions or performance of any Service contemplated
by this Agreement.
(c) EDS covenants that it and its subcontractors shall perform the Services in
a professional and workmanlike manner. In all cases where EDS has committed
to a specific performance standard or Service Level in an Authorization
Letter, such specific performance standard or Service Level shall govern.
In all cases where EDS has not committed to a specific performance standard
or Service Level in an Authorization Letter, EDS and its subcontractors
will use reasonable care in providing Services thereunder.
(d) EDS covenants that it shall not knowingly insert or permit to be inserted
into any Software, equipment or data any code, technology or feature which
would have the effect of disabling any Software, equipment or Services, or
preventing the aggregation, appending, use or accuracy of any STK Data and
EDS shall not knowingly invoke or permit to be invoked such disabling code,
technology or feature at any time (whether during or after the Term) for
any reason. If at any time the licensor or provider of any Third Party
Software, equipment, or services shall invoke or threaten to invoke any
disabling code, technology or feature in Third Party Software licensed or
provided to EDS which could adversely affect the Software, equipment,
Services, or STK Data, then EDS shall notify STK as soon as such third
party threat or action comes to EDS' attention and EDS and STK shall work
together using Commercially Reasonable Efforts to perform their respective
duties under this Agreement and the applicable Authorization Letter(s) to
preclude such action on the part of such third party.
(e) That the information furnished by EDS to STK as of the Agreement Effective
Date and each Authorization Letter Effective Date is accurate and complete
in all material respects.
(f) Warranty on Third Party Items.
(i) Subject to Section 5.2(f)(ii), EDS agrees that it will pass through to STK
any rights it obtains under warranties and indemnities given by its third
party suppliers in connection with any Software, equipment or other
products provided by EDS pursuant to an Authorization Letter to the extent
permitted by the applicable subcontractors or suppliers. If pass-through
warranties and indemnities reasonably acceptable to STK are not available
from a particular subcontractor or supplier, EDS will discuss the matter
with STK prior to engaging the particular subcontractor or supplier, and
the Parties will mutually determine to either accept the terms available
from such subcontractor or supplier, in which case EDS will enforce the
applicable warranty or indemnity on behalf of STK as provided below, or
deal with another vendor of comparable services, Software, equipment or
other products that will provide warranties and indemnities reasonably
acceptable to STK. In the event of a Third Party Software or equipment
nonconformance, EDS will coordinate with, and be the point of contact for
resolution of the problem through, the applicable vendor and, upon becoming
aware of a problem, will notify such vendor and will use Commercially
Reasonable Efforts to cause such vendor to promptly repair or replace the
nonconforming item in accordance with such vendor's warranty. If any
warranties or indemnities may not be passed through, EDS agrees that it
will, upon the request of STK, take reasonable action to enforce any
applicable warranty or indemnity which is enforceable by EDS in its own
name. However, EDS will have no obligation to resort to litigation or other
formal dispute resolution procedures to enforce any such warranty or
indemnity, unless EDS chooses to do so and STK agrees to reimburse EDS for
all costs and expenses incurred in connection therewith, including
reasonable attorneys' fees and expenses.
(ii) EDS agrees that it will notify STK promptly when any Software, equipment or
other products to be provided by EDS pursuant to an Authorization Letter
will be obtained from its third party suppliers. Such notice will be
provided in a timeframe which will allow STK and EDS to work out a pass
through warranty under Section 5.2(f)(i) with the third party which pass
through warranty is acceptable to STK, and, if such pass through warranty
is not acceptable to STK, for EDS or STK, as the case may be, to obtain
such software, equipment or other products from another source. If EDS
fails to so notify STK in a timely manner, then EDS will warrant such
software, equipment or other products directly to STK. The terms of such
direct warranty will be a mutually agreeable, but not less than the
prevailing warranty in the applicable industry.
(iii)Notwithstanding the foregoing, this Section 5.2(f) does not apply to EDS
Vendor Software.
(g) Developed Software Warranty.
(i) Except as otherwise specifically set forth in a warranty in the applicable
Authorization Letter, EDS warrants that, during the Warranty Period, each
item of Developed Software (as defined in Section 6.1(e) of this Agreement)
under such Authorization Letter will conform in all material respects to
the written technical specifications agreed to by the Parties and with the
software development methodologies adopted by the Parties pursuant to such
Authorization Letter. The "Warranty Period" is the time period following
the successful completion of systems integration testing which period is
specified in the applicable Authorization Letter, or, if not so specified,
the twelve (12) month period following the successful completion of systems
integration testing.
(ii) As soon as reasonably practicable after discovery by STK or EDS of a
failure of the Developed Software to so conform (a "Nonconformance"), STK
or EDS, as applicable, will deliver to the other a statement and supporting
documentation describing in reasonable detail the alleged Nonconformance.
If there is a Nonconformance, then EDS, at EDS' cost and expense, will use
Commercially Reasonable Efforts to correct such Nonconformance, utilizing
methods and techniques for correcting Nonconformances which comply with the
Software Development processes provided by STK to EDS. Such cost and
expenses will not be passed on to STK and the resources used by EDS to
correct such Nonconformances shall not be counted against any resource
baselines in the applicable Authorization Letter or charges related
thereto.
(iii) The foregoing warranty will not extend to any Nonconformances caused
(1) by any change or modification to Developed Software without EDS' prior
written consent, or
(2) by STK's operation of the Developed Software other than:
(a) in accordance with the applicable documentation,
(b) for the purpose for which it was designed, or
(c) on hardware not recommended, supplied or approved in writing by EDS. If the
hardware is included in the agreed written technical specification, EDS
will be deemed to have approved such hardware in writing.
(iii)Furthermore, unless otherwise set forth in the applicable Authorization
Letter, if, after undertaking Commercially Reasonable Efforts to remedy a
breach by EDS of the foregoing warranty, EDS, in the exercise of its
reasonable business judgment, determines that any repair, adjustment,
modification or replacement is not feasible, or in the event that the
Developed Software, subsequent to all repairs, adjustments, modifications
and replacements, continues to fail to meet the foregoing warranty, STK
will return the Developed Software to EDS, and EDS will credit to STK, in a
manner and on a schedule agreed to by the Parties and as STK's sole and
exclusive remedy for such failure, an amount equal to the charges actually
paid by STK to EDS for the Developed Software that has failed to meet the
foregoing warranty.
(iv) Notwithstanding the other provisions of this Section 5.2(g), upon the
written request of STK, EDS will use Commercially Reasonable Efforts to
correct an alleged Nonconformance for which EDS is not otherwise
responsible hereunder because it is caused or contributed to by one of the
factors listed above and, to the extent that such correction cannot be
performed within the scope of the Services, such correction will be paid
for by STK at the then current, applicable rates established in the
applicable Authorization Letter.
5.3 STK Representations, Warranties and Covenants.
---------------------------------------------
STK represents, warrants and covenants to and with EDS, EDS Affiliates and
their respective officers, directors, successors, representatives and
agents that:
(a) As of the Agreement Effective Date, it has not violated any applicable laws
or regulations which may be applicable to the STK obligations under this
Agreement, the applicable Authorization Letters, or to STK or its business;
(b) It is not a party to, and is not bound or affected by or subject to, any
instrument, agreement, charter or by-law provision, law, rule, regulation,
judgment, subordination requirement, or order which would be contravened or
breached in any way as a result of the execution of this Agreement or
consummation of the transactions or performance of any Services
contemplated by this Agreement.
(c) That the information furnished by STK to EDS, as of each Authorization
Letter Effective Date, on which EDS based the description of the Services,
any applicable performance standards or Service Levels, and the charges to
be paid by STK therefore, as set forth in each Authorization Letter, is
accurate and complete in all material respects.
5.4 Disclaimer of Warranties.
------------------------
(a) EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT, EDS MAKES NO
REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, REGARDING ANY MATTER,
INCLUDING THE MERCHANTABILITY, SUITABILITY, ORIGINALITY, NON-INFRINGEMENT,
FITNESS FOR A PARTICULAR USE OR PURPOSE, OR RESULTS TO BE DERIVED FROM THE
USE, OF ANY INFORMATION TECHNOLOGY SERVICE, SOFTWARE, HARDWARE OR OTHER
MATERIALS PROVIDED UNDER THIS MASTER AGREEMENT OR AUTHORIZATION LETTER
HEREUNDER.
(b) EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT, STK MAKES NO
REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, REGARDING ANY MATTER,
INCLUDING THE MERCHANTABILITY, SUITABILITY, ORIGINALITY, NON-INFRINGEMENT,
FITNESS FOR A PARTICULAR USE OR PURPOSE, OR RESULTS TO BE DERIVED FROM THE
USE, OF ANY SERVICE, SOFTWARE, HARDWARE OR OTHER MATERIALS OR INFORMATION
PROVIDED UNDER THIS MASTER AGREEMENT OR AUTHORIZATION LETTER HEREUNDER.
Article VI. Proprietary Rights
------------------
6.1 Definitions. For purposes of this Agreement and all Authorization Letters:
(a) Developed Software. The term "Developed Software" means any Software that
-----------------------
is developed by EDS or its subcontractors under an Authorization Letter,
and paid for by STK,
(i) including any Software Changes made by EDS or its subcontractors to STK
Software or STK-Vendor Software as part of the Services,
(ii) excluding
(a) any Software Changes made to EDS Software or EDS-Vendor Software, and
(b) any EDS Software or EDS Development Tools that are used in developing,
modifying or enhancing any Developed Software hereunder.
Unless there are specific express fees to be paid for particular Developed
Software pursuant to an Authorization Letter, the payment by STK of the
monthly EDS charges shall be deemed payment for the Developed Software. To
the extent the payment of such monthly EDS charges constitutes only partial
payment for the Developed Software or if there are specific express fees to
be paid for Developed Software under an Authorization Letter and STK has
only partially paid such fees, STK shall be entitled to receive the pro
rata portion of the Developed Software represented by such partial payment.
(b) EDS Development Tools. The term "EDS Development Tools" means all know-how,
--------------------------
intellectual property, methodologies, processes, technologies, algorithms,
software, or development tools used in performing the Services which:
(i) are based on trade secrets or proprietary information of EDS,
(ii) are developed or created by or on behalf of EDS without reference to or use
of the intellectual property of STK, or
(iii) are otherwise owned or licensed by EDS.
(c) EDS Patentable Developments. The term "EDS Patentable Developments" shall
---------------------------------
have the meaning set forth in Section 6.2(d)(v).
(d) EDS Software. The term "EDS Software" means any Software that, for any
-----------------
Services to be performed under a particular Authorization Letter, is owned
or developed by or on behalf of EDS before the particular Authorization
Letter Services Commencement Date, or is acquired or developed by or on
behalf of EDS after the particular Authorization Letter Services
Commencement Date without reference to or use of the intellectual property
of STK.
(e) EDS-Vendor Software. The term "EDS-Vendor Software" means any Software
-------------------------
that, for any Services to be performed under a particular Authorization
Letter, is proprietary to any party other than EDS or STK and is licensed
to EDS. EDS Vendor Software does not include Third Party Software.
(f) Other Deliverables. The term "Other Deliverables" means those tangible
------------------------
(including without limitation hard copy and electronic forms), viewable
items (other than Software) that are developed and delivered by EDS under
this Agreement and the applicable Authorization Letter, and paid for by
STK. Examples of Other Deliverables are assessments, reports, manuals,
charts, checklists, system design or site layouts, flow charts and other
documentation.
Unless there are specific express fees to be paid for particular Other
Deliverables pursuant to an Authorization Letter, the payment by STK of the
monthly EDS charges shall be deemed payment for the Other Deliverables. To
the extent the payment of such monthly EDS charges constitutes only partial
payment for the Other Deliverables or if there are specific express fees to
be paid for Other Deliverables under an Authorization Letter and STK has
only partially paid such fees, STK shall be entitled to receive the pro
rata portion of the Other Deliverables represented by such partial payment.
(g) Patentable Developments. The term "Patentable Developments" shall mean all
----------------------------
inventions, discoveries, or improvements that are first conceived, reduced
to practice, originated, or developed pursuant to this Agreement.
(h) Residual Knowledge. The term "Residual Knowledge" means:
-----------------------
(i) with respect to EDS, the ideas, concepts, methodologies, processes and
know-how which are developed or created by EDS in the course of performing
the Services and may be retained by EDS' employees in intangible form
(i.e., in the employee's memory, not in an electronic form such as computer
memory), and
(ii) with respect to STK, the ideas, concepts, methodologies, processes and
know-how which are learned by STK from EDS or its subcontractors while EDS
and its subcontractors are in the course of performing the Services and may
be retained by STK' employees in intangible form (i.e., in the employee's
memory, not in an electronic form such as computer memory).
(i) Software. The term "Software" means computer programs, together with input
-------------
and output formats, source and object codes, interpreted code, program
listings, data models, flow charts, outlines, narrative descriptions,
operating instructions and supporting documentation, and includes the
tangible media upon which such programs and documentation are recorded,
including all authorized reproductions of such programs. Except as
otherwise expressly provided in this Agreement or the applicable
Authorization Letter, Software includes any corrections, enhancements,
translations, modifications, updates, new releases, new versions and other
changes (collectively, "Software Changes").
(j) STK Application. The term "STK Application" means an STK patent application
--------------------
for an STK Patentable Development.
(k) STK Field of Use. STK Field of Use is defined in Section 6.2(d)(ii) below.
---------------------
(l) STK Software. The term "STK Software" means any Software that, as to any
-----------------
Services to be performed under a particular Authorization Letter, is owned
or developed by or on behalf of STK before the particular Authorization
Letter Services Commencement Date, or is acquired or developed by or on
behalf of STK (other than by EDS) after the particular Authorization Letter
Services Commencement Date without reference to or use of the intellectual
property of EDS.
(m) STK Patent. The term "STK Patent" means an STK patent in an STK Patentable
---------------
Development.
(n) STK Patentable Developments. The term "STK Patentable Developments" shall
---------------------------------
have the meaning set forth in Section 6.2(d)(iii).
(o) STK-Vendor Software. The term "STK-Vendor Software" means any Software
-------------------------
that, as to any Services to be performed under a particular Authorization
Letter, is proprietary to any party other than STK or EDS and is licensed
to STK.
(p) Knowledge Holders. The term "Knowledge Holders" shall mean the specific New
----------------------
EDS Employees identified in the applicable Authorization Letter. The
Parties acknowledge that the Knowledge Holders have unique knowledge and
understanding of STK business needs, processes, and data that make them
essential to the understanding of STK application requirements and the
successful design of new or enhanced Software applications.
6.2 Ownership
---------
(a) EDS Software; EDS Vendor Software.
--------------------------------------
(i) EDS Software Ownership. All EDS Software, including all Software Changes
-----------------------
made thereto, will be and remain EDS' property, and, except for the
licenses granted to STK by EDS as set forth in this Agreement or any
Authorization Letter, STK will have no rights or interest therein.
(ii) EDS-Vendor Software Ownership. All EDS-Vendor Software will be and remain
------------------------------
the property of the applicable third party vendor(s), and, as between EDS
and STK, any Software Changes made by EDS thereto will be owned by EDS. EDS
will obtain all consents necessary to permit EDS (and any subcontractors of
EDS engaged in accordance with this Agreement or any Authorization Letter
and, as applicable, STK and its subcontractors and outsourcers) to access
the EDS-Vendor Software in connection with the performance of the Services
and will pay all costs and expenses associated therewith.
(iii) License from EDS to STK for EDS Software and EDS Vendor Software.
----------------------------------------------------------------
(1) EDS hereby grants to STK a perpetual, royalty-free, nontransferable,
nonexclusive license to use, copy, display, perform, modify, maintain,
enhance, and create derivative works, sublicense (or, as applicable, grant
access rights) to subcontractors and outsourcers, after the earlier of the
beginning of Transition/Termination Assistance or the expiration date or
the effective date of termination of the applicable Authorization Letter,
the object or interpreted code forms and any existing source code form of
any software programs, including existing documentation, of the EDS
Software and the EDS-Vendor Software (if any and to the extent
transferable) then being used by EDS in performing the Services or licensed
by or on behalf of EDS to STK (other than those items of EDS Software and
EDS Vendor Software being used solely at one or more EDS data centers as
part of the Services,) solely for the purpose of STK (including its
subcontractors and outsourcers) performing the services previously
performed by EDS hereunder (the "Licensed Programs").
(2) At no additional cost, EDS will provide reasonable amounts of telephone and
email support and assistance to STK for the Licensed Programs at an
engineering level (not help desk support for end-users). Notwithstanding
anything to the contrary in this Agreement or any Authorization Letter,
such license will not include the right to use any Software Changes with
respect to the EDS Software other than those in use at the time the license
is granted, nor shall EDS be obligated to maintain or update the Licensed
Programs.
(3) The parties agree and acknowledge that the terms and conditions of any
licenses for Third Party Software (which excludes EDS Vendor Software),
licensed by STK from a third party with the assistance of EDS are separate
and distinct from the foregoing license terms and such separate terms and
conditions shall govern the use of such Third Party Software during the
Term and thereafter.
(b) STK Software Ownership. All STK Software, excluding any Software Changes
----------------------------
made by EDS thereto as part of the Services (which will be Developed
Software and will be owned as set forth in Sections 6.2(d) and/or 6.2(e),
as appropriate), will be and remain STK's property. The STK Software will
be made available to EDS in such form and on such media as EDS may
reasonably request, together with appropriate documentation. EDS shall use
such STK Software solely for the purpose of performing the Services for
STK.
(c) STK-Vendor Software Ownership.
----------------------------------
(i) All STK-Vendor Software, excluding any Software Changes made by EDS thereto
as part of the Services (which will be Developed Software and, subject to
any STK-Vendor rights or restrictions, will be owned as set forth in
Sections 6.2(d) and/or 6.2(e), as appropriate), will be and remain the
property of the applicable third party vendor(s). The STK-Vendor Software
will be made available to EDS in such form and on such media as EDS may
reasonably request. EDS shall use such STK-Vendor Software solely for the
purpose of performing the Services for STK.
(ii) STK will use Commerically Reasonable Efforts to obtain, within six (6)
months following the Agreement Effective Date, all consents necessary to
permit EDS (and any subcontractors of EDS engaged in accordance with this
Agreement or any Authorization Letter) to access the STK-Vendor Software
solely for purposes of performing the Services and will pay all costs and
expenses associated therewith. In the event STK is unable to obtain such
consents or for the period STK does not obtain such consent, EDS will be
relieved of the performance of the Services and the related Service Levels
to the extent the failure to obtain such consent or delay in obtaining such
consent directly impacts such performance or Service Levels. EDS agrees to
comply with the terms and conditions of the applicable license and support
agreements between STK and the STK Vendor with respect to each item of
STK-Vendor Software.
(d) Patentable Developments.
-----------------------
(i) STK shall own all patent rights in any Patentable Developments which are
created by Knowledge Holders, provided:
(1) such Knowledge Holder:
(a) conceives the Patentable Developments within five (5) years after the
Services Commencement Date of the applicable Authorization Letter, and
(b) is an employee of EDS working on the STK account when such Knowledge Holder
conceives the Patentable Development; and
(2) such Patentable Developments are, become, or are likely to become used in
STK products (including without limitation hardware, web sites, Software,
and Other Deliverables) which are sold, licensed, or made accessible, by or
on behalf of STK, in the commercial market to third parties in the ordinary
course of STK business ("STK Product").
EDS agrees it will not shift the employment of any Knowledge Holder to a
subcontractor of EDS or move any Knowledge Holder to another account for
purposes of avoiding the provisions of Section 6.2(d)(i)(1).
(ii) STK shall own all patent rights in any Patentable Developments which are
created in whole or in part by employees of EDS or its subcontractors
working on the STK account, which Patentable Developments are within the
STK Field of Use. [CONFIDENTIAL INFORMATION DELETED]
(iii)"STK Patentable Developments" are the Patentable Developments specified in
Sections 6.2(d)(i), and (ii), above.
(iv) For any STK Patentable Developments, STK hereby grants to EDS a royalty
free, perpetual, non-exclusive, worldwide license to use, make, sell, offer
to sell, lease, have used, have made, have sold, and have leased, under any
STK Patent or STK Application, used by EDS in the course of EDS' business,
either internally or for others, as a service bureau or otherwise, only to
provide services, including, without limitation, design services,
installation services, implementation services, provision services,
operation services, improvement services, maintenance services and
management services, for data storage and networking systems. The license
granted in this Section 6.2(d)(iv), however, shall not be considered a
license to EDS to use, make, sell, offer to sell, lease, have used, have
made, have sold, and have leased, any hardware or Software, except where
such Software is developed by EDS in the course of performing programming
services to implement the functional specifications required by a customer
other than STK. The license granted in this Subsection 6.2(d)(iv) is
subject to the provisions of Section 7.5.
(v) Other than the STK Patentable Developments, EDS shall own all patent rights
in any Patentable Developments developed by EDS without reference to or use
of STK intellectual property (the "EDS Patentable Developments"). EDS
hereby grants to STK a royalty free, perpetual, non-exclusive, worldwide
license to use, make, sell, offer to sell, lease, have used, have made,
have sold, and have leased, under the EDS Patentable Developments:
(1) in order to receive and use the Services,
(2) for STK's own internal purposes, and
(3) in providing STK products and services to third parties.
(vi) Processes Regarding STK Applications and STK Patents.
(1) EDS and its employees, subcontractors, and agents shall make reasonable
efforts to document any STK Patentable Developments. EDS shall provide to
STK the invention disclosures which EDS receives and which are in the STK
Field of Use. At the request of STK, EDS will provide reasonable assistance
to STK in identifying STK Patentable Developments, provided that, for EDS
employees, subcontractors, and agents who are or may be inventors of STK
Patentable Developments, such assistance shall be subject to the six (6)
hour limitation in Section 6.2(d)(vi)(5) below. If EDS wants attorneys to
participate in invention reviews, such attorneys' fees and expense will be
at EDS' expense. EDS shall create the kind of documentation for the STK
Patentable Developments that EDS typically creates in the ordinary course
of business and shall not in bad faith intentionally conceal an invention
from STK.
(2) EDS employees, subcontractors, and agents who are inventors of STK
Patentable Developments and who remain under the control of EDS shall
participate in one or more interviews for purposes of preparation of an STK
Application and for purposes of reviewing an STK Application for filing.
EDS will take commercially reasonable efforts to request all EDS employees,
subcontractors, and agents who are inventors of such STK Patentable
Developments to, where proper, execute a declaration and power of attorney
as required by the United States Patent and Trademark Office and an
invention assignment document, assigning to STK all right, title, and
interest in and to the STK Patentable Developments, provided that the
refusal of such EDS employees, subcontractors, or agents to do so shall not
constitute a breach of this Agreement. EDS agrees to execute an assignment
to STK assigning all right title and interest in and to such STK Patentable
Developments. EDS employees, subcontractors, and agents who are inventors
of STK Patentable Developments shall provide any additional assistance or
perform any other act in connection with any STK Application or STK Patent
as reasonably requested by STK, provided such assistance shall be subject
to the limitations of Section 6.2(d)(vi)(5), below.
(3) In no case shall any STK Application include, without permission of EDS,
any EDS Confidential Information, developed without reference to or use of
the intellectual property of STK. In no case shall any STK Patentable
Development, without permission of EDS, include any information licensed to
EDS by any third party. If an STK Application is accidentally filed
containing such prohibited information, then, upon notice by EDS prior to
issuance of an STK Application or the publication thereof, STK shall remove
this information or file a continuing STK Application which deletes such
information.
(4) STK shall have sole control in obtaining and maintaining patent, utility
model, or similar protection for STK Patentable Developments, including
whether to seek patent, utility model or similar protection. STK shall pay
all costs and expenses relating to the STK Applications and STK Patents,
including but not limited to attorneys' fees, patent draftsman fees, filing
fees, issue fees, maintenance fees, fees paid for any purpose to any patent
office, annuities, and taxes.
(5) EDS shall cause EDS employees, subcontractors, and agents who are inventors
of an STK Patentable Development to provide up to six (6) hours of time in
support of each STK Application at no additional charge. STK will pay EDS,
on a time and materials basis for all acts/assistance beyond the six (6)
hours set out above related to the preparation, filing, and prosecution of
the STK Applications at the personnel rates set forth in the applicable
Authorization Letter.
(6) EDS shall have no duty to submit prior art in the form of an information
disclosure statement for any STK Application, provided, however, EDS shall
cause such inventors to disclose to STK all prior art related to STK
Applications of which such inventors are aware or become aware at any time,
but EDS shall otherwise have no duty to do a prior art search with respect
to such STK Application. EDS shall not submit to any third party, including
but not limited to the US Patent Office, any prior art with respect to any
STK Application, unless EDS notifies STK of such submission and identifies
such prior art no later than the date of such submission.
(7) Other than as expressly set forth herein, EDS shall have no duty to provide
any assistance or information of any kind to STK after the filing of an STK
Application.
(8) In the event of any assignment of an STK Patent or STK Application, then
such assignment must be made subject to the license granted to EDS under
Section 6.2(d)(iv), and STK will notify EDS of such assignment. If STK
chooses to abandon any STK Application or STK Patent, then STK shall
provide notice of the same in writing to EDS and EDS shall have fourteen
(14) days to decide whether to accept assignment from STK of such STK
Application or STK Patent. If EDS elects to accept assignment, then STK
agrees to assign the same to EDS, including the right to ▇▇▇ for past
infringement, and EDS shall assume full responsibility for such STK
Application and STK Patent, including responsibility for all costs or
expenses associated therewith on a going-forward basis. Upon such
assignment, then EDS hereby grants to STK the license set forth in Section
6.2(d)(v) as to such assigned STK Application or STK Patent.
(9) If STK grants an exclusive license of a STK Patent or STK Application, then
such exclusive license must be granted subject to the license granted to
EDS in Section 6.2(d)(iv) of this Agreement.
(10) EDS shall have no liability of any kind to STK or any third party for any
act that invalidates, makes unenforceable, or contributes to the
invalidation of or making unenforceable any STK Patent (or portion thereof)
or prevents any STK Application (or portion thereof) from maturing into an
STK Patent, provided that EDS shall not take any action for the sole
purpose of invalidating or making unenforceable any STK Patent or
preventing any STK Application (or portion thereof) from maturing into an
STK Patent.
(11) EDS shall have no duty to cooperate in the enforcement of any STK Patent or
in any proceeding related to any STK Application or STK Patent, if such
cooperation, in the sole reasonable discretion of EDS, would interfere or
have the potential to interfere with a business relationship between EDS
and its affiliates and a supplier, customer, or prospective supplier or
customer, whether direct of indirect. If EDS has a duty to cooperate under
the preceding sentence, then EDS shall provide commercially reasonable
cooperation under the terms of this Section 6.2(d)(vi)(11).
(e) Copyrights and Trade Secrets in Developed Software and Other Deliverables.
-----------------------------------------------------------------------------
(i) STK will own the copyrights and trade secrets in and to all Developed
Software and Other Deliverables.
(ii) STK hereby grants to EDS (and any subcontractors of EDS engaged in
accordance with this Agreement or any Authorization Letters) a
royalty-free, nontransferable, nonexclusive license under STK's copyrights
and trades secrets, during the term of any applicable Authorization Letter,
to use, copy, maintain, modify, enhance and create derivative works of the
Developed Software or Other Deliverables solely to provide the Services to
STK.
(iii)If any EDS Software or EDS Development Tools used in developing, modifying
or enhancing the Developed Software or Other Deliverables hereunder or
under the applicable Authorization Letter are embedded in such Developed
Software or Other Deliverables, then EDS hereby grants to STK a perpetual
(subject to compliance with this sentence), royalty-free, nontransferable,
nonexclusive license to use, sublicense, copy, display, perform, maintain,
modify, enhance and create derivatives works of such embedded EDS Software
and EDS Development Tools solely in connection with STK's internal use and
internal and external exploitation (including within an STK Product) of
such Developed Software or Other Deliverables and provided such EDS
Software and EDS Development Tools remain embedded in such Developed
Software or Other Deliverables and are not separated therefrom.
(iv) All Developed Software and Other Deliverables, originated or prepared by or
on behalf of EDS (either solely or jointly with others) in contemplation
of, or in the course of, or as a result of, Services performed hereunder,
shall be promptly furnished to STK.
(v) All Developed Software and Other Deliverables shall be deemed to be works
for hire. To the extent that they may not, by operation of law, be works
for hire, EDS hereby assigns to STK all copyrights and trade secrets in and
to such Developed Software and Other Deliverables.
(vi) EDS will provide STK, upon expiration or termination of this Agreement or
any Authorization Letter for any reason or upon STK's request, with
sufficient documentation and source code (if such source code exists) to
fully utilize all Developed Software and Other Deliverables, provided
however, that EDS shall have no obligation to maintain or update such
documentation or source code after expiration or termination of this
Agreement, unless otherwise set forth in the applicable Authorization
Letter.
(f) EDS Development Tools. Subject to the terms of Section 6.2(d) and (e), EDS
--------------------------
will retain all right, title and interest in and to, and will be free to
use, the EDS Development Tools.
(g) Residual Knowledge.
-----------------------
(i) Subject to the terms of Section 6.2(d) and (e) and the confidentiality
obligations set forth in Section 7.5 of this Agreement, each Party will be
free to use the Residual Knowledge, provided such Party does not infringe
or misappropriate the other Party's intellectual property rights in such
Residual Knowledge.
(ii) The Parties acknowledge and agree that EDS' right, title and interest in
and to the Residual Technology may constitute substantial rights in the
technology developed as a result of the Services performed under this
Agreement and all Authorization Letters.
6.3 No Implied Licenses. No licenses will be deemed to have been granted by
--------------------
either Party to any of its patents, trade secrets, trademarks or
copyrights, except as otherwise expressly provided in this Agreement or the
applicable Authorization Letter.
6.4 Recognition of Third Party Intellectual Property. Nothing in or related to
------------------------------------------------
this Agreement or any Authorization Letter will require EDS or STK or any
of their respective subcontractors, consultants, or agents to violate or
infringe the proprietary rights of any third party in any Software or
otherwise. Without limiting the foregoing, EDS acknowledges the existence
and its receipt and review of, and agrees to strictly comply with, STK's
policy regarding compliance with third party proprietary rights in
Software, data, and other materials.
6.5 Further Assurances. EDS and STK agree to execute and deliver such other
-------------------
instruments and documents as either Party reasonably and specifically
requests in writing, to evidence or effect the transactions contemplated by
this Article VI. The provisions of this Article VI will survive the
expiration or termination of this Agreement and each Authorization Letter
for any reason.
Article VII. Data, Confidentiality and Audit Rights
--------------------------------------
7.1 Ownership of STK Data. All STK Data shall remain the property of STK. EDS,
---------------------
its employees, agents, subcontractors, and representatives shall not
(a) use STK Data other than in connection with providing the Services, as
contemplated by and in accordance with this Agreement and the applicable
Authorization Letter(s),
(b) with respect to STK Data, disclose to, sell to, assign to, lease to,
license to, or otherwise provide to or permit access to or by third
parties, or
(c) directly or indirectly, commercially exploit STK Data.
7.2 Return of Data.
--------------
(a) At no cost to STK, EDS shall, upon request by STK at any time, promptly
provide to STK all or any requested portion of the STK Data, in the format
and on the media in use as of the date of request or, at STK's option, in
the format and on the media requested by STK.
(b) Upon request by STK at any time, EDS, its affiliates, officers, employees,
agents, representatives and subcontractors promptly shall return to STK all
copies of the STK Data (or such portion thereof requested by STK) in their
possession and/or under their control and shall discontinue use of such STK
Data. However, for a period of twelve (12) months after such request, EDS
may retain archival tapes containing any portion of the requested STK Data
and EDS shall use such archival tapes only for purposed of restoring other
data contained on such tapes and, for a period of three (3) months after
such request, as reasonably required to properly invoice STK for EDS'
charges. Unless such STK request is predicated by a prior or threatened
breach of this Agreement or any Authorization Letter(s) by EDS, any breach
by EDS of this Agreement which is caused directly by EDS' lack of access to
such STK Data pursuant to this Section 7.2 shall be excused, but only to
the extent such breach would have been avoided if EDS had had access to
such requested portion of the STK Data.
(c) To the extent the provisions of this Section 7.2 place more stringent
obligations upon EDS and its subcontractors than the provisions of Section
7.5 (Confidentiality), the provisions of this Section 7.2 shall control.
7.3 Security.
--------
(a) During the Term, each Party will comply with the reasonable written
security procedures that are in effect at the other Party's facilities.
Unless otherwise specified in an Authorization Letter, the Parties will
jointly develop security procedures for the Services within ninety (90)
days after the Agreement Effective Date, or the applicable Authorization
Letter Effective Date, as applicable.
(b) Access to Attorney-Client Privileged Information and Attorney Work Product.
--------------------------------------------------------------------------
(i) Because EDS personnel may, by nature of the Services, have the ability to
defeat systems security provisions on devices specified in this Agreement
or any Authorization Letter(s) containing both attorney-client privileged
material or attorney work product, but such personnel have no need to
actually access such data in order to perform Services, EDS covenants that,
in addition to the other provisions of this Article VII, EDS shall inform
STK whenever access is sought by EDS, its employees, or contractors to the
data files on such devices if EDS has actual knowledge that it is seeking
to access data that contains either attorney-client privileged material or
attorney work product of STK. Except as required in its performance of the
Services, EDS shall not, and EDS' employees and contractors shall not,
access such STK Data, and EDS waives any claim that, as to EDS, STK, by any
act contemplated or permitted under this Agreement, has waived any
privileges to which it is otherwise entitled by virtue of the access
required for performing the Services.
(ii) Because EDS personnel may, by the nature of the Services, have the ability
to defeat systems security provisions on devices specified in this
Agreement containing STK's financial data that, if utilized or disclosed
could lead to violations of the applicable securities laws, EDS covenants
that, in addition to the other provisions of this Article VII,
(1) except as otherwise required to perform the Services or otherwise expressly
permitted by the provisions of this Agreement, neither EDS nor its
employees or contractors shall access any STK financial data,
(2) neither EDS nor its employees or contractors shall disclose any STK
financial data, and
(3) EDS employees and contractors who have access to STK financial data will
comply with:
(a) applicable laws and regulations regarding the disclosure and use of such
information, and
(b) policies and procedures which STK imposes upon the STK employees who have
permitted access to such data.
7.4 Privacy Laws.
------------
(a) The Parties acknowledge that various laws and regulations around the world,
including, without limitation, European Union Council Directive 95/46/EC,
and its EU and national implementing legislation, regulations and rules
(collectively, the "Privacy Laws"), may govern the processing of personal
data that forms part of the STK Data under this Agreement. The Parties
acknowledge and agree that in connection with processing of such personal
data under this Agreement, STK shall remain the data controller and EDS
shall remain a data processor, and that nothing in this Agreement or any
Authorization Letter will restrict or limit in any way either party's
respective rights or obligations as such data controller and data
processor. As used herein, the terms "data controller", "data processor",
"personal data", "process" and "processing", and terms comparable thereto,
shall have the usages given thereto, or shall apply to the concepts and
functions generally attributable thereto (if other terminology is used)
under applicable Privacy Laws.
(b) STK and EDS, as data controller and data processor, respectively, each
agrees to process personal data forming part of the STK Data under this
Agreement in compliance with Privacy Laws applicable to their respective
roles as such data controller and data processor, as such laws may be in
effect from time to time during the term of this Agreement.
(c) In the event that applicable Privacy Laws change after the effective date
of this Agreement, and such changes expand the scope of activities
previously undertaken by EDS pursuant to section 7.4 hereof, then the
provisions of section 1.7 of this Agreement shall apply.
7.5 Confidentiality.
---------------
(a) Definitions
-----------
(i) "Disclosing Party" means the Party furnishing Confidential Information and
"Receiving Party" means the Party receiving the Confidential Information
disclosed by the Disclosing Party.
(ii) "Confidential Information" means:
(1) when EDS is the Disclosing Party:
(a) whether or not marked confidential,
(i) EDS Software, EDS Development Tools, EDS Patentable Developments;
(ii) information relating to its Software or hardware products or services, its
research and development projects or plans; and
(iii)information relating to its business, policies, strategies, operations,
finances, plans or opportunities, including the identity of, or particulars
about, its clients or suppliers; and
(b) information marked or otherwise identified as confidential, restricted,
secret or proprietary, including, without limiting the generality of the
foregoing, information acquired by inspection or oral disclosure provided
such information was identified as confidential at the time of disclosure
or inspection and is confirmed in writing with ten (10) Business Days after
the disclosure or inspection.
(2) when STK is the Disclosing Party:
(a) whether or not marked confidential,
(i) STK Data, STK Software, Developed Software, Other Deliverables, STK
Patentable Developments;
(ii) information relating to its Software or hardware products or services, its
research and development projects or plans; and
(iii)information relating to its business, policies, strategies, operations,
finances, plans or opportunities, including the identity of, or particulars
about, its clients or suppliers; and
(b) information marked or otherwise identified as confidential, restricted,
secret or proprietary, including, without limiting the generality of the
foregoing, information acquired by inspection or oral disclosure provided
such information was identified as confidential at the time of disclosure
or inspection and is confirmed in writing with ten (10) Business Days after
the disclosure or inspection.
(3) Notwithstanding Sections (1) and (2), Confidential Information does not
include information which the Receiving Party can establish:
(a) has become generally available to the public or commonly known in either
Party's business (external to the Party) other than as a result of a breach
by the Receiving Party of any obligation to the Disclosing Party;
(b) was known to the Receiving Party prior to disclosure to the Receiving Party
by the Disclosing Party by reason other than having been previously
disclosed in confidence to the Receiving Party;
(c) was disclosed to the Receiving Party on a non-confidential basis by a third
party who did not owe an obligation of confidence to the Disclosing Party
with respect to the disclosed information; or
(d) was independently developed by the Receiving Party without any recourse to
any part of the Confidential Information.
(iii)"Confidential Materials" means the part of any tangible media upon or
within which any part of the Confidential Information is recorded or
reproduced in any form, excluding any storage device which forms a part of
computer hardware.
(b) Rights, Restrictions and Obligations of the Receiving Party
-----------------------------------------------------------
(i) During the Term, unless otherwise specifically set forth in this Agreement
or an Authorization Letter, the Receiving Party may:
(1) subject to the applicable licenses and other terms specified in this
Agreement and/or any applicable Authorization Letter(s), disclose or permit
access to Confidential Information received from the Disclosing Party only
to its subcontractors, representatives, advisors, employees, officers and
directors and Affiliates who have a need to know such information
exclusively for the purpose of executing EDS' obligations or exercising
EDS' rights under this Agreement, provided, however, that EDS is not
permitted to disclose STK Confidential Information to any of the foregoing
entities or individuals which/who are STK Competitors;
(2) reproduce and use the Confidential Information received from the Disclosing
Party only as required to execute its obligations or exercise its rights
under this Agreement, subject to the applicable licenses and other terms
specified in this Agreement and/or any applicable Authorization Letter(s);
and
(3) disclose Confidential Information as required by law, provided the
Receiving Party gives the Disclosing Party prompt notice prior to such
disclosure to allow the Disclosing Party to make a reasonable effort to
obtain a protective order or otherwise protect the confidentiality of such
information.
(ii) Except as otherwise specifically provided in this Agreement or any
applicable Authorization Letter(s), during the Term and for a period of
five (5) years after expiration or earlier termination hereof the Receiving
Party, exercising the same degree of care that it takes to protect its own
information of a similar nature, but in no event less than reasonable care,
shall not
(1) disclose or permit access to, in whole or in part, any Confidential
Information received directly or indirectly from the Disclosing Party; or
(2) sell, rent, lease, transfer, encumber, pledge, reproduce, publish,
transmit, translate, modify, reverse engineer, compile, decompile,
disassemble, license, distribute, or otherwise use the Confidential
Information, in whole or in part.
(iii)For purposes of Section 7.5(b)(ii), reasonable care includes, without
limiting the generality of the foregoing:
(1) informing its subcontractors, agents, representatives, advisors, directors,
officers, employees and Affiliates and, where applicable, their directors,
officers and employees, of the confidential nature of the Confidential
Information and the terms of this Agreement, directing them to comply with
these terms, and obtaining written acknowledgment in accordance with the
terms of this Agreement and, if applicable, the Authorization Letters, from
subcontractors and agents that they have been so informed and directed, and
their written undertaking to abide by these terms; and
(2) notifying the Disclosing Party immediately upon discovery of any loss,
unauthorized disclosure, access, or use of Confidential Information, or any
other breach of this Section 7.5 by the Receiving Party, and assisting the
Disclosing Party in every reasonable way to help the Disclosing Party
regain possession of the Confidential Information and to prevent further
unauthorized disclosure, access, or use.
(iv) The Receiving Party acknowledges that:
(1) the Disclosing Party possesses and will continue to possess Confidential
Information that has been created, discovered or developed by or on behalf
of the Disclosing Party, or otherwise provided to the Disclosing Party by
third parties, which information has commercial value and is not in the
public domain;
(2) unauthorized use or disclosure of Confidential Information may cause injury
not readily measurable in monetary damages, and therefore irreparable;
(3) in the event of an unauthorized use or disclosure of Confidential
Information, the Disclosing Party may be entitled, without waiving any
other rights or remedies, to such injunctive or equitable relief as may be
deemed proper by a court of competent jurisdiction;
(4) unless otherwise specifically set forth in this Agreement and/or any
applicable Authorization Letter, the Disclosing Party and its licensors
retain all right, title and interest in and to the Confidential
Information, including without limiting the generality of the foregoing,
title to all Confidential Materials regardless of whether provided by or on
behalf of the Disclosing Party or created by the Receiving Party; and
(5) as between STK and EDS, any disclosure by the subcontractors, agents,
representatives, advisors, directors, officers and employees and Affiliates
of the Receiving Party and, where applicable, their directors, officers and
employees shall be deemed to be disclosure by the Receiving Party and the
Receiving Party shall be liable for any such disclosure as if the Receiving
Party had disclosed the Confidential Information.
(c) Rights and Remedies of the Disclosing Party
-------------------------------------------
(i) Immediately upon the Disclosing Party's request, and at the expiration or
earlier termination of this Agreement, the Receiving Party shall:
(1) return all Confidential Materials, including, without limitation, all
originals, copies, reproductions and summaries of Confidential Information;
and
(2) destroy all copies of Confidential Information in its possession, power or
control, which are present on magnetic media, optical disk, volatile memory
or other storage device, in a manner that assures the Confidential
Information is rendered unrecoverable.
(ii) Upon completion of those tasks an authorized representative of the
Receiving Party shall provide written confirmation to the Disclosing Party
that the requirements of this Section have been complied with.
(d) Subject to more specific and stringent requirements specified in applicable
Authorization Letters, EDS shall at all times during the Term have its
employees providing Services to STK be parties to appropriate nondisclosure
agreements. EDS will have complied with the immediately preceding sentence
if such employees have executed and delivered the EDS standard employment
agreement.
7.6 Recordkeeping and Audit Rights.
------------------------------
(a) General.
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(i) Recordkeeping
(1) EDS shall maintain complete and accurate records of, and supporting
documentation for,
(a) the amounts billed to and payments made by STK under this Agreement and any
Authorization Letters and the charge back allocation, as specified in the
monthly invoice, of such amounts and payments, and
(b) Service Level compliance.
EDS shall provide to STK, at STK's request, paper and electronic copies of
documents and information reasonably necessary to verify EDS' compliance
with this Agreement, in the format and on media reasonably requested by STK
in advance of EDS' provision of such copies and information. The provisions
of Section 7.6(a)(vi), below, shall not apply to this Section 7.6(a)(i)(1).
(2) EDS shall maintain records and supporting documentation of all financial
and non-financial transactions under this Agreement sufficient to permit a
complete audit thereof in accordance with this Section 7.6. Such records
and supporting documentation shall be retained by EDS for the applicable
time periods required by applicable laws, rules or regulations, and any
special industry requirements identified by STK to EDS in writing and shall
then be returned to STK.
(ii) EDS shall, at no additional cost to STK, provide to STK, STK's internal and
external auditors, inspectors, regulators and such other representatives as
STK may designate from time to time, access at reasonable times and after
reasonable notice (unless circumstances reasonably preclude such notice) to
(1) the parts of any facility at which EDS is providing the Services,
(2) EDS personnel providing the Services,
(3) the systems and Software providing the Services, and
(4) all data and records relating to the Services,
for the purpose of performing audits and inspections of STK and its
business, to verify the integrity of STK Data, to examine the systems that
process, store, support and transmit that data, to verify compliance with
Section 7.5(c), to verify compliance with this Agreement and any/or the
Authorization Letter(s) thereunder, and to examine EDS' charges and
performance of the Services under this Agreement.
(iii)Any third party auditor or other representative of STK will be required to
enter into a confidentiality agreement that is reasonably acceptable to
EDS, provided that such confidentiality agreement shall not be more
restrictive than the confidentiality provisions set forth in this
Agreement. Any such third party auditor or representative of STK (other
than STK's corporate auditors) may be denied access if EDS reasonably
determines that such auditor or other representative is employed by a
competitor of EDS.
(iv) The foregoing audit rights shall include, without limitation, and when
applicable, audits
(1) of practices and procedures,
(2) of systems,
(3) of general controls and security practices and procedures,
(4) of data backup and restoration procedures,
(5) of the efficiency (in accordance with Section 1.15 (Benchmarking) of EDS in
performing the Services,
(6) record keeping,
(7) of charges under this Agreement or Authorization Letters,
(8) necessary to enable STK to meet applicable regulatory requirements, and
(9) Service Level compliance.
(v) EDS shall provide reasonable cooperation to such auditors, inspectors,
regulators and representatives, including the installation and operation of
audit software and access to Monitoring Protocol; provided, however, that
such audits and inspections shall not unreasonably interfere with EDS'
performance of the Services hereunder.
(vi) Other than audits conducted or required by regulators, STK will limit its
audits to one operational and one invoice audit in any annual period.
Notwithstanding the foregoing, if STK has reason to suspect any malfeasance
or dishonest acts on the part of EDS, or other significant or non-routine
problems, STK shall be entitled to undertake such audit of EDS as STK
reasonably deems appropriate upon reasonable notice to EDS and subject to
the provisions of this Section.
(vii)If, in any audit, STK determines that material operational problems or
financial issues exist, STK may conduct a follow-up audit. EDS shall
respond promptly to any conclusions and recommendations reported as part of
an audit and the applicable Authorization Letter Committee will establish
and monitor EDS' schedule for implementation of such recommendations.
(b) Audit of Payments.
-----------------
(i) If an undisputed audit finding reveals that EDS has overcharged STK for
Services performed under a particular Authorization Letter during the
audited period EDS shall reimburse STK for such overpayment, and if such
overcharge is an amount equal to or in excess of three percent (3%) of the
payments made to EDS during the last twelve-month period for such
Authorization Letter, EDS shall reimburse STK for the cost of the audit.
EDS shall pay such amounts to STK within thirty (30) days after STK's
written request.
(ii) If an undisputed audit finding reveals that EDS has undercharged STK for
Services during the audited period for a particular Authorization Letter,
STK shall pay such amount to EDS within thirty (30) days after EDS' written
request.
(c) Survival. This Section 7.6 shall survive the expiration or earlier
termination of the Term and shall continue to the fifth (5th) anniversary
of the last day EDS provides any Termination/Expiration Assistance.
Article VIII. Payments
--------
8.1 Charges for Services.
--------------------
(a) In consideration for the performance of the Services, STK will pay to EDS:
(i) the undisputed charges set forth in each Authorization Letter, plus
(ii) the undisputed taxes to be paid by STK pursuant to this Agreement;
provided, however, that disputed charges and taxes shall be handled in
compliance with Sections 8.5(b) and (c) of this Agreement.
(b) Unless otherwise expressly provided in an Authorization Letter with respect
to the charges to be paid thereunder, EDS will invoice STK for such charges
on a monthly basis in arrears (not later than the fifth day of each such
month), with each invoice setting forth the charges related to the previous
month. EDS either will include on each such invoice, or will ▇▇▇▇ STK
separately for, the taxes for which STK is responsible hereunder.
8.2 Travel and Travel-Related Expenses.
----------------------------------
(a) Unless otherwise expressly provided in the applicable Authorization Letter,
EDS will pay all of the travel and travel-related expenses incurred by EDS.
(b) If specifically provided in the applicable Authorization Letter and subject
to STK's prior written approval of such expenses in each instance, STK will
pay, or reimburse EDS for, the reasonable travel and travel-related
expenses incurred by EDS, in accordance with STK's standard travel
reimbursement guidelines, in the course of EDS' performance of its
obligations under such Authorization Letter. EDS acknowledges that STK has
provided EDS with access to an electronic copy of such reimbursement
guidelines as in effect on the Agreement Effective Date. STK will provide
access to such electronic guidelines during the Term and EDS shall be
responsible for monitoring such guidelines as they change over time. At
STK's option, STK may book directly, at STK's expense, any or all travel
arrangements with airlines, hotels and rental cars for EDS personnel and
EDS will cause its personnel to cooperate with STK or its designated travel
agent. For those travel and travel-related expenses that are initially paid
for by EDS and are subject to reimbursement by STK, EDS will invoice STK
separately for all such expenses, which invoice will be sent by EDS to STK
after EDS incurs such expenses and will contain an itemized listing of the
applicable expenses which is acceptable to STK.
8.3 Other Out-of-Pocket Expenses.
----------------------------
(a) Unless otherwise expressly provided in the applicable Authorization Letter,
EDS will pay all out-of-pocket expenses incurred by EDS.
(b) If specifically provided in the applicable Authorization Letter and subject
to STK's prior written approval of such expenses in each instance, STK will
pay, or reimburse EDS for, the reasonable out-of-pocket expenses, other
than travel and travel-related expenses covered by Section 8.2, incurred by
EDS, in accordance with STK's standard, applicable reimbursement
guidelines, in with the course of EDS' performance of its obligations under
such Authorization Letter. EDS will invoice STK separately for all such
out-of-pocket expenses, which invoice will be sent by EDS to STK after EDS
incurs such expenses and will contain an itemized listing of the applicable
expenses which is acceptable to STK.
8.4 Adjustment to Charges. Unless otherwise specifically set forth in the
-----------------------
applicable Authorization Letter, charges and fees payable by STK under this
Agreement and all Authorizations Letters shall not be subject to increases.
8.5 Time of Payment; Disputed Amounts.
---------------------------------
(a) Unless otherwise expressly provided in an Authorization Letter with respect
to the charges to be paid thereunder, any sum due a Party pursuant to this
Agreement or any Authorization Letter for which the time of payment is not
otherwise specified shall be due and payable thirty (30) days after the
date that the payer Party receives the other Party's invoice. Unless
otherwise expressly provided in an Authorization Letter, all periodic
charges under this Agreement or any Authorization Letter shall be computed
on a calendar month basis and shall be prorated for any partial month. If
either Party should receive a refund, credit or other rebate for goods or
services paid for by the other Party, the recipient of such refund, credit
or rebate shall promptly notify the other Party and shall pay such amount
to such other Party.
(b) If either Party disputes in good faith any portion of an invoice, the
disputing Party shall pay the undisputed dollar amount of such invoice when
due and may, at its option, but subject to the provisions of Section
8.5(c), withhold the disputed portion pending resolution of the dispute by
mutual agreement or pursuant to Article IX (Dispute Resolution). If the
disputing Party withholds any payment pursuant to this Section 8.5(b), the
disputing Party shall notify the other party of the basis for such
withholding in accordance with Section 12.9 (Notices).
(c) With respect to each Authorization Letter, in the event that the aggregate
amount in dispute for such Authorization Letter exceeds $200,000, then
pending resolution of the dispute, the disputing Party will pay all
disputed amounts in excess of $200,000 for such Authorization Letter into
an interest bearing escrow account with an independent third party escrow
agent reasonably acceptable to the other Party. The mediator, arbitrator or
court, as the case may be, will make the determination regarding
distribution of such deposited amounts plus interest. If the disputing
Party fails to escrow disputed payments as required by this Section 8.5(c),
the other Party may apply to any court of competent jurisdiction to seek
injunctive relief for such failure and will have the right to terminate
this Agreement in accordance with Section 10.1(b).
(d) Interest.
(i) Any sum or credit due either Party under this Agreement or any
Authorization Letter that is not paid or granted thirty (30) days after the
date otherwise due, shall thereafter bear interest until paid or applied,
as the case may be, at a rate of interest equal to the lesser of
(1) the then-current prime rate established from time to time by Citibank of
New York, plus 2%, or
(2) the maximum rate of interest allowed by applicable law.
(ii) No interest shall be due under Section 8.5(d)(i) with respect to disputed
amounts which are handled in compliance with Section 8.5(b) and 8.5(c).
(e) Within sixty (60) days after the Agreement Effective Date the Parties agree
to negotiate in good faith an escrow agreement to establish the escrow
contemplated by this Article VIII.
8.6 Taxes.
-----
(a) Unless STK provides EDS with a valid and applicable exemption certificate,
and to the extent that EDS is required by law to collect sales, use, gross
receipts, or other transaction type taxes (herein referred to as "Taxes")
from STK on any sum payable hereunder, then EDS shall timely remit such
taxes to the appropriate taxing jurisdiction. EDS shall only collect Taxes
that are required by law and will reimburse STK for any amounts collected
that are not required by law or that are otherwise not remitted to such
taxing jurisdiction. Taxes shall be separately stated on the invoice by
jurisdiction. Non taxable and taxable Services shall be documented
separately and by the applicable jurisdiction.
(b) Where permissible, the Parties shall work together in the minimization of
Taxes. The Parties understand that, for state and local sales and use tax
purposes, the amounts payable under this Agreement and all Authorization
Letters may be audited by the applicable taxing authority, and the Parties
shall cooperate to minimize any assessments.
(c) STK shall indemnify and hold harmless EDS from and against any and all
Taxes that STK is responsible to pay, or is liable for. STK shall not be
liable for any penalties, interest, fees, or other expenses, if any,
incurred by EDS as the result of any such Taxes not being paid at the time
or in the manner required by applicable law. In the event of an assessment
of Taxes, STK shall pay or reimburse EDS for such assessed Taxes, provided,
however, that STK shall have the right to appeal such assessment, and EDS
shall cooperate accordingly, provided, however, that STK shall pay
pre-authorized and reasonable third party fees if applicable. EDS reserves
the right to settle and pay such assessment without notification to or
approval by STK, provided, however, that in such event EDS cannot seek
relief from STK for such assessment. In the event that STK provides EDS
with a certificate that is deemed to be invalid by the applicable taxing
authority, then STK shall be required to pay tax, penalty and interest
assessed related to such invalid certificate.
8.7 EDS Financial Obligations. In addition to any other financial
-----------------------------
responsibilities of EDS contemplated by this Agreement and each
Authorization Letter, EDS will pay all costs and expenses related toeach
item that is to be provided by EDS pursuant to this Agreement and each
Authorization Letter.
Article IX. Dispute Escalation, Mediation and Arbitration
---------------------------------------------
9.1 General. Any dispute or controversy between the parties with respect to the
-------
interpretation or application of any provision of this Agreement, any
Authorization Letter or the performance by EDS or STK of their respective
obligations shall be resolved as provided in this Article IX.
9.2 Informal Dispute Resolution
---------------------------
(a) The Parties shall, by mutual agreement, attempt to resolve their dispute
informally in the following manner:
(i) Either Party may submit the dispute to the applicable Authorization Letter
Committee, which shall meet as often as the Parties reasonably deem
necessary to gather and analyze any information relevant to the resolution
of the dispute. The applicable Authorization Letter Committee shall
negotiate in good faith in an effort to resolve the dispute.
(ii) If the applicable Authorization Letter Committee determines in good faith
that resolution through continued discussions by such Authorization Letter
Committee does not appear likely, the matter shall be referred to the
Relationship Committee to negotiate a resolution of the dispute.
(iii)During the course of negotiations, all reasonable requests made by one
Party to the other for non-privileged information, reasonably related to
the dispute, shall be honored in order that each of the Parties may be
fully advised of the other's position.
(iv) The specific format for the discussions shall be determined at the
discretion of the applicable Authorization Letter Committee or the
Relationship Committee, but may include the preparation of agreed upon
statements of fact or written statements of position.
(b) For all or a specified class of disputes, an Authorization Letter may:
(i) substitute a dispute resolution process for the process set forth in
Section 9.2(a)
(ii) impose a dispute resolution process in addition to the process set forth in
Section 9.2(a).
(c) Proposals, statements of fact, statements of position, and other
information exchanged during the informal proceedings described in this
Article between the Parties shall be privileged, confidential and without
prejudice to a Party's legal position in any formal proceedings, unless
such information is otherwise known or otherwise subject to disclosure
under this Agreement or an Authorization Letter. All such proposals and
information, as well as any conduct during such proceedings, shall be
considered settlement discussions and proposals, and shall be inadmissible
in any subsequent proceedings.
(d) Notwithstanding this Section, neither Party may commence formal dispute
resolution proceedings pursuant to Section 9.3 (Arbitration) without first
observing the procedures set forth in this Section 9.2. If the Parties are
unable to resolve their dispute:
(i) within thirty (30) days, after the commencement of such informal dispute
resolution process, or
(ii) by another mutually agreeable date documented in writing,
then the Parties shall be deemed to have exhausted this Section 9.2.
9.3 Arbitration
-----------
(a) Except as set forth in clause (g) below, any dispute or controversy between
the parties with respect to the interpretation or application of any
provision of this Agreement, any Authorization Letter or the performance by
EDS or STK of their respective obligations, including any controversy
regarding the arbitrability of any dispute, shall be settled at the request
of either Party by binding arbitration in Denver, Colorado before and in
accordance with the then existing Commercial Arbitration Rules of the
American Arbitration Association (the "Rules").
(b) In any dispute in which the amount in controversy is less than Two Hundred
Thousand Dollars ($200,000), there shall be one (1) arbitrator agreed to by
the Parties or, if the Parties are unable to agree within thirty (30) days
after demand for arbitration is made, selected in accordance with the
Rules.
(c) In all other cases there shall be three (3) arbitrators, one (1) of whom
shall be selected by STK within thirty (30) days after demand for
arbitration is made, one (1) of whom shall be selected by EDS within thirty
(30) days after demand for arbitration is made, and one (1) of whom shall
be selected by the two Party-appointed arbitrators within thirty (30) days
after their selection.
(d) If one or more arbitrator(s) is not selected within the time period stated
in the preceding sentence, such arbitrator(s) shall be selected pursuant to
Rule 13 of the Rules (or the then-current, applicable Rule).
(e) Unless otherwise agreed by the Parties, all arbitrator(s) shall have at
least ten (10) years of experience in complex, commercial technology
engagements in the area that is generally the same as the technology issue
that is the subject of the dispute.
(f) Each Party shall pay its own attorneys' fees and one-half (1/2) of the
arbritators' fees, subject to final apportionment by the arbitrators. The
arbitrators shall apply the law set forth herein to govern this Agreement
and applicable Authorization Letters and shall have the power to award any
remedy available at law; provided, however, that the arbitrators shall have
no power to amend this Agreement or any Authorization Letters. Any award
rendered pursuant to such arbitration shall be final and binding on the
Parties, and judgment on such award may be entered in any court having
jurisdiction thereof.
(g) Notwithstanding Sections 9.2 and 9.3(a)-(f), inclusive, above, either Party
may request a court of competent jurisdiction to grant equitable relief to
such Party until an arbitrator can render an award on the matter in
question and such award can be confirmed by a court having jurisdiction
thereof.
9.4 Continued Performance. Subject to the terms and conditions of Section
----------------------
8.5(b) and (c), both parties shall continue performing their respective
obligations and responsibilities under this Agreement and the Authorization
Letters while any dispute is being resolved in accordance with this
Article, unless and until such obligations are terminated or expire in
accordance with the provisions of this Agreement or the applicable
Authorization Letter.
9.5 Applicable Law. All questions concerning the validity, interpretation and
--------------
performance of this Agreement shall be governed by and decided in
accordance with the laws of the State of Colorado, as such laws are applied
to contracts between Colorado residents that are entered into and performed
entirely with the State of Colorado.
9.6 Jurisdiction and Venue. Subject to the provisions of Section 9.3, the
-----------------------
Parties hereby submit and consent to the exclusive jurisdiction of any
state or federal court located within the State of Colorado and irrevocably
agree that all permitted actions or proceedings relating to this Agreement
and any Authorization Letter, other than any action or proceeding required
by this Article to be submitted to arbitration, shall be litigated in such
courts, and each of the Parties waives any objection which it may have
based on improper venue or forum non conveniens to the conduct of any such
action or proceeding in such court. Nothing in this Section shall affect
the obligation of the Parties with respect to the arbitration of disputes
pursuant to Section 9.3.
9.7 Charges and Costs. Unless otherwise set forth in this Agreement or
-------------------
otherwise determined by a court of competent jurisdiction, in any legal
action, each Party shall pay its own attorneys' fees, expert witness fees,
and other ordinary and necessary costs of litigation. Such costs include,
without limitation, costs of any legal proceedings brought to enforce a
judgment or decree.
9.8 Equitable Remedies. The Parties agree that in the event of any breach or
-------------------
threatened breach of any provision of this Agreement concerning (i)
Confidential Information, or (ii) intellectual property rights, money
damages may be an inadequate remedy. Accordingly, such provisions may be
enforced by the preliminary injunction or other equitable order of a court
of competent jurisdiction pending resolution of the dispute pursuant to
Sections 9.2 and 9.3.
Article X. Termination
-----------
10.1 Termination for Material Default; Termination for Non-Payment
-------------------------------------------------------------
(a) Except for a default in payments, which will be governed by Section 10.1(b)
below, either Party shall have the option, but not the obligation, to
terminate for material default:
(i) this Agreement (if the material default by the other Party occurs as a
breach of the terms of the body of this Agreement), and/or
(ii) any Authorization Letter (if the material default by the other Party occurs
as a breach of the terms of this Agreement or such Authorization Letter)
provided:
--------
(x) with respect to a curable material default which is curable within thirty
(30) days, such material default is not cured by the breaching Party within
thirty (30) days after the date on which the non-breaching Party provides
written notice of such material default, in accordance with Section 12.9;
(y) with respect to a curable material default which is not curable within
thirty (30) days,
(1) if, within ten (10) Business Days after the date on which the non-breaching
Party provides written notice of such material default, in accordance with
Section 12.9, the breaching Party has submitted to the non-breaching Party
a reasonable timeframe for curing such material default and, such material
default is not cured within that reasonable timeframe, or
(2) if, at the end of ten (10) Business Days after the date on which the
non-breaching Party provides written notice of such material default, in
accordance with Section 12.9, the breaching Party has not submitted to the
non-breaching Party a reasonable timeframe for curing such material
default, or
(z) the material default is not curable, immediately when the non-breaching
Party provides written notice of such material default, in accordance with
Section 12.9.
(b) Either Party shall have the option, but not the obligation, to terminate
this Agreement (if the material default occurs as a breach of the terms of
the body of this Agreement) or any applicable Authorization Letter (if the
material default occurs as a breach of the terms of this Agreement or such
Authorization Letter) if the other Party ("Payer") fails to pay when due
amounts which Payer owes to the first Party ("Payee") under this Agreement
or any Authorization Letter and Payer fails to cure such failure within
thirty (30) days after receipt from Payee of written notice specifically
stating that Payee is exercising its rights under this Section 10.1(b);
provided, however, that Payee shall not have the option to terminate this
Agreement for a failure of Payer to pay Payee amounts due once such failure
has been cured by Payer in accordance with this Section 10.1(b). With
respect to amounts due under this Agreement or an Authorization Letter
which are in dispute, the Payee shall not have the right to terminate this
Agreement or any Authorization if the Payer is in compliance with the
provisions of Section 8.5(b) and (c).
(c) If STK terminates this Agreement and/or any/all Authorization Letters
pursuant to Section 10.1(a) or 10.1(b), then no Termination Fees will be
payable by STK as to this Agreement or the particular Authorization
Letter(s) so terminated.
10.2 Termination of Dormant Agreement. If at any time during the term of this
----------------------------------
Agreement there are no Authorization Letters with an unexpired term and no
Authorization Letters have been entered into by the Parties during the
prior 12-month period, either Party may terminate this Agreement by giving
at least 30 days' prior written notice to the other Party and no
Termination Fees will be payable by STK.
10.3 Termination for Convenience. If applicable and appropriate, each
------------------------------
Authorization Letter will contain provisions pursuant to which STK shall
have the option, but not the obligation, to terminate such Authorization
Letter for its convenience. For each Authorization Letter, STK may exercise
its termination option by delivering to EDS written notice of such
termination, in accordance with Section 12.9, identifying the termination
date (which shall be at least one hundred and eighty (180) days after the
deemed delivered date of such notice), and STK shall pay to EDS the
applicable termination fee, if any, set forth in the applicable
Authorization Letter (the "Termination Fee"). In connection with any such
termination,
(a) STK shall have no liability to EDS for amounts in excess of:
(i) the charges or fees specified in the respective Authorization Letter for
Services through the effective date of termination, and
(ii) the applicable Termination Fee specified in each Authorization Letter.
(b) EDS shall use Commercially Reasonable Efforts to reduce any costs for which
STK is responsible that are associated with any such termination.
10.4 Termination for Insolvency. Subject to applicable law, either Party shall
---------------------------
have the option, but not the obligation, to terminate this Agreement or any
Authorization Letter without payment of any termination fees if the other
Party
(a) becomes insolvent or is unable to meet its debts as they mature,
(b) files a voluntary petition in bankruptcy or seeks reorganization or to
effect a plan or other arrangement with creditors,
(c) files an answer or other pleading admitting, or fails to deny or contest,
the material allegations of an involuntary petition filed against it
pursuant to any applicable statute relating to bankruptcy, arrangement or
reorganization,
(d) shall be adjudicated a bankrupt or shall make an assignment for the benefit
of its creditors generally,
(e) shall apply for, consent to or acquiesce in the appointment of any receiver
or trustee for all or a substantial part of its property, or
(f) any such receiver or trustee shall be appointed and shall not be discharged
within thirty (30) days after the date of such appointment.
10.5 Effect of Expiration or Termination.
-----------------------------------
(a) Except as set forth in this Agreement, termination of this Agreement or any
Authorization Letter under this Article shall not affect:
(i) any liabilities or obligations of either Party arising before such
termination or out of the events causing such termination, or
(ii) any damages or other remedies to which a Party may be entitled under this
Agreement, at law or in equity, arising from any breaches of such
liabilities or obligations.
(b) Expiration or Termination of Authorization Letter Only. Upon expiration or
-------------------------------------------------------
termination of an Authorization Letter, but not this Agreement, EDS will
cease to perform the Services covered thereby, and STK will pay to EDS all
undisputed amounts due to EDS under such Authorization Letter and, as
applicable, this Agreement. Any disputed amounts would be subject to the
provisions of Sections 8.5(b) and (c). Expiration or termination of an
Authorization Letter will not affect any other Authorization Letters the
performance of which by either or both of the Parties remains outstanding,
unless the Parties otherwise agree in writing. In addition, the transition
provisions set forth in Section 10.5(e) will apply to the extent indicated
therein. In the event one or more Authorization Letters are expressly tied
to the terminated Authorization Letter, the Parties will make mutally
agreeable adjustments to the continuing Authorization Letter(s).
(c) Expiration of Agreement with No Outstanding Authorization Letters or
---------------------------------------------------------------------------
Termination of Agreement. Upon expiration of this Agreement at a time when
------------------------
no Authorization Letters are outstanding or upon termination of this
Agreement (and all outstanding Authorization Letters) by STK in accordance
with this Article X, EDS will cease to perform the Services covered hereby
and thereby, and STK will pay to EDS all undisputed amounts due to EDS
hereunder and thereunder. Any disputed amounts would be subject to the
provisions of Sections 8.5(b) and (c). In addition, the transition
provisions set forth in Section 10.5(e) will apply to the extent indicated
therein.
(d) Expiration of Agreement with Outstanding Authorization Letters. Upon
--------------------------------------------------------------------
expiration of this Agreement when one or more Authorization Letters are
outstanding, this Agreement will remain in full force and effect solely for
purposes of such Authorization Letters. The effective date termination of
this Agreement will be deemed to be, as applicable, the "expiration date"
or "effective date of termination" of the last such Authorization Letter to
remain in effect. Thereafter, EDS will cease to perform the Services
covered hereby and thereby, and STK will pay to EDS all undisputed amounts
due to EDS hereunder and thereunder. Any disputed amounts would be subject
to the provisions of Section 8.5(b) and (c). In addition, the transition
provisions set forth in Section 10.5(e) will apply to the extent indicated
therein.
(e) Transition Assistance at Expiration or Termination of Authorization Letter
---------------------------------------------------------------------------
or Agreement.
------------
(i) Unless otherwise specified in the applicable Authorization Letter,
commencing six (6) months before the expiration of the term of the
applicable Authorization Letter or, if applicable, upon delivery of a
termination notice by STK or EDS pursuant to Article X (Termination), and
continuing until the expiration of the term of the applicable Authorization
Letter or, if applicable, the termination date, EDS shall provide to STK or
STK's designee the assistance reasonably requested by STK to enable the
Services to continue without interruption and to facilitate the orderly
transfer of the Services to STK or its designee ("Termination/Expiration
Assistance"). The Parties acknowledge that the six (6) month period
reflected above may not be appropriate for all Services that may be the
subject of an Authorization Letter and that the Parties will designate such
applicable period in the Authorization Letter if that period is different
from the six (6) month period reflected above. In addition, the Parties
shall, in each Authorization Letter, determine if it is appropriate to have
provisions which deal with extending the termination date of the applicable
Authorization Letter and, if so, the appropriate provisions for such
extension. Such Termination/Expiration Assistance shall be rendered at no
additional charge to STK.
(ii) At STK's request, EDS shall provide to STK for up to six (6) months after
the expiration date of the applicable Authorization Letter or, if
applicable, the effective date of termination, any and all of the Services
being performed by EDS immediately prior to such date under such
Authorization Letter, including, without limitation, Termination/Expiration
Assistance. The Parties acknowledge that the six (6) month period reflected
above may not be appropriate for all Services that may be the subject of an
Authorization Letter and that the Parties will designate such applicable
period in the Authorization Letter if that period is different from the six
(6) month period reflected above. This Agreement and the applicable
Authorization Letter shall continue to govern the performance of all such
Services during such period, except that to the extent that the
Termination/Expiration Assistance requested from EDS requires resources
beyond the resources then being provided by EDS, such services will be
provided at the applicable personnel rates specified in the applicable
Authorization Letter.
(iii)EDS acknowledges that, if it were to breach, or threaten to breach, its
obligation to provide STK with Termination/Expiration Assistance, STK would
be irreparably harmed. STK shall be entitled to proceed directly to a court
of competent jurisdiction and to attempt to obtain such injunctive,
declaratory or other equitable relief as may be reasonably necessary to
prevent such breach, provided that:
(1) STK has complied with its obligations under this Agreement and the
applicable Authorization Letter, including without limitation, its payment
obligations (subject to but in compliance with the obligations pursuant to
Section 8.5(b) and (c), or
(2) if STK has not complied with its obligations under this Agreement and the
applicable Authorization Letter, STK has paid in advance for fees, if any,
under Section 10.5(e)(ii), above, in accordance with Section 10.5(e)(iv),
below.
(iv) With respect to Section 10.5(e)(iii)(2), above, in connection with the
performance of Termination/Expiration Assistance, pursuant to this Section
10.5(e), if STK pays EDS monthly in advance the reasonable estimated
charges for such Termination/Expiration Assistance to be performed during
such month, then the charges paid pursuant to this Section 10.5(e)(iv)
shall be reconciled within fifteen (15) days after completion of each
month, and,
(1) in the case of an undercharge STK will pay EDS the amount of such
undercharge, or
(2) in the case of an overcharge, EDS will pay to STK the amount of such
overcharge.
10.6 Purchase of Equipment. Upon expiration or termination of any Authorization
---------------------
Letter, STK shall have the option, but not the obligation, to purchase any
equipment owned by EDS and used by EDS at the time of the termination or
expiration exclusively to provide the Services reflected in such
Authorization Letter. The purchase price for any equipment purchased by STK
shall be the greater of (i) the net book value of the applicable equipment,
or (ii) the fair market value of the applicable equipment. STK shall pay
the purchase price to EDS concurrently with EDS' delivery to STK of the
equipment and a ▇▇▇▇ of sale acceptable to STK. In addition, STK shall pay
any amounts payable pursuant to Section 8.6 (such section captioned Taxes).
In addition, STK shall have the option, but not the obligation, but only to
the extent permitted by EDS' leases, to assume any lease of equipment
leased by EDS and used by EDS at the time of the termination or expiration
exclusively to provide the Services reflected in the applicable
Authorization Letter. All references in this section to STK shall include
STK's designee.
10.7 Offers to Employees. As an exception to the provision of Section 3.3 of
--------------------
this Agreement, beginning six (6) months before expiration of the term of
the applicable Authorization Letter, or (if applicable), upon delivery of a
notice of termination pursuant to this Article, STK shall be entitled to
seek to hire any EDS employee who has spent a majority of his or her
working hours in the preceding six (6) months performing the Services
reflected in the applicable Authorization Letter. EDS shall not interfere
with STK's efforts, shall not enforce any restrictions imposed on such
employees by agreement or policy which would interfere with STK's efforts,
and shall provide STK access to such employees for the purposes of
interviews, evaluations and recruitment. In conducting the activities
described in this Section 10.7, STK shall not interfere with EDS'
performance of the Services under any Authorization Letter that are then
outstanding. Any such employment by STK would not be effective until
termination or expiration of this Agreement or the applicable Authorization
Letter, as the case may be.
Article XI. Indemnities, Liability and Insurance
------------------------------------
11.1 Indemnities for Third Party Claims.
----------------------------------
(a) Indemnification by EDS for Third Party Claims
---------------------------------------------
(i) Employment-related claims
------------------------------
EDS shall indemnify and hold harmless STK, its Affiliates and their past
and present (as applicable) respective officers, directors, employees,
agents, successors, and assigns (collectively, the "STK Indemnitees") from
and against any and all Losses arising out of or relating to a New EDS
Employee's employment with EDS or performance of services under or in
connection with this Agreement, including without limitation:
(1) violation by EDS of Federal, state, local, international or other laws or
regulations protecting persons or members of a protected class or category,
including without limitation laws or regulations prohibiting discrimination
or harassment on the basis of a protected characteristic;
(2) liability arising or resulting from a New EDS Employee's employment with
EDS;
(3) payment of wages that become due and owing to any New EDS Employee
following such New EDS Employee's effective date of employment with EDS;
(4) any employee pension or welfare benefits owed under an EDS pension or
welfare benefit plan;
(5) other aspects of any New EDS Employee's employment relationship with EDS or
the termination of such relationship, including without limitation claims
for breach of an express or implied contract of employment; and
(6) liability resulting from representations (oral or written) by EDS to
Eligible Employees or New EDS Employees.
(ii) Other third party claims
------------------------
EDS shall indemnify, defend and hold harmless the STK Indemnitees and each
of them, from and against all Losses arising from, in connection with or
relating to, any allegations by a third party (including without limitation
a federal, state or local agency) regarding any of the following:
(1) EDS' failure to perform any obligations required to be performed by EDS
after the effective date of the applicable Authorization Letter under any
of the third party contracts assigned to EDS thereunder, if any; and
(2) any claims of EDS' subcontractors, suppliers, or independent contractors.
(b) Indemnification by STK for Third Party Claims.
----------------------------------------------
(i) Employment-related claims
-------------------------
STK shall indemnify and hold harmless EDS, its Affiliates and their past
and present (as applicable), respective officers, directors, employees,
agents, successors, and assigns (collectively, the "EDS Indemnitees") from
and against any and all Losses arising out of or relating to an Eligible
Employee's employment with STK before the first date on which the Eligible
Employee is employed by EDS, including without limitation:
(1) violation by STK of Federal, state, local, international or other laws or
regulations protecting persons or members of a protected class or category,
including, without limitation, laws or regulations prohibiting
discrimination or harassment on the basis of a protected characteristic;
(2) payment of wages due and owing to
(a) any Eligible Employee who does not become a New EDS Employee or
(b) any New EDS Employee before such New EDS Employee's effective date of
employment with EDS;
(3) any employee pension or welfare benefits owed under an STK pension or
welfare benefit plan;
(4) other aspects of any Eligible Employee's employment relationship with STK
or the termination of such relationship, including, without limitation,
claims for breach of an express or implied contract of employment; and
(5) liability resulting from representations (oral or written) by STK to the
Eligible Employees.
(ii) Other third party claims
------------------------
STK shall indemnify, defend and hold harmless the EDS Indemnities and each
of them from and against all Losses arising from, in connection with or
relating to, any allegations by a third party (including without limitation
a federal, state or local agency) regarding of any of the following:
(1) STK's failure to perform any obligations required to be performed by it
prior to the effective date of the applicable Authorization Letter under
any of the third party contracts assigned to EDS thereunder, if any; and
(2) any claims of STK's subcontractors, suppliers or independent contractors.
(c) Mutual Indemnification. EDS shall indemnify, defend and hold harmless the
----------------------
STK Indemnitees, and STK shall indemnify, defend, and hold harmless the EDS
Indemnitees, from and against all Losses arising from claims relating to:
(i) death of or bodily injury to any agent, employee, customer, invitee,
visitor or other person to the extent caused by the conduct of the
indemnitor, its Affiliates, or their respective agents, employees or
contractors, except for Losses paid or incurred as a result of a claim for
workers' compensation benefits; or
(ii) damage to, or loss or destruction of, any real or tangible personal
property of third parties to the extent directly caused by the tortious
conduct of the indemnitor, its Affiliates, or their respective agents,
employees or contractors, or
(iii)incidents stemming from publications on the internet by such other Party
which result in third party claims of libel, indecency, false light,
invasion of privacy or image or personality rights.
(d) Intellectual Property Indemnification
-------------------------------------
(i) Defense Obligation.
(1) STK and EDS (each a "First Party") each agree to defend, the other Party
("Second Party") and the Second Party's respective, past and present (as
applicable) officers, directors, representatives, agents, and successors,
from and against any action to the extent that such action is based on a
third party claim that the Software (other than Third Party Software, which
by definition does not include EDS Vendor Software) provided by the First
Party, the Confidential Information provided by the First Party, or any
other deliverable provided by the the First Party to the Second Party, or
any part thereof, (collectively "IP Items")
(a) infringes a copyright perfected under applicable United States law,
(b) infringes a patent granted under applicable United States law, or
(c) constitutes an unlawful disclosure, use or misappropriation of another
party's trade secret.
(2) The First Party will:
(a) bear the expenses of such defense, including without limitation court
costs, attorneys' fees, and other related expenses, each as they come due,
and
(b) pay any damages, attorneys' fees, and expenses of such defense that are
attributable to such claim finally awarded by a court of competent
jurisdiction.
(ii) Alternatives.
------------
(1) If any IP Item becomes the subject of a claim under this Section, or in the
First Party's opinion is likely to become the subject of such a claim, then
the First Party may, at its option,
(a) modify the IP Item to make it noninfringing or cure any claimed misuse of
another's trade secret, provided such modification does not adversely
affect the functionality or usefulness of the IP Item or increase the
Second Party's costs related to the use of such IP Item, or
(b) procure for the Second Party the right to continue using the IP Item
pursuant to this Agreement or the applicable Authorization Letter, or
(c) replace the IP Item with a substantially equivalent IP Item that is
noninfringing or that is free of claimed misuse of another's trade secret.
(2) Any costs associated with implementing any of the alternatives in Section
11.1(d)(ii)(1) shall be borne by the First Party, but such costs will be
subject to Sections 11.2(b) (Limit on Types of Damages Recoverable) and
11.2(c) (Limit on Amount of Direct Damages Recoverable).
(3) If none of the alternatives set forth in Section 11.1(d)(ii)(1) is pursued
by, or (if pursued) available to, the First Party, then
(a) the Second Party will return such IP Item to the First Party, and
(b) if requested by the Second Party, the Parties will negotiate, pursuant to
Article IX but subject to Sections 11.2(b) (Limit on Types of Damages
Recoverable) and 11.2(c) (Limit on Amount of Direct Damages Recoverable),
to reach a written agreement on what, if any, monetary damages (in addition
to the First Party's obligation to defend the claim and pay any damages,
attorneys' fees, and expenses as required above in this Section 11.1(d))
are reasonably owed by the First Party to the Second Party as a result of
the of the Second Party no longer having use of such IP Item; the payment
of any such monetary damages will be the Second Party's sole and exclusive
remedy for the inability of the First Party to implement any of the above
alternatives in Section 11.1(d)(ii)(1).
(4) The indemnitor will regularly, fully, and promptly communicate with and
consider the views of the Second Party in any such defense and/or
settlement efforts.
(iii)With respect to any IP Item provided or developed by a First Party
pursuant to this Agreement or any Authorization Letter, such First Party
shall have no liability to the Second Party under this Agreement or any
Authorization Letter:
(1) to the extent that any claim of infringement is based upon the use of the
IP Item in connection or in combination with equipment, devices or another
IP Item not supplied by the First Party Party or used in a manner for which
the IP Item was not designed,
(2) to the extent caused by maintenance, modifications, updates, enhancements
and/or improvements to the IP Item made by any party other than the First
Party Party, unless such third party is or was a contractor, employee,
agent, representative, director, or Affiliate of such First Party; or
(3) to the extent the claim of infringement arises out of the First Party's
compliance with specifications provided by the Second Party and such
infringement would not have occurred but for such compliance.
(iv) This Section 11.1(d) sets forth the Parties' sole and exclusive obligations
and remedies with respect to infringement, misappropriation, or misuse, of
a third party's intellectual property rights.
(e) Indemnification Procedures
--------------------------
(i) Promptly after receipt by an indemnitee of any written claim or notice of
any action giving rise to a claim for indemnification by the indemnitee,
the indemnitee shall so notify the indemnitor and shall provide copies of
such claim or any documents relating to the action. No failure to so notify
an indemnitor shall relieve the indemnitor of its obligations under this
Agreement or the applicable Authorization Letter except to the extent that
the failure or delay is prejudicial. The indemnitor shall notify the
indemnitee in writing (a "Notice of Assumption of Defense") if the
indemnitor elects to assume control of the defense and settlement of such
claim or action:
(1) within thirty (30) days following receipt of such written notice, but in
any event no later than twenty (20) days before the deadline for any
responsive pleading, or
(2) in the case of a temporary restraining order, within two (2) days following
receipt of such written notice, but in no event later than five (5) days
prior to such proceeding, or
(3) if shorter time periods are dictated by the timing of the proceedings, as
soon as reasonably possible, but no later than one (1) day prior to such
proceeding.
(ii) If the indemnitor delivers a Notice of Assumption of Defense with respect
to a claim within the required period, the indemnitor shall have sole
control over the defense and settlement of such claim; provided, however,
that:
(1) the indemnitee shall be entitled to participate in the defense of such
claim and to employ counsel at its own expense to monitor and reasonably
assist in the handling of such claim, and
(2) the indemnitor shall obtain the prior written approval of the indemnitee
before entering into any settlement of such claim (but only as to
non-monetary concessions that will adversely affect the indemnitee), or
ceasing to defend against such claim.
(iii)After the indemnitor has delivered a timely Notice of Assumption of
Defense relating to any claim, the indemnitor shall not be liable to the
indemnitee for any legal expenses incurred by such indemnitee in connection
with the defense of such claim; provided, that the indemnitor shall pay for
separate counsel for the indemnitee to the extent that conflicts or
potential conflicts of interest between the Parties so require. In
addition, the indemnitor shall not be required to indemnify the indemnitee
for any amount paid by such indemnitee in the settlement of any claim for
which the indemnitor has delivered a timely Notice of Assumption of Defense
if such amount was agreed to by the indemnitee without prior written
consent of the indemnitor, which shall not be unreasonable withheld or
delayed in the case of monetary claims. An indemnitor may withhold consent
to settlement of claims of infringement affecting its proprietary rights,
including licenses to use others' proprietary rights, in is sole
discretion.
(iv) If the indemnitor does not deliver a Notice of Assumption of Defense
relating to a claim within the required notice period, the indemnitee shall
have the right to defend the claim in such a manner as it may deem
appropriate, at the cost and expense of the indemnitor. The indemnitor
shall promptly reimburse the indemnitee for all such costs and expenses
upon written request therefor, as such amounts come due.
(v) The indemnitee will provide to the indemnitor reasonable cooperation in the
defense or settlement of the claim. To the extent the indemnitee incurs
reasonable incremental expenses to provide such cooperation, indemnitor
will pay, as they come due, such expenses.
(f) Subrogation. Except as provided under Section 11.3, in the event an
-----------
indemnitor indemnifies an indemnitee pursuant to this Article, the
indemnitor shall, upon payment in full of such indemnity, be subrogated to
all of the rights of the indemnitee with respect to the claim to which such
indemnity relates.
11.2 Liability.
---------
(a) General Intent. Subject only to the limitations set forth in this
---------------
Agreement, a Party who breaches any of its obligations under this Agreement
or any Authorization Letter shall be liable to the other Party (but not any
third party) for any direct damages actually incurred by the other as a
direct result of such breach.
(b) Limit on Types of Damages Recoverable
-------------------------------------
(i) EXCEPT AS SET FORTH IN CLAUSE (ii) BELOW, NEITHER PARTY SHALL BE LIABLE FOR
INDIRECT, CONSEQUENTIAL (INCLUDING, WITHOUT LIMITATION, LOST PROFITS),
INCIDENTAL, EXEMPLARY OR PUNITIVE DAMAGES, REGARDLESS OF THE FORM OF
ACTION, WHETHER IN CONTRACT, TORT, WARRANTY OR OTHERWISE, AND EVEN IF SUCH
PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
(ii) The exclusion set forth in clause 11.2(b)(i) shall not apply to:
(1) Losses otherwise recoverable by an indemnitee pursuant to Sections 11.1(c)
and 11.1(d) (except for 11.1(c)(iii) and 11.1(d)(ii)),
(2) a Party's intentional breach of its obligations with respect to the other
Party's Confidential Information,
(3) damages caused by a Party's gross negligence or willful misconduct, and
(4) STK's payment obligation for EDS charges pursuant to Section 8.1.
(c) Limit on Amount of Direct Damages Recoverable
---------------------------------------------
(i) Each Party's aggregate liability under any Authorization Letter for all
acts or omissions and all claims, whether arising in contract, tort,
warranty or otherwise, will be stated in each Authorization Letter (the
"Authorization Letter Damages Limit"). However, in the event the
Authorization Letter Damages Limit is omitted from an Authorization Letter,
the Authorization Letter Damages Limit shall be an amount equal to the
total fees paid and payable to EDS under such Authorization Letter during
the twelve (12) complete calendar months immediately preceding the month in
which the event giving rise to the liability occurred (or, if the event
giving rise to the liability occurs during the first twelve (12) months
after the effective date of such Authorization Letter, the total charges
estimated to be payable to EDS pursuant to the Authorization Letter for
such first twelve (12) months). This limitation shall not apply to losses
or damages attributable to:
(1) Losses otherwise recoverable by an indemnitee pursuant to Sections 11.1 (c)
and 11.1(d) (except for 11.1(c)(iii) and 11.1(d)(ii))
(2) a Party's intentional breach of its obligations with respect to the other
Party's Confidential Information,
(3) claims arising out of a Party's gross negligence or willful misconduct, and
(4) STK's payment obligation for EDS charges pursuant to Section 8.1.
(ii) Notwithstanding the provisions of Sections 11.2(c)(i) or any other
provision in this Agreement, the liability of each Party to the other for
all damages arising out of or related to this Agreement and all
Authorization Letters, regardless of the form of action that imposes
liability, whether in contract, equity, negligence, intended conduct, tort
or otherwise will be limited to and will not exceed, in the aggregate for
all claims, actions and causes of action of every kind and nature, the sum
of all Authorization Letter Damages Limits for all Authorization Letters
then in effect, and, if the Authorization Letter under which the claim was
asserted has expired or been terminated and the liability for such claim
survives such termination or expiration, the Authorization Letter Damage
Limits for such Authorization Letter, (the "Aggregate Damages Limit"). This
limitation shall not apply to losses or damages attributable to:
(1) Losses otherwise recoverable by an indemnitee pursuant to Sections 11.1 (c)
and 11.1(d) (except for 11.1(c)(iii) and 11.1(d)(ii)),
(2) a Party's intentional breach of its obligations with respect to the other
Party's Confidential Information,
(3) damages caused by a Party's gross negligence or willful misconduct, and
(4) STK's payment obligation for EDS charges pursuant to Section 8.1.
(iii)The following shall be considered direct damages and neither party shall
assert that they are indirect, consequential, or special damages to the
extent they result from a Party's failure to fulfill its obligations in
accordance with this Agreement:
(1) reasonable costs of testing, verifying, recreating, documenting,
reformatting, and reloading any of STK's lost or damaged information;
(2) reasonable costs of designing, testing, documenting, and implementing a
workaround in respect of a failure to provide the Services;
(3) reasonable costs of diagnosing, repairing, testing, documenting,
reintegrating, and/or replacing lost or damaged equipment and Software or
other materials;
(4) reasonable costs and expenses incurred to correct excessive errors in
Software maintenance and enhancements provided as part of the Services
which result from EDS' failure to perform the Services in compliance with
Section 5.2(d);
(5) reasonable costs and expenses incurred to procure the Services from an
alternate source, including research, development, distribution,
publication, and administration of requests for proposals, and other
transaction costs; and
(6) straight time, overtime, and related expenses incurred by STK for
employees, consultants, and contractors, including overhead allocations of
STK for STK's employees consultants, and contractors, wages and salaries of
additional employees, travel expenses, overtime expenses, telecommunication
charges, and similar charges, reasonably incurred by STK as a direct result
of a failure of EDS to provide the Services in accordance with this
Agreement or incurred in connection with (1) through (5) above.
(iv) Each party shall have a duty to reasonably mitigate damages for which the
other Party is liable.
(d) Contractual Statute of Limitations. No claim and demand for mediation or
------------------------------------
arbitration or cause of action which arose out of an event or events which
occurred more than six (6) years prior to the filing of a demand for
mediation or arbitration or suit alleging a claim or cause of action may be
asserted by either Party against the other.
(e) Acknowledgment. The Parties expressly acknowledge that the limitations and
--------------
exclusions set forth in Sections 11.2(a), 11.2(b), 11.2(c), and 11.2(d)
have been the subject of active and complete negotiation between the
Parties and represent the Parties' agreement taking into account each
Party's level of risk associated with the performance or nonperformance of
its obligations under this Agreement and the payments and other benefits to
be derived by each Party pursuant to this Agreement. The provisions of this
Article XI will survive the expiration or termination of this Agreement and
any Authorization Letter for any reason.
11.3 Insurance; Risk of Loss
-----------------------
(a) Required Insurance Coverage
---------------------------
Throughout the Term EDS shall maintain in force (and cause their
subcontractors to maintain in force), at minimum, the insurance coverages
described below.
(i) Commercial General Liability Insurance, including Products/Complete
Operations and Advertising Injury coverage, with a minimum combined single
limit of $1,000,000 per occurrence. The policy shall contain coverage for
property in the "care, custody and control" of EDS in an amount not less
then $1,000,000;
(ii) Umbrella Liability Insurance, including Products/Complete Operations and
Advertising Injury coverage, with a minimum combined single limit of
$10,000,000 per occurrence;
(iii)Worker's Compensation Insurance or any alternative plan or coverage as
permitted or required by applicable law, of the state or nation in which
the work is performed and Employer's Liability coverage in an amount not
less then $1,000,000 per occurrence;
(iv) Automotive Liability Insurance covering use of all owned, non-owned and
hired automobiles with a minimum combined single limit of $1,000,000 per
occurrence for bodily injury and property damage liability; and
(v) Crime insurance for Losses arising out of the dishonest acts of EDS'
employees in the amount of $5,000,000 for each loss or series of related
losses.
(b) General Insurance Requirements. All insurance policies EDS is required to
-------------------------------
carry pursuant to this Section 11.3 shall:
(i) be primary as to EDS' negligence and non-contributing with respect to any
other insurance or self-insurance STK may maintain;
(ii) name STK, its Affiliates and their respective officers, directors and
employees as additional insureds, as such parties' interests may appear
with respect to this Agreement, but only with respect to the insurance
policies described in subsections 11.3(a)(i), 11.3(a)(ii) and 11.3(a)(iv)
above;
(iii)be provided by insurance companies rated by A-M Best with at least an A-
rating; and
(iv) require the insurer to notify STK in writing at least thirty (30) days in
advance of cancellation or material modification.
Upon STK's request, EDS shall cause its insurers to issue to STK as soon as
possible after the Agreement Effective Date and each policy renewal date
certificates of insurance evidencing that the coverages required by this
Section 11.3 are in effect.
(c) Risk of Loss. Unless such damages have been caused by the reckless or
------------
intentional misconduct of the other Party, EDS and STK each shall be
responsible for damages to their respective tangible personal or real
property (whether owned or leased), and each Party agrees to look only to
their own insuring arrangements (if any) with respect to such damage.
(d) Waiver of Subrogation. EDS and STK waive all rights to recover against each
---------------------
other for any loss or damage to their respective tangible personal property
(whether owned or leased) from any cause covered by insurance maintained by
each of them, including their respective deductibles or self-insured
retentions. EDS and STK also agree to waive and cause the waiver of all
rights that either of them or their respective insurers might have against
the other or the other's insurers for Losses paid or incurred as a result
of a claim for workers' compensation benefits. EDS and STK will cause their
respective insurers to issue appropriate waivers of subrogation rights
endorsements to all property insurance policies maintained by each party.
Each party shall give the other party written notice if a waiver of
subrogation is unobtainable, or obtainable only at additional expense. If
the party receiving such notice agrees to reimburse the other party for
such additional expense, the other party shall obtain such waiver of
subrogation. If a waiver is unobtainable or if a party elects not to pay
the additional expense of a waiver, then neither party nor their insurers
shall waive such subrogation rights.
Article XII. Miscellaneous
-------------
12.1 Interpretation
--------------
(a) In this Agreement and any Authorization Letter, words importing the
singular number include the plural and vice versa and words importing
gender include all genders. The word "person" includes, subject to the
context in which it appears, an individual, partnership, association,
corporation, trustee, executor, administrator or legal representative.
(b) The division of this Agreement and of any Authorization Letter and their
respective Schedules into Articles, Sections, subsections and Schedules and
the insertion of any captions or headings are for convenience of reference
only and shall not affect its construction or interpretation.
(c) In this Agreement and any Authorization Letter, unless otherwise
specifically provided:
(i) References to a specified Article, Section, subsection, Schedule or other
subdivision shall be construed as references to that specified Article,
Section, subsection, Schedule or other subdivision of this Agreement or of
any Authorization Letter, unless the context otherwise requires.
(ii) The word "dollar" and the symbol "$" refer to United States dollars.
(iii)References to "days" means calendar days unless "Business Days" are
expressly specified.
(vi) The term "including" means "including, without limitation," or "including,
but not limited to."
12.2 Binding Nature and Assignment.
-----------------------------
(a) Neither Party may assign, voluntarily or by operation of law, any of its
rights or obligations under this Agreement or any Authorization Letter
without the prior written consent of the other Party, which consent shall
not be unreasonably withheld; provided, that either Party may assign its
rights and obligations under this Agreement or any Authorization Letter to
an Affiliate, or to an entity which acquires all or substantially all of
the assets of such Party
(b). No assignment by a Party shall relieve such Party of its rights and
obligations under this Agreement or any Authorization Letter, unless
otherwise specifically set forth in an assignment approval signed by an
authorized representative of the other Party. Subject to the foregoing,
this Agreement and all Authorization Letters shall be binding on the
Parties and their respective successors and assigns.
(c) A corporate reorganization not involving any additional entities other than
a Party and its then-current wholly owned subsidiaries will not be deemed
to be an assignment for purposes of Section 12.2(a).
(d) Notwithstanding the provisions of Sections 12.2(a), (b), and (c), in no
event will EDS be permitted to assign this Agreement to an STK Competitor,
even if such STK Competitor is an EDS Affiliate.
(e) Notwithstanding the provisions of Section 12.2(a), (b), and (c), if the
control of EDS (or the entity providing Services under this Agreement) is
transferred to an STK Competitor, whether through acquisition of stock or
merger, then STK shall have the right, at its option, to terminate this
Agreement and any or all Authorization Letter(s) under the provisions of
Section 10.3, provided, however, that the number of days of notice shall be
ninety (90) days instead of one hundred eighty (180) days and the
applicable Termination Fee(s) shall be deemed to be:
(i) if the effective date of termination occurs during the first [CONFIDENTIAL
INFORMATION DELETED] months following the Agreement Effective Date, a total
of [CONFIDENTIAL INFORMATION DELETED] months of fees under the then
applicable fee schedule(s) for the terminated Authorization Letter(s), or
(ii) if the effective date of termination occurs after the first [CONFIDENTIAL
INFORMATION DELETED] months following the Agreement Effective Date, a total
of [CONFIDENTIAL INFORMATION DELETED] of the then applicable Termination
Fee(s) pursuant to the Termination Fee schedule(s) to the terminated
Authorization Letter(s).
12.3 Expenses. Unless otherwise specifically provided in this Agreement or in
--------
the applicable Authorization Letter, all costs and expenses (including the
fees and disbursements of legal counsel) incurred in connection with the
negotiation and preparation of this Agreement and all Authorization
Letters, and the completion of the transactions contemplated by this
Agreement and all Authorization Letters, shall be paid by the Party
incurring such expenses.
12.4 Amendment and Waiver. No supplement, modification, amendment or waiver of
--------------------
this Agreement or any Authorization Letter shall be binding unless executed
in writing by an authorized representative of the Party against whom
enforcement of such supplement, modification, amendment or waiver is
sought. No waiver of any of the provisions of this Agreement or any
Authorization Letter shall constitute a waiver of any other provision
(whether or not similar) nor shall such waiver constitute a continuing
waiver unless otherwise expressly provided.
12.5 Further Assurances; Consents and Approvals. Each Party shall provide such
-------------------------------------------
further documents or instruments reasonably required by the other Party as
may be reasonably necessary or desirable to give effect to this Agreement
and all Authorization Letters and to carry out their provisions. Whenever
this Agreement or any Authorization Letter requires or contemplates any
action, consent or approval, such Party shall act reasonably and in good
faith and (unless the Agreement or any Authorization Letter expressly
allows exercise of a Party's sole discretion) shall not unreasonably
withhold or delay such action, consent or approval.
12.6 Publicity. Except as otherwise set forth in the applicable Authorization
---------
Letter or this Agreement, all media releases, public announcements and
other disclosures by either Party relating to this Agreement, any
Authorization Letter or the subject matter hereof or thereof, including
promotional or marketing materials, but excluding announcements intended
solely for internal distribution or to meet legal or regulatory
requirements, shall be coordinated with and approved by the other Party in
writing prior to release. Each Authorization Letter may include procedures
regarding such coordination and approval matters applicable to such
Authorization Letter.
12.7 Severability. Any provision in this Agreement or any Authorization Letter
------------
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions or affecting
the validity or enforceability of such provision in any other jurisdiction.
12.8 Entire Agreement. This Agreement and all Authorization Letters, including
----------------
the Schedules hereto and thereto, constitute the entire agreement between
the Parties pertaining to the subject matter hereof and supersede all prior
and contemporaneous agreements, understandings, negotiations and
discussions, whether oral or written, of the Parties pertaining to the
subject matter hereof.
12.9 Notices. Any notice, demand or other communication required or permitted to
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be given under this Agreement or any Authorization Letter shall be in
writing and shall be deemed delivered to a Party:
(a) when delivered by hand or receipted courier,
(b) when sent by confirmed facsimile with a copy sent by another means
specified in this Section,
(c) six (6) days after the date of mailing if mailed by United States certified
mail, return receipt requested, postage prepaid, or
(d) when sent by confirmed electronic mail (email notification is not permitted
for notices of termination or notices of material default).;
in each case to the address of such Party set forth below (or at such other
address as the Party may from time to specify by notice delivered in the
foregoing manner):
If to EDS, to:
Electronic Data Systems Corporation
▇▇▇ ▇.▇. ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ O'Hair
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇ (number provided for convenience only)
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Email: ▇▇▇▇.▇▇▇▇▇@▇▇▇.▇▇▇
With a copy (for notices which may not be sent by email
pursuant to Section 12.9(d) above), to:
Electronic Data Systems Corporation
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇-▇▇-▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Counsel
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇ (number provided for convenience only)
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to STK, to:
Storage Technology Corporation
One StorageTek Drive MS 4315
Attention: Vice President , Global Supply Chain Management
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Email: ▇▇▇_▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇.▇▇▇
With copies to:
Storage Technology Corporation
One StorageTek Drive, MS 4309
Attention: Office of Corporate Counsel
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇ (number provided for convenience only)
Email: ▇▇▇▇▇▇▇_▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇.▇▇▇
StorageTek Technology Corporation
One StorageTek Drive, MS 4326
Attention: Vice President, Finance
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇ (number provided for convenience only)
Email: ▇▇▇▇▇▇▇_▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇.▇▇▇
12.10 Survival. Any provision of this Agreement or of any Authorization Letter
--------
which contemplates performance or observance subsequent to any termination
or expiration of this Agreement or of the applicable Authorization Letter
shall survive expiration or termination of this Agreement or of the
applicable Authorization Letter.
12.11 Independent Contractors. EDS shall perform its obligations under this
-----------------------
Agreement and all Authorization Letters as an independent contractor of
STK. Nothing herein or in any Authorization Letter shall be deemed to
constitute EDS and STK as partners, joint venturers, or principal and
agent. Neither Party has the authority to represent the other Party as to
any matters, except as expressly authorized in this Agreement or in any
Authorization Letter.
12.12 Third Party Beneficiaries. Nothing in this Agreement or in any
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Authorization Letter, express or implied, is intended to confer any rights,
benefits, remedies, obligations or liabilities on any person (including,
without limitation, any employees of the Parties) other than the Parties or
their respective successors or permitted assigns.
12.13 Counterparts. This Agreement and any Authorization Letter may be executed
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in one or more counterparts, each of which shall be deemed an original but
all of which taken together shall constitute one and the same instrument.
12.14 Additional EDS Signatory. By execution below, EIS, an indirect,
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wholly-owned subsidiary of EDS, agrees to be bound by and subject to the
terms of this Agreement and all Authorization Letters, including all rights
and obligations under this Agreement and all Authorization Letters, to the
same extent as EDS, and all references to EDS in this Agreement and in all
Authorization Letters will be deemed to include EIS. The addition of EIS as
an additional EDS signatory to this Agreement and all Authorization Letters
will in no way diminish the rights nor the obligations of any other Party
to this Agreement or any Authorization Letters.
12.15 Force Majeure
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(a) Neither Party shall be liable for any failure or delay in the performance
of its obligations under this Agreement or any Authorization Letter, if
any, to the extent such failure or delay both:
(i) is caused, directly or indirectly, without fault by such Party, by: fire,
flood, earthquake, elements of nature or acts of God; acts of war,
terrorism, riots, civil disorders, rebellions or revolutions; quarantines,
embargoes and other similar governmental action; or any other similar cause
beyond the reasonable control of such party; and
(ii) could not have been prevented by reasonably effective precautions.
Events meeting both of the criteria set forth in clauses (i) and (ii) above
are referred to collectively as "Force Majeure Events." Each Party
expressly acknowledges that Force Majeure Events do not include the
non-performance of its own subcontractors.
(b) Upon the occurrence of a Force Majeure Event, the non-performing Party
shall be excused from any further performance or observance of the affected
obligation(s) for as long as such circumstances prevail and such Party
continues to use Commercially Reasonable Efforts to recommence performance
or observance whenever and to whatever extent possible without delay. Any
Party so delayed in its performance will immediately notify the other by
telephone or by the most timely means otherwise available (to be confirmed
in writing within two (2) Business Days of the inception of such delay) and
describe in reasonable detail the circumstances causing such delay.
(c) If a Force Majeure Event causes a material failure or delay in the
performance of any Services under any Authorization Letter for more than
five (5) consecutive days, and EDS unreasonably fails to procure for STK
such Services under the affected Authorization Letter from an alternate
source, STK may, at its option, procure such Services under the affected
Authorization Letter from an alternate source until EDS is again able to
provided such Services. STK shall continue to pay EDS the charges
established hereunder during such period for the Services that EDS
continues to perform during such eriod, but EDS shall not be entitled to
any additional payments as a result of the Force Majeure Event, or payment
for Services that are not performed as a result of such Force Majeure
Event.
(d) Notwithstanding any other provision of this Section, a Force Majeure Event
shall not relieve EDS of its obligation to implement all of the Services
relating to disaster recovery services and business continuity
servicesunless and to the extent such disaster recovery services are
indepently affected by a separate Force Majeure Event.
(e) Despite the occurrence of a Force Majeure Event, EDS shall continue to
perform the Services in a manner so as to minimize the effects of such
Force Majeure Event on the delivery and performance of the Services and the
deliverables thereunder.
12.16 Right to Engage in Other Activities. Subject to the provisions of Article
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VI (Intellectual Property) and the restrictions on the use of data and the
disclosure of confidential information set forth in Article VII, or as
otherwise restricted in this Agreement or any applicable Authorization
Letter, nothing in this Agreement or any Authorization Letter will impair
either Party's right to acquire, license, market, distribute, develop for
itself or others or have others develop for such Party similar technology
performing the same or similar functions as the technology and Services
contemplated by this Agreement or any Authorization Letter.
12.17 Compliance with Laws and Policies.
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(a) Each party agrees to comply with all applicable laws and regulations in the
performance of its obligations and the exercise of its rights under this
Agreement and all Authorization Letters.
(b) EDS agrees to comply with STK's applicable corporate policies and
procedures.
12.18 Export Regulations. This Agreement and each Authorization Letter is
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expressly made subject to, and the Parties agree to comply with, the
applicable provisions of any United States government laws, regulations,
orders or other restrictions regarding export from the United States,
including exports of computer hardware, software, technical data or
derivatives of such hardware, software or technical data.
In Witness Whereof, the Parties have duly executed and delivered this Agreement
by their duly authorized representatives (in accordance with the terms of this
Agreement) as of the Agreement Effective Date.
STORAGE TECHNOLOGY CORPORATION ELECTRONIC DATA SYSTEMS
CORPORATION
By: By:
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Title: Title:
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Date: Date:
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EDS INFORMATION SERVICES L.L.C.
By:
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Title:
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Date:
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