Exhibit 10.30
PERSONAL COMPUTER FUNCTIONALITY MANAGEMENT AGREEMENT
BETWEEN
SPI HOLDING, INC.
AND
EDS TECHNICAL PRODUCTS CORPORATION
THIS AGREEMENT HAS CONFIDENTIAL PORTIONS OMITTED, WHICH PORTIONS HAVE BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. OMITTED PORTIONS ARE
INDICATED IN THIS AGREEMENT WITH BRACKETS ([ ]).
TABLE OF CONTENTS
Page
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ARTICLE I
AGREEMENT, TERM AND DEFINITIONS
1.1 Agreement....................................................... 1
1.2 Term............................................................ 2
1.3 Definitions..................................................... 2
ARTICLE II
PERSONAL COMPUTER FUNCTIONALITY REQUESTS AND LEASES
2.1 Personal Computer Functionality Request......................... 4
2.2 Leases.......................................................... 5
2.3 Facility Renewal................................................ 5
ARTICLE III
RIGHTS AND OBLIGATIONS UNDER LEASES
3.1 Inspection, Integration and Testing............................ 5
3.2 Installation................................................... 6
3.3 Transportation................................................. 6
3.4 Use of Personal Computer and Right of Quiet Enjoyment.......... 6
3.5 Risk of Loss................................................... 7
3.6 Insurance...................................................... 8
3.7 Event of Loss.................................................. 8
3.8 On-Site Service................................................ 9
3.9 Warranties and Remedies........................................ 10
3.10 Charges........................................................ 12
3.11 Taxes.......................................................... 12
3.12 Payment........................................................ 12
3.13 Assignment..................................................... 13
3.14 Interpretation of Payments in Certain Events................... 14
ARTICLE IV
RIGHTS AND OBLIGATIONS UPON
TERMINATION AND EXPIRATION OF LEASES
4.1 Events of Default.............................................. 14
4.2 Remedies for Events of Default................................. 15
4.3 EDS' Rights on Repossession.................................... 16
4.4 Obligations in the Event of Expiration or Termination.......... 17
4.5 Options Upon Expiration of Lease............................... 18
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ARTICLE V
PERFORMANCE REVIEW AND DISPUTE RESOLUTION
5.1 Performance Review............................................. 19
5.2 Dispute Resolution............................................. 19
ARTICLE VI
MISCELLANEOUS
6.1 Excusable Delays............................................... 21
6.2 UCC Financing Statements....................................... 21
6.3 Transaction Costs.............................................. 21
6.4 Waiver......................................................... 21
6.5 Public Disclosures............................................. 21
6.6 Notices........................................................ 21
6.7 Severability................................................... 22
6.8 Order of Priority.............................................. 23
6.9 Confidentiality................................................ 23
6.10 Time of the Essence............................................ 24
6.11 Relationship of the Parties.................................... 24
6.12 Governing Law.................................................. 24
6.13 Entire Agreement............................................... 24
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SCHEDULES
Schedule 1.3(o) - Personal Computer Configurations
Schedule 1.3(t) - Service Offerings
Schedule 1.3(y) - SPI Hardware
Schedule 1.3(z) - SPI Software
Schedule 3.2 - Installation Procedures
Schedule 3.4 - Hardware and Vendor Software Provided by EDS
Schedule 3.6 - Stipulated Loss Values
Schedule 3.8(a)(i) - Exempt Sites
Schedule 3.10 - Charges
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PERSONAL COMPUTER FUNCTIONALITY AGREEMENT
This PERSONAL COMPUTER FUNCTIONALITY MANAGEMENT AGREEMENT (the "PCFM"),
dated July 28, 1993 (the "Effective Date"), is by and between SPI Holding, Inc.
("SPI") and EDS Technical Products Corporation ("EDS").
RECITALS
SPI desires that EDS provide a facility under which SPI may obtain certain
personal computer hardware, software and related integration, installation,
warranty and maintenance services provided by or through and financed by EDS,
SPI desires that such facility allow all such services to be bundled with
and relate to the obligations for the personal computer hardware and software
and constitute separate transactions under such facility, and
SPI desires to pay for all such personal computer hardware, software and
related integration, installation, warranty and maintenance services on a "cost-
per-seat-per-month" basis.
EDS agrees to perform all such obligations under the terms and conditions
of this PCFM and each Lease (as defined in Section 2.1).
ARTICLE I
AGREEMENT, TERM AND DEFINITIONS
1.1 Agreement. SPI and EDS agree to enter into Leases (as defined in Section
2.1) for Personal Computer Functionality (as defined in Section 1.3(p) below) in
accordance with the terms and conditions of this PCFM, and that SPI and EDS will
each have all rights and obligations as set forth under each such Lease and the
terms and conditions of this PCFM.
SPI and EDS will enter into a minimum of [ ] Leases under this PCFM, and,
prior to receiving the unconditional approvals and waivers, as the case may be,
described in Section 1.2 of the Phase I Information Technology Services
Agreement dated July 28, 1993, neither party will have any obligation to enter
into any other Leases thereafter until such time as such unconditional approvals
and waivers, as the case may be, are obtained, if ever. SPI will use
commercially reasonable efforts to obtain the unconditional approvals and
waivers, as the case may be, as described in such Section 1.2, and upon
receiving such approvals, Spectradyne and EDS will have the obligation to enter
into a total of [ ] Leases (which number will include the number of Leases
into which SPI and EDS have entered by such time as such unconditional approvals
and waivers as the case may be, have been obtained). EDS will have the same
rights as those of Electronic Data Systems Corporation under such Section 1.2,
and SPI will have all rights and obligations set forth in such Section 1.2.
EMPTY BRACKETS ([ ]) ON THIS PAGE DENOTE CONFIDENTIAL INFORMATION, WHICH
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.
1.2 Term. The term of this PCFM will commence on the Effective Date and expire
on the tenth anniversary of the Effective Date, unless earlier terminated in
accordance with the provisions of Article IV. Notwithstanding the foregoing,
EDS' obligation to extend capital to finance the Leases for Personal Computer
Functionality (the "Facility") will expire upon the earlier of (i) the first
anniversary of the Effective Date, (ii) EDS' expenditure of capital in
connection with SPI and EDS entering into [ ] Leases for Personal Computer
Functionality (as such term is defined in Section 1.3(p)) at a rate of [ ] per
Lease per month for a period of 60 months for each such Personal Computer
Functionality and [ ] Leases for Personal Computer Functionality at a rate of
[ ] per Lease per month for a period of 60 months for each such Personal
Computer Functionality or (iii) any termination of this PCFM in accordance with
the provisions of Article IV. This PCFM, including without limitation the
Facility provided by EDS to SPI, may be extended by written agreement of SPI and
EDS.
1.3 Definitions. As used in this PCFM, the following terms will have the
respective meaning set forth below:
(a) "Business Day" means a day other than (i) Saturday, Sunday and (ii) any
day on which the principal commercial banks located in Texas are authorized
or obligated to close under the laws of Texas.
(b) "Commencement Date" has the meaning set forth in Section 3.12.
(c) "Confidential Information" has the meaning set forth in Section 6.9(a).
(d) "Coverage Time" has the meaning set forth in Section 3.8 (a).
(e) "EDS" has the meaning set forth in the Preamble.
(f) "EDS Software" has the meaning set forth in Section 1.3(ab) of the
Phase 1 Information Technology Services Agreement dated on or about July
28, 1993 by and between Spectradyne, Inc. and Electronic Data Systems
Corporation.
(g) "Effective Date" has the meaning set forth in the Preamble.
(h) "Event of Default" has the meaning set forth in Section 4.1.
(i) "Event of Loss" has the meaning set forth in Section 3.5.
(j) "Facility" has the meaning set forth in Section 1.2.
(k) "Hardware" means computers and related equipment, including but not
limited to, central processing units and other processors; peripheral
devices such as storage devices, printers, terminals and other input and
output devices; and/or other tangible mechanical and electronic equipment,
such as
EMPTY BRACKETS ([ ]) ON THIS PAGE DENOTE CONFIDENTIAL INFORMATION, WHICH
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.
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controllers, modems, communications and telecommunications equipment
(voice, data and video) and networks intended for the input, storage,
manipulation communication, transmission and retrieval of information and
data.
(l) "Lease" has the meaning set forth in Section 2.1.
(m) "PCFM" has the meaning set forth in the Preamble.
(n) "PC Installation Site" means the location designated in an Personal
Computer Functionality Request where a Personal Computer described in such
Request will be installed.
(o) "Personal Computer" means the Hardware and Software integrated by EDS
in accordance with a configuration set forth in Schedule 1.3(o), as amended
upon the mutual agreement of SPI and EDS, selected by SPI and identified in
a Personal Computer Functionality Request.
(p) "Personal Computer Functionality" means SPI's selection, as set forth
in a Personal Computer Functionality Request, of one of the Personal
Computer configurations set forth in Schedule 1.3(o) bundled with SPI's
selection of one of the Service Offerings set forth in Schedule 1.3(t).
(q) "Personal Computer Functionality Request" has the meaning set forth in
Section 2.1.
(r) "Phase I Information Technology Services Agreement" means that certain
agreement between SPI and Electronic Data Systems Corporation dated on or
about July 16, 1993.
(s) "Remaining Lease Term" has the meaning set forth in Section 4.3(a).
(t) "Service Offering" means the package of services selected by SPI from
those set forth in Schedule 1.3(t).
(u) "Service Request" has the meaning set forth in Section 3.8.
(v) "Software" means computer programs together with input and output
formats, program listings, narrative descriptions, operating instructions
and supporting documentation and will include the tangible media upon which
such programs and documentation are recorded. The term "software" does not
include SPI Programming.
(w) "Spectradyne" means Spectradyne, Inc., a wholly-owned subsidiary of
SPI.
(x) "SPI" has the meaning set forth in the Preamble.
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(y) "SPI Hardware" means that Hardware set forth in Schedule 1.3(y), as
amended from time to time upon the mutual agreement of SPI and EDS, which
Hardware will be provided by SPI to EDS without charge to EDS to be
integrated by EDS into a Personal Computer and in which title or all other
rights necessary to use are vested in SPI.
(z) "SPI Software" means the Software owned by SPI or Spectradyne, as the
case may be, and identified in Schedule 1.3(z), as such Schedule may be
amended from time to time upon the mutual agreement of SPI and EDS.
(aa) "Stipulated Loss Value" has the meaning set forth in Section 3.5.
(ab) "Vendor" means any person or entity that manufactures, publishes,
distributes or licenses, as the case may be, Hardware or Software.
(ac) "Vendor Software" means that Software the rights to which are licensed
or owned by a Vendor.
ARTICLE II
PERSONAL COMPUTER FUNCTIONALITY REQUESTS AND LEASES
2.1 Personal Computer Functionality Request. SPI will from time to time, as
set forth in Section 2.1(b) below, submit written requests to EDS for Personal
Computer Functionality. Each such request will incorporate the terms and
conditions of this PCFM and will specify (i) a Personal Computer, (ii) a Service
Offering, (iii) the PC Installation Site and (iv) SPI's desired installation
date (a request including all such information is referred herein as a "Personal
Computer Functionality Request"). (A Personal Computer Functionality Request
accepted by EDS is referred to in this PCFM as a "Lease".)
(a) If EDS is unable to install the Personal Computer on the date set forth
in the Personal Computer Functionality Request, EDS will notify SPI within
five Business Days after EDS' receipt of such Personal Computer
Functionality Request, and SPI and EDS will negotiate in good faith for the
installation of the Personal Computer and the commencement of the
corresponding Service Offering on a date mutually agreed to by SPI and EDS,
provided, however, that EDS will use commercially reasonable efforts to
install such Personal Computer and commence such Service Offering
expeditiously. EDS will accept each Personal Computer Functionality Request
issued in accordance with the provisions set forth above in this Section
2.1 (subject to such agreement on the installation date) and, based upon
such Request, enter into a Lease for Personal Computer Functionality in
accordance with Section 2.2.
(b) SPI will issue Personal Computer Functionality Requests and, subject to
the limitations set forth in Section 1.1, Section 1.2 and Section 2.2, SPI
and EDS will enter into Leases, and EDS will install each Personal
Computer, in accordance with the schedule set forth in the Transition Plan
developed under
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the Phase I Information Technology Services Agreement or such other
installation plan developed and mutually agreed to by SPI and EDS.
2.2 Leases. Each Lease will incorporate the terms and conditions of this PCFM
and constitutes a separate agreement. The term of each Lease will begin on the
Commencement Date (as defined in Section 3.12), and will continue in full force
until the fifth anniversary of the Commencement Date, unless terminated by
either party in accordance with the provisions of Article IV.
2.3 Facility Renewal. As is more specifically set forth in Section 4.4 and
Section 4.5, SPI will have the following options upon the expiration or
termination of each Lease: (i) return the Personal Computer to EDS, (ii)
purchase the Personal Computer for a nominal amount and not purchase any Service
Offering, (iii) purchase the Personal Computer for a nominal amount and purchase
a Service Offering or (iv) enter into a Lease for new Personal Computer
Functionality (which the election, SPI and EDS agree, will require a capital
commitment in addition to that described in Section 1.2(ii) above). If SPI
anticipates desiring to enter into Leases for new Personal Computer
Functionality (referred to by SPI and EDS as a technology refresh), then on or
about the fourth anniversary of the Effective Date, SPI and EDS will meet to
discuss the amount of such capital commitment and to consider whether or not
either party desires to renew the Facility.
ARTICLE III
RIGHTS AND OBLIGATIONS UNDER LEASES
3.1 Inspection, Integration and Testing. EDS will perform inspection,
integration and testing of Personal Computers in accordance with the
configurations set forth in Schedule 1.3(o).
(a) SPI Hardware. SPI may request that EDS integrate SPI Hardware into a
Personal Computer. EDS will perform such integration and will perform On-
Site Service on such SPI Hardware in accordance with Section 3.8, the
charges for which services are included in the charges set forth in Section
3.10.
(b) Licensing of Vendor Software. EDS will obtain all rights SPI and EDS
mutually agree are necessary and appropriate by SPI and EDS for SPI to use
throughout the term of each Lease any Vendor Software provided by or
through EDS and listed on Schedule 1.3(o). SPI agrees to comply with all
license agreements that may be required by Vendors in connection with SPI's
use of any such Vendor Software. SPI's obligation under this Section
3.1(b) includes without limitation Vendor Software delivered pre-loaded on
a Personal Computer where the applicable license agreement states that
SPI's obligations under such license arise with the breaking of the Vendor
Software packaging or some other act whether or not SPI has taken any such
act. If any such license agreement requires that an agreement be executed
and returned to the licensor, SPI agrees to execute and return such
agreement in accordance with such requirements.
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(c) Licensing of SPI Software. SPI represents and warrants that (i) SPI
has all rights necessary to provide to EDS SPI Software which is owned by
Spectradyne and (ii) to the extent that SPI requests that EDS integrate SPI
Software into a Personal Computer, SPI and EDS will have the rights and
obligations in such SPI Software set forth in the Phase I Information
Technology Services Agreement, including without limitation the provisions
of Section 11.3 and Section 14.1(d) (i) except that SPI will be the
indemnifying party and EDS will be the indemnified party and such provision
will apply only to the extent that it pertains to EDS' services related to
integrating SPI Software into a Personal Computer and SPI Software
integrated into a Personal Computer.
(d) Licensing of EDS Software. To the extent that SPI requests that EDS
integrate EDS Software into a Personal Computer, SPI and EDS will have the
rights and obligations in such EDS Software set forth in the Phase I
Information Technology Services Agreement, including without limitation the
provisions of Section 11.4 and Section 14.1(d)(ii) except that EDS will be
the indemnifying party and SPI will be the indemnified party and such
provision will only apply to the extent that it pertains to EDS Software
integrated into a Personal Computer.
3.2 Installation. EDS will install the Personal Computers in accordance with
the installation procedures set forth in Schedule 3.2. SPI will obtain all
necessary permissions, approvals, permits and other rights necessary to permit
EDS to install the Personal Computer in the desired location at the PC
Installation Site.
3.3 Transportation. Personal Computers will be delivered to the PC
Installation Site designated in the applicable Lease and in accordance with the
timetable set forth in the installation plan described in Section 2.1(b). The
method and mode of all required transportation, rigging, drayage, and insurance
will be those selected by EDS (the charges for which are included in the charges
under Section 3.10), except that EDS will not transport by overnight or other
expedited carrier unless stated on an Personal Computer Functionality Request or
unless EDS obtains the prior consent of SPI and SPI pays all charges for such
expedited transportation.
3.4 Use of Personal Computer and Right of Quiet Enjoyment. EDS will affix to the
Personal Computer, and each unit or element thereof, appropriate tags, decals or
plates provided by EDS indicating the ownership of such Personal Computer by
EDS, and SPI will not cause or permit any such tags, decals or plates to be
removed, defaced or covered in any way. SPI will use the Personal Computer
Functionality solely in the conduct of its business, in a manner and for the use
contemplated by the manufacturer thereof, and in compliance with all laws, rules
and regulations of every governmental authority having jurisdiction over the
Personal Computer. SPI will pay all costs, expenses, fees and charges incurred
in connection with the use and operation of the Personal Computer Functionality,
if any, other than those charges for EDS' obligations under this PCFM. So long
as SPI is not in default under the
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applicable Lease, EDS will not interfere with SPI's right of quiet enjoyment and
use of the Personal Computer. However, upon reasonable notice by (and at the
sole expense of) EDS, SPI will permit any person designated by EDS, at EDS's
expense, to visit and inspect the Personal Computer at such reasonable times and
places and as often as EDS may reasonably request.
Except as otherwise provided herein, the Personal Computer will be kept by SPI
in its sole possession and control and will at all times be located at the PC
Installation Site. SPI may relocate the Personal Computer within the continental
U.S., Alaska, Hawaii, Mexico, the Virgin Islands, Puerto Rico and Canada with
prior and written consent of EDS, which consent will not be unreasonably
withheld, delayed or conditioned. All costs and expenses of every nature which
may be incurred in connection with the permitted movement of the Personal
Computer Functionality between different locations will be borne by SPI, which
movement will be performed by EDS under the Phase I Information Technology
Services Agreement and subject to the charges set forth in Section 6(e) of
Schedule 9.1 of the Phase I Information Technology Services Agreement. SPI may
not upgrade, alter or make attachments to the Personal Computer without the
prior written consent of EDS, which consent will not be unreasonably withheld,
delayed or conditioned. If such consent is granted, SPI and EDS will amend the
Lease to reflect such change, including without limitation any increase in the
charges under such Lease, and, if, at the end of the term of this applicable
lease, EDS so requests, SPI will return, or request and pay all charges for EDS
to return, the Personal Computer to its original state, reasonable wear and tear
excepted, prior to returning the Personal Computer to EDS. If SPI wishes to
leave a SPI-provided upgrade, alteration or attachment on the Personal Computer,
SPI may do so provided (a) said change does not (i) reduce the value of the
Personal Computer or (ii) require any payment by EDS of any additional charges
related to disposal of such upgrade, alteration or attachment as a result of
legal, regulatory or other requirements related to the disposal of such upgrade,
alteration or attachment and (b) title thereto is transferred to EDS on the
expiration date of the applicable Lease. SPI will keep and maintain the Personal
Computer Functionality free and clear of all liens, charges and encumbrances
(except any placed thereon by EDS and liens, if any thereto, in favor of the
Agent and the Banks (as each such capitalized terms are defined in that certain
Agreement to make Secured Loans between SPI and Electronic Data Systems
Corporation dated on or about July 16, 1993) each of which liens will be junior
to that of EDS).
3.5 Risk of Loss. SPI will bear the risk of the Personal Computer being lost,
damaged, destroyed, stolen, confiscated or condemned (hereinafter called an
"Event of Loss") from any source (except as may be caused by EDS's or its
assignee's negligence or misconduct,) from the date of delivery of the Personal
Computer to SPI through and including the date upon which the Personal Computer
Functionality is returned to EDS (or its designee). If any Personal Computer, or
component thereof, is lost, destroyed or damaged, SPI will promptly repair,
restore or replace such Personal Computer, or component thereof, at its sole
cost and expense; provided, however, that SPI will not be required to make any
repair, restoration or replacement to the Personal Computer if SPI elects to
terminate the Lease for such Personal
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Computer and SPI pays the stipulated loss value (the "Stipulated Loss Value") in
accordance with Section 3.7.
In addition to the foregoing, as between EDS and SPI, EDS will be responsible
for any loss or damage to equipment to which the Personal Computer is attached
if and to the extent such loss or damage was caused by removal thereof and such
loss or damage was caused by EDS or its employees, agents or subcontractors, and
SPI will be responsible for any loss of or damage to the Personal Computer,
except as provided herein.
3.6 Insurance. SPI will obtain, pay for and maintain at all times until the
Personal Computer has been returned to EDS at the expiration of the Lease,
public liability, property damage, all risk, and fire and extended coverage
insurance with respect to the Personal Computer, in each case in such form as is
reasonably satisfactory to EDS. Such property damage insurance will be in an
amount at least equal to the greater of the replacement value of such Personal
Computer Functionality or the Stipulated Loss Value of such Personal Computer
Functionality determined as of the date of the occurrence of an Event of Loss in
accordance with Schedule 3.6. All policies will be issued by insurers recognized
internationally, reasonably satisfactory to EDS, and will name EDS as an
additional insured, and assignees, if any, as loss payee and provide that the
policies cannot be canceled or modified except on at least 30 days' prior
written notice to EDS. Evidence of such insurance will be delivered to EDS, and
in the case of renewals at least 30 days prior to the expiration of the current
policy.
3.7 Event of Loss. SPI will promptly and fully inform EDS after it has knowledge
of an Event of Loss. If an item of Personal Computer Functionality is damaged
beyond repair or stolen, destroyed or permanently rendered unfit, SPI will then
have the obligation to do either of the following within 60 days after the
occurrence of an Event of Loss: (i) pay EDS an amount equal to the Stipulated
Loss Value of the item of Personal Computer Functionality, computed as of the
date of such payment, less the amount received by EDS from the insurance carrier
referred to in Section 3.6. Upon payment of such Stipulated Loss Value, the
Lease will terminate with respect to such Personal Computer, and SPI Is
obligation to pay charges under the Lease will terminate as of the date on which
such Event of Loss occurred, except that SPI will pay to EDS charges under the
Lease which have accrued thereon (on a daily basis) and which remain unpaid on
the date of such termination; or (ii) at its expense, promptly replace the
affected Personal Computer with an identical item or comparable item with like
functionality and reliability, in good repair, condition and working order, free
and clear of all liens (except those liens permitted and described in Section
3.4). Any such replacement item will become the property of EDS and for the
purposes of the Lease be deemed to be the Personal Computer which it replaced.
The proceeds of any property damage insurance or condemnation award or other
payment in respect of a requisition or taking by any governmental authority,
received by EDS with respect to an Event of Loss will be applied by EDS (i)
first, as a credit against any accrued, unpaid charges under any Lease and (ii)
second, as a credit
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against, or a reimbursement of, such payment of Stipulated Loss Value by SPI,
and the excess of such payment over the Stipulated Loss Value will be paid to
SPI.
3.8 On-Site Service. EDS will perform On-Site Services in accordance with the
Service Offering specified in the Lease. If SPI or a customer of Spectradyne
determines that a Personal Computer is not operating properly, SPI may request
On-Site Service by calling EDS at 1-800-____-____ (a "Service Request"). All
Service Requests will include the location of the Personal Computer, model
number, serial number, manufacturer's name, a description of the problem, a
contact name and corresponding telephone number, and any other pertinent
information for each item of Hardware.
(a) Time of Performance of Hardware Services. EDS will perform On-Site
Services on the Personal Computer identified in a Service Request.
Hardware Services will be performed between the hours of 7:00 a.m. and
12:00 a.m. (midnight) according to that site's local time, Monday through
Sunday (the "Coverage Time"). If On-Site Services cannot be completed
during the Coverage Time, such On-Site Services will be resumed at 7:00
a.m. the next day or as soon thereafter as commercially reasonable efforts
permit. If no Service Offering is specified in a Personal Computer
Functionality Request, the following will constitute the Service Offering:
(i) Upon EDS' receipt of a Service Request, EDS will use commercially
reasonable efforts to have an authorized EDS representative arrive at
the Personal Computer requiring On-Site Services (other than those
Personal Computers located at the sites set forth in Schedule 3.8 (a)
(i) , which Schedule will include the applicable response times for
such sites therein) within four hours after the authorized EDS
representative is notified of such Service Request.
(ii) EDS will restore the Personal Computer Functionality within a
reasonable time after the arrival of the authorized EDS representative
at the Personal Computer requiring On-Site Services.
(b) Parts. EDS will maintain a supply of spare parts inventories in
accordance with the failure rates, repair times and spare part
replenishment recommendations published by the applicable Vendor. All such
parts will remain the property of EDS until incorporated into the Personal
Computer. If EDS stores spare parts on SPI's or Spectradyne's premises,
EDS may remove them at any time. When a part is removed from Personal
Computer and another is installed, the part removed will become the
property of EDS. Notwithstanding the foregoing, if SPI provides EDS with a
spare part to replace a SPI Hardware resident on or integrated into a
Personal Computer, the removed part will remain the property of SPI.
(c) Subcontracting. EDS represents and SPI acknowledges that EDS may
subcontract Service Requests to third parties to perform such repairs. In
such
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event, EDS will, nonetheless, be responsible for such subcontractor's
compliance with EDS' obligations under this PCFM.
(d) General Obligations of SPI. SPI will (i) prepare and maintain at each
location, at no expense to EDS, documentation in accordance with
instructions prescribed by Hardware Vendors and applicable codes, statutes,
regulations and standards, (ii) provide safe, clean and adequate work
spaces in each location, including heat, light, ventilation, electric
current and outlets for use by EDS and its representatives and (iii)
provide or cause to be provided to EDS and its representatives full and
free access to the Personal Computer and any other Hardware or other items
pertaining to the Personal Computer necessary for EDS to properly perform
On-Site Services. (To the extent that EDS has dispatched an employee or
agent that is on-site to perform an obligation under this PCFM or
Electronic Data Systems Corporation has dispatched an employee or agent to
perform an obligation under the Phase I Information Technology Services
Agreement, each such employee or agent will use commercially reasonable
efforts to check all consumable items at such site including, but not
limited to, paper, ribbons, printer cartridges and magnetic storage media
and other consumable items and, to the extent required and at SPI's
expense, replace such consumable items.) SPI will not perform any other
repairs, maintenance, alterations, or adjustments of or to any Personal
Computer. If requested by EDS, SPI will provide to EDS without charge all
technical documentation and diagnostic information that is in SPI's
possession or is accessible to SPI and that may be required for proper
servicing of the On-Site Service.
3.9 Warranties and Remedies. SPI and EDS will each have the following rights
and obligations:
(a) EDS Warranties. EDS warrants, as to any Hardware or Vendor Software
acquired by SPI by or through EDS pursuant to this PCFM and provided to SPI
under the applicable Lease, that (i) EDS has all necessary authority, right
and power to convey good and marketable title to all such Hardware and
licensing rights to all such Vendor Software, in each case subject to the
terms and conditions of this PCFM, and upon completion of such conveyance
SPI will have such title to such Hardware and such rights to such Vendor
Software, (ii) any such conveyance is in accordance with EDS' agreements
with any Vendor of such Hardware or Vendor Software and is not in violation
of or in conflict with any law, rule or regulation or any other EDS
agreement with any third party and (iii) Spectradyne will have the right to
use any licensed Vendor Software set forth in Schedule 1.3 (o) in
accordance with the terms and conditions of the applicable license.
EDS further warrants that each Personal Computer will be integrated in
accordance with the written specifications mutually agreed to by SPI and
EDS and that such integration will be performed in a good and workmanlike
manner in accordance with EDS' own internal standards for such integration
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and such mutually agreed to specifications. EDS will have no liability for
any impact on any vendor's warranty from integration by EDS in accordance
with SPI's integration specifications.
(b) Vendor Warranties. Each party represents and warrants that it will
provide to the other only Hardware and Software to which Vendor's
warranties will pass through or be assigned to the other and that each
party will pass through or assign to the other any Vendor's warranty that
the party providing such Hardware or Software then receives. SPI and EDS
each agree to look solely to the applicable Vendor for any and all warranty
claims respecting any Hardware or Vendor Software except for claims related
to EDS' warranty regarding integration set forth in Section 3.9 (a). In the
course of performing On-Site Services under Section 3.8, EDS will, at no
additional cost to SPI, exercise on SPI's behalf Vendor warranties
applicable to any Hardware and Vendor Software provided by either party and
integrated into a Personal Computer under this PCFM. With the exception of
Vendor warranties which EDS and SPI are able to exercise on SPI's behalf
and the warranties set forth above in this Section 3.9, all Hardware and
Vendor Software is provided on an "AS IS" basis without warranty.
(c) Disclaimer of Warranties. The warranties contained in Section 3.9 (a)
(iii) and Section 3.9 (b) are contingent upon proper use of Hardware and
Vendor Software. Except as set forth above in this Section 3.9, EDS
SUPPLIES THE PERSONAL COMPUTER "AS IS" AND, EDS MAKES NO REPRESENTATIONS OR
WARRANTIES, EXPRESS OR IMPLIED, REGARDING ANY MATTER, INCLUDING THE
MERCHANTABILITY, SUITABILITY, FITNESS FOR A PARTICULAR USE OR PURPOSE, OR
RESULTS TO BE DERIVED FROM THE USE (i) OF ANY INFORMATION TECHNOLOGY
SERVICES, PERSONAL COMPUTER, HARDWARE, SOFTWARE, OR OTHER PRODUCTS AND
SERVICES PROVIDED UNDER THIS AGREEMENT OR (ii) ANY HARDWARE OR VENDOR
SOFTWARE PROVIDED BY OR THROUGH EDS TO SPI UNDER THIS AGREEMENT. No
representation or warranty made by any person, including any representative
of EDS, which is inconsistent or in conflict with, or in addition to the
terms of, such warranties will be binding upon EDS unless expressed in a
writing signed by a duly authorized representative of EDS. Except as
related to EDS's performance of integration services, SPI agrees to look
solely to the applicable Vendor for all warranty claims and all warranties
made by such Vendors are hereby assigned to SPI.
(d) Remedies. SPI's sole and exclusive remedy and EDS' sole and exclusive
liability for any breach of EDS' warranty provided under this Section 3.9
will be (at EDS' option) to repair, replace or credit SPI's account for any
improperly integrated Hardware or Vendor Software and defective Hardware or
Vendor Software procured by SPI from or through EDS under this PCFM or any
Lease. If EDS elects to make a repair or to effect a replacement, EDS will
have a reasonable time to make such repair or replacement. EDS will pay
all
11
reasonable costs for any transportation, rigging, drayage and insurance
related to any such repair or replacement. Nothing in this first paragraph
of Section 3.9(d) will relieve Electronic Data Systems Corporation of any
obligation to comply with any performance criteria under the Phase I
Information Technology Services Agreement.
If the sole and exclusive remedy provided in this Section 3.9 (d) fails of
its essential purpose, then as an alternative sole and exclusive remedy,
SPI may recover ,from EDS, subject to the limitations set forth in Section
14.4 (d), Section 14.4 (e) and Section 14. 5 of the Phase I Information
Technology Services Agreement, direct damages incurred by SPI.
3.10 Charges. SPI will pay the amount set forth in Schedule 3.10, plus any
amounts under Section 3.11, for the Personal Computer Functionality in
accordance with the provisions of Section 3.12. Charges will set forth in
Schedule 3.10 are stated in U.S. dollars.
The charges set forth in Schedule 3.10 are the monthly amounts to be paid by
Spectradyne in accordance with Section 3.12 and include amounts for the
applicable Service Offering until the third anniversary of the Commencement Date
of such Lease. While such charge will remain constant throughout the term of the
Lease (unless otherwise agreed by the parties), such charge includes no amounts
for any Service Offering after such third anniversary of the Commencement Date.
On or about 90 days before the third anniversary of such Commencement Date, SPI
will notify EDS in writing that SPI will (i) pay an amount equal to [ ] on or
before such Commencement Date as payment in full of all charges related to
continuing such Service Offering for the remainder of the term of such Lease or
(ii) enter into good faith negotiations, within 5 Business Days after the date
on which EDS receives such written notice, for the renegotiation of the monthly
charge related to continuing such Service Offering for the remainder of the term
of such Lease to include, over time, such [ ] amount (albeit amortized over the
remaining term of the Lease) and such other amounts as SPI and EDS may mutually
agree. Spectradyne will have no right to forego such Service Offering for the
remainder of such Lease term.
3.11 Taxes. EDS will promptly report, file and pay to the proper taxing
jurisdiction, and SPI will pay EDS, for all sales, use, personal property taxes
and other tax or taxes now or hereafter imposed by any state, federal or local
government or other taxing authority with respect to this Lease (excluding,
however, any franchise taxes or any based upon or measured by the gross receipts
or payroll of EDS) , together with any fines, penalties or interest thereon that
are not caused by EDS's negligence or that did not result from EDS's failure to
remit such taxes in a timely manner. Except for sales, use or leasing tax, or
the like, which will be billed to and paid by SPI with each payment, SPI will
reimburse EDS upon receipt of EDS's invoice for same listing the location and
the Personal Computer Functionality being taxed.
3.12 Payment. SPI will have no obligation to pay any amount for the period
beginning on the date on which the Personal Computer is installed (meaning EDS'
EMPTY BRACKETS ([ ]) ON THIS PAGE DENOTE CONFIDENTIAL INFORMATION, WHICH
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.
12
completion of the procedures set forth in Schedule 3.2) and ending on the last
day of the month in which the Personal Computer is installed.
SPI will pay as "interim rent" an amount equal to the charge described in
Section 3.10 for the month immediately following the month in which the Personal
Computer was installed and for each subsequent month until the day immediately
preceding the first day of the next calendar quarter (such first day of such
calendar quarter being the "Commencement Date") . All such "interim rents" will
be paid monthly. Thereafter, the charge for each Personal Computer will be due
and payable by SPI monthly in advance on the first Business Day of the month to
which such payment applies. Whenever any payment of a charge is not made when
due and remains unpaid for a period of 10 Business Days, SPI will pay interest
on such amount at the lesser of 14 percent and the maximum interest rate legally
permissible in the state where the Personal Computer is located which interest
rate will apply only to any and all past due amounts and only for the period
such amount remains due and unpaid.
Except as provided herein, SPI will promptly pay to EDS all charges due under
Section 3.10 and all other amounts payable by it under this PCFM and any Lease.
SPI agrees that its obligations to pay all such charges and other sums payable
hereunder and the rights of EDS or its assignee and to such charges are absolute
and unconditional and are not subject to any abatement, reduction, setoff,
defense, counterclaim or recoupment due or alleged to be due to, or by reason
of, any past, present or future claims which SPI may have against EDS, any
assignee, the Vendor or seller (even though seller may be a division of EDS), of
the Personal Computer or against any person for any reason whatsoever. Except as
set forth in Section 3.9 (d), SPI acknowledges that SPI I s remedies for
nonperformance under Section 3.8 will be solely those related to breach of
contract.
3.13 Assignment. Each Lease and this PCFM will be binding upon and will inure to
the benefit of the parties hereto and their respective successors and permitted
assigns; provided, however, that SPI and EDS will each have the following rights
and obligations:
(a) EDS' Right of Assignment. SPI acknowledges, understands and agrees
that EDS may assign to a bank, insurance company, or any other financing
institution, or any other person or agency that EDS may select, all or any
part of EDS's right, title and interest in, any one or more Leases under
this PCFM, all of the charges and other sums due or to become due, or at
any time owing or payable by SPI under any provisions hereof, and in and to
the Personal Computer, and SPI agrees that upon written request it will
promptly execute and return to EDS such forms of consent to assignment as
EDS' assignee may reasonably request. SPI agrees that after written notice
by EDS of any such assignment SPI will pay all charges payable by SPI
hereunder to such assignee or as directed by EDS whether or not this PCFM
is terminated by operation of law, or otherwise, except as provided herein.
SPI will not (a) assert against any such assignee any claims by way of
abatement, defense, set-
13
off, counterclaim, recoupment or otherwise which SPI may have, (b) look to
such assignee to perform any of EDS's obligation hereunder or (c) terminate
or attempt to terminate this PCFM or any Lease on account of any default by
EDS. Notwithstanding the foregoing, nothing herein will be deemed to
relieve EDS of any of its obligations to SPI hereunder.
(b) SPI's Right of Assignment. SPI may not assign this Lease or any of
SPI's rights hereunder or sublease the Personal Computer Functionality or
its use without the prior written consent of EDS, which consent will not
be, unreasonably withheld, delayed or conditioned. Notwithstanding the
foregoing, SPI may, with prompt written notice to EDS, sublease any
Personal Computer Functionality to a subsidiary or affiliate of SPI without
EDS's permission. Any permitted assignment or sublease will not relieve
SPI of any of its obligations or liabilities hereunder.
3.14 Interpretation of Payments in Certain Events. If this PCFM or any Lease or
any of the monies issued thereunder is deemed to be a loan or a promissory note,
regardless of any provision contained in this PCFM or such Lease, no party(ies)
benefiting from this PCFM or such Lease will be entitled to receive, collect or
apply, as interest on any amount owing thereunder, any amount in excess of the
maximum rate of interest permitted by the laws of the State of Texas. If any
party(ies) benefiting from this PCFM or any Lease ever receives, collects or
applies as interest, any amount that would be construed as excessive interest
will be deemed a partial prepayment of principal and treated as such under the
applicable Lease; and, if the principal amount of the Lease is paid in full, any
remaining excess will be promptly paid to SPI. In determining whether or not
the interest paid or payable, under any specific contingency, exceeds the
maximum lawful rate, EDS or any party entitled to the benefits of this PCFM or
the Lease will, to the maximum extent permitted under applicable law, (i)
characterize any non-principal payment as an expense, fee or premium rather than
as interest; and, (ii) amortize, prorate, allocate and spread, in equal parts,
the total amount of interest throughout the entire contemplated term of the
applicable Lease. If the interest received for the actual period of existence
hereof exceeds the maximum lawful rate, the party(ies) benefiting from the Lease
will refund to SPI the amount of such excess or credit against the principal
amount under the applicable Lease, and in such event, no party(ies), benefiting
from this PCFM or the Lease will be subject to any penalties provided in any
laws for contracting for, charging for, or receiving interest in excess of the
maximum lawful rate.
ARTICLE IV
RIGHTS AND OBLIGATIONS UPON
TERMINATION AND EXPIRATION OF LEASES
4.1 Events of Default. The occurrence of any of the following constitutes an
event of default (the "Event of Default") hereunder:
(a) SPI fails to pay all or any portion of any charge or other payment
under this PCFM or any Lease when due and payable, and such failure
continues
14
uncured for a period of five Business Days after SPI's receipt of written
notice from EDS of such failure.
(b) Any representation or warranty made in this PCFM or any Lease or in any
report, financial statement or other statement furnished pursuant to the
provisions of this PCFM or in any Lease is false or misleading in any
material respect as of the date it was made;
(c) SPI fails to duly observe or perform any obligation, covenant,
condition or agreement it makes under this PCFM and such failure continues
for a period of 30 days after SPI's receipt of written notice from EDS or
its assigns stating the failure;
(d) SPI is declared insolvent or bankrupt, is the subject of any
proceedings relating to its liquidation, insolvency or f or the appointment
of a receiver, conservator or similar officer for it, makes an assignment
for the benefit of all or substantially all of its creditors or enters into
an agreement for the composition, extension or readjustment of all or
substantially all of its obligations;
(e) An Event of Default on or breach of any other material obligation or
contract (including and limited to the Phase I Information Technology
Services Agreement, the Phase II Information Technology Services Agreement
and the Financial Agreement [as each of the last two terms are defined in
the Phase I Information Technology Services Agreement]) that SPI or
Spectradyne may have with EDS or its affiliates as a result of which EDS or
its affiliates accelerates payment of any such obligation, forecloses upon
any pledged collateral or terminates such agreement prior to the expiration
date set forth in such agreement after all applicable grace or cure periods
have run.
4.2 Remedies for Events of Default. If an Event of Default occurs and is not
cured within the applicable cure period, EDS may exercise any one or more of the
following remedies:
(a) Terminate this PCFM and SPI's rights hereunder, in which event SPI will
pay to EDS an amount equal to all unpaid charges to the date of such Lease
termination, plus, as liquidated damages for loss of the bargain and not as
a penalty, the Stipulated Loss Value determined in accordance with Schedule
3.6 to each Lease describing each of the Personal Computers, computed as of
the date of such occurrence;
(b) Proceed, by appropriate action or actions under Article V to enforce
performance by SPI of the applicable covenants of this PCFM or in any Lease
or to recover damages for the breach thereof;
(c) Subject always to any mandatory requirements of applicable law then in
effect as to each Personal Computer:
15
(i) retake possession of the Personal Computer, without liability to
return to SPI any charges or other payments made under the applicable
Lease prior to the date on which EDS retakes possession or to perform
any On-Site Services after such date, free from all claims by SPI, by
directing SPI in writing to assemble the Personal Computer and deliver
the same to EDS at any place or places at which SPI then maintains
facilities for the maintenance or storage of equipment similar to the
Personal Computer or to any other place or places which may be
reasonably convenient to SPI and EDS, in which event SPI will, at its
own expense, immediately cause the Personal Computer to be moved to the
place or places so designated by EDS and there delivered to EDS, it
being understood (x) that SPI's obligation to deliver the Personal
Computer is of the essence to this PCFM and each Lease and that,
accordingly, upon application to a court of equity having jurisdiction,
EDS will be entitled to a decree requiring specific performance by SPI
of such obligation and (y) that EDS may, without charge, keep any of
the Personal Computers repossessed by EDS pursuant to this clause on
the premises of SPI pending further action by EDS as provided below; or
(ii) If SPI fails to deliver the Personal Computer in accordance with
Section 4.2(c)(i), personally, or by agents or attorney, remake
possession of the Personal Computer from SPI (and any items in or on
the Personal Computer Functionality at the time of repossession,
wherever such items may be, which items will be held temporarily for
SPI without liability on the part of EDS), after giving of notice by
process of law or otherwise, without liability to return to SPI any
charges or other payments theretofore made, free from all claims by
SPI, and for that purpose EDS may enter upon SPI's premises where the
Personal Computer is located, and remove such Personal Computer without
liability for suit, action or proceeding by SPI. SPI will use all
commercially reasonable; efforts to obtain all necessary permissions,
approvals, permits and other rights necessary to permit EDS to remove
the Personal Computer from the PC Installation Site, provided, however,
that if (1) the cost of obtaining such permits or approvals exceeds the
Stipulated Loss Value and (2) SPI is not prohibited from doing so by
court order or operation of law in either case in connection with any
bankruptcy proceedings, SPI may pay to EDS the Stipulated Loss Value.
EDS's right to recover the Personal Computer will not be hampered, but
EDS will be responsible for damages arising from breach of peace and/or
other actions of EDS, its assignee or agent.
4.3 EDS' Rights on Repossession. If EDS repossesses a Personal Computer, EDS
may, after taking possession, either rent or lease the Personal Computer
Functionality, in such manner, for such time and upon such terms as EDS may
determine or sell the Personal Computer Functionality at one or more public or
16
private sales, in such manner, and at such time or times and upon such terms as
EDS may determine.
(a) If EDS enters into any lease of the Personal Computer Functionality,
the rents, received by EDS under such lease for the Remaining Lease Term
(as defined below in this Section 4.3(a)) respectively applicable to any
item of Personal Computer Functionality, will be applied to the payment of
(i) any expenses and fees (including reasonable and documented attorneys,
fees) incurred by EDS in retaking possession of, and removing, storing and
renting the Personal Computer Functionality; (ii) the reasonable costs and
expenses incurred by EDS in overhauling or repairing the same; (iii) the
charges then remaining unpaid under the Lease; and (iv) any and all sums
then owing to EDS by SPI hereunder. The remaining balance of such charges,
if any, will be payable to SPI, provided, however, that any charges
received by EDS under any Lease for any period commencing after the
expiration of the Remaining Lease Term applicable to such item of Personal
Computer Functionality will be retained by EDS. SPI will remain liable to
EDS to the extent that the aggregate amount of the sums referred to by
clauses (i) through (iv) of this Section 4.3(a) exceed the aggregate rental
received by EDS under such Lease for the respective Remaining Lease Term
applicable to the item of Personal Computer Functionality covered by such
Lease. The Remaining Lease Term with respect to any item of Personal
Computer Functionality will mean the period ending on the date which the
term of such Lease would have expired if an Event of Default hereunder had
not occurred.
(b) If EDS sells or otherwise disposes of (other than pursuant to a Lease)
any item of Personal Computer Functionality, the proceeds thereof will be
applied to the payment of (i) the amounts set forth in clauses (i), (ii)
and (iv) of Section 4.3 (a), (ii) the Charges accrued under the Lease but
unpaid up to the time of such sale or other disposition and (iii) the
Stipulated Loss Value determined as of the date of such sale or other
disposition under Section 3.7. The remaining balance of such proceeds if
any, will be paid to SPI. SPI Will remain liable to EDS to the extent that
the aggregate proceeds received by EDS in connection with the sale or other
disposition of the Personal Computer is insufficient to satisfy in full
those items described in clauses (i), (ii) and (iii) of this Section
4.3(b).
4.4 Obligations in the Event of Expiration or Termination. The Personal
Computer remains the personal property of EDS and may be removed at any time
after termination of the applicable Lease. If SPI elects to return the Personal
Computer other than in connection with entering into a new Lease under Section
4.5, upon termination or expiration of the Lease, SPI will surrender possession
of the Personal Computer in the same operating condition and appearance as when
received, reasonable wear and tear excepted. For each Personal Computer so
surrendered, EDS will arrange for shipping with a carrier acceptable to SPI and
SPI will promptly return the Personal Computer to a location in the continental
United States specified by EDS which will not exceed the cost of shipping the
Personal Computer to EDS's
17
home office. SPI will prepare the Personal Computer for shipment by padded van,
not crated, and deliver the Personal Computer to EDS's loading dock (or
equivalent) one day after the last day of the initial term of the Lease or any
negotiated extensions of such Lease.
(a) Notice of Termination. EDS will notify SPI 90 days in advance of the
end of initial term of any Lease, or any negotiated extension of such Lease
(other than quarter-to-quarter extensions). Each Lease will be
automatically extended for a period of 90 days (or such other period as SPI
and EDS may mutually agree) unless one party notifies the other in writing
at least 60 days prior to the date on which such Lease expires of its
intent not to continue the Lease beyond such expiration date. If the
parties agree to extend the Lease beyond such expiration date, then the
Lease will be extended for the period agreed upon at the same quarterly
charge until terminated by either providing written notice the other as set
forth above in this Section 4.4 (a). Any notice of termination may not be
withdrawn without EDS' prior written consent.
(b) Restoration of Personal Computer. SPI will, at its own cost and
expense and within a reasonable period of time, the costs for which are not
in the charges under the Lease, replace all carts of the Personal Computer
that may (a) become worn out, or (b) suffer a loss with respect to which
SPI bears the risk of loss pursuant to Section 3.5. hereof with appropriate
replacement parts meeting the then current manufacturer's specifications
and any governmental regulation or requirement, free and clear of mortgage,
lien charge or encumbrance (and title thereto will vest in EDS immediately
upon installation, attachment or incorporation of the same in, on or into
such item of Personal Computer).
4.5 Options Upon Expiration of Lease. If EDS does not retrieve or SPI does not
return the Personal Computer, in each case under the provisions of Section 4.4,
SPI will exercise one of the following options upon the expiration of each
Lease:
(a) Purchase the Personal Computer. Provided SPI is not in default
hereunder, SPI may notify EDS of its intent to purchase the Personal
Computer in accordance with this Section 4.4(a). SPI will notify EDS at
least 60 days prior to the expiration of the initial term of the applicable
Lease or any extensions thereof and will have the following options:
(i) SPI may purchase the Personal Computer for a nominal amount and
not purchase any Service Offering, in which case after such payment is
received by EDS SPI and EDS will, with regard to such Personal
Computer, have no further obligation or liability to each other or
(ii) SPI may purchase the Personal Computer for a nominal amount and
purchase a Service Offering, in which case after such payment has been
received by EDS and SPI has notified EDS of the Service Offering
18
SPI has selected, EDS will commence such Service Offering as of the
expiration date of the applicable Lease (unless such notice is given to
EDS after the expiration of such Lease, in which case EDS will commence
the Service Offering as soon as practicable after EDS receives such
notification from SPI).
If SPI exercises its option under this Section 4.4(b), SPI and EDS will
enter into an agreement for and pertaining only to such Service
Offering and with regard to such agreement, SPI and EDS will each have
all rights and obligations related to such Service Offering under this
PCFM including without limitation SPI's obligation to pay all charges
related to such Service Offering under Section 3.10 in accordance with
Section 3.12.
(b) Refresh the Technology. If SPI and EDS have agreed to renew the
Facility under Section 2.3, SPI may elect to replace the Personal Computer
Functionality with new Personal Computer Functionality by submitting a
Personal Computer Functionality Request and entering into a Lease for such
Personal Computer Functionality in accordance with Section 2.1. Spectradyne
will only have the right to refresh the technology or otherwise obtain
personal computers, peripherals and Software from a third party if EDS
elects not to renew the Facility.
If SPI exercises its option under this Section 4.4 (b), SPI and EDS will
enter into a Lease for and pertaining only to such new Personal Computer
Functionality, and except with regard to the terms of any renewed Facility
under Section 2.3, such Lease will provide that SPI and EDS will each have
all rights and obligations under this PCFM.
ARTICLE V
PERFORMANCE REVIEW AND DISPUTE RESOLUTION
5.1 Performance Review. In the event of any dispute or controversy between the
parties of any kind or nature, upon the written request of either party, each of
the parties will appoint a designated officer whose task it will be to meet for
the purpose of resolving such dispute or controversy or to negotiate for an
adjustment to any provision of this PCFM or any Lease needed to resolve such
dispute or controversy. Such officers will discuss the dispute or controversy
and negotiate in good faith in an effort to resolve the dispute or controversy
or renegotiate the applicable section or provision of this PCFM and each Lease
without the necessity of any formal proceeding relating thereto. No formal
proceedings for the judicial or arbitrational resolution of such dispute or
controversy may be commenced until either or both of the designated officers
conclude in good faith that amicable resolution through continued negotiation of
the matter in issue is not likely to occur.
5.2 Dispute Resolution. Except for those disputes where injunctive relief is the
desired remedy and except for patent, trademark, trade secret or copyright
claims
19
brought by third parties, any dispute, controversy or claim arising out of or
related to this PCFM or any Lease, or the creation, validity, interpretation,
breach or termination of this PCFM or any Lease, and not resolved to the
satisfaction of the parties under Section 5.1 will be settled by binding
arbitration governed by the Commercial Arbitration Rules of the American
Arbitration Association. Any arbitration will be commenced and conducted using
the following procedure:
(a) Either party may demand arbitration in writing, stating the nature of
the controversy and naming the arbitrator selected by it.
(b) Within 15 days after such demand, the other party will name its
arbitrator, and the two named arbitrators will, within 15 days thereafter,
select the third arbitrator to serve on the arbitration panel. The two
arbitrators named by the parties may have prior relationships with the
naming party, which in a judicial setting would be considered a conflict of
interest. The third arbitrator, selected by the first two, should be a
neutral participant with no prior working relationship with either party.
If the first two arbitrators are unable to reach agreement as to the third
arbitrator within such 15-day period for any reason, then the first 2
arbitrators will request the American Arbitration Association to select a
third arbitrator meeting the criteria for such arbitrator set forth above
in this Section 5.2(b).
(c) The arbitration proceeding will be held in Dallas, Texas.
(d) Each party will bear its own arbitration costs and expenses; provided,
however, that the arbitrators may modify the allocation of fees, costs and
expenses in the award in those cases where fairness dictates other than an
equal allocation between the parties.
(e) The arbitrators will allow such discovery as is appropriate to the
purposes of arbitration in accomplishing fair, speedy and cost effective
resolution of disputes. The arbitrators will reference the rules of
evidence of the Federal Rules of Civil Procedure then in effect in setting
the direction of such discovery.
(f) The award will be final and binding on the parties, and judgment on the
award may be entered in and enforced by any court of competent
jurisdiction.
(g) EDS will continue to provide the On-Site Services under the terms and
conditions of this PCFM and the applicable Lease during such period from
the date the notion of arbitration is served on one party until the date of
any final award.
(h) SPI will continue to pay all charges under all Leases in accordance
with Section 3.12.
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ARTICLE VI
MISCELLANEOUS
6.1 Excusable Delays. Each party is excused from performing its obligations
(except for SPI's payment obligations) for the time and to the extent it is
prevented from performance by a cause beyond its reasonable control, such as but
not limited to, delays in performance by the other or third parties (other than
subcontractors of EDS, for whose acts, omissions or delays EDS will remain
liable to SPI as if such acts, omissions or delays were those of EDS itself),
acts of God, war, civil disturbance, court order, or a labor dispute. Delays in
performance caused by failures or fluctuations in electrical power or equipment
or services necessary for performance that are not under the control of the
performing party, such as but not limited to, telecommunications equipment or
services, are considered Excusable Delays. Excusable delays are not defaults in
performance and are not grounds for termination for cause.
6.2 UCC Financing Statements. SPI will execute and deliver to EDS for filing
any Uniform Commercial Code financing statements or any other documents which
EDS may reasonably request to protect its interest in the Personal Computer.
6.3 Transaction Costs. SPI and EDS will each bear and be responsible for the
costs and expenses incurred in connection with the preparation, execution,
delivery and performance of this PCFM and each Lease.
6.4 Waiver. Any modification or waiver of any provision of this PCFM or any
Lease, or any consent to any departure by either party therefrom, will not be
effective in any event unless the same is in writing and signed by other party,
and then such modification, waiver or consent will be effective only in the
specific instance and for the specific purpose given. Any notice to or demand
on SPI or EDS in any event not specifically required of other party hereunder
will not entitle the party to any other or further notice or demand in the same,
similar, or other circumstances unless specifically required hereunder.
6.5 Public Disclosures. All media releases, public announcements and public
disclosures by either party or its employees, agents or representatives relating
to this PCFM and each Lease or the subject matter of this PCFM or such Lease,
excluding any announcement beyond the control of the disclosing party, will be
approved by the non-disclosing party in writing prior to release.
6.6 Notices. Notices required or permitted under this Agreement will be in
writing and deemed delivered (a) on the date of actual receipt if delivered by
mail, first class, postage prepaid, (b) when received if delivered by hand or
courier service or (c) when confirmed if transmitted by telegraph, telex,
telecopier or facsimile. The addresses of the parties, which may be changed
with written notice, are:
21
If to EDS, to:
EDS Technical Products Corporation
1800 Jay Ell Drive
Richardson, Texas 75024
Attention: President
Telecopy: (214) 470-5099
With a copy (not constituting notice) to:
Electronic Data Systems Corporation
5400 Legacy Drive, H3-3A-05
Plano, Texas 75024
Attention: General Counsel
Telecopy: (214) 605-5617
If to SPI, to:
SPI, Inc.
1501 North Plano Road
Richardson, Texas 75081
Attention: Chief Executive officer
Telecopy: (214) 301-9234
With a copy to:
SPI, Inc.
1501 North Plano Road
Richardson, Texas 75081
Attention: General Counsel
Telecopy: (214) 301-9234
With a copy (not constituting notice) to:
Williams and Connolly
725 Twelfth Street, N.W.
Washington, D.C. 20005
Attention: Jerry Shulman
Telecopy: (202) 434-5029
6.7 Severability. If any provision of this PCFM or any Lease is prohibited by,
or is unlawful or unenforceable under, any applicable law of any jurisdiction,
such provision will, as to such jurisdiction, be ineffective to the extent of
such prohibition without invalidating the remaining provisions hereof; provided,
however, that any such prohibition in any jurisdiction will not invalidate such
provision in any other jurisdiction; and provided, further, that where the
provisions of any such applicable law may be waived, that they hereby are waived
by SPI and EDS to the full extent
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permitted by law to the end that this PCFM and each Lease will be deemed to be a
valid and binding agreement in accordance with its terms.
6.8 Order of Priority. In the event of any conflict between the terms and
conditions of this PCFM and the terms of any Lease, the terms and conditions of
such Lease will prevail.
6.9 Confidentiality. SPI and EDS will have the following obligations with
regard to Confidential Information:
(a) "Confidential Information" means the terms and conditions of this
Agreement and that information which is: (i) written information received
from the other party which is clearly and prominently marked or identified
as confidential and (ii) oral or visual information which is identified as
confidential in writing to the receiving party within 30 days after
disclosure to the receiving party and which adequately and clearly
identifies such visual or oral information claimed as confidential
("Confidential Information").
(b) Each party will protect Confidential Information received from the
other party, before or after the Effective Date, using the same degree of
care such party uses to protect its own confidential information, but in no
event less than reasonable care.
(c) Each party will use Confidential Information received from the other
party only for the purpose of performing their obligations under this
Agreement.
(d) It will not be a breach of the obligations of this Section 6.9 to
disclose to the arbitrators Confidential Information required to be
disclosed in connection with the conduct of any binding arbitration
proceeding, provided that such disclosure is made pursuant to and in
accordance with the approval and at the direction of a majority of the
arbitrators conducting such arbitration.
(e) Confidential Information will not include information which is (i)
already known by the recipient party without an obligation of
confidentiality, (ii) publicly known through no unauthorized act of the
recipient party, (iii) rightfully received from a third party, (iv)
independently developed by the recipient party without use of the other
party's Confidential Information, (v) disclosed without similar
restrictions to a third party by the party owning the information or (vi)
approved by the other party for disclosure.
(f) Each party agrees to return any and all of Confidential Information to
its owner upon such owner's request.
(g) If either party is required to disclose any Confidential Information
pursuant to securities laws or any other laws or governmental regulations,
or
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pursuant to subpoena or other compulsory process, then the disclosing party
will use its best efforts and exercise all rights available to it (short of
risking damages, injunction or contempt findings) to (i) maintain the
confidentiality of the existence, terms and conditions of this Agreement,
(ii) to the extent it may lawfully do so, inform the other party of any
requests for disclosure made pursuant to the Freedom of Information Act or
any other law or government regulation or of any subpoena or other
compulsory process prior to making such disclosure and (iii) allow the
nondisclosing party to contest such request and, if applicable, participate
in any resulting proceedings through counsel of the non-disclosing party's
choosing and at the non-disclosing party's expense.
6.10 Time of the Essence. Time is of the essence in the Agreement and Schedules
attached hereof and each and all provisions of each Lease.
6.11 Relationship of the Parties. Notwithstanding anything to the contrary in
this PCFM or any Lease, EDS will act only as an independent contractor and under
no circumstances will EDS be deemed to be in any relationship with SPI carrying
with it fiduciary or trust responsibilities, whether through partnership or
otherwise. EDS has the sole right and obligation to supervise, manage, contract,
direct, procure, perform or cause to be performed the day-to-day work to be
performed by EDS under this PCFM or any Lease unless otherwise provided in this
PCFM or such Lease or agreed by the parties in writing.
6. 12 Governing Law. This PCFM and each Lease will be construed in accordance
with, and the rights of the parties will be governed by, the internal laws of
the State of Texas applicable to agreements entered into and intended to be
performed within the state, without regard to any otherwise applicable
principles of conflicts of laws.
6.13 Entire Agreement. This PCFM and each Lease constitutes the entire agreement
between EDS and SPI with respect to the subject matter hereof and supersedes and
cancels any prior understandings and agreement between EDS and SPI with respect
thereto. The individuals executing this PCFM do each hereby warrant and
represent that they respectively have been and are authorized by all necessary
and appropriate corporation action to execute this PCFM on behalf of their
respective principals as of the dates of their respective execution hereof.
There are no representations, understandings or agreements relating to this PCFM
and each Lease that are not fully expressed herein. No other representations,
understandings or arrangements have been made with respect to this PCFM and each
Lease and no future representations, understandings or arrangements will bind
either party until such time as they are reduced to writing and signed as an
amendment to this PCFM or the applicable Lease. All changes to this PCFM and
each Lease must be in writing and signed by the party against whom such change
would be enforced. The parties agree that any other terms or conditions included
in any purchase orders, quotes, acknowledgements, bills of lading or other forms
utilized or exchanged by the parties will not be incorporated herein or be
binding unless expressly agreed upon in writing by authorized representatives of
the parties.
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IN WITNESS WHEREOF, EDS and SPI have caused this PCFM to be executed as of
the date written above.
SPI HOLDING, INC. EDS TECHNICAL PRODUCTS
CORPORATION
By: _________________________ By: ______________________________
Name: Al Jerome Name: Robert L. Neighbors
Title: President & Chief Title: President
Executive Officer
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