Exhibit 10.28
AGREEMENT
FOR
DATA PROCESSING SERVICES
BETWEEN
ASSOCIATED STATIONERS, INC.
AND
AFFILIATED COMPUTER SERVICES, INC.
TABLE OF CONTENTS
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ARTICLE 1 - DEFINITIONS ....................................................1
1.1 AAA ...............................................................1
1.2 ACS Account Manager ...............................................1
1.3 ACS Data Center ...................................................1
1.4 ACS Licensed Software .............................................1
1.5 ACS Network Portion ...............................................1
1.6 ACS Services ......................................................1
1.7 Affiliate .........................................................2
1.8 Associated Facility ...............................................2
1.9 Associated Software ...............................................2
1.10 BCOP ..............................................................2
1.11 BCOP Data Center ..................................................2
1.12 Boise Cascade .....................................................2
1.13 Damages ...........................................................2
1.14 Data Network ......................................................2
1.15 Delayed Termination Employees .....................................2
1.16 Disputed Matter ...................................................2
1.17 Effective Date ....................................................2
1.18 Performance Standards .............................................2
1.19 Re-engineered Software ............................................2
1.20 Software ..........................................................2
1.21 Software License ..................................................2
1.22 Third Party Software ..............................................3
1.23 Transition Services Agreement .....................................3
ARTICLE 2 - ACS SERVICES ...................................................3
2.1 ACS Services ......................................................3
2.2 Opportunity to Bid ................................................4
2.3 Acquisitions By Associated ........................................4
2.4 Control of Resources ..............................................4
2.5 Transfer of Software ..............................................5
2.6 Third Party and ACS Licensed Software .............................5
2.7 Associated Software and Modifications to Software .................5
2.8 Performance Standards .............................................6
2.9 Transition Services Agreement .....................................6
2.10 Joint Quarterly Meetings ..........................................6
2.11 Covenant Not-to-Compete ...........................................7
2.12 Other ACS Obligations .............................................7
ARTICLE 3 - ASSOCIATED OBLIGATIONS .........................................7
3.1 Associated Obligations ............................................7
3.2 Other Associated Obligations ......................................7
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ARTICLE 4 - PERSONNEL ......................................................7
4.1 Initial ACS Hiring ................................................7
4.2 Delayed Termination Employees .....................................8
4.3 ACS Account Manager ...............................................8
4.4 Replacement of Personnel ..........................................8
4.5 Requirements for Supervisory ACS Personnel ........................9
4.6 Right to Direct ACS Personnel .....................................9
4.7 Employment Rights upon Termination ................................9
4.8 Replacement Skills ...............................................10
4.9 Hiring of Employees ..............................................10
ARTICLE 5 - ACS CHARGES ...................................................10
5.1 Charges ..........................................................10
5.2 Cost of Living Adjustment ........................................10
5.3 Sales and Use Tax ................................................11
5.4 No Withholding of Payments or Services ...........................12
5.5 Information and Reports ..........................................12
5.6 Verification of Information ......................................12
ARTICLE 6 - TERM OF AGREEMENT .............................................13
6.1 Term .............................................................13
ARTICLE 7 - TERMINATION ...................................................13
7.1 Termination for Cause ............................................13
7.2 Termination for Nonpayment .......................................14
7.3 Termination for Insolvency .......................................14
7.4 Assistance Upon Termination ......................................14
7.5 Liquidated Damages ...............................................15
7.6 Termination for Convenience ......................................15
7.7 Continuing Force Majeure .........................................15
ARTICLE 8 - INDEMNITY AND LIABILITY .......................................16
8.1 Correction of Data ...............................................16
8.2 Limitation of Liability ..........................................16
8.3 General Indemnity ................................................17
8.4 Intellectual Property Indemnification ...........................17
8.5 Indemnification Procedures .......................................17
ARTICLE 9 - CONFIDENTIALITY, ASSOCIATED'S DATA AND SECURITY ...............17
9.1 Confidentiality ..................................................17
9.2 Associated's Data ................................................18
9.3 Security for Data Center .........................................18
9.4 Audit Rights .....................................................18
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ARTICLE 10 - MISCELLANEOUS .................................................19
10.1 Dispute Resolution ...............................................19
10.2 Assignment .......................................................22
10.3 Notices ..........................................................22
10.4 Relationship of Parties ..........................................23
10.5 Force Majeure ....................................................23
10.6 Severability .....................................................24
10.7 Entire Agreement .................................................24
10.8 No Third-Party Rights ............................................24
10.9 Attorney's Fees ..................................................24
10.10 Approvals and Similar Actions ....................................24
10.11 ACS' Costs .......................................................24
10.12 Governing Law ....................................................24
SCHEDULES
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SCHEDULE A - ACS SERVICES .................................................27
SCHEDULE B - DATA NETWORK CONFIGURATION ...................................30
SCHEDULE C - ACS LICENSED SOFTWARE ........................................31
SCHEDULE D - PERFORMANCE STANDARDS ........................................32
SCHEDULE E - OBLIGATIONS OF ASSOCIATED ....................................34
SCHEDULE F - PERSONNEL ....................................................36
SCHEDULE G - ACS CHARGES...................................................37
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AGREEMENT FOR DATA PROCESSING SERVICES
THIS AGREEMENT FOR DATA PROCESSING SERVICES ("Agreement"), dated January
31, 1992, is made and entered into by and between ASSOCIATED STATIONERS, INC.,
a Delaware corporation ("Associated"), and AFFILIATED COMPUTER SERVICES, INC.,
a Delaware corporation ("ACS").
WHEREAS, Associated has agreed to engage ACS, and ACS has agreed to be
engaged, to provide systems migration and data processing services to
Associated in accordance with the terms of this Agreement.
NOW, THEREFORE, in consideration of the mutual promises contained herein,
ACS and Associated agree as follows:
ARTICLE 1
DEFINITIONS
As used herein, the following terms shall have the meanings set forth
below:
1.1 "AAA" shall mean the American Arbitration Association as defined in
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Section 10.1 of this Agreement.
1.2 "ACS Account Manager" is defined in Section 4.3 of this Agreement.
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1.3 "ACS Data Center" shall mean one or more of ACS' mainframe computer
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centers as designated by ACS; provided, however, that any redesignation will
require Associated's consent if such redesignation would cause (a) an increase
in the taxes payable by Associated under Section 5.3 or (b) a degradation in
the quality of the ACS Services.
1.4 "ACS Licensed Software" shall mean software systems licensed by third
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party vendors to ACS and made available to Associated by ACS pursuant to
Section 2.6 of this Agreement, the current listing of such systems being set
forth in Schedule C attached hereto.
1.5 "ACS Network Portion" is defined in Section 5(b) of Schedule A
attached hereto.
1.6 "ACS Services" shall mean the system migration and data processing
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services which ACS will provide to Associated during the term of this Agreement
as specified in Article 2, including Schedule A attached hereto.
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1.7 "Affiliate" shall mean, with respect to any person or entity, any
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person or entity which, directly or indirectly, controls, is controlled by, or
under common control with such person or entity.
1.8 "Associated Facility" shall mean the corporate office facility
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occupied by Associated, wherever located during the term of this Agreement, to
be initially located in Itasca, Illinois.
1.9 "Associated Software" shall mean any software systems owned by
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Associated, including software systems developed by ACS during the term of this
Agreement on behalf of and at the expense of Associated.
1.10 "BCOP" shall mean Boise Cascade Office Products Corporation, a
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Delaware corporation.
1.11 "BCOP Data Center" shall mean the data center facility owned and
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operated by BCOP and located in Itasco, Illinois.
1.12 "Boise Cascade" shall mean Boise Cascade Corporation, a Delaware
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corporation.
1.13 "Damages" is defined in Section 8.3 of this Agreement.
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1.14 "Data Network" shall mean Associated's data telecommunications
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network.
1.15 "Delayed Termination Employees" is defined in Section 4.2 of this
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Agreement.
1.16 "Disputed Matter" is defined in Section 10.1 of this Agreement.
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1.17 "Effective Date" shall mean the date of this Agreement.
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1.18 "Performance Standards" is defined in Section 2.8 of this Agreement.
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1.19 "Re-engineered Software" shall mean the BCOP software systems to be
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re-engineered by BCOP, as described in Section 4.4.4 of the Transition Services
Agreement.
1.20 "Software" shall mean the software systems licensed by BCOP to
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Associated pursuant to the Software License and includes the Re-engineered
Software, all as described in Section 4.4 of the Transition Services Agreement.
1.21 "Software License" shall mean the perpetual license by BCOP of the
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Software pursuant to that certain Software License Agreement described in
Section 4.4.3 of the Transition Services Agreement.
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1.22 "Third Party Software" shall mean software systems licensed by third
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party vendors to Associated and operated by ACS on behalf of Associated.
1.23 "Transition Services Agreement" shall mean that certain Transition
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Services Agreement, dated as of the date hereof, entered into among Boise
Cascade, BCOP and Associated.
ARTICLE 2
ACS SERVICES
2.1 ACS Services. ACS will provide to Associated the ACS Services
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described in Schedule A attached hereto in accordance with the terms set forth
in this Agreement and the Schedules attached hereto, which ACS Services shall
consist generally of the following:
(a) Services provided in cooperation with BCOP in order to effect the
migration of the Software and certain data processing operations
(specified in Schedule A) from the BCOP Data Center to the ACS Data
Center, as described in Section 4.4 of the Transition Services
Agreement;
(b) Services provided in connection with conversion of Associated's data
processing from the Software to the Re-engineered Software, as
described in Section 4.4 of the Transition Services Agreement;
(c) Mainframe data processing and related services, including
applications software maintenance and development;
(d) Management services for the Data Network (currently configured as
described in Schedule B);
(e) Disaster recovery services as described in Schedule A; and
(f) The implementation of the Software, the Third Party Software, ACS
Licensed Software and any Associated Software.
Subject to the provisions of Section 2.3 below, during the term of this
Agreement ACS shall be the exclusive third party provider of (i) the management
services for the ACS Network Portion of the Data Network described in Schedule
B, (ii) all of Associated's requirements for IBM MVS mainframe (or plug -
compatible equivalent) data processing services (excluding, however,
Associated's payroll processing and data base and other incidental mainframe
data processing), and (iii) management of all application programming functions
for the Software or any replacement for the Software, whether developed by ACS
or not,
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provided however, that management of any such application programming functions
for any such replacement of the Software would commence only upon its
implementation on an ACS IBM MVS mainframe processor.
2.2 Opportunity to Bid. Associated will present ACS with an opportunity
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to bid on data processing related services that are not provided for in this
Agreement, including, without limitation, services related to Associated's
telecommunication networks other than the ACS Network Portion. Such opportunity
shall be on a basis comparable to bids solicited from other vendors. If
Associated does not select ACS to perform such services (which selection shall
be made by Associated in its sole discretion), then Associated will ensure that
any third party - provided services shall not interfere with ACS' ability to
provide ACS Services pursuant to this Agreement or directly or indirectly
increase ACS' costs associated with such provision unless, in either case,
Associated compensates ACS therefor. ACS will cooperate with any such vendor
as reasonably necessary. ACS acknowledges that Associated has entered into an
agreement with EDS pursuant to which EDS will perform a consulting study with
respect to Associated's information systems plan and that EDS may perform
certain services pending the outcome of such consulting study.
2.3 Acquisitions by Associated. Notwithstanding the exclusivity
--------------------------
provisions of Section 2.1 above, in the event Associated acquires one or more
additional businesses during the term of this Agreement, the management services
for the ACS Network Portion of the Data Network and the IBM MVS mainframe (or
plug-compatible equivalent) data processing services provided to the acquired
business, either on an in-house basis or by third party, shall not be subject to
the exclusivity provisions of this Agreement unless and until Associated elects
(a) in the case of a contract with a third party, to terminate or allow such
contract to expire (unless Associated then causes the acquired business to
provide such services on an in-house basis); or (b) in the case of an in-house
system, to contract with a third party for such services. In the event
Associated acquires a business operating an in-house data center, Associated may
elect to convert the data processing operations of that business to the ACS
Data Center and ACS will purchase the computer hardware remaining in such
in-house data center at fair market value. ACS will allow Associated to convert
such processing to the ACS Data Center at the lesser of the best rates then
being provided by ACS to any comparably sized customer (based on the combined
resource utilization that Associated will be running in the ACS Data Center
after the conversion from the in-house system), or the incremental charges as
shown in Schedule G.
2.4 Control of Resources. Except as otherwise provided in Article 4 of
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this Agreement, during the term of this Agreement ACS will have the exclusive
right to manage all ACS resources utilized
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in providing the ACS Services as ACS deems appropriate, including, without
limitation, the right to relocate and substitute computer equipment, personnel
and other resources and to change computer configurations and procedures;
provided, however that if any such change or relocation would affect
Associated's business (other than in a trivial manner) or adversely affect the
ACS Services, ACS will consult with Associated prior to such change or
relocation and ACS and Associated will by mutual agreement reached through good
faith negotiations make decisions with respect to any such change or relocation.
2.5 Transfer of Software. Associated hereby assigns to ACS the Software
--------------------
License entered into by Associated and BCOP pursuant to Section 4.4 of the
Transition Services Agreement. During the term of this Agreement, ACS shall have
all rights and obligations as licensee under the Software License and, upon
termination of this Agreement in accordance with the terms hereof, ACS shall
assign the Software License to Associated. In the event of any assignment by ACS
to Associated pursuant to this Section 2.5, Associated agrees that it will
accept such assignment and assume such obligations. ACS' performance of its
obligations under this Agreement shall be excused to the extent (a) ACS' rights
with respect to the Software License are impaired as a result of acts or
omissions of any person or entity other than ACS, and (b) such impaired rights
affect ACS' performance of its obligations. The provisions of this Section 2.5
shall survive any termination or expiration of this Agreement.
2.6 Third Party and ACS Licensed Software. Associated retains the right
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and responsibility to determine if any Third Party Software is required by
Associated and, if so, Associated will negotiate directly with the appropriate
vendor to obtain a license permitting ACS to install and operate the Third Party
Software in the ACS Data Center on behalf of Associated. If Associated obtains
such a license Associated retains all license and maintenance fee obligations
for such Third Party Software. At its option, Associated may request that ACS
assist Associated in acquiring licenses to Third Party Software. Such
assistance will include ACS' commitment to provide at least five (5) year
financing for any license and maintenance fees associated with such license
(but never to extend beyond the Agreement term) on mutually agreed terms
(including the right of ACS to receive a reasonable financing fee). ACS will
make the ACS Licensed Software identified on Schedule C available for use on
behalf of Associated at no additional charge to Associated. ACS will notify
Associated in writing from time to time of deletions or additions to ACS
Licensed Software available to Associated. If ACS Licensed Software being used
by Associated will no longer be available, ACS will provide sufficient notice
to Associated in order to allow Associated to assess the impact of any such
change and provide for appropriate action, including retraining. ACS will
provide a conversion to a comparable substitute ACS Licensed Software at no
charge to
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Associated and with minimal diversion of the ACS Account Team resources.
2.7 Associated Software and Modifications to Software. From time to time
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during the term of this Agreement ACS may (a) develop software systems for and
on behalf of Associated pursuant to Section 2.1(c), which systems are defined
herein as Associated Software and (b) at the direction of Associated, modify the
Software. The Associated Software and all modifications to any portion of the
Software will be developed by ACS or ACS' subcontractors on a "work for hire"
basis so that Associated shall own all right, title and interest in and to the
the Associated Software and any such modifications to the Software, including,
without limitation, all copyright entitlements.
2.8 Performance Standards. The ACS Services will meet or exceed (a)
---------------------
performance standards set forth on Schedule D and (b) other performance
standards established by the parties within six months after the Effective Date
pursuant to good faith negotiations (collectively, "the Performance Standards").
The Performance Standards to be established after the Effective Date will ensure
that the quality, accuracy, timeliness and responsiveness of the ACS Services
are at least equal to the same characteristics of services previously provided
by BCOP. By way of illustration only, such Performance Standards may measure (i)
the following operational performance matters: systems availability and
accuracy; internal systems response time; the availability and accuracy of
regularly scheduled reports; and routine problem resolution (including Help Desk
response time); and (ii) the following application support functions: routine
application software error correction (including the reporting, correction and
tracking of routine application software errors) and the performance of
maintenance and enhancement tasks within specified time periods. In addition to
the foregoing Performance Standards, upon the implementation of new systems or
technologies used to provide ACS Services the parties will through good faith
negotiations establish additional Performance Standards that correspond to such
new systems and technologies. Upon establishment of additional Performance
Standards, the parties will supplement and amend Schedule D accordingly,
whereupon Schedule D, as so supplemented and amended, will be deemed for all
purposes to be substituted as of the date thereof for Schedule D attached
hereto.
2.9 Transition Services Agreement. Associated will, at its expense, use
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its best commercially reasonable efforts to enforce its rights, and satisfy its
obligations, under the Transition Services Agreement, including, without
limitation, taking such actions as ACS may reasonably request of Associated.
ACS' performance of its obligations under this Agreement shall be excused to the
extent affected by any act or omission of any party to the Transition Services
Agreement.
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2.10 Joint Quarterly Meetings. Senior management of ACS and Associated
------------------------
will meet on at least a quarterly basis (and at other times upon the reasonable
request of either party, with reasonable prior notice to the other party), at
specific times and places mutually agreed upon, for the purpose of reviewing
ACS' performance of the ACS Services and participating in planning sessions
related to Associated's future technology needs and direction.
2.11 Covenant Not-to-Compete. During the term of this Agreement if ACS or
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any of its Affiliates intend to provide data processing services using the
Software (including any component part of the Software) or involving and ACS
employees who is part of or was formerly part of the ACS Account Team, ACS will
obtain the written consent of Associated prior to providing such services.
Associated's consent will not be unreasonably withheld and its determination
shall be based solely on whether the prospective ACS customer competes with
Associated's or BCOP's respective businesses or whether such provision of
services would cause Associated to be in breach or violation of its obligations
to BCOP as in existence on the date of this Agreement. ACS agrees that is ACS
proposes to provide data processing services to United Stationers, Stationers
Distributing or S.P. Richards Company, ACS will notify Associated of such fact
at least twenty-four (24) hours prior to entering into a contract for such
services. During the term of this Agreement neither ACS nor its Affiliates will
compete with Associated in the wholesale office supplies distribution business,
provided that within ninety (90) days of the Effective Date Associated and ACS'
Affiliate, Precept Business Products, Inc., shall have reached an agreement
whereby such Affiliate is offered Associated's "end-column pricing" status
(reflecting appropriate transportation charges) on sales of office supplies to
end users. This Section 2.11 shall survive any termination or expiration of this
Agreement for purposes of ACS' agreement not to provide data processing services
using the Software.
2.12 Other ACS Obligations. ACS assumes no obligations or liabilities of
---------------------
Associated except as expressly provided in this Agreement or in the Schedules
attached hereto.
ARTICLE 3
ASSOCIATED OBLIGATIONS
3.1 Associated Obligations. Associated will assume or retain the
----------------------
obligations set forth in Schedule E attached hereto.
3.2 Other Associated Obligations. Associated assumes no obligations or
----------------------------
liabilities of ACS except as expressly provided in this Agreement or in the
Schedules attached hereto.
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ARTICLE 4
PERSONNEL
4.1 Initial ACS Hiring. As of a date to be determined by ACS and
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Associated (but not later than thirty (30) days following the Effective Date),
ACS will hire or assign a permanent account manager, as described in Section
4.3, and two additional senior level programmers, to be located at the
Associated Facility.
4.2 Delayed Termination Employees. ACS will offer employment to, and
-----------------------------
employ (should an offer of employment be accepted), the BCOP employees listed on
Schedule F attached hereto, identified as "Delayed Termination Employees" in
Section 3.4 of the Transition Services Agreement, as of the date specified
therein and in accordance with the terms thereof. The sum of the initial total
compensation payable to each Delayed Termination Employee shall be approximately
equal to the sum of the total compensation most recently paid to such employee
by BCOP. ACS will provide benefits to the Delayed Termination Employees which
are comparable to the standard Associated employee benefits (except that ACS'
401(k) savings plan provides for discretionary employer contributions). ACS will
establish a bonus pool for the ACS Account Team on such basis as ACS determines
is appropriate. As of the date of hire by ACS, such employees will be
transferred to the Associated Facility at no additional cost to Associated
(provided BCOP is responsible for any costs associated with shipping of
furniture or equipment).
4.3 ACS Account Manager. ACS will designate, and during the term of this
-------------------
Agreement will maintain, a senior and experienced representative of ACS (the
"ACS Account Manager"), who will (a) have overall management responsibility for
ACS' performance of its obligations under this Agreement and (b) act as a
liaison with Associated. The ACS Account Manager shall report to an Associated
representative designated, from time to time, by Associated. The ACS Account
Manager is required to devote all of his or her working time to his or her
responsibilities under this Agreement and will be located at the Associated
Facility. Except as a result of resignation, death, disability, or termination
of employment, ACS shall, prior to replacing the ACS Account Manager, notify
Associated in writing on or before thirty (30) days prior to the date of
replacement. The notice shall also identify the individual proposed to be
designated as a replacement.
4.4 Replacement of Personnel. If Associated reasonably and in good faith
------------------------
determines that it is not in the best interest of Associated for any employee of
ACS to continue to provide ACS Services under this Agreement, then Associated
shall give ACS written notice thereof, specifying the reasons therefor, and
requesting that the employee be replaced or reassigned. Promptly after its
receipt of such a request by Associated, ACS shall investigate the matters
stated in the request and, unless it
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determines that Associated's concerns are manifestly unreasonable, shall replace
the employee with an individual of suitable ability and qualifications.
Associated's determination that it is not in its best interest to allow such an
employee to continue providing ACS Services shall not be based on an improper or
illegal reason.
4.5 Requirements for Supervisory ACS Personnel. ACS shall cause each of
------------------------------------------
its supervisory personnel assigned to the ACS Account Team (including the ACS
Account Manager) to devote his or her full time and effort to the provision of
ACS Services. Before assigning an individual to any of these positions, whether
the individual is being initially assigned or subsequently assigned, ACS shall
notify Associated of the proposed assignment, shall introduce the individual to
appropriate Associated representatives, and shall provide Associated with a
resume and any other information about the individual that Associated may
reasonably request. If, after being notified thereof, Associated reasonably and
in good faith objects to the proposed assignment within ten (10) business days,
then ACS shall not assign the individual to the proposed position and shall
propose to Associated the assignment of another individual of suitable ability
and qualifications. Associated's objection to a proposed assignment shall not be
based on an improper or illegal reason.
4.6 Right to Direct ACS Personnel. Associated reserves the right to
-----------------------------
direct the following with respect to ACS Account Team personnel: (a) overall
objectives, (b) priorities for the accomplishment of objectives, (c) design
standards, (d) technical direction, (e) development strategies, and (f) within
reason, the location at which such personnel perform ACS Services (provided,
with respect to clause (f) only, that Associated pays all associated reasonable
and necessary increased costs to ACS). ACS will be entitled to rely upon such
directions and will incur no liability in so relying, provided that at the time
of direction ACS notifies Associated in writing (unless not reasonably
necessary) that such direction may result in the failure to satisfy the
Performance Standards.
4.7 Employment Rights upon Termination. On or after the termination or
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expiration of this Agreement in accordance with the terms hereof, Associated
shall have the right to make offers of employment to, and employ, any person who
performs or supervises or who has performed or supervised the services provided
by ACS under this Agreement, including any then current employee of ACS.
Promptly after either party sends the other party written notice of termination
or expiration, ACS agrees to supply Associated, without charge, the names and
other nonconfidential information reasonably requested by Associated for the
purpose of exercising its rights under this Section 4.7. ACS agrees not to enter
into any agreement or adopt any employee policy or benefit that would
unreasonably restrict Associated's ability to exercise its rights under this
Section 4.7. During the term of this Agreement nothing shall
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prohibit Associated from employing any person who initially responded to a
public advertisement or other widely disseminated employment notice; provided,
however, that if such person is a member of the ACS Account Team, Associated and
ACS will cooperate with each other to ensure no disruption in the ACS Services
and to minimize any adverse effect on ACS or Associated. The provisions of this
Section 4.7 shall survive any termination or expiration of this Agreement.
4.8 Replacement Skills. ACS will use its best commercially reasonable
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efforts to insure that each ACS employee assigned to perform ACS Services in
replacement of another ACS employee will possess skills comparable to the skills
of the ACS employee being replaced or with such skills as Associated and ACS
may agree are appropriate under the circumstances.
4.9 Hiring of Employees. Subject to Section 4.7, during the term of this
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Agreement Associated shall not offer employment to or employ any person employed
then or within the preceding twelve (12) months by ACS, its parent corporation
or any subsidiary of ACS' parent corporation, and Associated will not knowingly
so offer to employ or employ any person employed then or within the preceding
twelve (12) months by any regular ACS subcontractor (except for CSC Partners)
which has materially participated in providing Associated the ACS Services. This
Section 4.9 shall not prohibit Associated from offering employment to and
employing any person in a position in which such person does not perform or
supervise data processing or services related to data processing (and such
person may perform any services for Associated beginning one year from
employment by Associated); provided that Associated did not initiate contact
with such person for purposes of making an employment offer and if such person
is a member of the ACS Account Team, Associated and ACS will cooperate with each
other to ensure no disruption in the ACS Services and to minimize any adverse
effect on ACS or Associated. During the term of this Agreement ACS shall not
offer employment to or employ any person employed then or within the preceding
twelve (12) months by Associated, its parent corporation or any subsidiary of
Associated's parent corporation.
ARTICLE 5
ACS CHARGES
5.1 Charges. Associated will pay ACS the monthly and other charges set
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forth in Schedule G attached hereto. Such charges shall be due and payable no
later than thirty (30) days after Associated's receipt of invoice, which invoice
shall contain the information specified in Section 5.5. Subject to Section 5.4,
any amount not paid within such period shall bear interest at a rate of 1-1/2%
per month, but in no event to exceed the highest lawful rate of interest.
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5.2 Cost of Living Adjustment. During the term of this Agreement a Cost
-------------------------
of Living Adjustment shall apply to that portion of the ACS Monthly Base Charges
which represents the compensation payable to the ACS Account Team and a
percentage thereof reflecting ACS' benefits costs as shown in Schedule G. The
Cost of Living Adjustment will be based on the Consumer Price Index - All Urban
Consumers (1982-84 = 100) published by the Bureau of Labor Statistics (the
"Index"). The applicable charges shall be subject to annual increases, beginning
January 1, 1993, equal to the aggregate cumulative percentage increase, if any,
that the Index increases over the published Index for the period ending on
December 31 of each preceding year; provided, however, that no such annual
increases in ACS charges shall be applicable unless the annual Index increase is
three percent (3%) or higher for the applicable annual period.
5.3 Sales and Use Tax. Associated shall be solely responsible for all
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sales, use or similar taxes, if any, payable with respect to the ACS Services
and shall pay any such taxes to ACS no later than thirty (30) days after
Associated's receipt of invoice. However, under no circumstances shall
Associated be required to reimburse ACS for ACS' property taxes, franchise
taxes, any taxes based on net worth, net income taxes or any taxes substituted
for such taxes, including, without limitation, Michigan's single business tax,
Indiana's gross income, supplemental net income and intangible taxes, Illinois'
corporation and replacement income tax and Tennessee's corporation excise tax.
Associated hereby indemnifies and holds ACS harmless from and against the
ultimate tax liability of any and all sales, use or similar taxes, including any
penalties or interest thereon. ACS will allow Associated to control any
challenge to, settlement of or payment of any amounts deemed payable by such
government authority as a result of an audit or inquiry, and will cooperate with
all reasonable requests by Associated for Acs to assist in challenging, settling
any paying such amounts; provided, however, that Associated takes all
appropriate actions to remove at, Associated's expense, any liens or other
encumbrances placed on assets of ACS as a result of any contested assessment of
sales, use or similar tax liability related to the ACS Services provided under
this Agreement. No later than three (3) business days prior to the date that any
assessment of tax hereunder is due, Associated will instruct ACS whether ACS is
to pay the assessment when due (in which case Associated will advance ACS the
necessary funds) or whether Associated will protest such payment (in which case
Associated will assume responsibility for challenging, settling and paying any
taxes, penalties and interest when ultimately due). The parties shall cooperate
with each other to minimize any applicable sales, use or similar tax and, in
connection therewith, the parties shall provide each other with any relevant tax
information (including, without limitation, resale certificates, multi-state
exemption certificates, information concerning the use of assets and materials
and notices of assessments, ect.). ACS shall provide
11
to Associated any notice of assessment (or similar legal notice) where
Associated may be liable under this Agreement for such taxes prior to expiration
of an exercisable right with respect thereto; provided, however, that if ACS
fails to give such notice to Associated, Associated shall nevertheless be
responsible for all assessed taxes, interest and penalties except to the extent
Associated was prejudiced by ACS' failure to provide such notice in a timely
manner. The provisions of this Section 5.3 shall survive any termination or
expiration of this Agreement.
5.4 No Withholding of Payments or Services. In the event any dispute
--------------------------------------
arises between ACS and Associated with respect to the ACS Services or this
Agreement, the parties shall promptly undertake to resolve such dispute, but
Associated shall not be entitled to withhold timely payment of applicable
charges under this Agreement pending resolution of such dispute and ACS shall
not be entitled to reduce or suspend the ACS Services except pursuant to Section
7.2 or upon any other termination of this Agreement in accordance with the terms
hereof. Notwithstanding the foregoing, if Associated reasonably and in good
faith determines that a billing error has occurred in an ACS invoice or ACS has
billed Associated for services or cost reimbursements not contemplated by this
Agreement and ACS and Associated are unable to resolve such error prior to the
date the invoice payment is due, Associated shall be entitled to pay the amount
considered to be in error into an interest bearing escrow account designated by
ACS where such amount shall be held until the dispute is resolved. The escrow
account shall be maintained by a financial institution insured by the FDIC that
is not an Affiliate of ACS or Associated. This escrow right applies only with
respect to billing errors and charges for services or cost reimbursements not
contemplated by this Agreement. Under no other circumstances will Associated be
entitled to withhold payment of invoices.
5.5 Information and Reports. With ACS' delivery of each invoice to
-----------------------
Associated for payment by Associated, ACS will provide to Associated a report or
reports describing in reasonably complete detail (a) Associated's use of ACS
resources in units of measurement used to calculate the invoice amount, and (b)
information reasonably necessary to ascertain ACS' attainment or non-attainment
of the Performance Standards. ACS will also provide Associated with such other
information and reports concerning Associated's data, the ACS Services and other
matters relating to this Agreement at the times and in the manner as the parties
may mutually agree. All reports and information delivered to Associated pursuant
to this Section 5.5 shall be in a format determined by mutual agreement. ACS
will maintain appropriate procedures and supporting documentation and will
maintain and provide access to records as reasonably required by Associated to
permit Associated to verify that the manner and method of measuring, accounting
and charging for the ACS Services is in accordance with Schedule G and the other
terms of this Agreement
12
and to permit Associated to verify the accuracy of the ACS charges, such ACS
obligations to survive for one (1) year following any termination or expiration
of this Agreement.
5.6 Verification of Information. The parties acknowledge that their
---------------------------
respective obligations under this Agreement, the ACS Services to be provided by
ACS and the charges therefor are based, in part, upon the information furnished
by BCOP and Associated to ACS, and by BCOP to Associated, certain of which
information has not been independently verified by ACS or, in some cases, by
Associated. To the extent that it is discovered, within sixty (60) days after
completion of the migration described in Schedule A, that the information
previously furnished concerning the data processing operations of Associated is
inaccurate or incomplete, the parties will negotiate in good faith to make
appropriate adjustments to the provisions of this Agreement, including the
provisions relating to the charges to be paid to ACS under this Agreement, the
Performance Standards and the ACS Services to be provided under this Agreement.
ARTICLE 6
TERM OF AGREEMENT
6.1 Term. The term of this Agreement shall commence on the Effective Date
----
and shall end on July 31, 2002 (the "Expiration Date") unless terminated earlier
in accordance with the provisions of this Agreement. This Agreement will
automatically renew for up to two (2) successive one (1) year renewal terms
unless either party notifies the other in writing 180 days prior to the end of
the original or any renewal term of this Agreement.
ARTICLE 7
TERMINATION
7.1 Termination for Cause. In the event of a material breach of this
---------------------
Agreement by either party (except for default in payments to ACS governed by
Section 7.2 hereof), which breach shall not be substantially cured within
ninety (90) days after written notice is given to the breaching party specifying
the breach in reasonable detail, then the party not in breach may terminate this
Agreement by giving written notice to the breaching party. Each of ACS and
Associated agree to proceed diligently to cure its breach or material breach of
this Agreement upon occurrence thereof. Failure of the party in material breach
to diligently proceed to cure such breach shall allow the party not in breach to
immediately terminate this Agreement, provided the party in material breach has
been notified in writing of the basis on which the other party believes the
party in material breach is not proceeding diligently and the party in material
breach fails to proceed diligently within twenty-four (24) hours of receipt of
the latter notice. Failure of
13
a party in breach (but not material breach) to diligently proceed to cure such
breach shall allow the party not in breach to immediately seek relief directly
from an arbitration panel pursuant to Section 10.1(c) hereof.
7.2 Termination for Nonpayment. Subject to Associated's ability to
--------------------------
escrow payments, on a limited basis, pursuant to Section 5.4, in the event that
Associated defaults in the payment when due, as set forth in Section 5.1, of any
amount due to ACS hereunder and does not cure such default within fifteen (15)
days, then ACS may cease providing the ACS Services upon ten (10) days' prior
written notice (which notice may be given ten days prior to expiration of such
15-day period). Associated's failure to pay any amount owed within fifteen (15)
days after ACS ceases providing the ACS Services shall constitute a material
breach of this Agreement by Associated and ACS may then terminate this Agreement
upon written notice to Associated.
7.3 Termination For Insolvency. In the event that either party hereto
--------------------------
becomes or is declared insolvent or bankrupt, is the subject of any proceedings
relating to its liquidation, insolvency or for the appointment of a receiver 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, then the other party hereto may, by giving written notice thereof
to such party terminate this Agreement as of a date specified in such notice of
termination.
7.4 Assistance Upon Termination. Upon expiration of the term of this
---------------------------
Agreement or upon termination of this Agreement in accordance with the terms
hereof, provided that Associated has paid all amounts then due ACS pursuant to
this Agreement, including any liquidated damages pursuant to Section 7.5, ACS
will (a) use all reasonable efforts to assist Associated in effecting a
transition of the ACS Services to Associated or another vendor chosen by
Associated, (b) promptly return to Associated, in the format and on the media
reasonably requested by Associated, all of Associated's data held by ACS, (c)
when directed by Associated to do so, delete all of Associated's data in ACS'
possession from any tapes or other data storage media in ACS' possession, and
(d) assign Associated all rights to the Software License, as contemplated by
Section 2.5. ACS shall be paid applicable charges for ACS Services rendered
through final termination of this Agreement. Provided that this Agreement has
not terminated in accordance with Section 7.7 or pursuant to ACS' material
breach and failure to cure in accordance with Section 7.1, ACS will be
reimbursed its reasonable out-of-pocket direct costs incurred on behalf of
Associated in providing the termination services. Upon expiration or termination
of this Agreement for any reason Associated shall reassume all responsibility
for the licenses and maintenance obligations related to the Software and Third
Party Software and costs and operation of
14
the ACS Portion of the Data Network. The provisions of this Section 7.4 shall
survive any termination or expiration of this Agreement.
7.5 Liquidated Damages. In the event this Agreement is terminated by ACS
------------------
prior to the expiration of the term hereof pursuant to Sections 7.1, 7.2 or 7.3
hereof, ACS shall be entitled to receive, and Associated agrees to pay,
liquidated damages equal to eighty percent (80%) of the remaining Monthly Base
Charges ACS would have been paid for the remainder of the Agreement term in
accordance with Schedule G. Associated acknowledges that such amount represents
liquidated damages based on ACS' long-term resource commitments under this
Agreement and such amount does not represent a penalty to Associated.
7.6 Termination For Convenience. Associated shall have the right to
--------------------------
terminate this Agreement without cause after the fourth (4th) anniversary of the
Effective Date only in the event that Associated or Associated's business is
acquired by or merges with a third party which following such acquisition or
merger actively conducts Associated's business operations and such acquiror
converts Associated's data processing operations from the ACS Data Center to an
in-house data center owned and operated by the acquiror, or such acquiror is a
party to an existing outsourcing contract with a third party vendor and such
acquiror converts Associated's data processing operations from the ACS Data
Center to the system being operated by the vendor on behalf of the acquiror.
Associated's right to terminate this Agreement without cause pursuant to this
Section 7.6 shall require at least one (1) year prior written notice to ACS
delivered at any time on or after the fourth (4) anniversary of the Effective
Date and such termination shall only be effective if (a) Associated shall have
paid ACS a termination fee of $11 million or, if less, a termination fee equal
to the amount Associated would owe ACS pursuant to Section 7.5 hereof, (b) all
amounts due and payable by Associated to ACS for ACS Services through the
effective date of such termination shall have been paid or otherwise provided
for in accordance with this Agreement, and (c) all preferred stock of Associated
Holdings, Inc. and accrued and unpaid dividends thereon (or Associated Holdings,
Inc. indebtedness into which such preferred stock may have been converted) held
by ACS shall have been redeemed or purchased from ACS or paid in full. The
termination fee payable pursuant to this Section 7.6 shall be payable by
Associated upon the effective date of termination of ACS Services, provided that
Associated provides reasonable assurance of payment to ACS at least ninety (90)
days prior to the proposed termination date.
7.7 Continuing Force Majeure. If any of the events set forth in Section
------------------------
10.5 (Force Majeure) prevent ACS from providing basic functional ACS Services to
Associated within twenty-four (24) hours of the occurrence, either directly or
indirectly through a disaster recovery facility or other means, Associated shall
be
15
entitled to obtain such services on a temporary basis from another vendor. ACS
shall use its best commercially reasonable efforts to arrange for such temporary
processing at the earliest practical time and at the ACS's expense and such
services shall be comparable to the ACS Services. Notwithstanding anything in
this article 7 to the contrary, Associated may terminate this Agreement by
written notice to ACS if ACS is prevented from restoring basic functional ACS
Services to Associated within ninety (90) days. ACS and Associated will in good
faith negotiate and agree, within ninety (90) days of the Effective Date, an
arrangement reasonably satisfactory to ACS, Associated and Associated's business
interruption insurance carrier providing for Associated's ability to access the
Software under emergency circumstances, provided that each of ACS and Associated
acknowledge the need for adequate safeguards to protect their respective
proprietary information and contractual rights.
ARTICLE 8
INDEMNITY AND LIABILITY
8.1 Correction of Data. ACS will use due care and diligence in providing
------------------
the ACS Services and will, as necessary and at ACS' expense, correct and data,
reports, files and other tangible work product containing errors to the extent
such errors were caused by ACS. The expense to ACS of correcting such work
product shall be the only responsibility of ACS in connection with such errors
except as provided in Section 8.2. The provisions of this Section 8.1 shall
survive any termination or expiration of this Agreement.
8.2 Limitation of Liability. Except as provided in this Section 8.2,
-----------------------
ACS's liability to Associated for monetary damages as a result of ACS' breach of
this Agreement for any reason, including material default in performance of ACS
Services, shall not exceed $600,000, plus the amount, if any, covered by ACS'
errors and omissions insurance policy and/or any other applicable insurance
policies if then in effect (without regard to deductibles or co-insurance). The
foregoing limit of liability shall not apply in the event of (a) ACS' liability
under the following provisions: Section 2.5 (Transfer of Software), Section 2.7
(Associated Software), Section 2.11 (Covenant Not-to-Compete), Section 4.7
(Employment Rights Upon Termination), Section 5.3 (Sales Tax), Section 8.3
(General Indemnity), Section 8.4 (Intellectual Property Indemnity), and Section
9.1 (Confidentiality), or (b) ACS' intentional relinquishment of all or
substantially all of its responsibilities and obligations under this Agreement
other than pursuant to the terms hereof. Nothing herein shall be deemed to
preclude Associated's right to file claims in any bankruptcy or similar
proceeding in the event of Associated's termination of this Agreement pursuant
to Section 7.3 hereof. No action arising out of any claimed breach of the
Agreement may be brought by either party
16
more than two (2) years after the cause of action accrued. The provisions of
this Section 8.2 shall survive any termination or expiration of this Agreement.
8.3 General Indemnity. Associated agrees to indemnify, defend and hold
-----------------
ACS and its respective directors, officers, agents, attorneys and affiliates
harmless from and against all losses, claims, obligations, demands, assessments,
penalties, liabilities, costs, damages, attorneys' fees and expenses
(collectively, "Damages"), asserted against or incurred by such entities by
reason of or resulting from any obligations or liabilities of Associated not
expressly assumed herein by ACS. ACS agrees to indemnify, defend and hold
Associated and its respective directors, officers, agents, attorneys and
affiliates harmless from and against all Damages asserted against or incurred by
such entities by reason of or resulting from any obligations or liabilities of
ACS not expressly assumed herein by Associated. The provisions of this Section
8.3 shall survive any termination or expiration of this Agreement.
8.4 Intellectual Property Indemnity. ACS and Associated will each
-------------------------------
indemnify, defend and hold the other harmless from and against any and all
Damages, whether asserted during or after the term of this Agreement, arising
from or related to any actual or alleged infringement or violation by such
indemnifying party of trade secret, copyright, trademark, service mark, patent
or similar intellectual property rights, including rights related to software,
of any person resulting from the intellectual property made available by the
other pursuant to this Agreement. The provisions of this Section 8.4 shall
survive any termination or expiration of this Agreement.
8.5 Indemnification Procedures. In the event either party is entitled to
--------------------------
indemnification from the other party pursuant to the terms of this Agreement,
the indemnified party shall promptly notify the indemnifying party of any
matters in respect of which the indemnity obligation may apply and of which the
indemnified party has knowledge. The indemnifying party shall have full
opportunity to control the response to the claim and the defense thereof,
including, without limitation, any agreement relating to the settlement thereof
(except that any such settlement shall require the indemnified party's approval,
which shall not be unreasonably withheld or delayed).
ARTICLE 9
CONFIDENTIALITY, ASSOCIATED'S DATA AND SECURITY
9.1 Confidentiality. ACS and Associated agree that all proprietary
---------------
information communicated to each other, whether before or after the Effective
Date, shall be and was received in strict confidence, shall be used only for
purpose of this Agreement, and
that no such information, including without limitation the provisions of this
Agreement, shall be disclosed by the recipient party, its agents or employees
without the prior written consent of other party, except as may be necessary by
reason of legal, accounting, regulatory, bankruptcy related, or other
requirements beyond the reasonable control of the recipient party. In performing
its study (described in Section 2.2 hereof) EDS will be restricted from access
to any information or software systems used by ACS in providing the ACS
Services, provided that EDS will be allowed "end-user" access to such
applications. The provisions of this Section 9.1 shall survive any termination
or expiration of this Agreement.
9.2 Associated's Data. Associated's data shall be and remain
-----------------
Associated's property and, upon the termination of this Agreement in accordance
with the terms hereof, shall be returned to Associated in accordance with
Section 7.4 of this Agreement. ACS shall safeguard all data of Associated
using such security procedures as are generally accepted in the data processing
services industry. ACS agrees to provide to Associated copies of Associated's
data upon request, provided that ACS shall not be required to provide such data
in magnetic media form or in any other manner which would facilitate a
conversion from the ACS Data Center. ACS will provide such data in magnetic
media or other appropriate form as requested by Associated from time to time if
needed for special limited purposes, but in no event will Associated use such
data to directly or indirectly facilitate a conversion from the ACS Data
Center. Associated agrees to reimburse ACS its costs of providing such copies.
9.3 Security for Data Center. ACS will adhere to reasonably required
------------------------
security procedures at the ACS Data Center. Such procedures shall be no less
rigorous than generally accepted standards in the data processing services
industry.
9.4 Audit Rights. ACS shall provide such auditors and agents of
------------
Associated as Associated may, from time to time, designate in writing with
reasonable access to each ACS Data Center or other facility from which ACS
provides any portion of the ACS Services to audit and inspect Associated's data
and any software systems operated on behalf of Associated. Such auditors and
agents may be internal or external to Associated; provided, however, that
neither Andersen Consulting nor any other competitor of ACS shall be provided
such access and ACS may require any such auditor or agent to agree to reasonable
confidentiality restrictions. ACS shall provide to such auditors and agents any
assistance they may reasonably require in connection with such audits and
inspections. Any such access provided pursuant to this Section 9.4 shall be
conducted in a manner which will not unreasonably interfere with ACS' security
needs. ACS will provide its annual audited financial statements and unaudited
quarterly financial statements, including
18
notes thereto, and its most recent EDP audit report to Associated upon request.
ARTICLE 10
MISCELLANEOUS
10.1 Dispute Resolution. This Section 10.1 governs any dispute,
------------------
disagreement, claim or controversy between ACS and Associated arising out of or
related to this Agreement (a "Disputed Matter"). All Disputed Matters shall be
submitted to the following dispute resolution process:
(a) Internal Escalation. First, the Disputed Matter shall be referred
-------------------
jointly to senior executives of each of the parties. If such
executives do not agree upon a decision within ten (10) business days
after referral of the matter to them, the parties shall proceed to
the next stage of dispute resolution procedure.
(b) Mediation. Either party may, upon written notice and within ten (10)
---------
business days after the conclusion of the internal escalation
procedure, elect to utilize a non-binding resolution procedure
whereby each party presents its case at a hearing before a panel
consisting of a senior executive of each of the parties and a
mutually acceptable neutral adviser. The mediation hearing will occur
no more than twenty (20) business days after a party serves written
notice to use outside mediation. The neutral adviser will be
instructed to assist the senior executives in evaluating the
strengths and weaknesses of each party's position on the merits of
the Disputed Matter. To the extent the neutral adviser is
compensated, the parties shall each bear half the cost. If the
Disputed Matter cannot be resolved at the mediation hearing, the
parties may proceed to the next stage of dispute resolution
procedure.
(c) Arbitration. To the extent the Disputed Matter has not been resolved
-----------
in whole or in part as a result of the processes set forth in
subsections (a), (b) or (d) of this Section 10.1, the parties shall,
at the option of either party upon written notice, submit the
Disputed Matter to arbitration under the Commercial Arbitration Rules
of the American Arbitration Association (the "AAA"), as modified
herein. The arbitration panel shall have the authority to render any
award or remedy allowed by law, including, without limitation,
specific performance, injunction, damages and exemplary damages,
subject to the terms of this Agreement.
19
ACS and Associated agree to modify and supersede the Commercial
Arbitration Rules of the AAA, as explicitly permitted by those rules, in
the following manner:
1. Any arbitration hearing or hearings shall take place in
Dallas, Texas.
2. The arbitration panel hearing the dispute shall be comprised
of three neutral members who will resolve the dispute by a majority
vote.
3. The three arbitrators shall be selected from the AAA's Panel
of Arbitrators. The AAA will present ACS and Associated with identical
lists of ten names of arbitrators meeting the qualifications set forth
in this Agreement. The AAA will supply ACS and Associated with
biographical data on each proposed arbitrator, including each proposed
arbitrator's current resume. Neither ACS nor Associated shall contact
any proposed arbitrator directly; all requests for information
concerning proposed arbitrators shall be directed to the AAA. ACS and
Associated shall each have the ability to strike five proposed
arbitrators from each list supplied by the AAA for any reason or for no
reason. ACS and Associated shall each have the ability to strike any
proposed arbitrator from the lists supplied by the AAA for bias or
apparent bias. The AAA shall designate as the arbitrators to decide a
dispute the first three arbitrators who have not been struck by either
ACS or Associated. If necessary, the AAA will supply ACS and Associated
with additional lists of proposed arbitrators until three arbitrators
are left unstruck by both parties. If ACS or Affiliated fails to
reasonably cooperate in the arbitrator selection process, the AAA will
select arbitrators on behalf of the non-cooperating party.
4. The arbitrators proposed by the AAA on the lists submitted to
ACS and Associated shall each meet the following qualifications:
a. The arbitrators shall reside and work in the north Texas
area.
b. At least one of the arbitrators shall have experience in
the computer services industry.
c. At least one (1) of the arbitrators shall be an attorney.
5. All discovery must be completed at least sixty (60) days
before the first arbitration hearing on the merits
20
of the dispute. This date shall be referred to as the discovery cutoff date.
6. If either ACS or Associated intends to use an expert witness's
testimony, the party must designate all experts at least ninety (90) days prior
to the discovery cutoff date. If an expert witness is not designated at least
ninety (90) days prior to the discovery cutoff date and offered for deposition
prior to the discovery cutoff date, that expert witness's testimony may not be
used in the arbitration proceeding.
7. ACS and Associated will be entitled to engage in any reasonable
discovery practices permitted by the Federal Rules of Civil Procedure. Any
document or information responsive to a request which is not objected to and
which is not produced prior to the discovery cutoff date may not be used in the
arbitration. The party requesting the document or information has the burden of
requesting a ruling on the objection. If a party fails to comply with the
arbitrator's ruling that documents or information be produced, that party shall
not be permitted to introduce into evidence any documents or information,
including undisclosed witnesses, which fall within the scope of the arbitrator's
discovery order.
8. All discovery disputes shall be decided by one arbitrator from the
panel. The AAA shall designate an arbitrator from the panel to decide discovery
disputes. All discovery disputes shall be submitted in writing, and the
arbitrator shall not hear oral argument or hold hearings on discovery matters.
The arbitrator's decision on discovery issues shall be final. If a party
refuses to comply with the arbitrator's order on discovery, the arbitrator may
order the non-complying party to pay the attorneys' fees and other costs the
requesting party incurs in compelling discovery.
9. Upon the request of either party, the arbitrators will be required
to issue a written award and opinion within seven (7) days after issuing their
decision, provided that the effectiveness of the decision shall not be delayed
pending a written award or written opinion.
(d) Emergency Relief. Notwithstanding the other provisions of this Section
----------------
10.1, either ACS or Associated may seek temporary emergency relief in any court
of competent jurisdiction with respect to any Disputed Matter. The process of
seeking temporary emergency relief through the court system shall not waive
either party's right to demand arbitration of a Disputed Matter. The parties'
rights to demand arbitration shall not prevent a court of
21
competent jurisdiction from granting or denying a request for
temporary emergency relief.
(e) Continuation of Payment and Services. Unless this Agreement has been
------------------------------------
terminated in accordance with Article 7 hereof, ACS will continue to
provide the ACS Services and otherwise comply with its obligations
under this Agreement during any dispute resolution proceedings
commenced pursuant to this Section 10.1 and Associated will continue
to pay the charges of ACS and otherwise perform its obligations in
accordance with this Agreement, including without limitation the
obligations of ACS and Associated under Section 5.4 hereof. If
Associated reasonably believes that the information and reports
provided by ACS pursuant to Section 5.5 hereof have been or are
inaccurate or are being falsified, Associated may request that the
arbitration panel appoint an independent auditor to verify such
information and reports (provided, however, that no competitor of ACS
shall be eligible for appointment).
10.2 Assignment. This Agreement shall be binding on the parties hereto and
----------
their respective successors and assigns. Associated shall not, without the prior
written consent of ACS, assign this Agreement or any of its rights and
obligations hereunder to any other person or entity, unless such assignment is
to an acquiror of Associated or Associated's business pursuant to a transaction
that constitutes a "Business Sale" as defined in the Certificate of
Incorporation of Associated Holdings, Inc. Notwithstanding the foregoing, ACS
agrees that Associated may assign this Agreement, as a collateral assignment, to
Chase Manhattan Bank subject at all times to all the terms and conditions
hereof. Associated agrees to notify ACS in writing upon receipt by Associated of
any notice of default from Chase Manhattan Bank under any applicable credit
agreement. ACS shall not, without the prior written consent of Associated,
assign this Agreement or any of its rights and obligations hereunder to any
other person or entity, unless such assignment is to a purchaser of all or
substantially all the assets of ACS which is financially and operationally
qualified to satisfy all obligations of ACS under this Agreement and is not a
competitor of Associated.
10.3 Notices. Whenever under this Agreement one party is required or
-------
permitted to give notice or other communication to the other, such notice shall
be deemed given when delivered in hand, telegraphed, telecopied or telexed, or
three (3) business days after when mailed by United States mail, registered or
certified mail, return receipt requested, postage prepaid, and addressed as
follows:
22
In the case of ACS:
Affiliated Computer Services, Inc.
2828 North Haskell Avenue
Dallas, Texas 75204
Attn: President
In the case of Associated:
Associated Stationers, Inc.
1075 Hawthorn Drive
Itasca, Illinois 60143
Attn: President
Either party may change its address for notification purposes by giving
the other the (10) days prior written notice of the new address and the date
upon which it will become effective.
10.4 Relationship of Parties. ACS, in furnishing services to
-----------------------
Associated hereunder, is acting only as an independent contractor. ACS does not
undertake by this Agreement or otherwise to perform any obligation of
Associated, whether regulatory or contractual, or, except as provided in this
Agreement, to assume any responsibility for Associated's business or operations.
ACS has the right and obligation to supervise, manage, contract, direct,
procure, perform or cause to be performed, all work to be performed by ACS
hereunder unless otherwise provided herein. It is expressly understood and
agreed that neither party is an employee or legal representative of the other
party, and unless specifically authorized in writing to do so may not incur any
obligations on behalf of or in the name of the other party. This Agreement does
not create a partnership or joint venture between parties.
10.5 Force Majeure. Subject to Section 7.7 hereof (Continuing Force
-------------
Majeure), either party hereto shall be excused from performance hereunder for
any period and to the extent it is prevented, hindered or delayed in the
performance of any obligation or services pursuant hereto, in whole or in part,
as a result of delays caused by an act of God, war, riot, civil disturbance,
explosion, accident, fire, court order, labor dispute, epidemic, or other cause
beyond its reasonable control, provided that such prevention, hindrance or delay
could not have been prevented by reasonable precautions and cannot reasonably be
circumvented by the non-performing party through the use of alternative sources
or plans (including, without limitation, disaster recovery planning), or other
means. Any party so delayed in its performance shall notify the other at the
earliest practicable time of the inception of such delay, describe the nature of
the delay and proceed promptly to remedy the same.
23
10.6 Severability. In the event that any of the provisions of this
------------
Agreement are held to be unenforceable or invalid by any court of competent
jurisdiction, the validity and enforceability of the remaining provisions shall
not be affected and, in lieu of such invalid or unenforceable provision, there
shall be added automatically as part of this Agreement one or more provisions as
similar in terms as may be valid and enforceable under applicable law.
10.7 Entire Agreement. This Agreement, including any Schedules
----------------
attached hereto, each of which is an integral part of this Agreement and
incorporated herein for all purposes, constitutes the entire agreement between
the parties with respect to the subject matter hereof and supersedes all prior
agreements and understandings between the parties (including, without
limitation, the agreements in letter form dated December 13, 1991 and December
17, 1991). There are no representations, understandings or agreements relative
hereto which are not fully expressed herein. No change, waiver, or discharge
hereof shall be valid unless in writing and signed by an authorized
representative of the party.
10.8 No Third-Party Rights. Nothing in this Agreement (including the
---------------------
Schedules attached hereto) or contemplated hereby shall create any express or
implied rights in any person or entity other than the parties hereto.
10.9 Attorneys' Fees. If any legal action or other proceeding is
---------------
brought for the enforcement of this Agreement, or because of our alleged breach
hereof, the prevailing party shall be entitled to recover reasonable attorneys'
fees and other costs incurred in that action or proceeding, in addition to any
other relief to which it may be entitled.
10.10 Approvals and Similar Actions. Where agreement, approval,
-----------------------------
acceptance, consent or similar action by either party hereto is required by any
provision of this Agreement, such action shall not be unreasonably delayed or
withheld, and shall only be effective if given in writing by duly authorized
representatives of the parties.
10.11 ACS' Costs. Whenever in this Agreement or the Schedules hereto
----------
there is a reference to ACS' "costs", such reference shall be deemed to refer to
ACS' direct out-of-pocket costs, without accounting for overhead. When direct
out-of-pocket costs are those paid to an affiliate of ACS, then such
out-of-pocket costs shall be based on the lower of the foregoing and fair market
value.
10.12 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
-------------
CONSTRUED IN ACCORDANCE WITH THE LAWS, OTHER THAN CHOICE OF LAW RULES, OF THE
STATE OF TEXAS.
24
IN WITNESS WHEREOF, ACS and Associated have each caused this Agreement to
be signed and delivered by its duly authorized officer, all as of the date first
set forth above.
AFFILIATED COMPUTER ASSOCIATED STATIONERS, INC.
SERVICES, INC.
By: ________________________ By: ________________________
Ben D. Podpechan Michael D. Rowsey
Senior Vice President President
25