EXHIBIT 10.40
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Customer's Outsourcing Agreement
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I. PREAMBLE
This Customer's Outsourcing Agreement (the "AGREEMENT"), dated to be effective
as of December 1, 2000 (the "COMMENCEMENT DATE") is entered by and among
Embotelladora Central, S.A., with its principal office at 26 Calle 6-02, Zona
11, Apartado Postal 161, Guatemala City, Guatemala (the "CUSTOMER"), and
Electronic Data Systems (EDS) de Guatemala S.A., with its principal office in
Guatemala at 7a. Avenida 5-10 Zona 4, Centro Financiero, Torre I, Nivel 10,
Oficina 3, Guatemala City, Guatemala 01004 (the "VENDOR").
Whereas Electronic Data Systems Corporation ("EDS") and The Coca-Cola
Company ("TCCC") have entered into a Master Outsourcing Agreement dated as of
the 18 day of June, 1999, ("MASTER OUTSOURCING AGREEMENT"), a copy of which
is attached hereto as Schedule M, which provides that a Customer (as that term
is defined in the Master Outsourcing Agreement) may, upon the execution of a
Customer's Outsourcing Agreement (as that term is defined in the Master
Outsourcing Agreement), outsource various technical information services to an
EDS affiliate upon the terms and conditions set forth in the Master
Outsourcing Agreement as supplemented or modified by this Agreement;
Whereas the Customer wishes to outsource various technical information
services to the Vendor on the terms and conditions set forth in the Master
Outsourcing Agreement, as supplemented or modified by this Agreement;
Whereas the Vendor is capable of providing the technical information
services required by this Agreement to be provided by Vendor to the Customer;
Now THEREFORE in consideration of the agreements contained herein, and
intending to be legally bound hereby, the parties agree as follows:
A. General
1. As of the Commencement Date all of the terms and conditions set
forth in the Master Outsourcing Agreement as supplemented or
modified by this Agreement, including all exhibits and
appendixes, shall be binding and enforceable between the
Customer and the Vendor.
a. The defined terms used in this Customer's Outsourcing
Agreement shall have the same meaning given to them in the
Master Outsourcing Agreement, including all exhibits and
appendixes thereto. Changes or amendments to the Master
Outsourcing Agreement made subsequent to the date hereof
shall only be effective for this Agreement if Customer and
Vendor hereto have so explicitly agreed in writing.
b. The Customer and the Vendor agree that they have both read
and do understand the Master Outsourcing Agreement,
including all exhibits and appendixes thereto.
c. Any reference to "Customer" herein shall include TCCC, its
divisions and subsidiaries and all entities directly or
indirectly involved in the manufacture or wholesale
distribution of TCCC products, provided that any such
entity shares information services with the Customer
during the Customer's Outsourcing Agreement Term.
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2. This Customer's Outsourcing Agreement shall supersede all
previous agreements and arrangements, written or oral, between
the parties on the subject matter hereof.
B. Definitions
In addition to the definitions in the Master Outsourcing Agreement,
the following definitions are applicable to this Agreement.
1. "CONTRACT YEAR" shall mean a twelve (12) consecutive month
period beginning at the Commencement Date and ending at
midnight on the day before the anniversary of the Commencement
Date in each subsequent year.
2. "DESKTOP SERVICES" are that portion of the Baseline Services
described as Desktop Services in Schedule B.
3. "HAND HELD TERMINALS" are the mobile computing terminals
generally used by the Customer sales force to take orders,
process invoices, perform sales settlements on delivery routes
and perform inventory control and in use by the Customer sales
force.
4. "HAND HELD SERVICES" are that portion of the Baseline Services
described as Hand Held Services in Schedule B.
5. "INTERNATIONAL TELECOMMUNICATIONS NETWORK MANAGEMENT SERVICES"
means the provision by Vendor, through duly licensed
telecommunications carriers, and management by Vendor in
accordance with the Telecommunications Management Services
described in Schedule B, of an international telecommunication
network connecting the Vendor Mexico City Data Center with
premises of an affiliate of Customer in San Jose, Costa Rica
for use in delivery and use of the Help Desk Services and
Midrange Services.
6. "KEY SYSTEMS" are those systems identified as Key Systems on
Schedule E-IV-C, made available through the Centralized
Services.
7. "LATIN AMERICA AGREEMENTS" are, collectively, this Customer's
Outsourcing Agreement together with the other seven Customer's
Outsourcing Agreements entered by and between affiliates of
Vendor and affiliates of Customer, each dated to be effective
as of December 1, 2000 and each incorporating the Master
Agreement with such additions and revisions as stated in such
Customer's Outsourcing Agreements, providing collectively for
services to be provided by Vendor and the affiliates of Vendor
to Customer and the affiliates of Customer in each of the
following countries: Mexico, the United States, Brazil, Costa
Rica (and Panama), Guatemala, Nicaragua, Colombia and
Venezuela.
8. "MIDRANGE SERVICES" are that portion of the Baseline Services
described as Midrange Services in Schedule B.
9. "NETWORK MANAGEMENT SERVICES" are that portion of the Baseline
Services described as Network Management Services in Schedule
B.
10. "PROJECT MANAGEMENT SERVICES" are that portion of the Baseline
Services described as Project Management Services in Schedule
B.
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11. "TELECOMMUNICATIONS MANAGEMENT SERVICES" are that portion of
the Baseline Services described as Telecommunications
Management Services in Schedule B.
C. Application of the Master Outsourcing Agreement
With reference to the below sections of the Master Outsourcing
Agreement, the parties to this Agreement have agreed to the
following particular terms and conditions:
II. TERM
A. Initial (2.03)
The initial term of this Agreement shall commence on the
Commencement Date and shall continue until midnight on the fifth
anniversary of the Commencement Date, unless terminated earlier
pursuant to Section 18 of the Master Outsourcing Agreement (the
"Initial Term").
III. PROVISION OF SERVICES
A. Description of Services (3.01)
The Baseline Services for this Agreement are described in Schedule B,
except for those portions of such Schedule B which refer expressly to
Services to be provided in another country other than Guatemala or
Central America , or in some cases are identified specifically by
reference to Guatemala or Central America
Schedule B describes generally the Baseline Services to be provided
by Vendor and affiliates of Vendor to Customer and affiliates of
Customer pursuant to the Latin America Agreements, and is being
attached and incorporated in substantially the same form to each of
the Latin America Agreements. It is acknowledged, however, that the
International Telecommunications Network Management Services, the
Midrange Services and the Help Desk Services described in Schedule B
shall not be provided by Vendor or paid for by Customer pursuant to
this Agreement, but rather shall be available to Customer and with
respect to Help Desk Services, Customer's Panamanian affiliate
because they shall be performed by an affiliate of Vendor operating
in Mexico and paid for by an affiliate of Customer operating in
Mexico pursuant to a different Latin America Agreement, and made
available to Customer by its affiliate on a shared use basis.
Similarly, the Project Management Services described in Schedule B
shall not be provided by Vendor or paid for by Customer pursuant to
this Agreement, but rather shall be available to Customer because
they shall be performed by an affiliate of Vendor operating in the
United States and paid for by an affiliate of Customer operating in
the United States pursuant to a different Latin America Agreement,
and made available to Customer by its affiliate on a shared use
basis. It is therefore agreed that any change in the terms of such
Latin America Agreements pertaining to Mexico and the United States,
as indicated, may affect the actual availability to Customer of the
International Telecommunications Network Management, Midrange, Help
Desk and Project Management Services provided pursuant thereto, and
that such terms may be changed by the parties to such agreements
without the consent and approval of Customer or Vendor. It is also
agreed that notwithstanding anything to the contrary provided in
this Agreement and its Schedules, Vendor shall have no liability or
responsibility to Customer under this Agreement with respect to any
delay or failure in the Service, including failure to achieve any
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Service Level, with respect to the International Telecommunications
Network Management, Midrange, Help Desk and Project Management
Services. Any such delay or failure in the International
Telecommunications Network Management, Midrange, Help Desk, or
Project Management Services shall be addressed solely in accordance
with the terms of the Latin America Agreements pursuant to which
such Services are provided and paid for by the affiliates of
Customer and Vendor.
In the event that the Latin America Agreement relating to services
to be provided by an affiliate of Vendor to an affiliate of Customer
in Mexico shall expire or terminate for any reason prior to the
expiration or termination of this Agreement, Customer agrees to
accept directly from the affiliate of Vendor providing such services
in Mexico such International Telecommunications Network Management,
Midrange and Help Desk Services, and to pay such affiliate of Vendor
Customer's proportionate share of usage (as allocated collectively
by Customer and the affiliates of Customer to account for the total
and communicated by written notice to Vendor and such affiliate of
Vendor) on a monthly basis of the fees payable to such affiliate of
Vendor for such International Telecommunications Network Management,
Midrange and Help Desk Services under such Latin America Agreement
on the date of its termination or expiration. Such fees payable
under such Latin America Agreement shall be grossed up to cover the
amount of any taxes required to be paid by any applicable law with
respect to such amounts due from Customer to such affiliate of
Vendor; the payment of such taxes being the obligation of Customer.
The parties hereto shall use their best efforts to agree on a
mutually satisfactory business arrangement to resolve the situation
in a different manner, and for that purpose Customer shall meet with
the affiliates of Customer and with Vendor and the affiliates of
Vendor party to all then continuing Latin America Agreements to
discuss and negotiate in good faith a different arrangement designed
to allow continued access to and use of the International
Telecommunications Network Management, Midrange and Help Desk
Services by Customer and the affiliates of Customer in a manner and
on terms mutually acceptable to all. It is understood that the
obligations of Customer under this paragraph may be enforced by the
affiliate of Vendor entitled to provide and receive payment for such
International Telecommunications Network Management, Help Desk and
Midrange Services as a third party beneficiary.
IV. DATA CENTERS
A. Data Center Location (4.01)
From the Commencement Date, Vendor shall deliver the Midrange
Services from the Data Center of an affiliate of Customer located at
San Jose, Costa Rica until completion of the Services described in
the Transition Plan. Following completion of such Services described
in the Transition Plan, an affiliate of Vendor shall deliver the
Midrange Services from a data center operated by it and located in
Mexico City (the "VENDOR MEXICO CITY DATA CENTER").
B. Improvements. (4.04)
Improvements to Customer's facilities that would constitute
"fixtures" will become the Customer's property and will be performed
at Customer expense.
V. PERFORMANCE STANDARDS
A. Description of Performance Standards (5.02 and 8.02)
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The Performance Standards and Service Levels to be applicable with
respect to this Agreement, and the applicability of the same during
the Transition Period, shall be as defined in Schedule E to this
Agreement. The credits that may be applicable in the event of any
failure by Vendor to achieve the Critical Service Levels with
respect to this Agreement shall be those identified by reference to
Guatemala or Central America in such Schedule E.
B. Adjustment of Service Levels (5.04)
Periodic adjustments of Service Levels and governing rules are
described in Schedule E to this Agreement.
C. Measurement and Monitoring (5.05) Measurement and monitoring of
Service Level performance are described in Schedule E to this
Agreement.
VI. PROJECT TEAM
A. Customer Project Manager (6.02)
The Customer Project Manager appointed as of the Commencement Date
is Rubens Padalino.
B. Vendor Project Manager (6.03)
The Vendor Project Manager (also referred to as the "CLIENT DELIVERY
EXECUTIVE" or the "CDE") appointed as of the Commencement Date is
Enrique Garcia.
C. Project Staff (6.06)
Key Staff Members are defined by reference to Guatemala in Schedule
G to this Agreement. Notwithstanding the terms of the Master
Agreement, (i) members of the Project Staff formerly employed by
Customer shall be considered to be Key Staff Members only if so
defined on Schedule G, and (ii) Vendor shall not reassign or replace
any such individual during the initial five (5) year term of this
Agreement except in those circumstances described in Section 6.06(b)
of the Master Outsourcing Agreement.
D. Contractors and Subcontractors (6.07)
Vendor contractors and subcontractors approved by Customer as of the
Commencement Date are identified on Schedule L to this Agreement.
E. Right to Hire (6.11)
It is recognized that the right of Customer to hire Vendor Personnel
during the Termination Assistance Period recognized by Section 6.11
of the Master Outsourcing Agreement shall not include any right of
Customer to hire the Vendor Project Manager.
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VII. OTHER VENDOR RESPONSIBILITIES
A. Reports (7.03)
Reports to be prepared periodically by Vendor are described in
Exhibit G of Schedule B to this Agreement.
B. Change Control Procedures (7.02)
The first draft of the Change Control Procedures to be applicable
for purposes of this Agreement shall be prepared by Vendor within
ninety (90) days of the Commencement Date and the parties shall use
their best efforts to have such Change Control Procedures agreed and
included in the Policy and Procedures Manual within one hundred
twenty (120) days of the Commencement Date.
C. Consents (7.04)
Customer shall have the obligation to obtain, and to pay for costs
associated with obtaining, required consents and approvals as
described in Section 7.04 of the Master Outsourcing Agreement,
including those specifically identified on Schedule N to this
Agreement.
D. Disaster Recovery Plan (7.11)
Arrangements for restoration and continued provision of the
Midrange, Network Management, and Help Desk Services (the
"CENTRALIZED SERVICES") in the event of a disaster, or force majeure
event, shall be addressed in a Disaster Recovery Plan which shall be
developed by Vendor within one hundred eighty (180) calendar days
following the Commencement Date and subsequently implemented by
Vendor following completion of the Services described in the
Transition Plan. Such Disaster Recovery Plan shall be designed to
allow for (i) restoration of the Key Systems provided through the
Centralized Services to be completed within forty eight (48) hours
and (ii) restoration of other Services to be provided by Vendor
within sixty (60) days, in each case following the declaration of
the occurrence of a disaster that inhibits the Vendor of providing
the Services. Such declaration shall be automatic if, at any time,
the Services are interrupted and not completely restorable in 24
hours from the occurrence of the event causing the outage.
VIII. TRANSITION TO VENDOR
A. Transition Plan (8.01)
The Transition Period shall begin with the Commencement Date and
shall be completed on or before the first anniversary of such date
in accordance with the Transition Plan defined and attached in
Schedule H to this Agreement.
B. Transitioned Customer Employees (8.03)
Certain Customer employees as are listed in Schedule J (the
"TRANSITIONING EMPLOYEES") may be offered employment with the Vendor
subject to employment policies of Vendor and the terms as set forth
in Schedule J. The Transitioning Employees who accept an offer of
employment with the Vendor will become employees of Vendor, and
shall commence such employment with Vendor on the date set forth in
Schedule J (such date being referred to as the "EMPLOYEE TRANSITION
DATE"). For each Transitioning Employee hired by Vendor, Customer's
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obligations to continue to pay wages, provide benefits and make
employee contributions shall terminate as of the Employee Transition
Date except to the extent otherwise provided in Schedule J. Within
forty five (45) days following the Commencement Date, Vendor shall
deliver to Customer a written list of all Transitioning Employees
who accepted an offer of employment with the Vendor, and Customer
shall acknowledge receipt of such list. Thereafter, upon the request
of either party, Customer and Vendor shall amend Schedule J by
mutual written agreement to substitute (i) the list of Transitioning
Employees hired by Vendor, for (ii) the list of Transitioning
Employees qualified to receive an offer of employment from Vendor
included in Schedule J on the Commencement Date.
IX. EQUIPMENT, SOFTWARE, AND PROPRIETARY RIGHTS (9.01, 9.02, 9.07)
A. Equipment
The equipment that will be used by the Vendor to provide and perform
the Services is listed by reference to Guatemala or Central America
in Schedule I, the Resource Control Log, attached to this Agreement,
and shall be provided by Customer or Vendor and replaced or
refreshed as described in such Schedule B.
In the event that any of such equipment used in providing the
Midrange Services is no longer needed for use in providing such
Services pursuant to this Agreement, if so requested by Customer in
accordance with the procedure discussed below, it shall be the
responsibility of Vendor to sell or otherwise dispose of such
equipment on behalf of Customer, using good faith efforts to sell
such equipment for its fair market value. Upon notice that disposal
of any such equipment is necessary, Vendor shall prepare and provide
to Customer estimates of both the then current fair market value of
the equipment in question and the anticipated expenses of sale or
other disposal. Within a reasonable time after receiving such
estimates, Customer shall provide written notice to Vendor of its
election as to whether Vendor should proceed to dispose of the
equipment in the manner contemplated by the Vendor estimates. The
proceeds of any such sale shall be first applied to pay the
reasonable expenses incurred by Vendor in completing such sale or
other disposal, and the remainder, if any, shall be paid by Vendor
to Customer. If the expenses of such sale or other disposition by
Vendor exceed the proceeds, Customer shall reimburse the difference
to Vendor.
In the event that any personal computers or Hand Held Terminals for
which Services are provided by Vendor pursuant to this Agreement are
replaced or otherwise not needed for use by Customer, upon the
request of Customer it shall be the responsibility of Vendor to (i)
first erase and overwrite the disc storage and memory of each such
device in a manner designed to assure that matters stored thereon
cannot be recovered, and (ii) then to sell or otherwise dispose of
such devices in a manner determined most appropriate by Vendor. All
expenses and all proceeds relating to or arising from such erasure
and overwriting and the sale or other disposal of such devices by
Vendor shall be for the account of Vendor.
B. Customer Software
Schedule I, by reference to Guatemala or Central America, contains a
list of all the Customer Software applicable hereto .
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C. Vendor Software
Schedule I, by reference to Guatemala or Central America , contains
a list of all the Vendor Software applicable hereto.
D. Source Code and Back-up Tapes
Vendor shall maintain copies of the Back-Up Tapes for the following
time periods:
For Midrange databases, Back-Up Tapes shall be required with respect
to each calendar month and each calendar year, and such Back-Up
Tapes shall be maintained for not less than six (6) years from date
of creation.
E. Third Party Software
Schedule I, by reference to Guatemala or Central America , contains
a list of all the Third Party Software anticipated to be used by
Vendor in providing the Baseline Services as of the Commencement
Date. The additional information with respect to such Third Party
Software as required by Section 9.09 (a) of the Master Outsourcing
Agreement shall be provided by Vendor to Customer within one hundred
twenty (120) days.
X. Resourcing and Aggregate Limitations (10.01)
To the extent that Customer obtains from third parties, or provides
to itself, any of the Services in accordance with Section 10.01 of
the Master Outsourcing Agreement, the amounts to be paid to Vendor
by Customer will be adjusted according to the mechanism set forth in
Schedule F (and, if appropriate, the Global Pricing Exhibit of the
Master Agreement), and any equipment, software or service contracts
owned or leased by Vendor for use in providing the Services and no
longer needed by Vendor as a result of such reduction in Services by
Customer shall be sold or assigned to or at the direction of
Customer as provided in Article XIV.B of this Agreement below as
applicable in the event of a termination of this Agreement.
XI. THIRD PARTY SERVICE CONTRACTS (10.03)
The Vendor shall have access to and use of all of the third party
services governed by the Third Party Service Contracts described in
Part I of Schedule K to this Agreement. The Vendor shall have
financial responsibility to reimburse Customer for the regular
monthly charges with respect to, but shall not assume, those Third
Party Service Contracts described by reference to Guatemala or
Central America in Part II of Schedule K to this Agreement.
XII. INSURANCE (12.01)
It is agreed that the requirements of Section 12.01 of the Master
Outsourcing Agreement shall be satisfied by EDS maintaining the
insurance described therein throughout the term of this Agreement,
with the endorsements required by Section 12.01(b) and the
certificates and notices required by Section 12.01(c) provided to
Administracion S.A. de C.V., an affiliate of Customer organized
under the laws of Mexico for the benefit collectively of Customer
and each of the affiliates of Customer party to a Latin America
Agreement.
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XIII. PAYMENT TO VENDOR (13.01, 13.03, 13.12, 13.14)
A. Baseline Service Fees
Baseline Service Fees and the Baseline Resources included in such
Fees are defined in Schedule F to the Agreement. In those instances
where fees or amounts with respect to more than one country are
indicated on such Schedule F, the fees and amounts applicable to
this Agreement shall be those identified by reference toGuatemala or
Central America. Such Baseline Service Fees are not calculated on a
"cost-plus" basis as anticipated by the Global Pricing Exhibit
attached to and part of the Master Agreement, and therefore shall
not be subject to the Global Volume Discounts as described in such
Global Pricing Exhibit. Such Baseline Service Fees and other amounts
stated on Schedule F as due to be paid by Customer to Vendor are not
inclusive of VAT, which shall be paid by Customer in accordance with
Section 13.14 of the Master Outsourcing Agreement.
B. Retained and Pass Through Expenses
Retained and Pass Through Expenses are defined in Schedule F to the
Agreement.
C. Incidental and Other Charges
Each of Customer and Vendor shall be responsible for the incidental
expenses that may be incurred by Vendor as provided in Schedule F to
this Agreement.
D. Increase or Reduction in Fees
Customer shall pay Additional Volume Charges (also referred to as
"ARCs" or "AVCs") and be entitled to receive Reduced Volume Credits
(also referred to as "RRCs" or RVCs") as defined in Schedule F to
this Agreement.
Each of Customer and Vendor acknowledge that the fees payable under
this Agreement for any New Services that are Inscope Infrastructure
Services shall be based upon the Global Pricing Exhibit attached to
and part of the Master Agreement, if other New Service Fees are not
agreed by Vendor and Customer in accordance with Section 3.02 of the
Master Outsourcing Agreement.
E. Payment Schedule
1. Start-up
Vendor shall invoice One-time Transition Charges as described
on Schedule F to this Agreement. In the event of a termination
for convenience by Customer in accordance with Section 18.01(b)
of the Master Outsourcing Agreement, any such Transition
Charges as yet unpaid by Customer shall be considered to be
among the capital investments to be paid by Customer to Vendor
as a termination fee.
2. Monthly Service Charges
Monthly Service Charges shall be invoiced in arrears. This
means that each month's Services will be invoiced on the first
day of each month and Customer will pay undisputed charges not
more than 30 days after receipt of the invoice.
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3. ARC/RRCs
Vendor will provide an invoice for variable charges, with
appropriate back-up detail, and shall endeavor to provide such
invoice in the month following the month in which the charges
were incurred. Customer will pay undisputed charges not more
than 30 days after receipt of the invoice.
F. Adjustment to Charges
1. Payment Currency.
All charges and sums due to the Vendor under this Agreement are
specified in this Agreement in either United States Dollars
("DOLLARS") or Guatemalan Quetzales ("LOCAL CURRENCY"). The
parties acknowledge, however, that to the extent required by
applicable law of Guatemala , the amounts specified here in
Dollars may be paid by Customer to Vendor in Local Currency. If
Customer elects or is required to make any such payment in
Local Currency rather than Dollars, the parties agree that the
rate of exchange used to convert the amounts due from Dollars
to Local Currency shall be the rate at which the Bank of
Guatemala publicly offers to sell Dollars for Local Currency on
the day immediately preceding the date payment is made to
Vendor. If such central bank should stop publishing its rate
for the sale of Dollars, the parties agree that the rate of
exchange used to convert the amounts due from Dollars to Local
Currency shall be (i) the rate published in the bulletin of the
local stock market for operations denominated in Dollars or,
(ii) if there is no local stock market or such a rate is not
published by the stock market, shall be the rate determined by
averaging the rates offered by the three largest banks in
Guatemala as the rates at which such banks offer to sell
Dollars for Local Currency on the day immediately preceding the
date payment is made to Vendor.
2. Interest on Late Payments
Any amounts due to be paid hereunder in Dollars not paid when
due will bear interest until paid as set forth in Section 13.12
of the Master Outsourcing Agreement. If any amounts due to be
paid hereunder in Local Currency are not paid when due, the
following procedure shall be followed to determine the amount
due from Customer when payment is made: (i) each amount due but
unpaid shall be converted to a value in Dollars at the exchange
rate established by Article XIII,F,1 of this Agreement above as
of the date such payment was due, (ii) interest on the
resulting amount of Dollars shall be calculated from the date
such amount was due until it is paid as set forth in Section
13.12 of the Master Outsourcing Agreement, and (iii) the
resulting total in Dollars of the payment due plus accrued
interest shall be converted to a value in Local Currency at the
exchange rate established by Article XIII,F,1 of this Agreement
above as of the date such payment is actually made.
3. Cost of Living Adjustment
a. Local Currency Adjustment.
The total portion of the amounts payable to Vendor
hereunder which are specified as due and payable in Local
Currency shall be indexed to the Inflacion index as
published by the Bank of Guatemala , or the equivalent if
such index is not available (the "NCPI"). If, on the first
day of any calendar year during the term of this
Agreement, the NCPI for the calendar month immediately
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preceding such day (the "NCPI Current Index") is higher
than the NCPI (i) one year prior thereto, or (ii) in the
event Vendor has made an immediate adjustment during such
year as described below, the date of such adjustment (as
applicable, the "NCPI Base Index"); then, effective as of
the first day of such calendar year, all amounts specified
in this Agreement as due from Customer to Vendor in Local
Currency, as previously adjusted pursuant to this Section,
shall be increased by the percentage that the NCPI Current
Index increased from the NCPI Base Index. If at any time
during a calendar year the NCPI Current Index increases by
ten percent (10%) or more over the NCPI Base Index, then
by notice to Customer, Vendor may immediately increase the
portion of the amount payable to Vendor in Local Currency
under this Agreement by such percentage, without waiting
until the first day of the next calendar year. For
purposes of clarity, it is acknowledged that the intent of
the parties is that any such amounts payable by Customer
to Vendor in Local Currency will be modified periodically
as appropriate in accordance with this paragraph, applying
any such changes in the NCPI for the appropriate period to
the pricing for this Agreement, as such pricing may have
been previously modified pursuant to this paragraph, so
that such adjustments have cumulative effect with respect
to all changes in the NCPI from the Commencement Date
through termination of this Agreement.
b. Dollar Adjustment.
Forty-two percent (42%) of the portion of the amounts
payable to Vendor hereunder which are specified in this
Agreement as due and payable in Dollars shall be indexed
to the Consumer Price Index for All Urban Consumers, U.S.
City Average, for All Items (1982-84 = 100), as published
in the Bureau of Labor Statistics of the Department of
Labor of the United States of America (the "CPI"). Such
adjustments shall be calculated using the CPI in the
manner as provided above with respect to adjustments based
upon the NCPI for amounts specified as payable in Local
Currency except that (i) such adjustments shall be
calculated only on the first day of each calendar year
during the term of this Agreement, commencing January 1,
2002, and no immediate adjustments shall be made, and (ii)
such adjustment shall be made to correspond to ninety five
percent (95%) of the change in the CPI index for each
calendar year, rather than one hundred percent (100%) of
the index change. If the CPI growth in every calendar year
is less than 5 %, Vendor will not adjust the portion of
the amounts payable to Vendor hereunder which are
specified in this Agreement as due and payable in Dollars.
For purposes of clarity, it is acknowledged that the
intent of the parties is that any such amounts payable by
Customer to Vendor in Dollars will be modified
periodically as appropriate in accordance with this
paragraph, applying any such changes in the CPI for the
appropriate period to the pricing for this Agreement, as
such pricing may have been previously modified pursuant to
this paragraph, so that such adjustments have cumulative
effect with respect to all changes in the CPI from the
Commencement Date through termination of this Agreement.
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XIV. TERMINATION
A. Termination for Failure to Provide the Services. (18.03)
If the Vendor fails to provide and perform the Baseline Services or
any New Services and such failure creates a material adverse effect
on the Customer's business and the Vendor does not, (within 48 hours
after proper notice of such failure has been provided to the Vendor
by the Customer), cure such failure or, if such failure cannot be
cured within such 48-hour period, then the Vendor shall provide to
the Customer a workaround solution that will allow the Customer to
perform its normal business operations, then the Customer may, upon
proper notice to Vendor, terminate this Customer's Outsourcing
Agreement as of the date specified in the notice of termination
without regard to Section 18.02 of the Master Outsourcing Agreement.
For purposes hereof, failure to provide Baseline Services or New
Services shall be deemed to have "a material adverse effect on
Customer's business" in accordance with the standard provided in
Section 18.03 of the Master Outsourcing Agreement.
B. Transfer of Assets upon Termination or Expiration of the Agreement.
Upon expiration or termination of this Agreement for any reason,
Vendor shall sell or assign to or at the direction of Customer, and
Customer shall accept and provide consideration as provided herein
with respect to, all equipment, software and service contracts then
owned or leased by Vendor primarily for use in providing the
Services, to the extent that Vendor may do so under the applicable
agreements. If any such agreements may not be assigned by Vendor to
Customer, then Vendor shall retain such agreements and be reimbursed
by Customer all costs related thereto arising from and after the
date of termination, in accordance with the procedures described on
Schedule D. All such equipment shall be transferred in good working
condition, reasonable wear and tear excepted. In the case of
Vendor-owned equipment, Vendor shall grant to Customer or its
designee a warranty of title and a warranty that such equipment is
free and clear of all liens and encumbrances. Such conveyance by
Vendor to Customer shall be (i) at Vendor's net book value for
assets being depreciated by Vendor in accordance with generally
accepted accounting principles, (ii) at fair market value for assets
the acquisition cost of which was not capitalized by Vendor, and
(iii) on assumption of all executory obligations and reimbursement
of pre-paid obligations with respect to non-capitalized contractual
rights. In the case of leases or other contracts, Vendor shall
represent and warrant that it is not in default of the lease or
other contract on the date of assignment, and that all payments due
thereunder have been made through the date of assignment. To the
extent permitted by Vendor's contracts with third parties, Vendor
shall assign or transfer to Customer or its designee all warranties
and other third party warranties on any such assets conveyed to
Customer or its designee.
C. Fee in the Event of Early Termination.
In the event of any termination of this Agreement prior to the
conclusion of the Initial Term, Customer agrees to pay to Vendor the
termination charge as defined by reference to Guatemala in the table
of such charges set forth in Schedule F.
XV. TERMINATION ASSISTANCE SERVICES (18.06 AND 19.01)
Termination Assistance Services and the Fees to be paid by Customer with
respect thereto are described in Schedule D hereto.
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XVI. DAMAGES (21.01)
NEITHER PARTY SHALL BE LIABLE FOR ANY INDIRECT, SPECIAL, INCIDENTAL,
PUNITIVE OR CONSEQUENTIAL DAMAGES OR LOST PROFITS ARISING OUT OF OR
RELATING TO SUCH PARTY'S PERFORMANCE UNDER THIS AGREEMENT. FURTHERMORE,
THE TOTAL AMOUNT WHICH CAN BE RECOVERED BY EITHER PARTY FOR THE OTHER
PARTY'S FAILURE TO PERFORM, WHETHER BASED ON AN ACTION OR CLAIM IN
CONTRACT, EQUITY, NEGLIGENCE, TORT OR OTHERWISE, UNDER THIS AGREEMENT
SHALL NOT EXCEED AN AMOUNT EQUAL TO THE AGGREGATE OF ALL SERVICE FEES
PAID BY CUSTOMER UNDER THIS AGREEMENT IN THE TWELVE MONTHS PRECEDING ANY
CLAIM. NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, THE FOREGOING
LIMITATIONS SHALL NOT APPLY TO (I) CUSTOMER'S OR VENDOR'S GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT; (II) THE INDEMNIFICATIONS SET FORTH IN
ARTICLE 20; (III) CUSTOMER OBLIGATIONS TO PAY FEES AS PROVIDED HEREIN FOR
SERVICES RENDERED, OR (IV) BREACH OF THE CONFIDENTIALITY OBLIGATIONS SET
FORTH IN ARTICLE 15.
Vendor's responsibilities for Telecommunications Management Services
under this Agreement shall be limited to managing the Telecommunication
Services Agreement(s) at issue as provided in Schedule B. Vendor shall
not itself be liable for a breach by the TC Vendor of the terms and
conditions of such Telecommunication Services Agreement(s) or for any
obligations incurred by Customer under the Telecommunication Services
Agreement(s).
Other than credits which may become available to Customer (directly or
indirectly) in the event of a failure of a Service Level with respect to
the International Telecommunications Network Management Services as
provided on Schedule E, Vendor disclaims any and all liability resulting
from or arising out of the provision of any Telecommunication Services by
a TC Vendor or any acts or omissions of a TC Vendor. With the exception
of such Service Level credits or any warranties or indemnities that the
TC Vendor shall provide for Customer's benefit pursuant to the
Telecommunication Services Agreement, the Telecommunication Services are
made available to Customer on an "AS IS" basis without warranty. Vendor'
responsibility with respect to any Service Interruption shall be as
described in Schedule B and, to the extent applicable to such Service
Interruption, Schedule E.
XVII. MISCELLANEOUS
A. Notices (22.03)
In the case of Customer:
Embotelladora Central, S.A.
26 Calle 6-02, Zona 11
Apartado Postal 161
Guatemala City, Guatemala
Attention: Director General
Telephone: (502) 442-3879
Facsimile: (502) 442-0966
With a copy to:
Panamco LLC
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701 Waterford Way, Suite 800
Miami, Florida 33126
Attention: General Counsel and Information Systems Director
FAX: 305-856-3900
In the case of Vendor:
Electronic Data Systems (EDS) de Guatemala S.A..
C/o Asencio, Andrade & Asoc.
7a. Avenida 5-10 Zona 4
Centro Financiero
Torre I, Nivel 10, Oficina 3
Guatemala City, Guatemala 01004
Attention: Managing Partner
With a copy to:
Electronic Data Systems Corporation
5400 Legacy Drive
Plano, Texas 75024 U.S.A.
Attention: General Counsel
FAX: 972-605-5610
And a copy to:
Electronic Data Systems Corporation
C/o Panamco L.L.C.
701 Waterford Way
Suite 800
Miami, Fl 33126 U.S.A.
Attention: EDS Client Delivery Executive
Telephone: (305) 929-0800
Facsimile: (305) 856-3900
B. Governing Law and Forum (22.13)
This Agreement shall be construed and governed by the laws of
Guatemala, subject to the requirements of Paragraph C in this
Article XVII of this Agreement below . Any claim, controversy or
dispute arising out of or relating to this Agreement ("Dispute")
shall be resolved first as provided in Section 17.01 of the Master
Outsourcing Agreement or, if such informal methods do not resolve
the Dispute, as provided in Paragraph C in this Article XVII of this
Agreement below. To the extent access to any courts is required
without contravention of such agreed provisions for the resolution
of any Dispute, each of Customer and Vendor irrevocably accepts the
jurisdiction of the courts of Guatemala.
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C. Arbitration
Any Dispute that the parties are unable to resolve through the
procedures described in Section 17.01 of the Master Outsourcing
Agreement will be submitted to arbitration in accordance with the
following procedures:
1. Either party may demand arbitration by giving the other party
written notice to such effect, which notice will describe, in
reasonable detail, the facts and legal grounds forming the
basis for the filing party's request for relief and will
include a statement of the total amount of damages claimed, if
any, and any other remedy sought by that party. The arbitration
will be held pursuant to the International Arbitration Rules of
the American Arbitration Association ("AAA") in effect at the
time of the arbitration, except as may be modified herein or by
mutual agreement of the parties. The arbitration shall be
conducted before three neutral arbitrators in New York, New
York, or such other location as may be mutually agreed by the
parties.
2. Within 30 days after the other party's receipt of such demand,
the parties will mutually determine who the arbitrators will be
in accordance with such rules of the AAA or, if the parties are
unable to agree on the arbitrators within that time period, the
arbitrators will be selected by the AAA in accordance with such
rules. In any event, the arbitrators must be neutral
participants, with no prior working relationship with either
party, and shall have a background in, and knowledge of, the
information technology services industry. If persons with such
industry experience are not available, the arbitrators shall be
chosen from the large and complex case panel or, if appropriate
persons are not available from such panel, the retired federal
judges pool.
3. The arbitrators shall allow such discovery as is appropriate to
the purposes of arbitration in accomplishing fair, speedy and
cost-effective resolution of disputes. The arbitrators will not
have authority to make any ruling, finding or award that does
not conform to the terms and conditions of this Agreement.
4. The decision of, and award rendered by, the arbitrators will be
final and binding on the parties. Upon the request of a party,
the arbitrator's award will include written findings of fact
and conclusions of law. Judgment on the award may be entered in
and enforced by any court of competent jurisdiction. Each party
will bear its own costs and expenses (including filing fees)
with respect to the arbitration, including one-half of the fees
and expenses of the arbitrators.
5 In the event that any Dispute subject to any such arbitration
relates to matters that are the subject of a separate and
additional dispute between an affiliate of Customer and an
affiliate of Vendor under another of the Latin America
Agreements, any arbitration proceedings to resolve such
Disputes shall be consolidated upon the request of either
party. In the event of any such consolidation of Disputes, to
the extent the matters in controversy is the same in each, the
parties agree that notwithstanding Paragraph B of this Article
XVII above, this Agreement shall be considered as construed
under and governed by the law of the jurisdiction to which the
largest claim in Dispute arises for the resolution of such
Disputes involving the same matters in controversy.
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6. Other than those matters involving injunctive or other
extraordinary relief or any action necessary to enforce the
award of the arbitrators, the parties agree that the provisions
of this Article XVII, Paragraph C, are a complete defense to
any suit, action or other proceeding instituted in any court or
before any administrative tribunal with respect to any Dispute.
D. Customer Third-Party Contractors. (10.02)
Customer shall require Customer Third Party Contractors to comply
with Vendor's security and confidentiality requirements and shall
not be required to disclose any Vendor confidential or proprietary
information to any Third Party Contractor of Customer that is a
competitor of Vendor.
E. Individuals Performing the Services. (13.14)
Vendor agrees to be responsible to verify that all individuals it
provides to perform the Services required to be provided by Vendor
under this Customer's Outsourcing Agreement are legally able to work
in the country in which they are working to provide such Services.
However, it is neither necessary nor appropriate that all such
individuals providing Services on behalf of Vendor be legally
authorized to work in the United States.
F. Rules of Interpretation. (22.11)
In the event of a conflict between the terms and conditions of the
Master Agreement and Customer's Outsourcing Agreement, the terms and
conditions of Customer's Outsourcing Agreement shall prevail. In the
event of a conflict between the Master Agreement and Customer's
Outsourcing Agreement and any Amendment to Customer's Outsourcing
Agreement, the terms of the Amendment to Customer's Outsourcing
Agreement shall prevail.
In those circumstances in the Schedules attached hereto where there
is a reference to "Central America" or "CA", it shall be considered
collectively as a reference to Costa Rica, Nicaragua and Guatemala.
Unless otherwise indicated from the context, the matter referenced
shall not be considered as a reference to each such country in the
Central America group, but rather in a manner allocated among the
Latin America Agreements pertaining to such three countries based
upon actual usage or location, or otherwise as mutually agreed by
Customer and its affiliates in Nicaragua and Costa Rica with Vendor
and its affiliates in those countries. In any event, Customer and
Vendor each agree to negotiate in good faith to agree to written
amendments to this Agreement and its Schedules within a reasonable
time to appropriately reflect such allocations and references among
the Latin America Agreements for Central America.
G. Euro and Euro Compliance (16.01, 16.02, 22.01).
It is recognized not to be necessary that all Software and Equipment
provided or used pursuant to this Agreement be tested or warranted
for functionality with respect to Euro Compliance or data involving
the Euro currency, or conversion between Local Currency and the said
Euro.
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H. Survival
Without limiting the requirements of Section 22.15 of the Master
Outsourcing Agreement, it is agreed that the terms of Articles
III-A; VI-E; XIII-F-1 and 2; XIV-B; XV; XVI; and XVII-B and F of
this Agreement shall survive the expiration or termination of this
Agreement for any reason.
XVIII. Representations and Warranties.
A. By Customer (16.01(a) through (f)).
Customer represents, warrants and covenants that:
(a) it is a corporation duly incorporated, validly existing and
in good standing under the laws of Guatemala;
(b) it has all the requisite corporate power and authority to
execute, deliver and perform its obligations under this Agreement;
(c) the execution, delivery and performance of this Agreement
have been duly authorized by Customer;
(d) it covenants that is has not as of the Commencement Date,
and will not, disclose any Confidential Information of Vendor in
violation of the terms of this Agreement;
(e) there is no claim, action, suit, investigation, or
proceeding pending or, to Customer's knowledge, contemplated or
threatened against Customer which seeks damages or penalties in
connection with any of the transactions contemplated by this
Agreement or to restrict or delay the transactions contemplated
hereby or to limit in any manner Vendor's rights under this
Agreement; and
(f) there are no brokers with claims to fees based upon the
transactions contemplated under this Agreement.
B. By Vendor (16.02 (a) through (g)).
Vendor represents, warrants and covenants that:
(a) it is a corporation duly incorporated, validly existing and
in good standing under the laws of Guatemala;
(b) it has all requisite corporate power and authority to
execute, deliver and perform its obligations under this Agreement;
(c) the execution, delivery and performance of this Agreement
have been duly authorized by Vendor;
(d) no approval, authorization or consent of any governmental
or regulatory authority is required to be obtained or made by it in
order for it to enter into and perform its obligations under this
Agreement;
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(e) it covenants that is has not, and will not, disclose any
Confidential Information of Customer in violation of the terms of
this Agreement;
(f) there is no claim, action, suit, investigation, or
proceeding pending or, to Vendor's knowledge, contemplated or
threatened against Vendor which seeks damages or penalties in
connection with any of the transactions contemplated by this
Agreement or to restrict or delay the transactions contemplated
hereby or to limit in any manner Customer's rights under this
Agreement; and
(g) there are no brokers with claims to fees based upon the
transactions contemplated under this Agreement.
XIX. SCHEDULES
The Schedules hereto shall form an integral part of this Customer's
Outsourcing Agreement and shall be regarded as incorporated into this
Agreement in every respect. In case of inconsistency between the terms
and conditions of the said Schedules and this Agreement the latter shall
prevail to the extent of such inconsistency but no further.
A. INTENTIONALLY OMITTED
B. DESCRIPTION OF SERVICES
C. INTENTIONALLY OMITTED
D. TERMINATION ASSISTANCE SERVICES
E. PERFORMANCE STANDARDS AND SERVICE LEVELS
F. CHARGES AND RESOURCE BASELINES
G. KEY VENDOR STAFF MEMBERS
H. VENDOR'S TRANSITION PLAN
I. EQUIPMENT AND SOFTWARE RESOURCE LOG
1. EQUIPMENT PROVIDED BY CUSTOMER
2. EQUIPMENT PROVIDED BY VENDOR
3. SOFTWARE PROVIDED BY CUSTOMER
4. SOFTWARE PROVIDED BY VENDOR
J. EMPLOYEE TRANSITIONS
K. THIRD PARTY SERVICE AGREEMENTS
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L. APPROVED SUBCONTRACTORS
M. MASTER AGREEMENT
N. CONSENTS AND APPROVALS
This Customer's Outsourcing Agreement is signed in two (2) original copies, on
December , 2000 to be effective on the date first above written as if the
Vendor had been legally formed and in existence on that date.
Embotelladora Central, S.A. Electronic Data Systems (EDS)
de Guatemala S.A.
- ----------------------------------- -----------------------------
Authorized representative Authorized representative
Printed name: Printed name:
- ----------------------------------- -----------------------------
- -----------------------------------
Authorized representative
Printed name: :
- -----------------------------------
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