Exhibit 10.40
EXECUTION VERSION
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INFORMATION TECHNOLOGY TRANSITION SERVICES AGREEMENT
by and among
THE GREAT ATLANTIC & PACIFIC TEA COMPANY, INC.,
THE GREAT ATLANTIC & PACIFIC TEA COMPANY
AND
METRO INC.
Dated as of August 15, 2005
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<PAGE>
INFORMATION TECHNOLOGY TRANSITION SERVICES AGREEMENT (this
"Agreement"), dated as of August 15, 2005
(the "Effective Date"), by and among
The Great Atlantic & Pacific Tea
Company, a Nova Scotia unlimited liability
company ("Service Recipient") and Metro
Inc., a Quebec company, ("Metro") (as
guarantor of Service Recipient's
obligations under this Agreement) on the one
hand, and The Great Atlantic & Pacific
Tea Company, Inc., a Maryland corporation
("Service Provider"), on the other hand.
Capitalized terms used and not
otherwise defined herein have the meanings
ascribed to them in the Purchase
Agreement (as defined below).
W I T N E S S E T H:
WHEREAS, pursuant to that certain Purchase Agreement by and
among
Metro, 4296711 Canada Inc., a Canadian
corporation ("Purchaser"), A&P Luxembourg
S.a.r.l, a Luxembourg societe a
responsabilite limitee and Service Provider
dated as of July 19, 2005 (the "Purchase
Agreement"), Service Provider agreed to
provide to Service Recipient certain
information technology ("IT") and other
services, as more fully set forth herein;
and
WHEREAS, Service Recipient wishes to receive such IT and other
services
for use in connection with its business in
order to ensure a smooth transition
to such other IT systems as Purchaser may
select.
NOW, THEREFORE, in consideration of the foregoing and the covenants
and
agreements set forth herein, the Parties,
intending to be legally bound hereby,
agree as follows:
ARTICLE I
SERVICES
Section 1.01 Description of various services to be provided.
(a) IT Services. Service Provider shall provide the IT
services set forth on Exhibit A
(collectively, the "IT Services"). Except as
otherwise specifically agreed by the
parties, and subject to the terms of this
Agreement, the IT Services shall be
substantially similar to the equivalent IT
services that Service Provider provides for
its own business needs.
(b) Project Services.
If Service Recipient desires to receive
any of the application development,
enhancement or integration services listed
in Exhibit B (collectively, the "Project
Services"), Service Recipient will
provide Service Provider with a detailed
written request for such proposed
services (such request sufficiently
detailed, to the extent reasonably
practicable, to enable Service Provider to
assess the feasibility of such
request, and if reasonably feasible,
estimate the resources and effort required
to provide such proposed services). Based
on such request, Service Provider
shall evaluate such proposal, and if
reasonably feasible, and not unduly
burdensome in light of Service Provider's
resource constraints and obligations,
provide a draft work order (a "Work Order")
for such services for Service
Recipient's approval. Such Work Order shall
be accepted or rejected as set forth
in Section 1.01(e). Notwithstanding the
foregoing, the Service Provider shall be
obligated to provide any and all Data
Extraction Services on a commercially
reasonable timeline to be mutually agreed
by the parties pursuant to Section
4.01(b). For purposes of this Agreement,
"Data Extraction Services" shall mean
the following Project Services in
connection with the transition of the data
related solely to the operation of the
Business: (i) working with Service
Recipient as necessary to determine the
format in which such data shall be
provided; (ii) extracting such data from
Service Provider's systems; (iii)
providing such data to Service Recipient in
such format; and (iv) working with
Service Recipient as necessary to determine
the most efficient manner in which
to complete the transition. Service
Provider will be obligated to consider in
accordance with the foregoing only such
requested services that are directly
related to the IT Services and that could
not be obtained from other commercial
service providers.
(c) Additional Services. Service Recipient may request, and
Service Provider may propose, services in
addition to the IT Services and the
Project Services, or the expansion of the
scope of any such service
(collectively, "Additional Services").
Additional Services shall include all
services that (i) are not primarily related
to the transition of the IT aspects
of the Business to Service Recipient's
systems or (ii) that could be obtained
from other commercial service providers. If
Service Recipient desires to receive
any such Additional Services, Service
Recipient will provide Service Provider
with a detailed written description of such
proposed services. Based on such
description, Service Provider shall have
the right, in its sole discretion, to
decline to provide such Additional
Services. If Service Provider does not
decline such Additional Services, Service
Provider shall provide a draft Work
Order for the provision of such services
for Service Recipient's approval. Such
Work Order shall be accepted or rejected as
set forth in Section 1.01(d).
(d) Work Orders. Any Work Order shall describe (i) the
services to be provided under such Work
Order, (ii) the timeline for such
services and (iii) the cost for such
services (which may be expressed as an
hourly rate). Upon delivery of a draft Work
Order to Service Recipient, Service
Recipient may approve or decline such Work
Order. If Service Recipient declines
such Work Order, then, within ten (10)
business days or receipt of such Work
Order, Service Recipient shall so notify
Service Provider and Service Provider
shall have no obligation to provide the
services described therein. If Service
Recipient approves such Work Order, then
Service Provider shall provide the
services in accordance therewith and
subject to the terms and conditions of this
Agreement. No Work Order shall be binding
unless signed by both parties.
(e) Services. The IT Services, and any Project Services and
Additional Services described in mutually
agreed Work Orders, are collectively
referred to herein as the "Services."
Section 1.02 Disaster Recovery.
(a) As part of the IT Services, Service Provider will provide
to Service Recipient substantially the same
disaster recovery services as
Service Provider provides to itself. In the
event that Service Recipient wishes
to receive additional or different disaster
recovery Services, such services
will be deemed Additional Services and be
subject to the provisions of Section
1.01(d).
(b) Service Provider will consult with, and will not
unreasonably discriminate against, Service
Recipient in the creation,
implementation and, if required, execution
of Service Provider's disaster
recovery plan. Service Provider will
minimize any such discrimination where
reasonably practicable to do so. Service
Recipient acknowledges that certain
discrimination is practically unavoidable,
such as with respect to any Services
that, practically speaking, must or should
be restored serially among service
recipients rather than simultaneously for
all service recipients.
(c) Notwithstanding Sections 1.02(a) and (b), Service Provider
shall not be required to provide disaster
recovery services to the extent that
Service Recipient has materially altered
the facilities, equipment, hardware or
software to which such disaster recovery
services pertain. If Service Recipient
wishes to receive disaster recovery
services in such circumstances, then such
services will be deemed Additional Services
and be subject to the provisions of
Section 1.01(d).
Section 1.03 Service Standards.
(a) For Services not governed by SLAs (as defined below) or
other express service standards set forth
herein, Service Provider will use
commercially reasonable efforts to provide
the Services substantially in the
same manner, and with substantially the
same functionality and performance, as
it provides such services to itself,
subject to the terms and conditions of this
Agreement.
(b) As set forth in Exhibit E, certain of the IT Services will
be subject to the Service Level Agreement
("SLA") set forth on Exhibit E.
Service Provider will measure and report
its performance relative to the SLAs,
and the parties shall meet periodically to
review such performance. In the event
that Service Provider materially fails to
meet any SLA, Service Provider will
initiate a root cause analysis for any
incident that contributed to the Service
Provider missing such Service Level within
a reasonable period of time after
such incident and use commercially
reasonable efforts to ascertain the actual
root cause of such failure, which analysis
shall include, where reasonable and
practicable, Service Provider's plan for
avoiding such incidents in the future.
For the sake of clarity, there are no
financial penalties associated with
Service Provider's failure to meet an
SLA.
(c) If the performance of the IT Services provided to Service
Recipient as measured by the SLAs is
materially inferior to the services Service
Provider provides to itself, then Service
Provider shall endeavor to identify
and resolve the cause of the disparity.
Service Provider shall attach greater
priority to such endeavor than it attaches
to any new or ongoing enhancement
projects being performed (other than
projects for emergency maintenance, to
address changes in law, other
time-sensitive matters or other matters that pose
a material risk to Service Provider's or
Service Recipient's respective
businesses). The foregoing obligations
shall not apply if the disparity is
caused by any act or omission by Service
Recipient, differences in the Services
being provided (including differences
attributable to changes in law applicable
to Service Recipient), or in Service
Recipient's facilities, equipment, hardware
or software, or if such disparity is
excused by the service standards or other
provisions of this Agreement.
(d) Service Provider shall have the right, in its sole
discretion, to make additions, deletions
and other modifications to the SLAs
from time to time, subject to the standard
set forth in Section 1.03(a). Subject
to the foregoing sentence, Service Provider
will provide prior written notice to
Service Recipient of such additions,
deletions and modifications, and shall
consider in good faith Service Recipient's
concerns regarding such additions,
deletions and modifications.
(e) It shall not be deemed to be a breach of this Agreement if
Service Provider fails to meet the service
standards set forth in this Section
1.03 because of (i) the failure of Service
Recipient to cooperate with or
provide information, services or decisions
to Service Provider as required
hereunder, (ii) changes reasonably deemed
to be required by changes in law,
technology or the availability of
reasonably commercially available products and
services, (iii) changes otherwise permitted
hereunder, (iv) the inability of
Service Provider to maintain such levels as
a result of the demands on, or
changes to, the relevant systems, processes
or personnel, provided Service
Recipient is not disproportionately
affected, (v) the implementation of Work
Orders or other changes to the Services
agreed by the parties, (vi) failures by
third party service providers or general
Internet services, (vii) force majeure,
or (viii) any other event or circumstance
beyond Service Provider's reasonable
control, provided that, with respect to
(iv), (vi) and (viii) only, Service
Provider expends commercially reasonable
efforts to correct the situation within
a reasonable period of time, at its
cost.
(f) With respect to Services other than IT Services and Data
Extraction Services, Service Provider shall
endeavor to perform such Services in
a workmanlike manner, and shall use
commercially reasonable efforts to perform
such Services in accordance with any
specifications and timelines set forth in
any Work Order or other mutually agreed
documentation provided. Subject to the
foregoing sentence, Service Provider
provides no guarantees whatsoever that it
will be able to deliver the functionality
or other deliverables intended to be
created or delivered pursuant to any Work
Order related to Additional Services,
that such functionality or other
deliverables will meet Service Recipient's
requirements, or that it will be able to
meet any timelines set forth in such a
Work Order. Subject to the previous
sentence and the remedy provisions of
Section 10.04, Service Provider shall not
be liable for any failure to provide
such Services.
Section 1.04 Service Recipients. Service Provider shall provide
the
Services to and for the benefit of Service
Recipient and the Converted Stores.
The Services may not be used by a third
party, or by Service Recipient for the
benefit of third parties, without Service
Provider's prior written consent. For
purposes of this Agreement, "Converted
Stores" shall mean such stores owned by
Loeb Canada Inc. ("Loeb Canada") as of the
Effective Date and conducted under
the "Loeb" or "Super C" banners in Ontario
as Loeb Canada may elect to re-banner
to "A&P" during the Term.
Section 1.05 Means of Providing Services. Service Provider shall,
in
its sole discretion, determine the means
and resources used to provide the
Services in accordance with its business
judgment. Service Provider shall have
sole discretion and responsibility for
staffing, instructing and compensating
its personnel and third parties who perform
the Services. Without limiting the
foregoing, Service Provider may elect to
modify or replace at any time (a) upon
reasonable notice where practicable, the IT
Services, provided that such
modifications or replacements apply to
Service Provider and Service Recipient;
(b) its policies and procedures; or (c) the
environment used to provide the
Services, including (i) the Affiliates of
Service Provider or the third parties
that provide all or any portion of the
Services; (ii) the location from which
any Service is provided; or (iii) the
intellectual property, IT, products and
services used to provide the Services,
provided in each case that the service
standards set forth in Section 1.03 are
substantially maintained. Service
Provider shall use commercially reasonable
efforts: (a) to eliminate or minimize
disruption to Service Recipient's business
as a result of such modifications
(for the avoidance of doubt, subject to
Section 1.06), (b) not to implement such
modifications during mutually agreed
periods of time before and after cut-overs
from such systems to Service Recipient's
systems.
Section 1.06 Right to Suspend Services. Notwithstanding anything
set
forth herein to the contrary, Service
Provider may suspend or, if Service
Provider deems necessary in its sole
discretion, terminate, the provision of all
or any part of any or all Services if
Service Provider reasonably believes that
(a) the performance of its obligations
relating thereto would violate any
applicable law, regulation, judicial or
administrative ruling, decision or
policy issued by any governmental entity,
(b) the performance of its obligations
relating thereto would violate any third
party patent of which Service Provider
was not and should not reasonably have been
aware, and Service Provider is
unable to implement a commercially
reasonable workaround; or (c) continued
provision of such Services would preclude
or materially impair Service
Provider's ability to provide similar
services to itself or its other service
recipients, but only in the case of clause
(a), to the extent reasonably
necessary for Service Provider to ensure
compliance therewith.
Section 1.07 Compliance with Law. Without limiting the provisions
of
Section 1.06, if any change in law or
regulation renders Service Provider's
performance of one or more of the Services
burdensome or illegal, in Service
Provider's reasonable judgment, the party
becoming aware of such change in law
shall provide prompt written notice thereof
to the other party. The parties
shall discuss the appropriate means of
addressing such change in law, provided
that (a) subject to Section 1.07(b),
Service Recipient and Service Provider will
be responsible for all incremental costs
arising from changes in law in
connection with their respective
businesses, and (b) the Parties will share on a
pro rata basis (based on each party's usage
of the affected Services) all
incremental costs arising from changes in
law affecting the Services or their
provision.
Section 1.08 Modifications to IT Services by Service Provider.
Service
Provider reserves the right to modify the
environment used to provide the IT
Services, and the IT Services themselves,
as Service Provider deems appropriate
to serve Service Provider's internal
business needs, provided that Service
Provider shall not materially disrupt the
Service Recipient's business as a
result of such modifications. Service
Provider shall not implement such
modifications during mutually agreed
periods of time before and after cut-overs
from such systems to Service Recipient's
systems.
Section 1.09 Change Control. Should Service Recipient desire to
make
any changes to the Services (other than
requests for Project Services or
Additional Services) Service Recipient
shall submit to Service Provider in
writing a full description of such proposed
changes. Service Provider shall,
within a reasonable time after receipt of
such description, advise as to whether
Service Provider will agree to the proposed
changes and, if so, submit to
Service Recipient a Work Order setting
forth a quotation for implementing such
changes and specifying any impact on
pricing or other terms of this Agreement.
ARTICLE II
COOPERATION AND ACCESS
Section 2.01 Cooperation. Each party will perform all of its
obligations hereunder in good faith, and
will cooperate diligently with the
other in all matters relating to provision
and receipt of the Services. Without
limiting the generality of the foregoing,
each party shall notify the other in
advance of any changes to such party's
operating environment or personnel,
including changes with respect to employee
status, and each party shall work
with the other to minimize the effect of
such changes.
Section 2.02 Access to Facilities, Equipment and Personnel.
(a) Service Recipient shall grant to Service Provider's and
its Affiliates' employees, service
providers and other contractors physical and
remote access to Service Recipient's
facilities, systems, equipment and
personnel as necessary for Service Provider
to provide the Services.
(b) In connection with Data Extraction Services, Service
Provider shall provide, at Service
Recipient's request and on an as-available,
mutually agreed basis, office space and
network connections for approximately
ten (10) employees of Service Recipient or
its consultants at no additional
charge. All office space and network
connections requested by Service Recipient
that are not related directly to Data
Extraction Services shall be provided as
Project Services and subject to Section
1.01(b).
(c) In connection with Data Extraction Services, Service
Recipient may request and Service Provider
shall provide access in a manner to
be mutually agreed by the parties to
Service Provider's facilities, personnel
and equipment to Service Recipient at no
additional charge. All access to
Service Provider's facilities, personnel
and equipment not related directly to
Data Extraction Services shall be provided
as Project Services and subject to
Section 1.01(b).
Section 2.03 Access to Information.
(a) Each party shall provide upon the written request of the
other any information within such party's
possession, subject to applicable
privacy laws, that the requesting party (i)
reasonably requires to comply with
requirements imposed on the requesting
party by a governmental authority; (ii)
reasonably requires for use by such
requesting party in any proceeding or to
satisfy audit, accounting, tax or similar
requirements; or (iii) which the
requesting party reasonably determines is
necessary or advisable in the
preparation of its financial statements or
any reports or filings with any
governmental agency.
(b) At the request of Service Provider, Service Recipient
shall timely provide information,
documentation and resources sufficient for
Service Provider to perform the Services.
Service Recipient will provide Service
Provider with timely notice of decisions,
approvals and acceptances in order
that Service Provider may perform its
obligations hereunder in a timely and
efficient manner.
Section 2.04 Errors. Service Provider may assume all
information,
documentation, decisions, approvals and
acceptances provided by Service
Recipient in connection with the Services
are accurate, complete and final, and
shall have no obligation to inquire as to
any errors or omissions nor any
obligation or liability for relying thereon
(absent actual knowledge of any
material error or omission). Service
Recipient shall be responsible for the
accuracy of all information and data
provided by it or on its behalf to Service
Provider.
Section 2.05 Compliance. Each party shall comply with all
applicable
laws, regulations, statutes and guidelines.
Without limiting the generality of
the foregoing, Service Recipient shall
comply with Service Provider's policies,
standards and guidelines relating to the
Services, information protection, and
information and system security as such
policies, standards and guidelines may
be provided to Service Recipient from time
to time. Such policies, standards,
and guidelines are subject to change by
Service Provider (as deemed necessary by
Service Provider in the course of
conducting its business operations); provided,
however, that such changes shall be
communicated to Service Recipient in advance
in an effort to avoid or minimize any
adverse impact on the business operations
of Service Provider.
Section 2.06 Security.
(a) Subject to Section 2.05, the parties shall work together
to ensure that Service Provider is able to
maintain its security requirements as
new security-related issues may arise for
either party.
(b) If either party, or its personnel, will be given access to
the other party's computer systems or
software ("Systems") in connection with
the performance of the Services, the
accessing party or its personnel, as the
case may be, shall comply with all of such
other party's written system security
policies, procedures and requirements made
available by each party to the other
(as amended from time to time, the
"Security Regulations"), and will not tamper
with, compromise or circumvent any security
or audit measures employed by such
other party.
(c) Each party shall use its reasonable endeavors to ensure
that only those of its personnel who are
specifically authorized to have access
to the Systems of the other party gain such
access, and to prevent unauthorized
access, use, destruction, alteration or
loss of information contained therein,
including notifying its personnel regarding
the restrictions set forth in this
Agreement and establishing appropriate
policies designed to effectively enforce
such restrictions.
(d) If, at any time, either party determines that the other
party or its personnel has sought to
circumvent, or has circumvented, its
Security Regulations, that any unauthorized
personnel of the other party has
accessed its Systems or that the other
party or any of its personnel has engaged
in activities that may lead to the
unauthorized access, use, destruction,
alteration or loss of data, information or
software, such party shall
immediately terminate any such personnel's
access to the Systems and notify the
other party. Each of Service Provider and
Service Recipient shall access and use
only those Systems, and within such
Systems, only such data and information, to
which it has been granted the right to
access and use. Notwithstanding the
foregoing, any party shall have the right
to deny the personnel of the other
party access to such party's Systems, after
prior written notice, in the event
the party reasonably believes that such
personnel pose a security concern.
(e) A material failure to comply with the Security Regulations
shall constitute a material breach of this
Agreement. All user identification
numbers and passwords of a party disclosed
to the other party and any
information obtained from the use of the
disclosing party's Systems shall be
deemed Confidential Information of the
Disclosing Party without the need for the
Disclosing Party to specifically identify
such information as such.
(f) Each party will cooperate with the other party in
investigating any apparent unauthorized
access to party's Systems or any
apparent unauthorized release by a party or
such party's personnel of
Confidential Information of a party. Each
party will: (i) immediately notify the
other party if such party has revoked
access to its own Systems to any of its
personnel if such personnel also has access
to the other party's Systems; and
(ii) to the extent reasonably possible,
will immediately revoke any access to
the other party's Systems once such party's
Personnel no longer has a need to
access the other party's Systems.
(g) Each party will use commercially reasonable efforts to
prevent the introduction of viruses and
other unauthorized software or
mechanisms into their and, to the extent of
such party's access to the other
party's computer systems, the other party's
computer systems. If a virus or
other unauthorized software or mechanism is
found to have been introduced into
Service Recipient's systems or Service
Provider's systems and affected the
Services, as Service Recipient's sole and
exclusive remedy, Service Provider
shall take reasonable efforts to remove
such virus, unauthorized software or
mechanism from such systems and to assist
in mitigating any interruption to the
Services (subject to Article X).
Section 2.07 Services Information. Service Provider shall
maintain
reasonable documentation in respect of the
Services provided hereunder,
consistent with its past practice, which
Service Provider will make available to
Service Recipient upon Service Recipient's
request, subject to Service
Provider's confidentiality and other
obligations to any third parties.
ARTICLE III
THIRD
PARTY CONTRACTS
Section 3.01 Subcontractors and Suppliers. Service Provider may
subcontract some or all of the Services to
another provider, including third
parties and Service Provider's Affiliates.
Service Provider shall have sole
discretion with respect to the evaluation
and selection of such other providers;
provided that Service Provider shall (a)
consult with and consider in good faith
any recommendations or concerns raised by
Service Recipient with respect to such
other providers, and (b) remain responsible
for the performance of the Services
in accordance with the terms and conditions
of this Agreement.
Section 3.02 Third Party Contracts. Services provided by third
parties
through Service Provider or using third
party intellectual property, products or
services are subject to the terms and
conditions of any agreements between
Service Provider and such third parties.
Each of Service Provider and Service
Recipient is responsible for its compliance
with its own third party contracts
and the applicable third party contracts of
the other party disclosed to such
party, provided that, Service Provider will
not be obligated to comply with any
onerous or unreasonable terms under any
such third party contract of Service
Recipient. In the event that Service
Provider reasonably determines that any
such terms are onerous or unreasonable,
Service Provider shall so notify Service
Recipient, and the parties will work
together to implement either a compromise
with such third party or an alternative
arrangement. Each party will pass
through to the other party any applicable
rights or benefits under the
underlying contract with the third party,
including any warranties or
indemnifications, to the extent permitted
by the applicable contracts.
Section 3.03 Required Consents. Service Recipient will be
responsible
for obtaining any necessary third party
consents, additional licenses and other
rights under its third party contracts to
which Service Provider requires
access to perform the Services. Service
Provider shall use commercially
reasonable efforts to obtain any necessary
third party consents, additional
licenses and other rights under its third
party contracts in order to perform
the Services. If any consent, additional
license or other right cannot be
reasonably obtained, the parties shall
discuss acceptable alternative
arrangements, if possible and as necessary,
to provide the Services sufficient
for the Service Recipient's purposes. In no
event shall the foregoing require
Service Provider to undertake any material
changes to its IT infrastructure or
to its development, operational or business
processes or plans. The Service
Recipient and the Service Provider shall
share equally up to CA$6,000,000 (or
up to CA$3,000,000 each) with respect to
any and all costs related to obtaining
any such necessary third party consents,
additional licenses and other rights
under Service Provider's third party
contracts in order to perform the Services
(collectively, "Consent Costs"). Service
Provider shall be solely responsible
for Consent Costs in excess of CA$6,000,000
and up to CA$20,000,000. Service
Recipient and Service Provider shall share
equally Consent Costs in excess of
CA$20,000,000.
ARTICLE IV
GOVERNANCE
Section 4.01 Relationship Managers and Committees.
(a) Relationship Managers. Each of Service Provider and
Service Recipient shall appoint a
Relationship Manager to coordinate provision
of the Project Services to Service
Recipient. The Relationship Managers will
meet on a monthly basis to review
performance, discuss issues and address any
other relevant relationship management
issues. The name and contact information
of each party's Relationship Manager is set
forth on Exhibit D.
(b) Operational Steering Committee. The parties shall
establish an Operational Steering Committee
consisting of an equal number of
representatives from each of Service
Provider
