This Outsourcing Agreement involves
Title: OUTSOURCING SERVICES AGREEMENT
Governing Law: Idaho Date: 2/28/2008
Exhibit 10.4
OUTSOURCING SERVICES AGREEMENT
by and between
BOISE CASCADE, L.L.C.,
and
BOISE PAPER HOLDINGS, L.L.C.
February 22, 2008
Outsourcing Services Agreement
This Outsourcing Services Agreement is made and entered into, as of February 22, 2008 (the “ Execution Date ”), by and between Boise Cascade, LLC, a Delaware limited liability company (“ Boise Cascade ”), and Boise Paper Holdings, L.L.C., a Delaware limited liability company (“ Boise Paper ”), (each, a “ Party ,” and collectively, the “ Parties ”).
WHEREAS, pursuant to that certain Purchase and Sale Agreement, by and among Boise Cascade and certain of its Affiliates and Aldabra 2 Acquisition Corp. (“ Aldabra ”) and certain of its Affiliates, dated September 7, 2007 (as the same has been and may be amended, modified, supplemented or waived from time to time, the “ Purchase Agreement ”), Boise Cascade is selling its paper, packaging and newsprint and transportation businesses and most of its corporate staff operations to Boise Paper by means of (i) a contribution and transfer of (x) the stock of its paper, newsprint and packaging and transportation subsidiaries and (y) certain additional assets and personnel involved in its paper, newsprint and packaging, and transportation businesses and its staff operations to Boise Paper and (ii) a sale of the entire equity interest in Boise Paper to a wholly owned subsidiary of Aldabra; and
WHEREAS, Boise Cascade and Boise Paper have agreed in the Purchase Agreement to cause the parties and their Affiliates to provide corporate staff services to each other on the terms and conditions set forth in this Agreement.
NOW, THEREFORE , the Parties agree as follows.
1. Defined Terms.
All definitions contained in Appendix 1 shall apply throughout this Agreement and each appendix, schedule, exhibit, and other attachment made a part hereof and any Statement of Work entered into pursuant hereto unless, in respect of a Statement of Work, its terms provide a different definition of a term to be used solely in respect of that Statement of Work.
2. Services; Statements of Work.
The Services to be provided by the parties to each other shall be as set forth in the Statements of Work provided for below
2.1. Statements of Work.
2.2. Services to and by Affiliates . Services to be provided hereunder shall be provided to the Party designated in the Statement of Work as the Services Recipient and to all of its Affiliates unless the Statement of Work provides a narrower definition of Services Recipient. A Service Provider may provide Services hereunder directly or through one or more of its Affiliates and provision of Services by an Affiliate of a Service Provider shall satisfy the obligations of the Service Provider hereunder; provided that, if a Service Provider elects to have Services provided hereunder through one or more of its Affiliates, the Service Provider shall remain as fully liable for the provision of such Services as though it had provided them directly.
2.3. Order of Precedence . In the event of any conflict between the terms of this Agreement and a Statement of Work, the terms of this Agreement shall control unless the Statement of Work contains a provision expressly identifying any provision of this Agreement which the parties intend to be superseded by the terms of such Statement of Work, expressing their intent to so modify such provision for purposes of such Statement of Work, setting out the scope of the modification, and acknowledging that such modification is limited in its effect solely to the Statement of Work in which it is contained. In such event the Statement of Work shall be signed by the Relationship Manager of each Party.
2.4. Services Inclusive . The descriptions of Services contained in the Statements of Work are intended by the parties to be descriptive and not exhaustive. To this end, the Services provided pursuant to this Agreement shall include performance of: (i) the functions and activities specifically described in the relevant Statement of Work; (ii) all ancillary functions and activities related thereto that, even though not specifically identified in the relevant statement of Work, were being performed by Boise Cascade’s relevant staff function in connection with the Services more particularly described in the Statement of Work prior to the Execution Date; and (iii) additional Services relating to the Services described in such Statement of Work that become necessary for the Service Provider to ensure that it delivers the relevant service in compliance with Law or that become necessary to the Services Recipient to ensure that it carries out the business functions affected by such Service in compliance with Law, including in each case any new or changed Laws applicable to the activities involved.
2.5. Absolute Obligation . Subject to Sections 22.5 , and 25.2 hereof, a Service Provider’s obligation to provide the Services required by this Agreement shall be absolute and unconditional and Service Provider may not suspend provision of the Services in the event of a Dispute (including a dispute over payment).
3. Term of the Agreement . Subject to the provisions of any Section hereof permitting early termination of this Agreement, the “ Initial Term ” of this Agreement shall commence as of the Execution Date and end on the third anniversary of the Execution Date. Thereafter. this Agreement shall continue for successive renewal terms of one year each (each such one-year term, a “ Renewal Term ”) beginning on the date of the expiration of the Initial Term or the immediately preceding Renewal Term and concluding on the first anniversary of the expiration of such Initial Term or Renewal Term, unless either party shall have given written notice of non-renewal to the other Party not less than 364 days prior to the end of the Initial Term or the Renewal Term then in effect. When used herein, the “ Term ” of this Agreement shall be the Initial Term and each Renewal Term; provided that the “ Term ” of this Agreement shall terminate on any earlier termination of this Agreement in accordance with its terms. No expiration or termination of the Term shall release any party from liability for breach of this Agreement arising prior to such expiration or termination. Absent a provision to the contrary in any Statement of Work, and subject to the provisions of any Section hereof permitting early termination of this Agreement or any
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Statement of Work, the term of each Statement of Work shall commence on the date of its execution by the parties and end on the termination of this Agreement.
4. Service Provider’s Commitments
4.1. Personnel and Facilities. Except as otherwise expressly provided in this Agreement or a Statement of Work, Service Provider shall be responsible during the Term for providing all facilities, personnel, and other resources necessary for Service Provider’s provision of the Services, and all costs and expenses associated therewith. If provision of any Services to Services Recipient at the level and quality required hereby while simultaneously providing the same or similar Services to the Service Provider’s own operations requires an expansion of Service Provider’s staff providing such Service, Service Provider shall promptly engage such additional Personnel as may be necessary to satisfy its and Services Recipient’s combined requirements. Each Party shall make all capital investments in equipment or other assets necessary to deliver or utilize Services provided for hereby or as may be necessary to maintain the quality of the Services in accordance with the Performance Requirements. All such capital expenditures shall be made at Service Provider’s sole expense and all equipment and other assets with respect to which such capital expenditures are made shall be owned exclusively by the Service Provider notwithstanding any provision herein for recovery of all or any portion of the Service Provider’s depreciation expense in respect of such equipment from Services Recipient; provided that if a capital expenditure is required solely to respond to a request for specific incremental services by a Services Recipient, such expenditure shall be made by the Services Recipient and the equipment or other asset with respect to which such capital expenditures are made shall be exclusively owned by Services Recipient, but Service Provider shall operate such capital item as necessary to provide services hereunder.
4.2. Improvements and New Technology. If requested by Services Recipient, or where it is essential to continuation of provision of a Service on a cost effective and efficient basis, Service Provider shall make available to Services Recipient all of the updates, modifications and improvements to the Services that Service Provider provides to its own business units and operations for Services that are the same as or substantially similar to the Services. Where necessary for continued use and enjoyment of a service by the Services Recipient, Service Provider shall also provide and deliver to Services Recipient all updates, modifications and improvements to Documentation, Software, processes, materials, and technology on a basis that is no less favorable than the updates, modifications and improvements to the foregoing that Service Provider provides to its own business units and operations.
5. Volume of Services and Changes
5.1 Volume of Services . Unless any Statement of Work provides otherwise, the volume of Service to be provided for any particular Service, shall be Services Recipient’s full requirements for such Service and the Service Provider shall make, on a timely basis, such additions to its staff and equipment necessary to meet such requirements, in combination with its own requirements for Services provided by the same staff and equipment. In the event that a Services Recipient foresees a need for a material increase or decrease in any Service provided hereunder, it shall give the Service Provider reasonable notice of the scope and timing of such prospective change in Service level, and the Service Provider shall take reasonable steps to appropriately adjust its capacity to deliver such Service, including addition or reduction of staff, addition of equipment, etc. Additional costs incurred for any expansion of Service shall be allocated between the parties pursuant to Section 10 hereof and any relevant provision of the specific Statement of Work covering such Service.
5.2 Changes in Scope . Changes in scope of any particular Service to be provided hereunder (other than changes in the volume of any particular service) shall be effected as follows:
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5.2.1 Changes in Legal Requirements . Where a change in the scope of any Service is necessitated by a change in any statute, regulation, or other legally enforceable requirement or any change in accounting rules applicable to the Services Recipient, the Service Provider shall provide the additional Services necessitated by such change on the same basis as a change in volume pursuant to Section 5.1 hereof.
5.2.2 Changes in Business Requirements . Where a change in the scope of any Service is necessitated by a change in the business requirements of the Services Recipient, including a decision to enter a new line of business, or to change its administrative procedures, and the additional Services required thereby are ones that can be accommodated by the Service Provider’s existing staff function (with or without the addition of personnel thereto) without addition of a wholly new staff function, such additional Service requirement shall be treated the same as a change in Service level under Section 5.1. However, where the required additional Services cannot be so accommodated, they may be added to this Agreement only by execution of a new Statement of Work on terms and conditions reasonably satisfactory to each Party; provided that neither Party shall be obligated to enter into any such new Statement of Work. By way of example and without limiting the foregoing, an expansion of scope which would be governed by the same rules as Section 5.1 would be a change in a Services Recipient’s financial reporting requirements necessitated by a new credit agreement and an example of a change in scope of Services which would not be governed by the same rules as Section 5.1 would be the acquisition by the Services Recipient of a foreign subsidiary that requires preparation of financial reports in accordance with generally accepted accounting principles of a jurisdiction other than the United States.
6. Record Keeping
6.1 General. Service Provider shall maintain records which shall include complete and accurate records of any invoices and supporting documentation for all amounts billable to, and payments made by, Services Recipient under this Agreement. Service Provider shall provide to Services Recipient or its designee documentation and other information relating to each invoice as may be reasonably requested by Services Recipient to verify that the Charges on such invoice are accurate, complete, and valid in accordance with this Agreement.
6.2 Compliance with Purchase Agreement . Section 8S of the Purchase Agreement shall apply to all records relating to Services Recipient created after the Closing Date pursuant to the Services supplied under this Agreement. The termination or earlier expiration of this Agreement shall not affect the obligations of a Party pursuant to Section 8S of the Purchase Agreement in respect of records created before the Execution Date or records created pursuant to this Agreement after the Execution Date.
7. Information Security Requirements. Each Party shall, with respect to the other Party’s Confidential Information, comply with the most stringent of the information security and privacy policies (i) in effect at Boise Cascade immediately prior to the Execution Date; (ii) required by Law; or (iii) utilized by the Party in possession of such Confidential Information from time to time. In addition, in the event of any breach of the foregoing which results in the release of material Confidential Information of a Party to third parties not controlled by the releasing Party or to the general public, the Party responsible for such breach shall promptly notify the other Party as soon as it becomes aware of any such breach, violation or incident.
8. Service Performance
8.1. Performance of Services—General Standard. Absent a provision to the contrary in any Statement of Work, Service Provider shall provide each Service (i) in a professional, workmanlike manner, (ii) in accordance with generally accepted industry standards and (iii) with a standard of care that
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is no less than the greater of a standard of care (a) that was observed prior to the Execution Date in providing such Service to Services Recipient, and (b) that Service Provider observes in providing such Service (or a substantially similar Service) to its own business units and operations, and (iv) in accordance with any specific performance requirements set forth in the applicable Statement of Work.
8.2 Reperformance. Services Recipient may require Service Provider to correct or re-perform any defective or nonconforming Services at Service Provider’s sole expense when such re-performance is reasonably necessary and practical under the circumstances, as reasonably determined by Services Recipient. Services Recipient may also require Service Provider to take appropriate and reasonable steps to ensure that future performance of the Services will be in accordance with the requirements of this Agreement and the applicable Statements of Work. Service Provider shall undertake any remedial action required by this Section 8.2 at no additional charge to Services Recipient.
8.3 No Preferential Treatment. Service Provider shall not favor its own business units and operations over those of Services Recipient (including in the level of service, staffing priorities, allocation of Personnel, training and expertise of Personnel, capital expenditures, allocation of work between internal staff and third party service providers and allocation of available resources upon the occurrence of a Force Majeure Event) when providing to its own business units and operations Services that are the same as, or substantially similar to, any Services provided hereunder or which are provided to both Parties by the same Personnel.
9. Business Continuity and Disaster Recovery Plan. Any Service Provider providing data processing Services shall maintain a disaster and business continuity plan in respect of its data processing operations that provides a level of protection and service restoration capability in respect of Services provided to Services Recipient that is not less than that provided by Boise Cascade’s similar plans in effect as of immediately prior to the Effective Date .
10. Charges.
10.1. Direct Fully Allocated Costs. Unless provided to the contrary in a Statement of Work, the Services Recipient shall pay the Service Provider for the Services provided it under each Statement of Work an amount equal to the Service Provider’s Direct Fully Allocated Cost of providing such Services. When used herein, “ Direct Fully Allocated Cost ” shall mean an allocable share of all direct costs incurred by Service Provider in the delivery of such Services including (i) fully loaded wage costs of personnel providing the Services including salary, payroll taxes, benefit costs, incentive compensation costs and other like costs customarily included in fully loaded employment costs; (ii) depreciation expense on equipment or other assets used in the provision of such Services; (iii) building rent for portions of the building in use for the delivery of such Services; (iv) out-of-pocket expenses reimbursed to or incurred on account of staff employees providing such Services including travel and entertainment and professional training; (v) payments to third parties for Services utilized in the operation of any staff function providing Services hereunder, excluding third party expense covered by Section 10.5 or for the provision by Service Provider of Services solely to itself; and (vi) portions of the cost of other staff functions of Service Provider customarily allocated to the staff function providing a Service, but without duplication of costs already allocated to Services Recipient by such other staff functions.
Notwithstanding the foregoing, the “ Direct Fully Allocated Cost ” of any Service shall not include any of Service Provider’s general overhead not specifically attributable to a staff function providing Services hereunder, including (a) wage and salary costs for senior executives not providing direct and immediate management of a Service providing staff function; (b) any portion of Service Provider’s cost of debt or equity financing; (c) any amount accrued, paid, or received as state federal or
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local income tax or franchise tax expense or benefit; and (d) indirect costs of any staff function not customarily allocated by Service Provider to its other staff functions.
10.2 Allocations . Allocations of the costs to be included in Direct Fully Allocated Costs shall, be made (i) on the basis of the percentage of staff time allocated to the provision of Services to a Services Recipient in each staff function providing Services, with such percentage to be reasonably determined and reported monthly by the Service Provider; (ii) on the basis of units of performance specified in the Statement of Work measured and reported monthly by the Service Provider; or (iii) on such other basis as may be specified in the relevant Statement of Work. For the avoidance of doubt, unless the options referred to in clause (ii) or (iii) of this Section 10.2 are specifically selected for particular Service in a Statement of Work, costs shall be allocated as provided in clause (i) of this Section 10.2.
10.3 Third Party Expenses. To the extent that a Service Provider retains third parties to assist it in the provision of Services to a Services Recipient and such Services are retained to augment the level of Services which can be provided by its own staff, such third party costs shall be included in its allocation of its direct costs of providing such Services and allocated between the parties in accordance with clause (v) of Section 10.1 and included in charges in accordance with Section 10.2. Where such third party Services are specifically requested by the Services Recipient or obtained by the Service Provider because it lacks the relevant expertise on its own staff to provide such Service and does not have a need for such Services itself, such Services shall not be included in the costs and cost allocation provided for above and Services Recipient shall be required to reimburse expenses incurred by Service Provider for such third party Services. The cost of any such Services shall be billed and paid along with each monthly billing for estimated Direct Fully Allocated Cost of other Services.
10.4 Tax Obligations . Service Provider shall bill to Services Recipient and Services Recipient shall pay to Service Provider all sales and use taxes applicable to Services provided hereunder. Service Provider shall remit such sales and use taxes to applicable taxing authorities and make all tax filings required thereby. All other Taxes shall be borne by the Party incurring same and not included in any allocation of costs hereunder.
11. Invoicing and Payment
11.1. Invoicing and Payment
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Recipient shall pay Service Provider a late fee calculated at a rate per annum that is three percentage points above the Prime Rate from date the relevant payment was due to the date of payment.
11.2 Record Keeping; Invoice Audits. Each Service Provider shall maintain accurate records of the amounts billed to Services Recipient and the basis for such billings, including records of the costs incurred and included in such bills and the allocation of such costs in accordance with this Agreement. At any time during the Term hereof (but not more frequently than once every six months) and for a period of one year after the termination hereof, Services Recipient or its designee may review and audit such records in respect of any Statement of Work. Service Provider shall cooperate in any audit of such records that Services Recipient may undertake. In the event any such audit uncovers an overcharge of Services Recipient, then Service Provider shall reimburse Services Recipient for the amount of the overcharge and, if the overcharge is more than 10% of the aggregate Charges for the period audited, interest on the amount of the overcharge calculated at a rate per annum that is three percentage points above the Prime Rate from the date paid until the date repaid. If such audit reveals an undercharge, Services Recipient shall pay the amount of such undercharge at the time of payment of the next monthly payment of charges. The cost of any such audit shall be borne by the Services Recipient unless such audit reveals an overcharge of more than 15% of the aggregate Charges for the period audited, in which case such audit costs shall be reimbursed by the Service Provider.
11.3. Disputed Charges. Services Recipient shall pay all undisputed Charges when they become due in accordance with this Agreement. If Services Recipient, in good faith, disputes any Charges regarding the Services, it shall promptly notify Service Provider and the Parties shall address such Dispute through the Dispute Resolution Process. With respect to those portions not in Dispute, Services Recipient shall pay such invoice in accordance with the time period associated with the invoice.
12. Service Provider’s Personnel
12.1. Personnel
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12.2. Solicitation. Notwithstanding Section 8R of the Purchase Agreement, Services Recipient shall have the right to solicit or hire any Personnel of Service Provider engaged in the provision of Services who has been terminated by Service Provider, and to solicit any such personnel of Service Provider to whom Service Provider has given notice of termination, provided that any rehiring of any such Personnel by Services Recipient shall occur no earlier than the termination date specified in such notice of termination.
12.3. Non-Employment. Service Provider’s Personnel are not Services Recipient’s employees or agents, and Service Provider shall be fully responsible for their acts, regardless of whether such Personnel are acting within the scope of their employment or agency. Service Provider shall be solely responsible for the payment of compensation of the Personnel, and Service Provider shall inform Personnel that they are not entitled to any of Services Recipient’s employee benefits or to participate in any of its compensation plans. Service Provider, and not Services Recipient, shall be solely responsible for payment of worker’s compensation, disability benefits and benefits similar thereto and unemployment insurance or for withholding and paying employment taxes for the Personnel. Service Provider shall, upon request of the services Recipient cause its Personnel providing services hereunder to affirm they are not employees of Services Recipient for any purpose and that they shall not exercise any right or seek any benefit accruing to the regular employees of Services Recipient.
13. Relationship and Statement of Work Management
13.1. Relationship Managers Each Party hereby appoints the individuals designated below to act as its initial Relationship Manager:
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Boise Paper |
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Rob McNutt |
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Boise Cascade: |
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Tom Carlile |
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Each Party represents and warrants that its Relationship Manager shall have overall control of his or her Party’s performance under this Agreement and shall have approval authority for all operational matters relating to this Agreement. The Relationship Managers shall meet as requested by either Party (i) to review performance, (ii) to coordinate provision of the Services, (iii) to discuss the Party’s future Service requirements and service delivery capacity, and (iv) to participate in the Dispute Resolution Process. Either Party may change its Relationship Manager at any time and from time to time upon written notice to the other.
13.2. Responsible Managers. Each Party shall designate, for each of the applicable Statements of Work, a Responsible Manager to act as its initial point of contact for each such Statement of Work. The Responsible Managers shall have responsibilities for the implementation of the applicable Statement of Work comparable to the responsibilities of the Relationship Managers for this Agreement generally. Either Party may change its Responsible Manager for an applicable Statement of Work upon written notice to the other Party’s Responsible Manager for such Statement of Work and such other Party’s Relationship Manager. In the event that a Party does not designate a Responsible Manager in any Statement of Work, then the Responsible Manager for such Party for such Statement of Work shall be such Party’s Relationship Manager.
13.3. Responsibility for Subcontractors and Third Party Suppliers. With respect to any obligations of Service Provider under this Agreement that is being performed by subcontractors, Service Provider shall remain responsible for the discharge of such obligations in accordance with this Agreement and shall also be responsible for the subcontractor’s compliance with the terms and conditions of this Agreement to the same extent Service Provider would be responsible for its own compliance with the terms and conditions of this Agreement. Service Provider shall not disclose to any subcontractor or any third party supplier under a third party supplier agreement with Service Provider any of Services Recipient’s Confidential Information unless and until such subcontractor, vendor or supplier has a need to know such Confidential Information for purposes of performance of Services to Services Recipient and has agreed in writing (with Services Recipient as an intended third party beneficiary of any such agreement executed after the Execution Date) to protect the confidentiality of such information in a manner that is equivalent to that required of Service Provider by Article 14 .
13.4. Failure to Act. Services Recipient’s failure to act or fulfill an obligation set forth in this Agreement or an applicable Statement of Work, including failure to give any consents, notices or approvals, shall not constitute breach of this Agreement or such Statement of Work (other than Services Recipient’s failure to comply with its payment obligations and disputed amounts requirements set forth in this Agreement), but shall excuse Service Provider’s non-performance with respect to the particular Service for which consent, notice or approval was sought, but solely to the extent such failure to act or non-performance prevents Service Provider from fulfilling its obligations hereunder with respect to such Service for which consent, notice or approval was sought.
14. Confidentiality
14.1. Confidential Information . Each Party acknowledges that it may possess or, in the course of providing or receiving the Services under this Agreement, be exposed to, or acquire, Confidential Information of the other Party or its Affiliates or their clients or third parties to whom such other Party or its Affiliates owe a duty of confidentiality (all of which, for purposes of this Agreement, shall be deemed Confidential Information of the other Party). Each Party shall hold the other Party’s Confidential Information in strictest confidence using the same or greater degree of care it uses with its own comparable Confidential Information (but in no event less than a reasonable degree of care) and shall not copy, reproduce, sell, assign, license, market, transfer or otherwise dispose of, give or disclose such
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Confidential Information to third parties or to use such information for any purposes whatsoever other than as may be necessary for the performance of this Agreement.
14.2. Confidentiality Agreements. Each Party shall advise all of its Personnel who have access, or may be exposed, to the other Party’s Confidential Information of their obligations to keep such information confidential in accordance with this Article 14 . A Party shall only provide access to the other Party’s Confidential Information to those Personnel who have a need to know or to have access to such information in order to provide or receive the Services.
14.3. Permitted Disclosures. If either Party is requested to disclose all or any part of any Confidential Information under a discovery request, a subpoena, or inquiry issued by a court of competent jurisdiction or by a judicial, administrative, regulatory or governmental agency or legislative body or committee, the Party subject to such request shall, to the extent practicable and subject to applicable Laws, give prompt written notice of such request to the other Party and shall give such other Party the opportunity to seek an appropriate confidentiality agreement, protective order or modification of any disclosure or otherwise intervene, prevent, delay or otherwise affect the response to such request, and the Party subject to such request to disclose shall cooperate with the other Party in such efforts. The Party seeking such confidentiality agreement, protective order or modification of disclosure shall reimburse the other Party for reasonable legal fees and expenses incurred in its effort to comply with this provision.
14.4. Exclusions. Except as otherwise inherent in the definition of Personal Data, “Confidential Information” shall not include information if and to the extent Service Provider can demonstrate such information: (i) is or becomes known to the public other than by disclosure by Service Provider in violation of this Agreement; (ii) was known to Service Provider previously, without a duty of confidentiality (but, for greater certainty, specifically excluding from this clause (ii) any Confidential Information known to Personnel of Boise Paper due to their prior employment by Boise Cascade); (iii) was independently developed by Service Provider outside of this Agreement and without reference to or use of any Confidential Information of Services Recipient; or (iv) was rightfully obtained by Service Provider from third parties without a duty of confidentiality.
14.5. Data Protection. In the event Service Provider shall have access to any Personal Data of Services Recipient, the Service Provider shall observe, in addition to the confidentiality obligations set forth above, any further or more restrictive obligations imposed by law on Service Provider or Services Recipient with respect to safekeeping and limitations on use and disclosure of such data.
14.6. Remedy. It is understood and agreed that in the event of a breach of this Article 14 , damages may not be an adequate remedy and, notwithstanding the dispute resolution provisions of Article 23 , the non-breaching Party shall be entitled to seek injunctive relief to restrain any such breach, threatened or actual without posting of bond or other security or proof of irreparable harm.
14.7. Attorney-Client Privilege/Work Product . Service Provider acknowledges that certain Data, documents, and databases to which Service Provider may have access or that are prepared by Service Provider for Services Recipient, and all associated communications relating thereto, may be subject to the attorney-client privilege and/or work product privilege and that such information may have been or may be prepared in anticipation of litigation and that Service Provider is performing the Services in respect of such information as an agent of Services Recipient. To the extent that any of the materials or information provided to and from Service Provider as part of the Services for, and related communications with, legal counsel of Services Recipient may be subject to attorney-client privilege and/or work product privilege, Service Provider shall reasonably cooperate with Services Recipient to take steps to prevent waiver of any privilege with respect thereto.
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14.8. No Right or License. Nothing in this Article 14 shall be construed as obligating Services Recipient to disclose its Confidential Information to Service Provider, or as granting to, or conferring on, Service Provider, expressly or impliedly, any rights or license to the Confidential Information.
15. Services Recipient’s Data
15.1. General . Notwithstanding any other provision of this Agreement, Service Provider shall make all of Services Recipient’s Data (complete and unaltered) available to Services Recipient and its authorized agents (including auditors, counsel, appraisers, financiers, and other professionals providing services to Services Recipient) in the form in which Service Provider maintains such Data. Service Provider shall also provide such Data to Services Recipient in the form requested by Services Recipient, and Service Provider may charge Services Recipient for the actual cost (including labor costs) to provide such media on which Service Provider provides such Data to Services Recipient, but without duplication of Charges payable pursuant to Section 10 hereof for provision of such Data.
15.2. Safeguarding Services Recipient’s Data. Service Provider shall establish and maintain safeguards against the destruction, loss, misuse or alteration of Services Recipient’s Data in the possession of Service Provider that are no less rigorous than those set forth in Article 7 and Article 14 and as otherwise required by applicable Data Protection Laws. Nothing herein shall limit the right of Services Recipient to establish separate backup security for such Data and to keep backup data and data files.
15.3. Ownership and Use of Services Recipient’s Data. As between the Parties, Services Recipient’s Data shall be and remain the property of Services Recipient. Service Provider shall use such Data solely to perform Service Provider’s obligations under this Agreement. Except as expressly permitted in this Agreement, Service Provider shall not sell, assign, lease, disseminate, or otherwise dispose of such Data or any part thereof to any other person, and Service Provider shall not commercially exploit any part of such Data. Service Provider shall not possess or assert any property interest in, or any lien or other right against or to, any of Services Recipient’s Data nor shall Service Provider permit the lien of any of its secured lenders to attach to any of Services Recipient’s Data.
15.4. Data Retention.
15.4.1. Term . During the term of an applicable Statement of Work, Service Provider shall retain Services Recipient’s Data in its possession for as long as Services Recipient is required by law, or by Services Recipient’s document retention policies and practices (including any litigation data destruction holds), to retain such Data associated with such Statement of Work. Services Recipient shall inform Service Provider of any change in requirements of law and policies and practices, which shall be incorporated by reference into the applicable Statements of Work. Nothing in this Article 15 shall relieve Service Provider of (i) other document retention requirements expressly provided in this Agreement or the Purchase Agreement or (ii) its obligation to modify the Services to conform to any requirement of Law.
15.4.2. Post-Term . Upon expiration or termination of a Statement of Work, a particular Service, or upon request by Services Recipient at any time with respect to particular Data not required by Service Provider to perform Service Provider’s obligations under this Agreement, or at the end of any specified retention period set forth in such Statement of Work, Service Provider shall return to Services Recipient the Data associated with such Statement of Work in the form and manner reasonably requested by Services Recipient, including all copies of documents, papers or other material that may contain Services Recipient’s Confidential Information and delete from its servers any electronic copies of all such information (excluding, for purposes of this Section 15.4.2 , copies of this Agreement) that are in Service Provider’s possession or control. Service Provider shall thereafter remove such Data from its applications
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and databases and shall use mutually approved data destruction methods to remove such Data from its back-up systems. Notwithstanding the foregoing, for so long as Services Recipient does not request the return of its Data, Service Provider shall maintain it in accordance with Section 8S of the Purchase Agreement, regardless of whether such Data was created before or after the Execution Date.
15.4.3. Destruction of Data. Service Provider shall destroy Services Recipient’s Data held by it when and as required by Services Recipient’s Document Retention policies from time to time in effect and by the terms of any Statement of Work providing for records management services.
15.4.4. Record of Destruction of Data . Whenever Data of a Services Recipient is required to be destroyed in accordance with this Agreement, such Services Recipient may require a certification of such destruction from the Relationship Manager for the other Party.
16. Audits.
Services Recipient shall have the right, at its cost, no more than two (2) times per year, upon reasonable request and during Service Provider’s business hours, to conduct financial, internal, operation, security (physical and electronic) and other technical audits with respect to the Services, at Services Recipient’s expense. Such audits are in addition to the invoice audit rights provided for in Article 10 hereof. Service Provider shall reasonably cooperate with such audits by making Personnel, documentation and other information reasonably available to Services Recipient. Services Recipient may conduct such audits with its own employees or with the employees of consultants, including those of its financial auditor.
17. Reserved.
18. Intellectual Property
18.1.1. Services Recipient Proprietary Software and Services Recipient Work Product . Subject to the other terms and conditions of this Agreement, Services Recipient hereby grants to Service Provider a non-exclusive, worldwide, royalty-free, non-transferable license to use, copy, maintain, modify, enhance and create derivative works of (i) Services Recipient’s Proprietary Software (and any design, architecture and techniques of software development or enhancements related thereto) set forth in any applicable Statement of Work, (ii) the Work Product and Deliverables created for Services Recipient, and (iii) the methodology and tools related to any of the foregoing, all solely for the purpose of providing the Services to Services Recipient pursuant to this Agreement. Except as otherwise requested or approved by Services Recipient, Service Provider shall cease all use of Services Recipient’s Proprietary Software and the Services Recipient Work Product at the end of the Term, or as otherwise provided for in this Agreement or any Statement of Work.
18.1.2. Services Recipient Work Product . All Services Recipient Work Product, Deliverables and other materials created for Services Recipient shall be considered “works made for hire” and shall be owned by Services Recipient, and Services Recipient shall be, pursuant to the Copyright Act, the author of such work. If any such Work Product, Deliverables or other materials may not be considered a “work made for hire” under applicable Law, Service Provider hereby irrevocably assigns,
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and shall assign, to Services Recipient, without further consideration, all of Service Provider’s right, title, and interest in and to the copyrights in such Work Product, Deliverables and other materials and waives any moral rights therein to the fullest extent permitted under applicable Law.
18.1.3. Further Assurances . Service Provider shall assist Services Recipient and its nominee or assignees, at any time, in the protection of the worldwide right, title, and interest in and to any Services Recipient Work Product, Deliverables or other materials created for Services Recipient, including the execution of all formal assignment documents requested and prepared by Services Recipient or its nominee or assignee and the execution of all lawful oaths and applications for registration of copyright in the United States and foreign countries; provided that Services Recipient shall, without duplication of charges paid pursuant to Section 10, reimburse Service Provider for its time so spent (excluding nominal efforts) and any out-of-pocket expenses reasonably incurred by Service Provider in connection therewith.
18.1.4. Service Provider’s Independent Contractors . If required by Services Recipient, Service Provider shall use reasonable efforts to require each of Service Provider’s independent contractors that creates any Services Recipient Work Product, Deliverables or other materials for Services Recipient to execute written agreements (i) assigning to Services Recipient (or to Service Provider who shall then in turn assign to Services Recipient), without further consideration, all of its right, title, and interest in and to such Services Recipient Work Product, Deliverables and other materials, including all Intellectual Property Rights assigned in accordance with Section 18.1.2 , and (ii) agreeing to execute any documents and take any other actions reasonably requested by Services Recipient (or Service Provider, on Services Recipient’s behalf) to effectuate the purposes of this Section 18.1.4 .
18.2. Service Provider Licenses to Services Recipient.
18.2.1. Service Provider Intellectual Property Rights. Except as otherwise specified in an individual Statement of Work or schedule thereto, by language expressly modifying the terms of this Section 18.2.1 , Service Provider hereby grants Services Recipient (i) a non-exclusive, perpetual, worldwide, royalty-free, transferable, irrevocable license, with the right to sublicense, to make, have made, use, copy, maintain, modify, enhance and create derivative works of Service Provider’s Software (and any design, architecture and techniques of software developments or enhancements related thereto), Service Provider’s Web Site, Documentation, Intellectual Property Rights and methodology and tools related to any of the foregoing or the Services to the extent incorporated into or embodied in the Services, Services Recipient’s Work Product, or Deliverables, or to the extent necessary for Services Recipient to receive the benefit of the Services, and (ii) any additional rights as set forth in the applicable Statement of Work. Services Recipient shall have the right to grant, at no additional charge, non-exclusive sublicenses to the rights licensed to Services Recipient under this Section 18.2.1 to any third party. Nothing in the foregoing shall constitute a sublicense of any such rights to Services Recipient where such a sublicense would breach the terms of any license of any such rights held by Service Provider.
18.2.2. Scope of License . The rights licensed under this Section 18.2 (including any sub-license permitted pursuant to Section 18.2.1) may be exercised by Services Recipient solely to provide to itself, or have provided to it, Services that are substantially similar to, or derivative of, the Services.
18.2.3. Software Documentation and Related Data . The license granted to Services Recipient pursuant to this Section 18.2 extends to all Software, Documentation, tools, related data and other tangible and intangible items necessary for Services Recipient’s exercise of such rights, subject to the limitations set forth in Article 14 and Section 18.2 .
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18.2.4. Modifications . Modifications and enhancements to Service Provider’s Software made by Services Recipient, or by a third party under Services Recipient’s direction, shall be considered to be owned by Service Provider unless such modifications are unique to Services Recipient’s use of the software so modified, in which case ownership thereof shall be retained by Services Recipient . Services Recipient acknowledges that Service Provider and the successors and assigns of Service Provider shall have the right to obtain and hold in their own name any Intellectual Property Rights in and to all such modifications and enhancements.
18.3.1. Ownership of Inventions . Except as agreed by the Parties in a Statement of Work, Service Provider and Services Recipient shall own an undivided equal interest in all right, title and interest in and to all Inventions created, conceived or developed by Service Provider or its Personnel in the course of providing the Services, without a duty to account.
18.3.2. Further Assurances . Where Service Provider assigns patent ownership to the Services Recipient in a Statement of Work, Service Provider shall assist Services Recipient and its nominee or assignees, at any time, in the protection of the worldwide right, title, and interest in and to any Invention and patent applications and patents issued thereon, including the execution of all formal assignment documents requested and prepared by Services Recipient or its nominee or assignee and the execution of all lawful oaths and applications for letters patent in the United States and foreign countries; provided that, Services Recipient shall, without duplication of charges paid pursuant to Section 10, reimburse Service Provider for its time so spent (excluding nominal efforts) and any out-of-pocket expenses reasonably incurred by Service Provider in connection therewith.
18.4. Disclosure and Delivery of All Work Product Upon completion of the Services or the termination of a project and subject to the transfer provisions of Section 18.2.1 , Service Provider shall, upon request of Services Recipient, use commercially reasonable efforts to disclose fully and to deliver promptly to Services Recipient all of the Work Product, including related object and source code, as well as any and all copies, summaries or extracts of such Work Product.
18.5. No Other Licenses This Agreement does not grant or otherwise give either Party ownership in, or other proprietary rights or license to use, the other Party’s Intellectual Property Rights except as expressly provided for herein or in an applicable Statement of Work.
18.6. Third Party Software To the extent Service Provider desires to include any third party Software or materials in any Work Product, Service Provider shall (i) notify Services Recipient prior to such i