Shared Services Agreement - Technology Solutions Co. and eLoyalty Corp.
SHARED SERVICES AGREEMENT
by and between
TECHNOLOGY SOLUTIONS COMPANY
and
ELOYALTY CORPORATION
Dated as of [ ], 2000
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TABLE OF CONTENTS
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Section 1. Definitions; Rules of Construction.............................. 1
1.1 Definitions................................................... 1
1.2 Other Terms................................................... 3
1.3 Rules of Construction......................................... 3
Section 2. Term............................................................ 5
Section 3. Performance of Services by TSC ................................. 5
3.1 General....................................................... 5
3.2 Standard of Care.............................................. 5
3.3 Service Modifications......................................... 6
3.4 Compliance with Law ........................................... 6
3.5 Audit.......................................................... 7
Section 4. Provision of eLoyalty Information.................................7
Section 5. Fees............................................................. 7
5.1 General........................................................ 7
5.2 Sales Taxes.................................................... 8
5.3 License Fees................................................... 8
5.4 Cap on Fees.................................................... 8
5.5 Unamortized Hardware and Software...............................8
Section 6. Invoicing and Payment............................................ 8
Section 7. Independence..................................................... 9
Section 8. Nonexclusivity................................................... 9
Section 9. Confidentiality................................................. 10
9.1 TSC Information............................................... 10
9.2 eLoyalty Information.......................................... 10
9.3 Security...................................................... 10
9.4 General....................................................... 10
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Section 10. Termination.................................................... 11
10.1 Grounds for Termination...................................... 11
10.2 Procedures on Termination.................................... 12
10.3 Termination Costs............................................ 12
Section 11. Limitation of Liability and Remedy............................. 12
11.1 Damages...................................................... 12
11.2 eLoyalty's Exclusive Remedies................................ 13
11.3 TSC's Exclusive Remedies..................................... 13
11.4 Affiliates................................................... 14
Section 12. Force Majeure.................................................. 14
Section 13. Assignment......................................................14
13.1 Assignment with Consent.......................................14
13.2 Assignment in Event of Acquisition........................... 14
Section 14. Indemnification and Insurance.................................. 15
14.1 TSC's Obligation............................................. 15
14.2 eLoyalty's Obligation........................................ 15
14.3 Third-Party Claims........................................... 15
(a) Control of Proceedings.............................. 16
(b) Settlement of Third-Party Claims
By the Indemnified Person..................... 17
14.4 Insurance.................................................... 18
Section 15. Disputes....................................................... 18
15.1 Agreement to Arbitrate....................................... 18
15.2 Escalation and Mediation..................................... 18
15.3 Procedures for Arbitration................................... 19
15.4 Selection of Arbitrator.......................................20
15.5 Hearings......................................................20
15.6 Discovery and Certain Other Matters...........................21
15.7 Certain Additional Matters....................................22
15.8 Law Governing Arbitration Procedures..........................23
15.9 Choice of Forum.............................................. 23
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Section 16. Miscellaneous Provisions....................................... 23
16.1 Notice....................................................... 23
16.2 Entire Agreement............................................. 23
16.3 Choice of Law................................................ 24
16.4 Amendment; Waiver............................................ 24
16.5 Severability................................................. 24
16.6 Relationship of the Parties.................................. 24
16.7 Survival..................................................... 24
16.8 Counterparts................................................. 24
16.9 Records Retention............................................ 24
16.10 Beneficiaries............................................... 25
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SHARED SERVICES AGREEMENT
This Agreement is made as of [ ], 2000 (the "Effective
Date") by Technology Solutions Company, a Delaware corporation ("TSC"), and
eLoyalty Corporation, a Delaware corporation ("eLoyalty").
RECITALS
TSC is planning to spin-off certain businesses by transferring
those businesses to eLoyalty (or its subsidiaries) and distributing all of the
stock of eLoyalty to the stockholders of TSC as a dividend. As a result of the
distribution of that dividend, TSC and eLoyalty, and their respective
subsidiaries, will be separate and independent corporations.
As a consequence of the foregoing contemplated actions, eLoyalty will
acquire business operations that have traditionally been supported by
administrative functions that will remain with TSC after the spin-off. TSC and
eLoyalty agree that it is advisable for eLoyalty to continue to receive
administrative services from TSC.
AGREEMENT
In consideration of the mutual undertakings contained herein,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, TSC and eLoyalty agree as follows:
SECTION 1. DEFINITIONS; RULES OF CONSTRUCTION.
1.1 Definitions. As used in this Agreement (including the Schedules
hereto):
(i) "Action" shall mean any action, claim, suit, arbitration,
inquiry, subpoena, discovery request, proceeding or investigation by or before
any court or grand jury, any governmental or other regulatory or administrative
entity, agency or commission or any arbitration tribunal.
(ii) "Affiliate" shall mean any Person controlling, controlled
by, or under direct or indirect common control with a Party. For the purpose of
this definition, the term "control" means the power to direct the management of
an entity, directly or indirectly, whether solely through the ownership of
voting securities (as in the case of a subsidiary), by contract, or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing. eLoyalty and TSC shall not be deemed to be Affiliates of each other.
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(iii) "Agreement" means this Shared Services Agreement dated
as of [________], 2000 including all Schedules attached hereto.
(iv) "Arbitration Act" shall mean the United States
Arbitration Act, 9 U.S.C. ss.ss. 1-14, as the same may be amended from time to
time.
(v) "Change in Control" shall mean the acquisition by any
individual, entity, group or Person (as such term is defined in Section 13(d)(3)
of the Exchange Act), other than by a subsidiary or affiliated corporation of
the relevant Party or any employee benefit plan (including a trust forming part
of such a plan) maintained by the relevant Party or a subsidiary or affiliate
thereof of ownership of [50%] or more of either (i) the then outstanding shares
of common stock of the relevant Party or (ii) the combined voting power of the
then outstanding voting securities of the relevant Party entitled to vote
generally in the election of directors.
(vi) "Cost" whether used alone or as part of another defined
term shall mean cost as determined by TSC in a manner substantially the same as
the manner in which TSC determined such cost in the one-year period ending
[_________], 1999.
(vii) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
(viii) "Fully Burdened Cost" shall mean all direct and
indirect Costs including allocable overhead (but excluding corporate overhead
and return on equity investment) allocable to the provision of any Service
without regard to whether the Service is provided to eLoyalty or to TSC. The
Fully Burdened Cost associated with the provision of any Service shall include
any Stay Bonus or Severance Pay paid to any employee who, as of the Effective
Date, was employed by TSC in the provision of that Service. As regards any
individual employee, "Fully Burdened Cost" shall include all direct Costs
relating to that individual (including their salary and accruals for incentive
compensation, vacation, holiday, insurance (medical, dental, vision, life,
legal, short-term and long-term disability, employee assistance program),
workers compensation and 401k match and FUI, SUI, OASDI and Medicare) and any
Stay Bonus or Severance Pay paid as well as that individual's proportionate
share of all indirect Costs incurred in the provision of the relevant Service,
such individual's proportionate share to be determined by dividing the total
indirect Costs relating to the provision of the relevant Service by the number
of full-time equivalent employees employed by the TSC department providing the
relevant Service.
(ix) "Governmental Authority" shall mean any foreign, federal,
state, local or other government, statutory or
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administrative authority, regulatory body or commission or any court, tribunal
or judicial or arbitral body.
(x) "Notice" shall mean notice given in accordance with
Section 16.1.
(xi) "Party" shall mean either TSC or eLoyalty.
(xii) "Person" shall mean an individual, corporation,
partnership, limited liability company, unincorporated syndicate, unincorporated
organization, trust, trustee, executor, adminis trator or other legal
representative, governmental authority or agency, or any group of Persons acting
in concert.
(xiii) "SEC" shall mean the Securities and Exchange
Commission.
(xiv) "Service" shall mean each service generally described in
Schedule 2, performed in substantially the same manner and containing the same
elements as when such Service was provided to TSC or Affiliates of TSC prior to
the Effective Date, except as otherwise permitted under Section 3.
(xv) "Term" shall mean the period of time provided in Section
2, including any and all extensions thereof.
(xvi) "Transfer" shall mean any assignment, transfer, sale or
other disposition to a Person that is not an Affiliate of the Transferor,
including any Transfer by way of merger or consolidation or otherwise by
operation of law.
1.2 Other Terms. Terms defined in other Sections of this
Agreement will have the meanings therein provided.
1.3 Rules of Construction.
(a) In this Agreement, unless a clear contrary intention
appears:
(i) the singular number includes the plural
number and vice versa;
(ii) reference to any Person includes such Person's
successors and assigns but, if applicable, only if such successors and
assigns are permitted by this Agreement;
(iii) reference to any gender includes the other
gender;
(iv) reference to any Section or Schedule
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means such Section of this Agreement or such Schedule to this
Agreement, as the case may be, and references in any Section or
definition to any clause means such clause of such Section or
definition;
(v) "herein", "hereunder", "hereof", "hereto," and
words of similar import shall be deemed references to this Agreement as
a whole and not to any particular Section or other provision hereof or
thereof;
(vi) "including" (and with correlative meaning
"include") means including without limiting the generality of any
description preceding such term;
(vii) relative to the determination of any period of
time, "from" means "from and including", "to" means "to but excluding"
and "through" means "through and including";
(viii) reference to any law (including statutes and
ordinances) means such law as amended, modified, codified or reenacted,
in whole or in part, and in effect from time to time, including rules
and regulations promulgated thereunder;
(ix) accounting terms used herein shall have the
meanings historically attributed to them by TSC and its subsidiaries
based upon TSC's internal financial policies and procedures in effect
prior to the spin-off described in the recitals above;
(x) in the event of any conflict between the
provisions of the body of this Agreement and the Schedules hereto, the
provisions of the body of this Agreement shall control; and
(xi) the headings contained in this Agreement have
been inserted for convenience of reference only, and are not to be used
in construing this Agreement.
(b) This Agreement was drafted and negotiated by the Parties
with the benefit of legal representation, and any rule of construction or
interpretation otherwise requiring this Agreement to be construed or interpreted
against either Party shall not apply to any construction or interpretation
hereof.
SECTION 2. TERM.
The initial Term of this Agreement shall begin on the
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Effective Date and, except as otherwise provided in this Agreement, end at the
end of the day on June 30, 2000. The Term may be extended for successive
additional periods, subject to the Parties agreeing upon the terms and
conditions of such an extension. Any such agreement to extend the term of this
Agreement must be entered into at least 90 days in advance of the date on which
this Agreement would otherwise naturally terminate. Each Party may in its
absolute discretion determine whether or not the terms of any such proposed
extension are acceptable and may refuse to agree to any such extension for any
reason whatsoever. Notwithstanding the above, eLoyalty shall have access to
TSC's systems, reports, databases and other records, which access shall not be
unreasonably requested by eLoyalty or denied by TSC, for 45 days after the date
of the termination of this Agreement. Such access shall be provided in order to
allow eLoyalty to complete its financial accounting and otherwise maintain its
records for the period when this Agreement shall have been in force.
SECTION 3. PERFORMANCE OF SERVICES BY TSC.
3.1 General. From time to time, beginning on the Effective Date, TSC
will, subject to Section 3.2(c), provide Services to eLoyalty (and to those
Persons who were, as of the Effective Date, eLoyalty Affiliates) on an "as
needed" basis (as determined by eLoyalty or its covered Affiliates). Services
may be provided by TSC itself or TSC may outsource the provision of the
Services.
3.2 Standard of Care.
(a) TSC will use (and will cause its Affiliates to use)
commercially reasonable efforts in the performance of its obligations hereunder
and will do so with the same degree of care, skill and prudence customarily
exercised when engaged in similar activities for itself and its Affiliates. TSC
will have no liability with respect to the provision of services to eLoyalty
hereunder in the absence of gross negligence or willful misconduct. To the
extent that any error or omission in any Service is not caused by failure of
eLoyalty or its Affiliates to conform to eLoyalty's obligations under Section 4
or is not otherwise excused under Section 12 and correction thereof by
reperformance or otherwise is practical, TSC will make such correction.
(b) TSC makes no representations or warranties whatsoever,
either express or implied, to eLoyalty or any other Person that the Services
provided hereunder are or will be adequate and sufficient (as to quantity,
quality or type) to meet the needs (including any specifically identified needs)
or any objectives of eLoyalty or any such Person with respect to the conduct of
the business of eLoyalty or such Person.
(c) The proportionate share of each Service to which eLoyalty
will be entitled will be approximately equal to the proportionate share of that
Service that was,
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prior to the Effective Date, devoted to the businesses that
TSC is planning to spin-off to eLoyalty. To the extent that TSC's capacity to
perform a Service is diminished, be it by system failure, departure of personnel
or any other factor outside of the control of TSC, the Services to which
eLoyalty will be entitled will be decreased proportionately.
(d) In performing its responsibilities hereunder, TSC will
accord eLoyalty and its Affiliates the same priority under comparable
circumstances as it provides itself and its Affil iates. Without limiting the
generality of the foregoing, in the provision of Services under comparable
circumstances TSC and its Affiliates will not discriminate against eLoyalty or
any of its Affiliates solely because eLoyalty or one of its Affiliates is the
recipient of such Services.
(e) TSC will use all reasonable efforts to provide Services at
the same levels of quality and efficiency as they have been provided to TSC and
its affiliates prior to the Effective Date. TSC shall give due consideration to
any suggestion by eLoyalty to improve performance but shall have no obligation
to accept or implement any such suggestion that it shall not, in its sole
discretion, deem advisable and in the best interests of TSC.
3.3 Service Modifications.
(a) TSC may reasonably supplement, modify, substitute or
otherwise alter a Service from time to time in a manner consistent with
supplements, modifications, substitutions or alterations made with respect to
similar services provided or otherwise made available by TSC to itself or its
Affiliates; provided that no change which, in the good faith judgment of TSC,
adversely affects the quality or availability of a Service or increases
eLoyalty's cost of using the Service (including any product thereof) in any
material respect, shall be made without the consent of eLoyalty. TSC will give
eLoyalty not less than 90 days Notice, prior to the implementation of any change
in a Service that, in the good faith judgment of TSC, may adversely affect the
quality or availability of a Service or increase the cost of using the Service
in any material respect.
(b) Without limiting the generality of the provisions of the
preceding subsection (a), TSC will not make any changes in any Service which
would require eLoyalty to modify any bridge or other interface between eLoyalty
facilities and the point at which data is transmitted to such facilities, except
when the costs of such modification is less than $10,000, unless eLoyalty
consents thereto. Conversely, TSC will not be obligated to make any change in a
Service because of changes eLoyalty makes in its facilities.
3.4 Compliance with Law.
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In performing Services, TSC will comply in all material
respects with all laws, rules and regulations that apply to the performance of
the Services.
3.5 Audit. (a) Each of TSC and eLoyalty may audit the other with
respect to (i) the performance of Services to ensure that adequate internal and
administrative controls and procedures are being employed, (ii) any Cost used to
determine any amounts payable hereunder, and (iii) any other matters reasonably
required to verify compliance with the terms of this Agreement. The Party
requesting the audit may use independent auditors, who may participate fully in
such audit.
(b) In the event that an audit is proposed with respect to
information which the Party to be audited wishes not to disclose to the other
Party ("Restricted Information"), then on the written demand of the Party to be
audited the individuals conducting the audit with respect to Restricted
Information will be limited to the independent auditors of the Party requesting
the audit. In such event, the Party to be audited shall pay the costs of the
independent auditors conducting such audit, but only with respect to that
portion of the audit relating to Restricted Information. Such independent
auditors shall enter into an agreement with the Parties hereto, on terms that
are agreeable to both Parties hereto, under which such independent auditors
shall agree to maintain the confidentiality of the information obtained during
the course of such audit and establishing what information such auditors will be
permitted to disclose to report the results of any audit of Restricted
Information to the Party requesting the audit.
(c) Any such audit shall be conducted during regular business
hours, in a manner that does not interfere unreasonably with the operations of
the Party being audited. Such audits shall be conducted not more than once in
any calendar quarter. Subject to the foregoing limitations, any such audit shall
be conducted when requested by Notice given not less than 30 days prior to the
commencement of the audit.
SECTION 4. PROVISION OF ELOYALTY INFORMATION.
To enable TSC to provide the Services, eLoyalty will provide
information, furnish access to data and take such other action as is reasonably
requested by TSC.
SECTION 5. FEES.
5.1 General. The aggregate Fully Burdened Costs for the Services set
forth in Schedule 2 will be allocated on a Service- by-Service basis as between
the Parties according to the procedures set forth in Schedule 3.
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5.2 Sales Taxes. eLoyalty shall pay, or reimburse TSC for, the gross
amount of any present or future sales, use, excise, occupation, privilege,
value-added, gross-receipts or other similar tax (excluding any tax on net
income, corporate franchise tax or fee or any similar tax or fee) applicable to
the fee, sale or furnishing of any Service or to its use by eLoyalty.
5.3 License Fees. If TSC reasonably concludes that it requires consent
to permit it to use any intellectual property for the provision of Services
hereunder that was not obtained prior to the Effective Date, TSC will use
reasonable efforts to obtain such consent and the amounts paid to the licensor
shall be equitably allocated between the Parties. If any consent required to
permit TSC to use any intellectual property for the provision of Services
hereunder (irrespective of when obtained) requires periodic payments to the
licensor, the amount thereof shall be equitably allocated between the Parties.
Allocations pursuant to this Section 5.3 shall be based upon the amount of each
Party's use of the intellectual property for which the payment is made. If the
Parties are unable to agree to the allocation, the question shall be resolved in
accordance with Section 15.
5.4. Cap on Fees. Notwithstanding any other provision of this
Agreement, fees charged to eLoyalty under this Agreement shall not exceed 60% of
the aggregate Fully Burdened Cost of all of the Services.
SECTION 6. INVOICING AND PAYMENT.
TSC will each month submit to eLoyalty for payment a statement of
amounts due under this Agreement. The statement will specify the charge for each
of the Services provided during the relevant month. Statements submitted other
than after the close of a fiscal quarter will be based on reasonable estimates
of the amounts due, and TSC will perform a true-up at the end of the fiscal
quarter. Each statement will specify the nature of the Services provided and
will contain or be followed by such other supporting detail as eLoyalty may from
time to time reasonably request.
eLoyalty will pay or cause its Affiliates receiving the Services to pay
all amounts due pursuant to this Agreement within 30 days after the date of each
such statement hereunder.
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If any amounts due hereunder have not been received by the due date,
such overdue amounts shall bear interest from the due date at the rate of 1% per
month, or portion thereof, until received.
Either Party shall have the right to withhold any disputed amounts due
hereunder if such Party in good faith disputes the amount claimed by the other
Party to be due hereunder and such Party notifies the other Party of such
dispute within 30 days after the date of the statement containing the disputed
amount. The foregoing right to withhold payment of disputed amounts shall be
limited to amounts disputed in good faith, and interest will accrue and be
payable on the net amount determined to be payable.
Neither payments made by eLoyalty nor the acceptance of payments by TSC
in the amount or less than the amount shown on TSC's statements shall be
construed as an acceptance or agreement with the amount so stated or the amount
received, respectively. Except as otherwise provided, either eLoyalty or TSC may
recover from the other the amount of any overpayment or underpayment. Without
limiting the generality of the foregoing, TSC may supplement any statement it
renders for less than the full amount to which it is entitled hereunder;
provided that such supplement is made within a reasonable time after the
statement being supplemented.
In addition to any other rights available to it at law or in equity,
upon ten days Notice to eLoyalty, TSC may suspend the provision of any Services
for which an undisputed statement for provision of Services hereunder from TSC
has not been satisfied within 20 days of its due date until such statement has
been satisfied.
SECTION 7. INDEPENDENCE.
All employees and representatives of TSC providing Services to eLoyalty
will be deemed for purposes of all compensation and employee benefits to be
employees or representatives of TSC (or its subcontractors) and not employees or
representatives of eLoyalty. In performing such services, such employees and
representatives will be under the direction, control and supervision of TSC (or
its subcontractors) (and not of eLoyalty) and TSC (or its subcontractors) will
have the sole right to exercise all authority with respect to the employment
(including termination of employment), assignment and compensation of such
employees and representatives.
SECTION 8. NONEXCLUSIVITY.
Nothing in this Agreement shall prevent TSC from providing any Service
to any other Person. Nothing in this Agreement shall
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prevent eLoyalty from obtaining all or any part of the Services from its own
employees and facilities or from providers other than TSC.
SECTION 9. CONFIDENTIALITY.
9.1 TSC Information. eLoyalty agrees to hold, and to use reasonable
efforts to cause its employees and representatives to hold, in confidence in a
manner consistent with eLoyalty's treatment of its own confidential information,
all information concerning TSC reasonably understood to be confidential (i)
contained in any of the Schedules to this Agreement or otherwise received by
eLoyalty from TSC after the Effective Date relating to the determination of the
fees and charges payable hereunder, (ii) obtained from TSC by the use of any
access to TSC data afforded by any connection between eLoyalty's systems and
TSC's systems maintained in connection with the provision of Services hereunder,
(iii) obtained from TSC in the course of an audit pursuant to Section 3.5 or
(iv) furnished to or obtained by eLoyalty after the Effective Date in the course
of its receipt of Services hereunder. Except as may otherwise be provided in
another agreement between the Parties, eLoyalty shall not use such information
for any purpose other than as contemplated under this Agreement or verifying
compliance with this Agreement, without TSC's prior written consent.
9.2 eLoyalty Information. TSC agrees to hold, and to use its reasonable
efforts to cause its employees and representatives to hold, in confidence in a
manner consistent with TSC's treatment of its own confidential information all
information reasonably understood to be confidential concerning eLoyalty,
furnished to or obtained by TSC after the Effective Date in the course of
providing Services under this Agreement. Except as may otherwise be provided in
another agreement between the Parties, TSC shall not use such information for
any purpose other than as contemplated under this Agreement or verifying
compliance with this Agreement, without eLoyalty's prior written consent.
9.3 Security. Each Party shall be responsible for preventing
unauthorized remote access by such Party's own agents and employees to data
transferred or otherwise made available to the other Party under this Agreement.
9.4 General. The obligations of confidentiality and non-disclosure
imposed under this Section 9 shall not apply to data and information that the
recipient can demonstrate:
(i) is published or is or otherwise becomes available to the
general public as part of the public domain without breach of this
Agreement;
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(ii) has been furnished or made known to the recipient without
any obligation to keep it confiden tial by a third party under
circumstances which are not known to the recipient to involve a breach
of the third party's obligations to a Party hereto;
(iii) was developed independently of information furnished to
the recipient under this Agreement; or
(iv) was known to the recipient at the time of receipt thereof
from the other Party, is not otherwise subject to [(a) the
confidentiality restrictions contained in the Reorganization Agreement
dated as of [ ], 2000 between eLoyalty and TSC] or (b) any other
obligation to keep it confidential and was not obtained from a third
party under circumstances which were known to the recipient to involve
a breach of the third party's obligations to a Party hereto.
Each Party (the "first party") acknowledges that the other Party would
not have an adequate remedy at law for the breach by the first party of any one
or more of the covenants contained in this Section 9 and agrees that, in the
event of such breach, the other Party may, in addition to the other remedies
which may be available to it, apply to a court for an injunction to prevent
breaches of this Section 9 and to enforce specifically the terms and provisions
of this Section.
The provisions of this Section 9 shall not preclude disclo sures
required by law; provided, however, that each Party will use reasonable efforts
to notify the other, prior to making any such disclosure, and permit the other
to take such steps as it deems appropriate, including obtaining a protective
order, consistent with applicable law, to minimize any loss of confidentiality.
SECTION 10. TERMINATION.
10.1 Grounds for Termination. Each Party shall have the right to
terminate this Agreement effective upon delivery of Notice to the other Party if
the other Party: (a) makes an assignment for the benefit of creditors, or
becomes bankrupt or insolvent, or is petitioned into bankruptcy, or takes
advantage of any state, federal or foreign bankruptcy or insolvency act, or if a
receiver or receiver/manager is appointed for all or any substantial part of
its property and business and such receiver or receiver/manager remains
undischarged for a period of 30 days, (b) has its corporate existence
terminated by voluntary or involuntary dissolution,(c) materially defaults
in the performance of any of its covenants or obligations contained in
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this Agreement and such default is not remedied to the nondefaulting Party's
reasonable satisfaction within 30 days after Notice to the defaulting Party of
such default, or if such default is not capable of rectification within 30 days,
if the defaulting Party has not promptly commenced to rectify the default within
such 30 day period and is not proceeding diligently to rectify the default, (d)
effects a Transfer of its rights and obligations under this Agreement pursuant
to Section 13.2, or (e) undergoes a Change in Control. Except as provided above,
neither this Agreement nor any of the Services may be terminated prior to June
30, 2000, except with the mutual agreement of the Parties.
10.2 Procedures on Termination. On any termination of this Agreement,
TSC will cooperate with eLoyalty as reasonably necessary to avoid disruption of
the ordinary course of eLoyalty's business, and such termination shall not
affect TSC's rights to payment for Services provided.
Except as otherwise required pursuant to Section 16.9 each Party shall
destroy or return to the other Party all records made or obtained in the course
of performance hereunder containing information regarding the other Party or its
customers that is protected from disclosure under Section 9. In the event that
any Party shall elect to destroy any records as permitted above, such Party
shall provide the other Party with written confirmation of any such destruction.
10.3 Termination Costs. If eLoyalty elects to terminate any Service
pursuant to Section 10.1 and such termination results in TSC's becoming liable
for termination charges imposed by a Person that is not an Affiliate of TSC,
eLoyalty will reimburse TSC therefor. If the amount of any such charges is
subject to negotiation between TSC and such Person, TSC will allow eLoyalty to
participate therein and will not agree to the amount thereof without eLoyalty's
consent, which will not be unreasonably withheld. Any amounts payable under this
Section 10.3 shall be in addition to, and separate from, any amounts payable
under Sections 5.5-5.7.
SECTION 11. LIMITATION OF LIABILITY AND REMEDY.
11.1 Damages. In no event, whether based on contract, indemnity,
warranty, tort (including willful and wanton misconduct or negligence), strict
liability or otherwise, shall either Party or any of its directors, officers,
employees or agents, be liable for any lost profits or any special, exemplary,
punitive, incidental, indirect or consequential damages. The foregoing
limitation and disclaimer shall apply irrespective of whether the
possibility of such lost profits or any special, exemplary, punitive,
incidental, indirect or consequential
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damages had been disclosed in advance or could have reasonably been foreseen.
The amounts due from one Party to the other based upon the Parties' respective
obligations to indemnify each other pursuant to this Agreement shall not be
deemed to be damages that would be excluded by this paragraph.
The limitations and disclaimers of obligations and liabili ties
contained in this Section 11 are intended to apply to the fullest extent
permitted by law; provided that such limitations and disclaimers shall not limit
amounts payable with respect to any express indemnity provided for in this
Agreement.
11.2 eLoyalty's Exclusive Remedies. eLoyalty's exclusive remedies
against TSC for any breach of, or other act or omission arising out of or
relating to, this Agreement shall be:
(i) the right to receive refunds of the amount of any payment
in excess of amounts owed under this Agreement;
(ii) the right to require reperformance of any Service to the
extent required pursuant to Section 3.2;
(iii) the right to indemnification as provided in Section 14;
(iv) the right to injunction, specific perform ance or other
equitable non-monetary relief when available under applicable law;
(v) the right to terminate this Agreement for material breach
as set forth in Section 10; and
(vi) the right to actual damages, any such damages to be
limited to the amount of fees paid.
11.3 TSC's Exclusive Remedies. TSC's exclusive remedies against
eLoyalty for any breach of, or other act or omission arising out of or relating
to, this Agreement shall be:
(i) the right to receive payment for Services and
any other amounts due under this Agreement;
(ii) the right to suspend performance as provided
in Section 6;
(iii) the right to indemnification as provided in Section 14;
(iv) the right to injunction, specific performance or other
equitable non-monetary relief when
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available under applicable law; and
(v) the right to terminate this Agreement for material breach
as set forth in Section 10.
11.4 Affiliates. The provisions of Sections 11.1 through 11.3 apply to
a Party's Affiliates providing any part of any Service or performing any other
function hereunder or receiving any part of any Service hereunder.
SECTION 12. FORCE MAJEURE.
The obligations of either Party to perform under this Agreement shall
be excused during each period of delay caused by matters (not including lack of
funds or other financial causes) such as strikes, supplier delays, shortages of
raw materials, government orders or acts of God, which are reasonably beyond the
control of the Party obligated to perform; provided that nothing contained in
this Agreement shall affect either Party's ability or discretion with respect to
any strike or other employee dispute or disturbance and all such strikes,
disputes or dis turbances shall be deemed to be beyond the control of such
Party. A condition of force majeure shall be deemed to continue only so long as
the affected Party shall be taking all reasonable actions necessary to overcome
such condition. In the event that either Party hereto shall be affected by a
condition of force majeure, such Party shall give the other Party prompt Notice
thereof, which Notice shall contain the affected Party's estimate of the
duration of such condition and a description of the steps being taken or
proposed to be taken to overcome such condition of force majeure. Any delay
occasioned by any such cause shall not constitute a default under this
Agreement, and the obligations of the Parties shall be suspended during the
period of delay so occasioned. During any period of force majeure, the Party
that is not directly affected by such condition of force majeure shall be
entitled to take any reasonable action necessary to mitigate the effects of such
condition of force majeure.
SECTION 13. ASSIGNMENT.
13.1 Assignment with Consent. This Agreement shall be binding upon and
inure to the benefit of the Parties hereto and their respective successors and
permitted assigns, provided, however, that, except as provided below, neither
Party may Transfer its interest in the Agreement, including Transfers by
operation of law such as by way of merger or consolidation, without the prior
written consent of the other Party, which consent may not be unreasonably
withheld.
13.2 Assignment in Event of Acquisition. Notwithstanding
the foregoing provisions of this Section 13, either Party may
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Transfer its rights and obligations under this Agreement to any corporation or
other entity that shall acquire all or substantially all of such Party's
business and assets and assume in writing all of such Party's obligations
hereunder and deliver a signed copy of such assumption instrument to the other
Party; and, upon the other Party's receipt of such assumption instrument, the
assigning Party shall be fully released and discharged from its obligations
under this Agreement. In the event of such a Transfer, the Non-Affected Party
shall have the right to terminate this Agreement as provided in Section 10.
SECTION 14. INDEMNIFICATION AND INSURANCE.
14.1 TSC's Obligation. TSC agrees to indemnify and hold eLoyalty and
the eLoyalty Indemnified Parties (as hereinafter defined) harmless from and
against, and in respect of, any and all damages, claims, losses, demands, suits,
fines, penalties and liabilities asserted against or incurred, and all expenses
(including all reasonable fees and expenses of counsel, travel costs and other
out-of-pocket costs) incurred in connection with pending or threatened
litigation or other proceedings ("Expenses") which arise out of or relate to any
claim, action or proceeding asserted by a third party to the extent exclusively
and solely arising out of any matter or thing constituting a breach by TSC
hereunder or any gross negligence or willful misconduct by TSC (or its employees
or agents) in its performance of this Agreement. The eLoyalty Indemnified
Parties shall mean and include: (x) eLoyalty's Affiliates; and (y) the
respective directors, officers, agents and employees of eLoyalty and its
Affiliates. Expenses shall be reimbursed or advanced when and as incurred
promptly upon submission by eLoyalty or any eLoyalty Indemnified Party of
statements to TSC.
14.2 eLoyalty's Obligation. eLoyalty agrees to indemnify and hold TSC
and the TSC Indemnified Parties (as hereinafter defined) harmless from and
against, and in respect of, any and all damages, claims, losses, demands, suits,
fines, penalties and liabilities asserted against or incurred, and all expenses
(including all reasonable fees and expenses of counsel, travel costs and other
out-of-pocket costs) incurred in connection with pending or threatened
litigation or other proceedings ("Expenses") which arise out of or relate to any
claim, action or proceeding asserted by a third party to the extent exclusively
and solely arising out of any matter or thing constituting a breach by eLoyalty
hereunder or any gross negligence or willful misconduct by eLoyalty (or its
employees or agents) in its performance of this Agreement. The TSC Indemnified
Parties shall mean and include: (x) TSC's Affiliates; and (y) the respective
directors, officers, agents and employees of TSC and its Affiliates. Expenses
shall be reimbursed or advanced when and as
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incurred promptly upon submission by TSC or any TSC Indemnified Party of
statements to eLoyalty.
14.3 Third-Party Claims. If any third party shall make any claim or
commence any arbitration proceeding or suit against any one or more of the TSC
Indemnified Parties or the eLoyalty Indemnified Parties (hereafter "Indemnified
Persons") with respect to which an Indemnified Person intends to make any claim
for indemnification against TSC under Section 14.1 or against eLoyalty under
Section 14.2 (as the case may be, the "Indemnifying Party"), such Indemnified
Persons shall promptly give written notice to the Indemnifying Party of such
third party claim, arbitration proceeding or suit and the following provisions
shall apply.
(a) Control of Proceedings.
1. In the event that some portion of the claim, arbitration
proceeding or suit brought against the Indemnified Person is for matters for
which the Indemnified Person will not seek indemnification from the Indemnifying
Party, the Parties shall negotiate in good faith as to which party shall have
control over the proceedings.
2. In all other instances, the Indemnifying Party shall have
20 business days after receipt of the notice referred to above in this Section
14.3 to notify the Indemnified Party that it elects to conduct and control the
defense of such claim, proceeding or suit. If the Indemnifying Party does not
give the foregoing notice, the Indemnified Party shall have the right to defend,
contest, settle or compromise such claim, proceeding or suit in the exercise of
its exclusive discretion subject to the provisions of Section 14.3(b), and the
Indemnifying Party shall, upon request from any of the Indemnified Persons,
promptly pay to such Indemnified Persons in accordance with the other terms of
this Section 14 the amount of any third party claim resulting from their
liability to the third party claimant and all related Expense.
3. If the Indemnifying Party gives the foregoing notice, the
Indemnifying Party shall have the right to undertake, conduct and control,
through counsel reasonably acceptable to the Indemnified Party, and at its sole
expense, the conduct and settlement of such claim, proceeding or suit, and the
Indemnified Party shall cooperate with the Indemnifying Party in connection
therewith, provided that (i) the Indemnifying Party shall not thereby permit any
lien, encumbrance or other adverse charge to thereafter attach to any asset of
any Indemnified Person; (ii) the Indemnifying Party shall not thereby permit any
injunction against any Indemnified Person; (iii) the Indemnifying Party shall
permit the Indemnified Person and counsel chosen by the Indemnified Person and
reasonably acceptable to the Indemnifying
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Party to monitor such conduct or settlement and shall provide the Indemnified
Person and such counsel with such information regarding such claim, proceeding
or suit as either of them may reasonably request (which request may be general
or specific), but the fees and expenses of such counsel shall be borne by the
Indemnified Person unless (1) the Indemnifying Party and the Indemnified Person
shall have mutually agreed to the retention of such counsel or (2) the named
parties to any such claim, proceed ing or suit include the Indemnified Person
and the Indemnifying Party and in the reasonable opinion of counsel to the
Indemnified Person representation of both parties by the same counsel would be
inappropriate due to actual or likely conflicts of interest between them, in
either of which cases the reasonable fees and disbursements of counsel for such
Indemnified Person shall be reimbursed by the Indemnifying Party to the
Indemnified Person; and (iv) the Indemnifying Party shall agree promptly to
reimburse to the extent required under this Section 14 the Indemnified Person
for the full amount of any third party claim resulting from such claim,
proceeding or suit and all related Expense incurred by the Indemnified Person.
4. In no event shall the Indemnifying Party
without the prior written consent of the Indemnified Person, settle or comprise
any claim or consent to the entry of any judgment that does not include as an
unconditional term thereof the giving by the claimant or the plaintiff to the
Indemnified Person a release from all liability in respect of such claim.
5. If the Indemnifying Party shall not have
undertaken the conduct and control of the defense of any claim, suit or
proceeding as provided above, the Indemnifying Party shall nevertheless be
entitled through counsel chosen by the Indemnifying Party and reasonably
acceptable to the Indemnified Person to monitor the conduct or settlement of
such claim by the Indemnified Person, and the Indemnified Person shall provide
the Indemnifying Party and such counsel with such information regarding such
action or suit as either of them may reasonably request (which request may be
general or specific), but all costs and expenses incurred in connection with
such monitoring shall be borne by the Indemnifying Party.
(b) Settlement of Third-Party Claims By the Indemni fied
Person. So long as the Indemnifying Party is contesting any such claim,
proceeding or suit in good faith, the Indemnified Person shall not pay or settle
any such claim, proceeding or suit. Notwithstanding the foregoing, the
Indemnified Person shall have the right to pay or settle any such claim,
proceeding or suit, provided that in such event the Indemnified Person shall
waive any right to indemnity therefor by the Indemnifying Party, and no amount
in respect thereof shall be claimed as Loss or Expense under this Section 14.
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If the Indemnifying Party shall not have undertaken the conduct and
control of the defense of any claim, proceeding or suit as provided above, the
Indemnified Person, on not less than 30 days' prior written Notice to the
Indemnifying Party, may make settlement (including payment in full) of such
claim and such settlement shall be binding upon the Parties hereto for the
purposes hereof, unless within said 30-day period the Indemnifying Party shall
have requested the Indemnified Person to contest such claim at the expense of
the Indemnifying Party. In such event, the Indemnified Person shall promptly
comply with such request and the Indemnifying Party shall have the right to
direct the defense of such claim or any litigation based thereon subject to all
of the conditions of this Section 14. Anything in this Section 14 to the
contrary notwithstanding, if the Indemnified Person advises the Indemnifying
Party that it has determined to make settlement of a claim, the Indemnified
Person shall have the right to do so at its own cost and expense, without any
requirement to contest such claim at the request of the Indemnifying Party, but
without any right under the provisions of this Section 14 for indemnification by
the Indemnifying Party.
14.4 Insurance. Each Party is responsible for carrying any insurance
desired by it in its sole discretion, including comprehensive general liability
insurance, insurance to cover its facilities, products liability insurance and
business interruption insurance. The indemnification provided for in Sections
14.1 and 14.2 shall not apply to the extent the Indemnified Party is compensated
by any insurance.
SECTION 15. DISPUTES.
15.1 Agreement to Arbitrate. The procedures for discussion, negotiation
and arbitration set forth in this Section 15 shall apply to all disputes,
controversies or claims (whether sounding in contract, tort or otherwise) that
may arise out of or relate to, or arise under or in connection with, this
Agreement. Each Party agrees on behalf of itself and its respective Affiliates
that the procedures set forth in this Section 15 shall be the sole and exclusive
remedy in connection with any dispute, controversy or claim relating to any of
the foregoing matters and irrevocably waives any right to commence any Action in
or before any Governmental Authority, except as expressly provided in Section
15.7(b) and except to the extent provided under the Arbitration Act in the case
of judicial review of arbitration results or awards. Each Party on behalf of
itself and its respective Affiliates irrevocably waives any right to any trial
by jury with respect to any claim, controversy or dispute set forth in the first
sentence of this Section 15.1
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15.2 Escalation and Mediation. (a) Each Party agrees to use its
respective reasonable efforts to resolve expeditiously any dispute, controversy
or claim between them with respect to the matters covered hereby that may arise
from time to time on a mutually acceptable negotiated basis. In furtherance of
the foregoing, any Party involved in a dispute, controversy or claim may deliver
a notice (an "Escalation Notice") demanding an in-person meeting involving
representatives of the Parties at a senior level of management of the Parties
(or if the Parties agree, of the appropriate strategic business unit or division
within such entity). A copy of any such Escalation Notice shall be given to the
General Counsel, or like officer or official, of each Party involved in the
dispute, controversy or claim (which copy shall state that it is an Escalation
Notice pursuant to this Agreement). Any agenda, location or procedures for such
discussions or negotiations between the Parties may be established by the
Parties from time to time; provided, however, that the Parties shall use their
reasonable efforts to meet within 10 days of the Escalation Notice.
(b) The Parties must retain a mediator to aid the Parties in
their discussions and negotiations by informally providing advice to the
Parties. Any opinion expressed by the mediator shall be strictly advisory and
shall not be binding on the Parties, nor shall any opinion expressed by the
mediator be admissible in any arbitration proceeding. The mediator shall be
selected by the Party that did not deliver the applicable Escalation Notice from
the list of individuals set forth on Exhibit A, the names of which individuals
were supplied to the Parties by JAMS/Endispute. Costs of the mediation shall be
borne equally by the Parties involved in the matter, except that each Party
shall be responsible for its own expenses. Mediation is a prerequisite to a
demand for arbitration under Section 15.3.
15.3 Procedures for Arbitration. (a) At any time after the completion
of the mediation required by Section 15.2(b), any Party involved in the dispute,
controversy or claim (regardless of whether such Party delivered the Escalation
Notice) may, unless the Applicable Deadline (as hereinafter defined) has
occurred, make a written demand (the "Arbitration Demand Notice") that the
dispute be resolved by binding arbitration, which Arbitration Demand Notice
shall be given to the Parties to the dispute, controversy or claim in the manner
set forth in Section 16.1. In the event that any Party shall deliver an
Arbitration Demand Notice to another Party, such other Party may itself deliver
an Arbitration Demand Notice to such first Party with respect to any related
dispute, controversy or claim with respect to which the Applicable Deadline has
not passed without the requirement of delivering an Escalation Notice. No Party
may assert that the failure to resolve any matter during any discussions or
negotiations, the course of conduct during the
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discussions or negotiations or the failure to agree on a mutually acceptable
time, agenda, location or procedures for the meeting, in each case, as
contemplated by Section 15.2, is a prerequisite to a demand for arbitration
under this Section 15.3. In the event that any Party delivers an Arbitration
Demand Notice with respect to any dispute, controversy or claim that is the
subject of any then pending arbitration proceeding or of a previously delivered
Arbitration Demand Notice, all such disputes, controversies and claims shall be
resolved in the arbitration proceeding for which an Arbitration Demand Notice
was first delivered unless the arbitrator in his or her sole discretion
determines that it is impracticable or otherwise inadvisable to do so.
(b) Any Arbitration Demand Notice may be given until one year
and 45 days after the later of (i) the occurrence of the act or event giving
rise to the underlying claim or (ii) the date on which such act or event was, or
should have been, in the exercise of reasonable due diligence, discovered by the
Party asserting the claim (as applicable and as it may in a particular case be
specifically extended by the Parties in writing, the "Applicable Deadline"). Any
discussions, negotiations or mediations between the Parties pursuant to this
Agreement or otherwise will not toll the Applicable Deadline unless expressly
agreed in writing by the Parties. Each Party agrees on behalf of itself and its
respective Affiliates that if an Arbitration Demand Notice with respect to a
dispute, controversy or claim is not given prior to the expiration of the
Applicable Deadline, such dispute, controversy or claim will be barred. Subject
to Section 15.7(d), upon delivery of an Arbitration Demand Notice pursuant to
Section 15.3(a) prior to the Applicable Deadline, the dispute, controversy or
claim shall be decided by a sole arbitrator in accordance with the rules set
forth in this Section 15.
15.4 Arbitrator. (a) If the amount in dispute is less than $500,000,
the mediator selected by the provisions set forth in Section 15.2(b) above shall
also serve as the sole arbitrator. If the amount in dispute equals or exceeds
$500,000, the mediator selected by the provisions set forth in Section 15.2(b)
above shall select a sole arbitrator from a list provided by JAMS/Endispute.
After selection of such sole arbitrator, the mediator shall have no further role
with respect to the dispute. Any arbitrator selected pursuant to this paragraph
(a) shall be disinterested with respect to any of the Parties and the matter and
shall be reasonably competent in the applicable subject matter.
(b) The sole arbitrator selected pursuant to paragraph (a)
above will set a time for the hearing of the matter which will commence no later
than 90 days after the date of the
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appointment of the sole arbitrator pursuant to paragraph (a) above, and such
hearing will be no longer than 30 days (unless in the judgment of the sole
arbitrator the matter is unusually complex and sophisticated and thereby
requires a longer time, in which event such hearing shall be no longer than 90
days). The final decision of such arbitrator will be rendered in writing to the
Parties not later than 60 days after the last hearing date, unless otherwise
agreed by the Parties in writing.
15.5 Hearings. Within the time period specified in Section 15.4(b), the
matter shall be presented to the arbitrator at a hearing by means of written
submissions of memoranda and verified witness statements, filed simultaneously,
and responses, if necessary in the judgment of the arbitrator or both of the
Parties. If the arbitrator deems it to be essential to a fair resolution of the
dispute, live cross-examination or direct examination may be permitted, but is
not generally contemplated to be necessary. The arbitrator shall actively manage
the arbitration with a view to achieving a just, speedy and cost-effective
resolution of the dispute, claim or controversy. The arbitrator may, in his or
her sole discretion, set time and other limits on the presentation of each
Party's case, its memoranda or other submissions, and refuse to receive any
proffered evidence that the arbitrator, in his or her sole discretion, finds to
be cumulative, unnecessary, irrelevant or of low probative nature. Except as
otherwise set forth herein, any arbitration hereunder will be conducted in
accordance with the JAMS/Endispute Streamlined Rules for Commercial, Real Estate
and Construction Cases then prevailing. The decision of the arbitrator will be
final and binding on the Parties, and judgment thereon may be had and will be
enforceable in any court having jurisdiction over the Parties. Arbitration
awards will bear interest at an annual rate of the Prime Rate plus 2% per annum.
To the extent that the provisions of this Agreement and the prevailing rules of
JAMS/Endispute conflict, the provisions of this Agreement shall govern.
15.6 Discovery and Certain Other Matters. (a) Any Party involved in the
applicable dispute may request limited document production from the other Party
of specific and expressly relevant documents, with the reasonable expenses of
the producing Party incurred in such production paid by the requesting Party.
Any such discovery (which rights to documents shall be substantially less than
document discovery rights prevailing under the Federal Rules of Civil Procedure)
shall be conducted expeditiously and shall not cause the hearing provided for in
Section 15.5 to be adjourned except upon consent of all of the Parties or upon
an extraordinary showing of cause demonstrating that such adjournment is
necessary to permit discovery essential to a Party to the proceeding.
Depositions, interrogatories or other forms of discovery (other than the
document production set
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forth above) shall not occur except by consent of all of the Parties. Disputes
concerning the scope of document production and enforcement of the document
production requests will be determined by written agreement of the Parties or,
failing such agreement, will be referred to the arbitrator for resolution. All
discovery requests will be subject to the Parties' rights to claim any
applicable privilege. The arbitrator will adopt procedures to protect the
proprietary rights of the Parties and to maintain the confidential treatment of
the arbitration proceedings (except as may be required by law). Subject to the
foregoing, the arbitrator shall have the power to issue subpoenas to compel the
production of documents relevant to the dispute, controversy or claim.
(b) The arbitrator shall have full power and authority to
determine issues of arbitrability but shall otherwise be limited to interpreting
or construing the applicable provisions of this Agreement, and will have no
authority or power to limit, expand, alter, amend, modify, revoke or suspend any
condition or provision of this Agreement; it being understood, however, that the
arbitrator will have full authority to implement the provisions of this
Agreement and to fashion appropriate remedies for breaches of this Agreement;
provided, however, that the arbitrator shall not have (i) any authority in
excess of the authority a court having jurisdiction over the Parties and the
controversy or dispute would have absent these arbitration provisions,(ii) any
right or power to award punitive or multiplicative damages or (iii) any power to
impose remedies other than those set forth in Section 11.2 and 11.3. It is the
intention of the Parties that in rendering a decision the arbitrator give effect
to the applicable provisions of this Agreement and follow applicable law (it
being understood and agreed that this sentence shall not give rise to a right of
judicial review of the arbitrator's award).
(c) If a Party fails or refuses to appear at and participate
in an arbitration hearing after due notice, the arbitrator may hear and
determine the controversy upon evidence produced by the appearing Party.
(d) Arbitration costs will be borne equally by each Party
involved in the matter, except that each Party will be responsible for its own
attorney's fees and other costs and expenses, including the costs of witnesses
selected by such Party.
15.7 Certain Additional Matters. (a) Any arbitration award shall be a
bare award limited to a holding for or against a Party and shall be without
findings as to facts, issues or conclusions of law (including with respect to
any matters relating to the validity or infringement of patents or patent
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applications) and shall be without a statement of the reasoning on which the
award rests, but must be in adequate form so that a judgment of a court may be
entered thereupon. Judgment upon any arbitration award hereunder may be entered
in any court having jurisdiction thereof.
(b) Prior to the commencement of an arbitration hearing
pursuant to Section 15.5, any Party may seek one or more temporary restraining
orders in a court of competent jurisdiction if necessary in order to preserve
and protect the status quo. Neither the request for, nor the grant or denial of,
any such temporary restraining order shall be deemed a waiver of the obligation
to arbitrate as set forth herein, and the arbitrator may dissolve, continue or
modify any such order. Any such temporary restraining order shall remain in
effect until the first to occur of the expiration of the order in accordance
with its terms or the dissolution thereof by the arbitrator.
(c) Except as required by law, the Parties shall hold, and
shall cause their respective officers, directors, employees, agents and other
representatives to hold, the existence, content and result of mediation or
arbitration in confidence in accordance with the provisions of Section 9 of this
Agreement and except as may be required in order to enforce any award. Each of
the Parties shall request that any mediator or arbitrator comply with such
confidentiality requirement.
(d) In the event that at any time the sole arbitrator shall
fail to serve as an arbitrator for any reason, the Parties shall select a new
arbitrator who shall be disinterested as to the Parties and the matter in
accordance with the procedure set forth herein for the selection of the initial
arbitrator. The extent, if any, to which testimony previously given shall be
repeated or as to which the replacement arbitrator elects to rely on the
stenographic record (if there is one) of such testimony shall be determined by
the replacement arbitrator.
15.8 Law Governing Arbitration Procedures. The interpretation of the
provisions of this Article 15, only insofar as they relate to the agreement to
arbitrate and any procedures pursuant thereto, shall be governed by the
Arbitration Act and other applicable federal law. In all other respects, the
interpretation of this Agreement shall be governed as set forth in Section 16.3.
15.9 Choice of Forum. Any arbitration hereunder shall take place in
Chicago, Illinois, unless otherwise agreed in writing by the Parties.
SECTION 16. MISCELLANEOUS PROVISIONS.
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16.1 Notices. All notices, requests, claims, demands and other
communications required or permitted hereunder shall be in writing and shall be
deemed given or delivered (i) when delivered personally, (ii) if transmitted by
facsimile when confirmation of transmission is received, (iii) if sent by
registered or certified mail, postage prepaid, return receipt requested, on the
third business day after mailing or (iv) if sent by private courier when
received; and shall be addressed as follows:
If to TSC, to:
Technology Solutions Company
205 North Michigan Avenue
Suite 1500
Chicago, Illinois 60601
Attention: General Counsel
Telephone: (312) 228-4500
Facsimile: (312) 228-4501
If to eLoyalty, to:
eLoyalty Corporation
205 North Michigan Avenue
Suite 1500
Chicago, Illinois 60601
Attention: Chief Financial Officer
Telephone: (312) 228-4500
Facsimile: (312) 228-4501
or to such other address as such Party may indicate by a notice delivered to the
other Party.
16.2 Entire Agreement. This Agreement is the entire agreement between
the Parties hereto with respect to the subject matter hereof, there being no
prior written or oral promises or representations not incorporated herein.
16.3 Choice of Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of Illinois and the
federal laws of the United States of America applicable therein, as though all
acts and omissions related hereto occurred in Illinois. Any lawsuit arising from
or related to this Agreement shall only be brought in the United States District
Court for the Northern District of Illinois or the Circuit Court of Cook County,
Illinois. To the extent permissible by law, the Parties hereby consent to the
juris diction and venue of such courts. Each Party hereby waives, releases and
agrees not to assert, and agrees to cause its Affiliates to waive, release and
not assert, any rights such Party or its Affiliates may have under any foreign
law or regulation that would be inconsistent with the terms of this Agreement as
governed by Illinois law.
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16.4 Amendment; Waiver. No amendment or modification of the terms of
this Agreement shall be binding on either Party unless reduced to writing and
signed by an authorized representative of the Party to be bound. The waiver by
either Party of any particular default by the other Party shall not affect or
impair the rights of the Party so waiving with respect to any subsequent default
of the same or a different kind; nor shall any delay or omission by either Party
to exercise any right arising from any default by the other affect or impair any
rights which the nondefaulting Party may have with respect to the same or any
future default.
16.5 Severability. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall be ineffective in such jurisdiction
to the extent of such prohibition or unenforceability without affecting,
impairing or invalidating the remaining provisions or the enforceability of this
Agreement.
16.6 Relationship of the Parties. By virtue of this Agreement, neither
Party constitutes the other as its agent, partner, joint venturer, or legal
representative and neither Party has express or implied authority to bind the
other in any manner whatsoever.
16.7 Survival. The rights and obligations of the Parties under Sections
3.5, 6, 9, 11, 14, 15 and 16.9, shall survive any termination of this Agreement.
16.8 Counterparts. For convenience of the Parties hereto, this
Agreement may be executed in one or more counterparts, each of which shall be
deemed an original for all purposes.
16.9 Records Retention. Each Party will retain all information obtained
or created in the course of performance hereunder in accordance with the records
retention guidelines of the other Party existing from time to time. Each Party
has advised the other of its respective guidelines as in effect on the Effective
Date and will advise the other Party of any subsequent changes therein.
16.10 Beneficiaries. Except for the provisions of Section 14 hereof,
which are also for the benefit of the other Persons indemnified, this Agreement
is solely for the benefit of the Parties hereto and their respective Affiliates,
successors and permitted assigns and shall not confer upon any other Person any
remedy, claim, liability, reimbursement or other right in excess of those
existing without reference to this Agreement.
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IN WITNESS WHEREOF, the Parties have caused this Agreement to
be signed by their authorized representatives as of the Effective Date.
TECHNOLOGY SOLUTIONS COMPANY eLOYALTY CORPORATION
By:___________________________ By:___________________________
Jack Hayden Kelly D. Conway
President and Chief
Title: _______________________ Executive Officer
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