Sample Business Contracts

Services Agreement [Amendment No. 2] - Exult Inc. and Prudential Insurance Co. of America

Sponsored Links

                                   AMENDMENT 2
                              TO SERVICES AGREEMENT

This Amendment #2 ("AMENDMENT #2) is an amendment to the Services Agreement
dated January 11, 2002, as amended (the "AGREEMENT") by and between Exult, Inc.
("SERVICE PROVIDER") and The Prudential Insurance Company of America ("CLIENT")
This Amendment # 2 to the Agreement is entered into by Service Provider and
Client as of December 31, 2002 ("AMENDMENT2 EFFECTIVE DATE").

1. Definitions. Capitalized terms used in this Amendment 2 not defined herein
shall have the definitions ascribed to them in the Agreement.

2. Scope. The Agreement is hereby amended by this Amendment 2 to replace the
existing Schedule C in its entirety with the revised and amended Schedule C
attached hereto.

For and in consideration of the agreements set forth herein, Service Provider
and Client hereby enter into this Amendment # 2 as of the date set forth below.
Except as amended by this Amendment # 2, the terms of the Agreement shall
continue in full force and effect.

                                   THE PRUDENTIAL INSURANCE COMPANY
                                   OF AMERICA

                                   By: /s/ Sekhar Ramaswamy

                                        Name:   Sekhar Ramaswamy

                                        Title:  Vice President, Human Resources


                                   EXULT, INC.

                                   By: /s/ Jay R. Ackerman

                                        Name:   Jay R. Ackerman

                                        Title:  Vice President


                               SERVICES AGREEMENT
                                   SCHEDULE C
                                FEES AND CHARGES
                                 UPDATE 12-30-02

Schedule C - Final                                                         Exult

1.         Introduction

2.         Definitions

3.         Verification

4.         Charging Methodology

5.         Third Party Costs

6.         Invoicing

7.         Reserved

8.         Termination

9.         Cost of Living Adjustment

10.        Project Charges/Rate Chart

11.        Transfer of Know-How

Schedule C - Final                                                         Exult



This Schedule describes the methodology for determining the Charges to be paid
by Client to Service Provider for the performance by Service Provider of its
obligations under the Agreement as well as the associated processes for
invoicing Client for such Charges.


Unless otherwise specified, any capitalized terms that are not defined in this
Schedule shall have the meanings assigned to them in the Agreement. The
following terms shall have the meanings set out below:

"ACTIVE EMPLOYEES" means the number of current, active Client employees,
eligible to receive Services from Service Provider, measured monthly by Resource
Unit Categories listed in Table, on the last business day of the month.

"ACTUAL RESOURCE UNITS" means the actual volumes of Services delivered with
respect to a Resource Unit Category in a Volume Measurement Period, calculated
in accordance with Section 4.2 of this Schedule.

"ADDITIONAL RESOURCE CHARGE" or "ARC" means the incremental charge payable by
Client in addition to the charges set forth in Section 4.1.1 for a particular
Resource Unit Category for a particular Volume Measurement Period when Service
Provider delivers Service volumes that exceed the upper Band limit for that
Resource Unit Category during that Volume Measurement Period. "ALLOCATED COSTS"
means charges billed to Service Provider by the Client for the provision of
Check Printing and Distribution.

"BAND" means, with respect to each Resource Unit Category, the range of volumes
of Services [***]* greater than or [***]* less than the Baseline Volume related
to such Resource Unit Category within which the monthly charges are not adjusted
by ARCs or RRCs. The Band measurements as of the Effective Date are set forth in
Table of this Schedule and are subject to verification and adjustment as
set forth herein.

"BASELINE CHARGES" means the base amount as described in Section 4.1 of this
Schedule C [***]*

"BASELINE VOLUME" means [***]* as set forth in Table 4.2.1 of this Schedule and
subject to verification and adjustment as set forth herein. "CHARGES" means all
amounts and categories of amounts that are or may become payable by Client to
Service Provider under the Agreement.

"CONTRACT YEAR" has the meaning set forth in Section 1.01 of the Agreement.



"FEES AT RISK" means the amount available for possible Service Credits subject
to the calculation [***]* as described in Section [***]* of Schedule C and
Schedule B.

"FULL-TIME EQUIVALENT" or "FTE" means [***]* of work per year by a Service
Provider employee, independent contractor or agent (or more than one (1) such
employee, independent contractor or agent where the combination of such persons
equals [***]* per week) working full time (defined as [***]* per week),
exclusive of training days, vacation, holidays, sick days or any legally
required temporary absence.


* Confidential information has been omitted.

Schedule C - Final                                                         Exult

                                     - 1 -

"IN-SITU PERIOD" means, with respect to any Process, the period following the
In Situ Process Take-On Date and before the Process Take On Date for such
Process when Service Provider performs such Process using Client personnel at
Client's site(s) under Service provider's management and supervision.

"IN SITU PROCESS TAKE ON DATE" means the date when the In Situ Period begins.

"IT" means the Information Technology and Information Services specified in
Section [***]* of Schedule A of the Agreement.

"MAJOR ENHANCEMENT" means application changes with an estimated effort of more
than [***]*.

"MINOR ENHANCEMENT" means application changes with an estimated effort of

"PROCESS TAKE-ON DATE" means, with respect to any Process, the date on which
Service Provider assumes management of and becomes responsible for providing
designated Services for such Process.

"RECURRING THIRD PARTY COSTS" means Third Party Costs that are payable on a
recurring basis, or are otherwise predictable.

"REDUCED RESOURCE CHARGE" or "RRC" means the incremental credit to Client that
accrues when Service Provider delivers Service volumes for a particular Resource
Unit Category for a particular Volume Measurement Period that are less than the
lower Band limits for that Resource Unit Category during that Volume Measurement

"RESOURCE UNIT CATEGORY" means each Service line item for which (i) there is a
Baseline Volume and (ii) Actual Resource Units are measured, as identified in

"SERVICE CREDIT" means an amount to be credited or paid to Client, at the
Client's option, in the event of an unexcused failure by Service Provider to
achieve a Key Performance Indicator as specified in Schedule B.

"THIRD PARTY VENDOR" is defined in Section 1.01 of the Agreement.

"THIRD PARTY VENDOR CONTRACT" is defined in Section 1.01 of the Agreement.

"THIRD PARTY COSTS" means amounts payable by Service Provider to Third Party
Vendors for Services delivered pursuant to Assigned Agreements and replacements
and successors thereof.


3. VERIFICATION During the period of [***]* following the Effective Date, the
Parties shall verify Third Party Costs, Baseline Volume, Client historical
achievement of service level targets, and Client Baseline Spend for each
Process. This process shall involve, among other things, (i) discussions with or
otherwise questioning knowledgeable members of Client's HR and IT staff
concerning Client's detailed day-to-day operations and responsibilities, (ii)
validation of rates and associated charges from Client, and (iii) confirmation
of the numbers of Client employees or full time equivalents engaged in the
performance of the Services. Upon completion of any verification and agreement
by the Parties upon the results thereof, this Schedule will be amended by mutual
agreement to adjust this Schedule C for discrepancies in the Client Baseline
Spend and/or Baseline Volume, as appropriate, and the Parties shall use Change
Control Management to assess the impact on any other Schedule of any such
adjustment. The amount of annualized adjustments resulting from such
verification shall be limited to two and one half percent (2.5%) of the annual
Client Baseline Spend. [***]*



      [***]* shall commence on the Process Take-On Date as identified in
Schedule G. Service Provider invoicing for Third Party Costs shall commence upon
assignment of Assigned Agreements. [***]* Recurring Third Party Costs will be
invoiced [***]* in advance as outlined in Section 6 of this Schedule [***]*:


* Confidential information has been omitted.

Schedule C - Final                                                         Exult

                                     - 2 -

-     [***]*

-     Recurring Third Party Costs [***]*

-     [***]*

      In addition to the above, Service Provider will invoice Client for Third
Party Costs other than Recurring Third Party Costs as outlined in Section 6.
During the Termination Assistance Period, Service Provider will invoice for the
amount of [***]* set forth in Table 4.1.1 until Client has advised Service
Provider in writing that it has completed its transition or repatriation of all
of the Services.

            4.1.1 Baseline Charges [***]* for each Contract Year are as follows:

      To be updated based on the mutual written agreement of both parties, upon
      finalization of calculations and evaluations by both parties and closed by


            4.1.2 New Projects

      Fees under Change Orders will be invoiced in accordance with the Rate
Chart set forth in Section 10 below, unless otherwise determined in accordance
with Change Control Management.

      4.1.3 Software Maintenance

      Client is responsible for paying for support and maintenance as applicable
for all third party software products under agreements designated as Managed
Agreements or Retained Agreements. Client may elect not to maintain such support
and maintenance, as provided under Section 14.01 of this Agreement.

      4.1.4 Changes to Service Levels

      If Client requests the support of Service Levels solely for Client's
benefit that are higher than Service Levels currently agreed to in Schedule B,
[***]* and Service Provider agrees to meet such higher Service Levels, then the
equipment, tools and resources required to support such enhanced Service Levels,
and any associated fees and costs must be approved through Change Control

      4.1.5 [***]*

      4.1.6 Plan Chargeable Costs

      Service Provider will provide Client with reasonable breakdowns of
Charges, including ARCs and RRCs, as requested by Client to enable Client to
account for costs that are chargeable to Client's employee retirement and
pension plans.

      4.1.7 Enhancements and Projects; Software Currency

      [***]* Additional resources for Minor Enhancements, as well as for Major
Enhancements and projects under Section 8.01(c) of this Agreement, shall be
mutually agreed pursuant to Change Control Management at the [***]* unless
otherwise agreed. Without limiting the foregoing, in consideration of [***]*,
Service Provider will maintain software currency with new releases of software
being supported by Service Provider as part of the Services, within support time
restrictions imposed by the provider of such software, in accordance with
Service Provider's normal timing and schedule for installing such new releases.
If Client wishes to have Service Provider install such new releases in advance
of Service Provider's normal schedule, the Parties shall use Change Control
Management to define and agree upon a project and Charges for such accelerated
installation. Client shall be responsible for installation activities and
upgrades to the Client Machines and Client Network, including to accommodate
software currency and Enhancements.

      4.1.8 Additional Information Technology and Information Services Projects


* Confidential information has been omitted.

Schedule C - Final                                                         Exult

                                     - 3 -

      In addition to IT projects and services set forth in the Agreement
(including Section 2.9 of Schedule A), Client agrees that it will spend at least
[***]* ([***]*) in calendar year [***]* and at least [***]* ([***]*) each
subsequent calendar year during the Term thereafter on additional information
technology and information services projects to be performed by Service
Provider. The rate to be charged by Service Provider shall [***]* the rates/fees
set forth in Section 10 of this Schedule C, unless otherwise agreed in writing
by Client and Service Provider. Subject to the provisions in this Section 4.1.8,
Client and Service Provider agree that the spend amounts set forth above are
[***]* and Service Provider shall invoice Client within [***]* days of the end
of each calendar year, and Client shall pay to Service Provider, any [***]*
between the [***]* amounts set forth above and the actual amounts spent by
Client on additional information technology and information services provided by
Service Provider. Notwithstanding the foregoing, however, in the event this
Agreement is terminated for any reason, there shall be no [***]* or other
payments due to Service Provider under this Section 4.1.8.


      4.2.1 Baseline Volumes and Actual Resource Units

      Actual Resource Units for each Resource Unit Category shall be tracked by
Service Provider on a [***]* basis. Provider will prepare a detailed
supplementary invoice for the net amount to be paid by or credited to Client for
each [***]* Volume Measurement Period, including calculations of all ARCs and
RRCs, which shall be paid by Client within [***]* after receiving Service
Provider's invoice, or credited to Client on Service Provider's next regular
invoice. The upper and lower Band limits with respect to the Resource Unit
Categories are calculated as [***]*, of the related Baseline Volumes. Baseline
Volumes and Band limits (except for those measured by Active Employees) are
expressed in [***]* terms, as included in Table, and will be divided by
[***]* for purposes of comparing Actual Resource Units to Baseline Volumes and
calculating ARCs and RRCs for any Volume Measurement Period.

TABLE Missing volumes to be updated based on the mutual written
agreement of both parties, upon finalization of December volumes and closed by


      4.2.2 Calculation of ARCs and RRCs




          Sample ARC/RRC Calculation-Payroll


            [***]* Additional Charges Arising from Volume Changes. If the Actual
   Resource Units increase or decrease outside the ranges set forth in Table, the Parties shall use Change Control Management to determine the
   applicable ARC and RRC rates for the applicable volumes. Pending agreement on
   such ARC and RRC rates, for volumes outside the ranges in Table,
   Service Provider shall invoice and Client shall pay ARCs or credit RRCs using
   the rates at the highest or lowest of the ranges in Table as
   applicable subject to adjustment pursuant to the Change Order. The Parties
   will also use Change Control Management to determine the additional
   non-recurring Charges for transitions, implementations and conversions of
   systems, facilities and any


* Confidential information has been omitted.

Schedule C - Final                                                         Exult

                                     - 4 -

   Changes in the scope of Services related to and necessary for extra Project
   staff and resources to accommodate changes in Actual Resource Unit volumes.

            4.3 SERVICE CREDITS

      4.3.1 Service Credits

      In the event of [***]* specified in Schedule B, Service Provider shall be
liable for Service Credits as follows:

      1.    Any Service Credit payment will be reported, calculated, and paid or
            credited [***]*.

      2.    [***]*

      3.    [***]*

      4.    Service Credits shall be calculated in accordance with Schedule B,
            and paid by Service Provider or credited as incurred against the
            next succeeding invoice at Client's option.

      5.    During the first [***]* after moving Services to operations under
            the DRP, in the event Service Provider fails to provide a Service at
            [***]*, Client shall be entitled to receive [***]* of the applicable
            Service Credit. After [***]* of operating under the DRP, the regular
            Service Levels and full Service Credits described in Schedule C
            shall apply. Notwithstanding the foregoing, Service Provider shall
            not be excused for failure to meet any Service Levels specifically
            set forth in the DRP.

      The Parties understand and intend that Fees at Risk are liquidated damages
as set forth in Section 6.06 of the MSA and agree that the amounts of the Fees
at Risk are reasonable.



      Following assignment and/or novation of Third Party Vendor Contracts,
Service Provider will review and pay third party invoices under such Third Party
Vendor Contracts. Recurring Third Party Costs shall be invoiced [***]* in
accordance with Section 4.1 and Section 6 of this Schedule and a true-up based
upon the actual invoice amount will be either billed (if actual invoice is
greater) or credited (if actual invoice is less) in the subsequent [***]*. The
remaining Third Party Costs shall be invoiced as received by Service Provider.
All invoices are due and payable within [***]* of receipt of invoice unless
otherwise agreed.

5.2   [***]*

5.3   [***]*

5.4   [***]*


      Service Provider may in its discretion from time to time provide directly,
using its own resources and affiliates to provide, any Services to Client
previously provided by Third Parties under Assigned Agreements or replacements
and successors thereto (such provision of Services called "Insourcing" and such
Services called "Insourced Services"). In such event, Service Provider will
invoice to Client and Client will pay for Insourced Services, [***]*

5.6 [***]*

5.7 [***]*




* Confidential information has been omitted.

Schedule C - Final                                                         Exult

                                     - 5 -


In establishing [***]* for purposes of [***]*, cost of living adjustments
("COLA") shall be handled as follows. Where a Third Party Vendor Contract
includes a provision for index-based increases or other COLA, such provision
shall be incorporated into the [***]* calculation. By way of example, if a Third
Party Vendor Contract contains a unit price of [***]* If such Third Party Vendor
Contract prohibits the supplier from increasing prices over a specified term,
then no COLA shall be included in the [***]*. If a Third Party Vendor Contract
does not specifically provide for or prohibit COLA, then the [***]* shall
establish in advance how COLA shall be handled in the applicable [***]*.

6. INVOICING Service Provider shall deliver a correct and detailed invoice on or
about [***]* for the [***]*, and Recurring Third Party Costs with respect to the
Services to be performed during such [***]* and each such correct and detailed
invoice shall be due in immediately available funds [***]* of receipt by Client
of such invoice. Any sum due Service Provider pursuant to this Agreement for any
Charges other than the [***]* and Recurring Third Party Costs shall be billed
[***]* after the completion of the applicable Services and payment shall be due
and payable [***]* after receipt by Client of a correct and detailed invoice
from Service Provider. All invoices shall be submitted to Client to the
attention of [***]*. Interest for late payments will be charged [***]*. Service
Provider agrees [***]*




      As described in Section 21.01 of the Agreement, in the event of a
termination for convenience, Client will pay Service Provider the full amount
set forth in Table 8.1 for the month within which the effective date of the
termination occurs. Client will pay [***]* of fee when Service Provider begins
to perform Termination Assistance and [***]* on the Termination Date (the date
that Client has transitioned the last Process from Service Provider). The fee
set forth in Table 8.1 includes recognition for Service Provider's set up and
direct installation costs in the event of a termination under Section 21.01 of
the Agreement. [***]*

                                    TABLE 8.1


8.2   [***]*

8.2.1 [***]*

8.2.2 [***]*


      9.1   Beginning [***]* and other fees and charges of Service Provider will
            be increased by a factor equal to [***]*. If [***]* is no longer
            maintained by [***]*, then a successor index maintained by [***]*
            that most closely approximates [***]* will be used. If a transition
            is made from [***]* to a successor index, then for the year in which
            the transition takes place, the parties will use the applicable
            translation or conversion methodology published by [***]*, and in
            the absence thereof the Parties will base adjustments for the year
            in which the transition takes place upon a comparison of the
            successor index with such index for the prior year. The Parties may
            change the index by mutual agreement through a Change Order. In
            other words, any increases in [***]*


* Confidential information has been omitted.

Schedule C - Final                                                         Exult

                                     - 6 -

            index in excess of [***]* for any adjustment period will result in a
            percentage increase in Service Provider's fees and charges hereunder

      9.2   If Client notifies Service Provider that it desires to renew this
            Agreement then the Term shall be extended on the same terms and
            conditions for the next Renewal Period, except that beginning on the
            first day of each Renewal Period, the Charges will be subject to
            [***]* for the calendar year immediately preceding the calendar year
            during which an increase in the Charges is sought.





      Client possesses various intangible: (a) methods, (b) procedures, (c)
techniques and (d) know-how to perform the various activities covered by the
Services (collectively, the "KNOW-HOW")







11.5  EFFECT



* Confidential information has been omitted.

Schedule C - Final                                                         Exult

                                     - 7 -