EXHIBIT 10.19.8

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN REDACTED PROVISIONS OF
THIS AGREEMENT. THE REDACTED PROVISIONS ARE IDENTIFIED BY THREE ASTERISKS
ENCLOSED BY BRACKETS AND UNDERLINED. THE CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

AMENDMENT NO. 2 TO

MASTER SERVICES AGREEMENT

 

THIS AMENDMENT NO. 2 TO MASTER SERVICES AGREEMENT (“Amendment 2”) is dated as of
December 20, 2002 (the “Amendment Effective Date”), by and between Exult, Inc.,
a Delaware corporation (“Service Provider”) and Bank of America Corporation
(“Customer”). All capitalized terms used herein without definition shall have
the meanings ascribed to them in that certain Master Services Agreement dated as
of November 21, 2000 (as amended to date, the “Existing Agreement”), by and
between Service Provider and Customer.

 

R E C I T A L S

 

WHEREAS, Service Provider and Customer desire to amend the Existing Agreement
pursuant to the terms and conditions set forth herein.

 

NOW, THEREFORE, in consideration of the foregoing and other valuable
consideration, the receipt of which is hereby acknowledged, the parties hereto
agree as follows:

 

1.   Amendment to Existing Agreement.    The Existing Agreement is hereby
amended as follows:

 

(a)     Section 1.1.42 of the Existing Agreement is hereby amended and restated
in its entirety as follows:

 

“ECI – shall mean the average of the Employee Cost Indexes (as maintained by the
U.S. Department of Labor, Bureau of Labor Statistics) for total compensation for
private industry workers by industry (not seasonally adjusted), for the
following three subgroups within the Service Producing Industry Group: (1) White
collar, (2) Finance, insurance, and real estate, and (3) Services—Business
services. In the event that information for one or more of the foregoing
Employee Cost Indexes is no longer available, Service Provider and Customer
shall invoke the Change Control Management provisions to determine a new
definition for ECI.”

 

(b)     The last sentence of Section 5.2.1 of the Existing Agreement is hereby
amended and restated in its entirety as follows:

 

“Each such invoice submitted to Customer pursuant to this Section 5.2.1 shall be
paid by Customer on or prior to the 

[***]* day of the [***]*.

 

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(c)     Section 5.2.2 of the Existing Agreement is hereby amended and restated
in its entirety as follows:
 
“Other Invoices. Any sum due Service Provider pursuant to this Agreement for
which a time of payment is not otherwise specified shall be due and payable
[***]* after receipt by Customer of an invoice from Service Provider.”
 
(d)     Section 22.11.4 of the Existing Agreement is hereby amended and restated
in its entirety as follows:
 
“As part of the plan referred to in Section 22.11.3, as mutually agreed by the
Parties, Service Provider shall use certified Minority-Owned, Disabled-Owned and
Women-Owned Business Enterprises in connection with its provisions of the
Customer Services in an amount to be mutually agreed upon by the Parties on an
annual basis. Service Provider shall provide Customer quarterly, by the tenth
business day of the calendar month following each quarter end, a report which
specifies the total amounts invoiced by and paid to Minority, Women and
Disabled-Owned Business Enterprises for the quarter being reported. The report
shall be in a format that has been mutually agreed to by the parties. The annual
goal and Service Provider’s progress on the annual goal will be reported on the
Exult/Bank of America Supply Chain Management Scorecard.”
 
(e)     Schedule C of the Existing Agreement is hereby amended as set forth in
Attachment A hereto. To the extent the changes set forth in Attachment A affect
sections or provisions in Schedule C which were subject to changes prior to the
Amendment Effective Date, including but not limited to those set forth in
Addendums 1-6 to the Existing Agreement, the changes set forth in Attachment A
shall prevail.
 
2.     [***]* Customer shall make a [***]* payment of [***]* to Service Provider
on or prior to [***]*. Customer and Service Provider each hereby agree that as
of the Amendment Effective Date, the amount of all Baseline charges received or
invoiced by Service Provider in connection with the Existing Agreement and the
Services provided or to be provided by Service Provider prior to [***]* is
complete and correct in all respects and not subject to further adjustment.
 
3.     No Other Changes.     In all other respects, the Existing Agreement shall
remain unchanged and in full force and effect in accordance with the terms
thereof. In the event of any conflict between the terms of the Existing
Agreement and the terms set forth herein, the terms set forth herein shall
prevail and govern the interpretation of the agreement between the parties
hereto.

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IN WITNESS WHEREOF, each of the parties hereto has executed this Amendment 2 as
of the Amendment Effective Date.
 
EXULT, INC.
 
By: ________________________________________            
Name:
Title:
 
 
BANK OF AMERICA CORPORATION
 
By: ________________________________________            
Name: Betty W. Luther
Title: SVP Supply Chain Management
 
 
By: _______________________________________            
Name: Christina McLaughlin
Title: SVP Personnel
 

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Attachment A
 
Changes to Schedule C to Master Services Agreement
 
The following changes are hereby made to Schedule C to the Existing Agreement:
 
1)     Tables 4.1.1.1, 4.1.2.1 and 4.1.3.1 (including any prior amendments
thereto) are hereby amended and restated in their entirety by Annexes 1, 2 and 3
hereto, respectively. In addition, the following provision is added immediately
prior to Section 4.1.1:
 
[***]*
 
2)
 
Section 4.1.4.1 is hereby amended and restated in its entirety as follows:

 
“All projects must be pre-approved by Customer. Service Provider shall make
available to Customer, [***]* such FTEs as are required to support In-Flight
Projects, [***]*. For purposes of this Section 4.1.4.1, [***]*
 
[***]*
 
3)     Section 4.2.1 is amended by:
 
(a)     replacing all instances of “Contract Year” therein with “calendar year”;
 
(b)     replacing Table 4.2.1 (including any prior amendments thereto) with
Annex 4 hereto; and
 
(c)     adding the following text immediately after the new Table 4.2.1:
 
“On or before [***]*”
 
4)     Section 4.2.2 is amended by:
 
(a)     replacing all instances of “Contract Year” therein with “calendar year”;
and
 
(b)     inserting the following new sentence as the last sentence of such
section:
 
[***]*
 
5)     Section 4.2.2.3 is amended by inserting the following text immediately
after the last sentence of such section:
 
“In addition, beginning January 1, 2003 and thereafter, upon the occurrence of a
Significant Event, the Parties shall invoke the Change Control Management
provisions of this Agreement with respect to [***]*

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6)     Section 4.2.3 is amended by replacing all instances of “Contract Year”
therein with “calendar year”.
 
7)     Section 4.3.1 is amended by inserting the following new sentence as the
last sentence of the second paragraph therein:
 
“Notwithstanding anything to the contrary herein or in the Agreement, [***]*
 
8)     Section 5.1 is amended as follows:
 
(a)     The third sentence of the first paragraph is hereby amended and restated
in its entirety as follows:
 
[***]*
 
(b)     The second paragraph of Section 5.1 is deleted in its entirety.
 
9)     New Sections 5.2 through 5.5 are added as follows:
 
“5.2     Gain Sharing Overview and Principles
 
Gain sharing is the process by which Service Provider, with Customer’s input,
assistance and cooperation, will strive to achieve net savings to be shared by
Service Provider and Customer according to the terms of this Schedule C, by
reducing the net costs of products and services originally provided under the
Third Party Contracts set forth in Table 5.2, as such table may be amended from
time to time by the Bank of America TPO Committee (defined below). Achievement
of gain sharing requires cooperation of Customer and Service Provider, may be
subject to the behavior of parties neither party can control, and therefore,
neither Service Provider nor Customer guarantee that any amount of gain sharing
will be achieved.
 
The gain sharing efforts will be coordinated under the direction of the Bank of
America TPO Committee, which shall consist of representatives from Exult and the
Bank of America Finance, Procurement, and Alliance teams.
 
Service Provider, with Customer’s assistance and support, achieves gain sharing
by re-negotiating better terms under eligible Third Party Contracts or by
replacing eligible Third Party Contracts with new Third Party Contracts with
other suppliers under more favorable terms, subject to continuation of required
service levels for services that are materially the same in scope. Service
Provider measures gain sharing by first establishing a gain share baseline for
each eligible Third Party Contract. The gain share baseline calculations shall
be subject to the approval of the Bank of America TPO Committee. Such gain share
baseline will establish and confirm either a gain share baseline unit price or a
mark-up gain share baseline or another basis for the parties to calculate gain
sharing. Any existing volume discounts, rebates, or similar terms that were
negotiated by Customer prior to the Term of the Agreement will be reflected and
accounted for in the gain share baseline.
 
[***]*

5

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Gain sharing will be captured and applied as invoices for Third Party Contracts
are received by Service Provider. All savings will be shared on a [***]* basis
between Service Provider and Customer and Service Provider shall invoice
Customer for the actual new charges, [***]* of such savings; provided, however,
notwithstanding the foregoing, the amount invoiced by Service Provider to
Customer in respect of savings achieved on new Third Party Contracts (or any
renegotiated or renewed Third Party Contracts) associated with Regional Staffing
Services will be determined as follows:
 

 
(a)
 
Gain share for the [***]* period of such contract shall be calculated as the
amount that represents [***]* Service Provider shall invoice Customer for the
actual new charges under the applicable new Third Party Contract, [***]*

 

 
(b)
 
After the [***]*-period of such contract, gain share shall be calculated and
invoiced on a [***]* basis.

 
Any service credits or liquidated damages payable to Service Provider by third
parties under Third Party Contracts will not be subject to gain sharing.
 
[***]*
 
5.3    Customer Assistance and Gain Sharing
 
Service Provider shall use commercially reasonable efforts to pursue
opportunities to achieve savings and gain sharing under this Section 5 and
Customer shall provide reasonable assistance, subject to Customer initiatives,
strategies and customer relationships, to Service Provider in pursuing such
opportunities, including implementation by Customer of policies and procedures
supporting this Section 5.
 
5.4    Excluded Savings
 
Savings attributable to [***]* will not be subject to gain sharing.
 
5.5    [***]*
 
10)    Section 6 is amended by deleting the first paragraph thereof and
replacing it with the following new paragraph:
 
“In accordance with Section 5.2.1 of the Agreement, Service Provider shall
deliver invoices for Baseline Charges on or about the beginning of each calendar
quarter and Customer shall pay such invoices by the [***]* day of such calendar
quarter. Recurring Third Party Contracts that are predictable may be invoiced no
more than [***]* and Customer shall pay such amounts within [***]* of receipt of
such invoice in accordance with Section 5.2.2 of this Agreement. Service
Provider shall invoice Customer for other amounts payable under this Agreement
as necessary and Customer shall pay such amounts within [***]* in accordance

6

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with Section 5.2.2 of this Agreement. Fees at Risk shall be calculated in
accordance with Section 4.3 of this Schedule C and credited [***]* against the
next succeeding invoice (or at expiration of this Agreement, or credited at
Customer option against amounts otherwise due from Customer).”
 
11)     Section 8 is amended by inserting the following new sentence as the last
sentence of such section:
 
“Beginning January 1, 2003 and thereafter, in the event that the ECI increase
for the previous [***]* period is equal to or less than [***]*, then there shall
be no adjustment to Baseline Charges and ARC and RRC rates. However, if the ECI
increase for such [***]* period is greater than [***]*, then the Parties shall
invoke the Change Control Management provisions of this Agreement to determine
adjustments to Baseline Charges and ARC and RRC rates. Notwithstanding the
foregoing, as a result of previous ECI increases in the 2002 calendar year, the
amount of [***]* shall be [***]* by Service Provider to Customer’s
[***]* invoices [***]*”
 
12)     (a)    Section 10.1 is amended and restated in its entirety as follows:
 
[***]* These charges shall commence following the Process Effective Date.
Non-Labor related systems and other charges to Service Provider shall be
adjusted at the beginning of each calendar year to reflect Customer’s then
current costs. Any change to the IT charges will be pre-approved by Customer and
Service Provider in accordance with Change Control Management.
 
Notwithstanding anything herein to the contrary, [***]*
 
(b)     Section 10.1.2 is amended by changing the reference to ‘Table 11.1.1”
therein to “Table 10.1.1”.
 
13)     Section 12(a), as added to Schedule C pursuant to Section 2.3 of
Schedule C of Addendum 2 to the Existing Agreement, is hereby deleted in its
entirety retroactive to September 10, 2001.
 
14)     Section 12(b) as added pursuant to Section 2.6 of Schedule C of Addendum
2 to the Existing Agreement, is hereby deleted in its entirety and the following
is inserted as new section 10.1.3 to Schedule C:
 
“Where Exult staff or equipment resides in facilities owned or leased by
Customer, Service Provider shall pay Customer for the associated occupancy costs
included in the Customer Baseline Spend. These costs may include leased or owned
space, utilities, and furniture and fixtures. Notwithstanding the foregoing,
with respect to Regional Staffing Services, the Customer Baseline Spend shall
not include costs associated with occupancy where three or fewer associates
reside in Customer related facilities as of September 10, 2001 and Customer
shall continue to pay all occupancy costs for these persons without payment from
Service Provider.

7

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Service Provider shall provide Customer with at least [***]* prior written
notice of Service Provider’s intent to vacate Customer owned or leased
facilities for which Service Provider is paying occupancy costs. If Service
Provider provides the foregoing [***]* notice or otherwise pays Customer for
associated occupancy costs for a period of [***]* after notice is delivered,
Service Provider shall have no further responsibility to pay Customer, and
Customer shall not invoice Service Provider for, the associated occupancy costs
after the later of (i) the end of such notice or payment period or (ii) the date
that Service Provider vacated the facilities. Notwithstanding the foregoing, if
the total space vacated is less than [***]* at a particular location, Service
Provider shall be responsible for [***]* of the associated occupancy costs until
a new tenant or Customer occupies the space, which obligation shall extend for a
period not to exceed the lesser of one year or the period specified in
Customer’s then current Corporate Real Estate policy. The provisions set forth
in this paragraph shall be effective as of January 1, 2003 and shall not reduce
or otherwise affect Service Provider’s obligation to pay occupancy costs for any
period prior to January 1, 2003; however, on and after January 1, 2003, such
provisions will apply to all property regardless of when vacated. For instance,
if a property was vacated in June 2002 and the requisite [***]* or payment
period had been complied with, then Service Provider shall not have any
occupancy cost obligation after December 31, 2002 notwithstanding that such
property was vacated prior to the effectiveness of this section. Upon vacating
any space owned or leased by Customer, Service Provider shall pay all of its own
costs incurred in vacating the space and for restoring the space to its original
condition, other than (i) pre-existing conditions prior to the time of Service
Provider’s occupancy and (ii) normal wear and tear.”
 
14)    New Section 12 is added to Schedule C as follows:
 
“13.    SAS 70 Audits. Whereas Section 17.2.3 of the Agreement provides that
Service Provider shall provide Customer with a copy of the portions of any SAS
70 audit of Service Provider to the extent directly related to the Customer
Services, the Parties agree that upon Customer’s request, Service Provider shall
obtain, [***]* an SAS 70 audit of its Payroll transaction processing in Service
Provider’s Charlotte facility and an SAS 70 audit of its Accounts Payable
transaction processing in Service Provider’s Charlotte facility. Both of these
SAS 70 audits, to the extent requested (up to and including level 2 audits),
shall be performed during calendar year 2003. Except for these two SAS 70 audits
that may be performed during 2003, all other SAS 70 audits, if any, during the
term of this Agreement, and the frequency and costs thereof, shall be subject to
the Change Control Management provisions of this Agreement.”
 

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ANNEX 1
 
Total HR and AP Labor Costs and Fixed Base Charges
 
[***]*

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ANNEX 2
 
Labor Related Other Costs/Charges
 
[***]*
 

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ANNEX 3
 
Non-Labor Related Other Costs/Charges
 
[***]*

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ANNEX 4
 
ARC/RRC Unit Rate and Baseline Volumes
 
[***]*

12