Exhibit 10.1

 

PROFESSIONAL SERVICES AGREEMENT

 

between

 

Allegheny Energy, Inc.

 

And

 

EDS Information Services, L.L.C., and Electronic Data Systems Corporation

 

Dated September 19, 2005

 

***A confidential Treatment Request has been submitted to the Commission by
Allegheny Energy, Inc. pursuant to Rule 24b-2 under the Securities Exchange Act
of 1934. The information as to which confidential treatment is sought is
indicated in footnotes to this agreement. This agreement has been filed with the
Commission with the text marked pursuant to the Securities Exchange Act of 1934.

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TABLE OF CONTENTS

 

1.    BACKGROUND AND OBJECTIVES    1      1.1    Performance and Management by
Service Provider.    1      1.2    Goals and Objectives.    1      1.3   
Interpretation.    2 2.    DEFINITIONS AND DOCUMENTS    2      2.1   
Definitions.    2      2.2    Other Terms    2      2.3    Associated Contract
Documents.    3 3.    TERM    4      3.1    Initial Term.    4      3.2   
Extension.    4 4.    SERVICES    5      4.1    Overview.    5      4.2   
Transition Services.    6      4.3    Transformation Services.    9      4.4   
Termination Assistance Services.    12      4.5    Use of Third Parties.    17  
   4.6    Projects.    19      4.7    Additional Work or Reprioritization.    19
5.    REQUIRED CONSENTS    19      5.1    Service Provider Responsibility.    19
     5.2    Financial Responsibility.    20      5.3    Contingent Arrangements.
   20 6.    FACILITIES, SOFTWARE, EQUIPMENT, CONTRACTS AND ASSETS ASSOCIATED
WITH THE PROVISION OF
SERVICES    21      6.1    Service Facilities.    21      6.2    Use of Service
Provider Facilities.    24      6.3    Allegheny Rules/Employee Safety.    24  
   6.4    Software, Equipment and Third Party Contracts.    25      6.5   
Assignment of Licenses, Leases and Related Agreements.    28      6.6    License
to Allegheny Licensed Third Party Materials.    30      6.7    License to
Service Provider Licensed Third Party Materials.    30      6.8    Acquired
Assets.    31      6.9    Managed Third Parties.    31      6.10    Notice of
Defaults.    32 7.    SERVICE LEVELS    32      7.1    General.    32      7.2
   Service Level Credits; Deliverable Credits.    32      7.3    Problem
Analysis.    32      7.4    Continuous Improvement Reviews.    33      7.5   
Measurement and Monitoring.    33      7.6    Satisfaction Surveys.    34     
7.7    Notice of Adverse Impact.    34 8.    PROJECT PERSONNEL    35      8.1   
Transitioned Personnel.    35      8.2    Employee Benefit Plans.    37      8.3
   Other Employee Matters.    39      8.4    Key Service Provider Personnel and
Critical Affected Personnel.    39      8.5    Service Provider Account Manager.
   41

 

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TABLE OF CONTENTS

(continued)

 

     8.6    Compensation of Service Provider Account Manager and Key Service
Provider Personnel.    41      8.7    Service Provider Personnel Are Not
Allegheny Employees.    42      8.8    Replacement, Qualifications, and
Retention of Service Provider Personnel.    42      8.9    Training/Career
Opportunities.    44      8.10    Conduct of Service Provider Personnel.    44  
   8.11    Substance Abuse.    44      8.12    Union Agreements and WARN Act.   
45      8.13    Directed Allegheny Employees.    45 9.    SUPPLIER
RESPONSIBILITIES    46      9.1    Policy and Procedures Manual.    46      9.2
   Reports.    48      9.3    Governance Model; Meetings.    48      9.4   
Quality Assurance and Internal Controls.    49      9.5    Processes,
Procedures, Architecture, Standards and Planning.    50      9.6    Change
Control.    53      9.7    Software Currency.    55      9.8    Network
Configuration Data.    56      9.9    Specialized Skills and Resources;
Disagreements Regarding New Services.    56      9.10    Audit Rights.    57  
   9.11    Agency and Disbursements.    61      9.12    Subcontractors.    62  
   9.13    Government Contract Flow-Down Clauses.    63      9.14    Additional
Telecommunications Matters.    64      9.15    Applicable Authority Actions.   
65      9.16    Unauthorized Use.    67      9.17    Technology and Business
Process Evolution.    67      9.18    Retained Systems and Business Processes.
   70      9.19    Annual Reviews.    70 10.    ALLEGHENY RESPONSIBILITIES    70
     10.1    Responsibilities.    70      10.2    Savings Clause.    71 11.   
CHARGES    72      11.1    General.    72      11.2    Pass-Through Expenses.   
73      11.3    Procurement.    74      11.4    Taxes.    75      11.5    New
Services.    77      11.6    Extraordinary Events.    78      11.7   
Unanticipated Change.    79      11.8    Proration.    80      11.9   
Refundable Items.    80      11.10    Allegheny Benchmarking Reviews.    80     
11.11    Efforts to Reduce Costs and Charges    82 12.    INVOICING AND PAYMENT
   82      12.1    Invoicing.    82      12.2    Payment Due.    83      12.3   
Set Off.    83      12.4    Disputed Charges.    83

 

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TABLE OF CONTENTS

(continued)

 

13.    ALLEGHENY DATA AND OTHER PROPRIETARY INFORMATION    84      13.1   
Allegheny Ownership of Allegheny Data.    84      13.2    Safeguarding Allegheny
Data.    84      13.3    Allegheny and Service Provider Personal Data.    86  
   13.4    Confidentiality.    88      13.5    File Access.    91      13.6   
Requirements for Information in Legal Proceedings.    92 14.    OWNERSHIP OF
MATERIALS    94      14.1    Allegheny Owned Materials.    94      14.2   
Developed Materials.    95      14.3    Service Provider Owned Materials.    96
     14.4    Other Materials.    98      14.5    General Rights.    98      14.6
   Allegheny Rights Upon Expiration or Termination of Agreement.    99 15.   
REPRESENTATIONS, WARRANTIES AND COVENANTS    102      15.1    Work Standards.   
102      15.2    Maintenance.    102      15.3    Efficiency and Cost
Effectiveness.    102      15.4    Software.    103      15.5   
Non-Infringement.    104      15.6    Authorization.    105      15.7   
Inducements; Allegheny Code of Business Conduct and Ethics.    105      15.8   
Malicious Code.    105      15.9    Disabling Code.    106      15.10   
Compliance with Laws.    106      15.11    Interoperability; Currency.    108  
   15.12    Disclaimer.    108 16.    INSURANCE AND RISK OF LOSS    109     
16.1    Insurance.    109      16.2    Risk of Loss.    111 17.    INDEMNITIES
   111      17.1    Indemnity by Service Provider.    111      17.2    Indemnity
by Service Provider for Breach of Section 8.12(b).    113      17.3    Indemnity
by Allegheny.    113      17.4    Additional Indemnities.    115      17.5   
Infringement.    115      17.6    Indemnification Procedures.    116      17.7
   Indemnification Procedures – Governmental Claims.    117      17.8   
Subrogation.    117 18.    LIABILITY    117      18.1    General Intent.    117
     18.2    Force Majeure.    118      18.3    Limitation of Liability.    119
     18.4    Joint and Several Liability.    121 19.    DISPUTE RESOLUTION   
122      19.1    Informal Dispute Resolution.    122      19.2    Jurisdiction;
Waiver of Jury Trial.    124      19.3    Continued Performance.    125     
19.4    Governing Law.    125

 

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TABLE OF CONTENTS

(continued)

 

20.    TERMINATION    125      20.1    Termination for Cause.    125      20.2
   Termination for Convenience.    126      20.3    Termination Upon Service
Provider Change of Control.    126      20.4    Termination Upon Allegheny
Change of Control.    127      20.5    Termination for Insolvency.    127     
20.6    Allegheny Rights Upon Service Provider’s Bankruptcy.    127      20.7   
Critical Services.    128 21.    GENERAL    129      21.1    Binding Nature and
Assignment.    129      21.2    Entire Agreement; Amendment.    129      21.3   
Notices.    129      21.4    Counterparts.    132      21.5    Headings.    132
     21.6    Relationship of Parties.    132      21.7    Severability.    132  
   21.8    Consents and Approval.    133      21.9    Waiver of Default;
Cumulative Remedies.    133      21.10    Survival.    133      21.11   
Publicity.    133      21.12    Service Marks.    133      21.13    Export   
134      21.14    Third Party Beneficiaries.    134      21.15    Covenant
Against Pledging.    134      21.16    Order of Precedence.    134      21.17   
Hiring of Employees.    135      21.18    Further Assurances.    135      21.19
   Liens    135      21.20    Covenant of Good Faith.    135      21.21   
Acknowledgment.    136      21.22    References.    136

 

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PROFESSIONAL SERVICES AGREEMENT

 

This Professional Services Agreement (this “Agreement”) dated September 19,
2005, (the “Effective Date”) by and between Allegheny Energy, Inc., a Maryland
corporation having a principal place of business at 800 Cabin Hill Drive,
Greensburg, Pennsylvania 15601 ( “Allegheny”), and EDS Information Services,
L.L.C. (“EIS”), a Delaware limited liability company and Electronic Data Systems
Corporation (“EDS”), a Delaware corporation, each having a principal place of
business at 5400 Legacy Drive, Plano, Texas 75024 (EIS and EDS are collectively
referred to herein as the “Service Provider”).

 

WHEREAS, Allegheny and Service Provider have engaged in extensive negotiations,
discussions and due diligence that have culminated in the formation of the
contractual relationship described in this Agreement; and

 

WHEREAS, Allegheny desires to procure from Service Provider, and Service
Provider desires to provide to Allegheny and the Eligible Recipients, the
information technology services, procurement and/or inventory management
consulting, and other products and services described in this Agreement, on the
terms and conditions specified herein.

 

NOW THEREFORE, in consideration of the mutual promises and covenants contained
herein, and of other good and valid consideration, the receipt and sufficiency
of which are hereby acknowledged, Allegheny and Service Provider (collectively,
the “Parties” and each, a “Party”) hereby agree as follows:

 

1. BACKGROUND AND OBJECTIVES

 

1.1 Performance and Management by Service Provider.

 

Allegheny desires that certain information technology services, procurement
and/or inventory management consulting, and other functions and services
presently performed and managed by or for Allegheny and the Eligible Recipients,
as each is described in this Agreement, be performed and managed by Service
Provider. Service Provider has carefully reviewed Allegheny’s requirements, has
performed all due diligence it deems necessary, and desires to perform and
manage such information technology services, procurement and/or inventory
management consulting, and other business processes and services for Allegheny
and the Eligible Recipients.

 

1.2 Goals and Objectives.

 

The Parties acknowledge and agree that the specific goals and objectives of the
Parties in entering into this Agreement are to:

 

  (1) Reduce Allegheny infrastructure capital and operating expenses both
initially and over the Term;

 

  (2) Utilize enabling technologies to add value to Allegheny’s business
processes;

 

  (3) Implement common processes and move toward an integrated enterprise wide
reporting system across Allegheny;

 

  (4) Enhance the timeliness and quality of analysis and reporting of financial
results, on a consolidated, legal entity and business unit presentation basis
both under a GAAP basis of presentation and a Uniform FERC basis presentation;

 

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  (5) Obtain specified levels of service quality;

 

  (6) Enhance the morale and career opportunities of displaced employees by
transitioning Allegheny information technology personnel to a for-profit
business with customer relationships and job opportunities;

 

  (7) Gain access to world class capabilities by contracting with a first tier
service provider that can attract the “best and brightest” individuals;

 

  (8) Enhance the ability of Allegheny and its affiliated companies to focus on
their core businesses;

 

  (9) Provide Allegheny with enhanced flexibility within the Services to quickly
and effectively adapt to changing business requirements and changes in the
Allegheny business environment;

 

  (10) Create the potential for sustainable long-term cost savings due to
continuous improvement and reduction or spreading of fixed costs over a
multi-year period; and

 

  (11) Obtain access to best practices in the area of information technology
services and procurement and/or inventory management consulting business
processes and services.

 

1.3 Interpretation.

 

The provisions of this Article 1 are intended to be a general introduction to
this Agreement and are not intended to expand the scope of the Parties’
obligations or alter the plain meaning of this Agreement’s terms and conditions,
as set forth hereinafter. However, to the extent the terms and conditions of
this Agreement are unclear or ambiguous, such terms and conditions are to be
construed so as to be consistent with the background and objectives set forth in
this Article 1.

 

2. DEFINITIONS AND DOCUMENTS

 

2.1 Definitions.

 

The terms used with initial capital letters in this Agreement shall have the
meanings ascribed to them in Schedule 1.

 

2.2 Other Terms

 

The terms defined in this Article include the plural as well as the singular and
the derivatives of such terms. Unless otherwise expressly stated, the words
“herein,” “hereof,” and “hereunder” and other words of similar import refer to
this Agreement as a whole and not to any particular Article, Section, Subsection
or other subdivision. Article, Section, Subsection and Attachment references
refer to articles, sections and subsections of, and attachments to, this
Agreement. The words “include” and “including” shall not be construed as terms
of limitation. The words “day,” “month,” and “year” mean, respectively, calendar
day, calendar month and calendar year. As

 

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stated in Section 21.3, the word “notice” and “notification” and their
derivatives shall mean notice or notification in writing. Other terms used in
this Agreement are defined in the context in which they are used and shall have
the meanings there indicated.

 

2.3 Associated Contract Documents.

 

This Agreement includes each of the following Schedules and their Attachments,
all of which are attached to this Agreement and incorporated into this Agreement
by this reference. Unless otherwise expressly stated, references to specific
Schedules include all numbered or lettered subsidiary Schedules (e.g.,
references to Schedule 2 include not only Schedule 2, but also Schedules 2.1,
2.2, 2.3, 2.4, 2.5, and 2.6 and references to Schedule 3 include Schedules 3A,
3B, 3C, and 3D).

 

1    Glossary of Terms 2   

Statement of Work

2.1   

Cross Functional General

2.2   

Cross Functional Equipment and Software

2.3   

Application and Utility Servers

2.4   

Network Services

2.5   

End User Computing

2.6   

Application Development and Maintenance

3   

Service Levels

3A   

Service Levels Matrix

3B   

Service Levels Definitions

3C   

Critical Deliverables

3D   

Service Level Outcome Examples

4   

Pricing

4A   

Pricing Forms

4B   

Financial Responsibility/Asset Allocation Matrix

4C   

Financial Base Case

4D   

Resource Base Lines

4E   

Billable Resource Category and Billable Resource Unit Definitions

4F   

Technology Refresh

4G   

Application Server Complexity Matrix

4H   

Termination Charges

4I   

Project Formation Process

4J   

Pass-Through Expenses

4K   

Applications Work Effort Measurement

4L   

New Services Examples

4M   

Treatment of ADM Services Under Agreement

5   

Human Resource Provisions

5A   

Affected Employees and Contractors

5B   

Personnel Projection Matrix (including Directed Allegheny Employees)

5C   

Employee Benefit Plans

5D   

Allegheny Severance Plan

6A   

Governance

6B   

Policies and Procedures Manual

7   

Sites: Allegheny Facilities, Allegheny Sites and Service Provider Facilities

8   

Technical Architecture and Standards

9   

Projects

10   

Equipment Assets

 

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11    Software Assets 12    Third Party Contracts 12A    Third Party Software
12B    Third Party Service Contracts 12C    Third Party Maintenance Contracts
12D    Managed Third Parties 13    Reports 14    Customer Satisfaction Survey
14A    Point of Service Survey 15    Business Continuity Plan 16    IT Disaster
Recovery Plan 17    SAS 70 Type II Audit at Allegheny Sites 18    Reserved 19   
Key Service Provider Personnel 20    Subcontractors 21    Acquired Assets 22A   
Transition Plan 22B    ERP Transformation Plan 22C    IT Transformation Plan, IT
Transformation Milestones 23    Termination Assistance Services 24    Reserved
25    Direct Allegheny Competitors 26    Allegheny Rules 27    Form of
Certification 28    *** 29    Third Party Materials Subject to Seat License
Restrictions 30    Prepaid Services and Functions 31    Directed Allegheny
Employees 32    Procurement Project Statement of Work Exhibit 1: Form of
Non-Disclosure Agreement Exhibit 2: Form of Invoice Exhibit 3: Form Source Code
Escrow Agreement

 

3. TERM

 

3.1 Initial Term.

 

The initial term of this Agreement shall commence as of 12:00:01 a.m., Eastern
Time on the Effective Date and continue until 11:59:59 p.m., Eastern Time, on
December 31, 2012 (the “Term”), unless this Agreement is terminated as provided
herein or extended as provided in Section 3.2 or 4.4(a)(2), in which case the
Term shall end at 11:59:59 p.m., Eastern Time, on the effective date of such
termination or the date to which this Agreement is extended.

 

3.2 Extension.

 

If Allegheny desires to renew this Agreement after the initial Term or any
renewal Term, Allegheny shall provide written notice to Service Provider of its
desire to do so at least one hundred twenty (120) days prior to the expiration
of the Term. The Parties shall thereafter negotiate in good faith with respect
to the terms and conditions upon which the Parties will renew

 

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this Agreement and thereafter execute such renewal. In the event the Parties are
unable to reach agreement and execute such renewal at least sixty (60) days
prior to the expiration of the Term, Allegheny may, at its sole option, extend
the Term for up to two (2) extension periods of up to twelve (12) months, each
on the terms and conditions then set forth in this Agreement, including
applicable pricing and price adjustments specified in Schedule 4. No Termination
Charges shall be applicable to any termination on or after the expiration of the
initial eighty-eight (88) month Term, unless, during any such extension period,
it becomes necessary for Service Provider to enter into new Third Party Contract
commitments, in which case Termination Charges may be payable with regard to
such contracts, as specified in Schedule 4H; provided that Service Provider
notifies Allegheny in advance of such commitments and the associated costs,
obtains Allegheny’s approval prior to incurring such costs, and uses
commercially reasonable efforts to minimize such costs.

 

4. SERVICES

 

4.1 Overview.

 

  (a) Services. Service Provider shall provide the Services to Allegheny, and,
upon Allegheny’s request, to Eligible Recipients and Authorized Users designated
by Allegheny. The Services shall consist of the following, as they may evolve
during the Term or be supplemented, enhanced, modified or replaced:

 

  (i) The services, functions and responsibilities described in this Agreement
and its Schedules and Attachments, which include the Technology and Business
Process Evolution and the following:

 

  (1) the Transition Services, as described in Section 4.2 and Schedule 22A;

 

  (2) the Transformation Services, as described in Section 4.3 and Schedules 22B
and 22C;

 

  (3) the Services, as further described in Schedule 2, including the Services
comprising each Service Category and each Tower;

 

  (4) New Services, subject to the provisions of Section 11.5 ***;

 

  (5) the Termination Assistance Services, as described in Section 4.4 and
Schedule 23.

 

  (ii) The services, functions and responsibilities related to the activities
described in Schedule 2 that were performed during the twelve (12) months
preceding the Commencement Date (and not discontinued during such twelve
(12)-month period so that such discontinued services are not being performed on
a recurring basis as of the Commencement Date) by Allegheny Personnel who were
displaced or whose functions were displaced as a result of this Agreement
(including, for the avoidance of doubt, those services, functions and
responsibilities performed by Directed Allegheny Employees), even if the
service, function, or responsibility is not specifically described in this
Agreement (provided that, in the event of a direct conflict between Schedule 2
and the scope of services as described in this Section 4.1(a)(ii), this
Section 4.1(a)(ii) shall not be construed as altering and/or superceding
Schedule 2); and

 

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  (iii) The related services, functions and responsibilities reflected in those
categories of the Allegheny Base Case which Service Provider is assuming
pursuant to this Agreement (provided, however, in the event of a direct conflict
between Schedule 2 and the scope of services as described in this
Section 4.1(a)(iii), this Section 4.1(a)(iii) shall not be construed as altering
and/or superceding Schedule 2).

 

  (b) Commencement of Services. Service Provider shall commence providing the
Services as follows:

 

  (i) in the case of the Transition Services and the Transformation Services, on
the date stated in the applicable Transition Plan or Transformation Plan,
respectively;

 

  (ii) in the case of the Services comprising Service Categories, on the
Commencement Date; and

 

  (iii) in the case of Services comprising Projects, New Services and
Termination Assistance Services, on the date determined in accordance with this
Agreement.

 

  (c) Included Services. If any services, functions or responsibilities not
specifically described in this Agreement are an inherent, necessary or customary
part of the Services or are required for proper performance or provision of the
Services in accordance with this Agreement, they shall be deemed to be included
within the scope of the Services to be delivered for the Charges, as if such
services, functions or responsibilities were specifically described in this
Agreement.

 

  (d) Required Resources. Except as otherwise expressly provided in this
Agreement, Service Provider shall be responsible for providing the facilities,
personnel, Equipment, Software, technical knowledge, expertise and other
resources necessary to provide the Services.

 

  (e) Service Provider Responsibility. Service Provider shall be responsible for
the provision of the Services in accordance with this Agreement even if, by
written agreement of the Parties, such Services are actually performed or
dependent upon services performed by (i) Subcontractors, (ii) non-Service
Provider Personnel, including Allegheny Personnel (subject to Section 10.2), or
(iii) Managed Third Parties (except as otherwise provided in Section 6.9 or
Schedule 12D).

 

4.2 Transition Services.

 

  (a) Transition. During the Transition Period, Service Provider shall perform
the Transition Services and provide the deliverables described in the Transition
Plan, which is attached to this Agreement as Schedule 22A. If any services,
functions or responsibilities not specifically described in the Transition Plan
are an inherent, necessary or customary part of the Transition Services or are
required for the proper performance of the Transition Services in accordance
with this Agreement, they shall be deemed to be included within the scope of the
Transition Services to be delivered for the transition charges, as if such
services, functions or responsibilities were specifically described in the
Transition Plan. During the Transition Period, Allegheny will perform only those
tasks which are designated to be Allegheny’s responsibility in the Transition
Plan, and any services, functions or responsibilities that are an inherent,
necessary or a customary part of the

 

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designated tasks. Unless otherwise agreed, Allegheny shall not incur any
charges, fees or expenses payable to Service Provider or third parties in
connection with the Transition Services, other than those charges, fees and
expenses specified in Schedule 4 and those incurred by Allegheny in connection
with its performance of tasks designated in the Transition Plan as Allegheny’s
responsibility, and any services, functions or responsibilities that are an
inherent, necessary or a customary part of the designated tasks. At Service
Provider’s request or as specified in the Transition Plan, Allegheny shall
provide reasonable cooperation to Service Provider in connection with its
performance of the Transition Services, as contemplated in Section 10.1(b).

 

  (b) Initial Transition Plan. The initial Transition Plan is attached to this
Agreement as Schedule 22A. During the thirty (30) days immediately following the
Effective Date, Service Provider shall prepare and deliver to Allegheny a
detailed Transition Plan for Allegheny’s review, comment and approval. The
proposed detailed Transition Plan shall describe in greater detail the specific
transition activities to be performed by Service Provider, but, unless otherwise
agreed by Allegheny, shall be consistent in all respects with the initial
Transition Plan, including the *** described therein. Service Provider shall
address and resolve any questions or concerns Allegheny may have as to any
aspect of the proposed detailed Transition Plan and incorporate any
modifications, additions or deletions to such detailed Transition Plan
reasonably requested by Allegheny. *** Once approved by Allegheny, the detailed
Transition Plan shall be appended to and incorporated in this Agreement as part
of Schedule 22A and shall supersede and replace the initial Transition Plan.
Allegheny will not unreasonably withhold its approval of the detailed Transition
Plan.

 

  (c) Contents of Transition Plan. The detailed Transition Plan shall identify,
among other things, (i) the transition activities to be performed by Service
Provider and the significant components and subcomponents of each such activity
for each Eligible Recipient, (ii) the deliverables to be completed by Service
Provider, (iii) the date(s) by which each such activity or deliverable is to be
completed (the “Transition Milestones”), (iv) Service Provider’s plans for the
hiring and long term retention of the Transitioned Employees consistent with the
requirements of Schedules 5A and 5B, (v) a process and set of acceptance
criteria for each milestone and deliverable, and standards acceptable to
Allegheny to which Service Provider will adhere in the performance of the
Transition Services and that will enable Allegheny to determine whether Service
Provider has successfully completed the transition and the activities and
deliverables associated with each Transition Milestone, including measurable
success criteria by each Service Category and Tower that Service Provider must
meet before further transitioning the portion of the work that failed to meet
the success criteria and any work on which such failed portion depends,
(vi) subject to Section 4.2(f), a process for Allegheny, after consultation with
Service Provider, to delay all or any part of the transition if Allegheny
determines that any part of the transition poses a risk or hazard to Allegheny’s
or an Eligible Recipient’s business interests (without any increase in Service
Provider’s Charges if Allegheny’s determination is based on Service Provider’s
failure to satisfactorily perform its transition obligations,***), (vii) the
contingency or risk mitigation strategies to be employed by Service Provider in
the event of disruption or delay, (viii) any transition responsibilities to be
performed or transition resources to be provided by Allegheny or the Eligible
Recipients and (ix) a detailed work plan identifying the specific transition
activities to be performed by Service Provider Personnel (at the individual or
team level, as appropriate) on a weekly basis during the Transition Period. The
Transition Plan also shall identify any related documents contemplated by the
Agreement and/or required to effectuate the transition to be executed by the
Parties.

 

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  (d) Performance. Service Provider shall perform the Transition Services
described in the Transition Plan in accordance with the timetable and the
Transition Milestones set forth in the Transition Plan, and Allegheny reasonably
shall cooperate with Service Provider to assist Service Provider in implementing
the Transition Plan as contemplated in Section 4.2(a). Service Provider shall
provide all cooperation and assistance reasonably required or requested by
Allegheny in connection with Allegheny’s evaluation or testing of the
deliverables set forth in the Transition Plan. Service Provider shall perform
the Transition Services in a manner that will not (i) disrupt or have an
unnecessary adverse impact on the business or operations of Allegheny or the
Eligible Recipients, (ii) degrade the Services then being received by Allegheny
or the Eligible Recipients, or (iii) disrupt or interfere with the ability of
Allegheny or the Eligible Recipients to obtain the full benefit of the Services,
except as may be otherwise provided in the Transition Plan. Prior to undertaking
any transition activity, Service Provider shall discuss with Allegheny all known
Allegheny-specific material risks and shall not proceed with such activity until
Allegheny is reasonably satisfied with the plans with regard to such risks
(provided that, neither Service Provider’s disclosure of any such risks to
Allegheny, nor Allegheny’s acquiescence in Service Provider’s plans, shall
operate or be construed as limiting Service Provider’s responsibilities under
this Agreement). Service Provider shall identify and resolve, with Allegheny’s
reasonable assistance, any problems that may impede or delay the timely
completion of each task in the Transition Plan that is Service Provider’s
responsibility and shall use commercially reasonable efforts to assist Allegheny
with the resolution of any problems that may impede or delay the timely
completion of each task in the Transition Plan that is Allegheny’s
responsibility.

 

  (e) Reports. Service Provider shall meet at least weekly with Allegheny to
report on its progress in performing its responsibilities and meeting the
timetable set forth in the Transition Plan. Service Provider also shall provide
written reports to Allegheny at least weekly regarding such matters, and shall
provide oral reports more frequently if reasonably requested by Allegheny.
Promptly upon receiving any information indicating that Service Provider may not
perform its responsibilities or meet the timetable or Transition Milestones set
forth in the Transition Plan, Service Provider shall notify Allegheny in writing
of material delays and shall identify for Allegheny’s consideration and approval
specific measures to address such delay and mitigate the risks associated
therewith.

 

  (f) Suspension or Delay of Transition Activities. Allegheny reserves the
right, in its sole discretion and subject to the Change Control Procedures, to
suspend or delay the performance of the Transition Services and/or the
transition of all or any part of the Services. ***

 

  (g) Failure to Meet Transition Milestones. The Parties acknowledge and agree
that the Transition Plan specifies various Transition Milestones by which
Transition activities and/or deliverables are to be completed. Service Provider
recognizes that its failure to meet the Transition Milestones may have a
material adverse impact on the business and operations of Allegheny and the
Eligible Recipients and that the damages resulting from Service Provider’s
failure to meet such Transition Milestones are not capable of precise
determination. *** Neither the transition nor the activities and deliverables
associated with individual Transition Milestones shall be deemed complete until
the Parties have mutually determined that Service Provider has successfully
completed them in accordance with the process and standards identified in the
Transition Plan.

 

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  (h) Termination for Cause. Allegheny may terminate the Term for cause if
(i) Service Provider fails to comply with its obligations with respect to the
provision of Transition Services and such failure causes or will cause a
material disruption to or otherwise has or will have a material adverse impact
on the operations or businesses of Allegheny or the Eligible Recipients, and, in
the case of a failure that will have a material adverse impact that has not yet
occurred, Service Provider fails to cure such failure within fifteen (15) days
after its receipt of notice of such failure or, in the case of a failure that
has caused a material adverse impact, Service Provider fails to cure such
failure within five (5) days after its receipt of notice of such failure,
(ii) Service Provider materially breaches its obligations with respect to the
provision of Transition Services and fails to cure such breach within fifteen
(15) days after its receipt of notice, or (iii) Service Provider fails to meet a
Transition Milestone and such failure constitutes a material breach of this
Agreement and Service Provider fails to cure such breach within fifteen
(15) days after its receipt of notice. In addition, unless otherwise agreed, if
Service Provider fails to meet the Transition Milestone for the completion of
the transition of all Services to Service Provider by more than sixty (60) days,
Allegheny may terminate the Term for cause without requirement of notice or
opportunity to cure. In all such events, subject to Section 18.3, Allegheny may
recover the damages suffered by Allegheny or the Eligible Recipients in
connection with such a termination, ***

 

4.3 Transformation Services.

 

  (a) Transformation. Without limiting any of Service Provider’s other
obligations hereunder with respect to Technology and Business Process Evolution,
Service Provider shall perform the transformational activities and implement the
technology and other changes described in the Transformation Plan attached to
this Agreement as Schedules 22B and 22C. If any services, functions or
responsibilities not specifically described in the Transformation Plan are an
inherent, necessary or customary part of the Transformation Services or are
required for proper performance or provision of the Transformation Services or
the completion of the changes described in the Transformation Plan in accordance
with this Agreement, they shall be deemed to be included within the scope of the
Transformation Services to be delivered without additional charge, as if such
services, functions or responsibilities were specifically described in the
Transformation Plan. During the period in which the Transformation Plan is
scheduled to be implemented, Allegheny will perform only those tasks that are
designated to be Allegheny’s responsibility in the Transformation Plan, and any
services, functions or responsibilities that are an inherent, necessary or
customary part of the designated tasks. Unless otherwise agreed in writing,
Allegheny shall not incur any charges, fees or expenses payable to Service
Provider or third parties in connection with the transformation, other than
those charges, fees and expenses specified in Schedule 4 and those incurred by
Allegheny (including third party contractors engaged by Allegheny) in connection
with its performance of tasks designated in the applicable Transformation Plan
as Allegheny’s responsibility, and any services, functions or responsibilities
that are an inherent, necessary or a customary part of the designated tasks. At
Service Provider’s request or as specified in the applicable Transformation
Plan, Allegheny shall provide reasonable cooperation to Service Provider in
connection with its performance of the Transformation Services.

 

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  (b) Initial Transformation Plans. The initial Transformation Plans are
attached to this Agreement as Schedules 22B and 22C. Within forty five (45) days
after the Effective Date, Service Provider shall prepare and deliver to
Allegheny a detailed Transformation Plan with respect to the transformation
activities described in Schedule 22C for Allegheny’s review, comment and
approval. The timing for providing a more detailed plan with respect to the ERP
Transformation Project described in Schedule 22B is set forth in that schedule.
The proposed detailed Transformation Plans shall describe in greater detail the
specific transformational activities to be performed by Service Provider, but,
unless otherwise agreed by Allegheny, shall be consistent in all respects with
the initial Transformation Plans, including the activities, deliverables,
Transformation Milestones and Deliverable Credits described therein. Service
Provider shall address and resolve any questions or concerns Allegheny may have
as to any aspect of the proposed detailed Transformation Plans and incorporate
any modifications, additions or deletions to such detailed Transformation Plans
reasonably requested by Allegheny. The Parties acknowledge that changes in the
scope of the ERP Transformation Project may be subject to changes in the price
for that Project, as provided in Schedule 22B. ***. Once approved by Allegheny,
the detailed Transformation Plans shall be appended to and incorporated in this
Agreement as the corresponding Schedule 22B or 22C and, where applicable, shall
supersede and replace the corresponding initial Transformation Plan. Allegheny
will not unreasonably withhold its approval of the detailed Transformation
Plans.

 

  (c) Contents of Transformation Plans. The Transformation Plans shall identify,
among other things, (i) the transformational activities to be performed by the
Service Provider and the changes in technology and business processes to be
implemented by Service Provider, (ii) the date(s) by which each such activity or
implementation is to be completed (“Transformation Milestones”), (iii) a process
and acceptance criteria for each milestone and deliverable, and set of standards
acceptable to Allegheny to which Service Provider will adhere in the performance
of the transformation and that will enable Allegheny to determine whether
Service Provider has successfully completed the transformation and the
activities and deliverables associated with each Transformation Milestone,
including measurable success criteria by each Service Category and Tower that
Service Provider must meet before further transforming the portion of the work
that failed to meet the success criteria and any work on which such failed
portion depends, (iv) a process for Allegheny, after consultation with Service
Provider, to delay Service Provider from proceeding with any part of the
transformation, either current or future plans, or altering the timing for
implementation of parts of the transformation, if Allegheny determines that any
part of the transformation poses a risk or hazard to Allegheny’s or an Eligible
Recipient’s business interests (without any increase in Service Provider’s
Charges if Allegheny’s determination is based on (A) Service Provider’s failure
to satisfactorily perform its transformation obligations, ***, or (B) risks that
arise from implementation of the Transformation Plans, ***), (v) the contingency
or risk mitigation strategies to be employed by Service Provider in the event of
disruption or delay, and (vi) any transformational activities to be performed by
Allegheny or the Eligible Recipients. If, pursuant to the process described in
clause (iv) above, Allegheny decides to delay Service Provider from proceeding
with any part of the transformation or altering the timing for implementation of
parts of the transformation, ***.

 

  (d) Implementation Plan. During the Term, at least thirty (30) days before the
end of each calendar year during the Term, Service Provider shall deliver to
Allegheny for Allegheny’s review, comment and approval a detailed plan for the
implementation of

 

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    transformational activities for the succeeding calendar year. In addition,
Service Provider shall deliver to Allegheny, at least thirty (30) days before
the end of each calendar quarter during the first twelve (12) months of the
Term, a detailed plan, consistent with the annual plan, for the implementation
of transformational activities that will be taking place during the succeeding
quarter, for Allegheny’s review, comment and approval. Such implementation plan
shall be based on and consistent with Schedules 22B and 22C, and shall identify
each transformational activity to be performed by Service Provider Personnel,
and the acceptance testing and review process for the changes being implemented.
If approved by Allegheny, in its sole discretion (other than with respect to
matters described in the initial Transformation Plans attached as Schedules 22B
and 22C, which matters shall be deemed approved subject to subsequent
modification as agreed by the Parties), each such plan for each calendar year
shall become a part of the corresponding Transformation Plan and be incorporated
in Schedules 22B or 22C, as applicable.

 

  (e) Performance. Service Provider shall perform the Transformation Services
and implement the Transformation Plans in accordance with the timetable and
Transformation Milestones set forth in the Transformation Plans, and Allegheny
reasonably shall cooperate with Service Provider to assist Service Provider in
implementing the Transformation Plans. Service Provider shall provide all
cooperation and assistance reasonably required or requested by Allegheny in
connection with Allegheny’s evaluation or testing of the deliverables resulting
from implementation of the Transformation Plans. Service Provider shall
implement the Transformation Plans in a manner that will not (i) disrupt or have
an unnecessary adverse impact on the business or operations of Allegheny or the
Eligible Recipients, (ii) degrade the Services then being received by them, or
(iii) interfere with their ability to obtain the full benefit of the Services,
except as may be otherwise provided in the applicable Transformation Plan. Prior
to undertaking any transformation activity, Service Provider shall discuss with
Allegheny all known Allegheny-specific material risks and shall not proceed with
such activity until Allegheny is reasonably satisfied with the plans with regard
to such risks (provided that, neither Service Provider’s disclosure of any such
risks to Allegheny nor Allegheny’s acquiescence in Service Provider’s plans
shall operate or be construed as limiting Service Provider’s responsibilities
under this Agreement). Service Provider shall identify and resolve, with
Allegheny’s reasonable assistance, any problems that may impede or delay the
timely completion of any phase of the Transformation Plans.

 

  (f) Failure to Meet Transformation Milestones.

 

  (i) The Parties acknowledge and agree that the Transformation Plans specify
various Transformation Milestones by which transformational activities and/or
deliverables are to be completed. Service Provider recognizes that its failure
to meet the Transformation Milestones may have a material adverse impact on the
business and operations of Allegheny and the Eligible Recipients and that the
damages resulting from Service Provider’s failure to meet such Transformation
Milestones are not capable of precise determination. ***

 

  (ii) Neither the transformation nor the activities and deliverables associated
with individual Transformation Milestones shall be deemed complete until the
Parties have mutually determined that Service Provider has successfully
completed them in accordance with the process and standards identified in the
Transformation Plans.

 

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4.4 Termination Assistance Services.

 

  (a) Availability. As part of the Services, and for the Charges set forth in
Section 4.4(b)(8) and Schedule 4, Service Provider shall provide to Allegheny,
the Eligible Recipients and/or their designee(s) the Termination Assistance
Services described in Section 4.4(b) and Schedule 23.

 

  (1) Period of Provision. Service Provider shall provide such Termination
Assistance Services to Allegheny and the Eligible Recipients, or their
designee(s) (i) commencing upon the date specified in reasonable prior written
notice from Allegheny, which date may be up to six (6) months prior to the
expiration of the Term or on such earlier date as Allegheny may request and
continuing for the period of time requested by Allegheny in its notice to
Service Provider, which may be up to twelve (12) months following the effective
date of the expiration of the Term (as such Term may be extended pursuant to
Section 3.2), (ii) commencing upon any notice of termination (including notice
based upon breach or default by Allegheny, breach or default by Service
Provider, or termination in whole or in part for convenience by Allegheny) of
the Term with respect to all or any part of the Services, and continuing for the
period of time requested by Allegheny in its notice to Service Provider, which
may be up to twelve (12) months following the effective date of such termination
of all or part of the Services, or (iii) commencing upon notice of termination
of all or part of the Services to an Eligible Recipient no longer Controlled by
Allegheny and continuing for the period of time requested by Allegheny in its
notice to Service Provider, which may be up to twelve (12) months following the
effective date of such termination.

 

  (2) Extension of Termination Effective Date. Allegheny may elect, upon
forty-five (45) days’ prior notice, to extend the effective date of any
expiration or termination of all or part of the Services and/or Termination
Assistance Services, in its sole discretion, provided that the total of all such
extensions will not exceed one hundred and eighty (180) days following the
originally specified effective date of such expiration or termination without
Service Provider’s prior written consent. If Allegheny provides less than
forty-five (45) days’ prior notice of an extension, Service Provider shall
nonetheless use commercially reasonable efforts to comply with Allegheny’s
request and provide the requested Services and/or Termination Assistance
Services.

 

  (3) Extension of Termination Assistance Services. As part of the Termination
Assistance Services, for a period of twelve (12) months following the applicable
expiration or termination date, Service Provider shall provide to the Eligible
Recipient(s), under the terms and conditions of this Agreement, at Allegheny’s
request in a written notice provided to Service Provider at least forty-five
(45) days in advance of such expiration or termination date, any or all of the
Services being performed by Service Provider prior to such expiration or
termination date, including those Services described in Article 4 and Schedule
2; provided that Allegheny may extend the period for the provision of such
Services for up to an additional one hundred eighty (180) days in accordance
with Section 4.4(a)(2). To the extent Allegheny requests such Services,
Allegheny will pay Service Provider the Charges specified in Schedule 4 that
Allegheny would have been obligated to pay Service Provider for such Services if
this Agreement had not yet

 

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expired or been terminated. To the extent Allegheny requests a portion (but not
all) of the Services included in a particular Charge, the amount to be paid by
Allegheny will be equitably adjusted by the amount attributable to the portion
of the Services that Service Provider will not be providing or performing.

 

  (4) Firm Commitment. Service Provider shall provide Termination Assistance
Services to Allegheny and the Eligible Recipients, or their designee(s)
regardless of the reason for the expiration or termination of the Term;
provided, if this Agreement is terminated by Service Provider under
Section 20.1(b) for failure to pay undisputed amounts, Service Provider may
require payment by Allegheny in advance for Termination Assistance Services to
be provided or performed under this Section 4.4. At Allegheny’s request, Service
Provider shall provide Termination Assistance Services directly to an Eligible
Recipient or an Entity acquiring Control of an Eligible Recipient; provided
that, unless otherwise agreed by the Parties, all such Termination Assistance
Services shall be performed subject to and in accordance with the terms and
conditions of this Agreement.

 

  (5) Performance. All such Termination Assistance Services shall be provided
subject to and in accordance with the terms and conditions of this Agreement.
Service Provider shall perform the Termination Assistance Services with at least
the same degree of accuracy, quality, completeness, timeliness, responsiveness
and resource efficiency as it provided and was required to provide with respect
to the same or similar Services during the Term. The quality and level of
performance of the Termination Assistance Services provided by Service Provider,
following the expiration or termination of the Term as to all or part of the
Services or Service Provider’s receipt of a notice of termination or
non-renewal, shall continue to meet or exceed the Service Levels and shall not
be degraded or deficient in any respect. *** Service Provider Personnel
(including all Key Service Provider Personnel) reasonably considered by
Allegheny to be critical to the performance of the Services and Termination
Assistance Services shall be retained on the Allegheny account through the
completion of all relevant Termination Assistance Services.

 

  (b) Scope of Termination Assistance Service. As part of the Termination
Assistance Services, Service Provider will timely transfer the control and
responsibility for all Services previously performed by or for Service Provider
to Allegheny, the Eligible Recipients and/or their designee(s) by the execution
of any documents reasonably necessary to effect such transfers. Additionally,
Service Provider shall provide any and all reasonable assistance requested by
Allegheny to allow, among other things:

 

  (i) the Systems and processes associated with the Services to operate
efficiently;

 

  (ii) the Services to continue without interruption or adverse effect; and

 

  (iii) the orderly transfer of the Services to Allegheny, the Eligible
Recipients and/or their designee(s).

 

The Termination Assistance Services shall include, as requested by Allegheny,
the Services, functions and responsibilities set forth on Schedule 23. In
addition, in

 

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connection with such termination or expiration, Service Provider will provide
the following assistance and Services at Allegheny’s direction:

 

  (1) General Support. Service Provider shall (i) assist Allegheny, an Eligible
Recipient and/or their designee(s) in developing a written transition plan for
the transition of the Services to Allegheny, such Eligible Recipient, or their
designee(s), which plan shall include (as requested by Allegheny) capacity
planning, business process planning, facilities planning, human resources
planning, telecommunications planning and other planning necessary to effect the
transition, (ii) perform programming and consulting services as requested to
assist in implementing the transition plan, (iii) train personnel designated by
Allegheny, an Eligible Recipient and/or their designee(s) in the use of any
business processes or associated Equipment, Software, Systems, Materials or
tools used in connection with the provision of the Services, (iv) provide
Allegheny a catalog of all business processes, Software, Allegheny Data,
Equipment, Materials, Third Party Contracts and tools used to provide the
Services, (v) provide machine readable and printed listings and associated
documentation for source code for Software owned by Allegheny and source code to
which Allegheny is entitled under this Agreement and assist in its
re-configuration, (vi) analyze and report on the space required for the
Allegheny Data and the Software needed to provide the Services, (vii) assist in
the execution of a parallel operation, data migration and testing process until
the successful completion of the transition to Allegheny, an Eligible Recipient
and/or their designee(s), (viii) create and provide copies of the Allegheny Data
in the format and on the media reasonably requested by Allegheny, an Eligible
Recipient and/or their designee(s), (ix) provide a complete and up-to-date,
electronic copy of the Policy and Procedures Manual in the format and on the
media reasonably requested by Allegheny, an Eligible Recipient and/or their
designee(s), and (x) provide other technical assistance as requested by
Allegheny, an Eligible Recipient and/or their designee(s).

 

  (2) Hiring.

 

  (i) Allegheny, the Eligible Recipients and/or their designee(s) shall be
permitted to undertake, without interference from Service Provider, Service
Provider Subcontractors or Service Provider Affiliates (including
counter-offers, other than for up to six (6) Service Provider contract delivery
executives identified by Service Provider, to whom Service Provider desires to
make counter-offers), to hire, effective after the later of the expiration or
termination of the applicable Services or completion of any Termination
Assistance Services requested under Section 4.4, any Service Provider Personnel
primarily dedicated (e.g., 80% of such individual’s working hours) to the
performance of the Services within the twelve (12)-month period prior to the
expiration or termination of the applicable Services. Service Provider shall
waive, and shall cause its Subcontractors and Affiliates to waive, their rights,
if any, under contracts with such personnel restricting the ability of such
personnel to be recruited or hired by Allegheny, the Eligible Recipients and/or
their designee(s). Service Provider shall provide Allegheny, the Eligible
Recipients and/or their designee(s) with reasonable assistance in their efforts
to hire such Service Provider Personnel, and shall give Allegheny,

 

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the Eligible Recipients and/or their designee(s) reasonable access to such
Service Provider Personnel for interviews, evaluations and recruitment.
Allegheny shall endeavor to conduct the above-described hiring activity in a
manner that is not unnecessarily disruptive of the performance by Service
Provider of its obligations under this Agreement. The prohibition on
counter-offers set forth in this Section shall not prevent Service Provider from
making ordinary payments to any Service Provide Personnel pursuant to the
then-existing base salary and variable compensation plans for such personnel.

 

  (ii) Promptly upon Allegheny providing notice for provision of Termination
Assistance Services pursuant to Section 4.4(a)(1), Service Provider shall
provide to Allegheny a list, organized by country, of the Service Provider
Personnel who are eligible for solicitation for employment pursuant to this
Section 4.4(b)(2). Subject to applicable Data Privacy Laws, such list shall
specify each such Service Provider Personnel’s job title and annual rate of pay.

 

  (3) Software. To the extent provided in Section 14.6, and subject to
Section 6.4(c), Service Provider shall provide, and hereby grants to Allegheny
(with a right to sublicense to the Eligible Recipients and/or Allegheny’s
designee), a license, sublicense and/or other rights to the Software and other
Materials used by Service Provider, Service Provider Affiliates or
Subcontractors in performing the Services or provided to Allegheny, any Eligible
Recipient or Allegheny Third Party Contractor by Service Provider, Service
Provider Affiliates or Subcontractors in connection with the Services ***,
including where expressly provided in Section 14.6, a copy of all source code,
object code and documentation related to such Software or other Materials in the
form then in the possession of Service Provider, or in such other form as may be
mutually agreed. After Service Provider provides such Software and other
Materials to Allegheny, Service Provider has no obligation to maintain or
support such Software and other Materials, except as otherwise provided in
Section 14.6(b)(iii) or any applicable warranty pursuant to Section 15.4(c) for
the duration of such warranty.

 

  (4) Equipment. Subject to Section 6.4(c), Allegheny, the Eligible Recipients
and/or their designee(s) shall have the right (but not the obligation) to
purchase, or assume the lease for, any Equipment (including the Acquired Assets)
owned or leased by Service Provider that is primarily used by Service Provider,
Service Provider Subcontractors or Service Provider Affiliates to perform the
Services. Such Equipment shall be transferred in good working condition,
reasonable wear and tear excepted, as used by Service Provider as of the
expiration or termination date or the completion of any Services requiring such
Equipment requested by Allegheny under Section 4.4, whichever is later. Service
Provider shall maintain such Equipment for which Service Provider has
operational responsibility pursuant to Schedule 2 or Schedule 4B through the
date of transfer so as to be eligible for the applicable manufacturer’s
maintenance program at no additional charge to Allegheny, so long as Allegheny’s
written instructions to Service Provider under this Agreement regarding such
Equipment have not voided the applicable manufacturer’s maintenance program
(provided that Service Provider has notified Allegheny in writing in advance
that Allegheny’s instructions will

 

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void the applicable manufacturer’s maintenance program and Allegheny
acknowledges such fact in such written instructions) and such maintenance
program is then-available. In the case of Service Provider-owned equipment,
Service Provider shall grant to Allegheny, the Eligible Recipients and/or their
designee(s) a warranty of title and a warranty that such Equipment is free and
clear of all liens and encumbrances. Such conveyance by Service Provider to
Allegheny, the Eligible Recipients and/or their designee(s) shall be at ***. At
Allegheny’s request, the Parties shall negotiate in good faith and agree upon
the form and structure of the purchase. In the case of leased Equipment, Service
Provider shall (i) represent and warrant that the lease is not in default,
(ii) represent and warrant that all payments thereunder have been made through
the date of transfer, and (iii) notify Allegheny of any lessor defaults of which
it is aware at the time.

 

  (5) Allegheny Facilities, Equipment and Software. Service Provider shall
vacate the Allegheny Facilities and return to Allegheny, if not previously
returned, any Allegheny-owned or leased Equipment, Allegheny Owned Software and
Allegheny licensed Software, in a condition at least as good as the condition
when made available to Service Provider, ordinary wear and tear excepted. Such
Allegheny Facilities, Equipment and Software shall be vacated and returned at
the expiration or termination date or the completion of any Services requiring
such Allegheny Facilities, Equipment and Software requested by Allegheny under
Section 4.4, whichever is later.

 

  (6) Service Provider Subcontracts and Third Party Contracts. Service Provider
shall inform Allegheny of all subcontracts or Third Party Contracts primarily
used by Service Provider, Service Provider Subcontractors or Service Provider
Affiliates to perform the Services. Subject to Sections 6.4(c), Service Provider
shall, at Allegheny’s request, cause any such Subcontractors, Service Provider
Affiliates or third party contractors to permit Allegheny, the Eligible
Recipients and/or their designee(s) to assume prospectively any or all such
contracts or to enter into new contracts with Allegheny, the Eligible Recipients
and/or their designees on substantially the same terms and conditions, including
price. Service Provider shall so assign the designated subcontracts and Third
Party Contracts to Allegheny, the Eligible Recipients and/or their designee(s)
as of the expiration or termination date or the completion of any Termination
Assistance Services requiring such subcontracts or Third Party Contracts
requested by Allegheny under Section 4.4, whichever is later. There shall be no
charge or fee imposed on Allegheny, the Eligible Recipients and/or their
designee(s) by Service Provider or its Subcontractors, Affiliates or third party
contractors for such assignment. Service Provider shall (i) represent and
warrant that it is not in default under such subcontracts and Third Party
Contracts, (ii) represent and warrant that all payments thereunder through the
date of assignment are current, and (iii) notify Allegheny of any
Subcontractor’s or third party contractor’s default with respect to such
subcontracts and Third Party Contracts of which it is aware at the time.

 

  (7) Other Subcontracts and Third Party Contracts. In addition to its
obligations under Section 4.4(b)(6), Service Provider shall make available to
Allegheny, the Eligible Recipients and/or their designee(s), pursuant to
reasonable terms and conditions, any Subcontractor or third party services then
being utilized by

 

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Service Provider in the performance of the Services. Service Provider shall
retain the right to utilize any such Subcontractor or third party services in
connection with the performance of services for any other Service Provider
customer. Allegheny and the Eligible Recipients shall retain the right to
contract directly with any Subcontractor or third party previously utilized by
Service Provider to perform any Services or to assume Service Provider’s
contract with such Subcontractor or third party to the extent provided in
Section 4.4(b)(6).

 

  (8) Rates and Charges. Except as provided in this Section 4.4(b)(8) and
Section 4.4(b)(9), if Allegheny requests that Service Provider provide or
perform Termination Assistance Services in accordance with this Agreement,
Allegheny shall pay Service Provider the rates and charges specified in Schedule
4 for the additional Service Provider Personnel or resources required to perform
such Termination Assistance Services. To the extent rates and charges for such
Service Provider Personnel or resources are not specified in Schedule 4,
Allegheny shall pay Service Provider ***. To the extent the Termination
Assistance Services requested by Allegheny can be provided by Service Provider
using personnel and resources already assigned to Allegheny to provide the
Services or Allegheny agrees to reprioritize the Services in accordance with the
following sentence, there will be no additional charge to Allegheny for such
Termination Assistance Services. If the Termination Assistance Services
requested by Allegheny cannot be provided by Service Provider using personnel
and resources then assigned to Allegheny, Allegheny, in its sole discretion, may
forego or delay any work activities or temporarily or permanently adjust the
work to be performed by Service Provider, the schedules associated therewith or
the Service Levels to permit the performance of such Termination Assistance
Services using such personnel or resources already assigned to perform the
Services.

 

  (9) Proprietary Communications Network. The Parties recognize that, as of the
Commencement Date, the Services do not include a proprietary communications
network. If Service Provider later uses a proprietary communications network to
provide Services to Allegheny or the Eligible Recipients, then for a period of
up to two (2) years following the expiration or termination date, Allegheny may
request that Service Provider continue to provide such proprietary
communications network and other network Services at the rates, and subject to
the terms and conditions, set forth in this Agreement.

 

  (c) Resources. Service Provider shall ensure that, at all times during the
Term, on forty-five (45) days’ notice, it is able to deploy all necessary
resources to perform Termination Assistance Services in accordance with this
Section 4.4.

 

  (d) Survival of Terms. This Section 4.4 shall survive termination or
expiration of the Term.

 

4.5 Use of Third Parties.

 

  (a) Right of Use. Nothing in this Agreement shall be construed as a
requirements contract, and notwithstanding anything to the contrary contained
herein, this Agreement shall not be interpreted to prevent Allegheny or any
Eligible Recipient from obtaining from third parties (each, an “Allegheny Third
Party Contractor”), or providing to itself, any or all of the Services or any
other services. Nor shall anything in this Agreement be construed or

 

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interpreted as limiting Allegheny’s right or ability during the Term to change
the requirements of Allegheny or the Eligible Recipients, move parts of Service
Categories or Towers in and out of scope, add or delete Eligible Recipients or
to increase or decrease its demand for Services. To the extent Allegheny or an
Eligible Recipient obtains from Allegheny Third Party Contractors, or provides
to itself, any of the Services, the amount to be paid to Service Provider by
Allegheny will be adjusted downward, subject to Schedule 4, to account for the
portion of the Services that Service Provider will not be providing or
performing. Similarly, to the extent Allegheny adds or deletes Eligible
Recipients or increases or decreases its demand for Services, the amount to be
paid to Service Provider by Allegheny will be adjusted in accordance with
Schedule 4 and the rates specified therein. ***Increases or reductions of any
Billable Resource Unit will be subject to the ARC/RRC methodology in Schedule 4.

 

  (b) Service Provider Cooperation. Service Provider shall fully cooperate with
and work in good faith with Allegheny or Allegheny Third Party Contractors as
described in Schedule 2 or as reasonably requested by Allegheny and at no
additional charge to Allegheny. Such cooperation may include: (i) timely
providing access to any facilities being used to provide the Services, as
necessary for Allegheny Personnel or Allegheny Third Party Contractors to
perform the work assigned to them; (ii) timely providing reasonable electronic
and physical access to the business processes and associated Equipment, Software
and/or Systems to the extent necessary and appropriate for Allegheny Personnel
or Allegheny Third Party Contractors to perform the work assigned to them;
(iii) timely providing reasonable written requirements, standards, policies or
other documentation for the business processes and associated Equipment,
Software or Systems procured, operated, supported or used by Service Provider in
connection with the Services; (iv) ensuring that there is no degradation in the
provision of the Services caused by the adjustments made by Service Provider in
transferring Services to a third party, Allegheny or an Eligible Recipient; and
(v) any other cooperation or assistance reasonably necessary for Allegheny
Personnel or Allegheny Third Party Contractors to perform the work in question.
Allegheny Personnel and Allegheny Third Party Contractors shall comply with
Service Provider’s reasonable security and confidentiality requirements, and
shall, to the extent performing work on Software, Equipment or Systems for which
Service Provider has operational responsibility, comply with Service Provider’s
reasonable standards, methodologies, and procedures, in order to avoid
disclosure of or access to any information of any other customer of Service
Provider.

 

  (c) Notice by Service Provider. Service Provider shall expeditiously notify
Allegheny when it becomes aware that an act or omission of an Allegheny Third
Party Contractor will cause, or has caused, a problem or delay in providing the
Services, and shall use commercially reasonable efforts, using existing Service
Provider Personnel assigned to perform the Services, to work with Allegheny, the
Eligible Recipients and the Allegheny Third Party Contractor to prevent or
circumvent such problem or delay; provided, that the Parties acknowledge and
agree that Service Provider has no responsibility for the work of Allegheny
Third Party Contractors or any delays therein or problems therewith, unless and
to the extent Service Provider or its Affiliates or Subcontractors are
responsible for managing such third parties or have caused such problems or
delays. Service Provider shall cooperate with Allegheny, the Eligible Recipients
and Allegheny Third Party Contractors to resolve differences and conflicts
arising between the Services and other activities undertaken by Allegheny, the
Eligible Recipients or Allegheny Third Party Contractors. Any notification
provided by Service Provider in accordance with this Section 4.5(c) shall not
excuse Service Provider from the performance of any of its obligations under
this Agreement.

 

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4.6 Projects.

 

  (a) Procedures and Performance. Service Provider shall perform Projects
requested and approved by Allegheny (including in accordance with the Project
formation process described in Schedule 4I) as part of the Services and in
accordance with the charging methodology set forth in Schedule 4. The Projects
underway as of the Effective Date are specified in Schedule 9. A “Project” is a
discrete unit of non-recurring work that is not an inherent, necessary or
customary part of the day–to-day Services, and is not required to be performed
by Service Provider to meet the existing Service Levels (other than Service
Levels related to Project performance). A Project may consist of or include work
that would otherwise be treated as New Services. The Service Provider Personnel
assigned to perform such Projects shall possess the training, education,
experience, competence and skill to perform such work. Service Provider shall
utilize personnel not assigned permanently to the Allegheny account as and to
the extent necessary to perform the work in question and meet the agreed Project
schedule. The Allegheny Contract Executive or his or her designee shall request,
define and set the priority for such Projects.

 

  (b) Project Proposals. As required by this Agreement (including Schedule 4I),
Service Provider shall prepare a Project proposal in accordance with the
applicable requirements of Section 11.5(a) prior to beginning such Project.
Allegheny may accept or reject such Project proposal in its sole discretion. The
hours expended by Service Provider in preparing proposals or plans or reporting
on the status of such Projects shall be included in the Monthly Base Charges ***
If Supplier believes that Allegheny is requesting an unreasonable number of
Project proposals then Supplier shall notify Allegheny and Allegheny will review
and take appropriate action to limit the number of such proposal requests.

 

4.7 Additional Work or Reprioritization.

 

***, the Allegheny Contract Executive or his or her designee may identify new or
additional work activities to be performed by Service Provider Personnel
(including work activities that would otherwise be treated as New Services) or
reprioritize or reset the schedule for existing Projects or other Services to be
performed by such Service Provider Personnel. Unless otherwise agreed, Allegheny
shall incur no additional charges for the performance of such work activities by
Service Provider Personnel then assigned to Allegheny. Service Provider shall
use reasonable efforts to perform such work activities without impacting the
established schedule for other tasks or the performance of the Services in
accordance with the Service Levels. If it is not possible to avoid such an
impact, Service Provider shall notify Allegheny of the anticipated impact and
obtain its consent prior to proceeding with such work activities. Allegheny, in
its sole discretion, may forego or delay such work activities or temporarily
adjust the work to be performed by Service Provider, the schedules associated
therewith or the Service Levels to permit the performance by Service Provider of
such work activities.

 

5. REQUIRED CONSENTS

 

5.1 Service Provider Responsibility.

 

***, Service Provider shall undertake all administrative activities necessary to
obtain all Required Consents. At Service Provider’s request, Allegheny will
cooperate with Service Provider in

 

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obtaining the Required Consents by executing appropriate Allegheny-approved
written communications and other documents prepared or provided by Service
Provider. Allegheny acknowledges that, in those instances where Allegheny is the
contracting party or licensee, Allegheny will make such contacts as may be
reasonably requested in writing by Service Provider. With Allegheny’s approval,
Service Provider shall exercise for the benefit of Allegheny and the Eligible
Recipients any rights Service Provider has to utilize or transfer license rights
or other applicable rights under Service Provider’s existing third party
licenses, leases or contracts, and the Parties shall cooperate in minimizing or
eliminating any costs associated therewith.

 

5.2 Financial Responsibility.

 

*** shall pay all transfer, re-licensing or termination fees or expenses
associated with obtaining any Required Consents or terminating any licenses or
agreements as to which Service Provider is unable to obtain such Required
Consents with Allegheny’s assistance as described in this Article 5. *** will
cooperate with *** in good faith to minimize such fees and expenses.

 

5.3 Contingent Arrangements.

 

If, despite using commercially reasonable efforts, *** is unable to obtain a
Required Consent with *** assistance as provided in this Article 5, with respect
to Allegheny-licensed Third Party Software, Service Provider shall, at
Allegheny’s option and with Allegheny’s consent, (i) replace the Allegheny
license for such Third Party Software with a Service Provider license,
(ii) replace such Third Party Software with other Software offering equivalent
features and functionality, or (iii) secure the right to manage the Allegheny
licensed Third Party Software on behalf of Allegheny. If, despite using
commercially reasonable efforts, Service Provider, with Allegheny’s assistance,
is unable to obtain a Required Consent with respect to any other Allegheny Third
Party Contract, then, unless and until such Required Consent is obtained,
Service Provider shall manage such Third Party Contract on Allegheny’s behalf
and perform all obligations and enforce all rights under such Third Party
Contract as if Service Provider were a party to the agreement in Allegheny’s
place. If, despite using commercially reasonable efforts, management of such
Third Party Contract is not legally or contractually possible or Service
Provider, with Allegheny’s assistance, is unable to obtain any other Required
Consent, Service Provider shall use commercially reasonable efforts to determine
and adopt, subject to Allegheny’s prior approval, such alternative approaches as
are necessary and sufficient to provide the Services without such Required
Consent. If such alternative approaches are required for a period longer than
one hundred twenty (120) days following the Commencement Date, the Parties will
equitably adjust the terms and reduce the prices specified in this Agreement to
reflect any additional costs being incurred by Allegheny and any Services not
being received by Allegheny and the Eligible Recipients. In addition, if Service
Provider, with Allegheny’s assistance, fails to obtain any Required Consent
within one hundred twenty (120) days after the Commencement Date and such
failure has a material adverse impact on the use or enjoyment of such Services
by Allegheny or the Eligible Recipients, Allegheny may terminate any affected
portions of this Agreement or affected Service Category without payment of any
Termination Charges. Except as otherwise expressly provided herein, the failure
to obtain any Required Consent shall not relieve Service Provider of its
obligations under this Agreement and Service Provider shall not be entitled to
any additional compensation or reimbursement amounts in connection with
obtaining or failing to obtain any Required Consent or implementing any
alternative approach.

 

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6. FACILITIES, SOFTWARE, EQUIPMENT, CONTRACTS AND ASSETS ASSOCIATED WITH THE
PROVISION OF SERVICES

 

6.1 Service Facilities.

 

  (a) Service Facilities. The Services shall be provided at or from (i) the
Allegheny Facilities described on Schedule 7, (ii) the Service Provider
Facilities described on Schedule 7, or (iii) any other service location
requested by Service Provider and approved by Allegheny. Service Provider shall
obtain Allegheny’s prior approval for any proposed relocation by Service
Provider, its Affiliates or Subcontractors of the provision of a Service to a
new or different Service Provider Facility. In deciding whether or not to
approve a location, Allegheny may consider, among other factors, (1) whether the
disaster recovery aspects of the location are satisfactory, (2) the need to be
able to have infrastructure readily available to Allegheny, (3) regulatory or
security restrictions or requirements, (4) restrictions or requirements under
applicable Laws, (5) any potential negative impact on the Service Levels,
(6) the potential impact of transitional related activities on Allegheny’s
business and internal resources, and (7) any additional logistical, financial or
strategic implications for Allegheny. Allegheny acknowledges and has approved
the Service Provider Facilities set forth on Schedule 7 as of the Effective Date
for the provision of the Services and scope thereof described therein. Service
Provider shall be financially responsible for all additional costs, Service
Taxes and expenses related to or resulting from any Service Provider-initiated
relocation to a new or different Service Provider Facility, including any costs
or expenses incurred or experienced by Allegheny or any Eligible Recipient as a
result of such relocation, excluding recurring telecommunications related taxes,
fees, and surcharges for which Allegheny is financially responsible under
Schedule 4B.

 

  (b) Allegheny Facilities. Allegheny shall provide Service Provider with the
use of and access to the Allegheny Facilities (or equivalent space) described in
Schedule 7 (as such space may be expanded if necessary and as determined by
mutual written agreement of the Parties) for the periods specified therein
solely as necessary for Service Provider to perform its obligations under this
Agreement. All Allegheny-owned or leased assets provided for the use of Service
Provider under this Agreement shall remain in Allegheny Facilities unless
Allegheny otherwise agrees. In addition, all improvements or modifications to
Allegheny Facilities requested by Service Provider shall be (i) subject to
review and approval in advance by Allegheny, (ii) in strict compliance with
Allegheny’s then-current policies, standards, rules and procedures, and
(iii) performed by and through Allegheny at Service Provider’s expense. THE
ALLEGHENY FACILITIES ARE PROVIDED BY ALLEGHENY TO SERVICE PROVIDER ON AN AS-IS,
WHERE-IS BASIS. ALLEGHENY EXPRESSLY DISCLAIMS ANY WARRANTIES, EXPRESS OR
IMPLIED, AS TO THE ALLEGHENY FACILITIES, OR THEIR CONDITION OR SUITABILITY FOR
USE BY SERVICE PROVIDER.

 

  (c) Furniture, Fixtures and Equipment. At the Allegheny Facilities described
in Schedule 7, Allegheny shall provide office space and office furniture for the
number of Service Provider Personnel and for such periods specified in Schedule
7. The office space and office furniture provided by Allegheny for the use of
Service Provider Personnel will be generally comparable in quality to the office
space and office furniture provided to similarly situated Allegheny employees.
Service Provider shall be financially responsible for providing all other office
space, office furniture and fixtures needed by Service Provider or Service
Provider Personnel (including Transitioned Employees) to provide the Services,
and for all upgrades, replacements and additions to such office furniture or

 

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fixtures; provided that such office furniture and fixtures must be approved in
advance by Allegheny and meet Allegheny’s then-current standards; and provided
further that Service Provider shall use commercially reasonable efforts to
purchase and use surplus Allegheny furniture and fixtures to the extent
available. Service Provider Personnel using the office facilities provided by
Allegheny will be accorded reasonable access to the communications wiring in
such facilities (including fiber, copper and wall jacks, subject to
Section 6.1(d)) and the use of certain shared office equipment and services,
such as photocopiers, local and long distance telephone service for
Allegheny-related calls, telephone handsets, mail service, office support
service (e.g., janitorial), heat, light, and air conditioning; provided that
such access and usage shall be solely for and in connection with the provision
of Services by such Service Provider Personnel; and provided further that
Service Provider shall reimburse Allegheny for the additional direct incremental
costs incurred by Allegheny or the Eligible Recipients if and to the extent
Service Provider’s technology solution, service delivery model and/or
inefficiency cause its usage or consumption of such resources to exceed
historical levels. Service Provider shall be responsible for providing all other
office related equipment and services needed by Service Provider or Service
Provider Personnel at such Allegheny Facilities to provide the Services, and for
upgrades, improvements, replacements and additions to such equipment or
services.

 

  (d) Service Provider’s Responsibilities Regarding Allegheny’s Network. To the
extent any Equipment provided or used by Service Provider or Service Provider
Personnel is connected directly to the network(s) of Allegheny or any Eligible
Recipient, such Equipment (and all Software installed thereon) shall be
(i) subject to review and approval in advance by Allegheny (Service Provider
shall cooperate with Allegheny in the testing, evaluation and approval of such
Equipment), (ii) in strict compliance with Allegheny’s then-current security
policies, architectures, standards, rules and procedures, and (iii) in strict
compliance with Allegheny’s then-current hardware and software specifications.
Service Provider shall not install or permit the installation of any other
software on such Equipment without Allegheny’s prior approval. Service Provider
shall promptly investigate any security breach of Allegheny’s networks or
Systems associated with Service Provider Personnel or the performance of the
Services. Service Provider shall notify Allegheny and permit Allegheny to
participate in any audit or investigation of any such security breach. Service
Provider shall promptly report in reasonable detail the findings of any such
audit or investigation to Allegheny and shall provide Allegheny with a summary
of any written report prepared in connection therewith; provided that Service
Provider has no obligation to disclose confidential or proprietary information
of its other customers and any disclosure of Service Provider’s Proprietary
Information shall be subject to the confidentiality requirements of Article 13.
From within Allegheny Facilities, Service Provider will be allowed to connect to
the Service Provider network through virtual private network connections
authorized by Allegheny, and in compliance with Allegheny’s then-current
security policies, architectures, standards, rules and procedures, so that
Service Provider can provide resources supporting Allegheny with access to
training, methodologies, tools, communication, collaboration and other valuable
assets essential to providing the Services to Allegheny.

 

  (e) Service Provider’s Responsibilities. Except as provided in Sections
6.1(a), (b) and (c), Section 6.4, and Schedule 4B, Service Provider shall be
responsible for providing all furniture, fixtures, Equipment, space and other
facilities required to perform the Services and all upgrades, improvements,
replacements and additions to such furniture, fixtures, Equipment, space and
facilities. Without limiting the foregoing, Service Provider shall (i) provide
all maintenance, site management, site administration and similar services for
the Service Provider Facilities and (ii) telecommunications transport (voice and
data) between Service Provider Facilities and Allegheny Sites and Facilities.

 

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  (f) Physical Security. Allegheny is responsible for the physical security of
the Allegheny Facilities; provided, that Service Provider shall be responsible
for the safety and physical access and control of the areas that Service
Provider is using in performing the Services and Service Provider shall not
permit any person to have access to, or control of, any such area unless such
access or control is permitted in accordance with control procedures approved by
Allegheny or any higher standard agreed to by Allegheny and Service Provider.
Service Provider shall be solely responsible for compliance by Service Provider
Personnel with such control procedures, including obtaining advance approval to
the extent required.

 

  (g) Standards, Requirements and Procedures at Allegheny Facilities. Except as
provided in Section 6.1(f), Service Provider shall adhere to and enforce, and
cause Service Provider Personnel to adhere to and enforce, the operational,
safety and security standards, requirements and procedures described in the
applicable lease and/or then in effect at the Allegheny Facilities, as such
standards, requirements and procedures may be modified by Allegheny from time to
time subject to Section 6.3(a). Service Provider shall regularly make
recommendations to Allegheny with regard to other operational, safety and
security practices, procedures and safeguards that Service Provider sees in
general practice in the industry.

 

  (h) Employee Services. Subject to applicable security requirements, Allegheny
will permit Service Provider Personnel to use certain employee facilities (e.g.,
designated parking facilities, cafeteria, and common facilities) at the
Allegheny Facilities that are generally made available to the employees and
contractors of Allegheny or the Eligible Recipients. The employee facilities in
question and the extent of Service Provider Personnel’s permitted use shall be
specified in writing by Allegheny and shall be subject to modification in
Allegheny’s sole discretion, with the same notice, if any, that Allegheny
provides to its own employees. Service Provider Personnel will not be permitted
to use employee facilities designated by Allegheny for the exclusive use of
certain Allegheny or Eligible Recipient employees and will not be entitled to
the provision or reimbursement of paid parking.

 

  (i) Use of Allegheny Facilities.

 

  (i) Unless Service Provider obtains Allegheny’s prior written agreement, which
Allegheny may withhold in its sole discretion, Service Provider shall use the
Allegheny Facilities, and the Equipment and Software located therein, only to
provide the Services to Allegheny and the Eligible Recipients.

 

  (ii) Allegheny reserves the right to relocate any Allegheny Facility from
which the Services are then being provided by Service Provider to another
geographic location; provided that, in such event, Allegheny will provide
Service Provider with comparable office space in the new geographic location. In
such event, Allegheny shall pay the applicable labor rate(s) for additional
personnel reasonably required by Service Provider ***, for the incremental
Out-of-Pocket Expenses ***, in each case as reasonably incurred by Service
Provider in physically relocating to such new geographic location ***; provided
that such relocation is not expressly contemplated in this Agreement, and that
Service

 

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Provider notifies Allegheny of such additional required personnel, incremental
Out-of-Pocket Expenses, *** obtains Allegheny’s approval prior to using such
personnel or incurring or accruing such expenses, ***, and uses commercially
reasonable efforts to minimize such personnel, expenses ***.

 

  (iii) Allegheny also reserves the right to direct Service Provider to cease
using all or part of the space in any Allegheny Facility from which the Services
are then being provided by Service Provider and to thereafter use such space for
its own purposes. In such event, Allegheny shall reimburse Service Provider for
any reasonable incremental Out-of-Pocket Expenses incurred by Service Provider
in leasing required substitute new space, ***; provided that such relocation
direction is not expressly contemplated in this Agreement and that Service
Provider notifies Allegheny of such additional required incremental
Out-of-Pocket Expenses, *** obtains Allegheny’s approval prior to incurring or
accruing such expenses, *** and uses commercially reasonable efforts to minimize
such expenses ***.

 

  (j) Conditions for Return. When the Allegheny Facilities are no longer to be
used by Service Provider as contemplated by Section 6.1 or are otherwise no
longer required for performance of the Services, Service Provider shall notify
Allegheny as soon as practicable and shall vacate and return such Allegheny
Facilities (including any improvements to such facilities made by or at the
request of Service Provider) to Allegheny in substantially the same condition as
when such facilities were first provided to Service Provider, subject to
reasonable wear and tear.

 

  (k) No Violation of Laws. Service Provider shall (i) treat, use and maintain
the Allegheny Facilities in a reasonable manner, and (ii) ensure that neither
Service Provider nor any of its Subcontractors commits, and use commercially
reasonable efforts to ensure that no business visitor or invitee commits, any
act in violation of any Laws in such Service Provider-occupied Allegheny
Facility or any act in violation of Allegheny’s insurance policies or in breach
of Allegheny’s obligations under the applicable real estate leases in such
Service Provider-occupied Allegheny Facilities (in each case, to the extent
Service Provider has received notice of such insurance policies or real estate
leases or should reasonably be expected to know of such obligations or
limitations).

 

6.2 Use of Service Provider Facilities.

 

During the Term, Service Provider will provide to Allegheny and Allegheny Third
Party Contractors at no charge, (i) reasonable access to and use of Service
Provider Facilities from which the Services are being performed, and (ii) access
to reasonable work/conference space at such Service Provider Facilities, for the
conduct of Allegheny’s business. Such access shall only be provided for
Allegheny’s audits, other reviews of the Services or other work directly related
to the Services, and such access shall be in compliance with Service Provider’s
security rules and procedures communicated in advance and applicable to other
parties visiting Service Provider’s facility.

 

6.3 Allegheny Rules/Employee Safety.

 

  (a) Allegheny Rules and Compliance. In performing the Services and using the
Allegheny Facilities, Service Provider shall observe and comply with all
Allegheny policies, rules, and regulations applicable at or to Allegheny
Facilities which have been communicated to

 

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Service Provider or Service Provider Personnel in advance by such means as are
generally used by Allegheny to disseminate such information to its employees or
contractors, including those set forth on Schedule 26 and those applicable to
specific Allegheny Sites (collectively, “Allegheny Rules”). The Parties
acknowledge and agree that, as of the Commencement Date, Service Provider is
fully informed as to the Allegheny Rules applicable to such Service Category,
both through due diligence and its hiring of the Transitioned Employees. Service
Provider shall be responsible for the promulgation and distribution of Allegheny
Rules to Service Provider Personnel as and to the extent necessary and
appropriate. Additions or modifications to the Allegheny Rules may be
(i) communicated orally by Allegheny or an Eligible Recipient directly to
Service Provider or Service Provider Personnel, (ii) disclosed to Service
Provider and Service Provider Personnel in writing, (iii) conspicuously posted
at an Allegheny Facility, (iv) electronically posted, or (v) communicated to
Service Provider or Service Provider Personnel by means generally used by
Allegheny to disseminate such information to its employees or contractors.
Service Provider and Service Provider Personnel shall observe and comply with
such additional or modified Allegheny Rules. If Service Provider believes that
any new or modified Allegheny Rule negatively impacts Service Provider’s ability
to provide the Services, or meet the Service Levels, Service Provider shall
notify Allegheny and Allegheny and Service Provider will meet to discuss
appropriate workarounds.

 

  (b) Safety and Health Compliance. Service Provider and Service Provider
Personnel shall familiarize themselves with the premises and operations at each
Allegheny Site or Facility at or from which Services are rendered and the
Allegheny Rules applicable to each such Site or Facility. *** Service Provider
and Service Provider Personnel shall observe and comply with all Laws applicable
to the use of each Allegheny Facility or Site or the provision of the Services,
including environmental Laws and Laws regarding occupational health and safety,
and the provision of the Services. Service Provider shall be responsible for the
compliance of Equipment, Software, Systems and Services for which it is
operationally responsible with such Laws and shall be responsible for any acts
or omissions of Service Provider Personnel in contravention of such Laws.
Service Provider and Service Provider Personnel also shall observe and comply
with all Allegheny Rules with respect to safety, health, security and the
environment and shall take commercially reasonable precautions to avoid injury,
property damage, spills or emissions of hazardous substances, materials or
waste, and other dangers to persons, property or the environment. To the extent
required by Allegheny, Service Provider Personnel shall receive prescribed
training prior to entering certain Allegheny Sites or Facilities.

 

6.4 Software, Equipment and Third Party Contracts.

 

  (a) Financial Responsibility. Service Provider shall be responsible for any
third party fees or expenses attributable to periods on or after the
Commencement Date that are associated with Software, Equipment, Equipment leases
and related Third Party Contracts for which Service Provider is financially
responsible under Schedule 2 or 4B and any other Third Party Contracts
(excluding Third Party Contracts administered by Service Provider for which
Allegheny remains financially responsible, either by paying the invoice directly
or by reimbursing Service Provider on a pass-through basis, which are addressed
in Section 11.2) used by Service Provider to provide the Services. Allegheny
shall be responsible for third party fees or expenses incurred on or after the
Commencement Date that are associated with Software, Equipment, Equipment Leases
and Third Party Contracts for which Allegheny is financially responsible under
Schedule 2 or 4B. Unless otherwise expressly provided, each Party also shall be
responsible for any third party fees or

 

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expenses attributable to periods on or after the Commencement Date that are
associated with new, substitute or replacement Software, Equipment, Equipment
leases or Third Party Contracts (including Upgrades, enhancements, new versions
or new releases of such Software or Equipment) for which such Party is
financially responsible under Schedule 2 or 4B in connection with Service
Provider’s provision of the Services in respect of that Service Category. With
respect to Third Party Software licenses, Equipment Leases and Third Party
Contracts that are transferred to Service Provider by Allegheny or for which
Service Provider otherwise assumes financial responsibility under this
Agreement, Service Provider shall (i) pay all amounts becoming due under such
licenses, leases or contracts, and all related expenses, for periods on or after
the Commencement Date; (ii) rebate to Allegheny any prepayment of such amounts
in accordance with Section 11.9(a); (iii) pay all modification, termination,
cancellation, late payment, renewal or other fees, penalties, charges, interest
or other expenses relating to periods and arising on or after the Commencement
Date; (iv) pay all costs associated with the transfer of such licenses, leases
and contracts to Service Provider, including all taxes associated with such
transfer; and (v) be responsible for curing any defaults in Service Provider’s
performance under such licenses, leases and contracts on or after the
Commencement Date. Allegheny will remain responsible for all amounts due under
such license, leases and contracts that are attributable to periods prior to the
Commencement Date.

 

  (b) Operational Responsibility. With respect to Software, Equipment, Equipment
leases and Third Party Contracts for which Service Provider is operationally
responsible under Schedule 2 or 4B and any other Third Party Contracts
(excluding Third Party Contracts administered by Service Provider for which
Allegheny remains financially responsible, either by paying the invoice directly
or by reimbursing Service Provider on a pass-through basis, which are addressed
in Section 11.2) used by Service Provider to provide the Services, Service
Provider shall be responsible for (i) the evaluation, procurement (i.e.,
performing administrative activities, but not assuming financial responsibility
unless otherwise provided herein), testing, installation, rollout, use, support,
management, administration, operation and maintenance of such Software,
Equipment, Equipment leases and Third Party Contracts; (ii) the evaluation,
procurement (i.e., performing administrative activities, but not assuming
financial responsibility unless otherwise provided herein), testing,
installation, rollout, use, support, management, administration, operation and
maintenance of new, substitute or replacement Software, Equipment, Equipment
leases and Third Party Contracts (including Upgrades, enhancements, new versions
or new releases of such Software); (iii) the performance, availability,
reliability, compatibility and interoperability of such Software, Equipment and
Third Party Contracts each in accordance with this Agreement, including the
Service Levels and change management procedures; (iv) the compliance with and
performance of all operational, administrative and contractual obligations
specified in the applicable licenses, leases and contracts; (v) the
administration and exercise as appropriate of all rights available under such
licenses, leases and contracts; and (vi) the payment of any fees, penalties,
charges, interest or other expenses due and owing under or with respect to such
licenses, leases and contracts that are incurred, caused by or result from
Service Provider’s failure to comply with or perform its obligations under this
Section 6.4(b) (except to the extent that such failure directly results from the
acts or omissions of Allegheny under those licenses, leases or contracts or in
contravention of its obligations under this Agreement). Allegheny agrees that,
during the Term, Service Provider, in consultation with Allegheny, shall direct
the actions of the applicable third party vendors with respect to the leases,
licenses and Third Party Contracts for which Service Provider has operational
responsibility hereunder.

 

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  (c) Rights Upon Expiration or Termination. With respect to all Third Party
Software licenses, Equipment leases and Third Party Contracts for which Service
Provider is financially responsible under this Agreement, Service Provider shall
use commercially reasonable efforts to (i) obtain for Allegheny, the Eligible
Recipients and/or their designee(s) the license, sublicense, assignment and
other rights specified in Sections 4.4(b) and 14.6, (ii) ensure that the
granting of such license, sublicense, assignment and other rights is not subject
to subsequent third party approval or the payment by Allegheny, the Eligible
Recipients or their designee(s) of license, assignment or transfer fees,
(iii) ensure that the terms, conditions and prices applicable to Allegheny, the
Eligible Recipients and/or their designee(s) following expiration or termination
of this Agreement (or any portion thereof) are no less favorable than those
otherwise applicable to Service Provider, and at least sufficient for the
continuation of the activities comprising the Services, (iv) ensure that neither
the expiration or termination of this Agreement (or any portion thereof) nor the
assignment of the license, lease or contract will trigger less favorable terms,
conditions or pricing, and (v) ensure that the fees to be paid by Allegheny, the
Eligible Recipients and/or their designee(s) on an annual basis under any
subscription license agreements will not in the aggregate exceed an amount which
is more than***greater than the aggregate amount of such fees paid by Allegheny
during the period covered by the Base Case. If Service Provider is unable to
obtain any such rights and assurances, it shall notify Allegheny in advance and
shall not use such Third Party Software license, Equipment lease or Third Party
Contract without Allegheny’s approval, except Service Provider may use those
Third Party Software licenses, Equipment leases and Third Party Contracts
assigned to Service Provider by Allegheny pursuant to this Agreement and for
which Service Provider, with Allegheny’s approval, procures a sublicense or
substitute license, lease or contract for Allegheny and the Eligible Recipients
(or, at Allegheny’s election, their designee(s)) and causes maintenance, support
and other services to continue to be available to Allegheny and the Eligible
Recipients at Allegheny’s cost following the expiration or termination of the
Term with respect to the Services applicable to those licenses, leases and/or
contracts. Absent such approval, Service Provider’s use of any such Third Party
Software license, Equipment lease or Third Party Contract shall obligate Service
Provider to obtain or arrange, at no additional cost to Allegheny, for such
license, sublicense, assignment or other right for Allegheny, the Eligible
Recipients and their designee(s) upon expiration or termination. If Allegheny
consents to Service Provider’s use of specific Third Party Software licenses,
Equipment leases or Third Party Contracts under these circumstances, such
consent shall be deemed to be conditioned on Service Provider’s commitment to
use commercially reasonable efforts to cause such third party to agree at
expiration or termination of this Agreement or the completion of Termination
Assistance Services to permit Allegheny, the Eligible Recipients and/or their
designee(s) to assume prospectively the license, lease or contract in question
or to enter into a new license, lease or contract with Allegheny, the Eligible
Recipients and/or their designee(s) on substantially the same terms and
conditions, including price.

 

  (d) Evaluation of Third Party Software, Equipment. In addition to its
obligations under Section 6.4(a) and (b) and in order to facilitate Allegheny’s
control of architecture, standards and plans pursuant to Section 9.5, Service
Provider shall use commercially reasonable efforts to evaluate any Third Party
Software and Equipment selected by or for Allegheny or an Eligible Recipient to
determine whether such Software and Equipment will adversely affect Allegheny’s
environment, Allegheny’s ability to interface with and use the Software,
Equipment and Systems and/or Service Provider’s ability to provide the Services.
Service Provider shall complete and report the results of such evaluation to

 

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Allegheny within fifteen (15) days of its receipt of Allegheny’s request;
provided, that Service Provider shall use commercially reasonable efforts to
respond more quickly in the case of a pressing business need or an emergency
situation.

 

  (e) Benefits Pass-Through. With respect to any products and services procured
by Service Provider for Allegheny on a cost-plus, cost-reimbursement or
Pass-Through Expense basis during the course of performing the Services, Service
Provider shall use commercially available efforts to pass through to Allegheny
all benefits offered by the manufacturers and/or suppliers of such products and
services (including all warranties, refunds, credits, rebates, discounts,
training, technical support and other consideration offered by such
manufacturers and suppliers) except to the extent otherwise agreed by Allegheny.
If Service Provider is unable to pass through any such benefit to Allegheny, it
shall notify Allegheny in advance and shall not purchase such product or service
without Allegheny’s prior written approval.

 

  (f) Allegheny Provided Equipment. Allegheny shall provide Service Provider
with the use of the Allegheny-owned and leased Equipment identified on Schedule
10 (collectively, the “Allegheny Provided Equipment”) for the periods specified
in such Schedule solely for and in connection with the provision of the
Services. Notwithstanding the foregoing, except as provided in this
Section 6.4(f), Sections 6.1(a), (b) and (c), and Schedule 4B, Service Provider
shall be responsible for providing all Equipment required to perform the
Services and all Upgrades, improvements, replacements and additions thereto.
Upon the expiration of the period specified in Schedule 10 for each item of
Allegheny Provided Equipment (or when such Allegheny Provided Equipment is no
longer required by Service Provider for the performance of the Services),
Service Provider shall promptly return such Allegheny Provided Equipment to
Allegheny in substantially the same condition (as it may have been modified or
improved by Service Provider with Allegheny’s approval) as when such Allegheny
Provided Equipment was first provided to Service Provider, subject to reasonable
wear and tear. THE ALLEGHENY PROVIDED EQUIPMENT IS PROVIDED BY ALLEGHENY TO
SERVICE PROVIDER ON AN AS-IS, WHERE-IS BASIS. ALLEGHENY EXPRESSLY DISCLAIMS ANY
WARRANTIES, EXPRESS OR IMPLIED, AS TO THE ALLEGHENY PROVIDED EQUIPMENT, OR ITS
CONDITION OR SUITABILITY FOR USE BY SERVICE PROVIDER TO PROVIDE THE SERVICES,
INCLUDING WARRANTIES OF NON-INFRINGEMENT, MERCHANTABILITY, OR FITNESS FOR A
PARTICULAR PURPOSE.

 

  (g) Surplus Equipment. Service Provider shall, at its cost, dispose of any
surplus Equipment owned by Allegheny, consistent with the requirements of
Schedule 2.8, and Service Provider shall pay Allegheny any money received from
disposal of Allegheny-owned Equipment. Service Provider shall obtain Allegheny’s
consent to dispose of any Allegheny-owned Equipment before disposing of such
Equipment. Service Provider shall maintain reasonable documentation regarding
the disposition of such surplus Equipment, including the costs of and revenues
from disposal and as proof of appropriate disposal, and shall make such
documentation available to Allegheny upon Allegheny’s request.

 

6.5 Assignment of Licenses, Leases and Related Agreements.

 

  (a) Assignment and Assumption. Subject to Service Provider obtaining any
Required Consents, on and as of the Commencement Date, Allegheny shall assign to
Service Provider, and Service Provider shall assume and agree to perform all
obligations arising on or after the Commencement Date that are related to, the
Third Party Software licenses,

 

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Equipment Leases and Third Party Contracts for which Service Provider is
financially responsible under Sections 6.4 and Schedules 2 and 4B, including
those listed on Schedules 10, 11, 12, 12A, 12B and 12C; provided, however, that
such assignment shall not include any assignment or transfer of any intellectual
property rights in Materials developed under such Third Party Software licenses,
Equipment Leases and Third Party Contracts prior to the date of such assignment
and, as between the Parties, Allegheny hereby expressly reserves and retains
such intellectual property rights. Allegheny and Service Provider shall execute
and deliver a mutually satisfactory assignment and assumption agreement with
respect to such leases, licenses and agreements, evidencing the assignment and
assumption provided for herein.

 

  (b) Items Not Assignable by Commencement Date. With respect to any such Third
Party Software licenses, Equipment Leases or Third Party Contracts that can not,
as of the Commencement Date, be assigned to Service Provider without breaching
their terms or otherwise adversely affecting the rights or obligations of
Allegheny or Service Provider thereunder, the performance obligations shall be
deemed to be subcontracted or delegated to Service Provider until any requisite
consent, notice or other prerequisite to assignment can be obtained, given or
satisfied by Service Provider. It is understood that, from and after the
Commencement Date, Service Provider, as a subcontractor or delegatee, shall be
financially and operationally responsible for such Third Party Software license,
Equipment Lease or Third Party Contract as Allegheny’s agent pursuant to
Section 9.11(b). Service Provider shall use commercially reasonable efforts to
satisfy the consent, notice or other prerequisites to assignment and, upon
Service Provider doing so, the Third Party Software license, Equipment Lease or
Third Party Contract shall immediately be assigned and transferred to and
assumed by Service Provider.

 

  (c) Non-Assignable Items. Allegheny will cooperate with Service Provider in
providing information that may be helpful in assisting Service Provider in
obtaining any Required Consents. If, after Service Provider using commercially
reasonable efforts for a reasonable period of time but not longer than one
hundred twenty (120) days after the Commencement Date, a Third Party Software
license, Equipment Lease or Third Party Contract cannot be assigned without
breaching its terms or otherwise adversely affecting the rights or obligations
of Allegheny or Service Provider thereunder, the Parties shall take such actions
and execute and deliver such documents as may be necessary to cause the Parties
to realize the practical effects of the allocation of responsibilities intended
to be effected by this Agreement.

 

  (d) Modification and Substitution. Service Provider may terminate, shorten,
modify or extend the Third Party Software licenses, Equipment Leases and Third
Party Contracts for which Service Provider is financially responsible under
Schedules 2 and 4B of this Agreement and, subject to Section 9.12, may
substitute or change vendors relating to goods or services covered thereby;
provided that, except as otherwise disclosed by Service Provider and agreed to
by Allegheny, such change(s) (i) shall not constitute a breach of any obligation
of Allegheny or the Eligible Recipients under such Software licenses, Equipment
Leases or Third Party Contracts; (ii) shall not result in additional financial
obligations, financial or operational risk or Losses to Allegheny or the
Eligible Recipients; (iii) shall not result in any increase to Allegheny or the
Eligible Recipients in the cost of receiving the Services; and (iv) if assumable
by Allegheny or the Eligible Recipients, shall not provide for less favorable
terms, conditions or prices for Allegheny, the Eligible Recipients and/or their
designee(s) following the expiration or termination of the Term or any
applicable Service than would otherwise be applicable to Service Provider
(except for

 

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terms, conditions or prices available to Service Provider because of its volume
purchases). Service Provider’s rights under the immediate preceding sentence are
conditioned upon Service Provider paying all applicable termination or
cancellation charges, Losses and other amounts due to the applicable vendor
associated with such action and indemnifying Allegheny and the Eligible
Recipients against any such charges, Losses or other amounts associated
therewith. Notwithstanding anything to the contrary herein, Service Provider
shall not terminate, shorten or modify without Allegheny’s prior written consent
any license for Third Party Software either created exclusively for Allegheny or
the Eligible Recipients or otherwise not commercially available. Service
Provider shall reimburse Allegheny and the Eligible Recipient(s) for any
termination charges, cancellation charges, or other amounts paid by them at
Service Provider’s direction in connection with obtaining any such modification.

 

6.6 License to Allegheny Licensed Third Party Materials.

 

Subject to the Required Consents having been obtained pursuant to Section 5.1,
Allegheny hereby grants to Service Provider, for the sole purpose of performing
the Services and solely to the extent of Allegheny’s underlying rights, the same
rights of access, use, maintenance and support as Allegheny possesses under the
applicable software licenses with respect to Allegheny licensed Third Party
Materials. Allegheny also shall grant such rights to Subcontractors designated
by Service Provider if and to the extent necessary for Service Provider to
provide the Services; provided that, Service Provider shall pay all fees, costs
and expenses associated with the granting of such rights to such Subcontractors.
Service Provider and its Subcontractors shall comply with the duties, including
use restrictions and those of nondisclosure, imposed on Allegheny by such
licenses. In addition, each Subcontractor shall sign a written agreement to be
bound by all of the terms contained herein applicable to such Third Party
Materials (such agreement shall be agreed to by the Parties and shall include
the terms specified in this Section as well as those pertaining to the ownership
of such Third Party Materials and any derivative materials developed by the
Parties, the scope and term of the license, the restrictions on the use of such
Third Party Materials, the obligations of confidentiality, etc.). Except as
otherwise requested or approved by Allegheny (or the relevant licensor), Service
Provider and its Subcontractors shall cease all use of such Third Party
Materials upon the end of the Term and the completion of any Termination
Assistance Services requested by Allegheny pursuant to Section 4.4. THE
ALLEGHENY LICENSED THIRD PARTY MATERIALS ARE PROVIDED BY ALLEGHENY TO SERVICE
PROVIDER AND ITS SUBCONTRACTORS ON AN AS-IS, WHERE-IS BASIS. ALLEGHENY EXPRESSLY
DISCLAIMS ANY REPRESENTATIONS OR WARRANTIES, EXPRESSED OR IMPLIED, AS TO SUCH
ALLEGHENY LICENSED THIRD PARTY MATERIALS, OR THE CONDITION OR SUITABILITY OF
SUCH MATERIALS FOR USE BY SERVICE PROVIDER OR ITS SUBCONTRACTORS TO PROVIDE THE
SERVICES, INCLUDING WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE.

 

6.7 License to Service Provider Licensed Third Party Materials.

 

Effective upon the first use by Service Provider of any Third Party Materials to
provide the Services and subject to any Required Consents having been obtained
pursuant to Section 5.1, Service Provider hereby grants to Allegheny and the
Eligible Recipients, at no additional charge, a non-exclusive, royalty-free
right and license to access and/or use, as set forth in this Section 6.7, the
Third Party Materials as to which Service Provider holds the license or for
which Service Provider is financially responsible under this Agreement
(including all modifications, substitutions, Upgrades, enhancements,
methodologies, tools, documentation, materials and

 

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media related thereto) during the Term and any Termination Assistance Services
period. In addition, at no additional Charge, Service Provider hereby grants to
Allegheny Third Party Contractor(s) a non-exclusive, royalty-free right and
license to access and/or use such Third Party Materials (including all
modifications, substitutions, Upgrades, enhancements, methodologies, tools,
documentation, materials and media related thereto), as set forth in this
Section 6.7, during the Term and any Termination Assistance Services period, for
the benefit of Allegheny and the Eligible Recipients. Allegheny, the Eligible
Recipients and Allegheny Third Party Contractors may use any Third Party
Materials licensed pursuant to this Section 6.7 (i) to the extent necessary for
Allegheny to receive the full benefit of the Services provided by Service
Provider, and (ii) otherwise for the same types of use for which Service
Provider is licensed to use such Third Party Materials in connection with the
provision of the Services*** with respect to any Third Party Materials
introduced by Service Provider following the Commencement Date. *** . . The
rights and obligations of Allegheny, the Eligible Recipients and Allegheny Third
Party Contractors with respect to such Service Provider licensed Third Party
Materials following the expiration or termination of the Agreement or
termination of any Service are set forth in Section 14.6.

 

6.8 Acquired Assets.

 

The Parties recognize that, as of the Effective Date, Allegheny will not be
conveying any Acquired Assets to Service Provider. Allegheny may later agree to
convey (or cause the applicable Eligible Recipient to convey) to Service
Provider, and Service Provider may later agree (or cause an Affiliate to agree)
to accept, as of the Commencement Date (or such other date as agreed upon by the
Parties in writing), all of Allegheny’s (or the applicable Eligible Recipient’s)
right, title and interest in and to the Acquired Assets. In consideration for
any such conveyance, Service Provider agrees to pay Allegheny on the
Commencement Date the Acquired Assets Credit specified in this Agreement. In
addition, Service Provider shall be responsible for, and shall pay, or provide
evidence of exemption from, all sales, use, and similar federal, state and local
transaction-based taxes arising out of the conveyance of the Acquired Assets,
excluding, income taxes, franchise taxes, and transaction-based gross receipts
taxes. The Acquired Assets Credit is exclusive of all taxes. Allegheny
represents and warrants to Service Provider that Service Provider (or its
Affiliates) shall take good title to the Acquired Assets as of the Commencement
Date, free and clear of all liens. The conveyance of the Acquired Assets shall
be effected by the delivery of each Acquired Asset to the Service Provider where
possible or, where this is not possible, by the delivery of a general assignment
and bill of sale in substantially the form set forth in Exhibit 3. Except as
otherwise expressly provided in this Section 6.8, Allegheny CONVEYS THE ACQUIRED
ASSETS TO SERVICE PROVIDER ON AN “AS IS,” “WHERE IS” AND “WITH ALL FAULTS”
BASIS. ALLEGHENY HEREBY DISCLAIMS ALL WARRANTIES, EXPRESS OR IMPLIED, WITH
RESPECT TO THE ACQUIRED ASSETS, OR THE CONDITION OR SUITABILITY OF SUCH ACQUIRED
ASSETS FOR USE BY SERVICE PROVIDER TO PROVIDE THE SERVICES, INCLUDING WARRANTIES
OF NON-INFRINGEMENT, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.

 

6.9 Managed Third Parties.

 

  (a) Service Provider shall cause Managed Third Parties to perform in
accordance with this Agreement, including Service Levels, and comply with all
applicable duties and obligations imposed on Service Provider under this
Agreement***.

 

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6.10 Notice of Defaults.

 

Allegheny and Service Provider shall promptly inform the other Party in writing
of any material breach of, or misuse or fraud in connection with, any Third
Party Contract, Equipment lease or Third Party Software license used in
connection with the Services of which it becomes aware and shall cooperate with
the other Party to prevent or stay any such breach, misuse or fraud.

 

7. SERVICE LEVELS

 

7.1 General.

 

  (a) General Performance Standards. Beginning on the Commencement Date, Service
Provider shall perform the Services in respect of the Service Categories at
levels of accuracy, quality, completeness, timeliness, responsiveness and
resource efficiency that are at least equal to those received by Allegheny or
the Eligible Recipients during the twelve (12) month period prior to such date.
In addition, Service Provider shall perform such Services at levels of accuracy,
quality, completeness, timeliness, responsiveness, resource efficiency and
productivity that are at least equal to ***This Section 7.1(a) shall not be
deemed to supersede the Service Levels specified in Schedule 3.

 

  (b) Service Level Performance Standards. Beginning on the dates specified in
Schedule 3, Service Provider shall perform the Services in respect of a Service
Category so as to meet or exceed the Service Levels applicable to that Service
Category, as set forth in Schedule 3.

 

  (c) Multiple Service Levels. If more than one Service Level applies to any
particular obligation of Service Provider, Service Provider shall perform in
accordance with the most stringent of such Service Levels.

 

  (d) Responsibility. Service Provider shall be responsible for meeting or
exceeding the applicable Service Levels even where doing so is dependent on the
provision of Services by Subcontractors, non-Service Provider Personnel to the
extent agreed by the Parties pursuant to Section 4.1(e), or Managed Third
Parties***.

 

7.2 Service Level Credits; Deliverable Credits.

 

  (a) ***

 

  (b)

 

7.3 Problem Analysis.

 

If Service Provider fails to provide Services in accordance with the Service
Levels and this Agreement, Service Provider shall (after restoring the Service
or otherwise resolving any immediate problem related to such Services)
(i) promptly investigate and report on the causes of the problem; (ii) provide a
Root Cause Analysis of such failure as soon as practicable after such failure or
at Allegheny’s request; (iii) correct the problem as soon as practicable
(regardless of cause or fault) or coordinate the correction of the problem if
Service Provider does not have responsibility for the cause of the problem;
(iv) advise Allegheny of the status of remedial efforts being undertaken with
respect to such problem; (v) demonstrate to Allegheny’s reasonable satisfaction
that the causes of such problem have been or will be corrected on a permanent
basis;

 

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and (vi) take commercially reasonable actions to prevent any recurrence of such
problem. Service Provider shall use commercially reasonable efforts to complete
the Root Cause Analysis within fifteen (15) days; provided that, if it is not
capable of being completed within fifteen (15) days using reasonable diligence,
Service Provider shall complete such Root Cause Analysis as quickly as possible
and shall notify Allegheny prior to the end of the initial fifteen (15) day
period as to the status of the Root Cause Analysis and the estimated completion
date. ***

 

7.4 Continuous Improvement Reviews.

 

  (a) Improvement of Services Quality. Service Provider acknowledges that the
quality of the Services provided in certain Service areas can and will be
improved during the Term and agrees that the Service Levels in such Service
areas will be enhanced periodically in recognition of the anticipated
improvement in service quality. Service Provider will improve the quality of the
Services provided in such areas to meet or exceed the enhanced Service Levels
and will do so at no additional charge to Allegheny.

 

  (b) Increase of Service Levels. In addition to the foregoing, Allegheny and
Service Provider shall periodically review the Service Levels and the
performance data collected and reported by Service Provider in accordance with
Schedule 3 and relevant industry data and trends on an annual basis (or more
frequently if requested by Allegheny). Service Provider shall give Allegheny any
assistance it reasonably requires to review and verify such data. As part of
this review process, the Parties shall, at no additional cost to Allegheny,
increase the Service Levels to reflect the higher performance levels actually
attained or attainable by Service Provider in accordance with Schedule 3. In
addition, subject to Section 11.5 and Schedule 3, the Parties shall agree, to
the extent reasonable and appropriate, to: (i) increase the Service Levels to
reflect improved performance capabilities associated with advances in the proven
processes, technologies and methods available to perform the Services; (ii) add
new Service Levels to permit further measurement or monitoring of the accuracy,
quality, completeness, timeliness, responsiveness, cost-effectiveness, or
productivity of the Services; (iii) modify or increase the Service Levels to
reflect changes in the processes, architecture, standards, strategies, needs or
objectives defined by Allegheny; and (iv) modify or increase the Service Levels
to reflect agreed upon changes in the manner in which the Services are performed
by Service Provider.

 

7.5 Measurement and Monitoring.

 

Service Provider shall, not later than the date by which Service Provider is
required to collect Service Level related data to enable it to comply with the
requirements set forth in Schedule 3, implement measurement and monitoring tools
and metrics as well as standard reporting procedures, all approved by Allegheny,
to measure and report Service Provider’s performance of the Services in respect
of such Service Category at a level of detail sufficient, as set forth in
Schedule 3A with respect to the initial Service Levels, to verify Service
Provider’s compliance with the applicable Service Levels. Allegheny or its
designee shall have the right to audit all such measurement and reporting tools,
performance metrics and reporting procedures. Service Provider shall provide
Allegheny with on-line access to up-to-date problem management data and other
data regarding the status of service problems, service requests and user
inquiries. Service Provider also shall provide Allegheny with access to the data
used by Service Provider to calculate its performance against the Service Levels
and the measurement and monitoring tools and procedures utilized by Service
Provider to generate such data for purposes of audit and verification. Allegheny
shall not be required to pay any amount in addition to the Charges for such
measurement and monitoring tools or the resource utilization associated with
their use. The

 

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measurement and monitoring tools that will be used by Service Provider in
connection with the Services (not later than the date by which Service Provider
is required to collect Service Level related data to enable it to comply with
the requirements set forth in Schedule 3) include those listed on Schedule 3A.

 

7.6 Satisfaction Surveys.

 

  (a) General. Based on the schedule and approach set forth in Schedule 14,
Service Provider and/or independent third parties engaged by Service Provider
shall conduct the satisfaction surveys of Allegheny’s management and Authorized
Users described in Schedule 14 in accordance with the survey protocols and
procedures specified therein in order to determine their satisfaction with
Service Provider’s provision of the Services in respect of that Service
Category. To the extent Service Provider engages an independent third party to
perform all or any part of any satisfaction survey, such third party shall be
approved in advance by Allegheny.

 

  (b) Allegheny Conducted Surveys. In addition to the satisfaction surveys to be
conducted by an independent third party pursuant to Section 7.6(a), Allegheny
may survey Authorized User satisfaction with Service Provider’s performance in
connection with and as part of broader Authorized User satisfaction surveys
periodically conducted by Allegheny. At Allegheny’s request, Service Provider
shall cooperate and assist Allegheny with the formulation of the survey
questions, protocols and procedures and the execution and review of such
surveys.

 

  (c) Survey Follow-up. If the results of any satisfaction survey conducted
pursuant to Section 7.6(a) or (b) indicate that the level of satisfaction with
Service Provider’s performance is less than the target level specified in
Schedule 3, Service Provider shall promptly: (i) conduct a Root Cause Analysis
as to the cause of such dissatisfaction; (ii) develop an action plan to address
and improve the level of satisfaction; (iii) present such plan to Allegheny for
its review, comment and approval; and (iv) take action in accordance with the
approved plan and as necessary to improve the level of satisfaction. Allegheny
and Service Provider shall establish a schedule for completion of a Root Cause
Analysis and the preparation and approval of the action plan which shall be
reasonable and consistent with the severity and materiality of the problem;
provided that Service Provider shall, to the extent practicable, complete such
tasks within thirty (30) days from the date such user survey results are
finalized and reported. Service Provider’s action plan developed hereunder shall
specify the specific measures to be taken by Service Provider and the dates by
which each such action shall be completed. Following implementation of such
action plan, Service Provider shall conduct follow-up surveys with the affected
Allegheny users and management to confirm that the cause of any dissatisfaction
has been addressed and that the level of satisfaction has improved.

 

7.7 Notice of Adverse Impact.

 

If Service Provider becomes aware of any failure by Service Provider to comply
with its obligations under this Agreement or any other situation (a) that has
impacted or reasonably could impact the maintenance of Allegheny’s or any
Eligible Recipient’s financial integrity or internal controls, the accuracy of
Allegheny’s or any Eligible Recipient’s financial, accounting, quality,
inventory, procurement or human resources records and reports or compliance with
Allegheny Rules, Allegheny Standards or applicable Laws, or (b) that has had or
reasonably could have any other material adverse impact on the Services in
question or the impacted business operations of

 

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Allegheny or the Eligible Recipients, then, Service Provider shall immediately
inform Allegheny in writing of such situation and the impact or expected impact
and Service Provider and Allegheny shall meet to formulate an action plan to
minimize or eliminate the impact of such situation.

 

8. PROJECT PERSONNEL

 

8.1 Transitioned Personnel.

 

  (a) Offers and Employment.

 

  (i) Service Provider Offers of Employment. Service Provider shall extend
offers of at-will employment to (1) those personnel identified in Table A in
Schedule 5A at least five (5) weeks before the Commencement Date, and (2) those
personnel in Table B in Schedule 5A who are “Selective Hires”, as defined in
such schedule, at least four (4) weeks before the Commencement Date with regard
to offers made for the first group of such Selective Hires (and as soon as
practicable for subsequent offers in the event any offers from the first or
subsequent group are declined), on a schedule and in a manner that is
pre-approved and in coordination with Allegheny. Service Provider shall waive
pre-employment background checks, drug testing and/or medical examinations. Such
offers shall be for employment for an indeterminate period of time with Service
Provider in positions comparable to those held by such employees at Allegheny or
Allegheny’s Affiliates, and with ***. Unless otherwise specified in Schedule 5A
or agreed by the Parties, personnel accepting such offers shall be hired by
Service Provider effective as of the Commencement Date.

 

  (ii) On-Leave Employees. With respect to any employee identified on Schedule
5A who, on the Commencement Date, is not actively at work or is on leave status,
including personal, medical, disability, industrial or sick leave, such employee
shall remain an employee of the applicable employing Entity until such employee
returns to work, with physician’s release or other appropriate documentation
stating that such employee may resume his or her prior work schedule. If such an
employee returns to work within six (6) months after the Commencement Date,
Service Provider shall promptly extend an offer of employment to such employee
and the compensation and other terms and conditions of such offer shall be as
set forth in this Article 8. If such an employee does not return within such six
(6) month period, Service Provider shall be under no obligation to offer
employment to such employee or to treat such employee as a Transitioned Employee
hereunder.

 

  (iii) Employment Effective Date. All personnel who accept Service Provider’s
offer of employment and begin work with Service Provider pursuant to the
foregoing paragraphs are herein referred to as “Transitioned Employees.” Each
such Transitioned Employee’s “Employment Effective Date” shall be the effective
date on which Service Provider actually employs such employee.

 

  (b) Minimum Retention. Service Provider shall not, without the affected
employee’s approval, relocate a Transitioned Employee or his or her assigned
work location during the *** immediately following such Transitioned Employee’s
Employment Effective Date, unless such relocation or reassignment is expressly
disclosed in the Transitioned

 

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Employee’s offer letter and agreed to by him or her at the time of hiring. For a
period of *** following the Effective Date, Service Provider will inform
Allegheny each month of Transitioned Personnel who are no longer providing
Services to Allegheny.

 

  (c) Additional Transitioned Employees. If during the six (6) months following
the Commencement Date, Allegheny identifies additional Allegheny employees who
performed functions that were transferred to Service Provider under this
Agreement, Service Provider shall reasonably consider making employment offers
to such employees on the terms and conditions set forth in this Article 8.

 

  (d) Reemployment of Transitioned Employees. During the six (6) months
following the Commencement Date, Allegheny may designate, or the Parties may
agree upon, one or more Transitioned Employees who were transferred to Service
Provider in error and are required for an Allegheny-retained function. Allegheny
may extend offers of reemployment to any such Transitioned Employee, and Service
Provider shall not interfere with Allegheny’s efforts to reemploy any such
Transitioned Employee.

 

  (e) Training/Career Opportunities. Service Provider shall offer training,
skills development and career growth opportunities to Transitioned Employees
that are at least as favorable as those offered generally to its similarly
situated employees.

 

  (f) Personnel Projection Matrix. Set forth in Schedule 5B is a staffing plan
showing the planned deployment of Service Provider Personnel primarily assigned
to provide the Services (the “Personnel Projection Matrix”). Service Provider
shall substantially comply with the Personnel Projection Matrix. Service
Provider shall report monthly to Allegheny any material changes to the Personnel
Projection Matrix during the first eighteen (18) months following the
Commencement Date and quarterly after the expiration of that period.

 

  (g) Employment Status with Allegheny. The Parties agree that Transitioned
Employees will no longer be considered employees of Allegheny or the Eligible
Recipients on and after their Employment Effective Dates. In addition, Service
Provider and Allegheny will conduct their respective businesses in a manner to
eliminate, or reduce to a significantly low level, the risk that, following the
Commencement Date, Allegheny (or the applicable Eligible Recipient) will be
considered an employer, co-employer or joint employer of any employee of Service
Provider or its Affiliates or Subcontractors performing the Services in respect
of that Service Category, including the Transitioned Employees.

 

  (h) Subcontractors. Unless otherwise specified in Schedule 5A, all offers of
employment to personnel must be for employment by Service Provider or an
Affiliate of Service Provider. To the extent Schedule 5A specifies that any
personnel will be offered employment with or transitioned to a Subcontractor or
Affiliate of Service Provider (rather than Service Provider itself), such
employment must be subject to and in strict accordance with the same
requirements of this Agreement applicable to Service Provider.

 

  (i) Prohibition on Hiring. For a period of *** after the Effective Date,
Service Provider and its Subcontractors shall not employ, offer to employ, or
contract with any Affected Employee who rejected a comparable job offer from
Service Provider pursuant to this Agreement, where such employment offer or
contract is directly or indirectly made by or on behalf of Service Provider’s
personnel on the Allegheny account, or with the knowledge of such Service
Provider personnel.

 

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8.2 Employee Benefit Plans.

 

  (a) General. Except as otherwise provided in this Article 8, each Transitioned
Employee and his or her dependents shall be eligible to enroll, effective as of
his or her Employment Effective Date, in the employee plans of Service Provider
that are made available to similarly situated employees of Service Provider.
Service Provider has listed all of such employee plans on Schedule 5C and
provided Allegheny with true and complete copies of the most recent summary plan
descriptions and summary of material modifications for such employee plans or
has provided a written summary where no current summary plan description exists.
The compensation and benefits provided by Service Provider to Transitioned
Employees shall consist of ***.

 

  (b) Years of Service Credit. Except as otherwise provided in this Article 8,
the service of a Transitioned Employee prior to his or her Employment Effective
Date, which is recognized by an employee plan of Allegheny, shall be recognized
by the comparable Service Provider employee plan for purposes of participation,
vesting, eligibility for benefits and future benefit accruals, vacation plan and
paid time off. Such past service credit will be established entirely on the
information as recorded by Allegheny and communicated to Service Provider, and
Service Provider will not be responsible for auditing, validating or confirming
the accuracy of any such information.

 

  (c) Employee Welfare Benefit Plans. Each Transitioned Employee shall be
eligible as of his or her Employment Effective Date to participate immediately
in Service Provider’s employee welfare benefit plans (“welfare plans”), which
shall include medical care, hospitalization, life, accidental death and
dismemberment, prescription drug, dental insurance benefits, short term
disability and long term disability, to the extent such benefits are provided to
similarly situated Service Provider employees. Subject to the general
comparability requirements of Section 8.2(a), eligibility for, the benefits of,
and the amount, if any, of employee contributions toward welfare plan coverage
will be determined by Service Provider; provided, however, that each of Service
Provider’s welfare plans shall (i) waive all pre-existing condition exceptions,
evidence of insurability, exclusionary provisions and/or waiting periods for
each such Transitioned Employee and any eligible spouse or covered dependents
(except that, there may be some conditions that are covered under Allegheny’s
health benefit plans that either are not covered or are covered in a different
manner under the Electronic Data Systems Corporation Health Benefit Plan, and
proof of insurability will be required for certain amounts of Group Universal
Life coverage as specified in the applicable policies), and (2) grant credit for
years of service to the extent applicable in accordance with Section 8.2(b). In
addition, any deductible, co-insurance amounts, or out-of-pocket expenses paid
by any Transitioned Employee in the calendar year of his or her Employment
Effective Date shall be applied toward any deductible, co-insurance amounts or
out-of-pocket expenses (unless such out-of-pocket expenses are to applied toward
a co-payment) by Service Provider’s group insurance program for the calendar
year of his or her Employment.

 

  (d) Paid-Time-Off (Vacation/Sick Leave). Beginning on his or her Employment
Effective Date, Service Provider shall make available to all Transitioned
Employees paid-time-off benefits for vacation and sick leave under its
applicable plans, with years of service of such Transitioned Employees
determined in accordance with Section 8.2(b). The paid-time-off vacation
benefits provided by Service Provider shall be no less favorable than the
vacation benefits under Allegheny’s plan and generally available to similarly
situated Service Provider employees. The paid time-off benefits for sick-leave
provided by Service

 

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Provider shall be no less favorable than the sick-leave benefits generally
available to similarly situated Service Provider employees. Service Provider
shall recognize vacation plans made by the Transitioned Employees and time-off
commitments made by Allegheny to the Transitioned Employees, that in each case
were approved by Allegheny prior to his or her Employment Effective Date and are
indicated on Schedule 5A, and shall permit such Transitioned Employees to incur
negative leave balances for this purpose.

 

  (e) Pension Plans. Each Transitioned Employee shall be eligible as of his or
her Employment Effective Date to participate immediately in Service Provider’s
defined benefit pension plan (“Pension Plan”). Service Provider will grant
credit for all years of service recognized by Allegheny for purposes of
determining eligibility, participation and vesting under the Service Provider’s
Pension Plan.

 

  (f) Savings Plans. Each Transitioned Employee shall be eligible as of his or
her Employment Effective Date to participate immediately in Service Provider’s
savings plan (“401(k) Plan”). Service Provider will grant credit for all years
of service recognized by Allegheny for purposes of determining eligibility,
participation and vesting under the Service Provider’s 401(k) Plan.

 

  (g) Flexible Spending Account Plans. Beginning on his or her Employment
Effective Date, Service Provider shall make available to all Transitioned
Employees reimbursement account benefits for health care and dependent care
under its applicable plans.

 

  (h) Tuition Assistance. Transitioned Employees shall be eligible to
participate in all tuition assistance programs provided by Service Provider to
its similarly situated employees. Courses which are in progress as of the
enrolled Transitioned Employee’s Employment Effective Date and for which tuition
assistance has been approved by Allegheny, and courses which have been approved
by Allegheny and paid for by the Transitioned Employee prior to the Transitioned
Employees Employment Effective Date shall be reimbursed by Service Provider at
the completion of the course, provided all of the requisites for reimbursement
under the Allegheny program have been approved. “Course” refers to specific
classes in progress or scheduled to start during a particular term and does not
refer to a degree program.

 

  (i) Bonus Programs. Service Provider shall provide to the Transitioned
Employees the same variable compensation, incentive compensation, and bonus
programs as are available to similarly situated Service Provider employees.
Service will be credited to Transitioned Employees by Service Provider for this
purpose, to the extent applicable.

 

  (j) Severance Pay Plans. Service Provider’s employment offers to Affected
Employees will state that if the Affected Employee accepts the employment offer
and is subsequently terminated by Service Provider within *** of employment with
Service Provider (or, in the case of Affected Employees who are designated as
filling Key Service Provider Personnel positions within *** after the Effective
Date, within *** of employment with Service Provider) for any reason other than
Cause (as defined below), and provided the Affected Employee is then providing
Services to Allegheny, ***. Service Provider will grant credit for all years of
service recognized by Allegheny for purposes of determining eligibility and
participation under the Service Provider’s severance pay plan. Payment of any
such severance amount shall be contingent upon the Transitioned Employee signing
a separation agreement deemed appropriate by Service Provider (which will
include, amongst its other terms, a release and/or waiver of any claims the
Transitioned Employee

 

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may have against Service Provider). As used in this Section 8.2(j), “Cause”
means: (1) material breach of any agreement entered into between the
Transitioned Employee and Service Provider; (2) material misconduct;
(3) material or repeated failure to follow Service Provider’s policies,
directives or orders applicable to Service Provider employees holding comparable
positions; (4) intentional destruction or theft of Service Provider property or
falsification of Service Provider documents; (5) material or repeated failure or
refusal to faithfully, diligently, and competently perform the usual and
customary duties associated with the applicable Transitioned Employee’s
position; (6) conviction of a felony or any crime involving moral turpitude; or
(7) material or repeated violation of the Service Provider Code of Business
Conduct.

 

  (k) Retiree Medical. Each Transitioned Employee shall be eligible as of his or
her Employment Effective Date to participate immediately in Service Provider’s
retiree health care plans (“Retiree Health Plans”). Service Provider will grant
credit for all years of service recognized by Allegheny for purposes of
determining eligibility and participation under the Service Provider’s Retiree
Health Plans.

 

8.3 Other Employee Matters.

 

As of the Employment Effective Date, the Transitioned Employees shall be
employees of Service Provider for all purposes. Service Provider shall be
responsible for all necessary recruiting and hiring costs associated with
employing appropriate staff. In addition, Service Provider shall be responsible
for funding and distributing benefits under the benefit plans in which
Transitioned Employees participate on or after the Transitioned Employee’s
Employment Effective Date and for paying any compensation and remitting any
income, disability, withholding and other employment taxes for such Transitioned
Employees beginning on the Employment Effective Date. Unless otherwise agreed,
Allegheny shall be responsible for funding and distributing benefits under the
Allegheny benefit plans in which Transitioned Employees participated prior to
the Employment Effective Date and for paying any compensation and remitting any
income, disability, withholding and other employment taxes for such Transitioned
Employees for the period prior to the Employment Effective Date of such
Transitioned Employee. Allegheny shall provide Service Provider with such
information in Allegheny’s possession reasonably requested by Service Provider
in order to fulfill its obligations under this Article 8.

 

8.4 Key Service Provider Personnel and Critical Affected Personnel.

 

  (a) Approval of Key Service Provider Personnel.

 

  (i) Before assigning an individual to act as one of the Key Service Provider
Personnel whether as an initial assignment or a subsequent assignment, Service
Provider shall notify Allegheny of the proposed assignment at least twenty
(20) business days prior to the planned assignment, shall introduce the
individual to appropriate Allegheny representatives, shall provide a reasonable
opportunity for Allegheny representatives to interview the individual, and shall
provide Allegheny with a resume, a plan describing the steps and education that
will be performed regarding the turnover of responsibility to the proposed
individual, and such other information about the individual as may be reasonably
requested by Allegheny. If Allegheny in good faith objects to the proposed
assignment, the Parties shall attempt to resolve Allegheny’s concerns on a
mutually agreeable basis. If the Parties have not been able to resolve
Allegheny’s concerns within five (5) business days of Allegheny communicating
its

 

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concerns, Service Provider shall not assign the individual to that position and
shall propose to Allegheny the assignment of another individual of suitable
ability and qualifications.

 

  (ii) Within sixty (60) days after the Effective Date, Allegheny will, in
consultation with Service Provider, designate up to *** to be held by Key
Service Provider Personnel for all Service Categories combined, and Critical
Affected Personnel totaling up to *** of the Transitioned Employees for all
Service Categories combined. Service Provider shall identify and obtain
Allegheny’s approval of all Service Provider Personnel constituting Key Service
Provider Personnel in connection with a Service Category prior to the
Commencement Date. The positions designated by Allegheny and the Key Service
Provider Personnel that have been selected and approved as of the Effective Date
are listed in Schedule 19.

 

  (iii) Allegheny may from time to time change the positions designated as Key
Service Provider Personnel under this Agreement with Service Provider’s approval
which shall not be unreasonably withheld.

 

  (b) Continuity of Key Service Provider Personnel. Subject to Sections 8.1(a)
and 8.1(b), Service Provider shall cause each of the Key Service Provider
Personnel to devote full time and effort to the provision of Services under this
Agreement for the period specified in Schedule 19, and if not so specified, then
for a minimum of *** from the date he or she assumes the position in question.
Service Provider shall not transfer, reassign or remove any of the Key Service
Provider Personnel (except as a result of voluntary resignation, involuntary
termination for or without cause, illness, disability, or death) or announce its
intention to do so during the specified period without Allegheny’s prior
approval, which Allegheny may withhold in its sole discretion. Allegheny shall
not unreasonably withhold its approval for Service Provider’s reassignment of
Key Service Provider Personnel in the case of unanticipated circumstances that
would create a personal hardship for such Key Service Provider Personnel absent
such reassignment. In the event of the voluntary resignation, involuntary
termination for or without cause, illness, disability, or death of one of its
Key Service Provider Personnel during or after the specified period, Service
Provider shall (i) give Allegheny as much notice as reasonably possible of such
development, and (ii) expeditiously identify and obtain Allegheny’s approval of
a suitable replacement. In addition, even after the specified period, Service
Provider shall transfer, reassign or remove one of its Key Service Provider
Personnel (except as a result of voluntary resignation, involuntary termination
for or without cause, illness, disability, or death) only after (A) giving
Allegheny prior notice of such action as soon as reasonably practicable but in
any case no later than thirty (30) business days prior notice, (B) identifying
and obtaining Allegheny’s approval of a suitable replacement as soon as
reasonably possible prior to such transfer, reassignment or removal and
(C) demonstrating to Allegheny’s reasonable satisfaction that such action will
not have an adverse impact on Service Provider’s performance of its obligations
under this Agreement. If Allegheny in good faith objects to the proposed removal
based on the criteria described in this Section, the Parties shall attempt to
resolve Allegheny’s concerns on a mutually agreeable basis. If the Parties have
not been able to resolve Allegheny’s concerns within five (5) business days of
Allegheny communicating its concerns, Service Provider shall not remove the
individual from that position. Unless otherwise agreed, Service Provider shall
not transfer, reassign or remove more than *** of the Key Service Provider
Personnel in any *** period.

 

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  (c) Continuity of Critical Affected Personnel. Service Provider shall cause
each of the Critical Affected Personnel to devote full time and effort to the
provision of Services under this Agreement during the period specified in
Schedule 5A, and if not so specified, then for a minimum of *** immediately
following his or her Employment Effective Date. Service Provider shall not
transfer, reassign or remove any of the Critical Affected Personnel (except as a
result of voluntary resignation, involuntary termination for or without cause,
illness, disability, or death) during the specified period without Allegheny’s
prior approval, which shall not be unreasonably withheld. In the event of the
voluntary resignation, involuntary termination for or without cause, illness,
disability or death of one of its Critical Affected Personnel during the
specified period, Service Provider shall (i) give Allegheny as much notice as
reasonably possible of such development, and (ii) expeditiously identify and
obtain Allegheny’s approval of a suitable replacement.

 

  (d) Retention and Succession. Service Provider shall implement and maintain a
retention strategy designed to retain Key Service Provider Personnel and
Critical Affected Personnel on the Allegheny account for the prescribed period.
Service Provider shall also maintain active succession plans for each of the Key
Service Provider Personnel positions. Service Provider shall implement various
retention strategies to retain Key Service Provider Personnel and Critical
Affected Personnel, which may include, granting stock options, awards, salary
increases, recognition events and other retention and incentive programs offered
to similarly situated Service Provider employees. Upon termination or
resignation of any Key Service Provider Personnel, Service Provider shall
provide notice to Allegheny of such separation (but shall not be required to
provide any other information as to the reason or basis for such separation) and
identify potential suitable replacements.

 

8.5 Service Provider Account Manager.

 

Service Provider shall designate a “Service Provider Account Manager” for this
Allegheny engagement who, unless otherwise agreed by Allegheny, shall maintain
his or her office at 800 Cabin Hill Drive, Greensburg, Pennsylvania 15601.
Except as otherwise agreed to by Allegheny, the Service Provider Account Manager
shall (i) be one of the Key Service Provider Personnel; (ii) be a full time
employee of Service Provider; (iii) devote his or her full time and effort to
managing the Services; (iv) not be transferred or reassigned for a minimum
period of two (2) years from the initial assignment (except as a result of
voluntary resignation, involuntary termination for or without cause, illness,
disability, or death); (v) serve as the single point of accountability for the
Services; (vi) be the single point of contact to whom all Allegheny
communications concerning this Agreement may be addressed; (vii) have authority
to act on behalf of Service Provider in all day-to-day matters pertaining to
this Agreement; and (viii) have day-to-day authority for ensuring customer
satisfaction and attainment of all Service Levels.

 

8.6 Compensation of Service Provider Account Manager and Key Service Provider
Personnel.

 

  (a) Service Provider Account Manager. At a minimum, *** of the Service
Provider Account Manager’s discretionary annual incentive compensation (and not
less than *** of the Service Provider Account Manager’s total annual
compensation) shall be based upon: (i) the level of customer satisfaction
reflected in the periodic customer satisfaction surveys; (ii) the extent to
which Service Provider has met or exceeded the Service Levels and Service
Provider’s other responsibilities and obligations under this Agreement;
(iii) Service Provider’s achievement of the objectives relating to Allegheny and
its businesses, as reasonably determined by Allegheny; and (iv) Allegheny’s
determination as to whether Service Provider has met the technical objectives
set by the Allegheny Chief Information Officer or his or her designee.

 

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  (b) Key Service Provider Personnel. At a minimum, *** of the annual incentive
compensation plus *** of all annual merit-based increases of the Service
Provider Personnel filling the Key Service Provider Personnel positions listed
on Schedule 19 shall be based upon the factors set forth in Section 8.6(a)
above.

 

  (c) Evaluation Input. Allegheny shall have a meaningful opportunity to provide
information to Service Provider with respect to Allegheny’s evaluation of the
performance of the Service Provider Account Manager and the other Key Service
Provider Personnel and such evaluation shall be considered and accorded
substantial weight by Service Provider in establishing the bonus and other
compensation of such individuals.

 

8.7 Service Provider Personnel Are Not Allegheny Employees.

 

Except as otherwise expressly set forth in this Agreement, the Parties intend to
create an independent contractor relationship and nothing in this Agreement
shall operate or be construed as making Allegheny (or the Eligible Recipients)
and Service Provider partners, joint venturers, principals, joint employers,
agents or employees of or with the other. No officer, director, employee, agent,
Affiliate, contractor or subcontractor retained by Service Provider to perform
work on Allegheny’s behalf hereunder shall be deemed to be an officer, director,
employee, agent, Affiliate, contractor or subcontractor of Allegheny or the
Eligible Recipients for any purpose. Service Provider, not Allegheny or the
Eligible Recipients, has the right, power, authority and duty to supervise and
direct the activities of the Service Provider Personnel and to compensate such
Service Provider Personnel for any work performed by them on the behalf of
Allegheny or the Eligible Recipients pursuant to this Agreement. Service
Provider, and not Allegheny or the Eligible Recipients, shall be responsible and
therefore solely liable for all acts and omissions of Service Provider
Personnel, including acts or omissions constituting negligence, gross
negligence, willful misconduct and/or fraud.

 

8.8 Replacement, Qualifications, and Retention of Service Provider Personnel.

 

  (a) Sufficiency and Suitability of Personnel. Service Provider shall assign
(or cause to be assigned) sufficient Service Provider Personnel to provide the
Services in accordance with this Agreement and such Service Provider Personnel
shall possess suitable competence, ability and qualifications and shall be
properly educated and trained for the Services they are to perform.

 

  (b) Requested Replacement. In the event that Allegheny determines lawfully and
in good faith that the continued assignment to Allegheny of any individual
Service Provider Personnel (including Key Service Provider Personnel) is not in
the best interests of Allegheny or the Eligible Recipients, then Allegheny shall
give Service Provider notice to that effect requesting that such Service
Provider Personnel be replaced. Service Provider, after conferring with
Allegheny, shall have fifteen (15) business days following Allegheny’s request
for removal of such Service Provider Personnel in which to investigate the
matters forming the basis of such request, correct any deficient performance and
provide Allegheny with assurances that such deficient performance shall not
recur (provided that, if requested to do so, Service Provider shall immediately
remove (or cause to be removed) the individual in question from all Allegheny
sites pending completion of Service Provider’s investigation and discussions
with Allegheny). If, following such

 

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fifteen (15) business day period, Allegheny is not reasonably satisfied with the
results of Service Provider’s efforts to correct the deficient performance
and/or to ensure its non-recurrence, Service Provider shall, as soon as
possible, remove and replace such Service Provider Personnel with an individual
of suitable ability and qualifications, without cost to Allegheny. Nothing in
this provision shall operate or be construed to limit Service Provider’s
responsibility for the acts or omission of the Service Provider Personnel, or be
construed as joint employment.

 

  (c) Turnover Rate and Data. Service Provider will use commercially reasonable
efforts to keep the turnover rate of personnel performing the Services to a
level comparable or better than the averages for *** performing similar
services, and in any case as necessary to comply with the applicable Service
Levels. If Allegheny determines that the turnover rate of Service Provider
Personnel on the Allegheny account is higher than that noted above and so
notifies Service Provider, Service Provider shall within ten (10) business days
(i) provide Allegheny with data concerning Service Provider’s turnover rate,
(ii) meet with Allegheny to discuss the reasons for the turnover rate, and
(iii) submit a proposal for reducing the turnover rate for Allegheny’s review
and approval. Notwithstanding any transfer or turnover of Service Provider
Personnel, Service Provider shall remain obligated to perform the Services
without degradation and in accordance with the Service Levels.

 

  (d) Restrictions on Performing Services to Competitors. Neither Service
Provider nor any Subcontractor shall, without Allegheny’s prior consent, cause
or permit any Transitioned Employee who is designated in Schedule 5A as being
subject to the restrictions of this Section 8.8(d), and for so long as such
Transitioned Employee remains employed by Service Provider or such
Subcontractor, to perform services directly or indirectly for or market Service
Provider’s services to a Direct Allegheny Competitor either while engaged in the
provision of Services or during the twelve (12)-month period immediately
following the termination of his or her involvement in the provision of such
Services.

 

  (e) Service Provider Personnel. Service Provider shall (i) comply with
applicable Laws with respect to verifying the authorization of Service Provider
Personnel to work in any country in which they are assigned to perform Services
and (ii) subject to applicable Laws, not assign to the Allegheny account any
Service Provider Personnel who (A) Service Provider reasonably believes, based
on the reasonable background checks conducted by Service Provider pursuant to
this Section 8.8(e), have been convicted of a felony, (B) Service Provider
reasonably believes are users of illegal drugs and/or are proven substance
abusers, (C) Service Provider knows or reasonably should know, based on the
reasonable background checks conducted by Service Provider pursuant to this
Section 8.8(e), do not have a good credit history or (D) are otherwise
disqualified from performing their assigned work under applicable Laws. To the
extent allowed by applicable Laws, and except with respect to the Transitioned
Employees, Service Provider shall perform or have performed a reasonable
background check, drug test and credit check on all Service Provider Personnel
assigned to work hereunder; provided that, if a satisfactory background check
was completed in connection with the hiring of such Service Provider Personnel
by Service Provider, it need not be repeated. Service Provider Personnel who do
not meet criteria acceptable to Allegheny shall not be assigned to work
hereunder.

 

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8.9 Training/Career Opportunities.

 

Service Provider shall offer training, skills development and career growth
opportunities to Transitioned Employees that are at least as favorable as those
offered generally to its similarly situated employees.

 

8.10 Conduct of Service Provider Personnel.

 

  (a) Conduct and Compliance. While at Allegheny Sites or Allegheny Facilities,
Service Provider Personnel shall (i) comply with the Allegheny Rules and other
rules and regulations regarding personal and professional conduct generally
applicable to personnel at such Allegheny Sites (and communicated to Service
Provider in writing or by any other means generally used by Allegheny to
disseminate such information to its employees or contractors), (ii) comply with
reasonable requests of Allegheny or the Eligible Recipients personnel pertaining
to personal and professional conduct, (iii) attend workplace training offered by
Allegheny and/or the Eligible Recipients at Allegheny’s request, and
(iv) otherwise conduct themselves in a businesslike and professional manner.

 

  (b) Identification of Service Provider Personnel. All Service Provider
Personnel shall clearly identify themselves as Service Provider Personnel and
not as employees of Allegheny and/or the Eligible Recipients. This shall include
any and all communications, whether oral, written or electronic. Each Service
Provider Personnel shall wear a badge indicating that he or she is employed by
Service Provider or its Subcontractors when at an Allegheny Site or Facility.
Service Provider Personnel will be required to display an Allegheny badge while
at an Allegheny Facility or Allegheny Site, such badge will be clearly marked
with the words “Contractor,” on the front of the badge in an offsetting color to
the badge background, to indicate that the Service Provider Personnel are not an
employee of Allegheny or an Eligible Recipient.

 

  (c) Restriction on Marketing Activity. Except for marketing representatives
designated in writing by Service Provider to Allegheny, none of the Service
Provider Personnel shall conduct any marketing activities to Allegheny or
Eligible Recipient employees at Allegheny Facilities or sites (including
marketing of any New Services), other than, subject to Section 13.4, reporting
potential marketing opportunities to Service Provider’s designated marketing
representatives.

 

8.11 Substance Abuse.

 

  (a) Employee Removal. To the extent permitted by applicable Laws, Service
Provider shall immediately remove (or cause to be removed) any Service Provider
Personnel who is known to be or reasonably suspected of engaging in substance
abuse while at an Allegheny Facility or Site, in an Allegheny vehicle or while
performing Services. In the case of reasonable suspicion, such removal shall be
pending completion of the applicable investigation. Substance abuse includes the
sale, attempted sale, possession or use of illegal drugs, drug paraphernalia,
or, to the extent not permitted on at Allegheny Facilities or Allegheny Sites,
alcohol, or the misuse of prescription or non-prescription drugs.

 

  (b) Substance Abuse Policy. Service Provider represents, warrants and
covenants that it has and will maintain substance abuse policies, in each case
in conformance with applicable Laws, and Service Provider Personnel will be
subject to such policies. Service Provider represents, warrants and covenants
that it shall require its Subcontractors who have

 

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become Subcontractors after the Effective Date and Affiliates providing Services
to have and maintain such policy in conformance with applicable Law and to
adhere to this provision.

 

8.12 Union Agreements and WARN Act.

 

  (a) Notice by Service Provider. Service Provider shall provide Allegheny not
less than ninety (90) days’ notice of the expiration of any collective
bargaining agreement with unionized Service Provider Personnel if the expiration
of such agreement or any resulting labor dispute could potentially interfere
with or disrupt the business or operations of Allegheny or an Eligible Recipient
or impact Service Provider’s ability to timely perform its duties and
obligations under this Agreement.

 

  (b) WARN Act Commitment. Service Provider shall not, for a period of sixty
(60) days after the Employment Effective Date, cause any of the Transitioned
Employees to suffer “employment loss” as that term is construed under the Worker
Adjustment and Retraining Notification Act (“WARN Act”), if such employment loss
could reasonably be anticipated to create any liability for Allegheny, the
Eligible Recipients, or its or their Affiliates, under the WARN Act with respect
to any such Transitioned Employees, unless Service Provider delivers notices
under the WARN Act in a manner and at a time such that Allegheny, the Eligible
Recipients, or its or their Affiliates bear no liability with respect thereto.

 

8.13 Directed Allegheny Employees.

 

  (a) Directed Allegheny Employees. Allegheny shall make available to Service
Provider for use in Service Provider’s performance of Services the employees of
Allegheny listed on Schedule 31 (so long as they remain employees with Allegheny
or an Eligible Recipient and are not unavailable due to reasons beyond
Allegheny’s reasonable control) for the period commencing on the Commencement
Date and extending through the date specified for each such employee on Schedule
31 (such period with respect to each such employee, the “Directed Employee
Period” and each such employee during such respective period, a “Directed
Allegheny Employee”). *** Service Provider shall provide direction to Allegheny
management personnel who will instruct Directed Allegheny Employees to perform
activities in connection with Service Provider’s performance of the Services in
a manner consistent with the technical direction provided by Service Provider.
Service Provider shall not have authority to hire, fire, impose discipline or
otherwise to take personnel related actions with respect to the Directed
Allegheny Employees. The Parties agree that no employer and employee
relationship is to be created between Service Provider and the Directed
Allegheny Employees, and further that no employee benefits available to
employees of Service Provider shall accrue to the Directed Allegheny Employees.
Service Provider will at all times exercise its right to provide Allegheny
management with technical direction regarding the activities of the Directed
Allegheny Employee in accordance with Allegheny’s policies, and in consultation,
as necessary, with the Allegheny Contract Executive or his/her designee. In
respect of the Directed Allegheny Employees, Service Provider shall not be
responsible for implementing and administering Allegheny human resources
policies, practices or procedures, including without limitation those addressing
hiring, compensation, promotions, transfers, terminations, employment related
complaints, or general career development and performance management. Deficient
performance by any Directed Allegheny Employee while performing a function under
Service Provider’s direction shall not constitute a failure by Allegheny to
perform any of its obligations under this Agreement, and shall not

 

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excuse Service Provider from any of its obligations under this Agreement. Other
terms applicable to the Directed Allegheny Employees shall otherwise be as
provided in Schedule 31.

 

  (b) ***.

 

9. SUPPLIER RESPONSIBILITIES

 

9.1 Policy and Procedures Manual.

 

  (a) Delivery and Contents. As part of the Services, and at no additional cost
to Allegheny, Service Provider shall deliver to Allegheny for its review,
comment and approval (i) an outline of the topics, including the topics in
Schedule 6B, to be addressed in a management policy and procedures manual for
each Service Category within thirty (30) days after the Commencement Date,
(ii) a final draft of such policy and procedures manual within ninety (90) days
after the Commencement Date (the “Policy and Procedures Manual”), and (iii) an
update of the Policy and Procedures Manual within 180 days after the
Commencement Date to incorporate the changes specific to the mode of operations
after the changes contemplated by the IT Transformation Plan are in effect. The
delivery requirements described are in addition to the more detailed delivery
requirements specified in Schedule 6B. At a minimum, the Policy and Procedures
Manual shall include the following:

 

  (i) a detailed description of the Services to the extent not described in
Schedule 2 and the manner in which each will be performed by Service Provider,
including (A) the Equipment, Software, and Systems to be procured, operated,
supported or used; (B) documentation (including operations manuals, user guides,
specifications, policies/procedures and disaster recovery plans) providing
further details regarding the Services; (C) the specific activities to be
undertaken by Service Provider in connection with each Service, including, where
appropriate, the direction, supervision, monitoring, staffing, reporting,
planning and oversight activities to be performed by Service Provider under this
Agreement; (D) the checkpoint reviews, testing, acceptance, controls and other
procedures to be implemented and used to assure service quality; and (E) the
Allegheny-approved processes, methodologies and controls to be implemented and
used by Service Provider to support Allegheny’s compliance with GAAP, where
applicable, the Sarbanes-Oxley Act of 2002, and any and all applicable Laws,
consistent with Allegheny’s interpretations and control objectives (which will
take into consideration information provided by Service Provider);

 

  (ii) the procedures for Allegheny/Service Provider interaction and
communication, including (A) call lists; (B) procedures for and limits on direct
communication by Service Provider with Allegheny Personnel (excluding Directed
Allegheny Employees); (C) problem management and escalation procedures;
(D) priority and project procedures; (E) Acceptance testing and procedures;
(F) Quality Assurance procedures and checkpoint reviews; (G) the Project
formation process and implementation methodology; and (H) annual and quarterly
financial objectives, budgets, and performance goals; and

 

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  (iii) practices and procedures addressing such other issues and matters as
Allegheny shall reasonably require relating to the Services.

 

To the extent not in direct conflict with a specific requirement in this
Agreement and the Schedules, Service Provider shall incorporate Allegheny’s
then-current policies and procedures in the Policy and Procedures Manual to the
extent it is directed to do so by Allegheny; ***.

 

  (b) Revision and Maintenance. Service Provider shall incorporate any comments
or suggestions of Allegheny into the Policy and Procedures Manual and shall
deliver a final revised version to Allegheny for its approval within fifteen
(15) days of its receipt of such comments and suggestions. The Policy and
Procedures Manual will be delivered and maintained by Service Provider in hard
copy and electronic formats and will be accessible electronically to Allegheny
management and Authorized Users in a manner consistent with Allegheny’s security
policies.

 

  (c) Compliance. Service Provider shall perform the Services in accordance with
Allegheny’s requirements (which will take into consideration information
provided by Service Provider) as to GAAP and the Sarbanes-Oxley Act of 2002, and
any and all applicable Laws and Allegheny’s then-current policies and procedures
until the Policy and Procedures Manual is finalized and agreed upon by the
Parties. Thereafter, Service Provider shall perform the Services in accordance
with the Policy and Procedures Manual. In the event of a conflict between the
provisions of this Agreement and the Policy and Procedures Manual, the
provisions of this Agreement shall control unless the Parties expressly agree
otherwise and such agreement is set forth in the relevant portion of the Policy
and Procedures Manual.

 

  (d) Modification and Updating. Service Provider shall promptly modify and
update the Policy and Procedures Manual monthly to reflect changes in the
operations or procedures described therein and to comply with Allegheny
Standards, the Technology and Business Process Plan and Strategic Plans as
described in Section 9.5. Service Provider shall provide the proposed changes in
the manual to Allegheny for review, comment and approval. To the extent such
change could (i) increase Allegheny’s total costs of receiving the Services,
(ii) require material changes to the facilities, systems, software or equipment
of Allegheny and/or the Eligible Recipients, (iii) have an adverse impact on the
functionality, interoperability, performance, accuracy, speed, responsiveness,
quality or resource efficiency of the Services, or (iv) violate or be
inconsistent with the Allegheny Standards, the Technology and Business Process
Plan or Strategic Plans, Service Provider shall not implement such change
without first obtaining Allegheny’s approval, which Allegheny may withhold in
its sole discretion. For the avoidance of doubt, Allegheny will not reject any
modification or update to the Policy and Procedures Manual that is necessary to
make the Policy and Procedures Manual consistent with the Allegheny Standards,
the Technology and Business Process Plan or Strategic Plans, as each have been
approved by Allegheny.

 

  (e) Annual Review. The Parties shall meet to perform a formal annual review of
each Policy and Procedures Manual on each anniversary of the Commencement Date.

 

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9.2 Reports.

 

  (a) Reports. Service Provider shall provide Allegheny with reports pertaining
to the performance of the Services and Service Provider’s other obligations
under this Agreement sufficient to permit Allegheny to monitor and manage
Service Provider’s performance (“Reports”). The Reports to be provided by
Service Provider at no additional charge shall include those described in
Schedule 13 at the frequencies provided therein, as well as those provided by
Allegheny in connection with a Service Category prior to the Commencement Date.
All Reports listed on Schedule 13 shall be provided to Allegheny as part of the
Services and at no additional charge to Allegheny. In addition, from time to
time, Allegheny may identify additional Reports to be generated by Service
Provider and delivered to Allegheny on an ad hoc or periodic basis. If Service
Provider can generate such additional reports using Service Provider Personnel,
Systems and Software then-assigned to provide the Services without degradation
of Services or Service Levels, Service Provider will do so at no additional
charge. The Reports described in Schedule 13 and, to the extent reasonably
possible, all other Reports provided under this Section 9.2, shall be delivered
to Allegheny (i) by secure on-line connection in an electronic format capable of
being accessed by Microsoft Office components and downloadable by Allegheny,
with the information contained therein capable of being displayed graphically
and accessible from a web browser, and (ii) in traditional printed form.

 

  (b) Back-Up Documentation. As part of the Services, Service Provider shall
provide Allegheny with such documentation and other information available to
Service Provider as may be reasonably requested by Allegheny from time to time
in order to verify the accuracy of the Reports provided by Service Provider. In
addition, Service Provider shall provide Allegheny with all documentation and
other information reasonably requested by Allegheny from time to time to verify
that Service Provider’s performance of the Services is in compliance with the
Service Levels and this Agreement.

 

  (c) Correction of Errors. As part of the Services and at no additional charge
to Allegheny, Service Provider shall promptly correct any errors or inaccuracies
in or with respect to the Reports, or the information or data contained in such
Reports, caused by Service Provider or its agents, Subcontractors, or Managed
Third Parties.

 

9.3 Governance Model; Meetings.

 

  (a) Governance Model. The Parties shall manage their relationship under this
Agreement using the governance model in Schedule 6. The Parties shall use
commercially reasonable efforts to complete and agree upon Schedule 6 within
thirty (30) days after the Effective Date.

 

  (b) Meetings. During the Term, representatives of the Parties shall meet
periodically or as requested by Allegheny to discuss matters arising under this
Agreement, including any such meetings provided for under the Transition Plan.
Each Party shall bear its own costs in connection with the attendance and
participation of such Party’s representatives in such meetings. Such meetings
shall include, at a minimum, the following:

 

  (i) a periodic meeting at least monthly to review performance and monthly
reports, planned or anticipated activities and changes that might impact
performance, and such other matters as appropriate;

 

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  (ii) a quarterly management meeting to review the monthly reports, review
Service Provider’s overall performance under the Agreement, review progress on
the resolution of issues, provide a strategic outlook for Allegheny’s and the
Eligible Recipients’ information systems requirements, and discuss such other
matters as appropriate;

 

  (iii) a meeting associated with the transition and ongoing provision of the
Services, quarterly during the first year of the Term and semi-annually
thereafter;

 

  (iv) a quarterly meeting of senior management of both Parties to review
relevant contract and performance issues;

 

  (v) a periodic meeting of management of both Parties in which Service Provider
will (A) explain how the Systems that Service Provider operates in connection
with the provision of the Services work and are operated, (B) explain how the
Services are provided at a management level and at such additional level of
detail as Allegheny may reasonably request, (C) provide such training and
documentation as Allegheny may require for Allegheny to be able to direct the
operation of the Services; and

 

  (vi) such other meetings of Allegheny and Service Provider Personnel,
including senior management of Service Provider, as Allegheny may reasonably
request.

 

  (c) Agenda and Minutes. For each such meeting, upon Allegheny request, Service
Provider shall prepare and distribute an agenda, which will incorporate the
topics designated by Allegheny. Service Provider shall distribute such agenda in
advance of each meeting so that the meeting participants may prepare for the
meeting. In addition, upon Allegheny request, Service Provider shall record and
promptly distribute minutes for every meeting for review and approval by
Allegheny.

 

  (d) Authorized User and Eligible Recipient Meetings. Service Provider shall
notify the Allegheny Contract Executive in advance of scheduled meetings with
Authorized Users or Eligible Recipients (other than meetings pertaining to the
provision of specific Services on a day-to-day basis) and shall invite the
Allegheny Contract Executive to attend such meetings or to designate a
representative to do so.

 

9.4 Quality Assurance and Internal Controls.

 

  (a) Service Provider shall develop and implement Quality Assurance and
internal control processes and procedures, including implementing tools and
methodologies, to ensure that the Services are performed in an accurate and
timely manner, in accordance with(i) the Service Levels and other requirements
of this Agreement, (ii)***(iii) the Laws applicable to Allegheny and the
Eligible Recipients ***and (iv) industry and sound utility practice standards
applicable to Allegheny and the Eligible Recipients and the performance of the
Services. Such processes, procedures and controls shall include verification,
checkpoint reviews, testing, acceptance, and other procedures for Allegheny to
assure the quality and timeliness of Service Provider’s performance. Without
limiting the generality of the foregoing, Service Provider will:

 

  (i) Maintain a strong control environment in day-to-day operations, to assure
that the following fundamental control objectives are met: (1) operational
information is valid, complete and accurate; (2) operations are performed
efficiently and achieve effective results, consistent with the requirements of
this Agreement; (3) assets are safeguarded; and (4) actions and decisions of the
organization are in compliance with Laws;

 

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  (ii) Build the following basic control activities into work processes:
(1) accountability clearly defined and understood; (2) access properly
controlled; (3) adequate supervision; (4) policies, procedures, and
responsibilities documented; (5) adequate training and education to Service
Provider Personnel (6) adequate separation of duties; and (7) recorded assets
compared with existing assets;

 

  (iii) Develop and execute a process to ensure periodic control
self-assessments are performed with respect to all Services;

 

  (iv) Maintain an internal audit function to sufficiently monitor the processes
and Systems used to provide the Services (i.e., perform audits, track control
measures, communicate status to management, drive corrective action, etc.);

 

  (v) Conduct investigations of suspected fraudulent activities within Service
Provider’s organization that impact or could impact Allegheny or the Eligible
Recipients. Service Provider shall promptly notify Allegheny of any such
suspected fraudulent activity and the results of any such investigation as they
relate to Allegheny or the Eligible Recipients. At Service Provider’s request,
Allegheny shall provide reasonable assistance to Service Provider in connection
with any such investigation; and

 

  (vi) Comply with the Allegheny and the FERC Code of Conduct Rules.

 

  (b) Service Provider shall submit such processes, procedures and controls to
Allegheny for its review, comment and approval within forty-five (45) days after
the Commencement Date and shall use commercially reasonable efforts to finalize
such processes, procedures and controls and obtain Allegheny’s final approval
within ninety (90) days after the Commencement Date. Upon Allegheny’s approval,
such processes and procedures shall be included in the Policy and Procedures
Manual. Prior to the approval of such processes and procedures by Allegheny,
Service Provider shall adhere strictly to Allegheny’s then current policies
procedures, and controls. No failure or inability of the quality assurance
procedures to disclose any errors or problems with the Services shall excuse
Service Provider’s failure to comply with the Service Levels and other terms of
this Agreement.

 

9.5 Processes, Procedures, Architecture, Standards and Planning.

 

  (a) Service Provider Support. As requested by Allegheny, Service Provider
shall assist Allegheny on an on-going basis in defining (A) information
technology, procurement, and/or inventory management and other standards,
policies, practices, processes, procedures and controls to be adhered to and
enforced by Service Provider in the performance of the Services and (B) the
associated IT technologies architectures, standards, products and systems to be
provided, operated, managed, supported and/or used by Service Provider in
connection therewith (collectively, the “Allegheny Standards”).

 

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Service Provider also shall assist Allegheny on an annual basis in preparing
Strategic Plans and short-term implementation plans. The assistance to be
provided by Service Provider shall include: (i) active participation with
Allegheny representatives on permanent and ad hoc committees and working groups
addressing such issues; (ii) assessments of the then-current Allegheny Standards
at a level of detail sufficient to permit Allegheny to make informed business
decisions; (iii) analyses of the appropriate direction for such Allegheny
Standards in light of business priorities, business strategies, competitive
market forces, and changes in technology; (iv) the provision of information to
Allegheny regarding Service Provider’s technology, business processes and
telecommunications strategies for its own business; and (v) recommendations
regarding standards, processes, procedures and controls and associated
technology architectures, standards, products and systems. With respect to each
recommendation, Service Provider shall provide the following at a level of
detail sufficient to permit Allegheny to make an informed business decision:
(1) the projected cost to Allegheny and the Eligible Recipients and cost/benefit
analyses; (2) the changes, if any, in the personnel and other resources Service
Provider, Allegheny and/or the Eligible Recipients will require to operate and
support the changed environment; (3) the resulting impact on the total costs of
Allegheny and the Eligible Recipients; (4) the expected performance, quality,
responsiveness, efficiency, reliability, security risks and other service
levels; and (5) general plans and projected time schedules for development and
implementation. Any assistance provided by Service Provider under this
Section 9.5(a), (d) or (e) shall be at no additional charge beyond the Charges
specified in Schedule 4 for the Services, ***.

 

  (b) Service Provider Familiarity with Allegheny Standards. Service Provider
will be informed as to the Allegheny Standards as of the Commencement Date to
the extent necessary for Service Provider to perform the Services in compliance
with the requirements of this Agreement, and will otherwise be fully informed as
to the Allegheny Standards applicable to the Services within sixty (60) days
following the Effective Date, in each case through the written materials
provided by Allegheny, through Service Provider’s due diligence and through
Service Provider’s hiring of the Transitioned Employees. Service Provider shall
be responsible, consistent with the preceding sentence, for documenting the
Allegheny Standards in the applicable Policy and Procedures Manual in accordance
with Section 9.1. Additions, deletions or modifications to the Allegheny
Standards shall be communicated in writing by Allegheny to Service Provider.

 

  (c) Allegheny Authority and Service Provider Compliance. Allegheny shall have
final authority to promulgate Allegheny Standards and Strategic Plans and to
modify or grant waivers from such Allegheny Standards and Strategic Plans.
Service Provider shall (i) comply with and implement the Allegheny Standards and
Strategic Plans in providing the Services, (ii) work with Allegheny to enforce
the Allegheny Standards and Strategic Plans, (iii) modify the Services as and to
the extent necessary and to a schedule to conform to such Allegheny Standards
and Strategic Plans, *** and (iv) obtain Allegheny’s prior written approval for
any deviations from such Allegheny Standards and Strategic Plans. ***.

 

  (d) Financial, Forecasting and Budgeting Support. To support Allegheny’s
forecasting and budgeting processes, Service Provider shall provide the
following processes information regarding the costs to be incurred by Allegheny
and/or the Eligible Recipients in connection with the Services and the
cost/benefit to Allegheny and/or the Eligible Recipients associated therewith:
(i) actual and forecasted utilization of Resource Units; (ii) actual and
forecasted changes in the total cost or resource utilization of Allegheny and
the

 

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Eligible Recipients associated with changes to the environment; and
(iii) opportunities to modify or improve the Services, to reduce the Charges,
Pass-Through Expenses or retained expenses incurred by Allegheny. Such
information shall be provided at Allegheny’s request and in accordance with the
schedule established by Allegheny.

 

  (e) Technology and Business Process Plan. Service Provider shall develop and
implement a technology and business process plan that is consistent with the
Allegheny Standards and Strategic Plan, and (where applicable) the
Transformation Plan, and that shows how Service Provider will provide the
Services to enable Allegheny to achieve the Strategic Plan objectives and to
implement and support Allegheny’s business, information technology, procurement,
and/or inventory management objectives and strategies (“Technology and Business
Process Plan”). The development of the Technology and Business Process Plan will
be an iterative process that Service Provider shall carry out in consultation
with Allegheny. The timetable for finalization of the Technology and Business
Process Plan shall be set each year having regard to the timetable for the
Strategic Plan.

 

  (i) Process. The process for developing and approving the Technology and
Business Process Plan shall be as follows. Service Provider shall provide a
draft Technology and Business Process Plan each year that is consistent with the
Allegheny Standards and Strategic Plan, and (where applicable) the
Transformation Plan, and that includes multi-year implementation plans to
achieve multi-year objectives. Allegheny shall review the draft Technology and
Business Process Plan and provide requested amendments. Service Provider shall
incorporate any such amendments, unless it reasonably believes that any
requested amendment would not assist Allegheny to achieve its objectives and
strategies. *** Allegheny and Service Provider shall escalate any disagreements
about requested amendments to the draft Technology and Business Process Plan in
accordance with the dispute resolution procedure in Article 19. Following
approval by Allegheny, the draft Technology and Business Process Plan will
replace the previous plan. Approval of the Technology and Business Process Plan
by Allegheny shall not relieve Service Provider of any obligation under this
Agreement in relation to its provision of the Services.

 

  (ii) Contents. In the Technology and Business Process Plan, Service Provider
shall, among other things, include plans for: (A) refreshing Equipment and
Software (consistent with the refresh cycles defined in defined in this
Agreement or its Schedules); (B) adopting new technologies and business
processes as part of the Technology and Business Process Evolution of the
Services, as defined in this Agreement; and (C) maintaining flexibility as
described in Section 9.17. In the Technology and Business Process Plan, Service
Provider shall also present implementation plans for the achievement of the
Strategic Plan and the Allegheny Standards.

 

  (iii) Compliance and Reporting. Service Provider shall comply with the
Technology and Business Process Plan at all times, unless Allegheny agrees to
depart from the Technology and Business Process Plan. Any such agreement to
depart from the Technology and Business Process Plan from the date on which it
is signed by Allegheny will not relieve Service Provider of its responsibilities
under the previous plan prior to the date of such agreement. ***.

 

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9.6 Change Control.

 

  (a) Compliance with Change Control Procedures. In making any change in the
information technology, application design and maintenance, procurement, and/or
inventory management or other standards, processes, procedures and controls or
associated IT technologies architectures, standards, products, Software,
Equipment, Systems, Services or Materials provided, operated, managed, supported
or used in connection with the Services, Service Provider shall comply with the
change control procedures specified in the Policy and Procedures Manual (“Change
Control Procedures”). The Policy and Procedures Manual shall contain a procedure
that allows Allegheny to exercise the approval rights in this Section and
complies with the following requirements:

 

  (i) Impact Assessment. If Service Provider desires to make any change,
upgrade, replacement or addition that may have a material adverse impact or
require material changes as described in Section 9.6(c) or materially increase
the risk of Service Provider not being able to provide the Services in
accordance with this Agreement or violate or be inconsistent with Allegheny
Standards or Strategic Plans, then Service Provider shall prepare a written risk
assessment and mitigation plan: (1) describing in detail the nature and extent
of such adverse impact or risk; (2) describing any benefits, savings or risks to
Allegheny or the Eligible Recipients associated with such change; and
(3) proposing strategies to mitigate any adverse risks or impacts associated
with such change and, after consultation and agreement with Allegheny, implement
the plan.

 

  (ii) Testing. Each time that Service Provider makes a material change (i.e.,
more than routine maintenance and like-for-like changes in the environment) to
the Software, Equipment, Systems, Services or Materials Service Provider shall
perform testing at a reasonable and mutually agreed level of detail to ensure
the change will not have an adverse impact on the costs, business, or
environment of Allegheny or an Eligible Recipient or on the functionality
interoperability, performance, accuracy, speed, legality, responsiveness,
quality or resource efficiency of, the Services, including user acceptance
testing.

 

  (iii) Prior to making any change or using any new (e.g., not tested in or for
the Allegheny environment) Software, Equipment or System to provide the
Services, Service Provider shall have verified by appropriate testing that the
change or item has been properly installed, is operating in accordance with its
specifications, is performing its intended functions in a reliable manner and is
compatible with and capable of operating as part of the Allegheny environment.
This obligation shall be in addition to any unit testing done by Service
Provider as part of routine deployment or installation of Software or Equipment.

 

  (b) Financial Responsibility For Changes. Unless otherwise set forth in this
Agreement, including specified in Schedule 2 or 4B, or approved in accordance
with Section 9.6(c) or otherwise, Service Provider shall bear all charges, fees
and costs associated with any change desired by Service Provider, including all
charges, fees and costs associated with (i) the design, installation,
implementation, testing and rollout of such change, (ii) any modification or
enhancement to, or substitution for, any impacted business process or associated
Software, Equipment, System, Services or Materials, (iii) any increase in the

 

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cost to Allegheny or the Eligible Recipients of operating, maintaining or
supporting any impacted business process or associated Software, Equipment,
System, Services or Materials, and (iv) subject to Section 9.6(h), any increase
in Resource Unit usage resulting from such change.

 

  (c) Allegheny Approval – Cost, Adverse Impact. Service Provider shall make no
change which will (i) increase Allegheny’s total cost of receiving the Services,
(ii) require material changes to, or have an adverse impact on, Allegheny’s or
an Eligible Recipient’s business, operations, facilities, business processes,
systems, software, utilities, tools or equipment (including those provided,
managed, operated, supported and/or used on their behalf by Allegheny Third
Party Contractors), (iii) require Allegheny or the Eligible Recipients to
install, at their expense, a new version, release, Upgrade of, or replacement
for, any Software or Equipment or to modify any Software or Equipment, (iv) have
an adverse impact on the functionality, interoperability, performance, accuracy,
speed, responsiveness, quality or resource efficiency of the Services, (v) have
an adverse impact on any Applications run by Allegheny or the Eligible
Recipients, (vi) have an adverse impact on Service Provider’s ability to
adequately deliver the Services, (vii) have an adverse impact on the cost,
either actual or planned, to Allegheny of terminating all or any part of the
Services or exercising its right to in-source or use third parties, (viii) have
an adverse impact on Allegheny’s or an Eligible Recipient’s environment
(including its flexibility to deal with future changes, interoperability and its
stability), (ix) introduce new technology to (A) Allegheny’s or an Eligible
Recipient’s environment or business or (B) Service Provider’s environment, to
the extent that such introduction has or may have an adverse impact on
Allegheny’s or an Eligible Recipient’s environment, (x) have an adverse impact
on the functionality, interoperability, performance, accuracy, speed,
responsiveness, quality, cost or resource efficiency of Allegheny’s Retained
Systems and Business Processes, or (xi) violate or be inconsistent with
Allegheny Standards or Strategic Plans as specified in Section 9.5, without
first obtaining Allegheny’s approval, which approval Allegheny may withhold in
its sole discretion. If Service Provider desires to make such a change, it shall
provide to Allegheny a written proposal describing in detail the extent to which
the desired change may affect the functionality, performance, price or resource
efficiency of the Services and any benefits, savings or risks to Allegheny or
the Eligible Recipients associated with such change.

 

  (d) Information for Exercise of Strategic Authority. In order to facilitate
Allegheny’s strategic control pursuant to Section 9.5, Service Provider will
provide Allegheny with such information as Allegheny shall reasonably require
prior to making any proposed change. Such information shall include, at a
minimum, a description of the proposed rights of Allegheny and the Eligible
Recipients with respect to ownership and licensing (including any related
restrictions) relating to such Software, Equipment or other technology or
Materials. Such description shall include the license fees, maintenance fees
and/or purchase or lease terms (if any) for use of such Software, Equipment or
other technology or Materials by Allegheny, the Eligible Recipients and their
respective third party contractors upon termination or expiration of the Term
and any limitations or conditions on such use.

 

  (e) Temporary Emergency Changes. Notwithstanding the foregoing, Service
Provider may make temporary changes required by an emergency if it has been
unable to contact the Allegheny Contract Executive or his or her designee to
obtain approval after making reasonable efforts. Service Provider shall document
and report such emergency changes to Allegheny not later than the next business
day after the change is made. Such changes shall not be implemented on a
permanent basis unless and until approved by Allegheny.

 

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  (f) Implementation of changes. Service Provider will schedule and implement
all changes so as not to (i) disrupt or adversely impact the business or
operations of Allegheny or the Eligible Recipients, (ii) degrade the Services
then being received by them, or (iii) interfere with their ability to obtain the
full benefit of the Services.

 

  (g) Planning and Tracking. On a monthly basis, Service Provider will prepare a
rolling quarterly “look ahead” schedule for ongoing and planned changes for the
next three (3) months. The status of changes will be monitored and tracked by
Service Provider against the applicable schedule.

 

  (h) Comparisons. For any change, Service Provider shall, upon Allegheny’s
request, perform a comparison at a reasonable and mutually agreed level of
detail, between the amount of Resource Units required to perform a
representative sample of the Services being performed for Allegheny and the
Eligible Recipients immediately prior to the change and immediately after the
change. Allegheny shall not be required to pay for increased Resource Unit usage
due to a change except to the extent that such change is requested or approved
by Allegheny after notice from Service Provider of such increased Resource Unit
usage.

 

9.7 Software Currency.

 

  (a) Currency of Software. Subject to and in accordance with Sections 6.4, 9.5,
9.6, 9.7(c) and Schedule 4, Service Provider will maintain reasonable currency,
in compliance at least with the currency requirements set forth in Schedule 2.2,
for Software for which it is financially responsible under this Agreement and to
provide maintenance and support for new releases and versions of Software for
which it is operationally responsible. At Allegheny’s direction, Service
Provider shall operate multiple releases or versions of Software to the extent
multiple versions are supported by Allegheny prior to the Commencement Date or
as set forth in Schedule 2.2, without any increase in the Monthly Base Charges.
***. In addition, unless otherwise directed by Allegheny, (A) Service Provider
shall keep Software within release levels supported by the appropriate third
party vendor to ensure compatibility with other Software or Equipment components
of the Systems and of Allegheny’s Retained Systems and Business Processes,
unless otherwise specified in Schedule 4F, and (B) Service Provider shall
install Minor Releases promptly or, if earlier, as requested by Allegheny as
such Minor Releases become commercially available. ***.

 

  (b) Evaluation and Testing. Prior to installing a new Major Release or Minor
Release, Service Provider shall evaluate and test such Release to verify that it
will perform in accordance with this Agreement and the Allegheny Standards and
Strategic Plans and that it will not (i) increase Allegheny’s total cost of
receiving the Services, (ii) require material changes to Allegheny’s or the
Eligible Recipient’s business, facilities, systems, software or equipment,
(iii) adversely impact the functionality, interoperability, performance,
accuracy, speed, responsiveness, quality or resource efficiency of the Services,
or (iv) violate or be inconsistent with Allegheny Standards or Strategic Plans
or applicable Laws. The evaluation and testing performed by Service Provider
shall be at least consistent with the reasonable and accepted industry norms
applicable to the performance of such Services and shall be at least as rigorous
and comprehensive as the evaluation and testing usually performed by highly
qualified service providers under such circumstances.

 

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  (c) Approval by Allegheny. Notwithstanding Section 9.7(a), Service Provider
shall confer with Allegheny prior to installing any Major Release or Minor
Release, shall provide Allegheny with the results of its testing and evaluation
of such Release and a detailed implementation plan and shall not install such
Release if directed not to do so by Allegheny; provided that Service Provider
will be provided relief from meeting any affected Service Levels due to
Allegheny’s decision not to install such Release subject to Section 9.7(d).
Where specified by Allegheny, Service Provider shall not install new Software
releases or make other Software changes until Allegheny has completed and
provided formal signoff on successful user acceptance testing. Service Provider
shall not install new Software releases or make other Software changes if doing
so would require Allegheny or the Eligible Recipients to install new releases
of, replace, or make other changes to Applications Software or other Software
for which Allegheny is financially responsible unless Allegheny consents to such
change. Service Provider shall install, operate and support multiple versions of
the same Software ***.

 

  (d) Allegheny Refresh Delay or New Software***.

 

9.8 Network Configuration Data.

 

Service Provider (i) shall provide Allegheny (and its third party vendors) with
network configuration data pertinent to Allegheny’s and/or the Eligible
Recipients’ use of the network supported by Service Provider; and (ii) hereby
grants to Allegheny (and its third party vendors) the unlimited right to use
such data in connection with businesses of Allegheny and the Eligible
Recipients.

 

9.9 Specialized Skills and Resources; Disagreements Regarding New Services.

 

  (a) Upon Allegheny’s request, Service Provider shall provide Allegheny and the
Eligible Recipients with prompt access to Service Provider’s specialized
services, personnel and resources pertaining to information technology,
procurement, and/or inventory management standards, processes and procedures and
associated software, equipment and systems on an expedited basis taking into
account the relevant circumstances (the “Specialized Services”). The Parties
acknowledge that the provision of such Specialized Services may, in some cases,
constitute New Services for which Service Provider is entitled to additional
compensation, but in no event shall Service Provider be entitled to any
additional compensation for New Services under this subsection unless the
Allegheny Contract Executive and Service Provider Account Manager, or their
authorized designee, expressly agree upon such additional compensation or
Service Provider’s entitlement to additional compensation is established through
the dispute resolution process.

 

  (b) If Allegheny authorizes Service Provider to proceed with any work *** but
the Parties disagree as to whether such work constitutes New Services, Service
Provider shall proceed with such work and the disagreement shall be submitted to
dispute resolution pursuant to Article 19. At Service Provider’s request,
Allegheny shall immediately escalate the dispute arising from this
Section 9.9(b) to Allegheny’s Vice President and Controller in advance of
Service Provider being required to proceed with the Services in dispute.

 

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9.10 Audit Rights.

 

  (a) Contract Records. Service Provider shall, and shall cause its
Subcontractors and suppliers to, maintain complete and accurate records of and
supporting documentation for all Charges, all Allegheny Data and all
transactions, authorizations, changes, implementations, soft document accesses,
reports, filings, returns, analyses, procedures, controls, records, data or
information created, generated, collected, processed or stored by Service
Provider pertinent or related to the Services (“Contract Records”). Service
Provider shall maintain such Contract Records in accordance with applicable
Laws. Service Provider shall retain Contract Records in accordance with
Allegheny’s record retention policy, as modified from time to time*** in
writing, during the Term and any Termination Assistance Services period and
thereafter through the end of the second full calendar year after the calendar
year in which Service Provider stopped performing Services (including
Termination Assistance Services requested by Allegheny under Section 4.4) (the
“Audit Period”).

 

  (b) Operational Audits. During the Audit Period, and upon reasonable prior
notice, Service Provider shall, and shall cause its Subcontractors and suppliers
to, provide to Allegheny (and internal and external auditors, inspectors,
regulators and other representatives that Allegheny may designate from time to
time, including customers, vendors, licensees and other third parties to the
extent Allegheny or the Eligible Recipients are legally or contractually
obligated to submit to audits by such entities) access at reasonable hours to
Service Provider Personnel, to the facilities at or from which Services are then
being provided and to Service Provider records and other pertinent information,
all to the extent relevant to the Services and Service Provider’s obligations
under this Agreement. Such access shall be provided for the purpose of
performing audits and inspections, to (i) verify the integrity of Allegheny
Data, (ii) examine the systems that process, store, support and transmit that
data, (iii) examine the internal controls (e.g., information technology,
procurement, and/or inventory management controls, organizational controls,
input/output controls, system modification controls, processing controls, system
design controls, and access controls) and the security, disaster recovery and
back-up practices and procedures, (iv) examine Service Provider’s performance of
the Services, (v) verify Service Provider’s reported performance against the
applicable Service Levels, (vi) examine Service Provider’s measurement,
monitoring and management tools, and (vii) enable Allegheny and the Eligible
Recipients to meet applicable legal, regulatory and contractual requirements
(including those associated with the Sarbanes-Oxley Act of 2002 and the
implementing regulations promulgated by the United States Securities and
Exchange Commission and Public Company Accounting Oversight Board), in each case
to the extent applicable to the Services. Service Provider shall (1) provide any
assistance reasonably requested by Allegheny or its designee in conducting any
such audit, including installing and operating audit software (subject to each
non-governmental auditor’s compliance with Service Provider’s reasonable
security rules and procedures communicated in advance and applicable to other
parties accessing Service Provider’s systems), (2) make requested personnel,
records and information available to Allegheny or its designee, and (3) in all
cases, provide such assistance, personnel, records and information in an
expeditious manner to facilitate the timely completion of such audit. If an
audit reveals a breach of this Agreement that is material relative to the scope
of the audit, Service Provider shall promptly reimburse Allegheny for the actual
cost of such audit and any damages, fees, fines, or penalties assessed against
or incurred by Allegheny as a result thereof.

 

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  (c) Financial Audits. During the Audit Period, and upon reasonable prior
notice, Service Provider shall, and shall cause its Subcontractors to, provide
to Allegheny (and internal and external auditors, inspectors, regulators and
other representatives that Allegheny may designate from time to time, including
customers, vendors, licensees and other third parties to the extent Allegheny or
the Eligible Recipients are legally or contractually obligated to submit to
audits by such entities) access at reasonable hours to Service Provider
Personnel and to Contract Records and other pertinent information to conduct
financial audits, all to the extent relevant to the performance of Service
Provider’s obligations under this Agreement. Such access shall be provided for
the purpose of performing audits and inspections to (i) verify the accuracy and
completeness of Contract Records, (ii) verify the accuracy and completeness of
Charges and any Pass-Through Expenses and Out-of-Pocket Expenses, (iii) examine
the financial controls, processes and procedures utilized by Service Provider in
connection with the provision of the Services, (iv) examine Service Provider’s
performance of its other financial and accounting obligations, and (v) enable
Allegheny and the Eligible Recipients to meet applicable legal, regulatory and
contractual requirements, in each case to the extent applicable to the Services
and/or the Charges for such Services. Service Provider shall (1) provide any
assistance reasonably requested by Allegheny or its designee in conducting any
such audit, (2) make requested personnel, records and information available to
Allegheny or its designee, and (3) in all cases, provide such assistance,
personnel, records and information in an expeditious manner to facilitate the
timely completion of such audit. If any such audit reveals an overcharge by
Service Provider, and Service Provider does not successfully dispute the amount
questioned by such audit in accordance with Article 19, Service Provider shall
promptly pay to Allegheny the amount of such overcharge, together with interest
from the date of Service Provider’s receipt of such overcharge at the Interest
Rate. In addition, if any such audit reveals an overcharge of more than *** of
the audited Charges in any Charges category, Service Provider shall promptly
reimburse Allegheny for the actual cost of such audit (including auditors’
fees). ***

 

  (d) Audit Assistance. Allegheny and certain Eligible Recipients may be subject
to regulation and audit by governmental bodies, standards organizations, other
regulatory authorities, customers or other parties to contracts with Allegheny
or an Eligible Recipient under applicable Laws, rules, regulations, standards
and contract provisions. If a governmental body, standards organization, other
regulatory authority or customer or other party to a contract with Allegheny or
an Eligible Recipient exercises its right to examine or audit Allegheny’s or an
Eligible Recipient’s books, records, documents or accounting practices and
procedures pursuant to such Laws, rules, regulations, standards or contract
provisions, Service Provider shall provide all assistance requested by Allegheny
or the Eligible Recipient in responding to such audits or requests for
information and shall do so in an expeditious manner to facilitate the prompt
closure of such audit or request.

 

  (e) General Procedures.

 

  (i) Service Provider shall obtain audit rights substantially the same as those
specified in this Section 9.10 to the extent the audit rights are relevant to
the Services (except as otherwise provided in Section 9.10(i)) from all
Subcontractors and will cause such rights to extend to Allegheny.

 

  (ii) Notwithstanding the intended breadth of Allegheny’s audit rights,
Allegheny, Eligible Recipients or their internal and external auditors,
inspectors, regulators or other representatives of Allegheny or any Eligible
Recipient shall not be

 

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given access to (A) the proprietary or confidential information of other Service
Provider customers, (B) Service Provider locations that are not related to
Allegheny, the Eligible Recipients or the Services, or (C) Service Provider’s
internal costs, except to the extent such costs are the basis upon which
Allegheny is charged (e.g., reimbursable expenses, Out-of-Pocket Expenses,
Pass-Through Expenses or cost-plus Charges) and/or are necessary to calculate
the applicable variable Charges.

 

  (iii) In performing audits, Allegheny shall endeavor to avoid unnecessary
disruption of Service Provider’s operations and unnecessary interference with
Service Provider’s ability to perform the Services in accordance with the
Service Levels.

 

  (iv) Following any audit, Allegheny shall conduct (in the case of an Allegheny
internal audit), or request its external auditors or examiners to conduct, an
exit conference with Service Provider to obtain factual concurrence with issues
identified in the review.

 

  (v) Allegheny shall be given adequate private workspace in which to perform an
audit, plus access to photocopiers, telephones, facsimile machines, computer
hook-ups, and any other facilities or equipment needed for the performance of
the audit.

 

  (vi) In performing audits, Allegheny, Eligible Recipients or their internal
and non-governmental external auditors, inspectors, regulators or other
representatives of Allegheny or any Eligible Recipient shall comply with the
confidentiality requirements of Section 13.4(b)(ii) and Service Provider’s
reasonable physical and information security procedures that are communicated in
advance and applicable to other parties accessing Service Provider’s facilities
and/or systems. External auditors designated by Allegheny shall not be direct
Service Provider competitors, which shall not in any case include professional
accounting organizations.

 

  (f) Service Provider Internal Audit. If Service Provider determines as a
result of its own internal audit that it has overcharged Allegheny, then Service
Provider shall promptly pay to Allegheny the amount of such overcharge, together
with interest from the date of Service Provider’s receipt of such overcharge at
the Interest Rate.

 

  (g) Service Provider Response. Service Provider and Allegheny shall meet
promptly upon the completion of an audit conducted pursuant to this Section 9.10
(i.e., an exit interview) and/or issuance of an interim or final report to
Service Provider and Allegheny following such an audit. Service Provider will
respond to each exit interview and/or audit report in writing within thirty
(30) days, unless a shorter response time is specified in such report. Service
Provider and Allegheny shall develop and agree upon an action plan to promptly
address and resolve any deficiencies, concerns and/or recommendations identified
in such exit interview and/or audit report and Service Provider, at its own
expense, shall undertake remedial action in accordance with such action plan and
the dates specified therein to the extent necessary to comply with Service
Provider’s obligations under this Agreement.

 

  (h) Service Provider Response to External Audits. If an audit by a
governmental body, standards organization or regulatory authority having
jurisdiction over Allegheny, an

 

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Eligible Recipient or Service Provider results in a finding that Service
Provider is not in compliance with any applicable Law or the standards that have
been identified by Allegheny, including any generally accepted accounting
principle or other audit requirement relating to the performance of its
obligations under this Agreement, Service Provider shall, at its own expense and
within the time period specified by such auditor, address and resolve the
deficiency(ies) identified by such governmental body, standards organization or
regulatory authority.

 

  (i) SAS70 Audit.

 

In addition to its other obligations under this Section 9.10, Service Provider
shall, at Allegheny’s option, cause a Type II Statement of Auditing Standards
(“SAS”) 70 audit (or equivalent audit) to be conducted on an annual basis for
Services performed at Allegheny Sites (i) for the operating platform types,
number of locations, number of servers, applications, and control objectives
reflected in Schedule 17, and (ii) for the Charges listed in Schedule 4.
Beginning in calendar year 2006, each SAS 70 Type II audit shall be conducted as
of September 30th of each year for a trailing twelve (12) month period through
such date, with a written report due to Allegheny containing the results of such
audit as soon as practicable (but in any event no later than November 15th of
each year). Service Provider shall permit Allegheny to participate in the
planning of each SAS 70 Type II audit conducted hereunder, shall confer with
Allegheny as to the scope and timing of each such audit and shall accommodate
Allegheny’s reasonable requirements and concerns to the extent practicable.
***Unless otherwise agreed by the Parties, each SAS 70 audit shall be designed
in accordance with the initial plans from Allegheny attached in Schedule 17 and
conducted to facilitate periodic compliance reporting by Allegheny and the
Eligible Recipients under the Sarbanes-Oxley Act of 2002 (and implementing
regulations promulgated by the United States Securities and Exchange Commission
and the Public Company Accounting Oversight Board) and comparable Laws. Service
Provider shall respond to such report in accordance with Section 9.10(g).

 

  (j) Quarterly Letter. To assist Allegheny with its reporting requirements
under Section 302 of the Sarbanes-Oxley Act of 2002, Service Provider shall
provide the quarterly letters to Allegheny, in the forms set forth in Schedule
27 for the corresponding purposes described in such Schedule (when applicable),
no later than fifteen (15) days subsequent to the end of each calendar quarter
end date.

 

  (k) In the event that the Service Provider becomes aware of any deficiencies
in internal controls under which the Services are being provided to Allegheny,
either at a Service Provider Facility or at an Allegheny Site, Service Provider
shall notify Allegheny with its identification of mitigating controls and its
plan for remediation of such deficiencies within thirty (30) days following the
date Service Provider learned of such deficiencies. Furthermore, Service
Provider agrees to complete the remediation of such deficiencies within
(i) thirty (30) days of the date of Service Provider’s notice provided under the
previous sentence, or (ii) if such remediation is not capable of being completed
within such thirty (30) day period, Service Provider and Allegheny shall create
an action plan for such remediation and Service Provider shall use commercially
reasonable efforts to remediate in accordance with such plan as soon as
reasonably practicable. Service Provider shall correct all deficiencies***.

 

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(l) Audit Costs. Except as otherwise provided in this Section 9.10, Service
Provider and its Subcontractors and suppliers shall provide the Services
described in this Section 9.10 at no additional charge to Allegheny.

 

9.11 Agency and Disbursements.

 

  (a) Disbursements. Beginning on the Commencement Date, Service Provider shall
make payments to certain lessors, licensors and vendors as paying agent of
Allegheny or the Eligible Recipients, or shall reimburse Allegheny for payments
made by Allegheny or the Eligible Recipients to such lessors, licensors and
vendors, if and to the extent such payments relate to Third Party Contracts,
Equipment leases or Third Party Software licenses as to which Service Provider
is financially responsible in connection with that Service Category, but which
have not been formally transferred to Service Provider.

 

  (b) Limited Agency. Allegheny hereby appoints Service Provider as its limited
agent during the Term solely for the purposes of and to the extent required for
the administration of and payment of Pass-Through Expenses, amounts under
Managed Third Party agreements and Managed Transport Agreements, and amounts
under Third Party Contracts, Equipment leases and Third Party Software licenses
for which Service Provider is financially responsible under Schedules 2 or 4B.
Allegheny shall provide, on a timely basis, such affirmation of Service
Provider’s authority to such lessors, licensors, suppliers, and other third
parties as Service Provider may reasonably request.

 

  (c) Reimbursement for Substitute Payment. If either Party in error pays to a
third party an amount for which the other Party is responsible under this
Agreement, the Party that is responsible for such payment shall promptly
reimburse the paying Party for such amount.

 

  (d) Notice of Decommissioning. Service Provider shall notify Allegheny
promptly if and to the extent any Allegheny or Eligible Recipient owned
Equipment or Allegheny or Eligible Recipient leased Equipment will no longer be
used to provide the Services. The notification will include the identification
of the Equipment, and the date it will no longer be needed by Service Provider,
along with the reason for decommissioning. Upon receipt of any such notice,
Allegheny may (or may cause the applicable Eligible Recipient to), in its sole
discretion, terminate the Equipment lease for such leased Equipment as of the
date specified in such notice and sell or otherwise dispose of or redeploy such
Allegheny or Eligible Recipient owned Equipment that is the subject of such a
notice as of the date specified in such notice. Upon Service Provider ceasing to
use any Equipment (or, in the case of leased Equipment, upon the last day
Allegheny or Eligible Recipient is obligated to make such leased Equipment
available to Service Provider, if earlier), Service Provider shall return the
same to Allegheny, the Eligible Recipients and/or their designee(s) in condition
at least as good as the condition thereof on the date Service Provider took
possession or control thereof, ordinary wear and tear excepted. Service Provider
shall, at Service Provider’s expense, deliver such Equipment to the location
designated by Allegheny, the Eligible Recipients and/or their designee(s).

 

  (e) Telecom Transport Services. To the extent necessary to provide the
Services, Allegheny hereby appoints Service Provider as its limited agent during
the Term solely for the purpose of negotiating, executing and administering one
or more agreements with third party telecom transport providers under contracts
retained by Allegheny but which Service Provider will manage as a Managed Third
Party Contract, including voice transport contracts for which Allegheny retains
financial responsibility pursuant to Schedule 4B as

 

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of the Commencement Date (collectively, “Managed Telecom Transport Providers”);
provided, that Service Provider shall obtain Allegheny’s prior written consent
to any such agency agreement.

 

9.12 Subcontractors.

 

  (a) Use of Subcontractors. Service Provider shall not subcontract any of its
responsibilities without Allegheny’s prior written approval. Prior to entering
into a subcontract with a third party for the Services, Service Provider shall
(i) give Allegheny reasonable prior notice of the subcontract, specifying the
components of the Services affected, the scope of the proposed subcontract, the
identity and qualifications of the proposed Subcontractor, and the reasons for
subcontracting the work in question, the location of the Subcontractor
facilities from which the Services will be provided, the extent to which the
subcontract will be dedicated, and the Subcontractor’s willingness to grant the
rights described in Section 6.4(c) upon expiration or termination, and
(ii) obtain Allegheny’s prior written approval of such Subcontractor, other than
subcontractors that qualify as Shared Subcontractors in accordance with
Section 9.12(c) below.

 

  (b) Right to Revoke Approval. Allegheny also shall have the right during the
Term to revoke its prior approval of a Subcontractor and direct Service Provider
to replace such Subcontractor as soon as possible at no additional cost to
Allegheny, if the Subcontractor’s performance is materially deficient or if
there are other reasonable grounds for removal. Service Provider shall have a
reasonable opportunity to investigate Allegheny’s concerns, correct the
Subcontractor’s deficient performance and provide Allegheny with a written
action plan to assure that such deficient performance will not recur. If
Allegheny is not reasonably satisfied with the Service Provider’s efforts to
correct the Subcontractor’s deficient performance and/or to ensure its
non-recurrence, the Service Provider shall, as soon as possible, remove and
replace such Subcontractor. Service Provider shall continue to perform its
obligations under this Agreement, notwithstanding the removal of the
Subcontractor. Allegheny shall have no responsibility for any termination
charges or cancellation fees that Service Provider may be obligated to pay to a
Subcontractor as a result of the removal of such Subcontractor at Allegheny’s
request or the withdrawal or cancellation of the Services then performed by such
Subcontractor as permitted under this Agreement.

 

  (c) Shared Subcontractors. Service Provider may, in the ordinary course of
business, enter into subcontracts with a total estimated value of less than ***
per year (beginning on the Effective Date) (i) for third party services or
products that are not part of a function critical to Allegheny’s business
operations, that are not exclusively dedicated to Allegheny and that do not
include regular direct contact with Allegheny or Eligible Recipient personnel or
the performance of services at Allegheny Sites, or (ii) with temporary personnel
firms for the provision of temporary contract labor (collectively, “Shared
Subcontractors”); provided, that such Shared Subcontractors possess the training
and experience, competence and skill to perform the work in a skilled and
professional manner. Service Provider shall not be required to obtain
Allegheny’s prior approval of Shared Subcontractors. If, however, Allegheny
expresses dissatisfaction with the services or products of a Shared
Subcontractor, Service Provider shall work in good faith to resolve Allegheny’s
concerns on a mutually acceptable basis and, at Allegheny’s request, replace
such Shared Subcontractor at no additional cost to Allegheny.

 

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  (d) Service Provider Responsibility. Unless otherwise approved by Allegheny,
the terms of any subcontract must be sufficient to enable Service Provider to
perform its obligations under this Agreement, including: (i) confidentiality and
intellectual property obligations; (ii) Allegheny’s approval rights (which must
apply directly to the Subcontractor); (iii) compliance with Allegheny Standards,
Strategic Plans and applicable Laws; (iv) compliance with Allegheny’s policies
and directions; (v) audit rights as described in Section 9.10; (vi) Key Service
Provider Personnel; and (vii) insurance coverage, as described in
Section 16.1(a), with coverage limits consistent with the scope of the work to
be performed by such Subcontractors. Service Provider shall use a common
methodology and tool set to ensure all of the Subcontractors are managed
effectively and efficiently. Notwithstanding the terms of the applicable
subcontract, the approval of such Subcontractor by Allegheny or the availability
or unavailability of Subcontractor insurance, Service Provider shall be and
remain responsible and liable. Service Provider shall be responsible for any
failure by any Subcontractor or Subcontractor personnel to perform in accordance
with this Agreement or to comply with any duties or obligations imposed on
Service Provider under this Agreement to the same extent as if such failure to
perform or comply was committed by Service Provider or Service Provider
employees. Service Provider shall be responsible for the performance of all such
Subcontractors and Subcontractor personnel providing any of the Services
hereunder. Service Provider shall be Allegheny’s sole point of contact regarding
the Services, including with respect to payment.

 

9.13 Government Contract Flow-Down Clauses.

 

  (a) General. The Parties acknowledge and agree that, as a matter of federal
procurement law, Service Provider may be deemed a “subcontractor” to Allegheny
and/or an Eligible Recipient under one or more of their contracts with the
federal government, that the Services provided or to be provided by Service
Provider in such circumstances constitute “commercial items” as that term is
defined in the Federal Acquisition Regulation, 48 C.F.R. Section 52.202, and
that “subcontractors” providing “commercial items” under government contracts
are subject to certain mandatory “flow-down” clauses (currently, (i) Equal
Opportunity, (ii) Affirmative Action for Special Disabled and Vietnam Era
Veterans, and (iii) Affirmative Action for Handicapped Workers) under the
Federal Acquisition Regulation, 48 C.F.R. Section 52.244-6. The Parties agree
that these specific clauses are required to be flowed down to Service Provider,
and Service Provider shall comply with such clauses at no additional cost to
Allegheny.

 

  (b) Special Requirements. The Parties do not expect or believe that the
Services provided by Service Provider under this Agreement will be subject to
government flow-down requirements other than those associated with any
subcontracts for commercial items. Should compliance by Service Provider with
additional flow-down provisions beyond those described above nevertheless be
required by the federal government due to Service Provider being a subcontractor
under a government contract in which the Services fail to qualify as “commercial
items”, then Allegheny will reimburse Service Provider for additional direct
incremental costs of compliance approved by Allegheny provided that (i) Service
Provider notifies Allegheny of such costs before Service Provider incurs them or
begins providing the applicable Services, (ii) uses commercially reasonable
efforts to minimize such costs, and (iii) Service Provider equitably allocates
such costs among Allegheny and any other Service Provider customers who have
similar compliance requirements.

 

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  (c) Special Purchases Support. Allegheny’s intent is to purchase products and
services from Small Disadvantaged Businesses and Small Woman Owned Businesses
(collectively “SDBs”) in order to satisfy its goals and comply with government
procurement laws and regulations. To help Allegheny achieve its goals, Service
Provider agrees to establish as a goal the purchase, when commercially
reasonable, of non-leveraged products and services from SDBs, utilized solely on
behalf of Allegheny and/or the Eligible Recipients, in the performance of
Service Provider’s obligations under this Agreement. Service Provider, as part
of the Service, shall track invoice payments made to SDBs, and shall submit a
quarterly summary to Allegheny with respect to such activity. Such quarterly
summary shall provide a breakdown of such payments by individual SDB. The
failure of Service Provider to meet its goal under this Section will not be
considered a material breach of this Agreement.

 

9.14 Additional Telecommunications Matters.

 

  (a) Connection. To the extent technologically and operationally compatible and
permitted by applicable Laws, including any applicable tariffs, the Services may
be connected/interconnected by Allegheny or an Eligible Recipient to other
services provided by Service Provider or to services provided by Allegheny or an
Eligible Recipient itself or any other vendor.

 

  (b) Change of Provider. To the extent Service Provider elects to change one or
more of its underlying providers of inter-exchange facilities, such change shall
not, unless otherwise agreed, result in any interruption, diminution in service
quality, or increase in the Charges.

 

  (c) Compatibility. With respect to the compatibility of the Services with
Equipment for which Allegheny is financially and operationally responsible,
Service Provider agrees to consult with Allegheny on its request concerning the
compatibility of Services with such Equipment including, in the case of
Equipment and related software that Allegheny proposes to acquire, informing
Allegheny of the likely effects (if any) of the use of such Equipment and
related software on the quality, operating characteristics and efficiency of the
Services and the effects (if any) of the Services on the operating
characteristics and efficiency of such Equipment and related software. Service
Provider further agrees to provide all interface specifications requested by
Allegheny with respect to any Service.

 

  (d) Interconnections. Without limiting Service Provider’s other obligations
hereunder, at Allegheny’s request, Service Provider shall connect new Eligible
Recipients and Authorized Users to the Allegheny voice and data networks and
systems as soon as practicable. If Service Provider determines that the Systems
used by such new Eligible Recipients or Authorized Users are incompatible in any
material respect with the Allegheny Standards or any other requirements for
interconnection with the Allegheny voice and data networks and systems, Service
Provider shall promptly notify Allegheny prior to proceeding with such
connection. Allegheny shall have the right to require that Service Provider
proceed with the interconnection notwithstanding Service Provider’s concerns
regarding incompatibility. Service Provider’s failure to meet the Service Levels
or its other obligations shall be excused if and to the extent such failure is
attributable to the connection of such new Eligible Recipients and Authorized
Users to the Allegheny voice and data networks and systems upon Allegheny’s
authorization, and despite Service Provider’s notice that such connection may
cause such failure as a result of the reported technical incompatibility.

 

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9.15 Applicable Authority Actions.

 

  (a) Applicable Tariff. If Service Provider, its Subcontractors and/or any
Managed Telecom Transport Providers are required to file a tariff or other
regulatory submission pursuant to Section 9.15(b), and the initial tariff option
or regulatory submission to implement this Agreement is not permitted to become
effective by the Applicable Regulatory Authority or if any ruling, order or
determination of such Applicable Regulatory Authority shall materially and
adversely affect Service Provider’s or its Subcontractors’ or Managed Telecom
Transport Providers’ ability to offer the Services under the terms and
conditions set forth herein, Service Provider shall develop a proposal the
purpose of which will be to provide comparable service to Allegheny or an
Eligible Recipient at rates at or below those set forth in, and on terms and
conditions substantially equivalent to those contained in, this Agreement, to
the extent permissible under applicable Laws. Allegheny shall cooperate with
Service Provider in the development of such a proposal. Such service may be
provided under (i) other existing Service Provider, Subcontractor or Managed
Telecom Transport Provider tariffs (if that can be done at such tariffs’
then-effective rates without further revision) or (ii) newly-filed tariffs or
regulatory submissions or (iii) public postings by Service Provider,
Subcontractor or Managed Third Party Telecom Transport Provider of rates and
other terms of service. Except as provided in Section 9.15(h) with respect to
Managed Telecom Transport Providers that are local exchange carriers (“Managed
LECs”), if Service Provider is unwilling or unable to develop such a proposal
within twenty (20) business days of any such event, such proposal is not
approved by Allegheny or such proposal fails to take effect within twenty
(20) business days of the Parties’ agreement to such proposal, Allegheny shall
have the right to terminate the affected telecom portion of the Services without
payment of a Termination Charge or other liability***. A proposal shall be
deemed not reasonably acceptable to Allegheny if it fails to comply with
applicable Law, materially increases Allegheny’s total costs of receiving the
Services, requires material changes to Allegheny’s or an Eligible Recipient’s
facilities, systems, software, utilities, tools or equipment, has a material
adverse impact on the functionality, interoperability, performance, accuracy,
speed, responsiveness, quality or resource efficiency of the Services or
violates or is inconsistent with Allegheny Standards or Strategic Plans as
specified in Section 9.5.

 

  (b) Regulatory Submission. To the extent required by Law, and within thirty
(30) days after the Effective Date, Service Provider shall, and shall use
commercially reasonable efforts to, cause its Subcontractors and/or any Managed
Telecom Transport Provider to, file any applicable tariff, tariff option or
other regulatory submission required to implement this Agreement. Service
Provider shall cause such filing to be consistent in all material respects with
all applicable provisions of this Agreement and not to be less favorable to
Allegheny and the Eligible Recipients than the rates and other terms and
conditions of this Agreement. Service Provider shall make a copy of any
applicable filings available to Allegheny for Allegheny’s review and inspection
and shall provide Allegheny with a copy of all amendments to such tariffs or
other filings having a bearing on the Agreement when such amendments are filed
with the appropriate governmental agencies. In addition, Service Provider shall
provide Allegheny with a draft of any revisions that will materially affect
Allegheny’s rights and obligations under this Agreement at least ten (10) days
before such revisions are filed with an Applicable Regulatory Authority, where
feasible. Without limiting Allegheny’s termination rights provided elsewhere in
this Agreement, if Service Provider, its Subcontractors and/or any Managed
Telecom Transport Provider makes revisions to a tariff, tariff option or other
submission that materially and adversely affect Allegheny’s rights hereunder
without obtaining Allegheny’s prior written consent, Allegheny shall have the
right to terminate any affected telecom portions of the Services ***.

 

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  (c) Agreement to Not Interpose Defense. Each of the Parties agrees that it
will not (and Service Provider shall cause its Subcontractors and Managed
Telecom Transport Providers not to) interpose as a defense in any action to
enforce the other Party’s rights under this Agreement that such terms and
conditions are invalid or unenforceable because of inconsistency with Service
Provider’s or its Subcontractors’ or Managed Telecom Transport Providers’
tariffs, tariff options or other regulatory submission, if any.

 

  (d) Detariff. If, at any time during the Term, an Applicable Regulatory
Authority with jurisdiction over a material portion of the Services, pursuant to
a final order that is not subject to further appeal, alters the rules or
regulations applicable to Service Provider, its Subcontractors and/or Managed
Telecom Transport Providers or the Services in a manner that requires or permits
Service Provider, its Subcontractors and/or Managed Telecom Transport Providers
to detariff all or any material portion of the Services, Service Provider shall,
and shall cause its Subcontractors and/or Managed Telecom Transport Providers
to, promptly detariff (and withdraw any tariff, tariff option or other
regulatory submission specifically relating to) such Services or the affected
portions thereof.

 

  (e) Tariff Copy and Revision. Service Provider shall make a copy of its, its
Subcontractors’ and/or Managed Telecom Transport Providers’ filed tariffs
available to Allegheny for Allegheny’s review and inspection and shall, in
accordance with Service Provider’s, its Subcontractors’ and/or Managed Telecom
Transport Providers’ standard tariff update service, provide Allegheny with a
copy of all amendments to the tariffs directly related to this Agreement when
such amendments are filed with the appropriate regulatory authority. In
addition, Service Provider shall provide a draft of its tariff revisions, if
any, that materially affect Allegheny’s rights and obligations under this
Agreement at least ten (10) days before such revisions are filed with the
Applicable Regulatory Authority, where feasible. Service Provider shall cause
its Subcontractors and/or Managed Telecom Transport Providers to make no
revisions to a tariff or a tariff option that materially and adversely affect
Allegheny’s rights hereunder without obtaining Allegheny’s prior written
consent.

 

  (f) Division of Agreement. If, at any time during the Term, an Applicable
Regulatory Authority with jurisdiction over a material portion of the Services
determines that it is unlawful for Service Provider, its Subcontractors and/or
Managed Telecom Transport Providers to provide both regulated and non-regulated
Services under a single agreement, the Parties agree to execute a separate
agreement under which the non-regulated services will be provided and, except as
otherwise agreed by the Parties or required by applicable Laws, the terms and
conditions applicable to such non-regulated Services shall be identical in all
non-material respects to those provided herein.

 

  (g) Adverse Law. If, at any time during the Term, an Applicable Regulatory
Authority with jurisdiction over a material portion of the Services promulgates
or passes a Law that adversely affects Service Provider’s or its Subcontractors’
or Managed Telecom Transport Providers’ ability to offer the Services under the
terms and conditions set forth herein, Service Provider shall provide service to
Allegheny and the Eligible Recipients under other arrangements with rates, terms
and conditions no less favorable to Allegheny and the Eligible Recipients than
those set forth in this Agreement. If any such Law shall require the enhancement
or improvement of a Service provided under this Agreement, Service Provider
shall not, and shall cause its Subcontractors not to, resist same and shall
improve or enhance such Service as required.

 

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  (h) Managed LEC Exceptions. Service Provider shall not be deemed in breach of
its obligation to (i) develop a proposal for providing comparable service as
described in Section 9.15(a) with respect to Managed LECs, (ii) file an
applicable tariff, tariff option or other regulatory submission in accordance
with Section 9.15(b) with respect to Managed LECs, (iii) cause a Managed LEC not
to interpose a defense, as required by Section 9.15(c), (iv) cause a Managed LEC
to detariff as required by Section 9.15(d), (v) cause a Managed LEC not to make
revisions to a tariff or a tariff option as required by Section 9.15(e), or
(vi) provide Managed LEC service to Allegheny and the Eligible Recipients under
other arrangements, and to cause Managed LECs not to resist enhancements or
improvements to services as required by Section 9.15(g), in each case if and to
the extent (A) Service Provider promptly notifies Allegheny that it is unable to
do so given the available local exchange carriers and the service options
offered by such carriers, (B) uses commercially reasonable efforts to identify
the alternatives available for minimizing adverse impacts on Allegheny, and
(C) uses commercially reasonable efforts to minimize such impacts.

 

9.16 Unauthorized Use.

 

In addition to Service Provider’s obligation to provide the Toll Fraud Services
specified in Schedule 2, Allegheny and Service Provider shall cooperate fully in
efforts to prevent and cure unauthorized use of the Services by expeditiously
informing each other of suspected abuse and, when known, the identity of the
responsible individuals. Service Provider shall advise Allegheny regarding
methods to minimize Allegheny’s and the Eligible Recipients’ exposure to misuse
and abuse of Allegheny’s and the Eligible Recipients’ service that results from
the operation of Allegheny or Eligible Recipient-provided systems, equipment,
facilities or services interconnected with Service Provider’s Services. Service
Provider shall provide assistance to Allegheny and/or the Eligible Recipients’
upon Allegheny’s request in Service Provider’s efforts to minimize ongoing
misuse or abuse through timely reconfiguration and limitation of the Services.
Appropriate representatives of Service Provider, Allegheny and Eligible
Recipient shall meet at the request of Allegheny to establish appropriate
operational fraud control procedures. The Parties acknowledge and agree that
Service Provider’s performance of its obligations under this Section 9.16 shall
be subject to and in accordance with applicable Data Privacy Laws.

 

9.17 Technology and Business Process Evolution.

 

  (a) Obligation to Evolve. Service Provider acknowledges and agrees that its
current technologies and business processes shall continue to evolve and change
over time, and at a minimum, shall remain consistent with *** of information
technology, procurement, and/or inventory management and other in-scope Services
and the business, information technology, procurement, and/or inventory
management objectives and competitive needs of Allegheny and the Eligible
Recipients. Subject to Section 9.5, Service Provider shall provide the Services
using current technologies and business processes that will enable Allegheny and
the Eligible Recipients to take advantage of advances in the industry and
support their efforts to maintain competitiveness in the markets in which they
compete. In addition, subject to Sections 9.5 and 11.5, Service Provider shall
make such current technologies and business processes available to Allegheny to
perform information technology services, procurement and/or inventory management
consulting, and other related services and functions on behalf of itself and/or
the Eligible Recipients at or from Allegheny Sites.

 

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  (b) Annual Technology and Business Process Audit. Allegheny may elect to
conduct an annual technology and business process audit to benchmark Service
Provider’s then-current technologies and business processes ***of information
technology services, procurement and/or inventory management consulting, and
other in-scope outsourcing services. If any such audit reveals that the
technologies and business process then-utilized by Service Provider are not at
such level, then Allegheny and Service Provider will review the results of the
audit and promptly establish and implement a plan to implement ***.

 

  (c) Obligation to Propose Technology and Business Process Evolutions. Service
Provider shall identify and propose the implementation of Technology and
Business Process Evolutions that are likely to: (i) improve the efficiency and
effectiveness of the Services (including cost savings); (ii) improve the
efficiency and effectiveness of the information technology services, procurement
and/or inventory management consulting, and functions performed by or for
Allegheny and the Eligible Recipients at or from Allegheny Facilities;
(iii) result in cost savings or revenue increases to Allegheny and the Eligible
Recipients in areas of their business outside the Services; (iv) enhance the
ability of Allegheny and the Eligible Recipients to conduct their business and
serve their customers; and (v) achieve the objectives of Allegheny and the
Eligible Recipients (as described in Section 1.2) faster and/or more efficiently
than the then-current strategies. Service Provider shall regularly make
recommendations to Allegheny with regard to the Technology and Business Process
Evolution that Service Provider sees in general practice in the industry.

 

  (d) Service Provider Briefings and Technology and Business Process Audit.
Service Provider shall routinely and regularly monitor and analyze Technology
and Business Process Evolutions of possible interest or applicability to
Allegheny and the Eligible Recipients. At least semi-annually, Service Provider
shall meet with Allegheny to formally brief Allegheny regarding such Technology
and Business Process Evolutions. Such briefing shall include Service Provider’s
assessment of the business impact, performance improvements and cost-savings
associated with such Technology and Business Process Evolutions. Where requested
by Allegheny, Service Provider shall develop and present to Allegheny proposals
for: (i) implementing Technology and Business Process Evolutions; or
(ii) changing the direction of Allegheny’s then-current strategy.

 

  (e) Service Provider Developed Advances. If Service Provider develops or
implements technological advances in or changes to the business processes and
services and associated technologies used to provide the same or substantially
similar services to other Service Provider customers or Service Provider
develops or implements new or enhanced processes, services, software, tools,
products or methodologies to be offered to such customers (collectively, “New
Advances”), Service Provider shall, subject to Section 11.5 and its contractual
obligations to its other customers, (i) offer Allegheny the opportunity to serve
as a pilot customer in connection with the implementation of such New Advances,
and (ii) if Allegheny declines such opportunity, offer Allegheny preferred
access to such New Advances and the opportunity to be among the first of Service
Provider’s customer base for whom the New Advance would be applicable given the
Services to implement and receive the benefits of any New Advances.

 

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  (f) Flexibility. Service Provider shall ensure that the technologies and
business process strategies it employs to provide the Services meet industry
standards and are flexible enough to allow integration with new technologies or
business processes, or significant changes in Allegheny’s or an Eligible
Recipient’s business objectives and strategies. For example, Equipment must have
sufficient scalability and be sufficiently modular to allow integration of new
technologies without the need to replace whole, or significant parts of, systems
or business processes (e.g., made to be a one-to-many model) to enable
Allegheny’s and/or the Eligible Recipients’ business to become more scalable and
flexible.

 

  (g) Equipment Implementation and Refresh. Service Provider shall be fully
responsible for the implementation of new Equipment in the ordinary course of
Technology and Business Process Evolution, and Service Provider shall refresh
all Equipment in accordance with Allegheny’s refresh strategies, as set out in
the Technology and Business Process Plan, subject to any applicable Equipment
refresh rates specified in this Agreement, and as otherwise necessary to provide
the Services in accordance with the Service Levels and satisfy its other
obligations under this Agreement. If Service Provider is aware that these
strategies differ from generally accepted practice (or there are any other areas
of concern in relation to such strategies) it shall provide Allegheny with
notice of that fact and, upon request, provide Allegheny with further
information as to how to more closely align the strategies with generally
accepted practice. Allegheny shall have the right to waive refresh of Equipment
under its control. If Allegheny does waive refresh of Equipment under its
control, Service Provider will work with Allegheny to assess and address any
impact on Service Provider’s support costs. ***.

 

  (h) Software Implementation and Refresh. Service Provider shall be fully
responsible for the implementation of new or changed Software, tools and
methodologies in the ordinary course of Technology and Business Process
Evolution subject to any Software refresh rates specified in this Agreement.
Service Provider shall: (i) refresh Software in accordance with Section 9.7 and
the Technology and Business Process Plan; and (ii) provide training to Allegheny
staff regarding the use of any new or changed Software, tools and methodologies.
Allegheny shall have the right to waive refresh of Software, tools or
methodologies under its control. If Allegheny does waive refresh of Software,
tools or methodologies under its control, Service Provider will work with
Allegheny to assess and address any impact on Service Provider’s support
costs***.

 

  (i) Included in Monthly Base Charges. *** Technology and Business Process
Evolution and New Advances shall be included in the Monthly Base Charges and
Service Provider shall deploy, implement and support Technology and Business
Process Evolution and New Advances throughout the Term. ***, Service Provider
shall be financially responsible for the capital cost of implementing Technology
and Business Process Evolution and New Advances to the extent such
implementation involves categories of Equipment, Software and other assets as to
which responsibility is allocated to Service Provider in Schedule 2 or Schedule
4B. ***, the performance of projects required to implement Technology and
Business Process Evolution also shall be included within the Monthly Base
Charge. ***, Allegheny shall pay additional sums for implementation only if and
to the extent (i) the Technology and Business Process Evolution or New Advance
is considered a New Service pursuant to Section 11.5, or (ii) Allegheny requests
accelerated implementation of the Technology and Business Process Evolution or
New Advance (i.e., more rapidly than previously contemplated in the Technology
and Business Process Evolution Plan or established refresh schedule), and in
each case, only if and to the extent additional Service Provider Personnel and
resources are required to implement the Technology and Business Process
Evolution or New Advance in the desired timeframe.

 

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9.18 Retained Systems and Business Processes.

 

  (a) No Adverse Effect. Service Provider shall not, by any act or omission,
adversely affect or alter the functionality, interoperability, performance,
accuracy, speed, responsiveness, quality, cost or resource efficiency of
Allegheny’s Retained Systems and Business Processes without the prior consent of
Allegheny. Nor shall Service Provider, by any act or omission, require changes
to Allegheny’s Retained Systems and Business Processes, including associated
business processes, applications, systems, software, utilities, tools or
equipment, without the prior consent of Allegheny.

 

  (b) Interface. Service Provider shall ensure that the processes, Systems,
Software and Equipment used by Service Provider to provide the Services will
interface and integrate with the Retained Systems and Business Processes.

 

  (c) Keep Informed. Service Provider shall inform itself and maintain up to
date knowledge about all aspects of the existing and future Retained Systems and
Business Processes.

 

  (d) Assistance. As part of the Services, Service Provider shall provide
Allegheny (upon Allegheny’s request) with Services in relation to Retained
Systems and Business Processes, including: (i) liaising with Allegheny or third
parties regarding the impact of any alterations to the Retained Systems and
Business Processes and vice versa; and (ii) identifying favorable vendors, and
acting as Allegheny’s agent, in relation to the acquisition, support and
development of Retained Systems and Business Processes.

 

9.19 Annual Reviews.

 

Annually, or more frequently if Allegheny requires, the Parties shall conduct a
detailed review of the Services then-being performed by the Service Provider. As
part of this review, the Parties shall review the Resource Baselines against
actual service volumes for the previous year, and forecast the service volumes
for the next year. In addition, the Parties shall examine: (i) whether the
Charges are consistent with Allegheny’s forecasts, industry norms, and Service
Provider’s representations, warranties and covenants in Article 15; (ii) the
quality of the performance and delivery of the Services; (iii) whether Service
Provider has delivered cost-saving or efficiency-enhancing proposals; (iv) the
level and currency of the technologies and business processes employed; (v) the
business and technology strategy and direction; and (vi) such other things as
Allegheny may reasonably require.

 

10. ALLEGHENY RESPONSIBILITIES

 

10.1 Responsibilities.

 

In addition to Allegheny’s responsibilities as expressly set forth elsewhere in
this Agreement, Allegheny shall be responsible for the following:

 

  (a) Allegheny Contract Executive. Allegheny shall designate one (1) individual
to whom all Service Provider communications concerning this Agreement may be
addressed (the “Allegheny Contract Executive”), who shall have the authority to
act on behalf of Allegheny and the Eligible Recipients in all day-to-day matters
pertaining to this

 

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Agreement. Allegheny may change the designated Allegheny Contract Executive from
time to time by providing notice to Service Provider. Additionally, Allegheny
will have the option, but will not be obligated, to designate additional
representatives who will be authorized to make certain decisions (e.g.,
regarding emergency maintenance) if the Allegheny Contract Executive is not
available. Allegheny will include the success of the Parties’ relationship and
the engagement contemplated by this Agreement among the factors used in the
performance evaluation of the Allegheny Contract Executive.

 

  (b) Cooperation. Allegheny shall cooperate with Service Provider by, among
other things, making available, as reasonably requested by Service Provider,
management decisions, information, approvals and acceptances so that Service
Provider may accomplish its obligations and responsibilities hereunder.

 

  (c) Requirement of Writing. To the extent Service Provider is required under
this Agreement to obtain Allegheny’s approval, consent or agreement, such
approval, consent or agreement must be in writing and must be signed by or
directly transmitted by electronic mail from the Allegheny Contract Executive or
an authorized Allegheny representative. Notwithstanding the preceding sentence,
the Allegheny Contract Executive may agree in advance in writing that as to
certain specific matters oral approval, consent or agreement will be sufficient.

 

10.2 Savings Clause.

 

Service Provider’s failure to perform its responsibilities under this Agreement
or to meet the Service Levels shall be excused if and to the extent such Service
Provider non-performance is caused by (i) the wrongful actions or tortious
actions (including intentional acts or negligence) of, or wrongful or tortious
failure to act by, Allegheny, an Eligible Recipient, an Allegheny Third Party
Contractor or an agent or employee thereof (other than Allegheny Personnel
properly carrying out the specific directions from Service Provider or Service
Provider Personnel, or Directed Allegheny Employees performing functions under
Service Provider’s direction), or any employee, agent or other third party
receiving the benefits of the Services (unless and to the extent, as to
Allegheny Third Party Contractors, such action or failure to act is attributable
to Service Provider’s failure to properly manage such Allegheny Third Party
Contractor), or (ii) the failure of Allegheny, an Eligible Recipient, an
Allegheny Third Party Contractor or an agent or employee thereof to perform
Allegheny’s obligations under this Agreement, but only if (A) Service Provider,
upon actual or constructive knowledge of such an occurrence, expeditiously
notifies Allegheny of such wrongful or tortious action or failure to perform and
its inability to perform under such circumstances, (B) where applicable, Service
Provider provides Allegheny with reasonable opportunity to correct such wrongful
or tortious action or failure to perform and thereby avoid such Service Provider
non-performance, (C) Service Provider identifies and pursues commercially
reasonable means to avoid or mitigate the impact of such wrongful or tortious
action or failure to perform, (D) Service Provider uses commercially reasonable
efforts to perform notwithstanding such wrongful or tortious action or failure
to perform, and (E) Service Provider conducts a Root Cause Analysis and thereby
demonstrates that such wrongful or tortious action or failure to perform is the
cause of Service Provider’s non-performance. Service Provider acknowledges and
agrees that the circumstances described in this Section 10.2, *** are the only
circumstances in which its failure to perform its responsibilities under this
Agreement or to meet the Service Levels will be excused and that Service
Provider will not assert any other act or omission of Allegheny or the Eligible
Recipients or any third party as excusing any such failure on Service Provider’s
part. For the avoidance of doubt with respect to clause (ii) above, and except
as otherwise provided in clause (i) above, Service Provider will not be excused
of any of

 

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its responsibilities, including its failure to meet any Service Levels, with
respect to an operational area due to an Authorized User’s negligent actions in
such operational area, except to the extent Allegheny has failed to perform an
obligation on which Service Provider’s performance was dependent.

 

11. CHARGES

 

11.1 General.

 

  (a) Payment of Charges. In consideration of Service Provider’s performance of
the Services, Allegheny agrees to pay Service Provider the applicable Charges
which are set forth in Schedule 4 beginning as of the Commencement Date.

 

  (b) No Additional Charges. Allegheny shall not pay any Charges for the
Services other than those set forth in this Agreement. Any costs incurred by
Service Provider prior to the Effective Date are included in the Charges as set
forth in Schedule 4 and are not to be separately paid or reimbursed by
Allegheny.

 

  (c) Incidental Expenses. Service Provider acknowledges that, except as
expressly provided otherwise in this Agreement, expenses that Service Provider
incurs in performing the Services (including management, travel and lodging,
document reproduction and shipping, desktop Equipment and other office Equipment
required by Service Provider Personnel, and long-distance telephone) are
included in Service Provider’s charges and rates set forth in this Agreement.
Accordingly, such Service Provider expenses are not separately reimbursable by
Allegheny unless Allegheny has agreed in advance and in writing to reimburse
Service Provider for the expense.

 

  (d) No Charge for Reperformance. At no additional expense to Allegheny,
Service Provider shall reperform (including any required backup or restoration
of data from scheduled backups or, if not available on such backups, restoration
by other means with Allegheny’s reasonable cooperation) any Services that result
in incorrect outputs due to an error or breach by Service Provider, and the
resources required for such reperformance shall not be counted in calculating
the Charges payable or resources utilized by Allegheny hereunder.

 

  (e) Charges for Contract Changes. Unless otherwise agreed, changes in the
Services (including changes in Allegheny Standards, Strategic Plans, Technology
and Business Process Plans, business processes, Software, Equipment and Systems)
and changes in the rights or obligations of the Parties under this Agreement
(collectively, “Contract Changes”) shall result in changes in the applicable
Charges only if and to the extent: (i) the Agreement expressly provides for a
change in the Service Provider Charges in such circumstances; (ii) the agreed
upon Charges or pricing methodology expressly provides for a price change in
such circumstances ***, or defines a Resource Baseline for the Resource Unit in
question with ARCs and RRCs for increased or decreased usage); or (iii) the
Contract Change meets the definition of New Services for purposes of
Section 11.5 and additional Charges are applicable in accordance therewith.

 

  (f) Eligible Recipient Services.

 

  (i) Eligible Recipients. Service Provider shall provide the Services to
Eligible Recipients designated by Allegheny. To the extent a designated Eligible
Recipient will receive less than all of the Services, Allegheny shall identify
the categories of Services to be provided by Service Provider to such Eligible
Recipient.

 

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  (ii) New Eligible Recipients. From time to time Allegheny may request that
Service Provider provide Services to Eligible Recipients not previously
receiving such Services. Except as provided in Section 11.5 or otherwise agreed
by the Parties, such Services shall be performed in accordance with the terms,
conditions and prices (excluding any non-recurring transition or start-up
activities specific to such Eligible Recipients) then applicable to the
provisions of the same Services to existing Eligible Recipients.

 

  (iii) Election Procedure. In the event of a transaction described in clause
(c) or (d) within the definition of Eligible Recipient in Schedule 1, Allegheny
may elect, on behalf of the Entity in question, either (A) that such Entity
shall continue to obtain Services in some or all of the Services in respect of
each Service Category or Tower subject to and in accordance with the terms and
conditions of this Agreement for the remainder of the Term, (B) that the Entity
shall obtain some or all of the Services under a separate agreement between
Service Provider and such Entity containing the same terms and conditions as
this Agreement, ***, or (C) that the Term shall be terminated as to such Entity
with respect to some or all Services as of a specified date, subject to its
receipt of Termination Assistance Services pursuant to Section 4.4. If the
Services are provided under a separate agreement, Allegheny shall have no
obligation to pay any fees in relation to the Services provided to such Entity.
***. Services provided to such Entity shall be included in the calculation of
Service volumes, if any, under this Agreement (as allocated by Allegheny), but
shall be excluded when determining any Termination Charges payable as a result
of termination for convenience***.

 

11.2 Pass-Through Expenses.

 

  (a) Procedures and Payment. Service Provider shall administer and invoice
Allegheny for Pass-Through Expenses identified in Schedule 4J as follows. Unless
otherwise agreed by the Parties, Allegheny shall pay all Pass-Through Expenses
directly to the applicable vendors following review, validation and approval of
such Pass-Through Expenses by Service Provider. No new Pass-Through Expenses may
be added without Allegheny’s prior consent. Before submitting an invoice to
Allegheny for any Pass-Through Expense, Service Provider shall (i) review and
validate the invoiced charges, (ii) identify any errors or omissions, and
(iii) communicate with the applicable vendor to correct any errors or omissions,
and use commercially reasonable efforts to resolve any questions or issues and
obtain any applicable credits for Allegheny. Service Provider shall deliver to
Allegheny the original supplier invoice, together with any documentation
supporting such invoice and a statement that Service Provider has reviewed and
validated the invoiced charges, within ten (10) days after Service Provider’s
receipt thereof; provided that, if earlier, Service Provider shall use
commercially reasonable efforts to deliver such invoice, documentation and
statement at least five (5) business days prior to the date on which payment is
due; and provided further that, if it is not possible to deliver such invoice,
documentation and statement at least five (5) business days prior to the due
date, Service Provider shall promptly notify Allegheny and, at Allegheny’s
option, either request additional time for review and validation or submit the
invoice for payment subject to subsequent review and validation. In addition, if
the vendor offers a discount for payment prior to a specified

 

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date, Service Provider shall use commercially reasonable efforts to deliver such
invoice and associated documentation to Allegheny at least five (5) business
days prior to such date. *** No new Pass-Through Expenses may be added without
Allegheny’s prior consent, which it may withhold in its sole discretion.

 

  (b) Efforts to Minimize. Service Provider will continually seek to identify
methods of reducing and minimizing Allegheny’s retained and Pass-Through
Expenses and will notify Allegheny of such methods and the estimated potential
savings associated with each such method.

 

  (c) Cost Savings. If Service Provider proposes an innovative, value-adding,
and cost-saving solution not previously identified by Allegheny or the Eligible
Recipients, and not otherwise required by this Agreement, that Allegheny or an
Eligible Recipient elects to implement, then Allegheny, in its sole discretion,
may agree on a case-by-case basis to share with Service Provider a percentage of
the net cost savings directly attributable to the proposed solution for a
specified period not to exceed one (1) year.

 

11.3 Procurement.

 

Service Provider shall procure and deliver certain third party products and
services for which Allegheny shall pay on a Pass-Through Expense basis or as to
which Service Provider’s Charges will be based on the third party’s invoiced
charges in accordance with Schedule 4. *** Service Provider shall also procure
products and services related to the Services, by purchase, lease, license or
contract, as the agent of Allegheny or an Eligible Recipient. In connection with
the foregoing, the following shall apply:

 

  (a) In procuring such products and services, Service Provider shall: (i) give
Allegheny and the Eligible Recipients the benefit of Service Provider’s most
favorable vendor arrangements where permitted by such vendors; (ii) use
commercially reasonable efforts to obtain the most favorable pricing and terms
and conditions then-available from any source for such products and services;
(iii) use the scale of Service Provider’s procurements on behalf of itself,
Allegheny, the Eligible Recipients and other customers as leverage in
negotiating such pricing or other terms and conditions; (iv) ensure that
Allegheny receives at least an equitable and proportionate share of the total
refunds, credits, discounts, incentives and other benefits then-available to
Service Provider in connection with such procurements; and (v) adhere to the
procurement procedures specified in the Policy and Procedures Manual, as such
procedures may be modified from time to time by Allegheny. Service Provider
shall adhere to Allegheny’s product and services standards and shall not deviate
from such standards without Allegheny’s prior approval. To the extent an
authorized Allegheny representative specifies the vendor, pricing and/or terms
and conditions for a procurement, Service Provider shall not deviate from such
instructions without Allegheny’s prior approval.

 

  (b) Service Provider may use, with Allegheny’s prior approval, master
agreements existing as of the Commencement Date that are between Allegheny and
various third party vendors to procure products and services requested by
Allegheny. Service Provider’s use of such Allegheny master agreements shall be
conditioned on and subject to the following: (i) Service Provider obtaining any
Required Consents to the use of such master agreements; (ii) Service Provider
complying with the terms and conditions of such master agreements; and
(iii) Service Provider accepting responsibility for curing any breaches by
Service Provider of such master agreements and indemnifying, in accordance with
Section 17.6, Allegheny or the Eligible Recipients for any Losses in connection
with such breaches.

 

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  (c) Service Provider may use existing agreements between Service Provider and
third party vendors or enter into new agreements with third party vendors to
procure such products and services.

 

  (d) If, at any time, Allegheny determines that the pricing and terms and
conditions available through Service Provider are not as favorable as those
Allegheny could obtain on its own, Allegheny reserves the right to select and
negotiate with the provider of such third party products and services and
Service Provider shall comply with Allegheny’s decision with respect thereto.

 

  (e) With respect to all products and services purchased by Service Provider
for Allegheny and/or the Eligible Recipients on a cost-plus, cost-reimbursement
or Pass-Through Expense basis during the course of performing the Services,
Service Provider shall use commercially available efforts to pass through, or
otherwise provide, to Allegheny and/or the applicable Eligible Recipient(s) all
benefits offered by the manufacturers and/or vendors of such products and
services (including all warranties, refunds, credits, rebates, discounts,
training, technical support and other consideration offered by such
manufacturers and vendors) except to the extent otherwise agreed by Allegheny.
If Service Provider is unable to pass through any such benefit to Allegheny
and/or the applicable Eligible Recipient(s), it shall notify Allegheny in
advance and shall not purchase such product or service without Allegheny’s prior
approval.

 

11.4 Taxes.

 

The Parties’ respective responsibilities for taxes arising under or in
connection with this Agreement shall be as follows:

 

  (a) Income Taxes. Each Party shall be responsible for its own Income Taxes.

 

  (b) Sales, Use and Property Taxes. Each Party shall be responsible for any
sales, lease, use, personal property, stamp, duty or other such taxes on
Equipment, Software or property it owns or leases from a third party, including
any lease assigned pursuant to this Agreement, and/or for which it is
financially responsible under this Agreement.

 

  (c) Recoverable Taxes. All sums payable under or in connection with this
Agreement shall be exclusive of Recoverable Taxes.

 

  (d) Taxes on Goods or Services Used by Service Provider. Service Provider
shall be responsible for all sales, service, value-added, lease, use, personal
property, excise, consumption, and other taxes and duties, including Recoverable
Taxes, payable by Service Provider on any goods or services used or consumed by
Service Provider in providing the Services (including services obtained from
Subcontractors, but excluding telecommunications taxes, fees, and surcharges to
the extent provided in Section 11.4(f)) where the tax is imposed on Service
Provider’s acquisition or use of such goods or services and the amount of tax is
measured by Service Provider’s costs in acquiring such goods or services and not
by Allegheny’s cost of acquiring such goods or services from Service Provider.

 

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  (e) Service Taxes. *** . If new or higher Service Taxes thereafter become
applicable to the Services as a result of either Party moving all or part of its
operations to a different jurisdiction (e.g., Allegheny opening a new office,
Service Provider relocating performance of Services to a shared service center
or assigning this Agreement to an Affiliate) the Party initiating such move
shall be financially responsible for such new or higher Service Taxes. ***.

 

  (f) Telecommunication Taxes, Surcharges or User Fees. To the extent Allegheny
is responsible under Schedule 4 for telecommunication taxes, surcharges or user
fees imposed by government authorities and associated with the Services and the
allocation of such taxes, fees or surcharges is within Service Provider’s or its
Subcontractors’ discretion, Service Provider and its Subcontractors shall act
fairly and equitably in allocating such taxes, fees and surcharges to Allegheny,
and Allegheny and the Eligible Recipients shall not receive more than a
proportionate share of such taxes, fees and surcharges. In addition, in the
event any such tax, fee or surcharge for which Allegheny or an Eligible
Recipient is responsible is subsequently reduced or vacated by the appropriate
regulatory authority or court of competent jurisdiction, Service Provider shall
seek on behalf of Allegheny a refund of any overpayment of such tax, fee or
surcharge by Allegheny or the Eligible Recipient, at Allegheny or the Eligible
Recipient’s reasonable request ***.

 

  (g) Notice of New Taxes and Charges. Service Provider shall promptly notify
Allegheny when it becomes aware of any new taxes or other charges (including
changes to existing taxes or charges) to be passed through and/or collected by
Allegheny under this Section. Such notification (which may be separate from the
first invoice reflecting such taxes or other charges) shall contain a detailed
explanation of such taxes or charges, including the effective date of each new
tax or charge.

 

  (h) Efforts to Minimize Taxes. The Parties shall cooperate fully with each
other to enable each Party to more accurately determine its own tax liability
and to minimize such liability to the extent legally permissible. Service
Provider’s invoices shall separately state the Charges that are subject to
taxation and the amount of taxes included therein. In the event Service Provider
does not provide invoices in such format, Service Provider shall be liable for
the entire amount of Service Tax on the invoice. Each Party will provide and
make available to the other any resale certificates, information regarding
out-of-state or out-of-country sales or use of equipment, materials, or
services, and other exemption certificates or information reasonably requested
by either Party. At Allegheny’s request, Service Provider shall provide
Allegheny with (i) a written certification signed by an authorized
representative of Service Provider confirming that Service Provider has filed
all required tax forms and returns required in connection with any Service Taxes
collected from Allegheny, and has collected and remitted all applicable Service
Taxes, and (ii) such other information pertaining to applicable Taxes as
Allegheny may reasonably request.

 

  (i) Tax Audits or Proceedings. Each Party shall promptly notify the other
Party of, and coordinate with the other Party, the response to and settlement
of, any claim for taxes asserted by applicable taxing authorities for which the
other Party is financially responsible hereunder. With respect to any claim
arising out of a form or return signed by a Party to this Agreement, such Party
will have the right to elect to control the response to and settlement of the
claim, but the other Party will have all rights to participate in the responses
and settlements to the extent of its potential responsibility or

 

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liability. Each Party also shall have the right to challenge the imposition of
any tax liability for which it is financially responsible under this Agreement
or, if necessary, to direct the other Party to challenge the imposition of any
such tax liability. If either Party requests the other to challenge the
imposition of any tax liability, such other Party shall do so (unless and to the
extent it assumes financial responsibility for the tax liability in question),
and, the requesting Party shall reimburse the other for all fines, penalties,
interest, additions to taxes or similar liabilities imposed in connection
therewith, plus the reasonable legal, accounting and other professional fees and
expenses it incurs. Each Party shall be entitled to any tax refunds or rebates
obtained with respect to the taxes for which such Party is financially
responsible under this Agreement. ***.

 

  (j) Tax Filings. Each Party represents, warrants and covenants that it will
file appropriate tax returns, and pay applicable taxes owed arising from or
related to the provision of the Services in applicable jurisdictions. Service
Provider represents, warrants and covenants that it is registered to and will
collect and remit Service Taxes in all applicable jurisdictions.

 

  (k) Survival. The provisions of this Section 11.4 will survive the expiration
or termination of this Agreement for any reason.

 

11.5 New Services.

 

  (a) Procedures. If Allegheny requests that Service Provider perform any New
Services reasonably related to the Services or other services generally provided
by Service Provider, Service Provider shall promptly prepare a *** proposal for
Allegheny’s consideration. Unless otherwise agreed by the Parties, Service
Provider shall prepare such *** proposal at no additional charge to
Allegheny***Service Provider shall deliver such ***proposal to Allegheny within
ten (10) days of its receipt of Allegheny’s request; provided, that Service
Provider shall use commercially reasonable efforts to respond more quickly in
the case of a pressing business need or an emergency situation. Allegheny shall
provide such information as Service Provider reasonably requests in order to
prepare such New Service proposal. Such New Services proposal shall include,
among other things, the following at a level of detail sufficient to permit
Allegheny to make an informed business decision: (i) a project plan and fixed
price or price estimate for the New Service; (ii) a breakdown of such price or
estimate; (iii) a description of the service levels to be associated with such
New Service; (iv) a schedule for commencing and completing the New Service;
(v) a description of the new hardware or software to be provided by Service
Provider in connection with the New Service; (vi) a description of the software,
hardware and other resources, including Resource Unit utilization, necessary to
provide the New Service; (vii) any additional facilities or labor resources to
be provided by Allegheny or the Eligible Recipients in connection with the
proposed New Service; and (viii) in the case of any Developed Materials to be
created through the provision of the proposed New Services, any ownership rights
therein that differ from the provisions of Section 14.2. Allegheny may accept or
reject any New Services proposal in its sole discretion and Service Provider
shall not be obligated to perform any New Services to the extent the applicable
proposal is rejected. Unless the Parties otherwise agree, if Allegheny accepts
Service Provider’s proposal, Service Provider will perform the New Services and
be paid in accordance with the proposal submitted by Service Provider and the
provisions of this Agreement. Upon Allegheny’s acceptance of a Service Provider
proposal for New Services, the scope of the Services will be expanded and this
Agreement will be modified to include such New Services. If Service Provider is
unable to provide such New Services using its own

 

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resources, Allegheny may require Service Provider to engage (as Service
Provider’s subcontractor) a third party approved or selected by Allegheny to
provide such services. Notwithstanding any provision to the contrary,
(A) Service Provider shall act reasonably and in good faith in formulating such
pricing proposal, (B) Service Provider shall use commercially reasonable efforts
to identify potential means of reducing the cost to Allegheny, including
utilizing Subcontractors as and to the extent appropriate, (C) such pricing
proposal shall be no less favorable to Allegheny than the pricing and labor
rates set forth herein for comparable Services, and (D) such pricing proposal
shall take into account the existing and future volume of business between
Allegheny and Service Provider.

 

  (b) Use of Third Parties. Allegheny may elect to solicit and receive bids from
third parties to perform any New Services. If Allegheny elects to use third
parties to perform New Services, (i) such New Services shall not be deemed
“Services” under the provisions of this Agreement, and (ii) Service Provider
shall cooperate with such third parties as provided in Section 4.5.

 

  (c) Services Evolution and Modification. The Parties anticipate that the
Services will evolve and be supplemented, modified, enhanced or replaced over
time to keep pace with technological advancements and improvements in the
methods of delivering Services and changes in the businesses of Allegheny and
the Eligible Recipients. The Parties acknowledge and agree that these changes
will modify the Services and will not be deemed to result in New Services unless
the changed services meet the definition of New Services.

 

  (d) Authorized User and Eligible Recipient Requests. Service Provider will
promptly inform the Allegheny Contract Executive of requests for New Services
from Authorized Users or Eligible Recipients, and shall submit any proposals for
New Services to the Allegheny Contract Executive or his or her designee. Service
Provider shall not agree to provide New Services to any Authorized Users or
Eligible Recipients without the prior written approval of the Allegheny Contract
Executive or his or her designee. If Service Provider fails to comply strictly
with this Section 11.5(d), it shall receive no compensation for any services
rendered to any person or entity in violation of such provision.

 

11.6 Extraordinary Events.

 

  (a) Definition. As used in this Agreement, an “Extraordinary Event” shall mean
a circumstance in which an event or discrete set of events has occurred or is
planned with respect to the business of Allegheny or the Eligible Recipients ***
. Examples of the kinds of events that might cause such material change in the
scope, nature or mix of the Services include the following:

 

  (i) changes in locations where the Eligible Recipients operate;

 

  (ii) changes in products of, or in markets served by, the Eligible Recipients;

 

  (iii) mergers, acquisitions, divestitures or reorganizations of the Eligible
Recipients;

 

  (iv) changes in the method of service delivery;

 

  (v) changes in the applicable regulatory environment;

 

  (vi) changes in Allegheny’s policy, technology or processes;

 

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  (vii) changes in market priorities; or

 

  (viii) changes in the business units being serviced by Service Provider.

 

  (b) Consequence. If an Extraordinary Event occurs, Allegheny may, at its
option, request more favorable pricing with respect to applicable Charges for
any affected Tower in accordance with the following:

 

  (1) Service Provider and Allegheny shall mutually determine on a reasonable
basis the efficiencies, economies, savings and resource utilization reductions,
if any, resulting from such Extraordinary Event and, upon Allegheny’s approval,
Service Provider shall then proceed to implement such efficiencies, economies,
savings and resource utilization reductions as quickly as practicable and in
accordance with the agreed upon schedule. Thereafter, as the efficiencies,
economies, savings or resource utilization reductions are realized, the Charges
specified on Schedule 4 and any affected Resource Baselines shall be promptly
and equitably adjusted to pass through to Allegheny the net benefit of such
efficiencies, economies, savings and resource utilization reductions; provided,
that Allegheny shall reimburse Service Provider for any net costs or expenses
incurred to realize such efficiencies, economies, savings or resource
utilization reductions if and to the extent Service Provider (i) notifies
Allegheny of such additional costs and obtains Allegheny’s approval prior to
incurring such costs, (ii) uses commercially reasonable efforts to identify and
consider practical alternatives, and reasonably determines that there is no
other more practical or cost effective way to obtain such savings without
incurring such expenses, and (iii) uses commercially reasonable efforts to
minimize the additional costs to be reimbursed by Allegheny.

 

  (2) An Extraordinary Event shall not result in Billable Resource Unit prices
to Allegheny being higher than such Billable Resource Unit prices would have
been if the RRCs, ARCs and other rates and charges then specified in Schedule 4
had been applied. Allegheny may, at its sole option, elect, for each
Extraordinary Event, at any time to forego its rights under this Section 11.6
and instead, apply RRCs, ARCs and other rates and charges specified in Schedule
4 to adjust the Charges.

 

11.7 Unanticipated Change.

 

If an Unanticipated Change occurs, and if Allegheny requests that the Services
should be modified to incorporate such Unanticipated Change, the Parties shall
use the procedures in Section 11.6(b) to equitably adjust the Charges and other
relevant provisions of this Agreement to take such Unanticipated Change into
account. An “Unanticipated Change” shall consist of a material change in the
technologies and/or business processes available to provide all or part of the
Services which is outside the normal evolution of technology experienced by the
information technology industry and other in-scope Services industry, that was
not generally available as of the Effective Date, and that would materially
reduce Service Provider’s cost of providing the Services.

 

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11.8 Proration.

 

Periodic charges under this Agreement are to be computed on a calendar month
basis, and shall be prorated for any partial month on a calendar day basis.

 

11.9 Refundable Items.

 

  (a) Prepaid Amounts. Where Allegheny and/or the Eligible Recipients have
prepaid for a service or function for which Service Provider is assuming
financial responsibility under this Agreement, including the items listed on
Schedule 30, Service Provider shall promptly refund to Allegheny or such
Eligible Recipient, upon either Party identifying the prepayment, that portion
of such prepaid expense which is attributable to periods on and after the
Commencement Date.

 

  (b) Refunds and Credits. If Service Provider should receive a refund, credit,
discount or other rebate for goods or services paid for by Allegheny and/or the
Eligible Recipients on a Pass-Through Expense, Retained Expense, cost-plus or
cost-reimbursement basis, then Service Provider shall (i) notify Allegheny of
such refund, credit, discount or rebate and (ii) pay the full amount of such
refund, credit, discount or rebate to Allegheny or such Eligible Recipient.

 

  (c) Allocation of Balloon, Roll-Over and Similar Payments. With respect to
contracts assigned to Allegheny pursuant to Sections 4.4(b)(4), (5), (6), and
(7), where the costs under any such contracts entered into by Service Provider,
a Service Provider Affiliate or Subcontractor are to be apportioned between the
Parties, Service Provider shall be responsible for the payment of any costs
required to be paid by Allegheny after the assignment of such contracts to
Allegheny, to the extent such costs are attributable to periods during the Term
and the provision of any Termination Assistance Services. Additionally, if
lease, license, maintenance, service charges or other periodic payments under
any such contract increase after assignment to Allegheny (other than to account
for cost of living or similar increases) (e.g., balloon or similar payments),
all such payments shall be recalculated so that, as between the Parties, the
entire cost shall be amortized evenly over the entire term of such contract. In
the case of licenses, such allocation of costs shall not apply to the initial
one-time license fees paid or payable by Service Provider. Service Provider
shall be responsible for those roll-over and recalculated costs that are
attributable to periods during the Term and the provision of any Termination
Assistance Services, and, upon assignment to Allegheny, Allegheny shall be
responsible for all other payments. Service Provider shall provide a credit to
Allegheny for any such roll-over costs and recalculated costs against any
amounts then-due and owing by Allegheny or, if there are no amounts then-owed by
Allegheny, pay such roll-over or recalculated amounts to Allegheny within thirty
(30) days after the assignment of the applicable contract to Allegheny.

 

11.10 Allegheny Benchmarking Reviews.

 

  (a) Benchmarking Review. Commencing *** Allegheny may *** engage the services
of an independent third party (a “Benchmarker”) to compare the quality and cost
of a Tower or the Services as a whole, as applicable, against the quality and
cost of other well managed service providers performing similar services to
determine whether Allegheny is receiving from Service Provider pricing and
levels of service that are competitive with market rates, prices and service
levels, given the nature, volume and type of Services provided by

 

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Service Provider hereunder (“Benchmarking”). The benchmarker shall be engaged on
terms consistent with this Section 11.10 and otherwise acceptable to Allegheny,
provided that Service Provider shall have an opportunity to review and comment
on the proposed agreement. If the Service Provider believes the agreement in the
form proposed by Allegheny is inconsistent with this Section 11.10 such that the
benchmarking is likely to be skewed in favor of Allegheny, Service Provider may
submit the issue to dispute resolution pursuant to Section 19. *** In making
this comparison, the Benchmarker shall consider the following factors, and such
other factors as it deems appropriate under the circumstances, and adjust the
prices as and to the extent appropriate: (A) whether supplier transition and
transformation charges are paid by the customer as incurred or amortized over
the term of the agreement or the manner in which such transition and
transformation charges are invoiced and paid; (B) the extent to which supplier
pricing includes the purchase of the customer’s existing assets; (C) the extent
to which supplier pricing includes the cost of acquiring future assets; (D) the
extent to which this Agreement calls for Service Provider to provide and comply
with unique Allegheny requirements; and (E) whether Service Taxes are included
in such pricing or stated separately in supplier invoices.

 

  (b) General. Any Benchmarker *** shall execute a non-disclosure agreement
substantially in the form attached hereto as Exhibit 1. Each Party shall
cooperate fully with the Benchmarker and shall provide reasonable access to any
premises, equipment, personnel or documents and provide any assistance required
by the Benchmarker to conduct the Benchmarking, all at the respective Party’s
cost and expense. The Benchmarking shall be conducted so as not to unreasonably
disrupt Service Providers’ operations under this Agreement.

 

  (c) Result of Benchmarking. If the Benchmarker finds that the Charges paid by
Allegheny for all Services or for any Tower are greater than the lowest
twenty-five percent (25%) of the prices charged by other well managed service
providers for work of a similar nature, type or volume (the “Benchmark
Standard”), ***Any adjustment to the Charges shall be made on a prospective
basis only beginning thirty (30) days after receipt of the final benchmark
report.

 

  (d) Service Provider Review and Dispute. The Benchmarker shall provide the
Parties with a copy of the Benchmarker’s report and each Party shall have ten
(10) business days to review such report. If the Parties are unable to agree
upon the validity of such findings, the matter shall be resolved pursuant to the
dispute resolution procedures set forth in Article 19. Reductions in Service
Provider’s Charges shall be implemented effective as of thirty (30) days after
the final benchmark report was provided to Service Provider.

 

  (e) Transport Rate Review. The following shall apply to the telecommunications
transport services for which Service Provider includes a separate Charge under
this Agreement for those telecommunications transport services.

 

  (i) *** Any reduction of a Transport Rate under this Agreement shall be
effective as of the date on which the corresponding reduction in the Subcontract
Transport Rate is effective.

 

  (ii) Notwithstanding the foregoing, Service Provider shall not be obligated to
disclose to Allegheny, and Allegheny shall not be entitled to audit or review,
the terms of Service Provider’s contract with the Subcontractor(s) utilized by

 

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       Service Provider to provide telecommunications transport services,
including pricing terms. However, at Allegheny’s request, Service Provider shall
cause the independent auditing firm that certifies Service Provider’s annual
financial statements, or another independent auditing firm of international
standing agreed upon by the Parties, to review the pertinent information and
methodology to verify Service Provider’s compliance with this provision.
Allegheny shall reimburse Service Provider for any fees or expenses of such
independent auditor(s) reasonably incurred by Service Provider in connection
with any requested review, provided (i) Service Provider notifies Allegheny of
such fees and expenses and obtains Allegheny’s approval prior to incurring them
and (ii) Service Provider uses commercially reasonable efforts to minimize the
amounts to be paid or reimbursed by Allegheny.

 

11.11 Efforts to Reduce Costs and Charges. From time to time, Allegheny may
request that the Parties work together to identify ways to achieve reductions in
the cost to Allegheny of the Services and corresponding reductions in the
Charges to be paid by Allegheny by modifying or reducing the nature or scope of
the Services to be performed by Service Provider, the applicable Service Levels
or other contract requirements. If requested by Allegheny, Service Provider
shall promptly prepare a proposal at a level of detail sufficient to permit
Allegheny to make an informed business decision identifying all viable means of
achieving the desired reductions without adversely impacting business objectives
or requirements identified by Allegheny. In preparing such a proposal, Service
Provider shall give due consideration to any means of achieving such reductions
proposed by Allegheny. ***Allegheny shall not be obligated to accept or
implement any proposal, and Service Provider shall not be obligated to implement
any change that affects the terms of this Agreement, unless and until such
change is reflected in a written amendment to this Agreement.

 

12. INVOICING AND PAYMENT

 

12.1 Invoicing.

 

  (a) Invoice. Within seven (7) days after the beginning of each month, Service
Provider will present Allegheny with an invoice (the “Monthly Invoice”) for
(i) the fixed portion of the Monthly Base Charges for the current month, and
(ii) any variable Charges due and owing for the preceding month, including
Charges for ARCs and RRCs, ***. The invoice shall be delivered to Allegheny, at
its request, at the address(es) listed in Section 21.3, and/or electronically.
Except as otherwise provided above, Service Provider shall not invoice Allegheny
for any advance or concurrent charges.

 

  (b) Form and Data. At Allegheny’s request, Service Provider shall provide
separate Monthly Invoices for each Allegheny Affiliate or Eligible Recipient
then receiving Services, allocated among such Affiliates or Eligible Recipients
based on the chargeback data generated by Service Provider and/or the allocation
formula provided by Allegheny, provided that if the number of such invoices
exceeds ten (10) per month then Service Provider may condition the delivery of
additional invoices on reimbursement of any additional direct incremental costs
incurred by Service Provider in producing such additional invoices. Each invoice
shall be in the form specified in Exhibit 2 and shall (i) comply with all
applicable legal, regulatory and accounting requirements, (ii) allow Allegheny
to validate volumes and fees, (iii) permit Allegheny to chargeback internally to
the same organizational level and at the same level of detail in use by
Allegheny, as provided by Allegheny from time to time, and (iv) meet Allegheny’s
and the Eligible

 

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Recipient’s business accounting and billing requirements as provided by
Allegheny from time to time. Each invoice shall include the pricing calculations
and related data utilized to establish the Charges and sufficient information to
validate the service volumes and associated Charges. The data underlying each
invoice shall be delivered to Allegheny electronically (if requested by
Allegheny) and in a form and format compatible with Allegheny’s accounting
systems, as provided by Allegheny from time to time.

 

  (c) ***

 

  (d) Time Limitation. For the Monthly Base Charges, if Service Provider fails
to provide an invoice to Allegheny for any amount within one hundred eighty
(180) days after the month in which the Services in question are rendered or the
expense incurred, Service Provider shall waive any right it may otherwise have
to invoice for and collect such amount, except in the case of Service Taxes,
which will be invoiced by Service Provider to Allegheny within thirty (30) days
of Service Provider receiving notice of an assessment for such Service Taxes.

 

12.2 Payment Due.

 

Subject to the other provisions of this Article 12, each Monthly Invoice
provided for under Section 12.1 is due and payable by Allegheny by wire transfer
in immediately available funds within thirty (30) days after receipt by
Allegheny of such Monthly Invoice unless the amount in question is disputed in
accordance with Section 12.4. Any amount due under this Agreement for which a
time for payment is not otherwise specified also shall be due and payable within
thirty (30) days, *** The Parties agree that invoicing and payment will be by
and between U.S. companies in U.S. dollars. Any amounts not paid when due will
bear interest from the date due until paid at a rate equal to the Interest Rate.

 

12.3 Set Off.

 

With respect to any amount to be paid or reimbursed by Allegheny hereunder,
Allegheny may set off against such amount any undisputed amount that Service
Provider is obligated to pay Allegheny hereunder. Allegheny shall have the right
to subsequent withholding or set off if and to the extent Allegheny paid an
amount which it previously had a right to withhold.

 

12.4 Disputed Charges.

 

Allegheny may withhold payment of particular Charges that Allegheny reasonably
disputes in good faith subject to the following:

 

  (a) Notice of Dispute. If Service Provider’s invoice includes sufficient
detail and supporting documentation to enable Allegheny to reasonably determine
whether Service Provider’s Charges are in accordance with this Agreement,
Allegheny shall notify Service Provider [***] if it disputes any of the Charges
in such invoice.

 

  (b) Notice of Insufficient Detail, Documentation and Dispute. If Service
Provider’s invoice does not include sufficient detail and supporting
documentation to enable Allegheny to reasonably determine whether Service
Provider’s Charges are in accordance with this Agreement, Allegheny shall so
notify Service Provider ***. Service Provider shall promptly provide such
reasonable detail and supporting documentation, and Allegheny shall notify
Service Provider *** whether it disputes any of the Charges in Service
Provider’s invoice.

 

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  (c) Description and Explanation. If Allegheny disputes any Service Provider
Charges, Allegheny shall so notify Service Provider and provide a description of
the particular Charges in dispute and an explanation of the reason why Allegheny
disputes such Charges.

 

  (d) ***

 

  (e) Continued Performance. Each Party agrees to continue performing its
obligations under this Agreement while any dispute is being resolved unless and
until such obligations are terminated by the termination or expiration of this
Agreement.

 

  (f) No Waiver. Neither the failure to dispute any Charges or amounts prior to
payment nor the failure to withhold any amount shall constitute, operate or be
construed as a waiver of any right Allegheny may otherwise have to dispute any
Charge or amount or recover any amount previously paid.

 

13. ALLEGHENY DATA AND OTHER PROPRIETARY INFORMATION

 

13.1 Allegheny Ownership of Allegheny Data.

 

Allegheny Data is and shall remain the property of Allegheny (and/or the
applicable Eligible Recipients). Service Provider shall promptly deliver
Allegheny Data (or the portion of such Allegheny Data specified by Allegheny) to
Allegheny in the format and on the media prescribed by Allegheny (i) at any time
at Allegheny’s request, (ii) at the end of the Term and the completion of all
requested Termination Assistance Services (except Contract Records, which shall
be retained by Service Provider for the Audit Period specified in
Section 9.10(a) unless and to the extent Service Provider is directed by
Allegheny to deliver such Contract Records to Allegheny prior to the expiration
of such audit period), or (iii) with respect to particular Allegheny Data, at
such earlier date that such data are no longer required by Service Provider to
perform the Services. Thereafter, Service Provider shall return or destroy, as
directed by Allegheny, all copies of the Allegheny Data in Service Provider’s
possession or under Service Provider’s control as soon as possible, but in any
event within ten (10) business days and deliver to Allegheny written
certification of such return or destruction signed by an authorized
representative of Service Provider. Service Provider shall not withhold any
Allegheny Data as a means of resolving any dispute. Allegheny Data shall not be
utilized by Service Provider for any purpose other than the performance of
Services under this Agreement and, to the extent necessary and subject to the
provisions of Section 13.4, the resolution of any then-current disputes that may
arise between the Parties hereunder, and Service Provider shall at all times
comply with Allegheny’s privacy policy, as modified by Allegheny from time to
time ***. Allegheny Data shall not be sold, assigned, leased, encumbered,
commercially exploited or otherwise provided to third parties by or on behalf of
Service Provider or any Service Provider Personnel. Service Provider shall
promptly notify Allegheny if it believes that any use of Allegheny Data by
Service Provider contemplated under this Agreement or to be undertaken as part
of the Services is inconsistent with the foregoing.

 

13.2 Safeguarding Allegheny Data.

 

  (a) Safeguarding Procedures. Service Provider shall establish and maintain
environmental, safety and facility procedures, data security procedures and
other safeguards against the

 

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destruction, loss, unauthorized access or alteration of Allegheny Data in the
possession of Service Provider which are (i) no less rigorous than those
maintained by Allegheny as of the Effective Date (or implemented by Allegheny in
the future to the extent deemed necessary by Allegheny), including Allegheny’s
privacy, security and records retention policies which have been provided or
made available by Allegheny to Service Provider in writing (which may include
electronic communications and notices of the applicable information contained on
a website with directions to the relevant location on the website that contains
such information) and the security and control requirements under this
Agreement, and (ii) no less rigorous than those maintained by Service Provider
for its own information of a similar nature, which shall be no less rigorous
than accepted security standards in the industry (such as ISO 17799). Within
sixty (60) days following the Effective Date, Service Provider shall evaluate
the then-current Allegheny security policy and shall prepare and submit for
Allegheny review and approval recommendations with respect to changes or
modifications to such policy. Service Provider shall maintain and enforce the
then-current Allegheny security policy until any changes or modifications are
approved by Allegheny for implementation. *** Allegheny shall have the right to
establish backup security for Allegheny Data and to keep backup copies of the
Allegheny Data in Allegheny’s possession at Allegheny’s expense if Allegheny so
chooses. Service Provider shall provide Allegheny with downloads of Allegheny
Data, as requested and directed by Allegheny, to enable Allegheny to maintain
such backup security or backup copies of Allegheny Data. Service Provider shall
remove all Allegheny Data from any media taken out of service and shall destroy
or securely erase such media in accordance with the Policy and Procedures
Manual. No media on which Allegheny Data is stored may be used or re-used to
store data of any other customer of Service Provider or to deliver data to a
third party, including another Service Provider customer, unless securely erased
in accordance with the Policy and Procedures Manual. In the event Service
Provider discovers or is notified of a breach or potential breach of security
relating to Allegheny Data in the possession or control of Service Provider or
its Affiliates or Subcontractors, Service Provider shall (A) expeditiously
notify Allegheny of such breach or potential breach, (B) investigate such breach
or potential breach and perform a Root Cause Analysis thereon, (C) remediate the
effects of such breach or potential breach of security to the extent possible,
(D) provide Allegheny with such assurances as Allegheny shall reasonably request
that such breach or potential breach will not recur and (E) provide periodic
updates during the investigation to Allegheny and provide Allegheny the root
cause analysis reports. To the extent Service Provider cannot remediate any
breach or potential breach of security relating to Allegheny Data in the
possession or control of Service Provider or its Affiliates or Subcontractors
within the time period desired by Allegheny, Allegheny will reprioritize the
Services, in accordance with Section 4.7, and Allegheny’s business requirements
to help make Service Provider Personnel then-assigned to the Allegheny account
available to perform such remediation or at Allegheny’s option require that
Service Provider provide required additional resources at the *** under this
Agreement.

 

  (b) Reconstruction Procedures. As part of the Services, Service Provider shall
be responsible for developing and maintaining procedures for the reconstruction
of lost Allegheny Data which are (i) no less rigorous than those maintained by
Allegheny as of the Effective Date (or implemented by Allegheny in the future to
the extent deemed necessary by Allegheny), and (ii) no less rigorous than those
maintained by Service Provider for its own information of a similar nature. As
soon as practicable following the Effective Date, Service Provider shall provide
Allegheny with copies of Service Provider’s procedures for the reconstruction of
lost Allegheny Data for Allegheny’s review and approval. Allegheny will provide
Service Provider with access to Allegheny’s existing

 

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documentation, and Service Provider will document all of Allegheny’s procedures
for the reconstruction of lost Allegheny Data in the Policy and Procedures
Manual (as supplemented by or replaced with those Service Provider procedures
that are approved by Allegheny).

 

  (c) Corrections. Where Allegheny has instructed, or where Schedule 2 provides,
that Allegheny Data is to be backed up by Service Provider and retained to
enable such data restoration, Service Provider shall restore all destroyed, lost
or altered Allegheny Data using generally accepted data restoration techniques.
In addition, if Service Provider or its Affiliates or Subcontractors has caused
the destruction, loss or alteration of any Allegheny Data, Service Provider
shall be responsible for the cost of restoring such data. *** Service Provider
shall at all times adhere to the procedures and safeguards specified in
Section 13.2(a) and (b) and shall correct (including any required back-up or
restoration of data from scheduled backups, or if not available on such backups,
restoration by other means with Allegheny’s reasonable cooperation), at no
charge to Allegheny, any destruction, loss or alteration of any Allegheny Data
attributable to the failure of Service Provider or Service Provider Personnel to
comply with Service Provider’s obligations under this Agreement.

 

  (d) Advice on Better Procedures. Where not limited from doing so by customer
confidentiality concerns, Service Provider shall regularly advise Allegheny of
data security practices, procedures and safeguards in effect for other Service
Provider customers, where such practices, procedures and safeguards are of a
higher standard than those contemplated under this Agreement.

 

13.3 Allegheny and Service Provider Personal Data.

 

  (a) Compliance with Data Privacy Laws. Service Provider shall comply with the
provisions of and the obligations imposed on Service Provider under applicable
Data Privacy Laws. In addition, Service Provider shall provide Allegheny with
such assistance as Allegheny may reasonably require to fulfill the
responsibilities of Allegheny and the Eligible Recipients under such Data
Privacy Laws. Service Provider also shall comply with the data privacy policies
of Allegheny, as well as the global data privacy policies of any self-regulatory
organizations to which Allegheny or the Eligible Recipients belong to the extent
(i) Allegheny has provided or made available in writing to Service Provider such
data privacy policies (which may include electronic communications and notices
of the applicable information contained on a website with directions to the
relevant location on the website that contains such information) and (ii) such
policies are applicable to Service Provider in its role as a third party service
provider to Allegheny and the Eligible Recipients in relation to Allegheny
Personal Data.

 

  (b) Return of Personal Data. All Allegheny Personal Data acquired by Service
Provider shall be returned or destroyed (at the option of Allegheny) by Service
Provider on request in accordance with Section 13.1, unless and to the extent
such Allegheny Personal Data is required by Service Provider to discharge its
obligations hereunder or under applicable Laws (including applicable Data
Privacy Laws).

 

  (c) Service Provider Responsible for Third Parties. Service Provider shall be
responsible for the acts and omissions of any Subcontractor or other third party
that processes (within the meaning of the applicable Data Privacy Laws)
Allegheny Personal Data on Service Provider’s behalf in the same manner and to
the same extent as it is responsible for its own acts and omissions with respect
to such Allegheny Personal Data.

 

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  (d) Personal Data Security. Without limiting Service Provider’s obligations
under Section 13.2 or otherwise with respect to data security, Service Provider
shall:

 

  (i) take commercially reasonable steps to ensure the reliability of Service
Provider Personnel who have access to, and who are responsible for the security
of, the Allegheny Personal Data;

 

  (ii) provide Allegheny or the relevant Eligible Recipient with such
information, assistance and cooperation as Allegheny or such Eligible Recipient
may reasonably require from time to time to establish Allegheny’s or any
Eligible Recipient’s compliance with the obligations relating to security
contained in the Data Privacy Laws; and

 

  (iii) inform Allegheny or the relevant Eligible Recipient as soon as
reasonably practicable of any particular risk to the security of any of their
computer networks of which Service Provider becomes aware and of the categories
of Allegheny Personal Data and individuals that may be affected.

 

  (e) Further Data Processor Obligations. Service Provider shall promptly, and
in any event not later than reasonably required in order to enable Allegheny or
the relevant Eligible Recipient to fulfill its duties under any Data Privacy
Law:

 

  (i) pass on to Allegheny or the relevant Eligible Recipient any inquiries or
communication (including subject access requests) from end users relating to
their Allegheny Personal Data or its processing; and

 

  (ii) provide such information as may be required for the purpose of responding
to any such end users or otherwise necessary for Allegheny to comply with duties
under Data Privacy Laws.

 

Service Provider shall at all times act in a manner consistent with the
requirements of any and all codes relating to personal data processing which are
generally accepted within the finance and accounting and human resources
outsourcing sectors in so far as they are relevant to the Services performed by
Service Provider and in so far as they are applicable to the Service Provider in
its role as a data processor in relation to Allegheny Personal Data. ***.

 

  (f) Service Provider Personal Data. During the Term and in connection with
their performance, Allegheny or the Eligible Recipients may receive personal
data of or relating to employees of Service Provider or its Affiliates or
Subcontractors. Allegheny agrees that it will use any such personal information
for the sole purposes of this Agreement, that it will use the same means as it
uses to protect its own employees’ personal information, but in no event less
than reasonable means considering the information involved, to prevent the
disclosure and to protect such personal data from unauthorized access by any
person, and that it shall not disclose such personal information to any third
party, other than Eligible Recipients and third parties who are permitted to
such information pursuant to this Section 13, without the express consent of
Service Provider.

 

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13.4 Confidentiality.

 

  (a) Proprietary Information. Service Provider and Allegheny each acknowledge
that the other possesses and will continue to possess information that has been
developed or received by it, has commercial value in its or its customers’
business and is not generally available to the public. Except as otherwise
specifically agreed in writing by the Parties, “Proprietary Information” shall
mean (i) this Agreement and the terms hereof and thereof, (ii) all information
marked confidential, restricted or proprietary by either Party, and (iii) any
other information that is treated as confidential by the disclosing Party and
would reasonably be understood to be confidential, whether or not so marked. In
the case of Allegheny and the Eligible Recipient, Proprietary Information also
shall include Software provided to Service Provider by or through Allegheny or
the Eligible Recipients, Developed Materials, Allegheny Data, attorney-client
privileged materials and attorney work product of Allegheny and the Eligible
Recipients, customer lists, customer contracts, customer information, rates and
pricing, information with respect to competitors, strategic plans, account
information, rate case strategies, research information, plant and equipment
design information, financial/accounting information (including assets,
expenditures, mergers, acquisitions, divestitures, billings collections,
revenues and finances), human resources and personnel information,
marketing/sales information, information regarding businesses, plans,
operations, third party contracts, licenses, internal or external audits, law
suits, regulatory compliance (including compliance with information sharing that
may violate the FERC Code of Conduct) or other information or data of Allegheny
or other Eligible Recipients obtained, received, transmitted, processed, stored,
archived, or maintained by Service Provider under this Agreement. By way of
example, Allegheny Proprietary Information shall include plans for changes in
Allegheny’s or an Eligible Recipient’s facilities, business units and product
lines, plans for business mergers, acquisitions or divestitures, rate
information, plans for the development and marketing of new products, financial
forecasts and budgets, technical proprietary information, employee lists and
company telephone or e-mail directories. In the case of Service Provider,
Proprietary Information shall include financial and pricing information, account
information, information regarding Service Provider’s business plans and
operations, research information, human resources and personnel information,
trade secrets, third party contracts or licenses, , and proprietary Systems,
software, tools and methodologies owned by Service Provider and used in the
performance of the Services. The terms of, and performance reports issued in
connection with, this Agreement will be deemed the Proprietary Information of
each Party and neither Party may disclose such Proprietary Information without
the prior written consent of the other Party; provided that the foregoing shall
not restrict Allegheny from disclosing Proprietary Information relating to
(1) the financial or operational terms of this Agreement and/or Service
Provider’s performance hereunder (e.g., applicable Service Levels and
measurements of Service Provider’s performance with respect to such Service
Levels) in connection with a benchmarking under Section 11.10 or (2) Allegheny’s
operations, the Services, the Service Levels and Allegheny’s costs for the
Services (but not the Charges) in connection with the solicitation of proposals
for or the procurement of the same or similar services from Allegheny Third
Party Contractors.

 

  (b) Obligations.

 

  (i) During the term of this Agreement and at all times thereafter as specified
in Section 13.4(f), Service Provider and Allegheny shall not disclose, and shall
maintain the confidentiality of, all Proprietary Information of the other Party

 

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       (and in the case of Service Provider, the Eligible Recipients). Allegheny
and Service Provider shall each use at least the same degree of care to
safeguard and to prevent disclosing to third parties the Proprietary Information
of the other as it employs to avoid unauthorized disclosure, publication,
dissemination, destruction, loss, or alteration of its own information (or
information of its customers) of a similar nature, but not less than reasonable
care. Service Provider Personnel shall not have access to Allegheny Proprietary
Information without proper authorization. Upon receiving such authorization,
authorized Service Provider Personnel shall have access to Allegheny Proprietary
Information only to the extent necessary for such person to perform his or her
obligations under or with respect to this Agreement or as otherwise naturally
occurs in such person’s scope of responsibility, provided that such access is
not in violation of Law.

 

  (ii) The Parties may disclose Proprietary Information to their Affiliates,
auditors, attorneys, accountants, consultants, contractors and subcontractors,
where (A) use by such person or entity is authorized under this Agreement,
(B) such disclosure is necessary for the performance of such person’s or
entity’s obligations under or with respect to this Agreement or otherwise
naturally occurs in such person’s or entity’s scope of responsibility, (C) the
entity (or where no entity, an individual) agrees in writing to assume the
obligations described in this Section 13.4, and (D) the disclosing Party assumes
full responsibility for the acts or omissions of such person or entity and takes
all reasonable measures to ensure that the Proprietary Information is not
disclosed or used in contravention of this Agreement. Any disclosure to such
person or entity shall be under the terms and conditions as provided herein.
Each Party’s Proprietary Information shall remain the property of such Party.
The Parties may, to the extent required and subject to appropriate
confidentiality notices, provide Proprietary Information to tax authorities and
advisors, pertinent to tax filings, claims, and assessments without notification
to or approval by the other Party.

 

  (iii) Neither Party shall (A) make any use or copies of the Proprietary
Information of the other Party except as contemplated by this Agreement,
(B) acquire any right in or assert any lien against the Proprietary Information
of the other Party, (C) sell, assign, transfer, lease, or otherwise dispose of
Proprietary Information to third parties or commercially exploit such
information, including through Derivative Works, or (D) refuse for any reason
(including a default or material breach of this Agreement by the other Party) to
promptly provide the other Party’s Proprietary Information (including copies
thereof) to the other Party if requested to do so. Notwithstanding the
foregoing, (1) either Party may disclose Proprietary Information relating to the
financial or operational terms of this Agreement and/or Service Provider’s
performance hereunder (e.g., applicable Service Levels and measurements of
Service Provider’s performance with respect to such Service Levels) in
connection with a benchmarking under Section 11.10 and (2) Allegheny may
disclose Proprietary Information relating to Allegheny’s operations, the
Services, the Service Levels and Allegheny’s costs for the Services (but not the
Charges) in connection with the solicitation of proposals for or the procurement
of the same or similar services from Allegheny Third Party Contractors. Upon
expiration or any termination of this Agreement and completion of each Party’s
obligations under this Agreement,

 

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       each Party shall return or destroy, as the other Party may direct, all
documentation in any medium that contains, refers to, or relates to the other
Party’s Proprietary Information within thirty (30) days (except Contract
Records, which shall be retained by Service Provider for the Audit Period
specified in Section 9.10(a) unless and to the extent Service Provider is
directed by Allegheny to deliver such Contract Records to Allegheny prior to the
expiration of such audit period). Each Party shall deliver to the other Party
written certification of its compliance with the preceding sentence signed by an
authorized representative of such Party. Notwithstanding the foregoing, each
Party may maintain an archival copy of the other Party’s Proprietary Information
solely as necessary to comply with Laws or to protect its rights with respect to
any then-current dispute under this Agreement. In addition, each Party shall
take all necessary steps to ensure that its employees comply with these
confidentiality provisions.

 

  (c) Exclusions. Section 13.4(b) shall not apply to any particular information
which the receiving Party can demonstrate (i) is, at the time of disclosure to
it, generally available to the public other than through a breach of the
receiving Party’s or a third party’s confidentiality obligations, (ii) after
disclosure to it, is published by the disclosing Party or otherwise becomes
generally available to the public other than through a breach of the receiving
Party’s or a third party’s confidentiality obligations, (iii) is lawfully in the
possession of the receiving Party at the time of disclosure to it, (iv) is
received from a third party having a lawful right to disclose such information,
or (v) is independently developed by the receiving Party without reference to
Proprietary Information of the furnishing Party; provided, however, that the
exclusions in the foregoing subsections (i) and (ii) shall not be applicable to
the extent that the disclosure or sharing of such information by one or both
Parties is subject to any limitation, restriction, consent or notification
requirement under any applicable federal or state information privacy law or
regulation then in effect. The Parties acknowledge and agree that Proprietary
Information that is not generally available to the public shall not be deemed
public or subject to this exclusion merely because it is combined with
information that is generally available to the public. In addition, the
receiving Party shall not be considered to have breached its obligations under
this Section 13.4 for disclosing Proprietary Information of the other Party as
required, in the opinion of legal counsel, to satisfy any legal requirement of a
competent government body, provided that, promptly upon receiving any such
request, such Party, to the extent it may legally do so, advises the other Party
of the Proprietary Information to be disclosed and the identity of the third
party requiring such disclosure prior to making such disclosure in order that
the other Party may interpose an objection to such disclosure, take action to
assure confidential handling of the Proprietary Information, or take such other
action as it deems appropriate to protect the Proprietary Information. The
receiving Party shall use commercially reasonable efforts to cooperate with the
disclosing Party in its efforts to seek a protective order or other appropriate
remedy or in the event such protective order or other remedy is not obtained, to
obtain assurance that confidential treatment will be accorded such Proprietary
Information.

 

  (d) Loss of Proprietary Information. Each Party shall (i) immediately notify
the other Party of any possession, use, knowledge, disclosure, or loss of such
other Party’s Proprietary Information in contravention of this Agreement,
(ii) promptly furnish to the other Party all known details and assist such other
Party in investigating and/or preventing the reoccurrence of such possession,
use, knowledge, disclosure, or loss, (iii) cooperate with the other Party in any
investigation or litigation deemed necessary by such other Party to

 

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protect its rights, and (iv) promptly use commercially reasonable efforts to
prevent further possession, use, knowledge, disclosure, or loss of Proprietary
Information in contravention of this Agreement. Each Party shall bear any costs
it incurs in complying with this Section 13.4(d).

 

  (e) No Implied Rights. Nothing contained in this Section 13.4 shall be
construed as obligating a Party to disclose its Proprietary Information to the
other Party, or as granting to or conferring on a Party, expressly or impliedly,
any rights or license to any Proprietary Information of the other Party.

 

  (f) Survival. The limitations on use and disclosure by Service Provider with
respect to Allegheny Personal Data and Allegheny’s human resources and personnel
information shall survive the expiration or termination of this Agreement and
shall be perpetual. The Parties’ obligations of non-disclosure and
confidentiality with respect to all other Proprietary Information shall survive
the expiration or termination of this Agreement for a period of seven (7) years
from the later of (i) the expiration or termination of this Agreement (including
all periods of Termination Assistance Services), or (ii) the return or
destruction of Proprietary Information in accordance with Sections 13.1 and
13.4(b)(iii) (but not including accounting information pertaining to this
Agreement that Service Provider is required to maintain pursuant to applicable
Laws); provided, however, that the passage of this seven (7) year period shall
not absolve either Party of responsibility for any breach of this Article 13
occurring prior to the expiration of such seven (7) year period.

 

13.5 File Access.

 

Subject to the limitations expressly noted in this Section 13.5, Allegheny shall
have unrestricted access to, and the right to review and retain the entirety of,
all computer or other files containing Allegheny Data, as well as all systems
and network logs, system parameters and documentation. At no time shall any of
such files or other materials or information be stored or held in a form or
manner not readily accessible to Allegheny. Service Provider shall provide to
the Allegheny Contract Executive all passwords, codes, comments, keys,
documentation and the locations of any such files and other materials promptly
upon the request of Allegheny, including Equipment and Software keys and such
information as to format, encryption (if any) and any other specification or
information necessary for Allegheny to retrieve, read, revise and/or maintain
such files and information. Upon the request of the Allegheny Contract
Executive, Service Provider shall confirm that, to the best of its knowledge,
all files and other information provided to Allegheny are complete and that no
material element, amount, or other fraction of such files or other information
to which Allegheny may request access or review has been deleted, withheld,
disguised or encoded in a manner inconsistent with the purpose and intent of
providing full and complete access to Allegheny as contemplated by this
Agreement. In exercising its rights under this Section 13.5, Allegheny shall
comply with Service Provider’s reasonable security and confidentiality
requirements, and, to the extent such access requires use of Service Provider’s
software, equipment, systems or facilities, shall comply with Service Provider’s
reasonable security and confidentiality requirements, and with Service
Provider’s reasonable standards and procedures in order to avoid disclosure of
or access to any information of any other Service Provider customers, or other
Service Provider Proprietary Information that Allegheny is not otherwise
entitled to obtain pursuant to this Agreement, including Service Provider’s
internal costs.

 

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13.6 Requirements for Information in Legal Proceedings.

 

  (a) Preservation of Legal Privileges. If Allegheny notifies Service Provider,
or Service Provider is otherwise aware, that particular Allegheny Data or
Allegheny Proprietary Information may be within Allegheny attorney-client or
work-product privileges of Allegheny, then regardless of any applicable
exclusions, Service Provider (i) shall not disclose such Allegheny Data or
Allegheny Proprietary Information or take any other action that would result in
waiver of such privileges and (ii) shall instruct all Service Provider Personnel
and Subcontractors who may have access to such communications to maintain
privileged material as strictly confidential and otherwise protect Allegheny
privileges. Communications to and from any lawyer employed or retained on behalf
of Allegheny shall be deemed to contain privileged material unless Allegheny
otherwise states, and Service Provider acknowledges it is aware of this.

 

  (b) Litigation Response Plan. If Allegheny so requests, Service Provider shall
participate in periodic meetings to discuss implementation and updating of
policies and procedures to prepare for and respond to discovery requests,
subpoenas, investigatory demands, and other requirements for information related
to legal and regulatory audits and proceedings (the “Litigation Response Plan”).
At such meetings, Service Provider shall fully cooperate with Allegheny in
providing all information requested by Allegheny or that would assist Allegheny
in connection with such Litigation Response Plan. Service Provider shall comply
with the Litigation Response Plan as it may be revised by Allegheny from time to
time, including preparing for and complying with requirements for the
preservation and production of data in connection with legal and regulatory
proceedings and government investigations; provided that if such work was not
previously performed by Allegheny Personnel whose functions were displaced by
the Services (including, for the avoidance of doubt, such work performed by
Directed Allegheny Employees), ***

 

  (c) Response to Preservation and Production Requirements.

 

  (i) If Allegheny is required to, or sees a risk that it will be required to,
preserve and/or produce any Materials, Allegheny Data, Allegheny Proprietary
Information or related Systems possessed by Service Provider or under Service
Provider’s control in the context of legal proceedings or investigations
(“Litigation Data”), Allegheny may send Service Provider a notice (a “Litigation
Requirements Notice”) describing the Litigation Data to be preserved or produced
in reasonable detail. If Allegheny so requests, Service Provider shall promptly
provide Allegheny with information needed to determine with greater specificity
the scope of the request.

 

  (ii) Upon receipt of a Litigation Requirements Notice, Service Provider shall
(A) designate a legal information management representative who shall be
responsible for managing Service Provider’s response and any resulting Services
and (B) cooperate with Allegheny to the fullest extent to preserve and/or
produce the Litigation Data described in such Litigation Requirements Notice.

 

  (iii) Without limiting the foregoing, Service Provider shall immediately take
all necessary measures to preserve all Litigation Data described in a Litigation
Requirements Notice and unless otherwise instructed by Allegheny, to deliver
such Litigation Data to Allegheny by the date set forth in the Litigation

 

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Requirements Notice (or within thirty (30) days, if no date is given). If
Service Provider is unable to determine from the Litigation Requirements Notice
what Litigation Data is to be preserved and/or produced, or is not able for
technical or other reasons to take effective steps to fully preserve or produce
such Litigation Data, Service Provider shall immediately so notify Allegheny and
undertake all necessary measures to comply with the Litigation Requirements
Notice to the fullest extent possible.

 

  (iv) Service Provider shall cooperate with Allegheny in generating information
to be presented in legal proceedings, including, as Allegheny requests,
(A) estimates of Allegheny’s costs, (B) descriptions of systems, data, media and
processes, (C) reports, declarations and affidavits, (D) reasons why it may be
infeasible to preserve or produce certain items, and (E) other material as
requested by Allegheny, so long as it does not require the disclosure of Service
Provider Proprietary Information or internal cost information that Allegheny
does not have a right to obtain. Any disclosure of Service Provider’s
Proprietary Information will be subject to the confidentiality requirements in
Section 13.4(c). Without limiting the generality of the foregoing, Service
Provider shall fully document all actions taken by Service Provider pursuant to
any Litigation Requirements Notice. Service Provider shall promptly report to
Allegheny on its activities related to complying with the requirements described
in the Litigation Requirements Notice, and shall issue periodic reports pursuant
to Section 9.2 on a schedule to be agreed to by the Parties.

 

  (d) Service Provider Responsibility for Allegheny Information. Upon receipt by
Service Provider from a third party of any request, demand, notice, subpoena,
order or other legal information request relating to legal proceedings or
investigations relating to any Materials, Allegheny Data, Allegheny Proprietary
Information or related Systems in Service Provider’s possession (“Third Party
Litigation Data”), Service Provider shall expeditiously notify the Allegheny
Contract Executive (or his or her designee) and provide Allegheny with a copy of
all Third Party Litigation Data requested, to the extent Service Provider
legally may do so. Prior to responding to such legal information request,
Service Provider shall meet and confer with Allegheny and shall cooperate with
Allegheny in preserving Allegheny’s legal rights, including objections,
reservations, limitations and privileges, relating to such legal information
request. If legally permissible, Allegheny at its sole discretion may demand
tender of the request by Service Provider and assume primary responsibility for
responding, in which case (i) Service Provider shall cooperate fully with
Allegheny in preparing the response and (ii) Allegheny shall inform Service
Provider of all proceedings related to the response and protect Service
Provider’s interests and legal rights. If Service Provider is barred legally
from notifying Allegheny of the legal information request, Service Provider
shall take commercially reasonable steps to protect Allegheny’s legal rights in
connection with any response.

 

  (e) Cost of Compliance. The Parties acknowledge that compliance with this
Section 13.6 may, in some cases, constitute New Services for which Service
Provider is entitled to additional compensation. However, in no event shall
Service Provider be entitled to any additional compensation for New Services
under this subsection unless the Allegheny Contract Executive and the Service
Provider Account Manager, or their authorized designees, expressly agree upon
such additional compensation or Service Provider’s entitlement to additional
compensation is established through the dispute resolution process. ***.

 

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14. OWNERSHIP OF MATERIALS

 

14.1 Allegheny Owned Materials.

 

  (a) Ownership of Allegheny Owned Materials. Allegheny shall be the sole and
exclusive owner of (i) all intellectual property, Software and other Materials
owned by Allegheny or the Eligible Recipients, including Allegheny Owned
Software and other Materials owned by Allegheny and the Eligible Recipients, and
(ii) all enhancements and Derivative Works of such intellectual property,
Software and other Materials, including all United States and foreign patent,
copyright and other intellectual property rights in such Materials
(collectively, “Allegheny Owned Materials”). As between Allegheny and Service
Provider, Allegheny Owned Materials shall include (A) all intellectual property,
Software and other Materials pertaining to Allegheny products or services
created by or obtained from sellers, distributors, purchasers or users of such
products or services, and (B) all enhancements or derivative works of such
intellectual property, Software and other Materials.

 

  (b) License to Allegheny Owned Materials. As of the Commencement Date,
Allegheny hereby grants Service Provider and, to the extent necessary for
Service Provider to provide the Services, to Subcontractors designated by
Service Provider that sign a written agreement to be bound by all of the terms
contained herein applicable to such Materials (such agreement shall be agreed to
by the Parties and shall include the terms specified in this Section as well as
those pertaining to the ownership of such Materials and any Derivative Works
developed by the Parties, the scope and term of the license, the restrictions on
the use of such Materials, the obligations of confidentiality, etc.) a
non-exclusive, non-transferable, royalty-free limited right and license during
the Term (and thereafter to the extent necessary to perform any Termination
Assistance Services requested by Allegheny) to access, use, execute, reproduce,
display, perform, modify and distribute the Allegheny Owned Materials for the
express and sole purpose of providing the Services. Service Provider and its
Subcontractors shall have no right to the source code to such Allegheny Owned
Materials unless and to the extent approved in advance by Allegheny. Allegheny
Owned Materials shall remain the property of Allegheny. Service Provider and its
Subcontractors shall not (i) use any Allegheny Owned Materials for the benefit
of any person or Entity other than Allegheny or the Eligible Recipients,
(ii) separate or uncouple any portions of the Allegheny Owned Materials, in
whole or in part, from any other portions thereof, or (iii) reverse assemble,
reverse engineer, translate, disassemble, decompile or otherwise attempt to
create or discover any source or human readable code, underlying algorithms,
ideas, file formats or programming interfaces of the Allegheny Owned Materials
by any means whatsoever, without the prior approval of Allegheny, which may be
withheld at Allegheny’s sole discretion. Except as otherwise requested or
approved by Allegheny, Service Provider and its Subcontractors shall cease all
use of Allegheny Owned Materials upon the end of the Term and the completion of
any Termination Assistance Services requested by Allegheny pursuant to
Section 4.4 and shall certify such cessation to Allegheny in a notice signed by
an officer of Service Provider and each applicable Subcontractor. THE ALLEGHENY
OWNED MATERIALS ARE PROVIDED BY ALLEGHENY TO SERVICE PROVIDER AND ITS
SUBCONTRACTORS ON AN AS-IS, WHERE-IS BASIS. ALLEGHENY EXPRESSLY DISCLAIMS ANY
REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, AS TO SUCH ALLEGHENY OWNED
MATERIALS, OR THE CONDITION OR SUITABILITY OF SUCH MATERIALS FOR USE BY SERVICE
PROVIDER OR ITS SUBCONTRACTORS TO PROVIDE THE SERVICES, INCLUDING WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.

 

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14.2 Developed Materials.

 

  (a) Ownership by Allegheny. Unless the Parties agree otherwise, all Developed
Materials created by Service Provider in connection with the Services provided
by Service Provider under this Agreement shall be owned solely by Allegheny and
considered to be works made for hire (as that term is used in Section 101 of the
United States Copyright Act, 17 U.S.C. § 101, or in analogous provisions of
other applicable Laws) and owned by Allegheny. If any such Developed Materials
may not be considered a work made for hire under applicable Law, Service
Provider hereby irrevocably assigns, and shall assign, to Allegheny without
further consideration, all of Service Provider’s right, title and interest in
and to such Developed Materials, including United States and foreign patent,
copyright and other intellectual property rights, including all patent rights in
business methods and other inventions, in or related to these Developed
Materials. Service Provider acknowledges that Allegheny and the successors and
assigns of Allegheny shall have the right to obtain and hold in their own name
the patent, copyright and other intellectual property rights in and to such
Developed Materials. Service Provider agrees to execute any documents and take
any other actions reasonably requested by Allegheny to effectuate the purposes
of this Section 14.2(a). Allegheny hereby grants Service Provider certain
license and other rights with respect to such Developed Materials, as described
in Section 14.1(b). Allegheny may, in its sole discretion and upon such terms
and at such financial arrangement as Allegheny and Service Provider may agree,
grant Service Provider a license to use such Developed Materials for other
purposes and to sublicense such Developed Materials.

 

  (b) Source Code and Documentation. At Allegheny’s request, Service Provider
shall, promptly as it is developed by Service Provider, provide Allegheny with
the source code and object code and documentation for all Allegheny-owned
Developed Materials used by Service Provider. To the extent Allegheny has not
requested that Service Provider provide such code to Allegheny, Service Provider
shall maintain such code in a location and in a form that is readily accessible
by Allegheny upon its request. In each case, such source code shall be
sufficient to allow a reasonably knowledgeable and experienced programmer to
maintain and support such Materials; and the user documentation for such
Materials shall accurately describe in terms understandable by a typical end
user the functions and features of such Materials and the procedures for
exercising such functions and features.

 

  (c) Service Provider Owned Developed Materials. Notwithstanding
Section 14.2(a), unless the Parties agree otherwise, Service Provider shall be
the sole and exclusive owner of all Developed Materials that are Derivative
Works of Service Provider Owned Materials (as defined in Section 14.3(a)),
including all United States and foreign patent, copyright and other intellectual
property rights in such Materials; provided, however, if the creation of any
such Developed Material is specifically requested by Allegheny, it shall be
treated as a work made for hire under Section 14.2(a) or assigned to Allegheny
and, unless otherwise agreed, shall be owned by Allegheny. Allegheny
acknowledges that Service Provider and the successors and assigns of Service
Provider shall have the right to obtain and hold in their own name any
intellectual property rights in and to such Service Provider owned Developed
Materials. Allegheny agrees to execute any documents and take any other actions
reasonably requested by Service Provider to effectuate the purposes of this
Section 14.2(c). Service Provider hereby grants Allegheny and the Eligible
Recipients the license and other rights with respect to such Developed Materials
that are described in Sections 14.3(b) and 14.6.

 

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  (d) Third Party Materials. The ownership of Derivative Works of Third Party
Materials created in connection with the Services shall, as between Service
Provider and Allegheny, be considered Developed Materials owned by Allegheny (if
Allegheny is the licensee of such Third Party Materials, whether during or after
the Term, including where Service Provider has assigned or otherwise provides
Allegheny a license to the underlying Third Party Material in accordance with
Section 4.4(b)(3)), or Service Provider if it, but not Allegheny, is the
licensee of such Third Party Materials; provided, however, if the creation of
any such Derivative Work is specifically requested by Allegheny, then as between
Service Provider and Allegheny, it shall be treated as a work made for hire
under Section 14.2(a) or assigned to Allegheny and, unless otherwise agreed,
shall be owned by Allegheny. For purposes of the foregoing, Service Provider
shall be deemed the licensee of Third Party Materials licensed by its
Subcontractors or Affiliates and Allegheny shall be deemed the licensee of Third
Party Materials licensed by Allegheny Affiliates or any Eligible Recipient. Each
Party acknowledges and agrees that its ownership of such Derivative Works may be
subject to or limited by the terms of the underlying agreement with the owner of
the underlying Third Party Materials; provided, that Service Provider shall
notify Allegheny in advance and obtain Allegheny’s consent prior to proceeding
with such Derivative Work if the terms of any such agreement will preclude or
limit, as applicable, (i) Allegheny’s ownership of such Derivative Work, or
(ii) Allegheny’s license rights in and to such Derivative Work as contemplated
in Sections 6.7, 14.3(b) and 14.6.

 

  (e) Disclosure by Service Provider of Developed Materials. Service Provider
shall promptly disclose in writing to Allegheny each Developed Material that is
developed in connection with the Services. With respect to each disclosure,
Service Provider shall indicate the features or concepts that it believes to be
new or different.

 

  (f) ***.

 

14.3 Service Provider Owned Materials.

 

  (a) Ownership of Service Provider Owned Materials. Service Provider shall be
the sole and exclusive owner of the (i) intellectual property, Software and
other Materials lawfully owned by it, (ii) intellectual property, Software and
other Materials acquired by Service Provider (including any such Materials
purchased from Allegheny pursuant to this Agreement) other than acquisitions for
Allegheny or an Eligible Recipient in connection with the performance of the
Services, (iii) Derivative Works of Service Provider owned intellectual
property, Software and other Materials created by or for Service Provider in
accordance with Section 14.2(c), (iv) Materials developed by or on behalf of
Service Provider other than in the course of the performance of its obligations
under this Agreement or in connection with the use of any Allegheny Data or
Allegheny Owned Materials, including all United States and foreign patent,
copyright and other intellectual property rights in such Materials described in
clauses (i) through (iv) of this paragraph (“Service Provider Owned Materials”).

 

  (b) License to Service Provider Owned Materials. Effective upon the first use
by the Service Provider of any Service Provider Owned Materials to provide the
Services, Service Provider hereby grants to Allegheny and the Eligible
Recipients, at no additional charge, a world-wide non-exclusive, royalty-free
right and license during the Term and any

 

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Termination Assistance Services period to (i) access, use, execute, reproduce,
display, distribute (among themselves and, only as appropriate, to Allegheny
Third Party Contractors) and perform such Service Provider Owned Materials and
(ii) modify, enhance and create Derivative Works of such Service Provider Owned
Materials, provided that Allegheny will notify Service Provider of any such
modifications, enhancements and Derivative Works and obtain Service Provider’s
approval through the Change Control Procedures if Allegheny’s modifications,
enhancements or Derivative Works would impair Service Provider’s ongoing use of
such Material to perform the Services. In addition, at no additional Charge,
Service Provider hereby grants to Allegheny Third Party Contractor(s) a
non-exclusive, royalty-free right and license during the Term and any
Termination Assistance Services period, for the benefit of Allegheny and the
Eligible Recipients, to (x) access use, execute, reproduce, display, distribute
(to Allegheny and such Eligible Recipients and, only as appropriate, to
Allegheny Third Party Contractors) and perform such Service Provider Owned
Materials and (y) modify, enhance and create Derivative Works of such Service
Provider Owned Materials, provided that Allegheny will notify Service Provider
of any such modifications, enhancements and Derivative Works and obtain Service
Provider’s approval through the Change Control Procedures if any Allegheny Third
Party Contractor’s modifications, enhancements or Derivative Works would impair
Service Provider’s ongoing use of such Material to perform the Services. For
purposes of this Section 14.3(b), Service Provider Owned Materials include all
modifications, replacements, Upgrades, enhancements, methodologies, tools,
documentation, materials and media related thereto. Allegheny, the Eligible
Recipients and Allegheny Third Party Contractors may only exercise the rights
granted to the Service Provider Owned Materials pursuant to this Section 14.3(b)
in order to (A) receive the full benefit of the Services provided by Service
Provider, and (B) perform or have performed services that entail the same or
similar types of use for which Service Provider used or uses such Material in
connection with the provision of the Services. Service Provider Owned Materials
shall remain the property of Service Provider. The rights and obligations of
Allegheny, the Eligible Recipients and Allegheny Third Party Contractors with
respect to such Service Provider Owned Materials following the expiration or
termination of the Agreement or termination of any Service are set forth in
Section 14.6.

 

  (c) Embedded Materials. To the extent that Service Provider Owned Materials
are embedded in any Developed Materials owned by Allegheny pursuant to
Section 14.2(a), Service Provider shall not be deemed to have assigned its
intellectual property rights in such Service Provider Owned Materials to
Allegheny, but Service Provider hereby grants to Allegheny a worldwide,
perpetual, irrevocable, non-exclusive, fully paid-up license, with the right to
grant sublicenses, to use, execute, reproduce, display, perform, modify,
enhance, distribute and create Derivative Works of such Service Provider Owned
Materials (including all modifications, replacements, Upgrades, enhancements,
methodologies, tools, documentation, materials and media related thereto) solely
for the benefit and use of Allegheny, Allegheny Affiliates and the Eligible
Recipients for so long as such Service Provider Owned Materials remain embedded
in such Developed Materials and are not separately commercially exploited.
Following the expiration or termination of the Term and the termination of the
Service(s) for which such Materials were used, Service Provider shall, at
Allegheny’s request, provide Upgrades, maintenance, support and other services
for such embedded Service Provider Owned Materials in accordance with
Section 14.6(b) or (c), as applicable.

 

  (d) Source Code Escrow. At Allegheny’s request and expense, Service Provider
shall deposit in escrow with an escrow agent selected by Allegheny the source
code and related

 

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documentation for Service Provider Owned Software and, to the extent available
to Service Provider, the source code for any Third Party Software used by
Service Provider to perform the Services. The escrow shall be governed by and
subject to the terms and conditions appearing in the Escrow Agreement attached
hereto as Exhibit 4, as such terms and conditions may be modified by Allegheny
and the escrow agent. Unless approved by Allegheny, Service Provider shall not
use for the performance of the Services any Third Party Software that is not
commercially available and which was not provided to Service Provider by
Allegheny without obtaining the right to the source code for such software,
whether by escrow or otherwise. The provisions of this Section 14.3(d) shall not
require Service Provider to deposit in escrow the source code for any Third
Party Software that constitutes commercial off-the-shelf software.

 

14.4 Other Materials.

 

This Agreement shall not confer upon either Party intellectual property rights
in Materials of the other Party (to the extent not covered by this Article 14)
unless otherwise so provided elsewhere in this Agreement.

 

14.5 General Rights.

 

  (a) Copyright Legends. Each Party agrees to reproduce copyright legends which
appear on any portion of the Materials which may be owned by the other Party or
third parties.

 

  (b) Residuals. Nothing in this Agreement (including Article 9) shall restrict
any employee or representative of a Party from using general ideas, concepts,
practices, learning or know-how relating to the processing of information
technology, procurement, and/or inventory management transactions that are
retained in the unaided memory of such employee or representative after
performing the obligations of such Party under this Agreement, except to the
extent that such use infringes upon any patent, copyright or other intellectual
property right of a Party or its Affiliates (or, in the case of Service
Provider, any Eligible Recipient); provided, however, that this Section 14.5(b)
shall not (i) be deemed to limit either Party’s obligations under this Agreement
with respect to the disclosure or use of Proprietary Information, or
(ii) operate or be construed as permitting an employee or representative of
Service Provider to disclose, publish, disseminate or use (A) the source of any
Proprietary Information of Allegheny or an Eligible Recipient, (B) any
financial, statistical or personnel information of Allegheny or an Eligible
Recipient, or (C) the business plans of Allegheny or the Eligible Recipients. An
individual’s memory is unaided if the individual has not intentionally memorized
the Proprietary Information for the purpose of retaining and subsequently using
or disclosing it and does not identify the information as Proprietary
Information upon recollection. For avoidance of doubt, the foregoing would not
permit Service Provider Personnel to use Proprietary Information of Allegheny or
an Eligible Recipient (other than ideas, concepts, practices, learning and
know-how relating generally to the processing of information technology,
procurement, and/or inventory management transactions) for any purpose other
than the provision of Services under this Agreement.

 

  (c) No Implied Licenses. Except as expressly specified in this Agreement,
nothing in this Agreement shall be deemed to grant to one Party, by implication,
estoppel or otherwise, license rights, ownership rights or any other
intellectual property rights in any Materials owned by the other Party or any
Affiliate of the other Party (or, in the case of Service Provider, any Eligible
Recipient).

 

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  (d) Incorporated Materials. Should either Party incorporate into Developed
Materials any intellectual property subject to third party patent, copyright or
license rights, any ownership or license rights granted herein with respect to
such Materials shall be limited by and subject to any such patents, copyrights
or license rights; provided that, prior to incorporating any such intellectual
property in any Materials, the Party incorporating such intellectual property in
the Materials has disclosed this fact and obtained the prior approval of the
other Party.

 

14.6 Allegheny Rights Upon Expiration or Termination of Agreement.

 

As part of the Termination Assistance Services, Service Provider shall provide
the following to Allegheny, Allegheny Affiliates and the Eligible Recipients
with respect to Software and other Materials:

 

  (a) Allegheny Owned Materials and Developed Materials. With respect to
Allegheny Owned Materials and the Developed Materials, Service Provider shall,
at no cost to Allegheny:

 

  (i) deliver to Allegheny all Allegheny Owned Materials and Developed Materials
and all copies thereof in the format and medium in use by Service Provider in
connection with the Services as of the date of such expiration or termination;
and

 

  (ii) following confirmation by Allegheny that the copies of the Allegheny
Owned Materials and Developed Materials delivered by Service Provider are
acceptable and the completion by Service Provider of any Termination Assistance
Services for which such Materials are required, destroy or securely erase all
other copies of such Materials then in Service Provider’s possession and cease
using such Materials and any information contained therein for any purpose.

 

  (b) Service Provider Owned Materials. With respect to those Materials owned by
Service Provider or Service Provider Affiliates or (subject to Section 6.4(c))
Subcontractors and used by Service Provider, Service Provider Affiliates or
Subcontractors in performing the Services or provided to Allegheny, any Eligible
Recipients or Allegheny Third Party Contractors by Service Provider, Service
Provider Affiliates or Subcontractors in connection with the Services *** (and
any modifications, substitutions, Upgrades, enhancements, methodologies, tools,
documentation, materials and media related thereto):

 

  (i) Service Provider hereby grants to Allegheny and the Eligible Recipients
(or, at Allegheny’s election, to their designee(s)) a worldwide, perpetual,
non-exclusive, non-transferable, irrevocable, fully paid-up license to use,
execute, reproduce, display, perform, distribute (among themselves, and, only as
appropriate, to Allegheny Third Party Contractors), modify, enhance and create
Derivative Works and to permit a third party to use, execute, reproduce,
display, perform, distribute (to Allegheny and such Eligible Recipients, and ,
as appropriate, to Allegheny Third Party Contractors), modify, enhance and
create Derivative Works of such Service Provider Owned Materials for the benefit
or use of Allegheny, Allegheny Affiliates and the Eligible Recipients upon the
expiration or termination of the Term, but only with respect to replacement
services that are the same or similar to the Services for which such Service
Provider Owned Materials and Derivative Works were used (without the obligation
to maintain, support, upgrade or provide other services with respect thereto
except as provided in clause (iii) below);

 

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  (ii) Service Provider shall deliver to Allegheny and the Eligible Recipients
(or, at Allegheny’s election, to their designee(s)) (A) a copy of such Service
Provider Owned Materials and related documentation, (B) the source code and
object code for such Service Provider Owned Materials to the extent such code is
reasonably necessary to permit them to use such Service Provider Owned
Materials, (C) the source code and object code for Service Provider Owned
Materials that are not commercial off-the-shelf products, and (D) the source
code and object code for Service Provider Owned Materials that are commercial
off-the-shelf products if Service Provider does not offer or provide upgrades,
maintenance, support and other services for such Materials as provided in
Section 14.6(b)(iii), but only with respect to replacement services that are the
same or similar to the Services for which such Service Provider Owned Materials,
related documentation, and source code were used (without the obligation to
maintain, support, upgrade or provide other services with respect thereto except
as provided in clause (iii) below); and

 

  (iii) Service Provider shall offer to provide to Allegheny and the Eligible
Recipients (or, at Allegheny’s election, to their designee(s)), Upgrades,
maintenance, support and other services for Service Provider Owned Materials,
commercial off-the-shelf Materials, and any other Materials provided by Service
Provider, on Service Provider’s then-current standard terms and conditions for
such services.

 

Unless Allegheny has otherwise agreed in advance, Allegheny and the Eligible
Recipients (and, to the extent applicable, Allegheny’s designee(s)) shall not be
obligated to pay any license or transfer fees in connection with its receipt of
the licenses and other rights to Service Provider Owned Materials above. Service
Provider shall not use any Service Provider Owned Materials for which it is
unable to offer such license or other rights without Allegheny’s prior written
approval (and absent such approval, Service Provider’s use of any such Service
Provider Owned Materials shall obligate Service Provider to provide, at no
additional cost, such license and other rights to Allegheny, Allegheny
Affiliates, the Eligible Recipients and Allegheny’s designees).

 

  (c) Third Party Materials. With respect to Third Party Materials licensed by
Service Provider or Service Provider Affiliates or Subcontractors and used by
Service Provider, Service Provider Affiliates or Subcontractors in performing
the Services or provided to Allegheny, any Eligible Recipients or Allegheny
Third Party Contractors by Service Provider, Service Provider Affiliates or
Subcontractors in connection with the Services ***, Service Provider hereby
grants to Allegheny and the Eligible Recipients (or, at Allegheny’s election, to
their designee(s)) a sublicense (with the right to grant sublicenses to
Allegheny Affiliates who would have been entitled to use the Third Party
Materials during the Term and Allegheny Third Party Contractors for their use in
providing services to Allegheny and its Affiliates) offering the same rights and
warranties with respect to such Third Party Materials available to Service
Provider (or Service Provider Affiliates or Subcontractors), on the same terms
and conditions, for the benefit and use of Allegheny, Allegheny Affiliates and
the Eligible Recipients upon the expiration or termination of the Term with
respect to the Services for which such Third Party Materials were used;

 

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provided that, during the Termination Assistance Services period, Service
Provider may, with Allegheny’s approval, substitute one of the following for
such sublicense:

 

  (i) the assignment to Allegheny and the Eligible Recipients (or, at
Allegheny’s election, to their designee(s)) of the underlying license for such
Third Party Materials;

 

  (ii) the procurement for Allegheny and the Eligible Recipients (or, at
Allegheny’s election, to their designee(s)) of a new license (with terms at
least as favorable as those in the license held by Service Provider or its
Affiliates or Subcontractors and with the right to grant sublicenses) to such
Third Party Materials for the benefit or use of Allegheny, Allegheny Affiliates
and the Eligible Recipients; or

 

  (iii) the procurement for Allegheny and the Eligible Recipients (or, at
Allegheny’s election, to their designee(s)) of a substitute license for Third
Party Materials sufficient to perform, without additional cost, support or
resources and at the levels of performance and efficiency required by this
Agreement, the functions of the Third Party Materials necessary to enable
Allegheny or its designee to provide the Services after the expiration or
termination of the Term.

 

In addition, Service Provider shall deliver to Allegheny and the Eligible
Recipients (or, at Allegheny’s election, to their designee(s)) a copy of such
Third Party Materials (including source code, to the extent it has been
available to Service Provider and Service Provider has the right to make it
available to Allegheny in accordance with the requirements of Section 14.3(d))
and related documentation and shall use commercially reasonable efforts to cause
maintenance, support and other services to continue to be available to Allegheny
and the Eligible Recipients at Allegheny’s cost (or, at Allegheny’s election, to
their designee(s)) to the extent it has been available to Service Provider).
Unless Allegheny has otherwise agreed in advance in accordance with
Section 6.4(c), Allegheny and the Eligible Recipients shall not be obligated to
pay any license or transfer fees in connection with its receipt of the licenses,
sublicenses and other rights specified in this Section 14.6(c). ***, Service
Provider shall not use any Third Party Materials for which it is unable to offer
such license, sublicense or other rights without Allegheny’s prior approval (and
absent such approval, Service Provider’s use of any such Third Party Materials
shall obligate Service Provider to provide, at no additional cost, such
licenses, sublicenses and other rights, or their functional equivalents).
Allegheny, however, shall be obligated to make monthly or annual payments
attributable to periods after the expiration or termination of the Term with
respect to the Services for which such Third Party Materials were used for the
right to use and receive maintenance or support related thereto, but only to the
extent Service Provider would have been obligated to make such payments if it
had continued to hold the licenses in question for Allegheny or Allegheny has
agreed in advance to make such payments.

 

To the extent Allegheny has agreed in advance to pay any fees in connection with
its receipt of such licenses, sublicenses or other rights, Service Provider
shall, at Allegheny’s request, identify the licensing and sublicensing options
available to Allegheny and the Eligible Recipients and the license or transfer
fees associated with each. Service Provider shall use commercially reasonable
efforts to obtain the most favorable options and the lowest possible transfer,
license, relicense, assignment or termination fees for Third Party Materials.
Service Provider shall not commit Allegheny or the Eligible Recipients to

 

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paying any such fees or expenses without Allegheny’s prior approval. If the
licensor offers more than one form of license, Allegheny (not Service Provider)
shall select the form of license to be received by Allegheny, the Eligible
Recipients or their designee(s).

 

15. REPRESENTATIONS, WARRANTIES AND COVENANTS

 

15.1 Work Standards.

 

Service Provider represents, warrants and covenants that: (i) the Services shall
be rendered with promptness, due care, skill and diligence; (ii) the Services
shall be executed in a workmanlike manner, in accordance with the ***of
information technology services, procurement and/or inventory management
consulting, and the Service Levels; (iii) Service Provider shall use adequate
numbers of qualified individuals with suitable training, education, experience,
know-how, competence and skill to perform the Services; (iv) Service Provider
shall provide such individuals with training as to new products and services
prior to the implementation of such products and services in the
Allegheny/Eligible Recipients environment; and (v) Service Provider shall have
the resources, capacity, expertise and ability in terms of Equipment, Software,
know-how and personnel to provide the Services. This Section 15.1 shall not be
interpreted to supersede the specific Service Levels set forth in Schedule 3.

 

15.2 Maintenance.

 

  (a) Service Provider Responsibility. Unless otherwise agreed and to the extent
Service Provider has operational responsibility under this Agreement, Service
Provider shall maintain the Equipment and Software so that they operate
substantially in accordance with the Service Levels and their Specifications,
including (i) maintaining Equipment in good operating condition, subject to
normal wear and tear, (ii) undertaking repairs and preventive maintenance on
Equipment in accordance with the applicable Equipment manufacturer’s
recommendations and requirements, and (iii) performing Software maintenance in
accordance with the applicable Software supplier’s documentation,
recommendations and requirements.

 

  (b) Out of Support Third Party Equipment and Software. For Third Party
Equipment and Software no longer supported by the licensor or manufacturer for
which Service Provider has operational responsibility under this Agreement,
Service Provider shall use commercially reasonable efforts to perform
maintenance for such Equipment or Software as required to meet its obligations
under this Agreement.

 

  (c) Refresh. To the extent Service Provider has financial responsibility under
this Agreement for Equipment or Software, Service Provider shall, subject to
Section 9.7 or as otherwise agreed by the Parties, Upgrade or replace such
Equipment or Software in accordance with Schedule 4F. Service Provider shall
also comply with the Technology and Business Process Plan, provided that such
compliance shall not require Service Provider to accelerate its refresh
obligations beyond the refresh rate set forth in Schedule 4F.

 

15.3 Efficiency and Cost Effectiveness.

 

Service Provider covenants that it shall use commercially reasonable efforts to
provide the Services in the most cost-effective manner consistent with the
required level of quality and performance. Without limiting the generality of
the foregoing, such actions shall include:

 

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  (a) Timing of Actions. Making adjustments in the timing of actions (consistent
with Allegheny priorities and schedules for the Services and Service Provider’s
obligation to meet the Service Levels).

 

  (b) Timing of Functions. Delaying or accelerating, as appropriate, the
performance of non-critical functions within limits acceptable to Allegheny.

 

  (c) Systems Optimization. Tuning or optimizing the Systems (including memory)
and/or Applications Software for which Service Provider has operational
responsibility under this Agreement, in order to optimize performance and
minimize costs.

 

  (d) Usage Scheduling. Controlling its use of the System and/or the Allegheny
data network by scheduling usage, where possible, to low utilization periods.

 

  (e) Alternative Technologies. Subject to Section 9.5, using alternative
technologies to perform the Services.

 

  (f) Efficiency. Efficiently using resources for which Allegheny is charged
hereunder, consistent with industry norms, and compiling data concerning such
efficient use in segregated and auditable form whenever possible.

 

15.4 Software.

 

  (a) Ownership and Use. Subject to Service Provider’s obligation to obtain
Required Consents pursuant to Article 5, and except for Allegheny’s obligation
to obtain licenses and rights as required by this Agreement for Software that
Allegheny provides, Service Provider represents, warrants and covenants that it
is either the owner of, or authorized to use, any and all Software provided and
used by Service Provider in providing the Services. As to any such Software that
Service Provider does not own but is authorized to use, Service Provider shall
advise Allegheny as to the ownership and extent of Service Provider’s rights
with regard to such Software to the extent any limitation in such rights would
impair Service Provider’s performance of its obligations under this Agreement.

 

  (b) Performance. Service Provider represents, warrants and covenants that any
Service Provider Owned Software will perform in conformance with its
Specifications and will provide the functions and features and operate in the
manner described therein.

 

  (c) Developed Materials Compliance. Service Provider warrants and covenants
that Developed Materials will be free from material errors in operation and
performance, will Comply with the documentation and Specifications in all
material respects, including any applicable Year 2000 Compliance requirements,
and will provide the functions and features and operate in the manner described
in Schedules 2 or 9 or otherwise agreed by the Parties for the later of one
hundred eighty (180) days or the completion of three (3) full production cycles
involving such Developed Material. During such warranty period, Service Provider
shall correct any failure to Comply at no additional Charge to Allegheny and
shall use commercially reasonable efforts to do so as expeditiously as possible.
The foregoing warranty will not extend to any failure to Comply attributable to
(i) a change or modification to the applicable Developed Material not
contemplated by this Agreement or Project statements entered into hereunder or
recommended, performed or approved by Service Provider or its Subcontractors or
suppliers, or (ii) Allegheny operating the applicable Developed Material other
than (x) in accordance with Service Provider’s

 

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directions or the applicable documentation and Specifications, (y) for the
purpose contemplated by the applicable Specifications, Service Provider’s
directions, or otherwise by this Agreement or Project statements entered into
hereunder, or (z) on types of hardware contemplated by this Agreement or
recommended, supplied or approved by Service Provider. In the event that Service
Provider fails or is unable to repair or replace such nonconforming Developed
Material, Allegheny shall, in addition to any and all other remedies available
to it hereunder, be entitled to obtain from Service Provider a copy of the
source code and/or object code to such Developed Material.

 

  (d) Nonconformity of Service Provider Owned Software. In addition to the
foregoing, in the event that the Service Provider Owned Software (excluding
Service Provider Owned Developed Materials which are addressed in
Section 15.4(c)) does not conform to the Specifications and criteria set forth
in this Agreement, and/or materially adversely affects the Services provided
hereunder, Service Provider shall expeditiously repair such Software or replace
such Software with conforming Software.

 

  (e) Out of Support Third Party Software. To the extent Third Party Software
for which Service Provider has operational responsibility under Schedule 2 or 4B
is no longer supported by the applicable licensor or manufacturer, Service
Provider shall use commercially reasonable efforts to perform maintenance for
such Software as required.

 

15.5 Non-Infringement.

 

  (a) Performance of Responsibilities. Except as otherwise provided in this
Agreement, each Party covenants that it shall perform its responsibilities under
this Agreement in a manner that does not infringe, or constitute an infringement
or misappropriation of, any patent, copyright, trademark, trade secret or other
proprietary rights of any third party; provided, however, that the performing
Party shall not have any obligation or liability to the extent any infringement
or misappropriation is caused by (i) modifications made by the other Party or
its contractors or subcontractors, without the knowledge or approval of the
performing Party, (ii) the other Party’s combination of the performing Party’s
work product or Materials with items not furnished, specified or reasonably
anticipated by the performing Party or contemplated by this Agreement, (iii) a
breach of this Agreement by the other Party, (iv) the failure of the other Party
to use corrections or modifications provided by the performing Party offering
equivalent features and functionality, or (v) Third Party Software, except to
the extent that such infringement or misappropriation arises from the failure of
the performing Party to obtain the necessary licenses or Required Consents or to
abide by the limitations of the applicable Third Party Software licenses. Each
Party further covenants that it will not use or create materials in connection
with the Services which are libelous, defamatory or obscene.

 

Allegheny hereby confirms that it possesses a license under the patent portfolio
held by Ronald A. Katz Technology Licensing, L.P. ***.

 

  (b) Third Party Software Indemnification. In addition, with respect to Third
Party Software provided by Service Provider pursuant to this Agreement, Service
Provider covenants that it shall obtain and provide intellectual property
indemnification for Allegheny and the Eligible Recipients (or obtain
intellectual property indemnification for itself and enforce such
indemnification on behalf of Allegheny and the Eligible Recipients) from the
suppliers of such Software. Unless otherwise approved in advance by Allegheny,
such indemnification shall be (i) comparable to the intellectual property
indemnification

 

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provided by Service Provider to Allegheny and the Eligible Recipients under this
Agreement, or (ii) the best indemnification reasonably available in the industry
for the same or substantially similar types of software products.

 

15.6 Authorization.

 

Each Party represents, warrants and covenants to the other that:

 

  (a) Corporate Existence. It is a corporation duly incorporated, validly
existing and in good standing under the Laws of its state of incorporation;

 

  (b) Corporate Power and Authority. It has the requisite corporate power and
authority to execute, deliver and perform its obligations under this Agreement;

 

  (c) Legal Authority. It has obtained all licenses, authorizations, approvals,
consents or permits required to perform its obligations under this Agreement
under all applicable federal, state or local laws and under all applicable rules
and regulations of all authorities having jurisdiction over the Services, except
to the extent the failure to obtain any such license, authorizations, approvals,
consents or permits is, in the aggregate, immaterial;

 

  (d) Due Authorization. The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated by this
Agreement have been duly authorized by the requisite corporate action on the
part of such Party; and

 

  (e) No Violation or Conflict. The execution, delivery, and performance of this
Agreement shall not constitute a violation of any judgment, order, or decree; a
material default under any material contract by which it or any of its material
assets are bound; or an event that would, with notice or lapse of time, or both,
constitute such a default.

 

15.7 Inducements; Allegheny Code of Business Conduct and Ethics.

 

  (a) Inducements. Service Provider represents, warrants and covenants that it
has not given and will not give commissions, payments, kickbacks, lavish or
extensive entertainment, or other inducements of more than minimal value to any
employee or agent of Allegheny in connection with this Agreement. Service
Provider also represents, warrants and covenants that, to the best of its
knowledge, no officer, director, employee, agent or representative of Service
Provider has given any such payments, gifts, entertainment or other thing of
value to any employee or agent of Allegheny. Service Provider also acknowledges
that the giving of any such payments, gifts, entertainment, or other thing of
value is strictly in violation of Allegheny policy on conflicts of interest, and
may result in the cancellation of this Agreement and other existing and future
contracts between the Parties.

 

  (b) Allegheny Code of Ethics. Service Provider covenants that, in the
performance of the Services and its other contractual obligations hereunder, it
shall comply with the Allegheny Code of Business Conduct and Ethics, as set
forth in Schedule 26, as such Code may be reasonably modified from time to time.

 

15.8 Malicious Code.

 

Each Party shall cooperate with the other Party and shall take commercially
reasonable actions and precautions consistent with Schedule 2 to prevent the
introduction and proliferation of

 

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Malicious Code into Allegheny’s or an Eligible Recipient’s environment or any
System used by Service Provider to provide the Services. Without limiting
Service Provider’s other obligations under this Agreement, in the event
Malicious Code is found in Equipment, Software or Systems managed or supported
by Service Provider or used by Service Provider to provide the Services, Service
Provider shall, at no additional charge to Allegheny, eliminate or quarantine
the Malicious Code and reduce the effects of such Malicious Code and, if the
Malicious Code causes a loss of operational efficiency or loss of data, to
mitigate such losses and restore such data with generally accepted data
restoration techniques.

 

15.9 Disabling Code.

 

Service Provider covenants that, without the prior written consent of Allegheny,
Service Provider shall not knowingly, after the exercise of reasonable due
diligence, insert into the Software any code that could be invoked to disable or
otherwise shut down all or any portion of the Software, Equipment and/or
Systems. Service Provider further covenants that, with respect to any disabling
code that may be part of the Software, Service Provider shall not knowingly,
after the exercise of reasonable due diligence, invoke or cause to be invoked
such disabling code at any time, including upon expiration or termination of
this Agreement for any reason, without Allegheny’s prior written consent. Except
with respect to Software provided by Allegheny, Service Provider also covenants
that it shall take commercially reasonable precautions (which shall include the
exercise of reasonable due diligence) to use only Third Party Software
(i) without disabling code or (ii) with respect to which the Third Party
Software licensor and any other entity controlling invocation of such disabling
code has agreed to refrain from invoking such disabling code at any time without
the prior approval of Allegheny. For purposes of this provision, code that
serves the function of ensuring software license compliance (including
passwords) shall not be deemed disabling code; provided that Service Provider
notifies Allegheny in advance of all such code of which Service Provider obtains
knowledge (after the exercise of reasonable due diligence) and obtains
Allegheny’s approval prior to installing such code in any Software, Equipment or
System.

 

15.10 Compliance with Laws.

 

  (a) Compliance by Service Provider. Subject to Section 15.10(b), (e), (f) and
(g), Service Provider covenants that, with respect to the provision of the
Services and the performance of any of its other legal and contractual
obligations hereunder, it is and shall be in compliance in all material respects
with all applicable Laws and shall remain in compliance with such Laws for the
Term and any Termination Assistance Services period including identifying and
procuring applicable permits, certificates, approvals and inspections required
under such Laws. If a written charge of non-compliance by Service Provider with
any such Laws occurs, Service Provider shall promptly notify Allegheny of such
charge.

 

  (b) Compliance by Allegheny. Subject to Section 15.10(a), (e) and (f),
Allegheny covenants that, with respect to the use of the Services in the conduct
of Allegheny’s business and the performance by Allegheny and the Eligible
Recipients of Allegheny’s legal and contractual obligations under this
Agreement, it is and shall be in compliance in all material respects with all
applicable Laws for the entire Term and any Termination Assistance Services
period. If a written charge of non-compliance by Allegheny with any such Laws
occurs, Allegheny shall promptly notify Service Provider of such charge.

 

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  (c) Compliance Data and Reports. At no additional charge, Service Provider
shall provide Allegheny with data and reports in Service Provider’s possession
necessary for Allegheny to comply with all Laws applicable to the Services.

 

  (d) Software, Equipment, Systems and Materials Compliance. Subject to the
following sentence, Service Provider covenants that the Software, Equipment,
Systems and Materials owned, provided or used by Service Provider in providing
the Services (other than the Acquired Assets) are in compliance with all
applicable Laws and shall remain in compliance with such Laws for the Term and
any Termination Assistance Services period. Notwithstanding the foregoing,
Service Provider shall have a reasonable period of time, not to exceed sixty
(60) days after the date that Allegheny provides any Software, Equipment,
Systems or Materials to Service Provider, to correct any non-compliance in the
Software, Equipment, Systems or Materials supplied by Allegheny for Service
Provider’s use hereunder and during such period the covenant set forth above
shall not apply to such Software, Equipment, Systems and Materials.

 

  (e) Notice of Laws. Service Provider shall notify Allegheny of any Laws and
changes in Laws applicable to (i) Service Provider’s performance of the Services
and (ii) Service Provider as a provider of outsourced information technology
services, procurement and/or inventory management consulting, and other in-scope
Services, including those applicable to the employment of Service Provider
Personnel and the provision of Services from the countries in which Service
Provider Facilities are located (collectively, “Service Provider Laws”).
Allegheny shall notify Service Provider of any Laws and any changes in Laws
applicable to the principal businesses of Allegheny and its Affiliates,
including utility holding company Laws and Laws specific to energy entities and
excluding any Service Provider Laws (collectively, “Allegheny Laws”). Service
Provider shall, through the Service Provider Personnel, maintain general
familiarity with Allegheny Laws, and shall bring additional or changed
requirements to Allegheny’s attention. Each Party shall use commercially
reasonable efforts (including, in the case of Service Provider, its work and
experience with other similarly situated customers) to advise the other Party of
Laws and changes in Laws about which such Party becomes aware in the other
Party’s area of responsibility, but without assuming an affirmative obligation
of inquiry, except as otherwise provided herein, and without relieving the other
Party of its obligations hereunder. At Allegheny’s request, Service Provider
Personnel shall participate in Allegheny provided compliance training programs.

 

  (f) Interpretation of Laws or Changes in Laws. Allegheny shall be responsible,
with Service Provider’s cooperation and assistance, for interpreting Allegheny
Laws or changes in Allegheny Laws and for identifying the impact of such
Allegheny Laws or changes in Allegheny Laws on Service Provider’s performance
and Allegheny’s and/or the Eligible Recipients’ receipt and use of the Services.
Service Provider shall be responsible, with Allegheny’s cooperation and
assistance, for interpreting Service Provider Laws or changes in Service
Provider Laws and for identifying the impact of such Service Provider Laws or
changes in Service Provider Laws on Service Provider’s performance and
Allegheny’s and/or the Eligible Recipients’ receipt and use of the Services. To
the extent the impact of any Service Provider Law or change in Service Provider
Law cannot be readily identified by Service Provider, the Parties shall
cooperate in interpreting such Law or change in Law and shall seek in good faith
to identify and agree upon the impact on Service Provider’s performance and
Allegheny’s and/or the Eligible Recipients’ receipt and use of the Services.

 

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  (g) Implementation of Changes in Laws. In the event of any changes in Laws
(including Allegheny Laws to the extent Service Provider receives notice of such
Allegheny Laws from Allegheny or as otherwise provided in Section 15.10(e)),
Service Provider shall implement any necessary modifications to the Services
prior to the deadline imposed by the regulatory or governmental body having
jurisdiction for such requirement or change ***. At Allegheny’s request, Service
Provider Personnel shall participate in Allegheny provided regulatory compliance
training programs. ***.

 

  (h) Responsibility. Subject to Section 15.10(e), Service Provider shall be
responsible for any Losses imposed on Service Provider, Allegheny or the
Eligible Recipients resulting from any failure of Service Provider or its
Subcontractors or third party product or service providers to comply with
applicable Laws or respond in a timely manner to changes in such Laws, unless
and to the extent such failure directly results from the acts or omissions of
Allegheny, an Eligible Recipient or an Allegheny third party contractor in
contravention of Allegheny’s obligations under this Agreement.

 

  (i) Assistance to Allegheny. Subject to Section 15.10(g), as part of the
Services and on an ongoing basis, Service Provider shall assist Allegheny and
the Eligible Recipients as they may reasonably require in their efforts to
comply with applicable Laws (including any changes to Laws) not applicable to
Service Provider but related to the Services.

 

  (j) Extraordinary Event. In the event that any change in Laws results in an
increase of *** in the estimated average monthly Charges in any Service Category
and Allegheny would not have incurred such additional cost or impact if it had
not outsourced the Services in question to Service Provider, then Allegheny may,
at its option, terminate the Term or the impacted Service Category(ies) by
giving Service Provider at least ninety (90) days prior notice and designating a
date upon which such termination shall be effective. *** .

 

15.11 Interoperability; Currency.

 

  (a) Interoperability. Service Provider covenants that the Software, Equipment
and Systems provided by Service Provider, and/or used to provide the Services
will be fully interoperable to the extent and in the manner required by Schedule
2 with the software, equipment and systems used by Allegheny or the Eligible
Recipients to provide the same or similar services and/or to deliver records to,
receive records from, or otherwise interact with the Software, Equipment and
Systems to receive the Services; provided that such interoperability requirement
shall not be interpreted to require Service Provider to (i) make Allegheny
Systems interoperable to the extent they are not interoperable as of the
Commencement Date, or (ii) make any Software, Equipment or Systems that are
introduced by Allegheny after the Commencement Date interoperable, to the extent
the non-interoperability was approved by Allegheny in accordance with the Change
Control Procedures.

 

  (b) Currency. Service Provider covenants that the Software, Equipment, Systems
and Services provided and/or used by Service Provider will be able to receive,
transmit, process, store, archive, maintain and support information in U.S.
Dollars.

 

15.12 Disclaimer.

 

EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT, NEITHER PARTY MAKES
ANY REPRESENTATIONS, CONDITIONS OR WARRANTIES TO THE

 

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OTHER PARTY, WHETHER EXPRESS OR IMPLIED, INCLUDING IMPLIED WARRANTIES AND
CONDITIONS OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE OR ANY
IMPLIED WARRANTY OR CONDITION OTHERWISE ARISING FROM COURSE OF DEALING OR USAGE
OF TRADE.

 

16. INSURANCE AND RISK OF LOSS

 

16.1 Insurance.

 

  (a) Requirements. Service Provider agrees to keep in full force and effect and
maintain at its sole cost and expense the following policies of insurance with
the specified minimum limits of liability during the term of this Agreement:

 

  (i) Workers’ Compensation and Employer’s Liability Insurance in full
compliance with the applicable Laws of the state and/or country in which the
work is to be performed or the country of hire (whichever is applicable).

 

  •   The limits of liability of Workers’ Compensation Insurance shall be not
less than the limits required by applicable Law.

 

  •   The limits of liability of Employer’s Liability Insurance with minimum
limits of $1,000,000 per employee by accident/$1,000,000 per employee by
disease/$1,000,000 policy limit by disease (or, if higher, the policy limits
required by applicable Law).

 

  (ii) Commercial General Liability Insurance (including coverage for
Contractual Liability assumed by Service Provider under this Agreement,
Premises-Operations, Completed Operations—Products, and Independent Contractors)
providing coverage for bodily injury, personal injury and property damage with
combined single limits of not less than $3,000,000 per occurrence.

 

  (iii) Commercial Business Automobile Liability Insurance including coverage
for all owned, non-owned, leased, and hired vehicles providing coverage for
bodily injury and property damage liability with combined single limits of not
less than $1,000,000 per occurrence.

 

  (iv) Professional Liability (also known as Errors and Omissions Liability)
Insurance covering acts, errors and omissions arising out of Service Provider’s
operations or Services in an amount not less than $*** per claim.

 

  (v) Comprehensive Crime Insurance, including Employee Dishonesty and Computer
Fraud Insurance covering losses arising out of or in connection with any
fraudulent or dishonest acts committed by Service Provider employees, acting
alone or with others, in an amount not less than $*** per occurrence. Allegheny
shall be included as a loss payee as its interests may appear with respect to
this insurance. ***.

 

  (vi) All-risk property insurance covering loss or damage to Service Provider
owned or leased Equipment and other assets with limits and terms similar to
those normally maintained by operations of a similar nature operating in similar
locations. This insurance shall include Allegheny, Allegheny’s Affiliates and
Eligible Recipients as loss payees as their interests may appear in accordance
with Section 16.2 below.

 

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The insurance limits stated above shall not limit recoveries should Service
Provider’s available insurance proceeds be greater than the limits so specified.

 

  (b) Approved Companies. All such insurance shall be procured with reputable
insurance companies and in such form as is usual and customary to Service
Provider’s business. Such insurance companies shall maintain a rating at least
“A-” and be at least a Financial Size Category VIII as both criteria are defined
in the most current publication of Best’s Policyholder Guide.

 

  (c) Endorsements. Service Provider’s insurance policies as required herein
under Sections 16.1(a)(ii) and (iii) shall name Allegheny, Allegheny Affiliates
and Eligible Recipients and their respective officers, directors and employees
as additional insureds for any and all liability arising at any time in
connection with Service Provider’s or Service Provider Personnel’s performance
under this Agreement. The Service Provider insurance policies required under
Section 16.1(a)(v) shall name Allegheny, Allegheny Affiliates and Eligible
Recipients and their respective officers, directors and employees as loss payees
for any and all liability arising at any time in connection with Service
Provider’s or Service Provider Personnel’s performance under this Agreement to
the extent the insurance claim involves Losses incurred by Allegheny, an
Allegheny Affiliate or an Eligible Recipient. Each policy shall provide that it
will not be canceled or materially altered except after thirty (30) days advance
written notice to Allegheny. Should any policy expire or be canceled during the
Term and Service Provider fails to immediately procure replacement insurance as
specified, Allegheny reserves the right (but not the obligation) to procure such
insurance and to deduct the cost thereof from any sums due Service Provider
under this Agreement. All insurance required under this Section 16.1 shall be
primary insurance and any other valid insurance existing for Allegheny’s benefit
shall be excess of such primary insurance. Service Provider shall obtain such
endorsements to its policy or policies of insurance as are necessary to cause
the policy or policies to comply with the requirements stated herein.

 

  (d) Certificates and Policy Information. Service Provider shall provide
Allegheny with certificates of insurance evidencing compliance with this Article
16 (including evidence of renewal of insurance) signed by authorized
representatives of the respective carriers for each year that this Agreement is
in effect. Each certificate of insurance shall provide that the issuing company
shall not cancel, reduce, or otherwise materially alter the insurance afforded
under the above policies unless notice of such cancellation, reduction or
material alteration has been provided at least thirty (30) days in advance to:

 

Allegheny Energy, Inc.

800 Cabin Hill Drive

Greensburg, Pennsylvania 15601

Attention: General Counsel

 

At Allegheny’s reasonable request, Service Provider shall grant Allegheny
reasonable access to inspect, during normal business hours and at Service
Provider’s applicable business location, the insurance policies utilized by
Service Provider to support its obligations under this Agreement.

 

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  (e) No Implied Limitation. The obligation of Service Provider and its
Affiliates to provide the insurance specified herein shall not limit in any way
any obligation or liability of Service Provider provided elsewhere in this
Agreement. The rights of Allegheny and its subsidiaries, Affiliates and Eligible
Recipients to insurance coverage under policies issued to or for the benefit of
one or more of them are independent of this Agreement shall not be limited by
this Agreement.

 

  (f) Waiver of Subrogation. With respect to insurance coverage to be provided
by Service Provider pursuant to this Section 16.1, the insurance policies shall
provide that the insurance companies waive by endorsement all rights of
subrogation against Service Provider, Allegheny, the Eligible Recipients and
their respective Affiliates, officers, directors and employees. Service Provider
waives its rights to recover against Allegheny, Allegheny Affiliates and
Eligible Recipients and their respective officers, directors, and employees in
subrogation or as subrogee for another party, and will cause its insurers to
issue waiver of subrogation rights endorsements to the extent not included among
the waivers referred to in the preceding sentence.

 

16.2 Risk of Loss.

 

Except as otherwise provided in Section 17.4(b), each Party shall be responsible
for risk of loss of, and damage to, any Equipment, Software or other Materials
in its possession or under its control. Service Provider shall be deemed to
possess and control all Equipment, Software and other materials located in
Service Provider Facilities or in Allegheny Facilities used by Service Provider
to provide the Services. Each Party shall promptly notify the other of any
damage (except normal wear and tear), destruction, loss, theft, or governmental
taking of any item of Equipment, Software or other Materials in the possession
or under the control of such Party, whether or not insured against by such
Party, whether partial or complete, which is caused by any act, omission, fault
or neglect of such Party (“Event of Loss”). Such Party shall be responsible for
the cost of any necessary repair or replacement of such Equipment, Software or
other Materials due to an Event of Loss. In the event of an Event of Loss by
Allegheny, such repair or replacement shall not be considered part of Service
Provider’s maintenance obligations, but Service Provider shall coordinate and
oversee repair or replacement performed by a third-party on a Pass-Through
Expenses basis, or by Service Provider at agreed-upon prices.

 

17. INDEMNITIES

 

17.1 Indemnity by Service Provider.

 

Service Provider agrees to indemnify, defend and hold harmless Allegheny and its
Affiliates and the Eligible Recipients and their respective officers, directors,
employees, agents, representatives, successors, and assigns from any and all
Losses and threatened Losses due to third-party claims arising from or in
connection with any of the following:

 

  (a) Representations, Warranties and Covenants. Service Provider’s breach of
any of the representations, warranties and covenants in ***.

 

  (b) Assumed Contracts. Service Provider’s decision to terminate or failure to
observe or perform any duties or obligations to be observed or performed by
Service Provider under any of the Third Party Software licenses, Equipment
Leases or Third Party Contracts assigned to Service Provider or for which
Service Provider has assumed financial or operational responsibility pursuant to
this Agreement, but only to the extent the cause of

 

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action accrues after the date of such assignment to Service Provider with
respect to contracts assigned to Service Provider, or after the Commencement
Date with respect to contracts not assigned to Service Provider but for which
Service Provider has assumed financial or operational responsibility pursuant to
this Agreement.

 

  (c) Licenses, Leases and Contracts. Service Provider’s failure to observe or
perform any duties or obligations to be observed or performed by Service
Provider under Third Party Software licenses, Equipment leases or Third Party
Contracts used by Service Provider to provide the Services to the extent Service
Provider is financially or operationally responsible or is otherwise informed
thereof (but only after the time Service Provider is informed thereof).

 

  (d) Allegheny Data or Proprietary Information. Service Provider’s breach of
its obligations with respect to Allegheny Data or Allegheny Proprietary
Information.

 

  (e) Infringement. Infringement or misappropriation or alleged infringement or
alleged misappropriation of a patent, trade secret, copyright or other
proprietary rights in contravention of Service Provider’s representations,
warranties and covenants in Sections 15.4 and 15.5, in each case subject to the
conditions set forth in Section 15.5.

 

  (f) Government Claims. Claims for fines, penalties, sanctions, interest or
other monetary remedies imposed by a governmental body, regulatory agency or
standards organization resulting from Service Provider’s failure to perform its
responsibilities under this Agreement.

 

  (g) Taxes. Taxes, together with interest and penalties, that are the
responsibility of Service Provider under Section 11.4.

 

  (h) Claims Arising in Shared Facility Services. Systems, services or products
provided by Service Provider to a third party from any shared Service Provider
facility or using any shared Service Provider resources (excluding Services
provided to an Eligible Recipient pursuant to this Agreement).

 

  (i) Affiliate, Subcontractor or Assignee Claims. Any claim, other than an
indemnification claim under this Agreement, initiated by (i) a Service Provider
Affiliate or Subcontractor asserting claims with regard to services provided by
them under this Agreement or (ii) any entity to which Service Provider assigned,
transferred, pledged, hypothecated or otherwise encumbered its rights to receive
payments from Allegheny under this Agreement.

 

  (j) Service Provider Personnel Injury Claims. Any claim by Service Provider
Personnel for death, personal injury or bodily injury suffered on an Allegheny
Site, except to the extent caused by Allegheny’s gross negligence or willful
misconduct.

 

  (k) Employment Claims. Any claim (including claims by Transitioned Employees)
relating to any (i) violation by Service Provider, Service Provider Affiliates
or Subcontractors, or their respective officers, directors, employees,
representatives or agents, of any Laws or any common law protecting persons or
members of protected classes or categories, including Laws prohibiting
discrimination or harassment on the basis of a protected characteristic,
(ii) liability arising or resulting from the employment of Service Provider
Personnel (including Transitioned Employees) by Service Provider, Service
Provider Affiliates or Subcontractors (including liability for any social
security or other

 

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       employment taxes, workers’ compensation claims and premium payments, and
contributions applicable to the wages and salaries of such Service Provider
Personnel), (iii) payment or failure to pay any salary, wages or other cash
compensation due and owing to any Service Provider Personnel (including
Transitioned Employees from and after their Employment Effective Date),
(iv) employee pension or other benefits of any Service Provider Personnel
(including Transitioned Employees) accruing from and after their Employment
Effective Date, (v) other aspects of the employment relationship of Service
Provider Personnel (including Transitioned Employees) with Service Provider,
Service Provider Affiliates or Subcontractors or the termination of such
relationship, including claims for wrongful discharge, claims for breach of
express or implied employment contract and claims of joint employment, and/or
(vi) liability resulting from representations (oral or written) to the Allegheny
or Eligible Recipient employees identified on Schedule 5A by Service Provider,
Service Provider Affiliates or Subcontractors (or their respective officers,
directors, employees, representatives or agents), or other acts or omissions
with respect to the Allegheny or Eligible Recipient employees identified on
Schedule 5A by such persons or entities, including any act, omission or
representation made in connection with the interview, selection, hiring and/or
transition process, the offers of employment made to such employees, the failure
to make offers to any such employees or the terms and conditions of such offers
(including compensation and employee benefits), except, in each case, to the
extent resulting from the wrongful actions of Allegheny, the Eligible
Recipients, or Allegheny Third Party Contractors, errors or inaccuracies in the
information provided by Allegheny and faithfully communicated by Service
Provider or the failure of Allegheny, the Eligible Recipients, or Allegheny
Third Party Contractors to comply with Allegheny’s responsibilities under this
Agreement. For purposes of this Agreement, Service Provider has no liability,
and is not responsible, for claims by Transitioned Employees accruing prior to
their Employment Effective Date to the extent Allegheny has an indemnity
obligation for such claim under Section 17.3(j).

 

17.2 Indemnity by Service Provider for Breach of Section 8.12(b).

 

Service Provider agrees to indemnify, defend and hold harmless Allegheny and its
Affiliates and the Eligible Recipients and their respective officers, directors,
employees, agents, representatives, successors, and assigns from any and all
Losses due to third-party claims arising from or in connection with Service
Provider’s breach of its obligations under Section 8.12(b), to the extent such
breach results in Allegheny being in violation of the WARN Act or the
regulations promulgated thereunder with respect to the Transitioned Employee(s)
separated by Service Provider in violation of Section 8.12(b). Service
Provider’s indemnity obligations under this Section 17.2 shall be limited to any
and all Losses due to third-party claims solely and directly related to Service
Provider’s separation, in violation of Section 8.12(b), of any Transitioned
Employee(s) during the sixty (60) day period after an employee’s Employment
Effective Date, and Service Provider shall not have any indemnity obligation
under this Section 17.2 with respect to any Losses due to third-party claims
related to other Allegheny employees terminated by Allegheny.

 

17.3 Indemnity by Allegheny.

 

Allegheny agrees to indemnify, defend and hold harmless Service Provider, its
Affiliates and their officers, directors, employees, agents, representatives,
successors, and assigns, from any and all Losses and threatened Losses due to
third-party claims arising from or in connection with any of the following:

 

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  (a) Representations, Warranties and Covenants. Allegheny’s breach of any of
the representations, warranties and covenants in Sections ***.

 

  (b) Licenses, Leases or Contracts. Allegheny’s failure to observe or perform
any duties or obligations to be observed or performed by Allegheny under any of
the applicable Third Party Software licenses, Equipment Leases or Third Party
Contracts to the extent Allegheny is informed thereof (but only after the time
Allegheny is informed thereof), or is financially or operationally responsible
under this Agreement, or to the extent such licenses, leases or contracts are
retained by Allegheny; provided Service Provider’s notification to Allegheny of
a duty or obligation to a third party shall not limit Service Provider’s
obligation to obtain the rights it requires to perform the Services as provided
in this Agreement.

 

  (c) Pre-Assignment Date Matters. Allegheny’s failure to observe or perform any
duties or obligations to be observed or performed prior to the applicable
assignment and assumption date pursuant to this Agreement for any of the Third
Party Software licenses, Equipment Leases or Third Party Contracts assigned to
Service Provider by Allegheny or made available to Service Provider by Allegheny
in order to be managed by Service Provider pursuant to this Agreement.

 

  (d) Service Provider’s Proprietary Information. Allegheny’s breach of its
obligations with respect to Service Provider’s Proprietary Information.

 

  (e) Infringement. Infringement or misappropriation or alleged infringement or
alleged misappropriation of a patent, trade secret, copyright or other
proprietary rights with respect to any Software or other Materials made
available by Allegheny to Service Provider hereunder or otherwise in
contravention of Allegheny’s representations, warranties and covenants in
Section 15.5, in each case subject to the conditions set forth in Section 15.5.

 

  (f) Taxes. Taxes, together with interest and penalties, that are the
responsibility of Allegheny under Section 11.4 (except as set forth in the last
sentence of Section 11.4(i)).

 

  (g) Allegheny Affiliate, Eligible Recipient or Third Party Contractor Claims.
Any claim, other than an indemnification claim or insurance claim under this
Agreement, initiated by an Allegheny Affiliate, an Eligible Recipient (other
than Allegheny) or an Allegheny Third Party Contractor asserting rights under
this Agreement.

 

  (h) Acquired Assets. Any claim relating to the Acquired Assets accruing prior
to the transfer of such Acquired Assets to Service Provider, including but not
limited to liens or encumbrances.

 

  (i) Government Claims. Claims for fines, penalties, sanctions, interest or
other monetary remedies imposed by a governmental body, regulatory agency or
standards organization resulting from Allegheny’s failure to perform its
responsibilities under this Agreement;

 

  (j) Employment Claims. Any claim relating to any (i) violation by Allegheny or
the Eligible Recipients, or their respective officers, directors, employees,
representatives or agents, of Federal, state, provincial, local, international
or other Laws or regulations or any common law protecting persons or members of
protected classes or categories, including laws or regulations prohibiting
discrimination or harassment on the basis of a protected characteristic,
(ii) liability arising or resulting from a Transitioned Employee’s

 

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employment with Allegheny prior to his or her Employment Effective Date,
(iii) payment or failure to pay any salary, wages or other cash compensation due
and owing to (A) any Allegheny employee who does not become a Transitioned
Employee or (B) any Transitioned Employee prior to such Transitioned Employee’s
Employment Effective Date, (iv) (A) all accrued employee pension or other
benefits of any Allegheny employee who does not become a Transitioned Employee
and (B) those employee pension or other benefits of any Transitioned Employee
accruing prior to such Transitioned Employee’s Effective Employment Date,
(v) other aspects of any Transitioned Employee’s employment relationship with
Allegheny or the termination of such relationship, including claims for breach
of an express or implied contract of employment, and/or (vi) liability resulting
from representations (oral or written) to the Affected Employees by Allegheny or
the Eligible Recipients (or their respective officers, directors, employees,
representatives or agents) with respect to their employment by Service Provider
or its Subcontractors or Affiliates (other than representations made with the
authorization or approval of Service Provider, representations that Service
Provider knew to be inaccurate and failed to correct and/or representations made
by Service Provider in this Agreement), except, in each case, to the extent
resulting from the actions of Service Provider, Service Provider Affiliates or
Subcontractors or their failure to comply with Service Provider’s
responsibilities under this Agreement, or involving any matters for which
Service Provider has an indemnity obligation under Section 17.1(k); and

 

  (k) Allegheny Employee Injury Claims. Any claim by employees of Allegheny or
Allegheny’s Affiliates for death, personal injury or bodily injury suffered on a
Service Provider site, except to the extent caused by Service Provider’s gross
negligence or willful misconduct.

 

17.4 Additional Indemnities.

 

Service Provider and Allegheny each agree to indemnify, defend and hold harmless
the other, and the Eligible Recipients and their respective Affiliates,
officers, directors, employees, agents, representatives, successors, and
assigns, from any and all Losses and threatened Losses to the extent they arise
from or in connection with any of the following: (a) except as otherwise
provided in Sections 17.1(j) and 17.3(k), third party claims arising from the
death, personal injury or bodily injury of any agent, employee, customer,
business invitee, business visitor or other person caused by the negligence or
other tortious conduct of the indemnitor or the failure of the indemnitor to
comply with its obligations under this Agreement; and (b) the damage, loss or
destruction of any real or tangible personal property caused by the negligence
or other tortious conduct of the indemnitor or the failure of the indemnitor to
comply with its obligations under this Agreement.

 

17.5 Infringement.

 

In the event that (1) any Software, Equipment, Materials or Services for which a
Party or its Affiliates or Subcontractors is financially responsible pursuant to
this Agreement or, with respect to Service Provider and its Affiliates and
Subcontractors, used by them in the performance of the Services are found, or in
the other Party’s reasonable opinion are likely to be found, to infringe upon
the patent, copyright, trademark, trade secrets, intellectual property or
proprietary rights of any third party in any country in which Services are to be
performed or received under this Agreement, or (2) the continued use of such
item(s) is enjoined, the Party that provided the infringing item shall, in
addition to defending, indemnifying and holding harmless the other Party as
provided in this Agreement and to the other rights such Party may have under
this Agreement, promptly and at its own cost and expense and in such a manner as
to minimize the disturbance to such Party’s business activities do one of the
following:

 

  (a) Obtain Rights. Obtain the right to continue using such Software, Equipment
or Materials.

 

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  (b) Modification. Modify the item(s) in question (which may occur through a
Project under this Agreement) so that it is no longer infringing (provided that
such modification does not degrade the performance or quality of the Services or
adversely affect Allegheny’s and the Eligible Recipients’ intended use as
contemplated by this Agreement).

 

  (c) Replacement. Replace such item(s) with a non-infringing functional
equivalent.

 

Notwithstanding the foregoing, Allegheny may require Service Provider to
discontinue use of any Software, Equipment or Materials supplied by Allegheny or
an Eligible Recipient, in which case Service Provider shall be excused as
provided in Section 10.2 to the extent such discontinuation impairs Service
Provider’s ability to perform its obligations under this Agreement.

 

17.6 Indemnification Procedures.

 

With respect to third party claims which are subject to indemnification under
this Agreement (other than as provided in Section 17.7 with respect to third
party claims covered by Section 17.1(f) or Section 17.3(i)), the following
procedures shall apply:

 

  (a) Notice. Promptly after receipt by any entity entitled to indemnification
under this Agreement of notice of the commencement or threatened commencement of
any civil, criminal, administrative, or investigative action or proceeding
involving a claim in respect of which the indemnitee will seek indemnification
hereunder, the indemnitee shall notify the indemnitor of such claim. No delay or
failure to so notify an indemnitor shall relieve it of its obligations under
this Agreement except to the extent that such indemnitor has suffered actual
prejudice by such delay or failure. Within fifteen (15) days following receipt
of notice from the indemnitee relating to any claim, but no later than five
(5) days before the date on which any response to a complaint or summons is due,
the indemnitor shall notify the indemnitee that the indemnitor elects to assume
control of the defense and settlement of that claim (a “Notice of Election”).

 

  (b) Procedure Following Notice of Election. If the indemnitor delivers a
Notice of Election within the required notice period, the indemnitor shall
assume sole control over the defense and settlement of the claim; provided,
however, that (i) the indemnitor shall keep the indemnitee fully apprised at all
times as to the status of the defense, and (ii) the indemnitor shall obtain the
prior written approval of the indemnitee before entering into any settlement of
such claim asserting any liability against the indemnitee or imposing any
obligations or restrictions on the indemnitee or ceasing to defend against such
claim. The indemnitor shall not be liable for any legal fees or expenses
incurred by the indemnitee following the delivery of a Notice of Election;
provided, however, that (A) the indemnitee shall be entitled to employ counsel
at its own expense to participate in the handling of the claim, and (B) the
indemnitor shall pay the fees and expenses associated with such counsel if there
is a conflict of interest with respect to such claim which is not otherwise
resolved or if the indemnitor has requested the assistance of the indemnitee in
the defense of the claim or the indemnitor has failed to defend the claim
diligently and the indemnitee is prejudiced or likely to be prejudiced by such
failure. The indemnitor shall not be obligated to indemnify the indemnitee for
any amount paid or payable by such indemnitee in the

 

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settlement of any claim if (1) the indemnitor has delivered a timely Notice of
Election and such amount was agreed to without the written consent of the
indemnitor, (2) the indemnitee has not provided the indemnitor with notice of
such claim and a reasonable opportunity to respond thereto, or (3) the time
period within which to deliver a Notice of Election has not yet expired.

 

  (c) Procedure Where No Notice of Election Is Delivered. If the indemnitor does
not deliver a Notice of Election relating to any claim within the required
notice period, the indemnitee shall have the right to defend the claim in such
manner as it may deem appropriate. The indemnitor shall promptly reimburse the
indemnitee for all such reasonable costs and expenses incurred by the
indemnitee, including reasonable attorneys’ fees.

 

17.7 Indemnification Procedures – Governmental Claims.

 

With respect to claims covered by Section 17.1(f) or Section 17.3(i), the
following procedures shall apply:

 

  (a) Notice. Promptly after receipt by the indemnitee of notice of the
commencement or threatened commencement of any action or proceeding involving a
claim in respect of which the indemnitee will seek indemnification pursuant to
Section 17.1(f) or Section 17.3(i), the indemnitee shall notify the indemnitor
of such claim. No delay or failure to so notify the indemnitor shall relieve the
indemnitor of its obligations under this Agreement except to the extent that the
indemnitor has suffered actual prejudice by such delay or failure.

 

  (b) Procedure for Defense. The indemnitee shall be entitled, at its option, to
have the claim handled pursuant to Section 17.6 or to retain sole control over
the defense and settlement of such claim; provided that, in the latter case, the
indemnitee shall (i) consult with the indemnitor on a regular basis regarding
claim processing (including actual and anticipated costs and expenses) and
litigation strategy, (ii) reasonably consider any indemnitor settlement
proposals or suggestions, and (iii) use commercially reasonable efforts to
minimize any amounts payable or reimbursable by the indemnitor.

 

17.8 Subrogation.

 

Except as otherwise provided in Section 16.1 or Section 16.2, in the event that
an indemnitor shall be obligated to indemnify an indemnitee pursuant to any
provision of this Agreement, the indemnitor shall, upon payment of such
indemnity in full, be subrogated to all rights of the indemnitee with respect to
the claims to which such indemnification relates.

 

18. LIABILITY

 

18.1 General Intent.

 

Subject to the specific provisions and limitations of this Article 18, it is the
intent of the Parties that each Party shall be liable to the other Party for any
actual damages incurred by the non-breaching Party as a result of the breaching
Party’s failure to perform its obligations in the manner required by this
Agreement.

 

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18.2 Force Majeure.

 

  (a) General. Subject to Section 18.2(d), no Party shall be liable for any
default or delay in the performance of its obligations under this Agreement if
and to the extent such default or delay is caused, directly or indirectly, by
fire, flood, earthquake, elements of nature or acts of God, wars, riots, civil
disorders, rebellions or revolutions, acts of terrorism, or any other similar
cause beyond the reasonable control of such Party except to the extent that the
non-performing Party is at fault in failing to prevent or causing such default
or delay, and provided that such default or delay can not reasonably be
circumvented by the non-performing Party through the use of alternate sources,
workaround plans or other means. A strike, lockout or labor dispute involving
Service Provider Personnel shall not excuse Service Provider from its
obligations hereunder. The failure of any Equipment, Software or System for
which Service Provider is operationally responsible to be year 2000 compliant
shall not be considered a force majeure event and shall not relieve Service
Provider of any of its obligations under this Agreement, including its
obligations to perform the Services in accordance with the Service Levels. In
addition, the refusal of Service Provider Personnel to enter a facility that is
the subject of a labor dispute shall excuse Service Provider from its
obligations hereunder only if and to the extent such refusal is based upon a
reasonable fear of physical harm.

 

  (b) Duration and Notification. In the event of a force majeure event the
non-performing Party shall be excused from further performance or observance of
the obligation(s) so affected for as long as such circumstances prevail and such
Party continues to use commercially reasonable efforts to recommence performance
or observance whenever and to whatever extent possible without delay. Any Party
so prevented, hindered or delayed in its performance shall, as quickly as
practicable under the circumstances, notify the Party to whom performance is due
by telephone (to be confirmed in writing within one (1) day of the inception of
such delay) and describe at a reasonable level of detail the circumstances of
the force majeure event, the steps being taken to address such force majeure
event, and the expected duration of such force majeure event.

 

  (c) Substitute Services; Termination. If any event described in
Section 18.2(a) has substantially prevented, hindered or delayed or is
reasonably expected to substantially prevent, hinder or delay the performance by
Service Provider or one of its Subcontractors of Services necessary for the
performance of functions that are critical for Allegheny’s or an Eligible
Recipient’s business (in light of their impact on Allegheny’s or an Eligible
Recipient’s business) for longer than the recovery period specified in the
applicable disaster recovery plan or, if there is no such recovery period, ***,
Allegheny may procure such Services from an alternate source, and Service
Provider shall be solely liable for payment for such services from the alternate
source ***; provided that Allegheny continues to pay the Charges to Service
Provider for such Services with respect to the period of non-performance. In
addition, if any event described in Section 18.2(a) substantially prevents,
hinders or delays the performance by Service Provider or one of its
Subcontractors of Services necessary for the performance of critical Allegheny
functions for more than ***, Allegheny, at its option, may (i) terminate any
portion of the Services so affected and the Charges payable hereunder shall be
equitably adjusted to reflect those terminated Services; or (ii) terminate the
Term. If Allegheny elects to terminate pursuant to clause (i) of the immediately
preceding sentence, ***. Service Provider shall not have the right to additional
payments or increased usage charges as a result of any force majeure occurrence
affecting Service Provider’s ability to perform.

 

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  (d) Disaster Recovery and Storm Staffing. Upon the occurrence of a force
majeure event that constitutes a disaster under the disaster recovery plan,
Service Provider shall implement promptly, as appropriate, its disaster recovery
plan and provide disaster recovery services as described in Schedule 2. The
occurrence of a force majeure event shall not relieve Service Provider of its
obligation to implement its disaster recovery plan and provide disaster recovery
services. In addition, in the event of storm weather conditions, as defined by
Allegheny applying its usual standards, Service Provider shall provide storm
staffing and take other storm related precautions to address the additional
Services demand that may occur as a result of such conditions.

 

  (e) Payment Obligation. If Service Provider fails to provide Services in
accordance with this Agreement due to the occurrence of a force majeure event,
all amounts payable to Service Provider hereunder shall be equitably adjusted in
a manner such that Allegheny is not required to pay any amounts for Services
that it is not receiving from Service Provider, unless Allegheny procures
services from an alternate source at Service Provider’s expense pursuant to
Section 18.2(c), in which case Allegheny will pay Service Provider pursuant to
Section 18.2(c).

 

  (f) Allocation of Resources. Without limiting Service Provider’s obligations
under this Agreement, whenever a force majeure event or disaster causes Service
Provider to allocate limited resources between or among Service Provider’s
customers and Affiliates, Allegheny and the Eligible Recipients shall receive at
least the same treatment as comparable Service Provider customers. In no event
will Service Provider re-deploy or re-assign any Key Service Provider Personnel
to another customer or account in the event of the occurrence of a force majeure
event.

 

18.3 Limitation of Liability.

 

  (a) Exclusions from Limitations. EXCEPT AS PROVIDED IN THIS SECTION 18.3,
NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY FOR INDIRECT, CONSEQUENTIAL,
INCIDENTAL, COLLATERAL, EXEMPLARY OR PUNITIVE DAMAGES, INCLUDING LOST PROFITS,
REGARDLESS OF THE FORM OF THE ACTION OR THE THEORY OF RECOVERY, EVEN IF SUCH
PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.

 

  (b) Liability Cap. Additionally, except as provided below, the total aggregate
liability of either Party, for claims asserted by the other Party under or in
connection with this Agreement, regardless of the form of the action or the
theory of recovery, shall be limited to ***.

 

  (c) Separate Liability Cap. The limitations of liability set forth in Sections
18.3(a) and 18.3(b) shall not apply with respect to: ***

 

  (d) Exceptions to Limitations of Liability. The limitations of liability set
forth in Sections 18.3(a) and (b) shall not apply with respect to:

 

  (i) Losses occasioned by the fraud, willful misconduct, or gross negligence of
a Party.

 

  (ii) Amounts paid with respect to third-party claims that are the subject of
indemnification pursuant to Sections *** under this Agreement.

 

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  (iii) Losses occasioned by the wrongful abandonment of this Agreement by
Service Provider; provided, however, that Service Provider may exercise its
express termination rights under this Agreement in good faith, in which case the
limitations in Sections 18.3(a) and 18.3(b) will apply.

 

  (iv) Losses occasioned by Service Provider’s refusal to provide Services or
Termination Assistance Services, provided that Service Provider may exercise its
express termination rights under this Agreement in good faith (in which case the
limitations in Sections 18.3(a) and 18.3(b) will apply) subject to Service
Provider’s continued obligation to provide Termination Assistance Services as
set forth in this Agreement. For purposes of this provision, “refusal” shall
mean ***.

 

  (v) Amounts paid under Section 17.4 with respect to death, personal injury or
bodily injury of an agent, employee, customer, business invitee, business
visitor or other person or damage, loss or destruction of real or tangible
personal property.

 

  (vi) Losses occasioned by any breach of a Party’s representations and
warranties set forth in Sections 15.6 and 15.7 and the first sentence of
Section 15.9.

 

  (e) Items Not Considered Damages. The following shall not be considered
damages subject to, and shall not be counted toward the liability exclusion or
cap specified in, Sections 18.3(a) or 18.3(b):

 

  (i) Amounts withheld by Allegheny in accordance with this Agreement due either
to incorrect Charges by Service Provider or non-conforming Services.

 

  (ii) Amounts paid by Allegheny but subsequently recovered from Service
Provider due either to incorrect Charges by Service Provider or non-conforming
Services.

 

  (iii) Invoiced Charges and other amounts that are due and owing to Service
Provider for Services under this Agreement.

 

  (f) In determining EDS’ liability under Sections 18.3(a) and 18.3(b), Service
Level Credits or Deliverable Credits assessed against Service Provider pursuant
to Schedule 3 will be given effect in measuring and determining the amount of
***.

 

  (g) Waiver of Liability Cap. If, at any time, the total aggregate liability of
one Party for claims asserted by the other Party under or in connection with
this Agreement exceeds *** of the liability cap specified in either
Section 18.3(b) or Section 18.3(c) and, within thirty (30) days from receipt of
the request of the other Party, the Party incurring such liability refuses to
waive such cap and/or increase the available cap to an amount at least equal to
the original liability cap, then the other Party may terminate the Term. Service
Provider shall not be entitled to any Termination Charges in connection with a
termination under this Section 18.3(g).

 

  (h) Acknowledged Direct Damages. The following shall be considered direct
damages and neither Party shall assert that they are indirect, incidental,
collateral, consequential or

 

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special damages or lost profits to the extent they result directly from the
breaching Party’s failure to perform in accordance with this Agreement:

 

  (i) Costs and expenses of recreating or reloading any lost, stolen or damaged
Allegheny Data.

 

  (ii) Costs and expenses of implementing a work-around in respect of a failure
to provide the Services or any part thereof.

 

  (iii) Costs and expenses of replacing lost, stolen or damaged Equipment,
Software, and Materials.

 

  (iv) Cover damages, including the costs and expenses incurred to procure the
Services or corrected Services from an alternate source, to the extent in excess
of Service Provider’s Charges under this Agreement.

 

  (v) Straight time, overtime or related expenses incurred by either Party,
including overhead allocations for employees, wages and salaries of additional
employees, travel expenses, overtime expenses, telecommunication charges and
similar charges.

 

  (vi) Costs and expenses incurred to bring the Services in-house or to contract
to obtain the Services from an alternate source, including the costs and
expenses associated with the retention of external consultants and legal counsel
to assist with any re-sourcing that are directly related to a material default
of Service Provider.

 

  (vii) Damages of an Allegheny Affiliate or an Eligible Recipient which would
be direct damages if they had instead been suffered by Allegheny (including
being so considered under this Section 18.3(h)).

 

  (viii) Subject to Section 15.10, fines, penalties, sanctions, interest or
other monetary remedies imposed by a governmental body or regulatory agency or
standards organization for failure of a Party to comply with requirements or
deadlines.

 

  (ix) Loss of funds resulting from Service Provider’s failure to provide
correct instructions for funds transfers, or failure to properly execute funds
transfers.

 

  (x) Lost discounts, late fees and/or interest charges incurred by Allegheny
and the Eligible Recipients.

 

18.4 Joint and Several Liability.

 

EIS and EDS shall be jointly and severally liable for all obligations and
liabilities under this Agreement designated as the responsibility of Service
Provider.

 

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19. DISPUTE RESOLUTION

 

19.1 Informal Dispute Resolution.

 

Prior to the initiation of formal dispute resolution procedures with respect to
any dispute, other than as provided in Section 19.1(d) or Sections 20.8, the
Parties shall first attempt to resolve such dispute informally, as follows:

 

  (a) Initial Effort. The Parties agree that the Allegheny Contract Executive
and the Service Provider Account Manager shall attempt in good faith to resolve
all disputes (other than those described in Section 19.1(d) or 20.8). In the
event the Allegheny Contract Executive and the Service Provider Account Manager
are unable to resolve a dispute in an amount of time that either Party deems
reasonable under the circumstances, such Party may refer the dispute for
resolution to the senior corporate executives specified in Section 19.1(b) below
upon written notice to the other Party.

 

  (b) Escalation. Within five (5) business days of a notice under
Section 19.1(a) above referring a dispute for resolution by senior corporate
executives, the Allegheny Contract Executive and the Service Provider Account
Manager will each prepare and provide to a Service Provider President
CI&R/Energy and the Allegheny Chief Financial Officer, respectively, summaries
of the non-privileged relevant information and background of the dispute, along
with any appropriate non-privileged supporting documentation, for their review.
The designated senior corporate executives will confer as often as they deem
reasonably necessary in order to gather and furnish to the other all
non-privileged information with respect to the matter in issue which the Parties
believe to be appropriate and germane in connection with its resolution. The
designated senior corporate executives shall discuss the problem and negotiate
in good faith in an effort to resolve the dispute without the necessity of any
formal proceeding. The specific format for the discussions will be left to the
discretion of the designated senior corporate executives, but may include the
preparation of agreed-upon statements of fact or written statements of position.

 

  (c) Provision of Information. During the course of negotiations under
Section 19.1(a) or (b) above, all reasonable requests made by one Party to
another for non-privileged information, reasonably related to the dispute, will
be honored in order that each of the Parties may be fully advised of the other’s
position. All negotiation shall be strictly confidential and used solely for the
purposes of settlement. Any materials prepared by one Party for these
proceedings shall not be used as evidence by the other Party in any subsequent
arbitration or litigation; provided, however, the underlying facts supporting
such materials may be subject to discovery.

 

  (d) Prerequisite to Arbitration. Arbitration of any dispute in connection with
Section 14.2(f) may not be commenced until the earlier of:

 

  (i) the designated senior corporate executives under Section 19.1(b) above
concluding in good faith that amicable resolution through continued negotiation
of the matter does not appear likely; or

 

  (ii) thirty (30) days after the notice under Section 19.1(a) above referring
the dispute to senior corporate executives.

 

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  (e) Arbitration. Any dispute in connection with Section 14.2(f) that the
Parties are unable to resolve as set forth in Subsections 19.1(a)-(d) will be
submitted to arbitration in accordance with the following procedures:

 

  (i) Demand for Arbitration; Location. Either Party may demand arbitration by
giving the other Party written notice to such effect, which notice will
describe, in reasonable detail, the facts and legal grounds forming the basis
for the filing Party’s request for relief and will include a statement of the
total amount of damages claimed, if any, and any other remedy sought by that
Party. The arbitration will be held before one (1) neutral arbitrator in Plano,
Texas if the proceedings are initiated by Allegheny and in Greensburg,
Pennsylvania if the proceedings are initiated by Service Provider.

 

  (ii) Identification of Arbitrator. Within thirty (30) days after the other
Party’s receipt of such demand, the Parties will mutually determine who the
arbitrator will be. If the Parties are unable to agree on the arbitrator within
that time period, the arbitrator will be selected by the American Arbitration
Association (“AAA”). In any event, the arbitrator will be a lawyer and will have
a background in, and knowledge of, the information technology services industry
and will be an appropriate person based on the nature of the dispute. If a
person with such industry experience is not available, the arbitrator will be
chosen from the large and complex case panel or, if an appropriate person is not
available from such panel, the retired federal judges pool.

 

  (iii) Conduct of Arbitration. The arbitration will be governed by the
Commercial Arbitration Rules of the AAA, except as expressly provided in this
Section. However, the arbitration will be administered by any organization
mutually agreed to in writing by the Parties. If the Parties are unable to agree
on the organization to administer the arbitration, it will be administered by
the AAA under its procedures for large and complex cases.

 

  (iv) Scope of Discovery. Discovery will be limited to the request for and
production of documents, depositions and interrogatories. Interrogatories will
be allowed only as follows: a Party may request the other Party to identify by
name, last known address and telephone number (i) all persons having knowledge
of facts relevant to the dispute and a brief description of that person’s
knowledge, (ii) any experts who may be called as an expert witness, the subject
matter about which the expert is expected to testify, the mental impressions and
opinions held by the expert and the facts known by the expert (regardless of
when the factual information was acquired) that relate to or form the basis for
the mental impressions and opinions held by the expert, and (iii) any experts
who have been used for consultation, but who are not expected to be called as an
expert witness, if such consulting expert’s opinions or impressions have been
reviewed by an expert witness. All discovery will be guided by the Federal Rules
of Civil Procedure. All issues concerning discovery upon which the Parties
cannot agree will be submitted to the arbitrator for determination.

 

  (v) Authority of Arbitrator. The arbitrator will determine the rights and
obligations of the Parties according to the laws of the Commonwealth of
Pennsylvania. The arbitrator will not have authority to award damages in excess
of the amount or other than the types allowed by Section 18.3 and may not, in
any event, make any ruling, finding or award that does not conform to the terms
and conditions of this Agreement.

 

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  (vi) Joinder of Parties. Each of Service Provider and Allegheny agree that it
will use commercially reasonable efforts to join (and will allow the other Party
to join) any third party that the Parties have agreed is indispensable to the
arbitration. If any such third party does not agree to be joined, the
arbitration will proceed nonetheless.

 

  (vii) Award. The decision of, and award rendered by, the arbitrator will be
final and binding on the Parties. Upon the request of a Party, the arbitrator’s
award will include written findings of fact and conclusions of law. Judgment on
the award may be entered in and enforced by any court of competent
jurisdiction. Each Party will bear its own costs and expenses (including filing
fees) with respect to the arbitration, including one-half of the fees and
expenses of the arbitrator.

 

  (viii) Other Disputes. The Parties acknowledge and agree that, except for any
disputes in connection with Section 14.2(f), the Parties are not required to
submit any other disputes arising under or in connection with this Agreement to
arbitration in accordance with the foregoing procedures.

 

  (f) Equitable Remedies. The provisions and time periods specified in this
Section 19.1 shall not be construed to prevent a Party from instituting, and a
Party is authorized to institute, formal proceedings earlier to (A) avoid the
expiration of any applicable limitations period, (B) preserve a superior
position with respect to other creditors, (C) address a claim arising out of the
breach of a Party’s obligations under Article 13, or (D) address a claim arising
out of the breach or attempted or threatened breach of the obligations described
in the next paragraph.

 

Service Provider acknowledges that, in the event it breaches (or attempts or
threatens to breach) its obligation to provide Services or Termination
Assistance Services in accordance with this Agreement, its obligation respecting
continued performance in accordance with Section 19.3, or its obligation to
provide access to Allegheny Data in accordance with Section 13.5, Allegheny
and/or the Eligible Recipients will be irreparably harmed. In such a
circumstance, Allegheny may proceed directly to court. If a court of competent
jurisdiction should find that Service Provider has breached (or attempted or
threatened to breach) any such obligations, Service Provider agrees that without
any additional findings of irreparable injury or other conditions to injunctive
relief, Allegheny shall be entitled to seek and obtain injunctive relief,
including entry of an appropriate order compelling performance by Service
Provider and restraining it from any further breaches (or attempted or
threatened breaches).

 

19.2 Jurisdiction; Waiver of Jury Trial.

 

Each Party irrevocably agrees that any legal action, suit or proceeding brought
by it in any way arising out of this Agreement must be brought solely and
exclusively in Pennsylvania, and each Party irrevocably submits to the sole and
exclusive jurisdiction of the federal courts for the Western District of
Pennsylvania and state courts in Westmoreland County in personam, generally and
unconditionally with respect to any action, suit or proceeding brought by it or
against it by the other Party. Allegheny and Service Provider hereby irrevocably
waive their respective rights to trial by jury in respect of any disputes
arising under or related to this Agreement.

 

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19.3 Continued Performance.

 

  (a) General. Each Party agrees that it shall, unless otherwise directed by the
other Party, continue performing its obligations under this Agreement while any
dispute is being resolved; provided, that this provision shall not operate or be
construed as extending the Term of this Agreement or prohibiting or delaying a
Party’s exercise of any right it may have to terminate the Term as to all or any
part of the Services. For purposes of clarification, Allegheny Data may not be
withheld by Service Provider pending the resolution of any dispute.

 

  (b) Non-Interruption of Service. Service Provider acknowledges and agrees that
any interruption to the Service may cause irreparable harm to Allegheny and/or
the Eligible Recipients, in which case an adequate remedy at law would not be
available. Subject to Service Provider’s right to terminate the Term pursuant to
Section 20.1(b), Service Provider expressly acknowledges and agrees that,
pending resolution of any dispute or controversy, it shall not deny, withdraw,
or restrict Service Provider’s provision of the Services to Allegheny and/or the
Eligible Recipients under this Agreement, except as specifically and expressly
agreed in writing by Allegheny and Service Provider.

 

19.4 Governing Law.

 

This Agreement and performance under it shall be governed by and construed in
accordance with the applicable laws of the Commonwealth of Pennsylvania, without
giving effect to the principles thereof relating to conflicts of laws. The
application of the United Nations Convention on Contracts for the International
Sale of Goods is expressly excluded.

 

20. TERMINATION

 

20.1 Termination for Cause.

 

  (a) By Allegheny. If Service Provider:

 

  (i) commits a material breach of its obligations with respect to Transition
Services as provided in Section 4.2(h) (including Service Provider’s right to
cure under Section 4.2(h));

 

  (ii) commits a material breach of this Agreement, which breach is not cured
within *** after notice of the breach from Allegheny ***;

 

  (iii) commits a material breach of this Agreement which is not capable of
being cured within the period specified pursuant to Section 20.1(a)(ii);

 

  (iv) commits numerous breaches of its duties or obligations of which Service
Provider has received notice and which collectively constitute a material breach
of this Agreement, and fails to ***;

 

  (v) fails to perform in accordance with the Minimum Service Level for a
Critical Service Level ***; or

 

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  (vi) commits a material breach of Section 15.7 of this Agreement;

 

then Allegheny may, by giving notice to Service Provider, terminate the Term
with respect to all or any part of the Services, as of a date specified in the
notice of termination. Service Provider shall not be entitled to any Termination
Charges in connection with such a termination for cause. If Allegheny chooses to
terminate in part pursuant to this Section 20.1(a), the Charges will be adjusted
in accordance with the pricing methodology set forth in Schedule 4, to reflect
such partial termination.

 

The express acknowledgment that a certain amount of Service Level Credits or
number of Service Level defaults constitutes grounds for termination under
Section 20.1(a)(v) and (vi) does not imply that a lesser amount or number cannot
constitute a material breach of this Agreement and therefore grounds for
termination under other subsections.

 

  (b) By Service Provider. In the event that Allegheny fails to pay Service
Provider in accordance with Article 12, ***, by the specified due date and fails
to cure such default within thirty (30) days of notice from Service Provider of
its intention to terminate for failure to make such payment, Service Provider
may, by notice to Allegheny, terminate the Term.

 

  (c) Service Provider acknowledges and agrees that Sections 20.1(b) and 20.5
describe Service Provider’s sole right to terminate this Agreement and Service
Provider hereby waives any other rights it may have to terminate this Agreement.

 

20.2 Termination for Convenience.

 

Allegheny may terminate the Term, effective at any time *** after the Effective
Date, with respect to all or any portion of the Services for convenience and
without cause by giving Service Provider at least six (6) months prior notice
designating the termination date. Unless otherwise agreed by the Parties, the
applicable portion of such Termination Charge shall be payable with respect to
any Tower of Services for which Allegheny terminates for convenience and without
cause ***. If Allegheny elects to terminate on this basis, Allegheny shall pay
to Service Provider a Termination Charge calculated in accordance with Schedule
4H as of the date the Service Provider ceases to provide the applicable Services
as required by this Agreement. In the event that a purported termination by
Allegheny other than for convenience is determined by a competent authority not
to be a proper termination under this Agreement, then such termination by
Allegheny shall be deemed to be a termination for convenience under this
Section 20.2.

 

20.3 Termination Upon Service Provider Change of Control.

 

In the event of a change in Control of Service Provider (or that portion of
Service Provider providing all or any material portion of the Services under
this Agreement) or the Entity that Controls Service Provider (if any), where
such control is acquired, directly or indirectly, in a single transaction or
series of related transactions, or all or substantially all of the assets of
Service Provider (or that portion of Service Provider providing all or any
material portion of the Services under this Agreement) are acquired by any
entity, or Service Provider (or that portion of Service Provider providing all
or any material portion of the Services under this Agreement) is merged with or
into another entity to form a new entity, then at any time within twelve
(12) months after the last to occur of such events, Allegheny may at its option
terminate the Term by giving Service Provider at least ninety (90) days’ prior
notice and designating a date upon which such termination shall be effective;
provided, however, if such change in Control of Service

 

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Provider involves a Direct Allegheny Competitor, Allegheny may terminate the
Term by giving Service Provider at least thirty (30) days prior notice, and such
Direct Allegheny Competitor shall be prohibited from any contact with Allegheny
Data, Allegheny Proprietary Information and any and all other information about
the Allegheny account, including discussions with Service Provider Personnel
regarding specifics relating to the Services. In the event of a termination
pursuant to this Section 20.3, Service Provider shall ***.

 

20.4 Termination Upon Allegheny Change of Control.

 

In the event that, in a single transaction or series of transactions, Allegheny
acquires or is acquired by any other Entity (by stock sale, asset sale or
otherwise) or merges with any other Entity, then, at any time within twelve
(12) months after the last to occur of such events, Allegheny may at its option
terminate the Term by giving Service Provider at least ninety (90) days’ prior
notice and designating a date upon which such termination shall be effective. If
Allegheny terminates on this basis, Service Provider shall ***.

 

20.5 Termination for Insolvency.

 

In the event that any Party (i) commences a bankruptcy case or a bankruptcy case
is commenced against a Party, (ii) becomes or is declared insolvent, is the
subject of insolvency or similar proceedings under state or federal law, or a
receiver or similar officer or representative is appointed with respect to all
or substantially all of a Party’s assets, (iii) passes a resolution for its
voluntary liquidation, (iv) makes an assignment for the benefit of all or
substantially all of its creditors, (v) enters into an agreement or arrangement
for the composition, extension, or readjustment of substantially all of its
obligations, or (vi) experiences an event analogous to any of the foregoing in
any jurisdiction in which any of its assets are situated, then the other Party
may terminate the Term as of a date specified in a termination notice; provided,
however, that Service Provider will not have the right to exercise such
termination under this Section so long as Allegheny pays for the Services to be
received hereunder in advance on a month-to-month basis. If any Party elects to
terminate the Term due to the insolvency of the other Party, such termination
will be deemed to be a termination for cause hereunder.

 

20.6 Allegheny Rights Upon Service Provider’s Bankruptcy.

 

  (a) General Rights. In the event of Service Provider’s bankruptcy or other
formal procedure referenced in Section 20.5 or of the filing of any petition
under bankruptcy laws affecting the rights of Service Provider which is not
stayed or dismissed within thirty (30) days of filing, in addition to the other
rights and remedies set forth herein, Service Provider shall not interfere with
Allegheny’s right of access to, or right to take possession for safekeeping of,
all Allegheny Data, Allegheny Proprietary Information, Allegheny licensed Third
Party Software, Allegheny-owned Equipment, Allegheny-owned Materials,
Allegheny-owned Developed Materials, and all other Software, Equipment, Systems
or Materials to which Allegheny and/or the Eligible Recipients are or would be
entitled during the Term or upon the expiration or termination of this
Agreement, subject to Service Provider’s reasonable security and confidentiality
requirements that are communicated in advance and applicable to other parties
accessing Service Provider’s facilities and/or systems. Service Provider shall
cooperate fully with Allegheny and the Eligible Recipients and assist Allegheny
and the Eligible Recipients in identifying and taking possession of the items
listed in the preceding sentence. Allegheny will have the right to hold such
Allegheny Data, Proprietary Information, Software, Equipment, Systems and
Materials until such time as the trustee or receiver in bankruptcy or other
appropriate insolvency office holder can

 

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provide adequate assurances and evidence to Allegheny that they will be
protected from sale, release, inspection, publication, or inclusion in any
publicly accessible record, document, material or filing. Service Provider and
Allegheny agree that without this material provision, Allegheny would not have
entered into this Agreement or provided any right to the possession or use of
Allegheny Data, Allegheny Proprietary Information, or Allegheny Software covered
by this Agreement. If and to the extent that Allegheny removes any Allegheny
Data, Proprietary Information, Software, Equipment, Systems or Materials from
Service Provider Facilities pursuant to this Section 20.6(a) and, as a result,
Service Provider is unable to perform any Services, then Service Provider shall
be excused of its obligation to perform such Services but only if (A) Service
Provider expeditiously notifies Allegheny of Service Provider’s inability to
perform under such circumstances, (B) Service Provider provides Allegheny with a
reasonable opportunity to return such Allegheny Data, Proprietary Information,
Software, Equipment, Systems or Materials and thereby avoid such Service
Provider non-performance, (C) Service Provider identifies and pursues
commercially reasonable means to avoid or mitigate the impact of such
non-performance, and (D) Service Provider uses commercially reasonable efforts
to perform notwithstanding Allegheny’s removal of such Allegheny Data,
Proprietary Information, Software, Equipment, Systems or Materials.

 

  (b) Allegheny Rights in Event of Bankruptcy Rejection. Notwithstanding any
other provision of this Agreement to the contrary, in the event that Service
Provider becomes a debtor under the United States Bankruptcy Code (11 U.S.C.
§101 et. seq. or any similar Law in any other country (the “Bankruptcy Code”))
and rejects this Agreement pursuant to Section 365 of the Bankruptcy Code (a
“Bankruptcy Rejection”), (i) any and all of the licensee and sublicensee rights
of Allegheny and the Eligible Recipients arising under or otherwise set forth in
this Agreement, including the rights of Allegheny and/or the Eligible Recipients
referred to in Section 14.6, shall be deemed fully retained by and vested in
Allegheny and/or the Eligible Recipients as protected intellectual property
rights under Section 365(n)(1)(B) of the Bankruptcy Code and further shall be
deemed to exist immediately before the commencement of the bankruptcy case in
which Service Provider is the debtor; and (ii) Allegheny shall have all of the
rights afforded to non-debtor licensees and sublicensees under Section 365(n) of
the Bankruptcy Code. Allegheny shall under no circumstances be required to
terminate the Term after a Bankruptcy Rejection in order to enjoy or acquire any
of its rights under this Agreement, including any of the rights of Allegheny
referenced in Section 14.6.

 

20.7 Critical Services.

 

Without limiting Allegheny’s rights under Section 20.1, if Service Provider
commits a material breach which has a significant impact on the ability of
Allegheny or the Eligible Recipients to conduct a critical aspect of their
businesses, and Service Provider is unable to cure such breach within
forty-eight (48) hours of its occurrence, then Allegheny may, in addition to its
other remedies at law and in equity, obtain from a third party or provide for
itself services which will allow Allegheny or the Eligible Recipients to conduct
their businesses until Service Provider has cured the breach or this Agreement
is terminated. Service Provider shall reimburse Allegheny for all costs and
expenses of obtaining or providing such services. The express inclusion of this
remedy in this Section 20.8 does not limit Allegheny’s right to use a similar
remedy for other breaches by Service Provider of this Agreement.

 

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21. GENERAL

 

21.1 Binding Nature and Assignment.

 

  (a) Binding Nature. This Agreement will be binding on the Parties and their
respective successors and permitted assigns.

 

  (b) Assignment. Neither Party may, or will have the power to, assign this
Agreement without the prior written consent of the other, except in the
following circumstances:

 

  (i) Allegheny may assign its rights or obligations under this Agreement,
without approval of Service Provider, to an Affiliate which expressly assumes
Allegheny’s obligations and responsibilities hereunder; provided Allegheny
(i) remains fully liable for and is not relieved from the full performance of
its obligations under this Agreement, and (ii) provides Service Provider prompt
written notice of the assignment;

 

  (ii) Allegheny may assign its rights and obligations under this Agreement
without the approval of Service Provider to an Entity acquiring, directly or
indirectly, Control of Allegheny, an Entity into which Allegheny is merged, or
an Entity acquiring all or substantially all of Allegheny’s assets, provided the
acquirer or surviving Entity agrees in writing to be bound by the terms and
conditions of this Agreement; and

 

  (iii) Service Provider may assign its rights or obligations under this
Agreement, without approval of Allegheny, to an Affiliate which expressly
assumes Service Provider’s obligations and responsibilities hereunder, provided
Service Provider (i) remains fully liable for and is not relieved from the full
performance of its obligations under this Agreement, and (ii) provides Allegheny
prompt written notice of the assignment

 

  (c) Impermissible Assignment. Any attempted assignment that does not comply
with the terms of this Section shall be null and void.

 

21.2 Entire Agreement; Amendment.

 

This Agreement, including any Schedules and Exhibits referred to herein and
attached hereto, each of which is incorporated herein for all purposes,
constitutes the entire agreement between the Parties with respect to the subject
matter hereof. There are no agreements, representations, warranties, promises,
covenants, commitments or undertakings other than those expressly set forth
herein. This Agreement supersedes all prior agreements, representations,
warranties, promises, covenants, commitments or undertaking, whether written or
oral, with respect to the subject matter contained in this Agreement. No
amendment, modification, change, waiver, or discharge hereof shall be valid
unless in writing and signed by an authorized representative of the Party
against which such amendment, modification, change, waiver, or discharge is
sought to be enforced.

 

21.3 Notices.

 

  (a) Primary Notices. Any notice, notification, request, demand or
determination provided by a Party pursuant to the following:

 

  (i) Section 4.4 (Termination Assistance Services);

 

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  (ii) Section 4.5(a) (Use of Third Parties – Right of Use);

 

  (iii) Section 6.10 (Notice of Defaults);

 

  (iv) Section 7.7 (Notice of Adverse Impact);

 

  (v) Section 11.6 (Extraordinary Events);

 

  (vi) Section 13.4(d) (Loss of Proprietary Information);

 

  (vii) Sections 17.6 (Indemnification Procedures);

 

  (viii) Section 17.7 (Indemnification Procedures – Government Claims);

 

  (ix) Section 18.2 (Force Majeure);

 

  (x) Section 18.3(g) (Waiver of Liability Cap);

 

  (xi) Section 19.1 (Informal Dispute Resolution);

 

  (xii) Article 20 (Termination); and

 

  (xiii) Section 21.1 (Binding Nature and Assignment);

 

shall be in writing and shall be delivered in hard copy using one of the
following methods and shall be deemed delivered upon receipt: (i) by hand;
(ii) by an express courier with a reliable system for tracking delivery; or
(iii) by registered or certified mail, return receipt requested, postage
prepaid. Unless otherwise notified, the foregoing notices shall be delivered as
follows:

 

In the case of Allegheny:

 

Allegheny Energy, Inc.

800 Cabin Hill Drive

Greensburg, Pennsylvania 15601

Attention: Vice President and Controller

 

With a copy to:

 

Allegheny Energy, Inc.

800 Cabin Hill Drive

Greensburg, Pennsylvania 15601

Attention: Vice President and General Counsel

 

and

 

In the case of Service Provider:

 

Electronic Data Systems Corporation

c/o Allegheny Energy, Inc.

 

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800 Cabin Hill Drive

Greensburg, Pennsylvania 15601

Attention: EDS Client Delivery Executive

 

With a copy to:

 

Electronic Data Systems Corporation

5400 Legacy Drive

H3-3A-05

Plano, Texas 75024

Attention: General Counsel

 

  (b) Other Notices. All notices, notifications, requests, demands or
determinations required or provided pursuant to this Agreement, other than those
specified in Section 21.3(a), may be sent in hard copy in the manner specified
in Section 21.3(a), or by e-mail transmission (where receipt is acknowledged by
the recipient) or facsimile transmission (with acknowledgment of receipt from
the recipient’s facsimile machine) to the addresses set forth below:

 

In the case of Allegheny:

 

Allegheny Energy, Inc.

800 Cabin Hill Drive

Greensburg, Pennsylvania 15601

Attention: Allegheny Contract Executive

E-mail Address:             

Facsimile Number:             

 

and

 

In the case of Service Provider:

 

Electronic Data Systems Corporation

c/o Allegheny Energy, Inc.

800 Cabin Hill Drive

Greensburg, Pennsylvania 15601

Attention: EDS Client Delivery Executive

E-mail Address: john.zakrasek@eds.com

Facsimile Number: TBD

 

  (c) Notice of Change. A Party may from time to time change its address or
designee for notification purposes by giving the other prior notice of the new
address or designee and the date upon which it shall become effective.

 

  (d) Service of Process. Notwithstanding the above, for the purpose of service
of legal process and receipt of notice or pleadings in judicial proceedings
before the federal or state courts of Pennsylvania, as selected by the Parties
under Section 19.2, Service Provider irrevocably appoints the company below as
its agent for service of process and receipt of such notice or notification, and
further elect domicile at the address of said company in Pennsylvania, as
follows:

 

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Corporation Service Company

2704 Commerce Drive

Harrisburg PA 17110

 

With a copies to:

 

Electronic Data Systems Corporation

5400 Legacy Drive

H3-3A-05

Plano, Texas 75024

Attention: General Counsel

 

and

 

Electronic Data Systems Corporation

c/o Allegheny Energy, Inc.

800 Cabin Hill Drive

Greensburg, Pennsylvania 15601

Attention: EDS Client Delivery Executive

 

21.4 Counterparts.

 

This Agreement may be executed in several counterparts, all of which taken
together shall constitute one single agreement between the Parties hereto.

 

21.5 Headings.

 

The article and section headings and the table of contents used herein are for
reference and convenience only and shall not be considered in the interpretation
of this Agreement.

 

21.6 Relationship of Parties.

 

Service Provider, in furnishing services to Allegheny and the Eligible
Recipients hereunder, is acting as an independent contractor, and Service
Provider has the sole obligation to supervise, manage, contract, direct,
procure, perform or cause to be performed, all work to be performed by Service
Provider under this Agreement. The relationship of the Parties under this
Agreement shall not constitute a partnership or joint venture for any purpose.
Except as expressly provided in this Agreement, Service Provider is not an agent
of Allegheny or the Eligible Recipients and has no right, power or authority,
expressly or impliedly, to represent or bind Allegheny or the Eligible
Recipients as to any matters, except as expressly authorized in this Agreement.

 

21.7 Severability.

 

In the event that any provision of this Agreement conflicts with the law under
which this Agreement is to be construed or if any such provision is held invalid
or unenforceable by a court with jurisdiction over the Parties, such provision
shall be deemed to be restated to reflect as nearly as possible the original
intentions of the Parties in accordance with applicable law. The remaining
provisions of this Agreement and the application of the challenged provision to
persons or circumstances other than those as to which it is invalid or
unenforceable shall not be affected thereby, and each such provision shall be
valid and enforceable to the full extent permitted by law.

 

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21.8 Consents and Approval.

 

Except where expressly provided as being in the sole discretion of a Party,
where agreement, approval, acceptance, consent, confirmation, notice or similar
action by either Party is required under this Agreement, such action shall not
be unreasonably delayed or withheld. An approval or consent given by a Party
under this Agreement shall not relieve the other Party from responsibility for
complying with the requirements of this Agreement, nor shall it be construed as
a waiver of any rights under this Agreement, except as and to the extent
otherwise expressly provided in such approval or consent.

 

21.9 Waiver of Default; Cumulative Remedies.

 

  (a) Waiver of Default. A delay or omission by either Party to exercise any
right or power under this Agreement shall not be construed to be a waiver
thereof. A waiver by either of the Parties of any of the covenants to be
performed by the other or any breach thereof shall not be construed to be a
waiver of any succeeding breach thereof or of any other covenant herein
contained. All waivers must be in writing and signed by the Party waiving its
rights.

 

  (b) Cumulative Remedies. All remedies provided for in this Agreement shall be
cumulative and in addition to and not in lieu of any other remedies available to
either Party at law, in equity or otherwise. The election by a Party of any
remedy provided for in this Agreement or otherwise available to such Party shall
not preclude such Party from pursuing any other remedies available to such Party
at law, in equity, by contract or otherwise.

 

21.10 Survival.

 

Any provision of this Agreement which contemplates performance or observance
subsequent to any termination or expiration of this Agreement shall survive any
termination or expiration of this Agreement and continue in full force and
effect. Additionally, all provisions of this Agreement will survive the
expiration or termination of this Agreement to the fullest extent necessary to
give the Parties the full benefit of the bargain expressed herein.

 

21.11 Publicity.

 

Neither Party shall use the other Party’s name or mark or refer to the other
Party directly or indirectly in any media release, public announcement, or
public disclosure relating to this Agreement, including in any promotional or
marketing materials, customer lists or business presentations without the prior
written consent of the other Party prior to each such use or release. Except as
provided in Sections 13.4(b)(iii)(B) and 13.4(c), neither Party shall make any
formal public statements about this Agreement, the Services or its relationship
with the other Party without the other Party’s prior approval.

 

21.12 Service Marks.

 

Each Party agrees that it shall not, without the other Party’s prior consent,
use any of the names, service marks or trademarks of the other Party in any of
its advertising or marketing materials.

 

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21.13 Export.

 

The Parties acknowledge that certain Software and technical data to be provided
hereunder and certain transactions hereunder may be subject to export controls
under the laws and regulations of the United States, the European Union, the
United Nations and other jurisdictions. No Party shall export or re-export any
such items or any direct product thereof or undertake any transaction or service
in violation of any such laws or regulations. To the extent within Service
Provider’s control, Service Provider shall be responsible for, and shall
coordinate and oversee, compliance with such export laws in respect of such
items exported or imported hereunder. To the extent within Allegheny’s control,
and not in Service Provider’s control, Allegheny shall be responsible for, and
shall coordinate and oversee, compliance with such export laws in respect of
such items exported or imported hereunder.

 

21.14 Third Party Beneficiaries.

 

Except as expressly provided herein, this Agreement is entered into solely
between, and may be enforced only by, Allegheny and Service Provider. This
Agreement shall not be deemed to create any rights or causes of action in or on
behalf of any third parties, including employees, suppliers and customers of a
Party, or to create any obligations of a Party to any such third parties.
Allegheny is responsible for: (i) causing each Eligible Recipient to comply with
the provisions of this Agreement to the extent that Service Provider performs
the Services for Eligible Recipients; and (ii) subject to Section 12.4, payment
of all of Service Provider’s Charges hereunder (including those that may be
invoiced to an Eligible Recipient) and Service Provider is not be required to
look to any Eligible Recipient for payment of any invoice before seeking payment
from Allegheny.

 

21.15 Covenant Against Pledging.

 

Service Provider may assign, transfer, pledge, hypothecate or otherwise encumber
its rights to receive payments from Allegheny under this Agreement, provided
that Service Provider shall ensure that (a) no Entity to which Service Provider
assigns, transfers, pledges, hypothecates or otherwise encumbers its rights to
receive payments hereunder shall have any right to enforce the collection of any
such payments from Allegheny or the Eligible Recipients, (b) any Entity to which
Service Provider assigns, transfers, pledges, hypothecates or otherwise
encumbers its rights to receive payments hereunder shall not be entitled to
approve any amendment, modification or termination of this Agreement, (c) any
such transaction shall not limit Service Provider’s rights to amend, modify or
terminate this Agreement in accordance with the terms hereof and (d) Service
Provider shall continue to be Allegheny’s sole point of contact with respect to
this Agreement, including with respect to payment. The person or Entity to which
such rights are assigned, transferred, pledged, hypothecated or otherwise
encumbered shall not be considered a third party beneficiary under this
Agreement and shall not have any rights or causes of action against Allegheny.

 

21.16 Order of Precedence.

 

In the event of a conflict, this Agreement shall take precedence over the
Schedules attached hereto, and the Schedules shall take precedence over any
attached Attachments or Exhibits.

 

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21.17 Hiring of Employees.

 

  (a) Solicitation and Hiring. Except as expressly set forth herein, during the
Term and for a period of twelve (12) months thereafter, Service Provider will
not solicit for employment directly or indirectly, nor employ, any employees of
Allegheny or an Eligible Recipient or individual Allegheny Third Party
Contractors (unless Service Provider is not aware that the employer of the
individual is an Allegheny Third Party Contractor) without the prior approval of
Allegheny. Except as expressly set forth herein in connection with the
expiration or termination of this Agreement, during the Term and for a period of
twelve (12) months thereafter, Allegheny will not solicit for employment
directly or indirectly, nor employ, any employee of Service Provider involved in
the performance of Service Provider’s obligations under this Agreement without
the prior consent of Service Provider. In each case, the prohibition on
solicitation and hiring shall extend one hundred twenty (120) days after the
termination of the employee’s employment or, in the case of Service Provider
employees, the cessation of his or her involvement in the performance of
Services under this Agreement. This provision shall not operate or be construed
to prevent or limit any employee’s right to practice his or her profession or to
utilize his or her skills for another employer or to restrict any employee’s
freedom of movement or association.

 

  (b) Publications. Neither the publication of classified advertisements in
newspapers, periodicals, Internet bulletin boards, or other publications of
general availability or circulation nor the consideration and hiring of persons
responding to such advertisements shall be deemed a breach of this
Section 21.17, unless the advertisement and solicitation is undertaken as a
means to circumvent or conceal a violation of this provision and/or the hiring
party acts with knowledge of this hiring prohibition.

 

21.18 Further Assurances.

 

Each Party covenants and agrees that, subsequent to the execution and delivery
of this Agreement and without any additional consideration, each Party shall
execute and deliver any further legal instruments and perform any acts that are
or may become necessary to effectuate the purposes of this Agreement.

 

21.19 Liens.

 

Other than judgment liens that Service Provider has obtained in a court of
competent jurisdiction, Service Provider will not file, or by its action or
inaction permit, any liens to be filed on or against property or realty of
Allegheny or any Eligible Recipient. In the event that any such liens (other
than judgment liens mentioned in the previous sentence) arise as a result of
Service Provider’s action or inaction, Service Provider will obtain a bond to
fully satisfy such liens or otherwise remove such liens at its sole cost and
expense within ten (10) business days. If Service Provider fails to do so,
Allegheny may, in its sole discretion, pay the amount of such lien, and/or
deduct such amounts from payments due to the Service Provider.

 

21.20 Covenant of Good Faith.

 

Each Party agrees that, in its respective dealings with the other Party under or
in connection with this Agreement, it shall act in good faith.

 

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21.21 Acknowledgment.

 

The Parties each acknowledge that the terms and conditions of this Agreement
have been the subject of active and complete negotiations, and that such terms
and conditions should not be construed in favor of or against any Party by
reason of the extent to which any Party or its professional advisors
participated in the preparation of this Agreement.

 

21.22 References.

 

Unless otherwise directed by Allegheny, Service Provider may use Allegheny as a
reference for all prospective Service Provider customers interested in
purchasing services that include the same or substantially similar services to
the Services. In conjunction with the foregoing, Allegheny’s Contract Executive
(or equivalent level of Allegheny management), shall serve as the contact point
for such prospective Service Provider customers and shall respond to all
inquiries in a timely manner. Notwithstanding Section 13.4, Service Provider
acknowledges and agrees that Allegheny’s Contract Executive (or equivalent level
of Allegheny management) may, upon receiving Service Provider’s prior written
request and consent, freely discuss all aspects of Service Provider’s
performance and Allegheny’s satisfaction with such performance with prospective
Service Provider customers. Service Provider shall provide such prospective
Service Provider customers with appropriate Allegheny contact information. The
identity of such prospective Service Provider customers and all information
related thereto shall be considered Service Provider Proprietary Information.

 

Signature Page Follows

 

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by
their respective duly authorized representatives as of the Effective Date.

 

ALLEGHENY ENERGY, INC. By:  

 

--------------------------------------------------------------------------------

Name:  

 

--------------------------------------------------------------------------------

Title:  

 

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EDS INFORMATION SERVICES, L.L.C. By:  

 

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Name:  

 

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Title:  

 

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ELECTRONIC DATA SYSTEMS CORPORATION By:  

 

--------------------------------------------------------------------------------

Name:  

 

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Title:  

 

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Schedule 1

 

Definitions

 

References to the preamble, articles, sections, schedules and exhibits in this
Schedule 1 are to the preamble, Articles and Sections of, and Schedules and
Exhibits to, the Agreement unless otherwise specified. As used in this
Agreement:

 

(1) “Acceptance” shall mean the determination, in Allegheny’s reasonable
discretion, following implementation, installation, testing and execution in the
production environment for an agreed upon number of business cycles that
Software, Equipment, Systems and/or other contract deliverables are in
Compliance in all material respects with the Specifications. The Parties
acknowledge that Schedule 22B contains acceptance processes and criteria
applicable to that Schedule.

 

(2) “Acquired Assets” shall mean the Equipment, Software and other assets owned
or controlled by Allegheny or the Eligible Recipients and listed on Schedule 21
that Service Provider will acquire pursuant to the terms of this Agreement.

 

(3) “Acquired Assets Credit” shall mean the amount that Service Provider will
pay to Allegheny as consideration for the Acquired Assets.

 

(4) “Actual Uptime” shall mean the measurement of time that a particular System,
Application, Software, Equipment, Network or any other part of the Services is
actually available during the Measurement Window, and such measurement will be
calculated by subtracting Downtime from the Scheduled Uptime.

 

(5) “Additional Resource Charge” or “ARC” shall have the meaning given in
Schedule 4.

 

(6) “Affected Employees” means the Allegheny Personnel who are identified in
Schedule 5A.

 

(7) “Affiliate” shall mean with respect to any Entity, any other Entity that it
directly or indirectly Controls, is Controlled by or under common Control with
such Entity at the time in question.

 

(8) “Agreement” shall have the meaning given in the preamble to this Agreement.

 

(9) “Allegheny Base Case” shall mean the summary financial base case attached
hereto as Schedule 4C, as made available to Service Provider prior to the
Effective Date.

 

(10) “Allegheny Contract Executive” shall have the meaning given in
Section 10.1.

 

(11) “Allegheny Data” shall mean any data or information of Allegheny or any
Eligible Recipient that is provided to or obtained by Service Provider in
connection with the negotiation and execution of this Agreement or the
performance of Service Provider’s obligations under this Agreement, including
data and information with respect to the businesses, customers, operations,
facilities, products, rates, regulatory compliance, competitors, consumer
markets, assets, expenditures, mergers, acquisitions, divestitures, billings,
collections, revenues and finances of Allegheny or any Eligible Recipient.
Allegheny Data also shall mean any data or information (i) created, generated,
collected or processed by Service Provider in the performance of its obligations
under

 

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this Agreement, including data processing input and output, service level
measurements, asset information, Reports, third party service and product
agreements for services and goods provided by Allegheny Third Party Contractors
and Managed Third Parties, contract charges, and Retained Expense and
Pass-Through Expenses or (ii) that resides in or is accessed through Software,
Equipment or Systems (excluding shared Systems located in Service Provider
Facilities to the extent such Systems are used to provide services to Service
Provider’s other customers) provided, operated, supported or used by Service
Provider in connection with the Services, as well as information derived from
this data and information. Allegheny Data shall not include Service Provider
Data.

 

(12) “Allegheny Facilities” shall mean the facilities listed in Schedule 7 that
are provided by Allegheny or an Eligible Recipient for the use of Service
Provider to the extent necessary to provide the Services.

 

(13) “Allegheny Owned Materials” shall have the meaning given in Section 14.1.

 

(14) “Allegheny Owned Software” shall mean Software owned by Allegheny, an
Allegheny Affiliate or an Eligible Recipient and used, operated, maintained or
supported by or on behalf of Service Provider under or in connection with this
Agreement.

 

(15) “Allegheny Personal Data” shall mean that portion of Allegheny Data that is
subject to any Data Privacy Laws.

 

(16) “Allegheny Personnel” shall mean the employees, agents, contractors or
representatives of Allegheny or its Affiliates or Eligible Recipients.

 

(17) “Allegheny Rules” shall have the meaning given in Section 6.3(a).

 

(18) “Allegheny Sites” or “Sites” shall mean the offices or other facilities,
including those listed on Schedule 7, at or to which Service Provider is to
provide the Services.

 

(19) “Allegheny Standards” shall have the meaning given in Section 9.5(a).

 

(20) “Allegheny Third Party Contractors” shall have the meaning given in
Section 4.5.

 

(21) “Allocation of Pool Percentage” shall have the meaning given in Schedule 3.

 

(22) “Applicable Regulatory Authority” shall mean, in the United States, the
Federal Communications Commission (the “FCC”) or comparable national,
territorial, regional, state, provincial or local regulatory bodies of competent
jurisdictions and in geographic regions other than the United States from, to or
in which the Services are provided, comparable national, territorial, regional,
state, provincial or local regulatory authorities.

 

(23) “Application Server(s)” shall mean any Server not otherwise defined as a
Utility Server.

 

(24) “Applications Software” or “Applications” shall mean those software
application programs and programming (and all modifications, replacements,
Upgrades, enhancements, documentation, materials and media related thereto) used
to support day-to-day business operations and accomplish specific business
objectives to the extent a Party has financial or operational responsibility for
such programs or programming under Schedule 2 or 4B. Applications Software shall
include all such programs or programming in use or required to be used as of the

 

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Commencement Date in accordance with this Agreement, including those set forth
in Schedule 11, those as to which the license, maintenance or support costs are
included in the Allegheny Base Case, and those as to which Service Provider
received reasonable notice and/or access prior to the Commencement Date.
Applications Software also shall include all such programs or programming
developed and/or introduced by or for Allegheny or the Eligible Recipients on or
after the Commencement Date to the extent a Party has financial or operational
responsibility for such programs or programming under Schedule 2 or 4B.

 

(25) “At Risk Amount” shall have the meaning given in Schedule 3.

 

(26) “Audit Period” shall have the meaning given in Section 9.10(a).

 

(27) “Authorized User” shall mean users of Services within and outside of
Allegheny, including Allegheny’s or an Eligible Recipient’s employees, vendors,
customers and contractors.

 

(28) “Availability” shall have the meaning given in Schedule 3.

 

(29) “Benchmark Standard” shall have the meaning given in Section 11.10(c).

 

(30) “Benchmarker” shall have the meaning given in Section 11.10(a).

 

(31) “Benchmarking” shall have the meaning given in Section 11.10(a).

 

(32) “Calls” shall mean the problems, questions, or requests submitted to the
Service Provider by telephone, electronically, or other means approved by
Allegheny.

 

(33) “Change Control Procedures” shall have the meaning given in Section 9.6(a).

 

(34) “Charges” shall mean the amounts set forth in Article 11 and Schedule 4 (or
otherwise set forth in the Agreement) as charges due to Service Provider in
return for providing the Services.

 

(35) “Commencement Date” shall mean the date on which Service Provider assumes
responsibility for the Services in accordance with the Transition Plan, or such
other date as the Parties may agree upon in writing as the date on which Service
Provider will assume full responsibility for such Services.

 

(36) “Compliance” and “Comply” shall mean, with respect to outsourced business
process(es), Software, Equipment, Systems or other contract deliverables to be
implemented, designed, developed, delivered, integrated, installed and/or tested
by Service Provider, in compliance in all material respects with the
Specifications.

 

(37) “Contract Year” shall mean the period ending on December 31, 2005 and on
each December 31 thereafter during the Term. If any Contract Year is more or
less than twelve (12) months, the rights and obligations under this Agreement
that are calculated on a Contract Year basis will be proportionately adjusted
for such longer or shorter period. For the avoidance of doubt, the first
Contract Year may be more or less than twelve (12) months from the Commencement
Date.

 

(38) “Control” and its derivatives shall mean: (a) the legal, beneficial, or
equitable ownership, directly or indirectly, of (i) more than fifty percent
(50%) of the aggregate of all voting equity interests in an Entity, or
(ii) equity interests having the right, in the event of dissolution, to more
than fifty percent (50%) of the net assets (i.e., equity) of an Entity; (b) the
right to appoint,

 

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directly or indirectly, a majority of the board of directors; (c) the right to
control, directly or indirectly, the management or direction of the Entity by
contract or corporate governance document; or (d) in the case of a partnership,
the holding by an Entity (or one of its Affiliates) of the position of sole
general partner.

 

(39) “Critical Deliverables” shall mean those milestone activities and
deliverables identified in Schedule 3C that have associated Deliverable Credits
payable to Allegheny in the event Service Provider fails to deliver such
deliverables in accordance with Schedule 3C.

 

(40) “Critical Affected Personnel” shall mean those individuals identified in
Schedule 5A as critical to the ongoing success of Service Provider’s delivery of
information technology services, and procurement and/or inventory management
consulting, to Allegheny and the Eligible Recipients.

 

(41) “Critical Service Level” shall mean those Service Levels established under
Schedule 3 for which a Service Level Credit may be payable. Critical Service
Levels are identified in Schedule 3A and are described in Schedule 3B. Each
Critical Service Level has an Expected Service Level and a Minimum Service Level
associated with it unless otherwise specified. It is the intent of the Parties
that all Critical Service Levels shall be quantifiable, measurable, and
objective.

 

(42) “Data Privacy Laws” shall mean Laws relating to data privacy, trans-border
data flow or data protection, including the implementing legislation and
regulations of the European Union member states under the European Union
Directive 95/46/EC.

 

(43) “Deliverable Credits” shall have the meaning given in Section 7.2(b).

 

(44) “Derivative Work” shall mean a work based on one or more preexisting works,
including a condensation, transformation, translation, modification, expansion,
or adaptation, that, if prepared without authorization of the owner of the
copyright of such preexisting work, would constitute a copyright infringement
under applicable Law, but excluding the preexisting work.

 

(45) “Developed Materials” shall mean any Materials (including Software), or any
modifications, enhancements or Derivative Works thereof, developed by or on
behalf of Service Provider for Allegheny or the Eligible Recipients in
connection with or as part of the Services, but not including Service Provider
Owned Materials.

 

(46) “Development Tool” shall mean all software programs and programming (and
all modifications, replacements, Upgrades, enhancements, documentation,
materials and media related thereto) that are used in the development, testing,
deployment and maintenance of Applications to the extent a Party has financial
or operational responsibility for such programs or programming under Schedule 2
or 4B. Development Tools shall include all such products in use or required to
be used as of the Commencement Date in accordance with this Agreement, including
those set forth in Schedule 11, those as to which the license, maintenance or
support costs are included in the Allegheny Base Case, and those as to which
Service Provider received reasonable notice and/or access prior to the
Commencement Date. Development Tools also shall include all such products
selected and/or developed by or for Allegheny or the Eligible Recipients on or
after the Commencement Date to the extent a Party has financial or operational
responsibility for such programs or programming under Schedule 2 or 4B.

 

(47) “Direct Allegheny Competitor” shall mean the Entities identified in
Schedule 25 and their Affiliates that are engaged in any business related to the
business of such Entities, as well as their successors and assigns, as such list
of Entities may be modified by Allegheny from time to time.

 

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(48) “Directed Allegheny Employee” shall have the meaning given in Section 8.13
and Schedule 31.

 

(49) “Directed Employee Period” shall have the meaning given in Section 8.13 and
Schedule 31.

 

(50) “Downtime” shall mean the time that a particular System, Application,
Software, Equipment, Network, or any other part of the Services is not available
during the Measurement Window.

 

(51) “Earnback” shall mean the methodology used to determine the potential
elimination of a Service Level Credit as described in Schedule 3.

 

(52) “EDP Project Pool” shall have the meaning given in Schedule 4.

 

(53) “Effective Date” shall have the meaning given in the preamble to this
Agreement.

 

(54) “Eligible Recipients” shall mean, collectively, and to the extent such
Entity is receiving Services under this Agreement, the following:

 

  (a) Allegheny;

 

  (b) any Entity that is an Affiliate of Allegheny on the Effective Date, or
thereafter becomes an Affiliate of Allegheny;

 

  (c) any Entity that purchases after the Effective Date from Allegheny or any
Affiliate of Allegheny, all or substantially all of the assets of Allegheny or
such Affiliate, or of any division, marketing unit, business unit,
administrative unit, or manufacturing, research or development facility thereof,
provided that such Entity agrees in writing to be bound by the terms and
conditions of this Agreement;

 

  (d) any Entity that after the Effective Date is created using assets of
Allegheny or any Affiliate of Allegheny, provided that such Entity agrees in
writing to be bound by the terms and conditions of this Agreement;

 

  (e) any Entity into which Allegheny or any Affiliate of Allegheny merges or
consolidates, provided that such Entity has assumed Allegheny’s obligations
under this Agreement, and provided further that such Entity agrees in writing to
be bound by the terms and conditions of this Agreement;

 

  (f) any Entity which merges into or consolidates with Allegheny or any
Affiliate of Allegheny;

 

  (g) any Entity, including any corporation, joint venture, or partnership, in
which on or after the Effective Date, Allegheny or any Affiliate of Allegheny
has an ownership interest and/or as to which Allegheny or such Affiliate has
management or operational responsibility by law or contract;

 

  (h) any person or Entity providing outsourcing services to Allegheny or any
Eligible Recipient, but only in connection with the provision of such
outsourcing services to Allegheny or such Eligible Recipient; and

 

  (i) other entities to which the Parties agree.

 

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Except as used in Sections 17.1, 17.2, 17.4, 17.5, 17.6 and 17.7, Eligible
Recipients shall include the employees, contractors, subcontractors, agents and
representatives, but only in their capacities as such, of the Entities
identified as Eligible Recipients in clauses (a) through (i) above.

 

(55) “Employment Effective Date” shall mean, with respect to each Transitioned
Employee, the date that such Transitioned Employee begins employment with
Service Provider, in accordance with applicable Laws.

 

(56) “End Date” shall have the meaning given in Schedule 4H.

 

(57) “Entity” shall mean a corporation, partnership, joint venture, trust,
limited liability company, limited liability partnership, association or other
organization or entity.

 

(58) “Equipment” shall mean all computing, networking, communications and
related computing equipment (hardware and firmware) procured, provided,
operated, supported, or used by Allegheny, Service Provider or Authorized Users
in connection with the Services, including (i) mainframe, midrange, server and
distributed computing equipment and associated attachments, features,
accessories, peripheral devices, and cabling, (ii) personal computers, laptop
computers, terminals, workstations and associated attachments, features,
accessories, printers, multi-functional printers, peripheral devices, and
cabling, and (iii) voice, data, video and wireless telecommunications and
network and monitoring equipment and associated attachments, features,
accessories, cell phones, peripheral devices, and cabling.

 

(59) “Equipment Leases” shall mean all leasing arrangements whereby Allegheny,
the Eligible Recipients or an Allegheny Third Party Contractor leases Equipment
as of the Commencement Date which will be used by Service Provider to perform
the Services after the Commencement Date. Equipment Leases shall include those
leases identified on Schedule 10, those as to which the lease, maintenance and
support costs are included in the Allegheny Base Case, and all other leases as
to which Service Provider received reasonable notice and/or access prior to the
Commencement Date.

 

(60) “ERP Transformation Plan” shall mean the Transformation Plan described in
Schedule 22B.

 

(61) “Expected Service Level” shall mean the desired level of current year
performance for a Critical Service Level, as set forth in Attachment 3A.

 

(62) “Expected Service Level Default” shall mean Service Provider’s level of
performance for a particular Critical Service Level fails to meet the applicable
Expected Service Level (but does not fail to meet the applicable Minimum Service
Level) as specified in Schedule 3 (Service Levels) and its attachments, and has
failed to meet such Expected Service Level for four (4) or more months in any
rolling twelve (12) month period for Critical Service Levels with a monthly
Measurement Window, or has failed to meet the Expected Service Level in any
period for Critical Service Levels with a quarterly or annual Measurement
Window.

 

(63) “Extraordinary Event” shall have the meaning given in Section 11.6(a).

 

(64) “FERC” shall mean the Federal Energy Regulatory Commission, and any
successor agency thereto.

 

(65) “Full Time Equivalent” or “FTE” or “FTP” shall have the meaning given in
Schedule 4.

 

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(66) “Income Tax” shall mean any tax on or measured by the net income of a Party
(including taxes on capital or net worth, or gross receipts that are imposed as
an alternative to a tax based on net or gross income), or taxes which are of the
nature of excess profits tax, minimum tax on tax preferences, alternative
minimum tax, accumulated earnings tax, personal holding company tax, and capital
gains tax.

 

(67) “Indirect Goods and Services” shall mean those goods and services that are
purchased by Allegheny, consumed directly by Allegheny, and not utilized in
Allegheny’s provision of its services to its customers. Such goods and services
include, for example: travel; office supplies and equipment; maintenance,
repair, and operating supplies/MRO; advertising and marketing services; contract
labor; and desktop IT equipment.

 

(68) “Interest Rate” shall mean ***or, if less, the highest rate permitted by
applicable Law.

 

(69) “IT Transformation Plan” shall mean the Transformation Plan described in
Schedule 22C.

 

(70) “Key Measurements” shall mean those Service Levels for which no Service
Level Credit is payable, but which are meaningful to Allegheny’s business and
are described in Schedule 3B.

 

(71) “Key Service Provider Personnel” shall mean the Service Provider Personnel
filling the positions designated in Schedule 19 as Key Service Provider
Personnel.

 

(72) “Laws” shall mean all federal, state, provincial, regional, territorial and
local laws, statutes, ordinances, regulations, rules, executive orders,
supervisory requirements, directives, circulars, opinions, interpretive letters
and other official releases of or by any government, or any authority,
department or agency thereof, including the United States Securities and
Exchange Commission, the Public Company Accounting Oversight Board, the Federal
Energy Regulatory Commission, Pennsylvania Public Utility Commission, Virginia
State Service Commission, Maryland Public Service Commission, West Virginia
Public Service Commission, and the Public Utility Commission of Ohio. The
definition of Laws shall include Data Privacy Laws. For purposes of this
Agreement, Laws also shall include all generally accepted accounting principles
of the United States (“GAAP”), as such principles and standards may be modified
during the Term by the Financial Accounting Standards Board or other applicable
authorities. In addition, any other laws in force in any jurisdiction
(regulatory or otherwise) in which the Services are being provided.

 

(73) “Losses” shall mean all losses, liabilities, damages (including punitive
and exemplary damages), fines, penalties, interest and claims (including taxes),
and all related costs and expenses (including reasonable legal fees and
disbursements and costs of investigation, litigation, experts, settlement,
judgment, interest and penalties).

 

(74) “Major Release” shall mean a new version of Software that includes changes
to the architecture and/or adds new features and functionality in addition to
the original functional characteristics of the preceding Software release. These
releases are usually identified by full integer changes in the numbering, such
as from “7.0” to “8.0,” but may be identified by the industry as a major release
without the accompanying integer change.

 

(75) “Malicious Code” shall mean (i) any code, program, or sub-program whose
knowing or intended purpose is to damage or interfere with the operation of the
computer system containing the code, program or sub-program, or to halt, disable
or interfere with the operation of the Software, code, program, or sub-program,
itself, or (ii) any device, method, or token that permits any person to
circumvent the normal security of the Software or the system containing the
code.

 

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(76) “Managed LECs” shall have the meaning given in Section 9.15(a).

 

(77) “Managed Third Parties” shall mean the Allegheny Third Party Contractors
and Managed Telecom Transport Providers listed on Schedule 12D, as such Schedule
may be amended from time to time.

 

(78) “Managed Telecom Transport Providers” shall have the meaning given in
Section 9.11(e).

 

(79) “Managed Transport Agreements” shall have the meaning given in
Section 9.11(e).

 

(80) “Management Tools” shall mean all software products and tools (and all
modifications, replacements, Upgrades, enhancements, documentation, materials
and media related thereto) that are used by Service Provider to deliver and
manage the Services. Management Tools shall include all such products or tools
in use or required to be used as of the Commencement Date in accordance with
this Agreement, including those set forth in Schedule 11, those as to which the
license, maintenance or support costs are included in the Allegheny Base Case,
and those as to which Service Provider received reasonable notice and/or access
prior to the Commencement Date. Management Tools also shall include all such
software products and tools selected and/or developed by or for Allegheny, the
Eligible Recipients or Service Provider on or after the Commencement Date to the
extent a Party has financial or operational responsibility for such programs or
programming under Schedule 2 or 4B.

 

(81) “Materials” shall mean, collectively, Software, literary works, other works
of authorship, specifications, designs, analyses, processes, methodologies,
concepts, inventions, know-how, programs, program listings, tools,
documentation, user materials, reports, drawings, databases, spreadsheets,
machine-readable text and files, financial models and work product, whether
tangible or intangible.

 

(82) “Measurement Window” shall mean the time during, or frequency by, which a
Service Level shall be measured. The Measurement Window will exclude Allegheny
approved scheduled maintenance.

 

(83) “Minimum Service Level Default” shall mean the Service Provider’s
performance for a particular Critical Service Level fails to meet the applicable
Minimum Service Level at any time.

 

(84) “Minimum Service Level(s)” shall mean the minimum level of performance set
forth in Schedule 3A with respect to each Critical Service Level and Key
Measurement.

 

(85) “Minor Release” shall mean a scheduled release containing small
functionality updates and/or accumulated resolutions to defects or
non-conformances made available since the immediately preceding release (whether
Major Release or Minor Release). Minor Releases shall include “Maintenance
Releases” which are supplemental to and made available between Major Releases
and other Minor Releases, issued and provided under specific vendor service
level or maintenance obligations and contain only accumulated resolutions or
mandated changes. These releases are usually identified by a change in the
decimal numbering of a release, such as “7.12” to “7.13.”

 

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(86) “Monthly Base Charge” shall mean Service Provider’s total Charges for a
given month, excluding ARCs and RRCs, associated with the performance of the
Services at the number of Resource Units included in the Resource Baseline(s)
for the applicable month.

 

(87) “New Advances” shall have the meaning given in Section 9.17(e).

 

(88) “New Services” shall mean new services or changes to existing Services
requested by Allegheny or required by a change in applicable Allegheny Laws,
(i) that are materially different from the Services (including the manner in
which the Services are performed), (ii) that require ***, and (iii) for which
there is no current Resource Baseline or charging methodology.

 

(89) “Out-of-Pocket Expenses” shall mean reasonable, demonstrable and actual
out-of-pocket expenses due and payable to a third party by Service Provider that
are approved in advance by Allegheny and for which Service Provider is entitled
to be reimbursed by Allegheny under this Agreement. Out-of-Pocket Expenses shall
not include Service Provider’s overhead costs (or allocations thereof), general
and/or administrative expenses or other mark-ups. Out-of-Pocket Expenses shall
be calculated at Service Provider’s actual incremental expense and shall be net
of all rebates and allowances.

 

(90) “Pass-Through Expenses” shall mean the expenses, if any, listed in Schedule
4, as such list may be amended by Allegheny from time to time, for which
Allegheny has agreed in advance to be financially responsible, in accordance
with Article 11 of this Agreement, following processing and review of the third
party invoice by Service Provider. Service Provider shall not charge any
handling or administrative charge in connection with its processing or review of
such invoices beyond the Monthly Base Charges and the application of the ARC and
RRC rates.

 

(91) “Performance Category” shall mean a grouping of Critical Service Levels as
set forth in Schedule 3A. Critical Deliverables do not constitute a Performance
Category.

 

(92) “Policy and Procedures Manual” shall have the meaning given in
Section 9.1(a).

 

(93) “Pool Percentage Available for Allocation” shall have the meaning given in
Schedule 3.

 

(94) “Projects” shall have the meaning given in Section 4.6(a).

 

(95) “Proprietary Information” shall have the meaning given in Section 13.4(a).

 

(96) “Quality Assurance” means the actions, planned and performed, to provide
confidence that all business processes, Systems, Equipment, Software and
components that influence the quality of the Services are working as expected
individually and collectively.

 

(97) “Recoverable Taxes” shall mean any tax on goods or services where the payer
of the tax is able to claim a credit or refund for that tax from a Tax
Authority, and includes Goods and Services Taxes, Harmonized Sales Taxes, Value
Added Taxes and other similar taxes.

 

(98) “Reduced Resource Credit” or “RRC” shall have the meaning given in Schedule
4.

 

(99) “Reports” shall have the meaning set forth in Section 9.2(a).

 

(100) “Required Consents” shall mean the consents (if any) required to be
obtained: (i) to assign or transfer to Service Provider Allegheny licensed Third
Party Software, Third Party Contracts,

 

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Equipment Leases or Acquired Assets (including related warranties); (ii) to
grant Service Provider the right to use and/or access the Allegheny licensed
Third Party Software in connection with providing the Services; (iii) to grant
Allegheny and the Eligible Recipients the right to use and/or access the Service
Provider Owned Software, Third Party Software and Equipment acquired, operated,
supported or used by Service Provider in connection with providing the Services;
(iv) to assign or transfer to Allegheny, the Eligible Recipients or their
designee(s) any Developed Materials; (v) to assign or transfer to Allegheny, the
Eligible Recipients or their designee(s) Service Provider Owned Software, Third
Party Software, Third Party Contracts, Equipment leases or other rights
following the Term to the extent provided in this Agreement; and (vi) all other
consents required from third parties in connection with Service Provider’s
provision of the Services or performance of its obligations hereunder.

 

(101) “Resolvable Calls” shall mean those Calls that would be possible to solve
at first level, either through existing knowledge, transfer of knowledge, or
process changes. This does not include Calls that require dispatch or transfer
to another group for resolution.

 

(102) “Resource Baseline” shall have the meaning given in Schedule 4.

 

(103) “Resource Baseline Band” shall have the meaning given in Schedule 4.

 

(104) “Resource Unit” or “RU” shall have the meaning given in Schedule 4.

 

(105) “Retained Systems and Business Processes” means those systems and business
processes of Allegheny or an Eligible Recipient for which Service Provider has
not assumed responsibility under this Agreement (including those provided,
managed, operated, supported and/or used on their behalf by Allegheny Third
Party Contractors). Retained Systems and Business Processes include equipment
and software associated with such systems and business processes.

 

(106) “Root Cause Analysis” shall mean the formal process, specified in the
Policy and Procedures Manual, to be used by Service Provider to diagnose the
underlying cause of problems at the lowest reasonable level so that corrective
action can be taken that will eliminate repeat failures. Service Provider shall
implement Root Cause Analysis as required by this Agreement or as reasonably
requested by Allegheny.

 

(107) “Scheduled Uptime” shall have the meaning given in Schedule 3.

 

(108) “Service Category” shall mean the Services category comprising the
information technology services and functions described in Schedules 2.1, 2.2,
2.3, 2.4, 2.5 and 2.6; and any other Services category that may be added under
this Agreement in the future. As of the Effective Date there is only one
Services Category under this Agreement.

 

(109) “Service Level Credit Allocation Percentage” shall have the meaning given
in Schedule 3.

 

(110) “Service Level Credits” shall have the meaning given in Section 7.2 and
Schedule 3.

 

(111) “Service Level(s)” shall mean, individually and collectively, the
quantitative performance standards for the Services set forth in Schedule 3.

 

(112) “Service Level Default” shall mean a Minimum Service Level Default or and
Expected Service Level Default

 

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(113) “Service Provider Account Manager” shall have the meaning given in
Section 8.5 and shall describe the Service Provider representative responsible
for both the day to day relationship with Allegheny as well as the delivery of
all Services to Allegheny.

 

(114) “Service Provider Data” shall mean (i) financial/accounting information
(including costs, expenditures, billings collections, revenues and finances) of
Service Provider, its affiliates or Subcontractors; (ii) any data or information
regarding the Service Provider’s proprietary Systems used to provide the
Services; (iii) human resources and personnel information of Service Provider,
its affiliates or Subcontractors; (iv) information with respect to third party
contracts or licenses of Service Provider, its affiliates or Subcontractors and
used in the performance of the Services; (v) all information concerning the
operations, affairs and businesses of EDS; (vi) any data or information of
Service Provider that is provided to or obtained by Allegheny in connection with
the negotiation and execution of this Agreement; and (vii) Service Provider
Owned Materials, Service Provider Owned Software and Service Provider
Proprietary Information. Service Provider Data shall not include Allegheny Data.

 

(115) “Service Provider Facilities” shall mean, individually and collectively,
the facilities owned or leased by Service Provider (or its Affiliates or
Subcontractors) from which Service Provider (or its Affiliates or
Subcontractors) provides any Services. Service Provider Facilities are listed on
Schedule 7.

 

(116) “Service Provider Owned Materials” shall have the meaning given in
Section 14.3(a).

 

(117) “Service Provider Owned Software” shall mean any Software owned by Service
Provider and used to provide the Services.

 

(118) “Service Provider Personnel” shall mean those employees, representatives,
contractors, subcontractors and agents of Service Provider, Subcontractors and
Service Provider Affiliates who perform any Services under this Agreement.

 

(119) “Service Taxes” shall mean all sales, use, transaction-based gross
receipts, excise and other similar taxes that are assessed against either Party
on the provision of the Services as a whole, or on any particular Service
received by Allegheny or an Eligible Recipient from Service Provider, excluding
Recoverable Taxes and Income Taxes.

 

(120) “Services” shall mean, collectively: (i) the services, functions and
responsibilities described in Article 4 and elsewhere in this Agreement
(including Transition Services, Transformation Services and Termination
Assistance Services) as they may be supplemented, enhanced, modified or replaced
during the Term in accordance with this Agreement; and (ii) any ongoing Projects
required to be performed as specifically described in this Agreement and any new
Projects upon Allegheny’s acceptance of Service Provider’s proposals for such
Projects in accordance with Section 4.6 and the other provisions of this
Agreement; and (iii) any New Services, upon Allegheny’s acceptance of Service
Provider’s proposal for such New Services (including additional Charges, if any,
for such New Services) in accordance with Section 11.5 and the other provisions
of this Agreement.

 

(121) “Software” shall mean all software programs and programming for which a
Party is financially or operationally responsible under Schedule 2 or 4B (and
all modifications, replacements, Upgrades, enhancements, documentation,
materials and media related thereto), including Applications, Development Tools,
Management Tools, and Systems Software.

 

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(122) “Specialized Services” shall have the meaning given in Section 9.9.

 

(123) “Specifications” shall mean, with respect to business processes, Software,
Equipment, Systems or other contract deliverables to be designed, developed,
delivered, integrated, installed and/or tested by Service Provider, the
technical, design and/or functional specifications set forth in Schedule 2, 22,
22A or 22B, in third party vendor documentation, in a New Services or Project
description requested and/or approved by Allegheny, or otherwise agreed upon in
writing by the Parties.

 

(124) “Strategic Plan” shall mean the plans that may be periodically developed
by Allegheny that set forth Allegheny’s key business objectives and requirements
and outline its strategies for achieving such objectives and requirements.
Allegheny may revise the Strategic Plan from time to time as provided in this
Agreement. The Strategic Plan will include both annual and multi-year
strategies, objectives and requirements.

 

(125) “Subcontractors” shall mean subcontractors (of any tier) of Service
Provider, including Shared Subcontractors (as defined in Section 9.12(c)). The
initial list of Subcontractors is set forth on Schedule 20, each of which has
been approved by Allegheny to the extent such approval is required and described
thereon. Schedule 20 may be amended during the Term in accordance with
Section 9.12.

 

(126) “System” shall mean an interconnected grouping of manual or electronic
processes, including Equipment, Software and associated attachments, features,
accessories, peripherals and cabling, and all additions, modifications,
substitutions, Upgrades or enhancements to such System, to the extent a Party
has financial or operational responsibility for such System or System components
under Schedule 2. System shall include all Systems in use or required to be used
as of the Commencement Date, all additions, modifications, substitutions,
Upgrades or enhancements to such Systems and all Systems installed or developed
by or for Allegheny, the Eligible Recipients or Service Provider following the
Commencement Date.

 

(127) “Systems Software” shall mean all software programs and programming (and
all modifications, replacements, Upgrades, enhancements, documentation,
materials and media related thereto) that perform tasks basic to the functioning
of the Equipment and are required to operate the Applications Software or
otherwise support the provision of Services by Service Provider, including
operating systems, systems utilities, data security software, compilers,
performance monitoring and testing tools and database managers, to the extent a
Party has financial or operational responsibility for such programs or
programming under Schedule 2 or 4B. Systems Software shall include all such
programs or programming in use or required to be used as of the Commencement
Date in accordance with this Agreement, including those set forth in Schedule
11, those as to which the license, maintenance or support costs are included in
the Allegheny Base Case, and those as to which Service Provider received
reasonable notice and/or access prior to the Commencement Date. Systems Software
also shall include all such programs or programming developed and/or introduced
by or for Allegheny, the Eligible Recipients or Service Provider after the
Commencement Date to the extent a Party has financial or operational
responsibility for such programs or programming under Schedule 2 or 4B.

 

(128) “Tax Authority” shall mean any federal, state, provincial, regional,
territorial, local or other fiscal, revenue, customs or excise authority, body
or official competent to impose, collect or asses tax.

 

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(129) “Technology and Business Process Evolution” means any improvement,
upgrade, addition, modification, replacement, or enhancement to the standards,
policies, practices, processes, procedures, methods, controls, scripts, product
information, technologies, architectures, standards, Applications, Equipment,
Software, Systems, tools, products, transport systems, interfaces and personnel
skills associated with the performance of information technology services,
procurement and/or inventory management consulting and related functions in line
with the generally accepted practices of first tier service providers of such
services, as determined by Allegheny. Technology and Business Process Evolution
includes: (i) higher capacity, further scaling and commercializing of business
processes, more efficient and scalable business processes, new versions and
types of applications and systems/network software, new business or IT
processes, and new types of hardware and communications equipment that will
enable Service Provider to perform the Services more efficiently and effectively
as well as enable Allegheny and the Eligible Recipients to meet and support
their business requirements and strategies; and (ii) any change to the
Equipment, Software or methodologies used to provide the Services that is
necessary to bring that function, Equipment or Software or those methodologies
into line with the Allegheny Standards and/or current industry standards. For
the avoidance of doubt, Technology and Business Process Evolution shall not
constitute New Services or Projects.

 

(130) “Technology and Business Process Plan” shall have the meaning given in
Section 9.5(e).

 

(131) “Term” shall have the meaning given in Article 3.

 

(132) “Termination Assistance Services” shall mean the termination/expiration
assistance requested by Allegheny to allow the Services to continue without
interruption or adverse effect and to facilitate the orderly transfer of the
Services to Allegheny or its designee, as such assistance is further described
in Section 4.4 and Schedule 23.

 

(133) “Termination Charge” shall mean the termination charges payable by
Allegheny upon termination pursuant to the provisions of this Agreement that
expressly provide for a termination charge and in accordance with Schedule 4H.
The Termination Charge shall be calculated as of the End Date.

 

(134) “Third Party Contracts” shall mean all agreements between third parties
and Allegheny, an Eligible Recipient or Service Provider that have been or will
be used to provide the Services to the extent a Party has financial or
operational responsibility for such contracts under Schedule 2 or 4B. Third
Party Contracts shall include all such agreements in effect as of the
Commencement Date as identified in Schedule 12, those as to which the costs are
included in the Allegheny Base Case, and those as to which Service Provider
received reasonable notice and/or access prior to the Commencement Date. Third
Party Contracts also shall include those third party agreements entered into by
Service Provider following the Commencement Date.

 

(135) “Third Party Materials” shall mean intellectual, property, Third Party
Software or other Materials that are owned by third parties and provided under
license to Service Provider (or its Affiliates or Subcontractors) or Allegheny
(or the Eligible Recipients) and that have been or will be used to provide or
receive the Services.

 

(136) “Third Party Software” shall mean all Software products (and all
modifications, replacements, Upgrades, enhancements, documentation, materials
and media related thereto) that are provided under license or lease to Service
Provider or Allegheny or an Eligible Recipient that have been or will be used to
provide or receive the Services to the extent a Party has financial or
operational responsibility for such Software products under Schedule 2 or 4B.
Third Party Software shall

 

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include all such programs or programming in use or required to be used as of the
Commencement Date in accordance with this Agreement, including those set forth
in Schedule 11, those as to which the license, maintenance or support costs are
included in the Allegheny Base Case, and those as to which Service Provider
received reasonable notice and/or access prior to the Commencement Date. Third
Party Software also shall include all such programs or programming licensed
and/or leased after the Commencement Date.

 

(137) “Tower” shall mean the Services described in each numbered subsidiary
Schedule to Schedule 2 or designated within a numbered subsidiary Schedule to
Schedule 2 as comprising a Tower (e.g., a single Service Category may be
comprised of multiple Towers). The Towers within the information technology
Service Category are: Mainframe, Servers, Network – Data, Network – Voice, End
User Computing, Bill Inserting, Help Desk, and ADM.

 

(138) “Transformation Milestone” shall have the meaning given in Section 4.3(c).

 

(139) “Transformation Plan” means the plan or plans set forth in Schedules 22B
and 22C and further developed pursuant to Section 4.3 hereof, which identifies
the principle changes in technology and deliverables to be undertaken by Service
Provider in connection with the transformational activities to be completed
during and after the Transition Period in relation to a Service Category, and
the dates by which each will be completed by Service Provider.

 

(140) “Transformation Services” shall mean the services, functions and
responsibilities described in Section 4.3 and the Transformation Plan to be
performed by Service Provider.

 

(141) “Transition Milestone” shall mean each date identified in the Transition
Plan and Schedule 22A as a milestone by which Service Provider shall have
completed a key task or set of tasks in accordance with the Transition Plan in a
manner acceptable to Allegheny.

 

(142) “Transition Period” shall mean the period that commences on the Effective
Date and expires 11:59:59 p.m., Eastern Time, on the date specified for the
completion of the Transition Services as specified in the Transition Plan,
unless expressly extended in writing by Allegheny.

 

(143) “Transition Plan” shall mean the plan or plans set forth in Schedule 22A
and developed pursuant to Section 4.2 hereof, which identifies all material
transition tasks, Projects and deliverables to be completed by Service Provider
in connection with the transition of each Service Category to Service Provider,
and the dates by which each is to be completed by Service Provider.

 

(144) “Transition Services” shall mean the services, functions and
responsibilities described in Section 4.2 and the Transition Plan to be
performed by Service Provider during the Transition Period.

 

(145) “Transitioned Employees” shall mean the employees of Allegheny or its
Affiliates who accept Service Provider’s offer of employment and become employed
by Service Provider pursuant to Article 8. Upon being employed by Service
Provider, such Transitioned Employees shall be deemed to be Service Provider
Personnel as defined herein.

 

(146) “Unanticipated Change” shall have the meaning set forth in Section 11.7.

 

(147) “Upgrade” and its derivatives shall mean the updates, renovations,
enhancements, additions and/or new versions or releases of Software or Equipment
by Service Provider. Unless otherwise

 

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agreed, financial responsibility for the costs, fees and expenses associated
with an Upgrade of Software or Equipment shall be allocated between the Parties
in accordance with Sections 6.4 and Schedule 4B.

 

(148) “Yearly Performance Average” shall mean, with respect to each Critical
Service Level for which there was a Service Level Default during the preceding
Contract Year, the average of the Service Provider’s average monthly
performances in the Critical Service Level during the preceding Contract Year.

 

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