Document:

EXHIBIT 10.18

                              EMPLOYMENT AGREEMENT

     EMPLOYMENT AGREEMENT (this "Agreement"), dated as of August 3, 2004 by
Nalco LLC, a Delaware limited liability corporation (the "Company") and William
H. Joyce, a resident of Connecticut ("Executive").

                                    ARTICLE I

                                TERM OF AGREEMENT

     SECTION 1.01 Term. Executive's employment commenced on November 4, 2003 and
the term of this Agreement (the "Term") shall terminate on the first to occur of
the following dates:

          (a) the date of Executive's death or adjudicated incompetency;

          (b) the date on which Executive becomes "permanently and totally
disabled" (within the meaning of Section 22(e)(3) of the Internal Revenue Code
of 1986, as amended);

          (c) the date on which Executive's employment is terminated by the
Company with or without "Cause" (as defined in Section 4.01) or by Executive's
resignation; and

          (d) December 31, 2008.

     SECTION 1.02 Extension. The term of this Agreement may be extended by
mutual agreement of the Company and Executive.

                                   ARTICLE II

                               TERMS OF EMPLOYMENT

     SECTION 2.01 Position and Duties. (a) During the Term, Executive shall
serve as the Chief Executive Officer of the Company. Executive accepts
employment on the terms and conditions contained herein. Executive will be
appointed as a member of the Board of Directors of the Company (the "Board")
without additional compensation. The Company shall nominate Executive for
reelection to the Board at each annual meeting that occurs during the Term when
his membership on the Board would expire if he were not reelected.

          (b) Notwithstanding any other provision of this Agreement, the Board
and Executive may mutually agree that Executive's role at the Company should be
reduced. If the Board and Executive mutually agree to such reduction, (i)
Executive's Base Salary, personal benefits and variable compensation shall be
appropriately adjusted and (ii) Executive shall continue to "vest" in the Class
B, C & D Units based on the level of Executive's continued role with the Company
(for example, if Executive continues to work 4 days per week, Executive will
continue to "vest" with respect to eighty percent (80%) of the Class B, C & D
Units), (i) and (ii) as mutually agreed between the Board and Executive.

                                                                               2

     SECTION 2.02 Office and Staff. During the Term, the Company shall (i)
maintain appropriately appointed executive offices for Executive at the
Company's headquarters in Naperville, Illinois from which Executive shall
perform his duties; and (ii) provide Executive with executive secretarial and
other administrative staff and services suitable to his offices and duties,
staffed by persons approved by Executive.

     SECTION 2.03 Base Salary, Variable Compensation and Expenses.

          (a) During the Term, Executive shall receive a base annual salary of
One Million Dollars ($1,000,000) (the "Base Salary"), pro rated for any partial
year, payable in equal monthly installments, subject to applicable tax
withholdings, in accordance with the Company's normal payroll practices.

          (b) During the Term, Executive shall be eligible to earn annual
variable compensation ("Variable Compensation"). For each year, Executive's
target Variable Compensation shall be One Million Dollars ($1,000,000), with
actual variable compensation being more or less than the target amount depending
upon the achievement of the performance criteria referred to in this clause (b).
The Variable Compensation will be established and paid under the Company's
Annual Management Incentive Compensation Plan or any successor thereto, with the
performance criteria for the Variable Compensation being established by the
Board or a committee appointed by the Board, taking into account in good faith
the recommendations of Executive with respect hereto.

          (c) The Company shall promptly reimburse Executive for all ordinary,
necessary, reasonable and proper business expenses actually incurred by
Executive during the Term in connection with the performance and discharge of
his duties and responsibilities under this Agreement in accordance with the
policies and procedures established by the Company from time to time. Executive
will not incur expenses other than in accordance with the Company's policies and
procedures both as to the nature and amount of such expenses.

     SECTION 2.04 Equity Investment.

          (a) Subject to the terms of the Management Members Agreement
substantially in the form attached hereto as Exhibit A (the "Management Members
Agreement") and the Limited Liability Company Operating Agreement of Nalco LLC
(the "LLC Agreement"), Executive has purchased 1,120,000,000 Class A Units of
the Company.

          (b) Pursuant to the terms of the Nalco LLC 2004 Unit Plan and subject
to the terms of the Management Members Agreement and the LLC Agreement,
Executive shall purchase (i) 416,232,066 Class B Units of the Company, (ii)
416,232,066 Class C Units of the Company and (iii) 277,488,044 Class D Units of
the Company. The purchase price per unit shall equal the fair market value of
such unit as of the date of purchase, as determined in good faith by the
Company.

          (c) Notwithstanding the terms and conditions set forth in the
Management Members Agreement and the LLC Agreement, the Class A Units, Class B
Units, Class C Units and Class D Units shall be subject to the terms and
conditions set forth on Schedule A attached hereto.

                                                                               3

     SECTION 2.05 Qualified Plans. Executive shall be entitled to participate in
each "pension plan" (as defined in Section 3(2) of the Employee Retirement
Income Security Act of 1974, as amended) (a "Pension Plan") sponsored by the
Company that is intended to be qualified under Section 401(a) of the Code (each,
a "Qualified Plan") to the extent and on such terms as made available to top
executives of the Company.

     SECTION 2.06 Non-Qualified Plans. Executive shall be entitled to
participate in all Pension Plans sponsored by the Company that are not Qualified
Plans (each, a "Non-Qualified Plan") to the extent and on such terms as made
available to top executives of the Company and with such participation to start
as of November 4, 2003.

                                  ARTICLE III

                        CERTAIN BENEFITS; INDEMNIFICATION

     SECTION 3.01 Personal Benefits. During the Term:

               (i) Executive shall be entitled to receive all fringe benefits
and participate in all plans generally available to executive personnel of the
Company, including without limitation, any hospital, medical, accident,
disability, life insurance, and dental coverages.

               (ii) Executive will be entitled to the holidays observed by other
employees of the Company.

               (iii) Executive shall be entitled to such sick days and personal
days as may be established by the Company for executives of the Company.

               (iv) Executive shall be entitled to four (4) weeks of vacation
per year.

               (v) The Company shall provide Executive with an automobile of his
selection for his exclusive business and personal use, primarily in Illinois and
for travel from Illinois on Company business or to Connecticut, and pay all
expenses of ownership, operation, repair and maintenance of such vehicle.

               (vi) The Company shall pay for suitable housing for the Executive
in the Illinois area.

               (vii) Executive shall be entitled to receive paid transportation
to and from Connecticut at such times as Executive shall determine, but not more
frequently than one round trip per week and one round trip per holiday.

     SECTION 3.02 Indemnification. Anything in this Agreement to the contrary
notwithstanding, the Company agrees to pay all reasonable costs and expenses
incurred by Executive in connection with the enforcement of his rights and
entitlements under this Agreement, unless the trier of fact in such matter finds
that Executive's claim was brought or maintained in bad faith or was frivolous.
In addition, Executive shall be indemnified and covered by liability insurance
on the same terms and conditions as other senior executives of the

                                                                               4

Company with respect to his service as an employee and manager of the Company
with respect to his service on the Board.

     SECTION 3.03 Reimbursement. The Company shall reimburse Executive for
reasonable expenses incurred in connection with the preparation and negotiation
of this Agreement.

                                   ARTICLE IV

                  TERMINATION OF EMPLOYMENT; CHANGE IN CONTROL

     SECTION 4.01 Termination of Employment. In the event Executive's employment
is terminated by the Company other than for Cause (as defined below) prior to a
Change in Control (as defined in a separate agreement described below in Section
4.02), the Company shall (i) continue to (A) pay to Executive the Base Salary
that Executive would have received had he remained employed hereunder through
the earlier of (1) the expiration of the Term and (2) the third anniversary of
the date of termination (the number of months in such period of three years or
the remainder of the Term, being referred to as the "Applicable Multiple"),
payable in equal monthly installments in accordance with the Company's customary
payroll practices and assuming that the Base Salary continued to be paid at the
rate in effect immediately before the date of termination and (B) pay to
Executive the Variable Compensation, computed by multiplying one-twelfth of the
actual Variable Compensation paid for the last completed year immediately before
the date of termination (or in the case of such termination prior to the payment
of Variable Compensation, if any, for 2004, the target Variable Compensation) by
the Applicable Multiple with the amount of such Variable Compensation to be
payable at such times and in such installments as would have been paid to
Executive had he remained employed by the Company during such period. The
aggregate amount required to be paid to Executive pursuant to this Section 4.01
is referred to as the "Severance Payment."

     A termination of Executive's employment by the Company shall be considered
to be for "Cause" under this Agreement if the Company Board terminates his
employment based upon a determination that Executive has (i) engaged in serious
misconduct in connection with the performance of his duties hereunder, (ii)
willfully neglected his duties hereunder, or (iii) engaged in criminal conduct
or other serious misconduct that is likely to be harmful to the business or
reputation of the Company; provided, that if the foregoing actions or inactions
on the part of Executive are capable of cure, the Company Board shall give
Executive notice of the first occurrence thereof and five business days'
opportunity to cure.

     SECTION 4.02 Change in Control. The consequence of the termination of
Executive's employment without "Cause" after a Change in Control shall be
governed by a separate Change in Control Employment Agreement, to be entered
into by the Company and Executive within 30 days after the execution of this
Agreement (the "Change in Control Agreement"). The Change in Control Agreement
shall provide for severance pay and benefits if Executive's employment is
terminated without "Cause" after a Change in Control, consisting of: a cash lump
sum payment equal to the Severance Payment and continuation of Executive's
welfare benefits (or the provision of comparable benefits) for a period through
the earlier of (A) the expiration of the Term and (B) the third anniversary of
the date of termination.

                                                                               5

     SECTION 4.03 Resignation. Notwithstanding any other provision of this
Agreement, upon the termination of the Executive's employment for any reason,
unless otherwise requested by the Board, he shall immediately resign from the
Board and from all boards of directors of subsidiaries and affiliates of the
Company of which he may be a member. The Executive hereby agrees to execute any
and all documentation of such resignations upon request by the Company, but he
shall be treated for all purposes as having so resigned upon termination of his
employment, regardless of when or whether he executes any such documentation.

                                   ARTICLE V

                               GENERAL PROVISIONS

     SECTION 5.01 Entire Agreement. This Agreement (and the documents referred
to in this Agreement) set forth the entire agreement between the parties with
respect to the subject matter referred to in this Agreement and merge and
supersede all prior discussions, agreements and understandings of every kind and
nature between any of them, and neither party shall be bound by any term or
condition other than as expressly set forth or provided for in this Agreement.
This Agreement may not be changed or modified except by an agreement in writing,
signed by the parties hereto.

     SECTION 5.02 Waiver. The failure of any party to this Agreement to enforce
any of its terms, provisions or covenants shall not be construed as a waiver of
the same or of the right of such party to enforce the same. Waiver by any party
hereto of any breach or default by any other party of any term or provision of
this Agreement shall not operate as a waiver of any other breach of default.

     SECTION 5.03 Severability. In the event that any one or more of the
provisions of this Agreement shall be held to be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remainder of the
Agreement shall not in any way be affected or impaired thereby. Moreover, if any
one, or more of the provisions contained in this Agreement shall be held to be
excessively broad as to duration, activity or subject, such provisions shall be
construed by limiting and reducing them so as to be enforceable to the maximum
extent allowed by applicable law.

     SECTION 5.04 Notices. Any notice given hereunder shall be in writing and
shall be deemed to have been given when delivered by messenger or courier
service (against appropriate receipt), or mailed by registered or certified mail
(return receipt requested), addressed as follows:

          If to the Company:   Nalco Company
                               1601 W. Diehl Road
                               Naperville, Illinois 60563
                               Attention: General Counsel

                                                                               6

          If to Executive:     William H. Joyce
                               12 Shepard Hill Road
                               Newtown, CT 06470

or at such other address as shall be indicated to either party in writing.
Notice of change of address shall be effective only upon receipt.

     SECTION 5.05 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Illinois without regard to
conflicts of law principles.

     SECTION 5.06 Confidentiality. Executive shall keep confidential all
proprietary and other information concerning of the Company, its subsidiaries
and its business, including but not limited to information concerning its
customers, vendors and others with whom it transacts business, its methods of
operation and other trade secrets, its future plans and strategies, and any
financial information concerning the Company and its subsidiaries (collectively,
"Confidential Information"). Executive agrees that all Confidential Information
is the exclusive property of the Company and Executive will not remove the
originals or make copies of any Confidential Information without the prior
written consent of the Company, if during or after the Term. Executive shall not
use Confidential Information for any purposes other than to carry out his
obligations under this Agreement and will not divulge Confidential Information
to any other person or entity during or after the Term of this Agreement without
the prior written consent of the Company, if during or after the Term, unless
required by law or judicial or other process. "Confidential Information" shall
not include any information that is generally known to the public other than as
a result of Executive's breach of this covenant.

     SECTION 5.07 Non-Competition and Non-Solicitation.

          (a) During the Term and ending eighteen (18) months following the
Executive's termination of employment for any reason (the "Non-Compete Period"),
without the prior written consent of the Company, Executive shall not, directly
or indirectly, either as principal, manager, agent, consultant, officer,
director, stockholder, partner, member, investor, lender or employee or in any
other capacity, carry on, be engaged in or have any financial interest in any
Competitive Business. For purposes hereof, a business shall be deemed to be a
"Competitive Business" if (i) it is significantly involved in the sale or
rendering of any product or service sold, dealt in or rendered by the Company
and/or any direct or indirect subsidiary of the Company at the commencement of
the Non-Compete Period or (ii) it is significantly involved in the sale or
rendering of any product or service that the Company or its affiliates have
specific plans to sell or provide and as to which Executive is aware of such
planning. As used in the preceding sentence, the term "significantly" shall be
deemed to refer to activities generating gross annual sales of at least $25
million. Nothing in this shall be construed so as to preclude Executive from
investing in any publicly held company; provided, that Executive's beneficial
ownership of any class of such company's securities does not exceed 2% of the
outstanding securities of such class.

          (b) During the Non-Compete Period, Executive will not, directly or
indirectly through another person, (i) solicit any employee of the Company or
any of its direct or indirect

                                                                               7

subsidiaries to leave the employ of the Company or such subsidiary, or in any
way interfere with the relationship between the Company and such subsidiary, on
the one hand, and any employee thereof, on the other hand or (ii) hire any
individual who was an employee of the Company or any of its direct or indirect
subsidiaries at any time from and after the Effective Date.

          (c) Executive and the Company agree that each of the foregoing
covenants is a reasonable covenant under the circumstances, and further agree
that if in the opinion of any court of competent jurisdiction such restraint is
not reasonable in any respect, such court shall have the right, power and
authority to excise or modify such provision or provisions of such covenant as
to the court shall appear not reasonable and to enforce the remainder of the
covenant as so amended. Executive agrees that any breach of the covenants
contained in this Section would irreparably injure the Company. Accordingly, the
Company may, in addition to pursuing any other remedies it may have in law or in
equity, obtain an injunction against Executive from any court having
jurisdiction over the matter, restraining any further violation of this Section
by Executive.

     SECTION 5.08 Executive Representation and Warranty. Executive represents
and warrants that the execution, delivery and compliance with the terms of this
Agreement by Executive do not and will not (with or without notice or lapse of
time, or both) conflict with any agreement, contract, commitment or restriction
to which Executive is a party or otherwise bound.

     SECTION 5.09 Descriptive Headings. The section headings contained herein
are for reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.

     SECTION 5.10 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original for all purposes but which, together,
shall constitute one and the same instrument.

                                      * * *

     IN WITNESS WHEREOF, each party has executed this Agreement as of the date
set forth on its signature page to this Agreement.

                                       NALCO LLC

                                       By:  /s/ Stephen N. Landsman
                                            -----------------------------------
                                            Name: Stephen N. Landsman
                                            Title: Vice President, General
                                                   Counsel and Corporate
                                                   Secretary

                                       Date: August 3, 2004
                                            -----------------------------------

                                       EXECUTIVE

                                       By:  /s/ William H. Joyce
                                            -----------------------------------
                                            Name: William H. Joyce

                                       Date: August 3, 2004
                                            -----------------------------------

With respect to Schedule A only:

                                       BLACKSTONE CAPITAL PARTNERS IV L.P.

                                         By:  Blackstone Management Associates
                                               IV L.L.C., its General Partner

                                              By: /s/ Chinh E. Chu
                                                  -----------------------------
                                                  Name: Chinh E. Chu
                                                  Title: Member

                                       BLACKSTONE CAPITAL PARTNERS IV-A L.P.

                                         By:  Blackstone Management Associates
                                              IV L.L.C., its General Partner

                                              By: /s/ Chinh E. Chu
                                                  -----------------------------
                                                  Name: Chinh E. Chu
                                                  Title: Member

                                       BLACKSTONE FAMILY INVESTMENT
                                         PARTNERSHIP IV-A L.P.

                                         By:  Blackstone Management Associates
                                              IV L.L.C., its General Partner

                                              By: /s/ Chinh E. Chu
                                                  ------------------------------
                                                  Name: Chinh E. Chu
                                                  Title: Member

                                       APOLLO INVESTMENT FUND V, L.P.

                                         By:  Apollo Management V, L.P.,
                                              its General Manager

                                              By:  Apollo Advisors V, L.L.C.,
                                                   its General Manager

                                                   By: /s/ Joshua J. Harris
                                                      --------------------------
                                                      Name: Joshua J. Harris
                                                      Title: Senior Partner

                                       APOLLO/NALCO ACQUISITION LLC

                                         By:  Apollo Management V, L.P.,
                                              its Manager

                                              By:  AIF V Management, Inc.,
                                                   its General Partner

                                                   By: /s/ Joshua J. Harris
                                                      --------------------------
                                                      Name: Joshua J. Harris
                                                      Title: Senior Partner

                                       GOLDMAN SACHS DIRECT INVESTMENT
                                         FUND 2000, L.P.

                                         By:  GS Employee Funds 2000 GP, L.L.C.,
                                              its General Partner

                                              By: /s/ Sanjeev K. Mehra
                                                  ------------------------------
                                                  Sanjeev K. Mehra

                                       GS CAPITAL PARTNERS 2000, L.P.

                                         By:  GS Advisors 2000, L.L.C.,
                                              its General Partner

                                              By: /s/ Sanjeev K. Mehra
                                                  ------------------------------
                                                  Name: Sanjeev K. Mehra

                                       GS CAPITAL PARTNERS 2000 OFFSHORE, L.P.

                                         By:  GS Advisors 2000, L.L.C.,
                                              its General Partner

                                              By: /s/ Sanjeev K. Mehra
                                                  ------------------------------
                                                  Name: Sanjeev K. Mehra

                                       GS CAPITAL PARTNERS 2000 GMBH & CO.
                                         BETEILIGUNGS KG

                                         By:  Goldman Sachs Management GP GmbH,
                                              its General Partner

                                              By: /s/ Sanjeev K. Mehra
                                                  ------------------------------
                                                  Name: Sanjeev K. Mehra

                                       GS CAPITAL PARTNERS 2000 EMPLOYEE
                                         FUND, L.P.

                                         By:  GS Employee Funds 2000 GP, L.L.C.,
                                              its General Partner

                                              By: /s/ Sanjeev K. Mehra
                                                  ------------------------------
                                                  Name: Sanjeev K. Mehra

                                                                      SCHEDULE A

                                 TERMS OF EQUITY

Notwithstanding the terms of the Management Members Agreement, the LLC Agreement
and the Registration Rights Agreement Concerning Nalco LLC (the "Registration
Rights Agreement"), the Executive's Class A Units, Class B Units, Class C Units
and Class D Units (collectively, the "Units") shall be subject to the following
terms and conditions (unless otherwise defined herein, the capitalized terms
shall have their respective meanings in the Management Members Agreement, LLC
Agreement or Registration Rights Agreement):

THE UNITS

     o    Any amendment to the LLC Agreement that materially adversely affects
          Executive's Units shall require the agreement of Executive, such
          agreement not to be unreasonably withheld.

     o    In the event that the Company elects to purchase Executive's Unvested
          Units in connection with a Drag-Along Sale, the purchase price for
          such Unvested Units will be the lower of fair market value or the
          amount paid for such Units; provided, however that, if (i) the fair
          market value of such Unvested Units exceeds the purchase price for
          such Unvested Units and (ii) Executive is willing to continue to
          provide Services for (or is terminated by the Company without Cause or
          resigns with Good Reason (as defined in the Change in Control
          Agreement) pursuant to the terms of the Change in Control Agreement
          during) the eighteen month period following the consummation of the
          Drag-Along Sale, then, with respect to each Unvested Unit that would
          have had an Applicable Percentage equal to 100% as a result of the
          Change of Control, Executive shall be entitled to receive the excess
          of the fair market value (as of the date of such Drag-Along Sale) of
          such Unvested Unit over the purchase price for such Unvested Unit.

     o    Following the first anniversary of a Qualified IPO, in the event of a
          Required Registration in which Executive has requested to participate,
          under the Registration Rights Agreement, the Company shall be
          required, subject to further underwriter cutbacks applicable to
          Sponsors Members and/or Executive, to include in such Required
          Registration, first all Registrable Securities requested to be
          included in the Required Registration by the Sponsor Members and
          Executive and, to the extent not all such Registrable Securities can
          be included in such Required Registration, the number of Registrable
          Securities to be included shall be allocated pro rata on the basis of
          the number of Registrable Securities beneficially owned at that time
          by all the Sponsor Members requesting to participate in the Required
          Registration and Executive or on such other basis as shall be agreed
          among the Sponsor Members, Executive, the Majority Holders and the
          Investor Group requesting such Required Registration.

                                                                               2

     o    Following the first anniversary of a Qualified IPO, if a registration
          in which Executive has requested to participate, pursuant to Section
          2(b) of the Registration Rights Agreement, involves an Underwritten
          Offering of the securities so being registered, whether or not for
          sale for the account of the Company, and the sole Underwriter or the
          lead managing Underwriter, as the case may be, of such Underwritten
          Offering shall advise the Company prior to the date then scheduled for
          such offering that, in its opinion, the amount of securities
          (including Registrable Securities) requested to be included in such
          registration exceeds the amount which can be sold in (or during the
          time of) such offering without adversely affecting the distribution of
          the securities being offered, then the Company will be required,
          subject to further underwriter cutbacks applicable to Sponsors Members
          and/or Executive, to include in such registration, unless the managing
          Underwriter shall otherwise specify (which specification may not
          adversely affect any Sponsor Member relative to any other Sponsor
          Member), first, all the securities entitled to be sold pursuant to
          such Registration Statement without reference to the incidental
          registration rights of any holder (including Holders), and second all
          Registrable Securities requested to be included in the Underwritten
          Offering by the Sponsor Members and Executive and, to the extent not
          all such Registrable Securities can be included in such Underwritten
          Offering, the number of Registrable Securities to be included shall be
          allocated pro rata on the basis of the number of Registrable
          Securities beneficially owned at that time by all the Sponsor Members
          requesting to participate in the Underwritten Offering and Executive
          or on such other basis as shall be agreed among the Sponsor Members,
          Executive and the Majority Holders;

CLASS A UNITS

     o    Executive's Class A Units shall not be subject to the Call Option set
          forth in Section 2.02 of the Management Members Agreement.

     o    Following a Qualified IPO and the expiration of any underwriter or
          Company "lock-up" period (as provided for in Section 4(a) of the
          Registration Rights Agreement or otherwise) applicable to such
          Qualified IPO, Executive may Transfer Executive's Units pursuant to a
          Transfer conducted in accordance with the requirements of Rule 144
          promulgated under the 1933 Act; provided, that Executive shall not
          make a Transfer pursuant to Rule 144 without the Company's prior,
          written approval, such approval not to be unreasonably withheld.

CLASS B, C & D UNITS

     o    Upon a termination of Executive's employment by the Company without
          "Cause" or due to the death or disability of Executive prior to
          December 31, 2008, all Executive's Class B, C & D Units shall be
          deemed "Vested Units" under the Management Members Agreement.

     o    The Applicable Percentage in respect of any Class B Unit upon and
          following a Change of Control shall be 100% on the date that is
          eighteen months following such Change of Control (if Executive
          continues to provide Services for (or is terminated by the Company

                                                                               3

          without Cause or resigns with Good Reason (as defined in the Change in
          Control Agreement) pursuant to the terms of the Change in Control
          Agreement during) such eighteen-month period)

     o    The numerator used to calculate the Applicable Percentage in respect
          of any Class C Unit or Class D Unit upon and following a Change of
          Control shall be the same as the numerator used at the time the Change
          of Control occurred, unless (i) with respect to a Change of Control
          that occurs on or prior to December 31, 2004, the EBITDA for the
          period beginning on January 1, 2004 and ending on the consummation of
          the Change of Control multiplied by a fraction, the numerator of which
          is 365 and the denominator of which is the number of the days in the
          2004 calendar year that have elapsed through the consummation of the
          Change of Control equals or exceeds the Target EBITDA for calendar
          year 2004 and (ii) with respect to a Change of Control that occurs
          following December 31, 2004, the EBITDA for the four most recent
          fiscal quarters prior to the Change of Control equals or exceeds the
          Target EBITDA applicable to such period (for example if a Change of
          Control occurs on April 30, 2005, the Target EBITDA shall equal the
          sum of (x) 9/12th of the 2004 Target EBITDA and (y) 3/12th of the 2005
          Target EBITDA), in each such case the numerator shall be 100 on the
          date that is eighteen months following such Change of Control (if
          Executive continues to provide Services for (or is terminated by the
          Company without Cause or resigns with Good Reason (as defined in the
          Change in Control Agreement) pursuant to the terms of the Change in
          Control Agreement during) such eighteen-month period).

     o    The numerator used to calculate the Applicable Percentage in respect
          of any Class C Unit or Class D Unit upon and following a Sponsor
          Sell-Down shall be the same as the numerator used at the time the
          Sponsor Sell-Down occurred, unless (i) with respect to a Sponsor
          Sell-Down that occurs on or prior to December 31, 2004, the EBITDA for
          the period beginning on January 1, 2004 and ending on the consummation
          of the Sponsor Sell-Down multiplied by a fraction, the numerator of
          which is 365 and the denominator of which is the number of the days in
          the 2004 calendar year that have elapsed through the consummation of
          the Sponsor Sell-Down equals or exceeds the Target EBITDA for calendar
          year 2004 and (ii) with respect to a Sponsor Sell-Down that occurs
          following December 31, 2004, the EBITDA for the four most recent
          fiscal quarters prior to the Sponsor Sell-Down equals or exceeds the
          Target EBITDA applicable to such period, in each such case the
          numerator shall be 100.

     o    With respect to the Class B, C & D Units the "Reference Date" shall
          mean October 6, 2003.exv10wxcy

 

Exhibit 10(c)

*** Certain portions of this exhibit have been omitted pursuant to a request
for confidential treatment. The omitted portions have been filed separately
with the Securities and Exchange Commission.

MASTER SERVICES AGREEMENT

between

Sears, Roebuck and Co.

and

Computer Sciences Corporation

DATED: June 1, 2004

 

 

TABLE OF CONTENTS

(continued)

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	 	 	 	 	1.
	 	 	 	 
	 	 	 	 	BACKGROUND AND OBJECTIVES
	 	 	 	 
	1.1	 	Information Technology Services	 	 	1	 
	1.2	 	Goals and Objectives	 	 	1	 
	 	 	 	 	2.
	 	 	 	 
	 	 	 	 	DEFINITIONS AND DOCUMENTS
	 	 	 	 
	2.1	 	Definitions	 	 	3	 
	2.2	 	Master Agreement and Associated Contract Documents	 	 	3	 
	 	 	(a)	 	General
	 	 	3	 
	 	 	(b)	 	Exhibits
	 	 	3	 
	 	 	(c)	 	Statements of Work
	 	 	4	 
	 	 	(d)	 	Service Addenda
	 	 	4	 
	 	 	(e)	 	Appendices
	 	 	4	 
	 	 	(f)	 	Transaction Document
	 	 	4	 
	 	 	(g)	 	Interpretation and Precedence
	 	 	4	 
	 	 	(h)	 	Ordering Affiliates
	 	 	5	 
	2.3	 	Appendices to this Master Agreement	 	 	5	 
	 	 	 	 	3.
	 	 	 	 
	 	 	 	 	TERM
	 	 	 	 
	3.1	 	Term of Master Agreement, Exhibits, SOWs and Service Addenda	 	 	5	 
	 	 	(a)	 	Master Agreement
	 	 	5	 
	 	 	(b)	 	Exhibits
	 	 	6	 
	 	 	(c)	 	Service Addenda and SOWs
	 	 	6	 
	3.2	 	Extension	 	 	6	 
	 	 	 	 	4.
	 	 	 	 
	 	 	 	 	SERVICES
	 	 	 	 
	4.1	 	Overview	 	 	6	 
	 	 	(a)	 	Services
	 	 	6	 
	 	 	(b)	 	Included Services
	 	 	8	 
	 	 	(c)	 	TI Exhibit
	 	 	8	 
	 	 	(d)	 	Off-Shore Services
	 	 	8	 

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	4.2	 	Eligible Recipient Services	 	 	9	 
	 	 	(a)	 	Eligible Recipients
	 	 	9	 
	 	 	(b)	 	Eligible Recipient Requests
	 	 	9	 
	4.3	 	Acquisition and Divestiture Services	 	 	9	 
	 	 	(a)	 	Acquisition Support
	 	 	10	 
	 	 	(b)	 	Migration of Systems
	 	 	10	 
	 	 	(c)	 	On-Site Support
	 	 	10	 
	 	 	(d)	 	Divestitures
	 	 	10	 
	4.4	 	Access to Specialized CSC Skills and Resources	 	 	10	 
	4.5	 	Additional Services	 	 	10	 
	 	 	(a)	 	General
	 	 	10	 
	 	 	(b)	 	New Services
	 	 	11	 
	 	 	(c)	 	Efforts to Reduce Costs and Charges
	 	 	13	 
	 	 	(d)	 	Charges for Contract Changes
	 	 	14	 
	 	 	(e)	 	Additional Work or Reprioritization
	 	 	14	 
	 	 	 	 	5.
	 	 	 	 
	 	 	 	 	GOVERNANCE
	 	 	 	 
	5.1	 	Operational Procedures Manual	 	 	14	 
	 	 	(a)	 	Delivery and Contents
	 	 	14	 
	 	 	(b)	 	Revision and Maintenance
	 	 	15	 
	 	 	(c)	 	Compliance
	 	 	15	 
	 	 	(d)	 	Modification and Updating
	 	 	16	 
	5.2	 	Change Control	 	 	16	 
	 	 	(a)	 	Compliance with Change Control Procedures
	 	 	16	 
	 	 	(b)	 	System Change Costs
	 	 	16	 
	 	 	(c)	 	Sears Approval — Cost, Adverse Impact
	 	 	17	 
	 	 	(d)	 	Temporary Emergency Changes
	 	 	17	 
	 	 	(e)	 	Implementation of System Changes
	 	 	17	 
	 	 	(f)	 	Planning and Tracking
	 	 	17	 
	 	 	(g)	 	Comparisons
	 	 	17	 

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	5.3	 	Reports	 	 	18	 
	 	 	(a)	 	Reports
	 	 	18	 
	 	 	(b)	 	Back-Up Documentation
	 	 	18	 
	5.4	 	Meetings	 	 	18	 
	 	 	(a)	 	Meetings
	 	 	18	 
	 	 	(b)	 	Agenda and Minutes
	 	 	18	 
	 	 	(c)	 	Eligible Recipient Meetings
	 	 	19	 
	 	 	(d)	 	Telephone/Video Conferences
	 	 	19	 
	 	 	 	 	6.
	 	 	 	 
	 	 	 	 	CSC RESPONSIBILITIES
	 	 	 	 
	6.1	 	Cooperation with Sears Personnel	 	 	19	 
	6.2	 	Subcontractors	 	 	20	 
	 	 	(a)	 	Use of Subcontractors
	 	 	20	 
	 	 	(b)	 	Exempt Subcontractors
	 	 	20	 
	 	 	(c)	 	Minority/Women-Owned Businesses
	 	 	20	 
	6.3	 	Quality Assurance	 	 	21	 
	6.4	 	Architecture, Standards and Information Technology Planning	 	 	21	 
	 	 	(a)	 	CSC Support
	 	 	21	 
	 	 	(b)	 	CSC Familiarity with Sears Standards
	 	 	22	 
	 	 	(c)	 	Sears Authority and CSC Compliance
	 	 	22	 
	 	 	(d)	 	Compliance with Sears Standards
	 	 	22	 
	 	 	(e)	 	Financial, Forecasting and Budgeting Support
	 	 	23	 
	6.5	 	Technology	 	 	23	 
	 	 	(a)	 	CSC Briefings
	 	 	23	 
	 	 	(b)	 	Currency
	 	 	23	 
	 	 	(c)	 	Evaluation and Testing
	 	 	24	 
	 	 	(d)	 	Approval by Sears
	 	 	24	 
	 	 	(e)	 	Updates by Sears
	 	 	25	 
	 	 	(f)	 	Unanticipated IT Change
	 	 	25	 
	 	 	(g)	 	CSC Developed Advances
	 	 	25	 

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	 	 	(h)	 	Services Evolution and Modification
	 	 	25	 
	6.6	 	Financial Filings and Notice of Change of Financial Condition	 	 	25	 
	 	 	(a)	 	Financial Filings
	 	 	25	 
	 	 	(b)	 	Notice
	 	 	26	 
	 	 	 	 	7.
	 	 	 	 
	 	 	 	 	SEARS’ RESPONSIBILITIES
	 	 	 	 
	7.1	 	General Sears Responsibilities	 	 	26	 
	 	 	(a)	 	Sears Relationship Manager
	 	 	26	 
	 	 	(b)	 	Cooperation
	 	 	26	 
	 	 	(c)	 	Sears Personnel
	 	 	26	 
	 	 	(d)	 	Contract Waivers
	 	 	26	 
	7.2	 	Sears’ Responsibilities	 	 	26	 
	 	 	(a)	 	Nature of Responsibilities
	 	 	26	 
	 	 	(b)	 	Exception to CSC Performance
	 	 	27	 
	 	 	(c)	 	Notice of Problems
	 	 	27	 
	 	 	(d)	 	***
	 	 	27	 
	 	 	 	 	8.
	 	 	 	 
	 	 	 	 	SEARS AND CSC FACILITIES
	 	 	 	 
	8.1	 	Service Facilities	 	 	27	 
	8.2	 	Sears Facilities	 	 	28	 
	 	 	(a)	 	General
	 	 	28	 
	 	 	(b)	 	Use of Sears Facilities
	 	 	29	 
	8.3	 	Access to Sears’ Networks	 	 	29	 
	8.4	 	CSC’s Responsibilities	 	 	30	 
	8.5	 	Physical Security	 	 	30	 
	 	 	 	 	9.
	 	 	 	 
	 	 	 	 	REQUIRED CONSENTS
	 	 	 	 
	9.1	 	Administrative Responsibility	 	 	31	 
	 	 	(a)	 	General
	 	 	31	 
	 	 	(b)	 	Cooperation
	 	 	31	 
	9.2	 	Financial Responsibility	 	 	31	 

*** CONFIDENTIAL MATERIAL REDACTED AND SEPARATELY FILED WITH THE COMMISSION.

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	9.3	 	Contingent Arrangements	 	 	32	 
	 	 	(a)	 	General
	 	 	32	 
	 	 	 	 	10.
	 	 	 	 
	 	 	SOFTWARE,	 	EQUIPMENT, CONTRACTS AND ASSETS ASSOCIATED WITH THE

PROVISION OF SERVICES
	 	 	 	 
	10.1	 	CSC Designated Contracts	 	 	32	 
	 	 	(a)	 	Assignment and Assumption
	 	 	32	 
	 	 	(b)	 	CSC Designated Contracts Not Assignable by Commencement Date
	 	 	32	 
	 	 	(c)	 	Non-Assignable CSC Designated Contracts
	 	 	33	 
	 	 	(d)	 	Modification and Substitution
	 	 	33	 
	 	 	(e)	 	Unidentified Third Party Contracts
	 	 	34	 
	 	 	(f)	 	Managed Third Parties
	 	 	34	 
	 	 	(g)	 	Notice of Defaults
	 	 	34	 
	10.2	 	Acquired Assets	 	 	34	 
	10.3	 	Sears Provided Systems and CSC Provided Systems	 	 	35	 
	 	 	(a)	 	Inventory
	 	 	35	 
	 	 	(b)	 	Non-Commercially Available Software
	 	 	35	 
	 	 	(c)	 	CSC Managed Systems
	 	 	36	 
	 	 	(d)	 	Financial Responsibility
	 	 	37	 
	 	 	(e)	 	Operational Responsibility
	 	 	37	 
	 	 	(f)	 	Benefits Pass-Through
	 	 	38	 
	 	 	(g)	 	UCITA and CISG
	 	 	38	 
	 	 	(h)	 	Other Matters
	 	 	38	 
	 	 	(i)	 	Evaluation of Third Party Software, Equipment
	 	 	39	 
	10.4	 	Notice of Decommissioning	 	 	40	 
	10.5	 	License to CSC Provided Systems	 	 	40	 
	10.6	 	License to Sears Provided Systems and CSC Managed Systems	 	 	41	 
	 	 	(a)	 	License to Sears Owned Materials
	 	 	41	 
	 	 	(b)	 	License to Third Party Materials
	 	 	41	 

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	 	 	 	 	11.
	 	 	 	 
	 	 	 	 	SERVICE LEVELS
	 	 	 	 
	11.1	 	Description of Service Levels	 	 	42	 
	 	 	(a)	 	Purpose of Service Levels
	 	 	42	 
	 	 	(b)	 	Service Level Performance Standards
	 	 	42	 
	11.2	 	Service Level Credits	 	 	42	 
	11.3	 	Problem Analysis	 	 	42	 
	11.4	 	Continuous Improvement Reviews	 	 	43	 
	11.5	 	Measurement and Monitoring	 	 	43	 
	11.6	 	Satisfaction Surveys	 	 	44	 
	 	 	(a)	 	General
	 	 	44	 
	 	 	(b)	 	Sears Conducted Surveys
	 	 	44	 
	 	 	(c)	 	Survey Follow-up
	 	 	44	 
	11.7	 	Excessive Service Level Failure	 	 	44	 
	 	 	 	 	12.
	 	 	 	 
	 	 	 	 	PROJECT PERSONNEL
	 	 	 	 
	12.1	 	Key Personnel	 	 	45	 
	 	 	(a)	 	Approval of Key Personnel
	 	 	45	 
	 	 	(b)	 	Continuity of Key Personnel
	 	 	45	 
	 	 	(c)	 	Succession
	 	 	46	 
	 	 	(d)	 	Location of Key Personnel
	 	 	46	 
	 	 	(e)	 	Restrictions on Performing Services to Sears’ Competitors
	 	 	46	 
	12.2	 	CSC Account Executive	 	 	46	 
	12.3	 	Compensation of CSC Account Executive and Key Personnel	 	 	46	 
	 	 	(a)	 	CSC Account Executive
	 	 	46	 
	 	 	(b)	 	Key Personnel
	 	 	47	 
	 	 	(c)	 	Evaluation Input
	 	 	47	 
	12.4	 	Qualifications and Retention of CSC Personnel	 	 	47	 
	 	 	(a)	 	Sufficiency and Suitability of Personnel
	 	 	47	 
	 	 	(b)	 	Turnover Rate and Data
	 	 	47	 
	 	 	(c)	 	Drug Testing
	 	 	47	 

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	 	 	(d)	 	Background Checks
	 	 	47	 
	 	 	(e)	 	Fingerprinting
	 	 	49	 
	12.5	 	Identification of CSC Personnel	 	 	49	 
	12.6	 	Substance Abuse	 	 	49	 
	12.7	 	Union Agreements	 	 	49	 
	12.8	 	CSC Responsibility	 	 	49	 
	 	 	 	 	13.
	 	 	 	 
	 	 	 	 	CHARGES
	 	 	 	 
	13.1	 	General	 	 	50	 
	 	 	(a)	 	Payment of Charges
	 	 	50	 
	 	 	(b)	 	No Charge for Reperformance
	 	 	50	 
	13.2	 	Pass-Through Expenses	 	 	50	 
	 	 	(a)	 	Procedures and Payment
	 	 	50	 
	 	 	(b)	 	No Markup; No Fees
	 	 	51	 
	 	 	(c)	 	Efforts to Minimize
	 	 	51	 
	 	 	(d)	 	Disbursements
	 	 	51	 
	 	 	(e)	 	Limited Agency
	 	 	51	 
	 	 	(f)	 	Reimbursement for Substitute Payment
	 	 	51	 
	13.3	 	Reimbursable Expenses and Sears Expense Policy	 	 	51	 
	13.4	 	Taxes	 	 	52	 
	 	 	(a)	 	Income Taxes
	 	 	52	 
	 	 	(b)	 	Sales, Use and Property Taxes
	 	 	52	 
	 	 	(c)	 	Taxes on Goods or Services Used by CSC
	 	 	52	 
	 	 	(d)	 	Service Taxes
	 	 	52	 
	 	 	(e)	 	Notice of New Taxes and Charges
	 	 	53	 
	 	 	(f)	 	Efforts to Minimize Taxes
	 	 	53	 
	 	 	(g)	 	Tax Audits or Proceedings
	 	 	54	 
	13.5	 	Tax Filings	 	 	54	 
	13.6	 	Extraordinary Events	 	 	54	 
	 	 	(a)	 	Definition
	 	 	54	 

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	 	 	(b)	 	Consequence
	 	 	55	 
	13.7	 	Proration	 	 	56	 
	13.8	 	Refundable Items	 	 	56	 
	 	 	(a)	 	Prepaid Amounts
	 	 	56	 
	 	 	(b)	 	Refunds and Credits
	 	 	56	 
	13.9	 	Repricing	 	 	56	 
	13.10	 	Benchmarking	 	 	57	 
	 	 	(a)	 	Required Benchmark Reviews
	 	 	57	 
	 	 	(b)	 	Other Price Reviews
	 	 	57	 
	 	 	(c)	 	General
	 	 	58	 
	 	 	(d)	 	Results of Required Benchmarking
	 	 	58	 
	 	 	(e)	 	Non-Competitive Charges
	 	 	58	 
	13.11	 	Most Favored Customer	 	 	58	 
	 	 	 	 	14.
	 	 	 	 
	 	 	 	 	INVOICING AND PAYMENT
	 	 	 	 
	14.1	 	Invoicing	 	 	59	 
	 	 	(a)	 	Invoice
	 	 	59	 
	 	 	(b)	 	Form and Data
	 	 	59	 
	 	 	(c)	 	Credits
	 	 	60	 
	 	 	(d)	 	Time Limitation
	 	 	60	 
	14.2	 	Payment	 	 	60	 
	 	 	(a)	 	Timing
	 	 	60	 
	 	 	(b)	 	Interest
	 	 	60	 
	14.3	 	Set Off	 	 	60	 
	14.4	 	Disputed Charges	 	 	60	 
	 	 	(a)	 	Description and Explanation
	 	 	61	 
	 	 	(b)	 	No Waiver
	 	 	61	 
	 	 	(c)	 	***
	 	 	61	 
	 	 	(d)	 	***
	 	 	61	 

	***	 	CONFIDENTIAL MATERIAL REDACTED AND SEPARATELY FILED WITH THE COMMISSION.

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	 	 	 	 	15.
	 	 	 	 
	 	 	 	 	SEARS DATA AND OTHER CONFIDENTIAL INFORMATION
	 	 	 	 
	15.1	 	Sears Ownership of Sears Data	 	 	61	 
	15.2	 	Safeguarding Sears Data	 	 	62	 
	 	 	(a)	 	Safeguarding Procedures
	 	 	62	 
	 	 	(b)	 	Reconstruction Procedures
	 	 	62	 
	15.3	 	Confidentiality	 	 	63	 
	 	 	(a)	 	Confidential Information
	 	 	63	 
	 	 	(b)	 	Confidential Business Information
	 	 	63	 
	 	 	(c)	 	Confidential Personal Information
	 	 	65	 
	 	 	(d)	 	Return or Destruction of Confidential Information
	 	 	67	 
	 	 	(e)	 	Loss of Confidential Information
	 	 	67	 
	 	 	(f)	 	No Implied Rights
	 	 	67	 
	15.4	 	File Access	 	 	68	 
	 	 	 	 	16.
	 	 	 	 
	 	 	 	 	OWNERSHIP
	 	 	 	 
	16.1	 	CSC Provided Systems	 	 	68	 
	 	 	(a)	 	Ownership of CSC Provided Systems
	 	 	68	 
	 	 	(b)	 	*** – Patents
	 	 	68	 
	16.2	 	Sears Provided Systems	 	 	70	 
	16.3	 	Deliverables	 	 	70	 
	 	 	(a)	 	License to Sears
	 	 	70	 
	 	 	(b)	 	Restrictions
	 	 	71	 
	 	 	(c)	 	Source Code and Documentation
	 	 	71	 
	16.4	 	General Knowledge	 	 	71	 
	16.5	 	Other Rights	 	 	71	 
	16.6	 	Copyright Legends	 	 	71	 
	 	 	 	 	17.
	 	 	 	 
	 	 	 	 	REPRESENTATIONS, WARRANTIES
AND COVENANTS
	 	 	 	 
	17.1	 	By CSC	 	 	71	 
	 	 	(a)	 	Work Standards
	 	 	72	 

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	 	 	(b)	 	Maintenance
	 	 	72	 
	 	 	(c)	 	Efficiency and Cost Effectiveness
	 	 	72	 
	 	 	(d)	 	CSC Provided Systems/CSC Managed Systems/Deliverables
	 	 	73	 
	 	 	(e)	 	Deliverables
	 	 	73	 
	 	 	(f)	 	Non-Infringement
	 	 	73	 
	 	 	(g)	 	Authorization
	 	 	74	 
	 	 	(h)	 	Sears Code of Conduct and Privacy Policies
	 	 	74	 
	 	 	(i)	 	Unauthorized Code
	 	 	74	 
	 	 	(j)	 	Compliance with Laws
	 	 	76	 
	 	 	(k)	 	Notice of Adverse Impact
	 	 	77	 
	 	 	(l)	 	Interoperability
	 	 	77	 
	 	 	(m)	 	Pass-Through
	 	 	77	 
	17.2	 	By Sears	 	 	77	 
	 	 	(a)	 	Non-Infringement
	 	 	77	 
	 	 	(b)	 	Authorization
	 	 	78	 
	17.3	 	Disclaimer	 	 	78	 
	17.4	 	Effect	 	 	79	 
	 	 	 	 	18.
	 	 	 	 
	 	 	 	 	Audit Rights
	 	 	 	 
	18.1	 	Contract Records	 	 	79	 
	18.2	 	Sears Audit	 	 	79	 
	 	 	(a)	 	General
	 	 	79	 
	 	 	(b)	 	Operational and Financial Audits
	 	 	79	 
	18.3	 	SAS 70 Audit	 	 	80	 
	18.4	 	Governmental or Other Non-Sears Audits	 	 	80	 
	18.5	 	Audit Process	 	 	81	 
	18.6	 	Security Testing	 	 	81	 
	18.7	 	Remedial Obligations	 	 	81	 
	18.8	 	General Procedures	 	 	82	 
	 	 	(a)	 	Access
	 	 	82	 

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	 	 	(b)	 	Notice
	 	 	82	 
	 	 	(c)	 	Exit Conference
	 	 	82	 
	 	 	(d)	 	Audit Workspace
	 	 	82	 
	18.9	 	CSC Breach	 	 	82	 
	 	 	 	 	19.
	 	 	 	 
	 	 	 	 	INSURANCE AND RISK OF LOSS
	 	 	 	 
	19.1	 	Insurance	 	 	83	 
	 	 	(a)	 	Requirements
	 	 	83	 
	 	 	(b)	 	Endorsements
	 	 	84	 
	 	 	(c)	 	Certificates
	 	 	85	 
	 	 	(d)	 	No Implied Limitation
	 	 	85	 
	 	 	(e)	 	Insurance Subrogation
	 	 	85	 
	 	 	(f)	 	Material Breach
	 	 	85	 
	19.2	 	Risk of Loss	 	 	86	 
	 	 	(a)	 	General
	 	 	86	 
	 	 	(b)	 	Waiver
	 	 	86	 
	 	 	 	 	20.
	 	 	 	 
	 	 	 	 	INDEMNITIES
	 	 	 	 
	20.1	 	Indemnity by CSC	 	 	86	 
	 	 	(a)	 	Breach of This Agreement
	 	 	86	 
	 	 	(b)	 	CSC Designated Contracts
	 	 	87	 
	 	 	(c)	 	Licenses, Leases or Contracts
	 	 	87	 
	 	 	(d)	 	Sears Data or Confidential Information
	 	 	87	 
	 	 	(e)	 	Infringement
	 	 	87	 
	 	 	(f)	 	Government Claims
	 	 	87	 
	 	 	(g)	 	Taxes
	 	 	87	 
	 	 	(h)	 	Shared Facility Services
	 	 	87	 
	 	 	(i)	 	Affiliate, CSC Personnel or Assignee Claims
	 	 	88	 
	 	 	(j)	 	Background and Drug Checks
	 	 	88	 
	 	 	(k)	 	CSC Acts or Omissions
	 	 	88	 
	 	 	(l)	 	Employment Claims
	 	 	88	 

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	 	 	(m)	 	Environmental Claims
	 	 	89	 
	 	 	(n)	 	Violation of Laws
	 	 	89	 
	20.2	 	Indemnity by Sears	 	 	89	 
	 	 	(a)	 	Breach of This Agreement
	 	 	89	 
	 	 	(b)	 	Licenses, Leases or Contracts
	 	 	89	 
	 	 	(c)	 	Pre-Commencement Date Matters
	 	 	89	 
	 	 	(d)	 	CSC’s Confidential Business Information
	 	 	89	 
	 	 	(e)	 	Infringement
	 	 	89	 
	 	 	(f)	 	Taxes
	 	 	90	 
	 	 	(g)	 	Eligible Recipients’ Acts or Omissions
	 	 	90	 
	 	 	(h)	 	Eligible Recipient Claims
	 	 	90	 
	 	 	(i)	 	Violation of Laws
	 	 	90	 
	20.3	 	Infringement	 	 	90	 
	 	 	(a)	 	CSC Provided Systems, CSC Managed Systems or Deliverables
	 	 	90	 
	 	 	(b)	 	Sears Provided Systems
	 	 	91	 
	20.4	 	Indemnification Procedures	 	 	91	 
	 	 	(a)	 	Notice
	 	 	92	 
	 	 	(b)	 	Procedure Following Notice of Defense
	 	 	92	 
	 	 	(c)	 	Procedure Where No Notice of Assumption Is Delivered
	 	 	92	 
	20.5	 	Indemnification Procedures — Governmental Claims	 	 	92	 
	20.6	 	Mixed Claims	 	 	93	 
	20.7	 	Independent Obligations	 	 	93	 
	 	 	 	 	21.
	 	 	 	 
	 	 	 	 	LIABILITY
	 	 	 	 
	21.1	 	Force Majeure	 	 	93	 
	 	 	(a)	 	General
	 	 	93	 
	 	 	(b)	 	Duration and Notification
	 	 	94	 
	 	 	(c)	 	Substitute Services; Termination
	 	 	94	 
	 	 	(d)	 	Disaster Recovery
	 	 	95	 
	 	 	(e)	 	Payment Obligation
	 	 	95	 

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	 	 	 	 	 	 	Page
	 	 	(f)	 	Allocation of Resources
	 	 	95	 
	21.2	 	Limitation of Liability	 	 	96	 
	 	 	(a)	 	Exclusions from Liability
	 	 	96	 
	 	 	(b)	 	Liability Cap
	 	 	96	 
	 	 	(c)	 	Other
	 	 	96	 
	 	 	(d)	 	Exceptions to Limitations of Liability
	 	 	96	 
	 	 	(e)	 	Items Not Considered Damages
	 	 	97	 
	 	 	(f)	 	Waiver of Liability Cap
	 	 	98	 
	 	 	(g)	 	Acknowledged Direct Damages
	 	 	98	 
	21.3	 	Public Telecommunications Transmissions	 	 	99	 
	 	 	 	 	22.
	 	 	 	 
	 	 	 	 	DISPUTE RESOLUTION
	 	 	 	 
	22.1	 	Informal Dispute Resolution	 	 	99	 
	 	 	(a)	 	Initial Effort
	 	 	99	 
	 	 	(b)	 	Escalation
	 	 	100	 
	 	 	(c)	 	Provision of Information
	 	 	100	 
	 	 	(d)	 	Prerequisite to Formal Proceedings
	 	 	100	 
	22.2	 	Arbitration	 	 	101	 
	 	 	(a)	 	Arbitration
	 	 	101	 
	 	 	(b)	 	Location and Decision
	 	 	101	 
	 	 	(c)	 	Selection and Qualification of Arbitrators
	 	 	101	 
	 	 	(d)	 	General
	 	 	102	 
	22.3	 	Continued Performance	 	 	102	 
	 	 	(a)	 	General
	 	 	102	 
	 	 	(b)	 	Non-Interruption of Services
	 	 	103	 
	 	 	 	 	23.
	 	 	 	 
	 	 	 	 	TERMINATION
	 	 	 	 
	23.1	 	Termination for Cause	 	 	103	 
	 	 	(a)	 	Termination By Sears
	 	 	103	 
	 	 	(b)	 	By CSC
	 	 	105	 
	23.2	 	Termination for Convenience	 	 	105	 

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	 	 	 	 	 	 	Page
	23.3	 	Termination Charges	 	 	106	 
	23.4	 	Termination Upon CSC Change of Control	 	 	106	 
	23.5	 	Termination Upon Sears’ Mergers and Acquisitions	 	 	107	 
	23.6	 	Termination for Insolvency	 	 	107	 
	23.7	 	Termination for Change in Laws	 	 	108	 
	23.8	 	Sears’ Rights Upon CSC’s Bankruptcy	 	 	108	 
	 	 	(a)	 	General Rights
	 	 	108	 
	 	 	(b)	 	Sears’ Rights in Event of Bankruptcy Rejection
	 	 	108	 
	23.9	 	Right to Assume Licenses in Bankruptcy	 	 	109	 
	 	 	 	 	24.
	 	 	 	 
	 	 	 	 	Rights Upon Expiration or Termination
	 	 	 	 
	24.1	 	Certain Rights	 	 	109	 
	24.2	 	Hiring	 	 	109	 
	24.3	 	Sears Provided Systems and Deliverables	 	 	110	 
	 	 	(a)	 	Deliver
	 	 	110	 
	 	 	(b)	 	Destroy
	 	 	110	 
	24.4	 	Sears Facilities	 	 	110	 
	24.5	 	CSC Provided Systems	 	 	110	 
	 	 	(a)	 	CSC Provided Circuits and Other Items
	 	 	110	 
	 	 	(b)	 	CSC Provided Equipment
	 	 	110	 
	 	 	(c)	 	CSC Provided Software
	 	 	111	 
	24.6	 	CSC Subcontracts and Third Party Contracts	 	 	113	 
	24.7	 	Effect on Termination Charge	 	 	114	 
	 	 	 	 	25.
	 	 	 	 
	 	 	 	 	Termination Assistance Services
	 	 	 	 
	25.1	 	Duration	 	 	114	 
	 	 	(a)	 	Period of Provision
	 	 	114	 
	 	 	(b)	 	Extension(s) of Services and Termination Assistance Services
	 	 	114	 
	 	 	(c)	 	Firm Commitment
	 	 	115	 
	 	 	(d)	 	Performance
	 	 	116	 
	25.2	 	Scope of Termination Assistance Service	 	 	116	 

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	 	 	 	 	 	 	Page
	25.3	 	General Support	 	 	116	 
	25.4	 	Rates and Charges	 	 	117	 
	 	 	 	 	26.
	 	 	 	 
	 	 	 	 	GENERAL
	 	 	 	 
	26.1	 	Binding Nature and Assignment	 	 	117	 
	 	 	(a)	 	Binding Nature
	 	 	117	 
	 	 	(b)	 	Assignment
	 	 	117	 
	 	 	(c)	 	Impermissible Assignment
	 	 	118	 
	26.2	 	Entire Agreement; Amendment	 	 	118	 
	26.3	 	Notices	 	 	118	 
	26.4	 	Legal Expenses	 	 	119	 
	26.5	 	Counterparts	 	 	120	 
	26.6	 	Headings	 	 	120	 
	26.7	 	Severability	 	 	120	 
	26.8	 	Jurisdiction	 	 	120	 
	26.9	 	Governing Law	 	 	121	 
	26.10	 	Relationship of the Parties	 	 	121	 
	26.11	 	Consents and Approval	 	 	122	 
	 	 	(a)	 	General
	 	 	122	 
	 	 	(b)	 	Written Approval
	 	 	122	 
	26.12	 	Waiver of Default; Cumulative Remedies	 	 	122	 
	 	 	(a)	 	Waiver of Default
	 	 	122	 
	 	 	(b)	 	Cumulative Remedies
	 	 	123	 
	26.13	 	Survival	 	 	123	 
	26.14	 	Publicity	 	 	123	 
	26.15	 	Equitable Remedies	 	 	123	 
	26.16	 	Parties To This Agreement	 	 	124	 
	26.17	 	Covenant Against Pledging and Liens	 	 	124	 
	26.18	 	Hiring of Employees	 	 	124	 
	 	 	(a)	 	Hiring Restriction
	 	 	124	 

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	 	 	 	 	 	 	Page
	 	 	(b)	 	Permitted Hiring
	 	 	124	 
	26.19	 	Further Assurances	 	 	125	 
	26.20	 	No Commitment and No Exclusivity	 	 	125	 
	26.21	 	Sears Rules and Compliance	 	 	125	 
	26.22	 	Interpretation	 	 	125	 
	26.23	 	Export Controls	 	 	126	 
	26.24	 	Covenant of Good Faith	 	 	126	 

 xvi 

 

 

MASTER SERVICES AGREEMENT

THIS MASTER SERVICES AGREEMENT (this “Master Agreement”) is made as of
June 1, 2004 (the “Effective Date”) by and between Computer Sciences
Corporation, a Nevada corporation (“CSC”), and Sears, Roebuck and Co., a New
York corporation (“Sears”).

WHEREAS, Sears and CSC wish to set forth the terms and conditions under
which CSC may provide Sears and the other Eligible Recipients with certain
services through one or more Transaction Documents pursuant to this Master
Agreement;

NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Sears and CSC
(collectively, the “Parties” and each, a “Party”) hereby agree as follows:

	1.	 	BACKGROUND AND OBJECTIVES

	 
	1.1	 	Information Technology
Services.

	 
	 	 	Sears desires that certain information technology services presently
performed and managed by or for Sears and the other Eligible Recipients
by their respective Personnel, and certain additional information
technology services, as each is described in a Transaction Document, be
performed and managed by CSC. CSC has carefully reviewed Sears’
requirements, has performed all due diligence it deems necessary, and
desires to perform and manage such information technology services for
Sears and the other Eligible Recipients.

	 
	1.2	 	Goals and Objectives.

	 
	 	 	The Parties acknowledge and agree that the goals and objectives of the
Parties in entering into this Agreement are to create a special
relationship between CSC and Sears, where CSC’s Personnel work
cooperatively and proactively with Sears’ Personnel in a “badge neutral”
environment with the common goals of:

	 	(a)	 	Transforming the underlying architecture of Sears’ and the
other Eligible Recipients’ technical infrastructure to improve
services;

	 
	 	(b)	 	Significantly reducing the current and ongoing cost to Sears
and the other Eligible Recipients for information technology
services and delivery;

	 
	 	(c)	 	Providing a flexible, reliable, high-performance architecture
for Sears and the other Eligible Recipients’ technical
infrastructure, that provides:

	 	(i)	 	Common processes across the Eligible Recipients;

	 
	 	(ii)	 	Elimination of duplication across the Eligible Recipients;

 

 

	 	(iii)	 	Simplified end user interactions;

	 
	 	(iv)	 	Scalable and modular solutions;

	 
	 	(v)	 	Flexibility and speed in changing service
delivery to meet the Eligible Recipients’ evolving business
requirements; and

	 
	 	(vi)	 	Technology currency;

	 	(d)	 	Performing all of the Services at or above existing service
levels while reducing costs, including providing:

	 	(i)	 	Improved quality and efficiency of information
technology delivery to the Eligible Recipients;

	 
	 	(ii)	 	Predictable and consistent service delivery;

	 
	 	(iii)	 	Industry best practices and delivery processes; and

	 
	 	(iv)	 	The right capability at the right time;

	 	(e)	 	Standardizing, simplifying and integrating the Eligible
Recipients’ technical infrastructure, including:

	 	(i)	 	Modernization and sustained infrastructure
support of the Eligible Recipients’ evolving business
requirements;

	 
	 	(ii)	 	Access to current and evolving technologies;

	 
	 	(iii)	 	Rapid transformation to future state initiatives
within defined time frames; and

	 
	 	(iv)	 	Uniform technical infrastructure prioritized over
best-of-class for creation of future state;

	 	(f)	 	Continuously innovating and improving the performance and
delivery of technical services to the Eligible Recipients and the
Eligible Recipients’ technical infrastructure cost and Service Level
metrics, including:

	 	(i)	 	Achieving and maintaining best-in-class pricing
for the technical capabilities and Service Levels for the
Services received by the Eligible Recipients under this
Agreement;

	 
	 	(ii)	 	Utilizing enabling technologies to add value to
the Eligible Recipients’ business processes;

	 
	 	(iii)	 	Keeping Sears apprised of new and advanced
technologies to enhance the performance of the Eligible
Recipients; and

2

 

	 	(iv)	 	Providing thought leadership in the selection and
use of enabling technologies;

	 	(g)	 	Allowing Sears to focus on its core competencies and allowing
Sears’ technical infrastructure management to focus on business
relationships and requirements, including:

	 	(i)	 	Delivering information technology services by
proactively and willingly participating on teams comprising
CSC, Sears enterprise leadership and staff, and Third Party
vendors; and

	 
	 	(ii)	 	Providing flexibility to allow Sears and its
Affiliates to meet their changing business needs, align
incentives, protect Sears Data and vital business interests,
allocate risks and to allow effective management of the
Services.

	2.	 	DEFINITIONS AND DOCUMENTS

	 
	2.1	 	Definitions.

	 
	 	 	Certain capitalized terms used in this Agreement are defined in
Appendix A (Glossary). Other capitalized terms used in this
Master Agreement, the Appendices to this Master Agreement or any
Transaction Documents are defined in the context in which they are used
and have the respective meanings there indicated.

	 
	2.2	 	Master Agreement and Associated Contract Documents.

	 	(a)	 	General. This Master Agreement is a master agreement that
sets forth the general terms and conditions upon which Sears and the
other Eligible Recipients may from time to time procure Services
from CSC. Services shall be provided by CSC pursuant to Transaction
Documents entered into by CSC and Sears and/or Affiliate(s) of
Sears. The Parties intend that they shall enter into a Transaction
Document before CSC or its Affiliates provides any Services to Sears
or the other Eligible Recipients. If CSC or its Affiliates provides
Services to Sears or the other Eligible Recipients in the absence of
such a Transaction Document or other written agreement signed by
each Party, this Agreement shall nevertheless apply to such
Services. However, Sears shall not be required to compensate CSC or
its Affiliates for Services not described in a Transaction Document
or other written agreement executed by the duly authorized
representatives of both Parties, except as and to the extent
expressly provided otherwise in Section 4.5 (Additional
Services).

	 
	 	(b)	 	Exhibits. If Sears elects to procure Services from CSC that
are unrelated to the subject matter of any existing Exhibit (and CSC
elects to provide such Services), the Parties shall enter into an
Exhibit for such Services. Separate Exhibits may be entered into
for discrete Services. Exhibits can be either: (i) commitments to
procure Services; or (ii) general descriptions of Services without
a commitment to

3

 

	 	 	 	procure Services, in which case Services shall not be deemed to
have been ordered under such Exhibit unless and until the Parties
shall have entered into a subsequent Statement of Work or Service
Addendum that expressly references such Exhibit and whereby Sears
agrees to procure Services. Each Exhibit shall be subject to the
terms and conditions of this Master Agreement. All references in
this Agreement to “Exhibits” shall include Appendices, SOWs and
Service Addenda thereunder.

	 
	 	(c)	 	Statements of Work. “Statements of Work” or “SOWs” are
transaction-level documents that are entered into pursuant to an
Exhibit. Each SOW shall be subject to the terms and conditions of
the applicable Exhibit and this Master Agreement. All references in
this Agreement to “SOWs” shall include all Appendices and Service
Addenda thereunder.

	 
	 	(d)	 	Service Addenda. “Service Addenda” are transaction-level
documents that are entered into to add Services to an Exhibit or a
SOW. Each Service Addendum shall be subject to the terms and
conditions of the applicable SOW, the applicable Exhibit and this
Master Agreement. All references in this Agreement to a “Service
Addendum” shall include all Appendices thereunder.

	 
	 	(e)	 	Appendices. “Appendices” are ancillary documents attached to
this Master Agreement, an Exhibit, a SOW or a Service Addendum and
the term Appendices shall include “Schedules” and “Attachments”.
Each Appendix shall be deemed incorporated by reference into the
Transaction Document that references it and shall be subordinate in
priority to such Transaction Document.

	 
	 	(f)	 	Transaction Document. “Transaction Document” means the
applicable Exhibit, SOW and/or Service Addendum.

	 
	 	(g)	 	Interpretation and Precedence. This Master Agreement and any
Transaction Documents are to be interpreted so that all of their
respective provisions are given as full effect as possible. In the
event of a conflict between any of the documents comprising this
Agreement, the following order of precedence shall apply: (i)
first, a Service Addendum; (ii) second, a SOW; (iii) third, the
applicable Exhibit; and (iv) fourth, this Master Agreement;
provided, however, that absent an express statement
therein to the contrary, no provision in a SOW, a Service Addendum
or an Appendix to any contract document shall be deemed to amend
this Master Agreement or any Exhibit (e.g., a different provision in
an Exhibit would control over this Master Agreement, but such a
provision in a SOW shall not control over this Master Agreement
unless there is an express statement in such SOW that such provision
was to control over a particular Section of this Master Agreement).
Notwithstanding the foregoing, if a Transaction Document provides a
more specific description of CSC’s obligations or the requirements
relating to the Services to be performed by CSC or sets higher
standards than the terms of this Master Agreement or the applicable Exhibit, then such
more specific description, requirements or higher standard, as the
case may be, shall not be deemed to

4

 

	 	 	 	conflict, or be inconsistent, with such terms of this Master
Agreement or the applicable Exhibit.

	 
	 	(h)	 	Ordering Affiliates.
Subject to Section 4.2(b)
(Eligible Recipient Requests), Affiliates of Sears may procure
Services directly from CSC under this Master Agreement by entering
into a Transaction Document with CSC for such Services that
references this Master Agreement. Each Transaction Document,
together with this Master Agreement, shall be deemed to constitute a
separate agreement between CSC and the Affiliate of Sears that
executed such Transaction Document. Any Affiliate of Sears that
executes a Transaction Document with CSC shall be deemed to be
“Sears” hereunder for purposes of such Transaction Document. Only
the Affiliate of Sears that executes such a Transaction Document
shall be liable for Sears’ obligations under such Transaction
Document and CSC shall look solely to such Affiliate (and not to
Sears) for satisfaction of any liability arising thereunder or
relating thereto.

	2.3	 	Appendices to this Master Agreement.

	 
	 	 	This Master Agreement includes the following Appendices:

	 
	 	 	Appendix A      Glossary

Appendix B      Sears Expense Policy

Appendix C      CSC Drug Testing Policy

	 
	3.	 	TERM

	 
	3.1	 	Term of Master Agreement, Exhibits, SOWs and Service Addenda.

	 	(a)	 	Master Agreement. The term of this Master Agreement (the
“Term”) 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
May 31, 2009, unless this Master Agreement is extended or terminated
earlier in accordance with the terms and conditions of this Master
Agreement. Upon any expiration or termination of this Master
Agreement, the terms and conditions of this Master Agreement shall
survive for purposes of any Transaction Document still in effect as
of such expiration or termination; provided, however,
that no new Exhibit shall be entered into after such expiration or
Termination. For purposes of clarity, the purpose of the preceding
sentence is to cause the parties to evaluate whether changes should
be made to this Master Agreement prior to entering into a new
Exhibit after such five (5) year period. Absent the express written
agreement of the Parties, for Transaction Documents that have a Term
that extends past the expiration of this Master Agreement: (i) no
renegotiation of this Master Agreement upon its expiration shall affect such Transaction
Document; and (ii) the expiration or
termination of this Master Agreement shall not affect the ability of the Parties to enter into
additional Exception Project Work, No Impact Proposals, Service
Addenda, SOWs or any other schedule or subsidiary document pursuant
to such a Transaction Document after such expiration or
termination.

5

 

	 	(b)	 	Exhibits. The Term of each Exhibit (the “Exhibit Term”) shall
be set forth therein, unless such Exhibit is extended or terminated
earlier in accordance with the terms and conditions of such Exhibit
or this Master Agreement. Upon any expiration or termination of an
Exhibit, the terms and conditions of such Exhibit shall survive for
purposes of any SOW and Service Addendum thereunder still in effect
as of such expiration or termination; provided,
however, that no new SOW or Service Addendum shall be entered
into thereunder after such expiration or termination.

	 
	 	(c)	 	Service Addenda and SOWs. Except as otherwise set forth in a
Service Addendum or SOW, the Term of each Service Addendum and SOW
shall be coterminous with the Exhibit pursuant to which it was
entered into.

	3.2	 	Extension.

	 
	 	 	CSC shall notify Sears in writing whether it desires to renew each
Exhibit, and of the proposed prices and other terms and conditions to
govern such renewal, not less than eighteen (18) months prior to the
expiration of the applicable Exhibit Term. If CSC so notifies Sears that
it desires to renew such Exhibit, Sears shall inform CSC in writing
whether it also desires to renew such Exhibit not less than twelve (12)
months prior to the expiration of the applicable Exhibit Term, whereupon
CSC shall promptly meet with Sears to agree upon the prices and other
terms and conditions for such renewal. Failure by either CSC or Sears to
provide notice at the time specified above shall be deemed to be notice
of intent not to extend such Exhibit, subject to the other rights of
Sears under this Agreement. If either Sears or CSC does not wish to
renew such Exhibit, such Exhibit shall expire at the end of the
applicable Exhibit Term. IF BOTH CSC AND SEARS DESIRE TO RENEW SUCH
EXHIBIT BUT ARE UNABLE TO AGREE IN WRITING UPON RENEWAL PRICES AND OTHER
TERMS AND CONDITIONS AT LEAST SIX (6) MONTHS PRIOR TO THE EXPIRATION OF
THE APPLICABLE EXHIBIT TERM, SEARS MAY, UPON NOTICE TO CSC, ELECT TO
EXTEND SUCH EXHIBIT TERM FOR ONE (1) YEAR AT THE PRICES, TERMS AND
CONDITIONS IN EFFECT DURING THE LAST YEAR OF THE THEN-CURRENT APPLICABLE
EXHIBIT TERM. If CSC and Sears are unable to reach agreement on renewal
during such extension period, if any, such Exhibit shall expire at the
end of such extension period unless earlier terminated in accordance with
the terms and conditions of such Exhibit or this Master Agreement, or
further extended pursuant to Section 25.1(b) (Extension of
Services).

	 
	4.	 	SERVICES

	 
	4.1	 	Overview.

	 	(a)	 	Services. Commencing on the applicable Commencement Date, (i)
CSC shall provide the Services to Sears, and, upon Sears’ request,
to other Eligible Recipients designated by Sears, in each case, at
levels of accuracy, quality, completeness, timeliness,
responsiveness and resource efficiency that are (1) at

6

 

	 	 	 	least equal to those received by Sears or the other Eligible
Recipients, respectively, prior to the Commencement Date and (2)
equal to or higher than the applicable Service Levels and the
accepted industry standards of first tier providers of information
technology services performing similar services, and (ii) the
Services that CSC shall provide under such Transaction Document
shall consist of the following, as they may evolve during the Term
of such Transaction Documents or be supplemented, enhanced,
modified or replaced:

	 	(i)	 	General. The services, functions and
responsibilities described in such Transaction Document and
the applicable portions of this Master Agreement.

	 
	 	(ii)	 	Displaced Functions. The services,
functions and responsibilities performed during the twelve
(12) months preceding such Commencement Date by Sears
Personnel who were displaced or whose functions were displaced
as a result of such Transaction Document, even if the service,
function or responsibility is not specifically described in
this Master Agreement or such Transaction Documents;
provided, however, that express statements in
such Transaction Document that such services, functions or
responsibilities are out of scope shall control over this
Section 4.1(a)(ii) Displaced Functions);

	 
	 	(iii)	 	Sears IT Base Case. The services,
functions and responsibilities reflected in those categories
of the Sears IT Base Case that CSC is assuming pursuant to
such Transaction Document; provided, however,
that express statements in such Transaction Document that such
services, functions or responsibilities are out of scope shall
control over this Section 4.1(a)(iii) (Sears IT Base
Case);

	 
	 	(iv)	 	Non-Retained Functions. The services,
functions and responsibilities that are not retained by Sears
or the other Eligible Recipients and that are reasonably
related to the Services and of a nature and type that would
ordinarily be performed by the information technology
department of a generally comparable, major, multi-division
retail merchandising and services company, even if such
services, functions and responsibilities are not specifically
described in this Agreement; and

	 
	 	(v)	 	Compliance Functions. All information
technology and telecommunication support services reasonably
related to the Services that are required for Sears and its
Affiliates to meet (A) requirements imposed by federal, state
and local laws and regulations, and (B) their internal and
external audit and compliance requirements.

	 
	 	(vi)	 	Peak Business Season Readiness. All peak
business season readiness services (a/k/a holiday readiness)
reasonably related to the Services that Sears and its
Affiliates deem prudent to prepare for their peak business

7

 

	 	 	 	periods. These include such things as forward deployment of
important spare parts, stress testing of various Systems,
etc.

	 	(b)	 	Included Services. If any services, functions or
responsibilities not specifically described in this Agreement or any
Transaction Document are an inherent, necessary or customary part of
the Services, including any Migration Services, Interim Services,
Termination Assistance Services and/or Transformation Services under
any Exhibit, and are (i) reasonably related to CSC’s performance of
the Services or (ii) 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 or
the applicable Transaction Document.

	 
	 	(c)	 	TI Exhibit. For purposes of the TI Exhibit, the Services
shall consist of four (4) components: (i) the Migration Services;
(ii) the Interim Services; (iii) the Transformation Services; and
(iv) the Future State Services, in each case as described in greater
detail therein.

	 
	 	(d)	 	Off-Shore Services. Except as otherwise provided in a
Transaction Document and subject to the other terms and conditions
of this Agreement, CSC may provide the Services using services or
facilities outside the United States (collectively, “Foreign Based
Services”), or install, transfer or otherwise use Sears Provided
Systems, CSC Managed Systems or Sears Data from outside the United
States (collectively, “Foreign Use of Certain Systems”), subject to
the following.

	 	(i)	 	Foreign Based Services. CSC shall notify
Sears at least *** in advance of the commencement of such
Foreign Based Service and such notice shall specifically
describe what Services will be performed in each foreign
jurisdiction. Sears shall have the right to reject the use of
such Foreign Based Service; ***.

*** CONFIDENTIAL MATERIAL REDACTED AND SEPARATELY FILED WITH THE COMMISSION.

8

 

	 	(ii)	 	Foreign Use of Certain Systems. CSC shall
notify Sears at least *** in advance of the commencement of
any Foreign Use of Certain Systems and such notice shall
specifically describe which Systems will be used in each
foreign jurisdiction. Sears shall have the right to reject,
*** any proposal that involves Foreign Use of Certain Systems.
If Sears does approve such a proposal, CSC shall be
responsible for obtaining, prior to commencement of such
foreign use, at its expense, any Required Consents required
from Third Parties in connection with such Foreign Use of
Certain Systems (e.g., approval from Software licensors,
etc.).

	 
	 	(iii)	 	Data Communications. Except as otherwise
expressly set forth in a Transaction Document, to the extent
necessary to provide Foreign Based Services, CSC shall,
without separate Charge, provide data network connectivity
between: (i) CSC’s data connection to the Eligible Recipients’
United States facilities and (ii) the Foreign Based Services.

	 
	 	(iv)	 	Further Information. CSC shall promptly provide
to Sears any information Sears reasonably requests, in
connection with any proposal for Foreign Based Services or
Foreign Use of Certain Systems.

	4.2	 	Eligible Recipient Services.

	 	(a)	 	Eligible Recipients. CSC shall provide the Services to
Eligible Recipients designated by Sears from time to time. Except
as provided in Section 4.5 (Additional Services) 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 which shall be subject to
Section 4.5
(Additional Services)) then applicable to the provisions of the same
Services to existing Eligible Recipients. To the extent a
designated Eligible Recipient shall receive less than all of the
Services, Sears shall designate the categories of Services to be
provided by CSC to such Eligible Recipient.

	 
	 	(b)	 	Eligible Recipient Requests. CSC shall promptly inform the
Sears Relationship Manager of requests for New Services from
Eligible Recipients and shall submit any proposals for such New
Services to the Sears Relationship Manager. Neither CSC nor its
Affiliates shall provide New Services to any Eligible Recipients
without the prior written approval of the Sears Relationship
Manager.

	4.3	 	Acquisition and Divestiture Services.

	 
	 	 	CSC shall provide the following Services, at no additional charge and as
part of the base Services, related to acquisitions or divestitures by
Sears or any other Eligible Recipient. Services that would require CSC to
create a new infrastructure to support an acquired Entity or to migrate
Sears to an acquired Entity’s Systems shall be subject to Section
4.5(b) (New Services).

*** CONFIDENTIAL MATERIAL REDACTED AND SEPARATELY FILED WITH THE COMMISSION.

9

 

	 	(a)	 	Acquisition Support. With respect to a potential acquisition
by any Eligible Recipient, upon Sears’ request, CSC shall provide
acquisition support (including assessments of the current technology
environments to be acquired, potential integration approaches and
the potential net economic impact of the acquisition in connection
with the Services) as reasonably necessary to assist any Eligible
Recipient’s assessment of the portion of the acquisition to which
the Services shall relate. Such support shall be provided within
the time frame reasonably requested by Sears or as required by the
timing of the transaction.

	 
	 	(b)	 	Migration of Systems. As requested by Sears, CSC shall
migrate all or some of the Systems, applications and data of the
acquired Entity to the Eligible Recipients’ existing environment
and/or migrate all or some of the Systems, applications and data of
Eligible Recipients to the environment of the acquired Entity. As
requested by Sears, CSC shall, following the integration, provide
the Services as they apply to the newly integrated acquired Entity
or business.

	 
	 	(c)	 	On-Site Support. As requested by Sears, CSC shall provide
CSC Personnel to staff vacancies and to provide management for the
information technology functions needed to support an acquisition,
including on-site support at the location of the acquired Entity or
business.

	 
	 	(d)	 	Divestitures. From time to time, any Eligible Recipient may
divest business units. In such cases, as and to the extent
requested by Sears, CSC shall provide transition support services to
the Eligible Recipients, the divested business unit and the
acquirer, and shall continue to provide such Services for a period
of up to twenty-four (24) months after such divestitures as
requested by Sears. Any revenues, resources or other similar usage
measures in connection with services that are the same as, or
similar to, the Services and that are obtained by any Eligible
Recipient’s divested business unit under a separate agreement
between such business unit (or any acquiring entity or successor
thereof) and CSC, shall count toward the satisfaction of any
revenue, resource or other similar usage requirements under this
Agreement.

	4.4	 	Access to Specialized CSC Skills and Resources.

	 
	 	 	Upon Sears’ request, CSC shall provide the Eligible Recipients with
prompt access to CSC’s specialized services, CSC Personnel and resources
and associated Software, Equipment and Systems. The foregoing shall be
provided on an expedited basis, taking into account the relevant
circumstances, in the event of a service disruption (the “Specialized
Services”).

	 
	4.5	 	Additional Services.

	 	(a)	 	General. If Sears requests CSC to perform any services not
already included in the Services, then CSC shall perform such
services at no additional Charge to any Eligible Recipient, except
to the extent such services constitute New Services. If

10

 

	 	 	 	CSC’s performance of such services results in a net reduction in
CSC’s costs of providing the Services, CSC shall provide Sears a
credit in the amount of such savings. If Sears requests that CSC
provide Services that CSC believes to be New Services, CSC may make
a proposal for New Services in accordance with Section
4.5(b) (New Services).

	 
	 	(b)	 	New Services.

	 	(i)	 	No Impact Proposal. If Sears requests
that CSC perform New Services, CSC shall first perform an
analysis to determine the means, if any, by which CSC can
complete such New Services without (1) additional charges to
Sears, (2) modifications to any Transaction Document, or (3)
any adverse impact to other Services under this Agreement,
and, if CSC can do so, CSC shall then: (A) document in writing
such a proposal (each a “No Impact Proposal”), (B) deliver a
written copy of any such No Impact Proposal to Sears, and (C)
shall promptly proceed to provide such New Services in
accordance with such proposal.

	 
	 	(ii)	 	Service Addendum.

	 	(1)	 	Development of Service Addendum. If
CSC determines that CSC cannot formulate a No Impact
Proposal, CSC shall promptly complete a Service Addendum
for such New Services. CSC shall deliver to Sears with
such Service Addendum a specific list of alternatives
that were explored as possible No Impact Proposals as
well as any adverse consequence CSC anticipates under
such Service Addendum. CSC shall prepare and deliver
any Service Addendum required by this Agreement, at no
additional charge to Sears, within ten (10) days of its
receipt of Sears’ request; provided, however, that CSC
shall use all commercially reasonable efforts to respond
more quickly in the case of a pressing business need or
an emergency situation. Sears shall provide such
information as CSC reasonably requests in order to
prepare such proposed Service Addendum. Such proposed
Service Addendum shall include, among other things, the
following at a level of detail sufficient to permit
Sears to make an informed business decision for those
New Services not already covered by this Agreement: (A)
a project plan; (B) a fixed price or a time and
materials price
estimate for new Charges required for the New Service,
if any, and
a breakdown of such Charges by items of
consumption (e.g., license and maintenance fees for CSC
Provided Software, number of hours of services, price,
service type, etc.); (C) a description of any
additional Service Levels to be associated with such
New Service (or changes to existing Service Levels);
(D) a schedule, including major milestones, for
commencing and completing the New Service; (E) a
description of the new CSC Provided Systems to be
provided by CSC in connection with the New Service; (F)
a

11

 

	 	 	 	description of any other software, hardware and other
resources, including resource unit utilization,
necessary to provide the New Service; (G) any
additional or different Sears Provided Systems,
facilities or labor resources to be provided by the
Eligible Recipients in connection with the proposed New
Service; and (H) in the case of any Deliverables to be
created through the provision of the proposed New
Services, any ownership rights therein that differ from
the provisions of Section 16.1(a)(Ownership of
CSC Provided Systems).

	 	 	 	

	 	(2)	 	Acceptance of Service Addendum.
Sears may accept or reject any proposed Service Addendum
in its sole discretion. CSC shall not be obligated to
perform any New Services for which a Service Addenda is
required unless the proposed Service Addendum is signed
by Sears, or Sears re-prioritizes or eliminates other
Services CSC is to provide such that CSC is not required
to incur any incremental resources. Upon the execution
by the Parties of a proposed Service Addendum for New
Services, the scope of the Services in the applicable
Transaction Document shall be expanded to include such
New Services. Except as provided for in Section
4.5(b)(iii) (Exception Project Work), CSC shall not
receive any additional compensation for New Services
unless the Sears Relationship Manager and CSC Account
Executive, or their authorized designees, have executed
a Service Addendum for such New Services. Sears’
execution of a proposed Service Addendum shall not waive
Sears’ right to challenge the appropriateness of any or
all of CSC’s Charges provided for in such Service
Addendum. If Sears authorizes CSC to proceed with any
work, such as by executing a Service Addendum, but the
Parties disagree as to whether the authorized work
constitutes New Services or the amount of the Charges
for such work, CSC shall proceed with such work and the
disagreement shall be submitted to dispute resolution
***.

	 	(iii)	 	Exception Project Work. The Sears Vice
President of Operations/Engineering may authorize CSC to
perform New Services (for
which an additional charge will apply) on a
project-by-project basis, without the need to execute a
Service Addendum; provided that:

	 	(1)	 	Such New Services are for a specific
project of a limited duration (rather than the addition
of ongoing Services to be performed for the Term of the
applicable Transaction Document);

	 
	 	(2)	 	The Charges applicable to such New
Services are non-recurring and do not exceed (A) *** per
incident, (B) *** in the

*** CONFIDENTIAL MATERIAL REDACTED AND SEPARATELY FILED WITH THE COMMISSION.

12

 

	 	 	 	aggregate per Contract Year, or (C) the hourly rates
set forth in the applicable Transaction Document;

	 
	 	(3)	 	Neither CSC nor Sears are seeking any
changes to the ownership provisions set forth in this
Agreement with respect to any Deliverables relating to
such New Services; and

	 
	 	(4)	 	CSC provides a written summary of
such New Services that contains the information in
Section 4.5(b)(ii) (Service Addendum) to the
extent requested by Sears.

	 
	 	By the fifth (5th) day of each month during the Term, CSC
shall provide to the Sears Relationship Manager a report
listing (A) each New Service subject to this Section
4.5(b)(iii) (Exception Project Work), (B) the amount of
Charges then incurred to date for each New Service and (C)
the total amount approved by Sears for each New Service. For
the avoidance of doubt, each such New Service shall be
subject to the terms of this Master Agreement and the
applicable Transaction Document.

	 	(iv)	 	Charges. CSC shall act reasonably and in
good faith in formulating its pricing proposal for such New
Services and shall use commercially reasonable efforts to
identify potential means of reducing or eliminating the cost
to Sears, including delaying expenditures in other areas under
this Agreement, utilizing Subcontractors, etc. CSC’s pricing
proposal shall be competitive to the fair market value for
such services and no less favorable to Sears than the pricing
and labor rates set forth in this Agreement for comparable
Services and shall take into account the existing and future
volume of overall business between Sears and its Affiliates
and CSC and its Affiliates.

	 	(c)	 	Efforts to Reduce Costs and Charges. The Parties shall work
together (throughout the Term) to identify ways of achieving
reductions in the cost of service delivery and corresponding
reductions in the Charges to be paid by Sears by modifying or
reducing the nature or scope of the Services to be performed by CSC,
the applicable Service Levels or other contract requirements. If
requested
by Sears, CSC shall promptly prepare a proposal at a level of
detail sufficient to permit Sears to make an informed business
decision identifying all viable means of achieving the desired
reductions without adversely impacting business objectives or
requirements identified by Sears (or, if such adverse impacts
cannot be avoided, identifying such adverse impacts and any means
of mitigating them). In preparing such a proposal, CSC shall give
due consideration to any means of achieving such reductions
proposed by Sears. CSC shall negotiate in good faith with Sears
about each requested reduction in Charges and, without disclosing
the actual cost of providing the Services, CSC shall identify for
Sears if and to what extent the cost of service delivery may be
reduced by implementing various changes in the contract
requirements, taking into account all avoided costs plus CSC’s
average profit on such Services. If CSC rejects any such change in
the

13

 

	 	 	 	Service delivery, CSC shall demonstrate to Sears why technically
such proposal cannot work. Sears shall not be obligated to accept
or implement any proposal, and CSC shall not be obligated to
implement any change that affects the Terms of this Agreement,
unless and until such change is reflected in a Service Addendum or
a written amendment to this Agreement.

	 	 	 	

	 	(d)	 	Charges for Contract Changes. Unless otherwise agreed,
System Changes, changes in the Services (including changes in the
Sears Standards) 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) this Agreement expressly provides for a change in the CSC
Charges in such circumstances, (ii) the agreed-upon Charges or
pricing methodology expressly provides for a price change in such
circumstances (for example, where the applicable Transaction
Document specifies a number of full time equivalents or hours of
coverage to be provided for the quoted price, or defines units of
consumption for increased or decreased usage), or (iii) the Contract
Change constitutes New Services for purposes of Section
4.5(b)(New Services) and additional Charges are applicable in
accordance therewith.

	 
	 	(e)	 	Additional Work or Reprioritization. The Sears Relationship
Manager may, in the sole discretion of Sears, identify new or
additional work activities to be performed by CSC Personnel,
reprioritize or reset the schedule for existing Services or New
Services, and designate which problems shall be resolved immediately
versus those that may be deferred due to the priority of other
Services to be performed by such CSC Personnel. The foregoing shall
not relieve CSC of its responsibility for identifying and addressing
problems and otherwise prioritizing its work flow absent specific
direction to the contrary by Sears. CSC shall use commercially
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 impact, CSC shall notify Sears of the
anticipated impact and obtain Sears’ consent under Section
7.2(d)prior to proceeding with any work activities that would
cause such impact. Sears, in its sole discretion, may forego or
delay such
work activities or temporarily adjust the work to be performed by
CSC, the schedules associated therewith or the Service Levels to
permit such reprioritization.

	5.	 	GOVERNANCE

	 
	5.1	 	Operational Procedures Manual.

	 	(a)	 	Delivery and Contents. CSC shall create, as part of the
Services, and at no additional cost to Sears, an operational
procedures manual that documents the processes and procedures that
underlie each Service (the “Operational Procedures Manual” or
“OPM”). CSC shall deliver to Sears for its review, comment and
approval both an outline of the topics to be addressed in the
Operational Procedures Manual and a final draft of the OPM for each
Exhibit, in each case within the time periods set forth in the
applicable Exhibit. At a

14

 

	 	 	 	minimum, the Operational Procedures Manual for each Exhibit shall
include the following:

	 	(i)	 	a detailed description of the Services and the
manner in which each shall be performed by CSC under the
Exhibit, including (1) all CSC Provided Systems, CSC Managed
Systems and Sears Provided Systems, as well as the functional
and operational characteristics of each of the foregoing, (2)
documentation (including operations manuals, user guides,
specifications, policies/procedures and disaster recovery
plans) providing further details regarding such Services, and
(3) the specific activities to be undertaken by CSC in
connection with each Service, including, where appropriate,
service responsibilities matrices, the direction, supervision,
monitoring, staffing, reporting, planning and oversight
activities to be performed by CSC and the time period in which
tasks are to be completed under the Exhibit;

	 
	 	(ii)	 	the procedures for Sears/CSC interaction and
communication, including (1) call lists, (2) procedures for
and limits on direct communication by CSC with Sears
Personnel, (3) problem management and escalation procedures,
(4) priority and project procedures, (5) acceptance testing
and procedures, (6) quality assurance procedures and
checkpoint reviews, and (7) annual and quarterly financial
objectives, budgets and performance goals; and

	 
	 	(iii)	 	practices and procedures addressing such other
issues and matters as Sears shall require.

	 
	 	CSC shall incorporate Sears’ then-current policies and procedures
in the Operational Procedures Manual to the extent Sears directs
CSC to do so.

	 	(b)	 	Revision and Maintenance. CSC shall incorporate any comments
or suggestions of Sears into the OPM and shall deliver a final
revised version to Sears within fifteen (15) days of its receipt of
such comments and suggestions for Sears’ approval. The OPM shall be
delivered and maintained by CSC in hard copy and electronic formats
and shall be accessible electronically to Sears Personnel in a
manner consistent with Sears’ security policies.

	 
	 	(c)	 	Compliance. CSC shall perform the Services in accordance
with Sears’ then-current policies and procedures until the
Operational Procedures Manual is finalized and mutually agreed upon
by the Parties. Thereafter, CSC shall perform the Services in
accordance with the Operational Procedures Manual. In the event of
a conflict between the provisions of this Agreement, including any
Transaction Document, and the Operational Procedures Manual, the
provisions of this Agreement shall control. The Operational
Procedures Manual shall not be considered an amendment to this
Agreement.

15

 

	 	(d)	 	Modification and Updating. CSC shall modify and update the
Operational Procedures Manual monthly to comply with Sears Standards
as described in Section 6.4 (Architecture, Standards and
Information Technology Planning) and to reflect changes in the
operations or procedures described therein and/or changes to the
features or functionality of the Services, including any CSC
Provided Systems and/or CSC Managed Systems. All updated versions
of the OPM shall be accurate and at least as detailed as the
documentation originally delivered to Sears. In addition, CSC shall
meet with Sears on at least an annual basis to review and discuss
the OPM and any changes to the OPM proposed by CSC. In advance of
each such meeting, and in advance of making any change to the OPM,
CSC shall provide Sears, for Sears’ review, comment and approval, a
revised copy of the OPM marked to show the proposed changes by CSC.
To the extent any such change could (i) increase Sears’ total costs
of receiving the Services, (ii) require changes to the facilities,
Software or Equipment or Systems of the Eligible Recipients
(including the installation of any Upgrades), (iii) have an adverse
impact on the functionality, interoperability, performance,
accuracy, speed, responsiveness, quality, security or resource
efficiency of the Services, or (iv) violate or be inconsistent with
the Sears Standards, neither CSC nor its Personnel shall implement
such change without first obtaining Sears’ approval (pursuant to a
written amendment to this Master Agreement or a Service Addendum),
which approval Sears may withhold in its sole discretion.

	5.2	 	Change Control.

	 	(a)	 	Compliance with Change Control Procedures. In requesting or
making any System Change, both Parties shall comply with the change
control procedures specified in the OPM (or, with respect to System
Changes prior to the Parties mutually agreeing on the OPM, Sears’
then-current change control procedures). Prior to making any System
Change or using any new (e.g., not tested in or for the
Sears environment) Software or Equipment to provide the Services,
CSC shall verify 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 Eligible Recipients’ environment. This obligation shall be in
addition to any unit testing to be performed by CSC as part of the
routine deployment or installation of Software or Equipment.

	 
	 	(b)	 	System Change Costs. Unless otherwise set forth in the
applicable Transaction Document or approved by Sears in accordance
with Section 5.2(c) (Sears Approval — Cost, Adverse Impact)
or otherwise, CSC shall bear all charges, fees and costs associated
with any System Change made by CSC or the CSC Personnel, including
all charges, fees and costs associated with (i) the design,
installation, implementation, testing and rollout of such System
Change, (ii) any modification, enhancement to, or substitution for,
any CSC Provided Systems, CSC Managed Systems or Sears Provided
Systems, (iii) any increase in the cost to the Eligible Recipients
of operating, maintaining or supporting any CSC Provided Systems,
CSC Managed Systems or Sears Provided Systems, and (iv) subject to

16

 

	 	 	 	Section 5.2(g) (Comparisons), any increase in resource usage
to the extent it results from a System Change.

	 	 	 	

	 	(c)	 	Sears Approval — Cost, Adverse Impact. Neither CSC nor the
CSC Personnel shall make any System Change that may (i) increase the
Eligible Recipients’ total cost of receiving the Services, (ii)
require changes to an Eligible Recipient’s facilities, Software,
Equipment or other Systems (including the installation of any
Upgrades), (iii) have an adverse impact on the functionality,
interoperability, performance, accuracy, speed, responsiveness,
quality, security or resource efficiency of the Services or on any
applications run by the Eligible Recipients, or (iv) violate or be
inconsistent with Sears Standards or plans as specified in
Section 6.4(Architecture, Standards and Information
Technology Planning), without first obtaining Sears’ approval, which
approval: (x) Sears may withhold in its sole discretion and (y)
shall be effective only if in writing (in the form of an amendment
to this Master Agreement or a Service Addendum), if any such change
would increase the Eligible Recipients’ costs over the remaining
Term of the applicable Transaction Document by more than $10,000 or
require a change to any provision of this Agreement (including
waivers of Service Level(s)). If CSC desires to make such a System
Change, it shall provide to Sears a written proposal describing in
detail the extent to which the desired System Change may affect the
functionality, performance, security, price or resource efficiency
of the Services and any benefits, savings or risks to the Eligible
Recipients associated with such System Change.

	 
	 	(d)	 	Temporary Emergency Changes. Notwithstanding the foregoing,
CSC may make temporary System Changes required by an emergency if it
has been unable to contact the Sears Relationship Manager to obtain
approval after making
reasonable efforts. CSC shall document and report such emergency
changes to Sears not later than the next Business Day after the
change is made. Such System Changes shall not be implemented on a
permanent basis unless and until approved by Sears.

	 
	 	(e)	 	Implementation of System Changes. CSC shall schedule and
implement all System Changes so as not to (i) disrupt or adversely
impact the business or operations of 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.

	 
	 	(f)	 	Planning and Tracking. On a monthly basis, CSC shall prepare
a rolling quarterly “look ahead” schedule for ongoing and planned
System Changes for the next three (3) months in accordance with the
OPM. The status of System Changes shall be monitored and tracked by
CSC against the applicable schedule.

	 
	 	(g)	 	Comparisons. For any System Change, CSC shall, upon Sears’
request, perform a comparison, at a reasonable and mutually agreed
level of detail, between the amount of resources required by the
affected Software or Equipment to perform a representative sample of
the processing being performed for the Eligible Recipients
immediately prior to the System Change and immediately after the

17

 

	 	 	 	System Change. Sears shall not be required to pay for increased
resource usage due to a System Change, except to the extent that
such System Change is requested or approved by Sears after notice
from CSC of such increased resource usage.

	5.3	 	Reports.

	 	(a)	 	Reports. CSC shall provide Sears with reports pertaining to
the performance of the Services and CSC’s other obligations under
this Agreement sufficient to permit Sears to monitor and manage
CSC’s performance (“Reports”). The Reports to be provided by CSC
shall include those described in each Transaction Document in the
format and at the frequencies provided therein. At no additional
charge, CSC shall provide Sears with data and reports in CSC’s
possession necessary for the Eligible Recipients to comply with all
Laws. In addition, from time to time, Sears may identify additional
Reports, to a commercially reasonable extent, to be generated by CSC
and delivered to Sears on an ad hoc or periodic basis. All Reports
shall be provided to Sears as part of the Services and at no
additional charge to Sears. The Reports described in each
Transaction Document and, to the extent reasonably possible, all
other Reports, shall be (i) capable of being accessed by Sears
through a secure on-line connection, (ii) exportable (together with
the underlying data) by Sears in an electronic, ODBC format capable
of being accessed by Microsoft Office components and modified by
Sears (e.g., not in “read only” form), with the information
contained therein capable of
being displayed graphically and accessed from a web browser, and
(iii) provided to Sears in traditional printed form.

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

	5.4	 	Meetings.

	 	(a)	 	Meetings. During each Exhibit Term, representatives of the
Parties shall meet periodically or as requested by Sears or as set
forth in the applicable Transaction Document to discuss matters
arising under this Agreement and each Transaction Document,
including any such meetings provided for under each Migration Plan
and Transformation 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:

	 
	 	(b)	 	Agenda and Minutes. For each such meeting CSC shall prepare
and distribute an agenda, which shall incorporate the topics
designated by Sears. CSC shall

18

 

	 	 	 	distribute such agenda in advance of each meeting so that the
meeting participants may prepare for the meeting. In addition, CSC
shall record and promptly distribute minutes for every meeting for
review and approval by Sears.

	 	 	 	

	 	(c)	 	Eligible Recipient Meetings. CSC shall notify the Sears
Relationship Manager (or her/his delegates) in advance of scheduled
meetings with Eligible Recipients (other than meetings pertaining to
the provision of specific Services on a day-to-day basis) and shall
invite the Sears Relationship Manager and the applicable Exhibit
Project Executives to attend such meetings or to designate
representatives to do so.

	 
	 	(d)	 	Telephone/Video Conferences. Telephone/video conferences can
be used in place of meetings with the prior approval of the
participants. Unless otherwise agreed to by the participants, all
meetings shall occur at Sears Facilities.

	6.	 	CSC RESPONSIBILITIES

	 
	 	 	In addition to CSC’s responsibilities as expressly set forth elsewhere in
this Agreement or any Transaction Document, CSC shall be responsible for
the following.

	 
	6.1	 	Cooperation with Sears Personnel.

	 
	 	 	CSC shall fully cooperate with and work in good faith with the Eligible
Recipients and Sears Personnel as described in this Agreement or as
otherwise requested by Sears. Such cooperation shall include timely
providing: (a) all cooperation and assistance reasonably required or
requested by Sears, the other Eligible Recipients or the Sears Personnel
in connection with Sears’ evaluation or testing of the Services and
Deliverables and/or services Sears is to receive from such third parties
(including the integration of such Third Party services with the Services
Sears is to receive under this Agreement); (b) access to any facilities
being used to provide the Services, as necessary for Sears Personnel to
perform the work assigned to them; (c) reasonable electronic and physical
access to business processes and associated CSC Provided Systems, CSC
Managed Systems and Sears Provided Systems to the extent necessary and
appropriate for the Sears Personnel to perform the work assigned to them
(including oversight of CSC); (d) written requirements, standards,
policies or other documentation for the Services, and the business
processes and associated CSC Provided Systems, CSC Managed Systems and
Sears Provided Systems; (e) access to CSC Facilities to permit Sears, its
Affiliates or Sears Personnel to install, maintain or manage Third Party
Software, Equipment and other Systems Sears desires to use in connection
with the Services; and (f) any other cooperation or assistance reasonably
necessary for Sears Personnel to perform the work in question. Sears
Personnel shall comply with CSC’s reasonable security requirements, and
shall, to the extent performing work on CSC Provided Systems or CSC
Managed Systems, comply with CSC’s reasonable standards, methodologies
and procedures, in each case, to the extent such requirements are
provided in advance and in writing to such Personnel.

19

 

	6.2	 	Subcontractors.

	 	(a)	 	Use of Subcontractors. Except as set forth in Section
6.2(a) (Exempt Subcontractors) or elsewhere in this Agreement,
CSC shall not subcontract any of its responsibilities under this
Agreement without Sears’ prior written approval;. Prior to entering
into a subcontract with a Third Party or a CSC Affiliate for the
Services, for whom approval is required under this subsection, CSC
shall (i) give Sears reasonable prior notice specifying the
Transaction Documents and 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 and (ii) obtain Sears’ prior written approval of
such Subcontractor.

	 
	 	(b)	 	Exempt Subcontractors. CSC may, without Sears’ approval,
subcontract in the ordinary course of business:

	 	(i)	 	for services that do not involve: (1) *** (2)
regular direct contact with Sears Personnel, including any
Services that are to be performed at Sears Sites; or (3)
off-site remote services and help desk support; or

	 
	 	(ii)	 	for services to the extent they consist of the
provision of Equipment or Software maintenance and do not
involve regular direct contact with Sears Personnel; or

	 
	 	(iii)	 	with temporary personnel firms for the provision
of temporary contract labor (collectively, “Exempt
Subcontractors”); or

In addition, the parties agree that the prohibition in Section
6.2(a) do not apply to third parties to the extent CSC is procuring
Equipment or Software from such third parties.

	 	(c)	 	Minority/Women-Owned Businesses. CSC acknowledges that it is
the commitment of Sears to successfully bring minorities and women
into the American economic system by doing business with qualified
minority and women sources. In furtherance of Sears’ aforesaid
commitment, if CSC utilizes the services of Subcontractors, CSC
shall use reasonable efforts to utilize Subcontractors that are
qualified minority-owned and/or women-owned sources. Upon Sears’
request, from time to time, CSC shall, and shall require each of its
Subcontractors to, provide Sears with a detailed listing of all
Subcontractors involved in the provision of the Services (including
any CSC Provided Systems), listing: (i) which, if any, are qualified
minority-owned or women-owned Entities, and (ii) the dollar amount
of Charges under this Agreement attributable to qualified
minority-owned or women-owned Subcontractors and suppliers versus
Subcontractors and suppliers that are not qualified minority-owned
or women-owned Entities over the period of time specified by Sears;
to assist Sears in reporting on the level of minority-owned and/or
women-owned entities involved in the provision of the Services
(including any CSC Provided Systems). CSC has

*** CONFIDENTIAL MATERIAL REDACTED AND SEPARATELY FILED WITH THE COMMISSION.

20

 

	 	 	 	informed Sears that *** Subcontractors be qualified minority-owned
or women-owned Entities and CSC will inform Sears of any changes in
this goal.

	6.3	 	Quality Assurance.

	 
	 	 	CSC shall develop, implement and fully document in the OPM quality
assurance processes and procedures to ***. Such procedures shall include
verification, checkpoint reviews, testing, acceptance and other
procedures to assure the quality and timeliness of CSC’s performance. No
failure or inability of the quality assurance procedures to disclose any
errors or problems with the Services shall excuse CSC’s failure to comply
with the terms of this Agreement, including the Service Levels. In
addition, CSC must integrate such quality assurance procedures with
Sears’ application development/enterprise service delivery teams. ***.

	 
	6.4	 	Architecture, Standards and Information Technology Planning.

	 	(a)	 	CSC Support. As requested by Sears from time to time, CSC
shall assist Sears in defining information technology architectures
and standards applicable to the activities that are the subject of
the Services on an ongoing basis (collectively, the “Sears
Standards”) and in annually preparing long-term strategic
information technology plans and short-term implementation plans
based thereon. The assistance to be provided by CSC shall include:
(i) active participation with Sears representatives on permanent and
ad hoc committees and working groups addressing such issues as
further specified in the Transaction Document, or otherwise agreed
to by the Parties; (ii) assessments of the then-current Sears
Standards at a level of detail sufficient to permit Sears to make
informed business decisions; (iii) analyses of the appropriate
direction for such Sears Standards in light of business priorities,
business strategies, competitive market forces and changes in
technology; (iv) the provision of information to Sears regarding
CSC’s information technology strategies for its own business; (v)
technology briefings from an industry perspective, (vi) accompanying
Sears, upon Sears’ request, at meetings with other technology
vendors (e.g., Microsoft), and (vii) recommendations regarding
information technology architectures and platforms, software and
hardware products, information technology strategies, standards and
directions, and other enabling technologies. With respect to each
recommendation Sears’ elects to investigate further, CSC shall
provide the

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21

 

	 	 	 	following at a level of detail sufficient to permit Sears to make
an informed business decision: (A) cost projections and
cost/benefit analyses; (B) the changes, if any, in the Software,
Equipment, Materials, Personnel and other resources required to
operate and support the changed environment; (C) the resulting
impact on Sears’ information technology costs; and (D) the expected
performance, quality, responsiveness, efficiency, reliability,
security risks and other Service Levels. CSC shall, and shall
cause the CSC Personnel to, perform their respective obligations
under this Agreement without any preference for or bias toward any
Software, Equipment or other products licensed or sold by CSC, its
Affiliates or any other CSC Personnel, including in connection with
any recommendations that CSC or the CSC Personnel may make
regarding business processes, technologies or specific solutions
that Sears should adopt.

	 
	 	(b)	 	CSC Familiarity with Sears Standards. CSC acknowledges and
agrees that as of the applicable Commencement Date, it is fully
informed of and familiar with the Sears Standards, Code of Conduct
and Privacy Policies, both through due diligence and its hiring of
Transitioned Personnel pursuant to the applicable Transaction
Document. CSC shall be responsible for documenting the Sears
Standards in the Operational Procedures Manual in accordance with
Section
5.1 (Operational Procedures Manual). Additions, deletions or
modifications to the Sears Standards shall be communicated in
writing by Sears to CSC.

	 
	 	(c)	 	Sears Authority and CSC Compliance. Sears shall have final
authority to promulgate Sears Standards and to modify or grant
waivers from such Sears Standards. CSC shall (i) comply with and
implement the Sears Standards in providing the Services, (ii) work
with Sears to enforce the Sears Standards, (iii) modify the Services
as and to the extent necessary to conform to such Sears Standards
and (iv) obtain Sears’ prior written approval for any deviations
from such Sears Standards. CSC’s compliance with new Sears
Standards and its modification of the Services in accordance
therewith may or may not constitute New Services.

	 
	 	(d)	 	Compliance with Sears Standards. The Parties acknowledge and
agree that (i) Sears shall not incur additional Charges in
connection with changes in the Sears Standards applicable to
Software if the new or changed Software can be distributed remotely
(in such event, the distribution of new or changed Software in this
manner and the setup of the distribution system to accommodate such
new or changed Software shall be deemed included in the Charges),
(ii) Sears shall not incur additional Charges in connection with
changes in the Sears Standards applicable to Equipment and Software
if such changes are implemented through the refresh of such
Equipment and Software in the ordinary course in accordance with the
refresh schedule set forth in the applicable Transaction Document,
and (iii) to the extent Sears requires that changes in the Sears
Standards applicable to Equipment and Software be implemented on an
accelerated basis, and not through the refresh of such Equipment and
Software in the ordinary course, and the implementation of such
changes requires CSC to perform tasks that satisfy the

22

 

	 	 	 	definition of New Services, the implementation of changes shall be
subject to Section 4.5(b)(New Services).

	 	 	 	

	 	(e)	 	Financial, Forecasting and Budgeting Support. On a monthly
basis, CSC shall provide to Sears, for Sears’ forecasting and
budgeting purposes, a report that shall include (i) a summary of the
Charges for the Services current year to date, by pricing element,
under each Transaction Document, (ii) a forecast of the utilization
of the Services, by pricing element, under each Transaction
Document, of the remainder of the current calendar year, as well as
the next calendar year, and (ii) changes to the environment
impacting Sears’ costs or utilization, including general plans and
projected time schedules for development and implementation. In
addition, on each anniversary of the Effective Date, CSC shall
provide information to Sears regarding opportunities to modify or
improve the Services and reduce the Charges and/or total cost to the
Eligible Recipients of receiving the Services.

	6.5	 	Technology.

	 	(a)	 	CSC Briefings. CSC shall meet with Sears at least
semi-annually to brief Sears regarding technological developments
and advances as well as new or enhanced services, software, tools,
products, methodologies, trends and directions which CSC is
developing or is otherwise aware of that could reasonably be
expected to have an impact on Eligible Recipients’ businesses, or
are otherwise of possible interest or applicability to Sears. Such
briefing shall include CSC’s assessment of the business impact,
performance improvements and cost savings to Sears associated with
each.

	 
	 	(b)	 	Currency. Subject to Section 6.4(Architecture,
Standards and Information Technology Planning), throughout each
Exhibit Term, CSC shall provide the Services using current
technologies that shall enable Sears and the other Eligible
Recipients to take advantage of technological advancements in Sears’
and its Affiliates’ businesses and support Sears’ and its
Affiliates’ efforts to maintain competitiveness in the markets in
which Sears and its Affiliates compete. Without limiting the
generality of the foregoing, and subject to and in accordance with
Sections 10.3(Sears Provided Systems and CSC Provided
Systems), Section 6.4(Architecture, Standards and
Information Technology Planning), Section 5.2(Change
Control), Section 6.5(d) (Approval by Sears) and the terms of
the applicable Transaction Document, CSC shall maintain reasonable
currency for Software for which it is financially responsible under
this Agreement and provide maintenance and support for new releases
and versions of Software for which it is operationally responsible.
*** For purposes of this Section 6.5 (Technology),
“reasonable currency” means that, unless expressly provided

*** CONFIDENTIAL MATERIAL REDACTED AND SEPARATELY FILED WITH THE COMMISSION.

23

 

	 		 	otherwise in the applicable Exhibit or otherwise directed by Sears,
(i) CSC shall maintain Software within one (1) Major Release of the
then-current Major Release, and (ii) CSC shall install Minor
Releases promptly or, if earlier, as requested by Sears.

	 	(c)	 	Evaluation and Testing. Prior to installing a new Major
Release or Minor Release, CSC shall evaluate and test such release
to verify that it shall perform in accordance with this Agreement
and the Sears Standards and that it shall not violate clauses (i)
 — (iv) of Section 5.2(c) (Sears Approval — Cost, Adverse
Impact). The evaluation and testing performed by CSC in accordance
with the OPM 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.

	 
	 	(d)	 	Approval by Sears. Notwithstanding Section 6.5(b) 
(Currency), CSC shall confer with Sears prior to CSC or the CSC
Personnel installing any Major Release or Minor Release, shall
provide Sears 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 Sears. Neither CSC nor the
CSC Personnel shall install new Software releases or make other
System Changes other than in accordance with Section 5.2 
(Change Control); provided, however, that if requested
by Sears, neither CSC nor the CSC Personnel shall install new
Software releases or make other Software changes until Sears has
completed and provided formal sign-off on successful user acceptance
testing. CSC shall install, operate and support multiple versions
of the same Software as and to the extent directed to do so by
Sears. ***

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24

 

	 	(e)	 	Updates by Sears. The Eligible Recipients shall have the
right, but not the obligation, to install new releases of, replace
or make other changes to Software for which Sears is financially
responsible under this Agreement.

	 
	 	(f)	 	Unanticipated IT Change. If an Unanticipated IT Change
occurs, and if Sears requests that such Unanticipated IT Change be
substituted or added by CSC to the Services, the Parties shall use
the procedures in Section 13.6(b) (Extraordinary Events;
Consequence) to equitably adjust the Charges and other relevant
provisions of this Agreement to take such Unanticipated IT Change
into account. An “Unanticipated IT Change” means a material shift
and improvement in technology capable of providing all or part of
the Services that is outside the normal evolution of technology
experienced by the information technology industry, was not
generally available as of the applicable Commencement Date, is
reasonably reliable and relevant and can be technically substituted
or added by CSC to the Services.

	 
	 	(g)	 	CSC Developed Advances. If CSC or its Affiliates develop
technological advances or changes to CSC’s Systems to be offered to
other CSC customers to provide services that are the same or similar
to the Services or CSC or its Affiliates develop new or enhanced
processes, services, software, tools, products or methodologies to
be offered to other CSC customers (collectively, “New Advances”),
CSC shall, subject to Section 4.5 (Additional Services), (i)
offer Sears the opportunity to serve as a pilot customer in
connection with the implementation of such New Advances, and (ii) if
Sears declines such opportunity, offer Sears preferred access to
such New Advances and the opportunity to be among the first ten
percent (10%) of the CSC customer base to implement and receive the
benefits of any New Advances.

	 
	 	(h)	 	Services Evolution and Modification. The Parties anticipate
that the Services shall 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 the
Eligible Recipients. The Parties acknowledge and agree that these
changes shall modify the Services and shall not be deemed to result
in New Services as provided in Section 4.5(b) (New Services)
unless the changed services otherwise meet the definition of New
Services.

	6.6	 	Financial Filings and Notice of Change of Financial Condition.

	 	(a)	 	Financial Filings. Promptly, but in no event later than
fourteen (14) days after CSC files any quarterly, annual or special
report with the (i) SEC, including 10-Q, 10-K and 8-K reports, Proxy
Statements pursuant to Section 14(a) of the Securities Exchange Act
of 1934, or Annual Reports to CSC’s shareholders, or (ii) applicable
listing stock exchange for Supplier’s publicly traded equities, CSC

25

 

	 	 	 	shall provide copies of such reports, statements or filings to (1)
Sears’ Chief Information Officer, and (2) Sears’ Chief Financial
Officer.

	 	 	 	

	 	(b)	 	Notice. CSC shall, within fourteen (14) days after obtaining
actual knowledge of the occurrence of a Credit Trigger Event,
provide notice to Sears of the occurrence of such Credit Trigger
Event. Promptly following the date Sears receives such notice,
senior executives of the Parties shall meet to discuss CSC’s and
CSC’s parent Entity’s (to the extent CSC has a parent Entity)
financial condition and their ability to continue to perform their
obligations hereunder.

	7.	 	SEARS’ RESPONSIBILITIES

	 
	7.1	 	General Sears Responsibilities.

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

	 	(a)	 	Sears Relationship Manager. Sears shall designate one (1)
individual to whom all CSC communications concerning this Agreement
may be addressed, as provided in Section 26.3 (Notices) (the
“Sears Relationship Manager”), who shall have the authority to act
on behalf of the Eligible Recipients in all day-to-day matters
pertaining to this Agreement. Sears may change the designated Sears
Relationship Manager from time to time by providing notice to CSC.

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

	 
	 	(c)	 	Sears Personnel. Subject to Section 7.2 (Sears
Responsibilities), Sears may elect to perform any of its obligations
under this Agreement through any Sears Personnel; provided that such
election by Sears shall not limit or affect
Sears responsibilities under this Agreement for the performance of
such obligations.

	 
	 	(d)	 	Contract Waivers. At CSC’s request, the Parties will meet,
from time to time, to discuss *** implementation of appropriate
contract waivers, through which the Parties can, limit both Sears
and CSC’s liability to Third Parties ***.

	7.2	 	Sears’ Responsibilities.

	 	(a)	 	Nature of Responsibilities. Without limiting Sears’
obligations under this Agreement, such as Sears’ payment obligation
as provided in Section 14 (Invoicing and Payment) and Sears’
obligations regarding CSC’s Confidential Business Information under
Section 15.3(b) (Confidential Business Information),

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26

 

	 	 	 	references in this Agreement to Sears’ responsibilities are
intended solely for the purpose of indicating items that are not
CSC’s responsibility, and shall not in any circumstance give rise
to, or constitute grounds for, a claim of breach by Sears.

	 
	 	(b)	 	Exception to CSC Performance. CSC’s failure to perform its
responsibilities under this Agreement or to meet the Service Levels
shall be excused if and to the extent such CSC non-performance is
directly caused by Sears’ or Sears Personnel’s (excluding for
purposes of this Section 7.2(b) (Exception to CSC
Performance) Sears Personnel under the direction or management of
CSC or CSC Personnel) breach of Sears’ obligations under this
Agreement or Sears’ failure (other than as a result of CSC’s failure
to complete its obligations on a timely basis) to timely complete
any necessary predecessor Sears’ obligation under this Agreement,
but only if (i) CSC immediately notifies Sears in accordance with
Section 7.2(c) (Notice of Problems) of such a breach or
Sears’ failure to perform such obligation and its inability to
perform under such circumstances, (ii) CSC provides Sears with every
reasonable opportunity to correct such breach or Sears’ failure to
perform such obligation and thereby avoid such CSC non-performance,
and (iii) CSC uses commercially reasonable efforts to perform
notwithstanding Sears’ breach or Sears’ failure to perform such
obligation.

	 
	 	(c)	 	Notice of Problems. CSC shall immediately notify Sears in
writing when it becomes aware that an act or omission of any
Eligible Recipient shall cause, or has caused, a problem or delay in
providing the Services, and shall use commercially reasonable
efforts to work with the Eligible Recipients to prevent or
circumvent such problem or delay. CSC shall cooperate with the
Eligible Recipients to resolve differences and conflicts regarding
the Services and other activities undertaken by the Eligible
Recipients.

	 
	 	(d)	 	***

	8.	 	SEARS AND CSC FACILITIES

	 
	8.1	 	Service Facilities.

*** CONFIDENTIAL MATERIAL REDACTED AND SEPARATELY FILED WITH THE COMMISSION.

27

 

	 	 	The Services shall be provided at or from (a) the Sears Facilities
described in the applicable Transaction Document, (b) the CSC Facilities
described in the applicable Transaction Document or (c) any other service
location approved in writing by Sears. CSC shall obtain Sears’ prior
written approval for any proposed relocation by CSC or CSC Personnel of
the provision of a Service from or to a new or different Sears Facility.
CSC shall be financially responsible for all additional costs, taxes or
expenses related to or resulting from any CSC-initiated relocation to a
new or different Sears Facility or CSC Facility, including any costs or
expenses incurred or experienced by any Eligible Recipient as a result of
such relocation (e.g., increases in taxes, telecommunications charges,
etc.).

	 
	8.2	 	Sears Facilities.

	 	(a)	 	General. To the extent expressly provided in a Transaction
Document, Sears shall provide CSC and the CSC Personnel with the use
of and access to the Sears Facilities (or equivalent space) and
office furniture described in such Transaction Document for the
periods specified therein solely as necessary for CSC to perform its
obligations thereunder. Notwithstanding anything to the contrary in
this Section 8.2 (Sears Facilities), Sears will provide
office space only to CSC Personnel directly involved in providing
the Services and dedicated to Sears. In addition, all improvements
or modifications to Sears Facilities requested by CSC shall be (i)
subject to review and approval in advance by Sears, (ii) in strict
compliance with applicable Laws and Sears’ then-current policies,
standards, rules and procedures, and (iii) performed by and through
Sears at CSC’s expense. CSC acknowledges and agrees that the
facilities to be provided by Sears are sufficient for performing the
Services and for satisfying CSC’s responsibilities under this
Agreement. THE SEARS FACILITIES ARE PROVIDED BY THE ELIGIBLE
RECIPIENTS TO CSC AND THE CSC PERSONNEL ON AN AS-IS, WHERE-IS BASIS.
THE ELIGIBLE RECIPIENTS EXPRESSLY DISCLAIM ANY WARRANTIES, EXPRESS
OR IMPLIED, AS TO THE SEARS FACILITIES OR THEIR CONDITION OR
SUITABILITY FOR USE BY CSC OR CSC PERSONNEL. It is understood that
CSC and the CSC Personnel’s use of the Sears Facilities does not
constitute or create a leasehold interest. When the Sears
Facilities, or any portion of the Sears Facilities, are no longer to
be used by CSC or the CSC Personnel as contemplated by this
Section 8 (Sears and CSC Facilities) or are otherwise no
longer required for performance of the Services, CSC shall notify
Sears as soon as practicable and shall vacate and return such Sears
Facilities (including any improvements to such facilities made by or
at the request of CSC) to Sears in substantially the same condition
as when such
facilities were first provided to CSC, subject to reasonable wear
and tear. CSC Personnel using the office facilities provided by
Sears shall be accorded reasonable use of (A) certain employee
facilities (e.g., parking facilities (other than paid parking
facilities), cafeteria and common facilities) to the extent
generally made available to similarly situated Sears employees, and
(B) certain shared office equipment and services (such as local
telephone service for Sears-related calls, mail service, office
support service (e.g., janitorial not including

28

 

	 	 	 	secretarial services), heat, light and air conditioning). The
foregoing employee facilities, and the extent of CSC Personnel’s
permitted use thereof, may be modified in Sears’ sole discretion
without advance notice, but in a manner generally applicable to
Sears Personnel.

	 	 	 	

	 	(b)	 	Use of Sears Facilities.

	 	(i)	 	No Use for Shared Services. Unless CSC
obtains Sears’ prior written agreement, which Sears may
withhold in its sole discretion, CSC shall use the Sears
Facilities, and the Equipment and Software located therein,
and the Sears Provided Systems solely to provide the Services
to the Eligible Recipients and not to CSC’s other customers.

	 
	 	(ii)	 	Relocation by Sears. Sears reserves the
right to relocate any Sears Facility from which the Services
are then being provided by CSC Personnel to another geographic
location; provided, however, that, in such
event, Sears shall provide CSC with comparable office space in
the new location. In such event, Sears shall reimburse CSC
for: (1) any reasonable incremental Out-of-Pocket Expenses
incurred by CSC, and (2) CSC’s internal labor costs (subject
to Section 4.5 (Additional Services)); in each such
case, incurred in physically relocating to such new geographic
location; provided, however, that such
relocation is not expressly contemplated in this Agreement,
and that CSC notifies Sears of such incremental expenses,
obtains Sears’ approval prior to incurring such expenses and
uses commercially reasonable efforts to minimize such
expenses.

	 
	 	(iii)	 	Re-Use of Space. Sears also reserves the
right to direct CSC to cease using all or part of the space in
any Sears Facility from or in which the Services are then
being provided by the CSC Personnel and to thereafter use such
space for Sears’ own purposes. In such event, Sears shall
reimburse CSC for: *** incurred in leasing required substitute
new space; provided, however, that such
relocation direction is not expressly contemplated in this
Agreement and that CSC notifies Sears of such incremental
expenses, obtains Sears’ approval prior to incurring such
expenses, and uses commercially reasonable efforts to minimize
such expenses. Except for office space provided by Sears in a
Sears Facility for CSC’s Personnel pursuant to the TI Exhibit
and any
Systems that are required to be located at a Sears Facility
for the proper performance of the Services, CSC shall
relocate to a CSC Facility all other CSC Personnel, CSC
Provided Systems and CSC Managed Systems as part of the
Transformation Services. Sears shall be entitled to charge
CSC rent for any such space that is not vacated by CSC
Personnel within the timelines set forth in the
Transformation Plan.

	8.3	 	Access to Sears’ Networks.

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	 	 	If CSC or any CSC Personnel has access, whether on-site or through remote
facilities, to any Eligible Recipient’s Equipment, Software, electronic
data storage Systems or other electronic Systems (each, an “Electronic
System”), in connection with this Agreement, CSC shall limit such access
and use by CSC Personnel solely to: (a) those Electronic Systems and
data contained therein that Sears has authorized CSC’s Personnel to
access; (b) those CSC Personnel who need access to such Electronic
Systems to accomplish CSC’s obligations under the applicable Transaction
Document, and CSC’s Personnel shall not attempt to access any Electronic
Systems and data contained therein other than those specifically required
to accomplish its obligations under the applicable Transaction Document;
and (c) performing CSC’s obligations within the scope of the applicable
Transaction Document. CSC shall, upon Sears’ request, advise Sears in
writing of the name of each such Personnel who have been granted such
access, and shall strictly follow all Sears Rules. CSC is responsible for
any unauthorized access or use by CSC Personnel. All user identification
numbers and passwords disclosed to CSC Personnel and any information
obtained by CSC Personnel as a result of CSC Personnel’s access to, and
use of, Eligible Recipients’ Electronic Systems shall be Sears’
Confidential Information, without the need to mark it as such. CSC shall
cooperate with Sears in the investigation of any apparent unauthorized
access by CSC Personnel to any Eligible Recipient’s Electronic Systems
and/or the data contained therein. CSC shall not install or permit the
installation or connection of any Software or Equipment on any Eligible
Recipient’s network(s) without Sears’ prior review and approval.

	 
	8.4	 	CSC’s Responsibilities.

	 
	 	 	Except for the Sears Provided Systems and as provided in Section
8.2 (Sears Facilities), CSC shall be responsible for all office, data
processing, and desktop and other computing Software, Equipment and
services, long-distance telephone service, space, furniture, fixtures,
facilities and other items, as well as all personnel, technical
knowledge, expertise and other resources, needed by CSC or CSC Personnel
(including Transitioned Personnel hired by CSC) to provide the Services,
and for all Upgrades, replacements and additions thereto. Without
limiting the foregoing, CSC shall (i) provide all maintenance, site
management, site administration and similar services for the CSC
Facilities, and (ii) provide uninterrupted power supply services for the
CSC Facilities and
for the Software, Equipment and Systems in Sears Facilities as designated
in the applicable Transaction Document.

	 
	8.5	 	Physical Security.

	 
	 	 	CSC shall be responsible for physical security, including safety and
physical access and control, for the CSC Facilities that CSC is using in
performing the Services. CSC shall not permit any person to have access
to, or control of, any Sears Facilities unless such access or control is
permitted in accordance with control procedures approved by Sears. If
CSC provides the Services to the Eligible Recipients from a CSC Facility,
CSC shall develop and implement the processes and controls ***
unauthorized access in any such CSC Facility to Sears Confidential
Information and prevent CSC Personnel servicing Third Parties at or from
such CSC Facility from having access to

*** CONFIDENTIAL MATERIAL REDACTED AND SEPARATELY FILED WITH THE COMMISSION.

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             Sears Confidential Information. ***.

	9.	 	REQUIRED CONSENTS

	 
	9.1	 	Administrative Responsibility.

	 	(a)	 	General. Unless otherwise elected by Sears, CSC shall,
commencing on the effective date of the applicable Transaction
Document, undertake all administrative activities necessary to
obtain all Required Consents, including those necessary to transfer
Acquired Assets to CSC and to permit CSC’s Personnel to access and
use the Acquired Assets in connection with providing the Services if
consent to transfer them to CSC is not received. Notwithstanding
the foregoing, Sears shall undertake all administrative activities
necessary to obtain any Required Consents for CSC’s use of Sears
Facilities as contemplated hereby.

	 
	 	(b)	 	Cooperation. At CSC’s request, Sears shall cooperate with
CSC in obtaining the Required Consents by executing appropriate
Sears-approved written communications and other documents prepared
or provided by CSC. Upon CSC’s request, Sears will provide to CSC
any information CSC reasonably requests that is in Sears’ possession
and that Sears is permitted to share with CSC under the terms of the
applicable Third Party Contract and Law. In connection with any
Required Consents for Sears Facilities, at Sears’ request, CSC shall
cooperate with Sears in obtaining the Required Consents by executing
appropriate CSC approved written communications and other documents
prepared or provided by Sears. With Sears’ approval, CSC shall
exercise for the benefit of the Eligible Recipients any rights CSC,
its Affiliates or the other CSC Personnel have to utilize or
transfer license rights or other applicable rights under any
existing Third Party licenses, leases or contracts, including
licenses, leases and/or contracts relating to functionally
equivalent Systems, and the Parties shall cooperate in minimizing or
eliminating any costs associated therewith.

	9.2	 	Financial Responsibility.

	 
	 	 	Except as set forth in a Transaction Document, (a) CSC shall pay all
transfer, relicensing or termination fees or expenses associated with
obtaining any Required Consents (including the rights provided for under
Section 10.3(h) (Other Matters) for Sears Provided Systems, CSC
Provided Systems, including Acquired Assets, CSC Managed Systems, CSC
Designated Contracts and CSC Facilities or terminating any licenses,
leases or agreements as to which CSC is unable to obtain such Required
Consents, and (b) Sears shall be responsible for any fees or expenses for
Required Consents for CSC’s use of Sears Facilities.

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31

 

	9.3	 	Contingent Arrangements.

	 	(a)	 	General. If, despite using all commercially reasonable
efforts, CSC is unable to obtain a Required Consent for any Acquired
Asset, CSC Designated Contract, or Sears Provided System, then,
unless and until such Required Consent is obtained, CSC shall use
all commercially reasonable efforts to determine and adopt, subject
to Sears’ prior approval, such alternative approaches as are
necessary and sufficient to provide the Services without such
Required Consent(s) and without violating the Third Party Contracts
applicable to the foregoing. If such alternative approaches are
required for a period longer than six (6) months following the
applicable Commencement Date, ***. The Parties shall work together
to negotiate in good faith any other appropriate adjustments to this
Agreement during such interim period. Except as otherwise expressly
provided herein, the failure to obtain any Required Consent shall
not relieve CSC of its obligations under this Agreement and CSC
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.

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

	 
	10.1	 	CSC Designated Contracts.

	 	(a)	 	Assignment and Assumption. On and as of the applicable
Commencement Date, Sears shall assign to CSC, and CSC shall assume
and agree to perform all obligations related to, the Software
licenses, Equipment leases and Third Party Contracts associated with
Acquired Assets and/or identified as “CSC Designated Contracts” in
the applicable Transaction Document (collectively, “CSC Designated
Contracts”). With respect to each CSC Designated Contract requiring
a Required Consent for assignment to CSC, CSC shall use commercially
reasonable efforts to cause the applicable Third Party to enter into
a mutually satisfactory novation agreement among such Third Party,
Sears and CSC evidencing the assignment and assumption by CSC of
Sears’ obligations and the
release of Sears as provided for in this Agreement. With respect
to CSC Designated Contracts not requiring a Required Consent for
assignment or for which CSC is unable to obtain such novation
agreement, then subject to CSC obtaining the applicable Required
Consents, Sears and CSC shall execute and deliver a mutually
satisfactory assignment and assumption agreement with respect to
such CSC Designated Contracts, evidencing the assignment and
assumption provided for in this Agreement.

	 
	 	(b)	 	CSC Designated Contracts Not Assignable by Commencement Date.
With respect to any CSC Designated Contracts that cannot, as of the
applicable Commencement Date, be assigned to CSC without breaching
their terms or

*** CONFIDENTIAL MATERIAL REDACTED AND SEPARATELY FILED WITH THE COMMISSION.

32

 

	 	 	 	otherwise adversely affecting the rights or obligations of Sears or
CSC thereunder, but for which any Required Consent necessary for
CSC to access and use the underlying Software, Equipment or
services has been received, the performance obligations thereunder
shall be deemed to be subcontracted or delegated to CSC until any
requisite consent, notice or other prerequisite to assignment can
be obtained, given or satisfied by CSC. It is understood that,
from and after the Commencement Date, CSC, as a Subcontractor or
delegate, shall be and remain financially and operationally
responsible for such CSC Designated Contract as Sears’ agent
pursuant to Section 13.2(e) (Limited Agency) and, if
applicable, the underlying Acquired Asset shall not be transferred
to CSC, but instead shall be considered part of the CSC Managed
Systems. CSC shall use all commercially reasonable efforts to
satisfy the consent, notice or other prerequisites to assignment
and, upon CSC doing so, the CSC Designated Contract and, if
applicable, the underlying Acquired Asset shall immediately be
assigned and transferred to and assumed by CSC (and shall
thereafter no longer be part of the CSC Managed Systems).

	 	(c)	 	Non-Assignable CSC Designated Contracts. If, after CSC using
commercially reasonable efforts for a reasonable period of time, a
CSC Designated Contract cannot be assigned to CSC without breaching
its terms or otherwise adversely affecting the rights or obligations
of Sears or CSC 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. Unless otherwise agreed to by
the Parties in writing, CSC may terminate, shorten, modify or extend
the CSC Designated Contracts and may substitute or change suppliers
relating to Equipment, Software or other goods or services covered
thereby, so long as such change(s) do not, in connection with such
CSC Designated Contract or the Services hereunder: (i) constitute a
breach of any obligation of the Eligible Recipients under any CSC
Designated Contract; (ii) result in additional financial
obligations, or Losses to
Sears Related Businesses arising out of such CSC Designated
Contract; and (iii) provide, if assumable by Sears, for less
favorable terms, conditions or prices for the Eligible Recipients
following the expiration or termination of the applicable
Transaction Document than would otherwise be applicable to CSC
(except for terms, conditions or prices available to CSC because of
its volume purchases). CSC’s rights under the immediately preceding
sentence are: (i) conditioned upon CSC paying all applicable
termination or cancellation charges, Losses and other amounts due
to the applicable supplier associated with such action, and (ii)
are subject to Section 10.1(d) (System Change Costs).
Notwithstanding anything to the contrary in this Agreement, CSC
shall not terminate, shorten or modify without Sears’ prior written
consent any license for Third Party Software either created
exclusively for the Eligible Recipients or otherwise not
commercially available. CSC shall reimburse the Eligible
Recipient(s) for any termination

33

 

	 	 	 	charges, cancellation charges, or other amounts paid by them at
CSC’s direction in connection with obtaining any such modification.

	 
	 	(e)	 	Unidentified Third Party Contracts. With respect to any
Third Party Contract that (i) is related to any of the Acquired
Assets or functions, responsibilities or services to be performed by
CSC under this Agreement, (ii) is not identified in a Transaction
Document and (iii) was not discovered by CSC during their due
diligence and negotiations preceding the execution of such
Transaction Document (an “Unidentified Third Party Contract”), the
following shall apply: (1) the Unidentified Third Party Contract
shall be added to the applicable Transaction Document as a CSC
Designated Contract as soon as it has been identified, subject to
Sears’ prior approval; (2) CSC shall obtain any Required Consents
with respect to any Unidentified Third Party Contract; and (3) the
costs of all transfers, upgrade and other fees necessary to obtain
such Required Consent with respect to the Unidentified Third Party
Contracts shall be the responsibility of CSC. ***.

	 
	 	(f)	 	Managed Third Parties. If a Transaction Document provides
for Managed Third Parties, CSC shall be responsible for those
Managed Third Parties perform in accordance with this Agreement,
including Service Levels, and comply with all applicable duties and
obligations imposed on CSC under this Agreement. Unless otherwise
specified in the applicable Transaction Document or agreed to in
writing by the Parties, CSC shall be responsible for all costs and
charges associated with such Managed Third Parties and for any
failure by any Managed Third Party or its Personnel to perform in
accordance with this Agreement or to comply with any duties or
obligations imposed on CSC under this Agreement to the same extent
as if such failure to perform or comply was committed by CSC or CSC
Personnel. CSC shall be the Eligible Recipients’ sole point of
contact regarding the services provided by such Managed Third
Parties.

	 
	 	(g)	 	Notice of Defaults. CSC shall promptly inform Sears 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 CSC becomes aware and shall cooperate
with Sears to prevent or stay any such breach, misuse or fraud.

	10.2	 	Acquired Assets.

	 
	 	 	If a Transaction Document provides for Acquired Assets, Sears agrees to
convey (or shall cause the applicable Eligible Recipient to convey) to
CSC (either directly or through an

*** CONFIDENTIAL MATERIAL REDACTED AND SEPARATELY FILED WITH THE COMMISSION.

34

 

	 	 	entity purchase transaction mutually approved by the Parties), subject to
CSC receiving any Required Consents, and CSC agrees (or shall cause an
Affiliate to agree) to accept, as of the applicable Commencement Date,
all of Sears’ (or the applicable Eligible Recipient’s) right, title and
interest in and to the Acquired Assets specified in the applicable
Transaction Document (or entity purchase transaction document). In
consideration for such conveyance, CSC shall pay Sears on the
Commencement Date the Acquired Assets Credit specified in the applicable
Transaction Document (or entity purchase transaction document). In
addition, CSC shall be responsible for, and shall pay, or provide
evidence of exemption from, all sales, use, Equipment, Software or other
goods and services and other similar taxes arising out of the conveyance
of such Acquired Assets. Subject to CSC receiving any Required Consents,
Sears represents and warrants to CSC that CSC (or its Affiliates) shall
take good title to such Acquired Assets as of the Commencement Date, free
and clear of all liens. Except as otherwise expressly provided in this
Section 10.2 (Acquired Assets), SEARS CONVEYS ACQUIRED ASSETS TO
CSC ON AN “AS IS,” “WHERE IS” AND “WITH ALL FAULTS” BASIS. SEARS HEREBY
DISCLAIMS ALL IMPLIED WARRANTIES, WITH RESPECT TO ACQUIRED ASSETS, OR THE
CONDITION OR SUITABILITY OF SUCH ACQUIRED ASSETS FOR USE BY CSC TO
PROVIDE THE SERVICES, INCLUDING WARRANTIES OF NON-INFRINGEMENT,
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.

	10.3	 	Sears Provided Systems and CSC Provided Systems.

	 	(a)	 	Inventory. Except as may be set forth in a Transaction
Document, with respect to the Services to be provided under such
Transaction Document, such Transaction Document shall contain an
inventory (the “Inventory”) of all: (i) Sears Provided Systems that
the Eligible Recipients are to provide for use by CSC Personnel
under such Transaction Document; (ii) CSC Provided Systems; (iii)
CSC Managed Systems; and (iv) CSC Designated Contracts. The
Inventory shall be incorporated into the OPM and shall be regularly
updated by CSC as changes occur. CSC shall review all such changes
with Sears, upon Sears’ request, and at least once per year. All
changes to the Inventory shall be subject to Sears’ approval.

	 
	 	(b)	 	Non-Commercially Available Software. CSC shall indicate on
the Inventory which of the CSC Software and Third Party Software
used in providing the Services are not commercially available. CSC
shall avoid, after the Commencement Date, using non-commercially
available CSC Software and Third Party Software where practical and
shall not introduce any non-commercially available CSC Software or
Third Party Software where a reasonably functionally equivalent
commercially available alternative exists, unless otherwise agreed
to in advance in writing by Sears. Prior to CSC or the CSC
Personnel introducing non-commercially available CSC Software or
Third Party Software, CSC shall notify Sears thereof and CSC shall
work with Sears in good faith to ensure that, to the extent
requested by Sears, Sears Related Businesses are able to procure a
license

35

 

	 	 	 	for such Software. CSC’s inability to obtain maintenance or
support for any CSC Provided Systems shall not excuse CSC’s
performance under this Agreement.

	 
	 	(c)	 	CSC Managed Systems.

	 	(i)	 	CSC Managed Systems Generally. For all
CSC Managed Systems that are not provided under Excluded
Agreements; CSC’s responsibility for such Systems shall be the
same under this Agreement as if the Third Party provider of
such System was a subcontractor to CSC, including end to end
management of such Systems and integration of such Systems
into CSC’s overall Service delivery; provided that CSC
shall not be responsible for the failure of any such Third
Party services provider to pay service credits, if any, as
required under the Third Party Contract between such service
provider and Sears for such CSC Managed System.

	 
	 	(ii)	 	IBM Lotus Notes Agreement. CSC shall have
the same responsibility for the IBM Lotus Notes Agreement, as
CSC has for other CSC Managed Systems under Section
10.3(c)(i); ***.

	 
	 	(iii)	 	Excluded Agreements. CSC’s
responsibility for CSC Managed Systems provided under Excluded
Agreements shall be limited to ***.

	 
	 	(iv)	 	Terms Applicable to All CSC Managed
Systems. Upon CSC’s request, Sears shall assist CSC in any
contractual matters under the Third Party Contracts between
Sears and such Third Party providers of such CSC Managed
Systems by, among other things, sending, in appropriate
circumstances, a notice of breach or termination (prepared by
CSC in a format acceptable to Sears); provided that Sears
shall not terminate such agreements (except for cause) with
out CSC’s concurrence. CSC shall be responsible for
replacing each CSC Managed System, including those provided
for under the Excluded Agreements and the IBM Lotus Notes
Agreement, on or before the expiration or termination (for any
reason) of the Third Party Contract for such CSC Managed
System, either: (a) with a

new CSC Provided System, or (b) by removal of the need for
such System from the Services (as may be further set forth in
the applicable Transaction Document), without any Charges to
Sears not set forth in the Transaction Document.

*** CONFIDENTIAL MATERIAL REDACTED AND SEPARATELY FILED WITH THE COMMISSION.

36

 

	 	(d)	 	Financial Responsibility. Except as set forth in a
Transaction Document, CSC shall be responsible for all costs and
expenses incurred on or after the applicable Commencement Date
associated with the CSC Provided Systems, CSC Managed Systems and
CSC Designated Contracts (excluding the Excluded Agreements and
Third Party Contracts administered by CSC on a pass-through basis,
which are addressed in Section 13.2 (Pass-Through Expenses)),
used by CSC to provide the Services. Subject to CSC’s obligations
with respect to Required Consents, Sears shall be responsible for
Third Party fees or expenses associated with Sears Provided Systems.
Unless otherwise expressly provided, each Party also shall be
responsible for any Third Party fees or expenses on or after the
applicable Commencement Date associated with new, substitute or
replacement Software, Equipment, Equipment leases, circuits,
Systems, services or Third Party Contracts (including Upgrades,
enhancements, new versions or new releases of such Software,
Equipment, circuits or services) for which such Party or any of its
Affiliates is financially responsible under this Agreement or the
applicable Transaction Document.

	 
	 	(e)	 	Operational Responsibility. Except as set forth in a
Transaction Document, with respect to the CSC Provided Systems, CSC
Managed Systems (except for Excluded Agreements) and CSC Designated
Contracts (excluding the charges under Third Party Contracts
administered by CSC on a pass-through basis, which are addressed in
Section 13.2 (Pass-Through Expenses)), used by CSC to provide
the Services, CSC shall be responsible for: (i) the evaluation,
procurement, testing, installation, rollout, use, repair, support,
management, administration, operation and maintenance of such
Software, Equipment or Systems, including Equipment leases,
circuits, services and Third Party Contracts, (ii) the disposal of
broken or replaced Equipment, Software or Systems; (iii) the
evaluation, procurement, testing, installation, rollout, use,
repair, support, management, administration, operation and
maintenance of new, substitute or replacement Software, Equipment,
Equipment leases, circuits, services and Third Party Contracts
(including Upgrades); (iv) the performance, availability,
reliability, compatibility and interoperability of such Software,
Equipment, circuits, services and Third Party Contracts each in
accordance with this Agreement, including the Service Levels and
change management procedures; (v) the compliance with and
performance of all operational, administrative and contractual
obligations specified in such licenses, leases and contracts; (vi)
the administration and exercise as appropriate of all rights
available under such licenses, leases and contracts; and (vii) the
payment of any fees, penalties,
charges, interest or other expenses due and owing under or with
respect to such Software licenses, Equipment, Equipment leases,
circuits, services and Third Party Contracts that are incurred,
caused by or result from CSC’s failure to comply with or perform
its obligations under this Section 10.3(e) (Operational
Responsibility) (except to the extent such failure is relieved due
to Sears’ failure to perform its responsibilities as set forth in
Section 7 (Sears Responsibilities)). CSC shall establish a
schedule to evaluate all such Systems on a rolling twelve (12)
month basis so that each System is reviewed at least annually.

37

 

	 	(f)	 	 Benefits Pass-Through. With respect to any products and
services acquired by CSC for an Eligible Recipient on a Pass-Through
Expense basis during the course of performing the Services, CSC
shall use all commercially available efforts to pass-through to
Sears and the other Eligible Recipients 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 Sears. If CSC is unable to pass through such benefit to Sears or
the other Eligible Recipients, it shall notify Sears in advance and
shall not purchase such product or service without Sears’ prior
written approval.

	 
	 	(g)	 	UCITA and CISG. CSC shall use commercially reasonable
efforts to ensure that any Third Party Contracts (i) related to
Software, Equipment or services procured by CSC or any CSC Personnel
in connection with this Agreement, and (ii) that may be transferred
to Sears upon the termination or expiration of this Agreement or any
Transaction Document, shall include provisions stating that the
parties agree that UCITA and CISG do not and shall not apply to such
contract, to the extent such exclusions are legally permissible
under the applicable governing law of such contract. If, despite
such commercially reasonable efforts, CSC is unable to obtain such
provisions, CSC shall promptly notify Sears in writing of such
failure. Thereafter, Sears may reject or approve CSC’s use of such
contract. If Sears rejects such contract, CSC shall identify a
replacement provider reasonably acceptable to Sears that shall
provide Sears with the applicable contractual rights. Nothing
contained in this Section 10.3(g) (UCITA and CISG) shall
relieve CSC of its obligation to (A) perform the Services or any of
its obligations under this Agreement, or (B) meet the Service
Levels.

	 
	 	(h)	 	Other Matters.

	 	(i)	 	With respect to all CSC Provided Systems, and
related Third Party Contracts to be used primarily to provide
the Services, CSC shall use all commercially reasonable
efforts to (1) obtain for Sears the rights specified in
Section 24 (Rights upon Expiration or Termination),
(2) ensure that the granting of such rights is not subject to
subsequent third party approval or the payment by a transferee
of transfer fees, (3) ensure

that the terms, conditions and prices applicable to Sears
following expiration or termination that are no less
favorable than those otherwise applicable to CSC, and at
least sufficient for the continuation of the activities
comprising the Services, and (4) ensure that neither the
expiration or termination of this Agreement or any
Transaction Document, nor the assignment of the contract,
shall trigger less favorable terms, conditions or pricing or
services.

	 
	 	(ii)	 	If in any instance CSC is unable to obtain any of
the rights and assurances described in this Section
10.3(h) (Other Matters), it shall notify Sears in advance
and shall not use such CSC Provided System or Third Party
Contract without Sears’ approval, and absent such approval,
CSC’s use of

38

 

	 	 	 	any such CSC Provided System or Third Party Contract shall
obligate CSC to obtain or arrange, at no additional cost to
Sears, equivalent rights to those set forth in Section 24
(Rights upon Expiration or Termination) below. If Sears
so consents to CSC’s use of any specific CSC Provided Systems
or Third Party Contracts under the foregoing circumstances,
such consent shall be deemed to be conditioned on CSC’s
commitment to use all commercially reasonable efforts to
cause such Third Party to agree at expiration or termination
of this Agreement or the applicable Transaction Document, or
the completion of Termination Assistance Services requested
by Sears, to permit Sears to assume prospectively the
license, lease or other contract in question or to enter into
a new license, lease or other contract with Sears on
substantially the same terms and conditions, including price
and restrictions on authorized users. Sears may, in its sole
discretion, withhold its consent to any such CSC Provided
Systems or Third Party Contract if, following expiration or
termination of this Agreement or any Transaction Document, as
the case may be, (1) Sears would not be entitled to the
license, sublicense, assignment or other rights specified in
Section 24.1 (Certain Rights), (2) the granting of
such license, sublicense, assignment or other rights would be
subject to subsequent Third Party approval or the payment by
a transferee of transfer fees or (3) Sears would be obligated
to reimburse CSC for any termination or cancellation fees,
noncancelable charges or other termination charges set forth
in the applicable Transaction Document.

	 	(i)	 	Evaluation of Third Party Software, Equipment.

	 	(i)	 	Replacement With Sears Provided System.
If Sears wishes to replace or provision any CSC Provided
System or CSC Managed System with an identical or comparable
Sears Provided System, CSC shall provide Sears with a credit
equal to the amount of the cost avoidance, if any, enjoyed by
CSC, its Affiliates or the CSC Personnel by reason of such

replacement. Such cost avoidance shall include all reduced
or eliminated license fees, lease payments, maintenance
contracts and all other costs and expenses avoided by CSC,
its Affiliates or the CSC Personnel as a result of Sears’
replacement or provisioning of such CSC Provided System or
CSC Managed System or other goods or services, as well as
CSC’s, its Affiliates’ or the CSC Personnel’s anticipated
profit associated with such avoided cost(s) (net of any
increased costs suffered by CSC as a result of such
replacement); provided that CSC shall not be required
to accept such a replacement System if such replacement would
result in a net increase to CSC costs. If Sears’
provisioning of a comparable Sears Provided System will have
an adverse affect on the Services or the method in which CSC
is providing any of the Services, CSC shall notify Sears in
writing of such adverse effect within ten (10) Business Days
of Sears’ notice of Sears’ intention to install such a
comparable system; in which case the parties shall work in
good faith to mitigate any potential harm from the use of

39

 

	 	 	 	Sears Provided System. ***.

	 
	 	(ii)	 	Evaluation of New Software or Equipment.
If Sears wishes to modify or replace or provision any CSC
Provided System or CSC Managed System or Sears Provided System
with any Third Party Software or Equipment (other than a Sears
Provided System, in which case Section 10.3(i)(i)
(Replacement With Sears Provided System) shall apply) selected
by an Eligible Recipient and that is not then in use in
connection with the Services, then CSC shall, without
additional cost to Sears, use all commercially reasonable
efforts to evaluate and determine whether such Software and
Equipment shall adversely affect the Eligible Recipients’
environment, CSC Provided Systems, CSC Managed Systems, Sears
Provided Systems and/or CSC’s ability to provide the Services.
CSC shall complete and report the results of such evaluation
to Sears within fifteen (15) days of its receipt of Sears’
request; provided, however, that CSC shall use
all commercially reasonable efforts to respond more quickly in
the case of a pressing business need or an emergency
situation.

	10.4	 	Notice of Decommissioning.

	 
	 	 	CSC shall notify Sears promptly if and to the extent any CSC Managed
Systems or Sears Provided Systems, including any Eligible Recipients’
owned Equipment or Eligible Recipients’ leased Equipment, shall no longer
be used to provide the Services. The notification shall include the
identification of the applicable Equipment, Software or circuit, and the
date it shall no longer be needed by CSC, along with the reason for
decommissioning or non-use. Upon receipt of any such notice, Sears may
(or may cause the applicable Eligible Recipient to), in its sole
discretion, terminate the Equipment lease for such leased Equipment or
the license for such Software, as the case may be, as of the

date specified in such notice and sell or otherwise dispose of or
redeploy such Eligible Recipient owned Equipment, Software or circuit
that is the subject of such a notice as of the date specified in such
notice. Upon CSC ceasing to use any Equipment (or, in the case of leased
Equipment, upon the last day such Eligible Recipient is obligated to make
such leased Equipment available to CSC, if earlier) or Software, CSC
shall return the same to the Eligible Recipients and/or their designee(s)
in condition at least as good as the condition thereof on the applicable
Commencement Date, ordinary wear and tear excepted. CSC shall, at CSC’s
expense, deliver such Equipment or Software to the location designated by
the Eligible Recipients.

	 
	10.5	 	License to CSC Provided Systems.

	 
	 	 	As of the applicable Commencement Date, CSC, at no additional charge to
the Eligible Recipients, hereby grants an irrevocable, worldwide,
non-exclusive, and except for the Charges, paid-up, royalty-free right
and license during the Term of the applicable Transaction Document and
any Termination Assistance Services period to the Eligible

*** CONFIDENTIAL MATERIAL REDACTED AND SEPARATELY FILED WITH THE COMMISSION.

40

 

	 	 	Recipients (but, as to Eligible Recipients ***, to access, interface
with, monitor, use, execute, reproduce, display, perform, prepare
Derivative Works based upon, and distribute, from and to any locations in
the world, the CSC Provided Systems to the extent necessary or
appropriate to receive the full benefit of the Services; *** may permit
the Sears Personnel to exercise the foregoing rights and licenses on
behalf of the Eligible Recipients in connection with receipt of the
Services by the Eligible Recipients.

	 
	10.6	 	License to Sears Provided Systems and CSC Managed Systems.

	 	(a)	 	License to Sears Owned Materials. As of the applicable
Commencement Date, Sears hereby grants to CSC, for the sole and
express purpose of performing the Services during the Term of the
applicable Transaction Document and any Termination Assistance
Services period, a non-exclusive, non-transferable, royalty-free
right and license to access, interface with, monitor, use, operate,
copy and store Sears Provided Systems that consist of Sears Owned
Materials; provided that CSC may permit the CSC Personnel
(that are retained in accordance with this Agreement) to use such
Materials solely to provide Services to Eligible Recipients on CSC’s
behalf. Neither CSC, nor CSC Personnel, shall have any right to the
source code to such Sears Owned Materials unless and to the extent
approved in advance by Sears, and shall cease all use of such Sears
Owned Materials upon the end of the Term of the applicable
Transaction Document and the completion of any applicable
Termination Assistance Services requested by Sears.

	 
	 	(b)	 	License to Third Party Materials. Subject to CSC having
obtained any Required Consents, Sears hereby grants to CSC, for the
sole and express purpose of performing the Services during the Term
of the applicable Transaction

Document and any Termination Assistance Services period and solely
to the extent of Sears’ underlying rights, the same rights of
access and use as Sears possesses under the applicable contract
with respect to the CSC Managed Systems and those Sears Provided
Systems that do not consist of Sears Owned Materials;
provided that CSC may permit the CSC Personnel (that are
retained in accordance with this Agreement) to use such Materials
solely to provide Services to Eligible Recipients on CSC’s behalf.
CSC shall comply with the duties, including use restrictions and
those of nondisclosure, imposed on Sears by such Third Party
contracts, and shall cease all use of such CSC Managed Systems and
Sears Provided Systems upon the end of the Term of the applicable
Transaction Document and the completion of any applicable
Termination Assistance Services requested by Sears.

*** CONFIDENTIAL MATERIAL REDACTED AND SEPARATELY FILED WITH THE COMMISSION.

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	11.	 	SERVICE LEVELS

	 
	11.1	 	Description of Service Levels.

	 	(a)	 	Purpose of Service Levels. Without limiting CSC’s
obligations provided elsewhere in this Agreement, the Parties
acknowledge and agree that the purpose of the Service Levels
specified in this Agreement is to serve as a reporting tool to
inform the Parties as to how the Services are being performed and to
enable the Parties to identify and measure those areas of the
Services that require improvement.

	 
	 	(b)	 	Service Level Performance Standards. CSC shall perform the
Services so as to meet or exceed the Service Levels set forth in the
applicable Transaction Document beginning on the applicable dates
set forth therein. If such Transaction Document does not specify
dates for CSC to meet the Service Levels, CSC shall perform the
Services so as to meet or exceed the Service Levels beginning on the
Commencement Date thereof. If more than one Service Level applies
to any particular obligation of CSC, CSC shall perform in accordance
with the most stringent of such Service Levels. CSC shall be
responsible for meeting or exceeding the applicable Service Levels,
even where doing so is dependent on the provision of Services by CSC
Personnel that are Third Parties.

	11.2	 	Service Level Credits.

	 
	 	 	CSC recognizes that Sears is paying CSC to deliver the Services at
specified Service Levels. If CSC fails to meet such Service Levels, then
CSC shall pay or credit to Sears the performance credits specified in the
applicable Transaction Document (“Service Level Credits”) in recognition
of the diminished value of the Services resulting from CSC’s failure to
meet the agreed-upon level of performance and not as a penalty. Sears
shall have the right to re-allocate the Service Level Credits among the
Service Levels under a Transaction Document, upon ninety (90) days’
advance written notice to CSC

***, provided that such re-allocation shall not change the total
amount of Service Level Credits at risk under such Transaction Document.
Under no circumstances shall the imposition of Service Level Credits be
construed as Sears’ sole or exclusive remedy for any failure to meet the
Service Levels. However, if Sears recovers monetary damages from CSC as
a result of CSC’s failure to meet a Service Level, CSC shall be entitled
to set off against such damages any Service Level Credits paid for the
failure giving rise to such recovery.

	 
	11.3	 	Problem Analysis.

	 
	 	 	If CSC fails to provide Services in accordance with the Service Levels or
otherwise in accordance with this Agreement, CSC shall (after restoring
service or otherwise resolving any immediate problems) (a) promptly
investigate and report on the causes of the problem, (b) provide a Root
Cause Analysis of such failure as soon as practicable after such failure
or at Sears’ request, (c) use all commercially reasonable efforts to
implement remedial action and begin meeting the Service Levels as soon as
practicable, (d) advise

*** CONFIDENTIAL MATERIAL REDACTED AND SEPARATELY FILED WITH THE COMMISSION.

42

 

	 	 	Sears of the status of remedial efforts being undertaken with respect to
such problem and (e) provide Sears reasonable evidence that the causes of
such problem have been or shall be corrected on a permanent basis. CSC
shall use all commercially reasonable efforts to complete the Root Cause
Analysis within fifteen (15) days; provided, however, that
if it is not capable of being completed within fifteen (15) days using
reasonable diligence, CSC shall complete such Root Cause Analysis as
quickly as possible and shall notify Sears 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.

	 
	11.4	 	Continuous Improvement Reviews.

	 
	 	 	Throughout each Exhibit Term, CSC shall identify and notify Sears of
commercially reasonable methods of improving the Services and reducing
the cost to the Eligible Recipients of such Services. In addition, Sears
and CSC shall periodically review the Service Levels and the performance
data collected and reported by CSC in accordance with the applicable
Transaction Document. As part of this review process, the Parties shall,
at no additional cost to Sears, increase the Service Levels to reflect
the higher performance levels actually attained or attainable by CSC in
accordance with the applicable Transaction Document. At minimum, if the
actual performance of any Services exceeds the applicable Service Level
for twelve (12) consecutive months, then the applicable Service Level
shall be automatically increased (or decreased, if applicable) to a value
which is halfway between the existing Service Level and the average
actual performance for such twelve (12) month period. In addition,
subject to Section 4.5 (Additional Services) and the applicable
Transaction Document, the Parties shall, to the extent reasonable and
appropriate, (a) increase the Service Levels to reflect improved
performance capabilities associated with advances in the proven
processes,

technologies and methods available to perform the Services, (b) add new
Service Levels to permit further measurement or monitoring of the
accuracy, quality, completeness, timeliness, responsiveness,
cost-effectiveness or productivity of the Services, (c) modify or
increase the Service Levels to reflect changes in the processes,
architecture, standards, strategies, needs or objectives defined by
Sears, (d) modify or increase the Service Levels to reflect agreed-upon
changes in the manner in which the Services are performed by CSC or (e)
replace Service Levels that are not accurately measuring the impact of
poor performance with Service Levels that better measure the benefits the
Eligible Recipients should receive from the Services. Sears may, from
time to time, require CSC to measure and report on additional Service
Levels.

	 
	11.5	 	Measurement and Monitoring.

	 
	 	 	CSC shall, on or before the applicable Commencement Date or as otherwise
set forth in the applicable Transformation Plan, implement measurement
and monitoring tools and metrics, as well as standard reporting
procedures, all acceptable to Sears, to measure and report CSC’s
performance of the Services against the applicable Service Levels. CSC
shall provide Sears 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. CSC also shall provide Sears with access to
the data used by CSC to calculate its performance against the Service
Levels and the measurement and monitoring tools and procedures

43

 

	 	 	utilized by CSC to generate such data for purposes of audit and
verification. Sears 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.

	 
	11.6	 	Satisfaction Surveys.

	 	(a)	 	General. Except as set forth in a Transaction Document,
within three (3) months after the initial Commencement Date under
this Master Agreement, at least once every twelve (12) months
thereafter during the Term and as part of the Services, CSC shall
conduct (i) a satisfaction survey of end users regarding the
Services performed under each Transaction Document, and (ii) a
survey of the senior management of the Sears information technology
department that shall focus on satisfaction with the functional
interface between Sears and CSC. The timing, content, scope,
protocols and procedures of each survey shall be as described in the
applicable Transaction Document or as otherwise mutually agreed upon
in writing by the Parties. To the extent CSC engages an independent
Third Party to perform all or any part of any satisfaction survey,
CSC shall obtain Sears’ prior approval of such Third Party.

	 
	 	(b)	 	Sears Conducted Surveys. In addition to the satisfaction
surveys to be conducted by CSC pursuant to Section 11.6(a)
(General), Sears may survey, or engage a Third Party to survey, end
user satisfaction with CSC’s performance. At Sears’ request, CSC
shall cooperate and assist Sears with the
formulation of the survey questions, protocols and procedures and
with the execution and review of such surveys.

	 
	 	(c)	 	Survey Follow-up. If the results of any satisfaction survey
conducted pursuant to Section 11.6(a) (General) or
11.6(b) (Sears Conducted Surveys) indicate that the level of
satisfaction with CSC’s performance is less than the level
reasonably deemed appropriate by Sears, CSC shall promptly: (i)
analyze and report on the cause of the management or end user
dissatisfaction; (ii) develop an action plan to address and improve
the level of satisfaction; (iii) present such plan to Sears for its
review, comment and approval; and (iv) take reasonable action in
accordance with the approved plan and as necessary to improve the
level of satisfaction. CSC’s action plan shall specify the specific
measures to be taken by CSC and the dates by which each such action
shall be completed. Following implementation of such action plan,
CSC shall conduct follow-up surveys with the affected Sears’ users
and management to confirm that the cause of any dissatisfaction has
been addressed and that the level of satisfaction has improved.

	11.7	 	Excessive Service Level Failure.

	 
	 	 	If the Parties define one or more Service Level failures in a Transaction
Document as giving Sears a right to terminate for cause (an “Excessive
Service Level Failure”), and such Excessive Service Level Failure occurs,
Sears shall have the right to terminate as provided in Section
23.1(a) (Termination By Sears). The express acknowledgment that such
number of Service Level failures shall be considered an Excessive Service
Level

44

 

	 	 	Failure, or that a certain amount of Service Level Credits shall give
Sears the right to terminate does not imply that a lesser number of
Service Level failures or lesser amount of Service Level Credits does not
or cannot constitute a material breach of this Agreement and therefore
grounds for termination under other subsections, and no Party shall
contend otherwise in any dispute or controversy between the Parties. In
the event of any Excessive Service Level Failure, either itself or in
combination with other breaches of the applicable Transaction Document,
Sears shall be entitled to all remedies under this Agreement and
applicable Law, and shall not be limited to Service Level Credits
received for individual Service Level failures; provided,
however, that any Service Level Credits received by Sears shall be
credited against any such damages.

	 
	12.	 	PROJECT PERSONNEL

	 
	12.1	 	Key Personnel.

	 
	 	 	A Transaction Document may identify certain CSC Personnel and related
positions critical to the provision of the Services (“Key Personnel”).
Key Personnel shall be subject to the following terms and conditions.

	 	(a)	 	Approval of Key Personnel. Before assigning an individual to
act as one of the Key Personnel, whether as an initial assignment or
a subsequent assignment, CSC shall notify Sears of the proposed
assignment, shall introduce the individual to appropriate Sears
Personnel, shall provide a reasonable opportunity for Sears
Personnel to interview the individual and shall provide Sears with a
resume and such other information about the individual as may be
reasonably requested by Sears. If Sears in good faith objects to
the proposed assignment, the Parties shall attempt to resolve Sears’
concerns on a mutually agreeable basis. If the Parties have not
been able to resolve Sears’ concerns within five (5) Business Days
of Sears communicating its concerns, CSC shall not assign the
individual to that position and shall propose to Sears the
assignment of another individual of suitable ability and
qualifications.

	 
	 	(b)	 	Continuity of Key Personnel. CSC shall cause each of the Key
Personnel to devote full time and effort to the provision of
Services under this Agreement for the period specified in the
applicable Transaction Document from the date he or she assumes the
position in question. CSC shall not transfer, reassign or remove
any of the Key Personnel (except as a result of voluntary
resignation, involuntary termination for cause; documented, repeated
negative performance; or illness, disability or death (collectively,
“Permitted Separation”)), without Sears’ prior approval, which
approval may be withheld in Sears’ reasonable discretion (based upon
Sears’ business needs and the nature of the Services performed by
such individual). In the event of a Permitted Separation of one of
its Key Personnel, CSC shall (i) give Sears as much notice as
reasonably possible of such development, and (ii) expeditiously
identify and obtain Sears’ approval of a suitable replacement.
Unless otherwise agreed, CSC shall not transfer, reassign or remove
more than *** of the Key Personnel under any Transaction Document in
any twelve (12) month period.

*** CONFIDENTIAL MATERIAL REDACTED AND SEPARATELY FILED WITH THE COMMISSION.

45

 

	 	(c)	 	Succession. CSC shall maintain active succession plans for
each of the Key Personnel positions, including plans to effectively
transfer knowledge from Key Personnel in the event that it becomes
necessary to replace such Key Personnel. Upon termination or
resignation of any Key Personnel, CSC shall promptly provide notice
to Sears of such termination or resignation and identify potential
suitable replacements.

	 
	 	(d)	 	Location of Key Personnel. If any Key Personnel are not
resident in the area where they will be providing Services (e.g.,
the Chicago metropolitan area for Key Personnel assigned to the
Sears Hoffman Estates, Illinois facility), CSC shall, at its
expense, relocate such Key Personnel to the area where they will be
providing Services within *** days of such individuals being
assigned as Key Personnel under this Agreement; provided that for
such interval period the Key
Personnel will be on-site Monday through Friday from 8 am to 5 pm,
unless otherwise agreed.

	 
	 	(e)	 	Restrictions on Performing Services to Sears’ Competitors.
CSC shall not permit any individual who (i) is retained (as CSC
Personnel) by CSC or its Subcontractors and (ii) provides Services
to the Eligible Recipients to provide services to any retailer that
is a competitor of Sears or its Affiliates either while engaged in
the provision of such Services or during the twelve (12) months
immediately following the termination of his or her involvement in
the provision of such Services without Sears’ prior written consent.

	12.2	 	CSC Account Executive.

	 
	 	 	CSC shall designate a “CSC Account Executive” who, unless otherwise
agreed by Sears, shall maintain his or her office at Sears’ Hoffman
Estates, Illinois facility. The CSC Account Executive shall: (a) be the
primary CSC representative under this Agreement; (b) be one of the Key
Personnel; (c) be a full-time employee of CSC; (d) devote his or her full
time and effort to managing the Services; (e) remain in this position for
a minimum period of three (3) years from the initial assignment (except
in the event of a Permitted Separation of the CSC Account Executive); (f)
serve as the single point of accountability for the Services; (g) be the
single point of contact to whom all Sears communications concerning this
Agreement may be addressed; (h) have authority to act for and on behalf
of CSC in all matters pertaining to this Agreement; and (i) have overall
responsibility for managing and coordinating the performance of CSC’s
obligations under this Agreement and day-to-day authority for ensuring
customer satisfaction and attainment of all Service Levels.

	 
	12.3	 	Compensation of CSC Account Executive and Key Personnel.

	 	(a)	 	CSC Account Executive. At a minimum, *** of the CSC Account
Executive’s *** compensation shall be based upon (i) the level of
customer satisfaction reflected in the periodic customer
satisfaction surveys, (ii) the extent to which CSC has met or
exceeded the Service Levels, Service Levels and CSC’s other
responsibilities and obligations under this

*** CONFIDENTIAL MATERIAL REDACTED AND SEPARATELY FILED WITH THE COMMISSION.

46

 

	 	 	 	Agreement, (iii) CSC’s achievement of the objectives relating to
the Eligible Recipients’ businesses set forth in Section 1.2
(Goals and Objectives), as reasonably determined by Sears, and (iv)
Sears’ determination as to whether CSC has met the technical
objectives set by the Sears Chief Information Officer.

	 
	 	(b)	 	Key Personnel. At a minimum, fifteen percent (15%) of the
annual incentive compensation of the Key Personnel listed in a
Transaction Document shall be based upon the factors set forth in
Section 12.3(a) (CSC Account Executive).

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

	12.4	 	Qualifications and Retention of CSC Personnel.

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

	 
	 	(b)	 	Turnover Rate and Data. If Sears determines that the
turnover rate of CSC Personnel is unacceptable and so notifies CSC,
CSC shall within ten (10) Business Days (i) provide Sears with data
concerning CSC’s turnover rate, (ii) meet with Sears to discuss the
reasons for the turnover rate, and (iii) submit a proposal for
reducing the turnover rate for Sears’ review and approval.
Notwithstanding any transfer or turnover of CSC Personnel, CSC shall
remain obligated to perform the Services without degradation and in
accordance with the Service Levels and other requirements of this
Agreement.

	 
	 	(c)	 	Drug Testing. Attached here as Appendix C, is a copy
of CSC’s drug testing policy (the “CSC Drug Testing Policy”). CSC
shall comply with its CSC Drug Testing Policy (or a similarly
restrictive policy) for any Personnel assigned to the Sears account.
CSC shall not subject the Transitioned Personnel to the CSC Drug
Testing Policy as a condition of employment. If CSC, in its sole
discretion, makes a material modification of the CSC Drug Testing
Policy, it shall provide Sears with a copy of such modifications at
least 60 days in advance of its implementation. For Personnel that
have not been tested under a similarly restrictive policy, CSC, its
Affiliates or its Subcontractors, may grandfather existing employees
of any Third Party that such party acquires or that such party
receives transitioned Personnel from as part of a purchased services
arrangement.

	 
	 	(d)	 	Background Checks. Within sixty (60) days of the Effective
Date, CSC shall comply with the following provisions;
provided that CSC shall not require the Transitioned
Personnel to submit to the following:

47

 

	 	(i)	 	CSC shall, at its sole cost and expense, conduct
a criminal background check report, and obtain any other
job-relevant consumer reports, for each of the CSC Personnel
to be assigned to the Sears account or involved in the
Services for more than a total of three (3) days. Said
reports must be based on a minimum of seven (7) years’
residential history, unless otherwise restricted by Law;
provided, however, that the time span of the
information obtained must extend to that which is reasonably
available from court records or any other applicable sources,
even if in excess of seven (7) years, except as otherwise
restricted by Law.

	 
	 	(ii)	 	CSC shall use the services of a consumer
reporting agency, approved in advance in writing by Sears, to
conduct such criminal background checks and any other
job-relevant consumer reports. At a minimum, criminal
background checks shall be based on information obtained by
the consumer reporting agency from every county court
associated with the applicable CSC Personnel’s residences. In
addition, CSC shall use a consumer reporting agency that
conducts searches (typically via pass-throughs of credit
bureau data) to obtain aliases and other addresses found that
are then used for additional criminal background checks and
CSC shall conduct retail theft background checks when offered
as an option by the consumer reporting agency.

	 
	 	(iii)	 	Such background check shall be completed by CSC,
and the results must be satisfactory to Sears, before the
applicable CSC Personnel report for the cumulative sixth day
of work on the Sears account or involvement in the Services,
except and to the extent the background check results are
delayed because of the administrative protocol of the
information suppliers (e.g., county courts), or as otherwise
agreed by Sears. CSC shall promptly notify Sears of any
adverse results obtained after the applicable CSC Personnel
have begun work on the Sears account and remove such Personnel
from the Sears account. CSC shall not be required to perform
such background checks on CSC Personnel located outside of the
United States that will not have access to Sears Confidential
Personnel Information and that will not have contact with
Sears Personnel.

	 
	 	(iv)	 	If an assignment involves operating equipment
that requires special licensing or certification such as
trucks or forklifts, working around sensitive equipment or
data (as in the Sears Testing Laboratory), CSC shall ensure
that all CSC Personnel involved with such assignment have
successfully acquired all required licenses and certifications
prior to reporting for the first day of work on such
assignment, regardless of any delay by any background check
information suppliers or administrative agencies.

	 
	 	(v)	 	If any CSC Personnel has satisfactorily completed
a criminal background check, and other job-relevant consumer
reports, where applicable, specifically for a Sears assignment
in accordance with the requirements of

48

 

	 	 	 	this Section 12.4(d) (Background Checks), an
additional check need not be performed due to break in
involvement in the Services by such CSC Personnel, as long as
the CSC Personnel’s primary residence has not changed and the
initial criminal background check was performed within
sixty (60) days prior to the CSC Personnel resuming
involvement in the Services.

	 
	 	(vi)	 	CSC shall not assign individuals with
job-relevant adverse information or information that indicates
an unreasonable risk to property, safety or the welfare of
individuals or the public or to any Eligible Recipient. At a
minimum, all such adverse information shall be evaluated by
CSC in accordance with all Laws. Sears reserves the right to
approve and modify the criteria CSC utilizes for this process.

	 
	 	(vii)	 	At Sears’ request, CSC shall submit evidence
satisfactory to Sears of CSC’s compliance with this Section
12.4(d) (Background Checks).

	 	(e)	 	Fingerprinting. ***

	12.5	 	Identification of CSC Personnel.

	 
	 	 	While at Sears Facilities or Sears Sites, all CSC Personnel shall clearly
identify themselves as CSC Personnel and not as employees of the Eligible
Recipients. This shall include any and all e-mail communications.

	 
	12.6	 	Substance Abuse.

	 
	 	 	CSC represents, warrants and covenants that CSC and its Affiliates have
and shall maintain substance abuse policies, in each case in conformance
with applicable Laws, and CSC Personnel shall be subject to such
policies.

	 
	12.7	 	Union Agreements.

	 
	 	 	CSC shall provide Sears not less than ninety (90) days’ prior written
notice of the potential expiration of any collective agreement with
unionized CSC Personnel (other than Exempt Subcontractors), if the
expiration of such agreement or any resulting labor dispute could
potentially interfere with or disrupt the business or operations of an
Eligible Recipient or impact CSC’s ability to timely perform its duties
and obligations under this Agreement.

	 
	12.8	 	CSC Responsibility.

	 
	 	 	CSC shall be fully responsible for the performance of all CSC Personnel,
as well as any failure by any CSC Personnel, including CSC employees and
Subcontractors and Subcontractor’s Personnel, to perform in accordance
with this Agreement or to comply with any duties or obligations imposed
on CSC under this Agreement. Except as

*** CONFIDENTIAL MATERIAL REDACTED AND SEPARATELY FILED WITH THE COMMISSION.

49

 

	 	 	expressly provided otherwise in this Agreement, CSC shall be responsible
for the provision of the Services in accordance with this Agreement even
if, by agreement of the Parties, such Services are actually performed by
Third Parties (including Sears Personnel, subject to Section
7.1(c) (Sears Responsibilities)). CSC shall be Sears’ sole point of
contact regarding the Services, including with respect to payment.

	13.	 	CHARGES

	 
	13.1	 	General.

	 	(a)	 	Payment of Charges. In consideration of CSC’s performance of
the Services, and subject to Section 14.4 (Disputed Charges),
Sears agrees to pay CSC the applicable Charges set forth in a
Transaction Document as full compensation for such Services. Sears
shall not pay any Charges or have any reimbursement obligations
other than those expressly set forth in a Transaction Document.
Except as provided for under Section 2.2(h) (Ordering
Affiliates), CSC shall not charge (nor seek any reimbursement from)
any Eligible Recipient other than Sears in connection with the
Services. The Charges in each Transaction Document shall be stated
separately for each relevant consumption item or Service component
at a level of detail reasonably satisfactory to Sears. In no event
shall any Eligible Recipient be required to pay any Charges in
connection with the training of CSC Personnel.

	 
	 	(b)	 	No Charge for Reperformance. As part of the Services and at
no additional expense to Sears, CSC shall promptly correct and
reperform (including any backups or restoration of data) any
Services or deliverables that result in incorrect outputs or contain
errors or inaccuracies due to an error or breach by CSC or any CSC
Personnel, and the resources required for such correction and
reperformance shall not be counted in calculating the Charges
payable or resources utilized by the Eligible Recipients under this
Agreement.

	13.2	 	Pass-Through Expenses.

	 	(a)	 	Procedures and Payment. Subject to Section 14.4
(Disputed Charges), Sears shall pay all Pass-Through Expenses
directly to the applicable suppliers following review, validation
and approval of such Pass-Through Expenses by CSC. Before
submitting an invoice to Sears for any Pass-Through Expense, CSC
shall (i) review and validate the invoiced charges, (ii) identify
any errors or omissions, and (iii) communicate with the applicable
supplier to correct any errors or omissions, resolve any questions
or issues and obtain any applicable credits for Sears. CSC shall
deliver (or cause to be delivered) to Sears the original supplier
invoice, together with any documentation supporting such invoice and
a statement that CSC has reviewed and validated the invoiced
charges, within ten (10) Business Days after CSC’s receipt thereof
or, if earlier, at least fifteen (15) Business Days prior to the
date on which payment is due if such invoice was received by CSC;
provided that if CSC receives an invoice within fifteen (15)
Business Days of its due date, CSC shall deliver such invoice to
Sears within
two (2) Business Days of

50

 

	 	 	 	CSC’s receipt. In addition, if the supplier offers a discount for
payment prior to a specified date, CSC shall deliver such invoice
and associated documentation to Sears at least fifteen (15)
Business Days prior to such date. To the extent CSC fails to
comply with its obligations under this Agreement, it shall be
financially responsible for any resulting discounts lost or any
late fees or interest charges incurred by the Eligible Recipients.
In addition, to the extent CSC fails to process any invoice in
accordance with this provision within six (6) months after CSC’s
receipt thereof, CSC shall be financially responsible for the
payment of all such invoiced amounts.

	 
	 	(b)	 	No Markup; No Fees. CSC shall not (i) mark up any
Pass-Through Expenses or (ii) add any management, administrative or
other fees to any Pass-Through Expenses. In addition, CSC shall not
separately charge Sears any handling or administrative charge in
connection with its processing or review of invoices for
Pass-Through Expenses in accordance with Section 13.2(a)
(Procedures and Payment).

	 
	 	(c)	 	Efforts to Minimize. CSC shall continually seek to identify
methods of reducing and minimizing both Sears’ retained and
Pass-Through Expenses and shall notify Sears of such methods and the
estimated potential savings associated with each such method.

	 
	 	(d)	 	Disbursements. Beginning on the applicable Commencement
Date, CSC shall make payments for all Third Party Contracts (other
than Excluded Agreements and Pass-Through Expenses) related to CSC
Managed Systems and CSC Designated Contracts (to the extent they
have not then been assigned to CSC) as paying agent of the Sears
Related Businesses or shall reimburse Sears for amounts paid by
Sears and which were due such Third Parties.

	 
	 	(e)	 	Limited Agency. Sears hereby appoints CSC as its limited
agent during the Term of the applicable Transaction Document solely
for the purposes of the administration of Pass-Through Expenses and
administration and payment of amounts under CSC Designated Contracts
(to the extent they have not then been assigned to CSC). Sears
shall provide, on a timely basis, such affirmation of CSC’s
authority to such Third Parties.

	 
	 	(f)	 	Reimbursement for Substitute Payment. If either Party (or
their representatives, or, in the case of Sears, the other Eligible
Recipients) 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 other
Party for such amount.

	13.3	 	Reimbursable Expenses and Sears Expense Policy.

	 
	 	 	To the extent a Transaction Document provides that an expense shall be
reimbursable by Sears, Sears’ obligation to pay such expenses shall be
conditioned upon CSC’s compliance with Sears Expense Policy (which was
provided to CSC prior to CSC

51

 

	 	 	incurring such expense). Sears’ current Expense Policy is set forth in
Appendix B (Sears Expense Policy), and may be amended by Sears
from time to time, upon notice to CSC.

	 
	13.4	 	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. CSC shall be responsible for
any sales, lease, use, personal property, stamp duty or other such
taxes on its real property and personal property, including CSC
Provided Systems. Sears (or the other Eligible Recipients) shall be
responsible for any sales, lease, use, personal property, stamp duty
or other such taxes on its real property and its personal property,
including Sears Provided Systems and CSC Managed Systems provided
pursuant to the Excluded Agreements or on a Pass-Through Expense
basis.

	 
	 	(c)	 	Taxes on Goods or Services Used by CSC. CSC shall be
responsible for all sales, service, value-added, lease, use,
personal property, excise, consumption and other taxes and duties,
including VAT, payable by CSC on any Equipment, Software or other
goods or services used or consumed by CSC in providing the Services
(including CSC Provided Systems, CSC Managed Systems, but not
including CSC Managed Systems provided pursuant to the Excluded
Agreements or on a Pass-Through Expense Basis, and CSC Designated
Contracts and services obtained from CSC Personnel) where the tax is
imposed on CSC’s acquisition or use of such goods or services and
the amount of tax is measured by CSC’s costs in acquiring or
procuring such goods or services and not by Sears’ cost of acquiring
such goods or services from CSC.

	 
	 	(d)	 	Service Taxes.

	 	(i)	 	Responsibility as of Effective Date.
Sears shall be financially responsible for all Service Taxes
assessed by any United States jurisdiction against either
Party as of the Effective Date on the provision of the
Services as a whole or on any particular Service received by
the Eligible Recipients from CSC. CSC shall be responsible
for assessing and collecting from Sears and remitting to the
appropriate Taxing Authority all such Service Taxes, and CSC
shall indemnify Sears from (pursuant to
Section 20.1 (Indemnity by CSC)): (A) except as set
forth in clauses (ii) and (iii) below, the
economic burden of any such Service Taxes which exceed the
amount of Service Taxes set forth in the applicable
Transaction Document, and (B) any fines, penalties and
interest arising from CSC’s failure to properly assess and
remit Service Taxes.

	 
	 	(ii)	 	Modifications Increasing Taxes After the
Effective Date. If after the Effective Date new or higher
Service Taxes become applicable to the

52

 

	 	 	 	Services as a result of either Party or its Affiliates (or
their Personnel) moving all or part of its operations to a
different jurisdiction (e.g., Sears opening a new office, CSC
relocating performance of Services to a shared service center
or CSC assigning this Agreement to an Affiliate) or as a
result of a change in the manner in which CSC performs or
invoices Sears for the Services, the Party who initiated (or
whose Personnel initiated) such move or change, respectively,
shall be financially responsible for such new or higher
Service Taxes.

	 
	 	(iii)	 	New or Increased Taxes. If new or higher
Service Taxes become applicable to such Services after the
Effective Date for any other reason (e.g., tax law changes,
but not volume changes) the Parties shall share equally
financial responsibility for such new or additional Service
Taxes; ***.

	 
	 	(iv)	 	Reimbursement. If required under
applicable Laws, CSC shall invoice Sears for the full amount
of any Service Taxes, fines, penalties and interest and then
credit or reimburse Sears in an amount to make Sears whole for
the economic burden of such Service Taxes, fines, penalties
and interest for which CSC is financially responsible under
this provision.

	 
	 	(v)	 	Invoicing. CSC’s invoices shall separately
state the Charges that are subject to taxation and the amount
of any taxes included therein (by tax jurisdiction).

	 	(e)	 	Notice of New Taxes and Charges. CSC shall promptly notify
Sears when it becomes aware of any new taxes or other Charges
(including changes to existing taxes or Charges) to be passed
through to and/or collected from Sears under this Section, as well
as any changes in the manner in which CSC assesses taxes in
connection with this Agreement. Such notification (which shall be
separate from the first invoice reflecting such taxes or other
Charges or changes, as the case may be, and delivered to Sears at
least thirty (30) days prior to the delivery to Sears of such
invoice) shall contain a detailed explanation of such taxes or
Charges or changes, as the case may be, including the effective date
of each new tax or charge or change.

	 
	 	(f)	 	Efforts to Minimize Taxes. CSC shall cooperate fully with
Sears to enable Sears to more accurately determine Sears’ tax
liability and to minimize such liability to the extent legally
permissible (e.g., by the way CSC invoices). Each Party shall
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 Sears’
request, CSC shall provide Sears with (i) written certification
signed by an authorized representative of CSC confirming that CSC
has filed all required tax forms and returns required in connection
with any

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53

 

	 	 	 	Service Taxes collected from Sears, and has collected and remitted
all applicable Service Taxes, and (ii) such other information
pertaining to applicable Taxes as Sears may reasonably request.
For purposes of the State of Illinois tax on telecommunications,
CSC acknowledges that Sears’ Hoffman Estates, Illinois facility is
presently exempt from such tax and CSC agrees that, for the
duration of such exemption, CSC shall not include such tax on
invoices for exempt Services, provided Sears furnishes CSC with a
current exemption certificate. CSC shall provide to Sears such
documentation as Sears may reasonably request to establish that CSC
is registered to collect any tax described in Section
13.4(d) (Service Taxes) that CSC seeks to collect from Sears.

	 
	 	(g)	 	Tax Audits or Proceedings. Each Party shall promptly notify
the other 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 or its Affiliates is
responsible hereunder, but solely with respect to the taxes claimed
for Services under this Agreement that CSC seeks to recover from
Sears. Information regarding other taxes that do not relate to the
Services or this Agreement shall not be provided. With respect to
any claim arising out of a form or return signed by either Party or
its Affiliates, such Entity shall have the right to elect to control
the response to and settlement of the claim, but the other Party
shall have all rights to consult with such Entity in the responses
and settlements that are appropriate to its potential
responsibilities or liabilities and in a reasonable time frame so as
to allow the other Party meaningful input into the responses and
settlements. Each Party also shall have the right to challenge the
imposition of taxes for which it is financially responsible under
this Agreement or, if necessary, to direct the other Party to
challenge the imposition of such taxes. If either Party requests
the other to challenge the imposition of any tax, 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 fees and expenses it incurs.
The Party who is ultimately responsible for payment of a tax under
this Agreement shall be entitled to receive, and to have the other
Party remit to it, any tax refunds or rebates granted with respect
to such tax that were paid by the obligated Party or its Affiliates.

	13.5	 	Tax Filings.

	 
	 	 	CSC represents, warrants and covenants that (a) it shall file appropriate
tax returns, and pay applicable taxes owed arising from or related to the
provision of the Services in applicable jurisdictions, and (b) it is
registered to and shall timely collect and remit Service Taxes in all
applicable jurisdictions.

	 
	13.6	 	Extraordinary Events.

	 	(a)	 	Definition. As used in this Agreement, an “Extraordinary
Event” means a circumstance in which an event or discrete set of
events has occurred or is planned with respect to the business of
the Eligible Recipients that results or
could reasonably be expected
to result in a change in the scope, nature or volume

54

 

	 		 	of the Services that the Eligible Recipients shall require from
CSC, and which is expected to cause the estimated average monthly
amount of Charges for any Transaction Document specified in the
applicable Transaction Document to increase or decrease by *** or
more. Examples of the kinds of events that might cause such
substantial increases or decreases 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 or advances in technology allowing
services to be delivered or supported in a more efficient
manner;

	 
	 	(vii)	 	changes in market priorities; or

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

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

	 	(i)	 	CSC and Sears shall mutually determine on a
reasonable basis the efficiencies, economies, savings and
resource utilization reductions resulting from such
Extraordinary Event and, upon Sears’ approval, CSC 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. As the efficiencies,
economies, savings or resource utilization reductions are
realized, the Charges specified in the applicable Transaction
Document shall be promptly and equitably adjusted to pass
through to Sears the full benefit of such efficiencies,
economies, savings and resource utilization reductions;
provided, however, that Sears shall reimburse
CSC for any out-of-pocket expenses incurred to realize such
efficiencies, economies, savings or resource utilization
reductions if and to the extent CSC (1) notifies Sears of
such additional costs and obtains Sears’ approval prior to
incurring such costs (at which point they shall become
approved Out-Of-Pocket Expenses), (2) 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

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55

 

	 		 	(3) uses commercially reasonable efforts to minimize the
Out-Of-Pocket Expenses to be reimbursed by Sears.

	 
	 	(ii)	 	An Extraordinary Event shall not result in
Charges to Sears being higher than such Charges would have
been if the rates and charges then specified in the applicable
Transaction Document had been applied, unless and to the
extent such Extraordinary Event results in New Services (e.g.,
Sears requires that CSC create a new infrastructure to support
an acquired Entity). Sears may, at its sole option, elect,
for each Extraordinary Event, at any time to forego its rights
under this Section 13.6 (Extraordinary Events), and
instead apply the rates and charges specified in the
applicable Transaction Document to adjust the Charges.

	13.7	 	Proration.

	 
	 	 	Periodic charges under a Transaction Document shall be computed on a
calendar-month basis, and shall be prorated for any partial month on a
calendar-day basis, unless expressly stated otherwise in a Transaction
Document.

	 
	13.8	 	Refundable Items.

	 	(a)	 	Prepaid Amounts. Where the Eligible Recipients have prepaid
for a service or function (e.g., prepaid software maintenance) for
which CSC is assuming financial responsibility under this Agreement,
CSC shall refund to Sears, upon either Party identifying the
prepayment, that portion of such prepaid expense which is
attributable to periods on and after the applicable Commencement
Date.

	 
	 	(b)	 	Refunds and Credits. If CSC receives a refund, credit,
discount or other rebate for Equipment, Software or other goods or
services paid for by the Eligible Recipients on a Pass-Through
Expense basis, then CSC shall (i) notify Sears of
such refund, credit, discount or rebate and (ii) promptly pay the
full amount of such refund, credit, discount or rebate to Sears.
***.

	13.9	 	Repricing.

	 
	 	 	If and to the extent provided for in a Transaction Document, each pricing
element for Services specified in a Transaction Document shall be subject
to repricing (“Repricing”) as provided below. Upon the occurrence of a
Repricing event specified in the applicable Transaction Document, as and
to the extent requested by Sears, in Sears’ sole discretion,

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56

 

	 	 	CSC shall promptly, but in no event more than thirty (30) days after the
occurrence of such Repricing event, provide to Sears a written document
detailing proposed new Charges for each pricing element subject to
Repricing, which proposed new Charges shall take into account (a) the
facts and circumstance giving rise to the Repricing event, (b) Sears’
expected future consumption of the applicable Service, and (c) the terms
and conditions applicable to such Service. The Parties shall, within
thirty (30) days after Sears receives CSC’s proposed new Charges,
negotiate in good faith the revised pricing to be applied to each pricing
element subject to Repricing. CSC covenants that the Charges it proposes
in connection with each Repricing shall be competitive with those
available to Sears from other providers for similar Services, volumes and
performance standards.

	 
	13.10	 	Benchmarking.

	 	(a)	 	Required Benchmark Reviews. At the intervals set forth, if
any, in the applicable Transaction Document, the Parties shall
participate in collaborative benchmarking reviews with an
independent Third Party selected by the Parties (a “Benchmarker”) to
compare the quality and cost of the Services against the quality and
cost of well-managed tier one information technology service
providers performing similar services to ensure that Sears is
receiving from CSC 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 CSC hereunder (each
a “Benchmarking”). The Parties shall each pay one-half of the
charges and reimbursable expenses to be paid to the Benchmarker for
each Benchmarking. In conducting the Benchmarking, the Benchmarker
shall consider the following factors, as well as any other
appropriate factors, and shall adjust the prices as and to the
extent appropriate: (i) whether supplier transition charges are
paid by the customer as incurred or amortized over the term of the
applicable agreement; (ii) the extent to which supplier pricing
includes the purchase of the customer’s existing assets; (iii) the
extent to which supplier pricing includes the cost of acquiring
future assets; (iv) the extent to which this Agreement calls for
supplier to provide and comply with unique Sears requirements; and
(v) whether Service Taxes are included in such pricing or stated
separately in supplier invoices. Prior to commencement of a
Benchmarking the Parties shall mutually
agree with the Benchmarker on the methodology to be used to perform
such Benchmarking. If the Parties cannot, in good faith, agree
upon a Benchmarker or either Party disputes, in good faith, the
methodology to be used by the Benchmarker, then either Party may
submit a notice to the other Party, stating the nature of the
disagreement and identifying with particularity the basis of such
Party’s dispute and the matter shall immediately thereafter be
resolved, in good faith, pursuant to Section 22 (Dispute
Resolution).

	 
	 	(b)	 	Other Price Reviews. From time to time during the Term of
the applicable Transaction Document, Sears may, at its own cost,
engage a Benchmarker to conduct a Benchmarking or similar
competitive review.

57

 

	 	(c)	 	General. Any Benchmarker engaged by the Parties or by Sears
shall execute an appropriate non-disclosure agreement. CSC shall
cooperate fully, in a collaborative manner, with Sears and the
Benchmarker and shall provide reasonable access to the Benchmarker
during such effort, all at CSC’s cost and expense. The Benchmarking
shall be conducted so as not to unreasonably disrupt CSC’s
operations under this Agreement.

	 
	 	(d)	 	Results of Required Benchmarking. For any Benchmarking
required under the applicable Transaction Document, the Benchmarker
shall submit a written report to both Parties setting forth the
Benchmarker’s findings and conclusions (the “Benchmark Results”).

	 
	 	(e)	 	Non-Competitive Charges. If the Benchmark Results indicate
(after resolution of any dispute as provided in Section
13.10(d) (Results of Required Benchmarking)), that the Charges
being paid by Sears for the Benchmarked Services under the
applicable Transaction Document are greater than the lowest
twenty-five percent (25%) of the prices charged by other
well-managed information technology service providers for services
of a similar nature, type and volume (the “Benchmark Standard”), or
the service levels associated with the contracts reviewed in
creating the Benchmark Standard are more stringent than those in
effect under such Transaction Document, CSC shall adjust the Charges
downward to reflect the Benchmark Results, including an appropriate
adjustment for any less-stringent service levels reflected by the
Benchmark Results, effective as of earlier of: (i) the date
specified in the Transaction Document; or (ii) the date the
Benchmark Results are first delivered to both Parties. The Charges
under this Agreement shall not be increased as the result of any
such Benchmarking.

	13.11	 	Most Favored Customer.

	 
		 	***.

*** CONFIDENTIAL MATERIAL
REDACTED AND SEPARATELY FILED WITH THE COMMISSION.

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	14.	 	INVOICING AND PAYMENT

	 
	14.1	 	Invoicing.

	 	(a)	 	Invoice. Within five (5) days after the beginning of each
month, CSC shall present Sears with a written invoice for any
Charges due and owing for the preceding month (the “Monthly
Invoice”), and the applicable rates for such Charges based on the
rate card set forth in the applicable Transaction Document. CSC
shall not invoice Sears for any advance or concurrent charges or
other amounts. CSC shall submit all Monthly Invoices to the
following address:

Sears, Roebuck and Co.

c/o Accounts Payable

P.O. Box 957437

Hoffman Estates, Illinois 60179-7437

IT Manager: Sears VP Operations/Engineering

IT Ledger Code: 704-OP

	 		 	or to such other address as may be specified by Sears from time to
time upon notice to CSC. Each invoice must reference the Sears IT
Manager, Sears IT Ledger Code and applicable Transaction Document
number.

	 
	 	(b)	 	Form and Data. At Sears’ request, CSC shall provide separate
Monthly Invoices for each Eligible Recipient then receiving
Services, allocated among such Eligible Recipients based on the
charge-back data generated by CSC and the allocation formula
provided by Sears. Each invoice shall be in a form as may be
reasonably acceptable to Sears and shall (i) comply with all
applicable legal, regulatory and accounting requirements, (ii)
contain transaction-level detail and other data sufficient to permit
Sears to validate and verify volumes and fees, (iii) permit Sears to
charge-back internally to the same organizational level and at the
same level of detail in use by Sears as of the applicable
Commencement Date, (iv) include accurate “bill to” designators, (v)
segregate the Charges for (1) taxable Services, (2) non-taxable
Services, (3) items for which CSC functions merely as a paying agent
for Sears (including leasing and licensing arrangements) that are
non-taxable or have previously been subject to tax, (4) the type and
amount of tax due on taxable Services billed by CSC (by taxing
jurisdiction), and (5) other taxes (if any) collected by CSC under
this Agreement, and (vi) otherwise meet the Eligible Recipients’
billing requirements. Each invoice shall include the pricing
calculations and related data utilized to establish the Charges.
Each invoice, and the data underlying each invoice, shall be
delivered to Sears electronically in a form and format compatible
with and suitable for automated input into Sears’ Systems and its
processes (e.g., as a fixed or delimited flat file or other mutually
agreed-upon file format). If requested by Sears, the Parties shall
work together to develop additional procedures for invoicing formats
and methods for invoice reconciliation.

59

 

	 	(c)	 	Credits. To the extent a credit may be due to Sears pursuant
to this Agreement or any Transaction Document, CSC shall provide
Sears with an appropriate credit against amounts then due and owing.
If such credit to Sears exceeds the Charges payable by Sears to CSC
over a two (2) month period, then any excess shall be paid to Sears
at the end of such two (2) month period.

	 
	 	(d)	 	Time Limitation. If CSC fails to invoice Sears for any
amount within ninety (90) days after the month in which the Services
in question are rendered or the expense incurred, CSC shall be
deemed to have waived any right it may otherwise have to invoice for
and collect such amount (and Sears shall have no obligation to pay
such amounts).

	14.2	 	Payment.

	 	(a)	 	Timing. Subject to the other provisions of this Section
14 (Invoicing and Payment), Sears shall initiate payment (e.g.,
by check, wire transfer, application of a credit due Sears) of all
properly invoiced amounts within thirty (30) calendar days after
receipt of a proper and correct Monthly Invoice as provided for
under Section 14.1 (Invoicing) unless (a) such 30th day is a
Saturday, Sunday or bank holiday, in which case such amounts shall
be due on the next banking day or (b) the amount in question is
disputed in accordance with Section 14.4 (Disputed Charges),
in which case Sears shall initiate payment of the undisputed portion
of such Monthly Invoice as provided in this Section 14.2
(Payment). Any undisputed amount due under this Agreement for which
a time for payment is not otherwise specified also shall be payable
as provided in this Section 14.2 (Payment).

	 
	 	(b)	 	Interest. If any properly invoiced amount remains unpaid by
Sears after the payment due date specified in Section 14.2(a)
(Timing), CSC may impose an interest charge until such amount is
paid at the Contract Rate per month; provided, that CSC shall
not impose an interest charge on the portion of Charges that Sears
is disputing in accordance with Section 14.4 (Disputed
Charges). Additionally, if CSC fails to timely issue any credit to
(or pay) Sears for any amounts owing hereunder, such amounts shall
accrue interest until paid by CSC at the Contract Rate per month.

	14.3	 	Set Off.

	 
	 	 	Sears shall have the right to set off any amounts properly due Sears in
connection with this Agreement against any undisputed amounts owed to CSC
under this Agreement.

	 
	14.4	 	Disputed Charges.

	 
	 	 	Sears may withhold payment of particular Charges ***, that Sears disputes
in good faith, subject to the following:

*** CONFIDENTIAL MATERIAL REDACTED AND SEPARATELY FILED WITH THE COMMISSION.

60

 

	 	(a)	 	Description and Explanation. If Sears disputes any CSC
Charges, Sears shall promptly notify CSC and provide a description
of the particular Charges in dispute and an explanation of the
reason why Sears disputes such Charges, ***.

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

	 
	 	(c)	 	***.

	 
	 	(d)	 	***.

	15.	 	SEARS DATA AND OTHER CONFIDENTIAL INFORMATION

	 
	15.1	 	Sears Ownership of Sears Data.

	 
	 	 	Sears Data is and shall remain the property of the applicable Eligible
Recipients. CSC shall promptly deliver Sears Data (or the portion of
such Sears Data specified by Sears) to Sears in the format and on the
media prescribed by Sears (a) at any time at Sears’ request, (b) at the
end of the Term of the applicable Transaction Document and the completion
of all requested Termination Assistance Services, or (c) with respect to
particular Sears Data, at such earlier date that such data are no longer
required by CSC to

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61

 

	 	 	perform the Services. Neither CSC, its Affiliates nor the CSC Personnel
shall withhold any Sears Data as a means of resolving any dispute. Sears
Data shall not be utilized by CSC, its Affiliates or the CSC Personnel
for any purpose other than the performance of Services under this
Agreement and shall not be sold, assigned, leased or otherwise
commercially exploited by or on behalf of CSC or any CSC Personnel.
Neither CSC, its Affiliates nor the CSC Personnel shall possess or assert
any lien or other right against or to Sears Data.

	 
	15.2	 	Safeguarding Sears Data.

	 	(a)	 	Safeguarding Procedures.

	 	(i)	 	CSC shall establish and maintain environmental,
safety and facility procedures, data security procedures and
other safeguards against the destruction, loss, unauthorized
access or alteration of Sears Data in the possession of CSC or
the CSC Personnel that are no less rigorous than the
most rigorous procedures and safeguards maintained by Sears
or CSC from time to time, and at least adequate to meet the
requirements of Sears’ records retention policy and
applicable Laws. CSC shall revise and maintain such
procedures and safeguards upon Sears’ request. Sears shall
have the right to establish backup security for Sears Data
and to keep backup copies of the Sears Data in Sears’
possession at Sears’ expense if Sears so chooses. If CSC,
its Affiliates or their Subcontractors revoke access to any
of its Systems for any CSC Personnel for any reason (e.g.,
resignation, termination, security purposes, etc.), and such
Personnel have or in the past have been given access to Sears
Provided Systems, CSC shall immediately (1) notify Sears’
designated security contact of such revocation of access
rights, and (2) revoke such CSC Personnel’s access to all
Sears Provided Systems for which CSC has operational
responsibilities.

	 
	 	(ii)	 	CSC shall remove all Sears Data from any media,
CSC Provided Systems and CSC Managed Systems taken out of
service ***, and from any Sears Provided Systems that are
taken out of service by CSC Personnel and shall securely erase
all Sears Data from such media and Systems. No media on which
Sears Data is stored may be used or re-used to store data of
any other customer of CSC or to deliver data to a Third Party,
including another CSC customer, unless Sears Data has been
securely erased from such media. Where this Agreement calls
for off-site storage of Sears Data, CSC shall use a
commercially acceptable off-site storage facility. All backup
and off-site storage shall be in full compliance with all
confidentiality provisions of this Agreement.

	 	(b)	 	Reconstruction Procedures. As part of the Services, CSC
shall be responsible for developing and maintaining commercially
reasonable procedures for the reconstruction of destroyed, lost or
altered Sears Data, including any procedures

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62

 

explicitly set forth in this Agreement. If and to the extent that
such destruction, loss or alteration was caused by CSC, its
Affiliates, CSC Personnel, any CSC Provided System or CSC Managed
System, CSC shall be responsible for the cost of restoring such
data.

	15.3	 	Confidentiality.

	 	(a)	 	Confidential Information. This Section 15.3
(Confidentiality) shall apply to any information exchanged between
the Parties regarding the Services or any proposed services or other
business, regardless of whether the Parties enter into a Transaction
Document regarding such proposed business. CSC’s obligations
pursuant to this Section 15.3 (Confidentiality) shall be in
addition to, and not in lieu of, CSC’s obligations provided for
elsewhere in this Agreement.

	 
	 	(b)	 	Confidential Business Information.

	 	(i)	 	Definition. The term “Confidential
Business Information” means any information, whether disclosed
in oral, written, visual, electronic or other form, disclosed
by, or on behalf of, a Party or such Party’s Affiliates (and,
as to Sears, the other Eligible Recipients) and their
Personnel (the “Disclosing Party”) to the other Party or such
Party’s Affiliates (the “Receiving Party”) or to Receiving
Party’s Personnel or which the Receiving Party or its
Personnel observe in connection with this Agreement, whether
before or after the date of this Agreement; that (1) if in
tangible form or other media that can be converted to readable
form, is marked clearly as “confidential” (or with a similar
term) when disclosed, or (2) if oral or visual, is either (A)
identified as “confidential” (or with a similar term) at the
time of disclosure and is promptly summarized in a writing
marked as such thereafter, or (B) treated as confidential by
the Disclosing Party and would reasonably be understood to be
confidential, whether or not so marked. Sears’ Confidential
Business Information shall include, without the need to mark
it as such, Sears Data and Sears’, Sears Affiliates’ and the
other Eligible Recipients’: business plans, strategies,
forecasts, projects and analyses; customer lists, customer
contracts, customer information, rates and pricing,
information with respect to competitors, strategic plans,
Sears Provided Systems, CSC Managed Systems, CSC Designated
Contracts, account information and research information;
financial information (including assets, expenditures,
mergers, acquisitions, divestitures, billings collections,
revenues and finances); employee and vendor information;
system designs and requirements, architectures, structure and
protocols (including all hardware, software and specifications
and documentation related thereto); 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;
information regarding businesses, plans, operations,
third-party contracts, licenses, internal or external audits,
law suits, regulatory compliance or

63

 

other information or data obtained, received, transmitted,
processed, stored, archived or maintained by CSC under this
Agreement; and other business processes and proprietary
information. The Disclosing Party’s Confidential Business
Information shall remain the property of such Entity.

	 	(ii)	 	Failure to Denote as Confidential.
Subject to Section 15.3(b)(i)(2)(B), if the Disclosing
Party fails to denote Confidential Business Information as
“confidential” (or with a similar term) prior to disclosure,
and later does so, and such Confidential Business Information
would not otherwise be considered as such pursuant to
Section 15.3(b)(i) (Definition), the Receiving Party
shall, after
receiving such notice, treat such information as Confidential
Business Information of the Disclosing Party to the extent
such untimely notice does not prejudice the Receiving Party.

	 
	 	(iii)	 	Treatment of Confidential Business
Information. The Receiving Party shall use at least the
same degree of care and discretion to safeguard and prevent
disclosure, publication or dissemination of any Confidential
Business Information received from the Disclosing Party as the
Receiving Party uses to avoid unauthorized disclosure,
publication or dissemination of its own information (or
information of its customers) of a similar nature, but not
less than reasonable care. Further, the Receiving Party
shall: (1) use the Disclosing Party’s Confidential Business
Information only in connection with the Receiving Party’s
performance of its obligations or its full enjoyment of its
rights under this Agreement, and (2) not disclose the
Disclosing Party’s Confidential Business Information except to
its Personnel who have a need to know such Confidential
Business Information in connection with the performance of the
Receiving Party’s obligations or the full enjoyment of its
rights under this Agreement. CSC shall restrict disclosure of
Sears’ Confidential Business Information to the CSC Personnel
who have executed a written agreement by which they agree to
be bound by terms substantially similar to this Section
15.3 (Confidentiality). In any case, the Receiving Party
is liable for any unauthorized disclosure or use of
Confidential Business Information by any of its Personnel.

	 
	 	(iv)	 	Exceptions to Confidential Treatment. The
obligations under this Section 15.3(b) (Confidential
Business Information) do not apply to any Confidential
Business Information that the Receiving Party can demonstrate:

	 	(1)	 	the Receiving Party possessed prior
to disclosure by the Disclosing Party, or its
Affiliates, without an obligation of confidentiality;

	 
	 	(2)	 	is or becomes publicly available
without breach of this Agreement by the Receiving Party;

64

 

	 	(3)	 	is independently developed by the
Receiving Party without use of any Confidential Business
Information of the Disclosing Party; or

	 
	 	(4)	 	is received by the Receiving Party
from a Third Party that does not have an obligation of
confidentiality to the Disclosing Party or its
Affiliates.

	 	(v)	 	Disclosure. If, in the reasonable opinion
of its legal counsel, a Receiving Party is: (1) required by
Law to disclose any Confidential Business Information of the
Disclosing Party, including in connection with
any legal proceeding, or (2) such disclosure would be
material in any legal proceeding concerning the Confidential
Business Information, the Services provided for hereunder or
this Agreement, then the Receiving Party may disclose such
information to the applicable arbitrator, court or other
governmental authority, etc., as the case may be, and shall
not thereby be considered to have breached its obligations
under this Section 15.3(b) (Confidential Business
Information) for such disclosure; provided,
however, that in each case, the Receiving Party shall,
to the extent it may legally do so, notify the Disclosing
Party a reasonable time prior to such disclosure of the
Confidential Business Information to be disclosed and the
identity of the Third Party requiring such disclosure in
order that the Disclosing Party may interpose an objection to
such disclosure, take action to assure confidential handling
of the Confidential Business Information or take such other
action as it deems appropriate to protect the Confidential
Business 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, if such protective order or
other remedy is not obtained, to obtain assurance that
confidential treatment shall be accorded such Confidential
Business Information.

	 
	 	(vi)	 	Duration. The Receiving Party’s
obligations under this Section 15.3(b) (Confidential
Business Information) shall survive the termination or
completion of the applicable Transaction Document for a period
of five (5) years from the date that the applicable
Confidential Business Information was initially disclosed.

	 	(c)	 	Confidential Personal Information.

	 	(i)	 	General. CSC agrees that all information
about the Eligible Recipients (including their respective
Affiliates’ individual customers and Personnel), provided to
CSC or the CSC Personnel by Eligible Recipients, including
names, addresses, telephone numbers, account numbers, customer
lists and demographic, financial and transaction information,
as well as employee lists and company telephone or e-mail
directories and any other information that is subject to
applicable Privacy Laws (collectively, “Confidential Personal
Information”) shall be deemed confidential.

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This Section 15.3(c) (Confidential Personal
Information) shall not apply to information independently
developed by CSC without the use of Confidential Personal
Information; provided that neither CSC nor the CSC
Personnel are using such information on Eligible Recipients’
behalf. If information may be deemed to be both Sears
Business Information and Sears Confidential Personal
Information, the provisions
of this Section 15.3(c) (Confidential Personal
Information) shall control.

	 	(ii)	 	Treatment of Confidential Personal
Information. CSC shall use Confidential Personal
Information only as necessary to perform the Services and its
other obligations under this Agreement. CSC shall not
duplicate or incorporate the Confidential Personal Information
into its own records or databases. CSC shall restrict
disclosure of Confidential Personal Information to those CSC
Personnel who have a need to know such information to perform
the Services and who have first agreed in writing to be bound
by terms substantially similar to this Section 15.3(c)
(Confidential Personal Information). CSC shall be liable for
any unauthorized disclosure or use of Confidential Personal
Information by any CSC Personnel.

	 
	 	(iii)	 	Non-Disclosure of Confidential Personal
Information. CSC shall not disclose the Confidential
Personal Information to any third party including Affiliates
of CSC, agents, independent contractors except Exempt
Subcontractors and Subcontractors approved by Sears, without
prior written consent of Sears and the written agreement of
such third party to be bound by terms substantially similar to
this Section 15.3(c) (Confidential Personal
Information). Unless otherwise prohibited by applicable Law,
CSC shall: (1) immediately notify Sears of any legal process
served on CSC for the purpose of obtaining Confidential
Personal Information; and (2) permit Sears or its Affiliates
adequate time to exercise its legal options to prohibit or
limit such disclosure.

	 
	 	(iv)	 	CSC Policies for Confidential Personal
Information. CSC shall establish and maintain written
policies and procedures designed to: (1) ensure the security
and the confidentiality of the Confidential Personal
Information; (2) protect against any anticipated threats or
hazards to the security or integrity of such information; and
(3) protect against unauthorized access to or use of such
information that could result in substantial harm or
inconvenience to any customer or data subject. Copies of such
policies and procedures shall be provided to Sears by CSC upon
Sears’ request.

	 
	 	(v)	 	CSC Notification for Confidential Personal
Information. CSC shall notify Sears promptly upon the
discovery of the actual or potential loss, unauthorized
disclosure or unauthorized use of the Confidential Personal
Information and shall indemnify and hold harmless the Eligible
Recipients for such loss, unauthorized disclosure or
unauthorized use, including Attorneys’ Fees pursuant to
Section 20.1 (Indemnity by CSC).

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	 	(vi)	 	CSC Breach. A material breach by CSC or
the CSC Personnel of this Section 15.3(c) (Confidential
Personnel Information) shall be a material breach of this
Agreement. In addition, Sears shall be entitled to the
recovery of any pecuniary gain realized by CSC or the CSC
Personnel from the unauthorized use or disclosure of
Confidential Personal Information.

	 	(d)	 	Return or Destruction of Confidential Information. Within ten
(10) days following the earlier of (i) termination or expiration of
this Agreement or any Transaction Document or (ii) completion of any
Services for which such Confidential Personal Information has been
provided, CSC shall, at Sears’ discretion, either return Sears’
Confidential Information, and all copies and derivatives thereof, to
Sears, and certify in writing to Sears that such Confidential
Information and all copies and derivatives thereof have been
destroyed in such a manner that it cannot be retrieved.

	 
	 	(e)	 	Loss of Confidential Information. Each Party shall (i)
immediately notify the other Party of any actual or potential breach
of security, unauthorized possession, use, knowledge, disclosure or
loss of such other Party’s Confidential Information, including Sears
Data, 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 recurrence 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 protect its rights, and (iv) promptly use all
commercially reasonable efforts to prevent further possession, use,
knowledge, disclosure or loss of Confidential Information in
contravention of this Agreement. Each Party shall bear any costs it
incurs in complying with this Section 15.3(e) (Loss of
Confidential Information). Furthermore, CSC shall, at no additional
charge, perform a Root Cause Analysis of any security failure
regarding a CSC Provided System, a CSC Managed System or
unauthorized access to Sears Provided Systems originating directly
or indirectly from any CSC Provided Systems, CSC Managed Systems or
CSC Personnel and provide Sears with such reasonable assurances as
Sears shall request that such breach or potential breach shall not
recur; ***.

	 
	 	(f)	 	No Implied Rights. Nothing contained in this Section
15.3 (Confidential Information) shall be construed as (i)
obligating a Party to disclose its Confidential Information to the
other Party, (ii) granting to or conferring on a Party any express
or implied rights or license to any Confidential Information of

*** CONFIDENTIAL MATERIAL REDACTED AND SEPARATELY FILED WITH THE COMMISSION.

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the other Party, or (iii) limiting or affecting any rights or
licenses granted to either Party elsewhere in this Agreement.

	15.4	 	File Access.

Sears Personnel authorized by the Sears Relationship Manager shall have
unrestricted access to, and the right to review and retain the entirety
of, all computer or other files containing Sears Data, as well as all
Systems and network logs, system parameters and documentation, and all
such files and other information provided to the Eligible Recipients
shall be complete. CSC shall not delay access by Sears to any of such
files or other materials or information. CSC shall provide to the Sears
Relationship Manager all passwords, codes, comments, keys, documentation
and the locations of any such files and other materials promptly upon the
request of Sears, including Equipment and Software keys and such
information as to format, encryption (if any) and any other specification
or information necessary for the Eligible Recipients to retrieve, read,
revise and/or maintain such files and information.

	16.	 	OWNERSHIP

	16.1	 	CSC Provided Systems.

	 	(a)	 	Ownership of CSC Provided Systems. Subject only to the
licenses granted to the Eligible Recipients by CSC under this
Agreement, title to all CSC Provided Systems shall not be affected
by this Agreement and shall at all times remain with CSC (or with
CSC’s or its Subcontractors’ licensors).

	 
	 	(b)	 	*** — Patents.

	 	(i)	 	Acknowledgement. CSC acknowledges and
agrees that (i) it may be given access to the Eligible
Recipients’ respective business operations and Confidential
Information during the course of CSC’s performance of the
Services, and (ii) by virtue of such access, it may develop
and patent related business methods and innovations.

	 
	 	(ii)	 	CSC and its Affiliates. CSC covenants, on
behalf of itself, its Affiliates and their respective
employees (while acting within the scope of their employment)
and their successors and assigns, that they shall not, and
shall cause each of its Affiliates and their respective
employees to not, enforce or assert, during the Term and
thereafter, against ***, or any of their Personnel (in
connection with such Personnel’s relationship with Sears), any
United States or foreign patent at any time owned, acquired or
controlled by CSC, any of its Affiliates or their respective
employees claiming any business method or innovation related
to the retail industry or any other aspect of the ***
respective products, services, methods of operation or
relating to any Confidential Information of any ***,

*** CONFIDENTIAL MATERIAL REDACTED AND SEPARATELY FILED WITH THE COMMISSION.

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	 		 	or any of their Personnel (in connection with such Personnel
relationship with Sears); ***.

	 
	 	(iii)	 	Sears Cooperation. If during the Term, a
***, implements, after the Effective Date of any applicable
Transaction Document, any process, method of operation or
System *** is an infringement of such CSC Patent, then Sears
will, upon CSC’s written request, ***.

	 
	 	(iv)	 	Subcontractors. In addition, except as
expressly provided otherwise in a Transaction Document, CSC
shall cause all Subcontractors (and their respective
Affiliates) to not enforce or assert, during the Term and
thereafter, against the Eligible Recipients any United States
or foreign patent at any time owned, acquired or controlled by
any such Subcontractor (or any of its Affiliates) claiming any
business method or innovation related to the retail industry
or any other aspect of the Eligible Recipients’ respective
products, services or businesses or relating to any
Confidential Information of any Eligible Recipient, except for
patents claiming inventions that were not invented, developed,
conceived, reduced to practice or otherwise discovered as a
result of, pursuant to or in connection with the Services or
this Agreement.

*** CONFIDENTIAL MATERIAL REDACTED AND SEPARATELY FILED WITH THE COMMISSION.

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	16.2	 	Sears Provided Systems.

Subject only to the license granted by Sears to CSC in Section 10.6
(License to Sears Provided Systems), title to all Sears Provided Systems shall
not be affected by this Agreement and shall at all times remain with Sears (or
with the Eligible Recipients’ licensor(s)), and CSC shall and hereby does,
without further consideration, assign to Sears any and all right, title or
interest that CSC, its Affiliates or the CSC Personnel may now or hereafter
possess in or to the Sears Provided Systems. To the fullest extent permissible
by applicable Law, all copyrightable aspects of any Sears Provided Systems
developed by CSC or the CSC Personnel shall be considered “works made for hire”
(as that term is used in Section 101 of the United States Copyright Act, as
amended) and owned by Sears. For purposes of clarity, if a Deliverable to be
owned by Sears pursuant to this Section 16.2 (Sears Provided Systems)
contains a Derivative Work based upon any pre-existing work in which a Third
Party has rights and such pre-existing work was provided to CSC by an Eligible
Recipient for use with such Deliverable or was incorporated into such
Deliverable by CSC Personnel with Sears’ prior written consent, then the
assignment and transfer to Sears of rights, title and interest in and to such
Derivative Work pursuant to this Section 16.2 (Sears Provided Systems)
shall be subject to such Third Party’s rights, if any. CSC acknowledges that,
as between CSC, CSC Personnel and Sears, Sears (and its successors and assigns)
shall have the right to obtain and hold in their own name any Intellectual
Property Rights in and to the Sears Provided Systems. CSC shall execute any
documents and take any other actions reasonably requested by Sears to
effectuate the purposes of this Section 16.2 (Sears Provided Systems).
If and to the extent that CSC uses a Third
Party to create Derivative Works, modifications, enhancements or other
Deliverables based upon (or for) a Sears Provided System, and a related portion
of such Sears Provided System was licensed to Sears by such Third Party prior
to the commencement of such work, then, CSC may not be able to get from such
Third Party the ownership rights provided for in this Section 16.2
(Sears Provided Systems). If such Third Party will not provide such ownership
rights, then CSC will not commence the applicable Services and instead CSC will
inform Sears in writing of the intellectual property rights such Third Party
will provide, and will request that Sears either or approve or reject such
lessor rights (which approval Sears may withhold in its sole discretion).
After notice from CSC that it can not get such rights, CSC shall be relieved
from providing such Services until Sears has expressly accepted or rejected
such lesser rights. If Sears rejects such rights, CSC shall be thereafter
relieved from providing such Services and the Parties shall equitably adjust
the resulting Charges. If Sears does accept such lesser rights, such change
will be documented in a Service Addenda to the Agreement prior to commencement
of the applicable Services.

	16.3	 	Deliverables.

	 	(a)	 	License to Sears. Unless otherwise expressly set forth in
the applicable Transaction Document, CSC shall and hereby does grant
to Sears a perpetual, assignable, unrestricted, worldwide,
royalty-free, irrevocable, non-exclusive right and license to copy,
use, display, modify, create Derivative Works based upon,
distribute, sublicense and otherwise enjoy all Deliverables
(including any CSC Provided Software or CSC Provided Materials
incorporated into such Deliverables or necessary to operate such
Deliverables) to the same extent as if Sears were the sole owner
thereof, without an obligation to account to CSC. For

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the avoidance of doubt, the parties agree that in the event both
this Section 16.1(a) and Section 16.3 (Sears Provided
Systems) could apply in a particular circumstance, that Section
16.3 (Sears Provided Systems) shall control over this Section.

	 	(b)	 	Restrictions. CSC shall not incorporate into any Deliverable
any CSC Provided Systems or other Third Party Materials for which
CSC does not have the right to grant the license provided for under
Section 16.3(a) (License to Sears).

	 
	 	(c)	 	Source Code and Documentation. CSC shall, upon Sears’
request, provide Sears with the source code and documentation for
all Deliverables that are Software, on media and in a format
reasonably requested by Sears. Such source code shall be sufficient
to allow a reasonably knowledgeable and experienced programmer to
maintain and support such Deliverables; and the user documentation
for such Deliverables shall accurately describe, in terms
understandable by a typical end user, the functions and features of
such Deliverables and the procedures for exercising such functions
and features.

	16.4	 	General Knowledge.

This Agreement shall not preclude either Party from using its general
knowledge, skills and experience; provided, however, that,
in each case, such Party does not use or disclose in connection therewith
any of the Confidential Information of the other Party or its Affiliates
(or in case of Sears, any Eligible Recipient) or infringe or
misappropriate any Intellectual Property Rights of the other Party or its
Affiliates (or in case of Sears, any Eligible Recipient).

	16.5	 	Other Rights.

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 Sears, owned by any
Eligible Recipient).

	16.6	 	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.

	17.	 	REPRESENTATIONS, WARRANTIES AND COVENANTS

	17.1	 	By CSC.

CSC represents, warrants and covenants (as to future performance) to
Sears (on its behalf and on behalf of the Eligible Recipients) as
follows:

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	 	(a)	 	Work Standards. The Services shall be rendered with
promptness and diligence and shall be executed in a workmanlike
manner, in accordance with the Service Levels, the best practices
and professional standards required under this Agreement. CSC shall
use adequate numbers of qualified individuals and all CSC Personnel
shall have suitable training, education, experience, competence and
skill to perform the Services. CSC shall provide such individuals
with sufficient training as to new products and services prior to
the implementation of such products and services in any Eligible
Recipient’s environment.

	 
	 	(b)	 	Maintenance.

	 	(i)	 	CSC Responsibility. Unless otherwise
agreed, CSC shall maintain the CSC Provided Systems and CSC
Managed Systems and Deliverables so that they operate
substantially in accordance with their respective
Specifications, including (1) maintaining Equipment in good
operating condition, subject to normal wear and tear, (2)
undertaking repairs and preventive maintenance on such
Equipment in accordance with
the applicable manufacturer’s recommendations and
requirements, and (3) performing maintenance on such Software
in accordance with the applicable Software supplier’s
documentation, recommendations and requirements.

	 
	 	(ii)	 	Refresh. CSC shall, subject to Section
6.5 (Technology) or as otherwise agreed by the Parties,
Upgrade or replace such CSC Provided Systems and CSC Managed
Systems as necessary to satisfy its obligations under this
Agreement, at no additional cost to Sears.

	 	(c)	 	Efficiency and Cost Effectiveness. CSC 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:

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

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

	 
	 	(iii)	 	Systems Optimization. Tuning or
optimizing CSC Provided Systems and CSC Managed Systems
(including memory) to optimize performance and minimize costs.

	 
	 	(iv)	 	Usage Scheduling. Controlling its use of
the CSC Provided Systems, CSC Managed Systems and the Sears
Provided Systems by scheduling usage, where possible, to lower
cost/utilization periods.

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	 	(v)	 	Efficiency. Efficiently using resources
for which Sears is charged under this Agreement, consistent
with industry norms, and compiling data concerning such
efficient use in segregated and auditable form whenever
possible.

	 	(d)	 	CSC Provided Systems/CSC Managed Systems/Deliverables. CSC is
either the owner of, or authorized to use, any and all CSC Provided
Systems, CSC Managed Systems (but not including any CSC Managed
Systems provided under the Excluded Agreements) and Deliverables,
and the use thereof by CSC, the CSC Personnel and the Eligible
Recipients in accordance with this Agreement shall not infringe or
misappropriate any Intellectual Property Rights of any Third Party.
As to any such CSC Provided Systems, CSC Managed Systems and
Deliverables that CSC does not own but is authorized to use, CSC
shall, prior to the use thereof in connection with the Services,
advise Sears as to the ownership and extent of CSC’s rights with
regard to such items to the extent any limitation in such rights
would impair CSC’s performance of its obligations under this
Agreement and obtain Sears’ written consent to such limitations.

	 
	 	(e)	 	Deliverables. All Deliverables (when delivered, but
excluding interim Deliverables for which the applicable project plan
calls for a later final Deliverable) shall be free from error, shall
comply with the requirements, if any, set forth in the applicable
Transaction Document and, except as expressly specified otherwise in
a Transaction Document, shall be fully compatible with any and all
Software and Equipment that such Deliverable was intended to be
interfaced or otherwise operated with.

	 
	 	(f)	 	Non-Infringement. Except as otherwise provided in this
Agreement, CSC and the CSC Personnel shall perform CSC’s
responsibilities under this Agreement in a manner that does not
infringe, or constitute an infringement or misappropriation of, any
Intellectual Property Rights of any third party; provided,
however, that CSC shall not have any obligation or liability
to the extent any infringement or misappropriation is caused by (i)
modifications to CSC Provided Systems, CSC Managed Systems or
Deliverables made by Eligible Recipients, without the knowledge or
approval of CSC, (ii) Sears’ or the other Eligible Recipients’
combination of CSC Provided Systems, CSC Managed Systems or
Deliverables with items not furnished, specified or reasonably
anticipated by CSC or contemplated by this Agreement or known by CSC
Personnel to be used with such items, (iii) a breach of this
Agreement by Sears, (iv) the failure of Sears to use corrections or
modifications provided by CSC, without additional charge and with
notice of actual infringement, offering equivalent or superior
features and functionality, or (v) CSC Managed Systems, except to
the extent that such infringement or misappropriation arises from
the failure of CSC to obtain the necessary licenses or Required
Consents or to abide by the Third Party Contracts associated with
such CSC Managed Systems. CSC shall not use or create materials in
connection with the Services which are libelous, defamatory or
obscene.

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	 	(g)	 	Authorization.

	 	(i)	 	Corporate Existence. CSC is a corporation
duly incorporated, validly existing and in good standing under
all applicable Laws;

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

	 
	 	(iii)	 	Legal Authority. CSC 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;

	 
	 	(iv)	 	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 CSC; and

	 
	 	(v)	 	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 CSC 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.

	 	(h)	 	Sears Code of Conduct and Privacy Policies. CSC acknowledges
that it has been furnished a copy of Sears Code of Business Conduct
(the “Code of Conduct”) and Sears Privacy Policies (collectively,
the “Privacy Policy”) and that Sears’ associates are required to
follow the Code of Conduct and Privacy Policy. CSC shall at all
times support and abide by the Code of Conduct and Privacy Policy,
as they may be modified from time to time by Sears, and shall not
take any action to induce Sears Personnel to violate the Code of
Conduct or Privacy Policy. In addition neither CSC, its Affiliates
nor the CSC Personnel have given nor shall give commissions,
payments, kickbacks, lavish or extensive entertainment, or other
inducements of more than minimal value to any Sears Personnel in
connection with this Agreement. CSC acknowledges that the giving of
any such payments, gifts, entertainment or other thing of value is
strictly in violation of the Code of Conduct, and may result in the
termination of this Agreement for cause by Sears, in whole or in
part, and any or all other existing and future contracts between the
Parties. CSC shall report to Sears immediately any violation of or
attempt to violate the Code of Conduct or Privacy Policy.

	 
	 	(i)	 	Unauthorized Code.

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	 	(i)	 	General. CSC shall cooperate with Sears
and shall take commercially reasonable actions and precautions
consistent with the applicable Transaction Document to prevent
the introduction and/or proliferation of Unauthorized Code
into an Eligible Recipient’s environment or any Sears Provided
System, CSC Provided System or CSC Managed System or
Deliverables. Without limiting CSC’s other obligations under
this Agreement, if Unauthorized Code is found in any such
systems, CSC shall exercise all commercially reasonable
efforts, at no additional charge to Sears, to eliminate and
reduce the effects of such Unauthorized Code and, if the
Unauthorized 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; ***.

	 
	 	(ii)	 	Items Containing Unauthorized Code.
Without the prior written consent of Sears, neither CSC nor
the CSC Personnel shall use any Software or Equipment or
Systems that includes Unauthorized Code in connection with the
Services and neither CSC, its Affiliates nor their Personnel
shall insert, or permit insertion of, any Unauthorized Code
into any Sears Provided System, CSC Provided System or CSC
Managed System or Deliverables. *** With respect to any
Unauthorized Code that is included in such Software or
Equipment or Systems, neither CSC, its Affiliates nor its
Personnel shall invoke or cause to be invoked such
Unauthorized Code at any time, including upon expiration or
termination of this Agreement or any Transaction Document for
any reason, without Sears’ prior written consent, which may be
withheld in Sears’ sole discretion. ***.

*** CONFIDENTIAL MATERIAL REDACTED AND SEPARATELY FILED WITH THE COMMISSION.

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	 	(j)	 	Compliance with Laws.

	 	(i)	 	Compliance by CSC. With respect to the
CSC Provided Systems, CSC Managed Systems and Deliverables,
the provision of the Services and the performance of CSC’s
obligations under this Agreement, CSC shall, and shall cause
its Affiliates and the CSC Personnel to, (1) comply with all
Sears Rules and Laws from the Effective Date and at all times
thereafter during the Term of this Agreement (including any
Termination Assistance Services period(s)), including those
Sears Rules and Laws relating to security, safety, health and
the environment, and shall identify and procure all permits,
certificates, approvals and inspections required under such
Laws and (2) comply with changes in Sears Rules and Laws and
at CSC’s expense, develop and implement any necessary
modifications to the Services, upon Sears’ approval of such
proposed changes, prior to the deadline for such requirement
or change. If a charge of non-compliance by CSC with any Law
occurs, CSC shall promptly notify Sears of such charge. CSC
shall take all 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, including by providing to CSC
Personnel appropriate training. CSC shall ensure that neither
CSC nor any CSC Personnel commits, and use all reasonable
efforts to ensure that no business visitor or invitee of CSC
or CSC Personnel commits, any act in violation of any Laws in
any Sears Facility or any act in violation of any Eligible
Recipient’s insurance policies or in breach of an Eligible
Recipient’s obligations under any applicable real estate
leases in such
Sears Facilities (in each case, to the extent CSC has
received notice of such insurance policies or real estate
leases or should reasonably be expected to know of such
obligations or limitations).

	 
	 	(ii)	 	Compliance with Privacy Laws. CSC shall
(1) comply with the Sears data protection and privacy policies
disclosed by Sears to CSC from time to time and (2) provide
Sears with such assistance as Sears may reasonably require to
fulfill its responsibilities under the Privacy Laws. CSC
shall, in good faith, work with Sears to adopt and implement
such contract clauses as Sears deems reasonably necessary.

	 
	 	(iii)	 	Notice of Laws. CSC shall notify Sears
of any Laws and changes in Laws applicable to the Services and
shall identify the impact of such Laws and changes in Laws
with respect to such Services. Subject to its non-disclosure
obligation under other customer contracts, CSC shall make
commercially reasonable efforts to obtain information
regarding such requirements from other customer engagements
and to communicate such information to Sears in a timely
manner.

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	 	(k)	 	Notice of Adverse Impact. As of each applicable Commencement
Date, CSC is not aware of any failure by CSC (including the CSC
Personnel) to comply with its obligations under this Agreement or
any other situation that (i) has impacted or reasonably could be
expected to impact the maintenance of any Eligible Recipient’s
financial integrity or internal controls, the accuracy of any
Eligible Recipient’s financial, accounting, manufacturing quality or
human resources records and reports or compliance with the Code of
Conduct, Privacy Policies, Sears Rules, Sears Standards or any Laws,
or (ii) has had or reasonably could be expected to have any other
material adverse impact on the Services in question or the impacted
business operations of the Eligible Recipients. If CSC at any time
becomes aware of any such situation, then CSC shall (A) immediately
notify Sears Relationship Manager of such situation and the expected
impact, and (B) with the assistance of Sears, formulate an
appropriate plan to mitigate the impact of, and to correct, the
situation; provided, however, that changes to CSC’s
performance as a result of such plan shall be subject to Sears’
prior consent.

	 
	 	(l)	 	Interoperability. Except as expressly specified otherwise in
a Transaction Document, the CSC Provided Systems and Deliverables
shall be fully interoperable with the Sears Provided Systems and the
CSC Managed Systems that are used to run or that interface with, or
that otherwise interact with, the CSC Provided Systems and
Deliverables, including for receipt of the Services.

	 
	 	(m)	 	Pass-Through. CSC shall enforce any representations,
warranties, covenants and indemnities granted to CSC its Affiliates
or the CSC Personnel by Third Parties regarding any Software or
other Materials, Equipment and/or Services, including
the CSC Provided Systems and Deliverables, on behalf of the
Eligible Recipients to the extent reasonably requested to do so by
Sears and to the extent CSC is permitted to do so under the terms
of the applicable agreements with those Third Parties, unless CSC
determines that it is not commercially reasonable for it to do so
and CSC provides to Sears an alternative, equivalent remedy and CSC
reimburses Sears for any additional costs Sears incurs as a result
of such alternative remedy.

	17.2	 	By Sears.

Sears represents, warrants and covenants (as to future performance) to
CSC as follows:

	 	(a)	 	Non-Infringement. Except as otherwise provided in this
Agreement, Sears shall perform its responsibilities under this
Agreement in a manner that does not infringe, or constitute an
infringement or misappropriation of, any Intellectual Property
Rights of any third party; provided, however, that
Sears shall not have any obligation or liability to the extent any
infringement or misappropriation is caused by (i) modifications to
Sears Provided Systems or CSC Managed Systems not made by the
Eligible Recipients, (ii) CSC or the CSC Personnel’s combination of
Sears Provided Systems or CSC Managed Systems with items not
furnished by the Eligible Recipients (provided,
however, that Acquired Assets shall not be deemed furnished
by the Eligible Recipients), (iii) the failure of CSC

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or the CSC Personnel to use corrections or modifications provided
by Sears (or the other Eligible Recipients), without additional
charge and with notice of actual infringement, offering equivalent
or superior features and functionality, or (iv) Third Party
Materials, except to the extent that Sears (or CSC on Sears’
behalf) is responsible under this Agreement for obtaining Required
Consents for such Third Party Materials and such infringement or
misappropriation arises from the failure to obtain such Required
Consents or to abide by the limitations of the applicable licenses
for such Third Party Materials. The Eligible Recipients shall not
use or create Materials in connection with the Services which are
libelous, defamatory or obscene.

	 	(b)	 	Authorization.

	 	(i)	 	Corporate Existence. Sears is a
corporation duly incorporated, validly existing and in good
standing under all applicable Laws;

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

	 
	 	(iii)	 	Legal Authority. Sears 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;

	 
	 	(iv)	 	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 Sears; and

	 
	 	(v)	 	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 Sears or
any of Sears’ material assets are bound; or an event that
would, with notice or lapse of time, or both, constitute such
a default.

	17.3	 	Disclaimer.

EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT, NEITHER PARTY
MAKES ANY EXPRESS OR IMPLIED REPRESENTATIONS, WARRANTIES OR COVENANTS TO
THE OTHER PARTY, INCLUDING THE IMPLIED WARRANTIES OF MERCHANTABILITY,
FITNESS FOR A PARTICULAR PURPOSE AND NON-INFRINGEMENT. IN ADDITION, CSC
ACKNOWLEDGES THAT THE SEARS PROVIDED SYSTEMS AND THE CSC

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MANAGED SYSTEMS ARE PROVIDED BY THE ELIGIBLE RECIPIENTS TO CSC ON AN
AS-IS, WHERE-IS BASIS AND SEARS AND THE OTHER ELIGIBLE RECIPIENTS
EXPRESSLY DISCLAIM ANY EXPRESS OR IMPLIED REPRESENTATIONS, WARRANTIES OR
COVENANTS AS TO SUCH SEARS PROVIDED SYSTEMS AND CSC MANAGED SYSTEMS, OR
THE CONDITION OR SUITABILITY OF SUCH SEARS PROVIDED SYSTEMS AND CSC
MANAGED SYSTEMS FOR USE BY CSC TO PROVIDE THE SERVICES, INCLUDING
WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND
NON-INFRINGEMENT.

	17.4	 	Effect.

All representations, warranties and/or covenants made in any provision of
this Master Agreement by either Party shall be true when made and remain
true throughout the Term and the Term of each Transaction Document.

	18.	 	AUDIT RIGHTS

	18.1	 	Contract Records.

CSC shall, and shall cause its Affiliates and all CSC Personnel and
suppliers to, maintain complete and accurate records of and supporting
documentation for all Charges, all Sears Data and all transactions,
authorizations, System Changes, implementations, soft document access,
reports, analyses, data or information created, generated, collected,
processed or stored by CSC in the performance of its obligations under
this Agreement (“Contract Records”). CSC shall maintain such Contract
Records in accordance with generally accepted accounting principles for
the applicable jurisdiction applied on a consistent basis. CSC shall
retain Contract Records in accordance with Sears’ record retention policy
as modified from time to time and provided to CSC in writing.

	18.2	 	Sears Audit.

	 	(a)	 	General. CSC shall, and shall cause its Affiliates and the
CSC Personnel to, allow Sears (and internal, governmental and other
external auditors, inspectors, regulators and other representatives
that Sears may designate from time to time or that may have
jurisdiction over one or more Eligible Recipients) (collectively,
“Sears Audit Designees”) to conduct audits and examinations of the
operations of CSC, its Affiliates and the CSC Personnel as described
in this Section 18 (Audit Rights).

	 
	 	(b)	 	Operational and Financial Audits. CSC shall, and shall cause
its Affiliates and the CSC Personnel to, provide to Sears Audit
Designees access to CSC Personnel, to the facilities at or from
which Services are then being provided and to Contract Records and
other pertinent information, all to the extent relevant to the
Services and CSC’s obligations under this Agreement. Such access
shall be provided for the purpose of performing audits and
inspections of Sears and the other Eligible Recipients’ businesses,
to (i) verify the accuracy, completeness and integrity of

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the Sears Data and Contract Records, (ii) verify the accuracy and
completeness of Charges, Pass-Through Expenses and Out-of-Pocket
Expenses, (iii) examine the financial controls, processes and
procedures utilized by CSC and the performance of CSC’s financial
obligations, (iv) examine the Systems that process, store, support
and transmit that data, (v) examine the controls (e.g.,
organizational controls, input/output controls, System modification
controls, processing controls, System design controls and access
controls) and the privacy, security, disaster recovery and back-up
practices and procedures, (vi) examine CSC’s performance of the
Services and the measurement and reporting tools, performance
metrics and reporting procedures for the Services, (vii) verify
CSC’s reported performance against the applicable Service Levels,
(viii) examine CSC’s measurement, monitoring and management tools,
and (ix) enable the Eligible Recipients to meet applicable legal,
regulatory and contractual requirements, in each case to the extent
applicable to the Services and/or Charges. CSC shall provide any
assistance reasonably requested by Sears or its designee in
conducting any such audit and shall make requested personnel,
records and information available during the Term and thereafter,
during the period specified in Sears’ records retention policy, as
it may be modified from time to time.

	18.3	 	SAS 70 Audit.

CSC shall, on an annual basis, retain an independent auditor to perform
an audit of the electronic data processing environment(s) and locations
used by CSC to provide the Services. Such audit shall conform to the
Statement of Auditing Standards No. 70 (“SAS 70”) or successor substitute
statement adopted by the American Institute of Certified Public
Accountants or other relevant body, and at least every other year such
audit shall be a “Type II” audit under SAS 70 Guidelines. CSC shall
provide Sears a reasonable opportunity to comment on each planned audit,
and provide suggested modifications (consistent with and in accordance
with SAS 70) to the planned audit prior to the commencement of the audit.
CSC shall provide Sears with a copy of the review resulting from each
SAS 70 audit and shall, as soon as reasonably practicable, remedy any
material deficiencies revealed by such audit. In addition, to the extent
a SAS 70 audit (or equivalent audit) is conducted with respect to a CSC
Facility at or from which the Services are provided, CSC shall promptly
provide a copy of the resulting audit report to Sears. CSC shall respond
to such report in accordance with Section 18.7 (Remedial
Obligations).

	18.4	 	Governmental or Other Non-Sears Audits.

Sears and the other Eligible Recipients may be subject to regulation and
audit by governmental bodies, standards organizations, other regulatory
authorities, customers or other parties to contracts with an Eligible
Recipient under applicable Laws, rules, regulations, standards and
contract provisions. If an Eligible Recipient is required by a
governmental body, standards organization or regulatory agency having
jurisdiction over an Eligible Recipient to have an audit or inspection of
the Services then being provided to an Eligible Recipient or information
concerning an Eligible Recipient held by CSC under this Agreement, CSC
shall allow the governmental body, standards organization or

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regulatory agency exercising jurisdiction over the business of an
Eligible Recipient to conduct such an audit or inspection as it relates
to CSC’s provision of the Services, or such information concerning an
Eligible Recipient held by CSC, under this Agreement. In addition, if a
customer or other party to a contract with an Eligible Recipient
exercises its right to audit or inspect an Eligible Recipient’s books,
records, documents or accounting practices, CSC shall provide all
cooperation requested by the Eligible Recipient in responding to such
audits or requests for information.

	18.5	 	Audit Process.

CSC shall provide Sears, and any Sears Audit Designees, access to the
facilities, Systems, books, records and information related to the
provision of the Services as
reasonably necessary to perform audits described in this Section
18 (Audit Rights), including assisting Sears and Sears Audit
Designees in testing their data files, programs and procedures and
operation of audit software. To the extent permitted by applicable Laws,
CSC shall provide Sears, and its designees, with a copy of the findings
of any such governmental audit.

	18.6	 	Security Testing.

Without limiting the generality of Section 18.2(b) (Operational
and Financial Audits), Sears Audit Designees may, from time to time,
without prior notice, perform security audits of CSC, its Affiliates and
their Personnel, which may include penetration testing and other exploits
of CSC Provided Systems, CSC Managed Systems and Sears Provided Systems
and Deliverables (“Security Testing”). CSC, on behalf of itself, its
Affiliates and their Personnel, shall and hereby does grant Sears
permission to perform such Security Testing. *** Notwithstanding
anything to the contrary contained herein, Sears shall have no obligation
to provide CSC with, and CSC shall not be entitled to receive, copies of
the results of any Security Testing.

	18.7	 	Remedial Obligations.

CSC and Sears shall meet to review each audit report promptly after the
issuance thereof. CSC shall respond to each audit report in writing
within thirty (30) days from receipt of such report, unless a shorter
response time is specified in such report. If any audit or inspection
reveals that CSC has failed to comply with this Agreement, any generally
accepted accounting principle or other audit requirement or any Law or
standard (including SAS 70) relating to the performance of CSC’s
obligations under this Agreement, CSC shall, at CSC’s sole cost and
expense, remedy such failures as soon as reasonably practical, but in no
event later than required by any auditing governmental body, standards
organization or regulatory authority, as the case may be. In addition,
if any audit or examination, including an internal CSC audit, reveals
that CSC has overbilled Sears or if an audit reveals any breach of this
Agreement, CSC shall promptly pay Sears: (a) the amount of such
overbilling that Sears has paid (net of underbilling discovered by such
audit), plus (b) interest at the Contract Rate per month accruing from

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the original date the error was made until the date such credit is paid,
plus (c) the reasonable costs and expenses of the audit incurred by
Sears; provided, however, that CSC’s obligation under this
clause (c) above shall not exceed one-half of the amount due under
clause (a) above.

	18.8	 	General Procedures.

	 	(a)	 	Access. Notwithstanding the intended breadth of Sears’ audit
rights, during any audits pursuant to this Section 18 (Audit
Rights) Sears shall not allow Sears or Sears Personnel access to (i)
the proprietary information of other CSC
customers, or (ii) CSC locations that are not related to the
Eligible Recipients or the Services, (iii) material protected by
the attorney-client or other legal privilege, or (iv) data to the
extent not related to the CSC’s provision of Services or CSC’s
obligations under this Agreement.

	 
	 	(b)	 	Notice. In performing audits, Sears shall endeavor to
provide CSC with twenty-four (24) hour advance notice of such audits
(other than Security Testing audits). Access for such audits shall
be provided by CSC at reasonable hours, except as may be required on
an emergency basis; provided, however, that any such
audit may not unreasonably interfere with CSC’s performance of its
obligation under this Agreement or compromise any reasonable
security processes or procedures. All audits shall be conducted in
a reasonable manner. CSC, its Affiliates and the CSC Personnel
shall provide the Services described in this Section 18
(Audit Rights) at no additional charge to Sears.

	 
	 	(c)	 	Exit Conference. Following any audit, Sears shall conduct
(in the case of an internal audit), or request its external auditors
or examiners to conduct, an exit conference with CSC to obtain
factual concurrence with issues identified in the review.

	 
	 	(d)	 	Audit Workspace. Sears and/or the Sears Audit Designee 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.

	18.9	 	CSC Breach.

***

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	19.	 	INSURANCE AND RISK OF LOSS

	19.1	 	Insurance.

	 	(a)	 	Requirements. CSC shall, and shall require its and its
Affiliates’ Subcontractors to, obtain and maintain in full force and
effect the following insurance during the Term and the Term of each
Transaction Document (including any Termination Assistance Services
period thereunder); ***

	 	(i)	 	Workers’ Compensation and Employer’s Liability
Insurance.

	 	(1)	 	Statutory Workers’ Compensation
insurance, including coverage for all costs, benefits
and liabilities under workers’ compensation and similar
laws that may accrue in favor of any person employed by
CSC, in all states where CSC performs Services in
accordance with applicable Law.

	 
	 	(2)	 	Employer’s Liability Insurance with
minimum limits of *** per employee by accident/*** per
employee by disease/*** policy limit by disease (or, if
higher, the policy limits required by applicable Law).

	 	(ii)	 	Commercial General Liability Insurance.
Commercial General Liability Insurance (including coverage for
Contractual Liability assumed by CSC under this Agreement,
Premises-Operations, Completed Operations-Products,
Independent Contractors, and explosion, collapse and
underground property damage hazards) providing coverage for
bodily injury, personal and advertising injury and property
damage with combined single limits of not less than *** per
occurrence and *** the aggregate per CSC policy year.

	 
	 	(iii)	 	Commercial Business Automobile Liability
Insurance. 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 *** per accident, except as may otherwise be
required by Law.

	 
	 	(iv)	 	Professional Liability Insurance.
Professional Liability (also known as Errors and Omissions
Liability) Insurance covering acts, errors and omissions
arising out of CSC’s operations or Services in an amount not

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	 	 	 	less than *** per claim and *** in the aggregate per CSC policy year.

	 
	 	(v)	 	Comprehensive Crime Insurance.
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 CSC employees, acting alone or with others, in an amount
not less than *** per loss and *** in the aggregate per CSC
policy year.

	 
	 	(vi)	 	All-Risk Property Insurance. All-risk
property insurance covering loss or damage to CSC owned or
leased Equipment and other property in an amount not less than
the full replacement cost of such Equipment and property.

	 
	 	(vii)	 	Excess Coverage. Excess coverage with
respect to Sections 19.1(a)(i)(2) (Workers’
Compensation and Employer’s Liability Insurance), (ii)
(Commercial General Liability Insurance), and (iii)
(Commercial Business Automobile Liability Insurance) with a
minimum combined single limit of ***.

CSC may satisfy the minimum limits requirements of this Section
19.1(a) (i), (ii), (iii), and (iv) (Requirements) by any
combination of primary liability and umbrella and/or excess
liability coverage that result in the same protection to CSC and
the Sears Indemnified Parties. To satisfy this insurance
requirement for non-owned and hired vehicles, CSC may extend its
commercial general liability insurance to provide insurance for
such vehicles. Any annual aggregate limit must be stated
separately as to the Services or twice the required limit. The
policies required under this Section 19.1 (Insurance) must
be on an occurrence basis except for Professional Liability
Insurance which is on a per claim basis. For policies that are on a
per claim basis, CSC will maintain equivalent policies for at least
4 years after the expiration or termination of this Agreement. CSC
shall purchase the insurance required by Section 19.1
(Insurance) from companies having a rating of A-/VII or better in
the current Best’s Insurance Reports published by A. M. Best
Company, Inc.

	 	(b)	 	Endorsements. CSC’s insurance policies as required in this
Agreement under Sections 19.1(a)(ii) (Commercial General
Liability Insurance) and 19.1(a)(iii) (Commercial Business
Automobile Insurance) shall name Sears, its Affiliates and their
respective employees, as Additional Insureds for any and all
liability arising at any time in connection with CSC’s performance
under this Agreement, with the standard separation of insureds
provision or an endorsement for cross-liability coverage. The CSC
insurance policies required under Sections 19.1(a)(v)
(Comprehensive Crime Insurance) and 19.1(a)(vi) (All Risk
Property Insurance) shall name Sears and its Affiliates as loss
payees in connection with any insurable interest of Sears for loss
or damage of such property under this Agreement. Should any policy
expire or be canceled during the Term or any Exhibit Term and

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CSC fails to procure replacement insurance as specified herein with
30 days of notice from Sears, Sears reserves the right (but not the
obligation) upon notice to CSC to procure such insurance and to
deduct the cost thereof from any sums due CSC under this Agreement;
provided that CSC’s liability for such replacement insurance
procured by Sears shall terminate 30 days after CSC provides
written evidence to Sears that CSC has procured (and paid the
premium for a minimum of three months after the date of such
notice) such required insurance. All insurance required under this
Section 19.1 (Insurance) shall be primary insurance and any
other valid insurance existing for the other Eligible Recipients’
benefit shall be excess of such primary insurance. CSC 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 in this Agreement.

	 	(c)	 	Certificates. CSC shall provide Sears with certificates of
insurance evidencing compliance with this Section 19
(Insurance and Risk of Loss) (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 Sears at the addresses for Sears specified in Section
26.3 (Notices).

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

	 
	 	(e)	 	Insurance Subrogation. With respect to insurance coverage to
be provided by CSC pursuant to this Section 19.1 (Insurance)
except professional liability, the insurance policies shall provide
that the insurance companies waive all rights of subrogation against
CSC, the Eligible Recipients and their respective Affiliates and
Personnel. CSC waives its rights to recover against the Eligible
Recipients, including their respective Personnel in subrogation or
as subrogee for another party.

	 
	 	(f)	 	***

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	19.2	 	Risk of Loss.

	 	(a)	 	General. Except as otherwise provided in Section
20.1(k) (CSC Acts or Omissions) or Section 20.2(g)
(Sears Acts or Omissions), (i) each Party shall be responsible for
risk of loss of, and damage to, any Equipment, Software, Systems or
other Materials in its or its Affiliates’ or their Personnel’s
possession or control, and (ii) such Party shall be responsible for
the cost of any necessary repair or replacement of such Equipment,
Software, Systems or other Materials due to an Event of Loss. CSC
shall be deemed to possess and control all Equipment, Software and
other Materials located in its own Facilities or in portions of
Sears Facilities used by CSC 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, Systems or other Materials (“Event of
Loss”). For Events of Loss for which Sears is responsible, such
repair or replacement shall not be considered part of CSC’s Service
obligations, but CSC shall, if requested by Sears, coordinate and
oversee repair or replacement performed by a Third Party on a
Pass-Through Expenses basis, or by CSC at agreed-upon prices.

	 
	 	(b)	 	Waiver. Each Party waives all rights to recover against the
other Party, its Affiliates (and as to Sears, any Eligible
Recipients) and their Personnel for damage, destruction, loss, theft
or governmental taking of their respective real or tangible personal
property (whether owned or leased) from any cause to the extent (i)
covered by insurance required to be maintained by such Party under
this Agreement, including their respective deductibles or
self-insured retentions, and (ii) insurance proceeds are actually
received by such Party for such loss. CSC and Sears shall cause
their respective insurers to issue appropriate waivers of
subrogation rights endorsements to all property insurance policies
required to be maintained by each Party.

	20.	 	INDEMNITIES

	20.1	 	Indemnity by CSC.

CSC shall defend, indemnify and hold harmless the Eligible Recipients,
including their respective Personnel (collectively, the “Sears
Indemnified Parties”) from any and all Losses and threatened Losses
arising out of any claims, demands, suits or causes of action by Third
Parties (collectively, “Claims”) (excluding Claims brought by Sears and
its Affiliates, and their Subcontractors, but including Claims brought by
other Sears Personnel) that result or are alleged to result, in whole or
in part, from or in connection with any of the following:

	 	(a)	 	Breach of This Agreement. CSC’s or CSC’s Personnel’s breach
of this Agreement, including any representations, warranties or
covenants set forth in this Agreement. ***.

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	 	(b)	 	CSC Designated Contracts. CSC’s decision to terminate or
failure to observe or perform any duties or obligations to be
observed or performed on or after the applicable Commencement Date
by CSC with respect to any CSC Designated Contracts or any Third
Party Contracts related to Acquired Assets and/or CSC Managed
Systems.

	 
	 	(c)	 	Licenses, Leases or Contracts. CSC’s failure to observe or
perform any duties or obligations to be observed or performed on or
after the applicable Commencement Date by CSC with respect to Third
Party Contracts associated with any CSC Provided Systems or CSC
Managed Systems; ***.

	 
	 	(d)	 	Sears Data or Confidential Information. CSC’s breach of its
obligations with respect to Sears Data or Sears Confidential
Information.

	 
	 	(e)	 	Infringement. Infringement or misappropriation or alleged
infringement or alleged misappropriation of any Intellectual
Property Rights in contravention of
Section 17.1(d) (CSC Provided Systems/CSC Managed Systems)
or Section 17.1(f) (Non-Infringement).

	 
	 	(f)	 	Government Claims. Claims by government regulators or
agencies for fines, penalties, sanctions or other remedies to the
extent such fines, penalties, sanctions, or other remedies caused by
any breach of any obligation under this Agreement, including any
obligation related to Laws, by CSC or any CSC Personnel or any other
failure by CSC or CSC Personnel to perform CSC’s responsibilities
under this Agreement.

	 
	 	(g)	 	Taxes. Taxes, including interest and penalties, that are the
responsibility of CSC under Section 13.4 (Taxes).

	 
	 	(h)	 	Shared Facility Services. Services, products or Systems (not
constituting Services provided pursuant to this Agreement) provided
by CSC to a Third Party from any shared CSC Facility or using any
shared CSC resources and not constituting Services provided to an
Eligible Recipient pursuant to this Agreement.

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	 	(i)	 	Affiliate, CSC Personnel or Assignee Claims. Any Claim,
other than an indemnification Claim under this Agreement, initiated
by (i) a CSC Affiliate or CSC Personnel asserting rights in
connection with this Agreement or any Services to be provided
hereunder, or (ii) any entity to which CSC assigned, transferred,
pledged or otherwise encumbered its rights to receive payments from
Sears under this Agreement.

	 
	 	(j)	 	Background and Drug Checks. Any Claim by any third party,
including CSC Personnel or individuals seeking employment or a
contract with CSC, that alleges injury or harm arising from the
administration of drug or background checks in connection with this
Agreement.

	 
	 	(k)	 	CSC Acts or Omissions. ***

	 
	 	(l)	 	Employment Claims. Any Claim (including claims by
Transitioned Personnel) relating to any (i) joint employment of CSC
Personnel by Sears, any other Eligible Recipients (including their
respective Personnel), (ii) violation by CSC, its Affiliates or
other CSC Personnel 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, (iii) liability arising or resulting from the
employment or engagement of CSC Personnel (including Transitioned
Personnel) by CSC, its Affiliates or other CSC Personnel (including
liability for any social security or other employment taxes,
workers’ compensation claims and premium payments, and contributions
applicable to the wages and salaries of such CSC Personnel), (iv)
payment or
failure to pay any salary, wages or other compensation due and
owing to any CSC Personnel (including Transitioned Personnel from
and after their Employment Effective Dates), (v) employee pension
or other benefits of any CSC Personnel (including Transitioned
Personnel) accruing from and after their Employment Effective Date,
(vi) other aspects of the employment relationship of CSC Personnel
(including Transitioned Personnel) with CSC, its Affiliates or
other CSC Personnel or the termination of such relationship,
including Claims for wrongful discharge, Claims for breach of
express or implied employment contract and increases in
unemployment insurance premiums, and/or (vii) liability resulting
from representations (whether oral or written) to the Transitioned
Personnel made, or alleged to have been made, by CSC, its
Affiliates or other CSC Personnel, or other acts or omissions with
respect to the Transitioned Personnel 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
Sears, the Eligible Recipients, errors or inaccuracies in the
information provided by Sears and faithfully communicated

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	 	 	 	by CSC or the failure of the Eligible Recipients to comply with
Sears’ responsibilities under this Agreement.

	 	 	 	 	 

	 	(m)	 	Environmental Claims. The generation, storage, use,
handling, discharge, other release or disposal of any materials that
are regulated by the federal government or any state or local
government during use, transportation, handling, storage, treatment
and/or disposal/recycling by CSC Personnel or at facilities owned or
controlled by CSC Personnel.

	 
	 	(n)	 	Violation of Laws. The violation by CSC or its Personnel of
any Law.

	20.2	 	Indemnity by Sears.

Sears agrees to defend, indemnify and hold harmless CSC, its Affiliates
and the CSC Personnel and their successors and assigns from any Losses
and threatened Losses arising out of any Claims (excluding the Claims of
CSC, its Affiliates and their Subcontractors but including Claims by
other CSC Personnel) (each, a “CSC Indemnified Party”) that result, or
are alleged to result, in whole or in part, from or in connection with
any of the following:

	 	(a)	 	Breach of This Agreement. Sears’ breach of this Agreement,
including any representations, warranties or covenants set forth in
this Agreement.

	 
	 	(b)	 	Licenses, Leases or Contracts. Sears’ failure to observe or
perform any duties or obligations to be observed or performed by
Sears or the other Eligible Recipients under any of the applicable
Third Party Contracts associated with Sears Provided Systems ***.

	 
	 	(c)	 	Pre-Commencement Date Matters. Any Eligible Recipients’
failure to observe or perform any duties or obligations to be
observed or performed prior to the applicable Commencement Date by
the Eligible Recipients under any of the Third Party Contracts
related to Sears Provided Systems, CSC Managed Systems or the
Acquired Assets to the extent CSC notifies Sears of such Claims
within twelve (12) months after the assignment or transfer to CSC of
the applicable Third Party Contract.

	 
	 	(d)	 	CSC’s Confidential Business Information. Sears’ breach of
its obligations with respect to CSC’s Confidential Business
Information.

	 
	 	(e)	 	Infringement. Infringement or misappropriation or alleged
infringement or alleged misappropriation of any Intellectual
Property Rights in contravention of Section 17.2(a)
(Non-Infringement).

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	 	(f)	 	Taxes. Taxes, including interest and penalties, that are the
responsibility of Sears under Section 13.4 (Taxes).

	 
	 	(g)	 	Eligible Recipients’ Acts or Omissions. Any Claim that an act
or failure to act of Sears or Sears Personnel (other than Sears
Personnel for which CSC is responsible) ***.

	 
	 	(h)	 	Eligible Recipient Claims. Any Claim, other than an
indemnification Claim or a Claim pursuant to Section 19
(Insurance and Risk of Loss) under this Agreement, initiated by
Sears’ Affiliates or by Sears’ and its Affiliates’ Subcontractors
asserting rights in connection with this Agreement or any Services
to be provided under this Agreement; provided,
however, that this provision shall not apply to Claims
brought by Sears on behalf of the other Eligible Recipients.

	 
	 	(i)	 	Violation of Laws. The violation by Sears or its Personnel of
any Law.

	20.3	 	Infringement.

	 	(a)	 	CSC Provided Systems, CSC Managed Systems or Deliverables.
If any portion of the Services, including any CSC Provided Systems,
CSC Managed Systems or Deliverables that is subject to the indemnity
under Section 20.1(e) (Infringement) are found, or in CSC’s
reasonable opinion are likely to be found, to infringe upon or
misappropriate any Intellectual
Property Rights of any third party in any country in which Services
are to be performed or received under this Agreement, or the
continued use of the foregoing is enjoined, CSC shall, in addition
to defending, indemnifying and holding harmless the Sears
Indemnified Parties as provided in Section 20.1(e)
(Infringement) and any other rights Sears may have under this
Agreement, promptly and at its own cost and expense and in such a
manner as to minimize the disturbance to the Eligible Recipients’
business activities, do one of the following:

	 	(i)	 	Obtain Rights. Obtain for the Eligible
Recipients the right to continue using the Services, including
such CSC Provided Systems, CSC Managed Systems and
Deliverables.

	 
	 	(ii)	 	Modification. Modify the Service in question,
including the applicable CSC Provided Systems, CSC Managed
Systems and Deliverables, so that such Service is no longer
infringing (provided that *** such Services as
contemplated by this Agreement and/or as previously enjoyed by
the Eligible Recipients under this Agreement).

	 
	 	(iii)	 	Replacement. If either of the foregoing are not
commercially feasible, either: (i) provide functionally
equivalent or superior replacement Services to the Eligible
Recipients and reimburse Sears for any additional

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cost to the Eligible Recipients, including costs of modifying
Sears Provided Systems to permit them to interface and
interoperate properly with such revised Services; or (ii)
reimburse Sears for all costs and expenses (including any CSC
fees, consultant fees and other transition expenses) of
obtaining such replacement Services.

	 	(b)	 	Sears Provided Systems. If any Sears Provided System
supplied by Sears that is subject to the indemnity under Section
20.2(e) (Infringement) is found, or in Sears’ reasonable opinion
is likely to be found, to infringe upon or misappropriate any
Intellectual Property Rights of any third party in any country in
which Services are to be performed or received under this Agreement,
or the continued use of the foregoing is enjoined, Sears may elect
to, in its sole discretion and at its own cost and expense (subject
to Section 7.1(c) (Sears Responsibilities) and Section
20.2(e) (Infringement)):

	 	(i)	 	Obtain Rights. Obtain for CSC the right to
continue using such Sears Provided System;

	 
	 	(ii)	 	Modification. Modify the Sears Provided System
in question so that it is no longer infringing;

	 
	 	(iii)	 	Replacement. Replace the Sears Provided System
with a non-infringing System; or

	 
	 	(iv)	 	Removal. Cease providing such Sears Provided
System.

Within ten (10) Business Days of a request by Sears, CSC shall
notify Sears in writing of: (I) any adverse affect on the Services,
and/or *** subsections (ii), (iii) or (iv) above. The Parties
shall work together in good faith, to mitigate any such adverse
effect and the cost of any such election to Sears. If Sears does
make an election under subsections (ii), (iii) or (iv) above: (x)
the Parties shall, if applicable, equitably adjust the terms of the
applicable Procurement Document, including any Service Levels
applicable thereto, to take Sears into account the elimination of
such Sears Provided Systems and (y) *** mitigated by the Parties.
Sears may elect to stop receiving a portion of the Services in
order to mitigate such costs.

	20.4	 	Indemnification Procedures.

With respect to Third Party Claims that are subject to this Section
20 (Indemnities) (other than as provided in Section 20.5
(Indemnification Procedures — Governmental Claims) with respect to Claims
covered by Section 20.1(f) (Government Claims)), the following
procedures shall apply:

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	 	(a)	 	Notice. Promptly after receipt by any Entity entitled to
indemnification under this Agreement of notice of the commencement
or threatened commencement of any Claim in respect of which the
indemnitee shall 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 ten (10) Business Days before the
date on which any response to a complaint or summons is due, the
indemnitor shall notify the indemnitee that the indemnitor is
assuming control of the defense and settlement of that Claim (a
“Notice of Assumption”).

	 
	 	(b)	 	Procedure Following Notice of Defense. If the indemnitor
delivers a Notice of Assumption 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: (x)
entering into any settlement asserting any liability against the
indemnitee for such Claim, (y) imposing any obligations or
restrictions on the indemnitee or (z) 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 Assumption;
provided, however, that (i) the indemnitee shall be
entitled to employ counsel at its own expense to participate in the
handling of the Claim, and (ii) the indemnitor shall pay the fees
and expenses associated with such counsel if, in the reasonable
judgment of the indemnitee, based on an opinion of counsel, 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.

	 
	 	(c)	 	Procedure Where No Notice of Assumption Is Delivered. If the
indemnitor does not deliver a Notice of Assumption 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. The indemnitor
shall not be obligated to indemnify the indemnitee for any amount
paid or payable by such indemnitee in the settlement of any Claim if
(i) the indemnitor has delivered a timely Notice of Assumption and
such amount was agreed to without the written consent of the
indemnitor, (ii) the indemnitee has not provided the indemnitor with
notice of such Claim and a reasonable opportunity to respond
thereto, or (iii) the time period within which to deliver a Notice
of Assumption has not yet expired.

	20.5	 	Indemnification Procedures — Governmental Claims.

Sears shall be entitled, at its option, to have any Claim involving
indemnification under Section 20.1(f) (Government Claims) handled
pursuant to Section 20.4 (Indemnification

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Procedures) or to retain sole control over the defense and settlement of
such Claim; provided, however, that, in the latter case,
Sears shall (a) consult with CSC on a regular basis regarding Claim
processing (including actual and anticipated costs and expenses) and
litigation strategy, (b) reasonably consider any CSC settlement proposals
or suggestions, and (c) use commercially reasonable efforts to minimize
any amounts payable or reimbursable by CSC. Sears shall notify CSC when
Sears elects to exercise the rights provided in the preceding sentence.
Sears shall not enter into any settlement asserting any liability against
CSC for such Claims without CSC’s prior written consent.

	20.6	 	Mixed Claims.

Notwithstanding anything to the contrary contained in Section 20.4
(Indemnification Procedures) but subject to Section 20.5
(Indemnification Procedures — Governmental Claims), in the event that
both Parties are entitled under this Section 20 to invoke the
other Party’s defense obligations with respect to the same Claim or a
group of related Claims, then CSC shall assume the defense of the Sears
Indemnified Parties with respect to such Claim or related Claims, as the
case may be, and
upon the rendering of a final, non-appealable order by a court or
arbitrator of competent jurisdiction with respect to such Claim or
Claims, Sears shall reimburse CSC for any reasonable Attorneys’ Fees and
other reasonable Out-of-Pocket Expenses incurred by CSC in defending such
Claim or Claims to the extent that the Sears Indemnified Parties are
found to be liable under such Claim or Claims. For example, if a Third
Party sues both Sears and CSC claiming that Sears’ employees and CSC’s
employees were negligent in causing injury to such Third Party, (a) CSC
would assume the defense of such a Claim, and (b) if, by a final,
non-appealable order by a court of competent jurisdiction, Sears were
found to be 60% liable and CSC were found to be 40% liable for such
injuries, Sears would reimburse CSC for 60% of the reasonable Attorneys’
Fees and other Out-of-Pocket Expenses incurred by CSC in defending such
Claim.

	20.7	 	Independent Obligations.

The obligations of CSC and Sears to defend, indemnify and hold harmless
the Sears Indemnified Parties and the CSC Indemnified Parties,
respectively, under this Section 20 (Indemnities) shall be
independent of each other and any other obligations of the Parties under
this Agreement.

	21.	 	LIABILITY

	21.1	 	Force Majeure.

	 	(a)	 	General. Subject to Section 21.1(d) (Disaster
Recovery), 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 (each, a “Force Majeure Event”), except to the

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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 cannot reasonably be circumvented by the
non-performing Party through the use of alternate sources, disaster
recovery plans and workaround plans or other means (including to
the extent within the scope of the Services under this Agreement,
the performance of disaster recovery services). ***

	 	(b)	 	Duration and Notification. In such Force Majeure Event, the
non-performing Party shall be excused from further performance or
observance of the obligation(s) so affected, subject to Section
21.1(a) (General), for as long as such circumstances prevail and
such Party continues to use all 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 21.1(a) (General) has prevented, hindered or delayed
or is reasonably expected to prevent, hinder or delay the
performance by CSC or the CSC Personnel of Services for longer than
the recovery period specified in the applicable disaster recovery
plan or for more than ten (10) Business Days, then Sears may require
CSC, to the extent practicable, to promptly procure such Services
from an alternate source.

	 	(i)	 	To the extent that it was a CSC Facility
impacted, CSC shall be solely liable for payment for such
services from the alternate source ***; provided,
however, that Sears continues to pay the portion of
Charges under the applicable Transaction Document that apply
to those Services that it continues to receive from CSC
(directly or from such an alternate source). CSC shall
diligently pursue either a restoration and/or replacement of
the affected CSC Facilities and CSC will use its commercially
reasonable efforts to relocate such Services to a CSC Facility
within ***. If ***, CSC has not been able to restore the
impacted CSC Facilities or move the Services to another CSC
location, then Sears shall have the option of *** (b)
partially or fully terminating the Services (in which case
Sears would not have to pay any Termination Charges as to the
impacted Services, *** Termination Charges for the
non-impacted Services terminated by Sears).

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	 	(ii)	 	If the Force Majeure event impacts a Sears
Facility, at which CSC was to perform its Services, then Sears
may require CSC to provide such an alternate Services provider
within *** of Sears request, pursuant to Section 4.5
(Additional Services). If Sears has not restored or replaced
the impacted Sears Facility within ***, then Sears shall have
the option of partially or fully terminating the Services (in
which case Sears would not have to pay any Termination Charges
as to the impacted Services *** Termination Charges for the
non-impacted Services terminated by Sears).

	 
	 	(iii)	 	If CSC does not provide an alternative provider
of such Services within *** of the Force Majeure Event, then
Sears may terminate this Agreement or any Transaction
Document, but only with respect to the portion of the
Services so affected, without payment of Termination Charges.
In the event of such partial termination, the Charges payable
under this Agreement shall be equitably adjusted to reflect
those terminated Services.

	 	(d)	 	Disaster Recovery. The occurrence of a Force Majeure Event
shall not relieve CSC of its obligation to (i) implement its
disaster recovery plan for the facilities used in providing the
Services, and (ii) provide any disaster recovery services described
in an applicable Transaction Document.

	 
	 	(e)	 	Payment Obligation. If CSC fails to provide Services in
accordance with this Agreement due to the occurrence of a Force
Majeure Event, all amounts payable to CSC hereunder shall be
equitably adjusted in a manner such that Sears is not required to
pay any amounts for Services that it is not receiving whether from
CSC or from an alternate source at CSC’s expense pursuant to
Section 21.1(c) (Substitute Services; Termination). CSC shall
not have the right to additional payments or an increase in per unit
consumption charges as a result of any Force Majeure Event (e.g., if
a decrease in consumption of a Service under a Transaction Document
would have resulted in an increase in the “per unit” charges under
the rate card under such Transaction Document, but such decrease in
consumption was due to a Force Majeure Event, then such increase
would not apply).

	 
	 	(f)	 	Allocation of Resources. Without limiting CSC’s obligations
under this Agreement, whenever a Force Majeure Event causes CSC to
allocate limited resources between or among CSC’s customers and
Affiliates, the Eligible Recipients shall receive at least the same
treatment as comparable CSC customers with respect to such limited
resources. In no event shall CSC re-deploy or re-assign any Key
Personnel to another customer or account in the event of the
occurrence of a Force Majeure Event.

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	21.2	 	Limitation of Liability.

	 	(a)	 	Exclusions from Liability. EXCEPT AS PROVIDED IN THIS
SECTION 21.2 (LIMITATION OF LIABILITY), NEITHER PARTY NOR ITS
AFFILIATES (NOR, IN THE CASE OF SEARS, ANY ELIGIBLE RECIPIENT) SHALL
BE LIABLE TO THE OTHER PARTY FOR INDIRECT, CONSEQUENTIAL, 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 (including its Affiliates,
and, in the case of Sears, any Eligible Recipient), for all 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)	 	Other. The exclusions from liability set forth in Section
21.2(a) (Exclusions from Liability) above and the liability cap
set forth in Section 21.2(b) (Liability Cap above shall ***.

	 
	 	(d)	 	Exceptions to Limitations of Liability. The limitations of
liability set forth in Sections 21.2(a) (Exclusions from
Liability) and 21.2(b) (Liability Cap) shall not apply with
respect to:

	 	(i)	 	Losses caused by the willful misconduct, fraud or
gross negligence of a Party, its Affiliates (or, in the case
of Sears, any Eligible Recipient), or their respective
Personnel.

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	 	(ii)	 	The Parties’ respective obligations under
Section 20.1 (Indemnity by CSC) and Section 20.2
(Indemnity by Sears).

	 
	 	(iii)	 	Losses related to personal injury, including
death, and damage to tangible property caused by the negligent
or intentional acts of a Party, its Affiliates (or, in the
case of Sears, any Eligible Recipient), or their respective
Personnel.

	 
	 	(iv)	 	Either Party’s obligation to pay litigation costs
and Attorneys’ Fees incurred by the other Party in enforcing
the terms of this Agreement as set forth in Section
26.4 (Legal Expenses).

	 
	 	(v)	 	Losses caused by: (A) the willful abandonment of
any significant portion (which shall be determined by taking
into account the actual or potential impact on the businesses
of each Sears Related Business) of the Services contracted for
under this Agreement, including any Termination Assistance
Services; and/or (b) wrongful termination of this Agreement or
any Transaction Document by CSC. For purposes of the
foregoing, “willful abandonment” means, with respect to any
Services, that CSC or its Subcontractors have elected not to
provide such Services, although CSC or such Subcontractor is
capable of providing them, or CSC or its Subcontractors have
intentionally acted, or failed to act, in a manner to avoid
its obligation to provide such Services (e.g., if CSC elects
not to renew a required governmental license and therefore is
not able to provide the Services).

	 
	 	(vi)	 	Losses caused by any breach of CSC’s obligations
under Section 15.3(c) (Confidential Personal
Information) related to an intentional misuse of Confidential
Personal Information.

	 	(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, Section 21.2(a)
(Exclusions from Liability) or 21.2(b) (Liability Cap):

	 	(i)	 	Service Level Credits assessed against CSC
pursuant to a Transaction Document.

	 
	 	(ii)	 	Charges withheld by Sears in accordance with this
Agreement due either to incorrect Charges by CSC or ***.

	 
	 	(iii)	 	Amounts paid by Sears but subsequently recovered
from CSC due either to incorrect Charges by CSC ***.

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	 	(iv)	 	Invoiced Charges, Pass-Through Expenses and other
amounts that are due and owing to either Party under this
Agreement.

	 	(f)	 	Waiver of Liability Cap. If, at any time, the total
aggregate liability of CSC under or in connection with this
Agreement exceeds, or in connection with any Third Party claim
against any Eligible Recipient is claimed by Sears to exceed, fifty
percent (50%) of the liability cap specified in Section
21.2(b) (Liability Cap) and, upon receipt of the request of
Sears, CSC refuses to waive such cap and/or increase the available
cap to an amount at least equal to the original liability cap with
respect to liability accruing on or after the receipt of such
request from Sears, then Sears may terminate this Agreement or any
Transaction Document, in whole or in part, without payment of
Termination Charges. Upon CSC’s request, Sears will provide to CSC
any information CSC reasonably requests regarding such Claim, to the
extent Sears (or such Eligible Recipients) has such information. If
the liability cap specified in Section 21.2(b) (Liability
Cap) is increased pursuant to this Section 21.2(f) (Waiver of
Liability Cap) and Sears fails in connection with the claim(s),
giving rise to such increase to recover or incur damages or a
monetary settlement sufficient to make CSC’s total aggregate
liability under this Agreement exceed fifty percent (50%) of the
original liability cap, the liability cap specified in Section
21.2(b) (Liability Cap) shall automatically revert to the amount
thereof immediately prior to such increase, without limiting the
effectiveness of this Section 21.2(f) (Waiver of Liability
Cap) as to any subsequent liability or potential liability of CSC
under this Agreement.

	 
	 	(g)	 	Acknowledged Direct Damages. The following shall be
considered direct damages and CSC shall not assert that they are
indirect, consequential, exemplary or punitive damages to the extent
they result from CSC’s breach of this Agreement:

	 	(i)	 	Costs and expenses of recreating or reloading any
lost, stolen or damaged Sears Data that was in the CSC’s, its
Affiliates’ or the CSC Personnel’s custody or that was lost or
damaged by CSC Provided Systems or CSC Personnel, subject to
Sears maintaining reasonable backup procedures with respect to
such Sears Data; provided, however, that CSC is
not otherwise obligated to provide such backup as part of the
Services.

	 
	 	(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 Sears Provided Systems that are in the CSC’s, its
Affiliates’ or the CSC Personnel’s custody.

	 
	 	(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 CSC’s Charges
under this Agreement (which Sears shall not be

98

 

	 	 	 	obligated to pay while Sears is procuring Services from such
alternate source).

	 
	 	(v)	 	Wages, salaries and other charges, including
overtime, for existing or additional Personnel, and related
Personnel expenses (e.g., travel costs, telecommunications
charges and similar charges, etc.) incurred by the Eligible
Recipients, including overhead allocations of the Eligible
Recipients, in connection with clauses (i) through
(iv) above or otherwise due to CSC’s or CSC Personnel’s
failure to perform in accordance with this Agreement.

	 
	 	(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.

	 
	 	(vii)	 	Damages of an Eligible Recipient that would be
direct damages if they had instead been suffered by Sears.

	21.3	 	Public Telecommunications Transmissions.

In the case of transmission of data via public telecommunications
facilities permitted under this Agreement, CSC shall not be responsible
for corruption, damage, loss or mistransmission of, or loss of security
with respect to, data during such transmission unless and to the extent
such corruption, damage, loss, mistransmission or loss of security is
attributable to CSC’s failure to comply with its obligations (including
data security requirements) under this Agreement, including the
obligation to (a) provide the Services (including data security
requirements) in accordance with the accepted practices of well-
managed tier one providers of information technology services, (b)
provide and maintain the technology required to detect and correct any
corrupt, damaged, lost or mistransmitted data and require retransmission
of any such corrupt, damaged, lost or mistransmitted data, (c) provide
for encryption of Confidential Personnel Information while in
transmission, and (d) perform other Services appropriate to assist in the
resolution of such corruption, damage, loss or mistransmission (e.g.,
backup and data recovery).

	22.	 	DISPUTE RESOLUTION

	22.1	 	Informal Dispute Resolution.

Prior to the initiation of formal dispute resolution procedures with
respect to any dispute, other than as provided in Section 22.1(d)
(Prerequisite to Formal Proceedings) or Section 26.15 (Equitable
Remedies), the Parties shall first attempt to resolve such dispute
informally, as follows:

	 	(a)	 	Initial Effort. The Parties agree that the Sears
Relationship Manager and the CSC Account Executive shall attempt in
good faith to resolve all disputes (other

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than those described in Section 22.1(d) (Prerequisite to
Formal Proceedings) or Section 26.15 (Equitable Remedies)).
If the Sears Relationship Manager and the CSC Account Executive are
unable to resolve a dispute in an amount of time that either Party
deems reasonable under the circumstances (e.g., 15-30 days), such
Party may refer the dispute for resolution to the senior corporate
executives specified in Section 22.1(b) (Escalation) upon
notice to the other Party.

	 	(b)	 	Escalation. Within five (5) Business Days of a notice under
Section 22.1(a) (Initial Effort) referring a dispute for
resolution by senior corporate executives, the Sears Relationship
Manager and the CSC Account Executive shall each prepare and provide
to President of the CSC Technology Management Group and the Sears
Vice President of Operations and Engineering, 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 shall 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 that is 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 shall 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 22.1(a) (Initial Effort) or Section
22.1(b) (Escalation), all reasonable requests made by one Party
to another for non-privileged information, reasonably related to the
dispute, shall be honored in order that each of the parties may be
fully advised of the other’s position. In addition, as part of the
negotiations under Section 22.1(b), CSC shall provide, upon
Sears’ request, CSC’s internal costs to the extent that such
information is relevant to resolving the underlying dispute. 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 are
discoverable to the extent provided in the applicable proceeding;
provided, further, that disclosure of such materials
pursuant to this process shall not prejudice a Party’s ability to
seek such discovery.

	 
	 	(d)	 	Prerequisite to Formal Proceedings. Formal proceedings for
the resolution of a dispute may not be commenced until the earlier
of:

	 	(i)	 	the designated senior corporate executives under
Section 22.1(b) (Escalation) concluding in good faith
that amicable resolution through continued negotiation of the
matter does not appear likely; or

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	 	(ii)	 	thirty (30) days after the notice under
Section 22.1(a) (Initial Effort) referring the dispute
to senior corporate executives.

The provisions and time periods specified in this Section
22.1 (Informal Dispute Resolution) shall not be construed to
prevent a Party from instituting, and a Party is authorized to
institute, formal proceedings earlier to (1) avoid the expiration
of any applicable limitations period, (2) preserve a superior
position with respect to other creditors, or (3) address a claim
arising out of the breach of a Party’s obligations under Section
15 (Sears Data and Other Confidential Information) or a dispute
subject to Section 26.15 (Equitable Remedies).

	22.2	 	Arbitration.

	 	(a)	 	Arbitration. Except for claims arising out of the breach of
a Party’s obligations under Section 15 (Sears Data and Other
Confidential Information) or disputes subject to Section
26.15 (Equitable Remedies), any controversy or claim arising out
of or relating to this Agreement, or any breach thereof, that cannot
be resolved using the procedures set forth above in Section
22.1 (Informal Dispute Resolution) shall be finally resolved
under the Commercial Arbitration Rules of the American Arbitration
Association then in effect; provided, however, that
without limiting any rights at law or in equity a Party may have
because of an improper termination of this Agreement by
the other Party, nothing contained in this Agreement shall limit
either Party’s right to terminate this Agreement or a Transaction
Document pursuant to Section 23 (Termination).

	 
	 	(b)	 	Location and Decision. The Arbitration shall take place in
Chicago, Illinois, and shall apply the governing law of this
Agreement. The decision of the arbitrators shall be final and
binding and judgment on the award may be entered in any court of
competent jurisdiction. The arbitrators shall be required to state
the reasons for their decisions, including findings of fact and law.
The arbitrators shall be bound by the warranties, limitations of
liability and other provisions of this Agreement. The arbitrators
shall not be permitted to decide any claims subject to Section
26.15 (Equitable Remedies) or to award any equitable remedies
and to the extent that any claim/counterclaim or series of related
claims/counterclaims include demands for both equitable and monetary
remedies, then the entire claim/counterclaim, or series of related
claims/counterclaims, as applicable, shall be excluded from the
arbitrators’ jurisdiction.

	 
	 	(c)	 	Selection and Qualification of Arbitrators. Within ten (10)
days after delivery of written notice (“Notice of Dispute”) by one
Party to the other in accordance with this Section, the Parties each
shall use good faith efforts to mutually agree upon one (1)
arbitrator. If the Parties are not able to agree upon one (1)
arbitrator within such period of time, the Parties each shall within
ten (10) days: (i) appoint one (1) arbitrator who has at no time
ever represented or acted on behalf of either of the Parties, and is
not otherwise affiliated with or interested in either of the
Parties; and (ii) deliver written notice of the identity of such
arbitrator and a copy of his or her written acceptance of such
appointment to the other Party. If either

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Party fails or refuses to appoint an arbitrator within such ten
(10) day period, the single arbitrator appointed by the other Party
shall decide alone the issues set out in the Notice of Dispute.
Within ten (10) days after such appointment and notice, such
arbitrators shall appoint a third neutral and independent
arbitrator (the “Third Arbitrator”) who shall at no time have ever
represented or acted on behalf of either of the Parties, and shall
not have otherwise been affiliated with or interested in either of
the Parties. In the event that the two (2) arbitrators fail to
appoint a Third Arbitrator within ten (10) days of the appointment
of the second arbitrator, either arbitrator or either Party may
apply for the appointment of a Third Arbitrator to the American
Arbitration Association.

	 	(d)	 	General. All arbitrators selected pursuant to this Section
shall be practicing attorneys with at least five (5) years’
experience with the technology and/or law applicable to the Services
or similar services or transactions. Any such appointment shall be
binding upon the Parties; provided, however, that if
the parties have agreed upon a single arbitrator, then each Party
shall have a one-time right during such arbitration to remove such
arbitrator for any reason (in which case the parties shall then
re-select their arbitrator(s) as provided above). The Parties shall
use best efforts to set the
arbitration hearing within sixty (60) days after selection of the
arbitrator or arbitrators, as applicable, but in no event shall the
arbitration hearing be set more than ninety (90) days after
selection of the arbitrator or arbitrators, as applicable.
Discovery as permitted by the Federal Rules of Civil Procedure then
in effect will be allowed in connection with arbitration to the
extent consistent with the purpose of the arbitration and as
allowed by the arbitrator or arbitrators, as applicable. In
connection with any dispute under Section 13.10
(Benchmarking), the arbitrator or arbitrator(s) shall expressly
have the authority to select a Benchmarker and to choose the
Benchmarking methodology. The decision or award of the arbitrator
or the majority of the three arbitrators, as applicable, shall be
rendered within fifteen (15) days after the conclusion of the
hearing, shall be in writing, shall set forth the legal and factual
basis therefor, and shall be final, binding and nonappealable upon
the Parties and may be enforced and executed upon in any court
having jurisdiction over the Party against whom the enforcement of
such decision or award is sought. During the arbitration, each
Party shall bear its own arbitration costs and expenses and all
other costs and expenses of the arbitration shall be divided
equally between the Parties; provided, however, the
arbitrator or arbitrators shall allocate such expenses between the
Parties in the final arbitration award in accordance with
Section 26.4 (Legal Expenses).

	22.3	 	Continued Performance.

	 	(a)	 	General. During each Exhibit Term and during each
Termination Assistance Services period, each Party shall, unless
otherwise directed by the other Party, continue performing its
obligations under this Agreement while any dispute is being
resolved; provided, however, that this provision shall
not operate or be construed as extending the Term 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.

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	 	(b)	 	Non-Interruption of Services. CSC acknowledges and agrees
that (i) any interruption to the Services would cause irreparable
harm to Sears and the other Eligible Recipients, in which case an
adequate remedy at law would not be available, and (ii) pending
resolution of any dispute or controversy, it shall not deny,
withdraw or restrict CSC’s provision of the Services to any Eligible
Recipient under this Agreement, except as specifically and expressly
agreed in writing by Sears and CSC.

	23.	 	TERMINATION

	23.1	 	Termination for Cause.

	 	(a)	 	Termination By Sears.

	 	(i)	 	Agreement. If CSC:

	 	(1)	 	commits any material breach of this
Agreement (except as provided in clauses (2),
and (3) below), including Termination Assistance
Services, which is curable by CSC and CSC fails to cure
such breach within *** CSC’s receipt of notice thereof;

	 
	 	(2)	 	commits a material breach of this
Agreement that is not capable of being cured;

	 
	 	(3)	 	commits a breach of this Agreement
that is capable of being cured, but is not capable of
being cured within the period specified pursuant to
clause (1) above,; ***

	 
	 	(4)	 	commits numerous breaches of its
duties or obligations under this Agreement, whether or
not cured within applicable cure periods, where such
breaches collectively constitute a material breach of
this Agreement ***;

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then Sears may, by giving notice to CSC, terminate this
Agreement, with respect to all or any part of the Services,
in whole or in part, as of a date specified in the notice of
termination. All notices of breach required to be given
under this Section 23.1(a) (Termination by Sears)
shall be given by Sears and contain a description of the
breach in reasonable detail. CSC shall not be entitled to
any Termination Charges in connection with such a termination
for cause. If Sears chooses to terminate this Agreement in
part, ***.

	 	(ii)	 	Transaction Document. If CSC:

	 	(1)	 	commits any material breach of a
Transaction Document (except as provided in clauses
(2) and (3) below), including Termination
Assistance Services, which is curable by CSC and CSC
fails to cure such breach within *** CSC’s receipt of
notice thereof;

	 
	 	(2)	 	commits a material breach of any
Transaction Document that is not capable of being cured;

	 
	 	(3)	 	commits a breach of a Transaction
Document that is capable of being cured, but is not
capable of being cured within the period specified
pursuant to clause (1) above; ***

	 
	 	(4)	 	commits numerous breaches of its
duties or obligations under a Transaction Document,
whether or not cured within applicable
cure periods, where such breaches collectively
constitute a material breach of any Transaction
Document and CSC fails to (A) within ten (10) days
after receiving notice of such breaches, provide a
reasonable plan to correct the deficiencies causing
such breaches on a permanent basis, or (B) implement
such plan, cure such breaches (to the extent they are
curable), and permanently cure such deficiencies within
thirty (30) days after delivery of such plan; or

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	 	(5)	 	commits any Excessive Service Level
Failure, as defined in any Transaction Document;

then Sears may, by giving notice to CSC, terminate all
affected Transaction Documents with respect to all or any
part of the Services, in whole or in part, as of a date
specified in the notice of termination. All notices of
breach required to be given under this Section 23.1(a)
(Termination by Sears) shall be given by Sears and contain a
description of the breach in reasonable detail. CSC shall
not be entitled to any Termination Charges in connection with
such a termination for cause. If Sears chooses to terminate
a Transaction Document in part, ***.

	 	(b)	 	By CSC. CSC may upon notice to Sears terminate a
Transaction Document if, and only if, (i) Sears fails to pay Charges
in accordance with this Agreement; subject to Sears’ rights under
Section 14.4 (Disputed Charges) (ii) CSC provides Sears with
a notice of such failure in accordance with Section 26.3
(Notices), and (iii) such amount remains unpaid for at least thirty
(30) days after such notice is received by Sears.

	23.2	 	Termination for Convenience.

Unless a different period is set forth in a Transaction Document, Sears
may terminate this Agreement with respect to all or any portion of the
Services for convenience and without cause upon 180 days’ prior notice;
provided, however, that for Services under a Service
Addenda, only ten (10) days’ notice shall be required. Sears shall pay to
CSC a Termination Charge (as such amount may be reduced from time to time
under this Agreement, the “Applicable Termination Charge”), calculated in
accordance with Section 23.3 (Termination Charges). Commencing
with the first invoice for Services due after the effective date of such
termination, CSC shall invoice Sears for (and Sears shall pay in
accordance with this Agreement), that portion of the Applicable
Termination Charge equal to the difference between the average monthly
Charges by CSC over the immediately preceding 12 months and the actual
Charges by CSC for Services for such period (the “TC Delta Payment”).
The Applicable Termination Charge shall be reduced by each TC Delta
Payment made by Sears, and as otherwise
provided for in this Agreement. For each following month, a TC Delta
Payment shall be calculated and paid by Sears as provided for above,
until the Applicable Termination Charge is reduced to twenty percent
(20%) of the original Applicable Termination Charge (the “TC Holdback
Amount”). The TC Holdback Amount (after adjustment as provided for
herein), shall be paid upon completion of any completion of the Services
(including any extension thereof, but not including the Termination
Assistance Services) under this Agreement. If a purported termination for
cause by Sears under Section 23.1 (Termination for Cause) is

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determined by a competent authority not to be properly a termination for
cause, then such termination by Sears shall be deemed to be a termination
for convenience under this Section 23.2 (Termination for
Convenience) (whether or not sufficient notice of such termination was
given).

	23.3	 	Termination Charges.

No Termination Charges shall apply under this Agreement unless the
applicable Transaction Document states that such Charges will apply. The
Parties acknowledge and agree that: (a) any Termination Charges specified
in a Transaction Document shall be the maximum amount Sears will be
required to pay in the event of a termination for convenience of the
Services under such Transaction Document (regardless of whether such
Services are terminated at one time, or in a series of terminations (such
as for partial terminations)); (b) Termination Charges shall decline over
time and, (iii) Termination Charges shall unless otherwise specified in a
Transaction Document, no longer apply upon the normal expiration of a
Transaction Document or during any renewal period thereof. *** Sears
may, from time to time, request that CSC calculate the amount of
Termination Charges Sears would be required to pay in the event Sears
were to terminate, for convenience, in whole or in part, any Services.
CSC shall provide to Sears a detailed estimate of such Charges (broken
out by the categories set forth in the definition of Termination
Charges), within 30 days after its receipt of Sears’ request. If Sears
elects to terminate, for convenience, any Services for which such an
estimate has been requested, then the Termination Charges applicable to
such termination shall not exceed the lower of: (x) the Termination
Charges set forth in the applicable Transaction Document, minus any
Termination Charges Sears is already obligated to pay due to previous
terminations under such Transaction Document, and (y) the amount set
forth in the CSC’s estimate pursuant to this Section 23.3
(Termination Charges).

	23.4	 	Termination Upon CSC Change of Control.

If a change in Control of CSC (or that portion of CSC providing Services
under this Agreement) or the Entity that Controls CSC (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 CSC are acquired by any entity, or CSC 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, Sears may at its option terminate
this Agreement or any Transaction Document, in whole or in part, by
giving CSC at least ninety (90) days’

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prior notice and designating a date upon which such termination shall be
effective; provided, however, if such change in Control of
CSC involves a competitor of Sears or its Affiliates, Sears may terminate
this Agreement, or any Transaction Document, in whole or in part, by
giving CSC at least ten (10) days’ prior notice, and such competitor of
Sears or its Affiliates shall be prohibited from any contact with Sears
Data, Sears Confidential Information and any and all other information
about the Sears account, including discussions with CSC Personnel
regarding specifics relating to the Services. ***

	23.5	 	Termination Upon Sears’ Mergers and Acquisitions.

If, in a single transaction or series of transactions, Sears acquires
Control of or Control of Sears 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, Sears may at its option terminate, for convenience, the Services,
in whole or in part, under this Agreement, by giving CSC at least ninety
(90) days’ prior notice and designating a date upon which such
termination shall be effective. If Sears acquires Control of or Control
of Sears is acquired by an Entity that has an existing agreement with CSC
(the “Entity Agreement”) for the provision of services similar to the
Services (“Other Services”), Sears shall not be required to pay any
Termination Charges in connection with the termination of the Services
under this Agreement, or the Entity Agreement to the extent that the
combined Entity elects, in its sole discretion, to have CSC provide the
Services and Other Services to the combined Entity pursuant to the terms
of (a) this Agreement; ***.

	23.6	 	Termination for Insolvency.

If either Party (a) files for bankruptcy, (b) becomes or is declared
insolvent, or is the subject of any bona fide proceedings related to its
liquidation, administration, provisional liquidation, insolvency or the
appointment of a receiver or similar officer for it, (c) passes a
resolution for its voluntary liquidation, (d) has a receiver or manager
appointed over all or substantially all of its assets, (e) makes an
assignment for the benefit of all or substantially all of its creditors,
(f) enters into an agreement or arrangement for the composition,
extension or readjustment of substantially all of its obligations or any
class of such obligations, (g) has any of its publicly traded equities
delisted from any stock exchange, or (h) experiences an event analogous
to any of the foregoing in any jurisdiction in which any material portion
of its assets are situated, then the other Party may terminate this
Agreement as of a date specified in a termination notice;
provided, however, that CSC shall not have the right to
exercise such termination under this Section 23.6 (Termination for
Insolvency) so long as Sears (within 30 days of such

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notice) pays for the Services to be received hereunder in advance on a
month-to-month basis. If any Party elects to terminate this Agreement
due to the insolvency of the other Party, such termination shall be
deemed to be a termination for cause hereunder.

	23.7	 	Termination for Change in Laws.

If any change in Laws results in an increase of twenty percent (20%) or
more in the estimated average monthly Charges for any Service or under
any Transaction Document or otherwise has a material adverse impact on
CSC’s ability to perform the Services, then Sears may, at its option,
terminate the applicable Transaction Document by giving CSC at least
ninety (90) days’ prior notice and designating a date upon which such
termination shall be effective. CSC shall be entitled to eighty percent
(80%) of the Termination Charges that would have been paid in the event
of a Termination for Convenience in connection with a termination under
this Section 23.7 (Termination for Change in Laws).

	23.8	 	Sears’ Rights Upon CSC’s Bankruptcy.

	 	(a)	 	General Rights. In the event of CSC’s, any of CSC’s
Affiliates’ or any Subcontractors’ bankruptcy or other formal
procedure referenced in Section 23.6 (Termination for
Insolvency) or of the filing of any petition under bankruptcy laws
affecting the rights of CSC or any CSC Personnel which is not stayed
or dismissed within thirty (30) days of filing, in addition to the
other rights and remedies set forth in this Agreement, to the
maximum extent permitted by Law, Sears shall have the immediate
right to retain and take possession for safekeeping all Sears Data,
Sears Confidential Information and Sears Provided Systems, including
Software, Equipment, Systems or Materials to which the Eligible
Recipients are or would be entitled during the Term or upon the
expiration or termination of this Agreement or any Transaction
Document, in the possession or control of CSC or CSC Personnel, as
the case may be. CSC shall, and shall cause the CSC Personnel (to
the extent not prohibited by Law) to cooperate fully with the
Eligible Recipients and assist the Eligible Recipients in
identifying and taking possession of the items listed in the
preceding sentence. Sears shall have the right to hold such Sears
Data, Confidential Information, Software, Equipment, Systems and
Materials until such time as the trustee or receiver in bankruptcy
or other appropriate insolvency office holder can provide adequate
assurances and evidence to Sears that they shall be protected from
sale, release, inspection, publication or inclusion in any publicly
accessible record, document, material or filing. CSC and Sears
agree that without this material provision, Sears would not have
entered into this Agreement or provided any right to the possession
or use of Sears Data, Sears Confidential Information or Sears
Provided Systems covered by this Agreement.

	 
	 	(b)	 	Sears’ Rights in Event of Bankruptcy Rejection.
Notwithstanding any other provision of this Agreement to the
contrary, if CSC 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

108

 

of the licensee and sublicensee rights of Sears and the other
Eligible Recipients arising under or otherwise set forth in this
Agreement, including the rights of Sears and the other Eligible
Recipients referred to in Section 16.6 (Sears’ Rights Upon
Expiration or Termination), shall be deemed fully retained by and
vested in Sears and the other 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 CSC is the
debtor, (ii) Sears and the other Eligible Recipients shall have all
of the rights afforded to non-debtor licensees and sublicensees
under Section 365(n) of the Bankruptcy Code, and (iii) to the
extent any rights of Sears and the other Eligible Recipients under
this Agreement which arise after the termination or expiration of
this Agreement are determined by a bankruptcy court not to be
“intellectual property rights” for purposes of Section 365(n), all
of such rights shall remain vested in and fully retained by Sears
and the other Eligible Recipients after any Bankruptcy Rejection as
though this Agreement were terminated or expired. Sears shall
under no circumstances be required to terminate this Agreement
after a Bankruptcy Rejection in order to enjoy or acquire any of
its or the other Eligible Recipients’ rights under this Agreement,
including without limitation any of the rights referenced in
Section 16.6 (Sears’ Rights Upon Expiration or Termination).

	23.9	 	Right to Assume Licenses in Bankruptcy.

In the event of commencement of bankruptcy proceedings by or against an
Eligible Recipient, such Entity or its trustee in bankruptcy shall be
entitled to assume the licenses granted to such Entity under or pursuant
to this Agreement and shall be entitled to retain all of such Entity’s
rights thereunder.

	24.	 	RIGHTS UPON EXPIRATION OR TERMINATION

	24.1	 	Certain Rights.

Except as expressly provided otherwise in a Transaction Document, upon
any expiration or termination (regardless of whether for cause or
convenience) of this Agreement or any Transaction Document, the rights
provided for in this Section 24 (Rights Upon Expiration Or
Termination) shall apply.

	24.2	 	Hiring.

The Eligible Recipients shall be permitted to undertake, without
interference from CSC or CSC Affiliates or CSC Subcontractors (including
counteroffers), to hire, effective after the expiration or termination of
the Services (or the applicable portion thereof) under this Agreement or
the applicable Transaction Document, as the case may be, or the
completion of any Termination Assistance Services (for which CSC
reasonably requires such Personnel’s Services) requested under Section
25 (Termination Assistance Services), any CSC Personnel assigned
primarily to the performance of Services within the 12-month period prior
to the expiration or termination date. CSC shall waive, and

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shall cause its Affiliates and Subcontractors to waive, their rights, if
any, under contracts with such Personnel restricting the ability of such
Personnel to be recruited or hired by the Eligible Recipients. The
Eligible Recipients shall have reasonable access to such CSC Personnel
for interviews, evaluations and recruitment. Sears shall endeavor to
conduct the above-described hiring activity in a manner that is not
unnecessarily disruptive of the performance by CSC of its obligations
under this Agreement. ***

	24.3	 	Sears Provided Systems and Deliverables.

With respect to Sears Provided Systems and Deliverables, CSC shall, at no
cost to Sears:

	 	(a)	 	Deliver. Deliver to Sears a copy of all Deliverables and all
Sears Provided Systems in the format and medium in use by CSC in
connection with the Services as of the date Sears requests such
items, or the date of such expiration or termination of this
Agreement or the applicable Transaction Document, as the case may
be; and

	 
	 	(b)	 	Destroy. Following completion by CSC of any Termination
Assistance Services for which Sears Provided Systems are required,
destroy or securely erase all tangible embodiments of such Sears
Provided Systems then in CSC’s or CSC Personnel’s possession or
under its control.

	24.4	 	Sears Facilities.

CSC and CSC Personnel shall vacate the Sears Facilities, in condition at
least as good as the condition when made available to CSC, ordinary wear
and tear excepted. Such Sears Facilities shall be vacated, at the
expiration or termination date of the applicable Transaction Document or
the completion of any Services requested by Sears under Section 25
(Termination Assistance Services) requiring such Sears Facilities,
whichever is later.

	24.5	 	CSC Provided Systems.

	 	(a)	 	CSC Provided Circuits and Other Items. CSC shall, upon
Sears’ request, and at no additional charge, register, re-register,
release, assign and transfer, as the
case may be, to Sears (or its designee) all Internet addresses,
domain names and toll and toll-free telephone numbers provided by
CSC or CSC Personnel to Sears that shall be used by Sears or CSC
Personnel primarily in connection with the provision of the
Services.

	 
	 	(b)	 	CSC Provided Equipment.

	 	(i)	 	Right to Purchase/Lease. Unless otherwise
agreed to by Sears pursuant to Section 10.3(h) (Other
Matters), Sears may have the option (but not the

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obligation) to purchase, or assume the lease for any
Equipment, including the Acquired Assets (on the same terms
and conditions as are applicable to CSC under such lease and
without transfer charges) or buy out the lease for such
Equipment (at a price appropriately discounted to reflect the
present value of future payments to be made under the lease),
owned or leased by CSC or its Affiliates that is used
primarily by CSC, its CSC Affiliates or the CSC Personnel to
perform the Services. If the terms of such lease do not
permit assignment or buyout by Sears as provided above, CSC
will, upon Sears’ request, inform Sears of the actual buyout
amount that CSC would incur to buy out out such lease (the
“CSC Buyout Price”), and then upon Sears’ request, CSC will
buyout out such lease and sell such Equipment to Sears at the
CSC Buyout Price.

	 	(ii)	 	Maintenance of Such Equipment. Such
Equipment shall be transferred in good working condition,
reasonable wear and tear excepted, as of the expiration or
termination date of the applicable Transaction Document, or
the completion of any Services requiring such Equipment
requested by Sears under Section 25 (Termination
Assistance Services), whichever is later. CSC shall maintain
such Equipment through the date of transfer so as to be
eligible for the applicable manufacturer’s maintenance program
at no additional charge to Sears.

	 
	 	(iii)	 	Conditions of Transfer. CSC shall assist
Sears in identifying each such piece of Equipment and the
terms and conditions upon which such Equipment may be sold or
assigned to Sears, including any costs to be assumed by Sears.
At Sears’ request, the Parties shall negotiate in good faith
and agree upon the form and structure of the purchase.

	 	(1)	 	Owned Equipment. In the case of
Equipment owned by CSC or its Affiliates purchased by
Sears, CSC shall grant to the Eligible Recipients a
warranty of title and a warranty that such Equipment is
free and clear of all liens and encumbrances. Such
conveyance by CSC to the Sears shall be at the
then-current net book value as stated in CSC’s or its
Affiliates accounting records;
provided, however, that for such purposes
net book value shall be calculated in accordance with
generally accepted accounting principles, using the
depreciation methods used by CSC in preparing its
federal income tax returns.

	 
	 	(2)	 	Leased Equipment. In the case of
leased Equipment, CSC shall (A) represent and warrant
that the lease is not in default, (B) represent and
warrant that all payments thereunder have been made
through the date of transfer, and (C) notify Sears of
any lessor defaults of which it is aware at the time.

	 	(c)	 	CSC Provided Software. With respect to CSC Provided
Software:

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	 	(i)	 	CSC Software.

	 	(1)	 	License. With respect to all CSC
Provided Software that is CSC Software, CSC shall grant
to Sears an irrevocable, perpetual, nonexclusive,
worldwide, paid-up license to use, execute, reproduce,
display, perform and prepare Derivative Works based
upon, and distribute to Eligible Recipients such CSC
Software; *** CSC shall deliver to Sears a copy of such
CSC Software and all related documentation sufficient to
enable the Eligible Recipients to exercise the foregoing
license; provided that such Software shall be subject to
the confidentiality provisions set forth in Section
15.3 (Confidentiality) above. The foregoing license
shall be at no cost to the Eligible Recipients, unless
and to the extent such CSC Software is generally
licensed to CSC’s other customers on a rental fee basis,
and such CSC Software was made available to Sears on a
rental fee basis under the applicable Transaction
Document, in which case such CSC Software shall be
provided to Sears on terms no less favorable than the
terms under which Sears was receiving such CSC Software
under this Agreement; provided, however,
that such CSC Software shall not be deemed to have been
provided on a rental fee basis if CSC included any
one-time licensing fees associated with such CSC
Software in the monthly Charges paid by Sears under this
Agreement. ***

	 
	 	(2)	 	Maintenance. CSC shall offer to
provide to Sears, and if and to the extent requested by
Sears, CSC shall provide to Sears, Upgrades,
maintenance, support and other services for such CSC
Software on CSC’s or its Affiliates’, as applicable,
then-current standard terms and conditions for such
services; provided, however, that the
charges for such Services shall not
exceed those CSC or its Affiliates, as applicable,
customarily charges to its other preferred commercial
customers.

	 	(ii)	 	Third Party Software.

	 	(1)	 	License. With respect to CSC
Provided Software that is Third Party Software, unless
otherwise agreed to by Sears pursuant to

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Section 10.3(h) (Other Matters), CSC shall, at
Sears’ option, transfer to Sears all licenses for Third
Party Software used primarily to provide Services to
Sears (on the same terms and conditions as are
applicable to CSC under such license and without
transfer charges); provided, however,
that Sears shall be entitled to permit the Eligible
Recipients to use such Software subject to the same
terms as conditions as Sears is entitled to use such
Software and subject to any limits on usage that apply
to Sears (e.g., if Sears were entitled to five (5) CPU
licenses, Sears and the Eligible Recipients can, on a
combined basis, only use such Software on five (5)
CPUs); ***.

	 	(2)	 	Transfer Fees. To the extent Sears
has agreed in advance to pay any fees in connection with
its receipt of such licenses, sublicenses or other
rights, CSC shall, at Sears’ request, identify the
licensing and sublicensing options available to the
Eligible Recipients and the license or transfer fees
associated with each. CSC shall use commercially
reasonable efforts to obtain the most favorable options
and the lowest possible transfer, license, re-license,
assignment or termination fees for Third Party
Materials. CSC shall not commit the Eligible Recipients
to paying any such fees or expenses without Sears’ prior
approval, which may be withheld in Sears’ sole
discretion. If the applicable licensor offers more than
one form of license, Sears (not CSC) shall be entitled
to select the form of license to be received by the
Eligible Recipients.

	 	(iii)	 	Sufficient Licenses. If CSC did not
purchase sufficient licenses to provide the Services, and
therefore additional licenses will have to be purchased to
permit CSC to meet its obligations under this Section
24.5(c), such costs shall be borne by CSC.

	24.6	 	CSC Subcontracts and Third Party Contracts.

CSC shall inform Sears of all subcontracts or Third Party Contracts used
primarily by CSC, its CSC Affiliates and any CSC Personnel to perform the
Services. Subject to Section 10.3(h) (Other Matters), at Sears’
request, CSC shall, and shall cause any such CSC Affiliates or any CSC
Personnel to, permit the Eligible Recipients to
assume prospectively any or all such contracts or to enter into new
contracts with the Eligible Recipients on substantially the same terms
and conditions, including price. CSC shall so assign the designated
subcontracts and Third Party Contracts to the Eligible Recipients as of
the expiration or termination date of the applicable Transaction Document
or the completion of any Termination Assistance Services requested by
Sears under Section 25 (Termination Assistance Services) requiring
such subcontracts or Third Party Contracts,

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whichever is later. There shall be no charge or fee imposed on the
Eligible Recipients by CSC, its Affiliates or any of CSC Personnel for
such assignment. CSC shall (1) represent and warrant that it is not in
default under such subcontracts and Third Party Contracts, (2) represent
and warrant that all payments thereunder through the date of assignment
are current, and (3) notify Sears 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. CSC shall retain the right
to utilize any such Subcontractor or Third Party services in connection
with the performance of services for other CSC customers.

	24.7	 	Effect on Termination Charge.

If Sears exercises any of its rights under this Section 24 (Rights
Upon Termination), the Termination Charge under the applicable
Transaction Document shall be reduced by (a) any amounts paid or payable
by Sears (or its designees) to CSC, or its designees, pursuant to this
Section 24 (Rights Upon Termination) upon or after termination, or
prior to the normal expiration, of the applicable Transaction Document,
as the case may be, and (b) all costs and expenses avoided by CSC
(including CSC’s applicable profit margins) by Sears (or its designees)
hiring CSC Personnel, taking assignment of Third Party Contracts, or
exercising any of Sears’ other rights under this Section 24
(Rights Upon Termination).

	25.	 	TERMINATION ASSISTANCE SERVICES.

	25.1	 	Duration.

As part of the Services, CSC shall provide to the Eligible Recipients the
Termination Assistance Services described in this Section 25
(Termination Assistance Services) and in the applicable Transaction
Document.

	 	(a)	 	Period of Provision. As and to the extent requested by Sears
from time to time, CSC shall provide to the Eligible Recipients
Termination Assistance Services commencing upon request from Sears
at any time or times during the Term of any Transaction Document and
continuing for up to twenty-four (24) months following the
expiration or termination of any Services.

	 
	 	(b)	 	Extension(s) of Services and Termination Assistance Services.

	 	(i)	 	Extension(s) of Services (other than
Termination Assistance Services). Sears may elect, in its
sole discretion, *** notice to CSC, from time to time, to
extend all or part of the Services (other than Termination
Assistance Services (which are dealt with in clause
(ii) below) beyond the expiration or termination date of
such Services, in its sole discretion; ***. The terms and
conditions of this Master Agreement and the applicable
Transaction

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Document(s) shall continue to apply to such Services during
such extension, notwithstanding such expiration or
termination.

	 	(ii)	 	Extension(s) of Termination Assistance
Services. In addition to the foregoing rights of Sears,
Sears also may from time to time elect, in its sole
discretion, *** prior notice to CSC, to extend the period
following the effective date of any expiration or termination
for the performance of Termination Assistance Services with
respect to a particular Transaction Document; ***.

	 
	 	(iii)	 	Other Extension(s). In any event, if
Sears provides CSC with less than *** prior notice of any
extension of the Services or Termination Assistance Services,
or requests for Termination Assistance Services beyond the
applicable period referenced in clause (i) or (ii)
above, CSC shall nonetheless *** comply with Sears’
request and provide the requested Termination Assistance
Services or other Services, as the case may be.

	 
	 	(iv)	 	Option to Complete Transformation
Services. In the event of a termination before all
Transformation Services are completed, Sears shall have the
right to require CSC to complete all or any portions of such
Transformation Services in accordance with the terms and
conditions of this Agreement, despite termination of any or
all other Services, in which event the Charges set forth in
the applicable Transaction Document for such Transformation
Services shall be equitably adjusted in proportion to the
Service that Sears elects to have CSC complete.

	 	(c)	 	Firm Commitment. CSC shall extend the Services and/or
provide Termination Assistance Services (as set forth in this
Section 25.1(c) (Firm Commitment)), upon Sears request
regardless of the reason for the expiration or termination of this
Master Agreement or any Transaction Document; provided,
however, that if this Master Agreement or a Transaction
Document is terminated by CSC in accordance with Section
23.1(b) (Termination for Cause; By CSC), CSC may require payment
by Sears monthly in advance for Services and Termination Assistance
Services to be provided or performed under this Section 25
(Termination Assistance Services). At Sears’ request, CSC shall
provide Termination Assistance Services directly to an Eligible
Recipient or an Entity acquiring Control of an Eligible Recipient;
provided, however, 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.

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	 	(d)	 	Performance. Except as expressly otherwise mutually agreed
upon in writing by the Parties, to the extent Sears requests
Termination Assistance Services or other Services, such Termination
Assistance Services and other Services shall be provided subject to
and in accordance with the terms and conditions of this Agreement,
with at least the same degree of accuracy, quality, completeness,
timeliness, responsiveness and resource efficiency as was required
to be provided for the same or similar Services during the Term of
the applicable Transaction Document. CSC Personnel (including all
Key Personnel) reasonably considered by Sears to be critical to the
performance of the Services, including the Termination Assistance
Services, shall be retained on the Sears account through the
completion of all relevant Termination Assistance Services or other
Services, as applicable.

	25.2	 	Scope of Termination Assistance Service.

As part of the Termination Assistance Services and to the extent
requested by Sears, CSC shall timely transfer the control and
responsibility for all information technology functions and Services
previously performed under the applicable Transaction Document by or for
CSC to the Eligible Recipients. Additionally, CSC shall provide any and
all reasonable assistance requested by Sears to allow:

	 	(a)	 	***

	 
	 	(b)	 	***

	 
	 	(c)	 	***

	25.3	 	General Support.

To the extent requested by Sears, CSC shall (i) assist Sears in
developing a written transition plan for the transition of the Services
to the Eligible Recipients, which plan shall include (as requested by
Sears) capacity 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 Sears in the use of any Equipment, Software, Systems,
Materials or tools used in connection with the
provision of the Services, (iv) catalog all Software, Sears 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 Sears and
source code to which Sears is otherwise entitled under this Agreement and
assist in its re-configuration, (vi) analyze and report on the space
required for the Sears 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 the Eligible Recipients has been successfully completed,
(viii) create and provide copies of the Sears Data in the format and on
the media reasonably requested by Sears, (ix) provide a complete and
up-to-date, electronic copy of

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the Operational Procedures Manual in the format and on the media
reasonably requested by Sears, (x) provide other technical assistance as
requested by Sears, (xi) provide Sears with information related to the
Services that Sears reasonably requests during any Exhibit Term to enable
Sears to draft requests for proposal relating to the Services, and (xii)
at Sears’ request, provide due diligence information to recipients of
such requests for proposal. CSC may or may not be a recipient of any
such requests for proposal.

	25.4	 	Rates and Charges.

For Services that Sears was receiving from CSC prior to any expiration or
termination of the applicable Transaction Document or the applicable
Service, the Charges applicable to such Services (during any extension of
such Services beyond such expiration or termination), shall be the
Charges that Sears was (or is) paying prior to such expiration or
termination, ***. For all Termination Assistance Services, Charges shall
be subject to Section 4.5(b) (New Services); provided,
however, that (i) to the extent Sears requests a portion (but not
all) of the Services included in a particular Charge, the amount to be
paid by Sears shall be equitably adjusted in proportion to the portion of
the Services included in the applicable Charge that CSC shall not be
providing or performing, (ii) to the extent the Termination Assistance
Services requested by Sears can be provided by CSC using Personnel and
resources then assigned to Sears, there shall be no additional charge to
Sears for such Termination Assistance Services, (iii) if the Termination
Assistance Services requested by Sears cannot be provided by CSC using
Personnel and resources then assigned to Sears, Sears, in its sole
discretion, may forego or delay any work activities or temporarily or
permanently adjust the work to be performed by CSC, the schedules
associated therewith or the Service Levels to permit the performance of
such Termination Assistance Services using such Personnel or resources at
no additional charge to Sears, and (iv) any Charges to Sears for
Termination Assistance shall not exceed the lesser of: (x) rates CSC
charges customers (prior to such customer terminating their agreement
with CSC), of similar size and volume for such services, and (y) CSC’s
actual cost plus ***.

	26.	 	GENERAL

	26.1	 	Binding Nature and Assignment.

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

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

	 	(i)	 	Either Party may assign its rights and
obligations under this Agreement, or any Transaction Document,
without the approval of the other Party, to an Affiliate that
expressly assumes such Party’s obligations and
responsibilities hereunder; provided, however,
that the assigning Party

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shall remain fully liable for and shall not be relieved from
the full performance of all obligations under this Agreement.
Any Party assigning its rights or obligations to an Affiliate
in accordance with this Agreement shall, within one (1)
Business Day after such assignment, provide notice thereof to
the other Party together with a copy of any relevant
provisions of the assignment document.

	 	(ii)	 	Sears may assign its rights and obligations under
this Agreement or any Transaction Document without the
approval of CSC to an Entity acquiring, directly or
indirectly, Control of Sears, an Entity into which Sears is
merged or an Entity acquiring all or substantially all of
Sears’ assets; provided, however, that if such
acquisition or merger would result in CSC being required to
provide Services that meet the definition of New Services,
then such Services shall be treated as New Services under
Section 4.5(b) (New Services). The acquirer or
surviving Entity shall agree in writing to be bound by the
terms and conditions of this Agreement.

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

	26.2	 	Entire Agreement; Amendment.

This Agreement, including any Appendices and Transaction Documents
referred to in this Agreement and attached hereto, each of which is
incorporated in this Agreement 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 in this
Agreement. This Agreement supersedes all prior agreements,
representations, warranties, promises, covenants, commitments or
undertakings, whether written or oral, with respect to the subject matter
contained in this Agreement. Furthermore, this Agreement shall
supersede, and the Eligible Recipients shall not be bound by any “shrink
wrap license” which is now or hereafter bundled with the CSC Provided
Systems, or any “disclaimers” or “click to approve” terms or conditions
now or hereafter contained in the CSC Provided Systems, or any web site
of CSC, its Affiliates or CSC’s Personnel that the Eligible Recipients
use in connection with the Services. No Transaction Document, amendment,
modification, change, waiver or discharge hereof shall be valid or
binding unless in a tangible writing (not in electronic form) and
manually signed by an authorized representative of the Party against
which such amendment, modification, change, waiver or discharge is sought
to be enforced.

	26.3	 	Notices.

All notices required or permitted to be given by one Party to the other
Party under this Agreement shall be in writing and shall be sufficient if
sent by: (a) hand delivery; (b) certified mail, return receipt
requested; (c) nationally recognized overnight courier

118

 

service; or (d) facsimile with electronic confirmation to the sender, to
the applicable Party at its address(es) or facsimile number(s) set forth
below:

	 	 	 
	If to Sears:

	 	Sears, Roebuck and Co.
	

	 	3333 Beverly Road, Mail Station: B6-157B
	

	 	Hoffman Estates, Illinois 60179
	

	 	Attn.: VP Operations/Engineering
	

	 	Facsimile: (847) 286-7574
	 
	 	 
	With a copy to:

	 	Sears, Roebuck and Co.
	

	 	3333 Beverly Road, Mail Station: B5-212B
	

	 	Hoffman Estates, Illinois 60179
	

	 	Attn.: General Counsel
	

	 	Facsimile: (847) 286-2471
	 
	 	 
	If to CSC

	 	Computer Sciences Corporation
	

	 	2100 East Grand
	

	 	El Segundo, California 90245
	

	 	Attn: VP, General Counsel and Secretary
	

	 	Facsimile: (310) 322-9767
	 
	 	 
	With a copy to:

	 	Computer Sciences Corporation
	

	 	400 Commerce Drive
	

	 	Newark, DE 19713
	

	 	Attn: Director of Contracts
	

	 	Facsimile: (302) 391-6072
	 
	 	 
	With a copy to:

	 	CSC’s Account Executive, which copy shall be provided at
the address or facsimile number assigned to CSC’s Account
Executive by Sears at the applicable Sears location.

All notices shall be effective: (i) when delivered personally; (ii)
three (3) Business Days after being sent by certified mail; (iii) the
first Business Day after being sent by a nationally recognized courier;
or (iv) on the same Business Day on which it is sent by facsimile;
provided such transmittal is complete before 5 p.m. (Central Time)
and is followed by notice under clause (i), (ii) or
(iii) above. Either Party may change its notice information by
giving proper notice of such change to the other Party; provided,
however, that such notice shall only be effective upon receipt.

	26.4	 	Legal Expenses.

In the event of an arbitration or litigation arising out of an alleged
breach of this Agreement (each a “Dispute”), the prevailing Party shall
be entitled to reimbursement of all of its costs and expenses, including
reasonable Attorneys’ Fees, incurred in connection with such Dispute,
including any appeal therefrom. For purposes of this Section 26.4
(Legal Expenses), the determination of which Party is to be considered
the prevailing

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Party shall be decided by the court of competent jurisdiction or
independent party (i.e., arbitrator) that resolves such Dispute.
Notwithstanding such determination by such court or independent party, a
Party (the “Offeree”) shall not be considered the prevailing party for
purposes of this Section 26.4 (Legal Expenses) if (a) the Offeree
withholds its acceptance of any settlement of such Dispute proposed by
the other Party (the “Offeror”) and (b) the judgment or award ultimately
obtained by the Offeree, if any, is not more favorable to the Offeree
than such settlement offer. If multiple settlement offers are made but
not accepted, the preceding sentence shall apply to the Offeror’s final
settlement offer. This provision shall not apply to any proposed
settlement that would require an admission of fault by the Offeree or
imposes any obligations on the Offeree other than: (i) the payment of
money or the issuance of a credit, (ii) release of the claim, and (iii)
agreement to keep the terms of the settlement confidential.

	26.5	 	Counterparts.

This Agreement may be executed in several counterparts, all of which
taken together shall constitute one single agreement between the Parties
hereto. Each Party shall have the right to rely on a facsimile signature
on this Agreement, and each Party shall, if the other Party so requests,
provide, after such transmission, an originally signed copy of this
Agreement to the other Party.

	26.6	 	Headings.

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

	26.7	 	Severability.

If 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.

	26.8	 	Jurisdiction.

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 Cook County, Illinois, and each Party
irrevocably submits to the sole and exclusive jurisdiction of the courts
in Cook County, Illinois in personam, generally and unconditionally with
respect to any action, suit or proceeding brought by it or against it by
the other Party; provided that either Party may bring an action in
another United States jurisdiction to: (a) enforce its rights under
Section 20 (Indemnities) if the underlying Claim is pending in
such jurisdiction; and (b) interplead the other Party into a Claim
pending in such

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jurisdiction. Further, each Party consents to transfer of all actions
filed in foreign jurisdictions to a United States federal or state court.
Notwithstanding the foregoing: a Party shall have the right to bring
litigation in an applicable foreign jurisdictions (e.g., Canada, India,
etc.), to the extent reasonably deemed necessary by such Party, in its
sole judgment, in order to either: (i) receive interim injunctive or
other equitable relief, including a temporary restraining order; or (ii)
to the extent required by such foreign law, litigate, re-litigate or
enforce any matter in order to enforce such Party’s rights under this
Agreement in such foreign jurisdiction, but only to the extent such
disputes or legal action: (A) as to Sears, relates to those Services
actually performed by CSC outside the United States; and (B) as to CSC,
relates to those Services specifically received by Sears outside the
United States.

	26.9	 	Governing Law.

This Agreement, and all questions concerning the validity, interpretation
and performance of this Agreement, as well as the ownership of all
materials created in connection with this Agreement, and all claims
arising out of this Agreement or the Services provided hereunder, shall
be governed by and construed in accordance with the applicable laws of
the State of Illinois and the United States as such laws are applied to
contracts between Illinois residents that are entered into and performed
entirely within the State of Illinois, and without giving effect to the
principles thereof relating to conflicts of laws. The application of
CISG is expressly excluded. If Illinois adopts any form of UCITA during
the Term of this Agreement, the Parties hereby agree that UCITA shall not
apply to this Agreement or any transactions contemplated hereunder, to
the extent that such exclusion is legally permissible under such adopted
law. Furthermore, to the extent permitted under Illinois law, each Party
waives the benefit all substantive, non-procedural, foreign and
international Laws (e.g., the laws of Canada and India), to the extent
such Laws would otherwise grant such Party rights which are different
than those contemplated under this Agreement.

	26.10	 	Relationship of the Parties.

CSC, in furnishing services to the Eligible Recipients hereunder, is
acting as an independent contractor, and CSC has the sole obligation to
supervise, manage, contract, direct, procure, perform or cause to be
performed all work to be performed by CSC Personnel under this Agreement.
Except as expressly provided in this Agreement, CSC is not an agent of
the Eligible Recipients and has no right, power or authority, express or
implied, to represent or bind the Eligible Recipients as to any matters,
except as expressly authorized in this Agreement. Nothing set forth in
this Agreement shall be deemed or construed to render the Parties as
joint venturers, partners, principals, joint employers, employer and
employee of or with the other. CSC’s Personnel are neither employees nor
agents of any Eligible Recipient and are not eligible to participate in
any employment benefit plans or other conditions of employment available
to any Eligible Recipient’s employees. No CSC Personnel retained by CSC
to perform work on the Eligible Recipients’ behalf in connection with
this Agreement shall be deemed to be an officer, director, employee,
agent, Affiliate, contractor or subcontractor of the Eligible Recipients
for any purpose. CSC (or its Subcontractors) shall be solely responsible
for making or

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causing to be made all deductions and withholdings from the CSC
Personnel’s salaries and other compensation. CSC (or its Subcontractors)
shall have exclusive control over the CSC Personnel and over the labor
and employee relations, and the policies relating to wages, hours,
working conditions or other conditions of the Personnel. CSC, and not
Sears, shall be responsible and therefore solely liable for all acts and
omissions of CSC Personnel. CSC (or its Subcontractors) shall have the
exclusive right to hire, transfer, suspend, lay off, recall, promote,
assign, discipline, discharge and adjust grievances with the CSC
Personnel. However, at any time Sears shall, without any additional
charge to any Eligible Recipient, have the right to require CSC to
immediately remove from involvement in any of the Services any Personnel
objectionable to Sears for any lawful reason.

	26.11	 	Consents and Approval.

	 	(a)	 	General. 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 (taking into account Sears’
business needs and objectives for entering into this Agreement).
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.
From time to time, CSC may request, or be entitled to receive,
Sears’ “approval” or “sign-off” of project plans or other
Deliverables prior to proceeding with the next phase or step of a
given project. CSC acknowledges and agrees that (i) Sears is
relying upon CSC’s technical expertise in providing such
Deliverables, and (ii) any such “approval” or “sign-off” by the
Eligible Recipients shall neither be construed as an endorsement by
the Eligible Recipients as to the technical means CSC has selected
to achieve the required results, nor as a waiver of any of the
Eligible Recipients’ rights or CSC’s obligations under this
Agreement.

	 
	 	(b)	 	Written Approval. To the extent CSC is required under this
Agreement to obtain Sears’ 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 Sears
Relationship Manager or an authorized Sears representative.
Notwithstanding the preceding sentence, the Sears Relationship
Manager may agree in advance in writing that as to certain specific
matters oral approval, consent or agreement shall be sufficient.

	26.12	 	Waiver of Default; Cumulative Remedies.

	 	(a)	 	Waiver of Default. A delay or omission by either Party
hereto 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 hereto 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 contained in this
Agreement.

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	 	(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.

	26.13	 	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, including Section 9 (Required
Consents), Section 12.1(e) (Restrictions on Performing Services to
Sears’ Competitors), Section 13.4 (Taxes), Section 13.8
(Refundable Items), Section 14.2 (Payment), Section 15
(Sears Data and Other Confidential Information), Section 16
(Ownership), Section 17 (Representations, Warranties and
Covenants),
Section 18 (Audit Rights), Section 19 (Insurance and Risk
of Loss), Section 20 (Indemnities), Section 21 (Liability),
Section 22 (Dispute Resolution), Section 23 (Termination),
Section 24 (Rights Upon Expiration or Termination), Section
25 (Termination Assistance Services), and Section 26
(General). Additionally, all provisions of this Agreement shall survive
the expiration or termination of this Agreement to the fullest extent
necessary to give the Parties the full benefit of the bargain expressed
in this Agreement.

	26.14	 	Publicity.

CSC shall not, without Sears’ prior written consent, directly or
indirectly, use or refer to the names, service marks and/or trademarks of
Sears or any of its Affiliates, or publicize the existence of this
Agreement in any manner, including in any advertising, customer lists,
publicity release or sales presentation.

	26.15	 	Equitable Remedies.

CSC acknowledges that, solely for purposes of enabling Sears to obtain
equitable relief and for no other purpose, if CSC or any of the CSC
Personnel breaches (or attempts or threatens to breach) its obligation to
provide Services or Termination Assistance Services as provided in
Section 25 (Termination Assistance Services), or its obligation to
provide access to computers or files, containing Sears Confidential
Personal Information and CSC obligations as such Confidential Personal
Information under Section 15 (Sears Data and Other Confidential
Information), the *** shall be irreparably harmed and money damages shall
not be an adequate remedy for such harm. In such a circumstance, Sears
may proceed directly to court. If a court of competent jurisdiction
should find that CSC or any CSC Personnel have breached (or attempted or
threatened to breach) any such obligations, CSC agrees that without any
additional findings of irreparable injury, CSC shall not oppose the entry
of an appropriate order compelling performance by CSC and CSC Personnel
and restraining it from any further breaches (or attempted or
threatened); provided that CSC shall be entitled to defend the claim
fully on the merits and may seek to have the court impose conditions such
as the payment of amounts due under this Agreement

*** CONFIDENTIAL MATERIAL REDACTED AND SEPARATELY FILED WITH THE COMMISSION.

123

 

	26.16	 	Parties To This Agreement.

Except as set forth in Section 20.1 (Indemnity by CSC), and
Section 20.2 (Indemnity by Sears), this Agreement is entered into
solely between, and may be enforced only by, Sears and CSC. Sears may
enforce, on behalf of the Eligible Recipients, the rights and protections
granted to the Eligible Recipients under this Agreement. This
Section 26.16 (Parties to this Agreement) shall not prejudice
Sears’ rights under Section 21.2(g) (Acknowledge Direct Damages).

	26.17	 	Covenant Against Pledging and Liens.

CSC agrees that, without the prior written consent of Sears, it shall not
assign, transfer, pledge, hypothecate or otherwise encumber its rights to
receive payments from Sears under this Agreement for any reason
whatsoever.

Furthermore, neither CSC nor any CSC Personnel shall file any liens, or
by their action or inaction permit, directly or indirectly, any liens to
be filed, on or against property (tangible or intangible) of Sears, or
any other Eligible Recipient. If any such liens arise as a result of CSC
or CSC Personnel’s action or inaction, CSC shall obtain a bond to fully
satisfy such liens or otherwise remove such liens at its sole cost and
expense within ten (10) Business Days.

	26.18	 	Hiring of Employees.

	 	(a)	 	Hiring Restriction. Except as otherwise provided in this
Agreement, each Party agrees that neither it nor its Affiliates
shall employ any person currently employed by the other Party or its
Affiliates. Acknowledging that damage resulting from breach of this
paragraph would be difficult or impossible to calculate, the
breaching Party shall pay, for each such breach, a one-time fee
equal to twenty-five percent (25%) of such employee’s first year’s
salary with the hiring Party (such amount being deemed liquidated
damages and not a penalty). The foregoing sentence shall not limit
either Party’s right to seek equitable remedies for such a breach.

	 
	 	(b)	 	Permitted Hiring. Notwithstanding the foregoing, it shall
not be a violation of Section 26.18(a) (Hiring Restriction),
if: (i) Sears or its Affiliates hires a person who: (x) has been
assigned continuously to work on Services under this Agreement for a
period of twelve (12) months or more; or (y) has not worked on
Services for the Eligible Recipients during the six (6) month period
immediately preceding Sears’ employment of such person; or (z) has
left the employ of CSC prior to being offered a position by Sears;
or (ii) Sears or its Affiliates hire a person to work in any
department other than information technology and e-commerce
(collectively, a “Permitted Hiring”). Any and all agreements
between CSC or CSC Personnel and their former employees that would
in any way conflict with or prohibit Sears or its Affiliates from
such Permitted Hiring shall be of no force and effect with regard to
such restriction.

124

 

	26.19	 	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.

	26.20	 	No Commitment and No Exclusivity.

Except as expressly stated in a Transaction Document, nothing in this
Agreement shall give CSC an exclusive right to provide, or require the
Eligible Recipients to purchase exclusively from CSC, any of the Services
or other products or services, and the Eligible Recipients make no
commitments, promises or representations whatsoever as to the amount of
business CSC can expect at any time under this Agreement. Any estimates
or forecasts of any Eligible Recipients’ future needs for Services are
for such Eligible Recipients’ planning purposes only and the Eligible
Recipients shall not have any liability for CSC’s reliance thereon.
Sears may request information, proposals or competitive bids from Third
Parties on the same or different terms than as provided in this
Agreement, in which event CSC shall cooperate with such Third Parties as
provided in Section 6.1 (Cooperation with Sears Personnel).
Factual descriptions of the Services provided or to be provided to the
Eligible Recipients shall not be deemed CSC Confidential Business
Information and Sears may, without CSC’s consent, disclose such
information to Third Parties, including other potential providers of
services to Sears. In addition, nothing in this Agreement shall be
construed or interpreted as limiting Sears’ right or ability during any
Exhibit Term to add or delete Eligible Recipients or to increase or
decrease its demand for Services.

	26.21	 	Sears Rules and Compliance.

CSC and Sears agree that that they, their Affiliates (and in case of
Sears, the Eligible Recipients) and their Personnel, while working at or
visiting the premises of the other Party, shall comply with all Laws and
the internal rules and regulations of the other Party communicated in
writing to the visiting Personnel, including security procedures. In
addition, CSC shall, and shall cause all CSC Personnel to, comply with
the security rules and procedures for use of the Eligible Recipients’
electronic resources and all other policies, rules and regulations
required by Sears and disclosed to CSC from time to time (collectively,
“Sears Rules”) and comply with reasonable requests of the Eligible
Recipients’ Personnel pertaining to personal and professional conduct and
otherwise conduct themselves in a businesslike manner.

	26.22	 	Interpretation.

The Section and Section headings of this Agreement and of any Appendixes
and Transaction Documents under this Agreement are for convenience only
and shall not be deemed part of this Agreement. As used in this
Agreement (including any Transaction Documents and Appendixes thereto):
(i) any defined terms will include the plural as well as the singular
and the derivatives of such terms, (ii) references to the word “include”
and

125

 

its derivatives (including “e.g.”) shall be deemed to mean “including but
not limited to,” (c) the words “day,” “month,” and “year” mean,
respectively, calendar day, calendar month and calendar year, (d) the
words “Business Day” means Monday through Friday, excluding any official
Sears holidays, and (e) references to Sears’ positions including the
Sears Relationship Manager, Sears Vice President of
Operations/Engineering and the Sears Chief Information Officer shall
include that individual and his or her designee(s). For purposes of
clarity, usage of the word “include” or its derivatives is not mean to
imply an unlimited scope, and any additional items which are claimed to
be inferred by such statement must be reasonably related to the concepts
stated before the usage of the “include” or similar term. For example,
if a provision stated that: “CSC shall provide Help Desk Services,
including answering End User Calls, Level 1 Support, Problem management .
        . ..” It would be unreasonable to argue that, by the use of the word
“include,” Help Desk Services also consists of hosting web servers. It
would be not be unreasonable to argue that Help Desk Services also
includes opening Problem Tickets, which is a normal and customary part of
Help Desk Services. Unless otherwise expressly stated, (i) the words
“herein,” “hereof” and “hereunder” and other words of similar import
refer to this Agreement as a whole and not to any particular Transaction
Document, Appendix, Section, Subsection or other subdivision, and (ii)
Section, Subsection and Appendix in this Master Agreement refer to
sections and subsections of, and appendices to, this Master Agreement.
The Parties agree that any principle of construction or rule of law that
provides that an agreement shall be construed against the drafter of the
agreement in the event of any inconsistency or ambiguity in such
agreement shall not apply to the terms and conditions of this Agreement.

	26.23	 	Export Controls.

CSC will comply with all export control Laws of the United States,
including Export Administration Regulations, 15 C.F.R. Chapter VII,
subchapter C (the “EAR”), with respect to the Services, CSC Provided
Systems and CSC’s Personnel’s use of and any United States or foreign
access to Sears Provided Systems and the CSC Managed Systems, including
to the extent applicable under such Laws access of such Software from a
location outside the United States. Upon Sears’ request, CSC will
identify which export Laws (and the applicable classifications related
thereto) that apply to Sears Provided Systems. CSC will cooperate with
Sears in obtaining any regulatory approvals, permits or licenses that are
necessary to enable Sears and the other Eligible Recipients to exercise
their rights herein.

	26.24	 	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.

Signature Page Follows

126

 

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

	 	 	 
	Sears, Roebuck and Co.

	 	Computer Sciences Corporation
	 

	 	 
	By: /s/ Gerald F. Kelly, Jr.
                                               

	 	By:/s/ R. C. Ricks                                            
	Title: Senior Vice President                                            

	 	Title: President, ABD
	Date: May 31, 2004                                                          

	 	Date: May 31, 2004

 

APPENDIX A

GLOSSARY

“Acquired Assets” means the Equipment, Software and other assets listed in the
applicable Transaction Document that CSC shall acquire as of the Commencement
Date.

“Acquired Assets Credit” means the amount set forth in the applicable
Transaction Document that CSC shall pay to Sears as consideration for the
Acquired Assets.

“Affiliate” means, at the applicable time, (a) with respect to either Party,
any Entity that directly or indirectly Controls, is Controlled with or by or is
under common Control with, such Party, and (b) with respect to Sears, any
Entity that is managed, operated or directed by Sears, is licensed to do
business using the Sears’ name, or does business within a Sears store (e.g.,
Sears’ dealer stores). For purposes of the foregoing,
“Control”, and its
derivatives, means, with respect to a corporation, the ownership, directly or
indirectly, of 50% or more of the voting power to elect directors thereof or,
for purposes of foreign corporations, if less than 50%, the amount allowed by
applicable law; and with respect to any other Entity, power to direct the
management of such Entity.

“Agreement” means this Master Services Agreement, all Transaction Documents to
this Master Agreement and all Appendices and other documents incorporated by
reference into this Master Agreement and/or such Transaction Documents.

“Appendices” has the meaning given in Section 2.2(e) (Appendices).

“Attorneys’ Fees” means the reasonable costs and expenses incurred by a Party
for outside counsel, and related staff, and a reasonable apportionment of the
internal costs incurred by a Party for their in-house counsel, and related
staff working on the matter at issue.

“Benchmark Results” has the meaning given in Section 13.10(d) (Results
of Required Benchmarking).

“Benchmark Standard” has the meaning given in Section 13.10(d)
(Non-Competitive Charges).

“Benchmarker” has the meaning given in Section 13.10(b) (Benchmarking).

“Benchmarking” has the meaning given in Section 13.10(b) (Benchmarking).

"Business Day” has the meaning given in Section 26.22 (Interpretation).

“Charges” means the amounts set forth in a Transaction Document (or otherwise
set forth in this Agreement) that are payable by Sears for the Services. The
term “Charges” includes Pass-Through Expenses and Out-of-Pocket Expenses.

1

 

“CISG” means the United Nations Convention on the International Sale of Goods.

“Code of Conduct” has the meaning given in Section 17.1(h) (Sears Code
of Conduct).

“Commencement Date” means, with respect to a Transaction Document, the date on
which CSC shall begin providing Services under such Transaction Document, as
defined in such Transaction Document.

“Confidential Business Information” has the meaning given in Section
15.3(b)(i) (Confidential Business Information; Definition).

“Confidential Information” means, collectively, Confidential Business
Information and Confidential Personnel Information.

“Confidential Personal Information” has the meaning given in Section
15.3(c)(i) (Confidential Personal Information; General).

“Contract Changes” has the meaning given in Section 4.5(d) (Charges for
Contract Changes).

“Contract Rate” means ***.

“Contract Year” means a period during the Term commencing on the first
Commencement Date under this Agreement or an anniversary thereof and ending on
the date one (1) year thereafter (or, if earlier, on the last day of the Term).
If any Contract Year is 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 shorter period.

“Credit Trigger Event” means a Downgrade Event, a MAC Event or a Default Event.

“CSC” has the meaning given in the preamble to this Master Agreement.

“CSC Account Executive” has the meaning given in Section 12.2 (CSC
Account Executive).

“CSC Designated Contract” has the meaning given in Section 10.1(a)
(Assignment and Assumption).

“CSC Facilities” means the facilities owned or leased by CSC, its Affiliates or
the CSC Personnel and from which any Services are provided.

“CSC Managed System” means (a) any Equipment or Software or System that the
applicable Transaction Document specifically states CSC will have operational,
but not financial, responsibility for, and (b) any Acquired Assets for which
CSC has been unable to obtain a Required Consent for the assignment, sale or
transfer to CSC of such Acquired Assets.

*** CONFIDENTIAL MATERIAL REDACTED AND SEPARATELY FILED WITH THE COMMISSION.

2

 

“CSC Personnel” means the Personnel of CSC, its Affiliates and their respective
Personnel including Subcontractors (e.g., an employee of CSC’s Subcontractor is
included within the definition of CSC Personnel).

“CSC Provided Circuits” means all communication circuits owned or leased by CSC
or any CSC Affiliate or otherwise provided by CSC Personnel and used in
connection with the Services or to which CSC, its Affiliates or the CSC
Personnel provides to any Eligible Recipient access in connection with the
Services.

“CSC Provided Equipment” means (a) all Acquired Assets, and (b) all Equipment
owned or leased by CSC, any CSC Affiliate or otherwise provided by CSC
Personnel and used in connection with the Services or to which CSC, its
Affiliates, or CSC Personnel provides any Eligible Recipient access in
connection with the Services.

“CSC Provided Materials” means all Materials (other than Sears Provided
Materials): (a) owned or licensed by CSC or its Affiliates; and (b) provided
by CSC Personnel; and, in each such case, used in connection with the Services.

“CSC Provided Software” means all Software owned by, or provided under license
to, CSC, any CSC Affiliate or otherwise provided by CSC Personnel and used in
connection with the Services or to which CSC provides any Eligible Recipient
with access in connection with the Services.

“CSC Provided System” means, collectively, the CSC Provided Circuits, the CSC
Provided Equipment, the CSC Provided Materials and the CSC Provided Software,
and any Systems consisting of a combination of the foregoing items.

“CSC Software” means all Software owned by CSC or its Affiliates and that has
been or shall be used to provide the Services.

“Default Event” means, for purposes of this Agreement and the provision of the
Services, (A) an event of default (as such term or any similar term is defined
in any material loan agreement of CSC or CSC’s parent Entity (to the extent CSC
has a parent Entity)), (B) any other event of default, the occurrence of which
would require CSC or CSC’s parent Entity (to the extent CSC has a parent
Entity) to notify its lenders or bondholders, or (C) any request for a waiver
or extension of, or a forbearance relating to, any event that with notice or
the passage of time (or both) would (unless such a waiver, extension or
forbearance is obtained) become an event of default by CSC or CSC’s parent
Entity (to the extent CSC has a parent Entity) under any material loan
agreement of CSC or CSC’s parent Entity (to the extent CSC has a parent Entity)
or any indenture or similar agreement governing a bond issue, requiring CSC or
CSC’s parent Entity (to the extent CSC has a parent Entity) to make a repayment
of principal or interest.

“Deliverables” means ***

*** CONFIDENTIAL MATERIAL REDACTED AND SEPARATELY FILED WITH THE COMMISSION.

3

 

provision of the Services, including all intermediate and partial versions
thereof, in whatever form or medium; provided, however, that
except as stated in Section 16.3 (Deliverables), the term “Deliverables”
shall not include other CSC Provided Software or CSC Provided Materials.

“Derivative Work” means 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.

“Downgrade Event” means (A) any downgrade of the long term unsecured debt
rating of CSC’s or CSC’s parent Entity (to the extent CSC has a parent Entity)
below Moody’s rating BA1 or Standard & Poor’s rating BBB-, or (B) the failure
of CSC or CSC’s parent Entity (to the extent CSC has a parent Entity) to have a
long term unsecured debt rating from both Standard & Poor’s and Moody’s.

“Effective Date” has the meaning given in the preamble to this Master
Agreement.

“Eligible Recipients” means, collectively, the following:

	 	(a)	 	Sears;

	 
	 	(b)	 	any Entity that is an Affiliate of Sears as of the Effective
Date;

	 
	 	(c)	 	for a period of twenty-four (24) months after such
transaction, any Entity that purchases any divested business
operation of Sears, or any of its Affiliates, including any
division, marketing unit, business unit, research unit or facility;

	 
	 	(d)	 	for a period of twenty-four (24) months after such
transaction, any Entity that is not an Affiliate of Sears and that
is created using assets of Sears or any Affiliate of Sears;

	 
	 	(e)	 	any Entity into which Sears or any Affiliate of Sears merges
or consolidates;

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

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

	 
	 	(h)	 	any Entity in which Sears or any of its Affiliates hold
significant stock, warrants or debt;

	 
	 	(i)	 	any customer of an Eligible Recipient identified in
clauses (a) through (h) above, but only in connection
with the provision of products or services by such Eligible
Recipient to such customer;

4

 

	 	(j)	 	any person or Entity engaged in the provision of products or
services to Sears or an Eligible Recipient identified in clauses
(a) through (h) of this definition, but only in
connection with the provision of such products or services to Sears
or such Eligible Recipient; and

	 
	 	(k)	 	other Entities to which the Parties agree.

Eligible Recipients shall include the Personnel of the Entities identified as
Eligible Recipients in clauses (a) through (k) above and the
Eligible Recipients and their Personnel’s respective successors and assigns.
Sears shall have the exclusive right, in Sears’ sole discretion, to exercise
the rights granted to the Eligible Recipients under this Agreement, to delegate
the exercise of such rights to other Eligible Recipients and/or to determine
which Eligible Recipients shall be entitled to receive the Services and other
benefits of this Agreement.

“Employment Effective Date” means, with respect to each Transitioned Personnel,
the date that such Transitioned Personnel begins employment with CSC (or its
delegates), in accordance with applicable Laws.

“Entity” means a firm, corporation, partnership (including general
partnerships, limited partnerships, and limited liability partnerships), joint
venture, trust, limited liability company, limited liability partnership,
business trust, association or other organization or entity.

“Equipment” means all computing, networking, communications and related
computing equipment (hardware and firmware) and other devices including (a)
mainframe, midrange, server and distributed computing equipment and associated
attachments, features, accessories, peripheral devices, and cabling, (b)
personal computers, laptop computers, workstations and personal data devices
and associated attachments, features, accessories, printers, multi-functional
printers, peripheral or network devices, and cabling, and (c) voice, data,
video and wireless telecommunications and network and monitoring equipment and
associated attachments, features, accessories, cell phones, peripheral devices
and cabling.

“Exception Project Work” means New Services authorized by Sears Vice President
of Operations/Engineering pursuant to Section 4.5(b)(iii) (Exception
Project Work).

“Exempt Subcontractors” has the meaning given in Section 6.2(a) (Exempt
Subcontractors).

***

“Exhibit” means an exhibit to this Master Agreement as more fully described in
Section 2.2(b) (Exhibits).

“Exhibit Term” has the meaning given in Section 3.1(b) (Exhibits).

“Extraordinary Event” has the meaning given in Section 13.6(a)
(Definition).

*** CONFIDENTIAL MATERIAL REDACTED AND SEPARATELY FILED WITH THE COMMISSION.

5

 

“Future State Services” means, with respect to any Exhibit, the Services, as
modified by the changes/improvements thereto contemplated by the Transformation
Plan under such Exhibit.

“Income Tax” means any tax on or measured by the net income of a Party
(including taxes on capital or net worth 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, capital gains tax or
franchise tax for the privilege of doing business.

“IBM” International Business Machines Corporation.

“IBM Lotus Notes Agreement” means that certain Exhibit 18: Messaging Services,
dated November 1, 2001, to that certain that certain Master Agreement for
Services, dated December 15, 2000, between IBM and Sears, including all SSAs
and other amendments thereto.

“Intellectual Property Rights” means any patents, patent applications,
know-how, processes, designs, industrial design rights, trademarks, domain
names, IP addresses, service marks, tradenames, trade dress, copyrights, moral
rights, mask works, trade secrets, inventions and technology (whether or not
patentable), confidential and proprietary information, software, databases and
other collections and compilations of data, rights of publicity/privacy, or
other intellectual property rights conferred by contract or by any Law.

“Interim Services” means, with respect to any Exhibit, the Services CSC is to
assume on the Commencement Date and provided prior to completion of any
Transformation Plan.

“Key Personnel” has the meaning given in Section 12.1 (Key Personnel).

“Laws” means: (i) *** (including, *** methods and manner in which CSC provides
Services): all federal, intergovernmental, 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 (with jurisdiction
over such matter), or any authority, department or agency thereof; and (ii) any
rules and regulations of stock exchanges and other self-regulating
organizations applicable to CSC, CSC’s Affiliates, Sears or any Sears
Affiliate.

“Losses” means all losses, liabilities, damages (including punitive and
exemplary damages), awards, fines, penalties and claims (including taxes), and
all related costs and expenses (including reasonable legal fees and
disbursements and costs of investigation, litigation, settlement, judgment,
interest and penalties).

“MAC Event” means any event that causes a material adverse change to the
business, properties, financial condition or results of operations of CSC or
CSC’s parent Entity (to the extent CSC has a parent Entity) or the ability of
CSC or CSC’s parent Entity (to the extent CSC has a parent Entity) to perform
its obligations under this Agreement.

*** CONFIDENTIAL MATERIAL REDACTED AND SEPARATELY FILED WITH THE COMMISSION.

6

 

“Major Release” means 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.

“Managed Third Parties” means any Third Parties who provide Equipment,
Software, Systems or services in connection with CSC Managed Systems.

“Materials” means, collectively, Software (in both source and object code
form), literary works, documentation, reports, flowcharts, notes, outlines,
drawings, other works of authorship, plans, models, specifications, designs,
analyses, algorithms, processes, methodologies, ideas, concepts, inventions
(whether patentable or reduced to practice), know-how, programming tools,
information, data, databases and work product, together with all modifications,
replacements, Upgrades, enhancements, document, materials and media related
thereto and any Intellectual Property Rights subsisting in each of the
foregoing.

“Migration Plan” has the meaning given in the TI Exhibit.

“Migration Services” has the meaning given in the TI Exhibit.

“Minor Release” means 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.”

“New Advances” has the meaning given in Section 6.5(g) (CSC Developed
Advances).

“New Services” means new services or significant changes to existing Services
requested by Sears, (a) that are materially different from the Services, (b)
that require materially different levels of effort, resources or expense from
CSC, and (c) for which there is no current charging methodology. For example,
if: (w) a Transaction Document provides that CSC shall support certain
devices; (x) a new device is introduced into the Eligible Recipients’
environment; (y) the new device does not require materially different ongoing
effort to support; and (z) there is an existing charging methodology for the
existing devices; then the support of the new device shall
not be a New Service and the charge for the existing device that most closely
matches the new device would apply to the new device. For the avoidance of
doubt, New Services shall not include increases in the volume of Services to be
provided by CSC.

“No Impact Proposal” has the meaning given in Section 4.5(b) (New
Services).

“ODBC” means open database compliant.

7

 

“Operational Procedures Manual” or “OPM” has the meaning given in Section
5.1 (Operational Procedures Manual).

“Out-of-Pocket Expenses” means reasonable, demonstrable and actual
out-of-pocket expenses due and payable to a Third Party by CSC that are
approved in advance by Sears or for which CSC is entitled to be reimbursed by
Sears under this Agreement. Unless expressly agreed otherwise in writing by
the Parties, Out-of-Pocket Expenses shall not include CSC’s overhead costs (or
allocations thereof), general and/or administrative expenses or other mark-ups,
but shall include taxes on such amounts. Out-of-Pocket Expenses shall be
calculated at CSC’s actual incremental expense and shall be net of all rebates
and allowances.

“Party” has the meaning given in the preamble to this Master Agreement.

“Pass-Through Expenses” means the costs and expenses identified as such in a
Transaction Document or otherwise agreed by the Parties in writing, as such
list may be amended from time to time in accordance with this Agreement.
Unless otherwise agreed, CSC shall not charge any handling or administrative
charge in connection with its processing or review of such invoices.

“Permitted Separation” has the meaning given in Section 12.1(b)
(Continuity of Key Personnel).

“Personnel” means the directors, officers, employees, partners, agents,
advisers, independent contractors and Subcontractors of a Party, its Affiliates
and, as to Sears, the other Eligible Recipients or another Entity, as
applicable.

“Privacy Laws” means all Laws relating to data privacy, trans-border data flow
or data protection including the Gramm-Leach-Bliley Act, Title V Privacy,
Subtitle A Disclosure of Nonpublic Information (15 U.S.C. 6801 et seq.) and
various agency implementing regulations and the California Information
Practices Act of 1977, as amended, California Civil Code 1798, etc.

“Privacy Policy” has the meaning given in Section 17.1(h) (Sears Code of
Conduct).

"Remediation Services” has the meaning given in the TI Exhibit.

“Reports” has the meaning set forth in Section 5.3(a) (Reports).

“Required Consents” means the consents (if any) required to be obtained: (a)
to assign or transfer to CSC any Acquired Assets and related CSC Designated
Contracts (including related warranties); (b) to grant CSC the right to use
and/or access any Sears Provided System or CSC Managed System from within or
outside the United States ***; (c) to grant Sears and the other Eligible
Recipients (including their customers and Personnel) the right to use and/or
access any CSC Provided Systems and Deliverables, as contemplated by this
Agreement, from within or outside the United States; (d) to assign or transfer
to Sears or its designee CSC Provided Systems and related Third Party Contracts
or other rights following the Term of the applicable Transaction Document to
the extent provided in

*** CONFIDENTIAL MATERIAL REDACTED AND SEPARATELY FILED WITH THE COMMISSION.

8

 

this Agreement; and (e) all other consents required from Third Parties in
connection with CSC’s provision of the Services.

“Root Cause Analysis” means the formal process, specified in the Operational
Procedures Manual, to be used by CSC to diagnose the underlying cause of
problems at the lowest reasonable level so that corrective action can be taken
that shall eliminate repeat failures. CSC shall implement a Root Cause
Analysis as further specified in Section 11.3 (Problem Analysis) or as
requested by Sears.

“Sears” has the meaning given in the preamble to this Master Agreement.

“Sears Data” means any data or information of any Eligible Recipient that is
provided to or obtained by CSC or CSC Personnel in connection with the
negotiation and execution of this Agreement or the performance of its
obligations under this Agreement, including data and information with respect
to the businesses, customer, operations, facilities, products, rates,
regulatory compliance, competitors, consumer markets, assets, expenditures,
mergers, acquisitions, divestitures, billings, collections, revenues and
finances of any Eligible Recipient. Sears Data also means any data or
information created, generated, collected or processed by CSC or CSC Personnel
in the performance of CSC’s obligations under this Agreement, including data
processing input and output, service level measurements, asset information,
Reports, Third Party service and product agreements, contract charges and
retained and Pass-Through expenses.

“Sears Facilities” means the facilities provided by any Eligible Recipient for
the use of CSC or its Personnel to the extent necessary to provide the
Services.

“Sears IT Base Case” means, with respect to an Exhibit, the summary financial
base case that may be attached to such Exhibit, as well as the detailed
financial and budget information.

“Sears Owned Materials” means the Materials that are: (a) owned or acquired by
the Eligible Recipients (whether prior to or after the Effective Date); (b)
Deliverables that a Transaction Document provides, or the Parties otherwise
agree, shall be owned by Sears or the other Eligible Recipients; or (c)
Derivative Works, modifications and enhancements to any of the foregoing.

“Sears Personnel” means the Personnel of Sears, including the Personnel of the
other Eligible Recipients.

“Sears Provided Circuits” means all communication circuits: (a) owned by or
leased (other than by CSC, a CSC Affiliate or CSC Personnel under this
Agreement) to any Eligible Recipient(s); and (b) used in connection with the
Services.

“Sears Provided Equipment” means all Equipment: (a) owned by or leased (other
than by CSC, a CSC Affiliate or CSC Personnel under this Agreement) to any
Eligible Recipient(s); and (b) used in connection with the Services.

9

 

“Sears Provided Materials” means all Materials: (a) owned by or licensed
(other than by CSC, a CSC Affiliate or CSC Personnel under this Agreement) to
any Eligible Recipient(s) (including the Sears Owned Materials); and (b) used
in connection with the Services.

“Sears Provided Software” means all Software: (a) owned by, or provided under
license (other than by CSC, a CSC Affiliate or CSC Personnel under this
Agreement) to any Eligible Recipient(s); and (b) used in connection with the
Services (including application Software).

“Sears Provided Systems” means, collectively, the Sears Provided Circuits,
Sears Provided Equipment, Sears Provided Materials and the Sears Provided
Software and any Systems consisting of a combination of the foregoing items.

“Sears Related Businesses” means ***.

“Sears Relationship Manager” has the meaning given in Section 7.1(a)
(Sears Exhibit Contacts).

“Sears Rules” has the meaning given in Section 26.21 (Sears Rules
and Compliance).

“Sears Sites” or “Sites” means the offices or other facilities listed in an
Exhibit owned or controlled by the Eligible Recipients at or to which CSC is to
provide the Services.

“Sears Standards” has the meaning given in Section 6.4(a) (CSC Support).

“SEC” means the United States Securities and Exchange Commission.

“Service Addenda” has the meaning given in Section 2.2(d) (Service
Addenda).

“Service Level Credits” has the meaning given in Section 11.2 (Service
Level Credits) and a Transaction Document.

“Service Levels” means, individually and collectively, the performance
standards for the Services set forth in a Transaction Document.

“Service Taxes” means all sales, use, excise and other similar taxes or any
governmental duties that are assessed against either Party on the provision of
the Services as a whole, or on any particular Service received by Sears or
another Eligible Recipient from CSC, excluding Income Taxes.

“Services” means, collectively: (a) the services, functions and
responsibilities as are described in Section 4 (Services) and elsewhere
in this Agreement as they may be supplemented, enhanced, modified or replaced
during the Term of the applicable Transaction Document in accordance with this
Agreement; and (b) any New Services, upon Sears’ acceptance of CSC’s proposal
for such New Services in accordance with Section 4.5 (Additional
Services) and the other provisions of this Agreement.

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10

 

“Software” means (a) any machine-readable instructions, any computer software
programs, interfaces, routines, any compilation of machine-readable data such
as a data base, and any related licensed materials, in any form, (b) any
related features, including distributed features, and any whole or partial
copies, (c) program listings, programming tools, and similar works in any form
that are applicable to any of the foregoing, (d) any modifications,
replacements, Upgrades, enhancements, documentation, patch-tapes, additions,
addenda, maintenance updates, defect fixes, materials and media related
thereto, and (e) any documentation or specifications for the foregoing.

“Specialized Services” has the meaning given in Section 4.4 (Access to
Specialized CSC Skills and Resources).

“Specifications” means, with respect to Software, Equipment, Systems or other
contract deliverables to be designed, developed, delivered, integrated,
installed and/or tested by CSC, the technical, design and/or functional
specifications set forth in a Transaction Document, in the original
manufacturer’s/licensor’s documentation, in a New Services description
requested and/or approved by Sears, or otherwise agreed upon in writing by the
Parties. Specifications contained in this Agreement, including any Transaction
Document, shall control, in the case of conflict, over those incorporated by
reference.

“Statement of Work” or “SOW” has the meaning given in Section 2.2(c).

“Subcontractors” means contractors/subcontractors (of any tier) of a Party or
other Entity (including Affiliates of CSC providing Services under this
Agreement).

“System” means an interconnected grouping of Equipment, Software and/or
communication circuits and associated attachments, features, accessories,
peripherals and cabling, and all additions, modifications, substitutions and
Upgrades to such System. The term “System” shall include all Systems in use as
of the applicable Commencement Date, all additions, modifications,
substitutions, Upgrades to such Systems and all Systems installed or developed
by or for the Eligible Recipients or CSC, its Affiliates and the CSC Personnel following the
Commencement Date.

“System Change” means any change to the Software, Equipment, System or
operating environment, including without limitation, changes to programs,
manual procedures, job control language statements, distribution parameters or
schedules.

“Term” has the meaning given in Section 3.1(a) (Term of Master
Agreement, Exhibits, SOWs and Service Addenda) for this Master Agreement, and
shall also mean the term of the applicable Transaction Document, as applicable.

“Termination Assistance Services” means the termination/expiration assistance
requested by Sears to allow the Services to continue without interruption or
adverse effect and to facilitate the orderly transfer of the Services to Sears
or its designee, as such assistance is further described in Section 25
(Termination Assistance Services).

11

 

“Termination Charge” means the costs incurred by CSC during the performance
under this Agreement and which are payable as the result of Sears terminating
for convenience any Transaction Document, subject to the limitations set forth
in Section 23.3 (Termination Charges) and elsewhere in this Agreement.
Except as expressly provided otherwise in a Transaction Document, Termination
Charges shall be limited to the aggregate of the following items:

	 	(a)	 	Other Charges. The remaining portion *** for the
Services, performed by CSC but not previously paid for (through the
Account Management Fees or other Charges) to the extent related to
the terminated Services;

	 
	 	(b)	 	CSC Designated Contracts/Acquired Assets. The
remaining portion of Out-of-Pocket costs incurred by CSC (and not
previously paid for by Sears) in acquiring from Sears *** terminated
Services to the extent such contracts and assets are not (or cannot
reasonably be expected to be) utilized by CSC internally or for its
other customers; provided that: (i) such CSC Designated
Contracts and/or Acquired Assets are not assigned, transferred to,
or assumed by Sears (or its designees) pursuant to Section 24
(Rights upon Expiration or Termination); and (ii) such costs shall
be reduced by the net proceeds of any disposition of such Acquired
Assets;

	 
	 	(c)	 	CSC Provided Systems. The remaining portion of
depreciation/amortization (not previously paid for by Sears), on ***
to provide the terminated Services but only to the extent (i) such
Systems are not (or cannot reasonably be expected to be) utilized by
CSC internally or for its other customers, and (ii) such CSC
Provided Systems are not assigned, transferred to, or assumed by
Sears (or its designees) pursuant to Section 24 (Rights upon
Expiration or Termination); provided that such costs shall be
reduced by the net proceeds of any disposition of such CSC Provided
Systems.

	 
	 	(d)	 	Terminated CSC Employees. Demonstrable and actual
amounts paid by CSC to *** the terminated Services that are
terminated as a direct result of Sears early termination;
provided, however, that (i) Sears shall only be liable to
reimburse termination benefits which CSC is obligated to provide by
Law and/or by policies generally applicable to employees of CSC,
(ii) such costs shall be reduced on a proportionate basis to the
extent such terminated employee(s) were not engaged on the Sears
account, and (iii) this provision shall not apply to any employees
that are offered positions by Sears or its designee under Section
24 (Rights upon Expiration or Termination); and

	 
	 	(e)	 	Third Party Contracts. With respect to *** that are
terminated as a direct result of Sears’ early termination of such
Services, any Out-of-Pocket costs CSC is required by contract to pay
to terminate such contracts; provided that: (i) this provision shall

*** CONFIDENTIAL MATERIAL REDACTED AND SEPARATELY FILED WITH THE COMMISSION.

12

 

not apply to any such contracts that are transferred to Sears or
its designee under Section 24 (Rights upon Expiration or
Termination); and (ii) if such contracts are used to support
multiple CSC customers or CSC’s non-service delivery functions,
***.

The “remaining portion” of depreciation and amortization shall be
calculated in accordance with generally accepted accounting principles,
applied on a consistent basis, using the methods used by CSC in preparing
its federal income tax returns.

The above costs shall only include amounts attributable to periods after
the end of the Term of the applicable Transaction Document, if Sears has
expressly approved the inclusion of such amounts in advance, and in
writing.

The term “Termination Charge” does not include Charges that are payable
by Sears for work performed prior to the expiration or termination of the
applicable Transaction Document. Charges for partially completed work
will be pro-rated based upon the portion of the work that was completed.
The term “Termination Charges” does not include Charges and Out of Pocket
Expenses payable for: (x) Services, or (y) Termination Assistance
Services under this Agreement.

“Third Party” means any person or Entity other than a Party, or such Party’s
Affiliates. When used without initial capital letters, “third party” means any
person or Entity that is not a party to this Agreement.

“Third Party Contracts” means all agreements between third parties and any
Eligible Recipient or CSC, its Affiliates or the other CSC Personnel that have
been or shall be used to provide the Services. Third Party Contracts shall
include all such agreements in effect as of the applicable Commencement Date,
including those contracts identified in the Transaction Document,
those as to which the costs are included in the Sears IT Base Case, and those as to
which CSC received reasonable notice and/or reasonable access prior to the
Commencement Date. Third Party Contracts also shall include those third party
agreements entered into by CSC, its Affiliates or the other CSC Personnel
following the Commencement Date.

“Third Party Materials” means all Materials that are owned by Third Parties and
that have been or shall be used to provide the Services.

“Third Party Software” means all Software provided under license or lease to
CSC, its Affiliates, the CSC Personnel or the Eligible Recipients that has been
or shall be used to provide the Services.

“TI Exhibit” means Exhibit 1 (Technical Infrastructure Outsourcing) to this
Master Agreement, of even date herewith.

“Transaction Document” has the meaning given in Section 2.2(f)
(Transaction Document).

*** CONFIDENTIAL MATERIAL REDACTED AND SEPARATELY FILED WITH THE COMMISSION.

13

 

“Transformation Plan” has the meaning given in the TI Exhibit.

“Transformation Services” has the meaning given in the TI Exhibit.

“Transitioned Personnel” means the Personnel of Sears and its Affiliates who
are eligible to be interviewed for employment by CSC (or its delegates)
pursuant to an Exhibit. Upon being employed by CSC, such Transitioned Personnel
shall be deemed to be CSC Personnel as defined in this Agreement.

“UCITA” means the Uniform Computer Information Transactions Act drafted by the
National Conference of Commissioners on Uniform State Laws or any enactment of
all or substantially all of such draft.

“Unanticipated IT Change” has the meaning set forth in Section 6.5(f)
(Unanticipated IT Change).

“Unauthorized Code” means any feature, routine or device that is intended or
designed, either automatically, upon the occurrence of a certain event, upon
the taking of or failure to take a certain action or under the control of a
third party that is not a Sears Personnel, (a) to disrupt the operation of any
Deliverable or any other Eligible Recipient Software, Equipment, data or
Systems, (b) to cause any Deliverable or any other Eligible Recipient Software,
Equipment, data or Systems to be unintentionally destroyed, erased, damaged or
otherwise made inoperable, or (c) to permit a third party that is not a Sears
Personnel to destroy, erase, damage or otherwise render inoperable any
Deliverable or any other Eligible Recipient Software, Equipment, data or
Systems, and shall include any computer virus, worm, trap door, back door, time
bomb, malicious program, or any mechanism such as software locks, password
checking, CPU serial
number checking or time dependency, introduced by the provider of the
applicable Software, Equipment, Systems, data or Deliverable that could hinder
Sears’ Eligible Recipient’s freedom to fully exercise its license rights to
such Software, Equipment, Systems, data or Deliverable under this Agreement.

“United States” means the United States of America, and its states,
commonwealths, possessions and territories, including Puerto Rico and the
District of Columbia.

“Upgrade” and its derivatives means the updates, renovations, enhancements,
additions and/or new versions or releases of Software or Equipment.

“Virus” means any Unauthorized Code that is included with or inserted into any
System without the consent of the owner or licensor of the underlying System.

End of Appendix

14

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