Document:

exv10w35

 

Exhibit 10.35

MASTER AGREEMENT

for

INFORMATION TECHNOLOGY SERVICES

between

HILLWOOD ENTERPRISES, L.P.

and

PEROT SYSTEMS CORPORATION

Dated as of April 1, 2001

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	PAGE

	1 BACKGROUND AND OBJECTIVES
	 	 	1	 
	2 DEFINITIONS
	 	 	1	 
	2.1 CERTAIN DEFINITIONS
	 	 	1	 
	2.2 OTHER DEFINITIONS
	 	 	3	 
	3 AGREEMENT, TERM AND AUTHORITY
	 	 	3	 
	3.1 SCOPE OF THIS AGREEMENT
	 	 	3	 
	3.2 TERM
	 	 	3	 
	3.3 AUTHORITY
	 	 	4	 
	3.4 STATEMENTS OF WORK
	 	 	4	 
	4 PEROT SYSTEMS PERSONNEL
	 	 	4	 
	4.1 TRANSFERRED EMPLOYEES
	 	 	4	 
	4.2 KEY POSITIONS
	 	 	5	 
	4.3 QUALIFICATIONS, RETENTION AND REPLACEMENT OF PEROT SYSTEMS PERSONNEL
	 	 	5	 
	5 EQUIPMENT, THIRD PARTY SERVICE CONTRACTS, AND FACILITIES
	 	 	5	 
	5.1 EXISTING EQUIPMENT
	 	 	5	 
	5.2 NEW EQUIPMENT
	 	 	6	 
	5.3 HILLWOOD FACILITIES
	 	 	6	 
	5.4 PEROT SYSTEMS FACILITIES
	 	 	7	 
	5.5 THIRD PARTY SERVICE CONTRACTS
	 	 	7	 
	5.6 REQUIRED CONSENTS
	 	 	8	 
	5.7 RISK OF LOSS
	 	 	8	 
	6 PROPRIETARY RIGHTS AND SOFTWARE
	 	 	8	 
	6.1 SOFTWARE
	 	 	8	 
	6.2 PEROT SYSTEMS SOFTWARE
	 	 	9	 
	6.3 EXISTING THIRD PARTY SOFTWARE
	 	 	9	 
	6.4 NEW THIRD PARTY SOFTWARE
	 	 	10	 
	6.5 RIGHTS IN NEW SOFTWARE 
	 	 	10	 
	6.6 RESIDUAL KNOWLEDGE
	 	 	10	 
	6.7 EXPORT
	 	 	10	 
	7 PERFORMANCE STANDARDS
	 	 	11	 
	7.1 GENERAL
	 	 	11	 
	7.2 CREDITS AND BONUSES
	 	 	11	 
	7.3 ADJUSTMENT OF SERVICE LEVELS
	 	 	11	 
	7.4 RESPONSIBILITY FOR ACHIEVING SERVICE LEVELS
	 	 	12	 
	7.5 MEASUREMENTS AND MONITORING TOOLS
	 	 	12	 
	8 PROJECT AND CONTRACT MANAGEMENT
	 	 	12	 
	8.1 RELATIONSHIP MANAGERS
	 	 	12	 
	8.2 REPORTS AND MEETINGS
	 	 	12	 
	8.3 CHANGE CONTROL PROCESS
	 	 	13	 
	8.4 ESCALATION PROCEDURES
	 	 	13	 
	9 OPERATIONAL AUDITS
	 	 	13	 
	9.1 AUDIT RIGHTS
	 	 	13	 

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	 	 	PAGE

	9.2 REGULATORY ACCESS
	 	 	14	 
	9.3 RECORDS RETENTION
	 	 	14	 
	10 HILLWOOD RESPONSIBILITIES
	 	 	14	 
	11 CHARGES
	 	 	14	 
	11.1 CHARGES
	 	 	14	 
	11.2 COST OF LIVING ADJUSTMENT
	 	 	14	 
	11.3 EXPENSES
	 	 	14	 
	11.4 TAXES
	 	 	15	 
	11.5 NEW SERVICES
	 	 	15	 
	12 INVOICING AND PAYMENT
	 	 	16	 
	12.1 INVOICING
	 	 	16	 
	12.2 PAYMENT DUE
	 	 	16	 
	12.3 AUDIT OF CHARGES
	 	 	16	 
	13 SAFEGUARDING OF DATA AND CONFIDENTIALITY
	 	 	16	 
	13.1 HILLWOOD DATA
	 	 	16	 
	13.2 SAFEGUARDING HILLWOOD DATA
	 	 	17	 
	13.3 PHYSICAL SECURITY FOR FACILITIES
	 	 	17	 
	13.4 CONFIDENTIALITY
	 	 	17	 
	14 REPRESENTATIONS AND WARRANTIES
	 	 	18	 
	14.1 AUTHORIZATION
	 	 	18	 
	14.2 COMPLIANCE WITH LAWS
	 	 	19	 
	14.3 OUTSTANDING LIABILITIES
	 	 	19	 
	14.4 DISCLAIMER
	 	 	19	 
	15 INSURANCE
	 	 	19	 
	15.1 INSURANCE
	 	 	19	 
	15.2 POLICIES
	 	 	20	 
	16 INDEMNITIES
	 	 	20	 
	16.1 INDEMNITY BY PEROT SYSTEMS
	 	 	20	 
	16.2 INDEMNITY BY HILLWOOD
	 	 	21	 
	16.3 CROSS INDEMNITY
	 	 	21	 
	16.4 INFRINGEMENT
	 	 	21	 
	16.5 INDEMNIFICATION PROCEDURES
	 	 	22	 
	17 LIABILITY
	 	 	22	 
	17.1 DEFINITION OF LIABILITY
	 	 	22	 
	17.2 FORCE MAJEURE
	 	 	23	 
	18 DISPUTE RESOLUTION
	 	 	24	 
	19 TERMINATION
	 	 	24	 
	19.1 TERMINATION FOR CAUSE
	 	 	24	 
	19.2 TERMINATION FOR NON-PAYMENT
	 	 	24	 
	19.3 TERMINATION FOR INSOLVENCY
	 	 	25	 
	19.4 TERMINATION FOR NO STATEMENTS OF WORK
	 	 	25	 
	19.5 RIGHTS UPON TERMINATION OR EXPIRATION
	 	 	25	 
	20 MISCELLANEOUS
	 	 	27	 
	20.1 NOTICES
	 	 	27	 

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	 	 	PAGE

	20.2 BINDING NATURE AND ASSIGNMENT
	 	 	28	 
	20.3 SEVERABILITY
	 	 	28	 
	20.4 COUNTERPARTS
	 	 	28	 
	20.5 RELATIONSHIP OF PARTIES
	 	 	28	 
	20.6 COMPLIANCE WITH LAWS AND REGULATIONS
	 	 	29	 
	20.7 HIRING OF EMPLOYEES
	 	 	29	 
	20.8 THIRD PARTY BENEFICIARIES
	 	 	29	 
	20.9 MEDIA RELEASES
	 	 	29	 
	20.10 MODIFICATION AND WAIVER
	 	 	29	 
	20.11 ENTIRE AGREEMENT
	 	 	30	 
	20.12 GOVERNING LAW
	 	 	30	 
	SCHEDULE 3.4
	 	 		 
	FORM OF
	 	 		 
	STATEMENT OF WORK
	 	 		 
	SCHEDULE A
	 	 		 
	SERVICES
	 	 		 
	SCHEDULE B
	 	 		 
	SERVICE LEVELS
	 	 		 
	SCHEDULE C
	 	 		 
	HILLWOOD OBLIGATIONS
	 	 		 
	SCHEDULE D
	 	 		 
	CHARGES
	 	 		 
	SCHEDULE 8.3
	 	 		 
	CHANGE CONTROL PROCESS
	 	 		 
	SCHEDULE 11.2
	 	 		 
	COST OF LIVING ADJUSTMENT
	 	 		 
	SCHEDULE 18
	 	 		 
	DISPUTE RESOLUTION PROCEDURES
	 	 		 
	SCHEDULE 19
	 	 		 
	FORM OF NON-DISCLOSURE AGREEMENT
	 	 		 

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MASTER AGREEMENT

for

INFORMATION TECHNOLOGY SERVICES

THIS MASTER AGREEMENT FOR INFORMATION TECHNOLOGY SERVICES, dated as of April 1,
2001 (the “Effective Date”), is between Hillwood Enterprises, L.P., a Texas
limited partnership, (“Hillwood”), and Perot Systems Corporation, a Delaware
corporation (“Perot Systems”). Hillwood and Perot Systems are collectively
hereinafter referred to as the “Parties,” and individually, a “Party”.

	1	 	BACKGROUND AND OBJECTIVES

	1.1	 	Perot Systems is in the business of providing, among other things,
management consulting and information technology services.

	1.2	 	Perot Systems and Hillwood desire to enter into this Agreement, which
will set forth the terms and conditions that will apply to services that
Perot Systems will provide to Hillwood pursuant to Statements of Work that
Perot Systems and Hillwood will enter into from time to time.

	1.3	 	Accordingly, for and in consideration of the agreements set forth below,
Hillwood and Perot Systems agree as follows:

	2	 	DEFINITIONS

	2.1	 	Certain Definitions

	 	 	As used in this Agreement:

	 	 	“Applications Software” or “Applications” are those programs and
programming (including the supporting documentation, media, online help
facilities and tutorials) that perform in the conduct of the Services
specific user-related data processing and telecommunications tasks, and
includes any data entry, update, query, or report program that processes
data for a use.

	 	 	“Change Control Process” shall have the meaning given in Section 8.3.

	 	 	“Confidential Information,” with respect to a Party, is all non-public
written, electronic, and oral proprietary information communicated to the
other Party during the Term and in connection with this Agreement or any
Statement of Work, including (a) with respect to Hillwood, all non-public
information of or relating to Hillwood and its affiliates, owners,
officers, employees and customers, (b) with respect to Perot Systems, all
costing, pricing, technology, techniques, processes, methodologies, and
other proprietary information of Perot Systems and its affiliates,
owners, officers, employees and customers,, and (c) with respect to each
Party, the terms of this Agreement and each Statement of Work.
Confidential Information will not include information that (i) was known
by the receiving Party without an obligation of confidentiality before
its receipt from the disclosing Party, (ii) is independently developed by
the receiving Party without reliance on Confidential

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	 	 	Information of the Disclosing Party, (iii) is or becomes publicly
available without a breach by the receiving Party of this Agreement, or
(iv) is disclosed to the receiving Party by a third person who is not
required to maintain its confidentiality.

	 	 	“Hillwood Data” are all data and information that Hillwood submits to
Perot Systems in connection with the Services, including information
submitted to Perot Systems before the Effective Date; data and
information of Hillwood’s customers; and all information derived from
that information, including as stored in or processed through the
Equipment or Software.

	 	 	“Hillwood Equipment” is Equipment owned or leased by Hillwood.

	 	 	“Hillwood Software” is any Software (including any third party Software),
or part of any Software, that is operated by or on behalf of Hillwood as
of the Effective Date and any other Software (other than Perot Systems
Software) that Perot Systems may use to provide the Services.

	 	 	“Effective Date” is the effective date of this Agreement and, with
respect to each Statement of Work, the effective date of that Statement
of Work.

	 	 	“Equipment” includes computer and communications equipment, including
personal computers, modems, printers, mainframes, routers, cabling and
related equipment.

	 	 	“Key Positions” will have the meaning given in Section 4.2.

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

	 	 	“New Services” are any services, functions or responsibilities other than
the Services.

	 	 	“Perot Systems Personnel” are the Perot Systems employees, together with
any Perot Systems subcontractors and independent contractors of Perot
Systems who are assigned to perform the Services.

	 	 	“Perot Systems Software” is any Software, or part of any Software, that
is designed, developed, owned, modified or provided by or on behalf of
Perot Systems.

	 	 	“Required Consents” will have the meaning given in Section 5.6.
	 
	 	 	“Services” are, with respect to each Statement of Work, the services set
forth in Schedules to that Statement of Work.
	 
	 	 	“Service Levels” are, with respect to each Statement of Work, the levels
of performance at which Perot Systems agrees to provide to Hillwood the
Services pursuant to that Statement of Work as set forth in that
Statement of Work.
	 
	 	 	“Software” is Applications Software and Systems Software.

2

 

	 	 	“Statement of Work” is any agreement, as provided for in Section 3.4 of
this Agreement that is entered into between Perot Systems and Hillwood
for the provision of Services to Hillwood.
	 
	 	 	“Systems Software” are those programs and programming (including the
supporting documentation, media, on-line help facilities and tutorials)
that perform tasks basic to the functioning of the Equipment and which
Perot Systems needs to operate the Applications Software or otherwise
support the provision of Services. Systems Software includes
mainframe/mid-range operating systems, LAN server/desktop operating
systems, network operating systems, systems utilities, data security
software and telecommunications monitors.
	 
	 	 	“Term” will have the meaning given in Section 3.2.
	 
	 	 	“Third Party Service Contracts” are those agreements under which a third
party is, as of the Effective Date, furnishing or providing services to
Hillwood similar to any of the Services.
	 
	 	 	“Third Party Software” is the Applications Software and Systems Software
used to provide the Services that is provided under license to Perot
Systems or Hillwood by a third party.
	 
	 	 	“Transferred Employees” are, with respect to each Statement of Work, the
employees of Hillwood who accept employment with Perot Systems pursuant
to that Statement of Work.
	 
	2.2	 	Other Definitions
	 
	 	 	Other terms used in this Agreement are defined in the context in which
they are used and will have the respective meanings there indicated.

	3	 	AGREEMENT, TERM AND AUTHORITY

	3.1	 	Scope of this Agreement
	 
	 	 	During the Term, Perot Systems will provide to Hillwood, and Hillwood
will obtain from Perot Systems, Hillwood’s requirements for the Services.
Except as the Parties may otherwise expressly agree in a Statement of
Work, this Agreement establishes the standard terms and conditions that
will be applicable to each Statement of Work. In the event of any
conflict or inconsistency between the terms of this Agreement and the
terms of any Statement of Work, the terms of the Statement of Work will
control.
	 
	3.2	 	Term
	 
	 	 	The term (the “Term”) of this Agreement will begin on the Effective Date
and, unless earlier terminated in accordance with the provisions of this
Agreement, will end on the seventh anniversary of the Effective Date, or
such later date as the parties may mutually agree. The Term of each
Statement of Work will be as set forth in that Statement of Work.

3

 

	3.3	 	Authority

	 	 	Hillwood represents that as of the Effective Date of this Agreement it
has, and as of the Effective Date of each Statement of Work it will have,
the authority to act concerning all matters relating to this Agreement
and each Statement of Work, including the giving or withholding of any
approval, acceptance, consent, notice, or other action required or
permitted by this Agreement or that Statement of Work.

	3.4	 	Statements of Work

	 	 	Unless the parties otherwise expressly agree in that Statement of Work,
each Statement of Work will be generally in the form of Schedule 3.4
hereto and will:

	 	(a)	 	Incorporate by reference the terms and conditions of this
Agreement identified for such purpose in that Scope of Work.

	 	(b)	 	Designate the Effective Date and Term of that Statement of
Work.

	 	(c)	 	Describe the obligations of Perot Systems pursuant to that
Statement of Work, including the Services to be provided and any
Service Levels applicable to those Services.

	 	(d)	 	Describe the obligations of Hillwood pursuant to that
Statement of Work, including any obligations relating to the
provision of facilities, equipment, or other support to be provided
by Hillwood that are different from, or in addition to, the
resources and support to be provided as described in this Agreement.

	 	(e)	 	Specify Perot Systems’ charges and the method of payment of
those charges for the Services provided under that Statement of
Work.

	 	(f)	 	Include any other provisions mutually deemed necessary or
desirable by the Parties.

	4	 	PEROT SYSTEMS PERSONNEL

	4.1	 	Transferred Employees

	 	 	As of the Effective Date of each Statement of Work, Perot Systems will
have offered employment to the employees of Hillwood mutually agreed upon
and identified prior to the applicable Effective Date. Such offers of
employment will be in accordance with Perot Systems’ normal employment
policies. Hillwood’s termination of such Transferred Employees shall be
in accordance with Hillwood’s normal employment policies, which policies
include the return of all Hillwood property, including computer
equipment, in a terminated employee’s possession.

4

 

	4.2	 	Key Positions

	 	(a)	 	As soon as reasonably practicable after the Effective Date of
each Statement of Work, Hillwood and Perot Systems will mutually
identify the key positions (the “Key Positions”) within Perot
Systems that will be dedicated to the performance of the Services
pursuant to that Statement of Work and that are deemed critical to
the success of Hillwood’s information technology operations.

	 	(b)	 	Before assigning an individual to a Key Position, Perot
Systems will notify Hillwood of the proposed assignment, introduce
the individual to appropriate Hillwood representatives (and, upon
request, provide those representatives with the opportunity to
interview the individual) and provide Hillwood with a résumé and any
other information about the individual that Hillwood reasonably
requests. If Hillwood objects to the proposed assignment and
provides Perot Systems with its reasons in writing, the Parties will
attempt to resolve Hillwood’s concerns on a mutually agreeable
basis.

	 	(c)	 	Any Perot Systems’ employee assigned to a Key Position shall
execute a confidentiality agreement in the form of the attached
Schedule 19.

	4.3	 	Qualifications, Retention and Replacement of Perot Systems Personnel

	 	(a)	 	Perot Systems will assign the number of personnel necessary
to perform the Services in accordance with the Service Levels. The
personnel Perot Systems assigns to perform the Services will be
properly educated, trained and qualified for the Services they are
to perform.

	 	(b)	 	If Hillwood determines in good faith that the continued
assignment of any of the Perot Systems Personnel to Hillwood’s
account is not in Hillwood’s best interests, then Hillwood will give
Perot Systems written notice to that effect. After receiving that
notice, Perot Systems will have a reasonable period of time in which
to investigate the matters stated in that notice, discuss its
findings with Hillwood, and resolve any problems with such person.

	5	 	EQUIPMENT, THIRD PARTY SERVICE CONTRACTS, AND FACILITIES

	5.1	 	Existing Equipment

	 	(a)	 	Except for the rights granted to Perot Systems under this
Section 5.1, or as otherwise expressly agreed in a Statement of
Work, as between Hillwood and Perot Systems, all right, title and
interest in and to the Existing Hillwood Equipment (as defined in
Section 5.1(b)) remains with Hillwood.

	 	(b)	 	During the Term of each Statement of Work and unless
otherwise provided therein, Hillwood will make available to Perot
Systems at no charge the Hillwood Equipment used by or on behalf of
Hillwood before the Effective Date to which the Services pertain
under any Statement of Work (the “Existing Hillwood Equipment”).

5

 

	 	(c)	 	With respect to Existing Hillwood Equipment that is leased:
(i) Hillwood grants to Perot Systems, at no charge, the same rights
of access to, and use of, that Existing Hillwood Equipment that
Hillwood exercised over that Equipment before the applicable
Effective Date, (ii) Perot Systems will have management
responsibility for that Existing Hillwood Equipment during the
applicable Term to the same extent as if Perot Systems were the
lessee, and (iii) Perot Systems will comply with the duties imposed
on Hillwood under the leases for that Existing Hillwood Equipment to
the same extent as Hillwood complied before the applicable Effective
Date.

	5.2	 	New Equipment

(a) Unless otherwise agreed, if any new Equipment or upgrades to Existing
Hillwood Equipment are required for Perot Systems to provide the Services
under any Statement of Work, such new Equipment or upgrades to Existing
Hillwood Equipment will be purchased by Hillwood pursuant to the Change
Control Process set forth in Section 8.3.

(b) Perot Systems shall acquire in its own name and for its own account
only that Equipment required by Perot Systems personnel to perform the
Services under a Statement of Work. Such Equipment will be limited to
laptops, personal printers, pagers, handheld devices, and cellular
phones.

(c) With respect to new Equipment or upgrades to Existing Hillwood
Equipment acquired by Hillwood under Section 5.2(a): (i) Hillwood grants
to Perot Systems the same rights of access to, and use of, that new
Hillwood Equipment or upgrades to Existing Equipment that Hillwood has,
and (ii) Perot Systems will have management responsibility for that
Equipment or upgrades to Existing Hillwood Equipment as set forth in a
Statement of Work.

	5.3	 	Hillwood Facilities

	 	(a)	 	Beginning on the Effective Date of each Statement of Work,
Hillwood will provide to Perot Systems, at no charge, the space,
office furnishings, janitorial service, telephone service, utilities
(including air conditioning) and general office equipment, supplies,
and duplicating services in Hillwood’s premises that Perot Systems
may reasonably require to provide the Services pursuant to that
Statement of Work, including the space, furnishings, and general
office equipment used by the Transferred Employees before the
applicable Effective Date, and the space, furnishings, and general
office equipment specifically identified in each Statement of Work
(collectively, the “Hillwood Facilities”).

	 	(b)	 	Perot Systems’ employees will have reasonable access to the
Hillwood Facilities 24 hours a day, seven days a week. In addition,
Hillwood will provide necessary storage space for backup data files
and will provide additional storage space that may be required by
any change in retention schedules required by any regulatory
authority with jurisdiction over Hillwood’s business.

6

 

	 	(c)	 	If Hillwood contemplates or makes a final decision to alter
or relocate the Hillwood Facilities, and the alteration or
relocation could reasonably be expected to impact Perot Systems’
performance of the Services or costs to provide the Services, then
Hillwood will provide Perot Systems with sufficient advance notice
of that fact to allow Perot Systems a reasonable amount of time to
prepare for and implement the alteration or relocation as it impacts
Perot Systems. Before requiring Perot Systems to relocate from any
Hillwood Facilities, the Parties will agree on any adjustments to
(i) the Service Levels that may be required as a result of the
alteration or relocation, and (ii) Perot Systems’ charges under any
Statement of Work that may be required to equitably compensate Perot
Systems for any additional costs it may incur in connection with the
alteration or relocation.

	 	(d)	 	Perot Systems will have the following obligations in
connection with its use of the Hillwood Facilities:

	 	(1)	 	Except as may be specifically
authorized by Hillwood, Perot Systems will use the
Hillwood Facilities solely to provide the Services.

	 	(2)	 	Perot Systems will keep the Hillwood
Facilities in good order, not commit waste or damage to
those facilities, not use those facilities for any
unlawful purpose and comply with Hillwood’s standard
policies and procedures, as made available to Perot
Systems before the applicable Effective Date, regarding
access to and use of the Hillwood Facilities.

	 	(3)	 	When the Hillwood Facilities are no
longer needed to perform the Services, Perot Systems
will return those facilities to Hillwood in
substantially the same condition as when Perot Systems
began using them, subject to reasonable wear and tear.

	5.4	 	Perot Systems Facilities.

	 	 	Perot Systems may perform the Services in such facilities maintained by
Perot Systems (collectively, “Perot Systems Facilities”) as Perot Systems
deems appropriate following consultation with Hillwood, so long as
appropriate security procedures have been implemented and are being
observed at the Perot Systems Facilities.

	5.5	 	Third Party Service Contracts.

	 	(a)	 	On or before the Effective Date of each Statement of Work,
Hillwood will provide Perot Systems with a list of all Third Party
Service Contracts related to the Services to be provided pursuant to
that Statement of Work. Perot Systems will assume management
responsibility for those identified Third Party Service Contracts as
of the applicable Effective Date, and Hillwood will retain financial
responsibility for those Third Party Service Contracts at all times
during the Term of that Statement of Work.

7

 

	 	(b)	 	During the Term of each Statement of Work:

	 	(1)	 	Hillwood will make available to Perot
Systems the services provided by third parties under
each Third Party Service Contract and used by Hillwood
before the Effective Date of that Statement of Work in
performing the services and functions assumed by Perot
Systems thereunder.

	 	(2)	 	Perot Systems will have
administrative and management responsibility for
managing those third party services to the same extent
as if Perot Systems were the contracting party for them,
provided that Perot Systems shall not increase
Hillwood’s obligations under such without Hillwood’s
prior written consent. Hillwood will retain sole
authority to execute amendments to the Third Party
Service Contracts, and upon Perot Systems’ reasonable
request, Hillwood will act to terminate those Third
Party Service Contracts at the earliest available
opportunity.

	5.6	 	Required Consents

	 	 	Hillwood, with the cooperation of Perot Systems, will obtain those
consents as may be required for the assignment or grant to Perot Systems
of the same rights of access and use that Hillwood has in and to the
Software, Equipment leases and Third Party Service Contracts (“Required
Consents”). Hillwood will pay any fees (such as transfer or upgrade
fees) that may be required to obtain a Required Consent. If a Required
Consent is not obtained, then, unless and until that Required Consent is
obtained, Perot Systems and Hillwood will mutually determine and adopt
alternative approaches that are necessary and sufficient to provide the
Services without those Required Consents, including making appropriate
adjustments to the Service Levels and Perot Systems’ charges under the
applicable Statement of Work.

	5.7	 	Risk of Loss

	 	 	As between Perot Systems and Hillwood, during the Term of each Statement
of Work the risk of loss for Equipment and Software provided in
accordance with this Agreement will remain with the Party at whose
facility the applicable Equipment or Software is located at the time of
such loss, provided that neither party will be responsible for the loss
of laptops, handheld devices, and cellular phones in the possession,
custody and control of the other party. The risk of loss for any
Equipment and/or Software while in the custody and control of a third
party for the purpose of transit will remain with the Party that arranged
the shipment.

	6	 	PROPRIETARY RIGHTS AND SOFTWARE

	6.1	 	Software

	 	 	As between Hillwood and Perot Systems, Hillwood will retain all right,
title and interest in and to the Hillwood Software. With respect to the
Hillwood Software that Perot

8

 

	 	 	Systems needs in order to provide the Services pursuant to any Statement
of Work, including the Hillwood Software listed in that Statement of
Work, Hillwood hereby grants to Perot Systems the non-exclusive right, at
no charge, to operate, copy, modify or otherwise use that specified
Hillwood Software in order to provide the Services. Hillwood Software
existing as of the Effective Date will be made available to Perot Systems
in the same form and on the same media as exists on the Effective Date,
together with existing documentation and any other related materials.

	6.2	 	Perot Systems Software

	 	(a)	 	Perot Systems Software will be and remain the property of
Perot Systems and its licensors, and Hillwood will have no rights or
interests in Perot Systems Software except as otherwise described in
this Agreement.

	 	(b)	 	During the Term of each Statement of Work, Perot Systems
hereby grants to Hillwood, and Hillwood hereby accepts from Perot
Systems, a nonexclusive, nontransferable, paid up, royalty free
license to access any Perot Systems Software as necessary to use the
Services that Perot Systems is obligated to provide to Hillwood
pursuant to that Statement of Work, subject to Perot Systems’ right
to grant such a license with respect to any Perot Systems Software
licensed by Perot Systems.

	 	(c)	 	Perot Systems, with Hillwood’s cooperation, will use
commercially reasonable efforts to obtain any third party consents
necessary for Hillwood to access the Perot Systems Software as
contemplated by Section 6.2(b).

	6.3	 	Existing Third Party Software

	 	 	Hillwood grants to Perot Systems the same rights of access to, and use
of, the Third Party Software that Hillwood exercised over it before the
applicable Effective Date, and Perot Systems will be responsible for that
Software during the applicable Term to the same extent as if Perot
Systems were the licensee of that Software. Perot Systems will comply
with the duties, including use restrictions and those of nondisclosure,
imposed on Hillwood under the licenses for that Software to the extent
complied with by Hillwood. Hillwood will continue to pay for any costs,
charges and fees associated with the use of that Third Party Software.
If Perot Systems identifies any unlicensed Third Party Software, Perot
Systems will, at Hillwood’s discretion, (i) obtain a license for such
software at Hillwood’s expense with Hillwood’s prior written approval, or
(ii) remove the software from Hillwood’s system. If Perot Systems is
unable to obtain a license to any unlicensed Third Party software and as
a result is forced to remove such software from Hillwood’s system, then
to the extent that Perot Systems is obligated to provide support for such
Software, Perot Systems will not be liable for any failure to meet the
Service Levels caused by such removal and, if such removal causes an
increase or decrease in the cost to Perot Systems to provide the
Services, the parties will agree, through the Change Control Process, to
an equitable adjustment in the charges hereunder.

9

 

	6.4	 	New Third Party Software

	 	(a)	 	Without Hillwood’s prior written approval, Perot Systems will
not introduce any third party Applications Software in providing the
Services if that Software will negatively impact the Services,
Service Levels, or the charges to Hillwood.

	 	(b)	 	Hillwood, at Perot Systems’ request, will provide new third
party Systems Software including in addition to, or in replacement
of, existing third party Systems Software as necessary or
appropriate to provide the Services (including maintaining,
upgrading, enhancing and implementing new versions of existing third
party Systems Software).

	6.5	 	Rights in New Software

	 	 	Ownership of new software developed under any Statement of Work shall be
determined according to the terms of that Statement of Work.

	6.6	 	Residual Knowledge

	 	 	Nothing contained in this Agreement or in any Statement of Work will
restrict either Party from using any ideas, concepts, know-how,
methodologies, processes, technologies, algorithms or techniques relating
to the Services that either Party, individually or jointly, develops or
discloses under this Agreement or any Statement of Work, provided that in
doing so the Party does not breach its obligations under Article 13 or
infringe the intellectual property rights of the other Party or third
parties who have licensed or provided materials to the other Party.
Without limiting this provision, nothing in Section 6.5 will prevent
either Party from independently developing any Software that is the same
or similar to any Software owned by the other Party so long as the
developing party does not violate any copyright of the other Party.
Except for the license rights contained in this Article or any Statement
of Work, this Agreement and the Statements of Work, and any disclosures
made hereunder or thereunder do not grant any license to either Party
under any patents or copyrights of the other Party.

	6.7	 	Export

	 	 	The Parties acknowledge that certain Software and technical data to be
provided under this Agreement and any Statement of Work may be subject to
export controls under the laws and regulations of the United States or
other countries. Neither Party will export or re-export any of those
items or any direct product of them nor undertake any transaction in
violation of any of those laws or regulations. To the extent within a
Party’s control, that Party will be responsible for, and will coordinate
and oversee, compliance with those export laws concerning any items it
exports or imports under this Agreement.

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	7	 	PERFORMANCE STANDARDS

	7.1	 	General

	 	 	After the initial 90 days after the Effective Date of a Statement of Work
(the “Beta Period”) and continuing thereafter for the term of such
Statement of Work, Perot Systems’ level of performance will be at least
equal to the Service Levels specified in that Statement of Work. The
Parties will use the Beta Period to (i) verify for which Services a
Service Level will be established and whether the measurement tools exist
to gather the necessary data to measure the selected Service Levels, (ii)
implement, at Hillwood’s request and expense, the appropriate measurement
tools, and (iii) gather the data from which Service Levels may be
appropriately established and adjusted.

	7.2	 	Credits and Bonuses

	 	 	Except as provided in Section 7.4, after the Beta Period, if Perot
Systems’ performance of the Services fails to meet any Service Level,
Hillwood, as its sole remedy and as Perot Systems’ sole liability, will
be entitled to a credit in the amount calculated in accordance with the
provisions of the applicable Statement of Work. In addition, except as
provided in Section 7.4, if Perot Systems fails to meet any Service
Level, Perot Systems will promptly (i) investigate and report on the
causes of the problem; (ii) advise Hillwood of the status of remedial
efforts being undertaken concerning those problems; (iii) use all
commercially reasonable efforts to correct the problem and begin meeting
the Service Levels; and (iv) take commercially reasonable measures to
prevent the problem from recurring. If Perot Systems’ performance of the
Services exceeds certain Service Levels designated as Bonus Offset
Standards in accordance with the applicable Statement of Work, then Perot
Systems will be entitled to earn bonuses, which shall only be used by
Perot Systems to offset credits to which Hillwood is or may become
entitled to under this Section. Any such bonuses shall not entitle Perot
Systems to any additional compensation with respect to the applicable
Statement of Work.

	7.3	 	Adjustment of Service Levels

	 	 	The Parties will meet to review the Service Levels at least annually, or
more frequently as either Party may reasonably request. As a result of
those meetings and as necessary from time to time during the Term, the
Parties may by mutual agreement add to, delete or adjust the Service
Levels under a Statement of Work. The reasons for those additions,
deletions or adjustments may include improved performance capabilities
associated with advances in the technology and methods used to perform
the Services, or changes in Hillwood’s business or technology
environment, such as the implementation of a major initiative that
changes the nature of the Services. Where the Parties agree to make such
an addition, deletion or adjustment, the Parties shall also agree on any
adjustment in Perot Systems’ charges appropriate to reflect changes in
the costs to provide the Services in accordance with the new Service
Levels.

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	7.4	 	Responsibility for Achieving Service Levels

	 	 	Perot Systems will not be responsible for the Service Levels under any
Statement of Work to the extent they are adversely affected by (i)
Hillwood’s material failure to perform its obligations under this
Agreement or any Statement of Work; (ii) the wrongful acts or omissions
of Hillwood or its third party vendors (including those third party
vendors that are managed by Perot Systems); (iii) the failure of any of
Hillwood’s employees to adequately perform their tasks related to the
Services; (iv) unreasonable, untimely, incomplete or inaccurate
information from Hillwood; (v) Hillwood’s failure to make available
information, materials, software, hardware, equipment or personnel in the
manner required by this Agreement; (vi) the failure of Hillwood Equipment
or any third party equipment required by Perot Systems to provide the
Services, in a manner that is not within Perot Systems’ ability to
control; or (vii) the occurrence of a Force Majeure Event (as defined in
Section 17.2) under this Agreement or any Statement of Work.

	7.5	 	Measurements and Monitoring Tools

	 	 	Upon Hillwood’s request and at Hillwood’s expense, Perot Systems will
implement and use the necessary measurement and monitoring tools and
procedures necessary to measure and report its performance of the
Services against the applicable Service Levels. That measurement and
monitoring will permit reporting at a level of detail sufficient to
verify compliance with the Service Levels.

	8	 	PROJECT AND CONTRACT MANAGEMENT

	8.1	 	Relationship Managers

	 	 	Each Party (an “Appointing Party”) will appoint an individual (a
“Relationship Manager”) who, from the Effective Date until replaced by
the Appointing Party, will serve as that Appointing Party’s
representative under this Agreement. Each Relationship Manager will (i)
have overall responsibility for managing and coordinating the performance
of the Appointing Party’s obligations under this Agreement, and (ii) be
authorized to act for and on behalf of the Appointing Party concerning
all matters relating to this Agreement. Neither Party will reassign its
Relationship Manager, unless it provides at least 10 days’ prior written
notice to the other Party. If a Party terminates the employment of or
reassigns its Relationship Manager, it will appoint a new Relationship
Manager with prior written notice to, and consultation with, the other
Party.

	8.2	 	Reports and Meetings

	 	(a)	 	As soon as reasonably practicable after the Effective Date,
the Parties will determine an appropriate set of periodic reports to
be issued by Perot Systems to Hillwood.

	 	(b)	 	As soon as reasonably practicable after the Effective Date,
the Parties will determine an appropriate set of meetings, and the
frequency of those meetings, to be held between representatives of
Hillwood and Perot Systems. Perot Systems will prepare and
circulate an agenda sufficiently in advance of each of

12

 

	 	 	 	those meetings to give participants an opportunity to prepare for
the meeting. Perot Systems will incorporate into that agenda any
items that Hillwood desires to discuss.

	8.3	 	Change Control Process

	 	 	As soon as reasonably practicable after the Effective Date, the Parties
will establish a written description of the change control process
(“Change Control Process”) that will apply to any Changes under any
Statement of Work. For the purpose of this Section, “Changes” are any
changes to the Software, the Equipment or the Services that would (i)
materially alter the functionality thereof or (ii) result in a
degradation of the Services or the Service Levels, or the cost to perform
the Services. Upon agreement by the parties of a Change Control Process,
it will be attached to and made part of this Agreement as Schedule 8.3.

	8.4	 	Escalation Procedures

	 	 	As soon as reasonably practicable after the Effective Date, Perot Systems
and Hillwood will establish a procedure for immediately escalating to a
team of appropriate senior level managers or officers, including the
Relationship Manager for each Party, any significant technical problem
that may arise from time to time that could have a negative impact on
critical portions of Hillwood’s business if not quickly resolved.

	9	 	OPERATIONAL AUDITS

	9.1	 	Audit Rights

	 	 	Hillwood and its independent auditors (who will not be competitors of
Perot Systems, other than Hillwood’s reporting external auditors) may
conduct an operational audit pertaining to the Services upon 10 business
days’ written notice to Perot Systems and at no additional expense to
Perot Systems. The operational audit may require Perot Systems to (i)
process through any system test data supplied by Hillwood or its auditors
reasonably determined to reflect the normal demands on the system, (ii)
download Hillwood Data to a computer designated by the Hillwood or its
auditors, or (iii) where applicable, conduct a system backup and disaster
recovery audit. The audit will be conducted in a manner that does not
interfere with the performance of the Services. The purpose of the audit
will be to verify that Perot Systems is exercising reasonable data
processing operational procedures in performing the Services and to
confirm that Perot Systems is performing its obligations under this
Agreement. The Parties will review the report from each operational
audit and take appropriate actions based on these reviews. Perot Systems
will provide to Hillwood’s auditors and inspectors any assistance they
reasonably require, Hillwood will reimburse Perot Systems for the
reasonable costs Perot Systems incurs in connection with those audits or
inspections, and Perot Systems’ obligation to meet the Service Levels
will be suspended during any such audit.

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	9.2	 	Regulatory Access

	 	 	The records maintained and produced under this Agreement will at all
times be available for examination and audit by any governmental agency,
regulator or exchange of which Hillwood is a member and which has
jurisdiction over Hillwood’s business. Each Party will notify the other
promptly of any formal request by an authorized governmental agency,
regulator or exchange to examine records regarding Hillwood that are
maintained by Perot Systems. Upon Hillwood’s written request, Perot
Systems will provide any relevant information to those agencies,
regulators or exchanges and will subject itself to any required
examination or regulation. Hillwood will reimburse Perot Systems for the
reasonable costs Perot Systems incurs in connection with that examination
or regulation.

	9.3	 	Records Retention

	 	 	For three years following the expiration or termination of each Statement
of Work, Perot Systems will maintain and provide Hillwood with access
upon request to the records, documents and other information related to
that Statement of Work to the extent necessary to meet Hillwood’s audit
rights under this Agreement.

	10	 	HILLWOOD RESPONSIBILITIES

	 	 	Hillwood will perform the functions and obligations described in each
Statement of Work, in addition to Hillwood’s other responsibilities set
forth elsewhere in this Agreement. Hillwood will cooperate with Perot
Systems by, among other things, making its management decisions,
information, approvals and acceptances available to Perot Systems on a
timely basis upon reasonable request, so that Perot Systems may
accomplish its obligations and responsibilities under this Agreement and
each Statement of Work. Hillwood’s Relationship Manager, or his or her
designee, will be Perot Systems’ principal point of contact for obtaining
those decisions, information, approvals and acceptances.

	11	 	CHARGES

	11.1	 	Charges

	 	 	Hillwood will pay to Perot Systems the amounts set forth in each Statement of Work.

	11.2	 	Cost of Living Adjustment

	 	 	Unless otherwise specifically provided in a Statement of Work, the
charges and rates contained in this Agreement and each Statement of Work
are subject to the Cost of Living Adjustment provisions set forth on
Schedule 11.2 hereto, unless a different cost of living adjustment
mechanism is set forth in a Statement of Work.

	11.3	 	Expenses

	 	 	Hillwood will reimburse Perot Systems for all out-of-pocket expenses,
such as travel and travel-related expenses, incurred by Perot Systems in
connection with its performance of

14

 

	 	 	the Services, provided that any expense in excess of $1,000.00 shall not
be incurred without the prior written or email approval of Hillwood..
Perot Systems will follow its corporate travel policy.

	11.4	 	Taxes

	 	 	The Parties’ respective responsibilities for taxes arising under or in
connection with this Agreement and each Statement of Work are as follows:

	 	(a)	 	Each Party is responsible for any personal property taxes on
property it owns or leases, for franchise and privilege taxes on its
business, and for taxes based on its net income.

	 	(b)	 	There will be added to any charges under this Agreement and
each Statement of Work, and Hillwood will pay to Perot Systems,
amounts equal to any federal, state or local taxes, however
designated or levied, based on those charges, on this Agreement, on
a Statement of Work, or on the Services.

	 	(c)	 	If a tax is assessed on the provision of any of the Services,
the Parties will work together to segregate the payments into (i)
those for taxable Services, and (ii) those for nontaxable Services.

	 	(d)	 	The Parties will cooperate to enable each to more accurately
determine its own tax liability and to minimize that liability to
the extent legally permissible. Perot Systems’ invoices will
separately state the amounts of any taxes Perot Systems is
collecting from Hillwood. Each Party will provide and make
available to the other any resale certificates, information
regarding out-of-state or out-of-country sales or use of equipment,
materials or services, and other exemption certificates or
information reasonably requested by either Party.

	 	(e)	 	Perot Systems will promptly notify Hillwood of, and
coordinate with Hillwood the response to and settlement of, any
claim for taxes asserted by applicable taxing authorities for which
Hillwood is responsible under this Agreement, it being understood
that with respect to any claim arising out of a form or return
signed by a Party, that Party will have the right to elect to
control the response to and settlement of the claim, but the other
Party will have all rights to participate in the responses and
settlements that are appropriate to its potential responsibilities
or liabilities. If Hillwood requests that Perot Systems challenge
the imposition of any tax, Hillwood will reimburse Perot Systems for
the reasonable legal fees and expenses Perot Systems incurs.
Hillwood will be entitled to any tax refunds or rebates granted to
the extent those refunds or rebates are of taxes that were paid by
Hillwood.

	11.5	 	New Services

	 	 	If at any time during the Term of any Statement of Work, Perot Systems
provides services to Hillwood that are not specifically described in such
Statement of Work,

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	 	 	Hillwood will pay Perot Systems at Perot Systems’ then-current rates for
such services or on such other basis as the Parties may mutually agree in
writing.

	12	 	INVOICING AND PAYMENT

	12.1	 	Invoicing

	 	 	Perot Systems will invoice Hillwood monthly for all amounts due under
this Agreement or any Statement of Work. Monthly base charges will be
invoiced in advance and will be due and payable on the first day of the
month for which the amounts are due. All other amounts due will be
invoiced in arrears. Perot Systems will compute periodic charges under
this Agreement and each Statement of Work on a calendar month basis and
prorate those charges for any partial month.

	12.2	 	Payment Due

	 	 	Subject to the other provisions of this Article 12 and unless otherwise
agreed, Hillwood will pay invoices that Perot Systems submits under this
Agreement and each Statement of Work within 30 days after receipt. Any
amount not paid when due will thereafter bear interest paid at a rate
equal to the lesser of (i) eighteen percent (18%) per annum, pro-rated on
the basis of a 365 day year, or (ii) the highest rate allowed by
applicable law.

	12.3	 	Audit of Charges

	 	 	If Hillwood provides a reasonable request in advance, Perot Systems will
permit Hillwood or its independent auditors (who will not be competitors
Perot Systems, other than Hillwood’s reporting external auditors), at no
additional expense to Perot Systems, to access Perot Systems’ books and
records at a mutually agreeable time and place to perform an annual audit
to the extent necessary to verify Perot Systems’ charges to Hillwood
under this Agreement and any Statement of Work. Hillwood will provide
Perot Systems with a copy of the audit report resulting from each audit.
As promptly as practicable after providing the audit report, the Parties
will review it and work in good faith to agree on any adjustment of
charges and any appropriate future adjustments to Perot Systems’ charges
or practices under, and necessary for compliance with, this Agreement and
any Statement of Work. If Perot Systems desires to limit the scope of
Hillwood’s audit in order to protect confidential or proprietary
information of Perot Systems or any customer of Perot Systems, the audit
will be conducted by an independent third party auditor mutually
acceptable to Perot Systems and Hillwood, who will verify Perot Systems’
charges to Hillwood for the relevant period without disclosing any
confidential information to Hillwood.

	13	 	SAFEGUARDING OF DATA AND CONFIDENTIALITY

	13.1	 	Hillwood Data

	 	 	As between Hillwood and Perot Systems, Hillwood owns and will continue to
own all right, title and interest in and to all Hillwood Data. Upon the
termination of this Agreement for any reason or, with respect to any
Hillwood Data, on any earlier date as

16

 

	 	 	Hillwood and Perot Systems mutually determine that Perot Systems will no
longer need the Hillwood Data to render the Services, that Hillwood Data
will be either erased from the data files maintained by Perot Systems or,
if Hillwood so elects, returned to Hillwood. Perot Systems may not use
Hillwood Data for any purpose except to provide the Services, nor may
Perot Systems disclose, sell, assign, lease or otherwise dispose of or
commercially exploit Hillwood Data or any part of thereof.
	 
	13.2	 	Safeguarding Hillwood Data
	 
	 	 	Perot Systems will establish and maintain safeguards against the
destruction, loss or alteration of Hillwood Data in its possession that
are no less rigorous than those in effect at the applicable Hillwood
Facilities as of the applicable Effective Date. If Hillwood reasonably
requests additional safeguards for Hillwood Data, Perot Systems will
provide those additional safeguards and Hillwood will pay Perot Systems
for them at Perot Systems’ then-current rates or agreed to rates in a
Statement of Work for the resources required to provide those safeguards.
Hillwood may establish backup security for data and keep backup data and
data files in its possession if it so chooses; but Perot Systems will
have access to the backup data and data files as Perot Systems reasonably
needs to provide the Services.
	 
	13.3	 	Physical Security for Facilities
	 
	 	 	Perot Systems will perform all reasonably necessary security procedures
at any place where it performs Services to the extent Perot Systems is
assuming responsibility for those security procedures pursuant to the
terms of a Statement of Work. The procedures at the Hillwood Facilities
will be no less rigorous than those in effect there as of the applicable
Effective Date. Hillwood will provide all necessary security personnel
and security equipment at the Hillwood Facilities. Perot Systems’
personnel will comply with Hillwood’s reasonable physical security
procedures, as made available to Perot Systems before the applicable
Effective Date, concerning access to any Hillwood Facilities, data and
data files.
	 
	13.4	 	Confidentiality

	 	(a)	 	Each Party (a “receiving Party”) agrees that all information

provided under this Agreement or a Statement of Work by the other
Party (a “disclosing Party”) will be treated as confidential
information, regardless of whether marked or described as
Confidential Information, and all confidentiality notices on that
Confidential Information will be retained.
	 
	 	(b)	 	In avoiding unauthorized disclosure or use of the disclosing
Party’s Confidential Information, the receiving Party will use at
least the same degree of care, but no less than a reasonable degree
of care, as it employs concerning its own Confidential Information
of similar importance.
	 
	 	(c)	 	The receiving Party may disclose Confidential Information
only to its own officers, directors, and employees and to its
consultants, subcontractors and advisors who reasonably need to know
it. The receiving Party will be

17

 

	 	 	 	responsible to the disclosing Party for any violation of the
provisions of this Article 13 by its officers, directors,
employees, consultants, subcontractors or advisors.
	 
	 	(d)	 	Except as otherwise provided in writing between the Parties,
the receiving Party may not print, copy or reproduce in any way, in
whole or in part, any documents or other media containing the
disclosing Party’s Confidential Information, other than copies for
its officers, directors, employees, consultants or advisors who
reasonably need to know it, without the prior written consent of the
disclosing Party.
	 
	 	(e)	 	The receiving Party may not use the disclosing Party’s
Confidential Information for any purpose not in furtherance of this
Agreement, unless it obtains the disclosing Party’s prior written
authorization.
	 
	 	(f)	 	If the receiving Party is requested to disclose any of the
disclosing Party’s Confidential Information as part of an
administrative or judicial proceeding, the receiving Party will, to
the extent permitted by applicable law, promptly notify the
disclosing Party of that request and cooperate with the disclosing
Party, at the disclosing Party’s expense, in seeking a protective
order or similar confidential treatment for the Confidential
Information. If no protective order or other confidential treatment
is obtained, the receiving Party will (i) disclose only that portion
of the Confidential Information that is legally required to be
disclosed based on the opinion of its counsel and (ii) use
reasonable efforts to obtain reliable assurance that confidential
treatment will be accorded the Confidential Information so
disclosed.
	 
	 	(g)	 	The receiving Party agrees that in the event of a breach or
threatened breach by the disclosing Party, or any officer, director,
consultant, subcontractor, advisor or employee of the disclosing
Party, of the provisions of this Article 13, the disclosing Party
will have no adequate remedy in money damages. Accordingly, each
Party agrees that the other may seek, from any court of competent
jurisdiction, injunctive and preliminary relief, including against a
party’s specific employees or subcontractors, to remedy any actual
or threatened unauthorized use or disclosure of the other party’s
Confidential Information

	14	 	REPRESENTATIONS AND WARRANTIES
	 
	14.1	 	Authorization
	 
	 	 	Each Party represents and warrants to the other that (i) it has the
requisite corporate power and authority to enter into this Agreement and
each Statement of Work and to carry out the transactions contemplated by
this Agreement and each Statement of Work, including the giving or
withholding of any approval, acceptance, consent, notice or other action
required or permitted by this Agreement or that Statement of Work, and
(ii) the execution, delivery and performance of this Agreement and each
Statement of Work and the consummation of the transactions contemplated
by this Agreement and each

18

 

	 	 	Statement of Work have been and will be duly authorized by the requisite
corporate action on the part of that Party.

	14.2	 	Compliance with Laws
	 
	 	 	Each Party represents and warrants to the other that it is duly licensed,
authorized or qualified to do business and is in good standing in every
jurisdiction in which a license, authorization or qualification is
required for the ownership or leasing of its assets or the transaction of
business of the character transacted by it, except where the failure to
be so licensed, authorized or qualified would have no material adverse
effect on its ability to fulfill its obligations under this Agreement and
each Statement of Work.
	 
	14.3	 	Outstanding Liabilities
	 
	 	 	Each Party represents to the other that it is not a party to any
outstanding litigation, arbitrated matter or other dispute known to that
Party that, if decided unfavorably to that Party, would reasonably be
expected to have a potential or actual material adverse impact on that
Party’s ability to fulfill its obligations under this Agreement and each
Statement of Work.
	 
	14.4	 	Disclaimer
	 
	 	 	EXCEPT AS PROVIDED IN THIS AGREEMENT, NEITHER PARTY MAKES AND EACH PARTY
DISCLAIMS ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING THE IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
	 
	15	 	INSURANCE
	 
	15.1	 	Insurance
	 
	 	 	During the Term, Perot Systems will have and maintain the following
insurance coverage:

	 	(a)	 	Worker’s Compensation Insurance, including occupational
illness or disease coverage, or other similar social insurance in
accordance with the laws of the country, state, or territory
exercising jurisdiction over the employee and Employer’s Liability
Insurance with a minimum limit of $500,000 per employee and
aggregate.
	 
	 	(b)	 	Commercial General Liability Insurance, including Products,
Completed Operations, and Personal Injury Liability, Contractual
Liability and Broad Form Property Damage Liability covering bodily
injury and property damage with a minimum combined single limit of
$1,000,000 per occurrence and $2,000,000 general aggregate. The
policy will be endorsed to name Hillwood as additional insured.

19

 

	 	(c)	 	Electronic Data Processing Property Insurance, using a
special cause of loss coverage form, on Equipment and Systems
Software owned or leased by Perot Systems, including Extra Expense
coverage, on a replacement cost valuation basis.
	 
	 	(d)	 	Automobile Liability Insurance covering use of owned,
non-owned, and hired automobiles with a minimum combined single
limit of $1,000,000 per accident for bodily injury and property
damage.
	 
	 	(e)	 	Umbrella Liability Insurance with a minimum limit of
$10,000,000 per occurrence and aggregate in excess of the insurance
under policies indicated in Sections 15.1(a), 15.1(b) and 15.1(d).
	 
	 	(f)	 	Employee Dishonesty Insurance, in a minimum amount of
$1,000,000 per loss, for loss arising out of or in connection with
fraudulent or dishonest acts committed by Perot Systems’ employees,
acting alone or in collusion with others, including loss of money,
securities and other property of others in Perot Systems’ care,
custody or control.

	15.2	 	Policies
	 
	 	 	Upon the written request of Hillwood, Perot Systems will cause its
insurers to issue certificates of insurance evidencing that the coverages
and policy endorsements required under this Agreement are in force.
	 
	16	 	INDEMNITIES
	 
	16.1	 	Indemnity by Perot Systems
	 
	 	 	Perot Systems will indemnify, defend and hold harmless Hillwood and its
Affiliates, and their officers, directors, employees, agents, successors,
and assigns, from any and all Losses and threatened Losses arising from
third party claims alleging:

	 	(a)	 	Perot Systems’ failure to perform any obligations to be
performed on or after the Effective Date by Perot Systems under any
contracts, including Third Party Software licenses and Third Party
Service Contracts where Perot Systems has expressly agreed under any
Statement of Work to perform those obligations; and
	 
	 	(b)	 	Any claims of infringement of any United States patent, trade
secret, copyright or other proprietary rights enforceable in the
United States or other proprietary rights, alleged to have occurred
because of (i) Software or other resources selected by Perot Systems
and provided by Perot Systems to Hillwood, or (ii) Perot Systems’
activities under this Agreement (other than claims based on Perot
Systems’ use of Software or resources provided by Hillwood).

20

 

	16.2	 	Indemnity by Hillwood
	 
	 	 	Hillwood will indemnify, defend and hold harmless Perot Systems and its
Affiliates and their respective officers, directors, employees, agents,
successors, and assigns, from any and all Losses and threatened Losses
arising from third party claims alleging:

	 	(a)	 	Hillwood’s failure to observe or perform any obligations to
be performed by Hillwood under any contracts, including Third Party
Software licenses and Third Party Service Contracts, excluding those
obligations under any of those contracts where Perot Systems has
expressly agreed under any Statement of Work to perform those duties
or obligations; and
	 
	 	(b)	 	Any claims of infringement of any patent, trade secret,
copyright or other proprietary rights, alleged to have occurred
because of (i) Software or other resources selected by customer or
provided by Hillwood to Perot Systems, or (ii) Hillwood’s activities
under this Agreement (other than claims based on Hillwood’s use of
Software or resources provided by Perot Systems).

	16.3	 	Cross Indemnity
	 
	 	 	Each Party will indemnify, defend and hold harmless the other and the
other’s Affiliates, and their officers, directors, employees, agents,
successors, and assigns, from any and all Losses and threatened Losses,
arising out of third party claims alleging (i) the death or bodily injury
of any agent, employee, customer, business invitee or business visitor of
the indemnitor, provided such claims do not arise out of any act or
omission of indemnitee, (ii) the damage, loss or destruction of any
tangible personal property (other than Software, data or documentation)
of the indemnitor, provided such damage, loss or destruction does not
arise out of any act or omission of indemnitee, (iii) any claim, demand,
charge, action, cause of action or other proceeding asserted against the
indemnitee by a person that results from an act or omission of the
indemnitor in its capacity as an employer of the person, provided such
claim, demand, charge, action, cause of action or other proceeding does
not arise out of any act or omission of indemnitee.
	 
	16.4	 	Infringement
	 
	 	 	If either Party is obligated to indemnify the other Party under Section
16.1(a) or (b), then such Party (the “Indemnifying Party”) will, in
addition to indemnifying the other Party as provided in this Article 16
and to the other rights the other Party may have under this Agreement,
promptly at the Indemnifying Party’s expense use all commercially
reasonable efforts to secure the right to continue using the item or to
replace or modify the item to make it non-infringing, provided that any
replacement or modification will not degrade the performance or quality
of the affected component of the Services. If the Indemnifying Party can
accomplish neither of those actions, and only in that event, then the
Indemnifying Party will cease using the infringing item, and the parties
will work in

21

 

	 	 	good faith to equitably adjust the Services, Service Levels and Perot
Systems’ charges under this Agreement.
	 
	16.5	 	Indemnification Procedures
	 
	 	 	With respect to any third party claims for which either Party is entitled
to indemnification under this Article 16 (an “Indemnifiable Claim”), the
following procedures will apply:

	 	(a)	 	Notice. After any entity entitled to indemnification under
this Article 16 receives notice of the commencement or threatened
commencement of any civil, criminal, administrative, or
investigative action or proceeding involving an Indemnifiable Claim
for which the indemnitee will seek indemnification under this
Article, the indemnitee will promptly notify the indemnitor of that
claim in writing. However, failing to notify an indemnitor of a
claim will not relieve the indemnitor of its obligations under this
Agreement except to the extent the indemnitor is prejudiced thereby.
As soon as reasonably practicable after receiving written notice of
the claim, the indemnitor will notify the indemnitee in writing as
to whether the indemnitor elects to assume control of the defense
and settlement of that claim (a “Notice of Election”).
	 
	 	(b)	 	Procedure Following Notice of Election. If the indemnitor
delivers a Notice of Election relating to any Indemnifiable Claim at
least 10 days before the date on which any response to a complaint
or summons is due, the indemnitor is entitled to have sole control
over the defense and settlement of that claim. However, the
indemnitee may participate in defending that claim and may employ
counsel at its own expense to assist in defending the claim. The
indemnitor will obtain the prior written approval of the indemnitee
before entering into any settlement of the claim or ceasing to
defend against the claim..
	 
	 	(c)	 	Procedure Where No Notice of Election Is Delivered. If the
indemnitor does not deliver a Notice of Election electing to assume
the defense of an Indemnifiable Claim at least 10 days before the
date on which any response to a complaint or summons is due, the
indemnitee may defend the claim in any manner as it may deem
appropriate, at the cost and expense of the indemnitor. The
indemnitor will promptly reimburse the indemnitee for all those
costs and expenses.
	 
	 	(d)	 	Subrogation. If an indemnitor is obligated to indemnify an
indemnitee under this Article 16, then upon paying that indemnity in
full, the indemnitor will be subrogated to all rights of the
indemnitee concerning the claims to which the indemnification
relates.

	17	 	LIABILITY
	 
	17.1	 	Definition of Liability

	 	(a)	 	Except with respect to Hillwood’s obligations to make
payments to Perot Systems under this Agreement including the
Statements of Work (including any obligation to make payments in the
future under this agreement including the

22

 

	 	 	 	Statements of Work), in no event is either Party liable to the
other because of the other Party’s performance or nonperformance
of its obligations under this Agreement or any Statement of Work,
whether arising by contract or tort (including negligence,
intended conduct, or otherwise), for any amounts for indirect,
special, consequential or punitive damages of any party, including
third parties.
	 
	 	(b)	 	Except with respect to Hillwood’s obligations to make
payments to Perot Systems under this Agreement including the
Statements of Work (including any obligation to make payments in the
future under this Agreement including the Statement of Work), with
respect to all claims arising out of, under or in connection with
this Agreement, each party’s liability will not exceed, in the
aggregate, an amount equal to the charges actually paid by Hillwood
to Perot Systems during the first three months after the Effective
Date of this Agreement (excluding amounts paid as reimbursement of
expenses and taxes).
	 
	 	(c)	 	The limitations in subsection (b) above do not apply with
respect to either Party’s obligations under Section 16.3(i).
	 
	 	(d)	 	A Party may not assert against the other any cause of action
arising under this Agreement or any Statement of Work that was
actually known to exist by such party more than two years before
that Party filed a suit alleging that cause of action.

	17.2	 	Force Majeure

	 	(a)	 	Neither Party is liable for any default or delay in the
performance of its obligations under this Agreement or any Statement
of Work (excluding payment obligations hereunder or thereunder) if
and to the extent a Force Majeure Event occurs. For purposes of
this Article, a “Force Majeure Event” occurs if and to the extent:
(i) the default or delay is caused, directly or indirectly, by:
fire, flood, earthquake, elements of nature or acts of God; riots,
civil disorders, rebellions or revolutions in any country; acts or
omissions of third parties not subcontractors of the defaulting
party; or any other cause beyond the reasonable control of that
Party; (ii) the non-performing Party is without fault in causing
that default or delay; (iii) the non-performing Party cannot
reasonably circumvent the default or delay through the use of
alternate sources, workaround plans or other means (including, with
respect to Perot Systems, by Perot Systems meeting any express
obligations it may have for performing disaster recovery services as
part of the Services), and (iv) with respect to any obligation to be
performed by Perot Systems hereunder, any delay caused by Hillwood’s
failure to furnish Perot Systems with written approval of
out-of-pocket expenses as set forth in Section 11.3, provided Perot
Systems is without fault in causing the delay and cannot reasonably
circumvent the delay through the use of alternate sources,
workaround plans or other means.

23

 

	 	(b)	 	If and for so long as a Force Majeure Event occurs, the
non-performing Party is excused from further performing or observing
the obligation(s) affected, provided the Party continues to use
commercially reasonable efforts to recommence performance. Any Party
delayed in its performance under those circumstances will promptly
notify the Party to whom performance is due and describe at a
reasonable level of detail the circumstances causing the delay.

	18	 	DISPUTE RESOLUTION
	 
	 	 	The Relationship Managers will meet as often as mutually agreed to review
performance under this Agreement and each Statement of Work. If any
dispute between the Parties arises out of or in connection with this
Agreement or any Statement of Work, the escalation and dispute resolution
procedures specified in Schedule 18 will apply. Unless the Agreement or
the applicable Statement of Work has been terminated in accordance with
the provisions of Article 19, Perot Systems will continue to provide the
Services during any dispute resolution proceedings, if Hillwood continues
to make payment for those Services as provided in this Agreement.
	 
	19	 	TERMINATION
	 
	19.1	 	Termination for Cause
	 
	 	 	If either party materially defaults in performing any of its duties or
obligations (except for payment obligations) under this Agreement or
under a Statement of Work, and fails to substantially cure that default
within 60 days after receiving written notice specifying the default (or,
concerning any default that cannot reasonably be cured within that 60 day
period but is curable, if Perot Systems fails to proceed within that 60
day period to commence curing the default and thereafter to proceed with
all due diligence to substantially cure it, and to substantially cure it
within 120 days after the giving of that written notice), then the
non-defaulting party may, by giving written notice of the default to the
defaulting party, terminate the Statement of Work that was breached and,
where applicable, this Agreement, as of a date specified in the notice of
termination, which date will be no later than one year after the date on
which the terminating Party’s right to terminate that Statement of Work
or this Agreement arose. A Party’s right to give a termination notice
under this Section will expire once the default is substantially cured.
	 
	19.2	 	Termination for Non-Payment
	 
	 	 	If either Party defaults in the payment when due of any amount under any
Statement of Work, and does not cure the default within 10 days after
receiving written notice of the default, then the other Party may, by
giving written notice of the default to the defaulting Party, terminate
that Statement of Work as of a date specified in the notice of
termination, which date will be no later than one year after the date on
which the terminating Party’s right to terminate that Statement of Work
arose. A Party’s right to give a termination notice under this Section
will expire once it is current in its payment obligations hereunder,
including any applicable interest payments.

24

 

	19.3	 	Termination for Insolvency
	 
	 	 	If a Party (the “Insolvent Party”) becomes or is declared insolvent or
bankrupt; is the subject of any proceedings relating to its liquidation,
insolvency or for the appointment of a receiver or similar officer for it
(which, in the case of involuntary proceedings, remains undismissed for
at least 60 days); makes an assignment for the benefit of substantially
all of its creditors; or enters into an agreement for the composition,
extension, or readjustment of substantially all of its obligations, then
the other Party may, by giving written notice to the Insolvent Party,
terminate this Agreement and each Statement of Work as of a date
specified in the notice of termination. However, neither this Agreement
nor any Statement of Work may be terminated under this Section 19.3 once
the Insolvent Party ceases to be insolvent or be the subject of a
proceeding relating to its liquidation, insolvency or the appointment of
a receiver.
	 
	19.4	 	Termination for no Statements of Work
	 
	 	 	Either Party may terminate this Agreement by providing the other Party
with at least 30 days prior written notice of termination if there are no
outstanding Statements of Work.
	 
	 	 	Other Termination Rights
	 
	19.5	 	Rights Upon Termination or Expiration
	 
	 	 	Upon receiving any notice of termination by Hillwood, or upon expiration
of the Term, Perot Systems will provide to Hillwood the termination
assistance reasonably requested to allow the Services provided under the
terminated Statement of Work to continue, and to facilitate the orderly
transfer of responsibility for performance of the Services to Hillwood,
for a period of up to six months after the termination or expiration of
the Term; provided that Hillwood shall pay Perot Systems for the
resources used by Perot Systems to provide those services at rates equal
to Perot Systems’ then-current commercial rates for those resources.
Notwithstanding the foregoing, if Hillwood terminates this Agreement for
cause in accordance with Section 19.1, Perot Systems will provide
termination assistance as part of its Services. If termination of this
Agreement is a result of a breach of any part of this Agreement or any
Statement of Work by Hillwood, then Hillwood will pay Perot Systems for
such termination assistance, in advance, on a time and material basis at
Perot Systems’ then-standard commercial billing rates. All such advance
payments will be payable on the first day of each month (the first
month’s payment will be paid on the first day termination assistance is
to begin if it is not on the first day of the month) of the termination
assistance period in an amount equal to Perot Systems’ reasonable
estimate of the total amount payable to Perot Systems for such
termination assistance for that month, adjusted as necessary, to
reconcile the estimated and actual charges for transition assistance
provided during the prior month. Perot Systems will invoice Hillwood
each month in advance in accordance with the preceding sentence. The
termination assistance to be provided may include the following:

25

 

	 	(a)	 	Developing, together with Hillwood, a plan for the orderly
transition of the performance of the Services from Perot Systems to
Hillwood or to a third party designated by Hillwood.
	 
	 	(b)	 	Providing reasonable training for personnel of Hillwood in
the performance of the Services then being transitioned to Hillwood
or the third party designated by Hillwood, to the extent Services
are being assumed by that third party.
	 
	 	(c)	 	Providing Hillwood the right to assume any leases for
Equipment leased by Perot Systems, if and to the extent Perot
Systems has the necessary rights, or to purchase from Perot Systems
any Equipment owned by Perot Systems that is then dedicated to
providing Services for Hillwood pursuant to the terminated Statement
of Work. If Hillwood exercises this right, it will pay to Perot
Systems an amount equal to Perot Systems’ book value of the
applicable Equipment, as calculated in accordance with generally
accepted accounting principles. Perot Systems will also provide all
user and other documentation in its possession that relates to that
Equipment. Hillwood will assume responsibility under any
maintenance agreements for that Equipment to the extent those
responsibilities relate to periods after the date of termination or
expiration of the applicable Statement of Work.
	 
	 	(d)	 	Assigning, at Hillwood’s expense, to Hillwood or its
designee, any third party services then being used by Perot Systems
in performing the Services pursuant to the terminated Statement of
Work, including Services being provided through third party service
or maintenance contracts on Equipment and Software if and to the
extent Perot Systems has the necessary rights. Perot Systems will
be entitled to retain the right to use any of those third party
services in connection with the performance of services for any
other Perot Systems customer.
	 
	 	(e)	 	Granting to Hillwood (provided that Hillwood is not
determined to be in breach of this Agreement, including any
Statement of Work hereunder, in accordance with the dispute
resolution procedures outlined in Schedule 18 or does not contest
Perot Systems allegation of such breach, and subject to Perot
Systems’ rights under any license agreement for any Perot Systems
Software licensed by Perot Systems) a nontransferable, nonexclusive,
paid up, royalty free license to use the application software
programs (including all related documentation) of any Perot Systems

Software then being used by Perot Systems in providing the Services
to Hillwood, and required for Hillwood’s continued operations,
pursuant to the terminated Statement of Work (the “Licensed Perot
Systems Programs”), subject to the following:

	 	(1)	 	Except with the prior written consent
of Perot Systems, the Licensed Perot Systems Programs
will not be operated, directly or indirectly, (i) by
persons other than employees, consultants or agents of
Hillwood, or (ii) on equipment that is not under the
control of Hillwood.

26

 

	 	(2)	 	Except with the prior written consent
of Perot Systems, the Licensed Perot Systems Programs
may only be used for Hillwood’s internal operations.
	 
	 	(3)	 	Hillwood will keep the Licensed Perot
Systems Programs confidential, will not at any time
allow the Licensed Perot Systems Programs, or any of the
various components of them or any modifications to them,
to be disclosed to third parties, sold, assigned, leased
or commercially exploited or marketed in any way, with
or without charge, by Hillwood or its employees or
agents and, except to the extent necessary for normal
operation of the Licensed Perot Systems Programs as
permitted in this Agreement, will not permit the
Licensed Perot Systems Programs to be copied or
reproduced, in whole or in part, by any person at any
time.
	 
	 	(4)	 	Hillwood agrees that the Licensed
Perot Systems Programs are Perot Systems’ and its
licensors’ valuable property, that violation in any
material respect of any provision of this Section would
cause Perot Systems irreparable injury for which it
would have no adequate remedy at law, and, in addition
to any and all other remedies or rights Perot Systems
may have at law or in equity, Perot Systems will be
entitled to preliminary and other injunctive relief
against a violation of that nature.

	20	 	MISCELLANEOUS
	 
	20.1	 	Notices
	 
	 	 	All notices, requests, demands and other communications to be given or
delivered under or by reason of the provisions of this Agreement or any
Statement of Work will be in writing and will be deemed given (i) on the
date sent, when sent by facsimile or delivered personally, (ii) on the
next business day when sent by overnight Federal Express, Express Mail or
similar service and (iii) on the third business day after being mailed
when mailed by certified first class mail, return receipt requested, to
each party at the following address (or to such other address as that
party may have specified by notice given to the other pursuant to this
provision):

	 	 	 
	If to Perot Systems:

	 	with a copy to:

	 	 	 
	Perot Systems Corporation

	 	Perot Systems Corporation
	12404 Park Central Drive

	 	12404 Park Central Drive
	Dallas, Texas 75251

	 	Dallas, Texas 75251
	Attention: Al Christianson

	 	Attention: General Counsel

27

 

	 	 	 
	If to Hillwood:

	 	with a copy to:

	 	 	 
	Hillwood Enterprises, L.P.

	 	Hillwood Enterprises L.P.
	12377 Merit Drive, Suite 1350

	 	12377 Merit Drive, Suite 1350
	Dallas, Texas 75251

	 	Dallas, Texas 75251
	Attention: Jonas Woods

	 	Attention: General Counsel

	20.2	 	Binding Nature and Assignment
	 
	 	 	This Agreement and each Statement of Work is binding on the Parties and
their respective successors and assigns. Either party may assign its
right to receive payments under this Agreement and each Statement of Work
by providing written notice of that assignment to the other Party. In
addition, either Party may assign all of its rights and obligations under
this Agreement and all Statements of Work to any acquiror of all, or
substantially all, of that Party’s assets, provided that such transfer
may not increase the scope of the Services or of any other obligations of
the non-assigning Party. Except as otherwise provided in this Section,
neither Party will, nor has the power to, assign this Agreement nor any
Statement of Work without the other Party’s prior written consent, which
will not be unreasonably withheld.
	 
	20.3	 	Severability
	 
	 	 	Whenever possible, each provision of this Agreement and each Statement of
Work will be interpreted in such a manner as to be effective and valid
under applicable law, but if any provision of this Agreement or a
Statement of Work is held to be prohibited by or invalid under applicable
law, that provision will be deemed restated to reflect the original
intentions of the Parties as nearly as possible in accordance with
applicable law, and, if capable of substantial performance, the remaining
provisions of this Agreement will be enforced as if this Agreement and
that Statement of Work was entered into without the invalid provision.
	 
	20.4	 	Counterparts
	 
	 	 	This Agreement and each Statement of Work may be executed in one or more
counterparts, all of which taken together will constitute one and the
same instrument.
	 
	20.5	 	Relationship of Parties
	 
	 	 	Perot Systems, in furnishing services to Hillwood under this Agreement
and each Statement of Work, is acting only as an independent contractor.
Perot Systems does not undertake by this Agreement or any Statement of
Work or otherwise to perform any of Hillwood’s obligations, whether
regulatory or contractual (excluding the Third Party Service Contracts),
or to assume any responsibility for any of Hillwood’s business or
operations. Perot Systems has the sole right and obligation to
supervise, manage, contract, direct, procure, perform or cause to be
performed, all work to be performed by Perot Systems under this Agreement
and each Statement of Work. Hillwood acknowledges and agrees that, except
as otherwise provided by this Agreement or any

28

 

	 	 	Statement of Work, Perot Systems may perform information technology
services, including services similar to those performed for Hillwood
under this Agreement and any Statement of Work, for any third party and
at any Perot Systems Facility that Perot Systems may use to provide the
Services.
	 
	20.6	 	Compliance with Laws and Regulations
	 
	 	 	Each Party will perform its obligations in a manner that complies with
the applicable federal, state and local laws, regulations, ordinances and
codes (including identifying and procuring necessary permits,
certificates, approvals and inspections). Neither Party’s execution,
delivery, or performance of this Agreement or any Statement of Work will
constitute a violation of any judgment, order, or decree; a material
default under any material contract by which it or any of its material
assets are bound; or an event that would, with notice or lapse of time,
or both, constitute such a default.
	 
	20.7	 	Hiring of Employees
	 
	 	 	Unless otherwise provided in a Statement of Work, during the Term and for
twelve months thereafter, neither Party will offer employment to or
employ any person employed then or within the preceding three months by
the other or the other’s affiliates without the prior written consent of
the other Party, provided that such consent will not be unreasonably
withheld.
	 
	20.8	 	Third Party Beneficiaries
	 
	 	 	This Agreement does not, and neither Party intends that this Agreement
will, confer any legal rights on any third party or to be enforceable in
any part by a third party.
	 
	20.9	 	Media Releases
	 
	 	 	Other than references by Perot Systems to Hillwood in its promotional,
marketing and related materials, all media releases, public announcements
and public disclosures by either Party relating to this Agreement or its
subject matter shall be subject to the other Party’s review and approval
prior to release. This restriction does not apply (i) to any
announcement intended solely for internal distribution or (ii) any
disclosure required by law. This Agreement does not confer and neither
Party will have any right to use the other Party’s trademarks or logos
without the other Party’s prior written consent.
	 
	20.10	 	Modification and Waiver
	 
	 	 	Only a written instrument duly executed by or on behalf of each Party may
modify this Agreement or any Statement of Work. No delay or omission by
either Party to exercise any right or power under this Agreement or any
Statement of Work will impair that modification right or power, nor be
construed to be a waiver of it. If either Party waives any of the other
Party’s obligations under this Agreement or any Statement of Work, or
waives any breach of this Agreement or any Statement of Work, that waiver
will not be construed to be a waiver of any succeeding breach nor of any
other obligation under this Agreement or any Statement of Work.

29

 

	20.11	 	Entire Agreement
	 
	 	 	This Agreement and each Statement of Work, including the Schedules and
Exhibits referred to in this Agreement and that Statement of Work and
attached to it, each of which is incorporated in this Agreement for all
purposes, constitutes the entire agreement between the Parties concerning
the subject matter of this Agreement and that Statement of Work. There
are no representations, understandings or agreements, written or oral,
relative to this Agreement that are not fully expressed in this Agreement
or a Statement of Work.
	 
	20.12	 	Governing Law
	 
	 	 	The laws of the State of Texas (other than the choice of law rules) will
govern all questions concerning the construction, validity,
enforceability and interpretation of this Agreement and each Statement of
Work and the performance of the obligations imposed by this Agreement and
each Statement of Work.

IN WITNESS WHEREOF, Perot Systems and Hillwood have each caused this Agreement
to be signed and delivered by its duly authorized representative, all as of the
Effective Date.

	 	 	 
	PEROT SYSTEMS CORPORATION

	 	HILLWOOD ENTERPRISES, L.P.
	 
	 	 
	By:
/s/ J. Woods

	 	By: /s/ Allen Christianson
	 
	 
	 	 
	Name: Jonas Woods

	 	Name: Allen Christianson
	 
	 	 
	Title: Executive Vice President

	 	Title: Emerging Industries Central Area Manager

30

 

SCHEDULE 3.4

Form of

STATEMENT OF WORK

THIS STATEMENT OF WORK (as amended, modified and supplemented from time to
time, this “Statement of Work”), dated as of __________ (the “Effective
Date”), is between Hillwood Enterprises, L.P., a Texas limited partnership
(“Hillwood”), and Perot Systems Corporation, a
_________ (“Perot
Systems”).

BACKGROUND AND OBJECTIVES

Hillwood desires to obtain from Perot Systems, and Perot Systems is willing to
provide to Hillwood, Hillwood’s requirements for the services described in this
Statement of Work, on the terms and conditions set forth in the Master
Agreement for Information Technology Services (the
“Agreement”), dated as
of ____,
200 __, between Perot Systems and Hillwood and this Statement of
Work;

Accordingly, Hillwood and Perot Systems agree as follows:

	1.	 	Agreement
	 
	 	 	Except as otherwise expressly set forth in this Statement of Work, all the
terms and conditions of the Agreement will apply to this Statement of
Work. In the event of any conflict or inconsistency between the terms and
conditions of this Statement of Work and the terms and conditions of the
Agreement, the terms and conditions of this Statement of Work will apply.
	 
	2.	 	Statement of Work
	 
	 	 	During the term of this Statement of Work and except as otherwise provided
in Schedule C hereto, Perot Systems will provide to Hillwood, and Hillwood
will obtain from Perot Systems, Hillwood’s requirements for the Services
specifically identified on Schedule A to this Statement of Work, all upon
and subject to the terms and conditions specified in this Statement of
Work.
	 
	3.	 	Definitions
	 
	 	 	As used in this Statement of Work:
	 
	4.	 	Term
	 
	 	 	The term of this Statement of Work will commence on the Effective Date
and, unless earlier terminated in accordance with the terms of the
Agreement, will continue until _______ or such later date as
the parties may mutually agree.

 

 

	5.	 	Perot Systems Obligations
	 
	 	 	During the term of this Statement of Work, Perot Systems will provide to
Hillwood the Services in accordance with the Service Levels set forth on
Schedule B hereto.
	 
	6.	 	Hillwood Obligations
	 
	 	 	Commencing on the Effective Date, Hillwood will be responsible for the
performance of the obligations set forth on Schedule C hereto.
	 
	7.	 	Perot Systems’ Charges
	 
	 	 	Hillwood will pay Perot Systems for the Services in accordance with
Schedule D hereto.
	 
	8.	 	Notices
	 
	 	 	Wherever under this Statement of Work one party is required or permitted
to give notice to the other, such notice shall be deemed given when
delivered by hand or when mailed by registered or certified mail, return
receipt requested, postage prepaid, and addressed as follows:
	 
	 	 	In the case of Perot Systems:
	 
	 	 	In the case of Hillwood:
	 
	 	 	Either party hereto may from time to time change its address for
notification purposes by giving the other prior written notice of the new
address and the date upon which it will become effective.
	 
	9.	 	Entire Agreement
	 
	 	 	This Statement of Work, including any Exhibits and referred to herein and
attached hereto, and the terms and conditions of the Agreement, each of
which is incorporated herein for all purposes, constitutes the entire
agreement between the Parties with respect to the subject matter hereof
and thereof and there are no representations, understandings or agreements
relative hereto and thereto, written or oral, which are not fully
expressed herein or therein.

 

 

IN WITNESS WHEREOF, Perot Systems and Hillwood have each caused this Statement
of Work to be signed and delivered by its duly authorized officer(s), all as of
the Effective Date.

	 	 	 
	 PEROT SYSTEMS CORPORATION 	 	  HILLWOOD ENTERPRISES, L.P.
	 
	 	 
	By:

	 	By:
	

	 	

	 
	 	 
	Name: Jonas Woods

	 	Name: Allen Christianson
	 
	 	 
	Title: Executive Vice President

	 	Title: Emerging Industries Central Area Managerexv10w36

 

Exhibit 10.36

STATEMENT OF WORK # 1

between

HILLWOOD ENTERPRISES L.P.

and

PEROT SYSTEMS CORPORATION

Dated as of April 11, 2001

 

 

Supporting Schedules to Statement of Work #1

	 	 	 	 	 
	Schedule Name
	 	Schedule Number

	Hillwood Hardware
	 	 	1.1	 
	Hillwood Network
	 	 	1.2	 
	Hillwood Software
	 	 	1.3	 
	Hillwood Sites
	 	 	1.4	 
	Standard Configuration
	 	 	1.5	 
	Key Positions
	 	 	2.2	(a)
	Transferred Employees
	 	 	2.2	(b)
	Third Party Service Contracts
	 	 	2.2	(c)
	Base Services
	 	 	3.1	(a)
	Service Levels and Service Level Credits
	 	 	3.2	 
	Base Services Charges
	 	 	5.1	 
	Additional Project Services Rates
	 	 	5.2	 
	Termination Fee
	 	 	6.2	(a)

1

 

STATEMENT OF WORK #1

This Statement of Work #1 (the “Statement of Work”) dated April 11, 2001 (the
“Statement of Work Agreement Date”), by and between Hillwood Enterprises, L.P.,
a Texas limited partnership (“Hillwood”) and Perot Systems Corporation (“Perot
Systems”), a Delaware corporation.

Recitals

Whereas, Perot Systems and Hillwood entered in the Master Agreement for
Information Technology Services, effective as of April 1, 2001 (the
“Agreement”), under which the parties may from time to time enter into
Statements of Work for the provision of Services by Perot Systems for the
benefit of certain of Hillwood.

Whereas, Perot Systems and Hillwood desire to enter into this Statement of Work
pursuant to which Perot Systems will provide the Base Services described in
this Statement of Work to Hillwood in support of Hillwood Sites specifically
identified in this Statement of Work;

Now, therefore, the parties agree as follows:

Article 1.0  Definitions

	1.1	 	Certain Defined Terms. For purposes of this Statement of Work, the
following terms have the following definitions.
	 
	 	 	“Additional Project Services” shall have the meaning set forth in Section
3.1(b).
	 
	 	 	“Additional Project Services Rates” shall be the Perot Systems’ rates for
Additional Project Services and will be as set forth in Schedule 5.2.
	 
	 	 	“Base Services” shall means the services described in Section 3.1(a).
	 
	 	 	“Base Services Metrics” shall have the meaning set forth in Section 5.4.
	 
	 	 	“Extended Term” shall have the meaning set forth in Section 6.4.
	 
	 	 	“Initial Term” shall have the meaning set forth in Section 6.1.
	 
	 	 	“Growth Matrix” shall be the chart in Schedule 1.1 to this Statement of
Work that provides for adjustments to the Base Services charges due to
growth or decline in different categories that Perot Systems supports as
part of the Base Services.
	 
	 	 	“Hillwood Hardware” shall mean the hardware described in Schedule 1.1 to
be supported by Perot Systems as part of the Base Services.

1

 

	 	 	“Hillwood Network” shall mean the network hardware and equipment
described in Schedule 1.2 to be supported by Perot Systems as part of the
Base Services.
	 
	 	 	“Hillwood Sites” shall mean the locations listed in Schedule 1.4 that
Perot Systems will support as part of the Base Services.
	 
	 	 	“JDE Applications” shall mean the description of Hillwood’s J.D. Edwards
financial applications provided in Schedule 1.3.
	 
	 	 	“Metrics Threshold” shall have the meaning given in Section 5.4.
	 
	 	 	“Service Level Credits” shall have the meaning given in Section 5.3.
	 
	 	 	“Standard Configuration” shall have the meaning described in Schedule
1.5.
	 
	 	 	“Supported System” shall mean the Hillwood Hardware and Hillwood
Software.
	 
	 	 	“Statement of Work Agreement Date” has the meaning set forth in the
preamble.
	 
	 	 	“Statement of Work Effective Date” has the meaning set forth in Section
6.1.
	 
	1.2	 	Terms Defined in the Agreement. Except as otherwise defined herein, all
capitalized terms used herein shall have the same meaning as in the
Agreement.

Article 2.0  Agreement

	2.1	 	The Agreement. The terms of the Agreement will apply to the activities
contemplated by this Statement of Work unless otherwise specifically
stated in this Statement of Work.
	 
	2.2	 	Agreement Terms. For purposes of the Agreement, the following terms will
have the meanings specified below with respect to this Statement of Work:

	 	(a)	 	“Key Positions” under this Statement of Work shall be those
set forth on Schedule 2.2(a).
	 
	 	(b)	 	“Transferred Employees” under this Statement of Work shall be
those set forth on Schedule 2.2(b)
	 
	 	(c)	 	“Third Party Service Contracts” under this Statement of Work
shall be those set forth on Schedule 2.2(c).

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Article 3.0 Services and Service Levels

	3.1	 	Services.

	 	(a)	 	Base Services. Perot Systems will provide to Hillwood the
Services as described in Schedule 3.1(a) (the “Base Services”)
using the Supported System, which shall be connected to the Hillwood
Sites via the Hillwood Network.
	 
	 	(b)	 	Additional Project Services. If Hillwood requests Perot
Systems to provide services outside of the scope of the Base
Services (“Additional Project Services”), and Perot Systems agrees
to provide them, then the parties will enter into a Change Order
under the Change Control Process or a new Statement of Work, as
applicable. The Change Order shall describe the Additional Project
Services and the terms (in addition to the terms of this Statement
of Work and the Agreement) under which Perot Systems shall provide
such Additional Project Services. Such Change Order may have terms
and conditions contained within it that are different than those
within this Statement of Work, in which case the terms of the Change
Order will prevail.

	3.2	 	Service Levels. Perot Systems will measure the performance of the Base
Services against the Service Levels forth in Schedule 3.2. The Service
Levels shall be adjusted by mutual agreement for Changes in the Base
Services Metrics as described in Section 5.4 of this Statement of Work and
other external factors beyond Perot Systems’ control in accordance with
the Change Control Process.
	 
	3.3	 	Third Party Service Providers. If Hillwood uses a third party to perform
any services that relate to the Supported System or the Hillwood Network,
Hillwood will not allow the third party to make any changes that will
affect the Supported System or Hillwood Network without first obtaining
the parties approval of the changes in accordance with the Change Control
Process including agreeing to any adjustments to the Service Levels and
the charges for the Base Services.
	 
	3.4	 	Transferred Employees. Perot Systems will not cause more than one of the
Transferred Employees to be assigned to any account other than Hillwood
during any four-month period during the Initial Term without Hillwood’s
prior written consent, provided that such consent will not be unreasonably
withheld. Notwithstanding the provisions of Section 20.7 of the
Agreement, Hillwood may offer employment to the Transferred Employees upon
the expiration or termination of this Statement of Work for any reason,
without the prior written consent of Perot Systems.
	 
	3.5	 	Assignment of Employees. Any new Perot Systems personnel assigned to
provide Services to Hillwood on a permanent, full-time basis shall (i)
execute a confidentiality agreement in the form of Schedule 19 attached to
the Agreement and (ii) be made only with the prior consent of Hillwood,
provided that such consent shall not be unreasonably withheld.

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Article 4.0 Hillwood’s Obligations

	4.1	 	Right of First Refusal. Hillwood shall offer Perot Systems a right of
first refusal for Additional Project Services for information technology
services in excess of $150,000 interfacing with or relating to the Base
Services being provided by Perot Systems pursuant to this Statement of
Work or Additional Project Services under any Task Order. Hillwood shall
have no responsibility to offer such Additional Project Services to Perot
Systems if all work will be performed by Hillwood’s employees or if Perot
Systems declines to match any competitive bid received by Hillwood for
said Additional Project Services. Hillwood will provide Perot Systems
with a copy of the request for competitive bid prior to submittal to third
parties. Perot Systems shall notify Hillwood of its willingness to match
any competitive bid received by Hillwood from third parties within 10
business days of Hillwood’s notification of the competitive bid to Perot
Systems or Perot Systems will waive its right to first refusal in regard
to the services covered by the competitive bid.

Article 5.0 Payments

	5.1	 	Charges. Hillwood will pay to Perot Systems for the Base Services
provided under this Statement of Work the amounts set forth in Schedule
5.1 at the times set forth in Schedule 5.1. The Base Services charges are
not subject to the cost of living adjustment as set forth in Section 11.2
of the Agreement. If at any time during the term of the Statement of
Work, Perot Systems reasonably demonstrates to Hillwood that it is not
then making a profit on the Base Service Charges on a fully allocated cost
basis, and Hillwood is unwilling to adjust the charges to enable Perot
Systems to make a profit on a fully allocated cost basis, then Perot
Systems may terminate the Statement of Work on thirty (30) days notice.
If at any time during the term of the Statement of Work, Hillwood
reasonably demonstrates to Perot Systems that the Base Service Charges are
not market competitive, and Perot Systems is unwilling to adjust the
charges to make them market competitive, then Hillwood may terminate the
Statement of Work on thirty (30) days notice. Notwithstanding any term
providing otherwise in this Statement of Work or the Agreement, if either
party terminates this Statement of Work pursuant to this Section 5.1, (i)
Perot Systems will provide to Hillwood the termination assistance
described in Section 19.5 of the Agreement at no additional charge to the
Base Service Charges and (ii) Hillwood will have no obligation to pay the
termination fee set forth in Schedule 6.2(a).

	5.2	 	Charges for Additional Project Services. Unless otherwise specifically
provided in a Change Order, Hillwood will pay Perot Systems for the
Additional Project Services provided under a Change Order on a time and
materials basis at the Additional Project Services Rates set forth in
Schedule 5.2. Unless otherwise specifically provided in a Change Order,
Perot Systems will deliver an invoice to Hillwood for Additional Project
Services, and each such invoice will be due in accordance with Article 12
of the Agreement.

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	5.3	 	Service Level Credits. Subject to the limitations in Article 17 of the
Agreement, Perot Systems shall issue to Hillwood, Service Level Credits as
specified in Schedule 3.2, based on Perot Systems’ performance of the Base
Services in relation to the Service Levels.

	5.4	 	Base Services Metrics. The charges for the Base Services and the Service
Levels for the Base Services are based upon the assumption that each of
the following components that comprise the Base Services metrics
(collectively, the “Base Services Metrics”) will not be modified or
changed in any manner other than the allowances provided for in the Growth
Matrix, if applicable, during the Initial Term from the quantities,
categories or descriptions of each Base Service Metric described in its
respective Schedule as of the Statement of Work Effective Date (the
“Metric Threshold”).

	 	•	 	The quantity or category of Hillwood Hardware described in
Schedule 1.1, subject to the Growth Matrix provided in Schedule 1.1.
	 
	 	•	 	The quantity or category of Hillwood Network equipment as
described in Schedule 1.2.
	 
	 	•	 	The quantity, category or manufacturer of Hillwood Software
described in Schedule 1.3.
	 
	 	•	 	The Hillwood Sites identified in Schedule 1.4.
	 
	 	•	 	The Standard Configuration set forth in Schedule 1.5.
	 
	 	•	 	The number of or Hillwood’s obligations under the Third Party
Contracts identified in Schedule 2.2(c).

	 	 	If any of the components of Base Services Metrics are changed or modified
in any manner, other than the allowances provided for in the Growth
Matrix, if applicable, during the Initial Term, the parties agree that
(i) the charges for the Base Services and Service Levels will be adjusted
by the parties in accordance with the Change Control Process, (ii) until
such adjustments are made, Perot Systems will incur no liability for and
will be relieved from its obligation to pay Service Level Credits, and
(iii) Perot Systems will not be obligated to provide Base Services in
support of that portion of the component of the Base Services Metrics
that exceeds the Metric Threshold.

Article 6.0 Term and Termination

	6.1	 	Initial Term. The initial term (“Initial Term”) of this Statement of
Work shall commence as of April 16, 2001 (the “Statement of Work Effective
Date”) and shall expire on the third anniversary of the Statement of Work
Effective Date, unless terminated earlier in accordance with this Article
6.0 or Article 19 of the Agreement.

	6.2	 	Additional Termination Rights. In addition to the termination rights in
Article 19 of the Agreement, Hillwood will have the rights to terminate
this Statement of Work as described below:

5

 

	 	(a)	 	Termination for Convenience. Hillwood will have the right at
any time to terminate this Statement of Work for convenience by
providing Perot Systems with 60 days prior written notice of
termination and by paying Perot Systems the termination fee set
forth in Schedule 6.2(a) prior to such termination date.
Notwithstanding the provisions of Section 19.5 of the Agreement, if
Hillwood terminates this Statement of Work in accordance with this
Paragraph, Perot Systems shall provide Hillwood the termination
assistance described in Section 19.5 of the Agreement at no
additional charge to the Base Service charges provided that Perot
Systems can reasonably provide termination assistance with the same
personnel responsible for providing the Base Services at the time of
termination. To the extent Perot Systems is reasonably required to
use personnel other than those responsible for providing the Base
Services at the time of termination, Perot Systems will make such
additional personnel available at Perot Systems’ then commercial
rates.
	 
	 	(b)	 	Termination for Service Level Failures. In the event that
Perot Systems fails to meet the Service Levels set forth in Schedule
3.2 for four (4) consecutive months, Hillwood shall have the right
to terminate this Statement of Work by providing Perot Systems 30
days prior written notice of termination. In no other event shall
the failure of Perot Systems to perform in accordance with the
Service Levels give rise to the right of Hillwood to terminate the
Agreement, subject to the provisions of Article 7.4 of the
Agreement.

	6.3	 	Extension. If Hillwood desires to extend this Statement of Work beyond
the Initial Term, Hillwood shall give Perot Systems written notice thereof
not later than 60 days prior to the expiration date of the Initial Term.
If Hillwood desires to extend this Statement of Work beyond any such
subsequent extension term, Hillwood shall give Perot Systems written
notice thereof not later than 60 days prior to the expiration date of such
term. Upon receipt by Perot Systems of any such notice from Hillwood, the
parties shall then negotiate in good faith for a mutually agreeable
extension term and, if they reach mutually acceptable terms and conditions
for such extension, the parties shall execute a written agreement for such
extension.

Article 7.0 General

	7.1	 	Section, Schedule and Exhibit References. Except as otherwise
specifically provided in this Statement of Work, Section, Exhibit and
Schedule references are references to Sections, Exhibits and Schedules in
or to this Statement of Work.

Article 8.0 Proprietary Rights

	8.1	 	Deliverables. Neither party anticipates any developed software or other
deliverables (“Deliverables”) under this Statement of Work. To the extent
that the parties agree to Deliverables, the terms and conditions regarding
such Deliverables are subject to the Change Control Process.

6

 

     WHEREUPON, the parties have executed this Statement of Work on the
Statement of Work Agreement Date through their duly appointed and authorized
representatives.

	 	 	 
	Hillwood Enterprises L.P.

	 	Perot Systems Corporation
	 
	 	 
	By: /s/ J. Woods

	 	By: /s/ Allen Christianson
	 
	 	 
	Name: Jonas Woods

	 	Name: Allen Christianson
	 
	 	 
	Title: Executive Vice President

	 	Title: Emerging Industries Central Area Manager

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