Outsourcing Agreement Televservice Resources & Cgs

EXHIBIT 10.3
------------


Outsourcing Agreement dated as of March 30, 1996, between Teleservice
Resources, Inc. and Computer Generated Solutions, Inc.


* Confidential treatment is being requested with respect to portions of
this exhibit


OUTSOURCING AGREEMENT between TELESERVICE RESOURCES, INC. and
COMPUTER GENERATED SOLUTIONS


THIS OUTSOURCING AGREEMENT (this "Agreement") is effective March 30, 1996 (the "Effective Date"), by and between TeleService Resources, Inc. ("TSR"), a Delaware corporation having its principal address at 4201 Cambridge Rd., Fort Worth, TX 76155, and Computer Generated Solutions ("CGS"), a Delaware corporation (also generically referred to herein as "Party" or "Parties") having its principal address at 1950 Stemmons Freeway, Suite 3049, Dallas, TX 75207.


1. PURPOSE.


This Agreement sets forth the terms and conditions under which CGS agrees to assume responsibility for answering, diagnosing and solving RyderFIRST support problems including, but not limited to, hardware, software and processes attached as Exhibit A, which TSR agrees to outsource to CGS. During the term of
--------- this Agreement, CGS shall be TSR's non-exclusive provider of, and TSR shall purchase from CGS, the services as defined herein, all in accordance with the terms and conditions of this Agreement.


2. DEFINITIONS.


2.1 TSR.
----
The term "TSR" shall mean and include TeleService Resources, Inc. and any Successor. "Affiliate" shall mean, with respect to any entity, any other entity directly or indirectly controlling, controlled by, or under common control with such first entity. "Control" (including, with correlative meaning, the terms "controlling" and "controlled by" shall mean, with respect to any entity, the possession, directly or indirectly, of the power to direct the management and policies of such entity.


2.2 Customer.
---------
The term "Customer" shall mean RyderFIRST, Ryder employees and dealers and other persons or entities who are under contract by Ryder, Inc.


2.3 AMRDS.
------
The term "AMRDS" shall mean and include AMR Distribution Systems, Inc., a division of AMR Services and their employees who will provide the warehouse, shipping, refurbishment and repair of RyderFIRST equipment.


2.4 CGS.
----
The term "CGS" shall mean and include Computer Generated Solutions, Inc. provider of Telephone Technical Help Desk support and maintenance.


3. TERM AND TERMINATION.


3.1 Term.
-----
The term of this Agreement will commence on the Effective Date and will end on March 30, 1999, or such anniversary thereof to which the term of this Agreement has been extended or earlier upon termination in accordance with the provisions of this Agreement. TSR may, at its option, extend this Agreement for successive terms of one (l) year(s) each, by providing CGS with notice of extension, at


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least sixty days (60) days in advance of the anniversary date of the Agreement. Upon termination of the Agreement, TSR will have no future liability except for Services rendered or Equipment delivered by CGS prior to the termination date.


3.2 Termination for Cause.
----------------------
Should CGS fail to perform its material obligations under this Agreement, TSR shall give CGS written notice of such failure. CGS shall have fifteen (15) days from receipt of said notice to correct this failure at no cost to TSR. Should CGS fail to correct its performance within the fifteen (15) day period, TSR shall have the right to immediately terminate this Agreement or a portion of this Agreement by giving CGS written notice of termination. In the event of termination for breach, TSR reserves all remedies available at law and in equity.


3.3 Termination without Cause.
--------------------------


TSR may terminate this Agreement at any time by providing CGS at least sixty (60) days notice of such termination. CGS has the right to terminate this Agreement at any time by providing TSR at least ninety (90) days notice of such terms.


3.4 Post Termination Events.
------------------------
Upon termination of the Agreement, CGS shall cease performing Services on behalf of TSR. All reports required to be provided by CGS shall be provided at the usual interval; however, all reports are required to be provided to TSR no later than thirty (30) after termination of Agreement. CGS shall immediately cease use of all TSR/Ryder Owned Equipment and Ryder Licensed Software. TSR has the right, with or without notice, to enter upon CGS's premises, de-install the TSR/RyderFIRST Owned Equipment and TSR/RyderFIRST Licensed Software and remove it from the premises.


4. PROJECT OVERVIEW.


The project is separated into two sections: 1) call handling and 2) warehouse refurbishment and repair. These two sections are delineated in Exhibit A.
---------- 5. PRODUCTS, SERVICES AND CGS RESPONSIBILITIES.


5.1 Seamless Integration.
---------------------
CGS shall perform the Services specified in this Agreement at the performance levels set forth in Exhibit B.
---------
5.2 Represent Ryder's/TSR's Interests.
---------------------------------- CGS agrees that at all times CGS and its employees shall act on behalf of the best interests of Ryder and TSR by consistently demonstrating the highest quality of professionalism, courtesy, customer service and demeanor. In the event that Ryder and/or TSR, at any time and in its sole reasonably discretion, deems an employee designated by CGS to be unsuitable, Ryder and/or TSR shall advise CGS of such determination, and CGS and TSR shall develop a plan to provide a suitable replacement employee acceptable to TSR to perform the Services hereunder.


5.3 Employee Training.
------------------ Ryder will conduct the initial training on the RyderFIRST application. All subsequent training CGS shall develop and conduct a program to train its employees and supervisors on an ongoing basis to perform the Services, with emphasis on high quality customer service and skilled resolution to problem calls. Recurrent and refresher training courses shall be delivered periodically to CGS's employees as


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well as initial training. All such training and development costs shall be borne wholly by CGS. All such training shall include and adhere to the content, methods and procedures submitted by Ryder for providing such Service.


5.4 Quality Control.
----------------
CGS agrees that a high level of quality is integral to the Services performed by CGS on behalf of Ryder. CGS agrees to institute quality control procedures such as, but not be limited to, employee training (as referenced in Section 5.3 above), program results, customer feedback, call monitoring, and adherence to Ryder procedures.


5.5 Call Monitoring.
----------------
CGS agrees to monitor its employees calls to determine if employees are performing the Services as required herein. CGS agrees to monitor a minimum of 200 calls per week. CGS agrees that Ryder or TSR or their agent may, at its option, participate in CGS's call monitoring.


5.6 Establish Priorities.
---------------------
CGS shall establish the priorities of problems that it is encountering in the performance of this Agreement and provide a list of priorities with proposed resolutions to TSR Client Services Manager on a monthly basis, as needed.


5.7 Provide Reports.
----------------
CGS agrees to provide Ryder/TSR the reports required in Exhibit A in the time
--------- frame required thereunder. Additional reports will be provided by CGS from time to time as reasonably requested by Ryder/TSR. (There may be costs associated with custom report development or analytical research.)


5.8 Interfaces.
-----------
CGS agrees, at its sole cost and expense, to build all interfaces required to connect CGS's equipment and systems with Ryder/TSR's systems. CGS shall comply with TSR's security practices in developing and connecting the equipment and systems.


5.9 Maintain Equipment and Interfaces.
-----------------------------------
CGS agrees to maintain the equipment required in Exhibit A and interfaces (as
--------- provided in Section 5.8 above) in good working order.


5.10 Maintain Software.
------------------
CGS agrees to maintain all software required in Exhibit A at the same release
--------- level as Ryder's software release.


5.11 Disaster Recovery.
------------------
CGS agrees to maintain a disaster recovery plan acceptable to Ryder/TSR.


5.12 Ryder/TSR Information.
----------------------
CGS agrees that any information that it obtains from TSR or Ryder is protected under the confidentiality provisions of this Agreement and shall be used solely for the performance of the Services under this Agreement. (Please see Attachment D.)


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5.13 Ryder's Equipment.
------------------
Ryder is supplying CGS with certain Ryder-owned Equipment and Ryder-Licensed Software for CGS's use on CGS's premises in connection with the Services to be provided under this Agreement. CGS acknowledges and agrees that it shall not use such Ryder-Owned Equipment or Ryder-Licensed Software for any purpose other than for the fulfillment of its obligations under this Agreement. CGS agrees to provide Ryder or Ryder's third party service provider access to Ryder-Owned Equipment and Ryder-Licensed Software located on CGS's premises for regular maintenance or repairs and for upgrades, updates and fixes. CGS shall be liable for any loss or damage to the Ryder-Owned Equipment and Ryder-Licensed Software located on CGS's premises. CGS shall not be liable for any loss or damage caused solely by Ryder or its third party service provider. Further CGS agrees that it shall not attach any other equipment nor load any other Software to Ryder-Owned Equipment without the express written consent of Ryder/TSR.


6. PERFORMANCE STANDARD, REMEDY AND INCENTIVE.


6.1 Performance Standard.
---------------------
CGS agrees to meet or exceed each of the applicable service levels and performance obligations set forth.


6.2 Verification of Service Levels.
-------------------------------
CGS shall provide TSR with a [daily/monthly] performance report, documenting CGS's performance relative to the Service Levels. In addition, CGS will provide TSR with such documentation and other information as may be reasonably requested by TSR from time to time to verify CGS's compliance with the Service Levels.


6.3 Review of Service Levels.
-------------------------
The parties will review during every month the Service Levels and the actual compliance of the CGS's Services in compliance herewith. If three or more of the performance measurements specified in Exhibit B are not met in any given month,
--------- CGS will be liable for the credits they are responsible for as specified in
Exhibit B. (For example: If answer time, abandon rate and shipping time are - --------- missed in a given month, CGS will be responsible for two thirds of the 1% credit due to Ryder.) In reverse if AMRDS performs at all levels for the quarter they will receive one third of the performance bonus. (This holds true for the penalites and bonuses from Dealer Satisfaction measurement as shown in Exhibit B.)


7. SECURITY.


CGS agrees that it will comply with all United States governmental rules and shall monitor its employees activities to ensure compliance with rules and regulations.


8. SERVICE LOCATIONS.


As of the Effective Date, CGS shall provide the Services to TSR at CGS's location on 1950 Stemmons Freeway, Suite 3049, Dallas, TX 75207.


9. WARRANTY.


CGS warrants that it will provide the Services in accordance with the highest professional duty of care and skill.


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9.1 Equipment and Software.
-----------------------
CGS warrants that the CGS owned equipment and licensed software shall meet the standards contained in this agreement.


9.2 Personnel.
----------
CGS warrants that each of its employees assigned to perform services under this Agreement shall have the proper skill, training and background to be able to perform such Services in a competent and professional manner at the level required in this Agreement.


9.3 CGS Viability.
--------------
CGS warrants that it has the financial capacity to perform and continue to perform its obligations under this Agreement, that no legal proceedings have been threatened or brought against CGS that could threaten performance of this Agreement and that entering into this Agreement is nor prohibited by any contract or order by any court of competent jurisdiction.


10. PAYMENT.


For the Services rendered under the terms of this Agreement, TSR agrees to pay CGS the amount set forth on Exhibit C at intervals agreed to in Exhibit C.
--------- --------- Invoices must be received by TSR by the third business day of the following month. All payment terms are net thirty (30) days upon receipt of invoice. The amount set forth in Exhibit C is exclusive of all costs, expenses and taxes
--------- required to be paid by TSR. Any other costs or expenses shall be borne by CGS.


11. INSURANCE.


11.1 Policies.
---------
CGS shall, at its own cost and expense, procure and maintain in full force and effect during the term of this Agreement, policies of insurance, of the types and in the amounts necessary to ensure that CGS is able to sustain claims, damages and other business liability without impacting its ability to provide the Services thereunder and to protect Ryder/TSR from any claim, damage or liability resulting from CGS's acts or omissions. Such insurance will include the replacement of all Ryder/TSR assets within CGS's possession. CGS will obtain such insurance with responsible insurance carriers duly qualified in those states (locations) where Services are to be performed covering the operations of CGS, pursuant to this Agreement.


11.2 Certificates.
-------------
CGS shall provide TSR with certificates of insurance as evidence of the above coverage, including all special requirements specifically noted above and shall provide TSR with certificates of insurance evidencing renewal or substitution of such insurance thirty (30) days prior to the effective date of such renewal or substitution.


11.3 Service.
--------
Provisions of this Section as to Service of insurance shall not be construed as limiting in any way the extent to which CGS may be held responsible for payment for damages to persons or property resulting from its activities or the activities of any person(s) for which CGS is otherwise responsible.


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12. LIABILITY AND INDEMNIFICATION.


CGS agrees to indemnify, defend and hold TSR/Ryder, its officers, directors, agents and employees harmless from and against any and all liabilities, damages, losses, expenses, claims, demands, suits, fines, penalties (whether civil or criminal) or judgments, including reasonable attorney fees, costs and expenses incidental thereto, which may be suffered by, accrued against, charged to or recoverable from TSR/Ryder, its officers, directors, agents or employees, by reason of liability, loss, expense, claim, demand, suit, fine, judgment or damage, including, but not limited to bodily injuries or physical destruction of property, arising out of or in connection with the performance of the obligations of CGS under this Agreement. Notwithstanding the foregoing, in no event shall either party be liable for indirect, incidental or consequential damages except when such damages are caused by the gross negligence or willful misconduct of the other party, its officers, directors agents, employees or subcontractors. In no event shall TSR be liable to CGS for any amounts in excess of what has been paid by TSR to CGS under this Agreement. Additionally, CGS's total liability must not exceed what has been paid to CGS in a given year by TSR.


13. SUBCONTRACTING.


CGS shall not, directly or indirectly, assign, subcontract, transfer or otherwise dispose of, in whole or in part, any of its interests, rights or obligations under this Agreement. TSR may assign any and all of its rights and obligations under this Agreement to (i) any affiliate of AMR Corporation, or (ii) any company that succeeds to, or that is an affiliate of any company (or affiliated group of companies) that succeeds to substantially all of TSR's assets.


14. BANKRUPTCY.


If CGS becomes insolvent, takes any step leading to its cessation as a going concern, fails to pay its debts as they become due, or ceases business operations for longer than five (5) business days for reasons other than a strike or natural disaster, then TSR may immediately terminate this Agreement on notice to CGS unless CGS immediately gives the Insecure Party adequate assurance of the future performance of this Agreement. If bankruptcy proceedings are commenced with respect to CGS, and if this Agreement has not otherwise terminated, then TSR may suspend all further performance of this Agreement until CGS assumes this Agreement and provides adequate assurance of performance thereof or rejects this Agreement pursuant to Section 365 of the Bankruptcy Code or any similar or successor provision. Any such suspension of further performance by TSR pending CGS's assumption or rejection will not be a breach of this Agreement, and will not affect TSR's right to pursue or enforce any of its rights under this Agreement or otherwise.


15. NON-DISCLOSURE OF INFORMATION.


CGS, on behalf of itself and its employees, acknowledges that much, if not all, of the material and information related to TSR or Ryder which has or will come into CGS's possession or knowledge in connection with the performance of the Agreement consist of confidential and proprietary data of TSR or Ryder (collectively, "Confidential Information"), disclosure of which or use by third parties would be damaging to TSR or Ryder. CGS, on behalf of itself and its employees, agrees to hold such Confidential Information in strictest confidence and agrees not to release such information to any employee of CGS unless such employee has a need for such knowledge. CGS, on behalf of itself and its employees, further agrees not to make use of Confidential Information for its own benefit or for the benefit of any third parties, but only for the performance of this Agreement, and not to release or


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disclose it to any other party either during the term of this Agreement or after the termination of this Agreement. In the event of any breach of this confidentiality obligation, CGS acknowledges that TSR or Ryder would have no adequate remedy at law, since the harm caused by such a breach would not be easily measured and compensated for in the form of damages. Accordingly, CGS waives its right to contest the availability or appropriateness as a from of remedy any equitable relief sought by TSR or Ryder but does not hereby waive its right to contest the question of whether a breach has occurred. CGS further waives the requirement of any bond being posted as security for such equitable relief. (See Attachment D).


16. RIGHT TO AUDIT.


TSR shall have the right from time to time to audit CGS's books and records related to this Agreement and the Services it is providing to TSR. Such audit shall be performed at CGS's offices and CGS agrees to provide such auditors any assistance they may reasonably require.


17. MOST FAVORED CUSTOMER.


If at any time during the term of this Agreement CGS enters into an agreement with any other customer, purchasing substantially similar Services under substantially similar material circumstances, terms and conditions, at terms more favorable than those provided in this Agreement, CGS shall, within thirty (30) days of its acceptance of the new agreement with the other customer, notify TSR of such agreement. Within thirty (30) days of receipt of CGS's notice, TSR may give written notice to CGS that this Agreement is to be amended to provide TSR with the same terms provided to the other customer. Such amendment shall be made retroactive to the effective date of the other customer's agreement.


18. GENERAL PROVISIONS.


18.1 Notices.
--------
Except as otherwise expressly specified herein, all notices, requests, or other communications required thereunder shall be in writing and shall be deemed to have been given or made if delivered personally or mailed, by certified or registered mail, postage prepaid, return receipt requested or by commercial courier service which maintains a record of delivery, or by fax followed by written confirmation in the form of a duplicate notice, to the Parties at their respective addresses first set forth below, or at such other addresses as shall be specified in writing by either of the parties to the other in accordance with the terms and conditions of this Section 18.1. Notices, requests, or
------------ communications shall be deemed effective upon personal delivery, or three (3) days following deposit in the mail in accordance with this Section 18.1.
------------
18.2 Captions.
---------
The captions appearing in this Agreement have been inserted as a matter of convenience and in no way define, limit or enlarge the scope of this Agreement or any of the Sections thereto.


18.3 Governing Law.
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This Agreement shall be governed by and construed in accordance with the laws of the State of Texas and the federal laws of the United States of America. CGS hereby consents and submits to the jurisdiction of the courts in the State of Texas or the United States District Court for the Northern District of Texas in all questions and controversies arising out of this Agreement.


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18.4 Severability.
-------------
In the event that any one or more of the provisions of this Agreement is determined by a court of competent jurisdiction to be invalid, unenforceable or illegal, such invalidity, unenforceability or illegality shall not affect any other provisions of this Agreement, and the Agreement shall be construed as if the challenged provision had never been contained herein. The parties further agree that in the event such provision is an essential part of this Agreement, they will immediately begin negotiations for a suitable replacement provision.


18.5 Advertising.
------------
CGS shall not use Ryder's name or refer to TSR or any of its affiliates, directly or indirectly, in any advertisement, news release or professional or trade publication without receiving prior written approval from TSR and Ryder.


18.6 Non-Exclusivity.
----------------
TSR understands and agrees that this is a non-exclusive agreement and that CGS may provide similar services to other third parties. CGS understands and agrees that this agreement is a nonexclusive and that TSR may obtain the same services from third parties or continue to operate the same services internally.


18.7 Survival.
---------
Sections 3.4, 5.13. 12, 15, 16 and 18.7 shall survive the termination or expiration of this Agreement.


18.8 No Waiver.
----------
The failure of either party at any time to require performance by the other party of any provision of this Agreement shall in no way affect that party's right to enforce such provisions, nor shall the waiver by either party of any breach of any provision of this Agreement be taken or held to be a waiver at any further breach of the same provision.


18.9 Force Majeure.
--------------
Neither Party shall be liable for delays or any failure to perform under this Agreement due to causes beyond its reasonable control. Such delays include, but are not limited to, fire, explosion, flood or other natural catastrophe, governmental legislation, acts, orders, or regulation, strikes or labor difficulties, to the extent not occasioned by the fault or negligence of the delayed Party. Any such excuse for delay shall last only as long as the event remains beyond the reasonable control of the delayed Party. However, the delayed Party shall use its best efforts to minimize the delays caused by any such event beyond its reasonable control. The delayed Party must notify the other Party promptly upon the occurrence of any such event, or performance by the delayed Party will not be considered excused pursuant to this Article, and inform the other Party of its plans to resume performance.


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18.10 Entire Agreement.
-----------------
The following Exhibits and Attachments, including all subparts thereof, are attached to this Agreement and are made a part of this Agreement for all purposes.


Exhibit A RyderFIRST Support Service Requirements Exhibit B Performance Standards and Remedies Exhibit C Pricing Schedule Exhibit D Cost Reduction Initiatives Exhibit E Reporting Requirements Exhibit F Training Requirements Attachment A Uninterruped Telecommunication Service Plan Attachment B Telephone Performance Response Reports Attachment C Telecommunications Trouble Shooting, Problem Resolution,
Escalation, and Testing and Trouble Reporting Procedures Attachment D Non-Disclosure Non-Compete Agreement


This Agreement constitutes the entire agreement between the parties and supersedes any and all previous representation, understandings, discussions or agreements between TSR and CGS as to the subject matter hereof. This Agreement may only be amended by an instrument in writing signed by TSR and CGS. TSR and CGS each acknowledge that it has had the opportunity to review this Agreement with its legal counsel.


Executed on the dates se ...