Outsourcing Services Agreement

CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED BASED ON A
REQUEST FOR CONFIDENTIAL TREATMENT


OMITTED PORTIONS HAVE BEEN SEPARATELY FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION


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OUTSOURCING SERVICES AGREEMENT


BETWEEN


CGI INFORMATION SYSTEMS AND MANAGEMENT CONSULTANTS, INC.
("CGI")


AND


UCAR INTERNATIONAL INC.
("UCAR")


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SECTION 1 - DEFINITIONS...................................................2


SECTION 2 - SERVICES......................................................7


SECTION 3 - SITE OF OPERATION............................................10


SECTION 4 - TRANSITION AND IMPLEMENTATION................................11


SECTION 5 - SERVICE LEVELS...............................................15


SECTION 6 - FEES.........................................................19


SECTION 7 - ANNUAL REVIEWS...............................................21


SECTION 8 - CHANGES TO THE PRODUCTION ENVIRONMENT........................22


SECTION 9 - RESPONSIBILITIES OF UCAR AND CGI.............................23


SECTION 10- TERM.........................................................23


SECTION 11 - TERMINATION..................................................24


SECTION 12 - HUMAN RESOURCES..............................................26


SECTION 13 - CONFIDENTIALITY, PROPRIETARY RIGHTS AND SOFTWARE.............26


SECTION 14 - SECURITY AND AUDIT...........................................28


SECTION 15 - INSURANCE....................................................28


SECTION 16 - WARRANTY.....................................................28


SECTION 17 - LIMITATION OF LIABILITY......................................30


SECTION 18 - FORCE MAJEURE................................................30


SECTION 19 - ASSIGNMENT AND BINDING EFFECT................................30


SECTION 20 - NO WAIVER....................................................31


SECTION 21 - SEVERABILITY.................................................31


SECTION 22 - NO AGENCY/INDEPENDENT CONTRACTOR.............................31


SECTION 23 - ENTIRE AGREEMENT.............................................31


SECTION 24 - COMPLIANCE WITH LAWS.........................................32


SECTION 25 - GOVERNING LAW................................................32


SECTION 26 - PUBLICITY....................................................32


SECTION 27 - NOTICES......................................................32


SECTION 28 - DISPUTE RESOLUTION AND ARBITRATION...........................33


SECTION 29 - CONFLICTS OF INTEREST........................................34


SECTION 30 - AUTHORIZATION AND ENFORCEABILITY.............................34


BASE SERVICES AGREEMENT


BETWEEN:


CGI Information Systems and Management Consultants, Inc., a duly
constituted corporation having its offices at 600 Federal St.,
Andover, Massachusetts 01810, herein acting by its representatives
duly authorized, as they so declare, (hereinafter referred to as
"CGI")


-AND-


UCAR International Inc. a duly constituted corporation having its
offices at 3102 West End Avenue, Suite 1100, Nashville, Tennessee
37203, herein acting by its representatives duly authorized, together
with its subsidiaries and affiliates, as they so declare,


(hereinafter referred to collectively as "UCAR")


WHEREAS prior to the date of this Agreement UCAR has operated and
managed internally an information systems and technology department;


WHEREAS CGI possesses expertise and provides professional services in
the support of applications portfolios, project development, systems
integration, and the management, implementation, administration and
operation of complex information technology infrastructures;


WHEREAS UCAR desires to outsource its information technology
infrastructure, data network services, the management and
administration of its voice and data network services, as well as
certain systems integration activities and applications development
and maintenance services to CGI in accordance with the terms and
conditions of this Agreement, so as to provide UCAR with access to
world class IS/IT Services.


WHEREAS CGI desires to manage and operate UCAR's information
technology environment according to CGI's outsourcing business model;


WHEREAS CGI is committed to supporting UCAR by providing at least the
same level of service as UCAR currently enjoys and to help in
realizing its Power of One business case by further identifying,
proposing and evaluating technological solutions that may allow UCAR
to benefit from potential areas of opportunity;


WHEREAS, the parties desire that this Agreement be construed such that
CGI be viewed as UCAR's information technology department and its
[TEXT DELETED] of information systems and technology; and


WHEREAS the parties desire that the Services shall be provided under
the terms and conditions set forth in this Agreement.


NOW THEREFORE in consideration of the mutual covenants contained
herein, the parties hereto agree as follows:


SECTION 1 - DEFINITIONS


1.1 DEFINITIONS - As used in this Agreement:


"ADDITIONAL SERVICES" mean any services that are different from, or in addition to, the Base Services;


"AGREEMENT" means this Agreement including its Schedules and any amendments thereto;


"APPLICATION SOFTWARE" means the group of computer-based programs of any format which perform a specific function or application which have been purchased from a third party or developed by UCAR prior to this Agreement or by CGI during this Agreement and which do not fall within the scope of the System Software, local area networks or desktop computers, together with all additions and enhancements thereto or replacements thereof provided;


"APPLICATION SOFTWARE DEVELOPMENT" means the activities leading to the implementation into production of any Application Software, including without limitation activities required to perform: (i) the preliminary analysis, (ii) the architecture, (iii) the functional design, (iv) the application design, (v) the programming, (vi) the testing (functional, integrated and user acceptance testing), (vii) the implementation, (viii) training and (ix) the project management and support activities to develop a new Application Software or an improvement to an existing Application Software which is not an Application Software Support activity;


"APPLICATION SOFTWARE SUPPORT" means the following activities: (i) implementation of improvements or changes to existing Application Software where such activity may be authorized by the Change Management Committee or (ii) provision of maintenance and corrective actions resulting from problems or defects in the Application Software;


"ASSIGNED CONTRACTS" are the contracts specified as "Assigned Contracts" on Schedule D to which UCAR is a party and which relate to the functions and responsibilities for which CGI is assuming responsibility hereunder.


"BASE SERVICES" mean the services, functions and responsibilities described in Schedule "A" hereto, and the J.D. Edwards Project;


"BASELINE LEVEL OF RESOURCES" is the amount, with respect to each Measured Resource, to be established during the Transition period as provided in Section 4.2. The amounts set forth in Schedule K will be verified during the Transition Period.


"BUDGET PERIOD" means the twelve (12) month period that commences each January or such other month as the parties may mutually agree during the Term;


"CGI SITE" means the various facilities owned or leased by CGI to be used by CGI to house any components of the Computer System;


"CGI SOFTWARE" is any software, or part of any software, that is designed, developed, owned, modified or provided by or on behalf of CGI;


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"CHANGE" means any modification as authorized by the Change Management Committee which has the effect of changing, modifying or altering the Computer System when the modification is implemented;


"CHANGE MANAGEMENT COMMITTEE" means the committee as defined in Section 8.2 (Change Management Committee);


"CIO" means the UCAR Chief Information Officer;


"COMMENCEMENT DATE" means 16 April 2001;


"COMPUTER SYSTEM" means all components of the computer system to be operated at the Operations Sites including without limitation, the Hardware, the System Software and Data, storage media and other supplies of UCAR, and personal computers and attached peripherals generally located at the user workstation, including LAN/WAN access and desktop software;


"CONTRACT MANAGEMENT OFFICE" means the management body used by CGI to manage and deliver Services to UCAR;


"Data" means the representation of information or computer instructions in a formalized manner suitable for interpretation or processing including, without limitation, any information set forth in hard copy document or stored on disk, magnetic media, or other storage media together with any combination or organization thereof;


"DATA CENTER SERVICES" means the activities required to deliver the Production and includes the operation of the Computer System, help desk, management of the data communications and related technical support services;


"ENHANCEMENT" means all new versions, releases, successor products, revisions, improvements, upgrades, modifications, customizations, changes, corrections, or adjustments made to any of the System Software;


"HARDWARE" means the computer equipment used to provide the Services hereunder and owned or leased by UCAR before or during the term of this Agreement together with all upgrades or additions or replacements made during the Term;


"INFORMATION SYSTEMS MANAGEMENT" means the management activities to be performed by CGI to fulfill its responsibilities listed in Schedule "A" (Base Services);


"[TEXT DELETED]" means those persons listed on Schedule "G";


"IS/IT SERVICES" means (i) the development and maintenance of application systems, including the management and the implementation of any defined third-party information services/information technology products and systems integration activities, and (ii) the management of UCAR's information technology processing infrastructure and associated operations including management and administration of internal data and voice communications and desktop; (iii) related administrative functions (ex. report generation); such IS/IT Services are part of the Base Services;


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"IT STEERING COMMITTEE" means the UCAR management committee composed of UCAR and CGI representatives responsible for the strategic direction of UCAR information technology. This committee shall be chaired by a UCAR Senior Executive. UCAR representatives shall be appointed by the UCAR Chief Executive Officer. The Chief Executive Officer of CGI shall appoint a representative to act on its behalf


"J.D. EDWARDS PROJECT" means the services to be provided as described in Schedule C, which, for purposes of Section 11, will be deemed a Tier III Project;


"MEASURED RESOURCE" is any resource used by CGI to provide the Base Services for which a baseline has been established as provided in Section 4.2 or for which a baseline may be established by mutual agreement from time to time. Schedule K contains a list of the Measured Resources for which CGI and UCAR currently expect a Baseline Level of Resource will be established.


"MISSION CRITICAL ACTIVITIES" means a Computer System or Base Services relating to UCAR's core business activities within a single UCAR division or operation of equivalent importance or on a company-wide basis, and which is critical to UCAR;


"OPERATIONAL FRAMEWORK" means CGI's information technology management framework, which is the basis of CGI's ISO 9001 certification, and consists of elements related to the management of a company's information technology function. It specifies the roles and responsibilities of each "IT stakeholder", describes the methodologies, practices and tools required for IT-related activities, and contains the processes inherent to information technology services management;


"OPERATIONS SITES" means any location from which CGI provides the Services, including the UCAR Sites and CGI Sites;


"[TEXT DELETED]" means the [TEXT DELETED] with whom [TEXT DELETED] for [TEXT DELETED] when all [TEXT DELETED] such as [TEXT DELETED], and [TEXT DELETED] being [TEXT DELETED] when taking into [TEXT DELETED] the [TEXT DELETED] on those [TEXT DELETED] when [TEXT DELETED] to a [TEXT DELETED].


"PRIME INTEREST RATE" means the prime commercial lending rate expressed as an annual rate, which Citibank, N.A. establishes, from time to time, as a reference rate of interest for the purpose of determining the rate of interest that it shall charge to its commercial customers for loans in U.S. funds;


"PRODUCTION" means the processing activities including backup and recovery and usual on demand job requests to be executed on the Computer System in order to meet UCAR processing requirements;


"PRODUCTION SCHEDULE" means the predefined Production activities, automated or not, that have to be executed during a given period;


"PURCHASED ASSETS" means the assets designated as such and set forth on Schedule "D";


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"RELOCATION PROJECT" shall mean the activities required to migrate the Data Center Services from the UCAR Sites to CGI Sites;


"RELOCATION PROJECT PLAN" shall have the meaning ascribed to it in Section 3.3 hereof


"RETAINED CONTRACTS" are the contracts specified as "Retained Contracts" on Schedule E to which UCAR is a party and which relate to the functions and responsibilities for which CGI is assuming responsibility hereunder.


"SERVICES" means those services to be performed or provided by CGI under this Agreement, including the Base Services and Additional Services;


"SYSTEM INTEGRATION" means to customize, modify, integrate, or configure components (hardware, software, computerized business solutions and supporting equipment), or manage the foregoing activities, when necessary, to satisfy inter-connectibility, compatibility, supportability, reliability or operability requirements and UCAR information processing requirements, including assembly, installation, testing, implementation, integration (including integration of third party software products), rendering operational and supporting off the shelf or third party information technology solutions into the Computer Systems and Application Software;


"SYSTEM SOFTWARE" means the group of computer-based programs of any format which are used in conjunction with the Hardware including, without limitation, the computer programs listed in Schedule "F" (System Software) hereto together with any and all computer program Enhancements or replacements and any additional computer-based programs which are generally known as operating software, utilities or system software;


"TARGET SERVICE LEVELS" means the levels of service that CGI shall provide to UCAR to be defined during the Transition Period in accordance with Section 5;


"TERM" means the period of time that this Agreement shall remain in effect from the Commencement Date as set out in Section 10 (Term) hereof;


"TIER III PROJECTS" are projects related to the development and implementation of new applications, the analysis, development and implementation of infrastructure projects, Application Software Development, Applications Software Support Services and Enhancements that require more than [TEXT DELETED] of [TEXT DELETED] during the first 12 months of the Term, [TEXT DELETED] of [TEXT DELETED] during the second 12 months of the Term, and [TEXT DELETED] of [TEXT DELETED] during the remainder of the Term, and other similar projects that the Change Management committee determines would fall outside of the scope of the Base Services.


"TIER III PROJECT RATES" means the rates set forth on Schedule H and identified as either long-term rates or short-term rates. Long-term rates will apply to those personnel resources that UCAR commits to obtain from CGI as part of any Annual Technology and Maintenance Plan pursuant to Section 2.7.


"TRANSITION PERIOD" means the ten (10) month period commencing on the Commencement Date.


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"UCAR SITES" means the facilities at which the Services are to be performed and which UCAR may make available to CGI hereunder. The initial UCAR Sites are identified on Schedule N;


"UCAR SOFTWARE" is any computer program (including applications, utilities and operating systems software) or database owned or licensed by UCAR or its affiliates that will be accessed or used by CGI in providing Services under this Agreement, including any of the foregoing set forth in Schedule "F";


1.2 GENDER AND NUMBER - In this Agreement, words importing the singular
include the plural and vice-versa, and words importing gender include
all genders.


1.3 CURRENCY - All references to amounts of money herein, unless otherwise
specified, shall be in U.S. Dollars.


1.4 SECTION HEADINGS - The insertion of headings and the division of this
Agreement into Sections are for convenience of reference only and shall
not affect the interpretation thereof.


1.5 SCHEDULES - The following Schedules are appended hereto and form part of
this Agreement:


A. Base Services
B. Tier III Project Methodology
C. J.D. Edwards Project
D. Purchased Assets and Leased Assets
E. Third Party Contracts
F. Software
G. In-Scope Personnel
H. Pricing
I. Transition Plan
J. Target Service Levels
K. Baseline Level of Resources
L. Termination for Convenience Fee
M. Travel and Expense Guidelines
N. UCAR Sites
O. Current Projects
P. [TEXT DELETED]


1.6 STATEMENT OF OBJECTIVES - Each party acknowledges that the other is
investing significant time, effort and money in establishing the
relationship described in this Agreement, including the purchase by CGI
of considerable IS/IT assets and resources (including the transition of
UCAR employees to CGI), the assumption by CGI of certain UCAR
contractual obligations, and the amortization over the Term of certain
start-up costs. The parties agree that this investment of time, effort
and money is being made with the objective of establishing a long term,
stable and mutually beneficial relationship where CGI will be the
exclusive provider of Base Services, including System Integration


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services, to UCAR; and that CGI will be viewed as the information
technology department of UCAR and [TEXT DELETED] OF [TEXT DELETED]
services. The objectives of this agreement shall be:


1. Cost efficiencies through infrastructure improvements
2. Maintain or improve current service level and breadth of
service
3. Improved IS/IT procurement efficiency, including, where
CGI is able, procurement for out of scope locations
4. Data center consolidation
5. Implementation and maintenance of J.D. Edwards


SECTION 2 - SERVICES


2.1 GENERAL -- Commencing on the Commencement Date and thereafter during the
Term, CGI will provide to UCAR on an exclusive basis, and UCAR will
obtain from CGI UCAR's requirements for, the Base Services in accordance
with the terms of this Agreement. UCAR may request or require such
Additional Services that CGI may provide pursuant to this Agreement. CGI
agrees that it will continue to perform, at no additional charge to
UCAR, the projects described on Schedule 0 that are being performed by
UCAR as such projects are scoped as of the Commencement Date.


2.2 J.D. EDWARDS PROJECT - CGI will implement the J. D. Edwards Project in
accordance with Schedule C and the terms of this Agreement. Within the
[TEXT DELETED] days after the Commencement Date, CGI, with UCAR's
assistance, will develop a [TEXT DELETED] for [TEXT DELETED] the [TEXT
DELETED] OF J.D. Edwards. If UCAR and CGI agree on either [TEXT DELETED]
the [TEXT DELETED] of the J. D. Edwards Project (solely to [TEXT
DELETED] the [TEXT DELETED] of the [TEXT DELETED]) or [TEXT DELETED] the
[TEXT DELETED] of the J. D. Edwards Project within that [TEXT DELETED]
day period, including [TEXT DELETED] and [TEXT DELETED], then Schedules
C, H and L shall be amended as mutually agreed to reflect such [TEXT
DELETED] or [TEXT DELETED]. Such [TEXT DELETED] shall be in accordance
with the same general economic principles used to establish the pricing
in this Agreement.


2.3 TIER III PROJECTS - Commencing on the Commencement Date and thereafter
during the Term, UCAR (i) will [TEXT DELETED] from CGI at least [TEXT
DELETED] of [TEXT DELETED] in accordance with Schedule P hereto, and
(ii) will consider CGI its [TEXT DELETED] of [TEXT DELETED] other [TEXT
DELETED] and may obtain from CGI such [TEXT DELETED] in accordance with
the terms of this Agreement. CGI's sole remedy for UCAR's failure to
[TEXT DELETED] its [TEXT DELETED] under subsection (i) above is the
express remedy set forth on Schedule P. For each Tier III Project, CGI
will charge UCAR a fixed price or on such other basis as the parties may
mutually agree. If UCAR and CGI cannot agree on a fixed price or another
charging mechanism for a specific Tier III Project, then the Tier III
Project Rates will apply to that Tier III Project. While the parties
agree that Tier III Projects include certain Applications Software
Support and Enhancement activities that exceed a specified number of
person hours of effort, CGI agrees that, on an exception basis, UCAR may
request that CGI perform such a Tier III Project with the then current
Applications Software Support staff at no additional charge to UCAR. In
that event, the Change Management Committee will reprioritize the


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work then being performed by the Applications Software Support staff and
will make appropriate adjustments to the Target Service Levels. The
parties agree that, except in extraordinary circumstances, the
Applications Software Support staff will not be required to reprioritize
its work where the reprioritization will result in noticeable
deterioration of Services to UCAR's business units. Prior to
redeployment of personnel resources to the JD Edwards Project and during
the Transition Period, CGI acknowledges that UCAR may, more as the rule
rather than the exception, request that a particular Tier III Project be
provided with the then current Applications Support Staff.


2.4 USE OF EXTERNAL SUPPLIERS - When UCAR desires to use an external
supplier to perform any Tier III Project subject to and in accordance
with Section 2.3 hereof, the following terms and conditions will apply:


2.4.1 UCAR will advise CGI in advance of its intention to obtain a
written price quote and proposal from an external supplier to
perform that Tier III Project, and CGI will have the first
opportunity to provide UCAR a proposal for the Tier III Project.
If, following consideration of CGI's proposal, UCAR elects to
obtain a proposal from a third party, then UCAR may do so.
Before accepting any [TEXT DELETED] for a [TEXT DELETED], UCAR
will provide CGI with enough information such that CGI can
determine its [TEXT DELETED] to [TEXT DELETED] as the [TEXT
DELETED] for the [TEXT DELETED]. If CGI agrees to provide to
UCAR the [TEXT DELETED] on [TEXT DELETED] at least as [TEXT
DELETED] as the [TEXT DELETED] contained in the [TEXT DELETED]
then UCAR will allow CGI to [TEXT DELETED] the [TEXT DELETED] on
[TEXT DELETED]. If CGI elects to not [TEXT DELETED] the [TEXT
DELETED] on such [TEXT DELETED], then UCAR may elect to have
[TEXT DELETED] the [TEXT DELETED] on the [TEXT DELETED]
contained in the [TEXT DELETED] and the remaining provisions of
this Section 2.4 will apply.


2.4.2 The parties will establish a mutually acceptable process and the
parameters upon which the deliverables of IT services or project
awarded to an external supplier shall be integrated into the
Computer Systems or Application Software managed by CGI. For
such an award to an external supplier, CGI will, as a Tier III
Project, estimate efforts and pricing for all applicable System
Integration activities, of such IT service or project through
the preparation of a Tier III Project charter in the format
described in Schedule B. The Project charter will also include
any and all financial impact on Base Services. CGI will perform
...