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Delaware
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1-5418
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41-0617000
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(State or other jurisdiction
of incorporation)
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(Commission
File Number)
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(IRS Employer
Identification No.)
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11840 Valley View Road
Eden Prairie, Minnesota
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55344
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(Address of principal executive offices)
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(Zip Code)
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N/A
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(Former name or former address, if changed since last report)
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Exhibit Number
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Description
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10.1
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Services Agreement, dated as of December 5, 2016, between SUPERVALU INC. and Moran Foods, LLC.*
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99.1
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Press Release, dated December 5, 2016.
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99.2
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Unaudited Pro Forma Condensed Consolidated Financial Statements of SUPERVALU INC.
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99.3
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Historical Segment Financial Information and Supplemental Non-GAAP and Pro Forma Financial Information of SUPERVALU INC.
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Dated:
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December 8, 2016
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SUPERVALU INC.
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By:
/s/ Bruce H. Besanko
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Bruce H. Besanko
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Executive Vice President, Chief Operating Officer and Chief Financial Officer
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(Authorized Officer of Registrant)
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Exhibit Number
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Description
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10.1
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Services Agreement, dated as of December 5, 2016, between SUPERVALU INC. and Moran Foods, LLC.*
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99.1
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Press Release, dated December 5, 2016.
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99.2
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Unaudited Pro Forma Condensed Consolidated Financial Statements of SUPERVALU INC.
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99.3
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Historical Segment Financial Information and Supplemental Non-GAAP and Pro Forma Financial Information of SUPERVALU INC.
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Services Agreement
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General Terms and Conditions
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SUPERVALU INC.
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Moran Foods, LLC
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By:
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/s/
Randy Burdick
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By:
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/s/
Eric Claus
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Printed:
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Randy Burdick
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Printed:
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Eric Claus
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Title:
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EVP Professional Services & Chief Information Officer
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Title:
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Chief Executive Officer & President
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Services Agreement
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General Terms and Conditions
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Services Agreement
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General Terms and Conditions
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Page
i
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Services Agreement
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General Terms and Conditions
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Page
ii
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Services Agreement
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General Terms and Conditions
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Page
iii
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Services Agreement
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General Terms and Conditions
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Page
iv
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Exhibit 1
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Illustrative Examples
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Exhibit 2
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Supplier and Customer Organizations
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Exhibit 3
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Governance Meetings
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Exhibit 4
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Project Order Form
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Exhibit 5
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Change Order Form
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Exhibit 6
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PCI Responsibility Matrix
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Services Agreement
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General Terms and Conditions
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Page
v
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1.
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PREAMBLE
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(a)
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Customer is a hard discount grocery retailer and distributor (“
Hard Discount Business
”). Until the Effective Date, Customer and its Subsidiaries were Subsidiaries of Supplier. On the Effective Date, Supplier separated Customer from Supplier’s business, resulting in Customer becoming an independent enterprise (the “
Separation
”).
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(b)
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As part of the Separation, Customer requires the continued provision of certain Functions that were previously provided by Supplier before the Separation.
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(c)
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Supplier is a grocery wholesaler and retailer and a service provider that until the Effective Date performed for Customer such Functions.
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(d)
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This Agreement is a services agreement that documents the terms and conditions pursuant to which Customer will obtain from Supplier the Services described in
Schedule A (Services)
.
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2.
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SERVICES
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(a)
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the Functions for which Supplier is expressly responsible as set forth on
Schedule A (Services)
;
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(b)
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any Project Services that Customer contracts with Supplier to perform pursuant to a Project Order; and
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(c)
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any Enhancements or New Services that Customer contracts with Supplier to perform pursuant to a Change Order.
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Services Agreement
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General Terms and Conditions
Page 1
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2.2
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Use of the Services
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2.3
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Projects
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Services Agreement
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General Terms and Conditions
Page 2
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2.4
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Enhancements
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2.5
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New Services
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2.6
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Relationship of the Parties
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2.7
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IT Systems
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Services Agreement
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General Terms and Conditions
Page 3
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2.8
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Omitted Services
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2.9
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Migrations
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(a)
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Customer and Supplier shall fulfill their respective responsibilities under
Schedule B-9 (Oracle Migration Plan and Acceptance Criteria)
. Following the Effective Date, the Parties will cooperate in good faith to amend
Schedule B-9 (Oracle Migration Plan and Acceptance Criteria) to include
a detailed project plan consistent with the provisions of and timeline set forth in
Schedule B-9 (Oracle Migration Plan and Acceptance Criteria).
Once a separate instance of Oracle is fully functional, the Oracle-related Services set forth in
Schedule A-1 (Technical Services)
(including the “Fin IT Services” and “Finance and Accounting Services” referred to on Schedule B-1) will remain the same as set forth therein. In the event that the migration of Oracle software falls behind the schedule set out in
Schedule B-9 (Oracle Migration Plan and Acceptance Criteria)
, as amended, by more than [**], at Customer's option Customer may elect to receive a credit against Charges to Supplier in an amount equal to [**]. If the migration of Oracle software falls behind the schedule set out in
Schedule B-9 (Oracle Migration Plan and Acceptance Criteria)
, as amended, by more [**], Customer may elect to terminate the Oracle-related Services pursuant to Section 10.2(a)(iii). Any delay attributable to the failure of Customer to fulfill Customer Responsibilities shall not be included in the duration that Supplier is deemed to be behind the schedule of migration for purposes of this Section 2.9(a), so long as the Supplier complies with its
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Services Agreement
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General Terms and Conditions
Page 4
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(b)
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Until the completion of the migration of Oracle software, Supplier will provide to Customer fiscal calendar reconciliation services [**]. These calendar reconciliation services will consist of providing financial and accounting services on the basis of fiscal quarters and fiscal years ending on the Saturday closest to the calendar quarter-end and year-end, and providing a manual roll-forward or roll-back, as applicable, of financial and/or accounting information from such Saturday to the applicable calendar quarter-end and year-end.
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(c)
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Customer and Supplier shall fulfill their respective responsibilities under
Schedule B-10 (Business Intelligence Migration Plan and Acceptance Criteria)
. Once a separate instance of the Business Intelligence software is fully functional, the Business Intelligence-related Services set forth in Schedule A-1-5 will be updated according to its terms, subject to transition costs Charges as specified in Section 2.4 of
Schedule B (Charges)
. In the event that Supplier’s performance of its obligations with respect to the migration of Business Intelligence software falls behind the schedule set out in
Schedule B-10
(Business Intelligence Migration Plan and Acceptance Criteria) [**], at Customer's option Customer may elect to receive a credit against Charges to Supplier in an amount equal to [**]. If the migration of Business Intelligence software falls behind the schedule set out in
Schedule B-10
(Business Intelligence Migration Plan and Acceptance Criteria) [**], Customer may elect to terminate the Business Intelligence-related Services pursuant to Section 10.2(a)(iii); provided that any delay attributable to the failure of Customer to fulfill Customer Responsibilities shall not be included in the duration that Supplier is deemed to be behind the schedule of migration for purposes of this Section 2.9(c), so long as Supplier complies with its obligations in clauses (ii) and (iii) of the last paragraph of Section 6.1.
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(d)
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Customer will cooperate with Supplier in good faith, including by providing interfaces to Supplier’s related IT Systems and training Customer’s personnel using training materials and instructor training provided by Supplier, to move the Human Resources/PeopleSoft and Microsoft Office 365 applications of Customer from the current premise based environment to a cloud environment (which may or may not be a shared environment) before the [**].
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Services Agreement
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General Terms and Conditions
Page 5
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No
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Sub-Team
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A-3-2
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Compensation / Benefit Accounting
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A-3-3
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Corporate Accounting
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A-3-6
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Fixed Asset / Lease Accounting
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A-3-7
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General Ledger
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A-3-9
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Indirect And Strategic Sourcing
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A-3-10
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(i) Internal Audit SOX, (ii) SOX Business Process Controls and ITGC's is not a Transitional Finance and Accounting Service
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A-3-12
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IT Finance
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A-3-16
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Risk Finance
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A-3-17
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Sales, Cash Control And It Retail Systems
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A-3-19
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Treasury
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A-3-21
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Retail Store Audit
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2.11
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Transitional Miscellaneous Services
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No
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Sub-Team
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A-4-3
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Facilities Management
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A-4-4
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Energy Management
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2.12
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Transitional Claims Management Services
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Services Agreement
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General Terms and Conditions
Page 6
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2.13
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Transitional Use of Taleo
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2.14
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Process Documentation
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3.
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PERFORMANCE
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3.2
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Manner of Performance
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Services Agreement
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General Terms and Conditions
Page 7
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3.3
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Governance and Management
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(a)
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The Parties’ overall organization structure to support this Agreement as of the Effective Date is depicted on
Exhibit 2 (Customer and Supplier Organization)
which illustrates
how Customer’s and Supplier’s management-level organizational units involved in the performance of this Agreement align with one another.
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(b)
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The Parties will form two governance bodies to support Governance: (i) the Relationship Steering Committee, and (ii) Executive Management Committee. The Relationship Steering Committee is responsible for resolving issues brought forward by Customer and Supplier business teams. If the issue cannot be resolved by the Relationship Steering Committee, it will take the issue forward to the Executive Management Committee. The Relationship Steering Committee will consist of representatives from both Customer and Supplier. The Executive Management Committee will consist of key leadership roles within the Customer and Supplier organizations including Supplier’s EVP - Professional Services and Supplier’s CIO. Within ten (10) days after the Effective Date, Customer and Supplier will identify the individuals who will be members of the Relationship Steering Committee and the Executive Management Committee, as well as name the individuals who will fill the other roles depicted in
Exhibit 3 (Governance Meetings)
.
Nothing in this Section 3.3(b) shall limit either Party’s right to seek dispute resolution in accordance with Section 16.
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(c)
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Governance of the Agreement will include conducting the regular quarterly, monthly and weekly meetings as described in
Exhibit 3 (Governance Meetings)
.
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(a)
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As applicable to the performance of this Agreement and except as set forth in either Section 6.3 of this Agreement or the Separation Agreement, each Party will, at its cost and expense, obtain from regulatory or governmental agencies any necessary approvals, licenses, and permits applicable to its business (except to the extent that Supplier is providing Services in connection with certain Customer licenses or permits as set forth in the Schedules) and comply with Laws to which such Party is subject, as such Laws may be revised from time to time. Supplier shall provide Services in accordance with Laws applicable to provision of such Services to Customer.
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(b)
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Without prejudice to the provisions of the Separation Agreement or the Merger Agreement, any international usage (including any imports, exports and other transfers outside of the United States) of data, technical information or software provided by Customer to Supplier in connection with New Services or Enhancements will only be permitted if Customer has obtained all required authorizations and provides documentation of such authorizations to Supplier; provided that Customer shall have no obligation to obtain such authorizations or provide such documentation. Neither Party will use, distribute, transfer, or transmit any data, products, software or technical information (even if incorporated into other products) in connection with this Agreement in violation of any Applicable Laws.
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Services Agreement
|
General Terms and Conditions
Page 8
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Services Agreement
|
General Terms and Conditions
Page 9
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Services Agreement
|
General Terms and Conditions
Page 10
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3.7
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Supplier and Customer Policies
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4.
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SUPPLIER PERSONNEL AND SUBCONTRACTING
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4.2
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Subcontracting
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Services Agreement
|
General Terms and Conditions
Page 11
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4.3
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Non-Hiring of Employees
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(a)
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During the Term and for twelve (12) months thereafter, neither Party shall directly or indirectly, solicit for employment or employ, any Covered Employee of the other Party without that Party’s written approval.
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(b)
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The term
“Covered Employee”
shall mean: (i) as to Supplier, any current or former Supplier Personnel who was involved in the provision of Services under this Agreement, unless (A) a period of at least twelve (12) months has elapsed from the last date such person performed Services for Customer under this Agreement, or (B) a period of at least twelve (12) months has elapsed from the last date such person was employed by Supplier or one of its Affiliates or Subcontractors; and (ii) as to Customer, any current or former employee of Customer or one of its Affiliates who is directly involved with the Services, unless (X) a period of at least twelve (12) months has elapsed from the last date such person was directly involved with the Services, or (Y) a period of at least twelve (12) months has elapsed from the last date such person was employed by Customer or one of its Affiliates.
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(c)
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Notwithstanding any provisions of this Section to the contrary, general solicitations for employment, such as advertisements in newspapers, magazines, or websites, that are not directed specifically at Covered Employees of the other Party shall not be deemed a solicitation of employment in violation of this Section and either Party’s offer to employ, or employing, Covered Employees of the other Party who respond to such general solicitations shall not be deemed to be in violation of this Section unless the Party solicited the Covered Employee’s response to such general solicitation.
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5.
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CHARGES
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(a)
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Schedule B (Charges)
sets forth all of the charges (as may be modified by Section 10.2 or by any amendment thereto, including pursuant to Section 3.6 or 17.11) payable to Supplier for performing the Services and invoicing and payment terms. Except as expressly provided in this Agreement, any costs paid or borne by Customer related to this Agreement shall not impact or reduce the Charges under
Schedule B (Charges)
and no cost paid or borne by Supplier or its Affiliates or Subcontractors in connection with the performance of the Services will be reimbursable by Customer.
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(b)
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If this Agreement expressly requires the use of checks issued or other fund transfers by Supplier (or a Subsidiary, Affiliate or Subcontractor designated by Supplier) on behalf of Customer as Customer’s payment agent (each a “Payment”), Supplier (or a Subsidiary, Affiliate or Subcontractor designated by Supplier), following reasonable notice to Customer, shall be obligated to issue such checks or make such fund transfers only to the extent they are adequately funded by Customer prior to such check issuance or fund transfer. For this purpose, Customer shall establish a deposit account with a depositary bank (the “Depositary Bank”) in the name of the Customer (the “Customer Expense Account”). Supplier shall be authorized by Customer to withdraw funds and write checks in connection with Payments
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Services Agreement
|
General Terms and Conditions
Page 12
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6.
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CUSTOMER RESPONSIBILITIES
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(a)
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Customer will provide Supplier with timely access to appropriate Customer personnel, information and materials reasonably requested by Supplier to enable Supplier to provide the applicable Services, and will arrange for Supplier Personnel to have suitable and safe access to Customer Facilities and IT Systems. As applicable, Customer will also provide suitable office space and associated resources for Contractor personnel working on-site, including all necessary office support resources.
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(b)
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Customer will respond reasonably promptly to any request by Supplier to provide information, approvals, decisions or authorizations in connection with the Services. If this Agreement does not specify a period for Customer’s response, Supplier may specify a reasonable time period for Customer’s response in the context of the request. Such request may also describe the course of action Supplier intends to follow if it does not receive a timely response from Customer, which may include suspension of the affected Services. Supplier will be entitled to follow the described course of action in the absence of a timely response from Customer.
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(c)
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Customer will (i) replace non-functional or obsolete IT Systems reasonably necessary for Supplier to provide the Services and Customer to receive the Services; (ii) subject to the Separation Agreement, maintain licenses to IT Systems reasonably necessary for Customer to receive the Services and renew or replace licenses upon expiration thereof; and (iii) acquire new IT Systems required by Customer to receive Enhancements and New Services provided under this Agreement.
|
(d)
|
Customer will cooperate with Supplier regarding the receipt of Services, including by making its employees and representatives reasonably available to communicate with Supplier’s employees and representatives and to coordinate the provision and receipt of Services by Customer and Supplier, respectively.
|
Services Agreement
|
General Terms and Conditions
Page 13
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6.2
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Customer Facilities and Resources
|
(a)
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“Customer Resources”
means Customer Software, Customer Equipment, and Customer Facilities made or to be made available to Supplier pursuant to
this Agreement as is necessary
for use in providing the Services.
|
(b)
|
Subject to Section 6.3 (Required Consents), Customer hereby grants to Supplier, solely to perform and provide the Services, the same rights during the Term (or the term of any governing Customer lease or license, if shorter) as Customer has (or later obtains) to use Customer Resources. Supplier shall comply with use and non-disclosure restrictions imposed on Customer (or its applicable Affiliate) by any third-party leases, licenses or other contracts governing such Customer Resources that have been disclosed in writing to Supplier prior to the offending conduct and shall use the Customer Resources for the sole purpose of performing the Services for Customer hereunder.
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(c)
|
Supplier will take, and shall direct any Subsidiary, Affiliate or Subcontractor designated by Supplier to take, reasonable precautions to safeguard Customer Resources while in the possession of Supplier or any Subsidiary, Affiliate or Subcontractor thereof. When Customer Resources made available to Supplier under Section 6.2(b) are no longer required for performance of the Services:
|
(i)
|
In the case of Customer Software, Supplier shall, and shall direct any Subsidiary or Affiliate of Supplier or any Subcontractor designated by Supplier to, destroy the Customer Software in its possession (or return such Customer Software if Customer so elects); and
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(ii)
|
In the case of Customer Equipment and Customer Facilities, Supplier shall, and shall direct any Subsidiary or Affiliate of Supplier or any Subcontractor designated by Supplier to return, Customer Equipment in its possession and any Customer Facilities to Customer (or its applicable Affiliate) in substantially the same condition they were in when Supplier began use of them, subject to reasonable wear and tear.
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(d)
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Supplier’s right to use Customer Facilities does not constitute a leasehold or other property interest in favor of Supplier. Supplier will comply with applicable leases and other requirements that have been disclosed to Supplier in writing regarding access to and use of Customer Facilities. Supplier will permit Customer and its agents and representatives to enter into those portions of the Customer Facilities occupied by Supplier Personnel at any time to perform inspections or facilities-related services.
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Services Agreement
|
General Terms and Conditions
Page 14
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7.
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DATA SECURITY AND PROTECTION
|
(a)
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“
Cardholder Data
” shall have the same meaning as it has in the PCI DSS (as defined below), and includes, as to any payment card, the full magnetic stripe (and all data encoded in it), the primary account number (PAN), the cardholder’s name, the expiration date, and the service code.
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(b)
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Subject to the terms and conditions of this Agreement, Supplier agrees that if, as part of performing the Services, it or its agents possess, store, process, handle or transmit Cardholder Data or could materially affect the security of Cardholder Data, it and its agents shall comply with the Payment Card Industry Data Security Standard, as set forth by the PCI Security Standards Council or its successors (the “
PCI DSS
”), to the extent that the PCI DSS applies to Supplier in providing the Services. Any change in the PCI DSS after the Effective Date which has the effect of increasing the costs to Supplier of providing the Services shall be handled in accordance with Section 10.3(c).
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Services Agreement
|
General Terms and Conditions
Page 15
|
(c)
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Notwithstanding any provisions of this Section 7.2 to the contrary, to the extent that Customer has access to, or ownership of Equipment within, the Supplier managed systems, Customer shall maintain and use such access and Equipment in compliance with PCI DSS and in a manner that avoids impacting Supplier’s ability to maintain Supplier’s PCI DSS compliance and security of the managed systems.
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(d)
|
Supplier agrees that it shall use the Cardholder Data that it accesses, possesses, stores, handles, or transmits pursuant to providing the Services only as necessary to perform the Services and as necessary to comply with the PCI DSS and applicable Laws. Supplier agrees that if it or its subcontractors have access to, store, process, handle, or transmit Cardholder Data as part of performing Services hereunder, it and its agents shall maintain appropriate business continuity procedures and systems to maintain its security of Cardholder Data in the event of a disruption, disaster, or failure of Supplier’s primary data systems.
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(e)
|
If Supplier discovers that unauthorized access has been gained to Cardholder Data to which it had access or has possessed, stored, processed, handled, or transmitted pursuant to providing the Services, then subject to law enforcement restrictions, Supplier shall notify Customer as promptly as commercially practicable in the circumstances and will comply with all contractual and legal requirements for notifying applicable card brand companies and acquiring financial institutions. Supplier shall also reasonably cooperate with Customer and relevant governmental authorities in investigating such incident. Supplier shall provide Customer with a detailed description of the incident, the Cardholder Data accessed, and the identity of affected individuals. Supplier shall investigate the incident and, depending on the results of such investigation, the parties shall take appropriate reasonable steps to identify, mitigate, and prevent the effects of such unauthorized access, including notification of any affected consumers as required under Law.
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(f)
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At least on an annual basis (or at such other frequency as may be required by PCI DSS), Supplier shall, at its own cost and expense (but not including expenses related to Customer’s own PCI DSS obligations, which are Customer’s responsibility), provide Customer with an attestation of compliance with the PCI DSS with respect to the performance of the Services expressly contemplated by this Agreement and its compliance with this Section as may be reasonably requested by Customer to enable Customer to be certified as being in compliance with PCI DSS. As of the Effective Date, but subject to any changes in PCI DSS or the Services to be provided by Supplier and/or assumed by Customer during the during the Term of this Agreement, Supplier and Customer shall comply with Exhibit 5 (PCI Responsibility Matrix) which compliance may include scope reductions as approved by applicable acquiring financial institutions, other actions approved by a party’s Qualified Security Assessor, and/or use of compensating controls. Customer shall obtain and maintain an annual PCI DSS Report on Compliance (ROC) during the Term.
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(g)
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In addition to any Charges set forth in this Agreement, Customer shall separately at its cost acquire and/or implement the appropriate hardware and software as reasonably recommended by Supplier from time to time to allow for Supplier and Customer to be compliant with PCI DSS and other applicable Law. Supplier will obtain attestations of compliance with PCI DSS from its service providers (e.g., gift card service providers) that it uses in the provision of Services to Customer, to the extent necessary for Supplier to obtain an attestation of compliance with PCI DSS for Supplier.
|
Services Agreement
|
General Terms and Conditions
Page 16
|
8.
|
CONFIDENTIALITY
|
8.2
|
Confidentiality Obligations
|
Services Agreement
|
General Terms and Conditions
Page 17
|
8.3
|
Exceptions
|
8.4
|
Compelled or Permitted Disclosure
|
8.5
|
Term
|
Services Agreement
|
General Terms and Conditions
Page 18
|
8.6
|
Termination
|
8.7
|
No Implied Rights
|
8.8
|
Securities Laws
|
8.9
|
Public Disclosures
|
9.
|
INTELLECTUAL PROPERTY RIGHTS
|
Services Agreement
|
General Terms and Conditions
Page 19
|
(a)
|
Customer grants Supplier a limited, nonexclusive, non-transferable, no-charge license during the Term to use, operate, or copy the Customer Independent IP in accordance with this Agreement solely for the purpose of providing the Services to Customer.
|
(b)
|
Supplier grants Customer a limited, nonexclusive, non-transferable, no-charge license during the Term for the Service Recipients to use the Supplier Independent IP in accordance with this Agreement solely for the purpose of receiving the Services.
|
9.2
|
Work Product; Developed Material
|
9.3
|
Deliverables
|
Services Agreement
|
General Terms and Conditions
Page 20
|
9.4
|
Licenses Survive Bankruptcy
|
9.5
|
Non-Interference
|
9.6
|
Mental Impressions
|
10.
|
TERM AND TERMINATION
|
10.2
|
Termination by Customer
|
(a)
|
For Breach
.
|
(i)
|
Customer may terminate this Agreement if Supplier commits a material breach of this Agreement and does not cure such material breach within forty-five (45) days after the date Supplier receives written notice in reasonable detail of the breach from Customer;
|
(ii)
|
Customer may terminate, in whole but not in part, a Service Category (but not the Agreement as a whole) if Supplier commits a breach material to such Service Category as a whole (which may include a Minimum Service Level Default on a single CPI in such Service Category) if the adverse impact on one or more Service Recipients’ businesses is significant to the Service Recipients’ businesses, taken as
|
Services Agreement
|
General Terms and Conditions
Page 21
|
(iii)
|
Customer may terminate the Oracle-related Services or Business Intelligence-related Services as described in and in accordance with Section 2.9(a) or Section 2.9(c), respectively (but not other Services or this Agreement as a whole); or
|
(iv)
|
Customer may terminate this Agreement if Supplier breaches Section 5.15(b) of the Merger Agreement in any material respect or undergoes a Change of Control where the acquirer or any direct or indirect parent of the acquirer (or any subsidiary of any of the foregoing), at the time of the acquisition or thereafter, would be in breach of Section 5.15(b) of the Merger Agreement if it were a party thereto.
|
(b)
|
Termination for Bankruptcy or Insolvency
. Customer may terminate this Agreement in the event Supplier becomes insolvent or unable to pay its debts as they come due or enters into or files (or has filed or commenced against it that is not dismissed within sixty (60) days) a petition, arrangement, application, action or other proceeding seeking relief or protection from creditors under the bankruptcy Laws or similar Laws of the United States or any state of the United States. In such event Customer shall not be liable for any termination related fees or liability with respect thereof.
|
(c)
|
Termination Without Cause
. Customer may terminate, in whole but not in part, (i) any individual Service Category (but not
this Agreement) at any time by giving not less than six months prior written notice to the Supplier. In the event of any such termination of Service Categories under this Section 10.2(c), the Base Charges with respect to such terminated Service Categories in year 4 and year 5 will be reduced by the Service Base Charge(s) for such Service Categories, provided, however, that no reduction under this Section 10.2(c) will reduce the Base Charges below the amounts specified in Section 2.1(a)(iii) of
Schedule B (Charges)
. Except as set forth in this Section 10.2(c), the Charges payable to Supplier under this Agreement for the remainder of the Term shall otherwise remain payable by Customer in accordance with the terms of this Agreement without modification or abatement and there will be no other termination related fees or liability, other than any Charges due for Disengagement Assistance. Supplier will provide Disengagement Assistance for such terminated Services in accordance with and subject to Section 10.4 below. This Section 10.2(c) does not apply to Services terminated under Section 2.9-2.13 of this Agreement, in which event Customer shall not be liable for any termination related fees or liability with respect thereof, other than any Charges due for Disengagement Assistance; provided, however, that the conversion services contemplated under Section 2.9 shall not be considered
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Services Agreement
|
General Terms and Conditions
Page 22
|
(d)
|
Failure to Meet Service Levels
. Customer may terminate, in whole but not in part, any individual Service Category if there is a Minimum Service Level Default of one or more
|
(a)
|
For Breach
. Supplier may terminate for default if:
|
(i)
|
Customer does not pay any Charges in full when due and fails to cure such payment default within 10 Business Days after the date Customer receives written notice thereof; or
|
(ii)
|
Customer commits a material breach of this Agreement (other than failure to pay any Charge when due covered by Section 10.3(a)(i) above) and Customer does not cure such breach within forty-five (45) days after the date Customer receives written notice in reasonable detail of the breach from Supplier; provided, however, that this Section 10.3(a)(ii) will not give rise to a termination right in respect of a Force Majeure Event affecting Customer’s performance unless such Force Majeure Event causes the breach described above to continue for more than thirty days.
|
(b)
|
Termination for Bankruptcy or Insolvency
. Supplier may terminate this Agreement in the event Customer becomes insolvent or unable to pay its debts as they come due or enters into or files (or has filed or commenced against it that is not dismissed within sixty (60) days) a petition, arrangement, application, action or other proceeding seeking relief or protection from creditors under the bankruptcy Laws or similar Laws of the United States or any state of the United States.
|
Services Agreement
|
General Terms and Conditions
Page 23
|
(c)
|
Legal or Regulatory Reason
.
|
(i)
|
Supplier may terminate the provision of any Service upon reasonable advance written notice (with a reduction in Charges commensurate with the Service(s) being
|
(ii)
|
If changes in Laws or PCI DSS including any new Laws (excluding Laws to the extent related to taxes) have the effect of increasing the cost to Supplier of providing a particular Service listed on
Schedule B-1 (Base Charges)
by more than five percent (5%) on an annualized basis, in relation to the annual cost of the particular Service prior to such change(s), as reasonably determined by Supplier, Customer may agree to pay for its pro rata share of such increased cost pursuant to a Change Order for a New Service. Customer’s pro rata share will be determined by multiplying such increased costs to Supplier to provide the Service to itself, Customer and its other service customers by a fraction, the numerator of which represents Customer’s volume of the affected Service and the denominator which represents the sum of Supplier’s own and its other customers’ volumes of the affected Service (“
Customer’s Share
”). Supplier will provide Customer and its designated accountants with supporting information reasonably required by Customer to verify the accuracy of Supplier’s determination of such change. Customer may, acting in good faith, submit any objections with respect to Supplier’s determination of the increase of the costs no later than fifteen Business Days following the day on which the notice of such increase of the costs was delivered to Customer. Customer and Supplier shall attempt to resolve the objections in good faith. In the event the objections are not resolved within 30 days, either Party may refer any remaining objections to an accounting firm, mutually acceptable to the Parties (the “
Accounting Firm
”). Accounting Firm within 30 days will resolve such dispute by determining the actual amount of Customer’s Share of the costs and such determination will be final, binding and non-appealable by the Parties. Customer will bear the fees and expenses of the accounting firm if the accounting firm’s calculation is within 10% of the amount determined by Supplier and Supplier will bear the costs and expenses of the Accounting Firm otherwise. If Customer does not agree to pay for such increased cost, Supplier may terminate the affected Service(s), and the termination shall be deemed to be a termination by Customer without cause and shall be governed by Section 10.2(c).
|
(a)
|
“
Disengagement Assistance
” means the reasonable and customary assistance and cooperation to assist with the transition of Services from Supplier to Customer or a successor provider of services in the event of a termination (other than by Supplier under Section 10.3(a)(i)) or expiration of this Agreement or any Services for any reason.
|
Services Agreement
|
General Terms and Conditions
Page 24
|
(b)
|
Disengagement Assistance shall include the provision by Supplier, [**], of a copy, in a format reasonably specified by Customer and agreed by Supplier, of Customer’s data stored
|
(c)
|
All Disengagement Assistance in connection with a termination by Customer under Section 10.2(b) or (c) or by Supplier under Section 10.3(b) or (c) will be provided by Supplier to Customer [**]. All Disengagement Assistance in connection with a termination by Supplier under Section 10.3(a) will be provided by Supplier to Customer [**]. Supplier shall perform Disengagement Assistance in connection with expiration of the Agreement or a termination by Customer under Section 10.2(a) or (d) for [**]. Payment for Disengagement Services shall not impact any of the other fees and payments payable under this Agreement.
|
(d)
|
Charges for Disengagement Assistance shall be invoiced by Supplier and shall be paid by Customer in accordance with
Schedule B (Charges)
. If this Agreement is terminated pursuant to Section 10.3(a)(i) or Section 10.3(b), Customer shall pre-pay Supplier’s [**] as a condition to providing Disengagement Assistance and if at any time Supplier reasonably expects that the amount pre-paid by Customer will be exceeded at any time before completion of the Disengagement Assistance, Customer shall pre-pay [**] to complete the Disengagement Assistance as a condition to completing the Disengagement Assistance.
|
(a)
|
As requested by Customer, Supplier shall continue to provide the Services provided immediately prior to the expiration or termination of the Agreement to the Service Recipients (including for the benefit of the Customer Licensees) on a wind-down basis, consistent with Schedule A-6 and on the terms and conditions, and for the Charges, set forth herein for up to eighteen (18) months following termination or expiration of the Agreement; provided, however, that: (i) there shall be no limitation on the application of RRCs or on the reduction or elimination of Service Base Charges from the Base Charge to account for terminated Services during such eighteen (18) month period; and (ii) Customer shall use its reasonable best efforts to migrate and terminate the Services as promptly as practicable.
|
(b)
|
Customer may elect to purchase (and Supplier hereby agrees to sell) any equipment that is exclusively dedicated to the provision of Services to Customer hereunder at Supplier’s net book value as of the effective date of purchase (as established by reasonable evidence and calculated in accordance with standard accounting rules).
|
(c)
|
Supplier shall have no obligation under this Section 10.5 if the reason for termination of the Agreement was non-payment of undisputed Charges under Section 10.3(a)(i).
|
Services Agreement
|
General Terms and Conditions
Page 25
|
11.
|
AUDITS AND RECORDS
|
12.
|
WARRANTIES
|
12.2
|
Viruses
|
12.3
|
DISCLAIMER
|
Services Agreement
|
General Terms and Conditions
Page 26
|
13.
|
INSURANCE
|
14.
|
INDEMNIFICATION
|
(a)
|
Any Claim based on allegations that, if true, would constitute a breach of Customer’s or any of its Subsidiaries’ and Affiliates’ or any other Service Recipient’s respective obligations under Section 8 (Confidentiality);
|
(b)
|
Any Claim that the Services provided by Supplier to Customer as part of this Agreement constitutes a breach or violation of any terms of any third-party Customer Resources, including any Claim arising out of the failure to obtain any Required Consents that it is the responsibility of Customer to obtain but excluding any Claim based on the use of Customer Resources by Supplier in violation of any license terms or restrictions under Section 6.2(b) above;
|
Services Agreement
|
General Terms and Conditions
Page 27
|
(c)
|
Any Claim that Customer Independent IP provided by Customer to Supplier as part of this Agreement which Customer Independent IP was not in existence as of the Effective Date constitutes an infringement or misappropriation of any third party’s Intellectual Property Rights, except to the extent caused by the modification, misuse or improper combination with other products by Supplier, not authorized by Customer, of such Customer Independent IP;
|
(d)
|
Any Claim for death or bodily injury, or the damage, loss or destruction of real or tangible personal property (including employees of Customer and Supplier and their respective subcontractors) alleged to have been caused by the conduct of Customer or its Affiliates or their respective employees or independent contractors;
|
(e)
|
Any Claim based on allegations of intentional tort, willful misconduct (including willful breach of contract), unlawful conduct, or negligence of Customer (or any entity or person for which Customer is responsible); and
|
(f)
|
Without limiting the foregoing (a) through (e), any other Claims arising out of the performance of this Agreement or the provision or receipt of Services pursuant to this Agreement regardless of the legal theory asserted (other than Claims for which and to the extent that Supplier would have liability under Section 14.2, including Section 14.2(e)).
|
14.2
|
Indemnification by Supplier
|
(a)
|
Any Claim based on allegations that, if true, would constitute a breach of Supplier's or any of its Subsidiaries’ and Affiliates’ or Subcontractor's respective obligations under Section 8 (Confidentiality) (it being understood that any breach of Section 7 (Data Security and Protection) shall not be deemed in itself to be a breach of Section 8 (Confidentiality));
|
(b)
|
Any Claim that the Services provided by Supplier to Customer as part of this Agreement constitutes a breach or violation of any terms of any third-party resources used by Supplier to perform the Services, including any Claim arising out of the failure to obtain any Required Consents that it is the responsibility of Supplier to obtain;
|
(c)
|
Any Claim for death or bodily injury, or the damage, loss or destruction of real or tangible personal property (including employees of Customer and Supplier and their respective subcontractors) alleged to have been caused by willful misconduct or negligence on the part of the Supplier or its Subsidiaries, Affiliates' or Subcontractors or their respective employees or independent contractors;
|
(d)
|
Any Claim that the Supplier Independent IP or Developed Materials (excluding any incorporated Customer Independent IP that was created after the Effective Date) provided
|
Services Agreement
|
General Terms and Conditions
Page 28
|
(e)
|
Any Claim arising from Supplier’s willful misconduct or negligence with respect to the provision of Services, breach of this Agreement or failure to comply with Applicable Law.
|
14.3
|
Indemnification Procedures
|
Services Agreement
|
General Terms and Conditions
Page 29
|
15.
|
LIABILITY
|
(a)
|
Neither Party shall be liable to the other Party for any lost profits, loss of business or other consequential, special, incidental, or indirect damages, even if it has been advised of the possibility of such damages, except that, subject to Section 15.1(b), consequential and incidental damages may apply in connection with third party Claims that are subject to a Party’s indemnification obligations under Section 14 (Indemnification), breach of Section 8 (Confidentiality) (it being understood that any breach of Section 7 (Data Security and Protection) shall not be deemed in itself to be a breach of Section 8 (Confidentiality)) and nothing in this Section 15.1 shall limit either Party’s liability for willful misconduct.
|
(b)
|
Except in the case of fraud, willful misconduct, or willful and intentional breach of this Agreement and Customer’s payment obligations for Charges under the Agreement, each Party's total aggregate liability arising out of, resulting from, or in connection with this Agreement and the Services, whether arising under contract, tort, statute, or otherwise, will be limited to $30,000,000.
|
(a)
|
“
Force Majeure Event
” means any event beyond the reasonable control of a Party that delays or prevents the Party, directly or indirectly, from performing its obligations under this Agreement (other than payment obligations). Without limiting the generality of the foregoing, a Force Majeure Event includes acts of God, acts of a public enemy, acts of terrorism, acts of a nation or any state, territory, province or other political division thereof, fires, floods, epidemics, riots, theft, quarantine restrictions, freight embargoes, and third-party telecommunications failures in each case that are beyond a Party’s reasonable control. In the event that a Subcontractor to Supplier is subject to a Force Majeure Event, Supplier may in turn also declare a Force Majeure Event until such Subcontractor is able to recover.
|
(b)
|
Upon the occurrence of a Force Majeure Event, the affected Party will promptly notify the other Party of the circumstances hindering its performance and of its plans and efforts to implement a work-around, in which case the affected Party will be excused from further performance or observance of the obligations so affected for as long as the Force Majeure Event continues. Supplier shall not be liable for any Losses whatsoever arising out of any interruption of Service or delay or failure to perform its obligations under this Agreement that is due to a Force Majeure Event and so long as Supplier met its obligations under this Section 15.2(b). The affected Party will continue to use commercially reasonable efforts to perform whenever and to whatever extent is possible and otherwise comply with any disaster recovery and business continuity obligations set forth in this Agreement. The affected Party will also notify the other Party promptly when the Force Majeure Event has abated. Without limiting the generality of the foregoing, if a Force Majeure Event affects the performance of the Services under this Agreement, Supplier shall work to recover the affected Services and allocate resources for such purpose with the same diligence and on no less favorable a basis as it works to recover and allocates resources for the recovery of services for itself, its Affiliates, and their respective customers receiving services similar to Services.
|
Services Agreement
|
General Terms and Conditions
Page 30
|
16.
|
DISPUTE RESOLUTION
|
Services Agreement
|
General Terms and Conditions
Page 31
|
16.4
|
Remedies
|
16.5
|
Governing Law
|
16.6
|
Jurisdiction and Venue
|
Services Agreement
|
General Terms and Conditions
Page 32
|
17.
|
MISCELLANEOUS
|
17.2
|
Certain Equitable Remedies; Remedies Cumulative
|
17.3
|
Assignment
|
17.4
|
Permitted Assignment
|
Services Agreement
|
General Terms and Conditions
Page 33
|
17.5
|
Notices
|
17.6
|
Interpretation
|
(a)
|
Unless otherwise indicated, section references are to sections of the document in which the reference is contained. References to numbered (or lettered) sections will be deemed to also refer to and include all subsections of the referenced section.
|
(b)
|
The section headings in this Agreement are intended to be for reference purposes only and shall in no way be construed to modify or restrict any of the terms or provisions of this Agreement.
|
(c)
|
This Agreement will be deemed to have been written by both Parties.
|
(d)
|
Unless the context requires otherwise, (i) “
including
” (and any of its derivative forms) means including but not limited to, (ii) “
may
” means has the right, but not the obligation to do something and “
may not
” means does not have the right to do something, (iii) “
will
” and “
shall
” are expressions of command, not merely expressions of future intent or expectation,
|
Services Agreement
|
General Terms and Conditions
Page 34
|
17.8
|
Severability
|
17.9
|
Counterparts
|
17.10
|
Third Party Beneficiaries
|
17.11
|
Contract Amendments and Modifications
|
17.12
|
Survival
|
17.13
|
Entire Agreement
|
Services Agreement
|
General Terms and Conditions
Page 35
|
Defined Term
|
Meaning
|
“AAA”
|
The American Arbitration Association.
|
“ABL”
|
Has the meaning given in Section 1.2 (Definitions) of
Schedule A-3 (Finance and Accounting Services)
.
|
“Accounting Firm”
|
Has the meaning given in Section 10.3(c) (Termination by Supplier) of the
GENERAL TERMS AND CONDITIONS
.
|
“ACH”
|
Automated Clearing House.
|
“Active Employee”
|
Has the meaning given in Section 1.2 (Definitions) of
Schedule A-2 (HR Services)
.
|
“Actor”
|
Has the meaning given in Section 1.2(j) (Organization) of
Schedule A-1 (Technical Services)
.
|
“Actual Volume”
|
The actual volume of Service provided by Supplier to Customer as measured by Supplier for those baseline volume categories set forth in
Schedule B-2 (Monthly Baselines)
.
|
“AD&D”
|
Has the meaning given in Section 1.2 (Definitions) of
Schedule A-2 (HR Services)
.
|
“ADA”
|
Has the meaning given in Section 1.2 (Definitions) of
Schedule A-2 (HR Services)
.
|
“Additional Resource Charge” or “ARC”
|
Each of the additional resource charges set forth in
Schedule B-3 (Rate Card)
.
|
“Affiliate”
|
With respect to an entity, any other entity or person that, now or in the future, either directly or through one or more intermediaries, controls, is controlled by, or is under common control with, such entity.
|
“Agreement”
|
The Services Agreement by and between Customer and Supplier. The Agreement consists of a signature document, plus the attached
GENERAL TERMS AND CONDITIONS
,
GLOSSARY
, Schedules, Exhibits, and any Project Orders and Change Orders executed during the Term.
|
“Annual Credit”
|
Has the meaning given in Section 4 (ANNUAL CREDIT) of
Schedule B (Charges)
.
|
“AP or A/P”
|
Has the meaning given in Section 1.2 (Definitions) of
Schedule A-3 (Finance and Accounting Services)
.
|
“AR or A/R”
|
Has the meaning given in Section 1.2 (Definitions) of
Schedule A-3 (Finance and Accounting Services)
.
|
Services Agreement
|
Glossary
Page 1
|
Defined Term
|
Meaning
|
“ARS”
|
Has the meaning given in Section 1.2 (Definitions) of
Schedule A-3 (Finance and Accounting Services)
.
|
“Audit Services Fee”
|
Has the meaning given in Section 2.8 (Retail Store Audit Fees) of
Schedule B (Charges)
.
|
“AUP”
|
Has the meaning given in Section 1.2 (Definitions) of
Schedule A-3 (Finance and Accounting Services)
.
|
“Bankruptcy Code”
|
Has the meaning given in Section 9.4 (Licenses Survive Bankruptcy) of the
GENERAL TERMS AND CONDITIONS
.
|
“Base Charge”
|
Has the meaning given in Section 2.1 (Base Charge) of
Schedule B (Charges)
.
|
“Baseline Volume”
|
The baseline volume for the Services for each of the categories set forth in
Schedule B-2 (Monthly Baselines)
.
|
“Benefits Portal”
|
Has the meaning given in Section 1.2 (Definitions) of
Schedule A-2 (HR Services)
.
|
“BI Conversion Fee”
|
Has the meaning given in Section 2.4(a) (Oracle Cloud Services; Business Intelligence Software) of
Schedule B (Charges)
.
|
“BI Hosting / Support Services”
|
Has the meaning given in Section 1(c) (INTRODUCTION) of
Schedule A-1-5 (Business Intelligence Services).
|
“BI Professional Services”
|
Has the meaning given in Section 1(d) (INTRODUCTION) of
Schedule A-1-5 (Business Intelligence Services).
|
“BI Services”
|
Has the meaning given in Section 1 (INTRODUCTION) of
Schedule A-1-5 (Business Intelligence Services).
|
“BI Software”
|
Has the meaning given in Section 1(a) (INTRODUCTION) of
Schedule A-1-5 (Business Intelligence Services).
|
“BI Software Operating Guide”
|
Has the meaning given in Section 1(b) (INTRODUCTION) of
Schedule A-1-5 (Business Intelligence Services).
|
“BOD”
|
Has the meaning given in Section 1.2 (Definitions) of
Schedule A-3 (Finance and Accounting Services)
.
|
“Business Critical Applications”
|
Has the meaning given in Section 2 (Disaster Recovery Services) of
Schedule A-1 (Technical Services)
.
|
Services Agreement
|
Glossary
Page 2
|
Defined Term
|
Meaning
|
“Business Day”
|
Whether or not captalized, means any day Monday through Friday, excluding holidays observed by Supplier at its home office in Eden Prairie, Minnesota. Unless otherwise agreed by the Parties, when there is a requirement that something be performed within “X” Business Days of an event, it shall be performed no later than the same time as such event, “X” Business Days later (e.g., a response to a request made at 3 pm Central Time on Friday that requires a 1 Business Day turnaround shall be provided by 3 pm Central Time on Monday).
|
“Business Material Adverse Effect”
|
Has the meaning given in the Merger Agreement.
|
“Calculation Roster Review”
|
Has the meaning given in Section 1.2 (Definitions) of
Schedule A-2 (HR Services)
.
|
“CAM”
|
Has the meaning given in Section 1.2 (Definitions) of
Schedule A-3 (Finance and Accounting Services)
.
|
“Capex”
|
Has the meaning given in Section 1.2 (Definitions) of
Schedule A-3 (Finance and Accounting Services)
.
|
“Chargeable Project”
|
Has the meaning given in Section 3.2(a) (Chargeable Projects) of
Schedule B (Charges)
.
|
“Cardholder Data”
|
Has the meaning given in Section 7.2(a) (PCI Compliance) of the
GENERAL TERMS AND CONDITIONS
.
|
“Change”
|
Has the meaning given in Section 3.6 (Change Control Procedure) of the
GENERAL TERMS AND CONDITIONS
.
|
“Change Control Procedure”
|
Has the meaning given in Section 3.6 (Change Control Procedure) of the
GENERAL TERMS AND CONDITIONS
.
|
“Change of Control”
|
Has the meaning given to it in the Merger Agreement.
|
“Change Order”
|
The form of an Order documenting the terms of the Parties’ agreement regarding a Change (including a New Service). The form of a Change Order is set forth on
Exhibit 4 (Change Order Form)
.
|
“Change Request”
|
A document requesting a Change.
|
“Chargeable Projects”
|
Has the meaning given in Section 3.2(a) (Chargeable Projects) of
Schedule B (Charges)
.
|
“Charges”
|
Has the meaning given in Section 1 (INTRODUCTION) of
Schedule B (Charges)
.
|
Services Agreement
|
Glossary
Page 3
|
Defined Term
|
Meaning
|
“Claims”
|
Any demand, or any civil, criminal, administrative, or investigative claim, action, or proceeding (including arbitration) asserted, commenced or threatened against an entity or person by an unaffiliated third party; provided that for the purposes of this definition, an employee of either Party is considered an unaffiliated third party.
|
“CMS”
|
Has the meaning given in Section 1.2 (Definitions) of
Schedule A-2 (HR Services)
.
|
“COLA”
|
Has the meaning given in Section 2.1(e) (COLA) of
Schedule B (Charges)
.
|
“Compensation Tool”
|
Has the meaning given in Section 1.2 (Definitions) of
Schedule A-2 (HR Services)
.
|
“Confidential Information”
|
Has the meaning given in Section 8.1 (“Confidential Information” Defined) of the
GENERAL TERMS AND CONDITIONS
.
|
“Confidentiality Obligations”
|
Has the meaning given in Section 8.2 (Confidentiality Obligations) of the
GENERAL TERMS AND CONDITIONS
.
|
“Contingent Worker”
|
Has the meaning given in Section 1.2 (Definitions) of
Schedule A-2 (HR Services)
.
|
“Corp”
|
Has the meaning given in Section 1.2 (Definitions) of
Schedule A-3 (Finance and Accounting Services)
.
|
“Coupon Processing Fee”
|
Has the meaning given in Section 2.7(a) (Miscellaneous Charges) of the
Schedule B (Charges)
.
|
“COTS”
|
Commercial off-the-shelf Software.
|
“Coupon Processing Fee”
|
Has the meaning given in Section 2.7(a) (Retained Third Party Fees; Miscellaneous Charges) of
Schedule B (Charges)
.
|
“Covered Employee”
|
Has the meaning given in Section 4.3(b) (Non-Hiring of Employees) of the
GENERAL TERMS AND CONDITIONS
.
|
“Covered Population”
|
Personnel listed on
Schedule A-2-9 (Covered Population Matrix
).
|
“CPI-U”
|
The United States Consumer Price Index - All Urban Consumers, U.S. City Average, All items, not seasonally adjusted, 1982-84=100 reference base, as published by the United States Bureau of Labor Statistics.
|
“CPR”
|
Has the meaning given in Section 16.2 (Proceedings) of the
GENERAL TERMS AND CONDITIONS
.
|
“CRM”
|
Has the meaning given in Section 1.2 (Definitions) of
Schedule A-3 (Finance and Accounting Services)
.
|
Services Agreement
|
Glossary
Page 4
|
Defined Term
|
Meaning
|
“Customer”
|
Moran Foods, LLC
|
“Customer Equipment”
|
Equipment owned or leased by Customer to be made available to Supplier for use in providing the Services.
|
“Customer Expense Account”
|
Has the meaning given in Section 5(b) (Charges) of the
GENERAL TERMS AND CONDITIONS.
|
“Customer Facilities”
|
Facilities owned or leased by Customer to be made available to Supplier for use in providing the Services.
|
“Customer Indemnitees”
|
Has the meaning given in Section 14.2 (Indemnification by Supplier) of the
GENERAL TERMS AND CONDITIONS
.
|
“Customer Independent IP”
|
Has the meaning given in Section 9.1 (Independent IP) of the
GENERAL TERMS AND CONDITIONS
.
|
“Customer Licensee”
|
Has the meaning given in Section 2.2 (Use of the Services) of the
GENERAL TERMS AND CONDITIONS
.
|
“Customer Resources”
|
Has the meaning given in Section 6.2(a) (Customer Facilities and Resources) of the
GENERAL TERMS AND CONDITIONS
.
|
“Customer Responsibilities”
|
Has the meaning given in Section 6.1 (General) of the
GENERAL TERMS AND CONDITIONS
.
|
“Customer Software”
|
Software owned or licensed by Customer to be made available to Supplier for use in providing the Services.
|
“Customer’s Share”
|
Has the meaning given in Section 10.3(c) (Termination by Supplier) of the
GENERAL TERMS AND CONDITIONS
.
|
“CVR”
|
Has the meaning given in Section 1.2 (Definitions) of
Schedule A-3 (Finance and Accounting Services)
.
|
“D&A”
|
Has the meaning given in Section 1.2 (Definitions) of
Schedule A-3 (Finance and Accounting Services)
.
|
“DC”
|
Has the meaning given in Section 1.2 (Definitions) of
Schedule A-3 (Finance and Accounting Services)
.
|
“DCRA”
|
Has the meaning given in Section 1.2 (Definitions) of
Schedule A-2 (HR Services)
.
|
“Dedicated Applications”
|
Has the meaning given in Section 5 (SUBSTITUTION) of
Schedule B (Charges)
.
|
“Deliverable”
|
Any work product specifically identified as a ‘Deliverable’ in a Project Order.
|
“Dependent”
|
Has the meaning given in Section 1.2 (Definitions) of
Schedule A-2 (HR Services)
.
|
Services Agreement
|
Glossary
Page 5
|
Defined Term
|
Meaning
|
“Depository Bank”
|
Has the meaning given in Section 5(b) (Charges) of the
GENERAL TERMS AND CONDITIONS.
|
“Developed Material”
|
Has the meaning given in Section 9.2 (Work Product; Developed Material) of the
GENERAL TERMS AND CONDITIONS
.
|
“Disclosing Party”
|
Has the meaning given in Section 8.1 (“Confidential Information” Defined) of the
GENERAL TERMS AND CONDITIONS
.
|
“Discount Rate”
|
Has the meaning given in Section 11.1 (Invoices) of
Schedule B (Charges)
.
|
“Disengagement Assistance”
|
Has the meaning given in Section 10.4 (Disengagement Assistance) of the
GENERAL TERMS AND CONDITIONS
.
|
“Dispute”
|
Has the meaning given in Section 16.1 (Disputes) of the
GENERAL TERMS AND CONDITIONS
.
|
“Dispute Notice”
|
Has the meaning given in Section 16.2 (Proceedings) of the
GENERAL TERMS AND CONDITIONS
.
|
“Diverse Suppliers”
|
Has the meaning given in Section 1.2 (Definitions) of
Schedule A-4 (Miscellaneous Services)
.
|
“DR Services”
|
Has the meaning given in Section 2 (Disaster Recovery Services) of
Schedule A-1 (Technical Services)
.
|
“DSD”
|
Has the meaning given in Section 1.2 (Definitions) of
Schedule A-3 (Finance and Accounting Services)
.
|
“EDI”
|
Has the meaning given in Section 1.2 (Definitions) of
Schedule A-3 (Finance and Accounting Services)
.
|
“EDW”
|
Has the meaning given in Section 1.2 (Definitions) of
Schedule A-3 (Finance and Accounting Services)
.
|
“Effective Date”
|
The date on which the Agreement first takes effect, as set forth on its signature page.
|
“Elements”
|
Has the meaning given in Section 1.2(j) (Organization) of
Schedule A-1 (Technical Services)
.
|
“Employee”
|
Has the meaning given in Section 1.2 (Definitions) of
Schedule A-2 (HR Services)
.
|
“Employee on Leave”
|
Has the meaning given in Section 1.2 (Definitions) of
Schedule A-2 (HR Services)
.
|
“Enhancement”
|
Has the meaning given in Section 2.4 (Enhancements) of the
GENERAL TERMS AND CONDITIONS.
|
Services Agreement
|
Glossary
Page 6
|
Defined Term
|
Meaning
|
“Equipment”
|
All machines and other hardware used in connection with the Services, including all associated attachments, features, accessories and peripheral devices.
|
“Equipment Sourcing Services”
|
Has the meaning given in Section 2.6 (Purchase Order Fees) of
Schedule B (Charges)
.
|
“Event Charge”
|
Has the meaning given in Section 2.5 (Event Charges) of
Schedule B (Charges)
.
|
“Excluded Services”
|
Has the meaning given in Section 2.1 (Scope of Services) of the
GENERAL TERMS AND CONDITIONS
.
|
“Exempt Employee”
|
Has the meaning given in Section 1.2 (Definitions) of
Schedule A-2 (HR Services)
.
|
“F&A Project Work”
|
Has the meaning given in Section 3.1(a) (Pooled Projects) of
Schedule B (Charges)
.
|
“FA”
|
Has the meaning given in Section 1.2 (Definitions) of
Schedule A-3 (Finance and Accounting Services)
.
|
“Facilities Maintenance Desk (FMD)”
|
Has the meaning given in Section 1.2 (Definitions) of
Schedule A-4 (Miscellaneous Services)
.
|
“Facilities Manager (FM)”
|
Has the meaning given in Section 1.2 (Definitions) of
Schedule A-4 (Miscellaneous Services)
.
|
“Facilities Team”
|
Has the meaning given in Section 1.2 (Definitions) of
Schedule A-4 (Miscellaneous Services)
.
|
“FAS”
|
Has the meaning given in Section 1.2 (Definitions) of
Schedule A-3 (Finance and Accounting Services)
.
|
“FCS”
|
Has the meaning given in Section 1.2 (Definitions) of
Schedule A-3 (Finance and Accounting Services)
.
|
“FHH Hosting / Support Services”
|
Has the meaning given in Section 1(c) (INTRODUCTION) of
Schedule A-1-7-1 (Finance and HR Application Hosting Services)
.
|
“FHH Professional Services”
|
Has the meaning given in Section 1(d) (INTRODUCTION) of
Schedule A-1-7 -1(Finance and HR Application Hosting Services)
.
|
“FHH Services”
|
Has the meaning given in Section 1 (INTRODUCTION) of
Schedule A-1-7-1 (Finance and HR Application Hosting Services)
.
|
“FHH Software”
|
Has the meaning given in Section 1(a) (INTRODUCTION) of
Schedule A-1-7 -1(Finance and HR Application Hosting Services)
.
|
“FH Professional Services”
|
Has the meaning given in Section 1(b) (INTRODUCTION) of
Schedule A-1-7 -1 (Finance and HR Application Services)
.
|
Services Agreement
|
Glossary
Page 7
|
Defined Term
|
Meaning
|
“FH Services”
|
Has the meaning given in Section 1(b) (INTRODUCTION) of
Schedule A-1-7 -1 (Finance and HR Application Services)
.
|
“FH Software”
|
Has the meaning given in Section 1(b) (INTRODUCTION) of
Schedule A-1-7 -1 (Finance and HR Application Services)
.
|
“FH Software Operating Guides”
|
Has the meaning given in Section 1(b) (INTRODUCTION) of
Schedule A-1-7 -1 (Finance and HR Application Services)
.
|
“FH Support Services”
|
Has the meaning given in Section 1(b) (INTRODUCTION) of
Schedule A-1-7 -1 (Finance and HR Application Services)
.
|
“FMLA”
|
Has the meaning given in Section 1.2 (Definitions) of
Schedule A-2 (HR Services)
.
|
“Force Majeure Event”
|
Has the meaning given in Section 15.2(a) (Force Majeure) of the
GENERAL TERMS AND CONDITIONS
.
|
“FSA”
|
Has the meaning given in Section 1.2 (Definitions) of
Schedule A-2 (HR Services)
.
|
“Functions”
|
Functions, responsibilities, activities or tasks completed or to be completed by a Party.
|
“GAAP”
|
Has the meaning given in Section 1.2 (Definitions) of
Schedule A-3 (Finance and Accounting Services)
.
|
“Garnishment Fee”
|
Has the meaning given in Section 2.7(b) (Miscellaneous Charges) of
Schedule B (Charges)
.
|
“GL”
|
Has the meaning given in Section 1.2 (Definitions) of
Schedule A-3 (Finance and Accounting Services)
.
|
“Governance”
|
Has the meaning given in Section 3.3 (Governance and Management) of the
GENERAL TERMS AND CONDITIONS
.
|
“H&W”
|
Has the meaning given in Section 1.2 (Definitions) of
Schedule A-3 (Finance and Accounting Services)
.
|
“Hard Discount Business”
|
Has the meaning given in Section 1.1(a) (Background and Purpose) of the
GENERAL TERMS AND CONDITIONS.
|
“HCM”
|
Has the meaning given in Section 1.2 (Definitions) of
Schedule A-2 (HR Services)
.
|
“HCRA”
|
Has the meaning given in Section 1.2 (Definitions) of
Schedule A-2 (HR Services)
.
|
“HR”
|
Has the meaning given in Section 1.2 (Definitions) of
Schedule A-2 (HR Services)
.
|
“HR Manager”
|
Has the meaning given in Section 1.2 (Definitions) of
Schedule A-2 (HR Services)
.
|
Services Agreement
|
Glossary
Page 8
|
Defined Term
|
Meaning
|
“HR Project Work”
|
Has the meaning given in Section 3.1(a) (Pooled Projects) of
Schedule B (Charges)
.
|
“HR Self Service Portal”
|
Has the meaning given in Section 1.2 (Definitions) of
Schedule A-2 (HR Services)
.
|
“IBNR”
|
Has the meaning given in Section 1.2 (Definitions) of
Schedule A-3 (Finance and Accounting Services)
.
|
“Indemnitee”
|
Has the meaning given in Section 14.3 (Indemnification Procedures) of the
GENERAL TERMS AND CONDITIONS.
|
“Indemnitor”
|
Has the meaning given in Section 14.3 (Indemnification Procedures) of the
GENERAL TERMS AND CONDITIONS.
|
“Independent IP”
|
Any material created prior to the Effective Date of the Agreement, or created subsequently outside and independent of the Agreement, and that is made available by a Party to the other Party in connection with this Agreement.
|
“Insolvency Event”
|
(a) the institution by or against Customer of insolvency, receivership or bankruptcy proceedings or any other proceedings for the settlement of Customer’s debts; (b) Customer making an assignment for the benefit of creditors; (c) Customer’s dissolution, winding up, liquidation, composition of its debts, or ceasing to do business; (d) a circumstance where the Customer applies for, seeks, consents to or acquiesces in, the appointment of a receiver, custodian, trustee, examiner, liquidator or similar official for it or any portion of its property; or (e) Customer’s action to authorize or effect any of the foregoing actions.
|
“Intellectual Property Rights”
|
All intellectual and industrial property rights recognized in any jurisdiction, including copyrights, mask work rights, moral rights, trade secrets, patent rights, rights in inventions, trademarks, trade names, and service marks (including applications for, and registrations, extensions, renewals, and re-issuances of, the foregoing).
|
“IT”
|
Information technology.
|
“IT Change Management”
|
Supplier’s processes, procedures, and project plans for implementing changes to IT Systems.
|
“IT Freeze Periods”
|
As designated by Supplier for each calendar year, those time periods within the applicable calendar year that no changes shall be made to Supplier’s IT Systems, other than in accordance exception process.
|
“IT Project Work”
|
Has the meaning given in Section 3.1(a) (Pooled Projects) of
Schedule B (Charges)
.
|
Services Agreement
|
Glossary
Page 9
|
Defined Term
|
Meaning
|
“IT Release Calendar”
|
Dates designated by application for completing upgrades and updates to Software within a Party’s IT Systems.
|
“IT Systems”
|
Software, Equipment, and processes used in combination to perform Functions.
|
“IVR”
|
Has the meaning given in Section 1.2 (Definitions) of
Schedule A-2 (HR Services)
.
|
“JE”
|
Has the meaning given in Section 1.2 (Definitions) of
Schedule A-3 (Finance and Accounting Services)
.
|
“Law”
|
Any statute, regulation, ordinance, rule, order, decree or governmental requirement enacted, promulgated or imposed by any governmental authority at any level (
e.g.,
municipal, county, province, state or national).
|
“Learning Portal”
|
Has the meaning given in Section 1.2 (Definitions) of
Schedule A-2 (HR Services)
.
|
“License and Consent Costs”
|
Has the meaning given in Section 6.3 (Required Consents) of the
GENERAL TERMS AND CONDITIONS
.
|
“LOA”
|
Has the meaning given in Section 1.2 (Definitions) of
Schedule A-2 (HR Services)
.
|
“Losses”
|
Means all losses, liabilities, damages, liens, and claims, and all related costs, expenses, and other charges, including reasonable attorneys’ fees and disbursements, costs of investigation, litigation, settlement, and judgment, and any taxes, interest, fees, penalties and fines with respect to any of the foregoing.
|
“LTD”
|
Has the meaning given in Section 1.2 (Definitions) of
Schedule A-2 (HR Services)
.
|
“LTI”
|
Has the meaning given in Section 1.2 (Definitions) of
Schedule A-2 (HR Services)
.
|
“Manager”
|
Has the meaning given in Section 1.2 (Definitions) of
Schedule A-2 (HR Services)
.
|
“Marketing Materials”
|
Has the meaning given in Section 8.9 (Public Disclosures) of the
GENERAL TERMS AND CONDITIONS
.
|
“Master COA”
|
Has the meaning given in Section 1.2 (Definitions) of
Schedule A-3 (Finance and Accounting Services)
.
|
“MCC”
|
Has the meaning given in Section 1.2 (Definitions) of
Schedule A-3 (Finance and Accounting Services)
.
|
“Mental Impressions”
|
Has the meaning given in Section 9.6 (Mental Impressions) of the
GENERAL TERMS AND CONDITIONS
.
|
Services Agreement
|
Glossary
Page 10
|
Defined Term
|
Meaning
|
“Merger Agreement”
|
The Agreement and Plan of Merger by and among SMITH ACQUISITION CORP, SMITH MERGER SUB CORP, Customer and Supplier, Customer dated October 16, 2016, as amended from time to time.
|
“MICR”
|
Has the meaning given in Section 1.2 (Definitions) of
Schedule A-3 (Finance and Accounting Services)
.
|
“Miscellaneous Services”
|
Has the meaning given in Section 1.1 (General) of
Schedule A-4 (Miscellaneous Services)
.
|
“MMH Hosting / Support Services”
|
Has the meaning given in Section 1(b) (INTRODUCTION) of
Schedule A-1-2 (Merchandising management Hosting Services).
|
“MMH Professional Services”
|
Has the meaning given in Section 1(c) (INTRODUCTION) of
Schedule A-1-2 (Merchandising management Hosting Services).
|
“MMH Services”
|
Has the meaning given in Section 1 (INTRODUCTION) of
Schedule A-1-2 (Merchandising management Hosting Services).
|
“MMH Software”
|
Has the meaning given in Section 1(a) (INTRODUCTION) of
Schedule A-1-2 (Merchandising management Hosting Services).
|
“MRKT Business Process Services”
|
Has the meaning given in Section 1(d) (INTRODUCTION) of
Schedule A-1-3-1 (Marketing Services)
.
|
“MRKT Hosting / Support Services”
|
Has the meaning given in Section 1(c) (INTRODUCTION) of
Schedule A-1-3-1 (Marketing Services)
.
|
“MRKT Professional Services”
|
Has the meaning given in Section 1(e) (INTRODUCTION) of
Schedule A-1-3-1 (Marketing Services)
.
|
“MRKT Services”
|
Has the meaning given in Section 1 (INTRODUCTION) of
Schedule A-1-3-1 (Marketing Services)
.
|
“MRKT Software”
|
Has the meaning given in Section 1(a) (INTRODUCTION) of
Schedule A-1-3-1 (Marketing Services)
.
|
“MRKT Software Operating Guides”
|
Has the meaning given in Section 1(b) (INTRODUCTION) of
Schedule A-1-3-1 (Marketing Services)
.
|
“MRKT Hosting / Support Services”
|
Has the meaning given in Section 1(b) (INTRODUCTION) of
Schedule A-1-3-2 (Marketing Hosting Services)
.
|
“MRKT Professional Services”
|
Has the meaning given in Section 1(c) (INTRODUCTION) of
Schedule A-1-3-2 (Marketing Hosting Services)
.
|
Services Agreement
|
Glossary
Page 11
|
Defined Term
|
Meaning
|
“MRKT Services”
|
Has the meaning given in Section 1 (INTRODUCTION) of
Schedule A-1-3-2 (Marketing Hosting Services)
.
|
“MRKT Software”
|
Has the meaning given in Section 1(a) (INTRODUCTION) of
Schedule A-1-3-2 (Marketing Hosting Services)
.
|
“MRO”
|
Has the meaning given in Section 1.2 (Definitions) of
Schedule A-3 (Finance and Accounting Services)
.
|
“MSS”
|
Has the meaning given in Section 1.2 (Definitions) of
Schedule A-2 (HR Services)
.
|
“MUL”
|
Has the meaning given in Section 1.2 (Definitions) of
Schedule A-3 (Finance and Accounting Services)
.
|
“NCDPD”
|
Has the meaning given in Section 1.2 (Definitions) of
Schedule A-3 (Finance and Accounting Services)
.
|
“New Services”
|
Has the meaning given in Section 2.5 (New Services) of the
GENERAL TERMS AND CONDITIONS
.
|
“Operating Guides”
|
Has the meaning given in Section 2 (Disaster Recovery Services) of
Schedule A-1 (Technical Services)
.
|
“Oracle Cloud Services”
|
An Oracle-hosted set of applications covering core finance and human resource business processes which will replace the current on premise Oracle EBS and PeopleSoft 9.2 applications over time.
|
“Oracle Conversion Fee”
|
Has the meaning given in Section 2.4(a) (Oracle Cloud Services; Business Intelligence Software) of
Schedule B (Charges)
.
|
“OSHA”
|
Has the meaning given in Section 1.2 (Definitions) of
Schedule A-3 (Finance and Accounting Services)
.
|
“Out-of-Pocket Expenses”
|
Actual out-of-pocket expenses incurred by Supplier in connection with the Services reimbursable under the Agreement.
|
“P&L”
|
Has the meaning given in Section 1.2 (Definitions) of
Schedule A-3 (Finance and Accounting Services)
.
|
“PA”
|
Has the meaning given in Section 1.2 (Definitions) of
Schedule A-3 (Finance and Accounting Services)
.
|
“Parties”
|
Collectively, Customer and Supplier.
|
“Participant”
|
Has the meaning given in Section 1.2 (Definitions) of
Schedule A-2 (HR Services)
.
|
“Party”
|
Individually, either Customer or Supplier.
|
Services Agreement
|
Glossary
Page 12
|
Defined Term
|
Meaning
|
“Pass-Through Expenses”
|
Has the meaning given to it in Section 2.7(c) of
Schedule B (Charges)
.
|
“Payment”
|
Has the meaning given in Section 5(b) (Charges) of the
GENERAL TERMS AND CONDITIONS.
|
“PCI DSS”
|
Has the meaning given in Section 7.2(b) (PCI Compliance) of the
GENERAL TERMS AND CONDITIONS
.
|
“Period”
|
One of the thirteen (13) fiscal periods into which each fiscal year of Supplier is divided, according to Supplier's customs and practices.
|
“Personally Identifying Information”
|
An individual’s unencrypted computerized first and last name together with the individual’s Social Security Number, Driver’s License Number, Financial Account number, Passport information, or Protected Health Information or information which applicable Law treats as personal information.
|
“PNT”
|
Has the meaning given in Section 1.2 (Definitions) of
Schedule A-3 (Finance and Accounting Services)
.
|
“PO”
|
Has the meaning given in Section 1.2 (Definitions) of
Schedule A-3 (Finance and Accounting Services)
.
|
“Pooled Projects”
|
Has the meaning given in Section 3.1(a) (Pooled Projects) of
Schedule B (Charges)
.
|
“POS”
|
Has the meaning given in Section 1.2 (Definitions) of
Schedule A-3 (Finance and Accounting Services)
.
|
“PPT”
|
Has the meaning given in Section 1.2 (Definitions) of
Schedule A-3 (Finance and Accounting Services)
.
|
“Prime Suppliers”
|
Has the meaning given in Section 1.2 (Definitions) of
Schedule A-4 (Miscellaneous Services)
.
|
“Process Documentation”
|
Has the meaning given in Section 2.14 (Process Documentation) of the
GENERAL TERMS AND CONDITIONS
|
“Project”
|
A discrete unit of discretionary, non-recurring work.
|
“Project Order”
|
The form of an order issued under the Agreement documenting the terms of the Parties’ agreement regarding a Project to be performed by Supplier. The form of a Project Order is set forth on
Exhibit 1 (Project Order)
.
|
“
Project Services
”
|
Has the meaning given in Section 2.3 (Projects) of the
GENERAL TERMS AND CONDITIONS
.
|
“Proposal”
|
Has the meaning given in Section 3.6(d) (Proposals) of the
GENERAL TERMS AND CONDITIONS
.
|
Services Agreement
|
Glossary
Page 13
|
Defined Term
|
Meaning
|
“PTO”
|
Has the meaning given in Section 1.2 (Definitions) of
Schedule A-3 (Finance and Accounting Services)
.
|
“Purchase Order Fees”
|
Has the meaning given in Section 2.6 (Purchase Order Fees) of
Schedule B (Charges)
.
|
“Purpose”
|
Has the meaning given in Section 8.2 (Confidentiality Obligations) of the
GENERAL TERMS AND CONDITIONS
.
|
“QMCSO”
|
Has the meaning given in Section 1.2 (Definitions) of
Schedule A-2 (HR Services)
.
|
“Rate Card”
|
The rate card set forth in
Schedule B-3 (Rate Card)
, as the same may be updated and modified by mutual written agreement of the Parties from time to time.
|
“Receiving Party”
|
Has the meaning given in Section 8.1(a) (“Confidential Information” Defined) of the
GENERAL TERMS AND CONDITIONS
.
|
“Recruiting Portal”
|
Has the meaning given in Section 1.2 (Definitions) of
Schedule A-2 (HR Services)
.
|
“Representatives”
|
Has the meaning given in Section 8.2 (Confidentiality Obligations) of the
GENERAL TERMS AND CONDITIONS
.
|
“Request”
|
A request for a Change, New Services, or a Project, as the case may be.
|
“Request Log”
|
Has the meaning given in Section 3.6(f) (Request Tracking and Reporting) of the
GENERAL TERMS AND CONDITIONS
.
|
“Required Consents”
|
Has the meaning given in Section 6.3 (Required Consents) of the
GENERAL TERMS AND CONDITIONS
.
|
“RET”
|
Has the meaning given in Section 1.2 (Definitions) of
Schedule A-3 (Finance and Accounting Services)
.
|
“Retail Ops Support”
|
Has the meaning given in Section 1.2 (Definitions) of
Schedule A-4 (Miscellaneous Services)
.
|
“Retiree”
|
Has the meaning given in Section 1.2 (Definitions) of
Schedule A-2 (HR Services)
.
|
“RM Business Process Services”
|
Has the meaning given in Section 1(d) (INTRODUCTION) of
Schedule A-1-4-1 (Retail Management Services).
|
“RM Hosting / Support Services”
|
Has the meaning given in Section 1(c) (INTRODUCTION) of
Schedule A-1-4-1 (Retail Management Services).
|
“RM Professional Services”
|
Has the meaning given in Section 1(e) (INTRODUCTION) of
Schedule A-1-4-1 (Retail Management Services).
|
Services Agreement
|
Glossary
Page 14
|
Defined Term
|
Meaning
|
“RM Services”
|
Has the meaning given in Section 1 (INTRODUCTION) of
Schedule A-1-4-1 (Retail Management Services).
|
“RM Software”
|
Has the meaning given in Section 1(a) (INTRODUCTION) of
Schedule A-1-4-1 (Retail Management Services).
|
“RM Software Operating Guides”
|
Has the meaning given in Section 1(b) (INTRODUCTION) of
Schedule A-1-4-1 (Retail Management Services).
|
“RMD Hosted Software”
|
Has the meaning given in Section 1(a) (INTRODUCTION) of
Schedule A-1-6-2 (RMD Hosting Services)
.
|
“RMD Hosting Services”
|
Has the meaning given in Section 1 (INTRODUCTION) of
Schedule A-1-6-2 (RMD Hosting Services)
.
|
“RMD Hosting / Support Services”
|
Has the meaning given in Section 1(c) (INTRODUCTION) of
Schedule A-1-6-1 (RMD Services)
.
|
“RMD Professional Services”
|
Has the meaning given in Section 1(d) (INTRODUCTION) of
Schedule A-1-6-1 (RMD Services)
.
|
“RMD Services”
|
Has the meaning given in Section 1 (INTRODUCTION) of
Schedule A-1-6-1 (RMD Services)
.
|
“RMD Services Term for SLIM”
|
Has the meaning given in Section 1(a) (INTRODUCTION) of
Schedule A-1-6-1 (RMD Services)
.
|
“RMD Software”
|
Has the meaning given in Section 1(a) (INTRODUCTION) of
Schedule A-1-6-1 (RMD Services)
.
|
“RMD Software Operating Guides”
|
Has the meaning given in Section 1(b) (INTRODUCTION) of
Schedule A-1-6-1 (RMD Services)
.
|
“RMH Hosting / Support Services”
|
Has the meaning given in Section 1(b) (INTRODUCTION) of
Schedule A-1-4-2 (Retail Management Hosting Services).
|
“RMH Professional Services”
|
Has the meaning given in Section 1(c) (INTRODUCTION) of
Schedule A-1-4-2 (Retail Management Hosting Services).
|
“RMH Services”
|
Has the meaning given in Section 1 (INTRODUCTION) of
Schedule A-1-4-2 (Retail Management Hosting Services).
|
“RMH Software”
|
Has the meaning given in Section 1(a) (INTRODUCTION) of
Schedule A-1-4-2 (Retail Management Hosting Services).
|
“Roster Review”
|
Has the meaning given in Section 1.2 (Definitions) of
Schedule A-2 (HR Services)
.
|
Services Agreement
|
Glossary
Page 15
|
Defined Term
|
Meaning
|
“RTW”
|
Has the meaning given in Section 1.2 (Definitions) of
Schedule A-2 (HR Services)
.
|
“Salaried Employee”
|
Has the meaning given in Section 1.2 (Definitions) of
Schedule A-2 (HR Services)
.
|
“SBC”
|
Has the meaning given in Section 1.2 (Definitions) of
Schedule A-2 (HR Services)
.
|
“SCM Business Processing Services”
|
Has the meaning given in Section 1(c) (INTRODUCTION) of
Schedule A-1-1 (Supply Chain Management Hosting Services).
|
“SCM Professional Services”
|
Has the meaning given in Section 1(d) (INTRODUCTION) of
Schedule A-1-1 (Supply Chain Management Hosting Services).
|
“SCM Services”
|
Has the meaning given in Section 1 (INTRODUCTION) of
Schedule A-1-1 (Supply Chain Management Hosting Services).
|
“SCM Software”
|
Has the meaning given in Section 1(a) (INTRODUCTION) of
Schedule A-1-1 (Supply Chain Management Hosting Services).
|
“SEC”
|
Has the meaning given in Section 1.2 (Definitions) of
Schedule A-3 (Finance and Accounting Services)
.
|
“Separated Employee”
|
Has the meaning given in Section 1.2 (Definitions) of
Schedule A-2 (HR Services)
.
|
“Separation”
|
Has the meaning given in Section 1.1(a) (Background and Purpose) of the
GENERAL TERMS AND CONDITIONS
.
|
“Separation Agreement”
|
The Separation Agreement by and between Supervalu Inc. and Customer dated [October] __, 2016, as amended from time to time.
|
“Services”
|
Has the meaning given in Section 2.1 (Scope of Services) of the
GENERAL TERMS AND CONDITIONS
.
|
“Service Base Charge”
|
Has the meaning given in Section 10.2(a) (Termination by Customer) of the
GENERAL TERMS AND CONDITIONS
.
|
“Service Category”
|
The Services to be performed in connection with the function described in a row of the table set forth in
Schedule B-1 (Base Charge)
; provided, however, that each of the following shall be treated as a single Service Category: (i) Payroll Services, Workforce Administration Services and HR Associate Contact Center Services; and (ii) Supplier Diversity and Accounts Payable.
|
Services Agreement
|
Glossary
Page 16
|
Defined Term
|
Meaning
|
“Service Delivery Environment”
|
Collectively, the Equipment, Software, systems, communications networks and connectivity, facilities, and other infrastructure components owned, controlled, or operated by Supplier (or its Subcontractors) and used by Supplier Personnel in rendering the Services under the Agreement.
|
“Service Levels”
|
Has the meaning given in Section 3.1 (Time of Performance) of the
GENERAL TERMS AND CONDITIONS.
|
“Service Recipient”
|
Has the meaning given in Section 2.2 (Use of the Services) of the
GENERAL TERMS AND CONDITIONS
.
|
“Service-Related Taxes”
|
Any sales, use, value added, services, consumption, excise, and other transaction-based taxes assessed in respect of the Services or Supplier’s charges for the Services excluding the taxes subject to Section 7.2 of
Schedule B (Charges)
and excluding taxes on Supplier’s (or its Affiliates’ or Subcontractors’) income.
|
“S&A”
|
Has the meaning given in Section 1.2 (Definitions) of
Schedule A-3 (Finance and Accounting Services)
.
|
“SMMs”
|
Has the meaning given in Section 1.2 (Definitions) of
Schedule A-2 (HR Services)
.
|
“Software”
|
Program code and all supporting documentation, media, on-line help facilities and tutorials, including updates, enhancements, modifications, releases and derivatives works of any of them.
|
“SOX”
|
Has the meaning given in Section 1.2 (Definitions) of
Schedule A-3 (Finance and Accounting Services)
.
|
“SPDs”
|
Has the meaning given in Section 1.2 (Definitions) of
Schedule A-2 (HR Services)
.
|
“Special Charges”
|
The expenses incurred by Supplier for any specialized equipment, software, facilities and third party services Supplier must acquire in order to perform the Project Services, as authorized by Customer in the applicable Project Order.
|
“STD”
|
Has the meaning given in Section 1.2 (Definitions) of
Schedule A-2 (HR Services)
.
|
“Subcontractor”
|
Any third party to whom Supplier has subcontracted any Function(s) constituting a part of the Services (including any Affiliate of a Subcontractor or other entity to whom a Subcontractor further Subcontracts or otherwise sub-delegates any of its Subcontracted duties or obligations).
|
Services Agreement
|
Glossary
Page 17
|
Defined Term
|
Meaning
|
“Subsidiary”
|
With respect to either Party, any corporation, limited liability company, joint venture or partnership of which such Party (a) beneficially owns, either directly or indirectly, more than fifty percent (50%) of (i) the total combined voting power of all classes of voting securities, (ii) the total combined equity interests or (iii) the capital or profit interests, in the case of a partnership, or (b) otherwise has the power to vote, either directly or indirectly, sufficient securities to elect a majority of the board of directors or similar governing body.
|
“Supervisor”
|
Has the meaning given in Section 1.2 (Definitions) of
Schedule A-2 (HR Services)
.
|
“Supplier”
|
SUPERVALU INC. or its successor-in-interest or assign.
|
“Supplier Hourly Rates”
|
Has the meaning given in Section 3.2 (Chargeable Projects) of
Schedule B (Charges)
.
|
“Supplier Indemnitees”
|
Has the meaning given in Section 14.1 (Indemnification by Customer) of the
GENERAL TERMS AND CONDITIONS
.
|
“Supplier Independent IP”
|
Has the meaning given in Section 9.1 (Independent IP) of the
GENERAL TERMS AND CONDITIONS
.
|
“Supplier Personnel”
|
Has the meaning given in Section 4.1 (General Requirements for Supplier Personnel) of the
GENERAL TERMS AND CONDITIONS
.
|
“Supplier Platforms”
|
Has the meaning given in Section 1.2 (Definitions) of
Schedule A-2 (HR Services)
.
|
“Supplier’s Fiscal Calendar”
|
Supplier’s 13-Period fiscal year, as published by Supplier on an annual basis.
|
“Taleo Services”
|
Has the meaning given in Section 2.13 (Transitional Use of Taleo) of the
GENERAL TERMS AND CONDITIONS
|
“Technical Services” or “TS”
|
Has the meaning given in Section 1.1 (General) of
Schedule A-1 (Technical Services)
.
|
“Term”
|
Has the meaning given in Section 10.1 (Term) of the
GENERAL TERMS AND CONDITIONS
.
|
“Tier I”
|
Has the meaning given in Section 1.2 (Definitions) of
Schedule A-4 (Miscellaneous Services)
.
|
“Tier II”
|
Has the meaning given in Section 1.2 (Definitions) of
Schedule A-4 (Miscellaneous Services)
.
|
“TPA”
|
Has the meaning given in Section 1.2 (Definitions) of
Schedule A-3 (Finance and Accounting Services)
.
|
“Transitional Claims Management Services”
|
Has the meaning given in Section 2.12 (Transitional Claims Management Services) of the
GENERAL TERMS AND CONDITIONS.
|
Services Agreement
|
Glossary
Page 18
|
Services Agreement
|
Glossary
Page 19
|
Services Agreement
|
Schedule A-1
Page A-1
-
1
|
** Confidential Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to this omitted information.
|
Services Agreement
|
Schedule A-2
Page A-2
-
1
|
** Confidential Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to this omitted information.
|
Services Agreement
|
Schedule A-3
Page A-3
-
1
|
** Confidential Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to this omitted information.
|
Services Agreement
|
Schedule A-4
Page A-4
-
1
|
** Confidential Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to this omitted information.
|
Services Agreement
|
Schedule A-5
Page A-5
-
1
|
** Confidential Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to this omitted information.
|
Services Agreement
|
Schedule A-6
Page A-6
-
1
|
** Confidential Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to this omitted information.
|
1.
|
Introduction
|
Services Agreement
December 5, 2016
|
Schedule B
Page B-1
|
2.
|
BASE charge
|
2.1
|
Base Charge
|
(a)
|
Base Charge and Up-front Payment
. Beginning on the Effective Date and for each month thereafter during the Term, Customer will be responsible for a monthly recurring charge for the Services (such monthly amount, the “
Base Charge
”) in an amount calculated in accordance with this Section 2.1. As further described in Section 11, the Base Charge will be invoiced on a monthly basis, except that that Customer shall prepay on the Effective Date an amount equal to thirty million dollars ($30,000,000), which amount will be credited against the Base Charge each month until such amount has been fully credited.
|
(b)
|
Calculation of Adjusted Base Charge
. The Base Charge will be calculated as follows:
|
(i)
|
The Base Charge will be two million five-hundred thousand dollars ($2,500,000) per month as adjusted (up or down) by operation of the following sections:
|
2.1.b.i.1
|
Section 2.1(e) (COLA);
|
2.1.b.i.2
|
Section 2.3 (TS Staff Augmentation);
|
2.1.b.i.3
|
Section 2.4(c) [**];
|
2.1.b.i.4
|
Section 2.7(c) (Stand-Alone Costs and P&L Expenses);
|
2.1.b.i.5
|
Section 5 (Substitution);
|
2.1.b.i.6
|
Section 9 (Adjustments of Supplier's Rates and Charges);
|
2.1.b.i.7
|
Section 10 (Volume Limitations);
|
2.1.b.i.8
|
Section 2.5 (New Services) of the GENERAL TERMS AND CONDITIONS; and
|
2.1.b.i.9
|
Section 10.2 (Termination) of the
GENERAL TERMS AND CONDITIONS
.
|
(c)
|
Minimums
. Notwithstanding Section 2.1(b), the Base Charge on an annual basis will not fall below the following amounts except: (i) in the event of termination of one or more Services for uncured material breach or failure to satisfy critical service levels under Section 10.2(a) or 10.2(d) of the
GENERAL TERMS AND CONDITIONS
; (ii) with respect to Years 1 to 3 only, as provided under Section 2.4(c) (Reduction in Base Charge Upon Oracle Conversion); (iii) pursuant to Section 2.3 (TS Staff Augmentation); and (iv) as provided in Sections 2.2 (Baseline and Volume Changes--ARCs and RRCs) and 10(a) (Volume Limitations), subject to Section 2.1(d) (RRCs and Volume Decreases);
|
(i)
|
Year 1: [**]
|
Services Agreement
December 5, 2016
|
Schedule B
Page B-2
|
(ii)
|
Year 2: [**]
|
(iii)
|
Year 3: [**]
|
(iv)
|
Year 4: [**]
|
(v)
|
Year 5: [**]
|
(d)
|
RRCs and Volume Decreases
. The application of RRCs under Section 2.2 and volume decreases under Section 10(a) of this Schedule B shall not reduce the Base Charges paid or payable to Supplier under the Agreement for any Year by more than [**] of the Base Charges before the application of any such reduction but after application of all other adjustments (other than the COLA adjustment pursuant to Section 2.1(e)).
|
(e)
|
COLA
. [**] and for the remainder of the Term, the Base Charge will be increased by a percentage equal to [**] Any such annual Base Charge increase shall be made after the inclusion of the Base Charge adjustments, if any, required under Section 2.1(b).
|
2.2
|
Baseline and Volume Changes
|
Example: Baseline Volume = 100, Actual Volume = 118, ARC = $10
|
|
118-100 =18*$10=$180 increase to the Base Charge for the month
|
|
Example: Baseline Volume = 100, Actual Volume = 82, RRC = $10
|
|
100 - 82 = 18*$10 = $180 decrease to the Base Charge for the month subject to the limitation set forth in Section 2.1(a)(iv) of this Schedule B (
Charges
).
|
|
2.3
|
TS Staff Augmentation
|
Services Agreement
December 5, 2016
|
Schedule B
Page B-3
|
2.4
|
Oracle Cloud Services; Business Intelligence Software
|
(a)
|
Subject to Section 2.9 of the
GENERAL TERMS AND CONDITIONS
, Customer shall convert to a separate instance of the Oracle Cloud Services and Supplier shall assist in such conversion, as further provided in
Schedule B-9 (Oracle Migration Plan and Acceptance Criteria)
. For such conversion, Customer shall pay to Supplier as a conversion fee (“Oracle Conversion Fee”) an amount equal to [**]
|
(i)
|
[**]
|
(ii)
|
[**]
|
(b)
|
[**]
|
(c)
|
[**]
|
(d)
|
Subject to Section 2.9 of the
GENERAL TERMS AND CONDITIONS
, Customer shall convert to a separate instance of the Business Intelligence and Supplier shall assist in such conversion, as further provided in
Schedule B-10 (Business Intelligence Software Migration Plan and Acceptance Criteria
). Such conversion support provided by Supplier as outlined in in
Schedule B-10 (Business Intelligence Software Migration Plan and Acceptance Criteria
) shall be performed [**].
|
2.5
|
Event Charges
|
Services Agreement
December 5, 2016
|
Schedule B
Page B-4
|
2.6
|
Purchase Order Fees
|
2.7
|
Retained Third Party Fees; Miscellaneous Charges
|
(a)
|
With respect to the coupon processing related Services provided under
Schedule A-3-8 (FAS)
, Supplier shall retain all coupon handling fees received from third parties (the “
Coupon Processing Fee
”) for all coupons processed by Supplier on behalf of Customer and Customer Licensees. [**].
|
(b)
|
Customer assesses its employees subject to a garnishment proceeding the maximum processing fee allowed under applicable Law with respect to such garnishment. Supplier shall process all garnishments to include, and Supplier shall be entitled to retain (or receive from Customer if not received by Supplier from the affected Customer employee) such maximum processing fees (the “
Garnishment Fees
”) as part of the garnishment-related Services provided under
Schedule A-2-6 (Payroll Services)
and
Schedule A-3-13 (Payroll Finance)
.
|
(c)
|
Without prejudice to either Party's rights or obligations under Section 7.9 of the Separation Agreement, Customer shall be responsible for [**] Other agreements between the Parties with regard to Shared Contracts and related matters are set out in Section 7.9 of the Separation Agreement. In the event of conflict between the Separation Agreement and this Section 2.7(c), the Separation Agreement will control.
|
(d)
|
Subject to Section 2.9 of the
GENERAL TERMS AND CONDITIONS
and Section 2.4 of this
Schedule B
, Customer may request from time to time that Customer’s data within Supplier’s IT Systems be physically separated. Customer and Supplier shall follow the Change Control Procedure in Section 3.6 of the
GENERAL TERMS AND CONDITIONS
for any such physical separation of Customer’s data. Any logical separation of Customer’s data shall not in itself give rise to a Change Order.
|
2.8
|
Retail Store Audit Fees
|
Services Agreement
December 5, 2016
|
Schedule B
Page B-5
|
2.9
|
Audits
|
2.10
|
Cost of Providing Services.
|
3.
|
PROJECT SERVICES
|
3.1
|
Pooled Projects
|
(a)
|
In addition to the Services set forth in
Schedule A (Services)
, the Base Charge compensates Supplier for performing up to (i) [**] of Project work related but incremental to
the Schedule A-1 (Technical Services)
Services (“
IT Project Work
”), (ii) [**] of Project work related but incremental to the Schedule A-2 Services (“
HR Project Work”
), and (iii) [**] of Project work related but incremental to the
Schedule A-3 (Finance Services)
Services (“
F&A Project Work
”) (collectively, “
Pooled Projects
”). Accordingly, Supplier will not bill Customer for time spent performing Pooled Projects within such per month hour limit. For avoidance of doubt, work performed by Supplier in connection with conversion to Oracle Fusion and separation of Business Intelligence systems under Section 2.9 of the
GENERAL TERMS AND CONDITIONS
will not be considered Project work under this Section 3.1. In the event that Customer expends all of its available hours within one of the Project Work categories in a month but hours remain under the other Project Work categories and Customer requests additional Project work within such expended category during the applicable month, Supplier shall, subject to its resources availability and the type of Project proposed by Customer, use reasonable efforts to accommodate Customer’s request for completion of such Project up to the remaining Project Work hours for such month.
|
(b)
|
[**] of unused Pooled Project hours during a month for each of IT Project Work, HR Project Work and F&A Project Work will carryover for one month and then expire. Customer must use the Pooled Project hours for the current month before any carryover hours from the prior month may be used.
|
(c)
|
Pooled Projects may not be used for work that exceeds the capacity of the Supplier team providing the work in the month requested.
|
Services Agreement
December 5, 2016
|
Schedule B
Page B-6
|
(d)
|
The process for Pooled Projects will be as follows:
|
3.2
|
Chargeable Projects
|
(a)
|
Projects that do not satisfy the criteria of a Pooled Project set forth in Section 3.1 will be authorized by Project Orders signed by authorized representatives of both Parties (“
Chargeable Projects
”). Chargeable Projects will be charged [**], such rates as of the Effective Date are set forth on
Schedule B-7 (Supplier Hourly Rates)
([**] “
Supplier Hourly Rates
”). Supplier Hourly Rates are subject to change by Supplier under the conditions set forth in
Schedule B-7 (Supplier Hourly Rates)
and are inclusive of all overhead costs, general and administrative fees, and profit, but are exclusive of Travel Expenses and any Special Charges authorized by Customer in the applicable Project Order.
|
(b)
|
In instances where a Chargeable Project is to be performed for a fixed amount, such amount will be set forth on the applicable Project Order.
|
(c)
|
Supplier will include the Charges due for Chargeable Projects on Supplier’s regular monthly invoice as the Charges are incurred. The invoice will include Supplier’s Charges for Chargeable Projects and, as applicable, Special Charges authorized by Customer pursuant to the Project Order, and Service-Related Taxes. Upon Customer’s written request following receipt of the invoice, Supplier will also provide hours by resource and activity included in the invoice within five (5) Business Days after Customer's request.
|
4.
|
ANNUAL CREDIT
|
(a)
|
Supplier hereby grants Customer a credit (the “
Annual Credit
”) as follows:
|
Services Agreement
December 5, 2016
|
Schedule B
Page B-7
|
Year
|
Credit
|
1
|
[**]
|
2
|
[**]
|
3
|
[**]
|
4
|
[**]
|
5
|
[**]
|
(b)
|
For each of Years 1, 2 and 3 of the Term, Customer may apply the Annual Credit for such Year only against ARCs, Enhancements, Projects (to the extent in connection with implementing Enhancements), and Event Charges, in each case applicable to the Year.
|
(c)
|
For each of Years 4 and 5 of the Term, Customer may apply the Annual Credit for such Year against only ARCs, and Event Charges applicable to the Year.
|
5.
|
SUBSTITUTION
|
6.
|
TRAVEL EXPENSES
|
Services Agreement
December 5, 2016
|
Schedule B
Page B-8
|
7.
|
SERVICE-RELATED TAXES
|
7.1
|
Responsibility for Service-Related Taxes
|
(a)
|
Customer will be financially responsible for and will pay (or reimburse) Supplier for any Service-Related Taxes invoiced by Supplier, except that Supplier will be financially responsible for and will pay (or reimburse) Customer to the extent that any increase in such Service-Related Taxes is caused by Supplier (i) opening new facilities or employing or engaging new personnel, in each case outside of jurisdictions where Supplier conducts its business as of the date hereof, with such increase measured at the time of such opening or employment or engagement; provided that Supplier will cease to be financially responsible for such Service-Related Taxes to the extent that Customer subsequently opens a new facility or employs or engages new personnel, in each that would have independently given rise to such Service-Related Taxes or (ii) otherwise making changes, other than at the request of a Service Recipient, to its manner of delivering the Services.
|
(b)
|
Supplier represents and warrants that as of the date of the Merger Agreement it does not incur or invoice Customer for any Service-Related Taxes and that the transactions contemplated by the Separation Agreement, the Merger Agreement, and this Agreement will not cause Supplier to incur or invoice Customer for any such Service-Related Taxes as of immediately following the Effective Date.
|
(c)
|
To the extent that Service-Related Taxes arise after the Effective Date due to changes in Laws, Section 10.3(c)(ii) of the GENERAL TERMS AND CONDITIONS will apply (notwithstanding any statement therein that such section does not apply to Laws related to taxes).
|
(d)
|
Supplier will not invoice Customer for Service Related Taxes except as contemplated by Section 7.1(a) or (c). (e) For the avoidance of doubt, except as otherwise agreed in writing by the Parties, Supplier’s Charges are exclusive of such Service-Related Taxes but Service-Related Taxes shall be considered Charges under the Agreement.
|
7.2
|
Supplier Responsibility for Other Taxes
|
7.3
|
Mutual Cooperation
|
Services Agreement
December 5, 2016
|
Schedule B
Page B-9
|
8.
|
CONTINGENCY FEE ARRANGEMENTS
|
9.
|
ADJUSTMENTS OF SUPPLIER'S RATES AND CHARGES
|
(a)
|
A material impact on Customer’s operations or business levels arising from significant acquisitions, mergers, divestitures or pronounced increase in the level of Customer’s business operations due to major shifts in the U.S. economy or Customer’s business sector; or
|
(b)
|
Any assumptions or limitations in Section 3 of
Schedule A (Services)
, Section 6 of
Schedule A-1 (Technical Services)
, Section 2 of
Schedule A-2 (HR Services)
, Section 2 of
Schedule A-3 (Finance Services)
or Section 2 of
Schedule A-4 (Miscellaneous Services)
no longer applies or Customer requests a change to the Services that violates any such limitation, except to the extent that such assumptions were not true and correct as of the date hereof.
|
10.
|
VOLUME LIMITATIONS
|
(a)
|
In the event of any sustained and material increase in the volume of inquiries, requests, actions, network and computational utilization, or other items under any Service that is not caused by actions or changes in policy of the Supplier, then upon request by Supplier, Customer shall negotiate in good faith with Supplier to agree on the amount of an equitable adjustment to the Charges intended to compensate Supplier for any increased or decreased costs of Supplier resulting from such volume increases. Similarly, subject to Section 2.1 of this Schedule B (
Charges
), in the event of any sustained and material decrease in such volumes, then, upon request by Customer, Supplier shall negotiate in good faith with Customer to agree on the amount of an equitable adjustment to the Charges intended to reflect any decreased costs to Supplier resulting from such volume decreases.
|
Services Agreement
December 5, 2016
|
Schedule B
Page B-10
|
(b)
|
Without limiting subsection (a), if the total number of Customer Litigation Holds (i.e., a process used to preserve relevant information when litigation is reasonably anticipated which includes Customer’s notification to its employees instructing them not to delete electronically stored information or paper documents that may be relevant to the existing or potential legal matter
)
exceeds 175 and/or the total number of Custodians on Customer Litigation Holds exceeds 45 at any time, Customer shall be required to acquire Software from a third party vendor that provides automated litigation hold support (such as Exterro’s Fusion software) to track and log all projects, custodians and collections to manage Customer's litigation hold process. Supplier shall no longer be able or obligated to provide any Services related to the litigation hold process should the number of Customer Litigation Holds and/or Custodians on Customer Litigation Holds (e.g., forensics) exceed such levels and
Customer does not obtain such Software.
|
11.
|
INVOICING AND PAYMENT
|
11.1
|
Invoices
|
11.2
|
Disputed Charges
|
11.3
|
Currency
|
11.4
|
No Set Off
|
Services Agreement
December 5, 2016
|
Schedule B
Page B-11
|
Services Agreement
December 5, 2016
|
Schedule B
Page B-12
|
Services Agreement
December 5, 2016
|
Schedule B-1
Page B-1-1
|
Services Agreement
December 5, 2016
|
Schedule B-4
Page B-4-1
|
Services Agreement
December 5, 2016
|
Schedule B-5
Page B-5-1
|
Services Agreement
December 5, 2016
|
Schedule B-6
Page B-6-1
|
Resource
|
Supplier Hourly Rates
(as of Effective Date) [**]
|
HR Executive Compensation / Benefit Consultant
|
|
HR Consultant
|
|
HR Analyst
|
|
HR Specialist
|
|
Finance Department Specialist
|
|
Finance Financial Analyst
|
|
Finance Accounting Manager
|
|
Generalist Business Resource
|
|
Analyst
|
|
Engineers I-Sr
|
|
Project Manager
|
|
Management
|
|
Principle Engineers
|
|
Architects
|
|
Cyber Security Consultant
|
|
Services Agreement
December 5, 2016
|
Schedule B-7
Page B-7-1
|
Services Agreement
December 5, 2016
|
Schedule B-8
Page B-8-1
|
1.
|
Dedicated Instance
: Supplier will provide Customer with a dedicated Oracle Cloud instance that does not have any other Customers or tenants within such instance.
|
2.
|
Oracle Licensing & Change of Control
: If Customer undergoes a Change in Control, the dedicated Customer instance will continue to be provided to Customer pursuant to this Agreement.
|
3.
|
Number of Environments
: Supplier will provide three environments: (1) DEV, (2) TEST and (3) PROD for use with Customer's dedicated Oracle cloud instance, for the Services. All environments will be exclusive to Customer, will be on-demand as needed, and for the avoidance of doubt not shared.
|
4.
|
Functionality & Supplier Process Standardization
: The dedicated instance for HR and Finance Services will be configured by Supplier and Customer such that it will adhere to 90% plus of the best industry practices as represented in the Fusion system. Items that must comply with best industry practices without reference to the 90% standard include:
|
a.
|
Financial reporting and analysis (budgeting/forecasting, financial close process, financial reporting and analysis, and public company filing requirements as per Customer's needs, e.g., SOX compliance measures, etc.), to the extent such items can be performed in the dedicated Oracle instance.
|
5.
|
Data Migration
: Supplier will migrate all Customer master data, historical data (e.g., sales, purchase, inventory, GL, etc.) from Supplier’s legacy systems (including Oracle EBS, Lawson, other Finance sub-systems but not including PeopleSoft) to support historical financial reporting requirements. Customer will, at its cost, provide migration of all Customer master data, historical data (e.g., sales, purchase, inventory, GL, etc.) from Customer’s legacy systems (e.g., WMS, etc.) to support historical financial reporting requirements.
|
6.
|
Interfaces
: Supplier will set up new interfaces with relevant third-party connections with Supplier’s systems that are in place as of the Effective Date, excluding interfaces to Customer’s systems that are not supported on a PSA by Supplier (i.e. for which Customer is responsible).
|
7.
|
Data Removal
: Supplier will remove all Customer data from Supplier’s legacy financial systems after migration is complete, subject to the Acceptance Criteria. Supplier will retain Customer’s data for the period legally required and consistent with Supplier’s document retention policy.
|
8.
|
Technical Implementation (Configuration, Development)
: Supplier
will
complete all other technical implementation responsibilities for the build of the Oracle environment, including but not limited to: core system configuration, workflow configuration/development, security configuration, and environment management.
|
9.
|
Migration Milestones
: Provided Customer performs its obligations in connection with the Oracle Cloud instance, the below milestones are targeted for the migration to Customer’s new Oracle Cloud and subject to the Acceptance Criteria.
|
Services Agreement
December 5, 2016
|
Schedule B-9
Page B-9-1
|
10.
|
ERP Acceptance Criteria
(For illustrative purposes only, to be finalized upon project plan completion)
|
ID
|
Guiding Principle
|
|
Customer will leverage standard, commercial implementation of Oracle Cloud whenever possible, minimizing customizations which may alter base-level configurations of the system (90% plus of the best industry practices as represented in the Fusion system). The standard implementation may include any Oracle-approved verticals or accelerators created for grocery retailers.
|
Services Agreement
December 5, 2016
|
Schedule B-9
Page B-9-2
|
1.
|
[**
]
|
2.
|
Supplier Services / Costs:
Supplier agrees to perform the scope of services in Section 3 for [**].
|
3.
|
Roles & Responsibilities:
The
below roles and
responsibilities
matrix
align to the steps in the Project Scope diagram.
|
4.
|
Software & Hardware Costs:
|
5.
|
Hosting Services & Go-forward BI PSA Support
: Supplier will provide Customer with hosting services for the purposes of Business Intelligence systems to be hosted in the Supplier environment (primarily Omnico and Staging). Customer desires to host the SAL BI environment and SAL DW Servers in the Microsoft Azure public cloud. Supplier will work in good faith to support the Azure environment within the existing Services set forth in Schedule A-1-5, provided that should such hosting or support or any simultaneous hosting of SAL’s old and new BI environments result in any net increased cost to Supplier (taking into account any costs savings arising from Customer no longer using the legacy environment), such actual and documented cost shall be Customer’s responsibility.
|
6.
|
Number of Environments
: Supplier will provide Customer with three environments: (1) DEV, (2) TEST and (3) PROD to support Business Intelligence systems.
|
7.
|
Data Removal
: Supplier will remove all Customer data from Supplier’s legacy Business Intelligence systems after migration is complete, subject to the Acceptance Criteria and what is required by law. Supplier will retain Customer’s data for a period of 90 days after sign-off of Go-live.
|
8.
|
[**]
|
9.
|
Acceptance Criteria
:
|
Services Agreement
December 5, 2016
|
Schedule B-10
Page B-10-1
|
10.
|
Guiding Principles:
The following guiding principles represent assumptions and parameters which support the migration and implementation of Customer’s BI separation.
|
ID
|
Guiding Principle
|
1
|
Customer is responsible for the database architect, integration engineer, and reporting analyst necessary for the design of the BI system, including reporting and functionality and performance of the BI environment.
|
2
|
Whenever possible, Supplier will leverage Customer’s existing technologies (e.g., SQL Server, Tableau) and environments currently provisioned for Customer to minimize additional licenses and costs
|
Services Agreement
December 5, 2016
|
Schedule B-10
Page B-10-2
|
Services Agreement
December 5, 2016
|
Schedule B-11
Page B-11-1
|
Services Agreement
December 5, 2016
|
Schedule B-12
Page B-12-1
|
Services Agreement
|
Exhibit 1
Page 1
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Services Agreement
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Exhibit 2
Page 1
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Meeting Name and Purpose
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Key Attendees
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Frequency
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Party Responsible for Agenda, Meeting Notes and Chairing the Meeting
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Transition Meetings
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Customer Designate
Supplier Designate
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Weekly during initial year of Term and monthly thereafter, as needed
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Customer
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Project Approval and Priority Setting Meetings
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Customer Designate
Supplier Designate
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For Chargeable Projects, on a quarterly basis or as needed; For Pooled Projects, on a monthly basis
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Customer
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Functional Team Meeting(s)
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Customer Designate
Supplier Designate
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Monthly or as needed
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Customer
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Relationship Steering Committee Meeting
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Relationship Steering Committee
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As needed and mutually agreed to by subject matter experts
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Supplier
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Relationship Steering and Executive Committee Meeting
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Relationship Steering Committee
Executive Committee
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Weekly, or as needed for the first 3 months after the Effective Date
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Supplier
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Executive Management Strategic planning meeting
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Key members from Relationship Steering Committee, Executive Committee and Functional Teams to deliver / receive Customer annual plan
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Quarterly, subject to project submission schedule
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Customer
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Services Agreement
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Exhibit 3
Page 1
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1.
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Project Overview
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2.
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Project Order Contacts
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2
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Insert a description of the event/milestone that will signify the successful completion and end-point of the Project. Alternatively insert the fixed end date.
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Services Agreement
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Exhibit 4
Page 1
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3.
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Scope of Project Services
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3.1
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Description of Project Services
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3.2
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Project Plan
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3.3
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Deliverables
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Deliverable Name
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Due Date
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Acceptance Criteria
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4.
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Project Charges
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5.
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Project Term and Termination
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5.1
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Term
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5.2
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Termination
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6.
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Agreement Overrides or Modifications
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Services Agreement
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Exhibit 4
Page 2
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7.
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Conflicts
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8.
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Execution
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SUPERVALU INC.
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Save-A-Lot, LLC
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By:
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By:
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Printed:
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Printed:
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Title:
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Title:
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Date:
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Date
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Services Agreement
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Exhibit 4
Page 3
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Services Agreement
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Exhibit 5
Page 1
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PCI DSS Requirements
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Customer (Save-A-Lot or SAL)[**]
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SAL could impact Security of the POS[**]
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SAL is a national retail grocer with over 1,300 stores. They outsource IT functions to SVU, including but not limited to supporting and maintaining all software, hardware, network equipment, and IT related systems; designing, building, and implementing software applications for operations; monitoring and security administration functions.
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1.1 Establish and implement firewall and router configuration standards that include the following:
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1.1.1 A formal process for approving and testing all network connections and changes to the firewall and router configurations
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1.1.2 Current network diagram that identifies all connections between the cardholder data environment and other networks, including any wireless networks
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1.1.3 Current diagram that shows all cardholder data flows across systems and networks
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1.1.4 Requirements for a firewall at each Internet connection and between any demilitarized zone (DMZ) and the internal network zone
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1.1.5 Description of groups, roles, and responsibilities for management of network components
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1.1.6 Documentation and business justification for use of all services, protocols, and ports allowed, including documentation of security features implemented for those protocols considered to be insecure.
Examples of insecure services, protocols, or ports include but are not limited to FTP, Telnet, POP3, IMAP, and SNMP v1 and v2.
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1.1.7 Requirement to review firewall and router rule sets at least every six months
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1.2 Build firewall and router configurations that restrict connections between untrusted networks and any system components in the cardholder data environment.
Note: An “untrusted network” is any network that is external to the networks belonging to the entity under review, and/or which is out of the entity's ability to control or manage.
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1.2.1 Restrict inbound and outbound traffic to that which is necessary for the cardholder data environment, and specifically deny all other traffic.
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1.2.2 Secure and synchronize router configuration files.
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1.2.3 Install perimeter firewalls between all wireless networks and the cardholder data environment, and configure these firewalls to deny or, if traffic is necessary for business purposes, permit only authorized traffic between the wireless environment and the cardholder data environment.
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Services Agreement
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Exhibit 6
Page 1
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1.3 Prohibit direct public access between the Internet and any system component in the cardholder data environment.
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1.3.1 Implement a DMZ to limit inbound traffic to only system components that provide authorized publicly accessible services, protocols, and ports.
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1.3.2 Limit inbound Internet traffic to IP addresses within the DMZ.
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1.3.3 Do not allow any direct connections inbound or outbound for traffic between the Internet and the cardholder data environment.
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1.3.4 Implement anti-spoofing measures to detect and block forged source IP addresses from entering the network.
(For example, block traffic originating from the Internet with an internal source address.)
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1.3.5 Do not allow unauthorized outbound traffic from the cardholder data environment to the Internet.
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1.3.6 Implement stateful inspection, also known as dynamic packet filtering. (That is, only “established” connections are allowed into the network.)
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1.3.7 Place system components that store cardholder data (such as a database) in an internal network zone, segregated from the DMZ and other untrusted networks.
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1.3.8 Do not disclose private IP addresses and routing information to unauthorized parties.
Note: Methods to obscure IP addressing may include, but are not limited to:
• Network Address Translation (NAT)
• Placing servers containing cardholder data behind proxy servers/firewalls,
• Removal or filtering of route advertisements for private networks that employ registered addressing,
• Internal use of RFC1918 address space instead of registered addresses.
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1.4 Install personal firewall software on any mobile and/or employee-owned devices that connect to the Internet when outside the network (for example, laptops used by employees), and which are also used to access the network. Firewall configurations include:
• Specific configuration settings are defined for personal firewall software.
• Personal firewall software is actively running.
• Personal firewall software is not alterable by users of mobile and/or employee-owned devices.
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1.5 Ensure that security policies and operational procedures for managing firewalls are documented, in use, and known to all affected parties.
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Services Agreement
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Exhibit 6
Page 2
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2.1 Always change vendor-supplied defaults and remove or disable unnecessary default accounts before installing a system on the network.
This applies to ALL default passwords, including but not limited to those used by operating systems, software that provides security services, application and system accounts, point-of-sale (POS) terminals, Simple Network Management Protocol (SNMP) community strings, etc.).
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2.1.1 For wireless environments connected to the cardholder data environment or transmitting cardholder data, change ALL wireless vendor defaults at installation, including but not limited to default wireless encryption keys, passwords, and SNMP community strings.
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2.2 Develop configuration standards for all system components. Assure that these standards address all known security vulnerabilities and are consistent with industry-accepted system hardening standards.
Sources of industry-accepted system hardening standards may include, but are not limited to:
• Center for Internet Security (CIS)
• International Organization for Standardization (ISO)
• SysAdmin Audit Network Security (SANS) Institute
• National Institute of Standards Technology (NIST).
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2.2.1 Implement only one primary function per server to prevent functions that require different security levels from co-existing on the same server. (For example, web servers, database servers, and DNS should be implemented on separate servers.)
Note: Where virtualization technologies are in use, implement only one primary function per virtual system component.
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2.2.2 Enable only necessary services, protocols, daemons, etc., as required for the function of the system.
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2.2.3 Implement additional security features for any required services, protocols, or daemons that are considered to be insecure—for example, use secured technologies such as SSH, S-FTP, TLS, or IPSec VPN to protect insecure services such as NetBIOS, file-sharing, Telnet, FTP, etc.
Note: SSL and early TLS are not considered strong cryptography and cannot be used as a security control after 30th June, 2016. Prior to this date, existing implementations that use SSL and/or early TLS must have a formal Risk Mitigation and Migration Plan in place.
Effective immediately, new implementations must not use SSL or early TLS.
POS POI terminals (and the SSL/TLS termination points to which they connect) that can be verified as not being susceptible to any known exploits for SSL and early TLS may continue using these as a security control after 30th June, 2016.
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Services Agreement
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Exhibit 6
Page 3
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2.2.4 Configure system security parameters to prevent misuse.
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2.2.5 Remove all unnecessary functionality, such as scripts, drivers, features, subsystems, file systems, and unnecessary web servers.
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2.3 Encrypt all non-console administrative access using strong cryptography. Use technologies such as SSH, VPN, or TLS for web-based management and other non-console administrative access.
Note: SSL and early TLS are not considered strong cryptography and cannot be used as a security control after 30th June, 2016. Prior to this date, existing implementations that use SSL and/or early TLS must have a formal Risk Mitigation and Migration Plan in place.
Effective immediately, new implementations must not use SSL or early TLS.
POS POI terminals (and the SSL/TLS termination points to which they connect) that can be verified as not being susceptible to any known exploits for SSL and early TLS may continue using these as a security control after 30th June, 2016.
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2.4 Maintain an inventory of system components that are in scope for PCI DSS.
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2.5 Ensure that security policies and operational procedures for managing vendor defaults and other security parameters are documented, in use, and known to all affected parties.
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2.6 Shared hosting providers must protect each entity’s hosted environment and cardholder data. These providers must meet specific requirements as detailed in Appendix A: Additional PCI DSS Requirements for Shared Hosting Providers.
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3.1 Keep cardholder data storage to a minimum by implementing data-retention and disposal policies, procedures and processes that include at least the following for all CHD storage:
• Limiting data storage amount and retention time to that which is required for legal, regulatory, and/or business requirements.
• Specific retention requirements for cardholder data
• Processes for secure deletion of data when no longer needed.
• A quarterly process for identifying and securely deleting stored cardholder data that exceeds defined retention.
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Services Agreement
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Exhibit 6
Page 4
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3.2 Do not store sensitive authentication data after authorization (even if encrypted). If sensitive authentication data is received, render all data unrecoverable upon completion of the authorization process.
It is permissible for issuers and companies that support issuing services to store sensitive authentication data if:
• There is a business justification and
• The data is stored securely.
Sensitive authentication data includes the data as cited in the following Requirements 3.2.1 through 3.2.3:
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3.2.1 Do not store the full contents of any track (from the magnetic stripe located on the back of a card, equivalent data contained on a chip, or elsewhere) after authorization. This data is alternatively called full track, track, track 1, track 2, and magnetic-stripe data.
Note: In the normal course of business, the following data elements from the magnetic stripe may need to be retained:
• The cardholder’s name
• Primary account number (PAN)
• Expiration date · Service code
To minimize risk, store only these data elements as needed for business.
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3.2.2 Do not store the card verification code or value (three-digit or four-digit number printed on the front or back of a payment card) used to verify card-not-present transactions after authorization.
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3.2.3 Do not store the personal identification number (PIN) or the encrypted PIN block after authorization.
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3.3 Mask PAN when displayed (the first six and last four digits are the maximum number of digits to be displayed), such that only personnel with a legitimate business need can see the full PAN.
Note: This requirement does not supersede stricter requirements in place for displays of cardholder data—for example, legal or payment card brand requirements for point-of-sale (POS) receipts.
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Services Agreement
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Exhibit 6
Page 5
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3.4 Render PAN unreadable anywhere it is stored (including on portable digital media, backup media, and in logs) by using any of the following approaches:
• One-way hashes based on strong cryptography, (hash must be of the entire PAN)
• Truncation (hashing cannot be used to replace the truncated segment of PAN)
• Index tokens and pads (pads must be securely stored)
• Strong cryptography with associated key-management processes and procedures.
Note: It is a relatively trivial effort for a malicious individual to reconstruct original PAN data if they have access to both the truncated and hashed version of a PAN. Where hashed and truncated versions of the same PAN are present in an entity’s environment, additional controls must be in place to ensure that the hashed and truncated versions cannot be correlated to reconstruct the original PAN.
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3.4.1 If disk encryption is used (rather than file- or column-level database encryption), logical access must be managed separately and independently of native operating system authentication and access control mechanisms (for example, by not using local user account databases or general network login credentials). Decryption keys must not be associated with user accounts.
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3.5 Document and implement procedures to protect keys used to secure stored cardholder data against disclosure and misuse:
Note: This requirement applies to keys used to encrypt stored cardholder data, and also applies to key-encrypting keys used to protect data-encrypting keys—such key-encrypting keys must be at least as strong as the data-encrypting key.
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3.5.1 Restrict access to cryptographic keys to the fewest number of custodians necessary.
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3.5.2 Store secret and private keys used to encrypt/decrypt cardholder data in one (or more) of the following forms at all times:
• Encrypted with a key-encrypting key that is at least as strong as the data-encrypting key, and that is stored separately from the data-encrypting key
• Within a secure cryptographic device (such as a hardware/host security module (HSM) or PTS-approved point-of-interaction device)
• As at least two full-length key components or key shares, in accordance with an industry-accepted method
Note: It is not required that public keys be stored in one of these forms.
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3.5.3 Store cryptographic keys in the fewest possible locations.
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Services Agreement
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Exhibit 6
Page 6
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3.6 Fully document and implement all key-management processes and procedures for cryptographic keys used for encryption of cardholder data, including the following:
Note: Numerous industry standards for key management are available from various resources including NIST, which can be found at http://csrc.nist.gov.
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3.6.1 Generation of strong cryptographic keys
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3.6.2 Secure cryptographic key distribution
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3.6.3 Secure cryptographic key storage
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3.6.4 Cryptographic key changes for keys that have reached the end of their cryptoperiod (for example, after a defined period of time has passed and/or after a certain amount of cipher-text has been produced by a given key), as defined by the associated application vendor or key owner, and based on industry best practices and guidelines (for example, NIST Special Publication 800-57).
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3.6.5 Retirement or replacement (for example, archiving, destruction, and/or revocation) of keys as deemed necessary when the integrity of the key has been weakened (for example, departure of an employee with knowledge of a clear-text key component), or keys are suspected of being compromised.
Note: If retired or replaced cryptographic keys need to be retained, these keys must be securely archived (for example, by using a key-encryption key). Archived cryptographic keys should only be used for decryption/verification purposes.
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3.6.6 If manual clear-text cryptographic key-management operations are used, these operations must be managed using split knowledge and dual control.
Note: Examples of manual key-management operations include, but are not limited to: key generation, transmission, loading, storage and destruction.
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3.6.7 Prevention of unauthorized substitution of cryptographic keys.
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3.6.8 Requirement for cryptographic key custodians to formally acknowledge that they understand and accept their key-custodian responsibilities.
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3.7 Ensure that security policies and operational procedures for protecting stored cardholder data are documented, in use, and known to all affected parties.
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Services Agreement
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Exhibit 6
Page 7
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4.1 Use strong cryptography and security protocols (for example, SSL/TLS, IPSEC, SSH, etc.) to safeguard sensitive cardholder data during transmission over open, public networks, including the following:
• Only trusted keys and certificates are accepted.
• The protocol in use only supports secure versions or configurations.
• The encryption strength is appropriate for the encryption methodology in use.
Examples of open, public networks include but are not limited to:
• The Internet
• Wireless technologies, including 802.11 and Bluetooth
• Cellular technologies, for example, Global System for Mobile communications (GSM), Code division multiple access (CDMA)
• General Packet Radio Service (GPRS).
• Satellite communications.
Note: SSL and early TLS are not considered strong cryptography and cannot be used as a security control after 30th June, 2016. Prior to this date, existing implementations that use SSL and/or early TLS must have a formal Risk Mitigation and Migration Plan in place.
Effective immediately, new implementations must not use SSL or early TLS.
POS POI terminals (and the SSL/TLS termination points to which they connect) that can be verified as not being susceptible to any known exploits for SSL and early TLS may continue using these as a security control after 30th June, 2016.
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4.1.1 Ensure wireless networks transmitting cardholder data or connected to the cardholder data environment, use industry best practices (for example, IEEE 802.11i) to implement strong encryption for authentication and transmission.
Note: The use of WEP as a security control is prohibited.
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4.2 Never send unprotected PANs by end-user messaging technologies (for example, e-mail, instant messaging, SMS, chat, etc.).
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4.3 Ensure that security policies and operational procedures for encrypting transmissions of cardholder data are documented, in use, and known to all affected parties.
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5.1 Deploy anti-virus software on all systems commonly affected by malicious software (particularly personal computers and servers).
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5.1.1 Ensure that anti-virus programs are capable of detecting, removing, and protecting against all known types of malicious software.
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5.1.2 For systems considered to be not commonly affected by malicious software, perform periodic evaluations to identify and evaluate evolving malware threats in order to confirm whether such systems continue to not require anti-virus software.
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Services Agreement
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Exhibit 6
Page 8
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5.2 Ensure that all anti-virus mechanisms are maintained as follows:
• Are kept current,
• Perform periodic scans
• Generate audit logs which are retained per PCI DSS Requirement 10.7.
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5.3 Ensure that anti-virus mechanisms are actively running and cannot be disabled or altered by users, unless specifically authorized by management on a case-by-case basis for a limited time period.
Note: Anti-virus solutions may be temporarily disabled only if there is legitimate technical need, as authorized by management on a case-by-case basis. If anti-virus protection needs to be disabled for a specific purpose, it must be formally authorized. Additional security measures may also need to be implemented for the period of time during which anti-virus protection is not active.
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5.4 Ensure that security policies and operational procedures for protecting systems against malware are documented, in use, and known to all affected parties.
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6.1 Establish a process to identify security vulnerabilities, using reputable outside sources for security vulnerability information, and assign a risk ranking (for example, as “high,” “medium,” or “low”) to newly discovered security vulnerabilities.
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6.2 Ensure that all system components and software are protected from known vulnerabilities by installing applicable vendor-supplied security patches. Install critical security patches within one month of release.
Note: Critical security patches should be identified according to the risk ranking process defined in Requirement 6.1.
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6.3 Develop internal and external software applications (including web-based administrative access to applications) securely, as follows:
• In accordance with PCI DSS (for example, secure authentication and logging)
• Based on industry standards and/or best practices.
• Incorporating information security throughout the software-development life cycle
Note: this applies to all software developed internally as well as bespoke or custom software developed by a third party.
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6.3.1 Remove development, test and/or custom application accounts, user IDs, and passwords before applications become active or are released to customers.
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Services Agreement
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Exhibit 6
Page 9
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6.3.2 Review custom code prior to release to production or customers in order to identify any potential coding vulnerability (using either manual or automated processes) to include at least the following:
• Code changes are reviewed by individuals other than the originating code author, and by individuals knowledgeable about code-review techniques and secure coding practices.
• Code reviews ensure code is developed according to secure coding guidelines
• Appropriate corrections are implemented prior to release.
• Code-review results are reviewed and approved by management prior to release.
Note: This requirement for code reviews applies to all custom code (both internal and public-facing), as part of the system development life cycle.
Code reviews can be conducted by knowledgeable internal personnel or third parties. Public-facing web applications are also subject to additional controls, to address ongoing threats and vulnerabilities after implementation, as defined at PCI DSS Requirement 6.6.
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6.4 Follow change control processes and procedures for all changes to system components. The processes must include the following:
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6.4.1 Separate development/test environments from production environments, and enforce the separation with access controls.
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6.4.2 Separation of duties between development/test and production environments
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6.4.3 Production data (live PANs) are not used for testing or development
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6.4.4 Removal of test data and accounts before production systems become active
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6.4.5 Change control procedures for the implementation of security patches and software modifications must include the following:
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6.4.5.1 Documentation of impact.
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6.4.5.2 Documented change approval by authorized parties.
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6.4.5.3 Functionality testing to verify that the change does not adversely impact the security of the system.
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6.4.5.4 Back-out procedures.
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Services Agreement
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Exhibit 6
Page 10
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6.5 Address common coding vulnerabilities in software-development processes as follows:
• Train developers in secure coding techniques, including how to avoid common coding vulnerabilities, and understanding how sensitive data is handled in memory.
• Develop applications based on secure coding guidelines.
Note: The vulnerabilities listed at 6.5.1 through 6.5.10 were current with industry best practices when this version of PCI DSS was published. However, as industry best practices for vulnerability management are updated (for example, the OWASP Guide, SANS CWE Top 25, CERT Secure Coding, etc.), the current best practices must be used for these requirements.
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6.5.1 Injection flaws, particularly SQL injection. Also consider OS Command Injection, LDAP and XPath injection flaws as well as other injection flaws.
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6.5.2 Buffer overflows
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6.5.3 Insecure cryptographic storage
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6.5.4 Insecure communications
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6.5.5 Improper error handling
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6.5.6 All “high risk” vulnerabilities identified in the vulnerability identification process (as defined in PCI DSS Requirement 6.1).
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Note: Requirements 6.5.7 through 6.5.10, below, apply to web applications and application interfaces (internal or external):
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6.5.7 Cross-site scripting (XSS)
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6.5.8 Improper access control (such as insecure direct object references, failure to restrict URL access, directory traversal, and failure to restrict user access to functions).
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6.5.9 Cross-site request forgery (CSRF)
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6.5.10 Broken authentication and session management
Note: Requirement 6.5.10 is a best practice until June 30, 2015, after which it becomes a requirement.
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6.6 For public-facing web applications, address new threats and vulnerabilities on an ongoing basis and ensure these applications are protected against known attacks by either of the following methods:
• Reviewing public-facing web applications via manual or automated application vulnerability security assessment tools or methods, at least annually and after any changes
Note: This assessment is not the same as the vulnerability scans performed for Requirement 11.2.
• Installing an automated technical solution that detects and prevents web-based attacks (for example, a web-application firewall) in front of public-facing web applications, to continually check all traffic.
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Services Agreement
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Exhibit 6
Page 11
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6.7 Ensure that security policies and operational procedures for developing and maintaining secure systems and applications are documented, in use, and known to all affected parties.
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7.1 Limit access to system components and cardholder data to only those individuals whose job requires such access. Access limitations must include the following:
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7.1.1 Define access needs for each role, including:
• System components and data resources that each role needs to access for their job function
• Level of privilege required (for example, user, administrator, etc.) for accessing resources.
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7.1.2 Restrict access to privileged user IDs to least privileges necessary to perform job responsibilities.
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7.1.3 Assign access based on individual personnel’s job classification and function.
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7.1.4 Require documented approval by authorized parties specifying required privileges.
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7.2 Establish an access control system for systems components that restricts access based on a user’s need to know, and is set to “deny all” unless specifically allowed.
This access control system must include the following:
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7.2.1 Coverage of all system components
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7.2.2 Assignment of privileges to individuals based on job classification and function.
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7.2.3 Default “deny-all” setting.
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7.3 Ensure that security policies and operational procedures for restricting access to cardholder data are documented, in use, and known to all affected parties.
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8.1 Define and implement policies and procedures to ensure proper user identification management for non-consumer users and administrators on all system components as follows:
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8.1.1 Assign all users a unique ID before allowing them to access system components or cardholder data.
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8.1.2 Control addition, deletion, and modification of user IDs, credentials, and other identifier objects.
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8.1.3 Immediately revoke access for any terminated users.
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8.1.4 Remove/disable inactive user accounts within 90 days.
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8.1.5 Manage IDs used by vendors to access, support, or maintain system components via remote access as follows:
• Enabled only during the time period needed and disabled when not in use.
• Monitored when in use.
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8.1.6 Limit repeated access attempts by locking out the user ID after not more than six attempts.
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8.1.7 Set the lockout duration to a minimum of 30 minutes or until an administrator enables the user ID.
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Services Agreement
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Exhibit 6
Page 12
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8.1.8 If a session has been idle for more than 15 minutes, require the user to re-authenticate to re-activate the terminal or session.
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8.2 In addition to assigning a unique ID, ensure proper user-authentication management for non-consumer users and administrators on all system components by employing at least one of the following methods to authenticate all users:
• Something you know, such as a password or passphrase
• Something you have, such as a token device or smart card
• Something you are, such as a biometric.
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8.2.1 Using strong cryptography, render all authentication credentials (such as passwords/phrases) unreadable during transmission and storage on all system components.
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8.2.2 Verify user identity before modifying any authentication credential—for example, performing password resets, provisioning new tokens, or generating new keys.
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8.2.3 Passwords/phrases must meet the following:
• Require a minimum length of at least seven characters.
• Contain both numeric and alphabetic characters.
Alternatively, the passwords/phrases must have complexity and strength at least equivalent to the parameters specified above.
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8.2.4 Change user passwords/passphrases at least once every 90 days.
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8.2.5 Do not allow an individual to submit a new password/phrase that is the same as any of the last four passwords/phrases he or she has used.
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8.2.6 Set passwords/phrases for first-time use and upon reset to a unique value for each user, and change immediately after the first use.
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8.3 Incorporate two-factor authentication for remote network access originating from outside the network by personnel (including users and administrators) and all third parties, (including vendor access for support or maintenance).
Note: Two-factor authentication requires that two of the three authentication methods (see Requirement 8.2 for descriptions of authentication methods) be used for authentication. Using one factor twice (for example, using two separate passwords) is not considered two-factor authentication.
Examples of two-factor technologies include remote authentication and dial-in service (RADIUS) with tokens; terminal access controller access control system (TACACS) with tokens; and other technologies that facilitate two-factor authentication.
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|
|
Services Agreement
|
Exhibit 6
Page 13
|
8.4 Document and communicate authentication policies and procedures to all users including:
• Guidance on selecting strong authentication credentials
• Guidance for how users should protect their authentication credentials
• Instructions not to reuse previously used passwords
• Instructions to change passwords if there is any suspicion the password could be compromised.
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8.5 Do not use group, shared, or generic IDs, passwords, or other authentication methods as follows:
• Generic user IDs are disabled or removed.
• Shared user IDs do not exist for system administration and other critical functions.
• Shared and generic user IDs are not used to administer any system components.
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|
|
8.5.1 Additional requirement for service providers only: Service providers with remote access to customer premises (for example, for support of POS systems or servers) must use a unique authentication credential (such as a password/phrase) for each customer.
Note: This requirement is not intended to apply to shared hosting providers accessing their own hosting environment, where multiple customer environments are hosted.
Note: Requirement 8.5.1 is a best practice until June 30, 2015, after which it becomes a requirement.
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|
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8.6 Where other authentication mechanisms are used (for example, physical or logical security tokens, smart cards, certificates, etc.), use of these mechanisms must be assigned as follows:
• Authentication mechanisms must be assigned to an individual account and not shared among multiple accounts.
• Physical and/or logical controls must be in place to ensure only the intended account can use that mechanism to gain access.
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8.7 All access to any database containing cardholder data (including access by applications, administrators, and all other users) is restricted as follows:
• All user access to, user queries of, and user actions on databases are through programmatic methods.
• Only database administrators have the ability to directly access or query databases.
• Application IDs for database applications can only be used by the applications (and not by individual users or other non-application processes).
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8.8 Ensure that security policies and operational procedures for identification and authentication are documented, in use, and known to all affected parties.
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9.1 Use appropriate facility entry controls to limit and monitor physical access to systems in the cardholder data environment.
|
|
|
Services Agreement
|
Exhibit 6
Page 14
|
9.1.1 Use video cameras and/or access control mechanisms to monitor individual physical access to sensitive areas. Review collected data and correlate with other entries. Store for at least three months, unless otherwise restricted by law.
Note: “Sensitive areas” refers to any data center, server room or any area that houses systems that store, process, or transmit cardholder data. This excludes public-facing areas where only point-of-sale terminals are present, such as the cashier areas in a retail store.
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9.1.2 Implement physical and/or logical controls to restrict access to publicly accessible network jacks.
For example, network jacks located in public areas and areas accessible to visitors could be disabled and only enabled when network access is explicitly authorized. Alternatively, processes could be implemented to ensure that visitors are escorted at all times in areas with active network jacks.
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9.1.3 Restrict physical access to wireless access points, gateways, handheld devices, networking/communications hardware, and telecommunication lines.
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|
|
9.2 Develop procedures to easily distinguish between onsite personnel and visitors, to include:
• Identifying onsite personnel and visitors (for example, assigning badges)
• Changes to access requirements
• Revoking or terminating onsite personnel and expired visitor identification (such as ID badges).
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|
|
9.3 Control physical access for onsite personnel to sensitive areas as follows:
• Access must be authorized and based on individual job function.
• Access is revoked immediately upon termination, and all physical access mechanisms, such as keys, access cards, etc., are returned or disabled.
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|
|
9.4 Implement procedures to identify and authorize visitors.
Procedures should include the following:
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|
|
9.4.1 Visitors are authorized before entering, and escorted at all times within, areas where cardholder data is processed or maintained.
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|
|
9.4.2 Visitors are identified and given a badge or other identification that expires and that visibly distinguishes the visitors from onsite personnel.
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|
|
9.4.3 Visitors are asked to surrender the badge or identification before leaving the facility or at the date of expiration.
|
|
|
Services Agreement
|
Exhibit 6
Page 15
|
9.4.4 A visitor log is used to maintain a physical audit trail of visitor activity to the facility as well as computer rooms and data centers where cardholder data is stored or transmitted.
Document the visitor’s name, the firm represented, and the onsite personnel authorizing physical access on the log.
Retain this log for a minimum of three months, unless otherwise restricted by law.
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|
|
9.5 Physically secure all media.
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|
9.5.1 Store media backups in a secure location, preferably an off-site facility, such as an alternate or backup site, or a commercial storage facility. Review the location’s security at least annually.
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|
|
9.6 Maintain strict control over the internal or external distribution of any kind of media, including the following:
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|
|
9.6.1 Classify media so the sensitivity of the data can be determined.
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|
|
9.6.2 Send the media by secured courier or other delivery method that can be accurately tracked.
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|
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9.6.3 Ensure management approves any and all media that is moved from a secured area (including when media is distributed to individuals).
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9.7 Maintain strict control over the storage and accessibility of media.
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9.7.1 Properly maintain inventory logs of all media and conduct media inventories at least annually.
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9.8 Destroy media when it is no longer needed for business or legal reasons as follows:
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|
9.8.1 Shred, incinerate, or pulp hard-copy materials so that cardholder data cannot be reconstructed. Secure storage containers used for materials that are to be destroyed.
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|
9.8.2 Render cardholder data on electronic media unrecoverable so that cardholder data cannot be reconstructed.
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9.9 Protect devices that capture payment card data via direct physical interaction with the card from tampering and substitution.
Note: These requirements apply to card-reading devices used in card-present transactions (that is, card swipe or dip) at the point of sale. This requirement is not intended to apply to manual key-entry components such as computer keyboards and POS keypads.
Note: Requirement 9.9 is a best practice until June 30, 2015, after which it becomes a requirement.
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|
|
9.9.1 Maintain an up-to-date list of devices. The list should include the following:
• Make, model of device
• Location of device (for example, the address of the site or facility where the device is located)
• Device serial number or other method of unique identification.
|
|
|
Services Agreement
|
Exhibit 6
Page 16
|
9.9.2 Periodically inspect device surfaces to detect tampering (for example, addition of card skimmers to devices), or substitution (for example, by checking the serial number or other device characteristics to verify it has not been swapped with a fraudulent device). Note: Examples of signs that a device might have been tampered with or substituted include unexpected attachments or cables plugged into the device, missing or changed security labels, broken or differently colored casing, or changes to the serial number or other external markings.
Note: Examples of signs that a device might have been tampered with or substituted include unexpected attachments or cables plugged into the device, missing or changed security labels, broken or differently colored casing, or changes to the serial number or other external markings.
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|
|
9.9.3 Provide training for personnel to be aware of attempted tampering or replacement of devices. Training should include the following:
• Verify the identity of any third-party persons claiming to be repair or maintenance personnel, prior to granting them access to modify or troubleshoot devices.
• Do not install, replace, or return devices without verification.
• Be aware of suspicious behavior around devices (for example, attempts by unknown persons to unplug or open devices).
• Report suspicious behavior and indications of device tampering or substitution to appropriate personnel (for example, to a manager or security officer).
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|
|
9.10 Ensure that security policies and operational procedures for restricting physical access to cardholder data are documented, in use, and known to all affected parties.
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|
|
10.1 Implement audit trails to link all access to system components to each individual user.
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|
|
10.2 Implement automated audit trails for all system components to reconstruct the following events:
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|
|
10.2.1 All individual user accesses to cardholder data
|
|
|
10.2.2 All actions taken by any individual with root or administrative privileges
|
|
|
10.2.3 Access to all audit trails
|
|
|
10.2.4 Invalid logical access attempts
|
|
|
10.2.5 Use of and changes to identification and authentication mechanisms—including but not limited to creation of new accounts and elevation of privileges—and all changes, additions, or deletions to accounts with root or administrative privileges
|
|
|
10.2.6 Initialization, stopping, or pausing of the audit logs
|
|
|
10.2.7 Creation and deletion of system-level objects
|
|
|
10.3 Record at least the following audit trail entries for all system components for each event:
|
|
|
Services Agreement
|
Exhibit 6
Page 17
|
10.3.1 User identification
|
|
|
10.3.2 Type of event
|
|
|
10.3.3 Date and time
|
|
|
10.3.4 Success or failure indication
|
|
|
10.3.5 Origination of event
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|
|
10.3.6 Identity or name of affected data, system component, or resource.
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|
|
10.4 Using time-synchronization technology, synchronize all critical system clocks and times and ensure that the following is implemented for acquiring, distributing, and storing time.
Note: One example of time synchronization technology is Network Time Protocol (NTP).
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|
|
10.4.1 Critical systems have the correct and consistent time.
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|
|
10.4.2 Time data is protected.
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|
|
10.4.3 Time settings are received from industry-accepted time sources.
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|
|
10.5 Secure audit trails so they cannot be altered.
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|
10.5.1 Limit viewing of audit trails to those with a job-related need.
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|
|
10.5.2 Protect audit trail files from unauthorized modifications.
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|
|
10.5.3 Promptly back up audit trail files to a centralized log server or media that is difficult to alter.
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|
|
10.5.4 Write logs for external-facing technologies onto a secure, centralized, internal log server or media device.
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|
|
10.5.5 Use file-integrity monitoring or change-detection software on logs to ensure that existing log data cannot be changed without generating alerts (although new data being added should not cause an alert).
|
|
|
10.6 Review logs and security events for all system components to identify anomalies or suspicious activity.
Note: Log harvesting, parsing, and alerting tools may be used to meet this Requirement.
|
|
|
10.6.1 Review the following at least daily:
• All security events
• Logs of all system components that store, process, or transmit CHD and/or SAD
• Logs of all critical system components
• Logs of all servers and system components that perform security functions (for example, firewalls, intrusion-detection systems/intrusion-prevention systems (IDS/IPS), authentication servers, e-commerce redirection servers, etc.)
|
|
|
10.6.2 Review logs of all other system components periodically based on the organization’s policies and risk management strategy, as determined by the organization’s annual risk assessment.
|
|
|
Services Agreement
|
Exhibit 6
Page 18
|
10.6.3 Follow up exceptions and anomalies identified during the review process.
|
|
|
10.7 Retain audit trail history for at least one year, with a minimum of three months immediately available for analysis (for example, online, archived, or restorable from backup).
|
|
|
10.8 Ensure that security policies and operational procedures for monitoring all access to network resources and cardholder data are documented, in use, and known to all affected parties.
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|
|
11.1 Implement processes to test for the presence of wireless access points (802.11), and detect and identify all authorized and unauthorized wireless access points on a quarterly basis.
Note: Methods that may be used in the process include but are not limited to wireless network scans, physical/logical inspections of system components and infrastructure, network access control (NAC), or wireless IDS/IPS.
Whichever methods are used, they must be sufficient to detect and identify both authorized and unauthorized devices.
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|
|
11.1.1 Maintain an inventory of authorized wireless access points including a documented business justification.
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|
|
11.1.2 Implement incident response procedures in the event unauthorized wireless access points are detected.
|
|
|
11.2 Run internal and external network vulnerability scans at least quarterly and after any significant change in the network (such as new system component installations, changes in network topology, firewall rule modifications, product upgrades).
Note: Multiple scan reports can be combined for the quarterly scan process to show that all systems were scanned and all applicable vulnerabilities have been addressed. Additional documentation may be required to verify non-remediated vulnerabilities are in the process of being addressed.
For initial PCI DSS compliance, it is not required that four quarters of passing scans be completed if the assessor verifies 1) the most recent scan result was a passing scan, 2) the entity has documented policies and procedures requiring quarterly scanning, and 3) vulnerabilities noted in the scan results have been corrected as shown in a re-scan(s). For subsequent years after the initial PCI DSS review, four quarters of passing scans must have occurred.
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|
|
11.2.1 Perform quarterly internal vulnerability scans and rescans as needed, until all “high-risk” vulnerabilities (as identified in Requirement 6.1) are resolved. Scans must be performed by qualified personnel.
|
|
|
Services Agreement
|
Exhibit 6
Page 19
|
11.2.2 Perform quarterly external vulnerability scans, via an Approved Scanning Vendor (ASV) approved by the Payment Card Industry Security Standards Council (PCI SSC). Perform rescans as needed, until passing scans are achieved.
Note: Quarterly external vulnerability scans must be performed by an Approved Scanning Vendor (ASV), approved by the Payment Card Industry Security Standards Council (PCI SSC). Refer to the ASV Program Guide published on the PCI SSC website for scan customer responsibilities, scan preparation, etc.
|
|
|
11.2.3 Perform internal and external scans, and rescans as needed, after any significant change. Scans must be performed by qualified personnel.
|
|
|
11.3 Implement a methodology for penetration testing that includes the following:
• Is based on industry-accepted penetration testing approaches (for example, NIST SP800-115).
• Includes coverage for the entire CDE perimeter and critical systems.
• Includes testing from both inside and outside of the network.
• Includes testing to validate any segmentation and scope reduction controls.
• Defines application-layer penetration tests to include, at a minimum, the vulnerabilities listed in Requirement 6.5.
• Defines network-layer penetration tests to include components that support network functions as well as operating systems.
• Includes review and consideration of threats and vulnerabilities experienced in the last 12 months.
• Specifies retention of penetration testing results and remediation activities results.
Note: This update to Requirement 11.3 is a best practice until June 30, 2015, after which it becomes a requirement. Prior to this date, PCI DSS v2.0 requirements for penetration testing must be followed until version 3 is in place.
|
|
|
11.3.1 Perform external penetration testing at least annually and after any significant infrastructure or application upgrade or modification (such as an operating system upgrade, a sub-network added to the environment, or a web server added to the environment).
|
|
|
11.3.2 Perform internal penetration testing at least annually and after any significant infrastructure or application upgrade or modification (such as an operating system upgrade, a sub-network added to the environment, or a web server added to the environment).
|
|
|
11.3.3 Exploitable vulnerabilities found during penetration testing are corrected and testing is repeated to verify the corrections.
|
|
|
Services Agreement
|
Exhibit 6
Page 20
|
11.3.4 If segmentation is used to isolate the CDE from other networks, perform penetration tests at least annually and after any changes to segmentation controls/methods to verify that the segmentation methods are operational and effective, and isolate all out-of-scope systems from systems in the CDE.
|
|
|
11.4 Use intrusion-detection and/or intrusion-prevention techniques to detect and/or prevent intrusions into the network. Monitor all traffic at the perimeter of the cardholder data environment as well as at critical points in the cardholder data environment, and alert personnel to suspected compromises.
Keep all intrusion-detection and prevention engines, baselines, and signatures up to date.
|
|
|
11.5 Deploy a change-detection mechanism (for example, file-integrity monitoring tools) to alert personnel to unauthorized modification (including changes, additions and deletions) of critical system files, configuration files, or content files; and configure the software to perform critical file comparisons at least weekly.
Note: For change-detection purposes, critical files are usually those that do not regularly change, but the modification of which could indicate a system compromise or risk of compromise. Change-detection mechanisms such as file-integrity monitoring products usually come pre-configured with critical files for the related operating system. Other critical files, such as those for custom applications, must be evaluated and defined by the entity (that is, the merchant or service provider).
|
|
|
11.5.1 Implement a process to respond to any alerts generated by the change-detection solution.
|
|
|
11.6 Ensure that security policies and operational procedures for security monitoring and testing are documented, in use, and known to all affected parties.
|
|
|
12.1 Establish, publish, maintain, and disseminate a security policy.
|
|
|
12.1.1 Review the security policy at least annually and update the policy when business objectives or the risk environment change.
|
|
|
12.2 Implement a risk-assessment process that:
• Is performed at least annually and upon significant changes to the environment (for example, acquisition, merger, relocation, etc.),
• Identifies critical assets, threats, and vulnerabilities, and
• Results in a formal, documented analysis of risk.
Examples of risk-assessment methodologies include but are not limited to OCTAVE, ISO 27005 and NIST SP 800-30.
|
|
|
Services Agreement
|
Exhibit 6
Page 21
|
12.3 Develop usage policies for critical technologies and define proper use of these technologies.
Note: Examples of critical technologies include, but are not limited to, remote access and wireless technologies, laptops, tablets, removable electronic media, e-mail usage and Internet usage.
Ensure these usage policies require the following:
|
|
|
12.3.1 Explicit approval by authorized parties
|
|
|
12.3.2 Authentication for use of the technology
|
|
|
12.3.3 A list of all such devices and personnel with access
|
|
|
12.3.4 A method to accurately and readily determine owner, contact information, and purpose (for example, labeling, coding, and/or inventorying of devices)
|
|
|
12.3.5 Acceptable uses of the technology
|
|
|
12.3.6 Acceptable network locations for the technologies
|
|
|
12.3.7 List of company-approved products
|
|
|
12.3.8 Automatic disconnect of sessions for remote-access technologies after a specific period of inactivity.
|
|
|
12.3.9 Activation of remote-access technologies for vendors and business partners only when needed by vendors and business partners, with immediate deactivation after use
|
|
|
12.3.10 For personnel accessing cardholder data via remote-access technologies, prohibit the copying, moving, and storage of cardholder data onto local hard drives and removable electronic media, unless explicitly authorized for a defined business need.
Where there is an authorized business need, the usage policies must require the data be protected in accordance with all applicable PCI DSS Requirements.
|
|
|
12.4 Ensure that the security policy and procedures clearly define information security responsibilities for all personnel.
|
|
|
12.5 Assign to an individual or team the following information security management responsibilities:
|
|
|
12.5.1 Establish, document, and distribute security policies and procedures.
|
|
|
12.5.2 Monitor and analyze security alerts and information, and distribute to appropriate personnel.
|
|
|
12.5.3 Establish, document, and distribute security incident response and escalation procedures to ensure timely and effective handling of all situations.
|
|
|
12.5.4 Administer user accounts, including additions, deletions, and modifications.
|
|
|
12.5.5 Monitor and control all access to data.
|
|
|
Services Agreement
|
Exhibit 6
Page 22
|
12.6 Implement a formal security awareness program to make all personnel aware of the importance of cardholder data security.
|
|
|
12.6.1 Educate personnel upon hire and at least annually.
Note: Methods can vary depending on the role of the personnel and their level of access to the cardholder data.
|
|
|
12.6.2 Require personnel to acknowledge at least annually that they have read and understood the security policy and procedures.
|
|
|
12.7 Screen potential personnel prior to hire to minimize the risk of attacks from internal sources. (Examples of background checks include previous employment history, criminal record, credit history, and reference checks.)
Note: For those potential personnel to be hired for certain positions such as store cashiers who only have access to one card number at a time when facilitating a transaction, this requirement is a recommendation only.
|
|
|
12.8 Maintain and implement policies and procedures to manage service providers with whom cardholder data is shared, or that could affect the security of cardholder data, as follows:
|
|
|
12.8.1 Maintain a list of service providers.
|
|
|
12.8.2 Maintain a written agreement that includes an acknowledgement that the service providers are responsible for the security of cardholder data the service providers possess or otherwise store, process or transmit on behalf of the customer, or to the extent that they could impact the security of the customer’s cardholder data environment.
Note: The exact wording of an acknowledgement will depend on the agreement between the two parties, the details of the service being provided, and the responsibilities assigned to each party. The acknowledgement does not have to include the exact wording provided in this requirement.
|
|
|
12.8.3 Ensure there is an established process for engaging service providers including proper due diligence prior to engagement.
|
|
|
12.8.4 Maintain a program to monitor service providers’ PCI DSS compliance status at least annually.
|
|
|
12.8.5 Maintain information about which PCI DSS requirements are managed by each service provider, and which are managed by the entity.
|
|
|
Services Agreement
|
Exhibit 6
Page 23
|
12.9 Additional requirement for service providers only: Service providers acknowledge in writing to customers that they are responsible for the security of cardholder data the service provider possesses or otherwise stores, processes, or transmits on behalf of the customer, or to the extent that they could impact the security of the customer’s cardholder data environment.
Note: This requirement is a best practice until June 30, 2015, after which it becomes a requirement.
Note: The exact wording of an acknowledgement will depend on the agreement between the two parties, the details of the service being provided, and the responsibilities assigned to each party. The acknowledgement does not have to include the exact wording provided in this requirement.
|
|
|
12.10 Implement an incident response plan. Be prepared to respond immediately to a system breach.
|
|
|
12.10.1 Create the incident response plan to be implemented in the event of system breach. Ensure the plan addresses the following, at a minimum:
• Roles, responsibilities, and communication and contact strategies in the event of a compromise including notification of the payment brands, at a minimum
• Specific incident response procedures
• Business recovery and continuity procedures
• Data backup processes
• Analysis of legal requirements for reporting compromises
• Coverage and responses of all critical system components
• Reference or inclusion of incident response procedures from the payment brands.
|
|
|
12.10.2 Test the plan at least annually.
|
|
|
12.10.3 Designate specific personnel to be available on a 24/7 basis to respond to alerts.
|
|
|
12.10.4 Provide appropriate training to staff with security breach response responsibilities.
|
|
|
12.10.5 Include alerts from security monitoring systems, including but not limited to intrusion-detection, intrusion-prevention, firewalls, and file-integrity monitoring systems.
|
|
|
12.10.6 Develop a process to modify and evolve the incident response plan according to lessons learned and to incorporate industry developments.
|
|
|
Indicate whether the assessed entity is a shared hosting provider (indicated at Requirement 2.6). (yes/no)
If “no,” mark the below as “Not Applicable” (no further explanation required)
If “yes,” complete the following:
|
|
|
Services Agreement
|
Exhibit 6
Page 24
|
A.1 Protect each entity’s (that is, merchant, service provider, or other entity) hosted environment and data, per A.1.1 through A.1.4:
A hosting provider must fulfill these requirements as well as all other relevant sections of the PCI DSS.
Note: Even though a hosting provider may meet these requirements, the compliance of the entity that uses the hosting provider is not guaranteed. Each entity must comply with the PCI DSS and validate compliance as applicable.
|
|
|
A.1.1 Ensure that each entity only runs processes that have access to that entity’s cardholder data environment.
|
|
|
A.1.2 Restrict each entity’s access and privileges to its own cardholder data environment only.
|
|
|
A.1.3 Ensure logging and audit trails are enabled and unique to each entity’s cardholder data environment and consistent with PCI DSS Requirement 10.
|
|
|
A.1.4 Enable processes to provide for timely forensic investigation in the event of a compromise to any hosted merchant or service provider.
|
|
|
Services Agreement
|
Exhibit 6
Page 25
|
•
|
the separation of the assets (including the equitys interest of certain subsidiaries) and liabilities related to the Save-A-Lot business from Supervalu and the transfer of such assets (including the equity interests of certain subsidiaries) and liabilities to Purchaser, including the associated results of operations;
|
•
|
the net proceeds from the Sale, after customary closing adjustments for Indebtedness, Cash and Working Capital (each as defined in the Merger Agreement), which are subject to finalization pursuant to the terms of the Merger Agreement following the closing date, and transaction costs;
|
•
|
the required prepayment of the Company’s $1,500 term loan facility (the “Secured Term Loan Facility”) with 100% of the first $750 of Net Cash Proceeds (as defined in the Secured Term Loan Facility) received from the Sale, and the required prepayment of the Secured Term Loan Facility with 50% of such Net Cash Proceeds in excess of $750 up to an aggregate amount that would cause the Company's Total Secured Leverage Ratio (as defined in the Secured Term Loan Facility), on a pro forma basis after giving effect to such prepayment, to be no higher than 1.50:1.00, which is estimated to be $75;
|
•
|
the impact of the agreement between the Pension Benefit Guarantee Corporation (“PBGC”) and Supervalu under which Supervalu agreed to certain excess contributions to Supervalu’s qualified pension plan and to repay any outstanding balance under the Company’s $1,000 asset-based revolving ABL credit facility (the “Revolving ABL Credit Facility”) at the time of the Sale;
|
•
|
the impact of the Services Agreement with Save-A-Lot;
|
•
|
the impact of Wholesale sales to the Save-A-Lot business previously eliminated on an intercompany basis; and
|
•
|
the recognition of the income tax effects of the Merger Agreement and the Separation Agreement.
|
|
Supervalu Historical
|
|
Disposition of Save-A-Lot (a)
|
|
Pro Forma Adjustments
|
|
Note
|
|
Supervalu Pro Forma
|
||||||||
Net sales
|
$
|
9,061
|
|
|
$
|
(2,491
|
)
|
|
$
|
24
|
|
|
(b)
|
|
$
|
6,594
|
|
Cost of sales
|
7,720
|
|
|
(2,095
|
)
|
|
8
|
|
|
(c)
|
|
5,633
|
|
||||
Gross profit
|
1,341
|
|
|
(396
|
)
|
|
16
|
|
|
|
|
961
|
|
||||
Selling and administrative expenses
|
1,120
|
|
|
(321
|
)
|
|
—
|
|
|
|
|
799
|
|
||||
Operating earnings
|
221
|
|
|
(75
|
)
|
|
16
|
|
|
|
|
162
|
|
||||
Interest expense, net
|
101
|
|
|
(1
|
)
|
|
(27
|
)
|
|
(d)
|
|
73
|
|
||||
Equity in earnings of unconsolidated affiliates
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
|
|
(2
|
)
|
||||
Earnings from continuing operations before income taxes
|
122
|
|
|
(74
|
)
|
|
43
|
|
|
|
|
91
|
|
||||
Income tax provision
|
45
|
|
|
(29
|
)
|
|
17
|
|
|
(e)
|
|
33
|
|
||||
Net earnings from continuing operations
|
$
|
77
|
|
|
$
|
(45
|
)
|
|
$
|
26
|
|
|
|
|
$
|
58
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Basic net earnings per share attributable to SUPERVALU INC.:
|
|
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
$
|
0.28
|
|
|
|
|
|
|
|
|
$
|
0.21
|
|
||||
Diluted net earnings per share attributable to SUPERVALU INC.:
|
|
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
$
|
0.28
|
|
|
|
|
|
|
|
|
$
|
0.21
|
|
||||
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted average number of shares outstanding:
|
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
264
|
|
|
|
|
|
|
|
|
264
|
|
||||||
Diluted
|
267
|
|
|
|
|
|
|
|
|
267
|
|
|
Supervalu Historical
|
|
Disposition of Save-A-Lot (a)
|
|
Pro Forma Adjustments
|
|
Note
|
|
Supervalu Pro Forma
|
||||||||
Net sales
|
$
|
9,469
|
|
|
$
|
(2,498
|
)
|
|
$
|
30
|
|
|
(b)
|
|
$
|
7,001
|
|
Cost of sales
|
8,076
|
|
|
(2,112
|
)
|
|
14
|
|
|
(c)
|
|
5,978
|
|
||||
Gross profit
|
1,393
|
|
|
(386
|
)
|
|
16
|
|
|
|
|
1,023
|
|
||||
Selling and administrative expenses
|
1,141
|
|
|
(291
|
)
|
|
—
|
|
|
|
|
850
|
|
||||
Operating earnings
|
252
|
|
|
(95
|
)
|
|
16
|
|
|
|
|
173
|
|
||||
Interest expense, net
|
103
|
|
|
—
|
|
|
(23
|
)
|
|
(d)
|
|
80
|
|
||||
Equity in earnings of unconsolidated affiliates
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
|
|
(2
|
)
|
||||
Earnings from continuing operations before income taxes
|
151
|
|
|
(95
|
)
|
|
39
|
|
|
|
|
95
|
|
||||
Income tax provision
|
57
|
|
|
(39
|
)
|
|
16
|
|
|
(e)
|
|
34
|
|
||||
Net earnings from continuing operations
|
94
|
|
|
(56
|
)
|
|
23
|
|
|
|
|
61
|
|
||||
|
|
|
|
|
|
|
|
|
|
||||||||
Basic net earnings per share attributable to SUPERVALU INC.:
|
|
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
$
|
0.34
|
|
|
|
|
|
|
|
|
$
|
0.21
|
|
||||
Diluted net earnings per share attributable to SUPERVALU INC.:
|
|
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
$
|
0.33
|
|
|
|
|
|
|
|
|
$
|
0.21
|
|
||||
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted average number of shares outstanding:
|
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
262
|
|
|
|
|
|
|
|
|
262
|
|
||||||
Diluted
|
268
|
|
|
|
|
|
|
|
|
268
|
|
|
Supervalu Historical
|
|
Disposition of Save-A-Lot (a)
|
|
Pro Forma Adjustments
|
|
Note
|
|
Supervalu Pro Forma
|
||||||||
Net sales
|
$
|
17,529
|
|
|
$
|
(4,622
|
)
|
|
$
|
47
|
|
|
(b)
|
|
$
|
12,954
|
|
Cost of sales
|
14,945
|
|
|
(3,912
|
)
|
|
17
|
|
|
(c)
|
|
11,050
|
|
||||
Gross profit
|
2,584
|
|
|
(710
|
)
|
|
30
|
|
|
|
|
1,904
|
|
||||
Selling and administrative expenses
|
2,124
|
|
|
(554
|
)
|
|
—
|
|
|
|
|
1,570
|
|
||||
Intangible asset impairment charge
|
6
|
|
|
—
|
|
|
—
|
|
|
|
|
6
|
|
||||
Operating earnings
|
454
|
|
|
(156
|
)
|
|
30
|
|
|
|
|
328
|
|
||||
Interest expense, net
|
196
|
|
|
(1
|
)
|
|
(43
|
)
|
|
(d)
|
|
152
|
|
||||
Equity in earnings of unconsolidated affiliates
|
(5
|
)
|
|
—
|
|
|
—
|
|
|
|
|
(5
|
)
|
||||
Earnings from continuing operations before income taxes
|
263
|
|
|
(155
|
)
|
|
73
|
|
|
|
|
181
|
|
||||
Income tax provision
|
85
|
|
|
(61
|
)
|
|
30
|
|
|
(e)
|
|
54
|
|
||||
Net earnings from continuing operations
|
$
|
178
|
|
|
$
|
(94
|
)
|
|
$
|
43
|
|
|
|
|
$
|
127
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Basic net earnings per share attributable to SUPERVALU INC.:
|
|
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
$
|
0.64
|
|
|
|
|
|
|
|
|
$
|
0.45
|
|
||||
Diluted net earnings per share attributable to SUPERVALU INC.:
|
|
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
$
|
0.63
|
|
|
|
|
|
|
|
|
$
|
0.44
|
|
||||
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted average number of shares outstanding:
|
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
263
|
|
|
|
|
|
|
|
|
263
|
|
||||||
Diluted
|
268
|
|
|
|
|
|
|
|
|
268
|
|
|
Supervalu Historical
|
|
Disposition of Save-A-Lot (a)
|
|
Pro Forma Adjustments
|
|
Note
|
|
Supervalu Pro Forma
|
||||||||
Net sales
|
$
|
17,917
|
|
|
$
|
(4,640
|
)
|
|
$
|
67
|
|
|
(b)
|
|
$
|
13,344
|
|
Cost of sales
|
15,329
|
|
|
(3,950
|
)
|
|
35
|
|
|
(c)
|
|
11,414
|
|
||||
Gross profit
|
2,588
|
|
|
(690
|
)
|
|
32
|
|
|
|
|
1,930
|
|
||||
Selling and administrative expenses
|
2,164
|
|
|
(516
|
)
|
|
—
|
|
|
|
|
1,648
|
|
||||
Operating earnings
|
424
|
|
|
(174
|
)
|
|
32
|
|
|
|
|
282
|
|
||||
Interest expense, net
|
243
|
|
|
(1
|
)
|
|
(44
|
)
|
|
(d)
|
|
198
|
|
||||
Equity in earnings of unconsolidated affiliates
|
(4
|
)
|
|
—
|
|
|
—
|
|
|
|
|
(4
|
)
|
||||
Earnings from continuing operations before income taxes
|
185
|
|
|
(173
|
)
|
|
76
|
|
|
|
|
88
|
|
||||
Income tax provision
|
58
|
|
|
(71
|
)
|
|
30
|
|
|
(e)
|
|
17
|
|
||||
Net earnings from continuing operations
|
$
|
127
|
|
|
$
|
(102
|
)
|
|
$
|
46
|
|
|
|
|
$
|
71
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Basic net earnings per share attributable to SUPERVALU INC.:
|
|
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
$
|
0.46
|
|
|
|
|
|
|
|
|
$
|
0.24
|
|
||||
Diluted net earnings per share attributable to SUPERVALU INC.:
|
|
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
$
|
0.45
|
|
|
|
|
|
|
|
|
$
|
0.24
|
|
||||
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted average number of shares outstanding:
|
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
260
|
|
|
|
|
|
|
|
|
260
|
|
||||||
Diluted
|
264
|
|
|
|
|
|
|
|
|
264
|
|
|
Supervalu Historical
|
|
Disposition of Save-A-Lot (a)
|
|
Pro Forma Adjustments
|
|
Note
|
|
Supervalu Pro Forma
|
||||||||
ASSETS
|
|
|
|
|
|
|
|
|
|
||||||||
Current assets
|
|
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents
|
$
|
57
|
|
|
$
|
(17
|
)
|
|
$
|
343
|
|
|
(f)
|
|
$
|
383
|
|
Receivables, net
|
479
|
|
|
(50
|
)
|
|
—
|
|
|
|
|
429
|
|
||||
Inventories, net
|
1,071
|
|
|
(314
|
)
|
|
—
|
|
|
|
|
757
|
|
||||
Other current assets
|
82
|
|
|
(18
|
)
|
|
—
|
|
|
|
|
64
|
|
||||
Total current assets
|
1,689
|
|
|
(399
|
)
|
|
343
|
|
|
|
|
1,633
|
|
||||
Property, plant and equipment, net
|
1,448
|
|
|
(463
|
)
|
|
—
|
|
|
|
|
985
|
|
||||
Goodwill
|
868
|
|
|
(143
|
)
|
|
—
|
|
|
|
|
725
|
|
||||
Intangible assets, net
|
50
|
|
|
(8
|
)
|
|
—
|
|
|
|
|
42
|
|
||||
Deferred tax assets
|
199
|
|
|
4
|
|
|
—
|
|
|
|
|
203
|
|
||||
Other assets
|
107
|
|
|
(13
|
)
|
|
16
|
|
|
(g)
|
|
110
|
|
||||
Total assets
|
$
|
4,361
|
|
|
$
|
(1,022
|
)
|
|
$
|
359
|
|
|
|
|
$
|
3,698
|
|
LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY
|
|
|
|
|
|
|
|
|
|
||||||||
Current liabilities
|
|
|
|
|
|
|
|
|
|
||||||||
Accounts payable
|
$
|
1,170
|
|
|
$
|
(285
|
)
|
|
$
|
—
|
|
|
|
|
$
|
885
|
|
Accrued vacation, compensation and benefits
|
181
|
|
|
(37
|
)
|
|
3
|
|
|
(h)
|
|
147
|
|
||||
Current maturities of long-term debt and capital lease obligations
|
24
|
|
|
(1
|
)
|
|
—
|
|
|
|
|
23
|
|
||||
Other current liabilities
|
173
|
|
|
(25
|
)
|
|
82
|
|
|
(i)
|
|
230
|
|
||||
Total current liabilities
|
1,548
|
|
|
(348
|
)
|
|
85
|
|
|
|
|
1,285
|
|
||||
Long-term debt
|
2,164
|
|
|
—
|
|
|
(897
|
)
|
|
(j)
|
|
1,267
|
|
||||
Long-term capital lease obligations
|
197
|
|
|
(8
|
)
|
|
—
|
|
|
|
|
189
|
|
||||
Pension and other postretirement benefit obligations
|
547
|
|
|
—
|
|
|
(26
|
)
|
|
(k)
|
|
521
|
|
||||
Long-term tax liabilities
|
83
|
|
|
(7
|
)
|
|
—
|
|
|
|
|
76
|
|
||||
Other long-term liabilities
|
164
|
|
|
(30
|
)
|
|
7
|
|
|
(l)
|
|
141
|
|
||||
Stockholders’ (deficit) equity
|
|
|
|
|
|
|
|
|
|
|
|||||||
Common Stock, $0.01 par value: 400 shares authorized; 266 shares issued
|
3
|
|
|
—
|
|
|
—
|
|
|
|
|
3
|
|
||||
Capital in excess of par value
|
2,813
|
|
|
—
|
|
|
—
|
|
|
|
|
2,813
|
|
||||
Treasury stock, at cost, 1 shares
|
(5
|
)
|
|
—
|
|
|
—
|
|
|
|
|
(5
|
)
|
||||
Accumulated other comprehensive loss
|
(411
|
)
|
|
—
|
|
|
(1
|
)
|
|
(k)
|
|
(412
|
)
|
||||
Accumulated deficit
|
(2,748
|
)
|
|
(629
|
)
|
|
1,191
|
|
|
(m)
|
|
(2,186
|
)
|
||||
Total SUPERVALU INC. stockholders’ (deficit) equity
|
(348
|
)
|
|
(629
|
)
|
|
1,190
|
|
|
|
|
213
|
|
||||
Noncontrolling interests
|
6
|
|
|
—
|
|
|
—
|
|
|
|
|
6
|
|
||||
Total stockholders’ (deficit) equity
|
(342
|
)
|
|
(629
|
)
|
|
1,190
|
|
|
|
|
219
|
|
||||
Total liabilities and stockholders’ (deficit) equity
|
$
|
4,361
|
|
|
$
|
(1,022
|
)
|
|
$
|
359
|
|
|
|
|
$
|
3,698
|
|
(a)
|
The “Disposition of Save-A-Lot” column reflects the net sales, expenses, assets, liabilities and stockholders’ equity attributable to Save-A-Lot, which were historically included in Supervalu’s consolidated financial statements. This column excludes certain amounts previously attributable to Save-A-Lot for Supervalu business segment reporting purposes, such as corporate administrative expense allocations, which will remain with Supervalu pursuant to the terms of the Merger Agreement and the Separation Agreement.
|
(b)
|
This adjustment reflects (1) the fees that Supervalu expects to recognize in connection with performing services for Save-A-Lot under the Services Agreement and (2) Wholesale distribution sales to Save-A-Lot pursuant to a customer agreement between Supervalu and Save-A-Lot with terms similar before and after the Sale that had historically been intercompany sales before the Sale. Actual Services Agreement fees are subject to adjustments pursuant to the terms of the Services Agreement including for changes in service levels.
|
(c)
|
This adjustment reflects the Cost of sales related to Wholesale’s distribution to Save-A-Lot, which was previously eliminated on an intercompany basis. No adjustment for expenses related to the Services Agreement has been included within Cost of sales because the shared service center costs incurred to support back office functions related to the Services Agreement represent administrative overhead costs that have been included within Selling and administrative expenses of the Supervalu Historical column.
|
(d)
|
This adjustment reflects the reduction of interest expense associated with the required debt prepayments pursuant to the terms of Supervalu’s Secured Term Loan Facility as a result of the Sale and the Company’s agreement with the PBGC to repay the outstanding balance under the Revolving ABL Credit Facility at the time of the Sale, both of which were calculated at prevailing interest rates under those facilities outstanding during each period presented. Historical interest expense under the Revolving ABL Credit Facility was reduced based on the $260 outstanding balance that was repaid as of the completion of the Sale.
|
(e)
|
This adjustment reflects the tax effect of the pro forma adjustments using the blended federal and state statutory tax rates of the applicable jurisdictions during each period presented.
|
(f)
|
This adjustment reflects the remaining cash proceeds from the Sale, calculated as follows:
|
|
|
September 10, 2016
|
||
Purchase price
|
|
$
|
1,365
|
|
Indebtedness, Cash and Working Capital adjustments (each as defined under the Merger Agreement)
(1)
and prepaid Services Agreement fees received at closing of the Sale (see note (i))
|
|
(34
|
)
|
|
Transaction cost payments (see note (m))
|
|
(30
|
)
|
|
Secured Term Loan Facility and Revolving ABL Credit Facility repayments (see note (j))
(2)
|
|
(925
|
)
|
|
Pension contribution (see note (k))
|
|
(25
|
)
|
|
Accrued interest repayment on long-term debt (see note (i))
|
|
(8
|
)
|
|
Total net cash and cash equivalents adjustment
|
|
$
|
343
|
|
(1)
|
Adjustments were calculated using balance sheet information estimated for the effective time under the Merger Agreement. This amount is subject to finalization pursuant to the terms of the Merger Agreement following the closing date of the Sale.
|
(2)
|
Long-term debt repayment includes an estimated $75 prepayment on the Secured Term Loan Facility, which will be made within ten days following the Sale (see note (j)).
|
(g)
|
This adjustment reflects the reclassification of deferred financing costs from Long-term debt to Other assets related to the Revolving ABL Credit Facility due to the repayment of the remaining outstanding balance pursuant to the terms of the Company’s agreement with the PBGC (see note (j)).
|
(h)
|
This adjustment reflects accrued employee incentive compensation payables required to be paid to certain Save-A-Lot employees by Supervalu pursuant to the Merger Agreement.
|
(i)
|
This adjustment reflects the estimated recognition of federal depreciation recapture, state income taxes and other taxes upon the Sale and the deferral of prepaid Services Agreement fees received at closing, offset by accrued interest repayments related to the required Secured Term Loan Facility and Revolving ABL Credit Facility repayments.
|
(j)
|
This adjustment reflects the required prepayment of the Secured Term Loan Facility with 100% of the first $750 of Net Cash Proceeds and a further prepayment of the Secured Term Loan Facility with 50% of the Net Cash Proceeds in excess of $750 up to an aggregate amount that would cause the Company's Total Secured Leverage Ratio, on a pro forma basis after giving effect to such prepayment, to be no higher than 1.50:1.00, which Supervalu estimates to be $75. In addition, pursuant to the terms of the Company’s agreement with the PBGC, this adjustment includes an additional $100 payment for the outstanding balance under the Revolving ABL Credit Facility as of September 10, 2016. Pursuant to the agreement with the PBGC, the Company paid in full the $260 balance outstanding under the Revolving ABL Credit Facility as of the completion of the Sale.
|
(k)
|
This adjustment reflects a $25 pension contribution made by the Company following the Sale pursuant to an agreement with the PBGC and the de-recognition of retiree medical obligations that Supervalu is no longer obligated to pay. In addition, under this same agreement with the PBGC, the Company is obligated to make additional payments of $25 and $10 on or before March 1, 2017 and November 15, 2017, respectively.
|
(l)
|
This adjustment reflects the recognition of Supervalu's indemnification obligation for uncertain tax obligations assumed by Save-A-Lot under the Merger Agreement.
|
(m)
|
This adjustment to Accumulated deficit includes the following:
|
|
|
September 10, 2016
|
||
Purchase price
|
|
$
|
1,365
|
|
Indebtedness, Cash and Working Capital adjustments (each as defined under the Merger Agreement)
(1)
|
|
(64
|
)
|
|
Recognition of accrued tax expenses (see note (i))
|
|
(60
|
)
|
|
Recognition of transaction costs (see note (f))
|
|
(30
|
)
|
|
Recognition of deferred financing costs and original issue discount acceleration (see note (j))
|
|
(12
|
)
|
|
Recognition of indemnified uncertain tax obligations (see note (l))
|
|
(7
|
)
|
|
Employee incentive compensation payables (see note (h))
|
|
(3
|
)
|
|
De-recognition of retiree medical obligations (see note (k))
|
|
2
|
|
|
Total net stockholder’s (deficit) equity adjustment
|
|
$
|
1,191
|
|
(1)
|
Adjustments were calculated using balance sheet information estimated for the effective time under the Merger Agreement. This amount is subject to finalization pursuant to the terms of the Merger Agreement following the closing date of the Sale.
|
|
Year-To-Date Ended
|
|
Fiscal Year Ended
|
||||||||
|
September 10,
2016 (28 weeks) |
|
September 12,
2015 (28 weeks) |
|
February 27,
2016 (52 weeks) |
||||||
Net sales
|
|
|
|
|
|
||||||
Wholesale
|
$
|
4,006
|
|
|
$
|
4,293
|
|
|
$
|
7,935
|
|
% of total
|
61.0
|
%
|
|
61.6
|
%
|
|
61.5
|
%
|
|||
Retail
|
2,464
|
|
|
2,565
|
|
|
4,769
|
|
|||
% of total
|
37.5
|
%
|
|
36.8
|
%
|
|
36.9
|
%
|
|||
Corporate
|
100
|
|
|
113
|
|
|
203
|
|
|||
% of total
|
1.5
|
%
|
|
1.6
|
%
|
|
1.6
|
%
|
|||
Total net sales
|
$
|
6,570
|
|
|
$
|
6,971
|
|
|
$
|
12,907
|
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|||
Operating earnings
|
|
|
|
|
|
||||||
Wholesale
(1)
|
$
|
122
|
|
|
$
|
126
|
|
|
$
|
230
|
|
% of Wholesale sales
|
3.0
|
%
|
|
2.9
|
%
|
|
2.9
|
%
|
|||
Retail
(2)
|
(4
|
)
|
|
43
|
|
|
94
|
|
|||
% of Retail sales
|
(0.2
|
)%
|
|
1.7
|
%
|
|
2.0
|
%
|
|||
Corporate
(3)
|
28
|
|
|
(12
|
)
|
|
(26
|
)
|
|||
Total operating earnings
|
146
|
|
|
157
|
|
|
298
|
|
|||
% of total net sales
|
2.2
|
%
|
|
2.3
|
%
|
|
2.3
|
%
|
|||
Interest expense, net
(4)
|
100
|
|
|
103
|
|
|
195
|
|
|||
Equity in earnings of unconsolidated affiliates
|
(2
|
)
|
|
(2
|
)
|
|
(5
|
)
|
|||
Earnings from continuing operations before income taxes
|
48
|
|
|
56
|
|
|
108
|
|
|||
Income tax provision
|
16
|
|
|
18
|
|
|
24
|
|
|||
Net earnings from continuing operations
|
$
|
32
|
|
|
$
|
38
|
|
|
$
|
84
|
|
|
|
|
|
|
|
||||||
LIFO charge
|
|
|
|
|
|
||||||
Wholesale
|
$
|
1
|
|
|
$
|
2
|
|
|
$
|
1
|
|
Retail
|
1
|
|
|
3
|
|
|
2
|
|
|||
Total LIFO charge
|
$
|
2
|
|
|
$
|
5
|
|
|
$
|
3
|
|
Depreciation and amortization
|
|
|
|
|
|
||||||
Wholesale
|
$
|
28
|
|
|
$
|
25
|
|
|
$
|
49
|
|
Retail
|
79
|
|
|
83
|
|
|
153
|
|
|||
Corporate
|
4
|
|
|
4
|
|
|
8
|
|
|||
Total depreciation and amortization
|
$
|
111
|
|
|
$
|
112
|
|
|
$
|
210
|
|
(1)
|
Wholesale operating earnings for the year-to-date ended
September 10, 2016
included a fee received from a supply agreement termination of $9. Wholesale operating earnings for the fiscal year ended February 27, 2016 included an intangible asset impairment charge of $6.
|
(2)
|
Retail operating loss for the year-to-date ended
September 10, 2016
included store closure charges and costs of $4. Retail operating earnings for the fiscal year ended February 27, 2016 included store closure and impairment charges of $1.
|
(3)
|
Corporate operating earnings for the year-to-date ended
September 10, 2016
included a sales and use tax refund of $2. Corporate operating earnings for the year-to-date ended
September 12, 2015
included severance costs of $4. Corporate operating earnings for the fiscal year ended February 27, 2016 included severance costs of $6 and store closure charges and costs of $6.
|
(4)
|
Interest expense, net for the year-to-date ended
September 10, 2016
included unamortized financing cost charges of $5 and debt refinancing costs of $2. Interest expense, net for the fiscal year ended February 27, 2016 included debt refinancing costs of $6 and unamortized financing cost charges of $4.
|
•
|
the Unaudited Pro Forma Condensed Consolidated Financial Statements included within Exhibit 99.2 of the Current Report on Form 8-K as of December 8, 2016;
|
•
|
the unaudited Condensed Consolidated Financial Statements and the Cautionary Statements for Purposes of the Safe Harbor Provisions of the Private Securities Litigation Reform Act contained in the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 10, 2016; and
|
•
|
the information in the Company’s Annual Report on Form 10-K for the fiscal year ended
February 27, 2016
.
|
|
|
Year-To-Date Ended
|
|
Fiscal Year Ended
|
||||||||
(In millions)
|
|
September 10,
2016 (28 weeks) |
|
September 12,
2015 (28 weeks) |
|
February 27, 2016
(52 weeks)
|
||||||
Results of operations, as reported:
|
|
|
|
|
|
|
||||||
Net earnings from continuing operations
|
|
$
|
32
|
|
|
$
|
38
|
|
|
$
|
84
|
|
Income tax provision
|
|
16
|
|
|
18
|
|
|
24
|
|
|||
Equity in earnings of unconsolidated affiliates
|
|
(2
|
)
|
|
(2
|
)
|
|
(5
|
)
|
|||
Interest expense, net
|
|
100
|
|
|
103
|
|
|
195
|
|
|||
Total operating earnings
|
|
$
|
146
|
|
|
$
|
157
|
|
|
$
|
298
|
|
Less Net earnings attributable to noncontrolling interests
|
|
(2
|
)
|
|
(5
|
)
|
|
(8
|
)
|
|||
Add Equity in earnings of unconsolidated affiliates
|
|
2
|
|
|
2
|
|
|
5
|
|
|||
Depreciation and amortization
|
|
111
|
|
|
112
|
|
|
210
|
|
|||
LIFO charge
|
|
2
|
|
|
5
|
|
|
3
|
|
|||
Store closure charges and costs
|
|
4
|
|
|
—
|
|
|
7
|
|
|||
Severance costs
|
|
—
|
|
|
4
|
|
|
6
|
|
|||
Intangible asset impairment charge
|
|
—
|
|
|
—
|
|
|
6
|
|
|||
Sales and use tax refund
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|||
Supply agreement termination fee
|
|
(9
|
)
|
|
—
|
|
|
—
|
|
|||
Total Adjusted EBITDA
|
|
$
|
252
|
|
|
$
|
275
|
|
|
$
|
527
|
|
Pro forma adjustments:
|
|
|
|
|
|
|
||||||
Net sales
(1)
|
|
24
|
|
|
30
|
|
|
47
|
|
|||
Cost of sales
(2)
|
|
8
|
|
|
14
|
|
|
17
|
|
|||
Total Pro forma adjustments
|
|
16
|
|
|
16
|
|
|
30
|
|
|||
Pro Forma Adjusted EBITDA
|
|
$
|
268
|
|
|
$
|
291
|
|
|
$
|
557
|
|
(1)
|
This adjustment reflects (1) the fees that Supervalu expects to recognize in connection with performing services for Save-A-Lot under the Services Agreement and (2) Wholesale distribution sales to Save-A-Lot pursuant to a customer agreement between Supervalu and Save-A-Lot with terms similar before and after the Sale that had historically been intercompany sales before the Sale. Actual Services Agreement fees are subject to adjustments pursuant to the terms of the Services Agreement including for changes in service levels.
|
(2)
|
This adjustment reflects the Cost of sales related to Wholesale’s distribution to Save-A-Lot, which was previously eliminated on an intercompany basis. No adjustment for expenses related to the Services Agreement has been included within Cost of sales because the shared service center costs incurred to support back office functions related to the Services Agreement represent administrative overhead costs that have been included within Selling and administrative expenses within Supervalu’s historical consolidated financial statements.
|
|
|
Year-To-Date Ended
|
|
Fiscal Year Ended
|
||||||||
(In millions)
|
|
September 10,
2016 (28 weeks) |
|
September 12,
2015 (28 weeks) |
|
February 27, 2016
(52 weeks)
|
||||||
Results of operations, as reported:
|
|
|
|
|
|
|
||||||
Net earnings from continuing operations
|
|
$
|
32
|
|
|
$
|
38
|
|
|
$
|
84
|
|
Income tax provision
|
|
16
|
|
|
18
|
|
|
24
|
|
|||
Equity in earnings of unconsolidated affiliates
|
|
(2
|
)
|
|
(2
|
)
|
|
(5
|
)
|
|||
Interest expense, net
|
|
100
|
|
|
103
|
|
|
195
|
|
|||
Total operating earnings
|
|
$
|
146
|
|
|
$
|
157
|
|
|
$
|
298
|
|
Reconciliation of total operating earnings to segment operating earnings, as reported:
|
|
|
|
|
|
|
||||||
Wholesale operating earnings
|
|
$
|
122
|
|
|
$
|
126
|
|
|
$
|
230
|
|
Retail operating (loss) earnings
|
|
(4
|
)
|
|
43
|
|
|
94
|
|
|||
Corporate operating earnings (loss)
|
|
28
|
|
|
(12
|
)
|
|
(26
|
)
|
|||
Total operating earnings
|
|
$
|
146
|
|
|
$
|
157
|
|
|
$
|
298
|
|
Reconciliation of segment operating earnings, as reported, to segment Adjusted EBITDA:
|
|
|
|
|
|
|
||||||
Wholesale operating earnings, as reported
|
|
$
|
122
|
|
|
$
|
126
|
|
|
$
|
230
|
|
Adjustments:
|
|
|
|
|
|
|
||||||
Supply agreement termination fee
|
|
(9
|
)
|
|
—
|
|
|
—
|
|
|||
Intangible asset impairment charge
|
|
—
|
|
|
—
|
|
|
6
|
|
|||
Wholesale operating earnings, as adjusted
|
|
113
|
|
|
126
|
|
|
236
|
|
|||
Wholesale depreciation and amortization
|
|
28
|
|
|
25
|
|
|
49
|
|
|||
LIFO charge
|
|
1
|
|
|
2
|
|
|
1
|
|
|||
Wholesale Adjusted EBITDA
(1)
|
|
$
|
142
|
|
|
$
|
153
|
|
|
$
|
286
|
|
|
|
|
|
|
|
|
||||||
Retail operating (loss) earnings, as reported
|
|
$
|
(4
|
)
|
|
$
|
43
|
|
|
$
|
94
|
|
Adjustments:
|
|
|
|
|
|
|
||||||
Store closure charges and costs
|
|
4
|
|
|
—
|
|
|
1
|
|
|||
Retail operating (loss) earnings, as adjusted
|
|
—
|
|
|
43
|
|
|
95
|
|
|||
Retail depreciation and amortization
|
|
79
|
|
|
83
|
|
|
153
|
|
|||
LIFO charge
|
|
1
|
|
|
3
|
|
|
2
|
|
|||
Equity in earnings of unconsolidated affiliates
|
|
2
|
|
|
2
|
|
|
5
|
|
|||
Net earnings attributable to noncontrolling interests
|
|
(2
|
)
|
|
(5
|
)
|
|
(8
|
)
|
|||
Retail Adjusted EBITDA
(1)
|
|
$
|
80
|
|
|
$
|
126
|
|
|
$
|
247
|
|
|
|
|
|
|
|
|
||||||
Corporate operating earnings (loss)
|
|
$
|
28
|
|
|
$
|
(12
|
)
|
|
$
|
(26
|
)
|
Adjustments:
|
|
|
|
|
|
|
||||||
Sales and use tax refund
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|||
Severance costs
|
|
—
|
|
|
4
|
|
|
6
|
|
|||
Store closure charges and costs
|
|
—
|
|
|
—
|
|
|
6
|
|
|||
Corporate operating earnings (loss), as adjusted
|
|
26
|
|
|
(8
|
)
|
|
(14
|
)
|
|||
Corporate depreciation and amortization
|
|
4
|
|
|
4
|
|
|
8
|
|
|||
Corporate Adjusted EBITDA
|
|
$
|
30
|
|
|
$
|
(4
|
)
|
|
$
|
(6
|
)
|
Total Adjusted EBITDA
|
|
$
|
252
|
|
|
$
|
275
|
|
|
$
|
527
|
|
Pro forma adjustments:
|
|
|
|
|
|
|
||||||
Net sales
(1)
|
|
24
|
|
|
30
|
|
|
47
|
|
|||
Cost of sales
(2)
|
|
8
|
|
|
14
|
|
|
17
|
|
|||
Total Pro forma adjustments
|
|
16
|
|
|
16
|
|
|
30
|
|
|||
Pro Forma Adjusted EBITDA
|
|
$
|
268
|
|
|
$
|
291
|
|
|
$
|
557
|
|
(1)
|
This adjustment reflects (1) the fees that Supervalu expects to recognize in connection with performing services for Save-A-Lot under the Services Agreement and (2) Wholesale distribution sales to Save-A-Lot pursuant to a customer agreement between Supervalu and Save-A-Lot with terms
|
(2)
|
This adjustment reflects the Cost of sales related to Wholesale’s distribution to Save-A-Lot, which was previously eliminated on an intercompany basis. No adjustment for expenses related to the Services Agreement has been included within Cost of sales because the shared service center costs incurred to support back office functions related to the Services Agreement represent administrative overhead costs that have been included within Selling and administrative expenses within Supervalu’s historical consolidated financial statements.
|