EXHIBIT 10.4
(Certain confidential portions of this Exhibit have been omitted,
as indicated by an {*} on the margin or in the text, and
filed with the Commission.)
SERVICES AGREEMENT
by and between
XXXXXX XXXXXXX XXXX XXXXXX & CO.
and
INTERNATIONAL BUSINESS MACHINES CORPORATION
Effective as of July 1, 1999
TABLE OF CONTENTS
-----------------
1. BACKGROUND AND CONSTRUCTION..................................................1
1.1 Background................................................................1
1.2 Construction..............................................................1
2. DEFINITIONS..................................................................2
2.1 Certain Definitions.......................................................2
2.2 Other Terms...............................................................8
3. SERVICES.....................................................................8
3.1 Provision of Services.....................................................8
3.2 Recipients of the Services................................................9
3.3 {*}.....................................................................{*}
3.4 Refresh..................................................................10
3.5 {*}.....................................................................{*}
3.6 {*}.....................................................................{*}
4. TERM........................................................................12
4.1 Term.....................................................................12
4.2 Renewal..................................................................12
4.3 Extension................................................................12
4.4 Termination of Previous Agreement........................................12
5. IBM PERSONNEL...............................................................13
5.1 Key IBM Positions........................................................13
5.2 Qualifications and Replacement of IBM Personnel..........................14
5.3 {*}.....................................................................{*}
6. EQUIPMENT AND FACILITIES....................................................15
6.1 MSDW Equipment...........................................................15
6.2 Other Equipment..........................................................15
6.3 MSDW Facilities..........................................................16
7. {*}........................................................................{*}
7.1 {*}.....................................................................{*}
7.2 {*}.....................................................................{*}
7.3 {*}.....................................................................{*}
7.4 {*}.....................................................................{*}
7.5 {*}.....................................................................{*}
7.6 {*}.....................................................................{*}
7.7 Export...................................................................22
7.8 Required Consents........................................................22
8. PERFORMANCE STANDARDS.......................................................23
8.1 General..................................................................23
8.2 Failure to Perform.......................................................23
8.3 Periodic Reviews.........................................................24
8.4 Measurement and Monitoring Tools.........................................24
9. PROJECT AND CONTRACT MANAGEMENT.............................................24
9.1 Steering Committee.......................................................24
9.2 Reports..................................................................25
-------
{*} = CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
9.3 Meetings.................................................................25
9.4 Procedures Manual........................................................26
9.5 Change Control...........................................................27
9.6 Use of Subcontractors....................................................28
9.7 Annual Technology Plan...................................................29
9.8 Quality Assurance and Improvement Programs...............................30
9.9 Productivity and Management Tools........................................30
10. AUDITS......................................................................31
10.1 Audit Rights..........................................................31
10.2 Audit Follow-up.......................................................31
10.3 Records Retention.....................................................32
11. MSDW RESPONSIBILITIES.......................................................32
11.1 Responsibilities......................................................32
11.2 {*}..................................................................{*}
12. CHARGES.....................................................................33
12.1 General...............................................................33
12.2 Incidental Expenses...................................................33
12.3 Taxes.................................................................33
12.4 New Services..........................................................34
12.5 {*}..................................................................{*}
12.6 Cost of Living Adjustment.............................................36
12.7 {*}..................................................................{*}
13. INVOICING AND PAYMENT.......................................................38
13.1 Invoicing.............................................................38
13.2 Payment Due...........................................................39
13.3 Accountability........................................................39
13.4 Proration.............................................................39
13.5 Set Off...............................................................39
13.6 Disputed Charges......................................................40
14. SAFEGUARDING OF MSDW DATA...................................................40
14.1 Safeguarding MSDW Data................................................40
14.2 Unauthorized Access...................................................40
15. CONFIDENTIALITY.............................................................41
15.1 Confidential Information..............................................41
15.2 Obligations...........................................................42
15.3 Exclusions............................................................43
15.4 Loss of Confidential Information......................................44
15.5 No Implied Rights.....................................................44
15.6 Survival..............................................................44
16. REPRESENTATIONS AND WARRANTIES..............................................44
16.1 Work Standards........................................................44
16.2 {*}..................................................................{*}
16.3 {*}..................................................................{*}
16.4 {*}..................................................................{*}
16.5 Non-Infringement......................................................45
16.6 Software Ownership or Use.............................................45
-------
{*} = CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
ii
16.7 Compliance With Laws and Regulations; Non-Contravention...............45
16.8 Authorization.........................................................46
16.9 Inducements...........................................................46
16.10 {*}..................................................................{*}
16.11 {*}..................................................................{*}
16.12 {*}..................................................................{*}
16.13 Disclaimer............................................................47
17. INSURANCE AND RISK OF LOSS..................................................47
17.1 Insurance.............................................................47
17.2 Risk of Loss..........................................................48
18. INDEMNITIES.................................................................48
18.1 Indemnity by IBM......................................................48
18.2 Indemnity by MSDW.....................................................48
18.3 Additional Indemnities................................................49
18.4 Indemnification Procedures............................................49
18.5 Subrogation...........................................................50
19. LIABILITY...................................................................50
19.1 General Intent........................................................50
19.2 Liability Restrictions................................................50
19.3 Force Majeure.........................................................51
20. DISPUTE RESOLUTION..........................................................52
20.1 Informal Dispute Resolution...........................................52
20.2 Formal Dispute Resolution.............................................53
20.3 Continued Performance.................................................54
20.4 Governing Law.........................................................54
20.5 Limitations Period....................................................54
21. TERMINATION.................................................................54
21.1 Termination for Cause.................................................54
21.2 {*}..................................................................{*}
21.3 Termination of SSAs and NSAs..........................................55
21.4 Extension of Termination Effective Date...............................55
21.5 Termination/Expiration Assistance.....................................55
21.6 {*}..................................................................{*}
22. GENERAL.....................................................................56
22.1 Binding Nature and Assignment.........................................56
22.2 Entire Agreement......................................................57
22.3 Notices...............................................................57
22.4 Counterparts..........................................................57
22.5 Headings..............................................................58
22.6 Relationship of Parties...............................................58
22.7 Severability..........................................................58
22.8 Consents and Approval.................................................58
22.9 Waiver of Default; Cumulative Remedies................................58
22.10 Survival..............................................................59
22.11 Public Disclosures....................................................59
22.12 Service Marks.........................................................59
-------
{*} = CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
iii
22.13 Third Party Beneficiaries.............................................59
22.14 Amendment.............................................................59
22.15 Order of Precedence...................................................59
22.16 Covenant of Good Faith................................................60
SCHEDULE A Scope of Services............................................A-1
SCHEDULE B Performance Standards........................................B-1
SCHEDULE C Charges......................................................C-1
SCHEDULE D Key IBM Positions............................................D-1
SCHEDULE E Software.....................................................E-1
SCHEDULE F {*}..........................................................{*}
SCHEDULE G Termination/Expiration Assistance............................G-1
SCHEDULE H SSAs and Certain Other Documents.............................H-1
SCHEDULE I New Services Amendment Form..................................I-1
SCHEDULE J Equipment....................................................J-1
SCHEDULE K {*}..........................................................{*}
SCHEDULE L {*}..........................................................{*}
SCHEDULE M Certain Leases, Licenses and Contracts.......................M-1
SCHEDULE N International Agreements.....................................N-1
SCHEDULE O Service Delivery Processes...................................O-1
iv
SERVICES AGREEMENT
This Services Agreement (the "Agreement"), effective as of July 1, 1999 (the
"Effective Date"), is entered into by and between Xxxxxx Xxxxxxx Xxxx Xxxxxx &
Co., a Delaware corporation with a place of business located at 0000 Xxxx Xxxx
Xxxx, Xxxxxxxxxx, Xxxxxxxx 00000 ("MSDW"), and International Business Machines
Corporation, a New York corporation with its principal place of business located
at Xxx Xxxxxxx Xxxx, Xxxxxx, Xxx Xxxx 00000 ("IBM"). As used in the Agreement,
"Party" means either MSDW or IBM, as appropriate, and "Parties" means MSDW and
IBM. The Parties agree that the following terms and conditions shall apply to
the services to be provided by IBM under the Agreement in consideration of
certain payments to be made by MSDW.
1. BACKGROUND AND CONSTRUCTION
1.1 Background.
----------
This Agreement is being made and entered into with reference to the
following:
(a) On November 30, 1992, MSDW (f/k/a Xxxx Xxxxxx Financial Services Group,
Inc.) and IBM (f/k/a Advantis) entered into that certain Master Agreement
for Systems Operations Services whereby IBM agreed to provide MSDW with
certain data networking services, data processing services and voice
networking services to MSDW as consideration for MSDW's commitment to pay
certain minimum annual payments to IBM.
(b) On March 13, 1997, MSDW (f/k/a Xxxx Xxxxxx, Discover & Co.) and IBM (f/k/a
Advantis) entered into that certain Amended Agreement for Systems
Operations Services (the "Previous Agreement"), which amended and restated
the Master Agreement for Systems Operations Services between MSDW and IBM.
Under the Previous Agreement, as amended, IBM agreed to provide MSDW,
MSDW's affiliates, and the clients of such entities certain data networking
services, data processing services and voice networking services as
consideration for MSDW's commitment to pay certain amounts to IBM.
(c) Prior to MSDW's divestiture of SPS Payment Systems, Inc. ("SPS"), SPS was
an Affiliate of MSDW entitled to receive services provided by IBM under the
Previous Agreement. As of the Effective Date, SPS is no longer an
Affiliate of MSDW.
1.2 Construction.
------------
(a) Terms other than those defined in the Agreement shall be given their plain
English meaning, and those terms, acronyms and phrases known in the
information technology services industry shall be interpreted in accordance
with their generally known meanings. Unless the context otherwise
requires, words importing the singular include the plural and vice-versa.
1
(b) References to an "Article," "Section," or "Subsection" shall be references
to the articles, sections, and subsections of this Services Agreement,
unless otherwise specifically stated.
(c) The Article and Section headings in the 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 the Agreement.
(d) The words "include," "includes", and "including" shall mean "include but
are not limited to", "includes but is not limited to", and "including but
not limited to", respectively.
2. DEFINITIONS
2.1 Certain Definitions.
-------------------
As used in the Agreement:
(a) "Affiliate" means, with respect to any entity, any other entity
Controlling, Controlled by or under common Control with such entity.
(b) "Agreement" means this Services Agreement and the Schedules attached to
this Services Agreement, which Schedules are hereby incorporated by this
reference into this Services Agreement.
(c) "Annex" shall mean any of the annexes attached to an Attachment.
(d) "Applications Software" or "Applications" means those programs and
programming (including the supporting documentation, media, on-line help
facilities and tutorials) that perform specific user related data
processing and telecommunications tasks and that are required for the
provision of, or are otherwise used in conjunction with, the Services.{*}
(e) "Attachment" means any attachment attached to a Schedule, including any
Annexes attached to such attachment which Annexes are hereby incorporated
by reference into such attachment by this reference subject to Section
22.15.
(f) {*}
(g) {*}
(h) "Change Control Procedures" has the meaning set forth in Section 9.5(b).
(i) "Confidential Information" has the meaning set forth in Section 15.1.
-------
{*} = CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
2
(j) "Contract Year" means any twelve (12) month period commencing on the
Effective Date or any anniversary thereof.
(k) "Control" and its derivatives mean with regard to any entity (i) the legal,
beneficial, or equitable ownership, directly or indirectly, of greater than
fifty percent (50%) of the capital stock (or other ownership interest, if
not a corporation) of such entity ordinarily having voting rights {*}.
(l) "Data Network Services" means collectively (i) those services, functions
and responsibilities described in Article 3 of Schedule A to the Agreement,
and (ii) those services, functions and responsibilities described in
Article 4 of Schedule A to the Agreement to the extent applicable to those
services, functions and responsibilities described in such Article 3, as
such services, functions and responsibilities described in (i) and (ii) may
evolve during the Term and be supplemented and enhanced as provided by the
Agreement.
(m) {*}
(n) "Effective Date" has the meaning set forth in the preamble to this Services
Agreement.
(o) "Equipment" means the computer and telecommunications equipment owned or
leased by MSDW or IBM (or in the case of either Party, by an Affiliate of
such Party {*}) that are necessary or used to provide the Services.
Equipment includes the following: (i) computer equipment and associated
attachments, features, accessories, peripheral devices, and other
equipment, (ii) telecommunications equipment, including private branch
exchanges, multiplexers, modems, hubs, bridges, routers, and other
telecommunications equipment; and (iii) related services (e.g., maintenance
and support services, upgrades, subscription services) provided by third
parties (e.g., vendor, manufacturer, lessor) in the same contract covering
the provision of such Equipment. {*}
(p) "Extraordinary Event" has the meaning set forth in Section 12.5.
(q) "Force Majeure Event" shall have the meaning set forth in Section 19.3(a).
(r) "Former Affiliate" has the meaning set forth in Section 3.2(b).
(s) "IBM" has the meaning set forth in the preamble to this Services Agreement.
-------
{*} = CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
3
(t) {*}
(u) "IBM Confidential Information" has the meaning set forth in Section
15.1(c).
(v) "IBM Equipment" means Equipment that is owned or leased by IBM or any of
IBM's Affiliates. {*}
(w) "IBM Facility" means any operating location or office of IBM, any IBM
Affiliate {*} of either of such entities, from which Services are
provided.
(x) "IBM Personnel" means {*} employees of IBM or its Affiliates, including
any temporary-duty personnel, that perform any of the Services, {*}.
(y) "IBM Project Executive" has the meaning set forth in Subsection 5.1(c).
(z) "IBM Software" means Software used by IBM in providing the Services that
is owned by IBM or any IBM Affiliate. {*}
(aa) "International Agreements" shall have the meaning set forth in Schedule N
of the Agreement.
(bb) "IPSS Services" means collectively (i) those services, functions and
responsibilities described in Article 2 of Schedule A to the Agreement,
and (ii) those services, functions and responsibilities described in
Article 4 of Schedule A to the Agreement to the extent applicable to those
services, functions and responsibilities described in such Article 2,as
such services, functions and responsibilities described in (i) and (ii)
may evolve during the Term and be supplemented and enhanced as provided by
the Agreement.
-------
{*} = CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
4
(cc) {*}
(dd) "Key IBM Positions" means the positions set forth as such in Schedule D.
(ee) "Losses" means all losses, liabilities, damages and claims, and all related
costs and expenses (including reasonable legal fees and disbursements and
costs of investigation, litigation, settlement, judgment, interest and
penalties).
(ff) "Minimum Annual Revenue Commitment" shall have the meaning set forth in
Schedule C.
(gg) {*}
(hh) "Monthly Performance Report" has the meaning set forth in Section 9.2.
(ii) "MSDW" has the meaning set forth in the preamble to this Services
Agreement.
(jj) "MSDW Business Unit" means any of the Affiliates of MSDW from time to time
and includes, with respect to any particular MSDW Affiliate, any entity
permitted to receive Services from IBM pursuant to the Agreement. As of
the Effective Date, the MSDW Business Units include: Novus Financial
Corporation ("Novus Financial"), Discover Financial Services, Inc.
("Discover"), Xxxx Xxxxxx Xxxxxxxx Inc. (also known as Private Client
Group) ("DWR", "Private Client Group" or "PCG") , and Xxxxxx Xxxxxxx & Co.
("Xxxxxx Xxxxxxx").
(kk) "MSDW Confidential Information" has the meaning set forth in Subsection
15.1(b).
(ll) "MSDW Contract Executive" has the meaning set forth in Subsection 11.1(a).
(mm) "MSDW Data" means {*} all information provided to IBM, {*} by or on behalf
of any recipient of the Services (as described in Section 3.2) that is
entered into, or transmitted by or through, Software or Equipment {*}.
(nn) "MSDW Equipment" shall mean Equipment that is owned or leased by MSDW or
any of MSDW's Affiliates. As of the Effective Date, MSDW Equipment
includes that Equipment set forth as such in Schedule J.
(oo) "MSDW Facility" means any operating location or office of MSDW or MSDW's
Affiliates for which access to IBM Personnel is necessary for such
personnel to provide the Services.
(pp) "MSDW Software" means Software owned by MSDW or any MSDW Affiliate (whether
or not created by MSDW or an MSDW Affiliate) that is used to provide the
Services. {*}
-------
{*} = CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
5
(qq) "New Services Amendment" or "NSA" shall mean an amendment to this
Agreement in which IBM agrees to provide New Services to MSDW pursuant to
pricing and terms set forth in such NSA. Each NSA shall be incorporated
by reference into this Agreement and subject to the order of precedence
set forth in Section 22.15. A form NSA is set forth in Schedule I.
(rr) "Out-of-Pocket Expenses" means reasonable and actual out-of-pocket
expenses incurred by IBM for equipment, materials, supplies, or other
services {*}.
(ss) "Party" and "Parties" have the meaning set forth in the preamble to this
Services Agreement.
(tt) "Performance Standard" has the meaning given in Section 8.1(a).
(uu) "Previous Agreement" has the meaning set forth in Subsection 1.1(b).
"Previous Agreement" shall include all Special Services Amendments
executed under the Previous Agreement.
-------
{*} = CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
6
(vv) "Procedures Manual" has the meaning set forth in Section 9.4.
(ww) "Required Consents" means any consents, approvals and authorizations from
third parties necessary to permit a Party to access Equipment or Software
as provided by the Agreement.
(xx) "Schedule" means any schedule attached to this Services Agreement,
including any Attachments attached to such schedule which Attachments are
hereby incorporated into such schedule by this reference subject to
Section 22.15.
(yy) "Services Agreement" means this Services Agreement between MSDW and IBM.
(zz) "Services" has the meaning set forth in Section 3.1(a).
(aaa) "Software" means either of or both of Applications Software and
Systems Software, as applicable.
(bbb) "Source Code" shall mean the source code form of software, including
source code listings as then commented, system and program flowcharts,
and such other components, programs and documents necessary to fully
utilize, modify and maintain such software, including all necessary
support routines, all of which, where applicable, shall be on media able
to be read and processed.
(ccc) "SPS" has the meaning set forth in Section 1.1(c).
(ddd) "SSA" means any of those Special Services Amendments being continued
from the Previous Agreement; SSAs are as set forth in Schedule H.
(eee) "Systems Software" means those programs and programming (including the
supporting documentation, media, on-line help facilities and tutorials)
that perform tasks basic to the functioning of Equipment and that are
required to operate the Applications Software or otherwise support the
provision of the Services. Systems Software includes operating systems,
utilities, job scheduling, security, online terminal environments, and
file management subsystems. {*}
(fff) "Technology Plan" has the meaning set forth in Section 9.7.
(ggg) "Term" has the meaning specified in Section 4.1.
(hhh) "Termination/Expiration Assistance" has the meaning set forth in
Subsection 21.5(a).
(iii) "Third Party Applications Software" means Third Party Software that
is Applications Software.
(jjj) "Third Party Software" means {*} the Applications Software and Systems
Software that is provided under license to IBM or MSDW (or in the case of
either Party, to an Affiliate of such {*}) by a third party, and shall
include any ongoing services
-------
{*} = CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
7
(e.g., maintenance and support services, upgrades, subscription services)
provided by third parties (e.g., {*} vendor, manufacturer, lessor) in the
same license covering such Software. {*}
(kkk) "Third Party Systems Software" means Third Party Software that is
Systems Software.
(lll) {*}
(mmm) "Voice Services" shall have the meaning set forth in Section
3.1(a)(ii) of the Agreement.
(nnn) {*}
2.2 Other Terms.
-----------
Other terms used in the Agreement are defined in the context in which
they are used and shall have the meanings there indicated.
3. SERVICES
3.1 Provision of Services.
---------------------
(a) Commencing on the Effective Date, IBM shall provide the following
services and perform the following functions and responsibilities (such
services, functions and responsibilities set forth in this Subsection (a)
collectively the "Services"):
(i) the services, functions and responsibilities described in the Agreement,
as such services, functions and responsibilities may evolve during the
Term and be supplemented and enhanced as provided by the Agreement;
(ii) the services, functions and responsibilities described in exhibit 3 of
the Previous Agreement (such services, functions and responsibilities the
"Voice Services");
(iii) the services, functions and responsibilities set forth in the
International Agreements;
-------
{*} = CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
8
(iv) the services, functions and responsibilities described in the SSAs,
notwithstanding the termination of the Previous Agreement pursuant to
Section 4.4;
(v) the services, functions and responsibilities not described in Subsections
(i), (ii), (iii) and (vi) of this Subsection (a) but which were
previously performed by IBM under the Previous Agreement, excluding (A)
those services, functions and responsibilities described in any Special
Services Amendment under the Previous Agreement that is not being
continued under this Agreement, and (B) those services, functions and
responsibilities which the Agreement expressly states will be assumed by
MSDW; and
(vi) {*}
(b) {*}
3.2 Recipients of the Services.
--------------------------
(a) As of the Effective Date, IBM shall provide the Services to (i) MSDW,
(ii) MSDW's Affiliates {*}. For purposes of the Agreement, Services
provided to the entities referenced in this Section shall be deemed to be
Services provided to MSDW. Notwithstanding the foregoing, MSDW shall have
right to specify, in its absolute and sole discretion, which of the
entities described in this Section shall receive the Services.
(b) In the event that MSDW relinquishes Control of an MSDW Affiliate after
the Effective Date such that the entity is no longer an MSDW Affiliate
(such entity a "Former Affiliate"), then upon MSDW's request, IBM shall
continue to provide the Services to such Former Affiliate after the date
such entity becomes a Former Affiliate for a period of time requested by
MSDW, which shall not exceed {*}; provided, however, that the Former
Affiliate agrees in writing to abide by the terms and conditions of the
Agreement. MSDW shall (i) remain the single point-of-contact with IBM
with respect to those Services provided to a Former Affiliate, (ii)
remain obligated to perform its payment obligations under the Agreement
with respect to those Services provided to a Former Affiliate, and (iii)
reimburse IBM for {*}. For purposes of the Agreement, Services provided
to a Former Affiliate shall be deemed to be Services provided to MSDW.
-------
{*} = CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
9
3.3 {*}
3.4 Refresh.
-------
(a) IBM shall refresh Equipment and Software as follows:
(i) IBM shall maintain Software (other than (A) MSDW Software that is
Applications Software, (B) Third Party Applications Software licensed by
MSDW or an MSDW Affiliate, and (C) Systems Software for which MSDW has
maintenance responsibility as indicated in Schedule E) {*}. MSDW will use
commercially reasonable efforts to eliminate the use of multiple releases
of Software other than MSDW Software that is Applications Software and
Third Party Applications Software licensed by MSDW or an MSDW Affiliate.
(ii) {*}
(b) {*}
3.5 {*}
-------
{*} = CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
10
3.6 {*}
-------
{*} = CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
11
4. TERM
4.1 Term.
----
The term of the Agreement shall begin on the Effective Date and shall
expire on June 30, 2005, unless terminated (in whole or in part)
earlier or extended in accordance with the Agreement (the "Term").
4.2 Renewal.
-------
In the event that MSDW provides IBM with notice at least {*} prior to
the expiration of the Term that MSDW desires to renew the Agreement,
IBM shall provide to MSDW, within {*} after such notice, a written
proposal setting forth the pricing and any changes to the other terms
and conditions set forth in the Agreement that IBM proposes to govern
a renewal of the Agreement.
4.3 Extension.
---------
Upon giving written notice to IBM no less than {*} prior to the then-
existing expiration date of the Agreement (including in the event that
MSDW and IBM fail to agree in writing upon the terms and conditions
applicable to renewal of the Agreement pursuant to Section 4.2), MSDW
shall have the right to extend the Term for up to {*} on the terms and
conditions then in effect. {*}
4.4 Termination of Previous Agreement.
---------------------------------
(a) Subject to Subsection (b) of this Section, and except to the extent
provided in Subsections 7.2(c), 7.2(d), 7.2(f), and 7.3(b)(ii) of the
Agreement, as of the
-------
{*} = CONFIDENTIAL TREATMENT HAS BEEN REQUESTED.
12
Effective Date, the Previous Agreement shall be terminated at no charge
to MSDW. The rights and responsibilities of the Parties from and after
the Effective Date shall be defined solely by the Agreement; the rights
and responsibilities of the Parties prior to the Effective Date shall be
defined solely by the Previous Agreement.
(b) Notwithstanding termination of the Previous Agreement pursuant to
Subsection (a) of this Section, with respect to exhibit 3 of the Previous
Agreement and any SSAs as defined by the Agreement:
(i) the Voice Services and corresponding pricing described in such exhibit 3,
and such SSAs, shall be incorporated by reference into the Agreement,
subject to the order of precedence set forth in Section 22.15, and shall
remain in full force and effect;
(ii) any references to the Previous Agreement in such exhibit 3 or SSAs shall
be deemed references to the Agreement; and
(iii) MSDW's payment of charges pursuant to such SSAs shall apply toward MSDW's
satisfaction of the Minimum Annual Revenue Commitment described in
Schedule C.
5. IBM PERSONNEL
5.1 Key IBM Positions.
-----------------
(a) {*}
(b) {*} Before assigning an individual to a Key IBM Position, whether as an
initial assignment or a subsequent assignment, IBM shall notify MSDW of
the proposed assignment {*} and shall provide MSDW with a resume and
other information about the individual reasonably requested by MSDW. If
MSDW in good faith objects to the proposed assignment, the Parties shall
attempt to resolve MSDW's concerns on a mutually agreeable basis. {*}
-------
{*} = CONFIDENTIAL TREATMENT HAS BEEN REQUESTED.
13
(c) IBM shall, in accordance with Subsection (b) above, designate an
individual to (i) serve as the single point of accountability for IBM for
the Services, (ii) have the authority to act for and bind IBM in matters
relating to the Agreement, and (iii) have day-to-day authority for
undertaking to ensure customer satisfaction (such individual the "IBM
Project Executive"). The IBM Project Executive shall be one of the Key
IBM Positions. {*}
(d) The personnel approved as of the Effective Date to fill the Key IBM
Positions are listed in Schedule D. {*}
5.2 Qualifications and Replacement of IBM Personnel.
-----------------------------------------------
(a) IBM shall assign an adequate number of personnel to perform the Services.
The personnel IBM assigns to perform the Services shall be properly
educated, skilled, trained and qualified for the Services they are to
perform.
(b) In the event that MSDW determines in good faith that the continued
assignment to the MSDW account of one of the IBM Personnel is not in the
best interests of MSDW, then MSDW shall give IBM written notice to that
effect. After receipt of such notice, IBM shall have a reasonable period
of time in which to investigate the matters stated in such notice,
discuss its findings with MSDW and resolve any problems with such person.
{*}
5.3 {*}
-------
{*} = CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
14
6. EQUIPMENT AND FACILITIES
6.1 MSDW Equipment.
--------------
(a) During the Term and subject to the Parties having obtained any necessary
Required Consents pursuant to Subsection (b) of this Section, MSDW grants
to IBM for the sole purpose of performing the Services, access to MSDW
Equipment to the extent that such access is necessary to provide the
Services; provided, however, that with respect to MSDW Equipment leased
by MSDW, such grant of access by MSDW shall be limited to the extent MSDW
has the rights to provide such access to IBM. IBM shall have management,
operational, support and administrative responsibility for MSDW Equipment
during the Term (i) as and to the extent that IBM requires such Equipment
to provide the Services, and (ii) with respect to leased MSDW Equipment,
to the same extent as if IBM were the lessee of such Equipment (exclusive
of financial obligations). With respect to leased MSDW Equipment, IBM
shall comply with the duties imposed on MSDW under the leases for such
Equipment. As between MSDW and IBM, the MSDW Equipment will remain the
property of MSDW. MSDW Equipment is provided to IBM on an "as is, where
is" basis, with no warranties whatsoever.
(b) MSDW authorizes IBM to administer, and pay amounts pertaining to the MSDW
Equipment leases, licenses for Third Party Software licensed by MSDW or
an MSDW Affiliate, and third-party service contracts set forth in
Schedule M for which IBM shall be financially responsible. MSDW shall not
terminate, extend or amend such leases, licenses and contracts without
the prior written approval of IBM. MSDW agrees to promptly notify all
appropriate third parties of such authorization to the extent necessary
and appropriate. IBM may, in its sole discretion, terminate, cancel,
substitute or change such leases, licenses and contracts; provided,
however that (i) IBM shall be solely responsible for any additional
charges resulting from such termination, cancellation, substitution or
change, and (ii) IBM continues to perform the Services as required by the
Agreement.
6.2 Other Equipment.
---------------
Except for MSDW Equipment,
(a) IBM will provide all additional or replacement Equipment, including
upgrades, as necessary to provide the Services in accordance with the
Agreement;
15
(b) IBM shall have financial responsibility for acquisition, lease, and
ownership costs for Equipment, including current and future Equipment,
upgrades, enhancements, and growth and technology refreshments in
accordance with this Agreement;
(c) IBM shall have financial responsibility for all costs and expenses
related to operational support, including installation, support,
Equipment maintenance, disaster recovery of the Equipment, Performance
Standards, and moves, adds and changes, except as otherwise agreed upon
by MSDW in writing; and
(d) IBM shall be administratively and operationally responsible for the
Equipment used to provide the Services, including provisioning, staging,
configuring, installing, operating, maintaining, upgrading, and enhancing
the Equipment, all as set forth in more detail in Schedule A of the
Agreement.
IBM's costs of performing the obligations set forth in this Section will
be recovered by IBM through the charges set forth in the Agreement.
6.3 MSDW Facilities.
---------------
(a) MSDW Obligations.
----------------
(i) MSDW will provide IBM with access to the MSDW Facilities to the extent
and for so long as such access is reasonably necessary for IBM to perform
the Services.
(ii) With respect to office space, MSDW shall provide to IBM the office space
provided by MSDW to IBM immediately prior to the Effective Date under the
Previous Agreement in the condition and configuration that exists as of
the Effective Date, except that such office space will be equitably
adjusted to reflect any adjustment in the scope of Services either (A)
relative to the scope of services provided under the Previous Agreement,
or (B) occurring after the Effective Date. With respect to such office
space, MSDW shall provide adequate furniture and office supplies. With
respect to the personnel that may occupy such office space, MSDW shall
provide office support services, parking privileges and cafeteria
services similar to that offered to similarly-situated MSDW employees.
(iii) MSDW will inform IBM of any relocation of an MSDW Facility that MSDW is
contemplating or has made a final decision to make (if such relocation
could reasonably be expected to impact IBM's performance of the Services)
so that IBM will have a reasonable amount of time to prepare for and
implement such relocation as it impacts IBM, with MSDW reimbursing IBM
for IBM's Out-of-Pocket Expenses reasonably incurred for the relocation
of IBM Personnel stationed on-site at such facility.
(iv) The MSDW Facilities shall be made available to IBM on an "as is, where
is" basis. Unless otherwise expressly stated in the Agreement, IBM will
16
be responsible for providing any other materials and support it requires
in order to provide the Services.
(b) IBM Obligations.
---------------
(i) IBM shall use the MSDW Facilities for the sole and exclusive purpose of
providing the Services, except as otherwise approved by MSDW in writing
(including as approved by MSDW pursuant to any node license agreements),
which approval may be withheld at MSDW's sole discretion. The use of such
facilities by IBM shall not constitute a leasehold interest in favor of
IBM, IBM Personnel or IBM customers.
(ii) IBM shall use the MSDW Facilities in a reasonably efficient manner. {*}
IBM shall be responsible for any damage to the MSDW Facilities resulting
from the abuse, misuse, neglect or gross negligence of IBM, its employees
and subcontractors or other failure to comply with its obligations
respecting the MSDW Facilities.
(iii) IBM, its employees and agents shall keep the MSDW Facilities in good
order, not commit or permit waste or damage to such facilities, not use
such facilities for any unlawful purpose or act, and comply with MSDW's
standard policies and procedures regarding access to and use of such
facilities (including procedures for the physical security of the MSDW
Facilities) that are (A) made available to IBM, and {*}.
(iv) IBM shall permit MSDW and its agents and representatives to enter into
those portions of the MSDW Facilities occupied by IBM Personnel at any
time to perform facilities-related services.
(v) IBM shall not make any improvements or changes involving structural,
mechanical or electrical alterations to the MSDW Facilities without
MSDW's prior written approval. Any improvements to the MSDW Facilities
will become the property of MSDW.
(vi) When the MSDW Facilities are no longer required for performance of the
Services, IBM shall return such facilities to MSDW in substantially the
same condition as when IBM began use of such facilities, subject to
reasonable wear and tear.
-------
{*} = CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
17
7. {*}
7.1 {*}
-------
{*} = CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
18
7.2 {*}
{*} = CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
19
(e) {*}
(f) {*}
-------
{*} = CONFIDENTIAL TREATMENT HAS BEEN REQUESTED.
20
7.3 [*]
-------
{*} = CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
21
7.4 {*}
7.5 {*}
7.6 {*}
7.7 Export.
------
The Parties acknowledge that certain Software and technical data to be
provided under the Agreement and certain transactions under the Agreement
may be subject to export controls under the laws and regulations of the
United States and other countries. Neither Party shall export or re-
export any such items or any direct product thereof or undertake any
transaction in violation of any such laws or regulations. To the extent
within IBM's control, IBM shall be responsible for, and shall coordinate
and oversee, compliance with such export laws in respect of such items
exported or imported under the Agreement.
7.8 Required Consents.
-----------------
(a) MSDW, with the cooperation of IBM, shall obtain any Required Consents
necessary to grant the licenses described in this Article 7 for [*]. MSDW
shall pay such fees (such as transfer or upgrade fees) as may be required
to obtain such Required Consents.
-------
{*} = CONFIDENTIAL TREATMENT HAS BEEN REQUESTED.
22
(b) IBM, with the cooperation of MSDW, shall obtain any Required Consents
necessary to grant the licenses described in this Article 7 for Software
other than the Software described in Subsection (a) of this Section. IBM
shall pay such fees (such as transfer or upgrade fees) as may be required
to obtain such Required Consents.
(c) If a Required Consent is not obtained, then, unless and until such
Required Consent is obtained, the Parties shall cooperate with each other
in achieving a reasonable alternative arrangement for MSDW to continue to
process its work with minimum interference to its business operations.
(d) MSDW shall be responsible for any claim arising prior to the Effective
Date from the failure to obtain consents or approvals required before the
Effective Date for the licensing or transfer to IBM under the Previous
Agreement of the right to use or access:
(i) equipment that was owned or leased by MSDW before the Effective Date and
for which MSDW, rather than IBM, retained financial and administrative
responsibility under the Previous Agreement; or
(ii) software and programs that were owned or licensed by MSDW before the
Effective Date for which MSDW, rather than IBM, retained financial and
administrative responsibility under the Previous Agreement.
8. PERFORMANCE STANDARDS
8.1 General.
-------
{*}
(a) At all times IBM's level of performance shall meet or exceed the
quantitative and qualitative performance standards for certain of the
Services ("Performance Standards") identified in Schedule B to the
Agreement, {*}
(b) {*}
8.2 Failure to Perform.
------------------
(a) If IBM fails to meet any Performance Standard, IBM shall, at no
additional charge to MSDW, (i) investigate and report on the causes of
the problem; (ii) advise MSDW, as and to the extent reasonably requested
by MSDW, of the status of remedial efforts being undertaken with respect
to such problems {*}.
-------
{*} = CONFIDENTIAL TREATMENT HAS BEEN REQUESTED.
23
(b) {*}
8.3 Periodic Reviews.
----------------
Within three (3) months after the expiration of the first Contract Year
following the Effective Date and at least annually thereafter, MSDW and
IBM shall review the Performance Standards pursuant to the process set
forth in Article 5 of Schedule B and shall make adjustments to them as
appropriate to reflect improved performance capabilities associated with
advances in the technology and methods used to perform the Services. {*}
8.4 Measurement and Monitoring Tools.
--------------------------------
IBM shall utilize the necessary measurement and monitoring tools and
procedures required to monitor, measure and report IBM's performance of
the Services against the applicable Performance Standards, including as
set forth in Schedule B. Such measurement and monitoring shall permit
reporting at a level of precision and detail sufficient to verify
compliance with the Performance Standards, and shall be subject to audit
by MSDW. For purposes of verification and at MSDW's request, IBM shall
provide MSDW with information about and from such tools and procedures
and, with IBM's participation, with access to such tools and procedures.
9. PROJECT AND CONTRACT MANAGEMENT
9.1 Steering Committee.
------------------
The Parties shall form a steering committee to facilitate communications
between them (the "Steering Committee"). The Steering Committee shall be
composed of:
(a) the MSDW Contract Executive;
(b) the chief information officer from each of the MSDW Business Units that
are receiving Services;
(c) the IBM Project Executive;
-----------
{*} = CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
24
(d) {*};
(e) {*}; and
(f) such other persons as may be mutually agreed by the Parties.
9.2 Reports.
-------
Within ninety (90) days after the Effective Date, the Parties shall
determine an appropriate set of periodic reports to be issued by IBM to
MSDW. Such reports shall be issued at the frequency and contain the level
of detail reasonably requested by MSDW. Unless otherwise requested by
MSDW, such reports shall be no less comprehensive and be issued no less
frequently than the reports provided by IBM prior to the Effective Date
under the Previous Agreement. IBM shall provide MSDW with suggested
formats for such reports, for MSDW's review and approval. As one such
report, IBM shall provide a monthly performance report, which shall be
delivered to MSDW within fifteen (15) days after the end of each calendar
month (commencing with the calendar month following the calendar month
that includes the Effective Date), describing IBM's performance of the
Services in the preceding month (the "Monthly Performance Report"). Such
report shall:
(a) separately address IBM's performance in each area of the Services;
(b) for each area of the Services, assess the degree to which IBM has
attained or failed to attain the pertinent objectives in that area;
(c) include a performance report for each MSDW Business Unit in no less
detail than similar reports provided by IBM to the MSDW Business Units
prior to the Effective Date, that at a minimum explains deviations from
the Performance Standards, includes a plan for corrective action where
appropriate, {*}
(d) describe the status of applications development projects (if any),
problem resolution efforts, and other initiatives;
(e) on a quarterly basis only, set forth a record of all material Equipment,
Software, and IBM Personnel changes that pertain to the Services and
describe planned changes during the upcoming quarter that may affect the
Services;
(f) set forth the utilization of resources for the month and report on
utilization trends and statistics; and
(g) include such documentation and other information as MSDW may reasonably
request to verify compliance with the Agreement.
9.3 Meetings.
--------
The Parties shall participate in the following meetings:
-----------
{*} = CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
25
(a) working-level meetings, held no less frequently than similar meetings
between the Parties before the Effective Date, between the Parties to
review any technical, operational, administrative or related matters with
respect to Schedule B, which may include matters with respect to
performance, capacity, changes, problems, measurement of the Performance
Standards, or any other matters agreed upon by the Parties;
(b) a monthly meeting among operational personnel representing MSDW and IBM
to discuss daily performance and planned or anticipated activities,
changes that might adversely affect performance, and otherwise address,
review, and discuss matters specific to MSDW;
(c) a quarterly meeting with each MSDW Business Unit and their respective
chief information officer to (i) review the Monthly Performance Reports
for the quarter, (ii) review IBM's overall performance under the
Agreement, (iii) review any managerial, contractual, financial,
relationship or related matters with respect to Schedule B, (iv) review
any proposal to modify the Performance Standards made pursuant to Article
5 of Schedule B, (v) review progress on the resolution of issues, (vi)
provide a strategic outlook for MSDW's information systems requirements,
and (vii) discuss such other matters as appropriate;
(d) a semi-annual meeting of Steering Committee to review relevant contract
and performance issues; and
(e) such other meetings between MSDW representatives and IBM Personnel
reasonably requested by either Party as necessary to address performance
of the Services.
IBM shall prepare and circulate an agenda sufficiently in advance of each
meeting to give participants an opportunity to prepare for the meeting.
IBM shall incorporate into such agenda items that MSDW desires to
discuss. At MSDW's request, IBM shall prepare and circulate minutes
promptly after a meeting.
9.4 Procedures Manual.
-----------------
(a) Within {*} calendar days after the Effective Date, IBM will deliver a
draft procedures manual to MSDW, for its comments and review (the
"Procedures Manual"). The Procedures Manual will describe how IBM shall
perform and deliver the Services under the Agreement, the Equipment and
Software being used, and the documentation (e.g., operations manuals,
user guides, specifications) that provides further details of such
activities. The Procedures Manual shall describe the activities IBM
proposes to undertake in order to provide the Services, including those
direction, supervision, monitoring, staffing, reporting, planning and
oversight activities normally undertaken at facilities that provide
services of the type IBM shall provide under the Agreement. The
Procedures Manual shall also include descriptions of the acceptance
testing and quality assurance procedures approved by MSDW, IBM's problem
management and escalation procedures, and the other standards and
procedures of IBM pertinent to MSDW's interaction with IBM in obtaining
the Services. The
-----------
{*} = CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
26
Procedures Manual shall be suitable for use by MSDW to understand the
Services.
(b) Following MSDW's review of the draft Procedures Manual, IBM shall
incorporate reasonable comments or suggestions of MSDW and shall finalize
the Procedures Manual within {*} of the Effective Date. {*} IBM shall
periodically update the Procedures Manual to reflect changes in the
operations or procedures described therein. Updates of the Procedures
Manual shall be provided to MSDW for review {*}.
9.5 Change Control.
--------------
(a) IBM shall comply with the following change control requirements:
(i) {*}
(ii) {*}
(iii) IBM shall move programs from development and test environments to
production environments in a controlled and documented manner, so that no
changes are introduced into the programs being moved to production
environments during such activity.
(iv) IBM shall control all changes to MSDW's computing environment, including
changes to programs, manual procedures, job control language statements,
distribution parameters, or schedules.
-------
{*} = CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
27
(b) Within {*} after the Effective Date, IBM shall prepare and provide to
MSDW change control procedures detailing how IBM will comply with the
requirements set forth in Subsection (a) of this Section and otherwise
control changes to the Services (such procedures the "Change Control
Procedures"). The Change Control Procedures may not modify or change the
scope of Services to be provided under, or any other terms or conditions
of, the Agreement. The Change Control Procedures shall be provided to
MSDW for review, comment and approval; and reasonable comments or
suggestions of MSDW shall be incorporated into the Change Control
Procedures. IBM shall perform the Services in accordance with the Change
Control Procedures.
9.6 Use of Subcontractors.
---------------------
(a) {*}
(i) {*}
(ii) {*}
(b) IBM may, in the ordinary course of business and without MSDW approval,
subcontract for third party services or products where
(i) {*}
(ii) {*}
{*} If MSDW expresses concerns to IBM about a subcontract covered by this
Subsection 9.5(b), IBM shall
-------
{*} = CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
28
discuss such concerns with MSDW and work in good faith to resolve MSDW's
concerns on a mutually acceptable basis.
(c) IBM shall not insert in any subcontract any provision the effect of which
would be to limit the ability of a subcontractor to contract directly
with MSDW. {*}
(d) IBM shall remain responsible for obligations, services and functions
performed by IBM Affiliates and {*} Subcontractors to the same extent as
if such obligations, services and functions were performed by IBM
employees and for purposes of the Agreement such work shall be deemed
work performed by IBM. IBM shall be MSDW's sole point of contact
regarding the Services, including with respect to payment. IBM shall not
disclose MSDW Confidential Information to a subcontractor unless and
until such subcontractor has agreed in writing to protect the
confidentiality of such Confidential Information in a manner
substantially equivalent to that required of IBM under the Agreement.
9.7 Annual Technology Plan.
----------------------
The Parties shall jointly prepare an annual technology plan in accordance
with the provisions of this Section (the "Technology Plan"). Preparation
of the Technology Plan shall be under the overall direction and guidance
of the Steering Committee. The Technology Plan shall address the
information technology requirements of MSDW's activities. Each Technology
Plan after the first shall review and assess the immediately preceding
Technology Plan. The Technology Plan shall consist of a three-year plan
and annual implementation plans as described below. {*}
(a) Three-Year Plan. The Technology Plan shall include a comprehensive
---------------
assessment and strategic analysis of MSDW's then-current information
technology systems and services for the next three (3) years, including
an assessment of the appropriate direction for such systems and services,
in light of MSDW's business priorities and strategies and competitive
market forces (to the extent such business information is provided by
MSDW to IBM). The plan shall consider growth requirements, IBM and MSDW
initiatives that may materially affect either Party, re-assessment of
skill and resource requirements, lessons learned from previous projects,
operational issues, technical solutions, and any other issues that xxxxxx
strategic planning and collaboration. The plan shall include specific
technical or business information, such as the identification of proposed
software and hardware strategies and direction, a cost projection, a
cost/benefit analysis of any
-------
{*} = CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
29
proposed changes, a description of the types of personnel skills and
abilities needed to respond to recommended changes or upgrades in
technology, a project plan and related schedule for developing and
achieving the recommended elements, and references to appropriate
information that supports service level requirements, exploits industry
trends in production capabilities, and outlines potential price
performance improvement opportunities, as applicable.
(b) Annual Implementation Plan. As necessary to support the overall
--------------------------
objectives and directions of the Three-Year Plan described above, each
annual implementation plan shall provide specific guidance as to the
information services requirements, projects, and plans for the upcoming
year, including details on operations, solutions and design and
development activities, as applicable. The annual implementation plan
shall include a summary review of IBM's performance of the Services in
the year then concluding and shall make updates and revisions of the
long-term plan as appropriate. An annual implementation plan shall be
prepared for each Contract Year of the Agreement or as otherwise mutually
agreed by the Parties.
(c) Drafting Responsibility. IBM shall submit to MSDW a draft of the
-----------------------
Technology Plan for MSDW's review, which draft shall have been developed
with input from key business users from MSDW. IBM shall submit the final
Technology Plan within {*} of receiving MSDW's comments on the draft, and
the Parties shall mutually agree upon the final Technology Plan. The
draft of the Technology Plan for the first Contract Year shall be
provided by IBM within {*} of the Effective Date or as otherwise mutually
agreed by the Parties. IBM shall recommend modifications to the
Technology Plan as it deems appropriate and, subject to the mutual
agreement of the Parties, shall revise the Technology Plan based upon
MSDW's review on an annual basis or as otherwise mutually agreed by the
Parties.
9.8 Quality Assurance and Improvement Programs.
------------------------------------------
IBM, as part of its total quality management process, shall provide
continuous quality assurance and quality improvement through: (a) the
identification and application of proven techniques and tools from other
installations within its operations {*} that would benefit MSDW either
operationally or financially; and (ii) the implementation of concrete
programs, practices and measures designed at a minimum to ensure that the
Services are performed in accordance with the Agreement and to improve
the Performance Standards. Such procedures shall include checkpoint
reviews, testing, acceptance, and other procedures for MSDW to assure the
quality of IBM's performance and shall be included in the Procedures
Manual.
9.9 Productivity and Management Tools.
---------------------------------
IBM shall utilize project management tools, including productivity aids
and project management systems, as reasonably necessary to perform the
Services. IBM shall use project management tools in all major projects
and employ a regular reporting mechanism to identify project tasks,
present current status reports, and identify potential bottlenecks and
problems.
-------
{*} = CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
30
10. AUDITS
10.1 Audit Rights.
------------
{*} IBM shall provide to MSDW, its auditors (including internal audit
staff and external auditors), regulators and other representatives {*}
access upon reasonable prior notice {*} to any Equipment, Software, IBM
Personnel, MSDW Facilities, IBM Facilities and to data and records
relating to the Services for the purpose of performing audits and
inspections {*} to:
(a) verify the accuracy of charges and invoices;
(b) verify the integrity of MSDW Data and examine the systems that process,
store, support and transmit that data; and
(c) examine IBM's performance of the Services including, to the extent
applicable to the Services performed by IBM and to the charges under the
Agreement, performing audits (i) of practices and procedures, (ii) of
Equipment and Software systems, (iii) of general controls and security
practices and procedures, (iv) of disaster recovery and back-up
procedures, (v) of the efficiency of IBM in using resources for which
MSDW is being charged, and (vi) any audit necessary to enable MSDW to
meet applicable regulatory requirements.
IBM shall provide to such auditors, inspectors, regulators, and
representatives such assistance as they reasonably require {*}. IBM shall
cooperate fully with MSDW or its designees in connection with audit
functions and with regard to examinations by regulatory authorities.
MSDW's auditors and other representatives shall comply with IBM's
reasonable security requirements. MSDW will make reasonable efforts to
limit the number, scope and duration of such audits and otherwise attempt
to minimize any disruption to IBM's business caused by such audits.
10.2 Audit Follow-up.
---------------
(a) Following an audit or examination, MSDW shall conduct (in the case of an
internal audit), or request its external auditors or examiners to
conduct, an exit conference with IBM to obtain factual concurrence with
issues identified in the review.
(b) {*}
(c) IBM and MSDW shall meet to review each audit report promptly after the
issuance thereof and to mutually agree upon the appropriate manner, if
any, in which to respond to the changes suggested by the audit report.
Notwithstanding
-------
{*} = CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
31
the foregoing, in the event that an audit reveals that IBM is not
complying with its obligations under the Agreement, IBM shall take action
as is necessary to correct such non-compliance. MSDW and IBM agree to
develop operating procedures for the sharing of audit and regulatory
findings and reports related to IBM's operating practices and procedures
produced by auditors or regulators of either Party.
10.3 Records Retention.
-----------------
(a) Until the latest of (i) three (3) years after expiration or termination
of the Agreement, (ii) the date that all pending matters relating to the
Agreement (e.g., disputes) are closed, (iii) the date that retention of
records is no longer required to meet MSDW's records retention policy as
identified to IBM as such policy may be reasonably adjusted from time to
time, or (iv) as otherwise required by law or regulation (the latest of
such dates the "Retention Date"), IBM shall maintain and provide access
upon request to the records, documents and other information required to
meet MSDW's audit rights under the Agreement.
(b) After the Retention Date, IBM may destroy or otherwise dispose of such
records, documents and other information required to meet MSDW's audit
rights under the Agreement {*}.
11. MSDW RESPONSIBILITIES
11.1 Responsibilities.
----------------
In addition to MSDW's responsibilities set forth elsewhere in the
Agreement, MSDW shall be responsible for the following:
(a) MSDW shall designate one individual to whom all IBM communications
concerning the Agreement may be addressed (such individual the "MSDW
Contract Executive"). The MSDW Contract Executive shall have the
authority to act for and bind MSDW in matters relating to the Agreement.
(b) MSDW shall cooperate with IBM by, among other things, making available,
as reasonably requested by IBM, data processing priorities, management
decisions, information, approvals and acceptances so that IBM may
accomplish its obligations and responsibilities under the Agreement. The
MSDW Contract Executive, or his or her designee, will be the principal
point of contact for obtaining such decisions, information, approvals and
acceptances.
11.2 {*}
-------
{*} = CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
32
12. CHARGES
12.1 General.
-------
All charges for the Services are set forth in this Article 12, in
Schedule C, in the SSAs, in the NSAs or in the International Agreements.
MSDW shall not be required to pay IBM any amounts for the Services in
addition to those payable to IBM under this Article 12 or Schedule C.
12.2 Incidental Expenses.
-------------------
IBM acknowledges that, except as may be otherwise provided in the
Agreement, expenses that IBM expects to incur in performing the Services
(including travel and lodging, document reproduction and shipping, and
long-distance telephone) are included in IBM's charges and rates set
forth in the Agreement. Accordingly, such IBM expenses are not separately
reimbursable by MSDW unless, on a case-by-case basis for unusual
expenses, MSDW has agreed in advance and in writing to reimburse IBM for
the expense.
12.3 Taxes.
-----
The Parties' respective responsibilities for taxes arising under or in
connection with the Agreement shall be as follows:
(a) Each Party shall be responsible for any personal property taxes on
property it owns or leases, for franchise and privilege taxes on its
business, and for taxes based on its net income or gross receipts.
(b) IBM shall be responsible for any sales, use, excise, value-added,
services, consumption, and other taxes and duties payable by IBM, {*} on
any goods or services that are used or consumed by such entities in
providing the Services where the tax is imposed on the acquisition or use
of such goods or services by such entities and the amount of tax is
measured by the costs in acquiring such goods or services.
(c) MSDW shall be responsible for any sales, use, excise, value-added,
services, consumption, or other tax that is assessed on the provision of
the Services as a whole, or on any particular Service received by MSDW
from IBM. If and to the extent any such tax is reduced or eliminated
during the Term, IBM shall reduce or eliminate any charges for such
taxes, as appropriate. In the event that any interest or penalty is
assessed against MSDW with respect to any such tax, then IBM shall
reimburse MSDW for such interest or penalty to the extent that such
interest or penalty arises from IBM's failure to invoice MSDW for such
tax or to remit amounts paid by MSDW to IBM for such tax.
-------
{*} = CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
33
(d) In the event that a sales, use, excise, value added, services,
consumption, or other tax is assessed on the provision of any of the
Services, MSDW shall provide tax calculations at the Affiliate level
based upon the benefit that each Affiliate receives within a tax
jurisdiction. The benefit shall be determined by MSDW and provided to IBM
so that the Parties can work together to segregate the payments under the
Agreement into three (3) payment streams:
(i) those for taxable Services;
(ii) those in which IBM functions merely as a payment agent for MSDW in
receiving goods, supplies, or services (including leasing and licensing
arrangements); and
(iii) those for other nontaxable Services.
(e) The Parties agree to cooperate with each other to enable each to more
accurately determine its own tax liability and to minimize such liability
to the extent legally permissible. IBM shall provide MSDW with
information that separately states, for each applicable tax jurisdiction,
the amount of any taxes IBM is collecting from MSDW. Each Party shall
provide and make available to the other any resale certificates,
information regarding out-of-state or out-of-country sales or use of
equipment, materials or services, and other exemption certificates or
information reasonably requested by the other Party.
(f) {*}
12.4 New Services.
------------
In the event that MSDW requests IBM to perform functions that are
materially different from, and in addition to, the Services, the Parties'
obligations with respect to such functions shall be as follows:
(a) To the extent that such additional functions require additional resources
for which a pricing metric exists under the Agreement, the additional
functions shall:
(i) subject to Subsection (e) of this Section, be priced in accordance with
the pricing metric;
(ii) be documented pursuant to Subsection (f) of this Section, and
(iii) be considered "Services" and be subject to the provisions of the
Agreement.
(b) To the extent that such additional functions require additional resources
for which a pricing metric does not exist under the Agreement, then prior
to performing such additional functions:
-------
{*} = CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
34
(i) IBM shall provide to MSDW a project plan and shall, subject to Subsection
(e) of this Section, quote MSDW a charge for such additional functions
that takes into account {*}.
(ii) MSDW, upon receipt of such quote, may then elect to have IBM perform the
additional functions. If MSDW elects to have IBM perform such additional
functions, then
(A) the charges under the Agreement shall be adjusted, if and to the extent
appropriate, to reflect such functions,
(B) such additional functions and adjustment of charges shall be documented
pursuant to Subsection (f) of this Section; and
(C) such additional functions shall be deemed "Services" and shall be subject
to the provisions of the Agreement.
(c) MSDW may elect to solicit and receive bids from third parties to perform
such additional functions. {*}
(d) The Parties anticipate that:
(i) the Services will evolve and be supplemented, modified, enhanced or
replaced over time to keep pace with technological advancements and
improvements in the methods of delivering services, and
(ii) Schedules E (Software) and J (Equipment) will be supplemented and
modified over time to accurately reflect the Equipment and Software,
respectively, used to provide the Services.
{*}
(e) If MSDW's request for additional functions pursuant to this Section
includes a request for, or otherwise would cause, IBM to correspondingly
reduce or eliminate Services it is providing, then such additional
functions shall be considered "Replacement Services." {*}
-----------
{*} = CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
35
(f) If MSDW elects to have IBM perform additional functions pursuant to
Subsections (a) or (b) of this Section, such additional functions (and
the appropriate adjustment to the charges under this Agreement as
determined pursuant to this Section 12.4) shall be documented using the
New Services Amendment form set forth in Schedule I; provided, however,
that no such writing shall be effective unless signed by the MSDW
Contract Executive. Such writing if effective shall constitute a New
Services Amendment. MSDW's payment of charges under any New Services
Amendment shall apply toward MSDW's satisfaction of the Minimum Annual
Revenue Commitment.
12.5 {*}
12.6 Cost of Living Adjustment.
--------------------------
(a) The Parties intend that commencing January 1, 2000, certain identified
charges listed in Section 7.4 of Schedule C (such charges the "Identified
Charges") will increase if inflation, measured from January 1, 1993,
exceeds four percent (4%) per year, compounded annually. These Identified
Charges include protection against inflation at a rate of four percent
(4%) per year, compounded annually (such inflation protection included in
the Identified Charges the "COLA Index"). The COLA Index for each
calendar year of the Term is as follows:
----------------------------------------------------------------------------------------------------------------------------
Calendar Year
----------------------------------------------------------------------------------------------------------------------------
1999 2000 2001 2002 2003 2004 2005
----------------------------------------------------------------------------------------------------------------------------
COLA Index {*} {*} {*} {*} {*} {*} {*}
----------------------------------------------------------------------------------------------------------------------------
MSDW agrees to pay IBM a Cost of Living Adjustment ("COLA") beginning
January 1, 2000 if actual cumulative inflation exceeds the COLA Index as
set forth above. IBM and MSDW agree to use the Consumer Price Index, as
published by the Bureau of Labor Statistics, U.S. Department of Labor,
For All Urban Consumers, U.S. City Average, All Items, 1982-84=100 ("CPI-
U") for purposes of calculating actual inflation. The COLA will be
calculated using the COLA Factor specified below. This COLA shall be
applied on a prospective basis, i.e., the Identified Charges payable by
MSDW will be surcharged by the COLA Factor after January 1, 2000 as
determined below, if such COLA Factor is in excess of zero. The COLA
Factor will be determined as soon as practicable after the end of each
calendar year during the Term beginning with the calendar year 2000. If
applicable, IBM will invoice MSDW for the COLA beginning with Services
rendered on or after January 1, 2000 in accordance with Article 13. The
COLA Factor shall be calculated as follows:
COLA Factor = ((Actual Inflation - Protected Inflation) /
Prior Year's Protected Inflation) x {*}, where:
(i) Actual Inflation = CPI-U for the December preceding the calendar year
-------
{*} = CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
36
for which COLA is being calculated;
(ii) Protected Inflation = the Base Year Index multiplied by the COLA Index,
set forth above, for the calendar year preceding the calendar year for
which COLA is being calculated;
(iii) Prior Year's Protected Inflation = the Base Year Index multiplied by the
COLA Index, set forth above, for the calendar year preceding the calendar
year for which the Protected Inflation is being calculated; and
(iv) Base Year Index = CPI-U for December, 1992.
(b) In the event the Bureau of Labor Statistics stops publishing the CPI-U or
substantially changes its content and format, IBM and MSDW will
substitute another comparable index published at least annually by a
mutually agreeable source. If the Bureau of Labor Statistics merely
redefines the base year for the CPI-U from 1982-84 to another year, IBM
and MSDW will continue to use the CPI-U, but will convert the COLA Index
to the new base year by using an appropriate conversion formula.
12.7 {*}
(a) {*}
(b) {*}
(c) {*}
-----------
{*} = CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
37
13. INVOICING AND PAYMENT
13.1 Invoicing.
---------
(a) IBM shall invoice MSDW for all amounts due under the Agreement on a
monthly basis in accordance with the SSA referenced as "DWD 18" (as
described in Schedule H). IBM shall separately invoice MSDW for the
following as follows:
(i) IBM shall invoice MSDW for the Monthly Service Charge for a calendar
month {*}, and
(ii) IBM shall invoice all other amounts due under the Agreement {*}.
IBM shall provide details as to charges as specified by MSDW. IBM shall
include in each invoice the calculations utilized to establish the
charges.
(b) To the extent a credit may be due MSDW pursuant to the Agreement, IBM
shall provide MSDW with an appropriate credit against amounts then due
and owing. If no further payments are due to IBM, IBM shall pay such
amounts to MSDW within thirty (30) days.
(c) IBM shall render invoices for each month's charges pursuant to Subsection
(a) of this Section, showing such details as reasonably specified by MSDW
including as necessary to satisfy MSDW's internal accounting and
chargeback requirements
-----------
{*} = CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
38
(such as allocating charges among portions of the Service, locations, and
business units). Such invoices shall separately state the amounts of any
taxes IBM is collecting from MSDW.
13.2 Payment Due.
-----------
(a) Subject to the other provisions of this Article 13:
(i) invoices described in Section 13.1(a)(i) that are properly submitted to
MSDW pursuant to the Agreement shall be due and payable by MSDW within
seven (7) business days after receipt thereof; and
(ii) invoices described in Section 13.1(a)(ii) that are properly submitted to
MSDW pursuant to the Agreement shall be due and payable by MSDW within
twenty (20) calendar days after receipt thereof.
(b) All amounts due and payable to IBM under this Article 13 shall be paid by
electronic funds transfer to IBM from account(s) designated by MSDW.
(c) In the event that any amounts due are not received by IBM within five (5)
business days following the applicable due date set forth in Subsection
(a), such amounts due shall be subject to a late fee equal to {*} of such
amounts due per month accruing from the original due date set forth in
Subsection (a) until the date MSDW pays such amount due.
13.3 Accountability.
--------------
IBM shall maintain complete and accurate records of and supporting
documentation for the amounts billable to and payments made by MSDW
hereunder, in accordance with generally accepted accounting principles
applied on a consistent basis. IBM agrees to provide MSDW with
documentation and other information with respect to each invoice as may
be reasonably requested by MSDW to verify accuracy and compliance with
the provisions of the Agreement. MSDW and its authorized agents and
representatives shall have access to such records for purposes of audit
pursuant to Article 10 of the Agreement.
13.4 Proration.
---------
Periodic charges under the Agreement are to be computed on a calendar
month basis, and shall be prorated for any partial calendar month.
13.5 Set Off.
-------
With respect to any amount to be paid by MSDW under the Agreement, MSDW
may set off against such amount any amount that IBM is obligated to pay
MSDW under the Agreement.
-------------
{*} = CONFIDENTIAL TREATEMENT HAS BEEN REQUESTED
39
13.6 Disputed Charges.
---- ----------------
Subject to Section 13.5, MSDW shall pay undisputed charges when such
payments are due under this Article 13. MSDW may withhold payment of any
particular charge that MSDW disputes in good faith, subject to the
following limitations:
(a) For any monthly invoice, no more than {*} of the total amount invoiced to
MSDW as set forth in such invoice may be withheld with respect to such
invoice; and
(b) No more than {*} may be withheld at any given time by MSDW. For each
calendar year, such aggregate shall be calculated as {*}.
If the dispute underlying an amount withheld from a particular invoice is
not recieved within {*} after such amount is withheld by MSDW, {*}.
14. SAFEGUARDING OF MSDW DATA
14.1 Safeguarding MSDW Data.
----------------------
IBM shall establish and maintain safeguards against the destruction,
loss, or alteration of MSDW Data in the possession of IBM that are no
less rigorous than those maintained by IBM on behalf of MSDW prior to the
Effective Date, and shall be no less rigorous than those maintained by
IBM for its own information of a similar nature. MSDW or at MSDW's
request, a third party vendor, shall have the right to establish backup
security for data and to keep backup data and data files in its
possession at MSDW's expense.
14.2 Unauthorized Access.
-------------------
Without limiting the generality of Section 14.1 above:
(a) IBM Personnel shall not attempt to access, or allow access to, any data,
files or programs within the information systems environment to which
they are not entitled under the Agreement. {*}
(b) IBM shall institute {*} systems security measures with respect to the
access and controls it affords to its employees, Affiliates and IBM
Personnel (including the employees of such Affiliates and IBM Personnel)
to guard against, identify and promptly terminate the unauthorized
access, alteration
-------
{*} = CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
40
or destruction of Software and MSDW Data. Such measures shall include the
installation of Software that (i) requires all entities described in the
preceding sentence to enter a user identification and password prior to
gaining access to the information systems; (ii) controls and tracks the
addition and deletion of such entities; and (iii) controls access by such
entities to areas and features of the systems.
15. CONFIDENTIALITY
15.1 Confidential Information.
------------------------
(a) IBM and MSDW each acknowledge that they may be furnished with, receive,
or otherwise have access to information of or concerning the other Party
which such Party considers to be confidential, proprietary, a trade
secret or otherwise restricted. As used in the Agreement, "Confidential
Information" shall mean {*}. The terms and conditions of the Agreement
shall be deemed Confidential Information.
(b) In the case of MSDW, Confidential Information also shall include {*}:
(i) {*}
(ii) {*}
(iii) {*}
(iv) {*}
(collectively, the "MSDW Confidential Information").
(c) In the case of IBM, Confidential Information also shall include {*}
-------
{*} = CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
41
(collectively, the "IBM Confidential Information").
15.2 Obligations.
-----------
(a) Each Party's Confidential Information shall remain the property of that
Party except as expressly provided otherwise by the other provisions of
the Agreement. MSDW and IBM shall each use at least the same degree of
care, but in any event no less than a reasonable degree of care, to
prevent disclosing to third parties the Confidential Information of the
other as it employs to avoid unauthorized disclosure, publication or
dissemination of its own information of a similar nature; provided that a
Party may disclose such information to entities performing services
required hereunder where (i) use of such entity is authorized under the
Agreement, (ii) such disclosure is necessary or otherwise naturally
occurs in that entity's scope of responsibility, and (iii) the entity
agrees in writing to assume the obligations described in this Article 15.
Any disclosure to such entity shall be under the terms and conditions as
provided in this Section.
(b) Neither Party may:
(i) make any use of the Confidential Information of the other Party except as
required to perform its obligations under the Agreement;
(ii) possess or assert any lien or similar right against or to the
Confidential Information of the other Party; or
(iii) sell, assign, lease, or otherwise dispose of to third parties or
commercially exploit the Confidential Information of the other Party.
(c) As requested by MSDW during the Term, upon expiration or any termination
of the Agreement, or with respect to any particular MSDW Confidential
Information, on such earlier date that the same shall be no longer
required by IBM in order to render the Services, IBM shall either return
in a form reasonably requested by MSDW or destroy, as MSDW may direct,
all material (including all copies) in any medium that contains {*} MSDW
Confidential Information; provided, however, that IBM may retain one (1)
copy of such information to the extent required to provide the Services,
to comply with laws or regulations, or to establish IBM's rights under
the Agreement.
(d) As requested by IBM
-------
{*} = CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
42
(i) after {*} MSDW shall either return in a form reasonably requested by IBM
or destroy, as IBM may direct, all material (including all copies) in any
medium that contains {*} IBM Confidential Information to the extent no
longer required by MSDW for the receipt of any Services after such
expiration or termination; or
(ii) after the use of IBM Confidential Information by MSDW that constitutes a
breach of MSDW's obligations described in Subsections (a) or (b) of this
Section, MSDW shall either return in a form reasonably requested by IBM
or destroy, as IBM may direct, all material (including all copies) in any
medium that contains {*} the IBM Confidential Information upon which such
breach is based;
provided, however, that in each case described in Subsections (i) and
(ii) of this Subsection, MSDW may retain one (1) copy of such information
to the extent required to perform its obligations under the Agreement, to
comply with laws or regulations, or to establish MSDW's rights under the
Agreement.
(e) Each Party shall take reasonable steps to ensure that its employees
comply with the terms and conditions of this Article 15.
15.3 Exclusions.
----------
(a) Section 15.2 shall not apply to any particular information which IBM or
MSDW can demonstrate (i) was, at the time of disclosure to it, lawfully
in the public domain; (ii) after disclosure to it, is published or
otherwise lawfully becomes part of the public domain through no fault of
the receiving Party; (iii) was in the possession of the receiving Party
at the time of disclosure to it; (iv) was received after disclosure to it
from a third party who had a lawful right to disclose such information to
it without any obligation to restrict its further use or disclosure; or
(v) was independently developed by the receiving Party without reference
to Confidential Information of the furnishing Party. In addition, a Party
shall not be considered to have breached its obligations by disclosing
Confidential Information of the other Party as required to satisfy any
legal requirement of a competent government body provided that,
immediately upon receiving any such request and to the extent that it may
legally do so, such Party advises the other Party promptly and prior to
making such disclosure in order that the other Party may interpose an
objection to such disclosure, take action to assure confidential handling
of the Confidential Information, or take such other action as it deems
appropriate to protect the Confidential Information.
(b) Either Party may disclose the terms and conditions of the Agreement to
third parties that (i) have expressed a bona fide interest in
consummating a significant financing, merger or acquisition transaction
between such third parties and the disclosing Party, (ii) have a
reasonable ability (financial and otherwise) to
-------
{*} = CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
43
consummate such transaction, and (iii) have executed a nondisclosure
agreement that (A) includes within its scope the terms and conditions of
the Agreement, (B) limits distribution to those with a need to know in
connection with such transaction, and (C) allows use only in connection
with the transaction. Each Party shall endeavor to delay the disclosure
of the terms and conditions of the Agreement until the status of
discussions concerning such transaction warrants such disclosure.
15.4 Loss of Confidential Information.
--------------------------------
In the event of any unauthorized disclosure or loss of, or inability to
account for, any Confidential Information of the furnishing Party by the
Party to whom such information was disclosed, upon becoming aware of such
event the receiving Party shall promptly, at its own expense (a) notify
the furnishing Party in writing; (b) take such actions as reasonably
requested by the furnishing Party, and (c) otherwise cooperate with the
furnishing Party to minimize the adverse effects to the furnishing Party
of such event and any damage resulting from such event.
15.5 No Implied Rights.
-----------------
Nothing contained in this Article 15 shall be construed as obligating a
Party to disclose its Confidential Information to the other Party, or as
granting to or conferring on a Party, expressly or impliedly, any rights
or license to the Confidential Information of the other Party.
15.6 Survival.
--------
This Article 15 shall survive the expiration or termination of the
Agreement for a period equal to {*}
(a) {*}
(b) {*}
16. REPRESENTATIONS AND WARRANTIES
16.1 Work Standards.
--------------
IBM represents and warrants that the Services will be executed in a
workmanlike manner, in accordance with {*}.
16.2 {*}
-------
{*} = CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
44
16.3 {*}
16.4 {*}
16.5 Non-Infringement.
----------------
Each Party represents and warrants that it will perform its
responsibilities under the Agreement in a manner that does not infringe,
or constitute an infringement or misappropriation of, any patent,
copyright, trademark, trade secret or other intellectual proprietary
rights of the other Party or any third party.
16.6 Software Ownership or Use.
-------------------------
Subject to Section 7.8, each Party represents and warrants to the other
that it is, or will be at the applicable time, either the owner of, or
authorized to distribute, provide and use Software to the extent it is
licensed or developed by such Party.
16.7 Compliance With Laws and Regulations; Non-Contravention.
-------------------------------------------------------
(a) Each Party represents and warrants that it will perform its obligations
in a manner that complies with applicable laws, regulations, ordinances
and codes, including identifying and procuring required permits,
certificates, approvals and inspections. If a charge of non-compliance
with such laws, regulations, ordinances, or codes occurs, such Party will
promptly notify the other Party of such charge in writing.
(b) To the extent such matters relate to IBM's performance of the Services,
MSDW will identify and make available to IBM interpretations of any laws
applicable to MSDW and its industry.
(c) Each Party represents and warrants that such Party's execution, delivery,
and performance of the Agreement will not constitute (i) a violation of
any judgment, order, or decree; (ii) a material default under any
material contract by which it or
-------
{*} = CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
45
any of its material assets are bound; or (iii) an event that would, with
notice or lapse of time, or both, constitute such a default as described
in (ii).
16.8 Authorization.
-------------
Each Party represents and warrants that:
(a) it has the requisite power and authority to enter into the Agreement and
to carry out the transactions contemplated by the Agreement; and
(b) the execution, delivery and performance of the Agreement and the
consummation of the transactions contemplated by the Agreement have been
duly authorized by the requisite action on the part of such Party.
16.9 Inducements.
-----------
IBM represents and warrants to MSDW that it has not violated and will not
violate any applicable laws or regulations or any MSDW policies of which
IBM has been given notice regarding the offering of unlawful inducements
in connection with the Agreement. {*}
16.10 {*}
16.11 {*}
16.12 {*}
-------
{*} = CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
46
16.13 Disclaimer.
----------
EXCEPT AS PROVIDED IN THE AGREEMENT, THERE ARE NO OTHER EXPRESS
WARRANTIES AND THERE ARE NO IMPLIED WARRANTIES, INCLUDING THE IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
17. INSURANCE AND RISK OF LOSS
17.1 Insurance.
---------
IBM shall during the Term have and maintain in force the following
insurance coverages:
(a) Worker's compensation insurance, including occupational illness or disease
coverage, or other similar social insurance in accordance with the laws of
the country, state, or territory exercising jurisdiction over the employee
and employer's liability insurance with a minimum limit of {*};
(b) Commercial general liability insurance, including products, completed
operations liability and personal injury, contractual liability and broad
form property damage liability coverage for damages to any property with a
minimum combined single limit of {*};
(c) Electronic data processing all-risk property insurance on equipment, data,
media and valuable papers, including extra expense coverage, with a minimum
limit adequate to cover such risks on a replacement costs basis;
(d) Automotive liability insurance covering use of all owned, non-owned, and
hired automobiles with a minimum combined single limit of {*} for
bodily injury and property damage liability;
(e) Umbrella liability insurance with a minimum limit of {*}; and
(f) Employee dishonesty and computer fraud coverage for loss arising out of or
in connection with any fraudulent or dishonest acts committed by the
employees of IBM, acting alone or in collusion with others, including the
property and funds of others in their care, custody or control, in a
minimum amount of {*}.
The foregoing insurance coverages shall be primary and non-contributing
with respect to any other insurance or self insurance which may be
maintained by MSDW, and the insurance coverages described in Subsections
(b), (d) and (e) of this Section shall be endorsed to MSDW as an additional
insured to the extent of MSDW's insurable interest. IBM shall cause its
insurers to issue certificates of insurance evidencing that the coverages
and policy endorsements required under the Agreement are maintained in
force and that not less than thirty (30) days written notice shall be given
to MSDW prior to any modification,
-------
{*} = CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
47
cancellation or non-renewal of the corresponding policies. The insurers
selected by IBM shall have an A.M. Best rating of A- or better or Class
12 or better, or if such ratings are no longer available, with a
comparable rating from a recognized insurance rating agency. IBM shall
assure that Authorized Subcontractors, if any, maintain insurance
coverages as specified in this Article 17 or are endorsed as additional
insureds on all required IBM coverages.
17.2 Risk of Loss.
------------
Each Party shall be responsible for risk of loss of, and damage to, any
Equipment, Software or other materials in its possession or under its
control.
18. INDEMNITIES
18.1 Indemnity by IBM.
----------------
IBM agrees to indemnify, defend and hold harmless MSDW and its Affiliates
and their respective officers, directors, employees, agents, successors,
and assigns, from any and all Losses and threatened Losses incurred as a
result of a third-party claim arising from, in connection with, or based
on allegations of:
(a) Any occurrences that IBM is required to insure against pursuant to
Article 17, but only to the extent that IBM fails to provide such
coverage and only to the extent of such coverage;
(b) Any infringement of any patent, trademark, trade secret, copyright or
other intellectual proprietary rights, alleged to have occurred because
of software, materials or other resources provided by IBM to MSDW, or
based upon performance of the Services by IBM, except to the extent
caused by the modification, misuse or improper combination with other
products by MSDW or MSDW's Affiliates, not authorized by IBM, of such
items; or
(c) Any breach of an IBM obligation under Sections 6.1 or 7.3 of the
Agreement to comply with applicable lease and license terms for MSDW
Equipment or Third Party Software licensed by MSDW or an MSDW Affiliate.
18.2 Indemnity by MSDW.
-----------------
MSDW agrees to indemnify, defend and hold harmless IBM and its Affiliates
and their respective officers, directors, employees, agents, successors,
and assigns, from any and all Losses and threatened Losses incurred as a
result of a third-party claim arising from, in connection with, or based
on allegations of
(a) MSDW's failure to pay rent or utilities at any location where MSDW is
required to furnish space or utilities to IBM pursuant to the Agreement;
or
(b) Any infringement of any patent, trademark, trade secret, copyright or
other intellectual proprietary rights, alleged to have occurred because
of software, materials or other resources provided to IBM by MSDW or
based upon MSDW's
48
performance of its obligations under the Agreement, except to the extent
caused by the modification, misuse or improper combination with other
products by IBM, IBM's Affiliates or IBM Personnel, not authorized by
MSDW, of such items.
18.3 Additional Indemnities.
----------------------
IBM and MSDW each agree to indemnify, defend and hold harmless the other,
and its Affiliates, officers, directors, employees, agents, successors,
and assigns, from any and all Losses and threatened Losses incurred as a
result of a third-party claim arising from, in connection with, or based
on allegations of:
(a) the death or bodily injury of any agent, employee, customer, business
invitee, or business visitor or other person caused by the tortious
conduct of the indemnitor (limited to Losses in proportion to the
indemnitor's comparative fault);
(b) the damage, loss or destruction of any real or tangible personal property
caused by the tortious conduct of the indemnitor (limited to Losses in
proportion to the indemnitor's comparative fault);
(c) an act or omission of the indemnitor in its capacity as an employer of a
person;
(d) a Party's breach of its obligations with respect to Confidential
Information; or
(e) the indemnitor's breach of any of the representations and warranties set
forth in Sections 16.7(a) and 16.7(c) of the Agreement.
{*}
18.4 Indemnification Procedures.
--------------------------
With respect to third-party claims that are subject to indemnification
pursuant to this Article 18, the following procedures shall apply:
(a) Notice. Promptly after receipt by any entity entitled to indemnification
------
under Sections 18.1 through 18.3 of notice of the commencement or
threatened commencement of any civil, criminal, administrative, or
investigative action or proceeding involving a claim in respect of which
the indemnitee will seek indemnification pursuant to any such Section,
the indemnitee shall notify the indemnitor of such claim in writing. No
failure to so notify an indemnitor shall relieve it of its obligations
under the Agreement except to the extent that it can demonstrate damages
attributable to such failure. Within fifteen (15) days following receipt
of written notice from the indemnitee relating to any claim, but no later
than ten (10) days before the date on which any response to a complaint
or summons is due, the indemnitor shall notify the indemnitee in writing
if the indemnitor elects to assume control of the defense and settlement
of that claim (a "Notice of Election").
-------
{*} = CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
49
(b) Procedure Following Notice of Election. If the indemnitor delivers a
--------------------------------------
Notice of Election relating to any claim within the required notice
period, the indemnitor shall be entitled to have sole control over the
defense and settlement of such claim; provided that (i) the indemnitee
shall be entitled to participate in the defense of such claim and to
employ counsel at its own expense to assist in the handling of such
claim, and (ii) the indemnitor shall obtain the prior written approval of
the indemnitee before entering into any settlement of such claim or
ceasing to defend against such claim. After the indemnitor has delivered
a Notice of Election relating to any claim in accordance with the
preceding paragraph, the indemnitor shall not be liable to the indemnitee
for any legal expenses incurred by the indemnitee in connection with the
defense of that claim. The indemnitee shall cooperate in all reasonable
respects with the indemnitor and its attorneys in the investigation,
trial and defense of such claim and any appeal arising therefrom. In
addition, the indemnitor shall not be required to indemnify the
indemnitee for any amount paid or payable by the indemnitee in the
settlement of any claim for which the indemnitor has delivered a timely
Notice of Election if such amount was agreed to without the written
consent of the indemnitor.
(c) Procedure Where No Notice of Election Is Delivered. If the indemnitor
--------------------------------------------------
does not deliver a Notice of Election relating to any claim within the
required notice period, the indemnitee shall have the right to defend the
claim in such manner as it may deem appropriate, at the cost and expense
of the indemnitor. The indemnitor shall promptly reimburse the indemnitee
for all such costs and expenses.
18.5 Subrogation.
-----------
In the event that an indemnitor shall be obligated to indemnify an
indemnitee pursuant to Sections 18.1 through 18.3, the indemnitor shall,
upon payment of such indemnity in full, be subrogated to all rights of
the indemnitee with respect to the claims to which such indemnification
relates.
19. LIABILITY
19.1 General Intent.
--------------
Subject to the specific provisions of this Article 19, it is the intent
of the Parties that each Party shall be liable to the other Party for any
actual damages incurred by the non-breaching Party as a result of the
breaching Party's failure to perform its obligations in the manner
required by the Agreement.
19.2 Liability Restrictions.
----------------------
(a) SUBJECT TO SUBSECTION 19.2(c), IN NO EVENT, WHETHER IN CONTRACT OR IN
TORT (INCLUDING BREACH OF WARRANTY, NEGLIGENCE, STRICT LIABILITY IN TORT
AND WITH RESPECT TO MSDW'S LIABILITY FOR FAILURE TO PAY AMOUNTS DUE UNDER
THIS AGREEMENT), SHALL A PARTY BE LIABLE FOR INDIRECT OR CONSEQUENTIAL,
EXEMPLARY, PUNITIVE OR SPECIAL DAMAGES
50
EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES IN
ADVANCE.
(b) Subject to Subsection 19.2(c), each Party's total liability to the other,
whether in contract or in tort (including breach of warranty, negligence,
strict liability in tort and with respect to MSDW's liability for failure
to pay amounts due under this Agreement) shall be limited in the
aggregate, for all claims, causes of action and occurrences, {*}.
(c) The limitations set forth in {*} shall not apply with respect to:
(i) {*}
(ii) {*}
(iii) {*}
(d) Each Party shall have a duty to mitigate damages for which the other
Party is responsible.
19.3 Force Majeure.
-------------
(a) No Party shall be liable for any default or delay in the performance of
its obligations under the Agreement if and to the extent such default or
delay is caused, directly or indirectly, by fire, flood, earthquake,
elements of nature or acts of God, riots, civil disorders, rebellions or
revolutions in any country, or any other cause beyond the reasonable
control of such Party; provided, however, that the non-performing Party
is without fault in causing such default or delay, and such default or
delay could not have been prevented by reasonable precautions and cannot
reasonably be circumvented by the non-performing Party through the use of
alternate sources, workaround plans or other means (including with
respect to IBM by IBM meeting its obligations for performing disaster
recovery Services as described in the Agreement) (any event for which a
Party is not liable for default or delay in the performance of its
obligation xxxxxx this Subsection (a) a "Force Majeure Event").
(b) In the event of a Force Majeure Event, the non-performing Party shall be
excused from further performance or observance of the obligation(s) so
affected for as long as such circumstances prevail and such Party
continues to use its commercially reasonable efforts to recommence
performance or observance whenever and to whatever extent possible
without delay. Any Party so delayed in its performance
-------
{*} = CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
51
shall immediately notify the Party to whom performance is due by
telephone (to be confirmed in writing within five (5) calendar days of
the inception of such delay) and describe at a reasonable level of detail
the circumstances causing such delay.
(c) If any Force Majeure Event substantially prevents, hinders, or delays
performance of the Services necessary for the performance of MSDW
functions reasonably identified by MSDW as critical for more than {*}
then at MSDW's option:
(i) {*};
(ii) MSDW may terminate any portion of the Services so affected {*} and the
charges payable under the Agreement shall be equitably adjusted to
reflect those terminated Services; or
(iii) MSDW may terminate the Agreement {*} as of a date specified by MSDW in a
written notice of termination to IBM;
provided, however, that MSDW may not terminate the Agreement or any
portion of the Services pursuant to Subsections (ii) or (iii) of this
Subsection as long as IBM is performing those functions reasonably
identified by MSDW as critical. If IBM is performing such functions
following a Force Majeure Event, then upon sixty (60) calendar days'
prior written notice to MSDW, IBM may cease performing such functions in
which case MSDW may terminate the Agreement or any portion of the
Services pursuant to Subsections (ii) or (iii) of this Subsection. MSDW
and IBM will cooperate with each other to (A) identify a process for
minimizing IBM's costs and expenses incurred by IBM as a result of any
Force Majeure Event.
20. DISPUTE RESOLUTION
Any dispute between the Parties arising out of or relating to the
Agreement, including with respect to the interpretation of any provision
of the Agreement and with respect to the performance by IBM or MSDW,
shall be resolved as provided in this Article 20.
20.1 Informal Dispute Resolution.
---------------------------
Prior to the initiation of formal dispute resolution procedures, the
Parties shall first attempt to resolve their dispute informally, as
follows:
(a) Upon the written request of a Party, each Party shall appoint a
designated representative who does not devote substantially all of his or
her time to performance under the Agreement, whose task it will be to
meet for the purpose of endeavoring to resolve such dispute.
-------
{*} = CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
52
(i) The designated representatives shall meet as often as the Parties
reasonably deem necessary in order to gather and furnish to the other all
information with respect to the matter in issue which the Parties believe
to be appropriate and germane in connection with its resolution. The
representatives shall discuss the problem and attempt to resolve the
dispute without the necessity of any formal proceeding.
(ii) During the course of discussion, all reasonable requests made by one
Party to another for nonprivileged information, reasonably related to the
Agreement, shall be honored in order that each of the Parties may be
fully advised of the other's position.
(iii) The specific format for the discussions shall be left to the discretion
of the designated representatives.
(b) Formal proceedings for the resolution of a dispute pursuant to Section
20.2(a) may not be commenced until the earlier of:
(i) the designated representatives concluding in good faith that amicable
resolution through continued negotiation of the matter does not appear
likely; or
(ii) {*} days after the initial written request to appoint a designated
representative pursuant to Subsection 20.1(a) above (this period shall be
deemed to run notwithstanding any claim that the process described in
this Section was not followed or completed).
This Section shall not be construed to prevent a Party from instituting,
and a Party is authorized to institute, formal proceedings earlier to
avoid the expiration of any applicable limitations period, or to preserve
a superior position with respect to other creditors, or as provided in
Section 20.2(b) or Section 21.6.
20.2 Formal Dispute Resolution.
-------------------------
(a) If the Parties are unable to resolve any dispute as contemplated by
Section 20.1, either Party may file an action to resolve any dispute,
controversy or claim.
(b) Immediate Injunctive Relief. The Parties agree that disputes,
---------------------------
controversies or claims between them shall not be subject to Sections
20.1 where a Party makes a good faith determination that a breach of the
terms of the Agreement by the other Party is such that a temporary
restraining order or other injunctive relief is the only appropriate and
adequate remedy. If a Party files a pleading with a court seeking
immediate injunctive relief and this pleading is challenged by the other
Party and the injunctive relief sought is not awarded in substantial
part, the Party filing the pleading seeking immediate injunctive relief
shall pay all of the costs and reasonable attorneys' fees of the Party
successfully challenging the pleading.
(c) Jurisdiction. The Parties consent to the non-exclusive jurisdiction of
------------
competent {*} state courts or federal courts in the {*} for all
litigation which may be brought with respect to the terms of, and the
transactions
-------
{*} = CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
53
and relationships contemplated by, the Agreement. The Parties further
consent to the jurisdiction of any state court located within a district
which encompasses assets of a Party against which a judgment has been
rendered for the enforcement of such judgment or award against the assets
of such Party.
20.3 Continued Performance.
---------------------
Each Party agrees to continue performing its obligations under the
Agreement while any dispute is being resolved except to the extent the
issue in dispute precludes performance (dispute over payment shall not be
deemed to preclude performance).
20.4 Governing Law.
-------------
The Agreement and performance under it shall be governed by and construed
in accordance with the laws of State of {*} without regard to its choice
of law principles.
20.5 Limitations Period.
------------------
No Party may bring an action, regardless of form, arising out of the
Agreement after the earlier to occur of:
(a) the expiration of the applicable statutory limitations period under
applicable law; and
(b) {*} years after the later of (i) the date the underlying cause of
action arose or (ii) the date such cause of action was or should have
been discovered by such Party.
21. TERMINATION
21.1 Termination for Cause.
---------------------
(a) In the event that IBM:
(i) Commits a material breach of the Agreement, which breach is capable of
being cured within thirty (30) days and fails to cure the breach within
thirty (30) days after notice of breach from MSDW to IBM;
(ii) Commits a material breach of the Agreement which is not capable of being
cured within thirty (30) days and fails to (i) proceed promptly and
diligently to correct the breach, (ii) develop within thirty (30) days
following written notice of breach from MSDW a complete plan for curing
the breach, and (iii) cure the breach within sixty (60) days of notice
thereof;
(iii) {*}
(iv) {*}
------
{*} = CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
54
(v) Terminates or suspends its business;
then MSDW may, by giving written notice to IBM and as of a date specified
in such notice, terminate {*}
(b) {*} and (ii) MSDW fails to cure such breach {*} of written notice of such
breach from IBM, then IBM may, by giving written notice to MSDW,
terminate the Agreement as of a date specified in such notice of
termination.
21.2 {*}
21.3 Termination of SSAs and NSAs.
----------------------------
If MSDW is entitled to terminate the IPSS Services, Data Network Services
or Voice Services pursuant to Sections 21.1(a) or 21.2, then as part of
such termination, MSDW may also terminate any SSAs, NSAs and
International Agreements associated with those Services being terminated,
as designated by MSDW. {*}
21.4 Extension of Termination Effective Date.
---------------------------------------
MSDW may extend the effective date of a termination by MSDW one (1) time,
at its sole discretion, provided that the duration of such extension
shall not exceed one hundred eighty (180) days following the original
effective date of termination. For any notice or notices of such
extension provided to IBM within sixty (60) days of the actual date of
termination, MSDW shall reimburse IBM at its then-current commercially
available rates for those additional resources required as a result of
MSDW's failure to provide such notice or notices sixty (60) days prior to
the actual date of termination.
21.5 Termination/Expiration Assistance.
---------------------------------
-------
{*} = CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
55
(a) (i) Commencing six (6) months prior to expiration of the Agreement or on
such earlier date as MSDW may request, or commencing upon any notice of
termination {*} or of non-renewal of the Agreement (including notice
based upon material breach by MSDW pursuant to Section 21.1(b)), and
continuing through the effective date of expiration (as such effective
date may be extended pursuant to Section 4.2) or, if applicable, through
the effective date of termination of the Agreement (as such effective
date may be extended pursuant to Section 21.3), IBM shall provide to MSDW
at no additional charge except as otherwise provided in this Subsection
(a), or at MSDW's request to MSDW's designee, the reasonable
termination/expiration assistance requested by MSDW to allow the Services
to continue without interruption or adverse effect and to facilitate the
orderly transfer of the Services to MSDW or its designee (such assistance
"Termination/Expiration Assistance"). {*}
(b) {*}
21.6 {*}
22. GENERAL
22.1 Binding Nature and Assignment.
-----------------------------
The Agreement shall be binding on the Parties as well as their respective
successors and permitted assigns. Neither Party may, or shall have the
power to, assign the Agreement or delegate such Party's obligations under
the Agreement without the prior written consent of the other Party, such
consent not to be unreasonably withheld, except that
(a) IBM may delegate its obligations under the Agreement to {*}
in accordance with Section 9.6 of the Agreement;
(b) MSDW may assign its rights and obligations under the Agreement without
the approval of IBM to an entity which acquires all or substantially all
of the assets of MSDW or to any subsidiary or Affiliate or successor in a
merger or acquisition of MSDW; and
-------
{*} = CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
56
(c) IBM may assign or transfer to a third party its rights to receive
payments from MSDW under the Agreement.
In the event of an assignment of the Agreement, delegation of a Party's
obligations or assignment or transfer of rights to receive payments as
permitted by this Section, the assigning Party shall remain obligated to
perform its obligations under the Agreement (including any obligations
assigned or delegated).
22.2 Entire Agreement.
----------------
The Agreement constitutes the entire agreement between the Parties with
respect to the subject matter hereof and supersedes all prior agreements
(including the Previous Agreement), whether written or oral, with respect
to the subject matter contained in the Agreement.
22.3 Notices.
-------
All notices, requests, demands, and determinations under the Agreement
(other than routine operational communications), shall be in writing and
shall be deemed duly given (i) when delivered by hand, (ii) one business
(1) day after being given to an express, overnight courier with a
reliable system for tracking delivery, or (iii) six (6) business days
after the day of mailing, when mailed by United States mail, registered
or certified mail, return receipt requested, postage prepaid, and
addressed as follows:
In the case of MSDW: With a copy to:
------------------- --------------
Xxxxxx Xxxxxxx Xxxx Xxxxxx Xxxxxx Xxxxxxx Xxxx Xxxxxx
0000 Xxxx Xxxx Xxxx 0000 Xxxxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000 Xxx Xxxx, XX 00000
Attention: MSDW Contract Executive Attention: General Counsel
(Xxxxxx Van Wyk)
--------------------------------------------------------------------------------------------------------
In the case of IBM: With a copy to:
------------------ --------------
International Business Machines Corporation International Business Machines Corporation
000 Xxxxx Xxxxxxxxxx Xxxx Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000-0000 Xxxxxx, New York 10589
Attention: IBM Project Executive, MSDW Attention: General Counsel, IBM Global
Services
--------------------------------------------------------------------------------------------------------
A Party may from time to time change its address or designee for
notification purposes by giving the other Party prior written notice of
the new address or designee and the date upon which it will become
effective.
22.4 Counterparts.
------------
The Agreement may be executed in several counterparts, all of which taken
together shall constitute one single agreement between the Parties.
57
22.5 Headings.
--------
The Article, Section, and Subsection headings of the Agreement, and the
table of contents of the Agreement, are for reference and convenience
only and shall not enter into the interpretation of the Agreement.
22.6 Relationship of Parties.
-----------------------
IBM, in furnishing the Services, is acting as an independent contractor.
IBM has the sole right and obligation to supervise, manage, contract,
direct, procure, perform or cause to be performed, all work to be
performed by IBM under the Agreement. IBM is not an agent of MSDW and has
no authority to represent MSDW as to any matters, except as otherwise
expressly authorized in the Agreement.
22.7 Severability.
------------
In the event that any provision of the Agreement conflicts with the law
under which the Agreement is to be construed or if any such provision is
held invalid by a court with jurisdiction over the Parties, such
provision shall be deemed to be restated to reflect as nearly as possible
the original intentions of the Parties in accordance with applicable law.
The remainder of the Agreement shall remain in full force and effect.
22.8 Consents and Approval.
---------------------
Except where expressly provided as being in the discretion of a Party,
where agreement, approval, acceptance, consent, or similar action by
either Party is required under the Agreement, such action shall not be
unreasonably delayed or withheld. An approval or consent given by a Party
under the Agreement shall not relieve the other Party from responsibility
for complying with the requirements of the Agreement, nor shall it be
construed as a waiver of any rights under the Agreement, except as and to
the extent otherwise expressly provided in such approval or consent.
22.9 Waiver of Default; Cumulative Remedies.
--------------------------------------
(a) No waiver of any right, or discharge of any obligation, under the
Agreement shall be valid unless in writing and signed by an authorized
representative of the Party against which such waiver or discharge is
sought to be enforced. A delay or omission by either Party to exercise
any right or power under the Agreement shall not be construed to be a
waiver of such right or power. A waiver by either Party of any of
obligation to be performed by the other Party or of any breach by the
other Party shall not be construed to be a waiver of any succeeding
obligation or breach, or of any other obligation under the Agreement.
(b) Except as otherwise expressly provided by the Agreement, all remedies
under the Agreement shall be cumulative and in addition to and not in
lieu of any other remedies available to either Party at law, in equity or
otherwise.
58
22.10 Survival.
--------
Any provision of the Agreement which contemplates performance or
observance subsequent to any termination or expiration of the Agreement
(in whole or in part) shall survive any termination or expiration of the
Agreement (in whole or in part, as applicable) and continue in full force
and effect.
22.11 Public Disclosures.
------------------
All media releases, public announcements, and public disclosures by
either Party relating to the Agreement or the subject matter of the
Agreement, including promotional or marketing material, but not including
announcements intended solely for internal distribution or disclosures to
the extent required to meet legal or regulatory requirements beyond the
reasonable control of the disclosing Party, shall be coordinated with and
approved by the other Party prior to release. Notwithstanding the
foregoing, IBM may list MSDW as a customer, and MSDW may list IBM as an
information technology services provider, and each Party may describe in
general terms the services provided by IBM under the Agreement in
proposals and other marketing materials.
22.12 Service Marks.
-------------
Each Party agrees that it shall not, without the other Party's prior
written consent, use the name, service marks or trademarks of such other
Party.
22.13 Third Party Beneficiaries.
-------------------------
The Agreement is entered into solely between, and may be enforced only
by, MSDW and IBM. The Agreement shall not be deemed to create any rights
in third parties, including suppliers and customers of a Party.
22.14 Amendment.
----------
This Agreement shall not be modified, amended or in any way altered
except by an instrument in writing signed by both Parties.
22.15 Order of Precedence.
-------------------
It is the intent of the Parties that the language in the documents making
up the Agreement be construed to the maximum extent possible so as not to
create a conflict among or between such documents. To the extent any
conflict among or between the documents making up the Agreement cannot be
resolved through application of the foregoing rule, such conflict will be
resolved in accordance with the following order of precedence (in
descending order of precedence (i.e., starting with highest precedence
and ending with lowest precedence)):
(i) NSAs, International Agreements as well as SSAs that were executed by the
MSDW Contract Executive;
(ii) The Schedules and exhibit 3 of the Previous Agreement;
59
(iii) The Attachments to the Schedules;
(iv) The Annexes to the Attachments;
(v) The Services Agreement; and
(vi) SSAs and International Agreements not executed by the MSDW Contract
Executive.
22.16 Covenant of Good Faith.
----------------------
Each Party agrees that, in its respective dealings with the other Party
under or in connection with the Agreement, it shall act in good faith.
XXXXXX XXXXXXX XXXX XXXXXX & CO. INTERNATIONAL BUSINESS MACHINES
CORPORATION
By: By:
------------------------------ ------------------------------
Printed: Printed:
------------------------- -------------------------
Title: Title:
--------------------------- ---------------------------
Date: Date:
---------------------------- ----------------------------
60
