EXECUTION COPY
EXHIBIT 10.9
****CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
SOFTWARE MAINTENANCE AND SUPPORT AGREEMENT
THIS AGREEMENT is made the 1st day of June, 0000
X X X X X X X
724 SOLUTIONS INC., a corporation incorporated under the laws of
Ontario, having its principal place of business at 0000 Xxxxx
Xxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxx, Xxxxxx X0X 0X0 ("724")
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BANK OF AMERICA NATIONAL TRUST & SAVINGS ASSOCIATION, a national
banking association, having an office at 000 Xxxxx Xxxxxx, Xxx
Xxxxxxxxx, XX, X.X.X., 00000 ("BOFA")
BACKGROUND:
1. 724 is in the business of designing, developing and marketing
Internet-based electronic banking applications over a variety of access
platforms.
2. 724 and BofA have entered into a technology license agreement dated as of
the date hereof (the "Technology License Agreement") pursuant to which
724 has licensed to BofA the right to use certain technology (referred to
in the Technology License Agreement as the "Licensed Technology and, to
some extent, the "BofA Funded Improvements") and pursuant to which the
Parties have agreed to enter into this Agreement.
3. This Agreement sets out the terms and conditions relating to the
provision by 724 of software maintenance, support and related services in
respect of the production versions of the Licensed Technology and BofA
Funded Improvements.
IN CONSIDERATION of the premises, the mutual covenants contained herein and
other good and valuable consideration (the receipt and sufficiency of which are
hereby irrevocably acknowledged), the parties hereto agree as follows:
ARTICLE I
INTERPRETATION
1.1 DEFINITIONS. In this Agreement, the following expressions shall have the
following meanings:
"724 CHANNEL" has the meaning ascribed to it in the Technology License
Agreement;
"AFFILIATE" has the meaning given to such term in the Technology License
Agreement;
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"AGREEMENT" means this Agreement, all schedules attached hereto and any
agreement or schedule supplementing or amending this Agreement. The words
"hereto," "herein," "hereof," "hereby" and "hereunder" and similar
expressions refer to this Agreement and not to any particular section or
portion of it. References to an Article, Section, Subsection or Schedule
refer to the applicable article, section, subsection or schedule of this
Agreement;
"ANNUAL MAINTENANCE FEE" means the sum of $****;
"BUSINESS DAY" means any day other than a Saturday, Sunday or holiday
observed by Bank of Montreal;
"CLAIM" means any claim, demand, action, cause of action, damage, loss,
liability, cost or expense (including professional fees and disbursements
as finally awarded) which may be paid, sustained, suffered or incurred
directly by a Person who asserts a right of compensation, contribution or
indemnity (a "Claimant") or which may be made or brought against the
Claimant by another Person;
"CONFIDENTIAL INFORMATION" means all information marked as confidential,
or identified as confidential if delivered orally and, in any case,
disclosed by or on behalf of either Party or their respective Affiliates
or subsidiaries (the "DISCLOSING PARTY") to the other (the "RECIPIENT")
or coming to the attention of the Recipient, its Affiliates, subsidiaries
or other controlled entities or their respective employees, officers,
directors, agents or advisors (collectively, the "RECIPIENT GROUP"),
together with, regardless of the manner of disclosure and whether or not
it was marked or identified as confidential, the source code version of
the Licensed Technology (including all physical and electronic
manifestations thereof), the Specified Confidential Information, BofA
Funded Improvements that are Derivative Works, Third Party Materials and
BofA's customer information. Confidential Information does not include
any of the following items: (i) information which at the time of its
disclosure is publicly available otherwise than as a result of
disclosures in breach of a duty or obligation in favour of the Disclosing
Party or its Affiliates or subsidiaries and through no fault of the
Recipient Group; (ii) information which, after disclosure hereunder, is
released to the public by the Disclosing Party without restriction or
otherwise properly becomes part of the public domain through no fault of
the Recipient Group or any other Person who, to the knowledge of the
Recipient after exercising due diligence, owed a duty of confidentiality
to the Disclosing Party or its Affiliates (but only after it is released
or otherwise becomes part of the public domain); (iii) information which
the Recipient can demonstrate was in the possession of a member of the
Recipient Group at the time of disclosure and which was not acquired by
such Person directly or indirectly under any obligation of confidence or
from a Person who, to the knowledge of the Recipient after exercising due
diligence, owed an obligation of confidentiality with regard to such
information (for the purposes of subsections (ii) and (iii) information
shall also be treated as confidential after the Disclosing Party shall
have demonstrated to the Recipient that, notwithstanding its due
diligence at the time of disclosure, the source of the information was in
fact under a duty of confidentiality with respect to such information -
the Recipient Group shall not be liable for having acted in good faith
that such information was not confidential until the Recipient is so
informed); and (iv) information which the Recipient can demonstrate was
independently developed
[****]REPRESENTS MATERIAL WHICH HAS BEEN REDACTED AND SEPARATELY FILED WITH
THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT PURSUANT TO
RULE 406 UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
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by any member of the Recipient Group without any use of, or reference to,
the Confidential Information of the Disclosing Party;
"CPI" means the Consumer Price Index (All Items) as published by the
United States Department of Commerce Bureau of Labor Statistics, or any
successor index thereto;
"DERIVATIVE WORKS" means a work which is based on the Licensed
Technology, such as a revision, enhancement, modification, translation,
abridgement, condensation, expansion, or any other form in which the
underlying work may be recast, transformed, or adapted, and which, if
prepared without authorization of the owner of the copyright in the
underlying work, would constitute a copyright infringement. Derivative
Works are subject to the ownership rights and licenses of others in the
underlying work;
"EFFECTIVE DATE" means the date upon which the first 724 Channel is
delivered to and accepted (or is deemed to be accepted) by BofA in
accordance with the acceptance procedure provided for in the Technology
License Agreement;
"ERRORS" means any failure of the Software to comply in all material
respects with the documentation for the Software or Improvement published
by 724 (including user guides, functional specifications and release
notes) or that produces materially incorrect results or the occurrence of
incorrect functions;
"IMPROVEMENT" has the meaning ascribed to it in the Technology License
Agreement;
"INCLUDING" and "INCLUDES" shall be deemed to be followed by the
statement "without limitation" and neither of such terms shall be
construed to limit any word or statement which it follows to the specific
or similar items or matters immediately following it;
"INTELLECTUAL PROPERTY RIGHTS" includes: (A) any and all proprietary
rights provided under (i) patent law, (ii) copyright law, (iii) design
patent or industrial design law, (iv) semi-conductor chip or mask work
law, or (v) any other statutory provision or common law principle which
may provide a right in either (a) ideas, formulae, algorithms, concepts,
inventions or know-how generally, including trade secret law, or (b) the
expression or use of such ideas, formulae, algorithms, concepts,
inventions or know-how; and (B) any and all applications, registrations,
licenses, sub-licenses, franchises, agreements or any other evidence of a
right in any of the foregoing;
"LICENSED TECHNOLOGY" has the meaning ascribed to it in the Technology
License Agreement;
"PARTY" means either 724 or BofA and "PARTIES" means both of them;
"PERSON" shall be broadly interpreted and includes an individual,
corporation, partnership, joint venture, trust, association,
unincorporated organization or any other entity recognized by law;
"PRODUCTION VERSION" means the most current Major Release of the Software
or any part thereof, as the context may require, that 724 makes generally
available to licensees of such Software and does not include any test or
development version of such Software.
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For the avoidance of doubt, "MAJOR RELEASE" encompasses the initial
version of each deliverable that BofA accepts in accordance with the
Technology License Agreement, subsequent releases identified with a date,
e.g., "Geneva 2000" and all Upgrades, unless 724 expressly otherwise
identifies those releases. A "BONUS PACK" also is a Major Release; a
"SERVICE PACK" (i.e., an Update), is not;
"SERVICES" means those maintenance and support services listed in
Schedule "A" hereto;
"SOFTWARE" means all Licensed Technology delivered by 724 to, and
accepted by, BofA in accordance with the terms of the Technology License
Agreement and includes all Improvements delivered by 724 to, and accepted
by, BofA;
"SPECIFIED CONFIDENTIAL INFORMATION" means all of 724's computer
programs, code, algorithms, user manuals, programmer instructions,
programmer materials, development notes, schematics, architectural
diagrams and drawings, patent applications, 724's product and marketing
plans and strategies, forecasts, financial plans, business models and
business plans, customers, customer lists, financial statements and
projections, tax returns, non-public product pricing, materials presented
to members of the board of directors of 724 or to the shareholders of
724, names and expertise of employees (when such name or expertise is
disclosed by or on behalf of one Party to the other), the terms of this
Agreement and any Technical Information or proprietary business
information disclosed, made available, or otherwise obtained on 724's
premises;
"TECHNICAL INFORMATION" has the meaning given to such term in the
Technology License Agreement;
"TAX RATE" means, at any given time, the combined Canadian federal and
Ontario provincial corporate tax rate applicable to non-manufacturing and
processing active business income earned by a corporation which is not a
Canadian controlled private corporation, including any surtaxes;
"TECHNOLOGY LICENSE AGREEMENT" means the Technology License Agreement
between the Parties dated as of the date hereof;
"THIRD PARTY MATERIALS" means any software, documentation, technology,
Intellectual Property Rights and other materials which are not owned by
724 but delivered to BofA under the Technology License Agreement together
with the Licensed Technology or incorporated in the Licensed Technology;
"TIME AND MATERIALS RATES" mean the hourly rates for Services stated in
Paragraph 3.1(c);
"UPDATE" means, in respect of any part of the Software, a set of
procedures or new program code that 724 implements to correct Errors in
such Software and which may include modifications to improve performance
or a revised version or release of such Software which may incidentally
improve its functionality, but expressly excludes Upgrades (the
determination of whether a version or release is an Update or Upgrade in
accordance with this or the following definition shall be made by 724 in
good faith);
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"UPGRADE" means a new version or release of the Software that 724 makes
generally available to its customers to improve the functionality of, or
add functional capabilities to, the Software.
1.2 HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not affect the construction or interpretation
hereof.
1.3 EXTENDED MEANINGS. Words in the singular include the plural and
vice-versa and words in one gender include all genders.
1.4 ENTIRE AGREEMENT. The Parties agree that this Agreement and the
Technology License Agreement constitute the complete and exclusive
statement of the terms and conditions between them covering the
performance thereof and cannot be altered, amended or modified except in
writing executed by the Parties to be bound thereby. Each of the Parties
acknowledge that it has not been induced to enter into this Agreement by
any representations not specifically stated herein or in the Subscription
Agreement between 724 and Bank of America Corporation, an Affiliate of
BofA.
1.5 INVALIDITY. If any of the provisions contained in this Agreement are
found by a court of competent jurisdiction to be invalid, illegal or
unenforceable in any respect, the validity, legality or enforceability of
the remaining provisions contained herein shall not be in any way
affected or impaired thereby.
1.6 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of California and the federal laws
of the United States applicable therein (excluding any conflict of laws
rule or principles that might refer such construction to the laws of
another jurisdiction) and shall be treated, in all respects, as a
California contract. The Parties submit to the non-exclusive jurisdiction
of the courts of the Province of Ontario or California. If either Party
is permitted to select whether any matter brought before a court is to be
decided by jury or by judge, the Parties agree that they will not select
to have any such matter decided by jury and hereby waive any such right
to a jury trial. The Parties expressly exclude the application of the
United Nations Convention on Contracts for the International Sale of
Goods.
1.7 CURRENCY. Except as otherwise expressly provided in this Agreement, all
dollar amounts referred to in this Agreement are stated in the lawful
currency of the United States of America.
1.8 COMPUTATION OF TIME. When calculating the period of time within which or
following which any act is required or permitted to be done, notice given
or step taken pursuant to this Agreement, the date which is the reference
date in calculating such period shall be excluded. If the last day of
such period is a non-business day, the period in question shall end on
the next following business day.
1.9 SCHEDULES. The following Schedules are incorporated into and form part
of this Agreement:
Schedule "A" Software Maintenance and Support Services
Schedule "B" Arbitration Rules of Procedure
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ARTICLE II
SOFTWARE MAINTENANCE AND SUPPORT SERVICES
2.1 PROVISION OF SERVICES. Subject to the exclusions set out in Section 2.3
and Section 2.4 and the payment by BofA of the relevant Annual
Maintenance Fee, Time and Materials Rates and other charges provided for
herein, 724 shall provide the Services described in Schedule "A" hereto
to BofA in respect of the Software. 724 shall render the Services in a
good and workmanlike manner, using qualified personnel. BofA shall also
be bound by the obligations set out herein as such obligations apply to
BofA. This Agreement sets out the entire obligation of 724 with respect
to the provision of the Services.
2.2 FEES AND CHARGES In consideration of 724 providing the Services, BofA
shall pay to 724 those fees and charges (as well as expense
reimbursement) provided for herein. Fees for Services shall be as
follows:
(a) SOFTWARE OTHER THAN IMPROVEMENTS: The Annual Maintenance Fee
(calculated and payable as provided in Article III) shall be
payable in respect Services concerning the Software and all
Updates and Upgrades thereto delivered in accordance with this
Agreement and the Technology License Agreement, but does not
constitute payment for Services relating to Improvements; and
(b) IMPROVEMENTS: With respect to Improvements and all Updates and
Upgrades thereto delivered in accordance with this Agreement and
the Technology License Agreement, except Improvements incorporated
by 724 into any Upgrade or new release of the Licensed Technology
accepted by BofA in accordance with the Technology License
Agreement:
(i) NORMAL TIME AND MATERIALS RATES: Additional fees calculated
at 724's Normal Time and Materials Rates shall be payable
for Services rendered during Normal Service Hours (as such
term is defined in Schedule "A" hereto) by 724 hereunder;
and
(ii) PREMIUM TIME AND MATERIALS RATES: Additional fees
calculated at 724's Premium Time and Materials Rates shall
be payable for Services rendered outside of Normal Service
Hours (as such term is defined in Schedule "A" hereto) by
724 hereunder,
all in accordance with the terms set out in Article III and as otherwise set
forth in this Agreement.
2.3 EXCLUSIONS. 724 shall not be required to provide Services:
(a) to any Person other than BofA;
(b) in respect of any software or technology that is not the Software
or Improvements;
(c) in respect of any Derivative Work that is not developed by 724; or
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(d) in respect of any Software that is altered by a Person other than
724. BofA shall be solely responsible for supporting any version
of the Software which is altered or modified by or on behalf of
BofA.
Any services rendered by 724 to BofA that are not expressly included in
this Agreement, (for example, services related to the testing,
implementation, installation and integration of the Licensed Technology)
shall be billed to BofA at 724's normal Time and Materials Rates. Such
amounts, if any, will be billed monthly in arrears and shall be paid by
BofA within 30 days of receipt of a correct invoice for such services.
2.4 THIRD PARTY MATERIALS. 724 shall not be responsible for providing
Services in respect of Third Party Materials, except that:
(a) 724 shall redistribute updates of such Third Party Materials to
BofA, if 724 has such right under any agreement; and
(b) 724 will use its commercially reasonable efforts to obtain
maintenance services or support on behalf of BofA, at BofA's cost,
and only upon BofA's written request.
2.5 PRINCIPAL CONTACT. BofA shall designate one of its employees with
sufficient authority to approve expenditures contemplated hereunder,
including 724 time and materials services, who shall act as BofA's
principal contact with 724 for all services to be provided to BofA
hereunder. All contact with 724 and all requests for Services at any of
BofA's locations shall be through such designated contact. BofA may
change any designated employee at any time by notifying 724 of such
change in writing.
2.6 DELIVERY. Any and all supplies of property made pursuant to this
Agreement shall be delivered or made available to BofA and Affiliates of
BofA outside of Canada. Any provision of tangible personal property
pursuant to this Agreement shall be made f.o.b. the premises of BofA, the
United States of America. Any other provision of property made pursuant
to this Agreement shall be upon the transfer to the system of and receipt
by BofA or the Affiliate of BofA, in each case outside of Canada. BofA
shall have the right to require delivery by means of electronic
transmission subject to the following provisions:
(i) BofA shall provide and designate to 724 a secure and FTP site
for the transmission; and
(ii) BofA shall assume full responsibility for any interception,
breach of confidentiality, theft or other unauthorized
disclosure or use of 724's Confidential Information arising or
resulting from such electronic transmission, provided that 724
substantially complies with the reasonable information security
specifications for the transmission that BofA proposes.
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ARTICLE III
FEES & PAYMENT TERMS
3.1 FEES AND CHARGES.
(a) ANNUAL MAINTENANCE FEE. 724 may invoice BofA for the
non-refundable Annual Maintenance Fee once annually commencing on
the Effective Date. Subsequent invoices may be rendered no earlier
than 30 days prior to the renewal date. Such amounts shall be
paid by BofA within 30 days of receipt of such invoices.
(b) TRAVEL AND COMMUNICATION EXPENSES. BofA acknowledges that the
Annual Maintenance Fee and any other payments made by BofA to 724
under this Agreement are exclusive of certain costs incurred by
724 in connection with 724 fulfilling its obligations under this
Agreement, including all communications, delivery and other
expenses reasonably incurred by 724, but excluding the cost of its
personnel in providing the Services. If BofA requests that 724
provide services at any location outside of Metropolitan Toronto,
BofA shall also reimburse 724 for all reasonable travel expenses
(including all reasonable communications, transportation, lodging,
meal and other out-of-pocket expenses and all applicable taxes,
duties and other such assessments and charges in respect thereof
that are not recoverable by way of credit, refund, rebate, offset
or similar reimbursement incurred by 724, at 724's cost). All
charges payable under this subparagraph (b) shall be invoiced
monthly for expenses incurred by 724 in the prior one month period
(errors, omissions and late-posted expenses excepted) and shall be
payable net 30 days from the date of the invoice.
(c) TIME AND MATERIALS RATES.
(i) Services provided at Time and Materials Rates pursuant to
this Agreement may be billed by 724 at the following rates:
(ii) NORMAL RATES:
(A) JUNIOR STAFF: $**** per day
(B) SENIOR STAFF: $**** per day
(iii) PREMIUM RATES: The premium rate, as such term is used in
this Agreement, is ****% of the relevant Normal Rate.
(iv) 724 shall assign those personnel to Services provided at
Time and Materials Rates who are best-equipped by training
and experience to provide high-quality Services
professionally and economically.
(v) 724 shall xxxx for the hours actually expended by its
personnel on work efforts for which this Agreement calls
for BofA to pay at Time and Materials Rates. Any partial
work exceeding 30 minutes shall be deemed
[****]REPRESENTS MATERIAL WHICH HAS BEEN REDACTED AND SEPARATELY FILED WITH
THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT PURSUANT TO
RULE 406 UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
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a full hour for billing purposes. The hourly rate shall be
determined on the basis that a day contains eight hours.
(d) FEE ADJUSTMENTS. 724 may increase the Annual Maintenance Fee or
the Time and Materials Rates, or both, once annually, with effect
as of the Effective Date. 724 shall notify BofA of any such
increase at least 30 days prior to the anniversary (provided that
the failure to deliver such notice or the failure to reflect such
increase in related invoices shall not prejudice 724's right to
render a further adjusting invoice correcting such omission). Any
increase shall not exceed the lesser of: (i) a proportional
increase from the previous Annual Maintenance Fee and/or Time and
Materials Rates based on the increase in the CPI during the most
recent 12-month period for which data are available at the time
724 so notifies BofA; and (ii) ****%. Notwithstanding the
foregoing, the level of the Annual Maintenance Fee and the Time
and Materials Rates may be increased by a mutually agreeable
amount as at an anniversary of the Effective Date if either:
(a) the scope of the Software and the Improvements for which
Services are rendered hereunder is materially expanded; or (ii)
the hourly rates of competent software professionals materially
increases beyond CPI in any given year. The Parties agree to act
reasonably in determining any such fee adjustments.
3.2 REINSTATING SERVICES. If BofA permits this Agreement to lapse and
subsequently wishes to reinstate Services for the Software, BofA shall be
required to license from 724 and install (and concurrently pay the
related license fee based on 724's standard price list) the then current
version of the Software incorporating the components and/or functionality
most recently licensed by BofA (if 724 cannot provide a version solely
incorporating such specific functionality then BofA shall be required to
license a more complete version) and to pay an amount equal to the Annual
Maintenance Fees that would have been paid by BofA for the period during
which this Agreement was not in effect. For greater certainty, all
Transfer Taxes and other amounts payable in accordance with Section 3.4
shall be payable in connection with the license and maintenance fees
payable pursuant to this Section 3.2. The Software license contemplated
by this Section 3.2 shall be governed by the terms of the "Preferred
Customer Option" contemplated by the Technology License Agreement.
3.3 INVOICES. Unless otherwise specified under this Agreement, 724 shall
invoice BofA for any amount payable hereunder no earlier than 30 days in
advance of the date that such payment is due. The terms of each such
invoice shall be net 30 days.
Without limiting the generality of the foregoing, in the event that 724
provides Services to a Person resident or otherwise located in Canada,
724 shall be entitled to issue to BofA or that Person a separate invoice
in respect of such Services.
3.4 TAXES.
(a) In addition to any and all fees, levies, imposts, reimbursements,
expenses and other charges hereunder, BofA shall pay to 724 all
taxes, duties, levies, imposts and other such assessments or
charges which may be assessed, levied or imposed, payable or
remittable pursuant to the relevant tax legislation in connection
with
[****]REPRESENTS MATERIAL WHICH HAS BEEN REDACTED AND SEPARATELY FILED WITH
THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT PURSUANT TO
RULE 406 UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
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the services and software licenses contemplated herein and any
other fees, levies, imposts and other charges in connection
with any other supply, provision, or other transfer
contemplated by this Agreement (for the purposes of this
Section 3.4, collectively referred to as "TRANSFER TAXES"),
except taxes on 724's income or capital, and any reference to a
payment by BofA, an Affiliate or sublicensee thereof or other
Person to or for the benefit of 724 hereunder shall be read to
include the payment of any and all such Transfer Taxes.
(b) Without limiting the generality of the foregoing, all payments by
BofA under this Agreement (excluding payments of Transfer Taxes)
shall be made free and clear of, and without deduction for, any
and all present or future taxes, levies, imposts, deductions,
charges or withholdings imposed on or with respect to such
payments, and all interest, penalties and other liabilities with
respect thereto (all such taxes, levies, imposts, deductions,
charges, withholdings and liabilities being hereinafter referred
to as "Amounts"). If BofA is required by law to deduct any such
Amount from payments or in respect of any sum payable hereunder,
and remit such Amount to a relevant taxing authority:
(i) the sum payable shall be increased by BofA as may be
necessary so that after making all required deductions
(including deductions applicable to additional sums payable
under this Section 3.4(b)(i)), 724 receives an amount equal
to the sum it would have received had no deduction been
made;
(ii) BofA shall make such deductions;
(iii) BofA shall pay and remit the full Amount deducted to the
relevant taxation authority in accordance with applicable
law; and
(iv) Within 30 days after the date of payment or remittance of
Amounts referred to in the preceding paragraph to the
relevant taxation authority, BofA will furnish to 724 the
original or a certified copy of any receipt furnished by
the relevant taxing authority evidencing payment thereof.
(c) For greater certainty, no such additional amount shall be payable
by BofA to the extent (but only to the extent) that no deduction,
or withholding from the payment to 724 is required by the
applicable tax legislation. For example, it is the parties'
understanding that where 724 otherwise becomes liable for the
payment of U.S. income taxes on a particular payment pursuant to
this Agreement by reason of it having a sufficient connection to a
U.S. taxing jurisdiction for such U.S. jurisdiction to impose
domestic U.S. tax on such payment (such as by 724 maintaining a
permanent establishment in the U.S. to which the income arising
pursuant to this Agreement is allocated or effectively connected
for U.S. tax purposes) other than a connection based merely on the
entitlement of 724 to the payments to be made under this
Agreement and the Technology License Agreement, then no deduction
or withholding requirement would be imposed by U.S. taxation
legislation.
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In this regard, the parties acknowledge and agree that BofA will
be obligated to withhold from payments to 724 and remit to the
applicable U.S. taxation authorities amounts in respect of U.S.
tax levied on the payments to 724, and therefore would be
obligated to pay the additional amounts contemplated by
Section 3.4(b)(b)(i), unless certain certificates, documents or
other evidence are delivered to BofA by 724, as required by the
Internal Revenue Code or Treasury Regulations issued pursuant
thereto, including, without limitation, Internal Revenue Service
Form W-8ECI, Form W-8BEN (see, e.g. Item 10 in Part II) and any
other certificate or statement of exemption required by Treasury
Regulation Sections 1.1441-1(e) and 1.1441-4(a) or Section
1.1441-6(b) or any subsequent version thereof, property completed
and duly executed by 724 establishing that the payment is: (i) not
subject to withholding under the Internal Revenue Code because
such payment is effectively connected with the conduct by 724 of a
trade or business in the United States; or (ii) totally exempt
from United States tax under a provision of an applicable tax
treaty. For greater certainty, this provision shall not be
construed so as to shift the burden of sales, use, excise, VAT and
similar taxes from BofA to 724, even if 724 carries on business in
the United States or maintains a U.S. permanent establishment.
(d) 724 covenants and agrees to act in good faith in connection with
requests by BofA for information and certificates or other written
statements (as contemplated above) reasonably required by it in
order to determine whether it has an obligation with respect to
any payment hereunder to deduct or withhold amounts for purposes
of remitting them to the relevant taxation authorities and,
therefore, an associated obligation to pay the additional amounts
contemplated by Section 3.4(b) above. Specifically, 724 covenants
and agrees that if it is able to truthfully and in good conscience
deliver the required statements or certificates obviating the need
for BofA to deduct or withhold amounts from the payments
contemplated hereunder, it shall do so upon request by BofA and on
a timely basis having regard to BofA's statutory obligations.
(e) Without duplication of the payments to be made pursuant to Section
3.4(f) and Section 3.4(g), in the event that 724 shall be entitled
to receive from the applicable U.S. taxation authorities a refund
of tax paid or payable by it (a "Tax Refund") with respect to or
calculated with reference to the deduction or withholding giving
rise to the payment of the additional amount as contemplated above
in Section 3.4(b), 724 shall use reasonable efforts to obtain the
Tax Refund, to the extent it can do so without prejudice to the
retention of the amount of such Tax Refund, and, upon receipt of
such Tax Refund, pay or cause to be paid to BofA such amount as
724 shall have concluded, acting reasonably, to be the after-tax
value to it of the Tax Refund which is attributable to the
relevant deduction, withholding or tax payable.
(f) In addition, subject to Section 3.4(g) and without duplication of
the payments to be made pursuant to Section 3.4(e), if 724 shall
obtain the benefit of a tax credit from the applicable Canadian or
United States taxation authorities with respect to amounts
deducted or withheld by BofA from payments due hereunder and
remitted on behalf of 724 to the applicable U.S. taxation
authority (and in respect
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of which 724 shall have received the additional amount
contemplated by Section 3.4(b)), then, upon receipt of the
benefit of the tax credit (through offsetting tax liability or
through refund), 724 shall, subject to Section 3.4(g), pay or
cause to be paid to BofA such amount as 724 shall have
concluded, acting reasonably, to be the after-tax value to it
of the tax credit which is attributable to the relevant
deduction, withholding or tax, to reimburse BofA for all or a
portion of the additional amount that had been paid to 724.
(g) In particular, if 724 shall receive the benefit of a foreign tax
credit under its Canadian federal or provincial income tax returns
in respect of an amount withheld or deducted at source by BofA and
remitted to the applicable U.S. taxation authority, the procedure
outlined in Section 3.4(f) shall be applicable provided, however,
that the amount of the tax credit shall first be applied:
(i) to reimburse 724 for the additional Canadian (including
federal and provincial) income and other taxes (or loss of
tax shelter - such as the reduction of non-capital tax loss
carryforwards or utilization of tax credits otherwise
available to shelter other current or future income) that
it incurred in respect of the taxation of additional
amounts paid pursuant to Section 3.4(b) as part of 724's
world-wide income. For these purposes, the amount of
additional tax burden incurred by 724 shall be deemed to be
that amount equal to the product obtained when the Tax Rate
is multiplied by the aggregate sum of such additional
amounts received or receivable by 724 for all taxation
periods (or parts thereof) during the term of this
Agreement up to the day on which the calculation is being
made; and
(ii) the balance of any such tax credit shall be applied as a
refund to BofA in accordance with the provisions of Section
3.4(f) MUTATIS MUTANDIS. For greater certainty, however,
tax credits and tax refunds shall be allocated solely to
the particular deduction/withholding by BofA and the
additional amounts paid by BofA pursuant to Section 3.4(b)
to which they relate.
(h) Both parties covenant and agree to file or re-file, as applicable,
all relevant tax returns and information returns necessary to
reflect such payment by 724 to BofA as a full or partial refund,
as the case may be, of the additional Amount previously received
by 724.
(i) In the event that a particular taxation authority having
jurisdiction shall object, assess, reassess or appeal a position
taken by the parties and should such position be upheld or appeals
by the relevant party abandoned, the parties undertake to readjust
the payments between them, acting reasonably and in good faith.
(j) If BofA reasonably believes that 724 is entitled to a Tax Refund
as described in Section 3.4(e) or a tax credit as described in
Section 3.4(f) in respect of which 724 has not applied, claimed or
deducted in computing its income, or if 724 has so applied for,
claimed or deducted, such application, claim or deduction has been
denied by the relevant taxing authority, then 724 agrees to (upon
receipt of written notice from BofA as to its reasonable belief):
(A) apply for, claim or deduct such
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amount not yet applied for, claimed or deducted, if applicable;
or (B) object and, if necessary, appeal such denial (where
permitted under the relevant tax legislation) and pursue such
objection and appeal in good faith provided: (i) that neither
applying for, claiming or deducting the Tax Refund or tax
credit, or objecting or appealing the denial of the Tax Refund
or tax credit shall in 724's view, materially prejudice 724's
past, present or future tax position; and (ii) BofA shall be
solely responsible for all costs and expenses related to such
objection or appeal, including, without limitation, all legal
and accounting fees and disbursements and other out-of-pocket
costs arising as a result of objecting or appealing the denial
of the Tax Refund or tax credit.
(k) Provided however, that notwithstanding anything contained herein
to the contrary, 724 shall be entitled to arrange its tax affairs
in whatever manner it thinks fit and shall not be required to
disclose to BofA any information regarding its tax affairs or tax
calculations (except that BofA shall be entitled to review 724's
tax returns for purposes of verifying the parties' respective
rights and obligations pursuant to this Section 3.4).
3.5 LATE FEES. If BofA fails to make payment of the amounts payable to 724
in accordance with Section 3.1, Section 3.2 or Section 3.4 above or any
other amount payable pursuant to this Agreement, or any portion or
portions thereof, BofA shall pay interest to 724 on such overdue amount
in the same currency as such overdue payment is payable both before and
after demand, default, and judgment until actual payment in full at a
rate per annum equal to **** percent (****%) calculated on a three
hundred and sixty-five (365) day year and payable daily in arrears with
interest on overdue interest at the same said rate.
3.6 REPRESENTATIONS AND WARRANTIES OF BOFA. Both now and on a continuing
basis, BofA represents and warrants to 724 and acknowledges that 724 is
relying upon the following representations and warranties:
(a) BofA is a non-resident of Canada as that term is defined in the
EXCISE TAX ACT (Canada);
(b) BofA is not registered pursuant to subdivision d of Party IX of
the EXCISE TAX ACT (Canada); and
BofA will forthwith provide 724 notice of any change that may affect
these representations and warranties.
ARTICLE IV
TERM & TERMINATION
4.1 TERM. The initial term of this Agreement shall be two years from the
Effective Date. After the initial term, this Agreement shall continue
for subsequent one year terms unless terminated by either Party in
accordance with the terms hereof or upon notice given at least 90 days
prior to the end of the existing term.
[****]REPRESENTS MATERIAL WHICH HAS BEEN REDACTED AND SEPARATELY FILED WITH
THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT PURSUANT TO
RULE 406 UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
-14-
4.2 TERMINATION OF TECHNOLOGY LICENSE AGREEMENT. In addition to any other
rights or remedies available to either Party, this Agreement shall
terminate immediately upon any termination of the Technology License
Agreement.
4.3 BUSINESS TERMINATION. In addition to any other rights or remedies
hereunder, either Party may terminate this Agreement immediately by
giving written notice to the other Party where the other Party: (i) makes
any general assignment for the benefit of creditors; (ii) has a receiver
and/or manager appointed over its assets (unless such appointment is
being contested in good faith by appropriate proceedings); (iii) becomes
bankrupt or insolvent or commits an act of bankruptcy or takes or
attempts to take advantage of any law or statute for the relief of
bankrupt or insolvent debtors; (iv) has a resolution or an order made for
its winding up (unless such order is being appealed in good faith by
effective proceedings which result in at least a temporary stay of such
order); or (v) ceases to carry on business.
4.4 TERMINATION BY 724. In addition to any other rights or remedies
hereunder, 724 may terminate this Agreement at any time on giving notice
in writing if: (i) BofA or any Affiliate thereof breaches any of its
obligations or covenants under the Technology License Agreement; (ii)
BofA infringes or contests or provides assistance to any third party who
infringes or contests the validity of any copyright or other intellectual
or industrial property or proprietary right of 724; (iii) BofA fails to
pay in full any sum owing by it under this Agreement within 30 days of
the due date thereof and such failure continues for a period of 30 days
after delivery of written notice by 724 requiring BofA to cure such
failure; or (iv) BofA fails to observe or perform any other material
obligation or covenant required to be observed or performed by it under
this Agreement and such failure continues for a period of 30 days after
delivery of written notice by 724 to BofA requiring BofA to cure such
failure.
ARTICLE V
LIMITATION OF LIABILITY
5.1 PROGRAMMING ERRORS. BofA acknowledges that although 724 shall use all
reasonable efforts in its programming to avoid programming Errors, 724
does not represent or warrant that the operation of the Software and the
Improvements will be Error free or that the operation of the Software and
Improvements will not be interrupted by reason of defect therein. 724
shall, however, during the term of this Agreement, use all commercially
reasonable efforts to correct any defects and make any modifications
which are necessary to cause the Software and Improvements to conform in
all material respects to their mutually-agreed detailed functional
specifications in consideration of the Annual Maintenance Fee and the
other fees and charges provided for herein. BofA expressly acknowledges
and agrees that the use and operation of any Software, Improvements,
Third Party Materials, documentation, services or products that are the
subject matter of this Agreement, and the results obtained from such use
and operation, are at the sole and exclusive risk of BofA, its Affiliates
and their respective customers and other permitted users and that,
notwithstanding anything herein to the contrary, 724 assumes no liability
or responsibility under this Agreement with respect to the use of, or
reliance upon, such Software, Improvements, Third Party Materials or
other items by BofA, its Affiliates, their respective customers and other
permitted users.
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5.2 RESPONSE TO LEVEL 1 ERRORS. If 724 fails to repair one or more Level 1
Errors reported in a particular service call (or series of related
service calls) as contemplated in Schedule "A" hereto ( a "Failure")
within a 48 hour period commencing on BofA's first service call pursuant
to which BofA reports the Failure, BofA shall be entitled to charge the
sum of $**** for each day or part thereof (commencing on the day
following such 48 hour period) that such Failure remains unrepaired
("Liquidated Damages"), provided, however, that:
(a) the maximum aggregate Liquidated Damages for any Failure shall be
$****;
(b) the maximum aggregate liability for all Liquidated Damages paid
pursuant to this Section 5.2 shall be limited in any one year
period commencing as of the Effective Date (the "Maintenance
Period"), to the lesser of: (i) $****; and (ii) the Annual
Maintenance fee paid during such Maintenance Period less the total
amount of all damages, costs, and other amounts paid by 724 to
BofA hereunder during such Maintenance Period;
(c) BofA must invoice 724 for Liquidated Damages relating to a Failure
within 30 days of the earlier of: (i) the resolution of the
Failure; and (ii) the date that is 20 calendar days from the date
upon which Liquidated Damages relating to the Failure commence to
accrue; failing which, BofA's right to the Liquidated Damages
shall terminate;
(d) 724's liability under this Section 5.2 shall only apply in respect
of Errors that are solely attributed to the unmodified version of
the Software for which the Annual Maintenance Fees are paid, and
for the avoidance of doubt, 724 shall have no liability under this
Section 5.2:
(i) resulting from the operation of any of BofA's systems,
facilities or other operating environment;
(ii) arising from or relating to any year 2000 century date
change Error or incompatibility;
(iii) arising from or relating to any content; or
(iv) arising from or relating to Third Party Materials; and
(e) 724 and BofA agree that the Liquidated Damages are a genuine
pre-estimate of liquidated damages for any Failure; that such
Liquidated Damages are reasonable in light of the harm that will
be caused by such Failures, the difficulties of proof of loss and
the inconvenience of otherwise obtaining an adequate remedy at
law: and that notwithstanding any other provision in this
Agreement, this Section 5.2 shall BofA's sole remedy in law or
otherwise that BofA may have against 724, its Affiliates,
officers, directors or agents for any Failure.
[****]REPRESENTS MATERIAL WHICH HAS BEEN REDACTED AND SEPARATELY FILED WITH
THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT PURSUANT TO
RULE 406 UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
-16-
5.3 MUTUAL LIMITATION OF LIABILITY.
(a) LIMITATION ON INDIRECT AND CONSEQUENTIAL DAMAGES. Notwithstanding
any other provision of this Agreement, except as contemplated in
the Technology License Agreement, in no circumstances shall BofA
be liable to 724 and in no circumstances shall 724 be liable to
BofA for loss of profits, loss of revenue, failure to realize
expected savings, loss of use or lack of availability of
facilities (including computer resources and any stored data), or
other commercial or economic loss of any kind whatsoever; nor
shall either party be liable to the other for any indirect,
special, consequential, punitive, exemplary or aggravated damages
whether or not arising out of or in connection with the use (or
inability to use) or performance of the Licensed Technology,
Improvements, documentation, services or products that are the
subject matter of this Agreement, even if advised of the
possibility of same.
(b) CUSTOMERS OF BOFA AND ITS AFFILIATES OR OTHER THIRD PARTIES.
Notwithstanding any other provision of this Agreement, 724 shall
not be liable, obligated or responsible in any way for any Claims
under this Agreement of or by any Person other than BofA (and then
only to the extent and in the manner contemplated herein) which
may use, be given access to, or otherwise involved with or
affected by, the Software, the Improvements or the Third Party
Materials. BofA covenants and agrees to indemnify 724 (together
with its Affiliates and their respective directors, officers,
employees and agents) in respect of any such Claims to the extent
of, and in the manner contemplated by, Sections 4.4.2, 4.11, 4.12,
4.13, 4.14 and 4.15 of the Technology License Agreement MUTATIS
MUTANDIS.
5.4 INTERACTION WITH TECHNOLOGY LICENSE AGREEMENT. The limitations of
liability contained in this Article V shall apply for purposes of the
Services and other services to be provided by 724 herein and shall not be
read so as to apply to the respective rights and obligations of the
Parties under the Technology License Agreement. For greater certainty:
(a) the provisions of the Technology License Agreement, both in terms
of the scope of, and limitations on, the liability and obligations
of the Parties shall apply with respect to the licensing and use
and disclosure of the Licensed Technology, the Improvements and
any Third Party Materials;
(b) nothing herein shall be construed so as to limit or affect the
rights and remedies of 724 with respect to 724 Third Party Claims
or Breach of Confidentiality Claims (each as defined in the
Technology License Agreement); and
(c) nothing herein shall be construed so as to limit or affect the
rights and remedies of BofA with respect to IP Infringement Claims
(as defined in the Technology License Agreement).
-17-
5.5 MAXIMUM ANNUAL LIABILITY. The liability of either Party under this
Agreement, in any one year period commencing on the Effective Date, or
anniversary thereof (a "Maintenance Year"), whether based on negligence,
breach of contract (whether or not a fundamental breach), warranty or
other legal theory, will not exceed an amount equal to one hundred
percent (100%) of the Annual Maintenance Fee and other fees and changes
paid or payable by BofA in respect of such Maintenance Year. For
avoidance of doubt, and except for any breach of any confidentiality
obligations hereunder, neither Party shall be obligated or liable to the
other Party under this Agreement beyond the limits set forth in this
Agreement regardless of the legal basis (contract, tort, or otherwise)
for the Claim.
For avoidance of doubt, any Liquidated Damages paid or payable by 724
to BofA pursuant to Section 5.2 in a Maintenance Year shall count
against the maximum aggregate limit of 724's liability in a
Maintenance Year as contemplated in the foregoing sentence.
ARTICLE VI
CONFIDENTIALITY AND NON-SOLICITATION
6.1 CONFIDENTIAL INFORMATION. Each Party who receives Confidential
Information (referred to in this section as the "Receiving Party") of the
other Party or its Affiliates (referred to in this section as the
"Disclosing Party") shall hold such Confidential Information in trust and
confidence for and on behalf of the Disclosing Party and shall not,
except as expressly authorized hereunder or in writing by the Disclosing
Party, use, copy or disclose to any third party any Confidential
Information so received. Each Receiving Party shall take appropriate
action by instruction, agreement or otherwise to ensure that the
Receiving Party, its Affiliates and shareholders, and each of their
directors, officers, employees, consultants, agents and customers are
required to keep confidential all Confidential Information of the
Disclosing Party which is disclosed to or comes into the possession of
any of them. For greater certainty, 724's Specified Confidential
Information and the source code version of the Licensed Technology is not
to be disclosed or used in any manner not contemplated by the Technology
License Agreement. The Receiving Party agrees to obtain from any
independent contractor or other Person to whom disclosure of the
Disclosing Party's Confidential Information is made in carrying out such
purposes, a covenant (on the terms of, but without duplication to, the
agreements contemplated by Sections 2.1, 2.2 and 2.6 of the Technology
License Agreement) not to further disclose or make use of any of the
Disclosing Party's Confidential Information in any manner whatsoever.
6.2 NON-SOLICITATION OF EMPLOYEES. During the term of this Agreement and the
one (1) year period thereafter, neither 724 nor any business group within
BofA that works directly with 724 (referred to as "OBLIGEE" for the
purposes of this Section) shall either individually or in partnership or
in conjunction in any way with any person or persons, whether as
principal, agent, consultant, shareholder, guarantor, creditor or in any
other manner whatsoever actively solicit or endeavour to entice away from
the other Obligee or its Affiliates, any person employed by the other
Obligee or its Affiliates at the date that this Agreement is terminated
for any reason, or who was so employed at any time during the previous
one year period or interfere in any way with the employment relationship
between any such employee and the other Obligee and its Affiliates. The
provisions of
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this Section 6.2 shall not apply if any one of the events listed in
Section 4.3 (Business Termination) occurs and this Agreement is
terminated as a result thereof, and shall not apply to newspaper and any
other generally available recruiting activities conducted by an Obligee
provided that the Obligee does not expressly address any such recruiting
activities at an employee of the other Obligee.
ARTICLE VII
GENERAL
7.1 DISPUTE RESOLUTION. The following procedure will be adhered to in all
disputes arising under this Agreement which the Parties cannot resolve
informally. The aggrieved Party shall notify the other Party in writing
of the nature of the dispute with as much detail as possible about the
deficient performance of the other Party. The project managers shall
meet (in person or by telephone) within seven days after the date of the
written notification to reach an agreement about the nature of the
deficiency and the corrective action to be taken by the respective
Parties. The project managers shall each produce a report about the
nature of the dispute in detail to their respective managements. If the
project managers are unable to agree on corrective action, senior
managers of the Parties having authority to resolve the dispute without
the further consent of any other person ("Management") shall meet or
otherwise act to facilitate an agreement within 14 days of the date of
the written notification. If Management cannot resolve the dispute or
agree upon a written plan of corrective action to do so within seven days
after their initial meeting or other action, or if the agreed-upon
completion dates in the written plan of corrective action are exceeded,
either party may request arbitration as provided for in this Agreement.
Except as otherwise specifically provided, neither Party shall initiate
arbitration unless and until this dispute resolution procedure has been
employed or waived.
7.2 ARBITRATION. Provided that the Parties have attempted to resolve the
dispute pursuant to Section 7.1, either Party may submit any dispute
between the Parties arising from or relating to this Agreement, including
any failure to agree on a matter requiring agreement, (but not any
dispute relating to the ownership of Intellectual Property Rights or the
improper disclosure or use of the source code version of the Software,
the Improvements or the Third Party Materials) to arbitration in
accordance with the provisions of Schedule "B" hereto.
7.3 ATTORNEYS FEES. If a legal action or arbitration proceeding is commenced
in connection with any dispute under this Agreement, the prevailing
party, as determined by the court or arbitrators, shall be entitled to
attorneys' fees actually incurred (including all applicable Transfer
Taxes under the relevant tax legislation), costs and necessary
disbursements incurred in connection with such action or proceeding.
7.4 EXCUSABLE DELAYS. Dates and times by which 724 or BofA is required to
render performance hereunder shall be postponed automatically to the
extent and for the period of time that 724 or BofA, as the case may be,
is prevented from meeting them by reason of any causes beyond its
reasonable control, provided the Party prevented from rendering
performance notifies the other Party immediately and in detail of the
commencement and nature of such a cause, and provided further than such
Party uses its reasonable efforts to
-19-
render performance in a timely manner utilizing to such end all
resources reasonably required in the circumstances, including
obtaining supplies or services from other sources if same are
reasonably available.
7.5 TIME. Time is of the essence of each provision of this Agreement.
7.6 NOTICES. Any notice, consent, determination or other communication
(herein a "NOTICE") required or permitted to be given or made hereunder
shall be in writing and shall be well and sufficiently given or made if:
(a) delivered in person during normal business hours on a Business Day
and left with the addressee at the address set forth below; or
(b) sent by any electronic means of sending messages, including
facsimile transmission, which produces a paper record ("Electronic
Transmission") during normal business hours on a Business Day,
charges prepaid and confirmed by prepaid first class mail:
TO 724, AT:
0000 Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx
X0X 0X0
Facsimile: (000) 000-0000
Attention: Xxxxxxxxxxx Xxxxxxxx
WITH A COPY TO:
0000 Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx
X0X 0X0
Facsimile: (000) 000-0000
Attention: Xxxx Xxxxxxx, BankAmerica Project Manager
TO BOFA, AT:
Bank of America NT&SA
Interactive Banking Division Administration #10308
000 Xxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx, Executive Vice President
-20-
WITH A COPY TO:
Bank of America
Office of the General Counsel
Bank Of America Corporate Center
000 Xxxxx Xxxxx Xxxxxx
XX0-000-00-00
Xxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxx, Associate General Counsel
AND WITH A COPY TO:
Bank Of America NT&SA
Interactive Banking Division
000 Xxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx
00000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx, Vice-President, Interactive Banking
Product Development 3690, 724 Solutions Project Manager
or to such other address or telecopier number to the attention of such
other individuals as any Party may from time to time notify the others in
accordance with this section. Any Notice so given or made shall be
deemed to have been given or made on the day of delivery if delivered as
aforesaid or on the Business Day immediately following the day of
Electronic Transmission.
7.7 ASSIGNMENT AND ENUREMENT. No Party may assign any rights or benefits
under this Agreement to any Person without the prior written consent of
the other Party. Notwithstanding the foregoing, a Party may assign this
Agreement to an Affiliate provided that such Affiliate remains an
Affiliate of the assigning Party and the original parties hereto remain
liable as principal covenantor and, provided further, that if the
Affiliate is a Competitor (as defined in the Technology License
Agreement) of 724 such Affiliate is wholly-owned, directly or indirectly,
by Bank of America Corporation. Provided, further, that BofA may not
assign this Agreement to any Person that: (a) is not a non-resident of
Canada as that term is defined in the ETA; or (b) is registered pursuant
to subdivision d of Part IX of the ETA. In the event that an Affiliate
of BofA has been assigned this Agreement and such Affiliate ceases to be
an Affiliate of BofA, such Affiliate shall, and BofA shall cause such
Affiliate to, immediately reassign this Agreement to an Affiliate of
BofA. Subject to the foregoing, this Agreement shall enure to the
benefit of and be binding upon the Parties and their respective heirs,
personal representatives, successors (including any successor by reason
of amalgamation or statutory arrangement of any Party) and permitted
assigns. In all such circumstances, the assignor shall remain liable
hereunder as principal debtor notwithstanding such assignment.
-21-
7.8 FURTHER ASSURANCES. Each Party shall do such acts and shall execute such
further documents, conveyances, deeds, assignments, transfers and the
like, and will cause the doing of such acts and will cause the execution
of such further documents as are within its power as any other Party may
in writing at any time and from time to time reasonably request be done
and or executed, in order to give full effect to the provisions of this
Agreement.
7.9 EXPENSES. Except as provided in Section 7.3, each Party shall pay all
expenses it incurs in authorizing, preparing, executing and performing
this Agreement and the transactions contemplated hereunder, including all
fees and expenses of its legal counsel, bankers, investment bankers,
brokers, accountants or other representatives or consultants.
7.10 REMEDIES CUMULATIVE. Subject to the provisions of Article V hereof, the
rights and remedies of the Parties under this Agreement are cumulative
and in addition to and not in substitution for any rights or remedies
provided by law.
7.11 CAUSE OF ACTION. No action, regardless of form, arising out of this
Agreement may be brought by BofA more than two years after the facts
giving rise to the cause of action arises and any cause of action shall
be deemed to have arisen at the time the matter complained of first
occurred regardless of whether that matter, or the losses or damages
thereby allegedly caused, could not have been discovered by BofA until
some time thereafter.
7.12 COUNTERPARTS. This Agreement may be executed and delivered in several
counterparts and by each of the Parties on the same or separate
counterparts, each of which when so executed and delivered shall be
deemed to be an original and such counterparts together shall constitute
one and the same instrument and shall be effective as of the date hereof.
7.13 WAIVER OF RIGHTS. Any waiver of, or consent to depart from, the
requirements of any provision of this Agreement shall be effective only
if it is in writing and signed by the Party giving it, and only in the
specific instance and for the specific purpose for which it has been
given. No failure on the part of any Party to exercise, and no delay in
exercising, any right under this Agreement shall operate as a waiver of
such right. No single or partial exercise of any such right shall
preclude any other or further exercise of such right or the exercise of
any other right.
7.14 RELATIONSHIP OF PARTIES. This is an agreement between separate legal
entities and neither is the agent or employee of the other for any
purpose whatsoever. The Parties do not intend to create a partnership or
joint venture between themselves. Neither Party shall have the right to
bind the other to any agreement with a Person or to incur any obligation
or liability on behalf of the other Party.
7.15 SURVIVAL. The provisions of the Sections 3.1 (as to any outstanding fees
and charges) 3.2, 3.3, 3.4, 3.5,3.6, Article V, Sections 6.1, 6.2, 7.1,
7.2, 7.3, 7.4, 7.8, 7.10, 7.11, 7.13 and 7.15 shall remain in force and
effect after the termination of this Agreement, until such time as the
Parties may mutually agree to the release of the obligations contained
therein.
TO WITNESS their agreement, the Parties have duly executed this Agreement on the
date first written above.
724 SOLUTIONS INC. BANK OF AMERICA NATIONAL TRUST &
SAVINGS ASSOCIATION
Per: /s/ Xxxxxxxxxxx Xxxxxxxx Per: /s/ Xxxxxxx XxXxxx
------------------------ ------------------
Name: Xxxxxxxxxxx X. Xxxxxxxx Name: Xxxxxxx XxXxxx
Title: President Title: Executive Vice President
Date: June 1, 1999
Per: /s/ Xxxxxx Xxxxxx
-----------------
Name: Xxxxxx Xxxxxx
Title: Vice President
Date: June 1, 1999
SCHEDULE "A"
SOFTWARE MAINTENANCE AND SUPPORT SERVICES
("SERVICES")
724 will provide the following "Services" in connection with the maintenance and
support of the most recent Production Version the Software and the most recent
prior Major Release:
(a) UPDATES: 724 shall provide Updates to the Software whenever 724
provides them to its other customers generally, but no less
frequently than every six months, unless no Updates have been made
during that period. BofA will have the right to provide input
into the Updates and delivery of such Updates, and 724 will use
commercially reasonable efforts to accommodate such requests.
(b) TELEPHONE SUPPORT: 724 will maintain a "Service Desk" based in
Toronto, Ontario to provide BofA with a single point of contact
for all questions and problems regarding the Software, and the
repair of any Errors in the Software.
(c) BOFA REQUESTS TO REPAIR ERRORS AND REQUESTS FOR IMPROVEMENTS: 724
will review requests to repair Errors in the Software at no charge
to BofA. If it is determined that such request is a request for
an Improvement, the terms of the Technology License Agreement
relating to request for Improvements shall apply. If however such
request is a request to fix an Error, then 724 shall repair such
Error in accordance with the terms of this Schedule at no
additional charge to BofA. The Parties will work, acting in good
faith, to resolve whether any particular request is a request to
repair an Error or a request for an Improvement.
724 reserves the right not to support any version of the Software that is older
than the most recent prior Production Version of the Software or any
customizations, modifications or enhancements made by any Person other than 724.
SERVICE DESK
(a) LOCATION: 724 will establish and maintain a Service Desk at its
offices in Toronto (or as determined by 724 from time to time).
(b) BASIC SERVICES: 724 will provide the following basic Service Desk
services:
(i) call and electronic mail answering and dispatch;
(ii) problem management including trouble ticketing and call
logging;
(iii) problem resolution; and
(iv) maintenance of website providing electronic support via the
Internet.
(c) SERVICE HOURS: The 724 Service Desk will be available to receive
calls from BofA between the hours of 9:00 a.m. and 5:00 p.m.
(Toronto time), during Business Days ("Normal Service Hours").
Beeper support by a single 724 staff
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member will be available from 5:00 p.m. to 8:00 p.m. (Toronto
Time) ("Extended Service Hours"), provided however that
response times shall be double that of response times during
Normal Service Hours. Normal Service Hours and Extended
Service Hours are referred to as "Service Hours".
(d) ON-SITE SUPPORT: 724 will provide on-site support services for
BofA:
(i) for any Level 1 Priority failure (as defined below) in the
event that 724 cannot correct a failure of the Software by
telephone or electronically, and 724, acting reasonably,
considers that the problem is caused solely by the failure
of the Software; and
(ii) if the BofA otherwise requests on-site support, but only if
724, in its sole discretion, determines that it has
sufficient staff to provide such support on a case-by-case
basis,
provided, however, that BofA shall:
(iii) reimburse 724 for all travel costs including without
limitation all reasonable communications, transportation,
lodging and meal expenses incurred by 724 in connection
with such on-site service and all applicable taxes, duties
and similar charges which are not recoverable by way of
credit, refund, rebate, offset or other reimbursement; and
(iv) if it is determined that the problem was not caused solely
by failure of the Software, reimburse 724 for all labour
costs, at 724's normal Time and Materials Rates.
(e) SUPPORT AFTER SERVICE HOURS: The Services do not include support
outside Service Hours. Service fees in respect of support outside
Service Hours are in addition to the Annual Maintenance Fees.
Support outside Service Hours shall be invoiced to BofA at the end
of each month in which such services are rendered to BofA at 724's
premium Time and Materials Rates for such services. Such support
may be subject to a minimum charge of 1 hour per occurrence.
(f) THIRD PARTY MATERIALS AND WARRANTY WORK: 724 shall use
commercially reasonable efforts to solve any material problem
experienced by BofA with the Third Party Materials included in or
delivered together with the Software (through consultation with
the publishers of Third Party Material) and shall, upon being
notified by BofA of any such problem, inform BofA of a reasonable
date by which 724 or the third party hopes to be able to solve
such problem. Notwithstanding the forgoing, any change to the
Software that is necessary to adapt the Software to any changes
in Third Party Materials that 724 calls for BofA to use together
with the Software, shall be treated, for the purposes of this
Schedule, to be the repair of an Error.
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SERVICE DESK PROCEDURES AND CORRECTION OF ERRORS
(a) RESPONSE TIME FOR SERVICE DESK: For all BofA calls reported
during Service Hours, a 724 Customer Service Representative shall
determine if the question can be answered or problem resolved
immediately over the telephone; however, if this is not possible,
the 724 Customer Service Representative will:
(i) assign a priority code (listed below under "Priority
Codes") to the call that BofA requests; and
(ii) attend to each service call in the order of the priority
codes and date of receipt of the call.
(b) EMERGENCY PROCEDURES AFTER SERVICE HOURS: In the case of an
emergency after Service Hours, BofA shall first attempt to reach
the 724 Customer Service Representative assigned to BofA and
failing this, BofA may contact the persons listed on 724's then
current emergency contact list. 724 will deliver the emergency
contact list to BofA's contact person promptly after the Effective
Date and after making any change to the list, but in no case less
frequently than semi-annually.
PRIORITY CODES
The level of service and order of priority shall be determined by the priority
codes assigned. BofA, working with 724, shall determine the relative merit of
'bumping' out other scheduled requests for service and development of requested
Improvements. If 724 receives a telephone support call for an Improvement or
for a lower priority service request, service for such item will be scheduled
after all higher priority service calls have been addressed.
For the purposes of this Section entitled "Priority Codes":
(a) "Core Services" means any material function of that part of the
Software which does not reside on a client device (E.G. PC,
wireless telephone, set top box, etc.), and which, if such
function became Unavailable, would cause all, or substantially all
of the Secondary Services, to be Unavailable; and banking and
brokerage services.
(b) "Secondary Services" means any material function of the Software
that provides a customer of BofA with access to a group of host
service (e.g. services like news, quotes, weather, horoscopes,
etc., but not banking or brokerage services which are Core
Services, and client device software such as PC, wireless
telephone, set top box, etc.) offered by BofA to its customers.
(c) "Unavailable" means that all, or substantially all of, the
material functionality of either a Core Service or a Secondary
Service, as the case may be, is unavailable to BofA and/or
Customers of BofA, or is so severely hampered that regular
processing cannot take place.
The priority codes that may be assigned to a call are:
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(i) LEVEL 1: An Error, defect or problem that has caused
either (i) one or more Core Services to be Unavailable, or
(ii) two or more Secondary Services to be Unavailable; or a
security issue that materially affects the integrity of any
Core Services or Secondary Services.
(ii) LEVEL 2: An Error, defect or problem has only caused a
Secondary Service to be Unavailable; or a security issue
that does not qualify as a Level 1 priority.
(iii) LEVEL 3: An Error, defect or problem that does not qualify
as either a Level 1 or Level 2 priority.
PERFORMANCE LEVELS
724 agrees to respond to each service call as follows:
(i) LEVEL 1: 724 will assign an Incident Manager and respond
to BofA within 30 minutes, and use its commercially
reasonable efforts, working diligently, to repair the
Error, defect or problem within 2 hours from receipt of the
service call. If such Error, defect or problem is not
resolved within 24 hours of receipt, 724's qualified staff
will work with BofA personnel on a 24-hour per day basis,
either at 724's location, or, at BofA's request, at any
BofA location. Reasonable travel, accommodation and living
expenses (having regard to the urgency and short time
frames) will be the responsibility of BofA if travel is
requested by BofA.
(ii) LEVEL 2: 724 will assign an Incident Manager and respond
to BofA within 2 hours, and use its commercially reasonable
efforts, working diligently during Service Hours, to repair
the Error, defect or problem within 48 hours of the service
call. At BofA's request, and subject to availability of
724 resources, 724 will dispatch 1 or more resources to the
location designated by BofA in order to resolve the matter.
Reasonable travel, accommodation and living expenses
(having regard to the urgency and short time frames) will
be the responsibility of BofA
(iii) LEVEL 3: 724 will respond within 1 day and to the extent
technically possible, repair same within 30 days or, at the
option of 724, with the next Major Release of the Software.
ESCALATION PROCEDURE
(a) SETTING PRIORITY CODES:
(i) As provided in paragraph (a)(i) of the Section entitled
SERVICE DESK PROCEDURES AND CORRECTION OF ERRORS, BofA may
establish the priority code of calls, and 724 shall handle
the call on the basis of that priority code.
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(ii) If 724 does not concur that the priority code BofA has
assigned is correct, 724's Vice-President in charge of
Maintenance and Support Services may so inform BofA's
contact person in writing, explaining, by reference to the
definition in the Section entitled PRIORITY CODE, why the
facts of the call did not correspond to the priority code
BofA assigned. 724 may invoice BofA at the Time and
Materials Rates for Services rendered in connection with
such call.
(b) LEVEL 1 ERRORS: 724's entire liability in respect of its failure
to correct any Level 1 Error is set out in Section 5.2.
724 will responded promptly to all such requests for escalations.
SCHEDULE "B"
ARBITRATION RULES OF PROCEDURE
1.0 DISPUTES COVERED BY THESE RULES. The disputes to be covered by the
provisions of these Rules of Procedures (the "Rules") are those disputes
referred to in Section 7.2 of the Agreement to which this Schedule "B" is
attached and which arise out of or relate to or are in connection with any of
the formation, interpretation, application, operation, and enforcement of the
Agreement.
1.1 EXCLUSIVE JURISDICTION. Subject to the provisions of Section 1.6
(Governing Law), it shall be a condition precedent to the bringing of any legal
proceedings with respect to the disputes referred to in Section 7.2
(Arbitration), that the settlement procedure provided for in these Rules shall
have been followed and completed.
1.2 APPOINTMENT OF ARBITRATION BOARD
(a) If any Party wishes to have any matter under this Agreement arbitrated in
accordance with the provisions of this Agreement, it shall give notice
("Arbitration Notice") to the other Party specifying particulars of the
matter or matters in dispute and proposing the name of its nominee.
(b) Arbitration shall be carried out by an Arbitration Board of three
persons. If the Parties agree in writing, the Arbitration Board may be
composed of a single arbitrator.
(c) The Parties will attempt in good faith to agree to a mutually acceptable
qualified Arbitration Board, that is willing to act, but if the Parties
are unable to do so within 15 days of the giving of the Arbitration
Notice, either Party may request the applicable courts of the Province of
Ontario to do so. Either Party may request that such courts, before
making such appointment, consult with the President of the Computer Law
Association as to the identity of suitable nominees as Arbitration Board.
(d) No member of the Arbitration Board may be a director, officer, an
employee or shareholder of either Party or of any affiliate or associate
of that Party or any associate of any such director, officer, employee or
shareholder or any other person who has a direct financial interest in
such Party or in any associate or affiliate of such Party or of a
director, officer, employee, or shareholder of such Party or who has a
direct financial interest in the matter in dispute. The terms
"associate" and "affiliate" shall have the respective meanings ascribed
to such terms by the BUSINESS CORPORATIONS ACT (Ontario) on the date
hereof.
(e) The expenses of the Arbitration Board shall be borne equally by the
Parties.
1.3 QUALIFICATIONS OF ARBITRATION BOARD. The Arbitration Board shall consist
of three individuals, one of which shall have not less than 10 years experience
as a licensed practising lawyer, and one of which shall have not less than 10
years experience in or with the computer software industry. If the Arbitration
Board consists of only one person, as agreed by the Parties, then the sole
arbitrator shall have not less than 10 years experience in or with the computer
software industry and must have acted as an arbitrator or mediator within the
previous 5 years.
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Without limiting the generality of the foregoing, the Arbitration Board shall
be at arm's length from both Parties and no member of the Arbitration Board
shall be a member of the audit or legal firm or firms who advise either
Party, nor shall he/she be a person who is otherwise regularly retained by
such Parties.
1.4 SUBMISSION OF WRITTEN STATEMENTS
(a) Within 20 days of the appointment of the Arbitration Board, the Party
initiating the arbitration (the "Claimant") shall send the other Party
(the "Respondent") a Statement of Claim setting out in sufficient detail
the facts and any contentions of law on which it relies, and the relief
that it claims.
(b) Within 20 days of the receipt of the Statement of Claim, the Respondent
shall send the Claimant a Statement of Defence stating in sufficient
detail which of the facts and contentions of law in the Statement of
Claim it admits or denies, on what grounds, and on what other facts and
contentions of law he relies.
(c) Within 20 days of receipt of the Statement of Defence, the Claimant may
send the Respondent a Statement of Reply.
(d) All Statements of Claim, Defence and Reply shall be accompanied by copies
(or, if they are especially voluminous, lists) of all essential documents
on which the Party concerned relies and which have not previously been
submitted by any Party, and (where practicable) by any relevant samples.
(e) After submission of all the Statements, the Arbitration Board will give
directions for the further conduct of the arbitration.
1.5 MEETINGS AND HEARINGS
(a) The arbitration shall take place in the Municipality of Metropolitan
Toronto, Ontario or in such other place as the Claimant and the
Respondent shall agree upon in writing. The arbitration shall be
conducted in English unless otherwise agreed by such Parties and the
Arbitration Board. Subject to any adjournments which the Arbitration
Board allows, the final hearing will be continued on successive working
days until it is concluded.
(b) All meetings and hearings will be in private unless the Parties otherwise
agree.
(c) Any Party may be represented at any meetings or hearings by legal
counsel.
(d) Each Party may examine, cross-examine and re-examine all witnesses at the
arbitration.
1.6 POWERS OF ARBITRATOR. By submitting a dispute to settlement under these
Rules, the Parties shall be taken to have conferred on the Arbitration Board the
following jurisdiction and powers, to be exercised by the Arbitration Board so
far as the relevant law allows, and in its absolute and unfettered discretion,
if the Arbitration Board shall judge it to be expedient for the purpose of
ensuring the just, expeditious, economical and final determination of the
dispute. The Arbitration Board shall have jurisdiction to:
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(a) determine any question of fact and law;
(b) determine any question as to its own jurisdiction;
(c) determine any question of good faith, dishonesty or fraud arising in the
dispute;
(d) order any Party to furnish such further details of the Party's case, in
fact or in law, as it may require;
(e) proceed notwithstanding the failure or refusal of any Party to comply
with these Rules or with its orders or directions, or to attend any
meeting or hearing, but only after giving that Party written notice that
it intends to do so;
(f) order the Parties to produce to the Arbitration Board, and to each other
for inspection, and to supply copies of, any documents in their
possession or power which it determines to be relevant. Notwithstanding
the foregoing, the Arbitration Board shall allow discovery only to the
extent of a single request for production of documents; oral depositions
or other discovery requests shall not be permitted unless the Arbitration
Board finds and informs the Parties that denial of such requests would be
manifestly unjust;
(g) receive and take into account such written or oral evidence as it shall
determine to be relevant, whether or not strictly admissible in law;
(h) hold meetings and hearings (at which the Parties may be represented by
legal counsel) and consider written and oral evidence and make his/her
award (including any interim award considered necessary by the
Arbitration Board, and the final award) in Ontario, and, with the
concurrence of the Parties thereto, elsewhere; and
(i) make any other interim or final orders which it considers to be
appropriate in all the circumstances for any of the above purposes.
In addition, the Arbitration Board shall have such further jurisdiction and
powers as may be allowed to it by the INTERNATIONAL COMMERCIAL ARBITRATIONS ACT
(Ontario), the Agreement, the specific submission referred to herein, the Rules
of the Institute and the arbitral laws of any place in which it holds hearings
or in which witnesses attend, and of any place in which it gives any directions
or makes any orders or any award.
1.7 THE AWARD. The Arbitration Board shall include in its award an order as
to the payment of the costs of the proceedings and reasonable counsel fees
(including all applicable taxes, duties or similar charges imposed, levied or
assessed under the relevant tax legislation) and, subject to the discretion of
the Arbitration Board, costs will follow success unless, in the opinion of the
Arbitration Board, there is a compelling reason to depart from such result. Any
Party ordered to pay costs may avail itself of any procedure for the taxing of
costs, provided, however, that the Parties specifically agreed that the officer
taxing such costs need not be bound by any statutory scale of costs.
The Arbitration Board will make its decision in writing and, unless the Parties
otherwise agree, the Arbitration Board's reasons will be set out in the award.
The Arbitration Board will send
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such award to the Parties as soon as practicable after the conclusion of the
proceedings. The award shall be final and binding on the Parties and shall
not be subject to any appeal or review procedure whatsoever, provided that
the Arbitration Board followed the Rules in good faith. The Arbitration Board
shall reconsider its findings once at the request and expense of a Party, but
in such event shall limit the Parties to a single memorandum stating any
relevant new evidence, points and authorities, unless doing so would be
manifestly unjust.
1.8 Access to Courts for Enforcement and Interim Remedies. The Parties
consent to the award of the Arbitration Board being entered in any Court having
jurisdiction for the purposes of enforcement. In addition, if it appears to any
Party that the Arbitration Board lacks the power to give effective interim
relief, either Party may apply to any appropriate Court for such relief.
1.9 Confidentiality. All meetings and hearings of or by the Arbitration
Board shall be in private. All matters in dispute, all claims, submissions,
evidence and findings, and the award itself (collectively, the "Information")
shall be kept confidential by the Arbitration Board, and no information
regarding any of the foregoing will be released to any third party or otherwise
made public without the written consent of both Parties, except as otherwise
contemplated herein and except for such information which is not Confidential
Information.
