Exhibit Number (10)(xxx)
To 1998 form 10-K
AGREEMENT
between
FISERV SOLUTIONS, INC.
000 Xxxxxx Xxxxx
Xxxxxxxxxx, XX 00000-0000
and
THE NORTHERN TRUST COMPANY
00 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, XX 00000-0000
Date:
PAYMENTS SYSTEM SERVICES AGREEMENT ("Agreement") dated as of October [20],
1998 ("Agreement Date"), by and between THE NORTHERN TRUST COMPANY ("Northern
Trust"), an Illinois banking corporation, and FISERV SOLUTIONS, INC. ("Fiserv"),
a Wisconsin corporation.
W I T N E S S E T H:
WHEREAS, based on the proposal presented by Fiserv to Northern Trust on
September 25, 1998, Northern Trust and Fiserv have engaged in extensive
negotiations, discussions and due diligence culminating in the relationship
described in this Agreement;
WHEREAS, based on such proposal, Northern Trust desires to outsource its
payments processing business to Fiserv pursuant to the terms hereof;
WHEREAS, in connection with the foregoing transaction, Northern Trust
desires to transfer to Fiserv certain assets used or useful in the conduct of
the payments processing business in exchange for cash pursuant to the terms
hereof; and
WHEREAS, Fiserv intends to perform the services described in this Agreement
reflecting appropriate new technologies for providing such services.
NOW, THEREFORE, Fiserv and Northern Trust agree as follows:
ARTICLE 1. DEFINITIONS.
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The following defined terms have the meanings specified in the Agreement
portion indicated below:
TERM DEFINED IN
Agreement Heading
Agreement Date Heading
Assets Section 13.1
Change Control Procedures Section 4.3
Change(s) Section 4.1
Completion Data Section 3.3
Conclusion Date Section 27.1
Contract Year Section 2.2
Conversion Section 3.3
Conversion Period Section 3.3
Credits Section 31.4
Critical Services Section 18.1
Data Tapes Section 17.6
Designated Fees Section 19.1
Designated Services Section 3.1
Designated Service Levels Section 5.1
Developed Software Section 11.2
Disaster Section 18.1
Disaster Recovery Plan Section 18.1
Discloser Section 22.2
Effective Date Section 2.1
Estimated Additional Fees Section 19.1
Estimated Designated Fees Section 19.1
Estimated Fees Section 19.1
Estimated Out-of-Pocket Expenses Section 19.1
Fees Section 19.4
Fiserv Heading
Fiserv 401(k) Savings Plan Section 16.7
Fiserv Acquired Services Article 14
Fiserv Agent(s) Section 9.3
Fiserv Benefits Plans Section 16.6
Fiserv Credits Section 31.3
Fiserv Health Benefits Plan Section 16.8
Fiserv Information Section 22.1
Fiserv Project Manager Section 9.1
Fiserv Proprietary Software Section 11.3
Fiserv Software Section 11.3
Fiserv Systems Section 7.1
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Fiserv Third Party Software Section 11.3
Force Majeure Event Section 18.2
General Assignment Section 13.1
Hearing Section 29.3
Implementation Consents Section 12.1
Improved Technology Section 3.4
Indemnifying Party Section 30.3
Indemnitee Section 30.3
Information Section 22.1
Initial Term Section 2.1
Insured Dependent(s) Section 16.8
Losses Section 30.1
Management Committee Section 10.2
Minimum Employment Period Section 16.5
New Service(s) Section 4.1
New Service Fees Section 19.4
New Service Levels Section 5.2
New Services Schedule Section 4.1
Northern Trust Heading
Northern Trust Benefit Plans Section 16.6
Northern Trust Credits Section 31.4
Northern Trust Data Section 17.3
Northern Trust Health Benefits Plan Section 16.8
Northern Trust Information Section 22.1
Northern Trust Project Manager Section 9.2
Northern Trust Proprietary Software Section 11.1
Northern Trust Retained Agreements Section 3.2
Northern Trust Retained Responsibilities Section 3.2
Northern Trust Software Section 11.1
Northern Trust Systems Section 7.2
Northern Trust Third Party Software Section 11.1
Problem Section 10.5
Project Managers Section 9.2
Proposal Section 4.1
Recipient Section 22.1
Reconstruction Costs Section 32.17
Renewal Term(s) Section 2.2
Report(s) Section 17.1
Required Change Section 21.1
Required Consents Section 12.3
Residuals Section 22.3
Retained Responsibilities Service Levels Article 14
Securities Section 32.17
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Service Levels Section 5.2
Service Location(s) Section 6.1
Services Section 4.1
Software Section 11.3
Start Date Section 16.3
Systems Section 7.2
Taxes Article 20
Term Section 2.2
Termination Assistance Period Section 27.1
Termination Assistance Services Section 27.1
Termination Consents Section 12.2
Termination for Convenience Section 25.1
Termination Losses Section 26.3
Termination Reasons Section 16.5
Third Party Resources Section 15.2
Third Party Resources Agreements Section 15.2
Third Party Resources Invoice(s) Section 15.4
Transitioned Employee(s) Section 16.2
Transition Period Section 16.1
Yearly Damage Cap Section 31.1
ARTICLE 2. TERM
2.1 Initial Term. The initial term of this Agreement shall commence on
November 1, 1998 ("Effective Date") and shall continue until midnight Central
Time on the last business day of October, 2008 ("Initial Term"), unless
terminated earlier pursuant hereto.
2.2 Renewal Term. Upon Initial Term expiration, this Agreement shall
automatically renew for three successive three-year terms (collectively,
"Renewal Terms"; each, a "Renewal Term") unless terminated (1) earlier pursuant
to Article 25; or (2) by either party upon at least 365 days' written notice to
the other prior to Initial Term expiration or any Renewal Term expiration.
(Initial Term and Renewal Terms collectively, "Term,") (each 12-month period
commencing on the Effective Date during the Term, a "Contract Year".)
ARTICLE 3. DESIGNATED SERVICES.
3.1 Designated Services. Fiserv shall provide Northern Trust and its
designated affiliates the payments system processing services, including
encoding, check
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processing, controlled disbursement processing and advising, account
reconcilement, statement rendition, totaling, verification, and sorting
services, return item processing, investigations, hardware, software, software
maintenance, software development, and related services performed in the
ordinary course by Northern Trust prior to the Effective Date (a) listed in
Exhibit 3.1; and (b) otherwise identified in this Agreement as being part of the
designated services (collectively, "Designated Services"). Except for Northern
Trust Retained Responsibilities, Fiserv shall assume full responsibility,
including financial responsibility, for managing, administering, operating, and
maintaining Northern Trust Service Locations, Northern Trust Systems, Northern
Trust Software, and such other resources mutually agreed by the parties. Except
as otherwise provided herein, Fiserv shall be the exclusive provider for
Northern Trust with respect to accounts held by Northern Trust, its successors,
and assigns of (i) Designated Services as such Designated Services were
performed by Northern Trust immediately prior to the Effective Date; and (ii)
any increases in volume of such Designated Services resulting from acquisition
or otherwise with respect to accounts held by Northern Trust. Affiliates of
Northern Trust may at their option and upon 60 days' notice to Fiserv during the
term hereof, elect to use Fiserv for the provision of payments processing
services on the same term and conditions as described herein, taking account of
the fact that differing Services may need to be provided to such affiliates,
upon such terms as may be mutually agreeable to the parties at such time. In
such case, such affiliate will become an additional signatory to this Agreement.
3.2 Northern Trust Retained Services. Northern Trust shall have
responsibility for (1) services described in Article 14 and such ancillary
services in support of Designated Services as were performed by Northern Trust
as of the Effective Date (respectively, "Northern Trust Retained
Responsibilities" and "Fiserv Acquired Services"); and (2) pursuant to Article
15, agreements identified in Exhibit 15.2 ("Northern Trust Retained
Agreements").
3.3 Conversion. Commencing on the Effective Date and continuing until the
date specified in Exhibit 3.3A ("Completion Date"), Fiserv shall convert the
systems and data described in Exhibit 3.3A in accordance with the conversion
plan set forth in Exhibit 3.3A ("Conversion;" the period commencing on the
Effective Date until the Completion Date, "Conversion Period"). During the
Conversion Period, (1) Fiserv shall provide Northern Trust with monthly reports
on its progress in the format indicated in Exhibit 3.3B, and (2) Fiserv shall
provide the Management Committee with regular reports of its progress.
3.4 Improved Technology. Fiserv shall use reasonable efforts to provide
Northern Trust access to, for Northern Trust's evaluation and testing, new
information technology developments relating to the financial and information
services industries, relating to Designated Services ("Improved Technology"),
providing such access is not
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inconsistent with Fiserv's obligations of confidentiality to any unaffiliated
third party. All fees and expenses associated with such evaluation and testing
shall be borne by the parties as mutually agreed by the parties. Fiserv shall
use reasonable efforts to adopt and implement at its cost any Improved
Technology that becomes the industry standard for leading technology banking
service institutions serving the large corporate market; provided however, that
nothing herein shall be understood to mean that any Improved Technology proposed
or implemented by Fiserv may not be a New Service hereunder, which New Service
is governed by the provisions of Section 4.1 hereof. In addition, to the extent
not inconsistent with Fiserv's obligations of confidentiality to any
unaffiliated third party, Fiserv shall meet with Northern Trust at least once
during every 180 day period to inform Northern Trust of any Improved Technology
related to any item or information processing or imaging technology Fiserv is
developing, or is considering developing, or is otherwise aware of, that relates
to either the financial or information services industries. In general Fiserv
covenants and agrees to use reasonable efforts to remain current with respect to
new information technology developments relating to the Designated Services,
such as investing in new hardware for image based item processing.
Notwithstanding the foregoing but in furtherance thereof, the Management
Committee shall adopt a plan each year for implementing Improved Technology.
Compliance with the plan shall create a strong presumption that Fiserv's
agreements with respect to Improved Technology contained in this Section 3.4
have been fully carried out.
3.5 Financial Reports and Other Information. Fiserv shall provide
Northern Trust within (1) 90 days after Fiserv, Inc.'s fiscal year end, copies
of Fiserv Inc.'s audited balance sheet and related audited statements of income,
shareholders' equity, and cash flow, together with the notes, if any, relating
thereto; and (2) 45 days after each of Fiserv Inc.'s quarter ends, copies of
Fiserv, Inc.'s unaudited quarterly financial statements. The foregoing shall be
prepared in accordance with generally accepted accounting principles.
3.6 Joint Verification. During the 180-day period after the Effective
Date, Northern Trust and Fiserv each reserve the right to validate costs (as
measured, calculated, and defined by Northern Trust during 1998), volume,
composition, and service levels of Designated Services against the information
set forth in Exhibit 3.1, Exhibit 5.1 and Exhibits 14A and 14B hereof. If any
such information is inaccurate or incomplete, unless the parties otherwise
agree, an equitable adjustment to the terms of this Agreement shall occur, as
mutually agreed by the parties; provided, however, that no such adjustment shall
be required with respect to inaccurate or incomplete information that has a de
minimis financial effect.
3.7 Fiserv Proposals. Fiserv may from time to time propose that Fiserv
perform services outside the scope of Services. At Fiserv's expense, any such
proposal shall be submitted by Fiserv to Northern Trust for consideration and
shall include the applicable terms, conditions, and fees, with an explanation of
Fiserv's actual business case and a proposed business case justification on
behalf of Northern Trust in respect of
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such proposal.
ARTICLE 4. REQUIRED SERVICES AND CHANGES
4.1 Required Services. Northern Trust may from time to time request that
Fiserv perform services related to payments system processing (1) either in
addition to or outside the scope of Designated Services; and (2) that require
resources other than those required for performance of Designated Services or
require additional start-up expenses not otherwise required for the performance
of Designated Services, including (a) certain Software modifications; and (b)
additions to a Designated Service ("New Services"), (New Services and Designated
Services collectively, "Services")or (3) that materially change the (a) Systems;
(b) the manner in which the Services are provided, delivered, or measured; (c)
Services composition; or (d) Software ("Changes"). Fiserv agrees to provide
10,500 hours of maintenance, programming and consulting services per Contract
Year with respect to New Services and/or Changes ("Required Services"), pursuant
to the Management Committee's Required Services annual budget required by
Section 10.2 hereof. Each annual budget for Required Services shall also include
quarterly budgeting of the projects and hours to be spent upon such projects for
each such quarter. The parties shall use their reasonable efforts to assure that
all projects involving Required Services are completed without material
variation from the time budgeted for such projects in the annual and quarterly
budgets. At the end of every quarter, any amount of hours budgeted for Required
Services for such quarter, other than immaterial amounts, shall not be carried
over to the budget for Required Services for any subsequent quarter. If any
proposed New Service is not a Required Service, which budget shall be in the
form contained in Exhibit 4.1A hereto, Fiserv shall prepare and provide the
Management Committee with a proposal in respect of such proposed New Service
requested containing, at a minimum, (i) the time frame for delivery or
performance of such New Service; (ii) if applicable, a description of such New
Service's scope and functionality; (iii) fees to be paid with respect to such
New Service ; and (iv) to the extent applicable, an estimate of the resource
requirements necessary to develop and implement such New Service (each, a
Proposal"). If (i) Northern Trust elects to have Fiserv perform such New Service
not as a Required Service or (ii) both parties agree to a New Service after all
the hours for Required Services for the Contract Year have been budgeted,
Northern Trust and Fiserv shall execute an amendment to this Agreement in
substantially the form set forth in Exhibit 4.1B for a New Service (a "New
Services Schedule"). Northern Trust and Fiserv shall each respectively perform
its responsibilities as required in the applicable New Services Schedule related
to any New Service. Fiserv shall perform all Required Services without fees or
other compensation in addition to the basic fees hereunder for performing
Designated Services.
4.2 Changes. Subject to Section 4.1 hereof, Fiserv may propose to
Northern Trust changes to any Services. A proposal shall contain, at a minimum,
(i) the time
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frame for delivery or performance of the Change; (ii) if applicable, a
description of the Change's scope and functionality; (iii) fees to be paid with
respect to the Change; and (iv) to the extent applicable, an estimate of the
resource requirements necessary to develop and implement the Change. If Northern
Trust agrees to the proposed Change, both parties shall execute an amendment to
this Agreement in substantially the form set forth in Exhibit 4.1B.
4.3 Change Control Procedures. The parties shall agree on Change Control
Procedures within 90 days of the date hereof, in written form ("Change Control
Procedures"). Fiserv shall (1) schedule all projects and Changes so as not to
unreasonably interrupt Northern Trust's business operations; (2) provide
Northern Trust a monthly schedule for ongoing and planned Changes for the next
60 day period; (3) monitor and report the status of Changes against the
applicable schedule; and (4) document and provide Northern Trust notice of all
material Changes performed on a temporary basis to maintain Services continuity.
Any changes to Change Control Procedures must contain the approval of each of
Northern Trust and Fiserv.
4.4 Fiserv shall provide Northern Trust with monthly reports of the status
of its progress in implementing Required Services and Changes.
ARTICLE 5. SERVICE LEVELS.
5.1 Designated Service Levels. As of the Effective Date, Fiserv shall
provide Designated Services at or better than the levels of service set forth in
Exhibit 5.1, which Northern Trust represents and warrants are the corresponding
levels of service as of the Effective Date (collectively, "Designated Service
Levels"). Exhibit 5.1 shall designate the service levels which have client
impact. Failure to meet those service levels will result in Fiserv paying
Northern Trust in the form of Fiserv Credits, in the case of Designated Services
performed by Fiserv hereunder, or Northern Trust will pay Fiserv in the form of
Northern Trust Credits, in the case of Fiserv Acquired Services, all as
described in Sections 31.3 and 31.4 hereof.
5.2 New Service Levels. Fiserv shall provide New Services at levels equal
to or better than the levels of service (1) specified in the New Services
Schedule; or (2) otherwise mutually established by Northern Trust and Fiserv
(collectively, "New Service Levels;" Designated Service Levels and New Service
Levels collectively, "Service Levels").
5.3 Service Levels Adjustment. Every six months, the Management Committee
shall review Service Levels for the preceding 6-month period. In respect of any
Service Levels that require periodic adjustment or that are no longer
appropriate because of a Change or technology that has been implemented to
change or enhance Services, the Management Committee may recommend that such
Service Levels be
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adjusted for the subsequent Contract Year, and, upon mutual agreement of the
parties hereto, such Service Levels shall be adjusted with expenses related
thereto paid as mutually agreed. In addition, either Northern Trust or Fiserv
may, at any time upon notice to the other party, initiate negotiations to review
and adjust any Service Levels that such party in good faith believes are
inappropriate at the time.
5.4 Service Reports. Fiserv shall provide Northern Trust with monthly
reports in respect of Service Levels set forth in Exhibit 5.1, and any New
Service Levels described in Section 5.2.
5.5 Float Policy. The Float Policy Fiserv shall observe in performing the
Designated Services shall be as set forth in Exhibit 5.5.
ARTICLE 6. SERVICE LOCATIONS AND RELATED PROCEDURES.
6.1 Service Locations. Fiserv and Northern Trust covenant and agree that
they shall use reasonable efforts to relocate the main unit for provision of the
Services out of the Northern Trust's Operations Center at 000 Xxxxx Xxxxx Xxxxxx
as promptly as practicable, to another location in the downtown Chicago area.
Fiserv shall continue to lease space at 000 Xxxxx Xxxxx Xxxxxx until such
relocation has occurred. The terms and conditions, including fees, applicable to
Fiserv's lease shall be specified in Exhibit 6.1A. Fiserv shall have the right
to replace a Northern Trust Service Location with another service location
selected by Fiserv, provided such new Service Location shall be operationally
suitable to provision of Designated Services and is consented to in writing by
Northern Trust. Northern Trust shall be permitted access to any locations used
by Fiserv to perform the Services ("Service Locations") at all times and subject
to any reasonable notice, security and confidentiality procedures in effect at
such Service Location. Such access shall be for the purpose of auditing and
verifying that the facility is in first-class operating condition and that work
rules (including reasonable dress codes and satisfactory security procedures)
are being enforced by on-site management. Fiserv specifically covenants and
agrees that all such facilities will be maintained appropriately during normal
business hours for tours by clients and prospective clients. Full access will
also be provided so that banking regulators shall be allowed to examine all
aspects of applicable laws and regulations, including, without limitation,
Fiserv's data and system security.
6.2 Facilities Security Procedures. Fiserv shall implement, maintain, and
enforce reasonable environmental and physical security standards and procedures
at each Service Location.
6.3 Data and Systems Security. Fiserv shall (1) implement, maintain, and
enforce data and systems security in respect of Fiserv Systems; and (2) maintain
and enforce in respect of (a) Northern Trust Systems that Fiserv is responsible
for as part of
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Designated Services; and (b) Northern Trust Data, in each case
on-line security standards and procedures at least as rigorous as those in
effect at Northern Trust Service locations as of the Effective Date.
6.4 Lockbox Operation. The parties hereto shall facilitate the
relocation, at Northern Trust's option and, if Northern Trust elects to pursue
such relocation, at Northern Trust's expense, of Northern Trust's lockbox
operations out of the Canal Center and to the main site for Fiserv's check
processing operations for Northern Trust pursuant to this Agreement, at such
time as Fiserv moves the payments processing unit out of such facility. Fiserv
shall provide such space at cost in the new facility. The lockbox operation,
which is under Northern Trust's ownership and control, may be moved to
facilitate its continued functioning. Northern Trust shall notify Fiserv of its
election concerning relocation of the lockbox operation prior to Fiserv
finalizing arrangements for its new facility. Fiserv shall notify Northern Trust
just prior to its finalizing such arrangements so that Northern Trust may make
the foregoing election.
ARTICLE 7. SYSTEMS.
7.1 Fiserv Systems. Except as provided in Article 11, any systems and
related documentation and procedures and any modifications or enhancements to
such systems or related documentation or procedures designed, developed, owned,
acquired, or licensed by Fiserv or any of its affiliates related to Services
("Fiserv Systems") shall be the exclusive property of Fiserv or its third party
licensor or lessor, as the case may be. Fiserv shall maintain Fiserv Systems in
good working order, to the reasonable satisfaction of Northern Trust. Fiserv
shall also maintain in good working order the interfaces the Fiserv Systems have
with any systems, software or devices of Northern Trust. Fiserv will also
cooperate with establishing and maintaining any interfaces it might have with
third parties in providing the Services. Except as otherwise provided hereto,
Northern Trust shall have no rights to or interests in Fiserv Systems.
7.2 Northern Trust Systems. Except as provided in Article 11, any systems
and related documentation or procedures and any modifications or enhancements to
such systems or related documentation or procedures designed, developed, owned,
acquired, or licensed by Northern Trust or any of its affiliates related to
Services ("Northern Trust Systems") shall be the exclusive property of Northern
Trust or its third party licensor or lessor. Fiserv shall have no rights to or
interests in Northern Trust Systems. (Fiserv Systems and Northern Trust Systems
collectively, "Systems".) Fiserv shall maintain in good working order and shall
not injure or compromise in any material way the portion of Northern Trust
Systems that Fiserv uses or with which Fiserv interfaces in order to provide
Services.
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ARTICLE 8. OMITTED INTENTIONALLY
ARTICLE 9. PROJECT TEAM.
9.1 Fiserv Project Manager. Fiserv shall appoint an individual who shall
be in charge of implementing Services at Service Locations ("Fiserv Project
Manager"). The initial Fiserv Project Manager shall be Xx. Xxxxxxx X. True.
9.2 Northern Trust Project Manager. Northern Trust shall appoint an
individual who shall be in charge of working with the Fiserv Project Manager
related to Fiserv's implementing Services at Service Locations ("Northern Trust
Project Manager"). The initial Northern Trust Project Manager shall be Xx. Xxxx
Xxx Xxxx. (The Fiserv Project Manager and Northern Trust Project Manager
collectively, "Project Managers").
9.3 Conduct of Fiserv Employees and Agents. While at Northern Trust
Service Locations, Fiserv's employees, agents, contractors, and subcontractors
(collectively, "Fiserv Agents") shall (1) comply with reasonable Northern Trust
requests, rules, and regulations regarding personal and professional conduct
(including the wearing of a particular uniform or business attire,
identification badge or adhering to general security procedures) generally
applicable to such Northern Trust Service Locations; (2) adhere to Northern
Trust security procedures; and (3) otherwise conduct themselves in a
businesslike manner.
9.4 Fiserv Employment Policies. Fiserv shall exercise due care and
diligence in the selection and training of Fiserv Agents and shall take
reasonable steps to assure that Services are provided only by persons who have
not been convicted of a job-related criminal offense involving violence,
dishonesty or any breach of trust. Fiserv shall include language on its
employment application or in its subcontracts requiring prospective Fiserv
Agents to attest to not having been so convicted. Each Fiserv Agent involved in
providing Services shall be bondable and covered by the insurance required under
Section 32.17. Fiserv will not discriminate against any of its employees or
applicants for employment because of age, race, color, religion, sex, national
origin, ancestry, disability, handicap, or veteran status or any other basis
prohibited by applicable federal, state or local law, and will comply with all
applicable requirements of the equal opportunity and affirmative action clauses
set forth in Executive Order 11246 (applicable to subcontractors), as amended,
in the regulations of the Department of Labor implementing the Vietnam Era
Veterans Readjustment Act of 1974, and in the Rehabilitation Act of 1973, as
amended, which, together with the implementing rules and regulations prescribed
by the Secretary of Labor, are incorporated in this Agreement by reference.
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ARTICLE 10. MANAGEMENT AND CONTROL.
10.1 Management Meetings. Monthly meetings of the Management Committee
shall be held at a designated site or by conference call or video conference, as
may be agreed by the members of the Management Committee to (a) review Fiserv's
performance of Services; (b) resolve disputes arising pursuant to this
Agreement; (c) track progress of special projects; and (d) coordinate and plan
for any new hardware or software acquisitions, or the provision of New Services
or Changes.
10.2 Management Committee. Within 10 days of the Effective Date, Northern
Trust shall appoint 3 members of its management staff, and Fiserv shall appoint
3 members of its management staff to serve on a management committee
("Management Committee"). Once every Contract Year, the Management Committee
shall designate one of its members to act as chairman. The first Contract Year,
the chairman shall be one of the Northern Trust members; the second Contract
Year, a Fiserv member; and shall continue to alternate each Contract Year. The
Management Committee shall be authorized and responsible for (1) generally
overseeing the performance hereof; (2) making recommendations relating to the
achievement of Northern Trust strategic and tactical objectives in respect of
the establishment, budgeting, and implementation of Northern Trust's priorities
and plans for payments system processing and communications relating thereto;
(3) monitoring and resolving disagreements regarding the provision of Services
and Service Levels; and (4) approving an annual budget for the Required Services
described in Section 4.1 hereof, and monitoring performance thereunder. Progress
with respect to such Required Services budget shall be followed in a report not
less than monthly which shall be one of the reports listed on Exhibit 17.1
hereof. The Management Committee shall identify major enhancements annually and
determine which of those will be part of the Required Services for the year.
10.3 Management Committee Direction. Each party shall abide by the
directions and plans of the Management Committee. The management process agreed
to by the parties hereto shall be as described in Exhibit 10.3 hereto.
10.4 Other Fiserv Projects. Any Fiserv contract or project proposed to be
entered into after the Effective Date with a party other than Northern Trust or
its affiliates that anticipates using the Transferred Assets or the former
Northern Trust employees working in the payment processing unit in connection
with such contract or project shall be pre-approved by a majority of the
Management Committee.
10.5 Problem Notification. In the event Fiserv becomes aware (either
through notification by Northern Trust or otherwise) of a Systems, software, or
Services event, occurrence, error, defect, or malfunction that Fiserv reasonably
believes would materially
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affect any of the Designated Services (each, a "Problem"), Fiserv shall promptly
notify the Northern Trust Project Manager or designated alternate of such
Problem. Fiserv shall treat such Problem as a priority and work diligently to
avert any adverse effect such Problem may have on the Services. If the Problem
is not corrected within 24 hours, Fiserv shall devote sufficient increased
resources to either treat the Problem or provide a work around acceptable to
Northern Trust. If the Problem has not been treated within two days, Fiserv
shall pay damages to Northern Trust as determined by the Management Committee,
with such damages to be governed pursuant to the provisions of this Agreement.
If more than one Problem arises or occurs at one time, the Northern Trust
Project Manager shall determine and inform Fiserv promptly as to the order of
priority in which such Problems shall be addressed and resolved.
10.6 Infiteq Alliance. Fiserv shall fund Northern Trust's membership in
this program.
ARTICLE 11. SOFTWARE.
11.1 Northern Trust Software.
(1) Subject to Article 12 hereof, Northern Trust hereby grants Fiserv
during the term hereof, a non-exclusive, non-transferable right to have access
to and to (a) operate and use as required to provide Services (i) Northern Trust
proprietary software operated and used by Transition Employees or other Northern
Trust employees prior to the Effective Date related to Designated Services,
including the proprietary software listed in Exhibit 11; and (ii) to the extent
mutually agreed, any Northern Trust proprietary software acquired by Northern
Trust after the Effective Date for use related to Services (collectively,
"Northern Trust Proprietary Software"); (b) operate and use as required to
provide Services (i) the software licensed or leased by Northern Trust from a
third party operational prior to the Effective Date related to Designated
Services, including the licensed or leased software listed in Exhibit 11; and
(ii) to the extent agreed upon by the parties, any software licensed or leased
by Northern Trust from a third party after the Effective Date for use related to
Services (collectively, "Northern Trust Third Party Software"); and (c) use any
documentation related to Northern Trust Proprietary Software or Northern Trust
Third Party Software in Northern Trust's possession on or after the Effective
Date ((a), (b) and (c) collectively, "Northern Trust Software"). Northern Trust
Software shall be the exclusive property of Northern Trust or its third-party
licensor, and Fiserv shall have no rights to or interests in Northern Trust
Software, except as described in this Section 11.1. Subject to Section 10.4,
Fiserv may use the Northern Trust Software to provide services for any entity
during the term of this Agreement. Nothing herein shall in any way affect
Northern Trust's rights to the Northern Trust Software, which except as
specifically described herein, remains absolute. Upon expiration or termination
of this Agreement and upon payment by Fiserv to Northern Trust of the then
current licensing
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fee, if any (so long as the licensing fee is no higher than the amount charged
to any other non-affiliated third party), Northern Trust shall deliver to Fiserv
a copy of, and hereby grants, or shall cause to be granted to Fiserv, for so
long as Fiserv is obligated to provide services to third parties under existing
agreements, a non-exclusive, non-transferable license to use and operate, and to
sublicense to a third party to have access to, operate, and use Northern Trust
Software and Developed Software. Upon the expiration or termination of (i) this
Agreement; and (ii) the license granted in the preceding sentence, the rights
granted to Fiserv in this Section 11.1 shall immediately revert to Northern
Trust.
(2) Fiserv may sublicense to Fiserv Agents (each of whom must be
specifically approved by Northern Trust) the right to have access to, operate,
and use Northern Trust Software to the extent set forth in Section 11.1(1) and
as may otherwise be mutually agreed.
(3) Upon expiration or termination of this Agreement for any reason, Fiserv
shall provide Northern Trust with all extant copies in its possession of
Northern Trust Software.
(4) Fiserv shall not reverse engineer or decompile Northern Trust Software.
11.2 Developed Software. Except as otherwise provided as part of a New
Services Schedule in accordance with Article 4, (1) any enhancements or
modifications to the Northern Trust Software shall be and shall remain the
exclusive property of Northern Trust or the applicable third party licensor
("Developed Software"). Fiserv shall provide Northern Trust with documentation
and source code for all Developed Software at the time the Developed Software
goes into use. (2) In consideration of the payments made by Northern Trust,
Fiserv hereby assigns to Northern Trust all right, title, and interest in
Developed Software. (3) Northern Trust hereby grants to Fiserv during the term
hereof, or until earlier termination, a non-exclusive, non-transferable right to
have access to, operate, and use Developed Software. (4) Fiserv may sublicense
to Fiserv Agents (each of whom shall be specifically approved by Northern Trust)
the right to have access to, operate, and use Developed Software during the term
of this Agreement and for so long thereafter as Fiserv is obligated to furnish
services to third parties under existing agreements. (5) Upon expiration or
termination of this Agreement for any reason, Fiserv shall deliver to Northern
Trust all extant copies in its possession of Developed Software.
11.3 Fiserv Software. (1) All software and related documentation (a) (i)
owned by Fiserv prior to the Effective Date or that Fiserv acquires ownership
after the Effective Date, which is used related to Services, including software
listed in Exhibit 13A; or (ii) developed by Fiserv after the Effective Date that
is not Developed Software (collectively, "Fiserv Proprietary Software"); or (b)
licensed or leased from a third party by Fiserv prior to or after the Effective
Date that is used related to Services, including software listed in
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Exhibit 13A ("Fiserv Third Party Software") ((a) and (b) collectively, "Fiserv
Software") shall be the exclusive property of Fiserv or its third-party
licensor, and Northern Trust shall have no rights to or interests in Fiserv
Software except as described in this Section 11.3. (2) Fiserv shall operate and
use Fiserv Software related to Services to provide the Designated Services at no
additional cost to Northern Trust other than as expressly provided in this
Agreement. (3) Northern Trust may sublicense to Northern Trust Agents (each of
whom shall be specifically approved by Fiserv) the right to have access to,
operate and use Fiserv Software. Upon expiration or termination of this
Agreement and upon payment by Northern Trust to Fiserv of the then current
licensing fee, if any (so long as the licensing fee is no higher than the amount
charged to any other non-affiliated third party), Fiserv shall deliver to
Northern Trust a copy of, and hereby grants, or shall cause to be granted to
Northern Trust, a non-exclusive, non-transferable license to use and operate,
and to sublicense to a third party to have access to, operate, and use Fiserv
Software. Upon the expiration or termination of (i) this Agreement; and (ii) the
license granted in the preceding sentence, the rights granted to Northern Trust
in this Section 11.3 shall immediately revert to Fiserv. (Northern Trust
Software, Developed Software, and Fiserv Software collectively, "Software.")
ARTICLE 12. REQUIRED CONSENTS.
12.1 Implementation Consents. Northern Trust shall use its commercially
reasonable efforts to obtain all consents, approvals, authorizations, notices,
requests, and acknowledgments necessary to allow Fiserv and Fiserv Agents to use
Northern Trust Software and Northern Trust Systems in order to provide Services
to Northern Trust ("Implementation Consents").
12.2 Termination Consents. Fiserv shall use its commercially reasonable
efforts to obtain all consents, approvals, authorizations, notices, and
acknowledgments necessary to allow Northern Trust and Northern Trust Agents to
continue to use Fiserv Software and Fiserv Systems, and to allow Fiserv to
assign or transfer third party agreements to Northern Trust pursuant to Article
28(4), upon expiration or termination of this Agreement for any reason
("Termination Consents"). The costs of obtaining the Termination Consents shall
be the responsibility of the party or parties as set forth below:
(1) in the event of a termination of this Agreement pursuant to Section
25.1, the costs of obtaining the Termination Consents shall be paid by Northern
Trust; and
(2) in the event of a termination of this Agreement pursuant to Section
25.2, the costs of obtaining the Termination Consents shall be paid by the
defaulting party.
12.3 General Obligations. Each party shall cooperate with and, at the
other's request, assist it in obtaining Implementation Consents and Termination
Consents (collectively, "Required Consents"). Fiserv and Northern Trust shall
each use
15
commercially reasonable efforts to mitigate the expense of obtaining
Required Consents. In the event a party is unable to obtain any Required
Consents, the parties shall cooperate with each other in implementing a
reasonable work around.
ARTICLE 13. ASSETS TRANSFERRED.
13.1 Assets Transferred. On the Closing Date (as hereinafter defined),
Fiserv shall purchase from Northern Trust the assets specified in Exhibit 13A
("Assets"). The purchase price of each of the Assets shall be the net book value
of the Asset, as reflected on the books of Northern Trust. In addition, Fiserv
shall be responsible for and shall pay all sales, use, and other similar taxes
related to such transfer. On or before December 31, 1998 or such other date as
the parties may mutually agree (the "Closing Date"), Northern Trust shall assign
and transfer to Fiserv good title to Assets free and clear of all liens by
delivery of (1) a General Assignment and Xxxx of Sale in the form of Exhibit 13B
("General Assignment"), duly executed by each of Northern Trust and Fiserv; and
(2) such other good and sufficient instruments of conveyance, assignment, and
transfer to be prepared by Fiserv, in form and substance reasonably acceptable
to Northern Trust, as shall be effective to vest good and marketable title to
Assets in Fiserv. From and after the Effective Date, until the Closing Date,
Fiserv shall lease from Northern Trust the Assets, for a rental payment equal to
the book value depreciation of such Assets from and after the Effective Date to
and including the Closing Date.
13.2 Joint Verification. During the six-month period following the
Effective Date, Northern Trust and Fiserv each reserve the right to inventory
and validate the information set forth in Exhibit 13A. If any such information
should prove to be inaccurate or incomplete, an equitable adjustment to the
terms of this Agreement shall occur, as mutually agreed by the parties;
provided, however, that no such adjustment shall be required with respect to
inaccurate or incomplete information that has a de minimis financial effect.
ARTICLE 14. NORTHERN TRUST RETAINED RESPONSIBILITIES AND ACQUIRED SERVICES.
Unless provided by Fiserv as a New Service, Northern Trust shall be
responsible for the services set forth in Exhibit 14A, which shall be performed
at the respective service levels set forth in Exhibit 5.1 ("Retained
Responsibilities Service Levels"). Fiserv shall acquire the services and at the
cost listed on Exhibit 14B from Northern Trust ("Fiserv Acquired Services"). The
Parties by mutual agreement may also add to the list of Fiserv Acquired
Services, and designate associated costs of such services, on Exhibit 14B
hereafter.
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ARTICLE 15. THIRD PARTY CONTRACTS
15.1 Transferred Contracts. On the Effective Date, Northern Trust shall
transfer or assign Fiserv the agreements, including all rights and
responsibilities thereunder, for assets and facilities leased or licensed by
Northern Trust or an affiliate and third party services identified in Exhibit
15.1. During the six-month period following the Effective Date, Northern Trust
and Fiserv each reserve the right to inventory and validate the information set
forth in Exhibit 15.1. If such information should prove to be inaccurate or
incomplete, an equitable adjustment to the terms of this Agreement shall occur,
as mutually agreed by the parties; provided, however, that no such adjustment
shall be required with respect to inaccurate or incomplete information that has
a de minimis effect.
15.2 Fiserv Administration. Except as provided in Section 15.6, Fiserv
shall be responsible, as of the Effective Date, for managing (including paying
any fees or expenses due under such agreements to Northern Trust or the
applicable third party vendor, as the case may be), administering, and
maintaining agreements for assets and facilities leased or licensed by Northern
Trust or an affiliate and third party services that Northern Trust has not
assigned to Fiserv pursuant to Section 15.1 and that are (1) identified in
Exhibit 15.2; (2) reasonably necessary to provide Designated Services to
Northern Trust; and (3) retained by Northern Trust or an affiliate in Northern
Trust's or such affiliate's name ("Third Party Resources"). Fiserv shall
provide Northern Trust with updates to Exhibit 15.2 periodically during the
Term. Fiserv shall provide Northern Trust with reasonable notice of any
renewal, termination, or cancellation dates and fees in respect of Third Party
Resources. Fiserv may, to the extent permitted by the agreements in respect of
Third Party Resources ("Third Party Resources Agreements"), modify, terminate,
or cancel any such Third Party Resources Agreements. Any modification,
termination, or cancellation fees or charges imposed upon Northern Trust related
to any such modification, termination, or cancellation shall be paid by Fiserv.
15.3 Performance Under Third Party Resources Agreements. Northern Trust
and Fiserv shall each promptly inform the other of any breach, misuse, or fraud
related to any Third Party Resources Agreements of which it becomes aware and
shall cooperate with the other party to prevent or stay any such breach, misuse,
or fraud. Each party shall pay all amounts due for any penalties or charges
(including amounts due to a third party as a result of such party's failure to
promptly notify the other party pursuant to the preceding sentence, legal
expenses, and other incidental expenses) incurred by such party as a result of
such party's performance or nonperformance of its obligations with respect to
Third Party Resources Agreements.
15.4 Third Party Invoices. Except as otherwise directed by Northern
Trust,
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Fiserv shall (1) receive all invoices submitted by third parties related to
Third Party Resources ("Third Party Resources Invoices"); (2) review and correct
any errors in Third Party Resources Invoices in a timely manner; and (3) pay
Third Party Resources Invoices prior to the due date. Fiserv shall be
responsible for any late fees in respect of Third Party Resources Invoices.
15.5 Appointment as Agent. To the extent permitted by Third Party
Resources Agreements, Northern Trust hereby appoints Fiserv as its sole, limited
purpose agent for all matters pertaining to such Third Party Resources
Agreements.
15.6 Northern Trust Retained Responsibilities. Northern Trust shall
retain all rights and responsibilities in and to those agreements for assets and
facilities leased or licensed by Northern Trust or an affiliate and third party
services identified in Exhibit 15.6. Upon Northern Trust's request, and at
Northern Trust's expense with Northern Trust's prior approval and solely to the
extent such information and cooperation requires resources other than those
provided related to Services, Fiserv shall (1) provide Northern Trust with
information relating to the agreements identified in Exhibit 15.6; and (2)
cooperate as reasonably required by Northern Trust or its affiliates in order
for Northern Trust or its affiliates or Northern Trust's or its affiliates'
customers to conduct business in the ordinary course.
ARTICLE 16. HUMAN RESOURCES.
16.1 Transition Period. Commencing on the Effective Date and continuing
through December 31, 1998, ("Transition Period"), Northern Trust shall be
responsible for all costs and expenses relating to Transitioned Employees, who
are listed on Exhibit 16.1, incurred or accrued prior to the Effective Date.
Fiserv shall be responsible for all costs and expenses related to Transitioned
Employees incurred or accrued from and after the Effective Date, as described in
Section 16.4 hereof. From the Agreement Date until the Effective Date, Northern
Trust shall not, without Fiserv's prior written consent, enter into any new
written or oral employment agreement with any Transitioned Employee. Fiserv and
Northern Trust shall cooperate during the Transition Period to facilitate salary
reviews and appropriate increases for non-officer employees.
16.2 Transitioned Employees. Fiserv shall take over the employment
relationship with respect to those individuals listed in (1) Exhibit 16.1 who
are active employees of Northern Trust or its affiliates as of January 1, 1999;
and (2) Exhibit 16.2 who are on a granted leave (paid or unpaid) from active
employment with Northern Trust (which entailed performing services that are
Designated Services hereunder) for reasons (e.g., leave of absence or
disability) other than layoff ("Transitioned Employees"), as of the Start Date
(as defined in Section 16.3 hereof) for each such Transitioned Employee. Fiserv
shall offer each Transitioned Employee for the period on and after the Start
Date a
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comparable position (a) requiring comparable skills and job responsibilities;
(b) with substantially equivalent hours and shifts; and (c) with a title
comparable to that held by such Transitioned Employees as of the Effective Date.
Such offer shall be for employment at will. Each employment offer shall include
(i) an initial base salary equal to the salary paid to such Transitioned
Employee by Northern Trust as of the Effective Date, with such salary to be
increased as of the Start Date to compensate for any premium increase such
Transitioned Employees may incur when electing comparable medical and/or dental
coverage under the 1999 Fiserv plans as compared to the 1999 Northern Trust
plans, (ii) additional compensation under rate structures for overtime and shift
differential equivalent to Northern Trust rates as of the Effective Date, if
any; (iii) an employment designation for such Transitioned Employee to either
(x) the Northern Trust Service Location where the Transitioned Employee
performed services as of the Effective Date; or (y) a Service Location within
the downtown Chicago area; and (iv) with respect to Transitioned Employees, the
benefits package described in Section 16.6 applicable to such Transitioned
Employees. Northern Trust shall provide Fiserv with the 1998 salary plan and
performance review dates, if any, after the Effective Date for each Transitioned
Employee.
16.3 Hiring Requirements. Fiserv shall hire on the terms and conditions
contained in this Article 16 (1) those Transitioned Employees listed in Exhibit
16.1 who transition to Fiserv as of January 1, 1999 and (2) those Transitioned
Employees listed in Exhibit 16.2 who accept an offer no later than 30 days after
the date they would otherwise be reinstated by Northern Trust in the absence of
this Agreement. Transitioned Employees who accept an employment offer with
Fiserv shall become Fiserv employees on the Start Date, which shall mean either
(a)January 1, 1999; or (b) with respect to any Transitioned Employee listed in
Exhibit 16.2 who returns to active status with Northern Trust and accepts the
Fiserv offer, the later of (i)January 1, 1999; (ii) the Fiserv offer acceptance
date; or (iii) the return date to active status. Notwithstanding anything else
contained herein, Fiserv shall not have to offer employment to any employee who
is not able to start employment with Fiserv by July 1, 1999. Except as provided
in Section 16.4, Fiserv shall have no responsibilities with respect to
Transitioned Employees who decline employment with Fiserv.
16.4 Transition Period Responsibilities. During the Transition Period,
Transitioned Employees shall perform their duties related to this Agreement
under Northern Trust's direction. Fiserv shall reimburse Northern Trust, by
applying credits against Designated Fees pursuant to Section 19.9 for an amount
equal to 124% of the applicable salary expenses incurred by Northern Trust,
together with reimbursing Northern Trust for all shift differentials, overtime,
and all associated accrued bonus expense incurred by Northern Trust for
Transitioned Employees after the Effective Date.
16.5 Minimum Employment Period. Those Transitioned Employees who accept
an employment offer from Fiserv (1) shall not be terminated by Fiserv prior to
19
January 1, 1999 ("Minimum Employment Period"); provided, however, that nothing
herein shall limit Fiserv's right to modify pay, benefit and terms and
conditions of employment, or to terminate a Transitioned Employee's employment
for reasons based on cause or unsatisfactory performance or conduct
("Termination Reasons"), to be determined in Fiserv's reasonable discretion; and
(2) may be reassigned during the Conversion Period to a Service Location or any
other location in the downtown Chicago area. Notwithstanding the foregoing, if
an employee is terminated by Fiserv (other than for Termination Reasons) during
the Minimum Employment Period, Fiserv shall pay such employee severance in an
amount equal to the greater of (i) the severance benefits payable under any
Fiserv severance plan or arrangement applicable to the employee at such time and
(ii) the severance benefits payable to such employee under the applicable
Northern Trust severance guidelines as of the Effective Date.
16.6 Benefits Generally. As of the Start Date for each Transitioned
Employee, Fiserv shall provide such Transitioned Employee with coverage under
benefit plans, programs, policies, and arrangements maintained by Fiserv for its
employees generally ("Fiserv Benefits Plans"), including those set forth in
Exhibit 16.6. Fiserv reserves the right to implement changes in Fiserv Benefit
Plans. As of the Start Date for each Transitioned Employee, Fiserv shall provide
credit for each Transitioned Employee's service with Northern Trust as such
actual service may be recognized for such Transitioned Employee under the
benefit plans, programs, policies, and arrangements maintained by Northern Trust
for its employees ("Northern Trust Benefits Plans") immediately prior to their
Start Date for purposes of eligibility, participation, vesting of, and
qualification for benefits under Fiserv Benefits Plans; provided, however, that
with respect to Fiserv's sabbatical plan each Transitioned Employee shall be
credited with 25% of such Transitioned Employee's actual service with Northern
Trust, up to a limit of five years of total credit toward the Fiserv sabbatical
plan. In addition, Fiserv shall make available to Transitioned Employees
immediate coverage under Fiserv's life insurance and disability plans as of the
Transitioned Employee's Start Date, without any waiting period, and Fiserv shall
waive application of any preexisting conditions provisions under said plans.
Fiserv shall be required to waive such preexisting conditions provisions only
for the level of coverage elected at Northern Trust immediately prior to the
Transitioned Employee's Start Date, subject to the maximum level of coverage
under Fiserv Benefits Plan.
16.7 401(k) Plan. Each offer to Transitioned Employees shall include
participation in the Fiserv 401(k) Savings Plan, subject to Fiserv's 401(k)
Savings Plan's eligibility criteria identified in Exhibit 16.6 ("Fiserv 401(k)
Savings Plan"); provided, however, that Transitioned Employees' service with
Northern Trust set forth in Exhibit 16.1 shall be added to such employees'
length-of-service with Fiserv when calculating eligibility and vesting for such
Transitioned Employees under the Fiserv 401(k) Savings Plan. Fiserv shall cause
the Fiserv 401(k) Savings Plan to accept a direct rollover of cash or the
equivalent of the vested account balance under The Northern Trust
20
Company Thrift-Incentive Plan (other than Northern Trust Corporation Common
Stock and after-tax contributions made by a Transitioned Employee) and vested
accrued benefit under The Northern Trust Company Pension Plan of each
Transitioned Employee wishing to make such a rollover, to the extent permissible
under applicable law. Fiserv will provide a one-time 401(k) loan rollover
opportunity when distributions from The Northern Trust Company's TIP plan are no
longer limited by the "same desk" rule. Northern shall assist Fiserv in the
transition of such loans by combining the employee rollover requests for a
single submission of all such requests to the administrator of the Fiserv 401(k)
Savings Plan at the agreed upon time. Fiserv shall provide Northern Trust with
any information that Northern Trust reasonably requests (such as a Transitional
Employee's date of termination of employment with Fiserv) to enable Northern to
administer The Northern Trust Company Thrift-Incentive Plan in compliance with
the requirements applicable to section 401(k) plans under the Internal Revenue
Code.
16.8 Health Benefits. Each offer to Transitioned Employees shall include
for such Transitioned Employee and any insured dependents participating in
Northern Trust health benefits plan ("Northern Trust Health Benefits Plan"), the
ability to participate in the health, dental, and vision benefits package
identified in Exhibit 16.6 ("Fiserv Health Benefits Plan") immediately as of the
Start Date, without any waiting period. Fiserv shall waive application of any
preexisting conditions provision under Fiserv Health Benefits Plan to any
Transitioned Employee or covered dependents under such plans ("Insured
Dependents") as of the Start Date for each Transitioned Employee provided such
Transitioned Employee, or Insured Dependents, are participating in the Northern
Trust Health Benefit Plan. Northern Trust shall retain all liability under the
Northern Trust Health Benefits Plan with respect to claims incurred by each
Transitioned Employee or Insured Dependents prior to the Start Date for such
Transitioned Employee. For this purpose, a claim is deemed to have been incurred
when the medical or other service giving rise to the claim is performed. In the
event any Transitioned Employee or Insured Dependent is hospitalized on or prior
to the Start Date for such Transitioned Employee, then to the extent Northern
Trust Health Benefits Plan would otherwise have covered hospital-related claims
through the date of such individual's discharge, Northern Trust shall be
responsible for such claims and Fiserv shall have no liability with respect
thereto.
16.9 Vacation. Fiserv shall provide each Transitioned Employee annual
vacation days at the greater of (1) the number of days such Transitioned
Employee would be eligible for under Fiserv's vacation policy determined by
using aggregate service of such Transitioned Employee at Northern Trust and
Fiserv; and (2) the annual vacation allotment that each such Transitioned
Employee would have been entitled to receive under the Northern Trust vacation
plan as of the Start Date for each Transitioned Employee. Notwithstanding the
foregoing, no Transitioned Employee shall receive more than four weeks of annual
vacation from Fiserv from and after such time as such employee becomes eligible
for a sabbatical under the Fiserv sabbatical plan.
21
16.10 Tuition. As of the Start Date, Fiserv shall reimburse Transitioned
Employees who meet requirements for reimbursement under Northern Trust's tuition
plan for all course work of a Transitioned Employee approved by Northern Trust
prior to the Effective Date (1) then in progress; or (2) paid for by the
Transitioned Employee, but not yet commenced. The amount of such reimbursement
shall be reduced by the amount of any outstanding tuition advance made by
Northern Trust to such Transitioned Employee. The amount so reimbursed to a
Transitioned Employee by Fiserv shall be repaid to Fiserv by Northern Trust. For
each Transitioned Employee who, for any course work approved by Northern Trust
prior to the Effective Date, has not submitted completed course work
documentation to Northern Trust as of the Start Date, Northern Trust will
furnish Fiserv with the approved education memorandum and the amount of all
tuition advanced outstanding with respect to such course work. For courses that
were approved by Northern Trust prior to the Effective Date, Fiserv shall (a)
provide to Northern Trust copies of all required documentation provided by
Transitioned Employees of grades received and the bursar's receipt; and (b)
promptly notify Northern Trust of any Transitioned Employee who (i) has a
tuition advance and leaves employment with Fiserv; or (ii) notifies Fiserv that
he or she has not met the requirements for reimbursement. Commencing on the
Effective Date and subject to the Transitioned Employee accepting Fiserv's
employment offer, Fiserv shall be responsible for (x) approving all courses
subject to tuition reimbursement; and (y) with respect to any courses so
approved by Fiserv, paying any tuition reimbursement requests in accordance with
Fiserv's tuition plan.
16.11 Human Resource Information. Fiserv and Northern Trust shall provide
the other, on a continuing basis without charge, such information regarding
Transitioned Employees as reasonably requested in order to permit proper
administration of various benefit plans applicable to Transitioned Employees.
Northern Trust shall provide Fiserv with the salary, last salary increase date,
and amount, shift, shift differentials, job function, date of performance
evaluations, health insurance coverage, numbers of supplemental life insurance
levels elected under Northern Trust plans (if any), corporate title (if any),
and Northern Trust (equated) hire date for each Transitioned Employee who
accepts an employment offer with Fiserv pursuant to Section 16.3. The parties
hereto acknowledge and agree that all personnel files, with the exception of
current discipline documentation and the employee's latest performance appraisal
for each of the Transitioned Employees representing their period of employment
with Northern Trust are and remain the property of Northern Trust. On or prior
to the Start Date, Northern Trust will take possession of such files, and Fiserv
specifically covenants and agrees to cooperate in such project.
16.12 No Hiring. Except as otherwise provided under this Agreement,
neither Northern Trust nor Fiserv shall, without the other party's consent, for
a period of 24 months after the Effective Date, solicit or hire then-current
employees of the other party that (1) performed services under or participated
in the negotiations with respect to this
22
Agreement; and (2) had significant direct contact with the soliciting or hiring
party while performing such Services. This restriction shall not apply to any
employees who are given employment termination notices by the other party or to
persons responding to general, published solicitations of employment.
ARTICLE 17. REPORTS AND DATA.
17.1 Reports. Fiserv shall provide Northern Trust those reports (1)
prepared by Northern Trust as of the Effective Date; and (2) described in
Exhibit 17.1 (collectively, "Reports"). Reports shall be prepared by Fiserv and
provided to Northern Trust according to the schedules set forth in Exhibit 17.1
and in substantially the same form as in effect as of the Effective Date unless
otherwise mutually agreed.
17.2 Inspection of Reports. Northern Trust shall (1) inspect and review
Reports; and (2) provide Fiserv with a notice of any errors or inaccuracies in
(a) daily and weekly Reports within 5 days of receipt; and (b) in monthly or
other Reports within 10 days of receipt.
17.3 Northern Trust Data Ownership. All data and information, including
checks, drafts, check issuance files, stop payment instructions, and other
instruments and items, submitted to Fiserv by Northern Trust or Northern Trust
customers in connection with Services ("Northern Trust Data") is and shall
remain Northern Trust's or its affiliates' property or property of their
respective customers, as applicable. Northern Trust Data shall not be (1) used
by Fiserv and Fiserv Agents other than in connection with providing Services;
(2) sold, assigned, or leased to third parties by Fiserv and Fiserv Agents; or
(3) commercially exploited by or on Fiserv's or Fiserv Agents' behalf.
17.4 Errors Correction. Fiserv shall promptly correct at its expense any
errors or inaccuracies in Northern Trust Data and Reports caused by Fiserv or
Fiserv Agents. At Northern Trust's expense, Fiserv shall promptly correct (a)
any other errors or inaccuracies in Northern Trust Data and Reports; and (b) any
errors or inaccuracies identified by Northern Trust after the applicable review
period expiration described in Section 17.2. Northern Trust is responsible for
(i) Northern Trust Data accuracy and completeness; and (ii) any errors or
inaccuracies in and with respect to data obtained from Fiserv or Fiserv Agents
because of any inaccurate or incomplete Northern Trust Data. Fiserv is
responsible for all of the completeness of the Reports and any errors or
inaccuracies in its data or Reports.
17.5 Return of Data. Except to the extent that Northern Trust's request
requires resources other than those provided related to Designated Services, in
which case the time and material charges set forth in Exhibit 19.1 shall apply,
Fiserv shall on (1) Northern Trust's request at any time; and (2) upon
Termination Assistance Services cessation, (a) promptly return to Northern
Trust, in the format and on the media mutually
23
agreed, all or part of Northern Trust Data; and (b) erase or destroy all or part
of Northern Trust Data in Fiserv's possession prior to Termination Assistance
Services cessation after successfully returning Northern Trust Data pursuant to
this Section 17.5. Archival tapes containing any Northern Trust Data shall be
used solely for back-up purposes. Fiserv shall be relieved of its obligations to
provide Services (except for any Termination Assistance Services to the extent
such Termination Assistance Services can be provided without such Northern Trust
Data) should Northern Trust require Fiserv to erase or destroy all Northern
Trust Data in its possession prior to cessation of all Termination Assistance
Services.
17.6 Data Retention. Fiserv and Northern Trust shall each make and
maintain tapes or other medium containing copies of any Northern Trust Data then
residing on Systems ("Data Tapes") in accordance with the Data Retention
Schedule set forth in Exhibit 17.6. On request, authorized Fiserv and Northern
Trust personnel shall be permitted access at any time to any facilities used to
store Data Tapes during normal business hours and subject to any reasonable
security and confidentiality procedures or other restrictions in effect at such
facilities. Fiserv and Northern Trust shall each maintain Data Tapes copies for
at least the period specified in Exhibit 17.6 from the date each such Data Tape
was made. Fiserv shall maintain its Data Tape copies at locations other than the
Service Locations.
ARTICLE 18. CONTINUED PROVISION OF SERVICES.
18.1 Disaster Recovery Plan. Fiserv shall (1) maintain during the
applicable Site Conversion Period and, in the event of a disaster, implement the
on-site and off-site disaster recovery procedures in effect at each Northern
Trust Service Location as of the Effective Date; (2) implement disaster recovery
procedures in respect of Fiserv Service Locations; and (3) implement disaster
recovery procedures in respect of the Northern Trust Service Locations after the
Conversion Period (collectively, "Disaster Recovery Plan"); (4) periodically
update and test twice a year, with Northern Trust's participation, Disaster
Recovery Plan operability; (5) provide Northern Trust with a current Disaster
Recovery Plan copy; (6) certify the Disaster Recovery Plan is fully operational
at least once every Contract Year; (7) implement the Disaster Recovery Plan upon
the occurrence of a disaster (a) at any Service Location; or (b) otherwise
affecting Services provision or receipt (a "Disaster"); (8) consult with
Northern Trust regarding Services priority during pendency of a Disaster ; and
(9) gain Northern Trust's written approval to the Disaster Recovery Plan not
less often than every six months during the Term of the Agreement. In the event
of a Disaster and as part of the Disaster Recovery Plan, Fiserv shall restore
those services designated in the Disaster Recovery Plan as critical services
("Critical Services") in accordance with the Disaster Recovery Plan. After the
Effective Date, Fiserv may, upon approval of Northern Trust, modify or change
the Disaster Recovery Plan at any time; provided, however, that such change or
modification shall not adversely
24
affect Fiserv's obligation to restore Services in accordance with this Section
18.1, Article 4, and Section 18.2. The Northern Trust Disaster Recovery Plan is
set forth in Exhibit 18.1.
18.2 Force Majeure. Neither Northern Trust nor Fiserv shall be liable for
a failure or delay in the performance of its obligations pursuant to this
Agreement, including in the event of failure or delay in respect of providing
Services, (1) provided that such failure or delay (a) could not have been
prevented by reasonable precautions; and (b) cannot reasonably be circumvented
by the non-performing party through the use of alternate sources, work around
plans, or other means; and (2) if such failure or delay is caused, directly or
indirectly, by fire, flood, earthquake, elements of nature or acts of God, acts
of war, terrorism, riots, civil disorders, rebellions or revolutions in the
United States, strikes, lockouts or labor difficulties, or any other similar
causes beyond the reasonable control of such party ("Force Majeure Event"). Upon
the occurrence of a Force Majeure Event, the non-performing party shall be
excused from any further performance of those of its obligations pursuant to
this Agreement affected by the Force Majeure Event for as long as (i) such Force
Majeure Event continues; and (ii) such party continues to use commercially
reasonable efforts to recommence performance. The party delayed by a Force
Majeure Event shall (x) promptly notify the other party by telephone (to be
confirmed in writing within 5 days of the inception of such delay) of the
occurrence of a Force Majeure Event; and (y) describe in reasonable detail the
circumstances causing the Force Majeure Event.
ARTICLE 19. PAYMENTS TO FISERV.
19.1 Designated Fees. In consideration of Fiserv providing Designated
Services, Northern Trust shall pay Fiserv the fees based on unit prices and
volume of each item processing Service as set forth in Exhibit 19.1 ("Designated
Fees"). The fee for Services in any month Services are performed shall be the
product of volume of items processed in that month multiplied by the applicable
unit price set forth in Exhibit 19.1 (as such unit prices may be amended from
time to time pursuant to this Agreement). Fiserv shall submit to Northern Trust
monthly invoices on the 15th day of each month for the following month in
respect of each Service containing (a) estimated Designated Fees applicable to
such Service ("Estimated Designated Fees"); (b) estimated postage for the
following month and other estimated direct, out-of-pocket disbursements for such
following month that are payable by Fiserv for Northern Trust's account pursuant
to this Agreement ("Estimated Out-of-Pocket Expenses"), and, if applicable, any
estimated New Service Fees and Development Fees, as defined in Exhibit 19.1,
(collectively, "Estimated Additional Fees"). (Estimated Designated Fees,
Estimated Out-of-Pocket Expenses, and Estimated Additional Fees collectively,
"Estimated Fees".) During the first quarter of the first Contract Year,
Estimated Designated Fees per month shall be $2,046,083 and Estimated Out-of-
Pocket Expenses per month shall be $76,000. (3) (a) Estimated
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Designated Fees and Estimated Out-of-Pocket Expenses for every other month
during the Term; and (b) all Estimated Additional Fees shall be agreed upon by
Northern Trust and Fiserv annually and shall be based on the actual volume of
Additional Fees during the preceding 6-month period (adjusted appropriately to
reflect known or anticipated changes in such volumes). Unless Northern Trust
disputes in good faith Estimated Fees within 30 days of receipt of the
applicable invoice, Northern Trust shall pay the invoice provided to Northern
Trust pursuant to this Section 19.1 by direct deposit to an account designated
by Fiserv on the later of (i) 30 days from Northern Trust's receipt of such
invoice; or (ii) the 15th day of the month for which such estimate is provided.
Within 30 days after the end of the applicable month, Fiserv shall reconcile
Estimated Fees paid by Northern Trust for Services provided by Fiserv for the
month and Fees actually due to Fiserv based on Northern Trust's actual Services
volume for such month and adjust the next invoice by such amount by either
application of a credit or addition of Fees. Northern Trust shall notify Fiserv
within 10 days of Northern Trust's receipt of the next invoice and accompanying
Fee Reconciliation Statement as to whether Northern Trust approves or
disapproves of the credit or additional Fees and other amounts owed or credited
set forth in such next invoice. In the event Northern Trust disapproves of any
such amount or additional Fees or other amounts owed or credited set forth in a
subsequent invoices, Northern Trust shall provide Fiserv with a list of any such
amount or additional Fees of which Northern Trust disapproves within 20 days of
Northern Trust's receipt of such invoice, together with Northern Trust's reason
for such disapproval, and shall pay to Fiserv within 30 days of Northern Trust's
receipt of such subsequent invoice any undisputed amounts. Fiserv shall adjust
the next invoice to reflect the changes agreed on by Northern Trust and Fiserv.
At the end of every 6-month period of the Term, Northern Trust and Fiserv shall
review the volume of the Services during the preceding 6 months to determine
whether a sufficient change in volume has occurred to warrant an adjustment to
the Estimated Fees. If an adjustment is warranted, Northern Trust and Fiserv
shall adjust the Estimated Fees.
19.2 Fee Schedules During the Initial Term. The fee schedules as set
forth in Exhibit 19.1 shall remain fixed for the first three Contract Years.
Thereafter, the Fees shall be adjusted no more often than annually as follows.
First, such Fees shall be subject to adjustment only for such Contract Years
that occur after a preceding calendar year (or years, as the case may be) with
respect to which the increase in the Consumer Price Index for Urban Consumers,
published monthly by the U.S. Department of Labor, or any successor index, was
greater than 1%. Second, such Fees shall be adjusted only in accordance with the
following formula: 77%, such percent determined in Exhibit 19.2, multiplied by
the applicable annual increase in the CPI less 1% per annum. Any such adjustment
in the Fees shall be for the following period, until the next adjustment, if
any.
19.3 Fee Schedules During Renewal Term. Prior to any Renewal Term, the
parties shall negotiate in good faith to adjust the fee schedules which will
apply to the Renewal Term. If the parties cannot agree to these adjusted Fees
prior to the beginning
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of such Renewal Term, this Agreement will remain in effect, with fee schedules
unchanged, for an additional Contract Year; and at the end of such Contract
Year, this Agreement will terminate without payment of any termination fees or
Termination Losses.
19.4 New Service Fees. In consideration of Fiserv providing any New
Service, Northern Trust shall pay Fiserv fees in the amount and manner mutually
agreed in accordance with Article 4 ("New Service Fees"). (Designated Fees and
New Service Fees collectively, "Fees".)
19.5 Most Favored Customer. Fiserv's charges to Northern Trust for the
Services shall be at least as low as Fiserv's lowest charges for such services
to any of Fiserv's other customers for (1) similar volumes and (2) similar scope
of service and (3) similar performance standards, in each case subject to
appropriate adjustments (a) to reflect the geographic area in which services are
delivered and (b) to reflect any tradeoffs made between profit sharing, base
prices, subsidies and assumption of existing operations. Upon request, Fiserv
shall provide to Northern Trust a written certificate, signed by an officer of
Fiserv, certifying that this Section 19.5 has not been contradicted by any
transaction entered into, including any renewal or amendment of an existing
agreement, by Fiserv since the later of (i) the Effective Date or (ii) the date
of the most recent certification provided by Fiserv pursuant to this Section
19.5. If Fiserv is unable to provide such certificate because of any such
transaction entered into by Fiserv contradicting this Section 19.5, Fiserv shall
offer to Northern Trust an adjustment to the financial and other terms of this
Agreement, including, if appropriate, the lowest total charges included in any
such transaction.
19.6 Detailed Invoices. On Northern Trust's request, Fiserv shall provide
mutually agreeable invoices with varying degree of detail (e.g., per unit,
department, project).
19.7 Time of Payment. Any sum due Fiserv or Northern Trust pursuant to
this Agreement that is not being disputed in good faith by the other party and
for which payment is not otherwise specified shall be due and payable 30 days
after receipt by either party of an invoice or demand for payment. If either
party does not make payment when due for items not in dispute, the other party
may assess a late fee of 1 1/2% per month on the outstanding balance.
19.8 Payment of Termination Fees. Upon receipt by Fiserv of a termination
notice pursuant to Section 25.1, Fiserv shall calculate and notify Northern
Trust of the fixed termination fee amount payable to Fiserv pursuant to Section
26.1 as a result of the termination. This amount shall be payable to Fiserv on
the date Fiserv ceases providing the Services. The termination fee portions
covering documented losses related to closing down Service Locations shall be
payable by Northern Trust on the date the Service
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Location is shut down. Northern Trust may conduct or, at its option and expense,
engage a certified public accounting firm to conduct, within 60 days, an
examination of the termination fee payable pursuant to Section 26.1, including
the portion relating to Fiserv's documented losses from closing down Service
Locations in order to determine the accuracy of such termination fee (or portion
thereof). In the event that such audit reveals an error (other than a de minimis
error) in such termination fee amount payable pursuant to Article 26, including
the portion covering documented Losses, Fiserv shall pay the cost of such audit
or shall reimburse Northern Trust for the amount previously paid for such audit
unless contested by Fiserv pursuant to Article 29.
19.9 Set-Off Rights. (1) With respect to any amount payable to Northern
Trust by Fiserv pursuant to this Agreement, including any occupancy-related
charges owed to Northern Trust by Fiserv, in the event that earlier payment
dates are not specified for such amounts, or Fiserv has not paid such amounts
when due, Fiserv shall credit such amounts against Estimated Fees and Fees in
the month for which such amounts owed to Northern Trust were incurred by Fiserv
or as soon thereafter as such amounts are known. (2) With respect to any amount
not credited to Northern Trust pursuant to Section 19.9(1) that (a) was not
accounted for in an invoice; and (b) Northern Trust in good faith determines
should be reimbursed or is owed to Northern Trust, Northern Trust may, upon
notice to Fiserv, deduct the entire amount owed against Fees otherwise payable
to Fiserv under this Agreement until such time as the entire amount owed to
Northern Trust is paid.
19.10 Unused Credits. Any unused credits or charges against payments or
credits or charges owed to Northern Trust by Fiserv pursuant to this Agreement
that were not credited to Northern Trust pursuant to Section 19.9 or accounted
for in an invoice shall be paid to Northern Trust by Fiserv within 30 days of
the expiration or termination hereof for any reason.
19.11 Services Provided to Third Parties. Other than with respect to
clients of Fiserv that are such clients on the date hereof, if Fiserv provides
services to third parties at any Service Location, any volume for such services
shall be added to Northern Trust volumes for purposes of determining applicable
unit prices charged to Northern Trust. If after the Effective Date, any new
client relationship results in added volume for Fiserv at its Service Locations,
and if the efforts of Northern Trust have been material to gaining such new
relationship, Fiserv shall pay to Northern Trust an amount based upon the
profitability to Fiserv of such new relationship, as the parties shall hereafter
agree upon.
ARTICLE 20. TAXES.
(1) Northern Trust shall pay or reimburse and indemnify Fiserv, for any
sales, use or excise taxes imposed in connection with Fiserv's provision of
Services hereunder. (2)
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Northern Trust and Fiserv shall cooperate to segregate Fees into the following
separate payment streams: (a) those for taxable Services; (b) those for
nontaxable Services; (c) those for which a sales, use, or similar Tax has
already been paid by Fiserv; and (d) those for which Fiserv functions merely as
a Northern Trust paying agent in receiving goods, supplies, or services
(including leasing and licensing arrangements) that otherwise are nontaxable or
were previously subject to tax. (3) Fiserv and Northern Trust also agree that in
the event any Fees for Services that were nontaxable become taxable, or are
asserted to be taxable by any taxing authority, Fiserv will take all
commercially reasonably possible steps to restructure provision of those
Services in a manner reasonably acceptable to Northern Trust that would cause
those Services not to be taxable, or subject to any taxing authority's assertion
that those Services are taxable. (4) For purposes of this Article 20, "Taxes"
shall mean all sales, use, transfer, ad valorem, gross receipts, or excise taxes
and any other similar taxes, fees, duties, or imposts, plus any interest and
penalties imposed thereon, and all expenses incurred by Northern Trust related
to payment or settlement of or defense against any claim for such taxes.
ARTICLE 21. AUDITS AND REGULATORY EXAMINATIONS.
21.1 Processing. On notice from Northern Trust, Fiserv shall provide such
internal auditors, external auditors, and inspectors as Northern Trust or any
regulatory authority may designate, with reasonable access to Service Locations
to perform audits or inspections of Northern Trust's business (including
Fiserv's provision of Services). Fiserv shall provide such auditors and
inspectors any assistance that they may reasonably require. If any audit by an
auditor designated by Northern Trust or a regulatory authority having
jurisdiction over Northern Trust or Fiserv results in Fiserv being notified that
it is not in compliance with banking laws, regulations, policies, or
interpretations thereof promulgated by any regulatory authority, any generally
accepted accounting principles, or other audit requirements relating to
Services, Fiserv shall, within a reasonable period of time comply with such
audit or regulatory authority, with Northern Trust's approval and at Northern
Trust's expense; provided, however, that Fiserv shall bear such expense if it
fails to comply with procedures existing prior to the Effective Date, fails to
follow any relevant laws, regulations, or generally accepted accounting
principles, or fails to follow procedures in accordance with Designated
Services. If Fiserv is required to make changes or take corrective action as a
result of such audit or regulatory examination, (1) Northern Trust will invite
Fiserv to participate in the Northern Trust response team discussions (without
such auditor or regulator); and (2) Northern Trust will invite Fiserv to offer
alternative solutions to such auditor or regulatory authority or participate in
discussions with such auditor or regulatory authority. If a change is required
by banking laws, regulations, policies, or interpretations thereof promulgated
by any regulatory authority (a "Required Change"), such change that is a New
Service shall be at Northern Trust's expense and a Change that is a modification
to a Designated Service shall be at Fiserv's expense.. In the event that either
Northern Trust or Fiserv is audited and a
29
regulatory change is required, both parties shall engage in cooperative behavior
in order to implement such change.
21.2 Federal Reserve Examinations. The performance of some or all
Services is subject to regulation and examination by the Federal Reserve. Fiserv
shall submit to regulations and examinations by the Federal Reserve to the same
extent Northern Trust would submit to regulations and examinations by the
Federal Reserve if such regulations and examinations were performed by the
Federal Reserve on Northern Trust premises.
ARTICLE 22. CONFIDENTIALITY.
22.1 Definition.
(1) Northern Trust Information. "Northern Trust Information" means: (a)
confidential plans, customer lists, information, and other Northern Trust
proprietary material and (b) any information and data concerning the business
and financial records of Northern Trust's customers.
(2) Fiserv Information. "Fiserv Information" means: (a) confidential
plans, information, research, development, trade secrets, business affairs
(including that of any Fiserv customer, supplier, or affiliate), and other
Fiserv proprietary material; and (b) Fiserv's proprietary computer programs,
including custom software modifications, software documentation and training
aids, and all data, code, techniques, algorithms, methods, logic, architecture,
and designs embodied or incorporated therein (whether or not any such
information is marked with a restrictive legend).
(3) Information. "Information" means Northern Trust Information and
Fiserv Information. No obligation of confidentiality applies to any Information
that the receiving party ("Recipient") (a) already possesses without obligation
of confidentiality; (b) develops independently; or (c) rightfully receives
without obligation of confidentiality from a third party. No obligation of
confidentiality applies to any Information that is, or becomes, publicly
available without breach of this Agreement.
22.2 Obligations. Recipient agrees to hold as confidential all
Information it receives from the disclosing party ("Discloser"). All Information
shall remain the property of Discloser or its suppliers and licensors.
Information will be returned to Discloser at the termination or expiration of
this Agreement. Recipient will use the same care and discretion to avoid
disclosure of Information as it uses with its own similar information that it
does not wish disclosed, but in no event less than a reasonable standard of
care. However, Northern Trust's customer information shall be kept confidential
as provided by 205 ILCS 5/48.1. Recipient may use Information for any purpose
that does not violate such obligation of confidentiality. Recipient may disclose
30
Information to (a) employees and employees of affiliates who have a need to
know; and (b) any other party with Discloser's written consent. Before
disclosure to any of the above parties, Recipient will have a written agreement
with such party sufficient to require that party to treat Information in
accordance with this Agreement. Recipient may disclose Information to the extent
required by law. However, Recipient agrees to give Discloser prompt notice so
that it may seek a protective order. The provisions of this Section 22.2 survive
any termination or expiration of this Agreement.
22.3 Residuals. Nothing contained in this Agreement shall restrict
Recipient from the use of any ideas, concepts, know-how, or techniques contained
in Information that are related to Recipient's business activities
("Residuals"), provided that in so doing, Recipient does not breach its
obligations under this Article 22. However, this does not give Recipient the
right to disclose the Residuals except as set forth elsewhere in this Agreement.
22.4 Systems. Each party's Systems contain information and computer
software that are proprietary and confidential information of, its suppliers,
and licensors. Each party agrees not to attempt to circumvent the devices
employed by the other to prevent unauthorized access to a system, including, but
not limited to, alterations, decompiling, disassembling, modifications, and
reverse engineering thereof.
22.5 Confidentiality of this Agreement. Fiserv and Northern Trust agree
to keep confidential the prices, terms and conditions of this Agreement, without
disclosure to third parties (except upon the request of bank regulators and as
required by law).
22.6 Injunctive Relief. Recipient recognizes that disclosure of
Information in respect of Discloser may give rise to irreparable injury to the
other party and acknowledges that remedies other than injunctive relief may not
be adequate. Accordingly, Discloser has the right to seek equitable and
injunctive relief without implementing dispute resolution procedures described
in Article 29 to prevent unauthorized possession, use, disclosure, or knowledge
of any Information, as well as to such damages or other relief as is occasioned
by such unauthorized possession, use, disclosure, or knowledge.
22.7 Legal Action. Recipient shall not commence any legal action or
proceeding in respect of any unauthorized possession, use, or knowledge, or
attempt thereof, of Discloser's Information by any person or entity, which
action or proceeding directly or indirectly identifies Discloser or its
Information without Discloser's prior written consent.
ARTICLE 23. REPRESENTATIONS AND WARRANTIES.
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23.1 By Northern Trust. Northern Trust represents and warrants that: (1)
it is an Illinois state bank; (2) it has all requisite power and authority to
execute, deliver, and perform its obligations hereunder; (3) the execution,
delivery, and performance of this Agreement are duly authorized; (4) any
approval, authorization, or consent of any government or regulatory agency, or
notice or filing required to be obtained or made by it in order for it to enter
into and perform its obligations under this Agreement shall be obtained or filed
prior to the Effective Date, or immediately upon notice that such approval,
authorization, consent, notice, or filing is required; (5) it shall comply with
all applicable Federal, state, and local laws and regulations, and shall obtain
all applicable permits and licenses in connection with its obligations under
this Agreement; (6) as of the Effective Date, it has not disclosed any Fiserv
Information; (7) as of Conversion, Designated Services shall not, and Northern
Trust Proprietary Software does not, infringe any third party proprietary
rights; (8) no outstanding litigation, arbitration, or other dispute to which
Northern Trust is a party exists that, if decided unfavorably to Northern Trust,
would have a material adverse effect on Northern Trust's ability to fulfill its
obligations under this Agreement; (9) it shall not incorporate into any Northern
Trust Software or Developed Software any (a) automatic shut-off devices or "time
bombs"; or (b) computer viruses or coding intended to corrupt, delete, or
otherwise render Fiserv Systems inaccessible; (10) to the knowledge of Northern
Trust, no circumstances of non-compliance by Northern Trust with any external
audit or regulatory authority exist as of the Effective Date; (11) Northern
Trust will not incur any additional costs or expenses in connection with its
performance of Designated Services from the Agreement Date to the Effective
Date, except (a) in the ordinary course of business consistent with past
practice; or (b) as otherwise provided under this Agreement; and (12) contracts
and agreements listed in Exhibit 15.1, Exhibit 15.2, and Exhibit 15.6 represent
all of the contractual arrangements used by Northern Trust as of the Effective
Date in order to perform services that are Designated Services under this
Agreement, other than contractual arrangements that (a) involve the payment by
Northern Trust of less than $10,000 annually; (b) can be terminated within 30
days after giving notice of termination, without resulting in any material cost
to Fiserv; (c) are specifically identified as not being assigned to Fiserv; or
(d) are incidental to occupancy of Northern Trust Service Locations; (13) the
assets transferred to Fiserv hereunder are substantially all the assets used by
Northern Trust in rendering the Designated Services as of the Effective Date;
(14) the personnel information concerning Transitioned Employees provided to
Fiserv hereunder is true and accurate in all material respects; and (15) the
services performed by Northern Trust prior to the date hereof corresponding to
the Services hereunder conform in all material respects to the descriptions of
such Services set forth in Exhibit 3.1.
23.2 By Fiserv. Fiserv represents and warrants that: (1) it is a
Wisconsin corporation, duly organized, validly existing, and in good standing
under the laws of Wisconsin; (2) it has all requisite power and authority to
execute, deliver, and perform its obligations hereunder; (3) the execution,
delivery, and performance of this Agreement are duly authorized; (4) it shall
comply with all applicable Federal, state, and local laws and
32
regulations, and shall obtain all applicable permits and licenses, in connection
with its obligations under this Agreement; (5) as of the Effective Date it has
not disclosed any Northern Trust Information; (6) New Services, Fiserv Systems,
and Developed Software shall not, and Fiserv Software does not and shall not,
infringe any third party proprietary rights; (7) it shall not incorporate into
any Developed Software any (a) automatic shut-off devices or "time bombs"; or
(b) computer viruses or coding intended to corrupt, delete, or otherwise render
inaccessible Northern Trust Data or Northern Trust Systems; (8) Services shall
conform in all material respects to the descriptions set forth in Exhibit 3.1,
as may be amended from time to time; (9) any approval, authorization, or consent
of any government or regulatory agency, or notice or filing required to be
obtained or made by it in order for it to enter into and perform its obligations
under this Agreement shall be obtained prior to the Effective Date, or
immediately upon notice that such approval, authorization, consent, filing, or
notice is required; (10) the knowledge of Fiserv, no circumstances of material
non-compliance by Fiserv with any external audit or regulatory authority exists
as of the Effective Date; and (11) no outstanding litigation, arbitration, or
other dispute to which Fiserv is a party that, if decided unfavorably to Fiserv,
would have a material adverse effect on Fiserv's ability to fulfill its
obligations under this Agreement.
23.3 Year 2000. Fiserv represents and warrants that the Services, the
Fiserv Systems, the Fiserv Software and any software interfaces developed by
Fiserv is or shall be Millennium Compliant. Northern Trust represents and
warrants that the Northern Trust Systems, Northern Trust Software and any
software interfaces developed by or on behalf of (other than by Fiserv) Northern
Trust is or shall be Millennium Compliant by the Effective Date, except for the
Pegasus System. Each party covenants and agrees with the other that it shall
not cause any such Systems, Software or software interfaces received from the
other to fail to be Millennium Compliant. Millennium Compliant means that they
shall consistently function in the same manner after December 31, 1999 as they
were warranted to work before such date and shall correctly process dates
falling after December 31, 1999. Any modifications of Northern Trust Software
made to become Millennium Compliant shall be made by Fiserv as part of the
Required Services. Northern Trust shall have the right to review Fiserv's plan
and progress towards Millennium Compliance. In addition, upon reasonable
request by Northern Trust, Fiserv shall cooperate with Northern Trust in testing
(including integration testing with Northern Trust and Federal Reserve Testing)
to verify that it is Millennium Compliant as part of the Required Services.
Fiserv agrees to abide by the guidelines established by the Federal Financial
Institutions Examination Counsel (FFIEC) issued in connection with Year 2000.
ARTICLE 24. DISCLAIMER OF WARRANTIES.
EXCEPT AS SPECIFIED IN THIS AGREEMENT, NEITHER FISERV NOR NORTHERN TRUST
MAKES ANY OTHER WARRANTIES IN RESPECT OF
33
SERVICES, SYSTEMS OR SOFTWARE, AND EACH EXPLICITLY DISCLAIMS ALL WARRANTIES,
EXPRESS OR IMPLIED, INCLUDING IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS
FOR A SPECIFIC PURPOSE.
ARTICLE 25. TERMINATION.
25.1 Termination for Convenience. Northern Trust may in its sole
discretion terminate this Agreement, in whole or in part, at any time with
respect to any period after the third Contract Year, without cause, upon at
least one year's notice to Fiserv (a "Termination for Convenience").
25.2 Termination for Cause. (1) If either party (a) fails to perform any
of its material obligations; or (b) breaches any of its material representations
under this Agreement and any such failure or breach is not cured within 30 days
after notice is given to the breaching party specifying the nature of the breach
(unless the defaulting party has demonstrated to the satisfaction of the other
party, acting reasonably, that it is proceeding with all due diligence to cure
or cause to be cured such breach), the non-breaching party may, upon further
notice given within 6 months after the end of the 30 day period to the breaching
party terminate this Agreement, in whole or in part, as of the date specified in
such notice of termination. (2) If (a) either party repeatedly fails to perform
any of its obligations or repeatedly breaches any of its representations under
this Agreement; and (b) such repeated failures or breaches taken together are
material in the aggregate as of the date of the most recent such failure or
breach even though cured, then (c) the non-breaching party may, upon notice
given within 6 months terminate this Agreement, in whole or in part, as of the
date specified in such notice of termination. (3) In the event of a termination
pursuant to Section 25.2(2), Northern Trust or Fiserv, as the case may be, may
only terminate (i) those parts of the Agreement that relate to such failures or
breaches; and (ii) such other parts of the Agreement that are affected adversely
or have become less effective or more costly, whether taken alone or together
with the terminated portions, and, therefore, would be rendered ineffective or
unpracticable as a result of terminating only those parts of the Agreement that
relate to such failures or breaches.
25.3 Early Termination. If the Agreement is terminated for cause under
Section 25.2 hereof at a time when the Designated Services are still being
performed predominantly at Northern Trust's existing location at the Canal
Center, 000 Xxxxx Xxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx, then Northern Trust, at its
option exercised in writing at the time of such for cause termination, may treat
such termination as an early termination (the "Early Termination"), with the
consequences described herein. An Early Termination shall entail the re-
transfer of the check processing business back to Northern Trust. All employees
of the business will be transferred back to Northern Trust, and all assets used
or useful in the business will be transferred back from Fiserv to Northern Trust
at the
34
price Fiserv paid for such assets, deducting any interim depreciation. Early
Termination shall not foreclose either party from seeking any other remedies
available to such party for breach of this Agreement or otherwise with respect
to the subject transaction. The parties shall cooperate with each other in case
of an Early Termination, using reasonable efforts to transfer the check
processing business back to Northern Trust as expeditiously and smoothly as
possible.
ARTICLE 26. TERMINATION FEES.
26.1 Termination for Convenience in Whole. In the event of a termination
of this Agreement in whole pursuant to Section 25.1, Northern Trust shall pay to
Fiserv a termination fee in an amount equal to applicable fees set forth in
Exhibit 26.1 for Termination for Convenience; and (2) Termination Losses, as
defined in Section 26.3 hereof.
26.2 Termination for Convenience in Part. In the event Northern Trust
terminates this Agreement in part pursuant to Section 25.1, Northern Trust shall
pay to Fiserv a termination fee in an amount equal to applicable fees set forth
in Exhibit 26.1 multiplied by a percentage equal to the percent by which
Designated Fees will be reduced as a result of such partial termination and
partial Termination Losses applicable thereto.
26.3 No Additional Fees. In the event of a termination of this Agreement
(except pursuant to Section 25.2 as a result of a breach by Northern Trust),
Northern Trust shall not pay to Fiserv any fees or charges other than the
applicable termination fees set forth in Section 26.1, Section 26.2, or Section
27.1. In the event of a termination other than pursuant to Section 25.1 or
Section 25.2 as a result of a breach by Northern Trust, Fiserv shall be
responsible for Termination Losses. "Termination Losses" shall mean any
documented losses directly incurred in connection with closing down Service
Locations as a result of such termination, including the unamortized portion of
any equipment and start-up costs incurred by Fiserv, severance with respect to
Fiserv Agents employed as of the date of notice of such termination, lease buy-
outs contained in contracts in effect as of the date of notice of such
termination for equipment, and documented losses directly incurred on leases or
sublets in effect as of the date of notice of such termination or required to be
renewed or entered into to provide services through the date of termination;
provided, however, (i) Fiserv uses its commercially reasonable efforts to
mitigate, and permits Northern Trust to mitigate, any Termination Losses payable
by Northern Trust pursuant to Section 26.1(2); (ii) Fiserv appoints Northern
Trust as its agent under any contracts pursuant to which Termination Losses are
incurred under Section 26.1(2) to mitigate any such Termination Losses; (iii)
leases entered into after the Effective Date for any affected Service Location
include customary sublet provisions; and (iv) prior to incurring any such
losses, the parties execute a written Termination Plan, that seeks to organize
the process of termination and, to the extent
35
possible, minimize the losses resulting from such termination.
ARTICLE 27. TERMINATION ASSISTANCE.
27.1 Termination Assistance Services. On notice from Northern Trust to
Fiserv after a determination that an expiration or termination of this Agreement
will occur, Fiserv shall (1) on request by Northern Trust, cooperate with
Northern Trust in effecting the orderly Services transfer to a third party or
Services resumption by Northern Trust; (2) continue to perform those Designated
Services until the effective date of expiration or termination of this Agreement
("Conclusion Date"); (3) continue to perform those Designated Services requested
by Northern Trust after the Conclusion Date; and (4) perform such New Services
as may be requested by Northern Trust pursuant to Article 4 ("Termination
Assistance Services"). As specified and requested by Northern Trust on notice
to Fiserv, in the event of expiration or termination of this Agreement, subject
to price adjustments based on reductions in volumes, Fiserv shall continue to
provide Services, and Northern Trust shall pay applicable Fees for provision of
Termination Assistance Services (a) for up to one year after the Conclusion Date
("Termination Assistance Period") at the rates set forth in Exhibit 19.1; and
(b) for up to one year from Termination Assistance Period expiration at 150
percent of rates set forth in Exhibit 19.1.
27.2 Facilities, Assets, and Personnel. In the event of termination of
this Agreement pursuant to Article 25, other than pursuant to Section 25.1 or
Section 25.2 as a result of a breach by Northern Trust, Northern Trust shall
have the right to (1) at any or all Service Locations, acquire the assets
required to provide Services at such Service Locations, including facilities and
equipment, at the then-current asset book value, unless otherwise agreed upon by
the parties at the time of such termination; (2) subject to the provisions of
Article 11 hereof, use the Fiserv Software; and (3) offer employment to any
Fiserv staff working on Northern Trust's behalf. In the event a facility is
being used by Fiserv for the provision of services to customers in addition to
Northern Trust, Northern Trust and Fiserv shall cooperate to provide ongoing
services to Fiserv customers serviced at Service Locations for a reasonable
period of time, and in accordance with the terms of such customers' agreements
and pricing arrangement. Northern Trust and Fiserv shall cooperate to ensure a
smooth transition for the relevant workforce.
ARTICLE 28. EXIT PLAN.
Upon the expiration of this Agreement or termination of this Agreement:
(1) Fiserv shall provide Termination Assistance Services in accordance with
Section 27.1;
36
(2) Northern Trust shall have the rights set forth in Section 27.2;
(3) each party shall have the rights specified in Article 11 in respect of
Software;
(4) on Northern Trust's request with respect to any contracts applicable
solely to services being provided to Northern Trust for maintenance, disaster
recovery services, and other necessary third party services (other than
subcontractor services) being used by Fiserv to perform Services as of the
expiration or termination, Fiserv shall transfer or assign such agreements to
Northern Trust or its designee, on terms and conditions acceptable to both
parties; and
(5) the parties shall pay the costs of obtaining Termination Consents as
set forth in Article 12.
ARTICLE 29. DISPUTE RESOLUTION.
29.1 Project Managers. All disputes shall initially be referred to the
Project Managers. If the Project Managers are unable to resolve the dispute
within 4 business days after referral to them, the parties shall submit the
dispute to the Management Committee.
29.2 Management Committee. The Management Committee shall meet at least
once every 30 days (or at such other time as either party may designate in a
notice to the other party) in person, by conference call, or video conference
for the purpose of resolving disputes that may arise under this Agreement. The
Management Committee shall consider disputes in the order such disputes are
brought before it. In the event the Management Committee is unable to resolve a
dispute within 5 business days of the meeting date during which such dispute was
considered, the Management Committee shall notify senior management of each
party pursuant to Section 29.3.
29.3 Senior Management. Either party may, upon notice and within 15 days
of receipt of a notice from the Management Committee pursuant to Section 29.2,
elect to utilize a non-binding resolution procedure whereby each presents its
case at a hearing ("Hearing") before a panel consisting of 2 senior executives
of each party and, if such executives can agree upon such an individual, a
mutually acceptable neutral advisor. If either party elects to use the
procedure set forth in this Section 29.3, the other party shall participate.
The Hearing will occur no more than ten days after a party serves notice to use
the procedure set forth in this Section 29.3. Each party may be represented at
the Hearing by lawyers. If the matter cannot be resolved at such Hearing by
such senior executives, the neutral advisor, if one has been agreed upon, may be
asked to assist such senior executives in evaluating the strengths and
weaknesses of each party's position on the dispute merits. Thereafter, such
senior executives shall meet and try again to resolve
37
the matter. If the matter cannot be resolved at such meeting, such senior
executives shall inform their respective senior management and each party may,
but shall not be obligated to, submit to binding arbitration as provided for in
Section 29.4; the proceedings occurring pursuant to this Section 29.3 will be
without prejudice to either party's legal position. Except as set forth in
Section 29.4, no arbitration or litigation may commence concerning the dispute
until 10 business days have elapsed from the last day of the Hearing. The
parties shall each bear their respective costs incurred in connection with the
procedure set forth in this Section 29.3, except that they shall share equally
the fees and expenses of the neutral advisor, if any, and the Hearing facility
cost.
29.4 Arbitration. If a dispute is not resolved pursuant to Section 29.3, the
parties may agree, but shall not be obligated, within 60 business days after the
completion of the procedures set forth in Section 29.1, Section 29.2, and
Section 29.3, as appropriate, upon notice, to submit the dispute to formal
binding arbitration in accordance with this Section 29.4. If a party commences
litigation regarding such dispute, no arbitration may be commenced by the other
party regarding such dispute. If the parties agree to formal binding
arbitration, the following procedures shall apply:
(1) The arbitration shall be held in Chicago, Illinois before a panel of 3
arbitrators. Either Northern Trust or Fiserv may, by notice to the other party,
demand arbitration by serving on the other party a statement of dispute,
controversy, or claim and the facts relating or giving rise thereto, in
reasonable detail, and the name of the arbitrator selected by it.
(2) Within 30 days after receipt of such notice, the other party shall (a)
deny the request for arbitration or; (b) name its arbitrator. The two
arbitrators named by the parties shall, within 10 days after the date of such
notice, select the third arbitrator.
(3) The arbitration shall be governed by the Commercial Arbitration Rules of
the American Arbitration Association, as may be amended from time to time,
except as expressly provided in this Section 29.4; provided, however, that the
arbitration shall be administered by any organization agreed upon by the
parties. The arbitrators may not amend or disregard any provision of this
Section 29.4.
(4) The arbitrators shall allow such discovery as is appropriate for the
purposes of arbitration in accomplishing fair, speedy, and cost-effective
resolution of disputes. The arbitrators shall reference the rules of evidence of
the Federal Rules of Civil Procedure then in effect in setting the scope and
direction of such discovery. The arbitrators shall not be required to make
findings of fact or render opinions of law.
(5) The decision of and award rendered by the arbitrators shall be final and
binding on the parties. Judgment on the award may be entered and enforced by any
court of competent jurisdiction. The arbitrators shall have no authority to
award damages in
38
excess of or in contravention of Article 31.
Except (a) for an action to seek injunctive relief to prevent a stay or
breach of Article 11, Article 22, or Section 29.6; or (b) any action necessary
to enforce the arbitrators' award, if submitted to arbitration, the provisions
of this Section 29.4 are a complete defense to any suit, action, or other
proceeding instituted in any court or before any administrative tribunal with
respect to any dispute, controversy, or claim related to this Agreement or the
creation, validity, interpretation, breach, or termination of this Agreement.
29.5 Critical Disputes. In the event either party determines that the
resolution of a dispute is critical to its business, such party may at any time
proceed directly to the stage described in Section 29.3 prior to the
commencement of an arbitration or litigation in respect of such dispute.
29.6 Continuity of Services. Northern Trust and Fiserv each acknowledges
that the provision of Services is critical to their respective business and
operations. Accordingly, in the event of a dispute between Northern Trust and
Fiserv pursuant to which Northern Trust believes in good faith it is entitled to
withhold payment and during the pendency of an arbitration pursuant to Section
29.4 or litigation, Fiserv shall continue to provide Services, and Northern
Trust shall continue to pay any undisputed amounts to Fiserv, in accordance with
Section 19.1, except that termination fees pursuant to Article 25 shall not be
covered by the foregoing ability to withhold payment. Northern Trust hereby
authorizes Fiserv to withhold all Termination Assistance and to retain all
Northern Trust property pending payment in full of termination fees payable
under Article 25.
ARTICLE 30. INDEMNIFICATION.
30.1 By Northern Trust. Northern Trust shall indemnify Fiserv, Fiserv
Agents, and Fiserv's officers, employees and directors from, and defend Fiserv,
Fiserv Agents, and Fiserv's officers, employees and directors against, any
losses, liabilities, and damages (including taxes and related penalties) and all
related costs and expenses, including, reasonable attorneys' fees and expenses
and costs of litigation, settlement, judgment, appeal, interest, and penalties
as relates to either party ("Losses") arising out of or relating to (1) any
claim by a third party that Northern Trust Proprietary Software, Developed
Software developed by Northern Trust or Northern Trust Agents, or Northern Trust
Systems infringe on any third party's proprietary rights (except as may have
been caused by a modification by Fiserv or Fiserv Agents); (2) any claim by a
third party in respect of services or systems provided by Northern Trust to such
third party; (3) any claim based on a Northern Trust act or omission in its
capacity as an employer and arising out of or relating to (a) Federal, state, or
other laws or regulations for the
39
protection of persons or members of a protected class or category of persons;
(b) sexual discrimination or harassment; (c) work-related injury or death; (d)
accrued employee benefits, including (i) income, disability, withholding, and
other employment taxes; and (ii) medical benefit premiums, vacation pay, sick
pay, or other fringe benefits not expressly assumed by Fiserv; and (e) any other
employment relationship aspect between Northern Trust and such employee, or the
termination of such employment relationship (including claims for breach of an
express or implied contract employment) that, in all such cases, are
attributable to the period when the person asserting the claim was a Northern
Trust employee; (4) any claim based on the personal injury (including death) or
damage to property received or sustained (a) by reason of any act or omission,
whether negligent or otherwise, to the extent caused by Northern Trust or
Northern Trust Agents; and (b) at any Northern Trust locations, including
premises owned or leased by Northern Trust, or other Northern Trust property to
the extent not licensed or sublet to Fiserv or otherwise used by Fiserv; (5)
except as may arise pursuant to Section 30.2(1), any claim against Fiserv by a
third party arising out of Northern Trust's or Northern Trust Agents' use of any
Northern Trust Third Party Software; (6) any costs incurred by Fiserv resulting
from a breach of a Northern Trust representation or warranty in this Agreement;
and (7) fees and expenses incurred in enforcement of this indemnity by Fiserv.
30.2 By Fiserv. Fiserv shall indemnify Northern Trust, Northern Trust
Agents, and Northern Trust's officers, employees and directors from, and defend
Northern Trust, Northern Trust Agents, and Northern Trust's officers, employees
and directors against, any Losses arising out of or relating to (1) any claim by
a third party that Services, Developed Software developed by Fiserv or Fiserv
Agents, Fiserv Software, or Systems infringe on any third party's proprietary
rights (except as may have been caused by modification by Northern Trust or
Northern Trust Agents); (2) any claim by a third party in respect of services or
systems provided by Fiserv to such third party; (3) any claim based on a Fiserv
act or omission in its capacity as an employer and arising out of or relating to
(a) Federal, state, or other laws or regulations for the protection of persons
or members of a protected class or category of persons; (b) sexual
discrimination or harassment; (c) work-related injury or death; (d) accrued
employee benefits, including (i) income, disability, withholding, and other
employment taxes; and (ii) medical benefit premiums, vacation pay, sick pay, or
other fringe benefits not retained by Northern Trust; and (e) any other
employment relationship aspect between Fiserv and such employee (including
Fiserv's hiring procedures from and after the Effective Date in respect of
Transitioned Employees), or the termination of such employment relationship
(including claims for breach of an express or implied contract of employment)
that, in all such cases, are attributable to the period when the person
asserting the claim (i) was a Fiserv employee; and (ii) the claim arose on or
after the Effective Date; (4) any claim by a Northern Trust Agent based on a
Fiserv act or omission during the Transition Period arising out of or relating
to (a) Federal, state, or other laws or regulations for the protection of
persons or members of a protected class or category of persons; (b) sexual
discrimination or harassment; and (c) work-related injury or death; (5) any
claim by a
40
Transitioned Employee based on a violation or alleged violation by Fiserv or a
Fiserv Agent during the Transition Period of a Northern Trust employment
practice, policy, or procedure contained in Northern Trust's manual for
employees, as set forth in Exhibit 30.2; (6) any claim based on the personal
injury (including death) or damage to property received or sustained (a) by
reason of any act or omission, whether negligent or otherwise, to the extent
caused by Fiserv or Fiserv Agents; and (b) at any Fiserv locations including
premises owned, leased, licensed, subleased, or sublicensed by Fiserv, or other
Fiserv property; (7) except as may arise pursuant to Section 30.1(1), any claim
against Northern Trust by a third party arising out of the use by Northern
Trust, Northern Trust Agents, Fiserv, or Fiserv Agents of any Fiserv Third Party
Software (except as may be caused by Northern Trust's or Northern Trust Agents'
use of Fiserv Third Party Software in violation of Fiserv Third Party Software
licenses); (8) any costs incurred by Northern Trust resulting from a Fiserv
breach of a representation or warranty in this Agreement; (9) any claim based on
the disclosure by Northern Trust to Fiserv, and the use by Fiserv, of any
personnel information with respect to Transitioned Employees including, without
limitation, any information with respect to employee demographics, job
performance, compensation, or benefits; and (10) fees and expenses incurred in
enforcement of this indemnity by Northern Trust.
30.3 Indemnification Procedures. If any third party makes a claim covered
by Section 30.1 or Section 30.2 against any indemnitee (an "Indemnitee") with
respect to which such Indemnitee intends to seek indemnification under Section
30.1 or Section 30.2, such Indemnitee shall give notice of such claim to the
indemnifying party (under Section 30.1 or Section 30.2) ("Indemnifying Party")
including a brief description of the amount and basis therefore, if known. Upon
giving such notice, the Indemnifying Party shall be obligated to defend such
Indemnitee against such claim, and shall be entitled to assume control of claim
defense with counsel chosen by the Indemnifying Party. The Indemnitee shall
cooperate fully with, and assist, the Indemnifying Party in its defense against
such claim. The Indemnifying Party shall keep the Indemnitee fully apprised at
all times as to status of the defense. Notwithstanding the foregoing, the
Indemnitee shall have the right to employ its own separate counsel in any such
action, but the fees and expenses of such counsel shall be at such Indemnitee's
expense; provided, however, (1) if the parties agree that it is advantageous to
the defense for the Indemnitee to employ its own counsel; or (2) in the
reasonable judgment of the Indemnitee, based upon an opinion of counsel that
shall be provided to the Indemnifying Party, a conflict of interest exists with
respect to such claim, then reasonable fees and expenses of the Indemnitee's
counsel shall be at the Indemnifying Party's expense as the Indemnitee accrues
such fees and expenses, provided that the Indemnifying Party approves such
counsel. Neither the Indemnifying Party nor any Indemnitee shall be liable for
or bound by any settlement of any action or claim effected without its consent.
Notwithstanding the foregoing, the Indemnitee shall retain, assume, or
resume sole control over any and all expenses relating to every aspect of
defense that it believes
41
is not the subject of the indemnification provided for in Section 30.1 or
Section 30.2.
Until both (1) the Indemnitee receives notice from the Indemnifying Party
that it will defend; and (2) the Indemnifying Party assumes such defense, the
Indemnitee may, at any time after 10 days from the date notice of claim is given
to the Indemnifying Party by the Indemnitee, resist or otherwise defend the
claim or, after consultation with and consent of the Indemnifying Party, settle
or otherwise compromise or pay the claim. The Indemnifying Party shall pay all
Indemnitee costs related to that defense and any such settlement, compromise, or
payment. The Indemnitee shall keep the Indemnifying Party fully apprised at all
times as to status of the defense.
Following indemnification as provided in Section 30.1 or Section 30.2, the
Indemnifying Party shall be subrogated to all rights, subject to Section 30.4,
of the Indemnitee with respect to the matters for which indemnification has been
made.
30.4 Contribution. Notwithstanding anything to the contrary contained in
this Agreement, Northern Trust and Fiserv shall contribute to amounts paid or
payable as a result of any Losses referred to in Section 30.1(2) or Section
30.2(2) in such proportion as is appropriate to reflect the relative fault of
Northern Trust, on the one hand, and Fiserv, on the other hand, in connection
with actions or omissions that resulted in such Losses, as well as any other
relevant equitable considerations. Northern Trust and Fiserv agree that it would
not be just and equitable if contributions pursuant to this Section 30.4 were to
be determined by any method of allocation that does not take account of the
equitable considerations referred to in the first sentence of this Section 30.4.
30.5 18 Month Limitation on Certain Claims. Notwithstanding anything else
contained herein, any claim for indemnification hereunder relating to
representations or warranties must be made within 18 months of the date hereof.
ARTICLE 31. DAMAGES AND LIMITATION OF LIABILITY.
31.1 Direct Damages. Northern Trust and Fiserv each shall be liable to the
other party for any direct damages relating to its performance or breach of any
of its representations or warranties under this Agreement; provided, however,
that the liability of each party relating to all claims for damages pursuant to
this Section 31.1 arising in a particular Contract Year shall not exceed
$4,000,000 ("Yearly Damage Cap"), so long as Fiserv shall keep in full force and
effect commercial insurance insuring against damages greater than $4 million in
any Contract Year suffered by anyone from errors and omissions of its employees.
The premium for such insurance shall be divided equally by the parties hereto.
(1) The following shall be considered Northern Trust direct damages, and
Fiserv shall not assert that they are indirect, incidental, special, or
consequential damages or lost
42
profits or otherwise not recoverable pursuant to Section 31.2 to the extent they
result from Fiserv's failure to provide Services in accordance with this
Agreement:
(a) costs of recreating or restoring any Northern Trust Data or information
lost or damaged;
(b) costs of implementing a work around in respect of a failure to provide
all or a portion of Services;
(c) costs of replacing lost or damaged Northern Trust Systems, Northern
Trust Software, Developed Software, and materials;
(d) costs incurred by Northern Trust to procure Services from an alternate
source, to the extent that such costs exceed the amount that would have been
owed or paid, as may be applicable, by Northern Trust to Fiserv for such
services;
(e) fines or penalties imposed on Northern Trust by any government or
regulatory agency as a result of such failure to the extent that such fine or
penalty is not a result of Services performed in a manner (i) required by
Northern Trust; or (ii) consistent with the procedures and practices in place as
of the Effective Date;
(f) costs of remedying processing errors and processing delays, including
costs of reconstructing lost, damaged, or destroyed cash letters and other
items;
(g) liability to bank customers or other financial institutions under the
Uniform Commercial Code or the Electronic Funds Transfer Act or under any other
regulation or statute for any errors in providing the Services, including
without limitation liability for the loss of use of any funds incurred by reason
of any error or omission calculated at the applicable Federal Funds rate at the
time of such error or omission; and
(h) straight time, overtime, or related expenses incurred by Northern
Trust, including wages and salaries of additional employees, travel expenses,
overtime expenses, telecommunication charges, and similar charges, due to
Fiserv's failure to provide all or a portion of Services or incurred in
connection with (a) through (g) above.
(2) The following shall be considered Fiserv direct damages, and Northern
Trust shall not assert that they are indirect, incidental, special, or
consequential damages or lost profits or otherwise not recoverable pursuant to
Section 31.2 to the extent that they result from Northern Trust's failure to
provide Northern Trust Retained Services in accordance with this Agreement:
(a) costs of recreating or restoring any Fiserv data or information lost or
damaged;
43
(b) costs of implementing a work around in respect of a failure to provide
all or a portion of Northern Trust Retained Services;
(c) costs of replacing lost or damaged Fiserv equipment, Fiserv Systems,
Fiserv Software, Developed Software, and materials;
(d) costs and expenses incurred by Fiserv to procure from an alternate
source the services provided by Northern Trust as part of Northern Trust
Retained Responsibilities and services provided under Northern Trust Retained
Agreements, to the extent such services are necessary to provide Services;
(e) costs of remedying processing errors and processing delays, including
cost of reconstructing lost, damaged, or destroyed documents and other items;
and
(f) straight time, overtime, or related expenses incurred by Fiserv,
including wages and salaries of additional employees, travel expenses, overtime
expenses, telecommunication charges, and similar charges, due to Northern
Trust's failure to provide all or a portion of services provided by Northern
Trust as part of Northern Trust Retained Responsibilities and services provided
under Northern Trust Retained Agreements or incurred in connection with (a)
through (f) above.
(3) Intentionally Omitted
(4) If, at any time, either Northern Trust or Fiserv has received damages
from the other party pursuant to this Section 31.1, and recovers funds,
payments, and costs from a third party relating to damages for which the other
party is liable, the amounts so recovered (less the costs of recovery and
amounts paid to the other party) shall be remitted to the other party. A party
liable pursuant to this Section 31.1 shall seek recovery in respect of any
insured liability from its insurance carrier to the greatest extent pursuant to
this Agreement and as promptly as possible. The proceeds of such insurance
shall be used to reimburse the other party for any damages sustained by the
other party in excess of those reimbursed pursuant to the first paragraph of
Section 31.1. When insurance proceeds are received, the party who has sustained
damages shall be paid in addition to any amount previously paid with respect to
such damages no more than the amount of insurance proceeds paid covering such
damages.
(5) For purposes of Section 31.1(1) and Section 31.1(2), actions taken
during a given month or on or prior to a particular date shall mean actions
taken with respect to items processed or Services rendered by Fiserv or Northern
Trust during such month or on or prior to such date, as the case may be,
regardless of when resolved or written off. Actions shall include any acts or
omissions of Fiserv or Fiserv Agents or Northern Trust or Northern Trust Agents
in performing Services.
44
31.2 Consequential Damages. Neither Fiserv nor Northern Trust shall be
liable for any indirect, incidental, special, or consequential damages or lost
profits of the other party relating to either party's performance under this
Agreement.
31.3 Fiserv Credits. In the event Fiserv fails to provide Services in
accordance with Service Levels (as defined in Exhibit 5.1), the Management
Committee will determine the amount of charges to be incurred by Fiserv ("Fiserv
Credits") against Estimated Fees and Fees owed to Fiserv in the month in which
such Fiserv Credits were incurred. In determining such Fiserv Credits,
consideration must be given to the impact on Northern Trust and its customers of
such failure, the severity of such failure (including the dollar value, volume
effect, duration, and number of customers affected by such failure), and such
other measures as may be relevant under the circumstances. The amount of such
Credits should be a percentage of Estimated Fees and Fees paid for the
particular Service that was not performed as required pursuant to this
Agreement. Such Credits will be in addition to any Damages for which Fiserv may
be liable to Northern Trust pursuant to Section 31.1.
31.4 Northern Trust Credits. In the event Northern Trust provides the
Northern Trust Retained Services in such a way that it adversely affects
Fiserv's ability to perform the Services, fails to provide Northern Trust
Retained Services at Retained Responsibilities Service Levels or fails to
provide Fiserv Acquired Services at Acquired Services Service Levels, the
Management Committee will determine the amount of charges to be incurred by
Northern Trust and payable to Fiserv as additional Fees ("Northern Trust
Credits") in the month in which such Northern Trust Credits were incurred.
(Fiserv Credits and Northern Trust Credits collectively, "Credits"). In
determining such Northern Trust Credits, consideration must be given to the
impact on Fiserv of such failure, the severity of such failure (including the
dollar value, volume effect, duration, and number of customers affected by such
failure), and such other measures as may be relevant under the circumstances.
The amount of such Credits shall be a percentage of Fiserv's incremental costs
(other than those paid as damages pursuant to Section 31.1) as a result of
Northern Trust not performing the particular Northern Trust Retained Service as
required pursuant to this Agreement. Such Credits will be in addition to any
damages for which Northern Trust may be liable to Fiserv pursuant to Section
31.1.
31.5 Exclusions. The limitations or exculpations of liability set forth in
Section 31.1 and Section 31.2 are not applicable to (1) the failure of either
party to make payments or issue Credits; (2) a breach of Article 22; or (3)
liability resulting from a party's bad faith, gross negligence, or willful
misconduct.
31.6 Acknowledgment. Fiserv acknowledges that Fiserv Credits, and Northern
Trust acknowledges that termination fees set forth in Article 26 and Northern
Trust Credits, are each liquidated damages for loss of the bargain, are not a
penalty, and are a
45
reasonable approximation of Northern Trust's and Fiserv's liquidated damages
under the circumstances as can best be determined as of the Effective Date.
Northern Trust and Fiserv each acknowledge that the limitations and exclusions
contained in this Article 31 are the subject of active and complete negotiation
between the parties and represent the parties' agreement based upon the level of
risk to Northern Trust and Fiserv associated with their respective obligations
under the Agreement.
ARTICLE 32. MISCELLANEOUS.
32.1 Assignment and Subcontractors. Fiserv shall not, without Northern
Trust's consent, assign this Agreement or any amounts payable pursuant to this
Agreement. Northern Trust agrees that Fiserv may subcontract any Services to be
performed hereunder. Any such subcontractors shall be required to comply with
all applicable terms and conditions. Northern Trust's consent to any assignment
or subcontracting shall not relieve Fiserv of any of its obligations whatsoever
under this Agreement. This Agreement shall be binding on the parties and their
respective successors and permitted assigns. Any assignment in contravention of
this Section 32.1 shall be void.
32.2 Notices. All notices, requests, approvals, consents, and other
communications required or permitted under this Agreement shall be in writing
and shall be sent by telecopy to the telecopy number specified below and the
party sending such notice shall telephone to confirm receipt. A copy of any
such notice shall also be sent by registered express mail or courier with
capacity to verify receipt of delivery on the date such notice is transmitted by
telecopy to the address specified below:
In the case of Fiserv:
Xx. Xxxxxxx X. Xxxxxx
Chief Financial Officer
Fiserv Solutions, Inc.
000 Xxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Telecopy No.: 000-000-0000
With a copy to:
Xxxxxxx X. Xxxxxxx, Esq.
General Counsel
Fiserv, Inc.
000 Xxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Telecopy No.: 000-000-0000
46
In the case of Northern Trust:
Xxxx Xxx Xxxx
Vice President
The Northern Trust Company
00 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Telecopy No.: (312)
With a copy to:
Xxxxx X. Xxxxxx, Esq.
Associate General Counsel
The Northern Trust Company
00 Xxxxx XxXxxxx Xxxxxx, X-0
Xxxxxxx, Xxxxxxxx 00000
Telecopy No.: (000) 000-0000
Telecopy No.:
Either party may change its address or telecopy number for notification purposes
by giving the other party notice of the new address or telecopy number and the
date upon which it will become effective.
32.3 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one single agreement
between the parties.
32.4 Headings. The Article and Section headings and the table of contents
are for reference and convenience only and shall not be considered in the
interpretation of this Agreement.
32.5 Relationship. Except as otherwise provided in this Agreement,
Fiserv's performance of its duties and obligations under this Agreement shall be
that of an independent contractor. Nothing contained in this Agreement shall
create or imply an agency relationship between Fiserv and Northern Trust, nor
shall this Agreement be deemed to constitute a joint venture or partnership
between the parties. The parties agree that they will file all Federal, state,
and local income tax returns in a manner consistent with the fact the parties
are not partners in a partnership for income tax purposes.
32.6 Consents, Approval, and Requests. Except as specifically set forth in
this Agreement, all consents, approvals, acceptance, or similar actions to be
given by either party under this Agreement shall not be unreasonably withheld or
delayed and each party
47
shall make only reasonable requests under this Agreement.
32.7 Severability. If any provision of this Agreement is held to be
unenforceable or invalid, the other provisions shall continue in full force and
effect.
32.8 Waiver. Either party's failure to insist on strict performance of any
of the provisions hereunder shall not be construed as the waiver of any
subsequent default of a similar nature.
32.9 Publicity. Each party shall submit to the other all advertising,
written sales promotion, press releases, and other publicity matters relating to
this Agreement in which the other party's name or xxxx is mentioned or language
from which the connection of said name or xxxx xxx be inferred or implied, and
shall not publish or use such advertising, sales promotion, press releases, or
publicity matter without the other party's approval. Whenever required by
reason of legal, accounting, or regulatory requirements, a party may disclose
all or any part of this Agreement following reasonable notice to the other
party, and after satisfying all reasonable means for masking, deleting, or
otherwise protecting all or portions of this Agreement. Notwithstanding the
foregoing, each party may disclose the existence and general relationship by
this Agreement but not the terms and conditions of this Agreement.
32.10 Entire Agreement. This Agreement, including its Exhibits, which are
expressly incorporated herein by reference, constitutes the complete and
exclusive statement of the agreement between the parties as to the subject
matter hereof and supersedes all previous agreements with respect thereto. No
amendment to, or change, waiver, or discharge of, any provision of this
Agreement shall be valid unless in writing and signed by an authorized party
representative against which such amendment, change, waiver, or discharge is
sought to be enforced. Each party hereby acknowledges that it has not entered
into this Agreement in reliance upon any representation made by the other party
not embodied herein.
32.11 Interpretation of Documents. In the event of a conflict between
this Agreement and any New Services schedule, the terms of such New Services
Schedule shall prevail.
32.12 Governing Law. This Agreement shall be governed by the substantive
laws of the State of Illinois, without reference to provisions relating to
conflict of laws.
32.13 Survival. All rights and obligations of the parties under this
Agreement that, by their nature, do not terminate with the expiration or
termination of this Agreement shall survive the expiration or termination of
this Agreement.
32.14 Third Party Beneficiaries. Each party intends that this Agreement
shall
48
not benefit or create any right or cause of action in or on behalf of any
person or entity other than Northern Trust and Fiserv.
32.15 Covenant of Further Assurances. Northern Trust and Fiserv each
agree that, subsequent to the execution and delivery of this Agreement and
without any additional consideration, Northern Trust and Fiserv each shall
execute and deliver any further legal instruments and perform any acts that are
or may become necessary to effectuate the purposes of this Agreement and to
establish or confirm Northern Trust's or Fiserv's ownership of Developed
Software.
32.16 Interpretation of Certain Terms. All usage of the word "including"
or the phrase "e.g.," in this Agreement shall mean "including, without
limitation," throughout this Agreement.
32.17 Insurance. During the Term, Fiserv shall maintain at its sole
expense the following insurance with financially sound and reputable insurers.
Within a reasonable period of time after the Conversion Period, and annually
thereafter, Northern Trust and Fiserv shall review the amounts of insurance
coverage required pursuant to this Agreement. Consideration shall be given to
Fiserv's performance and changes of volume, dollar value, mix of Services, and
processing risks (based on the use of such technology), in determining whether
recalibration of coverage is required.
(1) Insurance covering all risks of loss or damage to any checks and other
items and data (including Reconstruction Costs) from any cause while in Fiserv's
or Fiserv Agents' possession in an amount not less than $5 million per
occurrence. For the purposes hereof, "Reconstruction Costs" includes actual
market value of lost, damaged, or destroyed Securities at the close of business
on the business day immediately preceding the day on which the loss is
discovered, or for more than the actual cost of replacing Securities, whichever
is less, plus the cost to post any required Lost Instrument Bonds. Such costs
shall be paid by Fiserv's insurance carrier. Valuation shall also include the
cost of blank books, pages, tapes, or other blank materials to replace lost or
damaged books of account or other records; the actual cash value at time of loss
of other lost, damaged, or destroyed property or for more than the actual cost
of repairing or replacing the property with property of similar quality and
value, whichever is less. For purposes hereof, "Securities" means all
negotiable and non-negotiable instruments or contracts representing either money
or other property, including Northern Trust Data, revenue, and other stamps in
current use, tokens and tickets, but not including money.
(2) Worker's Compensation Insurance as mandated or allowed by the laws of
the state in which the services are being performed, including at least
$500,000 coverage for Employer's Liability.
(3) Commercial General Liability Insurance in an amount not less than $1
million
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per occurrence for claims arising out of bodily injury and property damage,
personal injury, and Broad Form Contractual Liability Insurance to insure
against any liability arising out of this Agreement.
(4) Automobile Liability and Property Damage insurance on vehicles, if any,
used to transport Northern Trust Data or other items in an amount not less than
$1 million per occurrence for bodily injury and property damage, including
vehicles for hire coverage.
(5) Commercial Crime Insurance, including fidelity, transit, and premises,
in an amount not less than $5 million per occurrence, which shall respond to any
loss involving Northern Trust Data under Fiserv's care, custody, and control.
(6) Errors and Omissions/Professional Liability Insurance in an amount not
less than $5 million per occurrence, which shall include coverage for claims for
loss or liability to third parties (including customers of Northern Trust)
arising out of Fiserv's performance of, or failure to perform, its obligation to
Northern Trust under this Agreement.
Simultaneously with Fiserv's execution of this Agreement and annually
thereafter Fiserv shall deliver to Northern Trust original certificates issued
by the insurers evidencing the coverage required by this Section 32.17. Each
certificate must unequivocally specify that at least 60 days' notice shall be
given to Northern Trust in the event of any material change or cancellation of
coverage for any reason.
32.18 Marketing Assistance. Fiserv shall assist Northern Trust in
marketing the Services to potential clients. Northern Trust will contact the
Fiserv Project Manager to assist Northern Trust in retaining existing clients
and assisting in new business development, including working with designated
Northern Trust employees to respond to Request for Proposals, develop marketing
materials and standard proposal documentation. Fiserv will respond to all
client or prospect proposals within 5 business days of a Northern Trust request,
with either the requested materials or a plan to provide such materials within a
reasonable time period. Fiserv, at the request of Northern Trust, will attend
client and prospect meetings to make presentations on Fiserv capabilities.
Northern Trust will contact the Fiserv Project Manager to make available Fiserv
conducted tours of its facilities during normal business hours.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized representatives as of the date indicated below.
For Northern Trust: For Fiserv:
THE NORTHERN TRUST COMPANY FISERV SOLUTIONS, INC.
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By: By:
------------------------------ ----------------------------
Name: Xxxxx X. Xxxxxxxx Name: Xxxxxx X. Xxxx
Title: Executive Vice President Title: President
Date: October 20, 1998 Date: October 20, 1998
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