Services Agreement - Morgan Stanley Dean Witter & Co. and International Business Machines Corp.
Services Agreement by and between MSDW and IBM effective as of July 1, 1999
Amended and Restated as of December 21, 2001
(Certain confidential portions of this Exhibit have been omitted, as indicated
by a { * } in the text, and filed with the Commission.)
SERVICES AGREEMENT
By and between
MORGAN STANLEY DEAN WITTER & CO.
And
INTERNATIONAL BUSINESS MACHINES CORPORATION
Effective as of July 1, 1999
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Services Agreement by and between MSDW and IBM effective as of July 1, 1999
Amended and Restated as of December 21, 2001
SERVICES AGREEMENT
This Services Agreement (the "Agreement"), effective as of July 1, 1999 (the
"Effective Date"), is entered into by and between Morgan Stanley Dean Witter &
Co., a Delaware corporation with a place of business located at 2500 Lake Cook
Road, Riverwoods, Illinois 60015 ("MSDW"), and International Business Machines
Corporation, a New York corporation with its principal place of business located
at New Orchard Road, Armonk, New York 10504 ("IBM"). As used in the Agreement,
"Party" means either MSDW or IBM, as appropriate, and "Parties" means MSDW and
IBM. The Parties agree that the following terms and conditions shall apply to
the services to be provided by IBM under the Agreement in consideration of
certain payments to be made by MSDW.
1. BACKGROUND AND CONSTRUCTION
1.1. Background.
----------
This Agreement is being made and entered into with reference
to the following:
(a) On November 30, 1992, MSDW (f/k/a Dean Witter
Financial Services Group, Inc.) and IBM (f/k/a
Advantis) entered into that certain Master Agreement
for Systems Operations Services (the "1992
Agreement") whereby IBM agreed to provide MSDW with
certain data networking services, data processing
services and voice networking services to MSDW as
consideration for MSDW's commitment to pay certain
minimum annual payments to IBM.
(b) On March 13, 1997, MSDW (f/k/a Dean Witter, Discover
& Co.) and IBM (f/k/a Advantis) entered into that
certain Amended Agreement for Systems Operations
Services (the "Previous Agreement" or the "1997
Agreement"), which amended and restated the Master
Agreement for Systems Operations Services between
MSDW and IBM. Under the Previous Agreement, as
amended, IBM agreed to provide MSDW, MSDW's
affiliates, and the clients of such entities certain
data networking services, data processing services
and voice networking services as consideration for
MSDW's commitment to pay certain amounts to IBM.
(c) Prior to MSDW's divestiture of SPS Payment Systems,
Inc. ("SPS"), SPS was an Affiliate of MSDW entitled
to receive services provided by IBM under the
Previous Agreement. As of the Effective Date, SPS is
no longer an Affiliate of MSDW.
1.2. Construction.
------------
(a) Terms other than those defined in the Agreement shall
be given their plain English meaning, and those terms,
acronyms and phrases known in the information
technology services industry shall be interpreted in
2
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Services Agreement by and between MSDW and IBM effective as of July 1, 1999
Amended and Restated as of December 21, 2001
accordance with their generally known meanings.
Unless the context otherwise requires, words
importing the singular include the plural and
vice-versa.
(b) References to an "Article," "Section," or
"Subsection" shall be references to the articles,
sections, and subsections of this Services Agreement,
unless otherwise specifically stated.
(c) The Article and Section headings in the Agreement are
intended to be for reference purposes only and shall
in no way be construed to modify or restrict any of
the terms or provisions of the Agreement.
(d) The words "include," "includes," and "including"
shall mean "include but are not limited to,"
"includes but is not limited to," and "including but
not limited to," respectively.
2. DEFINITIONS
2.1. Certain Definitions.
-------------------
As used in the Agreement:
(a) "Affiliate" means, with respect to any entity, any
other entity Controlling, Controlled by or under
common Control with such entity.
(b) "Agreement" means this Services Agreement and the
Schedules attached to this Services Agreement, which
Schedules are hereby incorporated by this reference
into this Services Agreement.
(c) "Annex" shall mean any of the annexes attached to an
Attachment.
(d) "Applications Software" or "Applications" means those
programs and programming (including the software code
modules and routines, header files, supporting
documentation, programmer and user interfaces and
exits, media, on-line help facilities and tutorials)
that perform specific user related data processing
and telecommunications tasks and that are required
for the provision of, or are otherwise used in
conjunction with, the Services. { * }
(e) "Attachment" means any attachment attached to a
Schedule, including any Annexes attached to such
attachment which Annexes are hereby incorporated by
reference into such attachment by this reference
subject to Section 22.15.
(f) { * }
(g) { * }
(h) "Change Control Procedures" has the meaning set forth
in Section 9.5(b).
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Services Agreement by and between MSDW and IBM effective as of July 1, 1999
Amended and Restated as of December 21, 2001
(i) "Confidential Information" has the meaning set forth
in Section 15.1.
(j) "Contract Year" means any twelve (12) month period
commencing on the Effective Date or any anniversary
thereof.
(k) "Control" and its derivatives mean with regard to any
entity { * } the legal, beneficial, or equitable
ownership, directly or indirectly, of greater than
fifty percent (50%) of the capital stock (or other
ownership interest, if not a corporation) of such
entity ordinarily having voting rights{ * }.
(l) "Data Network Services" means collectively (i) those
services, functions and responsibilities described in
Article 3 of Schedule A to the Agreement, and (ii)
those services, functions and responsibilities
described in Article 4 of Schedule A to the Agreement
to the extent applicable to those services, functions
and responsibilities described in such Article 3, as
such services, functions and responsibilities
described in (i) and (ii) may evolve during the Term
and be supplemented and enhanced as provided by the
Agreement.
(m) { * }
(n) "Effective Date" has the meaning set forth in the
preamble to this Services Agreement.
(o) "Equipment" means the computer and telecommunications
equipment owned or leased by MSDW or IBM (or in the
case of either Party, by an Affiliate of such
Party{ * }) that are necessary or used to provide the
Services. Equipment includes the following:
(i) computer equipment and associated attachments,
features, accessories, peripheral devices, and other
equipment, (ii) telecommunications equipment,
including private branch exchanges, multiplexers,
modems, hubs, bridges, routers, and other
telecommunications equipment; and (iii) related
services (e.g., maintenance and support services,
upgrades, subscription services) provided by third
parties (e.g., vendor, manufacturer, lessor) in the
same contract covering the provision of such
Equipment. { * }
(p) "Extraordinary Event" has the meaning set forth in
Section 10.5.
(q) "Force Majeure Event" shall have the meaning set
forth in Section 19.3(a).
(r) "Former Affiliate" has the meaning set forth in
Section 3.2(b).
(s) "IBM" has the meaning set forth in the preamble to
this Services Agreement.
(t) { * }
(u) "IBM Confidential Information" has the meaning set
forth in Section 15.1(c).
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Services Agreement by and between MSDW and IBM effective as of July 1, 1999
Amended and Restated as of December 21, 2001
(v) "IBM Equipment" means Equipment that is owned or
leased by IBM or any of IBM's Affiliates { * }.
(w) "IBM Facility" means any operating location or office
of IBM, any IBM Affiliate { * } of either of such
entities, from which Services are provided.
(x) "IBM Personnel" means { * } employees of IBM or its
Affiliates, including any temporary-duty personnel,
that perform any of the Services { * }.
(y) "IBM Project Executive" has the meaning set forth in
Subsection 5.1 (c).
(z) "IBM Software" means Software used by IBM in
providing the Services that is owned by IBM or any
IBM Affiliates. { * }
The Parties will negotiate in good faith to reach
written agreement, within { * } after the date
Amendment Six to this Agreement is signed, on the
{ * } for the purpose of { * } and { * }.
(aa) "International Agreements" shall have the meaning set
forth in Schedule N of the Agreement.
(bb) "IPSS Services" mean collectively (i) those services,
functions and responsibilities described in Article 2
of Schedule A to the Agreement, and (ii) those
services, functions and responsibilities described in
Article 4 of Schedule A to the Agreement to the
extent applicable to those services, functions and
responsibilities described in such Article 2, as such
services, functions and responsibilities described in
(i) and (ii) may evolve during the Term and be
supplemented and enhanced as provided by the
Agreement.
(cc) { * }
(dd) "Key IBM Positions" means the positions set forth as
such in Schedule D.
(ee) "Losses" means all losses, liabilities, damages and
claims, and all related costs and expenses (including
reasonable legal fees and disbursements and costs of
investigation, litigation, settlement, judgment,
interest and penalties).
(ff) "Minimum Annual Revenue Commitment" shall have the
meaning set forth in Schedule C.
(gg) { * }
(hh) "Monthly Performance Report" has the meaning set
forth in Section 9.2.
(ii) "MSDW" has the meaning set forth in the preamble to
this Services Agreement.
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Services Agreement by and between MSDW and IBM effective as of July 1, 1999
Amended and Restated as of December 21, 2001
(jj) "MSDW Business Unit" means any of the Affiliates of MSDW from
time to time and includes, with respect to any particular MSDW
Affiliate, any entity permitted to receive Services from IBM
pursuant to the Agreement. As of the Effective Date, the MSDW
Business Units include: Novus Financial Corporation ("Novus
Financial"), Discover Financial Services, Inc. ("Discover"),
Dean Witter Reynolds Inc. (also known as Private Client Group)
("DWR", or Individual Investor Group ("IIG"), formerly known as
"Private Client Group" or "PCG"), and Morgan Stanley & Co.
("Morgan Stanley").
(kk) "MSDW Confidential Information" has the meaning set forth in
Subsection 15.1(b).
(ll) "MSDW Contract Executive" has the meaning set forth in
Subsection 11.1(a).
(mm) "MSDW Data" means { * } all information provided to IBM{ * } by
or on behalf of any recipient of the Services (as described in
Section 3.2) that is entered into, or transmitted by or through,
Software or Equipment{ * }. MSDW Data does not include Software.
(nn) "MSDW Equipment" shall mean Equipment that is owned or leased by
MSDW or any of MSDW's Affiliates. As of the Effective Date, MSDW
Equipment includes that Equipment set forth as such in Schedule
J.
(oo) "MSDW Facility" means any operating location or office of MSDW
or MSDW's Affiliates for which access to IBM Personnel is
necessary for such personnel to provide the Services.
(pp) "MSDW Software" means Software owned by MSDW or any MSDW
Affiliate (whether or not created by MSDW or an MSDW Affiliate)
that is used to provide the Services. { * }
(qq) "New Services Amendment" or "NSA" shall mean an amendment to
this Agreement in which IBM agrees to provide New Services to
MSDW pursuant to pricing and terms set forth in such NSA. Each
NSA shall be incorporated by reference into this Agreement and
subject to the order of precedence set forth in Section 22.15. A
form NSA is set forth in Schedule I.
(rr) "Out-of-Pocket Expenses" means reasonable and actual
out-of-pocket expenses incurred by IBM for equipment, materials,
supplies, or other services{ * }.
(ss) "Party" and "Parties" have the meaning set forth in the preamble
to this Services Agreement.
(tt) "Performance Standard" has the meaning given in Section 8.1(a).
6
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Services Agreement by and between MSDW and IBM effective as of July 1, 1999
Amended and Restated as of December 21, 2001
(uu) "Previous Agreement" has the meaning set forth in Subsection
1.1(b). "Previous Agreement" shall include all Special Services
Amendments executed under the Previous Agreement.
(vv) "Procedures Manual" has the meaning set forth in Section 9.4.
(ww) "Required Consents" means any consents, approvals and
authorizations from third parties necessary to permit a Party
to access Equipment or Software as provided by the Agreement.
(xx) "Schedule" means any schedule attached to this Services
Agreement, including any Attachments attached to such schedule
which Attachments are hereby incorporated into such schedule by
this reference subject to Section 22.15.
(yy) "Services Agreement" means this Services Agreement between MSDW
and IBM.
(zz) "Services" has the meaning set forth in Section 3.1(a).
(aaa) "Software" means programs and programming (including the
software code modules and routines, header files, supporting
documentation, { * } media, on-line help facilities and
tutorials), including all Applications Software, Systems
Software, middleware, application code, system code, and/or
components of any of the foregoing, and { * } and { * } used or
incorporated therein.
(bbb) "Source Code" shall mean the source code form of software,
including source code listings as then commented, system and
program flowcharts, and such other components, programs and
documents necessary to fully utilize, modify and maintain such
software, including all necessary support routines, all of
which, where applicable, shall be on media able to be read and
processed.
(ccc) "SPS" has the meaning set forth in Section 1.1(c).
(ddd) "SSA" means any of those Special Services Amendments being
continued from the Previous Agreement; SSAs are as set forth in
Schedule H.
(eee) "Systems Software" means those programs and programming
(including the software code modules and routines, header
files, supporting documentation, { * } media, on-line help
facilities and tutorials) that perform tasks basic to the
functioning of Equipment and that are required to operate the
Applications Software or otherwise support the provision of the
Services. Systems Software includes operating systems,
utilities, job scheduling, security, online terminal
environments, and file management subsystems. { * }
(fff) "Technology Plan" has the meaning set forth in Section 9.7.
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Services Agreement by and between MSDW and IBM effective as of July 1, 1999
Amended and Restated as of December 21, 2001
(ggg) "Term" has the meaning specified in Section 4.
(hhh) "Termination/Expiration Assistance" has the meaning set forth
in Subsection 21.5(a).
(iii) "Third Party Applications Software" means Third Party Software
that is Applications Software.
(jjj) "Third Party Software" means { * } Software that is provided
under license to IBM or MSDW (or in the case of either Party,
to an Affiliate of such Party{ * }) by a third party, and shall
include any ongoing services (e.g., maintenance and support
services, upgrades, subscription services) provided by third
parties (e.g., { * } vendor, manufacturer, lessor) in (or in
support of) the same license covering such Software. { * }
(kkk) "Third Party Systems Software" means Third Party Software that
is Systems Software.
(lll) { * }
(mmm) "Voice Services" shall have the meaning set forth in Section
3.1(a)(ii) of the Agreement.
(nnn) { * }
(ooo) "Advantis" means the entity f/k/a Advantis Corporation, f/k/a
Advantis, a New York general partnership.
(ppp) { * }
(qqq) "{ * }" means the agreement entitled "{ * }" between { * } and
{ * }, executed on even date with Amendment 6 to this
Agreement.
(rrr) "{ * } Software" means Software owned by { * } or any { * }
Affiliate that is used to provide the Data Network Services as
an Authorized Subcontractor. { * } Software shall include
Software that is:
(i) { * }
(ii) { * }
(iii) { * }
{ * } Software shall not include { * } or any { * }.
(sss) "Financial Transaction Services" means routing of credit,
debit, smart, ATM, affinity, gift, stored-value transactions
and other similar monetary and associated transactions (whether
or not they involve a tangible card), by the financial services
businesses of MSDW and the MSDW Affiliates, including handling
of (i) authorization and other similar transactions, (ii)
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Services Agreement by and between MSDW and IBM effective as of July 1, 1999
Amended and Restated as of December 21, 2001
batch or real-time monetary and associated settlement files,
(iii) associated terminal software downloads, and (iv)
associated processing. Although the Parties acknowledge that
{ * } are { * } described above, it is the intent of the
Parties that the Financial Transaction Services not include
capabilities commonly considered to be { * }; accordingly, the
Financial Transaction Services do not include { * }.
(ttt) { * }
(uuu) "{ * } Software" means: (A) all Software and individual
components thereof referred to as the { * }, regardless of the
platform on which the { * } Software runs (including the { * },
etc.), which Software was created prior to the execution date
of the { * } by MSDW and any Affiliate of MSDW and the IBM { *
} Parties; and (B) any Derivatives of the foregoing created
prior to the execution date of the { * }. Notwithstanding
anything to the contrary contained in this Agreement, the term
"{ * } Software" does not include: { * }
(vvv) "{ * } System" means each instance of executable Software code
of the { * } and/or { * } managed by IBM and/or { * } for
production use to provide the Data Network Services to MSDW,
together with the hardware systems on which such Software runs,
and any other Software running on such systems. { * } System
also includes IBM and { * } test and development systems used
by IBM and/or { * } for { * } or { * }.
(www) "IBM { * } Parties" means { * }, any Affiliate of { * }, any {
* } (whether or not acting in its capacity as an { * }), any
Affiliate of { * }, any Affiliate of { * }, or any other third
party under contract with { * }.
(xxx) "{ * }" means any { * } now or subsequently owned by, or
assigned or licensed exclusively to, { * } for { * } related to
the { * } or the{ * } included in the Data Network Services or
predecessor data network services provided by the IBM { * }
Parties under this Agreement, the 1997 Agreement, and/or the
1992 Agreement, provided that the { * } were or are { * } at
any time prior to the expiration or termination of the Data
Network Services.
(yyy) "{ * }" means { * } of { * } (or predecessor IBM { * } Parties)
in the { * } relating to the { * }, which { * } has been or
will be { * } by MSDW during the term of this Agreement, the
Previous Agreement and the 1992 Agreement, and any extensions
thereof, in the normal course of utilizing the Data Network
Services. Although the Parties acknowledge that { * } are { * }
functionality described above, it is the intent of the Parties
that the { * } not include { * } capabilities commonly
considered to be { * }; accordingly, the { * } does not include
{ * }.
(zzz) "{ * } Software" means: (i) all Software and individual
components thereof referred to as the { * }, a multi-purpose {
* } that is capable of providing or supporting the use of a { *
}, regardless of the platform on
9
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Services Agreement by and between MSDW and IBM effective as of July 1, 1999
Amended and Restated as of December 21, 2001
which the { * } Software runs (including the { * }, etc.),
which such Software was created prior to and after the
execution date of the { * } by MSDW, any Affiliate of MSDW and
any IBM { * } Party, and (ii) any Derivatives of the foregoing
created prior to and after the execution date of the { * }. The
term { * } Software includes the { * }. Notwithstanding
anything to the contrary contained in this Agreement or the
{ * }, the term "{ * } Software" does not include the { * }
Software.
(aaaa) "{ * } Software" means all Software and individual components
thereof, created prior to and after the execution date of the {
* } by or for MSDW and any Affiliate of MSDW (other than by { *
}, unless otherwise expressly agreed to in writing by { * } and
MSDW after such execution date), and any Derivatives of the
foregoing which are independently created prior to and after
the execution date of the { * } by or for MSDW and any
Affiliate of MSDW (other than by { * }, unless otherwise
expressly agreed to in writing by { * } and MSDW after such
execution date), regardless of the platform on which the { * }
Software runs, that perform the { * }. { * } Software does not
include Software that originated as { * } Software and/or { * }
Software.
(bbbb) "{ * }" means all Software and individual components referred
to as the { * }.
(cccc) "{ * }" means those software code modules of the { * } Software
called { * } the Source Code of which was disclosed to MSDW on
or about November 12, 1999, and any Derivatives thereof, but
excluding any such Derivatives which are independently created
by or for MSDW or an Affiliate of MSDW (other than by { * })
after the execution date of the { * }.
(dddd) "Designees" means designees of MSDW and MSDW Affiliates for the
sole purposes of providing development, maintenance or
operations services on behalf of, and providing Financial
Transaction Services to, MSDW and the MSDW Affiliates.
2.2. Other Terms.
-----------
Other terms used in the Agreement are defined in the context in which
they are used and shall have the meanings there indicated.
3. SERVICES
3.1. Provision of Services.
---------------------
(a) Commencing on the Effective Date, IBM shall provide the
following services and perform the following functions and
responsibilities (such services, functions and responsibilities
set forth in this Subsection (a) collectively the "Services"):
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Services Agreement by and between MSDW and IBM effective as of July 1, 1999
Amended and Restated as of December 21, 2001
(i) the services, functions and responsibilities described in
the Agreement, as such services, functions and
responsibilities may evolve during the Term and be
supplemented and enhanced as provided by the Agreement;
(ii) the services, functions and responsibilities described in
exhibit 3 of the Previous Agreement (such services,
functions and responsibilities the "Voice Services");
(iii) the services, functions and responsibilities set forth in
the International Agreements;
(iv) the services, functions and responsibilities described in
the SSAs, notwithstanding the termination of the Previous
Agreement pursuant to Section 4.4;
(v) the services, functions and responsibilities not described
in Subsections (i), (ii), (iii) and (vi) of this Subsection
(a) but which were previously performed by IBM under the
Previous Agreement, excluding (A) those services, functions
and responsibilities described in any Special Services
Amendment under the Previous Agreement that is not being
continued under this Agreement, and (B) those services,
functions and responsibilities which the Agreement expressly
states will be assumed by MSDW; and
(vi) { * }
(b) { * }
3.2. Recipients of the Services.
--------------------------
(a) As of the Effective Date, IBM shall provide the Services to (i)
MSDW, (ii) MSDW's Affiliates{ * }. For purposes of the Agreement,
Services provided to the entities referenced in this Section
shall be deemed to be Services provided to MSDW. Notwithstanding
the foregoing, MSDW shall have the right to specify, in its
absolute and sole discretion, which of the entities described in
this Section shall receive the Services.
(b) In the event that MSDW relinquishes Control of an MSDW Affiliate
after the Effective Date such that the entity is no longer an MSDW
Affiliate (such entity a "Former Affiliate"), then upon MSDW's
request, IBM shall continue to provide the Services to such Former
Affiliate after the date such entity becomes a Former Affiliate
for a period of time requested by MSDW, which shall not exceed
{ * }; provided, however, that the Former Affiliate agrees in
writing to abide by the terms and conditions of the Agreement.
MSDW shall (i) remain the single point-of-contact with IBM with
respect to those Service provided to a Former Affiliate, (ii)
remain obligated to perform its payment obligations under the
Agreement with respect to those Services provided to a Former
Affiliate, and (iii)
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Services Agreement by and between MSDW and IBM effective as of July 1, 1999
Amended and Restated as of December 21, 2001
reimburse IBM for { * }. For purposes of the Agreement, Services
provided to a Former Affiliate shall be deemed to be Services
provided to MSDW.
3.3. { * }
3.4. Refresh.
-------
(a) IBM shall refresh Equipment and Software as follows:
(i) IBM shall maintain Software (other than (A) MSDW Software
that is Applications Software, (B) Third Party Applications
Software licensed by MSDW or an MSDW Affiliate, and (C)
Systems Software for which MSDW has maintenance
responsibility as indicated in Schedule E) { * }. MSDW will
use commercially reasonable efforts to eliminate the use of
multiple Software other than MSDW Software that is
Applications Software and Third Party Applications Software
licensed by MSDW or an MSDW Affiliate.
(ii) { * }
(b) { * }
3.5. { * } [2 pages]
3.6. { * }
4. Term
4.1. Term.
The term of the Agreement shall begin on the Effective Date and shall
expire on June 30, 2005, unless terminated (in whole or in part)
earlier or extended in accordance with the Agreement (the "Term").
4.2. Renewal.
-------
In the event that MSDW provides IBM with notice at least { * } prior
to the expiration of the Term that MSDW desires to renew the
Agreement, IBM shall provide to MSDW, within { * } after such notice,
a written proposal setting forth the pricing and any changes to the
other terms and conditions set forth in the Agreement that IBM
proposes to govern a renewal of the Agreement.
4.3. Extension.
---------
Upon giving written notice to IBM no less than { * } prior to the
then-existing expiration date of the Agreement (including in the event
that MSDW and IBM fail to agree in writing upon the terms and
conditions applicable to renewal of the
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Services Agreement by and between MSDW and IBM effective as of July 1, 1999
Amended and Restated as of December 21, 2001
Agreement pursuant to Section 4.2), MSDW shall have the right to
extend the Term for up to { * } on the terms and conditions then in
effect. { * }
4.4. Termination of Previous Agreement.
---------------------------------
(a) Subject to Subsection (b) of this Section, as of the Effective
Date, the Previous Agreement shall be terminated at no charge to
MSDW. The rights and responsibilities of the Parties from and
after the Effective Date shall be defined solely by the
Agreement; the rights and responsibilities of the Parties prior
to the Effective Date shall, except to the extent provided in
Subsections 7.2(e), 7.2(g) and Section 7.9 (all as amended), be
defined solely by the Previous Agreement. Termination of the
Previous Agreement shall in no way be deemed to reinstate the
1992 Agreement or any rights or obligations thereunder.
(b) Notwithstanding termination of the Previous Agreement pursuant to
Subsection (a) of this Section, with respect to exhibit 3 of the
Previous Agreement and any SSAs as defined by the Agreement:
(i) the Voice Services and corresponding pricing described in
such exhibit 3, and such SSAs, shall be incorporated by
reference into the Agreement, subject to the order of
precedence set forth in Section 22.15, and shall remain in
full force and effect;
(ii) any references to the Previous Agreement in such exhibit 3
or SSAs shall be deemed references to the Agreement; and
(iii) MSDW's payment of charges pursuant to such SSAs shall apply
toward MSDW's satisfaction of the Minimum Annual Revenue
Commitment described in Schedule C.
5. IBM PERSONNEL
5.1. Key IBM Positions.
-----------------
(a) { * }
(b) { * } Before assigning an individual to a Key IBM Position,
whether as an initial assignment or a subsequent assignment, IBM
shall notify MSDW of the proposed assignment{ * } and shall
provide MSDW with a resume and other information about the
individual reasonably requested by MSDW. If MSDW in good faith
objects to the proposed assignment, the Parties shall attempt to
resolve MSDW's concerns on a mutually agreeable basis. { * }
(c) IBM shall, in accordance with Subsection (b) above, designate an
individual to (i) serve as the single point of accountability for
IBM for the Services, (ii) have the authority to act for and bind
IBM in matters relating
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Services Agreement by and between MSDW and IBM effective as of July 1, 1999
Amended and Restated as of December 21, 2001
to the Agreement, and (iii) have day-to-day authority for
undertaking to ensure customer satisfaction (such individual the
"IBM Project Executive"). The IBM Project Executive shall be one
of the Key IBM Positions. { * }
(d) The personnel approved as of the Effective Date to fill the Key
IBM Positions are listed in Schedule D. { * }
5.2. Qualifications and Replacement of IBM Personnel.
-----------------------------------------------
(a) IBM shall assign an adequate number of personnel to perform the
Services. The personnel IBM assigns to perform the Services shall
be properly educated, skilled, trained and qualified for the
Services they are to perform.
(b) In the event that MSDW determines in good faith that the
continued assignment to the MSDW account of one of the IBM
Personnel is not in the best interests of MSDW, then MSDW shall
give IBM written notice to that effect. After receipt of such
notice, IBM shall have a reasonable period of time in which to
investigate the matters stated in such notice, discuss its
findings with MSDW and resolve any problems with such person.
{ * }
5.3. { * }
6. EQUIPMENT AND FACILITIES
6.1. MSDW Equipment.
--------------
(a) During the Term and subject to the Parties having obtained any
necessary Required Consents pursuant to Subsection (b) of this
Section, MSDW grants to IBM for the sole purpose of performing
the Services, access to MSDW Equipment to the extent that such
access is necessary to provide the Services; provided, however,
that with respect to MSDW Equipment leased by MSDW, such grant of
access by MSDW shall be limited to the extent MSDW has the rights
to provide such access to IBM. IBM shall have management,
operational, support and administrative responsibility for MSDW
Equipment during the Term (i) as and to the extent that IBM
requires such Equipment to provide the Services, and (ii) with
respect to leased MSDW Equipment, to the same extent as if IBM
were the lessee of such Equipment (exclusive of financial
obligations). With respect to leased MSDW Equipment, IBM shall
comply with the duties imposed on MSDW under the leases for such
Equipment. As between MSDW and IBM, the MSDW Equipment will
remain the property of MSDW. MSDW Equipment is provided to IBM on
an "as is, where is" basis, with no warranties whatsoever.
(b) MSDW authorizes IBM to administer, and pay amounts pertaining to
the MSDW Equipment leases, licenses for Third Party Software
licensed by
14
<PAGE>
Services Agreement by and between MSDW and IBM effective as of July 1, 1999
Amended and Restated as of December 21, 2001
MSDW or an MSDW Affiliate, and third-party service contracts set
forth in Schedule M for which IBM shall be financially
responsible. MSDW shall not terminate, extend or amend such
leases, licenses and contracts without the prior written approval
of IBM. MSDW agrees to promptly notify all appropriate third
parties of such authorization to the extent necessary and
appropriate. IBM may, in its sole discretion, terminate, cancel,
substitute or change such leases, licenses and contracts;
provided, however that (i) IBM shall be solely responsible for
any additional charges resulting from such termination,
cancellation, substitution or change, and (ii) IBM continues to
perform the Services as required by the Agreement.
6.2. Other Equipment.
---------------
Except for MSDW Equipment,
(a) IBM will provide all additional or replacement Equipment,
including upgrades, as necessary to provide the Services in
accordance with the Agreement;
(b) IBM shall have financial responsibility for acquisition, lease,
and ownership costs for Equipment, including current and future
Equipment, upgrades, enhancements, and growth and technology
refreshments in accordance with this Agreement;
(c) IBM shall have financial responsibility for all costs and
expenses related to operational support, including installation,
support, Equipment maintenance, disaster recovery of the
Equipment, Performance Standards, and moves, adds and changes,
except as otherwise agreed upon by MSDW in writing; and
(d) IBM shall be administratively and operationally responsible for
the Equipment used to provide the Services, including
provisioning, staging, configuring, installing, operating,
maintaining, upgrading, and enhancing the Equipment, all as set
forth in more detail in Schedule A of the Agreement.
IBM's costs of performing the obligations set forth in this Section
will be recovered by IBM through the charges set forth in the
Agreement.
6.3. MSDW Facilities.
---------------
(a) MSDW Obligations.
----------------
(i) MSDW will provide IBM with access to the MSDW Facilities to
the extent and for so long as such access is reasonably
necessary for IBM to perform the Services.
(ii) With respect to office space, MSDW shall provide to IBM the
office space provided by MSDW to IBM immediately prior to
the
15
<PAGE>
Services Agreement by and between MSDW and IBM effective as of July 1, 1999
Amended and Restated as of December 21, 2001
Effective Date under the Previous Agreement in the condition
and configuration that exists as of the Effective Date,
except that such office space will be equitable adjusted to
reflect any adjustment in the scope of Services either (A)
relative to the scope of Services provided under the
Previous Agreement, or (B) occurring after the Effective
Date. With respect to such office space, MSDW shall provide
adequate furniture and office supplies. With respect to the
personnel that may occupy such office space, MSDW shall
provide office support services, parking privileges and
cafeteria services similar to that offered to
similarly-situated MSDW employees.
(iii) MSDW will inform IBM of any relocation of an MSDW Facility
that MSDW is contemplating or has made a final decision to
make (if such relocation could reasonably be expected to
impact IBM's performance of the Services) so that IBM will
have a reasonable amount of time to prepare for and
implement such relocation as it impacts IBM, with MSDW
reimbursing IBM for IBM's Out-of-Pocket Expenses reasonably
incurred for the relocation of IBM Personnel stationed
on-site at such facility.
(iv) The MSDW Facilities shall be made available to IBM on an "as
is, where is" basis. Unless otherwise expressly stated in
the Agreement, IBM will be responsible for providing any
other materials and support it requires in order to provide
the Services.
(b) IBM Obligations.
---------------
(i) IBM shall use the MSDW Facilities for the sole and exclusive
purpose of providing the Services, except as otherwise
approved by MSDW in writing (including as approved by MSDW
pursuant to any node license agreements), which approval may
be withheld at MSDW's sole discretion. The use of such
facilities by IBM shall not constitute a leasehold interest
in favor of IBM, IBM Personnel or IBM customers.
(ii) IBM shall use the MSDW Facilities in a reasonably efficient
manner. { * } IBM shall be responsible for any damage to the
MSDW Facilities resulting from the abuse, misuse, neglect or
gross negligence of IBM, its employees and subcontractors or
other failure to comply with its obligations respecting the
MSDW Facilities.
(iii) IBM, its employees and agents shall keep the MSDW
Facilities in good order, not commit or permit waste or
damage to such facilities, not use such facilities for any
unlawful purpose or act, and comply with MSDW's standard
policies and procedures regarding access to and use of such
facilities (including procedures for the physical security
of the MSDW Facilities) that are (A) made available to IBM,
and { * }.
16
<PAGE>
Services Agreement by and between MSDW and IBM effective as of July 1, 1999
Amended and Restated as of December 21, 2001
(iv) IBM shall permit MSDW and its agents and representatives to
enter into those portions of the MSDW Facilities occupied by
IBM Personnel at any time to perform facilities-related
services.
(v) IBM shall not make any improvements or changes involving
structural, mechanical or electrical alterations to the MSDW
Facilities without MSDW's prior written approval. Any
improvements to the MSDW Facilities will become the property
of MSDW.
(vi) When the MSDW Facilities are no longer required for
performance of the Services, IBM shall return such
facilities to MSDW in substantially the same condition as
when IBM began use of such facilities, subject to reasonable
wear and tear.
7. { * }
7.1. { * } [1 page]
7.2. { * } [5 pages]
7.3. { * } [3 pages]
7.4. { * }
7.5. { * }
7.6. { * }
7.7. Export.
------
The Parties acknowledge that certain Software and technical data
to be provided under the Agreement and certain transactions under
the Agreement may be subject to export controls under the laws
and regulations of the United States and other countries. Neither
Party shall export or re-export any such terms or any direct
product thereof or undertake any transaction in violation of any
such laws or regulations. To the extent within IBM's control, IBM
shall be responsible for, and shall coordinate and oversee,
compliance with such export laws in respect of such terms
exported under the Agreement.
7.8. Required Consents.
-----------------
(a) MSDW, with the cooperation of IBM, shall obtain any Required
Consents necessary to grant the licenses described in this
Article 7 { * }. MSDW shall pay such fees (such as transfer
or upgrade fees) as may be required to obtain such Required
Consents.
(b) IBM, with the cooperation of MSDW, shall obtain any Required
Consents necessary to grant the licenses described in this
Article 7 for Software other than the Software described in
Subsection (a) of this Section. IBM
17
<PAGE>
Services Agreement by and between MSDW and IBM effective as of July 1, 1999
Amended and Restated as of December 21, 2001
shall pay such fees (such as transfer or upgrade fees) as
may be required to obtain such Required Consents.
(c) If a Required Consent is not obtained, then, unless and
until such Required Consent is obtained, the Parties shall
cooperate with each other in achieving a reasonable
alternative arrangement for MSDW to continue to process its
work with minimum interference to its business operations.
(d) MSDW shall be responsible for any claim arising prior to the
Effective Date from the failure to obtain consents or
approvals required before the Effective Date for the
licensing or transfer to IBM under the Previous Agreement of
the right to use or access:
(i) equipment that was owned or leased by MSDW before the
Effective Date and for which MSDW, rather than IBM,
retained financial and administrative responsibility
under the Previous Agreement; or
(ii) software and programs that were owned or licensed by
MSDW before the Effective Date for which MSDW, rather
than IBM, retained financial and administrative
responsibility under the Previous Agreement.
7.9. Additional Provisions Regarding { * } Software, { * } Software
--------------------------------------------------------------
and { * }.
---------
(a) "Intellectual Property" or "Intellectual Property Rights"
means all (i) copyrights and copyrightable works; (ii)
letters patent, patent applications, patent disclosures and
inventions (whether or not patentable and whether or not
reduced to practice), including, but not limited to, any
reissues, continuations, continuations-in-part, divisionals,
extensions or reexaminations thereof; (iii) applications,
registrations and renewals of any of the foregoing; (iv)
trade secrets; (v) know-how, including all processes,
architecture, methodology, concepts and specifications used
or incorporated therein; and (vi) other intellectual
property or industrial property rights, throughout the world
and arising or recognized under the laws of any nation or by
virtue of any international or bilateral conventions,
treaties or directives.
(b) MSDW, on behalf of itself, its parents, subsidiaries,
divisions, Affiliates, successors, and assigns (and, to the
extent of its right to do so, on behalf of its and their
respective shareholders, officers, directors, attorneys,
employees, legal representatives, insurers, sureties, and
agents) (individually and collectively referred to as "MSDW
{ * }"), hereby { * } IBM, its parents, subsidiaries,
divisions, Affiliates, successors, and assigns, and its and
their respective shareholders, officers, directors,
attorneys, employees, legal representatives, insurers,
sureties, and agents (individually and collectively referred
to as "IBM { * }") { * } as of the execution date of
Amendment 6 to this Agreement ("{ * }"), which are based on
or arise out of or relate in any way to any of the
following: (i)
18
<PAGE>
Services Agreement by and between MSDW and IBM effective as of July 1, 1999
Amended and Restated as of December 21, 2001
any Intellectual Property Rights, contractual rights or
other rights in or relating to any or all of the { * }
Software, the { * } Software, the { * }, and any Software
licensed to { * } pursuant to Section 2.9(h) of the { * };
(ii) { * } IBM { * } for { * } relating to any or all of the
{ * } Software, the { * } Software, the { * } and any
Software licensed to { * } pursuant to Section 2.9(h) of the
{ * } arising under this Agreement or any other agreement
between any MSDW { * } and any IBM { * }, or between any
MSDW { * } and any IBM { * } Party; (iii) { * } in the
letters to various IBM representatives from { * } of MSDW
dated September 30, 1999, October 29, 1999, November 23,
1999, January 31, 2000, or August 10, 2000 (including the {
* } enclosed with the latter or any additional { * } the { *
} Software, { * } Software, { * } or any Software licensed
pursuant to Section 2(h) { * }); or (iv) { * } described in
the presentation made by MSDW to { * } and IBM on March 5,
2001.
(c) MSDW represents and warrants to IBM that (i) MSDW is not
presently aware of any { * } that MSDW { * }, or { * }
following the execution of Amendment 6 to this Agreement, {
* } MSDW's Intellectual Property Rights relating to the
subject matter of this Agreement, including, but not limited
to, (A) the Intellectual Property Rights being assigned or
licensed by MSDW to { * } pursuant to the { * } or (B)
MSDW's Intellectual Property Rights in the { * }; and (ii)
MSDW presently has no plans to { * } following the execution
of Amendment 6 to this Agreement for { * } MSDW's
Intellectual Property Rights relating to the subject matter
of this Agreement or to { * } regarding the Services for the
purpose of { * } relating to MSDW's Intellectual Property
Rights { * } IBM or any IBM { * } or IBM Affiliate.
(d) IBM, on behalf of itself, its parents, subsidiaries,
divisions, Affiliates, successors, and assigns (and, to the
extent of its right to do so, on behalf of its and their
respective shareholders, officers, directors, attorneys,
employees, legal representatives, insurers, sureties, and
agents) (individually and collectively referred to as "IBM {
* }"), hereby { * } MSDW, and its parents, subsidiaries,
divisions, Affiliates, successors, and assigns, and its and
their respective shareholders, officers, directors,
attorneys, employees, legal representatives, insurers,
sureties, and agents (individually and collectively referred
to as "MSDW { * }") { * }: (i) any Intellectual Property
Rights, contractual rights or other rights in or relating to
any or all of the { * } Software, the { * } Software and the
{ * }; (ii) { * } relating to any or all of the { * }
Software, the { * } Software and the { * } arising under
this Agreement or any other agreement between any IBM { * }
and any MSDW { * }, or between any IBM { * } Party and any
MSDW { * }; or (iii) the agreement(s) pursuant to which IBM
conveyed or purported to convey to { * } any right to the {
* } Software, the { * } Software, or the { * }.
(e) IBM represents and warrants to MSDW that (i) IBM is not
presently aware of any { * } that IBM { * }, or { * }
following the execution of
19
<PAGE>
Services Agreement by and between MSDW and IBM effective as of July 1, 1999
Amended and Restated as of December 21, 2001
Amendment 6 to this Agreement, { * } IBM's Intellectual
Property Rights relating to the subject matter of this
Agreement, including, but not limited to, (A) any such { *
}, or (B) any such { * } the assignment and license to { * }
effected by the { * } and (ii) IBM presently has no plans to
{ * } following the execution of Amendment 6 to this
Agreement for { * } IBM's Intellectual Property Rights
relating to the subject matter of this Agreement or to { * }
regarding the Financial Transaction Services businesses of
MSDW or the MSDW Affiliates for the purpose of { * } IBM's
Intellectual Property Rights { * } MSDW or any MSDW { * } or
MSDW Affiliate.
(f) Each Party hereby covenants and agrees that it will not { *
}, or in any way aid in the { * }, any of the { * }
mentioned in (b) or (d) above { * }, respectively
(collectively "{ * }"). This Agreement may be { * } and may
be used as the basis for a { * }, or any private or public {
* } in breach hereof. In the event any { * } is found by a
court of competent jurisdiction to have been { * }, the
Party { * } shall be responsible for all { * }, including
reasonable { * }, incurred by { * }in { * } same.
(g) MSDW hereby covenants and agrees that after the execution
date of Amendment 6 to this Agreement, MSDW will not
knowingly: (i) directly access the { * } (other than { * })
without authorization from { * } or IBM (acting with the
authorization of { * }), and (ii) reverse compile, reverse
assemble or otherwise reverse engineer the { * } object code
(other than { * } object code).
(h) Each Party (including such Party's respective attorneys)
agrees not to publicize or disclose to any third party
(except { * }) the terms and conditions of { * }, any
documents or correspondence pertaining to { * }, or the { *
} (the "{ * }") or any documents or information related to
the { * }, except with the prior written consent of the
other Party or as required by law or as required to
implement the terms of this Agreement.
(i) Notwithstanding the provisions of Subsection (h), this
Section 7.9 does not limit the ability of either Party to:
(i) communicate such information or documents to either
Party's respective officers, directors, employees and
agents that have a legitimate business reason to know,
or to its attorneys, accountants and financial or other
advisors; or
(ii) disclose the terms and conditions of the { * } or the {
* } to third parties that (A) have expressed a bona
fide interest in consummating a significant financing,
merger or acquisition transaction between such third
parties and the disclosing Party, (B) have a reasonable
ability (financial and otherwise) to consummate such
transaction, and (C) have executed a nondisclosure
agreement that (1) includes within its scope the terms
and conditions of this Agreement, (2) limits
distribution to those with a need to know in
20
<PAGE>
Services Agreement by and between MSDW and IBM effective as of July 1, 1999
Amended and Restated as of December 21, 2001
connection with such transaction, and (3) allows use only in
connection with such transaction. Each Party shall endeavor
to delay the disclosure of the terms and conditions of this
Agreement until the status of discussions concerning such
transaction warrants such disclosure.
(j) In addition to MSDW's confidentiality obligations under this
Agreement, all such information, data, software code and modules,
or the like disclosed by { * } either in writing or by oral
presentation directly to MSDW after the execution date of the
{ * } and in furtherance of { * } of Data Network Services under
this Agreement, shall be subject to treatment as Confidential
Information under the { * } Agreement for Disclosure of
Confidential Information executed on the same date as the { * }
and referenced therein. Any Source Code of the { * } or { * }
Software disclosed prior to the execution date of the { * } shall
be held in confidence { * } by MSDW (and any employees, agents or
Designees that are further recipients of such Confidential
Information pursuant to the licenses and rights granted in the
{ * }) unless the same (i) is in the public domain at the time of
its use or disclosure through no fault of MSDW; (ii) was lawfully
in the possession of or demonstrably known to MSDW prior to its
receipt from { * } or IBM; (iii) is independently developed by
MSDW without use of or reference to the such Confidential
Information; or (iv) becomes known by MSDW from a third party
and, to MSDW's knowledge, is not subject to an obligation of
confidentiality.
(k) The Parties represent, warrant, agree, and acknowledge that they
have executed this Agreement in reliance on their own { * } and
after consultation with their respective counsel, and that no
representations, warranties, or promises of any kind have been
made directly or indirectly to induce either Party to execute
this Agreement other than those which are expressly set forth
herein.
(l) Neither this Agreement, nor anything contained herein, nor any
action taken by either Party in performance of their obligations
hereunder shall be { * } or an { * } by any IBM or MSDW { * }.
(m) The IBM { * } and the MSDW { * } hereby agree that each of the
{ * } identified in this Section 7.9 and not a party to this
Agreement is { * }.
(n) Nothing in this Section 7.9 shall be construed as { * } relating
to any other aspects of its { * } under this Agreement.
7.10. { * }
(a) With respect to any Software (including the { * } Software) used
by MSDW and the MSDW Affiliates for the purpose specified in
Subsection (b) below, to the extent that the functionality of
such Software is equivalent to the functionality of the { * }
Software and { * } or the { * } functionality of the { * }
included in, or available to MSDW as part of, the
21
<PAGE>
Services Agreement by and between MSDW and IBM effective as of July 1, 1999
Amended and Restated as of December 21, 2001
Data Network Services provided by the IBM { * } Parties
under this Agreement, the 1997 Agreement, and/or the 1992
Agreement, IBM hereby agrees { * } MSDW or the MSDW
Affiliates and Designees any { * } solely to the extent to
which such { * } the aforementioned Software (including the
{ * } Software) or such Software's use by MSDW and the MSDW
Affiliates and Designees, and its and their successors and
assigns as permitted under Section 22.1, solely for the
purposes of Subsection (b) below. Although the Parties
acknowledge that { * } are { * } functionality described
above, it is the intent of the Parties that the foregoing
{ * } by IBM not apply to capabilities commonly considered
to be { * }; accordingly the foregoing { * } does not apply
to { * }.
(b) The rights and benefits granted in Subsection (a) above (i)
are limited solely to use by MSDW and MSDW's Affiliates and
Designees to provide { * } that use { * }, and not for any
other purpose, (ii) shall survive any expiration or
termination of this Agreement, and (iii) shall be
transferable only as provided under Section 22.1.
(c) Nothing in this Section 7.10 shall be in derogation of any
patent rights granted by IBM pursuant to other provisions of
this Agreement.
8. PERFORMANCE STANDARDS
8.1. General.
-------
{ * }
(a) At all times IBM's level of performance shall meet or exceed
the quantitative and qualitative performance standards for
certain of the Services ("Performance Standards") identified
in Schedule B to the Agreement{ * }
(b) { * }
8.2. Failure to Perform.
------------------
(a) If IBM fails to meet any Performance Standard, IBM shall, at
no additional charge to MSDW, (i) investigate and report on
the causes of the problem; (ii) advise MSDW, as and to the
extent reasonably requested by MSDW, of the status of
remedial efforts being undertaken with respect to such
problems{ * }.
(b) { * }
8.3. Periodic Reviews.
----------------
Within three (3) months after the expiration of the first
Contract Year following the Effective Date and at least annually
thereafter, MSDW and IBM shall review the Performance Standards
pursuant to the process set forth in Article 5 of
22
<PAGE>
Services Agreement by and between MSDW and IBM effective as of July 1, 1999
Amended and Restated as of December 21, 2001
Schedule B and shall make adjustments to them as appropriate to
reflect improved performance capabilities associated with
advances in the technology and methods used to perform the
Services. { * }
8.4. Measurement and Monitoring Tools.
--------------------------------
IBM shall utilize the necessary measurement and monitoring tools
and procedures required to monitor, measure and report IBM's
performance of the Services against the applicable Performance
Standards, including as set forth in Schedule B. Such measurement
and monitoring shall permit reporting at a level of precision and
detail sufficient to verify compliance with the Performance
Standards, and shall be subject to audit by MSDW. For purposes of
verification and at MSDW's request, IBM shall provide MSDW with
information about and from such tools and procedures and, with
IBM's participation, with access to such tools and procedures.
9. PROJECT AND CONTRACT MANAGEMENT
9.1. Steering Committee.
------------------
The Parties shall form a steering committee to facilitate
communication between them (the "Steering Committee"). The
Steering Committee shall be composed of:
(a) the MSDW Contract Executive;
(b) the chief information officer from each of the MSDW Business
Units that are receiving Services;
(c) the IBM Project Executive;
(d) { * }
(e) { * }; and
(f) such other persons as may be mutually agreed by the Parties.
9.2. Reports.
-------
Within ninety (90) days after the Effective Date, the Parties
shall determine an appropriate set of periodic reports to be
issued by IBM to MSDW. Such reports shall be issued at the
frequency and contain the level of detail reasonably requested by
MSDW. Unless otherwise requested by MSDW, such reports shall be
no less comprehensive and be issued no less frequently than the
reports provided by IBM prior to the Effective Date under the
Previous Agreement. IBM shall provide MSDW with suggested formats
for such reports, for MSDW's review and approval. As one such
report, IBM shall provide a monthly performance report, which
shall be delivered to MSDW within fifteen (15) days after the end
of each calendar month (commencing with the calendar month
following the calendar month that includes the Effective Date),
describing IBM's
23
<PAGE>
Services Agreement by and between MSDW and IBM effective as of July 1, 1999
Amended and Restated as of December 21, 2001
performance of the Services in the preceding month (the "Monthly
Performance Report"). Such report shall:
(a) separately address IBM's performance in each area of the
Services;
(b) for each area of the Services, assess the degree to which
IBM has attained or failed to attain the pertinent
objectives in that area;
(c) include a performance report for each MSDW Business Unit in
no less detail than similar reports provided by IBM to the
MSDW Business Units prior to the Effective Date, that at a
minimum explains deviations from the Performance Standards,
includes a plan for corrective action where appropriate
{ * };
(d) (describe the status of applications development projects
(if any), problem resolution efforts, and other initiatives;
(e) on a quarterly basis only, set forth a record of all
material Equipment, Software, and IBM Personnel changes that
pertain to the Services and describe planned changes during
the upcoming quarter that may affect the Services;
(f) set forth the utilization of resources for the month and
report on utilization trends and statistics; and
(g) include such documentation and other information as MSDW may
reasonably request to verify compliance with the Agreement.
9.3. Meetings.
--------
The Parties shall participate in the following meetings:
(a) working-level meetings, held no less frequently than similar
meetings between the Parties before the Effective Date,
between the Parties to review any technical, operational,
administrative or related matters with respect to Schedule
B, which may include matters with respect to performance,
capacity, changes, problems, measurement of the Performance
Standards, or any other matters agreed upon by the Parties;
(b) a monthly meeting among operational personnel representing
MSDW and IBM to discuss daily performance and planned or
anticipated activities, changes that might adversely affect
performance, and otherwise address, review, and discuss
matters specific to MSDW;
(c) a quarterly meeting with each MSDW Business Unit and their
respective chief information officer to (i) review the
Monthly Performance Reports for the quarter, (ii) review
IBM's overall performance under the Agreement, (iii) review
any managerial, contractual, financial, relationship or
related matters with respect to Schedule B, (iv) review any
proposal to
24
<PAGE>
Services Agreement by and between MSDW and IBM effective as of July 1, 1999
Amended and Restated as of December 21, 2001
modify the Performance Standards made pursuant to Article 5
of Schedule B, (v) review progress on the resolution of
issues, (vi) provide a strategic outlook for MSDW's
information systems requirements, and (vii) discuss such
other matters as appropriate;
(d) a semi-annual meeting of Steering Committee to review
relevant contract and performance issues; and
(e) such other meetings between MSDW representatives and IBM
Personnel reasonably requested by either Party as necessary
to address performance of the Services.
IBM shall prepare and circulate an agenda sufficiently in advance
of each meeting to give participants an opportunity to prepare
for the meeting. IBM shall incorporate into such agenda items
that MSDW desires to discuss. At MSDW's request, IBM shall
prepare and circulate minutes promptly after a meeting.
9.4. Procedures Manual.
-----------------
(a) Within { * } after the Effective Date, IBM will deliver a
draft procedures manual to MSDW, for its comments and review
(the "Procedures Manual"). The Procedures Manual will
describe how IBM shall perform and deliver the Services
under the Agreement, the Equipment and Software being used,
and the documentation (e.g., operations manuals, user
guides, specifications) that provides further details of
such activities. The Procedures Manual shall describe the
activities IBM proposes to undertake in order to provide the
Services, including those direction, supervision,
monitoring, staffing, reporting, planning and oversight
activities normally undertaken at facilities that provide
services of the type IBM shall provide under the Agreement.
The Procedures Manual shall also include descriptions of the
acceptance testing and quality assurance procedures approved
by MSDW, IBM's problem management and escalation procedures,
and the other standards and procedures of IBM pertinent to
MSDW's interaction with IBM in obtaining the Services. The
Procedures Manual shall be suitable for use by MSDW to
understand the Services.
(b) Following MSDW's review of the draft Procedures Manual, IBM
shall incorporate reasonable comments or suggestions of MSDW
and shall finalize the Procedures Manual within { * } of the
Effective Date. { * } IBM shall periodically update the
Procedures Manual to reflect changes in the operations or
procedures described therein. Updates of the Procedures
Manual shall be provided to MSDW for review{ * }.
9.5. Change Control.
--------------
(a) IBM shall comply with the following change control
requirements:
(i) { * }
25
<PAGE>
Services Agreement by and between MSDW and IBM effective as of July 1, 1999
Amended and Restated as of December 21, 2001
(ii) { * }
(iii) IBM shall move programs from development and
test environments to production environments
in a controlled and documented manner, so
that no changes are introduced into the
programs being moved to production
environments during such activity.
(iv) IBM shall control all changes to MSDW's
computing environment, including changes to
programs, manual procedures, job control
language statements, distribution
parameters, or schedules.
(b) Within { * } after the Effective Date, IBM shall
prepare and provide to MSDW change control procedures
detailing how IBM will comply with the requirements
set forth in Subsection (a) of this Section and
otherwise control changes to the Services (such
procedures the "Change Control Procedures"). The
Change Control Procedures may not modify or change
the scope of Services to be provided under, or any
other terms or conditions of, the Agreement. The
Change Control Procedures shall be provided to MSDW
for review, comment and approval; and reasonable
comments or suggestions of MSDW shall be incorporated
into the Change Control Procedures. IBM shall perform
the Services in accordance with the Change Control
Procedures.
9.6. Use of Subcontractors.
---------------------
(a) { * }
(b) IBM may, in the ordinary course of business and
without MSDW approval, subcontract for third party
services or products where { * }. If MSDW expresses
concerns to IBM about a subcontract covered by this
Subsection 9.5(b), IBM shall discuss such concerns
with MSDW and work in good faith to resolve MSDW's
concerns on a mutually acceptable basis.
(c) IBM shall not insert in any subcontract any provision
the effect of which would be to limit the ability of
a subcontractor to contract directly with MSDW. { * }
(d) IBM shall remain responsible for obligations,
services and functions performed by IBM Affiliates
and { * } Subcontractors to the same extent as if
such obligations, services and functions were
performed by IBM employees and for purposes of the
Agreement such work shall be deemed work performed by
IBM. IBM shall be MSDW's sole point of contact
regarding the Services, including with respect to
payment. IBM shall not disclose MSDW Confidential
Information to a subcontractor unless and until such
subcontractor has agreed in writing to protect the
confidentiality of such Confidential Information in a
manner substantially equivalent to that required of
IBM under the Agreement.
26
<PAGE>
Services Agreement by and between MSDW and IBM effective as of July 1, 1999
Amended and Restated as of December 21, 2001
9.7. Annual Technology Plan.
----------------------
The Parties shall jointly prepare an annual technology plan in
accordance with the provisions of this Section (the
"Technology Plan"). Preparation of the Technology Plan shall
be under the overall direction and guidance of the Steering
Committee. The Technology Plan shall address the information
technology requirements of MSDW's activities. Each Technology
Plan after the first shall review and assess the immediately
preceding Technology Plan. The Technology Plan shall consist
of a three-year plan and annual implementation plans as
described below. { * }
(a) Three-Year Plan. The Technology Plan shall include a
---------------
comprehensive assessment and strategic analysis of
MSDW's then-current information technology systems
and services for the next three (3) years, including
an assessment of the appropriate direction for such
systems and services, in light of MSDW's business
priorities and strategies and competitive market
forces (to the extent such business information is
provided by MSDW to IBM). The plan shall consider
growth requirements, IBM and MSDW initiatives that
may materially affect either Party, re-assessment of
skill and resource requirements, lessons learned from
previous projects, operational issues, technical
solutions, and any other issues that foster strategic
planning and collaboration. The plan shall include
specific technical or business information, such as
the identification of proposed software and hardware
strategies and direction, a cost projection, a
cost/benefit analysis of any proposed changes, a
description of the types of personnel skills and
abilities needed to respond to recommended changes or
upgrades in technology, a project plan and related
schedule for developing and achieving the recommended
elements, and references to appropriate information
that supports service level requirements, exploits
industry trends in production capabilities, and
outlines potential price performance improvement
opportunities, as applicable.
(b) Annual Implementation Plan. As necessary to support
--------------------------
the overall objectives and directions of the
Three-Year Plan described above, each annual
implementation plan shall provide specific guidance
as to the information services requirements,
projects, and plans for the upcoming year, including
details on operations, solutions and design and
development activities, as applicable. The annual
implementation plan shall include a summary review of
IBM's performance of the Services in the year then
concluding and shall make updates and revisions of
the long-term plan as appropriate. An annual
implementation plan shall be prepared for each
Contract Year of the Agreement or as otherwise
mutually agreed by the Parties.
(c) Drafting Responsibility. IBM shall submit to MSDW a
-----------------------
draft of the Technology Plan for MSDW's review, which
draft shall have been developed with input from key
business users from MSDW. IBM shall submit the final
Technology Plan within { * } of receiving MSDW's
27
<PAGE>
Services Agreement by and between MSDW and IBM effective as of July 1, 1999
Amended and Restated as of December 21, 2001
comments on the draft, and the Parties shall mutually
agree upon the final Technology Plan. The draft of
the Technology Plan for the first Contract Year shall
be provided by IBM within { * } of the Effective Date
or as otherwise mutually agreed by the Parties. IBM
shall recommend modifications to the Technology Plan
as it deems appropriate and, subject to the mutual
agreement of the Parties, shall revise the Technology
Plan based upon MSDW's review on an annual basis or
as otherwise mutually agreed by the Parties.
9.8. Quality Assurance and Improvement Programs.
------------------------------------------
IBM, as part of its total quality management process, shall
provide continuous quality assurance and quality improvement
through: (a) the identification and application of proven
techniques and tools from other installations within its
operations { * } that would benefit MSDW either operationally
or financially; and (ii) the implementation of concrete
programs, practices and measures designed at a minimum to
ensure that the Services are performed in accordance with the
Agreement and to improve the Performance Standards. Such
procedures shall include checkpoint reviews, testing,
acceptance, and other procedures for MSDW to assure the
quality of IBM's performance and shall be included in the
Procedures Manual.
9.9. Productivity and Management Tools.
---------------------------------
IBM shall utilize project management tools, including
productivity aids and project management systems, as
reasonably necessary to perform the Services. IBM shall use
project management tools in all major projects and employ a
regular reporting mechanism to identify project tasks, present
current status reports, and identify potential bottlenecks and
problems.
10. AUDITS
10.1. Audit Rights.
------------
{ * } IBM shall provide to MSDW, its auditors (including
internal audit staff and external auditors), regulators and
other representatives { * }, access upon reasonable prior
notice { * } to any Equipment, Software, IBM Personnel, MSDW
Facilities, IBM Facilities and to data and records relating to
the Services for the purpose of performing audits and
inspections { * } to:
(a) verify the accuracy of charges and invoices;
(b) verify the integrity of MSDW Data and examine the
systems that process, store, support and transmit
that data; and
(c) examine IBM's performance of the Services including,
to the extent applicable to the Services performed by
IBM and to the charges under the Agreement,
performing audits (i) of practices and procedures,
(ii) of Equipment and Software systems, (iii) of
general controls and security
28
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Services Agreement by and between MSDW and IBM effective as of July 1, 1999
Amended and Restated as of December 21, 2001
practices and procedures, (iv) of disaster recovery
and back-up procedures, (v) of the efficiency of IBM
in using resources for which MSDW is being charged,
and (vi) any audit necessary to enable MSDW to meet
applicable regulatory requirements.
IBM shall provide to such auditors, inspectors, regulators,
and representatives such assistance as they reasonably
require{ * }. IBM shall cooperate fully with MSDW or its
Designees in connection with audit functions and with regard
to examinations by regulatory authorities. MSDW's auditors and
other representatives shall comply with IBM's reasonable
security requirements. MSDW will make reasonable efforts to
limit the number, scope and duration of such audits and
otherwise attempt to minimize any disruption to IBM's business
caused by such audits.
10.2. Audit Follow-up.
---------------
(a) Following an audit or examination, MSDW shall conduct
(in the case of an internal audit), or request its
external auditors or examiners to conduct, an exit
conference with IBM to obtain factual concurrence
with issues identified in the review.
(b) { * }
(c) IBM and MSDW shall meet to review each audit report
promptly after the issuance thereof and to mutually
agree upon the appropriate manner, if any, in which
to respond to the changes suggested by the audit
report. Notwithstanding the foregoing, in the event
that an audit reveals that IBM is not complying with
its obligations under the Agreement, IBM shall take
action as is necessary to correct such
non-compliance. MSDW and IBM agree to develop
operating procedures for the sharing of audit and
regulatory findings and reports relating to IBM's
operating practices and procedures produced by
auditors or regulators of either Party.
10.3. Records Retention.
-----------------
(a) Until the latest of (i) three (3) years after
expiration or termination of the Agreement, (ii) the
date that all pending matters relating to the
Agreement (e.g., disputes) are closed, (iii) the date
that retention of records is no longer required to
meet MSDW's records retention policy as identified to
IBM as such policy may be reasonably adjusted from
time to time, or (iv) as otherwise required by law or
regulation (the latest of such dates the "Retention
Date"), IBM shall maintain and provide access upon
request to the records, documents and other
information required to meet MSDW's audit rights
under the Agreement.
(b) After the Retention Date, IBM may destroy or
otherwise dispose of such records, documents and
other information required to meet MSDW's audit
rights under the Agreement { * }.
29
<PAGE>
Services Agreement by and between MSDW and IBM effective as of July 1, 1999
Amended and Restated as of December 21, 2001
11. MSDW RESPONSIBILITIES
11.1. Responsibilities.
----------------
In addition to MSDW's responsibilities set forth elsewhere in
the Agreement, MSDW shall be responsible for the following:
(a) MSDW shall designate two individuals to whom all IBM
communications concerning the Agreement may be
addressed (each such individual shall be deemed a
"MSDW Contract Executive"). Each MSDW Contract
Executive shall have the authority to act for and
bind MSDW in matters relating to the Agreement.
(b) MSDW shall cooperate with IBM by, among other things,
making available, as reasonably requested by IBM,
data processing priorities, management decisions,
information, approvals and acceptances so that IBM
may accomplish its obligations and responsibilities
under the Agreement. A MSDW Contract Executive, or
his or her designee, will be the principal point of
contact for obtaining such decisions, information,
approvals and acceptances.
11.2. { * }
12. CHARGES
12.1. General.
-------
All charges for the Services are set forth in this Article 12,
in Schedule C, in the SSAs, in the NSAs or in the
International Agreements. MSDW shall not be required to pay
IBM any amounts for the Services in addition to those to IBM
under this Article 12 or Schedule C.
12.2. Incidental Expenses.
-------------------
IBM acknowledges that, except as may be otherwise provided in
the Agreement, expenses that IBM expects to incur in
performing the Services (including travel and lodging,
document reproduction and shipping, and long-distance
telephone) are included in IBM's charges and rates set forth
in the Agreement. Accordingly, such IBM expenses are not
separately reimbursable by MSDW unless, on a case-by-case
basis for unusual expenses, MSDW has agreed in advance and in
writing to reimburse IBM for the expense.
12.3. Taxes.
-----
The Parties' respective responsibilities for taxes arising
under or in connection with the Agreement shall be as follows:
30
<PAGE>
Services Agreement by and between MSDW and IBM effective as of July 1, 1999
Amended and Restated as of December 21, 2001
(a) Each Party shall be responsible for any personal property taxes
on property it owns or leases, for franchise and privilege
taxes on its business, and for taxes based on its net income or
gross receipts.
(b) IBM shall be responsible for any sales, use, excise,
value-added, services, consumption, and other taxes and duties
payable by IBM{ * } on any goods or services that are used or
consumed by such entities in providing the Services where the
tax is imposed on the acquisition or use of such goods or
services by such entities and the amount of tax is measured by
the costs in acquiring such goods or services.
(c) MSDW shall be responsible for any sales, use, excise,
value-added, services, consumption or other tax that is
assessed on the provision of the Services as a whole, or on any
particular Service received by MSDW from IBM. If and to the
extent any such tax is reduced or eliminated during the Term,
IBM shall reduce or eliminate any charges for such taxes, as
appropriate. In the event that any interest or penalty is
assessed against MSDW with respect to any such tax, then IBM
shall reimburse MSDW for such interest or penalty to the extent
that such interest or penalty arises from IBM's failure to
invoice MSDW for such tax or to remit amounts paid by MSDW to
IBM for such tax.
(d) In the event that a sales, use, excise, value added, services,
consumption, or other tax is assessed on the provision of any
of the Services, MSDW shall provide tax calculations at the
Affiliate level based upon the benefit that each Affiliate
receives within a tax jurisdiction. The benefit shall be
determined by MSDW and provided to IBM so that the Parties can
work together to segregate the payments under the Agreement
into three (3) payment streams:
(i) those for taxable Service;
(ii) those in which IBM functions namely as a payment agent
for MSDW in receiving goods, supplies, or services
(including leasing and licensing arrangements); and
(iii) those for other nontaxable Services.
(e) The Parties agree to cooperate with each other to enable each
to more accurately determine its own tax liability and to
minimize such liability to the extent legally permissible. IBM
shall provide MSDW with information that separately states, for
each applicable tax jurisdiction, the amount of any taxes IBM
is collecting from MSDW. Each Party shall provide and make
available to the other any resale certificates, information
regarding out-of-state or out-of-country sales or use of
equipment, materials or services, and other exemption
certificates or information reasonably requested by the other
Party.
(f) { * }
31
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Services Agreement by and between MSDW and IBM effective as of July 1, 1999
Amended and Restated as of December 21, 2001
12.4. New Services.
------------
In the event that MSDW requests IBM to perform functions that are
materially different from, and in addition to, the Services, the
Parties' obligations with respect to such functions shall be as
follows:
(a) To the extent that such additional functions require additional
resources for which a pricing metric exists under the
Agreement, the additional functions shall:
(i) subject to Subsection (e) of this Section, be priced in
accordance with the pricing metric;
(ii) be documented pursuant to Subsection (f) of this Section,
and
(iii) be considered "Services" and be subject to the provisions
of the Agreement.
(b) To the extent that such additional functions require additional
resources for which a pricing metric does not exist under the
Agreement, then prior to performing such additional functions:
(i) IBM shall provide to MSDW a project plan and shall,
subject to Subsection (e) of this Section, quote MSDW a
charge for such additional functions that takes into
account { * }.
(ii) MSDW, upon receipt of such quote, may then elect to have
IBM perform the additional functions. If MSDW elects to
have IBM perform such additional functions, then
(A) the charges under the Agreement shall be adjusted,
if and to the extent appropriate, to reflect such
functions,
(B) such additional functions and adjustment of charges
shall be documented pursuant to Subsection (f) of
this Section; and
(C) such additional functions shall be deemed "Services"
and shall be subject to the provisions of the
Agreement.
(c) MSDW may elect to solicit and receive bids from third parties
to perform such additional functions. { * }
(d) The Parties anticipate that:
(i) the Services will evolve and be supplemented, modified,
enhanced or replaced over time to keep pace with
technological advancements and improvements in the
methods of delivering services, and
32
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Services Agreement by and between MSDW and IBM effective as of July 1, 1999
Amended and Restated as of December 21, 2001
(ii) Schedules E (Software) and J (Equipment) will be
supplemented and modified over time to accurately reflect
the Equipment and Software, respectively, used to provide
the Services. { * }
(e) If MSDW's request for additional functions pursuant to this
Section includes a request for, or otherwise would cause, IBM
to correspondingly reduce or eliminate Services it is
providing, then such additional functions shall be considered
"Replacement Services." { * }
(f) If MSDW elects to have IBM perform additional functions
pursuant to Subsections (a) or (b) of this Section, such
additional functions (and the appropriate adjustment to the
charges under this Agreement as determined pursuant to this
Section 12.4) shall be documented using the New Services
Amendment form set forth in Schedule I; provided, however, that
no such writing shall be effective unless signed by the MSDW
Contract Executive. Such writing if effective shall constitute
a New Services Amendment. MSDW's payment of charges under any
New Services Amendment shall apply toward MSDW's satisfaction
of the Minimum Annual Revenue Commitment.
12.5. { * } [1 page]
12.6. Cost of Living Adjustment.
-------------------------
(a) The Parties intend that commencing { * }, certain identified
charges listed in Section 7.4 of Schedule C (such charges the
"Identified Charges") will increase if inflation, measured from
{ * }, exceeds { * } per year, compounded annually. These
Identified Charges include protection against inflation at a
rate of { * } per year, compounded annually (such inflation
protection included in the Identified Charges the "COLA
Index"). The COLA Index for each calendar year of the Term is
as follows:
---------------------------------------------------------------
Calendar Year
---------------------------------------------------------------
1999 2000 2001 2002 2003 2004 2005
---------------------------------------------------------------
COLA
Index { * } { * } { * } { * } { * } { * } { * }
---------------------------------------------------------------
MSDW agrees to pay IBM a Cost of Living Adjustment ("COLA")
beginning { * } if actual cumulative inflation exceeds the COLA
Index as set forth above. IBM and MSDW agree to use the
Consumer Price Index, as published by the Bureau of Labor
Statistics, U.S. Department of Labor, For All Urban Consumers,
U.S. City Average, All Items, 1982-84-100 ("CPI-U") for
purposes of calculating actual inflation. The COLA will be
applied on a prospective basis, i.e., the Identified Charges
payable by MSDW will be surcharged by the COLA Factor after { *
} as determined below, if such COLA Factor is in excess of
zero. The COLA Factor will
33
<PAGE>
Services Agreement by and between MDSW and IBM effective as of July 1, 1999
Amended and Restated as of December 21, 2001
be determined as soon as practicable after the end of each
calendar year during the Term beginning with the calendar year
{ * }. If applicable, IBM will invoice MSDW for the COLA
beginning with Services rendered on or after { * } in
accordance with Article 13. The COLA Factor shall be calculated
as follows:
COLA Factor = { * }, where:
(i) Actual Inflation = { * };
(ii) Protected Inflation = { * };
(iii) Prior Year's Protected Inflation = { * }; and
(iv) Base Year Index = { * }.
(b) In the event the Bureau of Labor Statistics stops publishing
the CPI-U or substantially changes its content and format, IBM
and MSDW will substitute another comparable index published at
least annually by a mutually agreeable source. If the Bureau of
Labor Statistics merely redefines the base year for the CPI-U
from 1982-84 to another year, IBM and MSDW will continue to use
the CPI-U, but will convert the COLA Index to the new base year
by using an appropriate conversion formula.
12.7. { * } [2 pages]
13. INVOICING AND PAYMENT
---------------------
13.1. Invoicing.
---------
(a) IBM shall invoice MSDW for all amounts due under the Agreement
on a monthly basis in accordance with the SSA referenced as
"DWD 18" (as described in Schedule H). IBM shall separately
invoice MSDW for the following as follows:
(i) IBM shall invoice MSDW for the Monthly Service Charge for
a calendar month { * }, and
(ii) IBM shall invoice all other amounts due under the
Agreement { * }.
IBM shall provide details as to charges as specified by MSDW.
IBM shall include in each invoice the calculations utilized to
establish the charges.
(b) To the extent a credit may be due MSDW pursuant to the
Agreement, IBM shall provide MSDW with an appropriate credit
against amounts then due and owing. If no further payments are
due to IBM, IBM shall pay such amounts to MSDW within thirty
(30) days.
34
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Services Agreement by and between MSDW and IBM effective as of July 1, 1999
Amended and Restated as of December 21, 2001
(c) IBM shall render invoices for each month's charges pursuant to
Subsection (a) of this Section, showing such details as
reasonably specified by MSDW including as necessary to satisfy
MSDW's internal accounting and chargeback requirements (such as
allocating charges among portions of the Service, locations,
and business units). Such invoices shall separately state the
amounts of any taxes IBM is collecting from MSDW.
13.2. Payment Due.
-----------
(a) Subject to the other provisions of this Article 13:
(i) invoices described in Section 13.1(a)(i) that are
properly submitted to MSDW pursuant to the Agreement
shall be due and payable by MSDW within seven (7)
business days after receipt thereof; and
(ii) invoices described in Section 13.1(a)(ii) that are
properly submitted to MSDW pursuant to the Agreement
shall be due and payable by MSDW within twenty (20)
calendar days after receipt thereof.
(b) All amounts due and payable to IBM under this Article 13 shall
be paid by electronic funds transfer to IBM from account(s)
designated by MSDW.
(c) In the event that any amounts due are not received by IBM
within five (5) business days following the applicable due date
set forth in Subsection (a), such amounts due shall be subject
to a late fee equal to { * } of such amounts due per month
accruing from the original due date set forth in Subsection (a)
until the date MSDW pays such amount due.
13.3. Accountability.
--------------
IBM shall maintain complete and accurate records of and supporting
documentation for the amounts billable to and payments made by MSDW
hereunder, in accordance with generally accepted accounting
principles applied on a consistent basis. IBM agrees to provide MSDW
with documentation and other information with respect to each invoice
as may be reasonably requested by MSDW to verify accuracy and
compliance with the provisions of the Agreement. MSDW and its
authorized agents and representatives shall have access to such
records for purposes of audit pursuant to Article 10 of the
Agreement.
13.4. Proration.
---------
Periodic charges under the Agreement are to be computed on a calendar
month basis, and shall be prorated for any partial calendar month.
13.5. Set Off.
-------
35
<PAGE>
Services Agreement by and between MSDW and IBM effective as of July 1, 1999
Amended and Restated as of December 21, 2001
With respect to any amount to be paid by MSDW under the Agreement,
MSDW may set off against such amount any amount that IBM is obligated
to pay MSDW under the Agreement.
13.6. Disputed Charges.
----------------
Subject to Section 13.5, MSDW shall pay undisputed charges when such
payments are due under this Article 13. MSDW may withhold payment of
any particular charge that MSDW disputes in good faith, subject to the
following limitations:
(a) For any monthly invoice, no more than { * } of the total amount
invoiced to MSDW as set forth in such invoice may be withheld
with respect to such invoice; and
(b) No more than { * } may be withheld at any given time by MSDW. For
each calendar year, such aggregate shall be calculated as { * }.
If the dispute underlying the amount withheld from a particular
invoice is not resolved within { * } after such amount is withheld by
MSDW, { * }
14. SAFEGUARDING OF MSDW DATA
14.1. Safeguarding MSDW Data.
----------------------
IBM shall establish and maintain safeguards against the destruction,
loss, or alteration of MSDW Data in the possession of IBM that are no
less rigorous than those maintained by IBM on behalf of MSDW prior to
the Effective Date, and shall be no less rigorous than those
maintained by IBM for its own information of a similar nature. MSDW
or, at MSDW's request, a third party vendor, shall have the right to
establish backup security for data and to keep backup data and data
files in its possession at MSDW's expense.
14.2. Unauthorized Access.
-------------------
Without limiting the generality of Section 14.1 above:
(a) IBM Personnel shall not attempt to access, or allow access to,
any data, files or programs within the information systems
environment to which they are not entitled under the Agreement.
{ * }
(b) IBM shall institute { * } systems security measures with respect
to the access and controls it affords to its employees,
Affiliates and IBM Personnel (including the employees of such
Affiliates and IBM Personnel) to guard against, identify and
promptly terminate the unauthorized access, alteration or
destruction of Software and MSDW Data. Such measures shall
include the installation of Software that (i) requires all
entities described in the preceding sentence to enter a user
identification and password prior to gaining access to the
information systems; (ii) controls
36
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Services Agreement by and between MSDW and IBM effective as of July 1, 1999
Amended and Restated as of December 21, 2001
and tracks the addition and deletion of such entities; and (iii)
controls access by such entities to areas and features of the
systems.
15. CONFIDENTIALITY
15.1. Confidential Information.
------------------------
(a) IBM and MSDW each acknowledge that they may be furnished with,
receive, or otherwise have access to information of or concerning
the other Party which such Party considers to be confidential,
proprietary, a trade secret or otherwise restricted. As used in
the Agreement, "Confidential Information" shall mean { * }. The
terms and conditions of the Agreement shall be deemed
Confidential Information.
(b) In the case of MSDW, Confidential Information also shall include
{ * }: (collectively, the "MSDW Confidential Information").
(c) In the case of IBM, Confidential Information also shall include
{ * } (collectively, the "IBM Confidential Information").
15.2. Obligations.
-----------
(a) Each Party's Confidential Information shall remain the property
of that Party except as expressly provided otherwise by the other
provisions of the Agreement. MSDW and IBM shall each use at least
the same degree of care, but in any event no less than a
reasonable degree of care, to prevent disclosing to third parties
the Confidential Information of the other as it employs to avoid
unauthorized disclosure, publication or dissemination of its own
information of a similar nature; provided that a Party may
disclose such information to entities performing services
required hereunder where (i) use of such entity is authorized
under the Agreement, (ii) such disclosure is necessary or
otherwise naturally occurs in that entity's scope of
responsibility, and (iii) the entity agrees in writing to assume
the obligations described in this Article 15. Any disclosure to
such entity shall be under the terms and conditions as provided
in this Section.
(b) Neither Party may:
(i) make any use of the Confidential Information of the other
Party except as required to perform its obligations under
the Agreement;
(ii) possess or assert any lien or similar right against or to
the Confidential Information of the other Party; or
(iii) sell, assign, lease, or otherwise dispose of to third
parties or commercially exploit the Confidential
Information of the other Party.
37
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Services Agreement by and between MSDW and IBM effective as of July 1, 1999
Amended and Restated as of December 21, 2001
(c) As requested by MSDW during the Term, upon expiration or any
termination of the Agreement, or with respect to any particular
MSDW Confidential Information, on such earlier date that the same
shall be no longer required by IBM in order to render the
Services, IBM shall either return in a form reasonably requested
by MSDW or destroy, as MSDW may direct, all material (including
all copies) in any medium that contains{ * } MSDW Confidential
Information; provided, however, that IBM may retain one (1) copy
of such information to the extent required to provide the
Services, to comply with laws or regulations, or to establish
IBM's rights under the Agreement.
(d) As requested by IBM
(i) after { * } MSDW shall either return in a form reasonably
requested by IBM or destroy, as IBM may direct, all
material (including all copies) in any medium that
contains{ * } IBM Confidential Information to the extent no
longer required by MSDW for the receipt of any Services
after such expiration or termination; or
(ii) after the use of IBM Confidential Information by MSDW that
constitutes a breach of MSDW's obligations described in
Subsections (a) or (b) of this Section, MSDW shall either
return in a form reasonably requested by IBM or destroy, as
IBM may direct, all material (including all copies) in any
medium that contains{ * } the IBM Confidential Information
upon which such breach is based; provided, however, that in
each case described in Subsections (i) and (ii) of this
Subsection, MSDW may retain one (1) copy of such
information to the extent required to perform its
obligations under the Agreement, to comply with laws or
regulations, or to establish MSDW's rights under the
Agreement.
(e) Each Party shall take reasonable steps to ensure that its
employees comply with the terms and conditions of this Article
15.
15.3. Exclusions.
----------
(a) Section 15.2 shall not apply to any particular information which
IBM or MSDW can demonstrate (i) was, at the time of disclosure to
it, lawfully in the public domain; (ii) after disclosure to it,
is published or otherwise lawfully becomes part of the public
domain through no fault of the receiving Party; (iii) was in the
possession of the receiving Party at the time of disclosure to
it; (iv) was received after disclosure to it from a third party
who had a lawful right to disclose such information to it without
any obligation to restrict its further use or disclosure; or (v)
was independently developed by the receiving Party without
reference to Confidential Information of the furnishing Party. In
addition, a Party shall not be considered to have breached its
obligations by disclosing Confidential Information of the other
Party as required to satisfy any legal requirement
38
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Services Agreement by and between MSDW and IBM effective as of July 1, 1999
Amended and Restated as of December 21, 2001
of a competent government body provided that, immediately upon
receiving any such request and to the extent that it may legally
do so, such Party advises the other Party promptly and prior to
making such disclosure, take action to assure confidential
handling of the Confidential Information, or take such other
action as its deems appropriate to protect the Confidential
Information.
(b) Either Party may disclose the terms and conditions of the
Agreement to third parties that (i) have expressed bona fide
interest in consummating a significant financing, merger or
acquisition transaction between such third parties and the
disclosing Party, (ii) have a reasonable ability (financial and
otherwise) to consummate such transaction, and (iii) have
executed a nondisclosure agreement that (A) includes within its
scope the terms and conditions of the Agreement, (B) limits
distribution to those with a need to know in connection with such
transaction, and (C) allows use only in connection with the
transaction. Each Party shall endeavor to delay the disclosure of
the terms and conditions of the Agreement until the status of
discussions concerning such transaction warrants such disclosure.
15.4. Loss of Confidential Information.
--------------------------------
In the event of any unauthorized disclosure or loss of, or inability
to account for, any Confidential Information of the furnishing Party
by the Party to whom such information was disclosed, upon becoming
aware of such event the receiving Party shall promptly, at its own
expense (a) notify the furnishing Party in writing, (b) take such
actions as reasonably requested by the furnishing Party, and (c)
otherwise cooperate with the furnishing Party to minimize the adverse
effects to the furnishing Party of such event and any damage resulting
from such event.
15.5. No Implied Rights.
-----------------
Nothing contained in this Article 15 shall be construed as obligating
a Party to disclose its Confidential Information to the other Party,
or as granting to or conferring on a Party, expressly or impliedly,
any rights or license to the Confidential Information of the other
Party.
15.6. Survival.
--------
This Article 15 shall survive the expiration or termination of the
Agreement for a period equal to { * }.
16. REPRESENTATIONS AND WARRANTIES
------------------------------
16.1. Work Standards.
--------------
IBM represents and warrants that the Services will be executed in a
workmanlike manner, in accordance with { * }.
16.2. { * }.
-----
39
<PAGE>
Services Agreement by and between MSDW and IBM effective as of July 1, 1999
Amended and Restated as of December 21, 2001
16.3. { * }.
-----
16.4. { * }.
-----
16.5. Non-Infringement.
----------------
Each Party represents and warrants that it will perform its
responsibilities under the Agreement in a manner that does not
infringe, or constitute an infringement or misappropriation of, any
patent, copyright, trademark, trade secret or other intellectual
proprietary rights of the other Party of any third party.
16.6. Software Ownership or Use.
-------------------------
Subject to Section 7.8, each Party represents and warrants to the
other that it is, or will be at the applicable time, either the owner
of, or authorized to distribute, provide and use Software to the
extent it is licensed or developed by such Party.
16.7. Compliance With Laws and Regulations; Non-Contravention.
-------------------------------------------------------
(a) Each Party represents and warrants that it will perform its
obligations in a manner that complies with applicable laws,
regulations, ordinances and codes, including identifying and
procuring required permits, certificates, approvals and
inspections. If a charge of non-compliance with such laws,
regulations, ordinances, or codes occurs, such Party will
promptly notify the other Party of such charge in writing.
(b) To the extent such matters relate to IBM's performance of the
Services, MSDW will identify and make available to IBM
interpretations of any laws applicable to MSDW and its industry.
(c) Each Party represents and warrants that such Party's execution,
delivery, and performance of the Agreement will not constitute
(i) a violation of any judgment, order, or decree; (ii) a
material default under any material contract by which it or any
of its material assets are bound; or (iii) an event that would,
with notice or lapse of time, or both, constitute such a default
as described in (ii).
16.8. Authorization.
-------------
Each Party represents and warrants that:
(a) it has the requisite power and authority to enter into the
Agreement and to carry out the transactions contemplated by the
Agreement; and
(b) the execution, delivery and performance of the Agreement and the
consummation of the transactions contemplated by the Agreement
have been duly authorized by the requisite action on the part of
such Party.
16.9. Inducements.
-----------
40
<PAGE>
Services Agreement by and between MSDW and IBM effective as of July 1, 1999
Amended and Restated as of December 21, 2001
IBM represents and warrants to MSDW that it has not violated and will
not violate any applicable laws or regulations or any MSDW policies
of which IBM has been given notice regarding the offering of unlawful
inducements in connection with the Agreement. { * }
16.10. { * }.
-----
16.11. { * }.
-----
16.12. { * }
16.13. Disclaimer.
----------
EXCEPT AS PROVIDED IN THE AGREEMENT, THERE ARE NO OTHER EXPRESS
WARRANTIES AND THERE ARE NO IMPLIED WARRANTIES, INCLUDING THE IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
17. INSURANCE AND RISK OF LOSS
17.1. Insurance.
---------
IBM shall during the Term have and maintain in force the following
insurance coverages:
(a) Worker's compensation insurance, including occupational illness
or disease coverage, or other similar social insurance in
accordance with the laws of the country, state, or territory
exercising jurisdiction over the employee and employer's
liability insurance with a minimum limit of { * };
(b) Commercial general liability insurance, including products,
completed operations liability and personal injury, contractual
liability and broad form property damage liability coverage for
damages to any property with a minimum combined single limit of
{ * };
(c) Electronic data processing all-risk property insurance on
equipment, data, media and valuable papers, including extra
expense coverage, with a minimum limit adequate to cover such
risks on a replacement costs basis;
(d) Automotive liability insurance covering use of all owned,
non-owned, and hired automobiles with a minimum combined single
limit of { * } for bodily injury and property damage liability;
(e) Umbrella liability insurance with a minimum limit of { * }; and
(f) Employee dishonesty and computer fraud coverage for loss arising
out of or in connection with any fraudulent or dishonest acts
committed by the employees of IBM, acting alone or in collusion
with others, including the
41
<PAGE>
Services Agreement by and between MSDW and IBM effective as of July 1, 1999
Amended and Restated as of December 21, 2001
property and funds of others in their care, custody or control,
in a minimum amount of { * }.
The foregoing insurance coverages shall be primary and
non-contributing with respect to any other insurance or self insurance
which may be maintained by MSDW, and the insurance coverages described
in Subsections (b), (d) and (e) of this Section shall be endorsed to
MSDW as an additional insured to the extent of MSDW's insurable
interest. IBM shall cause its insurers to issue certificates of
insurance evidencing that the coverages and policy endorsements
required under the Agreement are maintained in force and that not less
than thirty (30) days written notice shall be given to MSDW prior to
any modification, cancellation or non-renewal of the corresponding
policies. The insurers selected by IBM shall have an A.M. Best rating
of A- or better or Class 12 or better, or if such ratings are no
longer available, with a comparable rating from a recognized insurance
rating agency. IBM shall assure that Authorized Subcontractors, if
any, maintain insurance coverages as specified in this Article 17 or
are endorsed as additional insureds on all required IBM coverages.
17.2. Risk of Loss.
------------
Each party shall be responsible for risk of loss of and damage to, any
Equipment, Software or other materials in its possession or under its
control.
18. INDEMNITIES
18.1. Indemnity by IBM.
----------------
IBM agrees to indemnify, defend and hold harmless MSDW and its
Affiliates and their respective officers, directors, employees,
agents, successors, and assigns, from any and all Losses and
threatened Losses incurred as a result of a third-party claim arising
from, in connection with, or based on allegations of:
(a) Any occurrences that IBM is required to insure against pursuant
to Article 17, but only to the extent that IBM fails to provide
such coverage and only to the extent of such coverage;
(b) Any infringement of any patent, trademark, trade secret,
copyright or other intellectual property rights, alleged to have
occurred because of software, materials or other resources
provided by IBM to MSDW, or based upon performance of the
Services by IBM, except to the extent caused by the modification,
misuse or improper combination with other products by MSDW or
MSDW's Affiliates, not authorized by IBM, of such items; or
(c) Any breach of an IBM obligation under Sections 6.1 or 7.3 of the
Agreement to comply with applicable lease and license terms for
MSDW Equipment or Third Party Software licensed by MSDW or an
MSDW Affiliate.
18.2. Indemnity by MSDW.
-----------------
42
<PAGE>
Services Agreement by and between MSDW and IBM effective as of July 1, 1999
Amended and Restated as of December 21, 2001
MSDW agrees to indemnify, defend and hold harmless IBM and its
Affiliates and their respective officers, directors, employees,
agents, successors, and assigns, from any and all Losses and
threatened Losses incurred as a result of a third-party claim arising
from, in connection with, or based on allegations of:
(a) MSDW's failure to pay rent or utilities at any location where
MSDW is required to furnish space or utilities to IBM pursuant to
the Agreement; or
(b) Any infringement of any patent, trademark, trade secret,
copyright or other intellectual property rights, alleged to have
occurred because of software, materials or other resources
provided by IBM to MSDW, or based upon MSDW's performance of its
obligations under the Agreement, except to the extent caused by
the modification, misuse or improper combination with other
products by IBM, IBM's Affiliates or IBM Personnel, not
authorized by MSDW, of such items.
18.3. Additional Indemnities.
----------------------
IBM and MSDW each agree to indemnify, defend and hold harmless the
other, and its Affiliates, officers, directors, employees, agents,
successors, and assigns, from any and all Losses and threatened Losses
incurred as a result of a third-party claim arising from, in
connection with, or based on allegations of:
(a) the death or bodily injury of any agent, employee, customer,
business invitee, or business visitor or other person caused by
the tortuous conduct of the indemnitor (limited to Losses in
proportion to the indemnitor's comparative fault);
(b) the damage, loss or destruction of any real or tangible personal
property caused by the tortuous conduct of the indemnitor
(limited to Losses in proportion to the indemnitor's comparative
fault);
(c) an act or omission of the indemnitor in its capacity as an
employer of a person;
(d) a Party's breach of its obligations with respect to Confidential
Information; or
(e) the indemnitor's breach of any of the representations and
warranties set forth in Sections 16.7(a) and 16.7(c) of the
Agreement. { * }
18.4. Indemnification Procedures.
--------------------------
With respect to third-party claims that are subject to indemnification
pursuant to this Article 18, the following procedures shall apply:
(a) Notice. Promptly after receipt by any entity entitled to
------
indemnification under Sections 18.1 through 18.3 of notice of the
commencement or threatened commencement of any civil, criminal,
administrative, or
43
<PAGE>
Services Agreement by and between MSDW and IBM effective as of July 1, 1999
Amended and Restated as of December 21, 2001
investigative action or proceeding involving a claim in respect
of which the indemnitee will seek indemnification pursuant to any
such Section, the indemnitee shall notify the indemnitor of such
claim in writing. No failure to so notify an indemnitor shall
relieve it of its obligations under the Agreement except to the
extent that it can demonstrate damages attributable to such
failure. Within fifteen (15) days following receipt of written
notice from the indemnitee relating to any claim, but no later
than ten (10) days before the date on which any response to a
complaint or summons is due, the indemnitor shall notify the
indemnitee in writing if the indemnitor elects to assume control
of the defense and settlement of that claim (a "Notice of
Election").
(b) Procedure Following Notice of Election. If the indemnitor
--------------------------------------
delivers a Notice of Election relating to any claim within the
required notice period, the indemnitor shall be entitled to have
sole control over the defense and settlement of such claim;
provided that (i) the indemnitee shall be entitled to participate
in the defense of such claim and to employ counsel at its own
expense to assist in the handling so such claim, and (ii) the
indemnitor shall obtain the prior written approval of the
indemnitee before entering into any settlement of such claim or
ceasing to defend against such claim. After the indemnitor has
delivered a Notice of Election relating to any claim in
accordance with the preceding paragraph, the indemnitor shall not
be liable to the indemnitee for any legal expenses incurred by
the indemnitee in connection with the defense of that claim. The
indemnitee shall cooperate in all reasonable respects with the
indemnitor and its attorneys in he investigation, trial and
defense of such claim and any appeal arising therefrom. In
addition, the indemnitor shall not be required to indemnify the
indemnitee for any amount paid or payable by the indemnitee in
the settlement of any claim for which the indemnitor has
delivered a timely Notice of Election if such amount was agreed
to without the written consent of the indemnitor.
(c) Procedure Where No Notice of Election Is Delivered. If the
--------------------------------------------------
indemnitor does not deliver a Notice of Election relating to any
claim within the required notice period, the indemnitee shall
have the right to defend the claim in such a manner as it may
deem appropriate, at the cost and expense of the indemnitor. The
indemnitor shall promptly reimburse the indemnitee for all such
costs and expenses.
18.5. Subrogation.
-----------
In the event that an indemnitor shall be obligated to indemnify an
indemnitee pursuant to Sections 18.1 through 18.3, the indemnitor
shall, upon payment of such indemnity in full, be subrogated to all
rights of the indemnitee with respect to the claims to which such
indemnification relates.
19. LIABILITY
19.1. General Intent.
--------------
44
<PAGE>
Services Agreement by and between MSDW and IBM effective as of July 1, 1999
Amended and Restated as of December 21, 2001
Subject to the specific provisions of this Article 19, it is the
intent of the Parties that each Party shall be liable to the other
Party for any actual damages incurred by the non-breaching Party as a
result of the breaching Party's failure to perform its obligations in
the manner required by the Agreement.
19.2. Liability Restrictions.
----------------------
(a) SUBJECT TO SUBSECTION 19.2(c), IN NO EVENT, WHETHER IN CONTRACT
OR IN TORT (INCLUDING BREACH OF WARRANTY, NEGLIGENCE, STRICT
LIABILITY IN TORT AND WITH RESPECT TO MSDW's LIABILITY FOR
FAILURE TO PAY AMOUNTS DUE UNDER THIS AGREEMENT), SHALL A PARTY
BE LIABLE FOR INDIRECT OR CONSEQUENTIAL, EXEMPLARY, PUNITIVE OR
SPECIAL DAMAGES EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES IN ADVANCE.
(b) Subject to Subsection 19.2(c), each Party's total liability to
the other, whether in contract or in tort (including breach of
warranty, negligence, strict liability in tort and with respect
to MSDW's liability for failure to pay amounts due under this
Agreement) shall be limited in the aggregate, for all claims,
causes of action and occurrences:
(i) except as provided in Paragraph (b)(ii),{ * }
(ii) with respect to claims relating to any Discrete Service
Project, to an amount equal to { * } the particular Discrete
Service Project that is the subject of the claim. The term
"Discrete Service Project" means individual projects for
{ * } Services pursuant to { * } of the Agreement, under
which IBM performs { * } Services and where IBM does not
take { * } responsibility under the Agreement for the { * }
to which such Services primarily relate.
(c) The limitations set forth in Subsections { * } shall not apply
with respect to: { * }
(d) Each Party shall have a duty to mitigate damages for which the
other Party is responsible.
19.3. Force Majeure.
-------------
(a) No Party shall be liable for any default or delay in the
performance of its obligations under the Agreement if and to the
extent such default or delay is caused, directly or indirectly,
by fire, flood, earthquake, elements of nature or acts of God,
riots, civil disorders, rebellions or revolutions in any country,
or any other cause beyond the reasonable control of such Party;
provided, however, that the non-performing Party is without fault
in causing such default or delay, and such default or delay could
not have
45
<PAGE>
Services Agreement by and between MSDW and IBM effective as of July 1, 1999
Amended and Restated as of December 21, 2001
been prevented by reasonable precautions and cannot
reasonably be circumvented by the non-performing
Party through the use of alternate sources,
workaround plans or other means (including with
respect to IBM by IBM meeting its obligations for
performing disaster recovery Services as described in
the Agreement) (any event for which a Party is not
liable for default or delay in the performance of its
obligations under this Subsection (a) a "Force
Majeure Event").
(b) In the event of a Force Majeure Event, the
non-performing Party shall be excused from further
performance or observance of the obligation(s) so
affected for as long as such circumstances prevail
and such Party continues to use its commercially
reasonable efforts to recommence performance or
observance whenever and to whatever extent possible
without delay. Any Party so delayed in its
performance shall immediately notify the Party to
whom performance is due by telephone (to be confirmed
in writing within five (5) calendar days of the
inception of such delay) and describe at a reasonable
level of detail the circumstances causing such delay.
(c) If any Force Majeure Event substantially prevents,
hinders, or delays performance of the Services
necessary for the performance of MSDW functions
reasonably identified by MSDW as critical for more
than { * }, then at MSDW's option:
(i) { * }
(ii) MSDW may terminate any portion of the
Services so affected { * } and the charges
payable under the Agreement shall be
equitably adjusted to reflect those
terminated Services; or
(iii) MSDW may terminate the Agreement { * } as of
a date specified by MSDW in a written notice
of termination to IBM; provided, however,
that MSDW may not terminate the Agreement or
any portion of the Services pursuant to
Subsections (ii) or (iii) of this Subsection
as long as IBM is performing those functions
reasonably identified by MSDW as critical.
If IBM is performing such functions
following a Force Majeure Event, then upon
sixty (60) calendar days' prior written
notice to MSDW, IBM may cease performing
such functions in which case MSDW may
terminate the Agreement or any portion of
the Services pursuant to Subsections (ii) or
(iii) of this Subsection. MSDW and IBM will
cooperate with each other to (A) identify a
process for minimizing IBM's costs and
expenses incurred by IBM as a result of any
Force Majeure Event.
20. DISPUTE RESOLUTION
46
<PAGE>
Services Agreement by and between MSDW and IBM effective as of July 1, 1999
Amended and Restated as of December 21, 2001
Any dispute between the Parties arising out of or relating to the
Agreement, including with respect to the interpretation of any
provision of the Agreement and with respect to the performance by IBM
or MSDW, shall be resolved as provided in this Article 20.
20.1. Informal Dispute Resolution.
---------------------------
Prior to the initiation of formal dispute resolution
procedures, the Parties shall first attempt to resolve their
dispute informally, as follows:
(a) Upon the written request of a Party, each Party shall
appoint a designated representative who does not
devote substantially all of his or her time to
performance under the Agreement, whose task it will
be to meet for the purpose of endeavoring to resolve
such dispute.
(i) The designated representatives shall meet as
often as the Parties reasonably deem
necessary in order to gather and furnish to
the other all information with respect to
the matter in issue which the Parties
believe to be appropriate and germane in
connection with its resolution. The
representatives shall discuss the problem
and attempt to resolve the dispute without
the necessity of any formal proceeding.
(ii) During the coarse of discussion, all
reasonable requests made by one Party to
another for nonprivileged information,
reasonably related to the Agreement, shall
be honored in order that each of the Parties
may be fully advised of the other's
position.
(iii) The specific format for the discussions
shall be left to the discretion of the
designated representatives.
(b) Formal proceedings for the resolution of a dispute
pursuant to Section 20.2(a) may not be commenced
until the earlier of:
(i) the designated representatives concluding in
good faith that amicable resolution through
continued negotiation of the matter does not
appear likely; or
(ii) { * } after the initial written request to
appoint a designated representative pursuant
to Subsection 20.1(a) above (this period
shall be deemed to run notwithstanding any
claim that the process described in this
Section was not followed or completed).
This Section shall not be construed to prevent a Party from
instituting, and a Party is authorized to institute, formal
proceedings earlier to avoid the expiration of any applicable
limitations period, or to preserve a superior position with
respect to other creditors, or as provided in Section 20.2(b)
or Section 21.6.
20.2. Formal Dispute Resolution.
-------------------------
47
<PAGE>
Services Agreement by and between MSDW and IBM effective as of July 1, 1999
Amended and Restated as of December 21, 2001
(a) If the Parties are unable to resolve any dispute as
contemplated by Section 20.1, either Party may file
an action to resolve any dispute, controversy or
claim.
(b) Immediate Injunctive Relief. The Parties agree that
---------------------------
disputes, controversies or claims between them shall
not be subject to Sections 20.1 where a Party makes a
good faith determination that a breach of the terms
of the Agreement by the other Party is such that a
temporary restraining order or other injunctive
relief is the only appropriate and adequate remedy.
If a Party files a pleading with a court seeking
immediate injunctive relief and this pleading is
challenged by the other Party and the injunctive
relief sought is not awarded in substantial part, the
Party filing the pleading seeking immediate
injunctive relief shall pay all of the costs and
reasonable attorneys' fees of the Party successfully
challenging the pleading.
(c) Jurisdiction. The Parties consent to the
------------
non-exclusive jurisdiction of competent { * } state
courts or federal courts in the { * } for all
litigation which may be brought with respect to the
terms of, and the transactions and relationships
contemplated by, the Agreement. The Parties further
consent to the jurisdiction of any state court
located within a district which encompasses assets of
a Party against which a judgment has been rendered
for the enforcement of such judgment or award against
the assets of such Party.
20.3. Continued Performance.
---------------------
Each Party agrees to continue performing its obligations under
the Agreement while any dispute is being resolved except to
the extent the issue in dispute precludes performance (dispute
over payment shall not be deemed to preclude performance).
20.4. Governing Law.
-------------
The Agreement and performance under it shall be governed by
and construed in accordance with the laws of State of { * }
without regard to its choice of law principles.
20.5. Limitations Period.
------------------
No Party may bring an action, regardless of form, arising out
of the Agreement after the earlier to occur of:
(a) the expiration of the applicable statutory limitations
period under applicable law; and
(b) { * } after the later of (i) the date the underlying
cause of action arose or (ii) the date such cause of
action was or should have been discovered by such Party.
48
<PAGE>
Services Agreement by and between MSDW and IBM effective as of July 1, 1999
Amended and Restated as of December 21, 2001
21. TERMINATION
21.1. Termination for Cause.
---------------------
(a) In the event that IBM:
(i) Commits a material breach of the Agreement,
which breach is capable of being cured
within thirty (30) days and fails to cure the
breach within thirty (30) days after notice of
breach from MSDW to IBM;
(ii) Commits a material breach of the Agreement
which is not capable of being cured within
thirty (30) days and fails to (i) proceed
promptly and diligently to correct the breach,
(ii) develop within thirty (30) days following
written notice of breach from MSDW a complete
plan for curing the breach, and (iii) cure the
breach within sixty (60) days of notice thereof;
(iii) { * }
(iv) { * }
(v) Terminates or suspends its business;
then MSDW may, by giving written notice to IBM and as
of a date specified in such notice, terminate { * }.
(b) { * } and (ii) MSDW fails to cure such breach { * }
of written notice of such breach from IBM, then IBM
may, by giving written notice to MSDW, terminate the
Agreement as of a date specified in such notice of
termination.
21.2. { * }
21.3. Termination of SSAs and NSAs.
----------------------------
If MSDW is entitled to terminate the IPSS Services, Data
Network Services or Voice Services pursuant to Sections 21.1(a)
or 21.2, then as part of such termination, MSDW may also
terminate any SSAs, NSAs and International Agreements associated
with those Services being terminated, as designated by
MSDW. { * }
21.4. Extension of Termination Effective Date.
---------------------------------------
MSDW may extend the effective date of a termination by MSDW
one (1) time, at its sole discretion, provided that the
duration of such extension shall not exceed one hundred eighty
(180) days following the original effective date of termination.
For any notice or notices of such extension provided to IBM
within sixty (60) days of the actual date of termination, MSDW
shall reimburse IBM at its then current commercially available
rates for those additional resources
49
<PAGE>
Services Agreement by and between MSDW and IBM effective as of July 1, 1999
Amended and Restated as of December 21, 2001
required as a result of MSDW's failure to provide such notice
or notices sixty (60) days prior to the actual date of
termination.
21.5. Termination/Expiration Assistance.
---------------------------------
(a) Commencing six (6) months prior to expiration of the
Agreement or on such earlier date as MSDW may
request, or commencing upon any notice of termination
{ * } or of non-renewal of the Agreement (including
notice based upon material breach by MSDW pursuant to
Section 21.1(b)), and continuing through the
effective date of expiration (as such effective date
may be extended pursuant to Section 4.2) or, if
applicable, through the effective date of termination
of the Agreement (as such effective date may be
extended pursuant to Section 21.3), IBM shall provide
to MSDW at no additional charge except as otherwise
provided in this Subsection (a), or at MSDW's request
to MSDW's designee, the reasonable
termination/expiration assistance requested by MSDW
to allow the Services to continue without
interruption or adverse effect and to facilitate
the orderly transfer of the Services to MSDW or its
designee (such assistance "Termination/Expiration
Assistance"). { * } [1 page]
(b) { * }
21.6. { * }
22. GENERAL
22.1. Binding Nature and Assignment.
-----------------------------
The Agreement shall be binding on the Parties as well as their
respective successors and permitted assigns. Neither Party
may, or shall have the power to, assign the Agreement or
delegate such Party's obligations under the Agreement without
the prior written consent of the other Party, such consent not
to be unreasonably withheld except that
(a) IBM may delegate its obligations under the Agreement
to { * } in accordance with Section 9.7 of the
Agreement;
(b) MSDW may assign its rights and obligations under the
Agreement without the approval of IBM to an entity
which acquires all or substantially all of the assets
of MSDW or to any subsidiary or Affiliate or
successor in a merger or acquisition of MSDW; and
(c) IBM may assign or transfer to a third party its
rights to receive payments from MSDW under the
Agreement.
In the event of an assignment of the Agreement, delegation of
a Party's obligations or assignment or transfer of rights to
receive payments as permitted by this Section, the assigning
Party shall remain obligated to perform its obligations under
the Agreement (including any obligations assigned or
delegated). In the
50
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Services Agreement by and between MSDW and IBM effective as of July 1, 1999
Amended and Restated as of December 21, 2001
event of an assignment pursuant to (b) above, the rights
granted pursuant to { * } hereof shall continue thereafter to
apply in accordance with its terms and with respect to any
Software (including { * } Software) used by MSDW or any MSDW
Affiliate to provide Financial Transaction Services prior to
the merger or acquisition, including any subsequent
modification or enhancement to such Software within the scope
of the definition of Financial Transaction Services, but such
rights shall not apply with respect to any other existing or
new Software used by the assignee entity to provide Financial
Transaction Services.
22.2. Entire Agreement.
----------------
The Agreement constitutes the entire agreement between the
Parties with respect to the subject matter hereof and
supersedes all prior agreements (including the Previous
Agreement), whether written or oral, with respect to the
subject matter contained in the Agreement.
22.3. Notices.
-------
All notices, requests, demands, and determinations under the
Agreement (other than routine operational communications),
shall be in writing and shall be deemed duly given (i) when
delivered by hand, (ii) one business (1) day after being given
to an express, overnight courier with a reliable system for
tracking delivery, or (iii) six (6) business days after the
day of mailing, when mailed by United States mail, registered
or certified mail, return receipt requested, postage prepaid,
and addressed as follows:
-------------------------------------------------- ------------------------------------------
In the case of MSDW: With a copy to:
------------------- --------------
Morgan Stanley Dean Witter Morgan Stanley Dean Witter
2500 Lake Cook Road 1585 Broadway
Riverwoods, Illinois 60015 New York, NY 10036
Attention: MSDW Contract Executive Attention: General Counsel
{ * }
-------------------------------------------------- ------------------------------------------
In the case of IBM: With a copy to:
------------------ --------------
International Business Machines International Business Machines
Corporation Corporation
231 North Martingale Road Route 100
Schaumburg, Illinois 60173-2254 Somers, New York 10589
Attention: IBM Project Executive, Attention: General Counsel, IBM Global
MSDW Services
-------------------------------------------------- ------------------------------------------
A Party may from time to time change its address or designee
for notification purposes by giving the other Party prior
written notice of the new address or designee and the date
upon which it will become effective.
22.4. Counterparts.
------------
51
<PAGE>
Services Agreement by and between MSDW and IBM effective as of July 1, 1999
Amended and Restated as of December 21, 2001
The Agreement may be executed in several counterparts, all of
which taken together shall constitute one single agreement
between the Parties.
22.5. Headings.
--------
The Article, Section, and Subsection headings of the
Agreement, and the table of contents of the Agreement, are for
reference and convenience only and shall not enter into the
interpretation of the Agreement.
22.6. Relationship of Parties.
-----------------------
IBM, in furnishing the Services, is acting as an independent
contractor. IBM has the sole right and obligation to
supervise, manage, contract, direct, procure, perform or cause
to be performed, all work to be performed by IBM under the
Agreement. IBM is not an agent of MSDW and has no authority to
represent MSDW as to any matters, except as otherwise
expressly authorized in the Agreement.
22.7. Severability.
------------
In the event that any provision of the Agreement conflicts
with the law under which the Agreement is to be construed or
if any such provision is held invalid by a court with
jurisdiction over the Parties, such provision shall be deemed
to be restated to reflect as nearly as possible the original
intentions of the Parties in accordance with applicable law.
The remainder of the Agreement shall remain in full force and
effect.
22.8. Consents and Approval.
---------------------
Except where expressly provided as being in the discretion of
a Party, where agreement, approval, acceptance, consent or
similar action by either Party is required under the
Agreement, such action shall not be unreasonably delayed or
withheld. An approval or consent given by a Party under the
Agreement shall not relieve the other Party from
responsibility for complying with the requirements of the
Agreement, nor shall it be construed as a waiver of any rights
under the Agreement, except as and to the extent otherwise
expressly provided in such approval or consent.
22.9. Waiver of Default; Cumulative Remedies.
--------------------------------------
(a) No waiver of any right, or discharge of any
obligation, under the Agreement shall be valid unless
in writing and signed by an authorized representative
of the Party against which such waiver or discharge
is sought to be enforced. A delay or omission by
either Party to exercise any right or power under the
Agreement shall not be construed to be a waiver of
such right or power. A waiver by either Party of any
obligation to be performed by the other Party or of
any breach by the other Party shall not be construed
to be a waiver of any succeeding obligation or
breach, or of any other obligation under the
Agreement.
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Services Agreement by and between MSDW and IBM effective as of July 1, 1999
Amended and Restated as of December 21, 2001
(b) Except as otherwise expressly provided by the
Agreement, all remedies under the Agreement shall be
cumulative and in addition to and not in lieu of any
other remedies available to either Party at law, in
equity or otherwise.
22.10. Survival.
--------
Any provision of the Agreement which contemplates performance
or observance subsequent to any termination or expiration of
the Agreement (in whole or in part) shall survive any
termination or expiration of the Agreement (in whole or in
part, as applicable) and continue in full force and effect.
Without limiting the generality of the foregoing, Subsections
7.2(e) and 7.2(g) and Sections 7.9 and 7.10 shall survive any
termination or expiration of the Agreement (in whole or in
part). In the event of any conflict with any other provision
of this Agreement, Subsections 7.2(e) and 7.2(g) and Sections
7.9 and 7.10 shall control.
22.11. Public Disclosures.
------------------
All media releases, public announcements, and public
disclosures by either Party relating to the Agreement or the
subject matter of the Agreement, including promotional or
marketing material, but not including announcements intended
solely for internal distribution or disclosures to the extent
required to meet legal or regulatory requirements beyond the
reasonable control of the disclosing Party, shall be
coordinated with and approved by the other Party prior to
release. Notwithstanding the foregoing, IBM may list MSDW as a
customer, and MSDW may list IBM as an information technology
services provider, and each Party may describe in general
terms the services provided by IBM under the Agreement in
proposals and other marketing materials.
22.12. Service Marks.
-------------
Each Party agrees that it shall not, without the other Party's
prior written consent, use the name, service marks or
trademarks of such other Party.
22.13. Third Party Beneficiaries.
-------------------------
The Agreement is entered into solely between, and may be
enforced only by, MSDW and IBM. The Agreement shall not be
deemed to create any rights in third parties, including
suppliers and customers of a Party.
22.14. Amendment.
---------
This Agreement shall not be modified, amended or in any way
altered except by an instrument in writing signed by both
Parties.
22.15. Order of Precedence.
-------------------
It is the intent of the Parties that the language in the
documents making up the Agreement be construed to the maximum
extent possible so as not to create a
53
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Services Agreement by and between MSDW and IBM effective as of July 1, 1999
Amended and Restated as of December 21, 2001
conflict among or between such documents. To the extent any
conflict among or between the documents making up the
Agreement cannot be resolved through application of the
foregoing rule, such conflict will be resolved in accordance
with the following order of precedence (in descending order of
precedence (i.e., starting with highest precedence and ending
with lowest precedence)):
(i) NSAs, International Agreements as well as SSAs
that were executed by the MSDW Contract
Executive;
(ii) The Schedules and exhibit 3 of the Previous
Agreement;
(iii) The Attachments to the Schedules;
(iv) The Annexes to the Attachments;
(v) The Services Agreement; and
(vi) SSAs and International Agreements not executed by
the MSDW Contract Executive.
22.16. Covenant of Good Faith.
----------------------
Each Party agrees that, in its respective dealings with the
other Party under or in connection with the Agreement, it
shall act in good faith.
MORGAN STANLEY DEAN WITTER & CO. INTERNATIONAL BUSINESS
MACHINES CORPORATION
/s/ Steven C. Van Wyk /s/ Mark Morin
By: _________________________ By: ___________________________
Steven C. Van Wyk Mark Morin
Printed: ____________________ Printed: _______________________
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SCHEDULE A: Services
SCHEDULE B: Performance Standards
SCHEDULE C: Charges
SCHEDULE D: Key IBM Positions
SCHEDULE E: Software
SCHEDULE F: Approved Subcontractors
SCHEDULE G: Termination/Expiration Assistance
SCHEDULE H: SSAs and Certain Other Documents
SCHEDULE I: New Services Amendment Form
SCHEDULE J: Equipment
SCHEDULE K: Sample Audit Summary
SCHEDULE L: Certain IBM Competitors
SCHEDULE M: Certain Leases, Licenses and Contracts
SCHEDULE N: International Agreements
SCHEDULE O: Service Delivery Processes