EX-10.1
INFORMATION TECHNOLOGY
OUTSOURCING SERVICES AGREEMENT
BETWEEN SCA AND IBM
This Master Agreement, dated as of the Effective Date, is between Security
Capital Assurance Ltd. ("SCA") and International Business Machines Corporation
("IBM") (collectively, the "PARTIES").
This Master Agreement includes these terms and conditions, the Schedules and
their related Attachments, and is the complete and exclusive agreement between
the Parties regarding the subject matter of this Master Agreement, and replaces
any prior oral or written communications between the Parties with respect to the
subject matter of this Master Agreement.
By signing below, the Parties agree to be bound by the terms of this Master
Agreement. Once signed, unless prohibited by applicable law, any reproduction of
this Master Agreement made by reliable means (for example, photocopy or
facsimile) is considered an original.
Agreed to: Agreed to:
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Security Capital Assurance Ltd International Business Machines
Corporation
By: By:
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Authorized Signature Authorized Signature
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Name and Title (Type or Print) Name and Title (Type or Print)
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Date Date
Security Capital Assurance Ltd International Business Machines
One Bermudiana Road Corporation
▇▇▇▇▇▇▇▇, ▇▇ 11, Bermuda ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
INFORMATION TECHNOLOGY OUTSOURCING SERVICES AGREEMENT BETWEEN SCA AND IBM
TABLE OF CONTENTS AND SCHEDULES
This Master Agreement includes the following Sections, Exhibits, and
Schedules:
SECTION TITLE PAGE #
1. GOALS AND OBJECTIVES.......................................................5
2. DEFINITIONS................................................................5
3. TERM.......................................................................5
4. AGREEMENT STRUCTURE AND INTERPRETATION.....................................6
4.1 Agreement Structure...................................................6
4.2 Interpretation........................................................6
5. MANAGEMENT OF THIS AGREEMENT...............................................6
5.1 Project Executives....................................................6
5.2 Meetings..............................................................6
5.3 Joint Advisory Committee..............................................7
5.4 Personnel.............................................................7
5.5 Change Control Procedures and Changes to The Services.................9
6. SERVICES..................................................................11
6.1 Description of Services..............................................11
6.2 Transition of Services...............................................16
6.3 Agreements...........................................................17
6.4 Equipment............................................................19
6.5 Consents.............................................................21
6.6 Service Levels.......................................................21
6.7 Disaster Recovery....................................................25
7. New Services and Projects.................................................26
7.1 New Services.........................................................26
7.2 Projects.............................................................26
7.3 Project Plan Contents................................................27
8. Changes in Circumstances and Other Reductions in Resource Usage...........28
8.1 Changes in Circumstances.............................................28
8.2 Changed Circumstance Adjustments.....................................29
9. Fees, Payment and Invoices................................................30
9.1 Fees.................................................................30
9.2 Costs and Expenses...................................................30
9.3 Rights of Set Off....................................................30
9.4 Refundable Items.....................................................30
9.5 Unused Credits.......................................................31
9.6 Proration............................................................31
9.7 Time of Payment......................................................31
9.8 Disputed Payment.....................................................31
10. Dispute Resolution........................................................32
11. Renewal and Termination...................................................32
11.1 Renewal.............................................................32
11.2 Termination for Cause...............................................33
11.3 Termination for Convenience.........................................34
11.4 Termination for Change in Control of IBM............................34
11.5 Termination for Bankruptcy..........................................34
11.6 Termination for Force Majeure.......................................35
11.7 Termination for Failure to Achieve Transition.......................35
11.8 Cumulative Remedies.................................................35
11.9 Adjustment..........................................................35
11.10 Transfer Assistance................................................35
11.11 Insurance..........................................................38
12. Confidential Information..................................................40
13. Intellectual Property Rights..............................................42
14. Indemnification...........................................................43
15. Limitation of Liability...................................................48
15.1 General Intent......................................................48
15.2 Damages.............................................................48
16. Warranty..................................................................49
16.1 By IBM..............................................................49
16.2 Mutual Representations and Warranties...............................50
17. Compliance with Laws......................................................51
18. General...................................................................53
18.1 Assignment and Binding Nature.......................................53
18.2 Data Privacy and Security...........................................53
18.3 Data and Return of Data.............................................56
18.4 Force Majeure.......................................................57
18.5 Freedom of Action...................................................57
18.6 Taxes...............................................................57
18.7 Governing Law and Jurisdiction......................................58
18.8 Modifications.......................................................58
18.9 Notifications and Approvals.........................................58
18.10 Publicity..........................................................59
18.11 Relationship.......................................................60
18.12 Remarketing........................................................60
18.13 Risk of Loss.......................................................60
18.14 Severability.......................................................60
18.15 Survival...........................................................60
18.16 Third Party Beneficiaries..........................................60
18.17 Waiver.............................................................61
18.18 Environmental......................................................61
18.19 Facilities.........................................................61
18.20 Service Locations..................................................62
18.21 Joint Verification.................................................62
18.22 Audits.............................................................63
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EXHIBIT TITLE
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1 Glossary
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SCHEDULES AND ATTACHMENTS
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SCHEDULE TITLE
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A Services and Support
Responsibilities
Part 0: Services by Country
Agreement
Part 1: Support Services
Part 2: Helpdesk Services
Part 3: Server Services
Part 4: End User Computing
Services
Part 5: Network Services
Part 6: Cross Functional
Services
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B Service Levels
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C Charges
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D Transition Plan
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E Contracts
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F Software
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G Machines and Connectivity
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H SCA Standards
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I Facilities
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J List of Approved Subcontractors
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K Materials for Policy and
Procedures Manual
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INTENTIONALLY LEFT BLANK
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M Asset Refresh Plan
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N Reports
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O Disaster Recovery Plan
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P IBM Affiliates and Agents
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INTENTIONALLY LEFT BLANK
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T SCA Competitors
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ATTACH- TITLE
MENTS
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A UNITED KINGDOM COUNTRY
AGREEMENT
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B BERMUDA COUNTRY AGREEMENT
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C XLFAS ACKNOWLEDGEMENT
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1. GOALS AND OBJECTIVES
a. Goals and Objectives. The Parties agree upon the following specific
goals and objectives for this Master Agreement:
1. The Parties agree that the Services shall be provided under
terms and conditions that are designed to provide SCA with
flexibility in (i) its future use of information technology in
the operation of its business, (ii) the hardware, software and
services IBM has engaged to support SCA's information
technology operations, and (iii) in the event SCA desires to
transition to other providers of information technology
services, efficiently transitioning to such and to new
technology platforms, all in accordance with the terms and
conditions of this Agreement.
2. The Parties will address the separation of SCA's information
technology networks, applications, and operations in
accordance with Schedule D (Transition Plan) attached hereto
to allow SCA to follow its own path, and in so doing, SCA
shall have access to certain agreed upon resources,
technology, economies of scale, and skills of IBM, which SCA
may not have been able to develop on its own, all in
accordance with the terms and conditions of this Agreement.
3. IBM acknowledges that SCA is seeking: (i) significant
reductions in expenses and capital; (ii) to change certain
fixed cost to variable costs; (iii) better linkage of costs to
the discrete services provided; (iv) ease and accuracy
associated with the services identified as Services hereunder,
and (v) improved business results for operations that are
dependent upon information technology SYSTEMS.
4. IBM acknowledges that SCA is seeking: (i) creative solutions
that maintain and improve upon the economies of scale SCA
currently enjoys, while accelerating the accomplishment of the
projects described herein; (ii) no disruption in the delivery
of services; and (iii) service levels that are equal to those
available for the services as of the Effective Date.
5. The Services will be provided in a cost-effective, efficient
manner in light of the material requirements of the Services
and the applicable Service Levels. IBM will use reasonable
efforts to identify technological advances and improvements
introduced generally in the information technology services
outsourcing industry.
b. The foregoing list of goals and objectives is not intended to expand
the scope of IBM's or SCA's obligations under this Agreement, or to
alter the plain meaning of the terms and conditions of this
Agreement.
2. DEFINITIONS
The defined terms used in this Agreement have the meanings specified in
Exhibit 1.
3. TERM
This Agreement begins on the Effective Date and expires on the Expiration
Date (the Term), unless earlier terminated or extended under the terms of
this Agreement.
4. AGREEMENT STRUCTURE AND INTERPRETATION
4.1 AGREEMENT STRUCTURE.
The Parties intend that the Services shall be provided pursuant to this
master Agreement (the "MASTER AGREEMENT") and separate country agreements
for the United Kingdom (the "UK COUNTRY AGREEMENT") and Bermuda (the
"BERMUDA COUNTRY AGREEMENT"). Services provided under the Master Agreement
shall be delivered and invoiced to XL Financial Administrative Services,
Inc. ("XLFAS"). Services provided under the UK Country Agreement and the
Bermuda Country Agreement shall be provided to the SCA Affiliates
identified in those agreements but shall be invoiced in a single, monthly
invoice to XLFAS as provided in Section 9 hereof and in Schedule C
(Charges) and SCA agrees to be ultimately responsible for the payment of
such invoices. IBM agrees to provide to SCA a consolidation of the Master
Agreement, UK Country Agreement and Bermuda Country Agreement invoices
into a single billing statement (a "CONSOLIDATED INVOICE"). Except as
expressly provided in the UK Country Agreement or the Bermuda Country
Agreement (including any country-specific terms set forth therein), the
terms and conditions of the Master Agreement shall govern both such
country agreements. In the event of a conflict between the terms of the
Master Agreement and either the UK Country Agreement or the Bermuda
Country Agreement, the conflicting terms of each such country agreement
shall govern
4.2 INTERPRETATION.
This Agreement including all of its Attachments shall be interpreted so
that all of the terms in such documents are given as full effect as
possible. If the terms contained in Articles 1 to 18 of this Agreement
conflict with its Attachment(s), the terms in Articles 1 to 18 will
prevail. If there is a conflict between the terms in this Agreement and
mandatory statutory law, mandatory statutory law will prevail.
5. MANAGEMENT OF THIS AGREEMENT
5.1 PROJECT EXECUTIVES.
Each Party will appoint an individual (the "PROJECT EXECUTIVE") who has
the authority to represent and bind its respective Party in connection
with all aspects of this Agreement. Before assigning an individual as a
Project Executive, each Party will introduce the individual to the other
and provide information reasonably requested regarding the assignment of
the individual as Project Executive, and discuss reasonable objections the
other may have to such assignment. IBM and SCA may replace their
respective Project Executives by informing each other with reasonable
prior notice and an opportunity to be introduced to the prospective new
Project Executives and discuss reasonable objections, if any, to such
replacement.
5.2 MEETINGS.
SCA and IBM will conduct periodic meetings which will include: (i) a
weekly operations meeting to discuss performance and anticipated
activities and changes; (ii) a monthly management meeting to review the
reports; and (iii) a quarterly senior management meeting to review
contractual, business, planning, or performance issues.
5.3 JOINT ADVISORY COMMITTEE.
Within two months after the Effective Date, IBM and SCA will create a
committee (the "JOINT ADVISORY COMMITTEE") consisting of three designees
from each of the Parties to oversee the management of this Agreement. Such
oversight will include conducting annual reviews of the operating and
strategic plans prepared by the Project Executives.
5.4 PERSONNEL.
a. SUBCONTRACTORS
1. PRIOR APPROVAL. Prior to subcontracting to a subcontractor
any Basic Services that are valued, in the aggregate (whether
in a single transaction or a series of related transactions),
at greater than one hundred thousand dollars ($100,000.00)
per year attributable to such Basic Services (such
subcontract, a "MAJOR SUBCONTRACT"), IBM shall notify SCA
of the proposed subcontractor and subcontract and in each
instance where such subcontractor is not set forth on Schedule
J (List of Approved Subcontractors) as an Approved
Subcontractor, shall obtain SCA's prior approval of such
subcontractor and subcontract. In seeking SCA's approval in
accordance with the foregoing, IBM will specify in writing to
SCA: (a) the specific components of the Services that IBM
proposes to subcontract; (b) the scope of the proposed
subcontract; and (c) the identity, qualifications and
financial resources of the proposed subcontractor, along with
any information reasonably requested by SCA regarding the
proposed subcontractor. At SCA's request, IBM shall forward to
SCA a description of the scope of such subcontract. SCA shall
have the right to approve or disapprove of proposed Major
Subcontracts in its reasonable discretion. Notwithstanding any
other provision of this Agreement, all potential
subcontractors shall be required to execute IBM's
nondisclosure agreement containing confidentiality obligations
no less restrictive than those set forth in Article 12
(Confidential Information), below, before IBM may disclose any
of SCA's Confidential Information to such subcontractors or
enter into any discussions with such subcontractors regarding
this Agreement. Notwithstanding the foregoing, IBM may, in the
ordinary course of business, subcontract for Third Party
Services or products that are not Dedicated Services to SCA
and that are not material (e.g., requiring access to SCA's
facilities or Confidential Information) to a particular
function constituting a part of the Basic Services without
SCA's prior approval.
2. RESPONSIBILITY. Any subcontracting shall not release IBM from
its responsibility for its obligations under this Agreement.
IBM shall be responsible for the work and activities of each
of its IBM Agents, including compliance with the terms of this
Agreement, and shall be and remain responsible for the
performance of all obligations under this Agreement that are
required to be performed by any subcontractor pursuant to a
subcontract approved in accordance with this Section 5.4. IBM
shall be responsible for all, and SCA shall have no
responsibility for any, payments required to be made to IBM's
subcontractors. SCA shall have the right to notify IBM if SCA
reasonably determines that the continued assignment to the SCA
account of any IBM subcontractor is not in the best interests
of SCA. Upon receipt of such notice, IBM shall work with SCA
to resolve the issue and, if appropriate or necessary replace
such IBM subcontractor with a suitable replacement in a
prudent manner so as not to interrupt or adversely affect the
Services.
b. IBM PERSONNEL
1. CONDUCT OF IBM PERSONNEL.
While at SCA Service Locations, IBM personnel shall: (i)
comply with IBM's business conduct guidelines, as well as
SCA's rules and regulations regarding personal and
professional conduct generally applicable to personnel at such
SCA Service Locations (as such rules and regulations may be:
(A) communicated orally by SCA directly to IBM or IBM
personnel, followed within five (5) business days with a
written statement summarizing the oral communication; (B)
disclosed to IBM or IBM personnel in writing; (C)
conspicuously posted at a SCA Service Location; (D)
electronically posted; or (E) communicated by any other means
generally used by SCA to disseminate such information to its
employees or contractors); (ii) comply with reasonable
requests of SCA personnel pertaining to personal and
professional conduct; and (iii) otherwise conduct themselves
in a businesslike manner.
All IBM personnel shall clearly identify themselves as IBM
personnel and not as employees of SCA, when reasonable under
the circumstances to do so, and IBM personnel shall not
identify themselves as SCA employees in any case. This shall
include any and all communications, whether oral, written or
electronic, to the extent reasonably necessary to so identify
themselves. Each IBM personnel working in a SCA Service
Location shall wear a badge provided by SCA in accordance with
its personnel policies applicable to similarly situated
on-site IBM personnel.
IBM shall immediately remove (or cause to be removed) any IBM
personnel who is or are known to be or reasonably suspected of
engaging in substance abuse while at a Service Location, in a
SCA vehicle or while performing Services. In the case of
reasonable suspicion, such removal shall be pending completion
of the applicable investigation. Substance abuse includes the
sale, attempted sale, possession or use of illegal drugs,
illegal drug paraphernalia, or, to the extent not permitted at
Service Locations, alcohol, or the misuse of prescription or
non-prescription drugs. IBM has and will maintain a substance
abuse policy and that such policy will be applicable to all
IBM personnel performing Services under this Agreement.
Except as otherwise approved by SCA, those IBM personnel
located on SCA's premises may only provide Services on such
premises which support SCA's operations.
2. ACCESS TO IBM PERSONNEL AND RESOURCES. Upon SCA's request, and
subject to Section 5.2, IBM shall provide SCA with timely
access to IBM's specialized services, personnel and resources
and associated software, equipment, systems, research
briefings, and briefings on available technology and process
and procedure improvements, as and when IBM makes them
available generally to its similarly-situated customers.
3. NON-COMPETITION. IBM shall not assign an IBM Project Executive
to the account of an SCA Competitor for twelve (12) months
after such IBM Project Executive ceases to work with SCA,
without SCA's prior consent.
4. PERSONNEL PROCEDURES. IBM shall maintain records relating to
all personnel provided pursuant to this Agreement, which
records shall include, at a minimum, verification of
qualifications, licenses, certifications, and references,
verifying that such personnel are qualified in light of
applicable law, industry standards, and this Agreement, to
perform the work contracted for herein. IBM shall also
maintain records of in-service training and records of
assignments. The foregoing shall be subject to IBM's personnel
practices.
5. TURNOVER. SCA and IBM agree that it is in their best interests
to keep the turnover rate of IBM Personnel primarily assigned
to perform the Services to a reasonably low level.
Accordingly, if SCA believes that IBM's turnover rate may be
excessive and so notifies IBM, IBM shall meet with SCA to
discuss the reasons for, and impact of, the turnover rate. If
requested by SCA, IBM shall submit to SCA its proposals for
reducing the turnover rate, and if requested by SCA the
Parties shall mutually agree on a program to bring the
turnover rate down to an acceptable level. In any event, to
the extent that the turnover rate adversely affects (or as
reasonably demonstrated by SCA could adversely affect) the
provision of the Services, IBM shall use reasonable efforts to
keep the turnover rate to a reasonably low level, and IBM
acknowledges and agrees that notwithstanding transfer or
turnover of IBM Personnel, IBM remains obligated to perform
the Services in accordance with this Agreement.
5.5 CHANGE CONTROL PROCEDURES AND CHANGES TO THE SERVICES.
a. CHANGE CONTROL. The responsibility for establishing the IT
architecture, standards and strategic direction of SCA shall at all
times remain with SCA. IBM, in performing the Services, shall
conform to and shall support such IT architecture, standards and
strategic direction. Any changes to the Services required for such
conformance shall be implemented through the Change Control
Procedures as defined herein.
IBM shall ensure that with respect to all changes to SCA's IT
environment, which changes are necessitated by, caused by or result
from the Services (including changes to programs, manual procedures,
jobs, distribution parameters and schedules), IBM shall comply with
the following change control requirements:
1. Prior to using any Software or Equipment to provide the
Services which Software or Equipment had not theretofore been
used, IBM shall have verified that the item has been properly
installed, is in good working order, and is operating in
accordance with its specifications.
2. IBM shall not make any of the following changes to SCA's IT
environment, including by implementing a change in technology
or equipment and software configuration, without first
obtaining SCA's approval, which approval SCA may not
unreasonably withhold: (A) any material change adversely
affecting or that may adversely affect the efficiency,
function or performance of the Services; (B) any change
increasing SCA's charges under this Agreement (other than ARCs
resulting from SCA's consumption of the Services); (C) any
material change inconsistent with the IT architecture,
standards or strategic direction specified by SCA; or (D) any
change materially adversely impacting the way in which SCA
conducts its business or operations. IBM may make temporary
changes required by an emergency, provided that IBM has been
unable to contact the SCA Program Manager to obtain SCA's
approval for such change after making reasonable efforts to do
so (and in any event taking those applicable steps described
in the Policy and Procedures Manual), and further provided
that IBM works diligently to remove the circumstance that
caused
the need for such emergency change and to return the affected
systems or materials to their pre-change condition. IBM shall
document and promptly report all emergency changes to SCA,
which changes then shall be subject to SCA's approval
hereunder.
3. IBM shall move programs from development and test environments
to production environments in a controlled manner using the
IBM's promotion to production procedures, which will be
included in the Policy and Procedures Manual, so that no
changes are introduced into any such programs during such
activity; provided that IBM provides for continually full
capability of restoring all programs and environments to the
prior (i.e., pre-move) state until the programs have been
established as fully operational and approved by SCA.
b. Change Control Procedures, as defined in this subsection, shall
govern changes to the Services. Within forty-five (45) days after
the Effective Date, IBM shall prepare and provide to SCA draft
Change Control Procedures detailing how IBM will comply with the
requirements set forth in this Section 5.5 and otherwise control
changes to SCA's IT environment pertaining to the Services. Such
draft change control procedures shall not be deemed to amend the
terms of this Agreement, shall be substantially the same as the
reference draft provided by IBM to SCA prior to the Effective Date,
and shall be consistent with Section 5.5(a) above. Upon receipt of
IBM's draft change control procedures, SCA will promptly review the
draft procedures and provide written comments and suggestions to
IBM, upon receipt of which IBM will promptly revise the draft
procedures in accordance with SCA's comments and suggestions and in
cooperation with SCA and provide a further revised draft of the
draft change control procedures to SCA for review and approval
within a reasonable period of time after receipt of SCA's comments.
The final change control procedures shall be subject to SCA's
approval, and upon such approval shall be deemed the "CHANGE CONTROL
PROCEDURES." The final Change Control Procedures shall be included
in and deemed as part of the Policy and Procedures Manual, and IBM
shall perform all Services in accordance with the final Change
Control Procedures; provided, that in the event that a change is
required before the Change Control Procedures are finalized in
accordance with this Section, IBM shall perform the Services in
accordance with SCA's then-current Change Control Procedures or as
otherwise agreed in writing by the Parties. In the event of a
conflict between the provisions of this Agreement and the Change
Control Procedures, the provisions of this Agreement shall control.
c. CHANGES TO THE SERVICE. SCA may, upon written notice to IBM, propose
changes to the scope of the Services. Upon receiving such notice,
IBM shall review the proposed change and IBM, at no additional cost
to SCA, shall submit to SCA a change in scope proposal as promptly
as reasonably practical (but in no event later than thirty (30)
days) after IBM's receipt of SCA's written proposed changes (the
"CHANGE IN SCOPE PROPOSAL"), which Change in Scope Proposal shall
outline in sufficient detail the tasks to be performed to accomplish
such proposed changes in the scope of the Services and the changes
in fees, if any, that will arise from such proposed changes. SCA, at
its sole discretion, reserves the right to accept, modify (with
IBM's consent), or reject any or all Change in Scope Proposals
received from IBM. If SCA does not accept a given Change in Scope
Proposal, neither Party shall have any obligation to the other under
the Change in Scope Proposal and SCA shall have no obligation to pay
for the proposed change. No Change in Scope Proposal will be deemed
binding upon either Party until both Parties' written acceptance of
the Change in Scope Proposal and SCA's written
authorization to begin work for an amount not to exceed the
additional fees set forth in the Change in Scope Proposal.
6. SERVICES
6.1 DESCRIPTION OF SERVICES.
a. SCOPE OF SERVICES. Commencing as of the Commencement of Steady
State, and thereafter throughout the Term and, if applicable, any
Termination/Expiration Assistance Period, IBM shall provide the
Services to SCA for the benefit of SCA and the Services Recipients
in accordance with the terms of this Agreement, including those
described in the Statement of Work set forth in Schedule A
(Statement of Work), as well as in accordance with the Service
Levels set forth in Schedule B (Service Levels) and any exhibits
thereto. The scope of the services to be provided by IBM hereunder
includes: (a) the Basic Services; (b) the New Services; and (c)
providing all support for the Services as described in this
Agreement. Except as otherwise provided in this Agreement, IBM shall
be responsible for providing all of the resources (including
facilities and personnel) necessary to perform its responsibilities
related to the Services.
b. PROVISION OF TECHNOLOGY. In providing the Services to SCA, IBM
shall: (a) maintain a level of technology that allows SCA to take
advantage of technological advances in order to remain competitive
in the markets which SCA serves; (b) identify to SCA Improved
Technology for SCA's evaluation in connection with the Services and
provide reasonably sufficient information to enable SCA to conduct
such evaluation to the extent such information is generally
commercially available; (c) advise SCA on the latest information
processing trends and directions; and (d) meet with SCA's Project
Executive, at SCA's request, during the Term to inform SCA of, to
the extent generally commercially available, any Improved Technology
or new information processing technology IBM is developing or
information processing trends and directions of which IBM is
otherwise aware that could reasonably be expected to have a material
positive impact on SCA's business. In the event there is a shift in
the technology in SCA's business which affects or might reasonably
affect in a material manner the Services provided hereunder, to the
extent such shift is not otherwise addressed in this Agreement, the
Parties shall negotiate in good faith to address the effect, if any,
of such shift on the Services and fees set forth in this Agreement.
c. TECHNICAL ARCHITECTURE AND PRODUCT STANDARDS. IBM shall comply with
the SCA Standards relating to the Services set forth on Schedule H
(SCA Standards). As requested by SCA, IBM shall assist SCA in
defining and refining the SCA Standards on an ongoing basis
throughout the Term, to be included as updates to Schedule H (SCA
Standards) (subject to SCA's written approval and subject to Section
5.5 (Change Control) and in preparing long-term strategic
information technology plans and short-term implementation plans on
an annual basis. Such assistance to be provided by IBM shall
include, in each case on SCA's request: (a) reasonable participation
with SCA representatives on permanent and ad-hoc committees and
working groups addressing such issues; (b) assessments of the
then-current SCA Standards; (c) analyses of the appropriate
direction for such SCA Standards in light of business priorities,
business strategies, IBM's technical knowledge/expertise and
competitive market forces; and (d) recommendations regarding
information technology architectures and platforms, software and
hardware products, information technology strategies and directions
and other enabling technologies. With respect to each
recommendation, IBM shall provide to
SCA, upon SCA's request, with any or all of the following (which
shall not bind SCA unless agreed to in writing by the Parties): (v)
cost projections and cost/benefit analyses; (w) the changes, if any,
in the personnel and other resources anticipated to be required to
operate and support the changed environment; (x) the resulting
anticipated impact on SCA's information technology costs; (y) the
expected performance, quality, responsiveness, efficiency,
reliability, security risks and other service levels; and (z)
general plans and projected time schedules for development and
implementation.
d. SCA AUTHORITY AND IBM COMPLIANCE. Notwithstanding any other
provision of this Agreement, SCA shall have final authority to
promulgate SCA Standards within the SCA-Dedicated Environment and to
modify or grant waivers from such SCA Standards. IBM shall (i)
comply with and enforce the SCA Standards, (ii) subject to Article 7
(New Services and Projects) and the Change Control Procedures,
modify the Services as and to the extent necessary to conform to
such SCA Standards, in each case subject to the direction and
approval of SCA and (iii) obtain SCA's prior written approval for
any deviations from such SCA Standards.
e. KNOWLEDGE SHARING. As part of the Basic Services, on SCA's
reasonable request (but no more than two (2) times during any twelve
(12) month period during the Term), IBM shall promptly (but in no
event less than thirty (30) days after any such request) meet with
representatives of SCA in order to: (a) explain to SCA how the
Systems work and should be operated; and (b) explain to SCA how the
Services are being provided, and how the Services are going to be,
or are proposed to be, provided in the future.
f. SHARED ENVIRONMENT. The Parties contemplate that, except for the
Dedicated Equipment and Dedicated Software identified on Schedules F
and G, the hardware and software environment that will be used to
provide the Services will likely be an environment that is shared
with one or more third parties. Notwithstanding the foregoing, prior
to any migration or relocation of any of the Services or SCA's
Confidential Information (including SCA Data) to a hardware or
software environment that is shared with any Third Party, IBM shall
provide to SCA a proposal for such migration or relocation, which
proposal shall include information with respect to functionality,
security, impact on SCA's IT architecture or strategy and risks to
SCA during the Term and following the expiration or termination of
this Agreement. Such proposal shall be subject to SCA's review and
approval (such approval not to be unreasonably withheld, provided
that a reasonable basis for withholding approval shall be any good
faith SCA concerns related to security of all or part of the
hardware or software environment).
g. COOPERATION. IBM shall cooperate with SCA and any Third Party
designated by SCA to perform services for SCA (such services, the
"THIRD PARTY SERVICES") (subject to IBM's intellectual property
rights, and reasonable safety and security procedures), including by
providing: (a) in writing, applicable requirements, standards and
policies for the Services including all information required so that
any enhancements or developments of such Third Party for which IBM
has operational responsibility may be operated by IBM (in each case,
subject to SCA's approval); (b) assistance and support services not
included in the Services to such Third Party at reasonable prices
subject to the approval of SCA; and (c) reasonable access to the
Equipment, Software, Service Locations, and any related information
(including documentation), to the extent that such access is
required for the performance of the Third Party Services and to the
extent that such access does not adversely affect IBM's ability, or
materially increase IBM's cost, to perform the Services; provided
that to the extent IBM's cooperation would result in IBM's
Confidential
Information being disclosed to the Third Party, such disclosure
shall be made pursuant to a confidentiality agreement between such
Third Party and the SCA which contains confidentiality obligations
which are no less restrictive than those set forth in Article 12
(Confidential Information). Each Party shall promptly notify the
other Party if such first Party is aware of an act or omission of
any such Third Party that may cause a problem or delay in providing
the Services, and the Parties shall cooperate with each other to
prevent or circumvent such problem or delay.
h. NO FUTURE OBLIGATIONS. SCA shall be under no future obligation to
acquire additional or future services from IBM, including any New
Services.
i. PRE-APPROVAL REQUIRED. IBM shall obtain the prior written approval
of SCA (approval not to be unreasonably withheld) prior to acquiring
and using in the provision of the Services any new Dedicated
Hardware, Dedicated Software, or other Dedicated resources or
Equipment that would (A) adversely affect the efficiency, function
or performance of the Services; (B) increase SCA's charges under
this Agreement; (C) be inconsistent with the IT architecture,
standards or strategic direction specified by SCA; or (D) adversely
impact the way in which SCA conducts its business or operations .
j. OFFICE SPACE.
1. IBM shall provide to SCA, without charge, a reasonable amount
of furnished non-permanent office space at any IBM Service
Location for the occasional use of the SCA Project Executive
and his or her designees when visiting such location in
connection with the Services. The SCA Project Executive and
his designees, as applicable, shall comply with all reasonable
policies and procedures governing access to and use of such
locations of which they have been notified in writing, and
shall leave such space in materially the same condition it was
in immediately before they used the space, ordinary wear and
tear excepted.
2. SCA shall, subject to and in accordance with the plan set
forth in Schedule I (Facilities), provide to IBM without
charge on a Dedicated basis, the amount of furnished office
space and other facilities set forth in Schedule I
(Facilities) at all SCA Service Locations (together with
reasonable security services, janitorial services, heat,
light, power, air conditioning and other utilities) and
substantially the same access to SCA's workplace services,
including office equipment (telephone, fax, copiers and
printers) and cafeteria facilities, as it provides to its
employees for the use of the IBM Project Executive and his
designees when performing the Services at such location and
other IBM employees as may be reasonably required. IBM shall
vacate the office space and other facilities as provided in
Schedule I (Facilities). The IBM Project Executive, his
designees and the other IBM employees, as applicable, shall
comply with all reasonable policies and procedures governing
access to and use of such locations of which they have been
notified in writing, and shall leave such space in materially
the same condition it was in immediately before they used the
space, ordinary wear and tear excepted.
k. POLICY AND PROCEDURES MANUAL.
1. Within ninety (90) days after the Effective Date, IBM shall
deliver to SCA for review and comment a draft of a manual (the
"POLICY AND PROCEDURES MANUAL") describing in detail (i) how
IBM shall perform the Services, (ii) the Equipment and
Software used
to provide the Services, and (iii) reasonably required and
available documentation that provides further information
regarding the Services (such as, for example, operations
manuals, user guides, forms of Service Level reports, call
lists, escalation procedures, emergency procedures, and
requests for approvals or information). Such draft Policy and
Procedures Manual shall describe the activities IBM proposes
to undertake in order to provide the Services, including,
where appropriate, those direction, supervision, monitoring,
quality assurance, staffing, reporting, planning and
overseeing activities normally undertaken at facilities that
provide services of the type IBM shall provide under this
Agreement, and further including acceptance testing and
quality assurance procedures to be approved by SCA. SCA will
thereafter review the draft Policy and Procedures Manual and
provide comments and suggestions to IBM within fifteen (15)
days after receipt of the initial draft, upon receipt of which
IBM will promptly revise the draft Policy and Procedures
Manual in accordance with SCA's comments and suggestions, as
mutually agreed by the Parties, and provide a further revised
draft of the draft Policy and Procedures Manual to SCA for
review and approval within fifteen (15) business days after
receipt of SCA's comments. The final Policy and Procedures
Manual shall be subject to SCA's approval.
2. IBM's initial draft of the Policy and Procedures Manual shall
be based on (i) the materials attached hereto as Schedule K
(Materials for Policy and Procedures Manual), and (ii) IBM's
customary practices.
3. IBM shall update and revise the Policy and Procedures Manual
throughout the Term to reflect changes in the Services and the
procedures used to provide the Services; provided that
proposed updates and revisions to the Policy and Procedures
Manual shall be provided to SCA in advance for review, comment
and approval, and no such updates or revisions will be deemed
to be part of the Policy and Procedures Manual without the
written approval of SCA. IBM shall update and deliver to SCA
for approval portions of the Policy and Procedures Manual
relating to any material operational change in the Services
within fifteen (15) business days after such change, provided
that no such updates will be deemed to be part of the Policy
and Procedures Manual without the written approval of SCA.
4. IBM shall perform the Services in accordance with the
then-current version of the Policy and Procedures Manual;
provided, that until such time as the Policy and Procedures
Manual is approved in writing by SCA, in accordance with
Section 6.1(k)(1) above, IBM shall perform the Services in
accordance with the then-currently existing policies and
procedures. In the event of a conflict between the provisions
of this Agreement (including Schedule A (Statement of Work))
and the Policy and Procedures Manual, the provisions of this
Agreement shall control, and SCA's acceptance of the Policy
and Procedures Manual shall not be deemed a waiver of any
rights of SCA.
l. QUALITY ASSURANCE. IBM shall develop and implement quality assurance
processes and procedures designed to ensure that the Services are
performed in an accurate and timely manner, in accordance with (i)
the Service Levels, (ii) the terms, conditions and requirements of
this Agreement and (iii) the Policy and Procedures Manual. Such
quality assurance processes and procedures shall be based upon
proven techniques from other installations within IBM's operations
applicable to the Services (unless otherwise directed by SCA, and
provided that this shall not be construed as altering or
superseding the specific obligations of IBM in this Agreement,
including without limitation IBM's obligation to provide the
Services in accordance with the Service Levels) and shall include
verification, checkpoint reviews, testing, acceptance, and other
procedures for SCA to assure the quality and timeliness of IBM's
performance. IBM shall submit such processes and procedures to SCA
for its review, comment and approval within thirty (30) days after
the Effective Date. SCA will thereafter review the draft quality
assurance processes and procedures and provide comments and
suggestions to IBM, upon receipt of which IBM will promptly revise
the draft policies and procedures in accordance with SCA's comments
and suggestions as mutually agreed by the Parties and provide a
further revised draft thereof to SCA for review and approval within
fifteen (15) days after receipt of SCA's comments. Upon SCA's final
approval, such processes and procedures shall be included in the
then-current Policy and Procedures Manual. Prior to the approval of
such processes and procedures by SCA, IBM shall adhere strictly to
SCA's then-current quality assurance policies and procedures as
provided to IBM in writing. No failure or inability of the quality
assurance procedures to disclose any errors or problems with the
Services shall excuse IBM's failure to comply with the Service
Levels and other terms of this Agreement.
m. TECHNOLOGY PLAN. IBM shall prepare an annual technology plan for the
Services in accordance with the provisions of this Section (the
"TECHNOLOGY PLAN"). Each Technology Plan after the first shall
review and assess the immediately preceding Technology Plan. Each
Technology Plan shall consist of (i) a three-year plan, and (ii) an
annual implementation plan, each as described below:
1. The Technology Plan shall include a comprehensive assessment
and strategic analysis of SCA's then-current IT systems and
services for the next three (3) years, including an assessment
of the appropriate direction for such systems and services in
light of SCA's business priorities and strategies and
competitive market forces. The Technology Plan shall include a
specific 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 any
recommended changes or upgrades in technology, a general plan
and a projected time schedule for developing and achieving the
recommended elements, and references to appropriate
information services operations platforms that support service
level requirements, exploit industry trends in production
capabilities and provide potential price performance
improvement opportunities.
2. As necessary to support the overall objectives and directions
of the three-year plan, the corresponding annual
implementation plan shall provide specific guidance as to the
information services requirements, projects and plans for the
upcoming year, including details on operations, maintenance
backlog and development activities. The annual implementation
plan shall include a summary review of IBM's performance of
the Services in the year then concluding, and shall provide
updates and revisions of the long-term plan as appropriate. An
annual implementation plan shall be prepared for each year of
the Master Agreement, and shall be revised in each Technology
Plan to reflect any changes in circumstances since the
previously most recent Technology Plan was provided to SCA. As
part of the process for preparing the annual implementation
plan, the Parties shall review the overall operation of the
Master Agreement to ensure that the Services continue to meet
SCA's strategic IT requirements.
3. IBM shall submit to SCA a draft of each Technology Plan for
SCA's review and approval, which draft shall have been
developed with input from key business users of SCA and shall
be provided within three (3) months after (i) the Effective
Date, for the first Technology Plan (which shall be in support
of calendar year 2007), or (ii) each subsequent anniversary of
the Effective Date, for each Technology Plan after the first
Technology Plan (which shall be in support of the applicable
calendar year after 2007). Following receipt of each draft
Technology Plan, SCA will review the draft Technology Plan and
provide comments and suggestions to IBM, upon receipt of which
IBM will promptly revise the draft Technology Plan in
accordance with SCA's comments and suggestions as mutually
agreed by the Parties and provide a further revised draft
thereof to SCA for review and approval within thirty (30) days
after receipt of SCA's comments. The final Technology Plan
shall be subject to SCA's approval.
4. Without limiting the foregoing subsection, the schedule for
developing and delivering each Technology Plan shall be
coordinated to support SCA's annual business planning cycle.
The Technology Plan shall be updated by the Parties (subject
to SCA's final written approval) during each calendar year as
necessary to reflect changes in the business of SCA which
materially impact the validity of the then-existing Technology
Plan. IBM shall recommend modifications to the Technology Plan
as it deems appropriate, and shall revise the Technology Plan
as requested by SCA (provided that such revisions will be
subject to SCA's written approval).
n. IBM PERFORMANCE. IBM shall not be responsible for a failure to
perform its obligations under this Master Agreement to the extent:
(a) such failure is directly attributable to SCA's or its
affiliates', subcontractors or agents failure to perform SCA's
obligations hereunder (provided SCA's failure is not directly
attributable to the failure of IBM, its affiliates, subcontractors
or agents failure to perform IBM's obligations hereunder); (b) the
SCA failure described in the foregoing subsection materially impacts
IBM's ability to perform such obligations; and (c) IBM uses
commercially reasonable efforts to provide SCA with reasonable
written notice of such SCA's nonperformance resulting in IBM's
nonperformance, and uses commercially reasonable efforts (the
"PERFORMANCE EFFORTS") to perform its obligations.
o. COMMUNICATION WITH SERVICES RECIPIENTS. SCA will require that the
Services Recipients direct all communication regarding the terms of
this Master Agreement through and to SCA, and not through or to IBM.
6.2 TRANSITION OF SERVICES.
a. TRANSITION TO BASIC SERVICES.
1. IBM shall develop, in conjunction with SCA, and by no later
than thirty (30) days after the Effective Date, deliver to SCA
for review and comment a draft plan describing in detail its
proposals with respect to the transition of SCA's internal
information technology services to the Basic Services (the
"TRANSITION"), which Transition plan shall take into account
and complement the Technology Plan, and shall include the
Equipment and Software used to effect Transition, the
activities IBM proposes to undertake in order to carry out
Transition and any documentation that provides further
information regarding such Equipment, Software and activities.
SCA will thereafter review the draft Transition plan and,
within ten (10) business days of its
receipt, provide comments and suggestions to IBM, upon receipt
of which IBM will promptly revise the draft Transition plan in
accordance with SCA's comments and suggestions as agreed upon
by the Parties and in cooperation with SCA and provide a
further revised draft of the draft Transition plan to SCA for
review and approval within thirty (30) days after receipt of
SCA's comments. The final Transition plan for such plan shall
be subject to SCA's approval, and upon such approval shall be
attached hereto as Schedule D (Transition Plan) (the
"TRANSITION PLAN"). The final Transition Plan, once approved
by SCA, shall replace the Transition Plan outline attached
hereto as of the Effective Date as Schedule D, and shall
substantially conform in all material respects to the goals,
functions, responsibilities, and milestones set forth in the
Transition Plan outline. On a weekly basis throughout the Term
until Transition is completed, IBM will provide SCA with a
status update on the Transition of deliverables and agreed
upon Transition milestones.
2. As part of the Basic Services, IBM will implement the
Transition Plan. The Transition Plan shall include a schedule
for Transition (the "TRANSITION SCHEDULE"). IBM shall perform
the Basic Services set forth in such Transition Plan (the
"TRANSITION BASIC SERVICES") without causing a material
disruption to SCA's business or operations, and on a schedule
in accordance with the Transition Schedule. SCA shall provide
to IBM reasonable assistance during the Transition period as
set forth in the Transition Plan.
b. TRANSITION COMPLETION. Upon the date of the successful completion of
the Transition, and SCA's written acceptance of the Transition and
the results of the Transition (the "COMMENCEMENT OF STEADY STATE"),
the transition shall be deemed complete.
c. MODIFICATIONS TO THE TRANSITION SCHEDULE. Notwithstanding any other
provision of this Master Agreement, SCA may extend, shorten, or
otherwise modify the Transition Schedule upon written notice to IBM
and in accordance with the Change Control Procedures, subject to the
approval of IBM (not to be unreasonably withheld or delayed). The
Transition Schedule, and any individual milestone dates set forth
therein, shall not otherwise be postponed, delayed, or otherwise
extended except by mutual written agreement between SCA and IBM.
Nothing in this Section shall limit IBM's rights in Section 6.1(n)
(IBM Performance).
6.3 AGREEMENTS.
a. SOFTWARE. In connection with the provision of the Services, IBM
shall be responsible for Software as indicated in Schedule F
(Software), including financial (responsibility for license fees and
maintenance fees), management, operational, administrative and
maintenance responsibilities. Maintenance by IBM shall include
provision and implementation of all fixes, patches, updates,
upgrades and revisions of Software, to the extent made available by
the vendor of such Software and as necessary to perform the Services
in accordance with the Services Levels or to maintain reasonable
currency of SCA's operating environment. Such maintenance for
Software for which IBM has "Maintenance" responsibility as indicated
in Schedule F (Software) is included within the Base Changes
(subject to SCA's responsibility to pay Maintenance Fees as
indicated in Schedule F) and shall not be separately charged to SCA
except where such maintenance applies only to Software exclusively
Dedicated to SCA. Where IBM has operational responsibility for
Software as indicated by Schedule F (Software), IBM shall preserve
an active copy of Software and a backup copy of Software, in
accordance with
the Policy and Procedures Manual and Statements of Work. IBM shall
use the Software to meet its Statements of Work and Service Level
Agreement obligations.
b. SYSTEMS SOFTWARE. In connection with the provision of Services, IBM
shall be responsible for the Systems Software as indicated in
Schedule F (Software), including financial, management, operational,
administrative, and maintenance support for the Systems Software
identified in Schedule F (Software), including any payments that
become due with respect to such Systems Software on or after the
Effective Date, and for modifying, upgrading and enhancing such
Systems Software in accordance with the Statement of Work and with
all confidentiality and usage restrictions requirements under any
license agreements for such Systems Software (provided that IBM
shall not be responsible for breaches of such confidentiality and
usage restrictions requirements committed by SCA).
c. APPLICATIONS SOFTWARE. In connection with the provision of Services,
IBM shall be responsible for the Applications Software, as indicated
on Schedule F (Software), except for SCA Retained Software as
indicated on Schedule F (Software), or, for any Applications
Software not listed on Schedule F (Software) or acquired after the
Effective Date, as directed by SCA.
d. IBM ASSUMED SOFTWARE; OTHER IBM ASSUMED AGREEMENTS. In addition to
IBM's responsibility for Systems Software and Applications Software
as set forth above, IBM shall be responsible for the agreements
indicated as "IBM ASSUMED" on Schedule E (Contracts), including
financial, management, operational, administrative, and maintenance
support therefor (including any payments that become due with
respect to such "IBM Assumed" agreements on or after the Effective
Date, and for compliance with all confidentiality and usage
restrictions requirements under any such agreements (other than for
breaches of such confidentiality and usage restrictions requirements
committed by SCA). Such responsibility shall extend to any
agreements not listed on Schedule E (Contracts) or acquired after
the Effective Date, that are designated by SCA as IBM Assumed
(pursuant to Change Control Procedures).
1. For the IBM Assumed Software used by SCA as of the Effective
Date, and for the services for which the applicable agreements
are indicated as "IBM Assumed" on Schedule E (Contracts), the
Parties shall cooperate with one another to jointly determine
and agree upon (provided that SCA shall not unreasonably
withhold its agreement) whether the IBM Assumed Software and
such agreements shall (i) be kept in effect or (ii) replaced
by IBM with alternative software or alternative services as
necessary to provide the Services. In the event that any fees
are required to be paid under any IBM Assumed agreement in
order for IBM to access and/or use such IBM Assumed Software
or service, such fees shall be paid by IBM. SCA shall
reasonably cooperate with IBM in negotiating any such fees
upon IBM's reasonable request.
2. In the event that the Parties jointly determine, in accordance
with subsection (d) above, that SCA shall keep a particular
IBM Assumed Software or other "IBM Assumed" service in effect,
the Parties may jointly determine whether the applicable
agreement(s) shall be maintained in the name of SCA, renewed
by SCA, assigned by SCA to IBM or its designee, or otherwise
amended. In the event that the Parties decide that such
agreement(s) shall be maintained in the name of SCA (as
applicable) or renewed by the SCA (as applicable) and if such
agreement(s) are so
maintained or renewed, IBM shall be responsible for all
payments that become due with respect to the applicable IBM
Assumed Software (including with respect to any maintenance
agreements related thereto), or other "IBM Assumed" agreement,
after the Commencement of Steady State (but not including
payments for services performed by the software or other IBM
prior to the Commencement of Steady State); provided that SCA
may elect either (i) by providing written notice to IBM, to
require IBM to pay such fees directly, in which event IBM
shall pay such fees directly, or (ii) to pay any such fees on
its own behalf, in which event IBM shall (A) review and
correct any errors in any applicable invoices in a timely
manner and provide any such corrections to the other
party(ies) to the applicable agreement(s), (B) submit such
invoices to SCA in a timely fashion for payment within a
reasonable period of time prior to the due date, and (C)
provide SCA with a credit hereunder equal to the value of such
fees). SCA shall reasonably assist IBM in providing initial
contacts for the other party(ies), if required.
3. In the event that the Parties jointly determine, in accordance
subsection (d) above, to replace a particular IBM Assumed
Software or other "IBM Assumed" agreement, IBM shall be
responsible for complying with any notice obligations to the
applicable software or other IBM. In the event that any fees
are incurred due to failure by the IBM to comply with such
notice obligations, or that any fees are incurred in addition
to those due under the applicable agreement due to a decision
to replace IBM Assumed Software or other "IBM Assumed"
agreement before the end of the then current term of the
applicable agreement, such fees shall be paid by IBM.
e. PASS THROUGH SOFTWARE; OTHER PASS THROUGH AGREEMENTS. IBM shall
install and replace any Pass Through Software only upon the
instruction or express prior written agreement of SCA. As of the
Effective Date, the parties acknowledge that there is no Pass
Through Software. IBM shall (A) review and correct any errors in any
applicable invoices for "Pass Through" agreements in a timely manner
and provide any such corrections to the other party(ies) to the
applicable agreement(s), and (B) submit such invoices to SCA in a
timely fashion for SCA payment within a reasonable period of time
prior to the due date. SCA shall reasonably assist IBM in providing
initial contacts for the other party(ies), if required, in
connection with subsection (A) of this Section 6.3(e). IBM shall be
responsible for compliance with all confidentiality and usage
restrictions requirements under any such "Pass Through" agreements
(other than for breaches of such confidentiality and usage
restrictions requirements committed by SCA). Such responsibility
shall extend to any agreements not listed on Schedule E (Contracts)
or acquired after the Commencement of Steady State, that are
designated by SCA as "Pass Through" (pursuant to Change Control
Procedures).
f. RETAINED SOFTWARE; OTHER RETAINED AGREEMENTS. SCA shall retain all
payment obligations with respect to Retained Software as stated on
Schedule F (Software), and with respect to the other agreements
indicated as "Retained" on Schedule E (Contracts).
6.4 EQUIPMENT.
a. GENERALLY. IBM shall provide the Services using the Equipment. In
connection with provision of Services, IBM shall be responsible for
the Equipment required for the provision of the Services, including
the financial, management, operational, administrative, maintenance,
repair, upgrade, and enhancement support for such Equipment.
b. ADDITIONS, REPLACEMENTS, AND UPGRADES.
1. As part of the Services, IBM shall provide IBM-Provided
Equipment and replace or upgrade the Equipment, including such
additional IBM-Provided Equipment, replacements, and upgrades
to the Equipment as may be necessary for IBM to perform the
Services in accordance with the Service Levels and as required
by the Asset Refresh Plan set forth as Schedule M (Asset
Refresh Plan). In the event the addition, replacement, or
upgrade of the Equipment requires an upgrade or modification
to any software, IBM shall not install or use such Equipment
without first notifying SCA of the impact of the proposed
changes and obtaining SCA's written consent. Upon receipt of
SCA's consent, IBM shall provide the additional, replacement,
or upgraded Equipment as specified in IBM's notice. Except for
SCA Retained Software and any Pass Through Software used by
IBM pursuant to the parties' mutual written agreement, IBM
shall be financially responsible for any upgrades or
modifications to any Software necessary as a result of IBM's
use of additional Equipment, replacements, or upgrades to the
Equipment, while SCA shall be financially responsible for any
upgrades or modifications to any Retained Software necessary
as a result of IBM's use of additional Equipment,
replacements, or upgrades to the Equipment. Upon SCA's request
and as part of the Basic Services, IBM shall be responsible
for configuring, installing, testing, implementing, and
maintaining (including warranty services) all additions,
replacements, and upgrades to the Equipment.
2. As part of the Services, IBM shall be responsible for any
maintenance, upgrade, modification, or replacement of any
IBM-Provided Equipment, which maintenance, upgrade,
modification, or replacement is required by (i) the addition,
replacement, or upgrade of any Software, or (ii) the
requirements set forth in Schedule A (Statement of Work) or
the Services Levels (e.g., any requirement to support a new
Software release, a new Software version, or any requirement
to support or continue to support a "sunset" or "backlevel"
version of Software).
3. As part of the Services, IBM shall be responsible for any
maintenance, upgrade, modification, or replacement of any
SCA-Provided Equipment, which maintenance, upgrade,
modification, or replacement is required by (i) the addition,
replacement, or upgrade of any Systems or Application Software
(subject to the Change Control Procedures, as may be
applicable), or (ii) the requirements set forth in Schedule A
(Statement of Work) or the Service Levels set forth in
Schedule B (Service Levels).
c. NEW AND REPLACEMENT EQUIPMENT. Beginning as of the Effective Date,
IBM shall procure new and replacement Equipment meeting the SCA
Standards from the Equipment manufacturers identified in the Policy
and Procedures Manual.
d. SUBJECT to Section 6.5 (Consents) of this Master Agreement, as of
the Effective Date:
1. IBM will pay the applicable charges for the Contracts as
stated in Schedule E (Contracts);
2. IBM will administer the Contracts to the extent that the
relevant related documents and agreements were disclosed to
IBM prior to the Effective Date. IBM acknowledges that the
Contracts listed in Schedule E were disclosed to IBM prior to
the Effective Date. SCA authorizes IBM to administer the
Contracts;
3. SCA will not terminate, extend, amend, or substitute a
Contract, or enter into any new or amend any existing
agreements or arrangements, written or oral, affecting such
Contracts, without IBM's prior written approval, which shall
not be unreasonably withheld or delayed. SCA will, at IBM's
request, terminate, extend, amend, or substitute a Contract,
provided that IBM reimburses SCA for actual resultant vendor
charges paid by SCA (including without limitation any
termination charges or other contract penalties) as a result
of complying with such IBM request, and IBM will retain any
resultant decreases;
4. IBM will comply with the terms of all Contracts to the extent
that IBM has assumed administration of such Contracts,
provided that SCA will adhere to the terms set forth in the
Contracts and will continue to perform those obligations
expressly retained by SCA under the Contracts as stated in
Schedule E (Contracts); and
5. Subject to Section 6.5 (Consents), SCA grants to IBM, for
IBM's provision of the Services, the authority to exercise
same rights that SCA has under the Contracts with respect to
products, software, and services provided to SCA pursuant to
the Contracts.
e. SCA represents and warrants that all of SCA's obligations under the
Contracts which have accrued periods prior to the Effective Date
have been satisfied.
6.5 CONSENTS.
a. SCA CONSENTS. All SCA Consents shall be obtained by SCA with IBM's
cooperation. SCA shall pay any costs of obtaining the SCA Consents,
except that IBM shall pay any costs of obtaining the SCA Consents
with respect to IBM Assumed Software.
b. IBM CONSENTS. All IBM Consents shall be obtained by IBM with SCA's
reasonable cooperation. IBM shall pay all costs of obtaining the IBM
Consents.
c. IBM RESPONSIBILITY. As part of the Services, IBM is responsible for
obtaining, and shall pay all costs reasonably required for obtaining
all necessary licenses, consents, approvals, permits and
authorizations required by any Laws, solely to the extent such
licenses, consents, approvals, permits and authorizations are
legally required to be obtained by IBM in connection with the
performance and delivery of the Services hereunder.
6.6 SERVICE LEVELS.
a. SERVICE LEVELS. IBM shall perform the Services with promptness and
diligence, in a workmanlike manner and in accordance with the
Service Levels set forth in Schedule B (Service Levels). Subject to
the exclusions specified herein or in an applicable Schedule, IBM
shall perform the Services so as to meet or exceed the Service
Levels set forth in Schedule B (Service Levels), and shall be
responsible for meeting or exceeding the applicable Service Levels
even where doing so is dependent on the provision of Services by IBM
Agents.
b. NEW SERVICE LEVELS. IBM shall provide all New Services at the New
Service Levels applicable to such New Services.
c. MEASUREMENT AND MONITORING TOOLS. IBM shall implement and utilize
the measurement and monitoring tools as set forth in Schedule B
(Service Levels) to measure and report IBM's performance of the
Services against the Service Levels as specified in Schedule B
(Service Levels). SCA shall have the right to approve such
measurement and monitoring tools and procedures prior to
implementation by IBM (provided that the measurement and monitoring
tools as set forth in Schedule B (Service Levels) shall be deemed
pre-approved). Such measurement and monitoring tools shall permit
reporting at a level of detail sufficient to verify compliance with
the Service Levels, and IBM acknowledges that the data produced by
such measurement and monitoring tools shall be subject to audit by
SCA in accordance with Section 18.22. Subject to the terms and
conditions of this Master Agreement, IBM shall provide SCA with
information and access to all such measurement and monitoring tools
and procedures upon request, for purposes of verification.
d. REPORTS. As part of the Basic Services, IBM shall provide monthly
performance reports to SCA as set forth in Schedule N (Reports), and
within ninety (90) days after the Effective Date, the Parties shall
determine and agree upon (as discussed below) additional periodic
reports to be issued by IBM to SCA. Such reports shall be issued at
the frequency reasonably requested by SCA as set forth in Schedule
N. As one such report, IBM shall provide a monthly performance
report, which shall be delivered to SCA within ten (10) business
days after the end of each calendar month, describing IBM's
performance of the Services in the preceding month (the "MONTHLY
PERFORMANCE REPORT"). Such Monthly Performance Report shall:
o separately address IBM's performance in each area of the
Services;
o for each area of the Services, assess the degree to which IBM has
attained or failed to attain the Service Levels and other
performance standards in that area as described in this Master
Agreement;
o explain deviations from the Service Levels and other applicable
performance standards and include a plan for corrective action
for each such deviation where appropriate;
o describe the status of problem resolution efforts, ongoing
projects, and other initiatives, and the status of IBM's
performance with respect to change requests;
o set forth a record of the material Equipment, Software and
personnel changes that pertain to the Services and describe
planned changes during the upcoming month that may affect the
Services;
o set forth the utilization of resources for the month and report
on utilization trends and statistics; and
o include such documentation and other information as SCA may
reasonably request for purposes of verifying compliance with, and
meeting the objectives of, this Master Agreement.
e. FINANCIAL, FORECASTING AND BUDGETING SUPPORT. On a quarterly basis,
and using information provided by SCA relating to its business needs
as relates to the Services, IBM shall provide a twelve (12) month
rolling forecast to SCA for SCA's forecasting and
budgeting purposes, which forecast shall include: (a) actual and
forecasted utilization of Resource Units; and (b) changes to the
environment impacting SCA's costs and/or utilization. In addition,
on an annual basis, IBM shall provide information to SCA regarding
opportunities to modify or improve the Services and/or to reduce the
Fees and/or total cost to SCA of receiving the Services.
f. ROOT CAUSE ANALYSIS. IBM shall perform root cause analysis in
accordance with the terms and conditions of this Master Agreement,
including Schedule A (Statement of Work) and Schedule B. (Service
Levels).
g. CONTINUOUS IMPROVEMENT AND BEST PRACTICES.
1. As further set forth in Schedule B (Service Levels), IBM shall
on a continuous basis, as part of its total quality management
process, identify ways to improve the level of Services
delivered.
2. IBM shall identify and apply proven techniques and tools from
other installations within its operations that would benefit
SCA either operationally or financially. IBM shall implement
the foregoing at the request of SCA, provided that IBM's
implementation thereof will be subject to SCA's prior review
and written approval and provided further that the Parties
shall negotiate in good faith with respect to, and agree upon,
any related increases or reductions in fees payable by SCA
hereunder or any related improvements in Service Levels.
h. SCA SATISFACTION SURVEYS. On an annual basis, IBM shall perform SCA
satisfaction surveys in accordance with to the Policy and Procedures
Manual and shall share the results of those surveys with SCA.
i. BENCHMARKING.
1. After the third (3rd) anniversary of the Effective Date, SCA
may, at its option, initiate a benchmark analysis of the
Services, or one or more Service Towers, provided, however,
that SCA may initiate such benchmark analysis for the Data
Network Transport (e.g., circuits) and Voice Transport (e.g.,
minutes) charges after the second (2nd) anniversary of the
Effective Date. A benchmarking of the Benchmarked Services may
not be duplicated within any eighteen (18) month period. The
Parties will, in good faith, jointly select and contract with
one of the following entities (or another industry-recognized
benchmarking service provider designated by SCA and approved
by IBM) for the benchmarking: Gartner Measurement, Forrester,
and Compass America. The entity selected in accordance with
the foregoing sentence shall be deemed the "BENCHMARKER." All
third party fees of the benchmarking service provider shall be
shared equally by the Parties. The Benchmarker shall have no
financial incentive in the outcome of the Benchmark.
2. Each Party shall have the right to review the benchmarking
procedures to be utilized by the Benchmarker, which shall be
provided to the Parties prior to the start of the benchmarking
process. If the Parties agree on specific directions,
processes or methodologies to be used by the Benchmarker, the
Benchmarker shall be provided such directions and instructed
to comply. Otherwise, the Benchmarker shall be instructed to
use its professional judgment as to the appropriate processes
and methodologies to be applied.
3. The Benchmarker shall execute an appropriately protective
confidentiality agreement with the Parties. In no event shall
IBM have any obligation to (i) provide any proprietary
information or data relating to IBM's agreements with other
customers or (ii) disclose IBM's cost of delivering the
Services. All results of the benchmarking process, and
materials created by the Benchmarker pursuant to the
benchmarking process, shall be jointly owned by SCA and IBM
and shall be the Confidential Information of both Parties, and
shall not be released by either Party to any Third Party
without the other Party's prior written consent.
4. The Benchmarker shall compare the total charges under this
Master Agreement for the Benchmarked Services to prices being
charged by top tier outsourcing service providers to a
representative sample of other entities (the "REPRESENTATIVE
SAMPLE"). In conducting the benchmarking, the Benchmarker
shall normalize the data used to perform the benchmarking to
accommodate, as appropriate, differences in volume of
services, geography, scope and configuration of services,
service levels, financing or payment streams, age of Equipment
and other pertinent factors. The Benchmarker shall select the
Representative Sample from entities (i) identified by the
Benchmarker and (ii) identified by a Party and approved by the
Benchmarker. The following conditions apply to the
Representative Sample: (A) it shall include at least six (6)
entities and no more than eighteen (18) entities, (B) it may
include entities that are outsourcing customers of IBM, and
(C) it may not include entities that have not outsourced those
IT operations that are being benchmarked. Subject to this
Section 6.6(i), Benchmarker shall perform the benchmarking in
accordance with the Benchmarker's documented procedures.
5. The Benchmarker is to conduct a benchmarking as promptly as is
prudent in the circumstances. Based upon the final results of
such benchmarking, IBM shall cooperate with SCA to investigate
variances, if any, and to take corrective action to respond to
any deficiencies. The twenty-fifth (25th) percentile (it being
understood that the "first (1st) percentile" is the lowest
price charged) of fees charged with respect to the
representative sample shall be referred to as the "Benchmark."
Such 25th percentile shall be calculated using a statistically
valid methodology (e.g., NIST). Any dispute as to such
deficiencies, variances or reduction shall be resolved
pursuant to Article 10 (Dispute Resolution).
6. The Benchmarker shall issue a preliminary written report
reflecting its findings. The Parties will review the
preliminary benchmark analysis report and provide any comments
in writing. The Benchmarker will be instructed to consider any
such comments received and, after such consideration and
making any appropriate adjustments, issue a final written
report of its finding and conclusions. If IBM's price(s) for
the Benchmarked Services are priced higher than the Benchmark:
(i) in the event IBM's price(s) exceeds the Benchmark by
five percent (5%) or less, there shall be no adjustment
to IBM's price(s).
(ii) in the event IBM's price(s) exceeds the Benchmark by
more than five percent (5%) of the Benchmark, IBM shall
within thirty (30) days reduce its price(s) to within
five percent (5%) of the Benchmark; provided, however,
in no event shall IBM be required to reduce its charges
by more than 5% of the unit pricing or Supplier Base
Charge for Resource Units for the Services Tower or
Towers that are the subject of the Benchmarker's report.
Such adjustments shall be retroactive to the calendar
month following the issuance of the Benchmarker's final
report. If IBM fails to reduce its price to within five
percent (5%) of the Benchmark, SCA may terminate the
affected portion of the Services subject to the
benchmarking by paying Wind Down Expenses only.
j. SERVICE LEVEL CREDITS. IBM recognizes that SCA is paying IBM to
deliver the Services at specified Service Levels. Without limiting
any other remedy which SCA may have hereunder or otherwise, whether
at law, in equity, or otherwise, if IBM fails to meet Service
Level(s), then IBM shall be required to make such payments or
provide such credits to SCA as are set forth in Schedule B (Service
Levels) in recognition of the diminished value of the Services
resulting from IBM's failure to meet the agreed upon level of
performance; provided that in the event SCA seeks any monetary
damages (other than Service Level Credits as defined in Schedule B
(Service Levels) for such failure by IBM, such monetary damages, if
awarded to SCA, shall be reduced by the amount of Service Level
Credits that have been credited to SCA (or, if such Service Level
Credits have not yet been credited to SCA, then they will be offset
against such monetary damages and, to the extent of the offset,
shall not be credited to SCA); provided, however, that in the event
that SCA does not seek any additional monetary damages within nine
(9) months after a credit is paid or credited to SCA such credit
shall become the sole and exclusive monetary remedy for the Service
Level failure associated with such credit. IBM acknowledges and
agrees that such Service Level Credits and Critical Deliverable
Credits shall not be deemed a penalty.
k. FAILURE. If IBM fails to meet any Service Level and such failure is
not excused pursuant to this Master Agreement, IBM shall promptly
(i) investigate and report on the causes of the problem; (ii) advise
SCA, as and to the extent requested by SCA, of the status of
remedial efforts that will be and/or are being undertaken with
respect to such problems; (iii) correct the problem(s) that led to
such failure, and begin meeting the Service Levels; and (iv) take
appropriate preventive measures designed to reduce the likelihood
that the applicable problem(s) recur. The foregoing shall not be
deemed to limit any other remedy to which SCA may be entitled
hereunder or otherwise, whether at law, in equity, or otherwise.
6.7 DISASTER RECOVERY.
a. DISASTER RECOVERY PLAN.
1. IBM shall, as part of the Basic Services and for the Fees set
forth in Schedule C (Charges), develop and provide to SCA for
its approval prior to the Commencement of Steady State and
thereafter implement a new disaster recovery plan. Upon
written approval by SCA, such disaster recovery plan shall be
attached hereto as Schedule O (Disaster Recovery Plan) (such
plan, the "DISASTER RECOVERY PLAN"). IBM shall annually update
and twice during each Contract Year test the Disaster Recovery
Plan as set forth in Exhibit A (Statement of Work, Disaster
Recovery) and in accordance with the Service Levels set forth
in Schedule B (Service Levels).
2. In the event of a declared disaster, IBM shall perform the
disaster recovery services as described in the Disaster
Recovery Plan and in Schedule A (Statement of Work).
3. The parties acknowledge that, prior to the Commencement of
Steady State, SCA shall obtain disaster recovery services from
its parent corporation and shall be
subject to the terms of any disaster recover plan in
connection therewith (the "INTERIM DISASTER RECOVERY PLAN").
In the event of a declared disaster under the Interim Disaster
Recovery Plan prior to the Commencement of Steady State, IBM
shall cooperate with SCA's reasonable requests for assistance
in connection with implementation by SCA of the Interim
Disaster Recovery Plan.
b. ALLOCATION OF RESOURCES. Whenever a disaster causes IBM to allocate
limited resources between or among IBM, IBM's Affiliates and SCA,
and/or SCA Affiliates at the affected Service Locations, SCA and its
Affiliates shall in no event be treated less favorably with respect
to such allocation than any similarly-situated IBM customer.
7. NEW SERVICES AND PROJECTS
7.1 NEW SERVICES.
a. GENERALLY. SCA, in its sole discretion, may, from time to time
during the Term, request that IBM perform a New Service. In the
event SCA requests IBM to provide any New Service, IBM shall use
commercially reasonable efforts to provide such New Services to SCA,
subject to the Parties negotiating and agreeing upon an appropriate
project plan and/or statement of work. The Parties shall review,
revise, and finalize, if applicable, such draft project plan and/or
statement of work, in each case in accordance with Section 7.2
below. Notwithstanding any other provision of this Master Agreement,
IBM shall not begin performing any New Service, and SCA shall not be
obligated to accept or pay for any New Service, until SCA has
provided IBM with written authorization from the SCA Project
Executive to perform such New Service, upon which approval such New
Service will be deemed a "Service" hereunder and will be performed
by IBM subject to the terms and conditions of this Master Agreement.
Except as otherwise agreed to by the Parties in writing, the terms
and conditions of this Master Agreement will apply to all New
Services.
b. FEE, CHARGES, AND PERSONNEL. Unless otherwise agreed by the Parties,
the fees for any New Service shall be calculated in accordance with
the applicable rate card(s) set forth in Schedule C (Charges).
Notwithstanding any other provision of this Master Agreement, to the
extent that an existing charging methodology would apply to any
portion of a New Service, SCA will pay the charges for such portion
in accordance with such charging methodology. Subject to the terms
and conditions of this Master Agreement, IBM will use commercially
reasonable efforts to provide all New Services utilizing IBM
Personnel who are familiar with the SCA account and SCA's business.
7.2 PROJECTS.
PROJECT PLANS. For each Project requested or required by SCA, IBM shall
promptly prepare and deliver to SCA for review and comment a draft Project
plan developed in accordance with the terms and conditions of this Section
7.2. For each Project, IBM will perform such Project in accordance with
the applicable, finally approved Project Plan for such Project. Except as
otherwise agreed to by the Parties in writing, the terms and conditions of
this Master Agreement will apply to all Project Plans and Projects.
7.3 PROJECT PLAN CONTENTS.
a. GENERALLY. Each draft Project plan, at a minimum, shall consist of
the following: a written statement of the Project's goals and
objectives; a description of the Project approach (i.e., a
description of the technical solution, Project governance, and
functionality to be delivered); a list of any Deliverables and
Completion Criteria applicable to such Deliverables; a Project
timeline that will include a work breakdown structure, required
resources (except with respect to any Project for which IBM proposes
to charge a fixed fee and which is comprised solely of New
Services), a list of tasks to be performed (with task description,
duration, start date and end date), and a list of critical
milestones and target completion dates for such milestones; a
proposed charges forecast that depicts the total projected charges
including charges for assets that either SCA or IBM need to purchase
in conjunction with the Project, and the timing of such charges; the
manner in which charges will be calculated and invoiced; a change
management plan that describes how changes to the Project will be
scoped and approved by the Parties; a communications plan that
describes the method and schedule for Project communications (e.g.,
status reports, conference calls, team meetings); and a risk plan
that identifies potential risks, including potential disruptions to
SCA operations, and the actions that IBM and/or SCA will need to
take in order to mitigate such risks.
b. PROJECT PLANS FOR NEW SERVICES. Each draft Project plan
corresponding to a New Service shall also include the following: a
written description of the work IBM anticipates performing in
connection with such New Service; a schedule for commencing and
completing the New Service; IBM's prospective charges for such New
Service, which charges shall be stated in the pricing methodology
specified by SCA (e.g., time and materials, fixed price, "not to
exceed"); when applicable, a description of any new application,
hardware or other Deliverables to be provided by IBM in connection
with such New Service; when applicable, the software and hardware
resources and run-time requirements necessary to develop and operate
any new applications or other materials; the human resources
necessary to provide the New Service; and when applicable, (A) a
list of any existing applications, hardware, or other materials or
equipment included in or to be used in connection with such New
Service, and (B) acceptance test criteria and procedures for any new
applications or any products or Third Party Services.
c. REVIEW AND APPROVAL OF PROJECT PLANS. Following SCA's receipt of a
draft Project plan, SCA will review the draft Project plan and
provide comments and suggestions to IBM, upon receipt of which IBM
will promptly revise the draft Project plan in accordance with SCA's
comments and suggestions and in cooperation with SCA and provide a
further revised draft of the draft Project plan to SCA for review
and approval within fifteen (15) days after receipt of SCA's
comments. The final Project plan for an applicable Project and/or
New Service shall be subject to SCA's approval, and upon such
approval shall be deemed a "PROJECT PLAN." No Project Plan shall be
modified or amended other than with the prior written approval of
SCA.
d. STATUS REPORTS. During the Term and any Termination/Expiration
Assistance Period, at least on a biweekly basis, IBM shall provide
SCA with a status report for each approved Project Plan. The update,
at a minimum, will provide the following: milestones achieved, the
variances to schedule and, if the project is behind schedule; a
recovery plan that describes the actions that IBM will undertake in
order to return to the schedule in the Project Plan; Deliverables
that have been created, developed, and/or completed and Completion
Criteria that have and have not been met; variances, if any, to the
specifications of the applicable Project and/or New Service; and
charges incurred to date including hardware, software, labor and any
other charges associated with the execution of the Project Plan.
e. ACCEPTANCE TESTING. Promptly after IBM's completion of each
Deliverable hereunder, IBM will deliver the Deliverable to SCA for
acceptance. SCA will have thirty (30) days from its receipt of any
Deliverable to review and evaluate such Deliverable to determine
whether the Deliverable meets, to SCA's reasonable satisfaction, the
specifications and other requirements for such Deliverable as agreed
upon by the Parties ("Acceptance Criteria"). Within such thirty (30)
day period, SCA shall notify IBM of its acceptance or rejection of
the Deliverable. SCA shall provide IBM with a list or description of
the inadequacies, defects, deficiencies or other problems in any
rejected Deliverable, and in such event, IBM shall have thirty (30)
days following receipt of such list or description to correct such
problems (to the extent that such problems do not constitute changes
to the Project requirements) and to deliver a corrected Deliverable
to SCA for SCA's review and acceptance as set forth above. In the
event such corrected Deliverable does not meet the Acceptance
Criteria, SCA may, in its sole discretion and in addition to any
other remedies available to it under this Master Agreement or at law
or in equity, either (i) grant IBM a further thirty (30) days (or
such longer period as SCA may, in its sole discretion, decide) in
which to correct any problems in such Deliverable; or (ii) deem
IBM's failure to provide SCA with an acceptable Deliverable to be a
breach under this Master Agreement.
f. THIRD PARTY SERVICES. Notwithstanding any request made to IBM by SCA
pursuant to Section 7.1, SCA shall have the right to provide to
itself, or to have any Affiliate or Third Party provide to it (in
either case, by agreement with a Third Party or otherwise), any or
all of the Services described in this Master Agreement as well as
the New Services. In the event SCA performs or contracts with a
Third Party to perform any Services, IBM shall cooperate in good
faith with SCA and as applicable any such Third Party in accordance
with Section 6.1(g) (Cooperation).
8. CHANGES IN CIRCUMSTANCES AND OTHER REDUCTIONS IN RESOURCE USAGE
8.1 CHANGES IN CIRCUMSTANCES. As used in this Master Agreement, a
"CHANGED CIRCUMSTANCE" means a circumstance in which an event or
discrete set of events has occurred, or is planned or anticipated,
with respect to the business of SCA (other than SCA's transferring
the Services or a portion of the Services in-house or to a Third
Party), which event or set of events results or will result in a
sustained change in the actual usage of a resource subject to a
Baseline, which event or set of events is reasonably expected to
cause the actual usage of such resource to vary from the applicable
Baseline by twenty five percent (25%) or more for the foreseeable
future but in any event for at least six (6) months. Examples of the
kinds of events that might cause such substantial changes are:
o additions, deletions or other changes to locations where the
Services operate;
o additions, deletions or other changes to the Services provided by
IBM;
o additions or deletions of entities, Affiliates, divisions or
other operating units to whom the Services are provided;
o mergers, acquisitions, divestitures or joint ventures of SCA;
o changes in the method of service delivery, or changes in
operational priorities; or
o changes in SCA's technology strategy.
8.2 CHANGED CIRCUMSTANCE ADJUSTMENTS.
a. Generally
1. SCA will notify IBM in writing at least ninety (90) days prior
to the requested effective date of a Changed Circumstance
Adjustment.
2. SCA will commit to each Changed Circumstance Adjustment for at
least six (6) months.
3. In no event will a Changed Circumstance Adjustment:
(a) reduce a Baseline for each year remaining in the Term by
more than fifty (50) percent of the applicable Original
Baselines for each such year (pro-rated for any partial
years); or
(b) reduce the ASC for each year remaining in the Term by
more than fifty (50) percent of the Original ASC for
each such year, or the applicable charges for the
remaining Services Towers for each such year following
any partial termination of Services.
4. Previously paid charges, such as the ASC and ARCs, and
previously issued credits, such as RRCs, will not be affected
by a Changed Circumstance Adjustment.
5. Upon IBM's and SCA's agreement to a Changed Circumstance
Adjustment, IBM and SCA will amend this Master Agreement to
reflect such Changed Circumstance Adjustment. A Changed
Circumstance Adjustment will not be effective until IBM's and
SCA's execution of such amendment.
b. SCA may notify IBM of any event or discrete set of events that it
believes constitutes a Changed Circumstance (each such notice, a
"CHANGED CIRCUMSTANCE NOTICE")
1. Upon receipt of a Changed Circumstance Notice, IBM will
promptly develop a plan to modify the Services to accommodate
such Changed Circumstance by adjusting the Baselines,
Services, Service Levels, and/or the charges set forth in this
Master Agreement in a cost-effective manner without disruption
to SCA's ongoing operations ("CHANGED CIRCUMSTANCE
ADJUSTMENT"). Such plan shall be submitted to SCA for its
review and approval within thirty (30) days of receipt of a
Changed Circumstance Notice.
2. If SCA approves such plan, IBM will make the agreed
adjustments to the Baselines, Service Levels, Services and/or
the charges set forth in this Master Agreement within thirty
(30) days, and distribute an amended Exhibit C-1 to SCA and
IBM.
3. SCA may, at its option and expense, employ an accredited and
independent auditor, subject to the Confidentiality
obligations set forth in this Master Agreement, to verify
IBM's methodology for calculating the savings, if any, from a
Changed Circumstance Adjustment above conforms to accepted
accounting practices.
9. FEES, PAYMENT AND INVOICES
9.1 FEES. All fees to be payable and which IBM may charge under this
Master Agreement (the "FEES") for the Basic Services are set forth
in Schedule C (Charges). SCA shall not required to pay IBM any
amounts for the Services other than as set forth in this Article 9
and in Schedule C. IBM shall invoice SCA for the Services performed
in accordance with this Master Agreement, including Schedule C.
Invoices shall be itemized as set forth in the Policy and Procedures
Manual or as otherwise reasonably agreed by the Parties. Without
limiting the foregoing, the Policy and Procedures Manual will
include provisions for the itemization of invoices in detail
sufficient to enable SCA to allocate all monthly recurring charges
and all non-recurring charges and costs (including any Projects or
New Services) on a country by country basis with regard to all
Services provided under the Master Agreement. Invoices shall be in
the form set forth in the Policy and Procedures Manual or as
otherwise reasonably agreed by the Parties. Any Pass Through
Expenses shall be passed through to SCA without any ▇▇▇▇ up or other
additional charge by IBM. Any reductions in any Pass Through
Expenses (including without limitation third party expenses related
to voice or data network usage or Third Party Software) shall be
passed through to SCA. In the event that any Services are performed
by IBM hereunder and such performance does not comply with the terms
and conditions of this Master Agreement, IBM's re-performance of
such Services shall not result in any additional charge or cost to
SCA. The provision of any Services or other services pursuant to
this Master Agreement that would result in charges to SCA in
addition to the Fees shall be subject to the prior written approval
of a SCA Authorized Representative, which approval shall not be
unreasonably withheld.
9.2 COSTS AND EXPENSES. Except as expressly set forth in this Master
Agreement, any costs and expenses of IBM incurred in providing the
Services are included in the Fees and shall not be reimbursed by SCA
unless agreed to by SCA in writing in advance, in its discretion, on
a case-by-case basis. Any such reimbursement shall be, where
applicable, in accordance with the SCA Expense Policy set forth in
the Policy and Procedures manual.
9.3 RIGHTS OF SET OFF. With respect to any undisputed amount which (a)
should be reimbursed to a Party or (b) is otherwise payable to a
Party pursuant to this Master Agreement, such Party may upon written
notice to the other Party deduct the entire amount owed to such
Party against the charges otherwise payable or expenses owed to the
other Party under this Master Agreement.
9.4 REFUNDABLE ITEMS. In the event IBM receives during the Term or any
Termination/Expiration Assistance Period any refund, credit or other
rebate (including deposits) in connection with any Assigned
Agreement, that is attributable to periods prior to the effective
date of the assignment, then IBM shall promptly notify SCA of such
refund, credit or rebate and shall promptly pay to SCA the full
amount of such refund, credit or rebate. In the event SCA receives
during or after the Term any refund, credit or other rebate
(including deposits) in connection with any such Assigned Agreement
that is attributable to periods on or after the effective date of
the assignment, then SCA shall
promptly notify IBM of such refund, credit or rebate and shall
promptly pay to IBM the full amount of such refund, credit or
rebate.
9.5 UNUSED CREDITS. Any unused credits against future payments owed to
either Party by the other Party pursuant to this Master Agreement
shall be paid to the Party to whom such credits are or were owed
within thirty (30) days of the expiration or termination of this
Master Agreement.
9.6 PRORATION. All periodic fees or charges under this Master Agreement
are to be computed on a calendar month basis and shall be prorated
on a daily basis for any partial month.
9.7 TIME OF PAYMENT.
a. IBM shall invoice SCA (a) each month of the Term beginning on the
Commencement Date, for the Monthly Base Charges for such month and
(b) each month of the Term beginning on the tenth day of the
calendar month immediately following the Commencement Date, for the
Fees other than the Monthly Base Charges including ARCs, RRCs and
Hourly Services Fees (the "VARIABLE FEES") incurred during the
preceding month.
b. SCA will pay IBM's invoice on or before the date ("PAYABLE DATE")
below:
1. in the case of the Monthly Base Charges, the last day of the
calendar month in which SCA receives the invoice from IBM,
provided SCA receives such invoice on or before the tenth day
of the month; or
2. in all other cases (including, in the case of the Monthly Base
Charges, if SCA receives such invoice after the tenth day of
the month), 30 days after SCA's receipt of such invoice.
c. If any payments or portions thereof are not received by IBM within
ten (10) days after the Payable Date ("GRACE PERIOD"), IBM may
invoice SCA and SCA will pay a late fee for each day between and
including the day following the Grace Period and the date IBM
receives such late payment in full. If any payments or portions
thereof are not received by IBM within the ten (10) day Grace Period
on more than one occasion within any Contract Year, then the Grace
Period, provided to SCA above, shall be reduced to five (5) days for
the remainder of such Contract Year. The amount of the late fee will
be invoiced to SCA and payable in accordance with Section 9.7(a)
above. The late fee will be based on a rate equal to the lesser of:
(i) one-point-five (1.5) percent of such payments per every thirty
(30) days or portion thereof; or (ii) the maximum amount permissible
by the applicable law.
9.8 DISPUTED PAYMENT. SCA may withhold payment of charges that SCA
disputes in good faith, provided that SCA may not withhold (a) in
any one month, an amount greater than fifty (50) percent of
one-twelfth (1/12) of the then-current Annual Services Charge, or
(b) in the aggregate at any given time, more than one-sixth (1/6) of
the then-current Annual Services Charge ((a) and (b), collectively,
the "DISPUTED FEES CAP"). Disputed charges in excess of the Disputed
Fees Cap shall be paid when due without prejudice to SCA's rights
hereunder. SCA
shall notify IBM in writing on or before the date that any amount is
so withheld and describe, in reasonable detail, the reason for such
withholding. SCA and IBM shall diligently pursue an expedited
resolution of such dispute in accordance with the dispute resolution
procedures set forth in Article 10.
10. DISPUTE RESOLUTION
a. If SCA and IBM have a dispute regarding the Services, SCA and IBM
will exercise reasonable, good faith efforts to resolve the dispute
and follow the dispute resolution process described in this Section
(the "DISPUTE RESOLUTION PROCESS"). All disputes will be referred in
writing.
b. A dispute under this Master Agreement initially will be referred to
the Project Executives. If the Project Executives are unable to
resolve the dispute within ten (10) business days of their receipt
of the referral, the dispute will be referred, at SCA's discretion,
either to the Chief Information Office or Chief Operating Officer of
SCA, and, in the case of IBM, to the General Manager of Finance
Service Sector for IBM Global Services for their review and
resolution. In the event that the lead executives are unable to
resolve the dispute within thirty (30) days of their receipt of the
referral, either Party may apply to the competent courts for the
resolution of such dispute.
c. The Parties agree that written or oral statements or offers of
settlement made in the course of the Dispute Resolution Process will
be Confidential Information, will not be offered into evidence,
disclosed, or used for any purpose other than the Dispute Resolution
Process, and will not constitute an admission or waiver of rights.
Upon request, each Party will promptly return to the other all
copies of any such written statements or offers of settlement.
d. Except where clearly prevented by the nature of the dispute or in
the event of SCA's nonpayment of any undisputed amounts to IBM or
breach of Section 9.8 (Disputed Payment), IBM and SCA shall continue
to perform their respective obligations under this Master Agreement
while a dispute is being resolved.
11. RENEWAL AND TERMINATION
11.1 RENEWAL.
a. If either IBM or SCA desires to renew this Master Agreement, it will
notify the other in writing, at least twelve (12) months prior to
the Expiration Date, of its desire to renew this Master Agreement.
If IBM and SCA agree to discuss such renewal, IBM will provide SCA,
within two (2) months after such renewal request, with its proposed
terms for such renewal. Within sixty (60) days after SCA's receipt
of IBM's proposed terms, SCA will notify IBM of:
1. SCA's response to IBM's proposed terms for such renewal; or
2. any modifications or other SCA requests with respect to IBM's
proposed terms.
b. If SCA and IBM both wish to renew this Master Agreement, IBM and SCA
will negotiate in good faith regarding such renewal.
c. If SCA and IBM are unable to agree on the terms of the renewal of
this Master Agreement
as of three (3) months prior to the Expiration Date, this Master
Agreement will be extended at the then-current prices, Baselines,
charging methodology, and other applicable terms as listed under
this Master Agreement, for a period of twelve (12) months beginning
on the Expiration Date (the "EXTENSION PERIOD"). During such
Extension Period, SCA and IBM will continue to negotiate in good
faith regarding renewal of this Master Agreement. If SCA and IBM are
unable to reach agreement on the renewal of this Master Agreement
during the Extension Period, this Master Agreement will terminate
upon expiration of the Extension Period.
11.2 TERMINATION FOR CAUSE.
a. By SCA:
In the event that IBM:
1. commits a material breach of this Master Agreement, which
breach is not cured within thirty (30) days from the date IBM
receives written notice of such material breach or such longer
period as mutually agreed by the Parties in writing;
2. commits a material breach of this Master Agreement which is
not capable of being cured within sixty (60) days from the
date that IBM receives written notice of such breach;
3. commits multiple breaches of its duties or obligations
hereunder, of which IBM received written notice of, or of
which IBM knows, or reasonably should know, and which
collectively constitute a material breach of this Master
Agreement, and which are not cured within thirty (30) days
from the date that IBM receives written notice of such breach;
or
4. commits multiple breaches of its duties or obligations
hereunder (for which SCA has provided prior notice) which
collectively constitute a material breach of this Master
Agreement (including without limitation breaches of IBM's
Service Level obligations), which breach is not capable of
being cured within sixty (60) days from the date that IBM
receives written notice of such breach;
then SCA may, by giving written notice to IBM within sixty
(60) days after the material breach or the last breach in the
case of multiple breaches which collectively constitute a
material breach, terminate this Master Agreement, in whole or
in relevant part by Services Tower, as of a date specified in
the notice of termination, without payment of any Wind Down
Expenses, unrecovered Pre-Paid Charges, or other termination
charges. If SCA chooses to terminate this Master Agreement in
part, the Fees payable under this Master Agreement will be
equitably adjusted to reflect those Services that are
terminated.
b. By IBM:
In the event of a failure by SCA to make timely payment of any
undisputed Fees, or a breach by SCA of Section 9.8 (Disputed
Payment), which failure or breach is not cured within thirty (30)
days from the date that SCA receives written notice of such failure
or breach, then IBM may, by giving written notice to SCA in
accordance with Section 18.9 (Notifications and Approvals),
terminate this Master Agreement, as of the date specified in the
notice of termination.
SCA's failure to perform its responsibilities set forth in this
Master Agreement (other than as provided in this Section 11.2) shall
not be deemed to be grounds for termination by IBM.
11.3 TERMINATION FOR CONVENIENCE.
a. Subject to subsection (c), below, SCA may terminate this Master
Agreement, in whole or in part (consistent with Schedule C
(Charges)), for convenience and without cause by giving IBM at least
one hundred eighty (180) days prior written notice designating the
termination date and paying, solely as applicable to the terminated
Services, the following: (i) the applicable termination charge set
forth in Schedule C (Charges) (the "TERMINATION FOR CONVENIENCE
CHARGE"); and (ii) Wind Down Expenses.
b. IBM will provide SCA with an initial non-binding estimate of the
Wind Down Expenses amounts thirty (30) days prior to the termination
date, or at any time during the Term upon SCA's reasonable request,
and will provide a final adjustment and true-up to reflect the
actual charges within six (6) months after the applicable
Termination/Expiration Assistance Period.
c. SCA shall have the right to terminate this Master Agreement for
convenience at any time commencing sixteen (16) months after the
Effective Date.
11.4 TERMINATION FOR CHANGE IN CONTROL OF IBM. In the event (a) of a
change in Control of IBM (Lead Party) where such Control is
acquired, directly or indirectly, in a single transaction or series
of related transactions by (i) an SCA Competitor, or (ii) an entity
that SCA reasonably believes would adversely affect SCA's business
or the Services, (b) that all or substantially all of the assets of
IBM (Lead Party) are acquired by (i) an SCA Competitor, or (ii) an
entity that SCA reasonably believes would adversely affect SCA's
business or the Services, or (c) that IBM (Lead Party) is merged
with or into another entity to form a new entity that is (i) an SCA
Competitor, or (ii) an entity that SCA believes would adversely
affect the SCA's business or the Services ((a), (b) or (c) a "CHANGE
IN CONTROL"), then at any time within twelve (12) months after the
last to occur of such events, SCA may terminate this Master
Agreement in its sole discretion by giving IBM at least one hundred
eighty (180) days prior written notice and designating a date upon
which such termination will be effective. In the event of such
termination for Change in Control of IBM, SCA shall only be required
to pay the full amount of Wind Down Expenses in the case of a change
in Control to an SCA Competitor, or in any other case, the full
amount of Wind Down Expenses and fifty (50) percent of the
Termination Fees applicable to a termination for convenience.
11.5 TERMINATION FOR BANKRUPTCY. In the event that either Party (a) files
for bankruptcy; (b) becomes or is declared insolvent, or is the
subject of any unchallenged proceedings related to its liquidation,
insolvency or the appointment of a receiver or similar officer for
it; (c) makes an assignment for the benefit of all or substantially
all of its creditors; or (d) enters into an agreement for the
composition, extension, or readjustment of substantially all of its
obligations, then the other Party may, by giving written notice of
termination to the first Party, terminate the Master Agreement as of
a date specified in such notice of termination; provided, however,
that IBM shall not have the right to exercise such termination so
long as SCA pays for the Services in advance on a month-to-month
basis by certified bank check or other method to be mutually agreed
upon.
11.6 TERMINATION FOR FORCE MAJEURE. In the event a material portion of
the Services or the performance of the Services is delayed or
interrupted because of a Force Majeure condition as described in
Section 18.4 (Force Majeure) for more than thirty (30) days and IBM
cannot provide a temporary alternative acceptable to SCA, SCA may,
at its option on notice to IBM terminate for convenience the
affected portion of the Services without termination for convenience
charges, other than the payment of Wind Down Expenses. In the case
of a Force Majeure Event, SCA will promptly receive an equitable
adjustment in Fees hereunder.
11.7 TERMINATION FOR FAILURE TO ACHIEVE TRANSITION. In the event that the
Commencement of Steady State does not occur within sixteen (16)
months of the Effective Date (or such later date as the parties may
mutually agree in a written amendment to this Master Agreement),
provided that SCA has not requested or been the sole cause of such
delay in the Commencement of Steady State, then SCA may, at its
option on written notice to IBM, terminate this Master Agreement in
whole or in part without any obligation to pay termination for
convenience charges, other than the payment of Wind Down Expenses
associated with the Transition (except in the event that IBM is in
material breach of its obligations under the Transition Plan, in
which case SCA also shall have no obligation to pay Wind Down
Expenses).
11.8 CUMULATIVE REMEDIES. SCA's termination of this Master Agreement, and
any adjustment of fees or charges or any other remedy in connection
with any such termination, shall be without prejudice to any other
right or remedy that SCA may have hereunder, or at law or in equity,
and shall not relieve IBM of breaches occurring prior to the
effective date of such termination.
11.9 ADJUSTMENT. In the event of any termination-in-part by SCA, as
provided in this Master Agreement, the charges payable under this
Master Agreement for Services will be equitably adjusted to reflect
those services that are terminated. In no event may SCA
terminate-in-part the Server Services.
11.10 TRANSFER ASSISTANCE.
a. TERMINATION/EXPIRATION ASSISTANCE. At SCA's reasonable request, IBM
will provide to SCA at any time during the Term (including any
renewal term) and during the Termination/Expiration Assistance
Period of up to twelve (12) months following the effective date of
termination or expiration of the Master Agreement, the reasonable
termination expiration assistance requested by SCA to allow the
Services to continue without interruption or adverse effect
("ONGOING ACTIVITIES") and to facilitate the orderly transfer of the
Services to SCA (such assistance, "TERMINATION/EXPIRATION
ASSISTANCE"), provided that IBM shall not be obligated to provide
such Ongoing Activities and Termination/Expiration Assistance in the
event of a termination by IBM of this Master Agreement pursuant to
Section 11.2 based upon default for non-payment by SCA (i.e.,
failure to pay undisputed charges or breach of Section 9.8 (Disputed
Payments)) unless such non-payment has been cured. IBM will provide
Termination/Expiration Assistance to SCA to the extent that IBM can
perform such requested Termination/Expiration Assistance using its
then-existing resources Dedicated solely to providing the Ongoing
Activities under this Master Agreement, until expiration or
termination of this Master Agreement. If IBM's
Termination/Expiration Assistance will require the use of different
or additional services or resources beyond that which IBM is then
using to provide the Ongoing Activities in accordance with the
Baselines and Service Levels, such request
for Termination/Expiration Assistance will be considered a New
Service; provided, however, that the parties may agree to the
reallocation of resources performing the Ongoing Activities to
Termination/Expiration Assistance activities subject to an
adjustment to Service Levels, milestones or other performance
obligations in connection with such reprioritization. If IBM
terminates this Master Agreement for non-payment of fees pursuant to
Section 11.2, then IBM may require SCA to pay in advance for any
Termination/Expiration Assistance activities to the extent any such
activities do not constitute Ongoing Activities. In addition, IBM
shall provide, upon reasonable prior written request of SCA,
Termination/Expiration Assistance to SCA for one additional period
of up to six (6) months. The charges for Termination/Expiration
Assistance provided by IBM after such Termination/Expiration
Assistance Period shall be billed to SCA at the rates set forth in
the rate card set forth in Schedule C (Charges). Subject to the
foregoing, the quality and level of the Services shall not be
degraded during the Termination/Expiration Assistance Period, and
all such Termination/Expiration Assistance shall be provided in
accordance with the terms and conditions governing IBM's provision
of the Services hereunder. SCA shall reasonably cooperate with IBM
in IBM's provision of Termination/Expiration Assistance. After the
expiration of the Termination/Expiration Assistance Period, IBM
shall answer questions from SCA regarding the Services on an "as
needed" basis for up to 6 months at IBM's then standard commercial
billing rates. Termination/Expiration Assistance will include the
Services set forth in this Master Agreement, as well as the
following:
1. Within twenty (20) days after the commencement of
Termination/Expiration Assistance, IBM will prepare and
provide to SCA a preliminary plan for operational turnover
that enables a smooth transition of the applicable functions
performed by IBM under this Master Agreement to SCA or its
designee(s). Such draft turnover plan will be provided to SCA
in both hardcopy and in an electronic format capable of being
utilized by SCA, and shall not be deemed to amend the terms of
this Master Agreement. Upon receipt of IBM's draft turnover
plan, SCA will promptly review the draft plan and provide
written comments and suggestions to IBM, upon receipt of which
IBM will promptly revise the draft plan in accordance with
SCA's comments and suggestions and in cooperation with SCA and
provide a further revised draft of the draft turnover plan to
SCA for review and approval within a reasonable period of time
after receipt of SCA's comments. The final draft turnover plan
shall be subject to SCA's approval (which shall not be
unreasonably withheld), and upon such approval shall be deemed
the "TURNOVER Plan." Upon such approval by SCA, IBM will
provide Termination/Expiration Assistance in accordance with
the Turnover Plan. Provision of Termination/Expiration
Assistance will not be complete until SCA's Project Executive
agrees (which agreement shall not be unreasonably withheld)
that all tasks and Deliverables set forth in the Turnover Plan
have been completed and delivered.
2. IBM will attend periodic review meetings called by SCA, during
which the Parties at a minimum will review IBM's performance
of Termination/Expiration Assistance, including the completion
and delivery of tasks and Deliverables set forth in the
Turnover Plan.
3. For all Termination/Expiration Assistance, subject to terms
set forth in the definition of "Ongoing Activities" above, IBM
will provide sufficient personnel with current knowledge of
the Services to work with the appropriate staff of SCA and, if
applicable, SCA's designee(s), to provide the
Termination/Expiration Assistance and
to define the specifications for operational turnover in a
manner consistent with the Turnover Plan. Subject to the terms
of this Master Agreement, IBM will cooperate with SCA and its
designees in transitioning the functions performed by IBM
under this Master Agreement in the same manner as described in
Section 6.1(g) for third parties performing any of the
Services.
4. IBM will promptly cooperate and provide SCA and its designees
with information that is reasonably required to effectuate a
smooth transfer of the functions performed by IBM under this
Master Agreement to SCA and its designee(s), including
reasonable assistance to SCA to prepare a "request for
proposal" (RFP).
5. IBM will provide SCA with reasonable access and use,
consistent with the terms of this Master Agreement, of those
IBM Service Locations being used to perform the Services, (i)
during the Termination/Expiration Assistance Period (if any)
and (ii) at IBM's then-applicable rates, for up to thirty (30)
days following the effective date of expiration or termination
of this Master Agreement (or from the last day of any
Termination/Expiration Assistance Period, if applicable), to
enable SCA to effect an orderly transition (but in no event
for longer than a reasonable period of time).
6. IBM shall identify, any shared hardware or software then used
by IBM in providing the Services.
7. Upon the latter of the expiration or termination of this
Master Agreement and the last day of the
Termination/Expiration Period, the rights granted to IBM in
Article 13 shall immediately terminate and IBM shall (i)
deliver to SCA a current copy of all of the SCA Software in
the form in use as of that time and (ii) destroy or erase all
other copies of the SCA Software in IBM's care, custody or
control, and cause all IBM Agents and subcontractors to
destroy or erase all copies of the SCA Software in their
respective care, custody or control.
8. If SCA is entitled pursuant to this Master Agreement to a
sublicense or other right to use any Software owned or
licensed by IBM, IBM shall promptly, upon the earlier of the
expiration or termination of this Master Agreement and the
last day of the Termination/Expiration Assistance Period,
provide SCA with such sublicense or other right including the
applicable Software and, if applicable, Source Code thereto.
9. Upon the latter of the expiration or termination of this
Master Agreement and the last day of the
Termination/Expiration Period, at SCA's request, with respect
to generally commercially available Third Party Software which
IBM has licensed or purchased and is Dedicated to providing
the Services as of that time, IBM shall, to the extent
permitted by the applicable third party license agreements,
transfer, assign or sublicense such IBM Third Party Software
to SCA, on reasonable terms and conditions and at SCA's
expense. In the event IBM is unable to obtain any required
consents under a third party license agreement, IBM shall, at
SCA's expense, cooperate with SCA in implementing a reasonable
work around.
10. Upon the latter of the expiration or termination of this
Master Agreement and the last day of the
Termination/Expiration Period, at SCA's request, with respect
to any third party contracts Dedicated to services being
provided to SCA for maintenance, disaster recovery, or other
necessary Third Party Services being used by IBM to perform
the Services as of that time, IBM shall, to the extent
permitted by the third
party contracts, transfer any necessary rights or assign such
contracts to SCA, on reasonable terms and conditions and at
SCA's expense. IBM will be entitled to retain the right to
utilize any such Third Party services in connection with the
performance of services for any IBM customer.
11. In the event IBM has incorporated SCA's network into a IBM
proprietary network, IBM shall provide SCA with continued
network services, at IBM's then current rates for such network
services, for up to two (2) years (subject to SCA's
discretion) following the date of expiration or termination of
this Master Agreement subject to the terms of this Master
Agreement.
12. IBM will provide SCA with all documentation, policies,
procedures and tools used to provide the Services to the
extent that SCA has rights to use such items after termination
or expiration as set forth in this Master Agreement.
13. SCA may extend offers of employment to IBM's employees
Dedicated to performing the affected Services, and IBM shall
waive any prohibitions in any employment agreements with such
individuals that may restrict such individuals from accepting
such offers of employment from SCA.
14. Upon SCA's request, IBM shall sell to SCA, the IBM-owned
Equipment Dedicated to providing the Services, on an "AS IS,
WHERE IS, WITH ALL FAULTS" basis with no warranties from IBM
whatsoever, then being used by IBM to provide the Services on
a Dedicated basis, free and clear of all liens, security
interests or other encumbrances at fair market value.
11.11 INSURANCE.
a. INSURANCE COVERAGE. IBM shall during the Term and at its expense
have and maintain in force at least the following insurance
coverages:
1. Employer's Liability Insurance, including coverage for
occupational injury, illness and disease, and other similar
social insurance with minimum limits per employee and per
event of $1,000,000 and a minimum aggregate limit of
$10,000,000 or the minimum limits required by law, whichever
limits are greater.
2. Workers' Compensation Insurance, including coverage for
occupational injury, illness and disease, and other similar
social insurance in accordance with the laws of the country,
state or territory exercising jurisdiction over the employee.
3. Comprehensive General Liability Insurance, including Products,
Completed Operations, Premises Operations Personal and
Advertising Injury, Contractual and Broad Form Property Damage
liability coverages, on an occurrence basis, with a minimum
combined single limit per occurrence of at least $5,000,000
and a minimum combined single aggregate limit of $10,000,000.
This coverage shall be endorsed to name SCA as additional
insured.
4. Electronic Data Processing Insurance providing coverage for
all risks of loss or damage to IBM's or SCA's Equipment, data,
media and valuable papers, with respect to IBM's Equipment,
data, media and valuable papers with a minimum limit adequate
to cover such risks on a replacement cost or upgrade basis or
$10,000,000, whichever is greater, and with respect to SCAs
Equipment, data, media and valuable papers, $10,000,000. Such
insurance shall include Extra Expense and Business Income
coverage for IBM with a separate minimum limit equal to
$10,000,000 and except with respect to Extra Expense and
Business Income Coverage shall name SCA as a loss payee.
5. Property Insurance for all risks of physical loss of or damage
to buildings, business personal property (except property
covered by Electronic Data Processing Insurance) or other
property that is in the possession, care, custody or Control
of IBM pursuant to this Master Agreement, with a minimum limit
adequate to cover risks on a replacement costs basis. Such
insurance shall include Extra Expense and Business Income
coverage for IBM with a separate minimum limit equal to
$10,000,000 and except with respect to Extra Expense and
Business Income Coverage shall name SCA as a loss payee.
6. Automotive Liability Insurance covering use of all owned,
non-owned and hired automobiles for bodily injury, property
damage, uninsured motorist and underinsured motorist liability
with a minimum combined single limit per accident of at least
$5,000,000, and at least $10,000,000 on an aggregate basis.
This coverage shall be endorsed to name SCA as additional
insured.
7. Commercial Crime Insurance, in an amount not less than
$10,000,000, covering the loss of money, securities and other
tangible property belonging to SCA resulting directly from a
fraudulent or dishonest act by an IBM employee or IBM Agent,
while performing professional services for the SCA.
8. Professional Liability Insurance covering liability for loss
or damage due to an act, error, omission or negligence, with a
minimum limit per claim of $10,000,000 and with an aggregate
limit of $20,000,000.
9. Umbrella Liability Insurance with a minimum limit of
$20,000,000 in excess of the insurance coverage described in
Sections (a)(1) through (a)(8).
b. INSURANCE TERMS.
1. The insurance coverages under Section 11.11(a) shall be
primary, and all coverage shall be non-contributing with
respect to any other insurance or self insurance which may be
maintained by SCA.
2. IBM shall cause its insurers (1) to issue certificates of
insurance evidencing that the coverages and policy
endorsements required under this Master Agreement are
maintained in force and (2) to endeavor to provide not less
than thirty (30) days' written notice to SCA prior to any
modification, cancellation or non-renewal of the policies. The
insurers selected by IBM shall be of good standing and
authorized to conduct business in the jurisdictions in which
Services are to be performed. When the policy is issued each
such insurer shall (where such ratings are applicable), have
at least an A.M. Best rating of A- and replacement coverage
shall be sought if the insurer's rating goes below B+.
3. In the case of loss or damage or other event that requires
notice or other action under the terms of any insurance
coverage specified in this Section 11.11, IBM shall
be solely responsible to take such action with respect to
IBM's carrier. IBM shall provide SCA with contemporaneous
notice and with such other information as SCA may request
regarding the event. Moreover, SCA shall provide to IBM
reasonable assistance and cooperation with respect to any
insurance claim.
4. IBM's obligation to maintain insurance coverage shall be in
addition to, and not in substitution for, IBM's other
obligations hereunder and IBM's liability to SCA shall not be
limited to, or expanded by, the amount of coverage required
hereunder.
12. CONFIDENTIAL INFORMATION
a. IBM's and SCA's mutual objective under this Section is to provide
appropriate protection for Confidential Information while
maintaining IBM's and SCA's ability to conduct their respective
business activities. IBM and SCA agree that the following terms
apply when IBM or SCA (the "DISCLOSER") discloses Confidential
Information to the other (the "RECIPIENT") under this Master
Agreement.
b. "CONFIDENTIAL INFORMATION" means information provided by the
Discloser to the Recipient that:
1. is marked with a restrictive legend of the Discloser or is
identified as confidential at the time of disclosure; or
2. contains the Discloser's customer lists, customer information,
account information, information regarding business planning
and business operations, and administrative, financial, or
marketing activities; provided the Discloser treats such
information as confidential.
c. OBLIGATIONS.
1. The Recipient will protect the Confidential Information
residing on systems in accordance with the obligations set
forth in Schedule A (Statement of Work) including without
limitation the security provisions (Section 5.0) of Schedule A
(statement of Work).
2. The Recipient will:
(i) use the same care and discretion to avoid disclosure,
publication, or dissemination of the Discloser's other
Confidential Information (i.e., Confidential Information
not residing on systems) as the Recipient uses with its
own similar information that it does not wish to
disclose, publish, or disseminate, and in any event the
Recipient will maintain the confidentiality of the
Confidential Information using no less than reasonable
care under the circumstances; and
(ii) use the Discloser's Confidential Information only for
the purpose for which it was disclosed or otherwise for
the benefit of the Discloser.
3. The Recipient may disclose Confidential Information to:
(i) the Affiliates and permitted Subcontractors designated
on Schedule J (List of Approved Subcontractors) of this
Master Agreement to the extent required by them to
provide Services under this Master Agreement; and
(ii) any other entity, provided the Recipient obtains the
Discloser's prior written consent. Prior to such
disclosure, the Recipient will obtain such Affiliate's,
Subcontractor's, or other entity's written agreement to
treat the Confidential Information in accordance with
the applicable terms of this Master Agreement. Recipient
shall remain directly and primarily liable for any
breach of the confidentiality of the Discloser's
Confidential Information by Recipient's Affiliates or
Subcontractors.
4. SCA and IBM will not disclose, publish, or disseminate the
terms of this Master Agreement without the prior written
consent of the other, except to the extent permitted by this
Section and Section 18.10 (Publicity) of the Base Terms or as
required under applicable Law, including for regulatory
reporting and accounting purposes.
5. The Recipient will protect Confidential Information as set
forth in this Section for a period of five (5) years following
the date of disclosure of such Confidential Information,
unless otherwise provided by applicable law without the
possibility of contractual waiver or limitation.
6. The Recipient may use in its business activities the ideas,
concepts, and know-how contained in the Discloser's
Confidential Information which are retained in the memories of
Recipient's employees as a result of access to Confidential
Information as permitted in accordance with this Master
Agreement and in the course of providing the Services, and
further provided that such use is made without reference to
any tangible copies of the Discloser's Confidential
Information and without public reference to the identity of
the Discloser. Nothing in this paragraph shall be deemed to
constitute a license under the Discloser's copyrights,
trademarks or patents.
d. EXCLUSIONS.
1. The Recipient may disclose, publish, disseminate, and use the
Discloser's Confidential Information that is:
(i) already in its possession without obligation of
confidentiality;
(ii) developed independently without reference to Discloser's
Confidential information;
(iii) obtained from a source other than the Discloser without
obligation of confidentiality;
(iv) publicly available when received, or thereafter becomes
publicly available through no fault of the Recipient; or
(v) disclosed by the Discloser to another entity without
obligation of confidentiality.
2. The Recipient may disclose Confidential Information to the
extent required by applicable Laws, regulations, or other
legal process, provided the Recipient gives the Discloser
prompt written notice of such legally required disclosure, if
permitted, to allow the Discloser a reasonable opportunity to
obtain a protective order at Discloser's expense. Discloser
shall only disclose that portion of the Confidential
Information which is legally required and shall use reasonable
efforts to obtain assurances that confidential treatment will
be accorded to such Confidential Information.
e. LIMITATION. IBM will not be responsible for the security of data
during transmission via public telecommunications facilities or
services.
13. INTELLECTUAL PROPERTY RIGHTS
a. This Section specifies the ownership and license rights of literary
works or other works of authorship (such as programs, program
listings, programming tools, documentation, reports, drawings and
similar works) that are developed by IBM, or by IBM and SCA, under
the Master Agreement and delivered by IBM to SCA as part of the
Services, but excluding those materials that are available under
vendor software license agreements (including license agreements for
IBM Products) (collectively, "MATERIALS").
b. SCA shall own the copyright in Materials developed by IBM as a
Deliverable under the Master Agreement, with the exception of the
following Materials that shall be owned by IBM ("SCA-OWNED
MATERIALS"):
1. Derivative Works of Materials owned by IBM, and
2. the Policy and Procedures manual and similar documentation,
excluding any portions of such documentation which disclose or
are specific to SCA's business or otherwise identify SCA;
(1 and 2 collectively, "IBM-OWNED MATERIALS").
c. SCA hereby grants to IBM and to those Affiliates providing Services
the following license to SCA-owned Materials (described in Section
9(b)):
1. a nonexclusive, worldwide, paid-up, irrevocable license to
use, execute, reproduce, display, perform, distribute copies
of, and modify (including creating Derivative Works based on)
SCA-owned Materials, but only to the extent necessary to
perform the Services during the Term; and
2. the right to authorize Subcontractors to do any of the former,
provided that such license will terminate upon SCA's termination of
this Master Agreement for IBM's material breach.
d. IBM hereby grants to SCA and its Affiliates the following license to
IBM-owned Materials (described in 9 b):
1. a nonexclusive, worldwide, paid-up license to use, execute,
reproduce, display, perform and distribute copies of IBM-owned
Materials, but only for:
(i) SCA's and its Affiliates' internal use,
(ii) for the purpose of SCA's and its Affiliates' receipt of
the Services during the Term, and
(iii) for SCA's and its Affiliates' sole benefit and exclusive
use after termination or expiration, provided that such
license will terminate upon IBM's termination of this
Master Agreement for SCA's material breach; and
2. the right to authorize SCA Agents to do any of the former.
e. PRE-EXISTING MATERIALS. With respect to Materials developed by SCA
or IBM, or their respective Affiliates and Subcontractors, prior to
or independently of this Master Agreement (the "PRE-EXISTING
MATERIALS"), such items are owned, as between SCA and IBM, by the
party that developed such Pre-Existing Materials. Each party hereby
grants to the other a license to such items as follows:
1. a nonexclusive, worldwide, paid-up license to use, execute,
reproduce, display, perform, distribute copies of, and modify
(including creating Derivative Works based on) such items, but
only:
(i) for a party's internal use,
(ii) for the purposes of IBM providing the Services or for
SCA receiving the Services,
(iii) during the Term; and
2. the right, in the case of IBM, to authorize its Subcontractors
to do any of the former and, in the case of SCA, to authorize
SCA Agents to do any of the former.
f. The ownership and license rights granted in this Section are limited
by and subject to any patents and copyrights held by, and the terms
of any license agreements with, applicable vendor software providers
(including IBM and its Affiliates), provided, however, that the Fees
and Charges hereunder are inclusive of any fees for the use of IBM's
or its Affiliates' patents to the extent that SCA's and its
Affiliates' receipt and/or use of the Services would require a
license under one or more patents of IBM or its Affiliates.
g. To the extent all or any portion of the Materials may not, by
operation of law, be owned by the entity to which ownership is
granted in this Section (the "OWNER"), the other hereby assigns,
without further consideration, ownership in such Materials to such
Owner.
h. IBM and SCA grant only the licenses and rights specified in this
Master Agreement. No other licenses or rights (including licenses or
rights under patents) are granted.
14. INDEMNIFICATION
a. INDEMNITY BY IBM. IBM agrees to indemnify, defend and hold harmless
SCA and its Affiliates, and their respective officers, directors,
trustees, employees, agents, licensors,
successors, and assigns, from any and all Losses and threatened
Losses arising from, in connection with, or based on allegations of,
any of the following:
1. IBM's failure to observe or perform any duties or obligations
to be observed or performed by IBM under any of the Assigned
Agreements on or after the effective date of the assignment
and assumption;
2. IBM's use or disclosure, in violation of IBM's obligations
under Article 12 (Confidential Information), of SCA's
Confidential Information;
3. Any claims of infringement of any patent, trade secret,
trademark, copyright, license or other proprietary rights,
alleged to have occurred because of IBM or IBM Agent items or
IBM or IBM Agent resources provided by IBM or IBM Agents;
provided however, this subsection shall not apply to the
extent any such claims are a result of: (i) (A) modifications
of items or resources or the use of such items or resources in
other than their specified operating environment, or (B) the
combination, operation, or use of such items or resources with
products, data, or apparatus not provided by IBM, unless for
the foregoing subsections (A) or (B) such modification,
combination, operation or use was at the direction or request
of, or in accordance with the specifications provided by IBM;
or (ii) items or resources provided to SCA with the written
agreement by SCA and IBM that such items or resources shall
not be covered by the indemnity in this subsection; or (iii)
third party items or resources, except such items or resources
which are IBM Agent items or resources which are made
available by IBM hereunder in providing the Services and which
are not generally commercially available, provided, however,
IBM shall (to the extent IBM has the right to do so) make
available to SCA any intellectual property infringement
indemnifications provided by any Third Party or IBM Agent with
respect to the foregoing in this subsection (iii);
4. Any claim, demand, charge, action, cause of action, or other
proceeding asserted against SCA but resulting from IBM's
withholding or failure to withhold taxes with respect to any
IBM employee or IBM Agent;
5. The death or bodily injury of any agent, employee, SCA
business invitee, or business visitor or other person caused
by the tortious conduct of IBM or its employees or agents or
any subcontractor;
6. The damage, loss or destruction of any real or tangible
personal property caused by the conduct of IBM or its
employees or agents or any subcontractor;
7. Any claim, demand, charge, action, cause of action, or other
proceeding asserted against SCA but resulting from an act or
omission of IBM in its capacity as an employer or prospective
employer of a person (including any Transitioned Employee
accruing on or after his or her Hire Date), including claims
of harassment, discrimination or wrongful discharge or arising
under OSHA, workers compensation, ERISA or other applicable
federal, state or local laws or regulations;
8. any liability for premiums, contributions, or taxes payable
under any workers' compensation, unemployment compensation,
disability benefit, old age benefit, or tax withholding or
failure to withhold for which SCA may be adjudged liable as an
employer with respect to any IBM Agent or IBM employee (in the
case of any
Transitioned Employee who is or was a IBM employee, accruing
on or after his or her Hire Date) except to the extent caused
by SCA; and
9. any claim or action by IBM's subcontractors arising out of
IBM's breach or violation of IBM's subcontracting
arrangements.
b. INDEMNITY BY SCA. SCA 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 arising from, in connection with, or based on
allegations of, any of the following:
1. SCA's failure to observe or perform any duties or obligations
to be observed or performed by SCA under any of the Assigned
Agreements before the effective date of the assignment and
assumption thereof;
2. SCA's misappropriation of IBM's Confidential Information;
3. Any claims of infringement of any patent, trade secret,
trademark, copyright, license or other proprietary rights,
alleged to have occurred because of SCA or SCA Agent items or
SCA or SCA Agent resources provided by SCA to IBM; provided
however, this subsection shall not apply to the extent any
such claims are a result of: (i) (A) modifications of items or
resources or the use of such items or resources in other than
their specified operating environment, or (B) the combination,
operation, or use of such items or resources with products,
data, or apparatus not provided by SCA, unless for the
foregoing subsections (A) or (B) such modification,
combination, operation or use was at the direction or request
of, or in accordance with the specifications provided by, SCA
(and such direct, request, or specifications were not
originally provided by IBM); (ii) items or resources provided
to IBM with the written agreement by IBM and SCA that such
items or resources shall not be covered by the indemnity in
this subsection; or (iii) third party items or resources,
except such items or resources which are SCA Agent items or
resources which are made available by SCA hereunder in
providing the Services and which are not generally
commercially available, provided, however, SCA shall (to the
extent SCA has the right to do so) make available to IBM any
intellectual property infringement indemnifications provided
by any Third Party or SCA Agent with respect to the foregoing
in this subsection (iii);
4. Any claim, demand, charge, action, cause of action, or other
proceeding asserted against IBM but resulting from SCA's
withholding or failure to withhold taxes with respect to SCA
Agents or contractors (excluding IBM);
5. The death or bodily injury of any agent, employee, IBM
business invitee; or business visitor or other person caused
by the tortious conduct of SCA or its employees or agents;
6. The damage, loss or destruction of any real or tangible
personal property caused by the conduct of SCA or its
employees or agents;
7. Any claim, demand, charge, action, cause of action, or other
proceeding asserted against IBM but resulting from an act or
omission of SCA in its capacity as an employer or prospective
employer of a person (including any Transitioned Employee)
accruing prior to his or her Hire Date, including claims of
harassment, discrimination or wrongful discharge or arising
under OSHA, workers compensation, ERISA or other applicable
federal, state or local laws or regulations;
8. any liability for premiums, contributions, or taxes payable
under any workers' compensation, unemployment compensation,
disability benefit, old age benefit, or tax withholding or
failure to withhold for which IBM may be adjudged liable as an
employer with respect to any SCA Agent, SCA employee (with
respect to any Transitioned Employee who is or was a SCA
employee, accruing prior to his or her Hire Date) except to
the extent caused by IBM;
9. Any claim or action by SCA's subcontractors arising out of
SCA's breach or violation of SCA's subcontracting arrangements
(excluding this Master Agreement);
10. Any claim that is brought by any Services Recipients and is
related to the Services, so long as not caused by the willful
misconduct of IBM; and
11. Any claim or action arising out of the Ethical Hack activities
conducted pursuant to Section 18.2(c) (Ethical Hacks).
c. INFRINGEMENT. If any Service, item used by IBM to provide the
Services, Developed SCA Software, Developed IBM Software, or other
materials prepared by or on behalf of IBM in the performance of the
Services hereunder becomes, or in IBM's reasonable opinion is likely
to become, the subject of an infringement or misappropriation claim
or proceeding, IBM will, in addition to indemnifying SCA as provided
in this Article 13 and to the other rights or remedies SCA may have
available to it under this Master Agreement, promptly at IBM's
expense, take the following actions at no additional charge to SCA:
1. Secure the right to continue using the item, Service, or
material, provided this can be accomplished in the absence of
commercially oppressive terms; or
2. If the remedy provided for in foregoing subsection (1) is not
available to IBM, replace or modify the item, Service, or
material, to make it non-infringing, provided that any such
replacement or modification will not materially degrade the
performance or quality of the item, Service, or materials or
IBM's performance under this Master Agreement; or
3. solely for items used by IBM to provide the Services and if
and only if neither of the remedies provided for in foregoing
subsections (1) or (2) can be accomplished by IBM with
commercially reasonable efforts, remove the item from the
Services, in which case IBM's charges shall be equitably
adjusted to reflect such removal, or if such removal is
material to all or any portion of the remaining Services, SCA
may terminate such portion of the affected Services
immediately upon notice to IBM and without penalty.
d. If IBM or SCA is obligated to provide the defense in subsections (a)
(Indemnity by IBM) or (b) (Indemnity by SCA) above (the
"INDEMNIFYING PARTY"), subject to subsection (e) (Indemnification
Procedures), the Indemnifying Party agrees to pay to the other (the
"INDEMNIFIED PARTY") all:
(i) damages that a court finally awards to such Third Party
for such claim and any Defense Costs; or
(ii) the amount of any settlement agreed to by the
Indemnifying Party and any Defense Costs,
in each case ((1) and (2)), in proportion to the Indemnifying
Party's comparative fault in causing such amounts.
e. INDEMNIFICATION PROCEDURES. With respect to third-party claims, the
following procedures shall apply:
1. NOTICE. Promptly after receipt by any entity entitled to
indemnification under this Section of notice of the
commencement or threatened commencement of any civil,
criminal, administrative, or investigative action or
proceeding involving a claim in respect of which the
indemnitee will seek indemnification pursuant to this Section,
the indemnitee shall notify the indemnitor of such claim in
writing and provide to the indemnitor all reasonably available
information requested in order to enable the indemnitor to
make an informed decision as to whether the indemnity is
appropriate. No failure to so notify IBM shall relieve it of
its obligations under this Master Agreement except to the
extent that it can demonstrate that it was materially
prejudiced by such failure. Within a reasonable period of time
(but not later than fifteen (15) business days) following
receipt of written notice and the relevant reasonably
available information from the indemnitee relating to the
claim ("NOTICE PERIOD"), 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"). During the Notice Period, the indemnitee shall
use commercially reasonable efforts to extend the date on
which a response to the claim is due until the indemnitor has
provided its Notice of Election.
2. PROCEDURE FOLLOWING NOTICE OF ELECTION. If the indemnitor
delivers a Notice of Election relating to any claim pursuant
to this Article 14 and such Notice of Election indicates that
the indemnitor elects to assume control of the defense and
settlement of such claim, the indemnitor shall be entitled to
have sole control over the defense and settlement of such
claim; provided that (i) the indemnitee shall be entitled to
participate in the defense of such claim and to employ counsel
at its own expense to assist in the handling of such claim,
and (ii) indemnitor shall obtain the prior written approval of
indemnitee before entering into any settlement of such claim
(however no approval is required if the settlement only
consists of the payment of money or otherwise places no burden
on SCA or disruption of SCA's operations) 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.
3. PROCEDURE WHERE NO NOTICE OF ELECTION IS DELIVERED. If (i) the
indemnitor does not deliver a Notice of Election relating to
any claim, or otherwise fails to acknowledge its
indemnification obligation or to assume the defense of a
claim, or fails to diligently defend the claim, or (ii) the
indemnitor has not delivered a Notice of Election and, despite
using commercially reasonable efforts to extend the date on
which a
response to the claim is due, the indemnitee shall have the
right to defend and/or settle the claim in such manner as it
may deem appropriate, at the cost and expense of the
indemnitor, provided that the indemnitor is obligated to
indemnify hereunder. The indemnitor shall cooperate in any
such defense and/or settlement, and shall promptly reimburse
the indemnitee for all such costs and expenses.
4. SUBROGATION. In the event that IBM shall be obligated to
indemnify SCA pursuant to this Section, IBM shall, upon
payment of such indemnity in full, be subrogated to all rights
of SCA with respect to the claims to which such
indemnification relates.
15. LIMITATION OF LIABILITY
15.1 GENERAL INTENT.
IBM's and SCA's and their respective Affiliates', employees', officers',
and directors' entire liability under this Master Agreement, and their
exclusive remedies, are set forth in this Section and Article 14
(Indemnification) of the Base Terms.
15.2 DAMAGES.
a. IBM's and SCA's and their respective Affiliates', employees',
officers' and directors' entire liability for actual, direct damages
under this Master Agreement, regardless of the basis on which IBM or
SCA is entitled to claim damages (including breach, negligence,
misrepresentation, or other contract or tort claim), will be limited
in the aggregate for all claims and causes of actions to an amount
equal to the amount actually paid by SCA to IBM for the Services
provided under this Master Agreement during the twelve (12) months
prior to the occurrence of the first claim or cause of action.
b. The limitation of liability in subsection 15.2(a)(Damages) above
does not apply to:
1. SCA's failure to pay any amounts owing to IBM under this
Master Agreement;
2. any damages for bodily injury (including death) and damage to
real property and tangible personal property for which a Party
is legally liable; and
3. SCA's or IBM's obligation to indemnify the other under this
Master Agreement with regard to third party intellectual
property infringement claims, claims with regard to payment of
withholding taxes, claims for death or bodily injury, claims
for real or tangible personal property, or claims made by or
relating to subcontractors of the other party.
c. In no event will IBM, SCA, or their respective Affiliates,
employees, officers, and directors have any liability under this
Master Agreement, regardless of the basis on which IBM or SCA is
entitled to claim damages (including breach, negligence,
misrepresentation, or other contract or tort claim), for any
special, incidental, punitive, or indirect damages, or for any
economic consequential damages (including lost profits or savings),
even if foreseeable or even if SCA or IBM has been advised of the
possibility of such damages, provided that this subsection does not
apply to SCA's failure to pay any amounts owing to IBM under this
Master Agreement (including amounts owing for Services rendered or
services that would
have been rendered but for SCA's breach of this Master Agreement).
For clarification purposes, any claims for services that would have
been rendered but for SCA's breach of the Master Agreement would be
subject to reduction for costs that IBM will not incur based on not
providing those services.
d. The parties agree that the following shall be considered direct
damages and shall not be considered consequential damages to the
extent they are the proximate result of a party's breach of the
Master Agreement:
1. with respect to any SCA data which IBM is responsible for
processing, storing or backing up as a part of the Services,
the costs of recreating or reloading, to the latest available
backup, any information that is lost or damaged;
2. costs of implementing a workaround in respect of a failure to
provide all or part of the Services;
3. costs of replacing lost or damaged Equipment or Software that
are provided or maintained by IBM under this Master Agreement;
4. costs and expenses incurred to procure the Services from an
alternate source; and
5. fines, restitution payments, or other payments imposed by any
Governmental Authority under applicable Law in connection with
the alleged breach or violation of privacy or data security
Law, including costs incurred as a direct result of responding
to any investigations, demands or requests for information by
a court, regulatory body or other governmental authority in
connection with an alleged breach or violation of privacy or
data protection Law.
16. WARRANTY
16.1 BY IBM.
a. WORK STANDARDS. IBM represents and warrants that the Services will
be rendered with promptness, efficiency and diligence and will be
executed in a workmanlike manner, in accordance with the practices
and professional standards used in well-managed, "Tier 1" operations
performing services similar to the Services and the requirements of
this Master Agreement. IBM represents and warrants that it will use
adequate numbers of qualified individuals with suitable training,
education, experience, and skill to perform the Services.
b. MAINTENANCE. IBM represents and warrants that it will maintain the
Software and the Equipment so that they operate in accordance with
its specifications, including by means of (a) maintaining the
Software and the Equipment in good operating condition, (b) promptly
undertaking repairs and preventive maintenance on the Equipment in
accordance with applicable manufacturer's recommendations, and (c)
performing reasonable maintenance with respect to the Software in
accordance with applicable documentation and Third Party Software
IBM's recommendations.
c. EFFICIENCY AND COST EFFECTIVENESS. IBM represents and warrants that
it will use commercially reasonable efforts to use efficiently the
resources or services necessary to provide the Services. IBM
represents and warrants that it will perform the Services in a
cost-effective manner consistent with the required level of quality
and performance.
d. TECHNOLOGY. IBM represents and warrants that it will provide the
Services using proven, current technology that will enable SCA to
take advantage of technological advancements in its industry and
support SCA's efforts to maintain competitiveness in the markets in
which it competes.
e. SPECIFICATIONS. Unless provided otherwise herein, IBM represents and
warrants that all Developed SCA Software and Developed IBM Software,
Deliverables, and other materials prepared by or on behalf of IBM in
the performance of the Services hereunder do and will conform to
their respective specifications or to such other criteria as agreed
to by the parties (i.e., acceptance criteria).
f. VIRUSES. IBM represents and warrants that it will use reasonable
efforts not to introduce, and will not knowingly code, Viruses into
the systems used to provide the Services, into SCA's systems, or
into any Developed SCA Software, Developed IBM Software, or other
materials prepared by or on behalf of IBM in the performance of the
Services hereunder. IBM agrees that, in the event a Virus is found
to have been introduced into the systems used to provide the
Services, or into SCA's systems, or is found in any such materials,
and the introduction is the fault of IBM, IBM shall promptly assist
SCA in reducing the effects of the Virus and, if the Virus causes a
loss of operational efficiency or loss of data, to assist SCA to the
same extent to mitigate and restore such losses. If the Virus is
introduced by someone other than IBM or an IBM Agent and IBM was not
otherwise at fault, such assistance will be at SCA's expense to the
extent that such assistance is not included within the Services.
g. DISABLING CODE. IBM represents and warrants that, without the prior
written consent of SCA, IBM will not knowingly insert into any
Software (including any Developed SCA Software or Developed IBM
Software) any code which would have the effect of disabling or
otherwise shutting down all or any portion of the Services
("DISABLING CODE"). IBM further represents and warrants that, with
respect to any Disabling Code that may be part of the Software used
to provide the Services, IBM will not knowingly invoke such
Disabling Code at any time without SCA's prior written consent.
h. APPLICATIONS SOFTWARE. IBM represents and warrants that each
Deliverable produced by Applications Software development projects
undertaken by IBM, or for which IBM otherwise has responsibility for
the successful completion as part of the Services, shall conform to
the specifications or to such other criteria as agreed to by the
parties (i.e., acceptance criteria).
i. PASS-THROUGH WARRANTIES AND INDEMNITIES. With respect to any
Equipment or Software purchased by IBM on SCA's behalf: (i) IBM
shall pass through to SCA, to the extent permitted by the
manufacturer, all available warranties and indemnities and provide
all available, including extended, applicable original equipment
manufacturer and additional warranties for such equipment; (ii)
during the Term IBM is responsible for the maintenance of all
information required to make claims on such warranties; and (iii)
during the Term IBM shall promptly file all warranty claims.
16.2 MUTUAL REPRESENTATIONS AND WARRANTIES.
a. AUTHORIZATION. Each Party represents and warrants that:
1. it has the requisite power and authority to enter into this
Master Agreement and to carry out the transactions and perform
its obligations as contemplated by this Master Agreement; and
2. the execution, delivery and performance of this Master
Agreement and the consummation of the transactions
contemplated by this Master Agreement have been duly
authorized by the requisite action on the part of such Party.
b. NO VIOLATION. Each Party represents and warrants that its execution,
delivery, and performance of this Master 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 foregoing subsection (ii).
c. CLAIMS. Except as described in each Party's SEC filings and except
for non-material claims arising in the ordinary course of business,
each Party represents and warrants that there are no pending, or (to
the Party's knowledge) threatened, claims against it that will have
a material adverse effect on its ability to meet its obligations
under this Master Agreement.
d. COMPLIANCE WITH LAWS AND REGULATIONS. Each Party represents and
warrants that it will perform its obligations in a manner that
complies with applicable Laws, including identifying and procuring
required permits, certificates, approvals and inspections that are
applicable to it (i.e., in IBM's case, as an information technology
services provider). If a charge of non-compliance with such Laws
occurs that is applicable to this Master Agreement, each Party will
promptly notify the other Party of such charge in writing.
DISCLAIMER. OTHER THAN AS EXPRESSLY PROVIDED IN THIS MASTER
AGREEMENT (INCLUDING ANY SCHEDULES OR EXHIBITS HERETO), THERE ARE NO
EXPRESS WARRANTIES. THERE ARE NO IMPLIED WARRANTIES, INCLUDING THE
IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR
PURPOSE.
17. COMPLIANCE WITH LAWS
a. RESPONSIBILITIES.
1. IBM REGULATORY REQUIREMENTS.
(a) INTERPRETATION OF IBM REGULATORY REQUIREMENTS. As
between the Parties, IBM shall be responsible for
interpreting all IBM Regulatory Requirements (as they
may be modified from time to time).
(b) COMPLIANCE WITH IBM REGULATORY REQUIREMENTS. As between
the Parties, IBM shall be responsible for compliance
with all IBM Regulatory Requirements, including keeping
current with, researching, interpreting, and taking any
actions necessitated by the IBM Regulatory Requirements
(as they may be modified from time to time).
(c) COSTS RELATED TO COMPLIANCE WITH IBM REGULATORY
REQUIREMENTS. IBM shall be responsible for all costs
related to compliance with IBM Regulatory Requirements
(including any fines and penalties for noncompliance).
2. SCA REGULATORY REQUIREMENTS.
(a) INTERPRETATION OF SCA REGULATORY REQUIREMENTS. As
between the Parties, SCA shall be responsible for
interpreting all SCA Regulatory Requirements (as they
may be modified from time to time). IBM shall regularly
and actively participate in both SCA and third-party
committees and meetings and other activities with
respect to the SCA Regulatory Requirements.
(b) COMPLIANCE WITH SCA REGULATORY REQUIREMENTS. As between
the Parties, SCA shall be responsible for compliance
with all SCA Regulatory Requirements, including keeping
current with, researching, interpreting, and taking any
actions necessitated by the SCA Regulatory Requirements
(as they may be modified from time to time), subject to
the following: IBM shall (i) perform the Services in
compliance with SCA's interpretation of all SCA
Regulatory Requirements of which IBM has been informed
by SCA, subject, as applicable, to the change management
process; and (ii) make recommendations to SCA, in
writing and in a timely manner, with respect to any
changes to SCA's IT environment or the Services, or any
other actions, that are or may be required to be made or
taken based on SCA's interpretation of the SCA
Regulatory Requirements. Such recommendations shall
include, as applicable, specifications of the applicable
changes to SCA's IT environment or the Services
(including any other actions entailed thereby) which
will be subject to the review and approval of SCA. In
the event that SCA elects in writing to have IBM
implement any such recommendations, IBM shall implement
the recommendations in accordance with such
specifications, subject to the Change Control
Procedures.
b. MISCELLANEOUS. IBM shall perform the Services regardless of changes
in the Laws, subject to the change management process, with respect
to changes in SCA Regulatory Requirements. If changes in the Laws
prevent or materially hinder IBM from performing its obligations
under this Master Agreement, pursuant to the change management
process, IBM shall promptly develop in cooperation with SCA and,
upon SCA's written approval, shall promptly implement, a suitable
work-around until such time as IBM can perform its obligations under
this Master Agreement without requiring such work-around. To the
extent that a change in Law generally affects IBM's provision of
services to customers and obligates IBM to introduce changes to the
Services (or to Equipment or Software used in providing the
Services) which are not unique to SCA, IBM shall not charge SCA more
than a pro rata share of the increased costs as distributed over the
affected IBM customer base. Any such increased charges to SCA shall
be subject to audit in accordance with Section 18.22 of this Master
Agreement.
c. DISCLAIMER. Without any obligation or duty to do so, IBM may provide
SCA with certain information based upon IBM's knowledge or
experience on SCA Regulatory Requirements. Any such information is
provided on an "AS IS" basis, without warranty of any kind.
Furthermore, notwithstanding anything to the contrary in this Master
Agreement or elsewhere, IBM does not provide legal advice or other
legal services and does not represent or warrant that the Services
will place SCA or any other entity or individual in compliance with
SCA Regulatory Requirements.
d. CHANGES IN INSURANCE LAWS. IBM will work with SCA to determine how
any changes in insurance-related laws and regulations will impact
the methods by which IBM provides, and SCA receives and uses, the
Services, including through presenting generally available
technological options.
18. GENERAL
18.1 ASSIGNMENT AND BINDING NATURE.
a. IBM may delegate its obligations, and SCA may assign its rights or
delegate its obligations, under this Master Agreement to their
respective Affiliates, provided:
1. SCA has approved any assignment of IBM's obligations hereunder
in advance in writing (such approval not to be unreasonably
withheld) to any IBM Affiliates not identified on Schedule P
(IBM Affiliates) hereto;
2. such Affiliate accepts such assignment and assumes such
obligations, in writing;
3. SCA or IBM, respectively, remains fully liable for and is not
relieved from the full performance of its obligations; and
4. SCA and IBM provide the other with written notice, together
with a copy of the signed assignment, delegation, and
assumption agreement, within three (3) business days of such
assignment, delegation, or both.
b. IBM may assign its rights to payment hereunder upon written notice
to SCA. IBM's and SCA's respective permitted successors and assigns
will be bound by this Master Agreement. A change in Control or a
sale of all or substantially all of the assets of IBM or SCA will
not be deemed an assignment and delegation of this Master Agreement
requiring consent as set forth in this Section.
c. Any attempted assignment or delegation of all or any part of this
Master Agreement that does not comply with this Section is void.
18.2 DATA PRIVACY AND SECURITY.
a. IBM and SCA are each responsible for complying with their respective
obligations under the applicable data protection laws governing SCA
Data. SCA remains solely responsible for determining the purposes of
IBM's processing of SCA Data under this Master Agreement. Data
protection laws are SCA Regulatory Requirements with respect to SCA
Data, except and only to the extent such data protection laws
regulate IBM's processing of SCA Data in IBM's performance of the
Services or otherwise regulate IBM as a data processor or data
licensee. SCA's requirements for the security of SCA Data are set
forth in Schedule A (Statement of Work) and in the Information
Security Controls Document. Nothing in this Master Agreement
prevents IBM or SCA from taking the steps it deems necessary to
comply with applicable data protection laws. During the Transition
Period, the parties shall jointly develop detailed requirements for
information security for the Services that shall be included in the
Information Security Controls Document, including through the use
and application of IBM's form GSD-331 for the purposes of joint due
diligence of the information security requirements of SCA. Prior to
the Commencement of Steady State, IBM shall provide to SCA for its
review and
approval a complete written description of all security-related
obligations of IBM in the Information Security Controls Document.
Once approved by SCA in writing, such written description shall be
added to and made part of Schedule A to this Master Agreement.
b. IBM responsibility with regard to any security measures concerning
SCA Data is set forth in this Master Agreement. As a processor of
SCA Data, IBM will process SCA Data as specified in Schedule A
(Statement of Work, Security), as the same may be amended by the
parties from time to time. Without limiting the foregoing, IBM shall
at all times while this Master Agreement or any of its provisions is
in effect:
1. maintain a reasonable level of physical security (including
without limitation access controls and fire prevention
measures) at its Facilities which is no less stringent than
the physical security measures specified in the current
version of the Information Security Controls Document.
2. maintain a reasonable level of logical and administrative
security in its operations with respect to SCA Data which is
no less stringent than the logical and administrative measures
specified in the current version of the Information Security
Controls Document;
3. operate the Equipment used in the provision of the Services
under environmental conditions that are compliant with those
recommended by the Equipment manufacturers;
4. limit access to SCA Data to only those IBM employees and
Subcontractors who need such access for the provision of the
Services and ensure that the foregoing personnel shall not
download SCA data from the Equipment used in providing the
Services to their personal computers or other storage or
computing devices, whether at the Facilities or at a remote
site, without the prior written consent of SCA's Project
Executive;
5. maintain an adequate audit trail to enable IBM or an SCA
auditors to determine that no unauthorized access to or
downloading of SCA Data has occurred;
6. use commercially reasonable efforts to comply with SCA's
information security policies and procedures, as these may
evolve, provided that such policies and procedures are made
available to IBM in writing and subject to the terms of this
Master Agreement with regard to change control and the
allocation of costs associated with compliance with Laws
(including applicable privacy and information security Laws);
7. IBM shall provide relevant documentation of IBM's and each
Subcontractors' safety and security policies and practices and
shall reasonably detail such policies and practices as they
relate to the Services, and such documentation shall be
considered IBM Confidential and Proprietary Information
hereunder. In the event of any failure or potential failure of
any such safety and/or security procedures of which IBM
becomes aware (or should have reasonably known to exist), IBM
shall immediately notify the SCA Project Executive;
8. immediately inform SCA of any breach of security, or attempted
breach in security, of which IBM becomes aware, including any
corruption, loss or mis-addressed or mis-
delivered transmission of SCA Data, or any breach of SCA Data
security during transmission and storage. In the event of a
security breach, IBM shall, as part of the Services, perform a
root cause analysis to identify the cause of such security
breach and shall, on an expedited basis, provide to SCA a
report detailing the cause of such a security breach and
stating a commercially reasonable efforts schedule to remedy
such breach. IBM shall use commercially reasonable efforts to
confine and stop any such breach or attempted breach as soon
as possible but in any event not later than one calendar day
after learning of such breach, and IBM shall cooperate fully,
and shall cause Subcontractors to cooperate fully, with SCA
and their respective designees, and with any civil or criminal
authority in any investigation or action relating to such
breach, or attempted breach; and
9. if as a result of an on-site review or audit performed in
accordance with Section 18.22 (Audits) or this Section 18.2,
IBM or its Subcontractor is alleged or found not to be
complying with all policies as required by this Section 18.2,
IBM shall, and shall cause its Subcontractor to, at IBM's
expense, take reasonable steps specified by SCA to correct
such non-compliance ("CORRECTIVE STEPS") within a reasonable
time period to be specified by SCA.
c. Ethical Hacks.
1. "ETHICAL HACK" means the efforts of SCA, or a third party
computer security testing firm retained by SCA, to identify
any security vulnerabilities in the systems used by IBM for
the performance of the Services through intrusion and related
testing techniques.
2. IBM agrees that SCA may from time to time, in SCA's discretion
and at SCA's expense, conduct an Ethical Hack of IBM systems
used on a Dedicated basis for the performance of the Services
in accordance with this Section 18.2(c) and the terms
regarding audits set forth in Section 18.22 (Audits).
3. An Ethical Hack may be done not more often than twice each
calendar year during the Term, except as stated herein. The
Ethical Hack shall be performed by SCA or a third party
computer security testing firm selected by SCA which shall be
bound by confidentiality obligations ("TEST FIRM").
4. SCA shall notify the IBM Project Executive at least ten (10)
Business Days prior to the planned Ethical Hack, and such
notice shall state a range of dates selected by SCA during
which such Ethical Hack may take place. If the IBM Project
Executive notifies SCA within five (5) Business Days of
receipt of SCA's Ethical Hack notice of any specific dates or
times planned for the Ethical Hack which would significantly
disrupt or impede IBM's provision of Services hereunder, SCA
shall not conduct the Ethical Hack during such stated date(s)
and time(s). Since an Ethical Hack is intended to be performed
without notice to the managers of the systems being tested,
IBM's Project Executive shall not disclose any of SCA's plans
for any Ethical Hack to any other IBM personnel without SCA's
prior written agreement.
5. The Test Firm's role shall be limited to communicating the
test findings and reporting such findings to SCA. Should the
Test Firm discover any vulnerability or security breach, no
action regarding IBM's systems shall be taken by such Test
Firm.
6. A copy of the Test Firm's Ethical Hack report shall be
provided to IBM by SCA at no cost to IBM.
7. Any vulnerability, breach or other problem reported to IBM as
a result of the Ethical Hack shall be promptly reviewed and
resolved in accordance with the terms of Section 18.2 hereof.
Notwithstanding the limitation of conducting two Ethical Hacks
per calendar year, SCA may conduct follow-up Ethical Hack(s)
to ensure full resolution of the problem(s) reported by the
Test Firm, each to be conducted in accordance with the
procedures stated herein.
8. IBM shall not be liable for any damages or disruption of the
Services to the extent arising out of the Ethical Hack
activities conducted by the Test Firm under the circumstances
set forth herein.
9. SCA agrees to obtain all Required Consents from Third Parties
(other than IBM and IBM's subcontractors) whose systems will
be tested by the Ethical Hack activities.
d. IBM will not, except as expressly permitted under this Master
Agreement or in accordance with prior written instructions from SCA,
transfer any SCA Data across a country border unless IBM reasonably
considers such transfer appropriate or useful for IBM's performance
of the Services. Except for cross-border data transfers carried out
by IBM, its Affiliates or Subcontractors which fail to comply with
the foregoing sentence, SCA is solely responsible for determining
that any transfer by IBM or SCA of SCA Data across a country border
under this Master Agreement complies with the applicable data
protection laws.
e. If SCA is required to provide information to an individual regarding
SCA Data, IBM will reasonably cooperate with SCA in providing such
information. SCA will reimburse IBM for its reasonable out-of-pocket
expenses for such assistance. Upon IBM's or SCA's reasonable written
request (and subject to compliance with applicable Law), SCA or IBM
will provide the other with such information that it has regarding
SCA Data and its processing that is necessary to enable the
requester to comply with its obligations under this Section and the
applicable data protection laws.
f. Nothing in this Section requires IBM to provide SCA access to IBM's,
its Affiliates', or any of their Subcontractors' premises or
systems, provided that IBM shall cooperate fully with any court,
regulatory body or other government authority or to information
relating to IBM's, its Affiliates', or their Subcontractors' other
customers.
18.3 DATA AND RETURN OF DATA.
a. OWNERSHIP OF SCA DATA. All SCA Data is and shall remain the property
of SCA and shall be deemed Confidential Information of SCA and
treated as provided in Article 12. IBM shall (a) to the extent SCA
Data is marked as SCA's property or Confidential Information when
provided to IBM, retain all such marks, (b) subject to the
provisions of this Master Agreement concerning shared environments,
store SCA Data separately from other IBM property and/or any
property of any Third Party, and (c) promptly remove SCA Data from
storage at SCA's request. SCA shall have the right to establish
backup security for SCA Data and to keep all backups of SCA Data and
SCA Data files in its possession if it chooses, and IBM shall comply
with any backup security and other similar procedures
established by SCA in relation to the SCA Data, subject to the
change management process.
b. RETURN OF DATA. Upon expiration or termination of this Master
Agreement, and/or upon request by SCA at any time, IBM shall
promptly, and shall cause all IBM Agents to promptly, (a) at SCA's
expense, return to SCA, in the format and on the media requested by
SCA, all of SCA Data and (b) erase or destroy all of SCA Data in
IBM's possession or under IBM's or its agents' control (as
applicable). Any archival tapes containing SCA Data shall be used by
IBM and IBM Agents solely for back up purposes, and shall be purged
or destroyed, at SCA's option, upon request.
18.4 FORCE MAJEURE.
a. IBM and SCA will not be liable for any default or delay in the
performance of their respective obligations, to the extent that such
default or delay is caused, directly or indirectly, by an event
beyond the reasonable control of IBM or SCA, whichever is the entity
unable to perform (the "NONPERFORMING PARTY"), such as fire, flood,
earthquake, elements of nature, acts or regulations of government
bodies, court orders, acts of war, terrorism, riots, civil
disorders, rebellions or revolutions, strikes, lockouts or labor
difficulties. Such event or circumstance giving rise to the default
or delay is a "FORCE MAJEURE EVENT."
b. The Nonperforming Party will be excused from any further performance
of the obligations affected by such Force Majeure Event for as long
as such Force Majeure Event continues and the Nonperforming Party
continues to use commercially reasonable efforts to recommence
performance. If recommencing performance requires the Nonperforming
Party to incur cost or expense beyond that assumed in the delivery
of the Services, such recommencement shall be subject to the
Parties' agreement on payment of associated charges.
c. Except as expressly excused in this Section, each Party will
continue to perform its obligations under this Master Agreement
during a Force Majeure Event. Provision of Disaster Recovery
Services will be excused to the extent that such services are
rendered unavailable by a Force Majeure Event.
18.5 FREEDOM OF ACTION.
The relationship created between the Parties by this Master Agreement is
non-exclusive. Each party may enter into similar agreements with others.
18.6 TAXES.
a. SCA will pay all:
1. applicable taxes (such as sales (including sales tax on
services), use, gross receipts, excise, value-added, and other
transaction-based taxes), duties, levies, and fees on IBM's
charges;
2. personal property, sales, value-added, and use taxes on SCA's
personal property;
3. telecommunication taxes for network lines and services; and
4. taxes, assessments, and other levies on SCA's owned, leased,
rented, or purchased real property.
b. IBM will pay all:
1. personal property, sales, value-added, and use taxes on IBM's
personal property; and
2. taxes, assessments, and other levies on IBM's owned, leased,
rented, or purchased real property.
c. Business tax will be paid by each Party according to the applicable
law.
d. SCA and IBM agree to cooperate reasonably with the other to
determine SCA's tax liability on IBM's charges. IBM's invoices will
state applicable taxes owed by SCA, if any, by tax jurisdiction. IBM
and SCA will provide and make available to the other any resale
certificates, tax exemption certificates, information regarding
out-of-state sales or use of equipment, materials or services,
direct pay certificates and other exemption certificates.
18.7 GOVERNING LAW AND JURISDICTION.
Both SCA and IBM consent to the application of the laws of New York to
govern, interpret, and enforce all of SCA and IBM's rights, duties, and
obligations arising from, or relating in any manner to, the subject matter
of this Master Agreement, without regard to conflict of law principles.
Any legal claim arising out of this Master Agreement will be brought
before, and settled exclusively by, the United States District Court for
the Southern District of New York, White Plains, New York, or, if
jurisdiction cannot be maintained, in the New York State Supreme Court in
White Plains, New York.
18.8 MODIFICATIONS.
Modifications to this Master Agreement may be made only by a written
amendment signed by IBM and SCA.
18.9 NOTIFICATIONS AND APPROVALS.
a. IBM's nonperformance of its obligations under this Master Agreement
shall be excused if such nonperformance results from SCA's, or Third
Party performing for SCA, failure to perform its responsibilities
until a reasonable period following SCA's performance of its
responsibility. SCA will pay IBM for any additional expenses
incurred as a result of SCA's delay or nonperformance.
b. IBM and SCA may communicate with each other by electronic means.
Such communication is acceptable as a signed writing to the extent
permissible under applicable law.
c. Notices given under this Master Agreement will be deemed given upon
the earlier of:
1. the day of receipt, if delivered in person or electronically;
or
2. three (3) business days after the date of mailing, when using
local postal services, registered or certified mail, return
receipt requested, postage prepaid.
d. Unless changed by prior written notice, notifications for
termination, breach or default shall be sent to:
If to IBM: If to SCA:
IBM Project Executive ▇▇▇▇▇ ▇▇▇▇
IBM Corporation XL Financial Administrative Services Inc.
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 1221 Avenue of the Americas
▇▇▇ ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇; Telephone: ▇▇▇-▇▇▇-▇▇▇▇;
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇ Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
With a copy to: With a copy to:
▇▇▇▇ ▇▇▇▇▇, SCA Project Executive
XL Financial Administrative Services Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇; Facsimile:
▇▇▇-▇▇▇-▇▇▇▇
General Counsel: General Counsel:
IBM Global Services ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Attention: General Counsel: SCA General Counsel
Route 100 1221 Avenue of the Americas
▇▇▇▇▇▇, NY 10589 ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇}
Telephone:▇▇▇-▇▇▇-▇▇▇▇; Telephone: ▇▇▇-▇▇▇-▇▇▇▇;
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇ Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
For other notices:
IBM Project Executive ▇▇▇▇ ▇▇▇▇▇, SCA Project Executive
IBM Corporation XL Financial Administrative Services Inc.
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 1221 Avenue of the Americas
▇▇▇ ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇; Telephone: ▇▇▇-▇▇▇-▇▇▇▇;
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇ Facsimile:▇▇▇-▇▇▇-▇▇▇▇
18.10 PUBLICITY.
a. IBM and SCA will obtain the other's prior written consent before
publicly using any advertising, written sales promotion, press
releases, or other publicity matters relating to
this Master Agreement or in which the other's name is used or may
reasonably be inferred.
b. IBM and SCA may include the other's name, and a factual description
of the work performed under this Master Agreement on employee
bulletin boards, in its list of references, in the experience
section of proposals, in internal business planning documents, in
its annual report to stockholders, and whenever necessary to comply
with generally accepted accounting principles or applicable laws.
18.11 RELATIONSHIP.
This Master Agreement will not be construed as constituting SCA to be a
partner of IBM, creating any form of legal association between SCA and IBM
that would impose liability upon one for the act or failure to act of the
other, or any form of a fiduciary relationship or duty between IBM and
SCA; or granting SCA or IBM the right, power, or authority (express or
implied) to create any duty or obligation for the other.
18.12 REMARKETING.
SCA and its Affiliates receiving Services under this Master Agreement may
not remarket all or any portion of the Services, or make all or any
portion of the Services available to any entity, other than to Service
Recipients.
18.13 RISK OF LOSS.
Each Party is responsible for risk of loss of and damage to equipment
owned, leased, or rented by the other Party that is located on its
premises and any loss of and damage to software owned by or licensed to
the other Party that is in its possession at the time of such loss or
damage.
18.14 SEVERABILITY.
If any provision of this Master Agreement is held to be invalid, illegal,
or unenforceable, the remaining provisions of this Master Agreement will
not in any way be affected or impaired, and the invalid, illegal, or
unenforceable provision will be restated to reflect the original
intentions of SCA and IBM under this Master Agreement as nearly as
possible in accordance with applicable laws.
18.15 SURVIVAL.
Any terms of this Master Agreement that by their nature extend beyond its
expiration or termination remain in effect until fulfilled.
18.16 THIRD PARTY BENEFICIARIES.
This Master Agreement does not create any benefits, rights, claims,
obligations, or causes of action in, to, or on behalf of, any person or
entity (including Affiliates, Third Parties, or Subcontractors) other than
to SCA and IBM under this Master Agreement, except as set forth in Article
14 (Indemnification) and Article 15 (Limitation of Liability) of this
Master Agreement.
18.17 WAIVER.
The exercise or waiver, in whole or in part, of any right, remedy, or duty
provided for in this Master Agreement will not constitute the waiver of
any prior, concurrent or subsequent right, remedy, or duty within this
Master Agreement.
18.18 ENVIRONMENTAL.
SCA represents and warrants that during the Term the Facilities will not
contain any unsafe condition or Hazardous Materials. If SCA becomes aware
of any unsafe condition or Hazardous Materials at a Facility, SCA will
promptly provide IBM with written notice specifying the nature and
location of such unsafe condition or Hazardous Materials. IBM reserves the
right to discontinue performance of affected Services until the unsafe
condition or presence of Hazardous Materials has been remedied. SCA will
use reasonable efforts to provide a working environment complying with any
applicable environmental laws.
18.19 FACILITIES.
a. USE OF SCA SERVICE LOCATIONS. Use of any SCA Service Locations by
IBM does not constitute a leasehold or fee interest in favor of IBM.
IBM personnel shall not be required to work in any area of a SCA
Service Location in which SCA would not require its own employees to
work.
b. EFFICIENCY. IBM shall use SCA's Service Locations in an efficient
manner. To the extent that IBM uses or operates the space in a
manner that unreasonably increases facility costs incurred by SCA as
determined by SCA in its sole reasonable discretion, SCA reserves
the right to set off the excess utility costs of such practices
against any payments owed to IBM hereunder.
c. PROCEDURES. IBM shall, and shall cause its employees and agents to,
keep SCA's Service Locations 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 all of SCA's standard
policies and procedures regarding access to and use of the SCA
Service Locations, including procedures for the physical security of
the SCA Service Locations and procedures for the security of
computer network, as those procedures are provided to IBM in writing
during the Term. In the event IBM becomes aware of any breach or
attempted breach of security in or involving any SCA Service
Location, then IBM will promptly notify SCA of such event, will
assist in ascertaining and containing any damage, and will cooperate
with SCA and applicable Governmental Authorities in addressing such
event(s) as may be reasonably required by SCA.
d. ACCESS. Subject to any applicable SCA restrictions, IBM shall permit
SCA and its agents, employees, and representatives to enter into
those portions of the SCA Service Locations occupied by IBM
personnel at any time.
e. STRUCTURE. IBM shall not make any improvements or changes involving
structural, mechanical or electrical alterations to the SCA Service
Locations without SCA's prior approval.
f. CONDITION. When the SCA Service Locations are no longer required for
performance of the Services, IBM shall, at its sole cost and
expense, return such locations to SCA in
substantially the same condition as when IBM began use of such
locations, ordinary wear and tear excepted.
g. TRANSITION. IBM shall transition out of the SCA Service Locations in
accordance with the Transition Schedule.
18.20 SERVICE LOCATIONS.
a. SERVICE LOCATIONS. The Services shall be provided from (a) SCA's
Service Locations set forth on Schedule I (Facilities), (b) the IBM
Service Locations set forth on Schedule I (Facilities) and (c) the
Other Service Locations, if any, set forth on Schedule I
(Facilities); provided, however, that the use of any such Other
Service Location(s) for the provision of Services shall be subject
to SCA's prior written approval, which it may give in its sole
discretion. Any incremental expense incurred by SCA as a result of
any relocation requested by IBM to an Other Service Location shall
be credited to SCA by IBM. IBM and IBM Agents may not provide or
market any products or services to a Third Party from any of SCA's
Service Locations without SCA's prior written consent.
b. SAFETY AND SECURITY PROCEDURES. As part of the Basic Services, IBM
shall maintain and enforce, and shall require that the IBM Agents
enforce, at the Service Locations safety and security procedures
that are at least: (a) equal in scope and stringency to
industry-standard safety and security procedures for such Service
Locations and (b) as rigorous as those safety and physical security
procedures in effect as of the Effective Date at the IBM Service
Locations and communicated to IBM. As part of the Basic Services,
IBM shall maintain, and shall require that the IBM Agents maintain,
safety and physical security procedures for SCA's operating system
environment and telecommunications infrastructure, which are
described herein and which safety and physical security procedures
protect the data and information of SCA, Affiliates, and their
vendors (including without limitation all of SCA's Confidential
Information and all SCA Data) from unauthorized access. IBM shall
comply, and shall require that the IBM Agents comply, with all
safety and physical security procedures which are in effect at SCA's
Service Locations as of the Effective Date and as such are provided
to IBM. IBM shall inform SCA of, and shall cause the IBM Agents to
promptly inform IBM of, any known breaches in security or potential
breaches in security at any of the Service Locations.
c. SECURITY RELATING TO COMPETITORS. If (a) IBM provides the Basic
Services to SCA from a Service Location that is shared with a Third
Party or third parties and (b) any part of the business of IBM or
any such Third Party is, as of the Effective Date or at any time
thereafter, competitive with SCA's business, then IBM, at SCA's
request, shall promptly develop and implement a process, subject to
SCA's approval, to restrict access in any such shared environment to
SCA's Confidential Information so that IBM or IBM Agents providing
services to such competitive business shall have no access to SCA's
Confidential Information, and IBM shall be responsible for all costs
related to the development and implementation of such process. SCA
shall be permitted to audit IBM's compliance with this Section upon
reasonable written notice to IBM at any time during the Term.
18.21 JOINT VERIFICATION.
During the six months after the Effective Date (the "JOINT VERIFICATION
PERIOD"), SCA and IBM reserve the right to inventory and validate any
information that is reflected in or omitted from
this Master Agreement. If, during such Joint Verification Period, SCA or
IBM discovers inaccuracies in the information or an omission from this
Master Agreement, IBM and SCA will amend this Master Agreement to provide
for an equitable adjustment to the charges, Baselines and other terms of
this Master Agreement affected by such inaccuracies. Any dispute will be
resolved through the Dispute Resolution Process.
18.22 AUDITS.
a. PROCESSING. Upon reasonable notice from SCA, IBM and IBM Agents
shall (and IBM shall cause all subcontractors to) provide such
auditors and inspectors as SCA or any Governmental Authority may,
from time to time (with respect to SCA-requested audits, no more
than once per Contract Year) designate in writing, with reasonable
access (subject to IBM's reasonable confidentiality and security
requirements) (1) during normal business days and hours (except, as
may be necessary to perform security audits, at any time) to the IBM
Service Locations, Other Service Locations and the Software and
Equipment and (2) at any time to the SCA Service Locations, in each
case for the purpose of performing audits to verify that:
1. the variable charges are accurate;
2. IBM is exercising reasonable care to control the resources
provided by SCA, such as heat, light, and utilities used in
providing the Services;
3. the Services are being provided in accordance with the Service
Levels;
4. IBM is complying with the security requirements set forth in
Schedule A and disaster recovery and business continuity
requirements under Schedule O; and
5. SCA is in compliance with SCA's disclosed internal controls
requirements (including without limitation any accounting
requirements) and with SCA Regulatory Requirements
(collectively 1 to 5, the Audit Requirements).
b. IBM shall provide, and shall cause all IBM Agents and subcontractors
to provide, such auditors and inspectors any reasonable assistance
that they may require. If any audit by an auditor or inspector
designated by SCA or a Governmental Authority results in IBM being
notified that it or IBM Agents are not in compliance with the Audit
Requirements, then IBM shall promptly remedy such noncompliance. If
an audit demonstrates that IBM's invoices for the Services for the
audited period were not correct, and IBM and SCA agree with such
audit, IBM will promptly credit SCA for the amount of any paid
overcharges (plus interest at the rate of one point five (1.5)
percent, or the highest lawful rate of interest, calculated from the
date of receipt by IBM of the overcharged amount until the date of
payment or credit to SCA), or SCA will promptly pay IBM for the
amount of any undercharges. In the event that an audit demonstrates
an overcharge of more than five (5) percent of all charges payable
by SCA over a one (1) year period, IBM shall promptly pay for the
reasonable costs of such audit of the charges. If IBM does not agree
with the results of the audit, the Parties shall follow the dispute
resolution procedures herein.
c. FEES. Upon reasonable notice from SCA, IBM shall provide SCA and SCA
Agents (including any third party auditor(s) designated by SCA) with
access (such access, at IBM's expense) to such financial records and
supporting documentation as may be
reasonably requested by SCA and SCA may audit the variable charges
charged to SCA to determine that such variable charges are accurate
and in accordance with this Master Agreement; provided, however,
that nothing in this Master Agreement shall obligate IBM to disclose
the costs incurred by IBM in providing the Services.
d. RECORD RETENTION. As part of the Basic Services, IBM shall (i)
retain records and supporting documentation sufficient to document
the Fees paid or payable by SCA under this Master Agreement during
the Term and for a period of time following the expiration or
termination of this Master Agreement, consistent with SCA's record
retention policy as disclosed to IBM but in no event less than seven
(7) years from when the Services cease, and (ii) upon notice from
SCA, provide SCA and SCA Agents with reasonable access to such
records and documentation.
e. AUDIT SOFTWARE. As part of the Basic Services, IBM shall, to the
extent permitted under the applicable third party agreements, and
subject to IBM's approval (not to be unreasonably withheld or
delayed) install such audit software as SCA or SCA Agents may
provide to IBM from time to time during the Term, provided that such
activities do not adversely affect the Services or the Service
Levels or use resources not covered by the Fees.
f. FACILITIES. IBM shall provide to SCA and such of those SCA Agents
and auditors and inspectors as SCA may designate in writing, on
IBM's premises (or if the audit is being performed of a IBM Agent or
subcontractor, the IBM Agent's or subcontractor's premises, if
necessary), temporary workspace, office furnishings (including
lockable cabinets), telephone and facsimile service (including
analog phone lines for data transmission), external network access
(to the extent permitted by IBM policies as applied to similarly
situated third parties), utilities and office related equipment and
duplicating services as SCA or such auditors and inspectors may
reasonably require to perform the audits described in this Section
18.22.
g. SAS 70 TYPE II AUDIT. IBM, to the extent that it conducts a SAS 70
Type II audit at an IBM Service Location in the ordinary course of
its business, shall provide a summary of such audit to SCA at IBM's
expense. SCA may, at SCA's expense, require to be performed, no more
than once annually, a SAS 70 Type II audit of the data center(s)
from which IBM provides Services (to the extent such data center(s)
are used to provide the Services, and provided that SCA and its
designees shall not have access to third-party confidential data in
the context of such audit), by a certified public accounting firm or
mutually agreeable alternative. To the extent that any such audit is
conducted at an IBM Service Location, IBM shall hire, at SCA's
expense, the third-party auditor to perform the SAS 70 Type II audit
services, which includes issuing a SAS 70 Type II audit report, for
the benefit of SCA. SCA will be solely responsible for determining
the nature and extent of the SAS 70 Type II audit. SCA will be
responsible for any fees of the auditor in connection with the
audit. The Parties hereby agree that the auditor shall be solely
responsible for the accuracy of the reports and its findings and for
the quality of the SAS 70 Type II audit. The report of the
third-party auditors shall be solely for the use of IBM and SCA and
its independent accountants, shall be subject to the provisions of
Article 12 (Confidential Information). Both Parties recognize that
the report of the third-party auditor does not constitute a
certification or an attestation under the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002
or otherwise.
Information Technology Outsourcing Services Agreement between SCA and IBM
Exhibit 1 - Glossary
1. ADDITIONAL RESOURCE CHARGE or ARC means the charge, as set forth in
Schedule C (Charges), to SCA if SCA's usage of Resource Units is above the
applicable Baseline.
2. AFFILIATE means any entity controlling, controlled by, or under common
control with IBM or SCA. The term "Control" and its correlative meanings,
"controlling," "controlled by" and "under common control with," means the
legal, beneficial or equitable ownership, directly or indirectly, of more
than fifty percent of the aggregate of all voting equity interests in an
entity.
3. ANNUAL SERVICES CHARGE or ASC means the total Supplier Base Charges to SCA
for the Services and includes the quantity of Resource Units set forth in
the Baselines.
4. APPLICATIONS SOFTWARE means the programs, including all supporting
documentation, source code, and media that perform specific data
processing and telecommunication tasks and are listed as Applications
Software in Schedule F (Software).
5. APPROVED SUBCONTRACTOR means a Subcontractor approved by SCA pursuant to
Section 5.4(a) (Subcontractors).
6. ARC INVOICE has the meaning set forth in Schedule C (Charges).
7. ASC INVOICE has the meaning set forth in Schedule C (Charges).
8. ASSIGNED AGREEMENTS means the third party agreements, including contract
employee and independent contractor agreements, which are, in writing,
assigned by SCA to IBM and which IBM assumes in writing during the Term
pursuant to this Master Agreement.
9. ATTACHMENTS means the Schedules and Exhibits, collectively.
10. BASE TERMS means this Information Technology Outsourcing Agreement between
the Lead Parties of SCA and IBM.
11. BASELINE means the quantity of Resource Units included in the ASC, as set
forth in Schedule C (Charges).
12. BASIC SERVICES means, collectively: (i) the services, functions, and
responsibilities described in this Master Agreement, including the
services described in Schedule A (Statement of Work) to this Master
Agreement and the Exhibits to such Schedule A (Statement of Work); (ii)
any services, functions, and responsibilities, whether or not
specifically described in this Master Agreement, that are required for,
or inherent in the proper performance and delivery of the services
described in the preceding subclause (i); and (iii) the IT functions
and responsibilities within the general scope of Services described in
Schedule A performed during the twelve (12) month period immediately
prior to the Effective Date by XL Capital, or an Affiliate thereof.
13. BENCHMARKED SERVICES has the meaning set forth in Section 6.6 (Service
Levels).
14. BENCHMARKER has the meaning set forth in Section 6.6 (Service Levels).
15. BERMUDA COUNTRY AGREEMENT has the meaning set forth in Section 4.1
(Agreement Structure).
16. CHANGED CIRCUMSTANCE has the meaning set forth in Section 8.1 (Changes in
Circumstances).
17. CHANGED CIRCUMSTANCE ADJUSTMENT has the meaning set forth in Section 8.2
(Changed Circumstance Adjustment).
18. CHANGED CIRCUMSTANCES NOTICE has the meaning set forth in Section 8.1
(Changes in Circumstances).
19. CHANGE CONTROL PROCEDURES has the meaning set forth in Section 5.5 (Change
Control Procedures and Changes to the Services).
20. CHANGE IN SCOPE PROPOSAL has the meaning set forth in Section 5.5 (Change
Control Procedures and Changes to the Services).
21. COMPLETION CRITERIA means written conditions, mutually agreed upon by the
Parties, which IBM is required to meet to satisfy its obligations for a
given Project, as set forth in the applicable Project Plan.
22. COMMENCEMENT OF STEADY STATE has the meaning set forth in Section 6.2
(Transition of Services).
23. CONFERENCING SERVICES means those Services described in Section 6.0 of
Part 5 of Schedule A (Services and Support Responsibilities).
24. CONFIDENTIAL INFORMATION has the meaning set forth in Article 12
(Confidential Information).
25. CONSOLIDATED INVOICE has the meaning set forth in Section 4.1 (Agreement
Structure).
26. CONTRACT YEAR means any twelve (12) month period during the Term or the
Termination/Expiration Assistance Period beginning on the Effective Date
and thereafter, on any anniversary of the Effective Date.
27. CONTRACTS means the written contracts listed in Schedule E (Contracts)
under which SCA receives or has the right to use software, hardware or
services.
28. COSTS AND EXPENSES has the meaning set forth in Section 14
(Indemnification).
29. COVERED ITEMS has the meaning set forth in Section 16.1 (By IBM).
30. DATA NETWORK SERVICES means those Services described in Section 3.0 of
Part 5 of Schedule A (Services and Support Responsibilities).
31. DEDICATED ENVIRONMENT, DEDICATED SERVICES, DEDICATED PRODUCTS, DEDICATED
HARDWARE, DEDICATED SOFTWARE means, as the case may be, computing and
networking
environments (including related Equipment and Software), Services, and/or
Products provided or used by IBM that are dedicated to use by IBM
exclusively on behalf of Customer in IBM's provision of the Services to
Customer and are not shared for use by or on behalf of other IBM
customers.
32. DEFAULT NOTICE PERIOD has the meaning set forth in Section 9.7 (Time of
Payment).
33. DEFENSE COSTS means reasonable attorneys' fees and costs of investigation
incurred by the Indemnified Party in connection with defending a claim
subject to indemnification under Article 14 (Indemnification).
34. DELIVERABLE means any material(s) described as "deliverables" in an
applicable Project Plan, Ongoing Activity, or otherwise delivered or to be
delivered to SCA hereunder in connection with or while performing the
Services.
35. DERIVATIVE WORK means a work based on one or more preexisting works,
including a condensation, transformation, translation, modification,
expansion, or adaptation that, if prepared without authorization of the
owner of the copyright of such preexisting work, would constitute a
copyright infringement under applicable law.
36. DISABLING CODE has the meaning set forth in Section 16.1 (By IBM)
37. DISASTER RECOVERY PLAN has the meaning set forth in Section 6.7 (Disaster
Recovery).
38. DISASTER RECOVERY SERVICES means (i) if prior to Customer's approval of
the Disaster Recovery Plan in accordance with Section 6.7 hereof, the
services described in the Existing Disaster Recovery Plan; or (ii) if
subsequent to SCA's approval of the Disaster Recovery Plan in accordance
with Section 6.7 hereof, the services described in the Disaster Recovery
Plan and in Exhibit A-2 (Statement of Work, Disaster Recovery) to Schedule
A (Statement of Work).
39. DISCLOSER has the meaning set forth in Article 12 (Confidential
Information).
40. DISPUTE RESOLUTION PROCESS has the meaning set forth in Article 10.
(Dispute Resolution).
41. DISPUTED FEE CAP has the meaning set forth in Section 9.8 (Disputed
Payment).
42. ECA means the Economic Change Adjustment as defined in Part 3 of Schedule
C (Charges).
43. EFFECTIVE DATE means October 1, 2006, 12:01 AM Eastern Time.
44. END USER SERVICES means those Services described in Part 4 of Schedule A
(Services and Support Responsibilities).
45. EQUIPMENT means the IBM-Provided Equipment and the SCA-Provided Equipment.
46. ETHICAL HACK has the meaning set forth in Section 18.2 (Data Privacy and
Secuirty).
47. EXHIBIT means an exhibit expressly referenced in and attached to a
Schedule.
48. EXPIRATION DATE means five (5) years from the Effective Date, midnight
Eastern Time.
49. EXTENSION PERIOD has the meaning set forth in Section 11.1 (Renewal).
50. FACILITIES means any location owned, leased, rented, or used by (a) SCA
that IBM may use in providing the Services or (b) IBM and used in
providing the Services, and that is listed in Schedule I (Facilities).
51. FEES has the meaning set forth in Section 9.1 (Fees).
52. FORCE MAJEURE EVENT has the meaning set forth in Section 18.4 (Force
Majeure).
53. GOVERNMENTAL AUTHORITIES means any applicable federation, nation, state,
sovereign or government, any federal, supranational, regional, state,
local or municipal political subdivision, any governmental or
administrative body, instrumentality, department or agency, or any court,
administrative hearing body, arbitrator, commission or other similar
dispute resolving panel or body, and any other entity exercising
executive, legislative, judicial, regulatory, taxing or administrative
functions of a government with jurisdiction over the applicable matter.
54. GRACE PERIOD has the meaning set forth in Section 9.7 (Time of Payment).
55. HAZARDOUS MATERIAL means any substance or material classified or
considered hazardous or toxic under applicable law.
56. HELP DESK SERVICES means those Services described in Part 2 of Schedule A
(Services and Support Responsibilities).
57. IBM AGENT means any non-IBM employee used or designated by IBM for use in
the provisions of the Services (including any Approved Subcontractor).
58. IBM ASSUMED has the meaning set forth in Section 6.3 (Agreements).
59. IBM PERSONNEL means IBM employees and IBM Agents.
60. IBM PRODUCTS means International Business Machines Corporation logoed
hardware or software made generally available by IBM or its Affiliates.
61. IBM REGULATORY REQUIREMENTS means the laws applicable to IBM in its
capacity as an information technology services provider relating to the
performance of its obligations under this Master Agreement.
62. IBM-OWNED MATERIALS has the meaning set forth in Article 13 (Intellectual
Property Rights).
63. IBM-PROVIDED EQUIPMENT means any equipment, system, program, product, or
business process provided by IBM under this Master Agreement and used by
IBM to perform the Services.
64. IBM SERVICE LOCATIONS means IBM facilities listed in Schedule I
(Facilities) from which the Services are provided.
65. IMPROVED TECHNOLOGY means any new information processing technology
developments, including new software and hardware developments, that are
generally commercially available (from IBM or otherwise) and that could
reasonably be expected to have a positive impact on SCA's or an
Affiliate's business or on IBM's business as it relates to providing the
Services to SCA hereunder.
66. INCLUDING. References to and mentions of the word "including" or the
phrase "e.g." shall mean "including, without limitation," and references
to and mentions of the phrase "such as" shall mean "such as, without
limitation."
67. INDEMNIFIED PARTY has the meaning set forth in Article 14
(Indemnification).
68. INDEMNIFYING PARTY has the meaning set forth in Article 14
(Indemnification).
69. INFORMATION SECURITY CONTROLS DOCUMENT means the security requirements
documents to be prepared by IBM and approved by SCA pursuant to the
Transition Plan.
70. INTERIM DISASTER RECOVERY PLAN has the meaning set forth in Section 6.7
(Disaster Recovery).
71. IT means any and all hardware, software, systems, telecommunications and
other networks and other technology and services used to create, collect,
store, retrieve, manage, process, distribute, transmit, exchange, and
otherwise use or manipulate information or data.
72. JOINT ADVISORY COMMITTEE has the meaning set forth in Section 5.3 (Joint
Advisory Committee).
73. JOINT VERIFICATION PERIOD has the meaning set forth in Section 18.21
(Joint Verification).
74. LAWS. References to any Law, unless otherwise specified, (or any item
included in the term "Laws" as defined herein) shall also mean references
to such Law in changed or supplemented form or to a newly adopted Law
replacing such Law.
75. LEAD PARTY means the IBM or SCA Party to the Base Terms.
76. LEASED SCA PROVIDED EQUIPMENT means those computing, telecommunications
and other Equipment, and associated attachments, features, accessories and
peripheral devices (including storage devices and printers), set forth on
Schedule G (Machines and Connectivity), that are leased by SCA.
77. LOSSES means shall mean, with respect to any claim that is the subject
of indemnification under Article 14, all amounts paid or payable to or
for the benefit of any Third Party asserting such claim (including such
Third Party's successors and assigns) pursuant to any settlement
(approved by the indemnifying party, provided that the indemnifying
party has elected to assume control of the defense and settlement of
such claim pursuant to Article 14), judgment or award with respect to
such claim, and shall include reasonable legal fees, reasonable
disbursements, and reasonable costs and expenses of investigation and
litigation.
78. MAJOR SUBCONTRACT has the meaning set forth in Section 5.4 (Personnel).
79. MASTER AGREEMENT has the meaning set forth in Section 4.1 (Agreement
Structure).
80. MATERIALS has the meaning set forth in Article 13 (Intellectual Property
Rights).
81. MONTHLY BASE CHARGE means the monthly pro rata portion of the ASC.
82. MONTHLY PERFORMANCE REPORT has the meaning set forth in Section 6.6
(Service Levels).
83. NETWORK SERVICES means the Services described in Sections 2.0, 3.0 and 4.0
of Part 5 of Schedule A (Services and Support Responsibilities).
84. NEW SERVICE LEVELS means the service levels established by IBM and SCA in
connection with a New Service in accordance with the terms and conditions
of this Master Agreement.
85. NEW SERVICES has the meaning set forth in Schedule C (Charges).
86. NONPERFORMING PARTY has the meaning set forth in Section 18.4 (Force
Majeure).
87. NOTICE OF ELECTION has the meaning set forth in Article 14
(Indemnification).
88. NOTICE PERIOD has the meaning set forth in Article 14 (Indemnification).
89. ONGOING ACTIVITIES has the meaning set forth in Section 11.10 (Transfer
Assistance).
90. ORIGINAL ASC means the Annual Services Charges set forth in Exhibit C-2 to
Schedule C as of the Effective Date.
91. ORIGINAL BASELINE means the Resource Unit Baselines set forth in Exhibit
C-2 to Schedule C as of the Effective Date.
92. OTHER PRODUCTS has the meaning set forth in Article 16 (Warranty).
93. OTHER SERVICE LOCATIONS means any location, other than SCA Service
Locations or an IBM Service Location, from which Services are provided.
94. OWNER has the meaning set forth in Article 13 (Intellectual Property
Rights).
95. PARTIES means IBM and SCA, collectively.
96. PARTY means either IBM or SCA, alternatively.
97. PASS THROUGH SOFTWARE means the Software licensed by SCA and licensed to
IBM pursuant to Section 6.4, as of the Commencement of Steady State, that
is designated as "Pass Through" in Schedule F (Software), and any
replacement Software of such Pass Through Software, and Software licensed
by SCA from a Third Party after the Commencement of Steady State that is
designated by SCA as Pass Through Software (pursuant to Change Control
Procedures).
98. PAYABLE DATE has the meaning set forth in Section 9.7 (Time of Payment).
99. PERFORMANCE EFFORTS has the meaning set forth in Section 6.1 (Description
of Services).
100. POLICY AND PROCEDURES MANUAL means the mutually-agreed manual (electronic
or hard copy) describing the operating processes and procedures governing
the performance of the Services.
101. PRE-EXISTING MATERIAL has the meaning set forth in Article 13
(Intellectual Property Rights).
102. PREMISES NETWORK MANAGEMENT SERVICES means those Services described in
Section 2.0 of Part 5 of Schedule A (Services and Support
Responsibilities).
103. PROJECT EXECUTIVE has the meaning set forth in Section 5.1 (Project
Executives).
104. PROJECT means a unit of work, which work may consist of Basic Services,
New Services, or a combination of both Basic Services and New Services,
and which is appropriate for management by a project management
methodology.
105. PROJECT PLAN has the meaning set forth in Section 7.3 (Project Plan
Contents).
106. RECIPIENT has the meaning set forth in Article 12 (Confidential
Information).
107. REDUCED RESOURCE CREDIT or RRC means the credit, as set forth in Schedule
C (Charges), to SCA if SCA's usage of a Resource Unit is less than the
applicable Baseline.
108. REPRESENTATIVE SAMPLE has the meaning set forth in Section 6.6 (Service
Levels).
109. REQUEST FOR NEW SERVICES has the meaning set forth in Schedule C
(Charges).
110. REQUIRED CONSENTS means any consents or approvals required to give IBM,
its Affiliates and their Subcontractors the right or license to use,
execute, reproduce, display, perform, distribute copies of, and modify
(including creating Derivative Works), any Third Party Software licensed
to SCA and required by IBM to provide the Services under this Master
Agreement, as set forth on Schedule F.
111. RESOURCE UNIT or RU means a unit of resource for which IBM and SCA have
established a Baseline, as set forth in Schedule C (Charges).
112. RETAINED SOFTWARE means the Software licensed by SCA and licensed to IBM
pursuant to Section 6.4, as of the Commencement of Steady State, that is
designated as "Retained" in Schedule F (Software), and any replacement
Software of such Retained Software, and Software licensed by SCA from a
Third Party after the Commencement of Steady State that is designated by
SCA as Retained Software (pursuant to Change Control Procedures).
113. SCA means Security Capital Assurance Ltd.
114. SCA AGENT means the agents and subcontractors of SCA (excluding IBM),
including their employees.
115. SCA AUTHORIZED REPRESENTATIVE means that individual or those individuals
identified in writing by SCA as SCA's authorized representative(s).
116. SCA COMPETITOR means the entities listed in Schedule T (SCA Competitors).
117. SCA DATA means any information relating to an identifiable individual or
legal entity (Personal Data) that IBM processes on behalf of SCA in
performing the Services. SCA Data excludes Personal Data:
118. SCA EXPENSE POLICY shall have the meaning set forth in the Policy and
Procedures Manual.
119. SCA REGULATORY REQUIREMENTS means the laws and regulations applicable to
SCA.
120. SCA SERVICE LOCATIONS means those SCA locations identified on Schedule I
(Facilities) from which the Services are provided.
121. SCA STANDARDS means those information management, technical architecture
and product standards set forth in Schedule H (SCA Standards).
122. SCA-OWNED MATERIALS has the meaning set forth in Article 13 (Intellectual
Property Rights).
123. SCA-PROVIDED EQUIPMENT means any equipment, system, program, product, or
business process provided to IBM by SCA under this Master Agreement or
used by SCA in conjunction with the Services.
124. SCHEDULES means the Schedules expressly referenced in and attached to this
Master Agreement with its Exhibits.
125. SEMI ANNUAL PERIOD means either the period of January through June, or
July through December, of any calendar year.
126. SERVER SERVICES means those Services described in part 3 of Schedule A
(Services and Support Responsibilities).
127. SERVICE LEVEL CREDITS has the meaning set forth in Section 2.0 of Schedule
B (Service Levels).
128. SERVICE LEVELS means the service delivery criteria established for certain
of the Services, as set forth in Schedule B (Service Levels).
129. SERVICE LOCATIONS means SCA Service Location, IBM Service Location or
Other Service Location.
130. SERVICES means the IT services and functions provided by IBM to SCA, as
set forth in Schedule A (Statement of Work), including the Basic Services.
131. SERVICES RECIPIENT means SCA, its Affiliates, entities and end users
receiving Services at SCA's request, including, but not limited to XL
Financial Administrative Services, Inc., SCA Bermuda Administrative, Ltd.,
and XL Capital Assurance (U.K.), Ltd.
132. SERVICES TOWER means (i) the End User Services (including Helpdesk), (ii)
Server Services (including SAN), (iii) the Network Services (including
Premise Network), or (iv) the Voice Services (including Conferencing
Services).
133. SOFTWARE means Applications Software and Systems Software, collectively.
134. SOURCE CODE means code other than object code, and includes code that may
be displayed in a form readable and understandable by a programmer of
ordinary skill, as well as any enhancements, corrections and documentation
related thereto. Source Code includes related Source Code level system
documentation, comments and procedural code, such as job control language.
135. SUBCONTRACTORS means contractors, vendors, agents, and consultants
selected and retained by IBM or SCA, respectively.
136. SUPPLIER BASE CHARGE means the recurring fixed charge for each of the
Services Towers as described in Schedule C and specified in Exhibit C-2.
137. SYSTEM SOFTWARE means the programs, including all source code (if
applicable), supporting documentation and media that perform tasks basic
to the functioning of data processing and telecommunication that are
required to operate the Applications Software, and are listed as Systems
Software in Schedule F (Software).
138. TARGETED COST INCREASES has the meaning set forth in Section 8.2
(Adjustments).
139. TARGETED RESOURCE REDUCTIONS has the meaning set forth in Section 8.2
(Adjustments).
140. TARGETED RESOURCES ADDITIONS has the meaning set forth in Section 8.2
(Adjustments).
141. TECHNOLOGY PLAN has the meaning set forth in Section 6.1 (Description of
Services).
142. TERM has the meaning set forth in Article 3 (Term).
143. TERMINATION CHARGES has the meaning set forth in Schedule C (Charges).
144. TERMINATION EXPIRATION ASSISTANCE has the meaning set forth in Section
11.7 (Transfer Assistance).
145. TERMINATION FOR CONVENIENCE CHARGES has the meaning set forth in Section
11.3 (Termination for Convenience).
146. TERMINATION/EXPIRATION ASSISTANCE has the meaning set forth in Section
11.10 (Transfer Assistance).
147. TERMINATION/EXPIRATION ASSISTANCE PERIOD means a period of time designated
by SCA, not to exceed eighteen (18) months after the expiration or
termination of this Master Agreement, during which IBM shall provide
Termination/Expiration Assistance Services in accordance with Section
11.10 (Transfer Assistance).
148. TERMINATION/EXPIRATION PERIOD has the meaning set forth in Section 11.10
(Transfer Assistance).
149. TEST FIRM has the meaning set forth in Section 18.2 (Data Privacy and
Security).
150. THIRD PARTY and THIRD PARTIES means any entity or person other than IBM
and SCA and their respective Affiliates, directors, officers, and
employees.
151. THIRD PARTY SERVICES has the meaning set forth in Section 6.1 (Description
of Services).
152. THIRD PARTY SOFTWARE means the Applications Software and System Software
used to provide the Services, which are provided under license to IBM or
SCA by a Third Party, and includes any related software and ongoing
services (e.g., maintenance and support services, upgrades, subscription
services) provided by third parties.
153. TRANSITION BASIC SERVICES has the meaning set forth in Section 6.2
(Transition of Services).
154. TRANSITION has the meaning set forth in Section 6.2 (Transition of
Services).
155. TRANSITION PERIOD has the meaning set forth in Section 6.2 (Transition of
Services).
156. TRANSITION PLAN has the meaning set forth in Section 6.2 (Transition of
Services).
157. TRANSITION SCHEDULE has the meaning set forth in Section 6.2 (Transition
of Services).
158. TURNOVER PLAN has the meaning set forth in Section 11.10 (Transfer
Assistance).
159. UK COUNTRY AGREEMENT has the meaning set forth in Section 4.1 (Agreement
Structure).
160. VARIABLE FEES has the meaning set forth in Section 9.7 (Time of Payment).
161. VIRUS means: (a) program code, programming instruction or set of
instructions intentionally constructed to, or with the ability to, damage,
interfere with, or otherwise adversely affect computer programs, data
files or operations; and/or (b) other code typically designated to be a
virus, including any Trojan horse or worm.
162. VOICE SERVICES means those Services described in Section 5.0 of Part 5 of
Schedule A (Services and Support Responsibilities).
163. WIND DOWN EXPENSES has the meaning set forth in Section 2.2(b)(1)(b) of
Schedule C (Charges).
164. XLFAS has the meaning set forth in Section 4.1 (Agreement Structure).
ACKNOWLEDGEMENT AND AGREEMENT CONCERNING
INFORMATION TECHNOLOGY OUTSOURCING SERVICES AGREEMENT
BY AND BETWEEN SECURITY CAPITAL ASSURANCE LTD AND INTERNATIONAL BUSINESS
MACHINES CORPORATION, DATED SEPTEMBER 30, 2006
XL Financial Administrative Services, Inc. ("XLFAS") and International Business
Machines Corporation ("IBM") hereby acknowledge and agree that XLFAS shall be
directly and primarily responsible for the performance of the obligations of,
and entitled to receive all rights, services provided and benefits owing to,
Security Capital Assurance Ltd ("SCA") pursuant to the Information Technology
Outsourcing Services Agreement entered into by and between SCA and IBM on
September 30, 2006, as the same may be amended from time to time pursuant to
mutual written agreement between SCA and IBM (the "MASTER AGREEMENT"). IBM shall
deliver the Services to XLFAS and its Affiliates, and IBM's performance of its
obligations under the Master Agreement shall be deemed to be performance of its
obligations to SCA. Nothing in this Acknowledgement shall relieve either SCA or
IBM of its obligations pursuant to the Master Agreement.
ACKNOWLEDGED AND AGREED:
------------------------
--------------------------------------- ----------------------------------------
Security Capital Assurance Ltd International Business Machines
Corporation
By: By:
------------------------------------ -------------------------------------
Authorized Signature Authorized Signature
--------------------------------------- ----------------------------------------
Name and Title (Type or Print) Name and Title (Type or Print)
--------------------------------------- ----------------------------------------
Date Date
Security Capital Assurance Ltd International Business Machines
One Bermudiana Road Corporation
▇▇▇▇▇▇▇▇, ▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
---------------------------------------
XL Financial Administrative
Services, Inc.
By:
------------------------------------
Authorized Signature
---------------------------------------
Name and Title (Type or Print)
---------------------------------------
Date
XL Financial Administrative
Services, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
BERMUDA COUNTRY AGREEMENT BETWEEN
SCA BERMUDA ADMINISTRATIVE, LTD. AND IBM WORLD TRADE CORP.
PURSUANT TO THE
INFORMATION TECHNOLOGY
OUTSOURCING SERVICES AGREEMENT
BETWEEN SCA AND IBM
This Agreement, dated as of the Effective Date, is between SCA Bermuda
Administrative, Ltd ("SCA AFFILIATE") and IBM World Trade Corp. ("IBM
AFFILIATE") (collectively, the "PARTIES") and is made pursuant to the
Information Technology Outsourcing Services Agreement between Security Capital
Assurance Ltd and International Business Machines Corporation dated September
30, 2006 (the "MASTER AGREEMENT").
This Agreement includes these terms and conditions, the terms and conditions of
the Master Agreement, all Schedules and Attachments thereto, and is the complete
and exclusive agreement between the Parties regarding the subject matter of this
Agreement, and replaces any prior oral or written communications between the
Parties with respect to the subject matter of this Agreement.
By signing below, the Parties agree to be bound by the terms of this Agreement.
Once signed, unless prohibited by applicable law, any reproduction of this
Agreement made by reliable means (for example, photocopy or facsimile) is
considered an original.
Agreed to: Agreed to:
--------------------------------------- ----------------------------------------
SCA Bermuda Administrative, Ltd IBM World Trade Corporation
By: By:
------------------------------------ ------------------------------------
Authorized Signature Authorized Signature
--------------------------------------- ----------------------------------------
Name and Title (Type or Print) Name and Title (Type or Print)
--------------------------------------- ----------------------------------------
Date Date
SCA Bermuda Administrative, Ltd IBM World Trade Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇ Second Terrace and ▇▇▇▇▇▇▇ Ave.
Bermuda P.O. Box 6400
Nassau N.P.,
Commonwealth of the Bahamas
LOCAL COUNTRY AGREEMENT
BERMUDA
-------
This Local Country Agreement for Bermuda (the "AGREEMENT") is entered into as of
the Effective Date between:
SCA BERMUDA ADMINISTRATIVE LTD, a Bermuda company whose office is at One
▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇ ▇▇, ▇▇▇▇▇▇▇ ("▇▇▇ AFFILIATE") and
IBM WORLD TRADE CORPORATION a Delaware corporation whose office is at Atlantic
House, Second Terrace and ▇▇▇▇▇▇▇ Avenue, P.O. Box 6400 Nassau N.P.,
Commonwealth of the Bahamas ("IBM AFFILIATE").
All capitalized terms used in this Agreement and not otherwise defined herein
will have the respective meanings assigned thereto in the Master Agreement
identified below.
BACKGROUND STATEMENT
Security Capital Assurance Ltd.. ("SCA") has agreed, on behalf of itself and its
Affiliates, to outsource the performance and management of certain of their
information technology operations to International Business Machines Corporation
("IBM") and certain IBM Affiliates. Towards this end, SCA and IBM have entered
into an Information Technology Outsourcing Services Agreement as of the
Effective Date. Such Services Agreement, together with all Schedules and
attachments thereto, are collectively referred to as the "MASTER AGREEMENT."
In order to implement the Master Agreement in Bermuda, this Agreement (i)
is being executed and delivered by each of SCA Affiliate and IBM Affiliate as
contemplated by the Master Agreement and (ii) hereby incorporates the terms and
conditions of the Master Agreement as if fully set forth herein, except for
those different or additional terms and conditions set forth in this Agreement,
including the country-specific terms and conditions set forth on Exhibit A to
this Agreement.
NOW THEREFORE, in consideration of the mutual promises and covenants
contained herein, and other good and valid consideration, the receipt and
sufficiency of which is hereby acknowledged, SCA Affiliate and IBM Affiliate
hereby agree as follows:
1 AGREEMENT. During the Term, IBM Affiliate will provide to SCA Affiliate,
and SCA Affiliate will purchase from IBM Affiliate, that portion of the
Services to be provided by IBM and purchased by SCA under the Master
Agreement in Bermuda, as stated in the Master Agreement, all upon and
subject to the terms and conditions specified in the Master Agreement
(with references to IBM to be treated as references to IBM Affiliate and
references to SCA to be treated as references to SCA Affiliate in relation
to the Bermuda Services) as such terms and conditions may be modified or
supplemented for purposes of this Agreement by the terms and conditions
set forth in this Agreement.
2 PRIORITY OF TERMS. SCA Affiliate and IBM Affiliate, with respect to that
portion of the Services to be provided by IBM or its delegates to Bermuda
and purchased by SCA under the Master Agreement, agree to be governed by
all the terms and conditions of the Master Agreement including those
provisions regarding compliance with those laws that apply within the
jurisdiction of Bermuda. Unless otherwise expressly provided in this
Agreement ., in the event of any conflict or inconsistency between the
terms of this Agreement and the terms of the Master Agreement, the terms
of this Agreement shall govern.
3 RELATIONSHIP BETWEEN AGREEMENTS. All defences, excuses and remedies
available to IBM under the Master Agreement shall be available to IBM
Affiliate under this Agreement with respect to the corresponding
obligation of IBM Affiliate under this Agreement, and all defences,
excuses and
remedies available to SCA under the Master Agreement shall be available to
SCA Affiliate under this Agreement with respect to the corresponding
obligation of SCA Affiliate under this Agreement.
4 PAYMENTS. IBM Affiliate will invoice SCA Affiliate monthly for the
Services provided by IBM Affiliate, through a single invoice prepared by
IBM and delivered to SCA's U.S. Affiliate. SCA Affiliate shall remit
payment to IBM Affiliate in accordance with the terms and conditions of
Section 9.7 (Time of Payment) of the Master Agreement and Section 2.4 of
Schedule C (Charges).
5 RIGHTS OF THIRD PARTIES. The Parties do not intend any term of this
Agreement to be enforceable pursuant to the Contracts (Rights of Third
Parties) ▇▇▇ ▇▇▇▇ provided however that the Persons entitled to
indemnification pursuant to Article 14 (Indemnification) of the Master
Agreement will be entitled to enforce the provisions thereof.
6 TERM. The Term of this Agreement will begin on the Effective Date and will
continue concurrent with the Master Agreement, ending upon the first to
occur of (i) termination or expiration of such Master Agreement, or (ii)
termination for any reason of the obligations of IBM to provide the
Services in the United States pursuant to the Master Agreement, in which
case the effects of any such termination shall be as provided in the
Master Agreement.
7 COUNTERPARTS. This Agreement shall be executed in counterparts. Each such
counterpart shall be an original and together shall constitute but one and
the same document.
8 NOTICES. Wherever under this Agreement SCA Affiliate or IBM Affiliate is
required or permitted to give written notice to the other, such notice
shall be delivered by providing notice to SCA or IBM, as appropriate, in
accordance with the Master Agreement.
9 ENTIRE AGREEMENT AND AMENDMENTS. This Agreement and the Master Agreement
constitute the entire agreement between SCA Affiliate and IBM Affiliate
with respect to the subject matter hereof. There are no agreements,
representations, warranties, promises, covenants, commitments or
undertakings with respect to the subject matter hereof other than those
expressly set forth herein. This Agreement supersedes all prior
agreements, representations, warranties, promises, covenants, commitments
or undertakings, whether written or oral, with respect to the subject
matter hereof. This Agreement may only be modified by a written document
signed by all parties hereto.
EXHIBIT A
---------
COUNTRY-SPECIFIC TERMS AND CONDITIONS
There are no country-specific terms for Bermuda
UNITED KINGDOM COUNTRY AGREEMENT BETWEEN
XL CAPITAL ASSURANCE (U.K.) LIMITED AND IBM UNITED KINGDOM, LTD.
PURSUANT TO THE
INFORMATION TECHNOLOGY
OUTSOURCING SERVICES AGREEMENT
BETWEEN SCA AND IBM
This Agreement, dated as of the Effective Date, is between XL Capital Assurance
(U.K.) Limited ("SCA AFFILIATE") and IBM United Kingdom, Ltd. ("IBM AFFILIATE")
(collectively, the "PARTIES") and is made pursuant to the Information Technology
Outsourcing Services Agreement between Security Capital Assurance Ltd and
International Business Machines Corporation dated September 30, 2006 (the
"MASTER AGREEMENT").
This Agreement includes these terms and conditions, the terms and conditions of
the Master Agreement, all Schedules and Attachments thereto, and is the complete
and exclusive agreement between the Parties regarding the subject matter of this
Agreement, and replaces any prior oral or written communications between the
Parties with respect to the subject matter of this Agreement.
By signing below, the Parties agree to be bound by the terms of this Agreement.
Once signed, unless prohibited by applicable law, any reproduction of this
Agreement made by reliable means (for example, photocopy or facsimile) is
considered an original.
Agreed to: Agreed to:
--------------------------------------- ----------------------------------------
XL Capital Assurance (U.K.) Limited IBM United Kingdom, Ltd.
By: By:
------------------------------------ ------------------------------------
Authorized Signature Authorized Signature
--------------------------------------- ----------------------------------------
Name and Title (Type or Print) Name and Title (Type or Print)
--------------------------------------- ----------------------------------------
Date Date
XL Capital Assurance (U.K.) Limited IBM United Kingdom, Ltd.
▇▇ ▇▇▇▇▇ ▇.▇. ▇▇▇ ▇▇
70 Gracechurch Street North Harbour
London EC3V 0XL ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
LOCAL COUNTRY AGREEMENT
UNITED KINGDOM
--------------
This Local Country Agreement for the United Kingdom (the "AGREEMENT") is entered
into as of the Effective Date between:
XL CAPITAL ASSURANCE (U.K.) LIMITED, a company registered under the laws of
England and Wales, under number 04290613, whose registered office is at ▇▇ ▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ ("SCA AFFILIATE") and
IBM UNITED KINGDOM LIMITED, a company registered under the laws of England and
Wales, under number 741598, whose registered office is at ▇.▇. ▇▇▇ ▇▇, ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇. ("IBM Affiliate").
All capitalized terms used in this Agreement and not otherwise defined herein
will have the respective meanings assigned thereto in the Master Agreement
identified below.
BACKGROUND STATEMENT
Security Capital Assurance Ltd.. ("SCA") has agreed, on behalf of itself and its
Affiliates, to outsource the performance and management of certain of their
information technology operations to International Business Machines Corporation
("IBM") and certain IBM Affiliates. Towards this end, SCA and IBM have entered
into an Information Technology Outsourcing Services Agreement as of the
Effective Date. Such Services Agreement, together with all Schedules and
attachments thereto, are collectively referred to as the "MASTER AGREEMENT."
In order to implement the Master Agreement in the United Kingdom, this
Agreement (i) is being executed and delivered by each of SCA Affiliate and IBM
Affiliate as contemplated by the Master Agreement and (ii) hereby incorporates
the terms and conditions of the Master Agreement as if fully set forth herein,
except for those different or additional terms and conditions set forth in this
Agreement, including the country-specific terms and conditions set forth on
EXHIBIT A to this Agreement.
NOW THEREFORE, in consideration of the mutual promises and covenants
contained herein, and other good and valid consideration, the receipt and
sufficiency of which is hereby acknowledged, SCA Affiliate and IBM Affiliate
hereby agree as follows:
1 AGREEMENT. During the Term, IBM Affiliate will provide to SCA Affiliate,
and SCA Affiliate will purchase from IBM Affiliate, that portion of the
Services to be provided by IBM and purchased by SCA under the Master
Agreement in the United Kingdom, as stated in the Master Agreement, all
upon and subject to the terms and conditions specified in the Master
Agreement (with references to IBM to be treated as references to IBM
Affiliate and references to SCA to be treated as references to SCA
Affiliate in relation to the UK Services) as such terms and conditions may
be modified or supplemented for purposes of this Agreement by the terms
and conditions set forth in this Agreement including EXHIBIT A
(Country-Specific Terms and Conditions).
2 PRIORITY OF TERMS. SCA Affiliate and IBM Affiliate, with respect to that
portion of the Services to be provided by IBM or its delegates to the
United Kingdom and purchased by SCA under the Master Agreement, agree to
be governed by all the terms and conditions of the Master Agreement
including those provisions regarding compliance with those laws that apply
within the jurisdiction of the United Kingdom. Unless otherwise expressly
provided in this Agreement, including the country-specific terms and
conditions set forth in EXHIBIT A of this Agreement, in the event of any
conflict or inconsistency between the terms of this Agreement and the
terms of the Master Agreement, the terms of this Agreement shall govern.
3 RELATIONSHIP BETWEEN AGREEMENTS. All defences, excuses and remedies
available to IBM under the Master Agreement shall be available to IBM
Affiliate under this Agreement with respect to the corresponding
obligation of IBM Affiliate under this Agreement, and all defences,
excuses and remedies available to SCA under the Master Agreement shall be
available to SCA Affiliate under this Agreement with respect to the
corresponding obligation of SCA Affiliate under this Agreement.
4 PAYMENTS. IBM Affiliate will invoice SCA Affiliate monthly for the
Services provided by IBM Affiliate through a single invoice prepared by
IBM and delivered to SCA's U.S. Affiliate in accordance with Section 4.1
(Agreement Structure) of the Master Agreement with a copy of the monthly
invoice sent to SCA Affiliate. Payment shall be remitted in accordance
with the terms and conditions of Section 9.7 (Time of Payment) of the
Master Agreement and Section 2.4 of Schedule C (Charges).
5 RIGHTS OF THIRD PARTIES. The Parties do not intend any term of this
Agreement to be enforceable pursuant to the Contracts (Rights of Third
Parties) ▇▇▇ ▇▇▇▇ provided however that the Persons entitled to
indemnification pursuant to Article 14 (Indemnification) of the Master
Agreement will be entitled to enforce the provisions thereof.
6 TERM. The Term of this Agreement will begin on the Effective Date and will
continue concurrent with the Master Agreement, ending upon the first to
occur of (i) termination or expiration of such Master Agreement, or (ii)
termination for any reason of the obligations of IBM to provide the
Services in the United Kingdom pursuant to the Master Agreement, in which
case the effects of any such termination shall be as provided in the
Master Agreement.
7 COUNTERPARTS. This Agreement shall be executed in counterparts. Each such
counterpart shall be an original and together shall constitute but one and
the same document.
8 NOTICES. Wherever under this Agreement SCA Affiliate or IBM Affiliate is
required or permitted to give written notice to the other, such notice
shall be delivered by providing notice to SCA or IBM, as appropriate, in
accordance with the Master Agreement.
9 GOVERNING LAW. Notwithstanding Section 18.7 of the Master Agreement, both
SCA Affiliate and IBM Affiliate (collectively, the "UK Parties") consent
to the application of the laws of England and Wales to govern, interpret,
and enforce all of the UK Parties' rights, duties, and obligations arising
from, or relating in any manner to, the subject matter of this UK Local
Agreement, without regard to conflict of law principles, solely with
respect to disputes arising under the UK Local Agreement and which
disputes are confined exclusively to the UK Parties. Nothing in this UK
Local Agreement shall constitute, or be deemed to be consent by, any SCA
Affiliate or any other SCA-related entity other than XL Capital Assurance
(U.K.) Limited to acceptance of legal process within the United Kingdom or
to location of the jurisdiction or venue of any judicial or other dispute
resolution proceedings within the United Kingdom.
10. ENTIRE AGREEMENT AND AMENDMENTS. This Agreement and the Master Agreement
constitute the entire agreement between SCA Affiliate and IBM Affiliate
with respect to the subject matter hereof. There are no agreements,
representations, warranties, promises, covenants, commitments or
undertakings with respect to the subject matter hereof other than those
expressly set forth herein. This Agreement supersedes all prior
agreements, representations, warranties, promises, covenants, commitments
or undertakings, whether written or oral, with respect to the subject
matter hereof. This Agreement may only be modified by a written document
signed by all parties hereto.
EXHIBIT A
---------
COUNTRY-SPECIFIC TERMS AND CONDITIONS
1 The following provisions shall be added to the UK Local Agreement
A. DATA PROTECTION
A1A. Each party shall comply with its obligations under the UK Data Protection
Act 1998,(together with subordinate legislation and any subsequent
enactment), that apply in relation to any personal data disclosed to it
under, and processed for the purpose of supplying Services under this UK
Local Agreement.
A1.B. In respect of any processing of personal data under this UK Local
Agreement:
A1.B.1 for personal data provided by, or relating to, SCA: the SCA
Affiliate shall be the data controller and IBM Affiliate shall
be the data processor; and
A1.B.2 for personal data provided by, or relating to, IBM: IBM
Affiliate shall be the data controller and the SCA Affiliate
shall be the data processor.
A1.B.3 SCA acknowledges that it is solely responsible for determining
that the security measures specified in Schedule A constitute
appropriate technical and organisational measures to protect
SCA's or SCA Affiliate's data.
2 The following sections of the Master Agreement shall be replaced or
amended in the UK Local Agreement by the provisions set out below insofar
as they relate to the United Kingdom:
2.3 The "Disclaimer" in Section 16.2 of the Master Agreement shall be replaced
with the following provisions:
"Disclaimer
EXCEPT AS OTHERWISE EXPRESSLY PROVIDED HEREIN, NEITHER PARTY MAKES ANY
REPRESENTATIONS OR WARRANTIES TO THE OTHER, WHETHER EXPRESS OR IMPLIED,
INCLUDING THE IMPLIED WARRANTIES OF SATISFACTORY QUALITY, FITNESS FOR A
PARTICULAR PURPOSE AND MERCHANTABILITY."
2.4 Section 15.2 (c) of the Master Agreement shall be replaced with the
following:
The exclusion of liability set forth in Section 15.2 (a) above shall be
replaced with the following: "Under no circumstances is either party
liable to the other for any of the following, even if such party has been
informed of the possibility of such losses provided that this subsection
does not apply to SCA's failure to pay any amounts owing to IBM under this
Agreement (including amounts owing for Services rendered or services that
would have been rendered but for SCA's breach of this Agreement). .:
(i) special, indirect or consequential loss;
(ii) loss of profits, business, revenue, goodwill or anticipated savings;
or
(iii) subject to Section 15.2(d), loss of, or damage to, data."
3. UK HUMAN RESOURCE MATTERS
3.1 INTRODUCTION
This Section sets out how certain human resources related obligations will
be handled. The capitalised terms not otherwise defined herein shall have
the respective definitions assigned thereto in the UK Local Agreement, and
in the Master Agreement. This Schedule supplements the provisions in the
Master Agreement and the Agreement, in relation to human resources and
related obligations in the UK.
3.2 If there is any conflict or inconsistency between this Exhibit A to the UK
Local Agreement and the terms of the Master Agreement, then the terms of
this Exhibit A to the UK Local Agreement shall prevail to the extent of
the conflict or inconsistency in respect of the services and territory
covered hereunder.
3.3 DEFINITIONS
"EXIT EMPLOYEES" means those employees of IBM Affiliate who are wholly or
mainly employed to work in the provision of the UK Services immediately
prior to the termination of the UK Services.
"LOSSES" means in respect of any matter, event or circumstance or demands,
claims, actions, proceedings, damages, losses, costs (including reasonable
legal costs) expenses or other liabilities.
"REGULATIONS" means the Transfer of Undertakings (Protection of
Employment) Regulations 2006) as amended;
"TULR(C)A" means the Trade Union and Labour Relations ( Consolidation)
▇▇▇ ▇▇▇▇.
"UK BUSINESS" means the provision of the Services in the UK by SCA prior
to the Effective Date.
"UK SERVICES" the provision of the Services in the UK pursuant to this UK
Local Agreement following the Effective Date.
"SUCCESSOR SUPPLIER" means the provider of services equivalent to the UK
Services (or part thereof) after the termination of the UK Services (or
part thereof) who is appointed by SCA Affiliate.
3.4 STAFF TRANSFER
The Parties acknowledge and agree that it is not anticipated that any SCA
Affiliate employees shall transfer to IBM Affiliate but in the event that
any do by virtue of the application of the Regulations, the parties
acknowledge that the transaction referred to herein constitutes a relevant
transfer ("Relevant Transfer") for the purpose of the Regulations. For
purposes of this clause 3, any SCA Affiliate employees so affected shall
be referred to as "TRANSFERRING EMPLOYEES."
3.5 SCA RESPONSIBILITIES
SCA Affiliate shall indemnify IBM Affiliate in respect of any costs or
claims arising from:
(a) any failure by SCA Affiliate to inform and consult appropriate
representatives in accordance with Regulations 13 and 14 of the
Transfer Regulations, and section 188 of TULR(C)A, save to the
extent that such failure is caused by the failure of IBM Affiliate,
IBM Corporation and/or all of its Affiliated Companies to comply
with its or their legal obligations;
(b) any failure by SCA Affiliate to pay any amounts payable to or in
relation to the Transferring Employees arising or in respect of any
period on or before the date of any Relevant Transfer; and
(c) any claim or other legal recourse by a Transferring Employee for
any remedy as a result of anything done or omitted to be done in
relation to the Transferring Employee's employment prior to the
date of the Relevant Transfer.
3.6 SCA'S INDEMNITY
3.6.1 If, as a result of a Relevant Transfer, the contract of employment
of any person expressly employed by SCA Affiliate shall have effect as if
originally made between IBM Affiliate and such person pursuant to the
Regulations, then:
(a) a manager of IBM Affiliate will within [10] days of becoming aware
of (i) the application of the Regulations or (ii) a claim by a
former SCA Affiliate employee that the Regulations may apply to any
such contract, [terminate] such [contract];
and
(b) SCA Affiliate shall indemnify and keep indemnified IBM Affiliate,
IBM Corporation and all of its Affiliated Companies against any and
all Losses (including any claims in respect of any individual's
pension rights) suffered or incurred by IBM Affiliate, IBM
Corporation and /or any Affiliated Companies of IBM Affiliate.
3.6.2 The indemnities contained in clauses 3.5 and 3.6.1(b) above shall
be subject to the obligation of the IBM Affiliate to take reasonable steps
to mitigate the relevant costs, claims and Losses, and to the obligation
of the SCA Affiliate to reasonably cooperate with the IBM Affiliate to
this end.
3.7 IBM'S INDEMNITY
IBM shall indemnify and keep SCA Affiliate, SCA and all of its Affiliated
Companies indemnified against all Losses arising out of any breach by IBM,
IBM Corporation and/or of Affiliated Companies of IBM Affiliate of
Regulation 13(4) of the Regulations.
3.8 PROVISIONS ON TERMINATION
If the Regulations apply to the transfer of the UK Services (or part
thereof) provided by IBM Affiliate in accordance with this Agreement
either to SCA Affiliate or a Successor Supplier on or after the
termination of the Services (or part thereof):
(a) each Party shall comply, and provide all reasonable assistance to
the other Party and any potential Successor Supplier to enable them
to comply with all of their obligations under Regulation 13 of the
Regulations;
(b) SCA Affiliate shall indemnity and keep indemnified IBM Affiliate
against any Losses arising out of any failure by SCA Affiliate to
comply with its obligations under the Regulations save where any
such failure is caused by IBM Affiliates breach of its obligations
under the Regulations;
(c) IBM Affiliate shall indemnify and keep indemnified SCA Affiliate
(for itself and on behalf of a Successor Supplier) from and against
any Losses arising out of any failure by IBM Affiliate to comply
with its obligations under the Regulations save where any such
failure is caused by SCA Affiliate or any Successor Supplier to
comply with its obligations under the Regulations;
(d) IBM Affiliate shall indemnify and keep indemnified SCA Affiliate
(for itself and on behalf of a Successor Supplier) from and against
any Losses (including all employment costs and the costs of
terminating the employment) arising
(i) in the event that any person who is not an Exit Employee
transfers or alleges they have transferred pursuant to the
Regulations to SCA Affiliate or a Successor Supplier; and
(ii) from any claim or other legal resource by an Exit Employee
for any remedy as a result of anything done or omitted in
relation to the Exit Employee's employment prior to the
termination or expiration of this UK Local Agreement.
