EXHIBIT 10.56
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MANAGED OPERATIONS SERVICES AGREEMENT
This Managed Operations Agreement (the "Agreement") between Franklin
▇▇▇▇▇▇▇▇▇ Companies, LLC., whose address is ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ("Franklin") and International Business Machines Corporation,
whose address is ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ("IBM"), is effective as of
the 6 day of February, 2001 (the "Effective Date").
WHEREAS, Franklin desires to purchase IBM's managed operations services and
IBM desires to provide such managed operations services to Franklin, pursuant to
the rates, terms, and conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises, covenants, and other
terms and conditions contained herein, the parties agree as follows:
1. Definitions: The following capitalized terms, when used in this Agreement
shall have the meanings specified as follows:
a. "Affiliates" with respect to a party means a Person Controlled by,
Controlling or under common Control with the party.
b. "Benchmarker" means a third party with reasonably suitable skill,
experience and objectivity (and who is not a competitor of IBM in the
field of outsourcing) who has been chosen to conduct the Benchmarking
Process described in Section 15 and who is bound by confidentiality
obligations at least as protective of the parties as those herein.
c. "Benchmark Initiation" shall have the meaning set forth in Section 15.
d. "Benchmarking Process" means the process described in Section 15.
e. "Business Recovery Services Term" shall have the meaning set forth in
Section 20.b.
f. "Change" shall have the meaning set forth in Section 4.a.
g. "Commencement Date" means March 1, 2001.
h. "Comparators" shall have the meaning set forth in Section 15.
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i. "Confidential Information and Materials" means all information
belonging to a party, a party's clients or other third parties that is
designated in writing as confidential or that is reasonably understood
to be confidential, considering the nature of the information and the
circumstances of its disclosure, including but not limited to
information relating to services and products, business methods,
strategies and practices, internal operations, pricing and billing,
financial data, costs, personnel information, customer and supplier
contacts and needs, sales lists, technology, software, computer
programs, other documentation, computer systems, inventions,
developments, trade secrets of every kind and character.
j. "Control" (including with correlative meanings, the terms
"controlling", "controlled by" or "under common control with"), as
used with respect to any Person, shall mean the possession, directly
or indirectly, of the power to direct or cause the direction of the
management and policies of such Person, whether through the ownership
of voting securities or by contract or otherwise.
k. "Data Center" means facilities used for data transmission and
processing and for the management and operations of network and
computer infrastructure.
l. "Data Center Site Manager" means the IBM representative(s) appointed
pursuant to Section 10.
m. "Delivery Project Executive" means the IBM representative appointed
pursuant to Section 10.
n. "Dedicated Staff" means IBM personnel dedicated to performing the
Services greater than 60% of their work time.
o. "Defined Defaults" shall have the meaning set forth in Section 21.b.
p. "Discloser" shall have the meaning set forth in Section 26.
q. "Event of Default" shall have the meaning set forth in Section 21.b.
r. "Excused Replacement" shall have the meaning set forth in Section
10.b.
s. "Force Majeure Event" shall have the meaning set forth in Section 18.
t. "Franklin Data Center" means a data center that Franklin or a Franklin
Affiliate owns, operates or otherwise provides.
u. "Franklin Works" shall have the meaning set forth in Section 22.c.
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v. "Franklin Provided Equipment" means the In-Scope Equipment that
Franklin is responsible for providing pursuant to Section 8.a.
w. "Franklin Provided Software" means the In-Scope Software that Franklin
is responsible for providing pursuant to Section 8.a.
x. "Harmful Code" shall have the meaning set forth in Section 23.b.i.
y. "IBM Developed Works" means any Works (a) authored, designed and/or
developed by or for IBM or its affiliates or subcontractors used to
provide the Services and that (b)(i) are derivative works of IBM
proprietary Works or (ii) do not constitute Franklin Works.
z. "IBM Provided Equipment" means the In-Scope Equipment that IBM is
responsible for providing pursuant to Section 8 and any other
equipment used by IBM to provide the Services.
aa. "IBM Provided Software" means the In-Scope Software that IBM is
responsible for providing pursuant to Section 8 and any other software
used by IBM to provide the Services.
bb. "Indemnified Party" shall have the meaning set forth in Section 24.
cc. "Indemnifying Party" shall have the meaning set forth in Section 24.
dd. "Initial Refresh" means the date on which an equipment lease ends, or,
in the case of equipment owned by Franklin or a Franklin Affiliate,
when that equipment is fully depreciated.
ee. "In-Scope Equipment" means the non-software equipment listed on
Schedule G and any other non-software equipment that IBM uses to
provide Services.
ff. "In-Scope Software" means the software listed on Schedule F and any
other software that IBM uses to provide Services.
gg. "Intellectual Property Rights" means all current and future trade
secrets, (including proprietary or confidential information and
know-how), copyrights or other rights relating to authorship, patents,
industrial rights, and other non-patent rights, whether or not
registered and any and all other intellectual property or proprietary
rights now known or hereafter recognized in any jurisdiction.
hh. "Location" means the facilities, including but not limited to Data
Centers, from which the Services are provided.
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ii. "New Services" means services that are substantially and materially
different from the Services that IBM is providing pursuant to this
Agreement.
jj. "Person" means any natural person, corporation, limited liability
company, trust, association, company, partnership, joint venture or
other entity and any governmental agency, instrumentality or political
subdivision.
kk. "Procedures Manual" means the procedures manual documenting the
detailed procedures and operations that will be used to manage the
Data Centers, including the processes and procedures used to provide
the Services.
ll. "Project Executive" means the party representative appointed pursuant
to Section 10.
mm. "Protected Employees" means the IBM representatives designated in
accordance with Section 10(a).
nn. "Recipient" shall have the meaning set forth in Section 26.
oo. "Service Levels" shall mean the service level requirements defined and
specified in Schedule B.
pp. "Service Level Credits" shall have the meaning set forth in Section
13.
qq. "Services" means those managed operations services described in
Schedule A (Services), as amended from time to time.
rr. "Services Staff" means the persons (including but not limited to
subcontractors) performing Services.
ss. "Temporary Extension of Services" shall have the meaning set forth in
Section 19.a.
tt. "Term" shall have the meaning set forth in Section 20.a.
uu. "Termination for Convenience Charges" means the charges described in
Section 21.a.
vv. "Third Party OEM Software" means that In-Scope Software that is not
owned or otherwise controlled by IBM or an IBM affiliate, provided
that as used in this definition, "control" does not mean use.
ww. "Transfer Assistance Service" shall have the meaning set forth in
Section 19.c.
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xx. "Transfer Period" shall have the meaning set forth in Section 19.
yy. "Transition Period" shall have the meaning set forth in Schedule D.
zz. "Works" means all discoveries, ideas, inventions, concepts,
developments, know-how, trade secrets, works of authorship, materials,
software (source and object code), HTML, writings, drawings, designs,
processes, techniques, formulas, data, specifications, technology,
patent applications (and contributions thereto), and other creations
(and any related improvements or modifications to the foregoing),
together with the Intellectual Property Rights relating thereto.
2. Schedules. The following is a list of Schedules attached to and
incorporated into this Agreement and deemed to be a part of this Agreement:
Schedule A (Services and Support Responsibilities)
Schedule B (Service Levels)
Schedule C (Charges)
Schedule D (Transition)
Schedule E (Projects)
Schedule F (Software)
Schedule G (Machines)
Schedule H (Network Services)
Schedule I (Facilities)
Schedule J (Contracts)
Schedule K (Employees)
Schedule L (▇▇▇▇ of Sale)
Schedule M (Business Recovery Services)
Schedule N (Reports)
3. Services. IBM will provide the Services to Franklin and Franklin
Affiliates, at or above the Service Levels, as further set forth in this
Agreement. IBM shall provide the Services commencing no later than the
Commencement Date for the Term set forth in Section 20 below. The Services
shall be provided at Locations designated in Schedule I (Facilities).
a. Scope of Services. IBM agrees to operate, manage, maintain and provide
the Services to Franklin and Franklin Affiliates. If any services,
functions, responsibilities or other components of work not
specifically described in this Agreement are an inherent or necessary
part of the Services, they shall be deemed to be included within the
scope of the Service as if specifically described in this Agreement.
Except as provided elsewhere in this Agreement, IBM shall be
responsible for providing the facilities, personnel, equipment,
software and other resources necessary to provide the Services. IBM
shall be responsible for ensuring its own and its subcontractors
compliance with this Agreement.
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b. Transition Services. IBM shall provide the transition assistance as
set forth in Schedule D. During the Transition Period, if a material
number of Available Affected Employees (as that term is defined in
Schedule K) either do not accept employment with IBM or leave IBM
after the Hire Date (as that term is defined in Schedule K), IBM will
use diligent efforts to replace such employees with other IBM
employees who have substantially similar skill sets as such employees.
c. Timely Performance and Non-Disruption. IBM's implementation of the
Services and all Changes thereto shall be undertaken in a manner
designed to minimize any disruption of Franklin's normal business
operations. IBM shall coordinate all such implementations with
Franklin.
d. Meetings. Franklin and IBM will participate in the meetings described
in Schedule A (Services). Additional meetings may occur, as reasonably
requested by either IBM or Franklin.
e. Project Executive. IBM and Franklin will each appoint an individual
(each a "Project Executive") who shall, among other things, be
responsible for obtaining approvals necessary to bind their respective
companies in connection with all aspects of this Agreement. IBM and
Franklin will provide each other with written notice before assigning
a new Project Executive. IBM shall also appoint an individual (the
"Data Center Site Manager") for each of the the St. Petersburg and
Rancho ▇▇▇▇▇▇▇ Data Centers. These Data Center Site Managers shall
serve as the manager for all Services provided by IBM at the Data
Centers from the date such applicable Data Center begins receiving the
Services. In addition, IBM shall appoint one delivery Project
Executive (the "Delivery Project Executive") who shall be responsible
for managing the Services. IBM's Project Executive, Delivery Project
Executives and each of the two Data Center Site Managers shall be
deemed Protected Employees (provided that the St. Petersburg Data
Center Site Manager shall be considered a Protected Employee until IBM
has completed its consolidation obligations) and the appointment of
such individuals shall be subject to Section 10 (Protected Employees).
f. Procedures Manual. No later than three (3) months after the
Commencement Date, IBM shall prepare and deliver to Franklin a draft
of the Procedures Manual. The Procedures Manual shall contain
procedures that are consistent with IBM's best practices. Franklin
shall have the right to review, comment on, and approve the Procedures
Manual, such approval not to be unreasonably withheld or delayed. The
final Procedures Manual shall be delivered to Franklin no later than
six (6) months after the Commencement Date. The Procedures Manual
shall be accepted upon written approval by Franklin, which written
approval requires the signature of a Franklin representative who has
at least the same executive authority as the executive who has signed
this Agreement. Following such acceptance, IBM shall provide the
Services in compliance with the Procedures Manual. Until such
Procedures Manual is completed and approved by Franklin, IBM shall
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provide the Services in accord with Franklin's current policies and
procedures effective as of the Effective Date, which may be reflected
in documentation provided to IBM by Franklin or otherwise conveyed to
IBM by Franklin, and IBM shall provide the Services in a manner and at
service levels no less than exists as of the Commencement Date.
Notwithstanding the foregoing, the parties agree that before the
Procedures Manual is completed and approved, IBM will be implementing
process and procedure changes in connection with IBM's
responsibilities and obligations as otherwise set forth in this
Agreement. IBM shall own all right, title and interest in and to the
Procedures Manual and all Intellectual Property rights therein,
provided that IBM shall have no ownership or other rights to Franklin
Confidential Information embodied in the Procedures Manual, other than
the limited rights set forth in Sections 22 and 26. IBM hereby grants
Franklin and Franklin Affiliates an irrevocable, perpetual,
nonexclusive, worldwide, paid-up license to use, reproduce, modify and
otherwise distribute copies of such manual internally and to third
parties who are providing services to Franklin and Franklin Affiliates
and who are under written obligations of confidentiality that are at
least as restrictive as the confidentiality provisions herein. The
foregoing right includes the right to grant sublicenses to third
parties who are providing services to Franklin and Franklin
Affiliates, but only for the purpose of providing such services to
Franklin and Franklin Affiliates, and who are under written
obligations of confidentiality that are at least as restrictive as the
confidentiality provisions herein.
g. New Services. If Franklin wishes to receive New Services from IBM,
such New Services shall be provided pursuant to a separate, written
agreement or a written amendment to this Agreement containing terms
and conditions mutually acceptable to both parties.
4. Change Management.
a. Either party may at any time, upon written notice, request to add,
delete, relocate or modify the Services. Any such addition, deletion,
relocation or modification to the Services shall be considered a
"Change" and shall be subject to the change management procedures set
forth in Schedule A (Services). If Franklin requests an addition,
deletion, relocation or modification to Service and the pricing for
such addition, deletion, relocation or modification is included in
Schedule C or otherwise covered by this Agreement, IBM shall
diligently implement such addition, deletion, relocation or
modification at such prices. If IBM wishes to make an addition,
deletion, relocation or modification of Services, Franklin shall have
the right to approve such addition, deletion, relocation or
modification, which approval will not be unreasonably withheld.
▇. ▇▇▇▇▇▇▇▇ may suspend or delay the implementation or Change of any
Service if its reasonable business needs so require, in which event it
shall reimburse IBM for any direct, out-of-pocket costs incurred by
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IBM on account of such suspension or delay that IBM is unable to avoid
and that are not the result of a suspension, delay or other
circumstances attributable to IBM.
c. Notwithstanding anything to the contrary in this Agreement (including
the Schedules), IBM shall not install any new release or version of,
or make any other change to, the In-Scope Hardware or Software or make
any other change to any aspect of the Services that will require
Franklin to install a new version or release of, or replacement for,
any operating system or applications software, equipment or to modify
any operating system or applications software unless Franklin has
consented in writing to such change. Franklin will not unreasonably
withhold approval of a change to the In-Scope Hardware or Software,
provided that Franklin may refuse to approve a change if such change
might affect an Application Program. If Franklin refuses to approve a
change for the foregoing reason, IBM will use diligent efforts to
provide an alternate solution that addresses Franklin's application
program concerns and, only if IBM is unable to provide such a solution
and only if the change is required because of changes in Franklin's
requirements, IBM shall be relieved of its obligations with respect to
the In-Scope Equipment affected by Franklin's refusal to consent until
Franklin consents to IBM's requested change. Further, if Franklin
refuses to permit IBM to refresh In-Scope Equipment or In-Scope
Software, IBM shall be relieved of its obligations under Section 8(f)
and/or (g) with respect to such equipment or software.
5. Payments.
▇. ▇▇▇▇▇▇▇▇ shall pay IBM for Services as set forth in Schedule C
(Pricing).
b. IBM will invoice Franklin for monthly recurring charges on the first
of each month and payment on all undisputed amounts is due within
thirty (30) days. Payments for other undisputed charges shall be due
and payable within thirty (30) days of receipt of IBM's valid invoice.
Interest shall begin to accrue on any overdue payments, commencing on
the sixteenth day after the payment was due (which intermediate
fifteen day period is the "grace period"), at the rate of one (1)
percent/month. Notwithstanding the foregoing, IBM agrees that it shall
not make a claim of material breach of this Agreement or seek any
other remedy for or enforce any other right based on Franklin's
failure to pay an invoice until after expiration of the "grace
period."
c. IBM will be responsible for the payment of (a) personal property,
sales, value-added, and use taxes on IBM's personal property; and (b)
taxes, assessments, and other levies on IBM's owned, leased, rented,
or purchased real property. Franklin will be responsible for the
payment of (a) 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
for Services; (b) personal property, sales, value-added, and use taxes
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on Franklin's personal property; (c) telecommunication taxes for
network services that Franklin is providing as set forth in Schedule
H; and (d) taxes, assessments, and other levies on Franklin's owned,
leased, rented, or purchased real property.
6. Ongoing Cooperation.
a. IBM and Franklin shall cooperate in planning and implementing Services
and Changes in an efficient, cost-effective manner. Such cooperation
shall include each party's prompt provision to the other of any
information that the other may reasonably request to carry out its
responsibilities hereunder. Such coordination shall be designed to
minimize any disruption to Franklin's business activities.
b. IBM's Project Executive, Franklin's Project Executive and such other
Franklin and technical support services personnel as the parties'
Project Executives designate shall attend quarterly meetings to review
Service performance, the Service Levels, IBM's recommendations
concerning Data Center managed operations services, any anticipated
new services or Changes that would improve the performance of or
reduce Franklin's costs for the Services. The Project Executives and
their designees shall propose to IBM and Franklin any revisions that
may from time to time be justified by changes in technology and
attainable performance levels.
c. In no event shall any party's participation in any meetings convened
pursuant to this Subsection be deemed a waiver or alteration of any
right or obligation imposed by this Agreement.
7. Cooperation with Third Party Vendors.
a. IBM acknowledges that Franklin and Franklin Affiliates will use the
Services with services and equipment provided to Franklin and Franklin
Affiliates by third parties. Upon Franklin's request, IBM agrees to
fully cooperate with and work in good faith with any third party (and
the agents, contractors and subcontractors of such third party)
designated by Franklin or a Franklin Affiliate, including in the
installation of services and resolution of troubles. IBM will
cooperate with Franklin and the Franklin Affiliate and such third
parties to resolve differences and conflicts arising between the
Services and other activities undertaken by Franklin and the Franklin
Affiliate or any of such third parties.
b. IBM acknowledges that Franklin may designate one or more third parties
to act as Franklin's agent in performing any or all of Franklin's
obligations hereunder. IBM agrees to cooperate with any such agent and
its subcontractors and agents in the performance of such Franklin
obligations, and to interact with such agent and its subcontractors
and agents in the same manner as IBM is required to interact with
Franklin hereunder. Except as otherwise provided in this Agreement,
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the foregoing shall not require IBM to disclose Confidential
Information to a competitor in the field of outsourcing.
8. Software and Equipment
▇. ▇▇▇▇▇▇▇▇ Provided Software and Equipment. Until Initial Refresh (with
respect to each item of software or equipment), except as otherwise
set forth in this Agreement, Franklin will have financial
responsibility for and will provide all In-Scope Software and In-Scope
Equipment required to provide the Services, including leases, license
fees, upgrade fees and maintenance fees. The foregoing obligations
shall not include (i) the S/390 T16 situated in Rancho ▇▇▇▇▇▇▇,
described in Section 8.b., below; (ii) the upgrade to the S/390 T16 to
an R56; (iii) all IBM S/390 Systems Software, and (iv) the IBM Systems
Software on the AS/400s. With respect to the foregoing items described
in (i) through (iv), IBM shall provide and will maintain financial and
other responsibility. Franklin hereby grants to IBM during the Term,
its Affiliates, and their subcontractors, for use solely in connection
with IBM's provision of the Services, the rights to use such Franklin
Provided Software and Franklin Provided Hardware that is necessary for
IBM's provision of the Services, subject to Section 8.d (Required
Consents) of this Agreement.
b. Machine Purchase. IBM shall acquire, as of the Commencement Date, the
Franklin-owned T16 processor currently located in the Rancho ▇▇▇▇▇▇▇
Data Center for a purchase price of $300,000 with payment being in the
form designated by Franklin. The form of ▇▇▇▇ of Sale for such T16
processor is set forth in Schedule L.
c. IBM Provided Software and IBM Provided Equipment. At the time of
Initial Refresh, with respect to a particular piece of In-Scope
Equipment, IBM shall assume all responsibility for such In-Scope
Equipment and all System Software running on such In-Scope Equipment
(but not including any Third Party OEM Software or application
software and the AS/400 midrange servers and DEC/VAX midrange servers
listed on Schedule G), including leases, license fees, upgrade fees
and maintenance fees. With respect to Third Party OEM Software, IBM
will be responsible for the management and procurement of such
software and will reasonably cooperate with Franklin and Franklin
Affiliates to assess and to maximize efficiencies and volume benefits
that Franklin and Franklin Affiliates may seek from licensors of such
software. Franklin will be financially responsible for all Third Party
OEM Software.
d. Required Consents. Franklin shall be responsible to secure the
consents (if any) required to be obtained to allow IBM to use the
In-Scope Software and In-Scope Equipment prior to Initial Refresh to
perform the Services. IBM agrees to reimburse Franklin for the fees
that Franklin must pay to obtain such consent, up to an aggregate
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amount of two hundred fifty thousand dollars ($250,000). Franklin
shall be financially responsible for all such consents above this
amount.
e. Refresh. For each item of In-Scope Hardware and In-Scope Software as
to which IBM has an obligation under subsection (c) above, Franklin
will provide IBM with prior notice of the expiration or termination of
the applicable equipment lease agreement or pending expiration of
depreciation for such item of hardware. Subject to the terms and
conditions of this Agreement, IBM will negotiate and be financially
responsible for the renewal or other extension of such hardware and
associated IBM Systems Software, or of a similar alternative software
or hardware solution proposed by IBM. IBM shall not implement or
otherwise use any hardware or software with respect to the Services
which will unreasonably adversely affect Franklin's or a Franklin
Affiliate's application environment.
f. Lease. At Initial Refresh, IBM agrees to lease all equipment that
replaces the equipment being refreshed. IBM further agrees that, with
respect to all other equipment that IBM uses to provide Services, IBM
shall lease the equipment and that if IBM wishes to purchase the
equipment, IBM shall obtain Franklin's prior written consent. For
those new agreements that IBM enters into directly with a vendor (and
with respect to any IBM equipment or software), IBM will use diligent
efforts to include the right to assign the contract and will advise
Franklin, in advance, when IBM is unable to procure assignment rights.
Franklin shall have the right to approve any non-assignable contract
and, if Franklin decides not to grant such approval, the parties will
examine reasonable workarounds, including but not limited to Franklin
entering into the agreement directly with the third party.
g. Software Currency. Following Initial Refresh, IBM shall perform all
functions required to maintain all In-Scope Software currency. Unless
otherwise agreed by the parties, IBM shall maintain In-Scope Software
within one generation of current release levels.
h. Equipment Currency. Following Initial Refresh, IBM shall perform all
functions required to maintain all In-Scope Equipment currency (except
with respect to the AS/400 midrange servers and DEC/VAX midrange
servers listed on Schedule G). Unless otherwise agreed by the parties,
IBM shall subsequently refresh the In-Scope Equipment no longer than
every 42 months, except that the In-Scope Equipment falling within the
categories of equipment listed in the tables found in Section
5.3.a.1.(b) and Section 5.3.b.2 of Schedule C will be refreshed no
longer than every 36 months.
i. IBM Consents. Except for consents that Franklin is required to obtain
pursuant to subsection (d) above, IBM shall be financially and
administratively responsible for obtaining any consents not already
obtained and necessary for IBM to perform the Services using third
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party software licensed by IBM as of the Commencement Date, and shall
inform Franklin of the existence, ownership, and extent of IBM's
rights to all such software.
9. IBM STAFFING
a. Adequate Personnel. IBM shall ensure that an adequate number of
appropriately qualified and trained personnel are employed and
available at all times to provide and support Franklin's use of the
Services in accordance with the terms of this Agreement.
b. Status of Personnel. IBM shall not knowingly utilize Services Staff
that are untrustworthy or are engaged in drug, chemical or other
substance abuse during their involvement in providing Services under
this Agreement. IBM shall notify Franklin immediately if IBM has
reason to believe that such is not the case.
10. Protected Employees.
a. Designation of Protected Employees. Franklin and IBM hereby designate
the following employees as "Protected Employees": (i) the IBM Project
Executive, (ii) the Delivery Project Executive, (iii) the Data Center
Site Manager for the Rancho ▇▇▇▇▇▇▇ Location, (iv) the Data Center
Site Manager for the St. Petersburg Data Center (except the St.
Petersburg Data Center Site Manager shall be considered a Protected
Employee only until IBM has completed its consolidation obligations),
and (v) twenty five percent (25%) of the then-current Dedicated Staff
who are designated and listed as IBM Key Employees in accordance with
the procedures set forth in Schedule B (which list of designated IBM
Key Employees may be updated from time to time) and who shall be
assigned to Franklin's account in accordance with the Agreement.
Before assigning an individual as (i), (ii) or (iii), whether as an
initial assignment or as a replacement, IBM shall provide thirty (30)
days prior notice to Franklin of the proposed assignment, shall
introduce the individual to appropriate representatives of Franklin
and shall provide Franklin with a resume and other information
regarding the individual that may be reasonably requested by Franklin.
If Franklin in good faith objects to the proposed assignment, the
parties will attempt to resolve Franklin's concerns on a mutually
agreeable basis. If the parties have not been able to resolve
Franklin's concerns within thirty (30) calendar days of Franklin's
objection, IBM shall not assign that individual to that position and
shall propose to Franklin the assignment of another individual of
suitable ability and qualifications pursuant to the process described
in this Section 10.
b. Replacement or Reassignment of Protected Employees. During the
eighteen months from the Commencement Date, IBM shall not reassign or
replace any Protected Employee described in (i), (ii), (iii) or (iv)
(with (iv) being limited as described above). In addition, after the
first anniversary of the Commencement Date, and annually thereafter,
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IBM shall not reassign or replace more than twenty percent (20%) of
the employees described in (v) in Section (a) above. The restrictions
described above shall apply, except for the reasons set forth below:
(i) replacement or reassignment of such Protected Employee pursuant to
Franklin's written consent to such reassignment; (ii) Protected
Employee's voluntary resignation from IBM; (iii) dismissal of a
Protected Employee by IBM for misconduct (e.g., fraud, drug abuse,
theft) or unsatisfactory performance as determined by IBM; or, (iv)
inability of a Protected Employee to work due to sickness or
disability, or any relevant labor or employment legislation or
following the termination or expiration of the Agreement (each, an
"Excused Replacement"). If IBM replaces or reassigns a Protected
Employee in violation of this provision, in addition to whatever
rights and remedies Franklin may otherwise have, (A) IBM shall be
responsible: (i) for replacing such Protected Employee within thirty
(30) days of the last day of such Protected Employee's employment with
IBM; and (ii) for training such Protected Employee's replacement at
IBM's sole expense; and (B) Franklin shall be eligible for the Service
Level Credits as set forth on the attached Schedule B (Service
Levels). The IBM Project Executive may approach the Franklin Project
Executive with a request to include a specific personnel reassignment
in the category of Excused Replacement based upon IBM's desire to not
limit an IBM Key Employee's career development and advancement. The
Franklin Project Executive will consider such a request in good faith.
c. Subcontractors. IBM may not, without Franklin's prior written
approval, assign or otherwise use subcontractors (i) for the positions
set forth in (i), (ii), (iii) or (iv) in Subsection a of this Section
10; or (ii) to perform any management functions with respect to the
Services that Franklin, in its reasonable judgment, considers to be
mission critical, including but not limited to systems engineering and
capacity planning. IBM agrees that it shall not engage SunGard or
Comdisco as a subcontractor in any capacity with respect to this
Agreement.
d. Replacement of a Protected Employee. Franklin may require IBM to
remove a Protected Employee immediately for any lawful reason. Subject
to the foregoing, whenever reasonably practicable, Franklin will
confer with IBM in advance in an effort to resolve a problem with a
Protected Employee, including providing IBM with a written notice for
Franklin's request and cooperating with IBM to resolve the problem
with the person or to reach some alternative solution.
e. Services Staff List. IBM shall provide Franklin, upon Franklin's
written request, with a list of the Services Staff.
f. Access to Data Centers. Franklin, in its sole discretion, shall
approve all Services Staff or other IBM employees or subcontractors
requiring access to any Franklin Data Center. IBM shall notify
Franklin as soon as reasonably practicable, but no later than two
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business days, after dismissing or reassigning any of the staff whose
normal work location is at a Data Center.
g. Removal and Replacements. If Franklin reasonably determines that it is
not in Franklin's best interests for any of the Services Staff (other
than Protected Employees) to continue performing the Services,
Franklin will provide IBM with a written notice and explanation for
Franklin's request that IBM remove such employee from providing
Services. Promptly after receiving such notice and explanation, IBM
will investigate the matter and take appropriate action, which may
include the removal of such employee. If Franklin and IBM are not able
to resolve Franklin's concerns within 30 days after Franklin's notice
to IBM (or such later date agreed upon by Franklin and IBM), IBM shall
replace the member of the staff with an individual acceptable to
Franklin.
h. Transition of Services Staff. If Services Staff are reassigned, IBM
shall ensure a smooth transition between the replaced and the
newly-assigned personnel or, where appropriate, an overlap in the
assignment of such personnel to Franklin, all of the foregoing at no
additional cost to Franklin.
i. Hiring. Franklin and Franklin Affiliates will be permitted to
undertake, without interference from IBM (interference shall not be
interpreted to restrict IBM's right to offer its employees promotional
or other personal enhancement opportunities), to hire (1) the IBM
Project Executive, the IBM Delivery Project Executive, and the IBM
Rancho ▇▇▇▇▇▇▇ primary Site Manager as of the date IBM receives notice
of termination, or, in the case of expiration, within the four month
period prior to expiration, (2) any IBM employees performing Services
at the Rancho ▇▇▇▇▇▇▇ Facility as of the date IBM receives notice of
termination, or, in the case of expiration, within the four month
period prior to expiration, and (3) Dedicated Staff as of the date IBM
receives notice of termination, or, in the case of expiration, within
the four month period prior to expiration. IBM agrees that neither any
such offer nor the hiring of any such IBM staff by Franklin and
Franklin Affiliates or their designees shall constitute a tortious act
or breach of contract by ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ Affiliates, any such
designee, or any individual receiving or accepting any such offer of
employment, notwithstanding any other provision of this Agreement or
any agreement now in effect or subsequently executed by IBM and any
such staff.
11. Conduct of Services Staff.
a. Compliance with Rules and Regulations. While at Franklin Data Centers,
all members of the Services Staff and other IBM employees and
subcontractors shall (i) comply with the rules and regulations
available to IBM in writing regarding personal and professional
conduct (including compliance with Franklin's dress code, the wearing
of an identification badge provided by Franklin, and adherence to
Franklin's regulations and general safety and security practices and
14
procedures) generally applicable to such Data Centers, (ii) comply
with reasonable requests of Franklin personnel pertaining to personal
and professional conduct, and (iii) otherwise conduct themselves in a
businesslike manner.
b. Security Passes. IBM acknowledges that the Services Staff allowed
access to Data Centers shall require security passes from Franklin to
obtain such access. In no event may members of the Services Staff
approve security passes allowing access to Franklin Sites or sign in
visitors except in accordance with prior agreed security procedures.
12. Employment of Existing Franklin Employees. IBM shall employ existing
Franklin employees as set forth in Schedule K.
13. Credits for Service Level Failures. IBM acknowledges that, in the event of
a failure to meet a Service Level, Franklin may suffer damages, the amount
of which cannot easily be determined. Therefore, in the event of a failure
to meet a Service Level, IBM shall ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ a credit ("Service Level
Credit"), which Service Level Credit shall be calculated and applied as set
forth in Schedule ▇. ▇▇▇▇▇▇▇▇ may elect to refund a Service Level Credit
for a period of up to six (6) months after having received such Service
Level Credit. If Franklin has not elected to refund such Service Level
Credits in accordance with the foregoing, such Service Level Credit shall
be Franklin's sole and exclusive remedy for a failure to meet a Service
Level (as to which the Service Level Credit was applied), provided that (i)
IBM has otherwise used diligent efforts to comply with the Service Levels;
(ii) the foregoing limitation shall not affect Franklin's rights and
remedies with respect to any breaches of the Agreement other than Service
Level requirements; and (iii) nothing in this Section shall relieve IBM of
its obligations under Schedule M.
14. Audits. IBM will provide Franklin with commercially reasonable assistance
in meeting its audit requirements as set forth in this Section. The Audits
will be limited to verifying that: (i) the variable charges are accurate;
(ii) IBM is exercising reasonable care to control the resources provided by
Franklin, such as heat, light, and utilities used in providing the
Services; (iii) the Services are being provided in accordance with the
Service Levels; (iv) IBM is complying with the security requirements set
forth in Schedule A (Services, Security); and (v) Franklin is in compliance
with Franklin regulatory requirements.
a. IBM will provide access to routinely prepared records and reports to
enable Franklin to conduct appropriate audits ("Audits") of IBM's
operations relating to the performance of Services.
b. Audits will (i) occur no more than once each calendar year, unless
required to meet regulatory requirements; (ii) be conducted
expeditiously, efficiently, and at reasonable business hours; and
(iii) be conducted upon reasonable prior written notice, which
normally will be at least 30 days, but may be less if IBM and Franklin
15
agree in the Procedures Manual that certain Audits, may be conducted
upon shorter notice. Franklin's right to conduct an audit shall
survive for one year after expiration or termination of this
Agreement.
c. The Parties will work together in good faith to establish an audit
process that does not interfere with IBM's ability to maintain Service
Levels during the audit.
▇. ▇▇▇▇▇▇▇▇ or its designated auditor shall not have access to IBM's or
its Affiliates' locations or proprietary data, except to the extent
reasonably necessary to conduct the audit described above provided
that Franklin complies with IBM's normal security requirements that
have been identified to Franklin. If such access is required, IBM
shall provide to Franklin and such independent auditors and inspectors
as Franklin may designate in writing, on IBM's premises, (or if the
audit is being performed of a subcontractor, the subcontractor's
premises if necessary) such space, office furnishings (including
lockable cabinets), telephone and facsimile services, utilities and
office-related equipment and duplicating services as Franklin or such
auditors and inspectors may reasonably require to perform the Audit.
▇. ▇▇▇▇▇▇▇▇ may designate a certified public accountant or other mutually
agreeable third party to perform the Audit, at Franklin's expense,
provided such auditor executes a confidentiality agreement consistent
with the confidentiality provisions in this Agreement.
f. If, as a result of such audit, Franklin determines that IBM has
overcharged Franklin for Services, Franklin shall notify IBM of the
amount of such overcharge, and if the findings are accurate, IBM shall
promptly pay to Franklin the amount of the overcharge. In the event
any such audit reveals an overcharge to Franklin during any 12-month
period exceeding two (2) percent of the charges in the aggregate paid
by Franklin under this Agreement during such period, IBM shall
reimburse Franklin for the cost of such audit. In the event any such
audit reveals an undercharge, Franklin shall promptly pay to IBM the
amount of any such undercharge upon receipt of an invoice for the same
in accordance with Schedule C (Pricing). IBM shall retain operational
records and supporting documentation relating to the Services for at
least a period of one (1) year from the date of termination of the
Agreement; and shall retain financial records and supporting
documentation relating to the charges paid or payable by Franklin
under the Agreement for at least a period of one (1) year from the
date of relevant invoice.
15. Benchmarking. At the end of the twenty-eighth, the fifty-sixth and
eighty-fourth months following the Commencement Date, either party may
elect to conduct a benchmarking process designed to objectively compare the
Services and the rates and charges related thereto to industry standards
16
for comparable services in accordance the procedures set forth herein.
a. Upon ten (10) business days prior written notice by Franklin, the
parties will commence the Benchmarking Process as set forth herein
("Benchmark Initiation"). Within thirty (30) days of Benchmark
Initiation, Franklin will identify the Benchmarker, who shall not be a
competitor of IBM in the field of outsourcing and who will be subject
to IBM's approval, which approval shall not be unreasonably withheld
or delayed. The Benchmarker shall be subject to a confidentiality
agreement that is comparable to the confidentiality requirements set
forth herein. Costs for the Benchmarker shall be shared equally by the
parties.
b. The Benchmarker shall collect a representative, reasonably current,
statistical sampling of a sufficient number of receivers of the
quality and quantity of services comparable to the Services
("Comparators"). The parties agree that the Benchmarker shall take
into consideration the costs that IBM has incurred in connection with
the purchase of and unexpired leases for equipment dedicated to
Franklin (and that IBM shall provide such information to the
Benchmarker and Franklin), but shall also have the authority to direct
that rates and charges be lowered at appropriate times in the future
(e.g., at the end of a lease). In no event shall the Benchmarker have
the authority to raise rates or charges. The Benchmarker shall be
directed to deliver to the designated representatives of the parties,
within sixty (60) days after appointment as the Benchmarker, a report
and recommendation for lowering the rates and charges set forth herein
to a level comparable to the Comparators (the "Benchmark Results").
The parties shall have the thirty (30) day period (the Benchmark
Review Period) immediately following their receipt of the Benchmark
Results to review, comment on, and request appropriate changes in the
results. If the Benchmarker believes that there may be merit to issues
raised in response to the Benchmark Results, the Benchmarker shall be
given an additional thirty (30) days (the Second Benchmark Review
Period) to review the issues raised and any other materials submitted
by either party and to submit a final set of Benchmark Results,
including any revisions to the original Benchmark Results.
c. The parties shall, within thirty (30) days of the Benchmark Review
Period or Second Benchmark Review Period, amend this Agreement to
reflect such recommendation and shall lower the prices accordingly.
The parties agree that, with respect to each Benchmarking Process, the
maximum reduction shall be eleven and a half percent (11.5%) of the
total charges that the Benchmarker includes in the Benchmark Process
for the month preceding Benchmark Initiation, provided that the
Benchmarker shall have the discretion to allocate the amount of the
reduction among the individual charge elements in accordance with the
Benchmarker's findings. Any reduction in rates or charges for the
Services shall be applied retroactively to the date of the Benchmark
Initiation.
17
16. Cost Reduction. Either IBM or Franklin may bring opportunities to reduce
costs of providing the Services to the other party. Such opportunities will
be jointly evaluated in good faith, taking into consideration elements such
as the investments required of either or both parties for such
opportunities. The decision to pursue these opportunities will be jointly
made, with consideration given to the return on the investments required to
implement said opportunity. The savings realized as the result of the
implementation of the opportunity will be shared 50/50 between the parties.
Neither party will refuse to evaluate any proposal made in good faith.
17. Data Centers
a. Facilities. Franklin will provide the IBM Service Staff with the use
of space, equipment, and support at the Data Centers and the same or
similar access to Franklin's workplace services, such as parking and
cafeteria facilities, if any, as Franklin provides to its similarly
situated employees.
b. Network Facilities. Franklin and IBM will provide the network services
described in Schedule H (Network Services).
c. Use of Facilities. IBM may use Franklin facilities, including but not
limited to the network facilities and the Data Centers, only to
provide the Services to Franklin and Franklin Affiliates. Franklin
reserves the right to use portions of such facilities, and, on
reasonable notice, to direct IBM to cease using such Data Centers, in
which case Franklin shall be responsible for any reasonable
incremental costs resulting from such direction, such as, but not
limited to, communication lines, equipment and facilities. IBM's use
of the Data Centers does not constitute or create a leasehold
interest.
d. At the end of the Term, IBM shall return such facilities to Franklin
in substantially the same condition as when IBM began use of such
facilities, subject to reasonable wear and tear. IBM's use of Franklin
facilities will comply with all applicable laws, regulations and other
government requirements, including, without limitation all applicable
environmental laws, regulations and other government requirements.
e. IBM will generally perform Services on-site at Franklin's Data Centers
or other Locations designated by Franklin. Franklin acknowledges that
some activities will be performed by IBM in its Boulder, Colorado
facility. IBM will be responsible for any reasonable costs resulting
from IBM moving work off-site, including, but not limited to,
communication lines, equipment and facilities, except where such move
is requested in writing by Franklin.
18. Force Majeure. IBM and Franklin will not be liable for any default or delay
in the performance of their respective obligations, to the extent that such
default or delay:
18
a. is caused by an event beyond the diligent control of IBM or Franklin,
whichever is the entity unable to perform (the Nonperforming Party),
such as fire, flood, earthquake, elements of nature, acts of war,
terrorism, riots, civil disorders, rebellions or revolutions,
telecommunications network outages (except for local access failures),
lockouts at the other party's facilities; and could not have been
prevented by commercially reasonable precautions, alternative sources,
workaround plans, or other means.
b. Such default or delay ((a) and (b), collectively) is a Force Majeure
Event.
c. 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. The Nonperforming Party will immediately notify the other
under this Agreement by telephone (to be confirmed in writing within
five days of the inception of such default or delay) and describe at a
reasonable level of detail the circumstances causing such Force
Majeure Event. If a Force Majeure Event substantially prevents,
hinders, or delays IBM's performance of the Services necessary for the
operation of Franklin's critical functions, if any, then Franklin may
procure such Services from an alternate provider until IBM is able to
provide the Services. Franklin shall continue to pay IBM the
applicable charges due during the period which the Force Majeure event
substantially prevents, hinders, or delays IBM's performance of the
Services necessary for the operation of Franklin's critical functions.
If Franklin engages an alternate provider pursuant to this subsection,
IBM shall reimburse Franklin for the amount that Franklin pays to such
alternate provider, up to the amount that Franklin pays IBM during the
same period.
d. In the event that Franklin is unable, after diligent efforts, to find
an alternate provider who can begin providing comparable Services
during the first thirty (30) days after a Force Majeure event has
commenced, or if Franklin determines in its good faith business
judgment, that a Force Majeure Event is likely to continue for a
period in excess of 90 days, Franklin may terminate this Agreement,
without penalty, effective upon written notice to IBM.
e. This Section does not affect IBM's obligation to provide disaster
recovery Services, if any, to the extent set forth in Schedule M
(Business Recovery Services), provided that such Force Majeure Event
does not also prevent IBM from providing such disaster recovery
Services.
19. Transfer Assistance Services
a. Temporary Extension of Services. Upon request, Franklin may elect to
extend this Agreement at the then-current prices, charging
methodology, and other applicable terms for up to six (6) months
beyond the then-effective date of the expiration or termination of
19
this Agreement (a "Temporary Extension of Services") by notifying IBM
in writing of such election, such notice to be provided at least one
hundred and twenty (120) days prior to such effective date, except in
the case of a termination for an IBM Event of Default, in which case
notice shall be provided simultaneously with the notice of Event of
Default. As part of such Temporary Extension of Services, Franklin
will pay IBM for: (i) the charges otherwise due and owing under this
Agreement; and (ii) reasonable additional charges and expenses, if
any, incurred by IBM as a result of the Temporary Extension of
Services that are not covered by the charges otherwise due and owing
under this Agreement, provided such additional charges and expenses
are approved by Franklin in writing in advance.
b. Charges. In calculating the Termination for Convenience Charge, if any
is due, any months during which IBM provides Temporary Extension of
Services will be added to the actual term months. For example, if
termination is effective at the end of month forty eight (48), but
Franklin extends Services for an additional four (4) months, then the
parties will add the four (4) months to the forty eight (48) months
(for a total of fifty two (52) months) when looking at the termination
for convenience table listed in Schedule C.
c. Transfer. As part of the Services, IBM agrees to provide to Franklin
or Franklin's designee the transfer services ("Transfer Assistance
Service") described in this Section. Transfer Assistance Services
shall commence six (6) months prior to the expiration of the Term, or
on such earlier date as Franklin may reasonably request in connection
with a notice of termination of this Agreement. IBM shall provide
Transfer Assistance Service to Franklin, on a continuous basis, for
the lesser of (A) six (6) months following the effective date of the
expiration or termination of the Agreement or (B) such time as
Franklin requires to complete its transition to Franklin or a
successor vendor, provided that Franklin shall use all reasonable
efforts to complete transition of the Services to Franklin or
Franklin's designees expeditiously, consistent with Franklin's
reasonable business requirements (such period being the "Transfer
Period.") Throughout the Transfer Period, IBM agrees to meet the
Service Levels in effect as of the notice of termination and maintain
at least the level and quality of Services in effect during the 90
days prior to expiration or termination, to perform the Transfer
Assistance Service with the same degree of accuracy, quality,
completeness, timeliness, responsiveness, and cost-effectiveness as it
was required to provide the same or similar Services during the Term,
and to cooperate in an orderly and efficient transition to Franklin or
a successor vendor. IBM agrees to provide all the Transfer Assistance
Services reasonably required by Franklin to assist Franklin in
achieving seamless transition of the service to Franklin or a
successor vendor, provided that both parties acknowledge that IBM
cannot be held responsible for Franklin's or the successor vendor's
performance. Franklin shall pay for all requested Services at the
rates and charges set forth on Schedule C. Upon Franklin's request,
IBM will provide the following assistance to Franklin, at reasonable
20
time and materials rates to be agreed by the parties, at Franklin's
direction: (i) assist Franklin in developing a written transition plan
for the transition of the Services to Franklin or Franklin's designee;
(ii) provide reasonable consulting services as requested to assist in
implementing such transition plan; (iii) train a reasonable number of
personnel designated by Franklin in the use of any equipment,
software, materials, or processes to be transferred; (iv) assist in
the execution of a parallel operation and testing process until the
transition to Franklin or Franklin's designee has been successfully
completed; (v) afford Franklin and Franklin's designees (other than
for a competitor of IBM in the field of outsourcing) a reasonable
opportunity to observe IBM's provision of the Services (including the
performance of related preventive and remedial maintenance services),
explain the Service and related Documentation; (vi) explain the
Services and answer any reasonable questions Franklin or Franklin's
designees may have pertaining thereto; and (vii) provide other
reasonable technical assistance as requested by Franklin.
d. As part of the Transfer Assistance Services, IBM will timely transfer
the control and responsibility for all of the Services and
Services-related functions previously performed by or for IBM to
Franklin or Franklin's designees by the execution of any documents
reasonably necessary to effect such transfers. IBM shall provide
Transfer Assistance Services to Franklin or its designee pursuant to
this Section 19 regardless of the reason for the expiration or
termination of the Agreement; provided that if this Agreement is
terminated by IBM for Franklin's failure to pay undisputed amounts,
IBM may require Franklin to pay in advance for Transfer Assistance
Services provided or performed under this Section.
20. Term.
a. Except with respect to Schedule M, this Agreement shall commence on
the Effective Date and shall extend until 2400 hours, Pacific time, on
the later of (i) the tenth anniversary of the Commencement Date or
(ii) the last day of the Temporary Extension of Services or the
Transition Period (if any), if not terminated earlier pursuant to
Section 18 or 21 (the "Term"). If either party desires to renew the
Agreement, it will notify the other in writing no less than twelve
(12) months prior to the end of the Term. IBM will provide Franklin,
within two months after such renewal request, with its proposed terms
for such renewal. If Franklin and IBM both wish to renew the Agreement
but are unable to agree upon the terms of the renewal as of three (3)
months prior to the end of the term, the Agreement will be extended at
the then-current prices, baselines, charging methodology, and other
applicable terms for a period of six (6) months beginning on the date
of expiration to enable Franklin and IBM to complete renewal
negotiations.
b. Schedule M shall commence on the Effective Date and shall extend until
2400 hours, Pacific time, on the seventh anniversary of the
Commencement Date, if not terminated earlier pursuant to Section 18 or
21 (the "Business Recovery Services Term"). Franklin shall have the
21
right to renew Business Recovery Services Term for three successive
one year renewal terms, on the same terms and conditions as set forth
in Schedule M, by providing IBM with written notice ninety (90) days
before the expiration of the initial seven year term or before
expiration of a one-year renewal term.
21. Termination.
a. Termination for Convenience. At any time after the third anniversary
of the Commencement Date, Franklin may terminate or suspend this
Agreement (but not including Schedule M) for convenience for any
reason or no reason upon at least one hundred twenty (120) days
written notice, and Franklin shall have no further obligations under
this Agreement except for (i) payment for any acceptable Services
completed by IBM prior to the effective date of termination; (ii)
payment of the Termination for Convenience Charge specified in
Schedule C and (iii) payment of the reasonable costs incurred by IBM
in winding down the Services to termination that would not have been
incurred if the Agreement had not been terminated for convenience,
such amounts not to exceed $1,500,000 plus the amount of $50,000
multiplied by every three (3) employees in excess over 100 who are
dedicated to providing Services as of the date on which Franklin gives
notice of termination. For example, if on the date on which Franklin
gives notice of termination, 121 IBM employees are dedicated to
providing Services, the cap on the reasonable costs for which Franklin
is liable under subsection (iii) above, is $1,850,000. If on the date
on which Franklin gives notice of termination, 120 IBM employees are
dedicated to providing Services, the cap on the reasonable costs for
which Franklin is liable under subsection (iii) above, is $1,800,000.
b. Termination for Cause. Either party may terminate this Agreement
without penalty (including but not limited to the payment of a
Termination for Convenience Charge) by providing written notice to the
other if the other party fails to perform or comply with any material
provision of this Agreement, including but not limited to the
occurrence of any of the Defined Defaults listed below (each failure
to perform or comply of Defined Default, an "Event of Default").
Termination due to an Event of Default, other than a Defined Default,
under this Subsection (b), shall be effective thirty (30) days after
the defaulting party receives written notice of termination if the
default has not been cured within such thirty (30) day period. Without
limitation of any other defaults that may occur under this Agreement,
certain "Defined Defaults" are set forth in Schedule B. With respect
to a Defined Default, termination shall be effective sixty (60) days
after written notice from Franklin that a Defined Default has
occurred. In the event of a Defined Default specified in Section 7.0
g. of Schedule B, Franklin shall have the right to provide a written
notice of termination to IBM at the point in time when IBM's failure
to achieve the Personnel Turnover Service Level for the third year of
the rolling five-year period occurs.
22
c. Termination of Schedule M. At any time after the fifth anniversary of
the Commencement Date, Franklin may terminate Schedule M for
convenience for any reason or no reason upon at least one hundred
twenty (120) days written notice, and Franklin shall have no further
obligations under Schedule M except for (i) payment for any acceptable
Services provided under Schedule M and completed by IBM prior to the
effective date of termination; (ii) payment of the Termination for
Convenience Charge for termination of Schedule M as specified in
Schedule C. Further, Franklin shall have the right to terminate
Schedule M, for convenience for any reason or no reason, if IBM and
Franklin enter into an agreement, mutually agreeable to both parties,
pursuant to which IBM shall provide managed operation services at a
location not listed in Schedule I (which location shall be a "New
Facility"), where such services include business recovery services and
replace the business recovery services that IBM was providing
hereunder. Such termination shall be effective ninety (90) days after
IBM has commenced such managed operation services at the New Facility.
Franklin shall also have the right to terminate Schedule M,
immediately upon written notice, if IBM is more than ninety (90) days
late in completing the final Business Recovery Milestone described in
Schedule M.
d. IBM may terminate this Agreement in accordance with the procedures set
forth in Schedule C, Section 4.0(l).
e. Leases at Expiration or Termination. If Franklin terminates this
Agreement under Section 21 (a) or if IBM terminates this Agreement
under Section 21 (b), Franklin agrees to accept the assignment of all
unexpired leases. If the Agreement expires at the end of the Term, if
Franklin terminates this Agreement under Section 21(b), or if IBM
terminates this Agreement under Section 21 (d), Franklin shall have
the option of accepting assignment of some or all unexpired leases.
f. Survival. All provisions of this Agreement which by their nature must
survive termination in order to achieve the fundamental purposes of
this Agreement shall survive any termination of this Agreement,
including but not limited to the following Sections: 13 (in accordance
with its terms), 19, 21(f), 22, 24, 26, and 27(m).
22. Development.
a. Scope. The parties acknowledge that development of specific
applications is not contemplated by the parties under this Agreement.
Notwithstanding the foregoing, except as otherwise expressly set forth
in writing signed by both parties that references this Section, the
following provisions shall apply to all Works which are developed by
or for either party (or their subcontractors), (either together or
separately) or used in relation to the Services.
23
b. IBM Developed Works. IBM Developed Works shall be owned by IBM and IBM
hereby grants Franklin and Franklin Affiliates an irrevocable,
perpetual, nonexclusive, worldwide, paid-up license to access, use,
execute, reproduce, display, perform, modify (including preparing
derivative works of) and otherwise use such Works as reasonably
necessary to receive or otherwise use the Services or perform services
comparable to the Services for itself. IBM agrees (i) it will not use
any IBM Developed Works (including but not limited to software tools)
to provide Services to Franklin if a third party would be required to
use more than commercially reasonable efforts to migrate Franklin and
Franklin Affiliates from such IBM Developed Works to a functionally
comparable product; and (ii) it will diligently assist Franklin and
Franklin Affiliates (and any third party who is to provide services to
Franklin and Franklin Affiliates) to migrate from IBM Developed Works
to a third party product. If IBM fails to comply with the foregoing,
IBM hereby grants Franklin and Franklin Affiliates the right to
sublicense its rights to IBM Developed Works to third parties to allow
the third parties to provide services comparable to the Services to
Franklin and Franklin Affiliates and provided that the third parties
are under written obligations of confidentiality that are at least as
restrictive as the confidentiality provisions herein. Notwithstanding
the foregoing, Franklin and Franklin Affiliates may disclose and use
the ideas, concepts, know-how and techniques related to Franklin's
business activities which are contained in the IBM Developed Works and
retained in the unaided memories of Franklin's and Franklin
Affiliates' employees who have had access to the IBM Developed Works
pursuant to this Agreement, provided that the foregoing shall not be
construed to include information regarding IBM customers.
▇. ▇▇▇▇▇▇▇▇ Works. Franklin shall own all Works (a) authored, designed
and/or developed by or for ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ Affiliates, or
subcontractors; or (b) that are derivative works of other Works owned
by Franklin or Franklin Affiliates or provided to IBM by Franklin or
Franklin Affiliates or as to which IBM has access at the Franklin Data
Centers ("Franklin Works"). To the extent necessary, IBM hereby
assigns all right title and interest in the Franklin Works and all
related intellectual property rights to Franklin. Franklin hereby
grants (and will cause its Affiliates to grant) IBM an irrevocable,
nonexclusive, worldwide, paid-up license during the Term to access,
use, execute, reproduce, display, perform, and distribute copies of
(internally and externally to its subcontractors), modify (including
and preparing derivative works of) and otherwise use such Works
provided, however, IBM may utilize such license only as is reasonably
necessary to provide the Services to Franklin and Franklin Affiliates.
Notwithstanding the foregoing, IBM may disclose and use the ideas,
concepts, know-how and techniques related to IBM's business activities
which are contained in the Franklin Works and retained in the unaided
memories of IBM's employees who have had access to the Franklin Works
pursuant to this Agreement, provided that the foregoing shall not be
24
construed to include confidential information regarding Franklin's and
Franklin Affiliates' customers.
▇. ▇▇▇▇▇▇▇▇ Developed Works. To the extent that any Works authored,
designed and/or developed by or for Franklin or Franklin Affiliates
are In-Scope Software or Equipment or are reasonably necessary for
IBM's provision of the Services, Franklin hereby grants (and agrees to
cause its Affiliates to grant) to IBM an irrevocable, nonexclusive,
worldwide, paid-up license during the Term to access, use, execute,
reproduce, display, perform, make, sell and otherwise distribute
copies of (internally and externally to its subcontractors), modify
(including preparing derivative works of) and otherwise use such
Works, provided, however, IBM may utilize such license only as is
reasonably necessary to provide the Services to Franklin and Franklin
Affiliates.
e. Jointly Developed Works. With respect to any Works authored, designed
and/or developed jointly by Franklin or its Affiliates (including
Franklin subcontractors other than IBM) and IBM or its Affiliates
(including IBM subcontractors), all such Works shall be jointly and
equally owned by the parties and each party may exercise its ownership
rights without permission of or accounting to the other party, subject
to the rights and obligations with respect to Confidentiality in
Section 26 of this Agreement.
23. Representations and Warranties.
a. Each party represents and warrants to the other that it has the power
and authority to enter into this Agreement and each Schedule or
Schedule hereunder.
b. IBM represents and warrants that:
i. any software, (including any updates, releases and versions
thereto) and any media used to distribute it used by IBM to
provide the Services, to IBM's knowledge, contains no computer
instructions, circuitry, routines or other technological means
("Harmful Code") whose purpose is to disrupt, damage or interfere
with Franklin's use of its computer and network facilities for
their commercial, test or research and development purposes; and
ii. In-Scope Software (including any updates, releases and versions
thereto), but not including any Third Party OEM Software, and any
media used to distribute it used by IBM to provide the Services
shall be able to accurately process data (including without
limitation, calculating, compiling and sequencing) from, into and
between the twentieth and twenty-first centuries, including leap
year calculations, and will create, store, process and output
information related to or including dates on or after January 1,
2000 without error or omissions, provided that all hardware,
software and firmware that interact with In-Scope Software (but
not including Third Party OEM Software) shall also be able to
25
accurately process data (including without limitation,
calculating, compiling and sequencing) from, into and between the
twentieth and twenty-first centuries, including leap year
calculations, and will create, store, process and output
information related to or including dates on or after January 1,
2000. At Franklin's request, IBM will provide evidence sufficient
to demonstrate the ability of IBM's software and equipment
provided under this Agreement to meet these requirements;
iii. Third Party OEM Software that IBM provides will not be installed
or utilized by IBM unless the manufacturer of such third party
software has indicated that the software will perform in
accordance with the warranty set forth in (ii) above, unless
Franklin consents in writing in advance;
iv. there are no pending or threatened lawsuits, claims, disputes or
actions that would, if adversely determined, materially affect
IBM's ability to meet its obligations hereunder;
v. other than the consents as to which Franklin is required to
obtain pursuant to Section 9.d, IBM will obtain all consents and
license or other rights necessary from third parties (including
but not limited to third party vendors of software and hardware
that IBM uses to provide the Services) to enable Franklin to
receive and enjoy the benefits of the Services; and
vi. it has and will maintain manufacturer's warranties of the kind
typically used in the applicable industry for all software and
equipment used to provide the Services and will pass on the
benefits of such warranties to the full extent possible to
Franklin.
c. THE EXPRESS WARRANTIES IN THIS AGREEMENT ARE IN LIEU OF ALL OTHER
WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, THOSE
OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. NOTHING IN
THIS AGREEMENT SHALL BE DEEMED TO DIMINISH IN ANY WAY WARRANTIES
SPECIFICALLY APPLICABLE TO ANY SOFTWARE OR HARDWARE THAT IBM USES TO
PROVIDE SERVICES HEREUNDER.
24. Indemnification.
a. IBM shall indemnify, hold harmless and defend Franklin, its Affiliates
and its and their directors, officers, employees and agents, at IBM's
expense, against any claim by a third party against Franklin:
i. that any software, equipment or other material owned and provided
to Franklin by IBM under this Agreement infringes a copyright or
patent or misappropriates a trade secret;
26
ii. that a contractual obligation expressly assumed by IBM in writing
(other than this Agreement) was not performed by IBM;
iii. resulting from an act or omission of IBM in its capacity as an
employer of any Hired Employee, which acts or omissions are not
authorized by Franklin, or are not authorized by this Agreement,
including claims concerning employment related to: (i)
allegations of wrongful discharge, discharge in violation of
public policy, harassment or discrimination on the basis of race,
color, sex, religion, national origin, age, disability,
retaliation or other unlawful conduct alleged by such employees,
or any such applicant for employment with IBM or any claim for
benefits by Hired Employees under IBM's benefit plans; (ii)
misrepresentations by IBM; (iii) allegations of fraud by IBM or
detrimental reliance on the conduct of IBM; (iv) violations by
IBM of public policy or law or (v) other unlawful conduct alleged
to have been engaged in by IBM;
iv. based on any representations, oral or written, made by IBM to the
Available Affected Employees, regarding the employment of the
Available Affected Employees with IBM under this Agreement,
unless such representations were expressly authorized in writing
by Franklin;
v. from any claim or damages due to the injury or death of any
individual, including but not limited to the Hired Employees
and/or the Available Affected Employees, or the loss or damage to
real or tangible personal property, resulting from the willful or
negligent acts or omissions of IBM, including but not limited to
any such loss or damage involving the Hired Employees and/or the
Available Affected Employees;
vi. from any claims involving any allegations by the Hired Employees
that IBM and Franklin are a single and/or joint employer, or in
any similar or related capacities, for the time period from and
after the Hired Employees commencement of employment with IBM;
and
vii. for taxes, interest, or penalties against Franklin that are
obligations of IBM pursuant to this Agreement arising from a
breach of IBM's warranty set forth in Section 23(b)(v).
▇. ▇▇▇▇▇▇▇▇ shall indemnify, hold harmless and defend IBM, its Affiliates
and its and their directors, officers, employees and agents, at
Franklin's expense, against any claim by a third party against IBM:
i. that any software, equipment or other material provided to IBM by
Franklin under this Agreement infringes a copyright or patent or
misappropriates a trade secret;
27
ii. that a contractual obligation expressly assumed by Franklin in
writing (other than this Agreement) was not performed by
Franklin;
iii. resulting from an act or omission of Franklin in its capacity as
an employer or former employer of any Affected Employee, which
acts or omissions are not authorized by IBM, or authorized by
this Agreement, including claims concerning employment related
to: (i) allegations of wrongful discharge, discharge in violation
of public policy, harassment or discrimination on the basis of
race, color, sex, religion, national origin, age, disability,
retaliation or other unlawful conduct alleged by such Affected
Employees or any claim for benefits by Affected Employees under
Franklin's benefit plans; (ii) misrepresentations by Franklin;
(iii) allegations of fraud by Franklin or detrimental reliance on
the conduct of Franklin; (iv) violations by Franklin of public
policy or law or (v) other unlawful conduct alleged to have been
engaged in by Franklin;
iv. based on any representations, oral or written, made by Franklin
to the Affected Employees, regarding the employment of the
Affected Employees with IBM under this Agreement, unless such
representations were expressly authorized in writing by IBM;
v. from any claim or damages due to the injury or death of any
individual, or the loss or damage to real or tangible personal
property, resulting from the willful or negligent acts or
omissions of Franklin; and
vi. for taxes, interest, or penalties against IBM that are
obligations of Franklin pursuant to this Agreement.
c. The indemnified Party shall (i) notify the indemnifying Party of the
claim promptly after the indemnified Party becomes aware of the claim
or the threat thereof (provided that failure to provide prompt notice
shall not excuse an the indemnifying Party from its obligations unless
such failure materially prejudices the indemnifying Party), (ii) give
the indemnifying Party the right to control the defense of the claim,
and (iii) provide the indemnifying Party with any assistance
reasonably requested by the indemnifying Party in the defense and
settlement of the claim. The indemnifying Party's obligation to
indemnify shall include, without limitation, an obligation to pay any
damages resulting from the claim that are finally awarded in a legal
action against the indemnified Party (or any settlement of the claim),
any costs reasonably incurred by the indemnified Party in assisting
the indemnifying Party at the indemnifying Party's request, such as
expert witness fees and attorney's fees. The indemnifying Party may
settle, at the indemnifying Party's sole expense, any claim for which
the indemnifying Party is responsible under this Section 24, provided
that such settlement does not impose any additional liability on the
28
indemnified Party. The indemnified Party reserves the right to employ
counsel at its own expense to participate in the defense of any claim.
d. Right to Mitigate. If, in the indemnifying or indemnified Party's
opinion, regardless of whether there has been notice from an
indemnified Party, a claim described in (a)(i) above has been or is
likely to be asserted against an indemnified Party or the indemnifying
Party, the indemnifying Party may, at its option and sole expense (i)
procure the right to continue using the allegedly infringing software,
equipment or other material; (ii) replace the material with
non-infringing material or modify the material to make it
non-infringing, provided that such replacement or modification does
not materially alter or otherwise limit the functionality of such
material.
e. Exceptions. The obligations of the indemnifying Party under this
Section 24 with respect to (a)(i) above do not apply with respect to
software, equipment or other material to the extent such software,
equipment or other material (i) is developed in accordance with
requirements specified in writing (whether alone or in combination
with the indemnifying Party or a third party) by an indemnified Party,
(ii) is modified by a Person other than the indemnifying Party, and
not at the direction of the indemnifying Party, if the alleged
infringement relates to such modification, or (iii) is combined with
other software, materials, products, processes or data, if the alleged
infringement results from such combination, unless such combination
was reasonably expected to have occurred.
25. Limitation of Liability.
a. EXCEPT WITH RESPECT TO EITHER PARTY'S BREACH OF THE CONFIDENTIALITY
OBLIGATIONS UNDER SECTION 26, IN NO EVENT SHALL EITHER PARTY BE LIABLE
TO THE OTHER OR TO ANY THIRD PARTY FOR ANY SPECIAL, INDIRECT,
CONSEQUENTIAL OR EXEMPLARY DAMAGES, INCLUDING, BUT NOT LIMITED TO LOSS
OF BUSINESS PROFITS OR REVENUES, (INCLUDING BREACH, NEGLIGENCE OR
OTHER CONTRACT OR TORT CLAIM) EVEN IF FORESEEABLE OR IF THE PARTIES
HAVE KNOWLEDGE OF THE POSSIBILITY OF SUCH DAMAGES.
b. EXCEPT WITH RESPECT TO (A) FRANKLIN'S OBLIGATIONS TO PAY FOR SERVICES
OR OTHER CHARGES IN ACCORDANCE WITH THIS AGREEMENT; (B) DAMAGES FOR
BODILY INJURY (INCLUDING DEATH) AND DAMAGES TO REAL PROPERTY AND
TANGIBLE PERSONAL PROPERTY; (C) EITHER PARTY'S INDEMNIFICATION
OBLIGATIONS UNDER SECTION 24 ABOVE; (D) EITHER PARTY'S BREACH OF THE
CONFIDENTIALITY OBLIGATIONS UNDER SECTION 26; IN NO EVENT SHALL EITHER
29
PARTY'S LIABILITY TO THE OTHER PARTY FOR ALL CLAIMS OR CAUSES OF
ACTION UNDER THIS AGREEMENT EXCEED THE TOTAL AMOUNT OF PAYMENTS MADE
BY FRANKLIN TO IBM UNDER THIS AGREEMENT DURING THE TWELVE (12) MONTHS
PRECEDING THE ACCRUAL OF THE CLAIM OR CAUSE OF ACTION OR IF THE CLAIM
OR CAUSE OF ACTION ACCRUES WITHIN THE FIRST TWELVE MONTHS OF THE
COMMENCEMENT DATE, THE AMOUNT OF THE ANNUAL SERVICE CHARGE FOR THE
FIRST CONTRACT YEAR.
c. If any applicable law does not allow the limitation or exclusion of
liability as provided for in this Agreement, the subject limitation or
exclusion of liability shall be deemed modified so as to limit or
exclude the parties' liability for damages hereunder to the greatest
extent permitted by such law.
26. Confidential Information. Franklin and IBM agree that the following
confidentiality provisions shall apply.
a. Neither party shall disclose the other party's Confidential
Information or knowingly permit its representatives to disclose the
other party's Confidential Information to any person other than
persons among its representatives having a specific need to know in
performance of the work. Confidential Information shall only be used
by a party to which Confidential Information has been disclosed (the
"Recipient") to fulfil its obligations or exercise its rights under
this Agreement. Franklin agrees and acknowledges that IBM may use
third parties in the provision of the Services and otherwise to fulfil
its obligations hereunder and may therefore disclose Confidential
Information of Franklin to such third parties (and such third parties
my use such Confidential Information in providing the Services)
provided that such third parties are obligated in writing to hold
Confidential Information as confidential under terms and conditions at
least as strict as those set forth herein. Each party agrees and
acknowledges that the other party may disclose Confidential
Information to third parties who are providing professional services
to a party (e.g., legal or accounting services) provided that such
third parties are obligated in writing to hold Confidential
Information as confidential under terms and conditions at least as
strict as those set forth herein or are otherwise under a
confidentiality obligation.
b. If a subpoena or other legal process in any way concerning
Confidential Information is served upon Recipient, Recipient shall
notify the disclosing party ("Discloser") promptly, and the Recipient
shall provide notice to the Discloser, take all reasonably steps to
minimize the disclosure and maintain the confidentiality of the
information and shall cooperate with the Discloser, at the latter's
expense, in any lawful effort to contest the validity of such subpoena
or other legal process.
30
c. The obligations of confidentiality in this Section shall not apply to
any information which a party has in its possession when disclosed to
it by the other party, information which a party independently
develops, information which is or becomes known to the public other
than by breach of this Agreement or information rightfully received by
a party from a third party without the obligation of confidentiality.
d. Upon completion, expiration or termination of this Agreement, or at
any other time upon request, each party shall return or destroy any
and all related Confidential Information of the other party and all
copies thereof (in whatever form and on whatever medium).
e. Notwithstanding anything to the contrary in this Agreement, the
Recipient may disclose and use the ideas, concepts, know-how and
techniques related to Recipient's business activities which are
contained in the Discloser's Confidential Information and retained in
the unaided memories of Recipient's employees who have had access to
the Confidential Information pursuant to this Agreement, provided that
the foregoing shall not be construed to include information regarding
the Discloser's customers.
f. The terms of this Section 26 shall survive for two years after the
expiration or termination of this Agreement.
27. Miscellaneous.
a. Interpretation. If any of the provisions of this Agreement are held
invalid, the remaining provisions shall be unimpaired.
b. Headings. Headings are for reference and shall not affect the meaning
of any of the provisions of this Agreement.
c. Joint Work Product. The parties, who have both been represented by
legal counsel, have jointly participated in negotiating and drafting
this Agreement, including its Schedules and any attachments. In the
event an ambiguity or question of intent or interpretation arises,
this Agreement shall be construed as if jointly drafted by the parties
and no presumption, inference or burden of proof shall arise favoring
or disfavoring a party by virtue of authorship of any or all of the
Agreement provisions
d. Inconsistencies. In the event of any inconsistency or conflict among
this Agreement, or any Schedule or Exhibit, the governing provisions
and interpretation necessary to resolve the inconsistency or conflict
shall be based on the following order: this Agreement, followed by the
specific Schedule or Exhibit.
31
e. Relationship of the Parties. The parties are independent contractors.
Nothing in this Agreement or in the activities contemplated by the
parties pursuant to this Agreement shall be deemed to create an
agency, partnership, employment or joint venture relationship between
the parties. Each party shall be deemed to be acting solely on its own
behalf and, except as expressly stated, has no authority to pledge the
credit of, or incur obligations or perform any acts or make any
statements on behalf of, the other party. Neither party shall
represent to any person or permit any person to act upon the belief
that it has any such authority from the other party.
f. Compliance with Laws. The parties shall comply with all applicable
federal, state and local laws, regulations and ordinances as they
materially relate to this Agreement and the Services.
g. No Third Party Beneficiary. It is intended that Franklin and
Affiliates of Franklin (other than natural persons) and their
respective successors or permitted assigns will receive the Services
under this Agreement (the "Franklin Entities"). Except as provided in
this subparagraph, nothing in this Agreement express or implied, is
intended to confer, nor shall anything herein confer on, any other
entity or person, including but not limited to employees of the
Franklin Entities or any agents of or contractors to the Franklin
Entities, any rights, remedies, obligations or liabilities.
h. Waiver and Enforceability. No waiver by any party of any breach of
this Agreement or failure of any party to take action to enforce or
assert any right or remedy hereunder shall be deemed a waiver of any
prior, concurrent or subsequent breach. No waiver shall be effective
unless it is made in writing.
i. Modification. This Agreement can only be modified in a writing signed
by duly authorized representatives of both parties. No conflicting
terms on P.O.'s or invoices issued between the parties with respect to
the services provided by IBM shall apply. No amendments to this
Agreement shall be enforceable unless in writing and signed by
authorized representatives of IBM and Franklin.
j. Severability. If at any time subsequent to the date hereof, any
provision of this Agreement shall be held by any court to be illegal,
void or unenforceable, such provision shall be of no force and effect,
but the illegality of such provision shall have no effect upon and
shall not impair the enforceability of any of the other provisions of
this Agreement.
k. Notices. Notices required pursuant to this Agreement shall be given by
personal delivery, by commercial express courier, by certified or
registered mail, or by facsimile transmission that is followed by
certified or registered mail. Notices shall be sent to the respective
addresses given below or such substitute address as either party may
give by providing notice in accordance with this provision. Notices
32
shall deemed given when received or, in any event, five (5) days after
being deposited into the U.S. mail, properly addressed, certified or
registered mail, postage pre-paid. Addresses for notice are:
---------------------------------------------------------------------------------------------
To IBM: To Franklin:
International Business Machines Corporation Franklin ▇▇▇▇▇▇▇▇▇ Companies, LLC
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: IBM Project Executive (Melody Attention: ▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇.,Technology
▇▇▇▇▇▇▇) Department
With a copy to: With a copy, at the same address, to:
International Business Machines Corporation Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Senior Vice
Route 100 President, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇, ▇▇▇▇▇
Attention: IBM General Counsel
---------------------------------------------------------------------------------------------
l. Assignment. On written notice to IBM, Franklin shall have the right to
assign this Agreement to any affiliate or in connection with a merger,
acquisition, or sale of all or substantially all of the assets to
which this Agreement relates. No other assignment of this Agreement
(including by acquisition or change of control) shall be effective
without the prior written consent of the other party, which shall not
be unreasonably withheld. IBM is free to assign its right to receive
payments hereunder.
m. Publicity. IBM and Franklin will obtain the other's prior written
consent before publicly using any advertising, written sales
promotion, press releases, or other publicity materials that describe
or refer to this Agreement or in which the other's name is used or may
reasonably be inferred. Notwithstanding the foregoing, IBM and
Franklin may include the other party's name, and a brief, factual
description of the work performed under this Agreement: (i) on
employee bulletin boards; (ii) in its list of references; (iii) in the
experience section of proposals; (iv) in internal business planning
documents; and (v) whenever necessary to comply with generally
accepted accounting principles or applicable laws. Franklin shall have
the right to approve the foregoing factual description, provided that
such approval will not be unreasonably withheld or delayed and that,
once approved, IBM may reuse the factual description for different,
permitted purposes. Notwithstanding anything else in this Agreement,
IBM shall not disclose the existence of or any terms and conditions of
this Agreement to anyone outside of IBM until Franklin has internally
announced this Agreement.
n. GOVERNING LAW. This Agreement shall be governed by and construed in
all respects in accordance with the laws (without regard to the laws
33
of conflicts of law that may be applicable to refer any interpretation
to the law of another jurisdiction) of the State of California.
o. Entire Agreement. This Agreement is comprised of this Agreement and
any Schedule or Exhibits specified hereunder or which are added to
hereto by the parties; such Schedule or Exhibits are incorporated by
this reference and shall constitute a part of this Agreement as if
fully set forth herein. This Agreement constitutes the entire
agreement between the parties respecting the subject matter herein and
supersedes all previous agreements, promises, proposals,
representations, understandings and negotiations, whether written or
oral, between the parties respecting the subject matter hereof.
p. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original, but all such
counterparts together shall constitute but one and the same
instrument. Signatures may be exchanged by facsimile, and such
facsimile signatures will be deemed original.
Executed by the duly authorized representatives of the parties as of the
dates corresponding with their signatures below.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement.
--------------------------------------------------------------------------------
International Business Machines Corporation Franklin ▇▇▇▇▇▇▇▇▇ Companies, LLC.,
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
--------------------- ----------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Name: ▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
Title: Vice President Title: Senior Vice President
Franklin ▇▇▇▇▇▇▇▇▇ Companies, LLC.,
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: President
--------------------------------------------------------------------------------
------------------------------------------------------------
AGREEMENT BETWEEN
FRANKLIN AND IBM
------------------------------------------------------------------------------
SCHEDULE A
SERVICES AND SUPPORT RESPONSIBILITIES
I. INTRODUCTION.......................................................2
II. DEFINITIONS.......................................................2
III. SERVICE HOURS.....................................................5
IV. DOCUMENTATION.....................................................5
V. DESCRIPTION OF SERVICES AND SUPPORT ACTIVITIES....................6
1.0 General Responsibilities......................................6
1.1 Reporting.....................................................6
1.2 Meetings......................................................6
2.0 Systems Engineering...........................................7
3.0 Systems Management Controls...................................7
3.1 Systems Management Control Project Office.....................7
3.2 Configuration Management......................................7
3.3 Change Management.............................................8
3.4 Performance Management........................................9
3.5 Problem Management............................................9
3.6 Capacity Planning............................................10
3.7 Availability Management......................................10
4.0 Systems Operations...........................................11
4.1 General Description of Systems Operations....................11
4.2 Processing Operations........................................12
4.3 Midrange and Intel Systems Operations........................12
5.0 Production Control Services..................................12
5.1 General Description..........................................12
5.2 Mainframe Production Control Services........................13
6.0 Systems and Technical Support................................14
7.0 Storage Management Services..................................15
8.0 Data Base Management Services................................15
9.0 Tape Management Services.....................................16
9.1 General Description of Tape Management Services..............16
10.0 Output Services..............................................17
11.0 System Testing and Implementation Services...................18
12.0 Maintenance Services.........................................19
13.0 Application Support Services.................................19
14.0 Security Management..........................................20
14.1 General Responsibilities.....................................20
14.2 Physical Security............................................20
14.3 Logical Access Control.......................................20
15.0 Business Recovery Services...................................22
16.0 Other Services and Responsibilities..........................22
1
I. INTRODUCTION
This Schedule describes the duties and responsibilities of International
Business Machines Corporation and Franklin ▇▇▇▇▇▇▇▇▇ Companies, LLC (referred to
herein as IBM and Franklin, respectively; or as a Party or the Parties) related
to IBM's provision of steady state Services. A description of the Services IBM
will provide and the responsibilities of the parties with regard to the
transition to steady state are described in Schedule D (Transition).
II. DEFINITIONS
The following terms have the meanings set forth below when used in this Schedule
(and in the base Agreement and other Schedules). Capitalized terms not defined
in this Section 2.0 have the meanings set forth in the Agreement or other
Schedules.
▇. ▇▇▇▇▇ means, with respect to computer processing, an abnormal end of task.
b. Applications Software means those programs and programming, including all
supporting documentation and media, that perform specific End User related
data processing and telecommunications tasks. For purposes of this
Schedule, Applications Software also includes database management software
in all platforms except the mainframe.
c. Availability Management means the process for coordinating the appropriate
skills, information, tools and procedures required to manage the
availability of the Mainframe, Midrange, and Intel server devices, and the
supporting hardware and software components that IBM uses to provide
Services.
d. Batch Management means the process for controlling production batch work
including the scheduling of resources, the processing of data and
transactions and the distribution of data output/information between End
Users.
e. Capacity Management means the process for the development and maintenance
of tactical and strategic plans to verify that the operating environments
accommodate Franklin's growing or changing business requirements.
f. Change Management means the process for the planning, testing,
coordinating, implementing and monitoring of changes affecting service
delivery and the operating environments. The process will not adversely
impact Service delivery.
g. Configuration Management means the process for processing and tracking
hardware and software configuration changes and maintaining lists and
diagrams of system configurations.
h. DASD means direct access storage device.
i. Data Center means either the IBM Data Center(s) or the Franklin Data
Center(s), as identified on Schedule I (Facilities), or both.
j. Facilities means those Franklin locations listed in Schedule I
(Facilities).
▇. ▇▇▇▇▇▇▇▇ Data Network means the portions of the network that Franklin is
responsible for providing as set forth in Schedule H.
l. End Users means users of Services who are employees, Affiliates, and
contractors or other designees of Franklin.
m. End User Machines means all workstations, terminals, printers, and
associated peripheral equipment located at Franklin Facilities.
n. Focal Point means the individual designated by either Party to act as the
single point of contact within a specified set of Services or Facility to
whom the other Party may direct all communications related to such set of
Services or Facility.
▇. ▇▇▇▇▇▇▇▇ Machines means machines that are:
2
1. owned, leased or rented by Franklin Resources, Inc. on or after the
Effective Date; and
2. used by IBM to provide the Services.
p. Holiday means the days specified as holidays by Franklin corporate policy,
which list of holidays Franklin will provide to IBM annually.
q. IBM Data Network means the network owned, managed and maintained by IBM,
IBM partners or IBM vendors.
r. IBM Management Environment means IBM's tools, processes and programs which
are used by IBM in managing of the System Layer.
s. Implementation means the collaborative planning, preparation, physical
installation, and post installation validation of changes within the test
and production environments in compliance with Change Management procedures
set forth in the Procedures Manual.
t. Information Security Controls Document means the guidelines to establish
security implementation practices and procedures for the protection of
Franklin and IBM.
u. Intel Server means those servers identified as such and listed in Schedule
G (Machines) on the Effective Date and, subsequently, those machines listed
in the IBM database of assets.
v. Inventory Management means the process for maintaining a record of the IBM
and Franklin equipment (including incoming and outgoing) for those
environments for which IBM is providing Services.
w. Level 1 Support means the initial request is handled by an individual who
takes the incoming request and attempts to fulfill the request. Specific
responsibilities include:
1. responding to the incoming request;
2. gathering the appropriate information for the type of request;
3. assessing the severity and priority of requests;
4. attempting to fulfill the request;
5. reassigning requests as needed;
6. contacting the customer for further information, as required;
7. performing escalation as necessary;
8. performing notification as required; and
9. closing requests that are fulfilled, with customer agreement.
x. Level 2 Support means the call is referred to a subject matter expert who
handles additional request fulfillment. Specific responsibilities include:
1. fulfilling assigned requests;
2. documenting all actions in the request record;
3. contacting the customer for further information, if required;
4. participating in root cause analysis, when required;
5. requesting escalation;
6. working with vendors as necessary;
7. assisting in the use of supported products;
8. making recommendations for process and tool improvements;
9. contacting other service providers, as required; and
3
10. interfacing with other systems, networks, and operating system
environments.
y. ▇▇▇▇▇ ▇ Support means the call is referred to a subject matter expert who
handles request fulfillment requiring more in-depth expertise than Level 2.
These subject matter experts may be part of external organizations
(vendors). Specific responsibilities include:
1. fulfilling assigned requests;
2. documenting all actions in the request record;
3. contacting the customer for further information, if required;
4. participating in root cause analysis, when required;
5. requesting escalation;
6. working with vendors as necessary;
7. assisting in the use of supported products;
8. making recommendations for process and tool improvements;
9. contacting other service providers, as required; and
10. interfacing with other systems, networks, and operating system
environments.
z. Local Area Network or LAN means the configuration (hardware components,
software, and communications devices) used to transmit and receive data
signals within a Facility.
aa. Mainframe Machine means those machines listed as such in Schedule G
(Machines) on the Effective Date and, subsequently, those machines listed
in the IBM database of assets.
bb. Midrange Machine means the UNIX, AS/400, DEC Alpha or DEC Vax system
(servers) as listed in Schedule G (Machines) on the Effective Date and,
subsequently, those machines listed in the IBM database of assets.
cc. Other Site means a location identified as "other site" and listed in
Schedule I (Facilities).
dd. Performance Management means the process for monitoring, measuring,
analyzing and reporting systems performance as compared to the Service
Levels.
ee. Post Print Operations means processes that occur after the printed output
is removed from the printer and placed in the mutually agreed upon
designated area, and includes, but is not limited to, bursting, trimming,
stuffing/insertion, addressing, sorting, mailing and courier services.
ff. Prime Site means a location identified as a "prime site" and listed in
Schedule I (Facilities).
gg. Problem Management means the process for identifying, recording, tracking,
and correcting issues impacting service delivery, recognizing recurring
problems, addressing procedural issues and containing or minimizing the
impact of problems that occur for the levels of support (i.e. Level 2 and
Level 3) described in this Schedule A.
hh. PTF is a Program Temporary Fix or repair patch provided by the software
vendor.
ii. Recovery Management means the process for planning, establishing and
testing the recovery procedures required to reestablish the functionality
of systems included in the Services in the event of a failure. The intent
of this process is to anticipate and minimize the impact of systems
resource failure through the development of predefined, documented
procedures and software/hardware recovery capabilities.
jj. Remote Site means a location identified as "remote site" and listed in
Schedule I (Facilities).
kk. Services Machines means those machines that are listed as "Services
Machines" in Schedule G (Machines) on the Effective Date and, subsequently,
those machines listed in the IBM database of assets.
ll. Standard Reports means those reports IBM provides to Franklin, as agreed by
the Parties and listed in the Procedures Manual.
4
mm. System Layer is the combination of the Hardware and Systems Software that
provides access to resources required by the Application Software.
nn. Systems Software means those programs and programming, including all
supporting documentation and media, that perform tasks basic to the
functioning of the hardware and which are required to operate the
Applications Software or otherwise support the provision of Services by
IBM.
oo. TCP/IP means transmission control protocol/internet protocol.
pp. Testing means the combined effort of exercising data processing
subsystems/systems (including software and hardware) and production
procedures, in an environment which progressively simulates operational
processes and conditions to allow for verification and validation of system
readiness to support business functions, workflow, data integrity,
operational support and rerun/restart/recovery.
qq. User Identification or User ID means a string of characters (i.e., a user
name or a password) that uniquely identifies a user to a system and enables
access to a system or specific data residing on a system.
III. SERVICE HOURS
IBM will provide the Services specified in this Schedule 24 hours/day, 7
days/week, 365 days/year. Project offices and administrative functions will be
open during normal business hours, on normal business days, excluding Holidays.
The Parties may agree to extended hours for the project office and
administrative functions.
IV. DOCUMENTATION
Franklin and IBM agree that the Procedures Manual will incorporate appropriate
implementation details and procedures for the Services.
a. IBM is responsible for:
1. creating, updating and maintaining the Procedures Manual in
consultation with Franklin. IBM will obtain Franklin's prior approval
of any Franklin obligations and any proposed changes to any Franklin
obligations before inclusion in the Procedures Manual and IBM will not
reduce its obligations under the Agreement and will not make changes
which would materially alter performance of Services without
Franklin's prior written approval;
2. reviewing operations documentation for adherence to operational
procedures and standards;
3. periodically distributing to appropriate Franklin employees,
information bulletins regarding new or changed operations and
procedures;
4. developing operations documentation for all Systems Software;
5. developing, implementing and maintaining a common electronic,
web-accessible document repository through which Franklin may
authorize IBM to provide Franklin employees with access to read,
download and print documents relating to activities which could
reasonably be expected to affect business operations, including but
not limited to Project Change Requests ("PCR's"), project plans and
schedules and the Procedures Manual; and
6. maintaining procedural documentation necessary to the currency of the
disaster recovery plan.
▇. ▇▇▇▇▇▇▇▇ will:
1. provide IBM with existing documentation for operations procedures and
processes relating to the Applications Software and Franklin Machines
as well as any new documentation for operations procedures and
processes related to new Applications Software and new Franklin
Machines for inclusion in the Procedures Manual to the extent required
for IBM to perform the Services;
2. assist IBM in IBM's development of documentation of Franklin's
operations and procedures existing prior to the Effective Date of this
Agreement, for which documentation is not current and available for
transmittal to IBM on or before the Effective date; and
3. assist IBM in development and implementation of the electronic
document repository.
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V. DESCRIPTION OF SERVICES AND SUPPORT ACTIVITIES
The Services described in this Section V will be provided for the application
development and maintenance, testing, and production environments unless
otherwise noted.
1.0 GENERAL RESPONSIBILITIES
IBM will provide the Services in accordance with the descriptions contained in
this Schedule and the Procedures Manual. Franklin will support IBM's provision
of the Services in accordance with the descriptions contained in this Schedule
and the Procedures Manual. During the Term, IBM will continue to investigate new
technologies, look for areas of improvement of Services described herein, and
recommend initiatives required to implement those improvements that would be
beneficial to Franklin's business operations and to make effective use of IT
resources. At a minimum, IBM will work with Franklin during the annual planning
session to prioritize improvement activities.
1.1 REPORTING
IBM will provide Franklin with Standard Reports for which a representative
sample is referred to in Schedule N, which will reflect the statistics related
to IBM's operational responsibilities and performance as defined within this
Schedule A (Services and Support Responsibilities). Specifically, within the
first 90 days following the Commencement Date, IBM will provide Franklin with
the periodic reports that Franklin was generating immediately prior to the
Effective Date. Included within these reports will be the information necessary
to support creation of Franklin's Executive Level Business Review (ELBR) report,
which IBM will continue to provide to Franklin throughout the Term. Beginning no
later than 90 days following the Commencement Date, IBM will also provide
Franklin with drafts of the format for the periodic standard reports that IBM
will provide Franklin during the Term. In the event that Franklin desires
additional reporting or modifications to the standard report formats provided,
requests for changes will be considered pursuant to Change Management procedures
set forth in the Procedures Manual.
1.2 MEETINGS
The Parties agree that frequent and ongoing communication is required to support
the working relationship set forth in this Agreement. Within the first 90 days
after the Effective Date, Franklin and IBM will mutually determine a schedule of
periodic operations and contract management meetings between the Parties and
define the participation from each company. IBM will publish an agenda for each
meeting sufficiently in advance to allow meeting participants a reasonable
opportunity to prepare. Additionally, meeting minutes will be recorded and
distributed to appropriate Franklin and IBM management. Actions as appropriate
will be recorded and tracked through closure in the respective meetings.
The periodic meetings will include, but not be limited to:
a. Operations Management
1. a daily operations review meeting to discuss operations and events,
plan immediate steps required to support operational priorities, and
assign appropriate resources to perform actions;
2. bi-weekly problem management meetings to discuss status of open
problems and problem resolution trends and problematic areas;
3. weekly change management meetings to review and assess production and
test environment recommended changes;
4. a weekly operations meeting to discuss the week's operational trends
and the results of daily performance and planning meetings and
activities; and
5. a monthly operations performance meeting to review monthly service
level attainment reports, recurring issues and actions to solution,
operational trends and recommendations, and other matters, as
appropriate; and
6. participate in service review meetings with vendors and service
providers under contract with Franklin who interact with IBM relative
to the Services, as Franklin reasonably requests.
b. Relationship Management
1. A quarterly senior management meeting to review appropriate
contractual, business, planning or performance issues; and
2. An annual planning session to coincide with Franklin's budgeting
process to outline the next 12-15 month operational view, including
strategic investments, growth and project related work.
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2.0 SYSTEMS ENGINEERING
IBM will provide systems engineering support for the Mainframe, Midrange and
Intel server environments, as described below.
a. IBM will:
1. perform infrastructure architecture, engineering and design for
In-Scope Hardware and In-Scope Software and prepare and present
documentation relating to any material changes in the infrastructure
to the Franklin Architectural Review Board and any such material
changes must be approved by the Franklin Architectural Review Board,
provided that an infrastructure change shall not require approval if
the change is made in accordance with Franklin's strategic
infrastructure standards developed under Section 2.0 b. 1. below;
2. perform requirements analysis for hardware and systems software and
provide that information to Franklin in a schedule and format to be
agreed upon by the parties;
3. perform periodic review of software for determination of currency and
necessity to working environment;
4. perform project management of change and upgrade activities to the
infrastructure through design phase;
5. perform hardware and software prototyping for In-Scope Hardware and
In-Scope Software;
6. perform review and analysis of major trends in Level 1 and Level 2
support and facilitate transfer of information and knowledge to Level
1 and Level 2 support personnel;
7. provide management and oversight of the design/engineering lab;
8. document and monitor adherence to standards; and
9. coordinate with third party vendors as they relate to the In-Scope
Hardware and In-Scope Software and to IBM's responsibilities
continuously to seek improved technologies and efficiencies.
▇. ▇▇▇▇▇▇▇▇ will:
1. in cooperation with IBM, establish strategic infrastructure standards
and communicate those standards to IBM in a schedule and format to be
agreed to by the parties;
2. retain responsibility for systems engineering for the distributed
Windows/Intel desktop environment;
3. establish the design and engineering lab;
4. coordinate with IBM new and developing technology research; and
5. assist with IBM in review and analysis of trends in Level 1 and Level
2 support;
3.0 SYSTEMS MANAGEMENT CONTROLS
IBM will provide to Franklin, and IBM and Franklin will mutually agree on and
use, the System Management Controls (SMC) procedures as the standard set of
disciplines for managing information systems included within the Services. The
SMC procedures, in some combination, apply to all the Services provided, and
they will be implemented, as described in this Schedule, to each Service being
provided. The Procedures Manual will contain the SMC procedures. IBM's SMC
responsibilities will consist of Configuration Management, Change Management,
Performance Management, Problem Management; Capacity Planning; and Availability
Management, as described herein.
3.1 SYSTEMS MANAGEMENT CONTROL PROJECT OFFICE
IBM will create a dedicated project office to coordinate and provide direction
to the overall development and implementation of Systems Management Controls.
3.2 CONFIGURATION MANAGEMENT
a. IBM will maintain and provide documentation for the following:
1. operating systems configuration;
2. backup and restore processes;
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3. an inventory of In-scope Hardware and In-scope Software; and
4. hardware configuration reports.
▇. ▇▇▇▇▇▇▇▇ will provide IBM with existing documentation and future
requirements for the following:
1. operating systems configuration;
2. network operating systems configuration;
3. backup and restore processes; and
4. hardware configuration reports.
3.3 CHANGE MANAGEMENT
a. IBM will:
1. work with Franklin to develop procedures for handling all planned and
emergency changes affecting the In-Scope Hardware, In-Scope Software
and Services, including review, approval, communication and
documentation;
2. document and communicate changes made by IBM affecting the In-Scope
Hardware, In-Scope Software and Services in accordance with the change
management procedures contained in the Procedures Manual;
3. record and track approved change requests;
4. schedule or manage testing and implementation of approved changes,
including communication to and coordination with Franklin designated
business units' coordinators;
5. evaluate planned changes to the In-Scope Hardware and In-Scope
Software and advise Franklin of any requirements to support such
changes;
6. verify operations of hardware and Systems Software following changes
to the hardware or Systems Software environment, by checking job logs
and system messages;
7. provide automation scripts, where possible, for tasks associated with
a changes;
8. receive and handle notification of related change activity;
9. track change history of managed resources;
10. provide standard change management reports;
11. create and maintain a tactical change calendar;
12. create and maintain a current and accurate database of assets that
contains a list of all equipment and Systems Software that IBM is
using to provide Services. Among other things, the database will
specify which equipment falls into the appropriate Resource Unit
categories. IBM will provide Franklin with access to such database and
will promptly correct any inaccuracies that Franklin identifies.
▇. ▇▇▇▇▇▇▇▇ will:
1. assist IBM in developing procedures for handling all planned and
emergency changes affecting the In-Scope Hardware, In-Scope Software,
and Services including review, approval, communication and proper
documentation;
2. notify IBM of any planned or emergency changes (including Applications
changes) to Franklin's environment affecting IBM's provision of the
Services and to be provided for the tactical change calendar;
3. verify operation of Application Software following changes to the
hardware or Systems Software environment;
4. provide a test environment for the evaluation of applications and
tools configurations; and
5. test and evaluate applications and tools configurations before
implementing them in the production environment.
8
6. be responsible for all aspects of Franklin-owned hardware and software
not included within the defined Services. Provide IBM with prior
notification as defined in the Procedures Manual when adding,
deleting, changing or relocating other customer hardware or software
which may, directly or indirectly, affect IBM's provision of the
Services;
3.4 PERFORMANCE MANAGEMENT
a. IBM will:
1. continue to utilize existing Franklin performance indicators, enhance
the existing performance indicators and define new performance
indicators, where appropriate, and monitor in-scope performance
against such indicators;
2. install management agents;
3. take appropriate resolution action (for example, tuning, notifying the
Franklin Focal Point) when in-scope system(s) performance is impacted;
4. request Franklin to authorize changes to the hardware and software as
needed to enable system performance improvement;
5. work with Franklin to establish a schedule for performing in-scope
system(s) maintenance (for example, virus detection, backup, DASD
cleanup and testing) modifications and enhancements;
6. advise Franklin of any required system configurations and/or
modifications necessary to enable IBM to provide the Services; and
7. provide performance reports as described in the Procedures Manual and
Schedule ▇.
▇. ▇▇▇▇▇▇▇▇ will:
1. authorize changes to the hardware and software as reasonably requested
by IBM for the purpose of enabling system performance improvement; and
2. assist IBM in establishing a schedule for performing in-scope
system(s) maintenance (for example, virus detection, backup, DASD
cleanup, and testing) and modifications and enhancements.
3.5 PROBLEM MANAGEMENT
A party shall open a problem ticket immediately upon learning of a problem.
Promptly upon opening a ticket, the party opening the ticket will assign the
problem ticket to the appropriate queue. The time in which IBM is required to
generate notifications and escalations and take other actions is determined by
the electronic time stamp indicating when the problem ticket entered IBM's
queue.
a. IBM will:
1. take calls escalated from Franklin's Level 1 Help Desk for all
in-scope environments;
2. perform problem management tasks including real time in-scope
system(s) monitoring and problem identification for Level 2 and Level
3 Support;
3. for each problem record forwarded to IBM by Franklin and for each
problem record originated by IBM, make initial assignments regarding
ownership and priority for each problem;
4. for problem records with Severity 1 and 2 codes, generate automatic
notification to IBM and Franklin management personnel
(a) within fifteen (15) minutes after identification of the problem;
(b) within one hour after identification of the problem; and
(c) hourly thereafter until resolved or until the parties agree on a
different notification schedule;
5. take steps identified in the Procedures Manual to notify Franklin
within five minutes of Severity 1 problems originally identified by
IBM;
6. work with Franklin to:
(a) define indicators to monitor,
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(b) define alert and paging processes and procedures, including
escalation procedures for Levels 2 and 3 support;
7. manage problem records through to closure indicating "Resolved" status
and report on timeframes in which problem records are closed; and
8. perform reporting, logging, tracking, resolution, communication and
escalation for problems as defined in the Procedures Manual for ▇▇▇▇▇
▇ ▇▇▇ ▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇.
▇. ▇▇▇▇▇▇▇▇ will:
1. make changes to any assignments regarding priority and ownership of
problem records;
2. perform problem management tasks for Level 1 Support;
3. define problem priority levels and associated escalation procedures
for Level 1 Support;
4. perform reporting logging, tracking, resolution, communication and
escalation for problems as defined in the Procedures Manual for Level
1 Support;
5. provide to IBM the Franklin escalation chain, including any updates as
they occur; and
6. use diligent efforts to make available the appropriate Franklin
personnel to interface with IBM personnel, as required to isolate or
resolve complex network, operational or software problems affecting
IBM's ability to provide the Services.
7. assist IBM in:
(a) defining problem priority levels and associated escalation
procedures;
(b) defining indicators to monitor, and
(c) defining alert and paging processes and procedures, including
escalation procedures.
8. assist IBM and provide necessary Franklin resources for the resolution
of technical problems affecting the Services.
3.6 CAPACITY PLANNING
a. IBM will:
1. monitor and document Franklin's current workloads and provide the
information to Franklin for IBM's and Franklin's use in determining
future capacity requirements.
2. report to Franklin on usage of system capacity in a format and content
to be agreed upon by the Parties for Franklin's use in budgeting and
planning and determining impacts on software licensing requirements;
3. procure adequate capacity for growth and expansion needs communicated
to IBM by Franklin in accordance with the Agreement; and
4. conduct periodic capacity planning meetings.
▇. ▇▇▇▇▇▇▇▇ will:
1. work with IBM in developing growth planning as it relates to
Franklin's capacity needs;
2. project future trends and capacity requirements for new projects and
provide such information to IBM not less frequently than annually or
when there is a change in Franklin's operations or business planning
which would affect IBM's provision of the Services; and
3. participate in periodic capacity planning meetings.
3.7 AVAILABILITY MANAGEMENT
a. IBM will:
1. assist Franklin in defining Franklin's availability requirements;
2. establish backup and recovery processes and procedures;
10
3. develop an availability plan during the Transition Period, to include
hours of operation, maintenance windows and related pertinent
information;
4. track, analyze and report on availability;
5. provide hardware maintenance in accordance with the equipment
manufacturer's specifications or as otherwise mutually agreed;
6. develop and maintain a plan that enables the recovery of data due to
unplanned operational types of failures such as equipment malfunction,
temporary power disturbances and abnormal termination;
7. provide the Franklin Focal Point with procedures for measuring system
availability;
8. review system availability and utilization requirements at status
meetings on a mutually agreed schedule;
9. provide the Franklin Focal Point a system availability and utilization
report on a mutually agreed schedule including measurements on
processor and disk resources; and
10. recommend availability improvements.
▇. ▇▇▇▇▇▇▇▇ will:
1. with IBM's assistance, define Franklin's availability requirements;
and
2. participate in planning processes for purpose of determining
availability needs, as set forth in the Procedures Manual.
4.0 SYSTEMS OPERATIONS
4.1 GENERAL DESCRIPTION OF SYSTEMS OPERATIONS USING THE IBM
Management Environment, IBM will provide remote operational services for the
Machines specified in Schedule G which are located at the Franklin Data
Center(s) and at the Franklin dedicated DR site designated in Disaster Recovery
Plan.
a. IBM will:
1. monitor the hardware;
2. monitor system messages in system operator message queue;
3. perform backups as described in the Procedures Manual;
4. perform file or system restores from incremental or full backups as
described in the Procedures Manual;
5. perform reboots, recycles, stops and restarts for in-scope machines;
6. notify Franklin of unsuccessful backups according to problem
management procedures;
7. provide system start-up services including shipping, unpacking of
hardware, preparation and installation, power-on and related
diagnostics and testing;
8. load operating Systems Software on all systems added to the in-scope
environment;
9. load Applications software on production systems;
10. provide maintenance services on the IBM In-Scope Hardware listed in
Schedule G and the IBM Systems Software listed in Schedule F and
manage the maintenance services provided under Franklin's contracts
for the OEM server hardware listed in Schedule G and the OEM Systems
Software listed in Schedule F until refresh;
11. provide maintenance services on the refreshed OEM In-Scope Hardware
listed in Schedule G and the refreshed OEM Midrange and Distributed
Systems Software listed in Schedule F after refresh; and
12. set up system logs, allocate disk space, provide user ID admin at the
system level and provide file system protection and security.
▇. ▇▇▇▇▇▇▇▇ will:
11
1. provide the existing In-Scope Hardware and In-Scope Software, Franklin
Data Network, and associated documentation, if any exists, which is
required for the provision of Services;
2. provide the tape library,
3. provide IBM with required information on file restores and verify
integrity of restored files; and
4. provide offsite storage and transportation of backups to offsite
facilities as well as retrieving storage media from offsite facilities
as required for restores of backed up user/system data;
5. provide the information required to enable IBM to load Applications
software on production systems.
4.2 PROCESSING OPERATIONS
IBM will make available, monitor and process on-line and batch applications,
including scheduled, unscheduled and on-request services and End User initiated
processing.
a. IBM will:
1. support the environments consistent with the obligations set forth in
this Schedule A;
2. provide operations support and perform console monitoring activities;
3. operate and provide system availability for present and future
Applications Software and Systems Software to support Franklin's
operating schedules;
4. in accordance with the change management process schedule systems
maintenance so as to minimize interference with Franklin's business
operations; and
5. regularly monitor scheduled job submissions to verify scheduled
completion.
▇. ▇▇▇▇▇▇▇▇ will:
1. be responsible for selecting or defining requirements for business
Applications Software; and
2. assist in scheduling required system maintenance windows.
4.3 MIDRANGE AND INTEL SYSTEMS OPERATIONS
The following services are unique to Midrange Servers and Intel Servers.
a. IBM will:
1. manage production job scheduling, job monitoring and job restarts for
Midrange;
2. provide on-site Midrange and Intel server support for the Prime and
Remote Sites; and
3. operate the Exchange mail application in accordance with the
Procedures Manual.
▇. ▇▇▇▇▇▇▇▇ will:
1. manage test and development job scheduling, job monitoring and job
restarts;
2. provide on-site Midrange and Intel server support for the Other Sites;
and
3. provide mail policies, including access, retention and encryption
policies and mailbox size policies.
5.0 PRODUCTION CONTROL SERVICES
5.1 GENERAL DESCRIPTION
IBM will maintain production schedules and cooperate with Franklin in responding
to special processing requests and new processing requirements for the Machines
specified in Schedule G which are located at the sites listed in Schedule I and
the IBM Boulder Data Center, and at the Franklin dedicated site designated in
the Disaster Recovery Plan as described below.
a. IBM will:
1. review and comment on Franklin's current batch job procedures;
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2. prioritize, schedule, control and monitor running of production jobs
using scheduling and quality control procedures specified in the
Procedures Manual;
3. monitor scheduler related incidents, and develop and recommend
refinements and revisions and implement such refinements and revisions
to the scheduler database;
4. manage on-request schedules and ad-hoc processing;
5. coordinate and modify schedules for special requests, follow Franklin
priorities and notify Franklin if special requirements will affect the
timely completion of other tasks to allow Franklin to adjust
priorities;
6. to the extent reasonably possible, process all special request
activities within the requested time frames and in the sequence
Franklin defines;
7. obtain Franklin approval for and distribute major production schedules
before implementation;
8. for jobs initiated by IBM, use Franklin's documented recovery
procedures to attempt recovery of Franklin's batch applications in the
event of Abends;
9. in instances where batch jobs complete abnormally, due to Applications
Software, notify Franklin Focal Point according to IBM problem
management procedures;
10. notify appropriate personnel of Abends of IBM-scheduled or initiated
processes according to problem management procedures;
11. schedule mutually agreeable system downtime in order to facilitate
upgrades, perform maintenance and implement other system management
tasks; and
12. perform manual pre-existing activities relating to Franklin's
Applications Software.
▇. ▇▇▇▇▇▇▇▇ will:
1. verify that an Applications Software version/release/maintenance level
for all new Application Software versions/releases/maintenance levels
added after the Commencement Date is consistent with and will operate
with the Systems Software;
2. provide IBM with all existing run books/sheets including batch job
names and descriptions, batch job schedules, job-specific parameters
and estimated time of completion, by job
3. for new Applications Software provide schedules, manual and batch
processes, recovery procedures and instructions for input into IBM
Management Environment;
4. monitor Franklin-scheduled and initiated manual or batch processes,
including all notifications;
5. initiate on-request and ad- hoc processing consistent with IBM
processes;
6. assist IBM in the scheduling of mutually agreeable system downtime in
order to facilitate new releases and version upgrades of software and
implementation of hardware changes and upgrades and implement other
system management tasks;
7. review and approve schedules for batch job submission;
8. provide requirements for job Abend restart instructions;
9. provide change requirements to the batch schedule in accordance with
the change management process contained in the Procedures Manual; and
10. assist IBM in scheduling and coordinating End User test time.
5.2 MAINFRAME PRODUCTION CONTROL SERVICES
a. IBM will:
1. schedule and report on batch jobs consistent with Franklin's
scheduling parameters;
2. distribute reports based on report distribution requirements that
Franklin provides; and
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3. maintain scheduler database definitions to reflect changes in
production environment and monitor scheduler incidents so as to
develop and recommend refinements and revisions for Franklin's
implementation.
▇. ▇▇▇▇▇▇▇▇ will:
1. assist IBM in implementing reasonably requested refinements and
revisions to improve operating environment; and
2. provide existing and new scheduling parameters and other direction, as
needed, to allow IBM time to provide outputs as scheduled.
6.0 SYSTEMS AND TECHNICAL SUPPORT
a. IBM will:
1. provide technical personnel to provide the Services;
2. support the operating systems and subsystems, compilers, programming
languages, products and operational tools;
3. evaluate, recommend, install, maintain and provide support for
In-Scope Hardware and Systems Software;
4. configure device descriptions based on Franklin's naming conventions
in support of day to day operations. If Franklin desires to modify its
overall naming convention the parties agree to treat as a Project;
5. plan, test and install not more than two version or release upgrade
per System Software product listed in Schedule F (Software) in each
contract year. Upon Franklin request, IBM will plan, test and install
more than two version or release upgrades per System Software product
listed in Schedule F in a contract year so long as the total number of
version or release upgrades during the year does not exceed two such
upgrades per the number of Systems Software products listed in
Schedule F;
6. selectively test and install PTF tapes for System Software. The
parties agree to jointly plan and schedule the application of PTFs as
mutually agreed. Neither party will unreasonably withhold its
agreement to support the application of PTFs;
7. notify Franklin of all implementations of PTFs installed on an
emergency basis;
8. initiate change requests in accordance with Change Management
Procedures for all PTFs which IBM determines should be implemented on
a non-emergency basis;
9. for the Systems Software, apply
(a) emergency fixes as required; and
(b) selected high impact and security PTFs monthly.
10. verify Systems Software version/release maintenance level is
consistent with and will operate with the Applications Software;
11. plan and configure host table entries and associated addresses based
on Franklin's naming conventions;
12. provide printer queue configuration support for attached printers; and
13. provide TCP/IP address documentation to Franklin for IBM network
segments.
▇. ▇▇▇▇▇▇▇▇ will:
1. assist IBM in the planning, testing and implementation of all system
upgrades and repair patches;
2. provide IBM, on a timely basis, with all information received from the
respective System Software manufacturers regarding repair patches and
version upgrades; and
3. retain financial responsibility for obtaining licenses to all third
party Application Software and third party System Software, excluding
SAS, upgrades and PTFs.
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7.0 STORAGE MANAGEMENT SERVICES
IBM will provide Storage Management Service that include storage device
preparation, space and utilization management and reporting, recovery
management, performance monitoring, capacity planning and backup and restore
management which includes planning, establishing and testing recovery procedures
required to re-establish the functionality of in-scope systems in the event of a
failure.
a. IBM will:
1. keep files under IBM's control, current and available during scheduled
access times;
2. initiate and complete required data processing activities concerning
data integrity (for example, handling line transmission errors) of all
processed files, according to the procedures specified in the
Procedures Manual;
3. verify, using tools and procedures specified in the Procedures Manual,
the receipt of incoming files and the processing and transmission of
outgoing files;
4. document, maintain and, as appropriate, update and execute mutually
approved file backup and recovery procedures;
5. provide a recovery procedure for restoring the data image to a
previous level within a mutually agreed time frame;
6. conduct regularly scheduled backup and recovery procedures as
specified in the Procedures Manual and as prioritized by Franklin (for
example, data set restore), so as to avoid impacting scheduled
operations; ;
7. conduct routine monitoring and corrective action according to
procedures IBM prepares and Franklin approves for intermediate files
used for on-line and batch processing;
8. perform an annual formal review of storage management policy and
ongoing tactical reviews of capacity, performance and load balancing
and provide recommendations to Franklin regarding backup and recovery
considerations such as improved levels of protection, efficiencies and
cost reductions;
9. verify availability of adequate file space for processing, subject to
the provisions of Schedule C (Charges);
10. report to Franklin on Franklin's disk space utilization and
requirements for Franklin's capacity planning purposes; and
11. lay out and configure disk subsystems according to Franklin's
documented requirements.
▇. ▇▇▇▇▇▇▇▇ will define the requirements for allocation of file system space
for Applications Software.
8.0 DATA BASE MANAGEMENT SERVICES
a. IBM will:
1. in cooperation with Franklin, monitor and report database performance
and database space utilization; and identify and recommend practical
modifications for improved performance;
2. provide Franklin with information regarding changes and modifications
required in order for IBM to provide the Services;
3. maintain mutually agreed upon database backup procedures and database
log archive processes, provided by Franklin, to recover from database
outage or corrupted database;
4. maintain physical database definitions and make such definitions
available to Franklin upon request;
5. promote Franklin-approved database changes into the production
environment;
6. in cooperation with Franklin, maintain standard database access
routines for application development and maintenance, and personnel
use, and document any changes to such routines;
7. assist in problem determination and resolution of database management
system issues including escalation to the Systems Software vendor;
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8. provide physical database administration and management to include
activities such as reorgs and image copies;
9. participate in planning for changes in the size of databases due to
business growth or reduction and applications development projects,
and review Franklin's plans on a regular basis; and
10. provide operating systems database support for Franklin's database
environments and those IBM establishes.
▇. ▇▇▇▇▇▇▇▇ will:
1. define database backup and recovery requirements;
2. provide requirements for changes and upgrades to databases;
3. define and approve database security requirements;
4. be responsible for logical database design and data modeling and
coordinate with IBM during physical database design and review; and
5. perform logical database administration and management including, but
not limited to defining tables, analyzing database performance, and
database reorganization.
9.0 TAPE MANAGEMENT SERVICES
9.1 GENERAL DESCRIPTION OF TAPE MANAGEMENT SERVICES
a. IBM will:
1. make recommendations for improvements to efficiency of tape
management;
2. complete tape mounts in sufficient time to meet application
development, testing and production processing as reasonably specified
by Franklin;
3. maintain adequate inventories of Franklin-supplied tapes for the tape
environment, including a sufficient scratch tape pool to service
required processing needs, and notify Franklin when additional tapes
and other supplies are required;
4. retain tapes for a mutually agreed upon retention period for auditing
purposes;
5. rotate tapes, as required, for off-site storage;
6. log and track physical tapes that are checked in and out by Franklin
or a Third Party in accordance with the procedures specified in the
Procedures Manual;
7. prepare output tape cartridges or tape reels for shipment and deliver
to designated staging area for pickup and transport;
8. upon return of output tape cartridges or tape reels to the designated
staging area for pickup, put such cartridges and reels back into
operation;
9. provide tapes and paper documentation, as appropriate, for storage
consistent with provisions in Procedures Manual;
10. report tape utilization to Franklin on a mutually agreed upon
frequency;
11. notify the Franklin-designated storage services provider when it is
time to scratch or return a tape in accordance with the procedures
specified in the Procedures Manual;
12. retrieve and restore files and data sets from archived tapes within
mutually agreed time frames; and
13. allow Franklin to review tape management operations, including mailing
and receipt; upon a mutually agreed upon schedule;
14. conduct an initial inventory of portable storage media and provide
documentation of initial inventory to Franklin;
15. monitor and manage tape pool resources and provide for availability of
adequate media to meet peak load, planned growth and anticipated tape
volume fluctuations;
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16. manage off-site storage of tape media for vital records and backup and
recovery;
17. perform an annual inventory of portable storage media under IBM's
control and provide documentation of annual inventory to Franklin,
including the following information:
(a) beginning inventory;
(b) media received into inventory during the reporting period (year);
(c) media sent out to other locations during the year;
(d) new media added to library;
(e) discarded media;
(f) current inventory.
18. report and account for discrepancies in inventory; and
19. retain inventory reconciliation documentation in accordance with
procedures outlined in the Procedures Manual.
20. separate, package, label, validate label content to job log for
accuracy, scan and track all tape output and distribute to the
mutually agreed distribution drop point;
▇. ▇▇▇▇▇▇▇▇ will:
1. define requirements for off-site tape storage and archiving;
2. provide required off-site storage facilities and services;
3. provide tapes as IBM requests that meet the IBM-supplied tape
specifications;
4. be responsible for the costs associated with the transportation of
tapes between the Data Center and an off-site storage facility;
5. assist IBM in conducting the initial inventory; and
6. assist IBM in maintaining the inventory and in reviewing and
reconciling the annual inventory reports.
10.0 OUTPUT SERVICES
IBM will provide output device processing and operational support necessary to
accomplish processing, production and delivery of files and printed output as
listed below.
a. IBM will:
1. produce and deliver output (for example, files, tapes, printed matter)
in accordance with schedules reasonably requested by Franklin;
2. track, manage, communicate and resolve problems related to output
production and delivery;
3. verify that all files are on the queue and available for transmission
to the applicable Franklin output and production control locations
within the mutually agreed time frames and monitor file transmissions
and network messages regarding network connectivity;
4. operate the Xerox system printers or comparable printers identified in
Schedule G and up to a maximum of four additional Xerox system
printers or comparable printers as reasonably requested by Franklin.
Requests to support more than the Xerox system printers or comparable
printers identified in Schedule G plus the four additional Xerox
system printers or comparable printers will subject to an adjustment
in the ASC;
5. operate the printers directly attached to the Midrange Machines and
the Intel Servers located at the Prime Sites and Remote Sites;
6. deliver hard copy output to the designated drop location(s) within the
Facility;
7. work with appropriate Franklin personnel to trace and attempt to find
missing output items;
8. execute reruns of output Franklin requests and notify Franklin if
rerunning any output will impact scheduled on-line or batch production
processing; and
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9. provide on-line viewing administration for the Mobius application as
defined herein and as detailed in the procedures manual
(a) add and delete reports, as requested and in accordance with
security guidelines;
(b) create indexing; and
(c) track and report usage and output volume.
▇. ▇▇▇▇▇▇▇▇ will:
1. provide output distribution from the designated drop location(s)
within a Facility;
2. with IBM's assistance, trace and attempt to locate missing output
items;
3. notify IBM of any required reruns of output;
4. operate all printers except those set forth in Section 12.0 (a) (5)
above;
5. be responsible for all Post Print Operations as defined in the
Procedures Manual;
6. maintain responsibility for output devices that are located within the
Other Sites defined in Schedule I (Facilities) (e.g., operation, paper
loading, service maintenance, output distribution, purchase of
consumables);
7. be responsible for all distribution services (for example, mail,
messenger, postage, courier);
8. support the Mobius application as follows:
(a) set up user profiles and user group access; and
(b) coordinate Mobius vendor management;
9. perform all end user workstation printer connectivity, maintenance and
print output/distribution services for print operations.
11.0 SYSTEM TESTING AND IMPLEMENTATION SERVICES
a. IBM will:
1. assist Franklin in the definition, design, and construction of the
testing environments;
2. assist in the physical establishment of test data originating from the
production environment;
3. participate in planning and preparation meetings for all changes;
4. provide physical installation support for all changes;
5. validate physical completion criteria for all changes;
6. work with Franklin to validate operational and functional completeness
of a change;
7. report to Franklin on the post-installation status and quality of
changes; and
8. comply with the change management procedures set forth in the
Procedures.
▇. ▇▇▇▇▇▇▇▇ will:
1. manage, with IBM's assistance, the definition, design, and
construction of testing environments;
2. plan and construct test cases;
3. define and coordinate establishment of test data originating from
production environment;
4. create and establish test data not yet in production;
5. conduct application interactive test scripts as planned within test
cases;
6. validate test results;
7. comply with problem follow-up and resolution procedures as set forth
in the Procedures Manual;
8. comply with change procedures as set forth in the Procedures Manual;
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9. participate in planning and preparation meetings for changes;
10. comply with change management procedures set forth in the Procedures
Manual;
11. participate and coordinate in post installation validation testing;
and
12. assist IBM in physical installations, as appropriate.
12.0 MAINTENANCE SERVICES
a. IBM will:
1. provide maintenance for IBM Services Machines and Systems Software;
2. dispatch maintenance requests for In-Scope Hardware;
3. refer Franklin's non-IBM third-party vendor performance problems in
support of Systems Software, Application Software and In-Scope
Hardware to Franklin for resolution;
▇. ▇▇▇▇▇▇▇▇ will provide warranty or maintenance coverage, as applicable, for
Franklin Machines, Franklin Software and the Franklin Data Network
equipment;
13.0 APPLICATION SUPPORT SERVICES
a. IBM will:
1. provide the IBM Systems Software products listed in Schedule F
(Software), to support the development of Applications Software. IBM
will not discontinue support of such software products without
Franklin's approval; provided, that Franklin will assume support
expenses for Systems Software products that Franklin requires IBM to
retain after current support is no longer reasonably commercially
available;
2. recommend and implement hardware and software architectural changes
consistent with and supportive of the strategic and technical
standards agreed upon by the parties;
3. verify that changes to the in-scope environment will not adversely
impact the application environment;
4. if Franklin requests additional application development support
products (such as an application development library management tool,
specialized compilers, rapid development tool, etc) , such request
will be considered as a Request for New Services.
▇. ▇▇▇▇▇▇▇▇ will:
1. select, or define the requirements for all Applications Software;
2. designate and document application information requirements, including
report design and content, frequency of reports, and accessibility;
3. retain responsibility for maintenance, support and all licenses and
related charges for all Applications Software;
4. have the right to audit, control and approve new Applications Software
before its promotion into production;
5. verify the results of Application Software on-line and batch system
support processing;
6. provide Applications Software program problem determination and
resolution, including providing support for application Abends and job
recovery;
7. use commercially reasonable efforts to minimize outages caused by
application program failures;
8. follow the existing change management process for all application
changes, before submission or installation into the system;
9. follow the problem management process, according to published problem
resolution criteria the Procedures Manual contains and document
problem resolution and closure;
10. certify, in cooperation with IBM, that existing applications function
correctly when IBM installs new Systems Software or upgrades to or new
releases of current Systems Software; and
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11. define requirements for application recovery management to include
such activities as job recovery management and backup and recovery
procedures.
14.0 SECURITY MANAGEMENT
14.1 GENERAL RESPONSIBILITIES
a. IBM will:
1. provide an IBM Focal Point with responsibility for day-to-day security
management;
2. in conjunction with Franklin, review security policies and procedures
for effectiveness and recommend improvements;
3. review changes made or requested by Franklin to its security policies
and standards and advise Franklin whether or not such changes:
(a) can be implemented; and
(b) if implemented, will be considered a New Service, and
(c) maintain and update the Information Security Controls Document,
as IBM deems necessary.
▇. ▇▇▇▇▇▇▇▇ will:
1. provide a Franklin Focal Point with responsibility for day-to-day
security management;
2. provide IBM with Franklin's security audit history (both internal and
external) and security policies, standards and practices in effect as
of the Effective Date and any updates as they occur;
3. communicate the security procedures to End Users (for example, login
procedures, password requirements, use of antivirus programs, data and
equipment security procedures);
4. in conjunction with IBM, review Franklin's security policies and
procedures for effectiveness and recommend improvements; and
5. notify IBM of changes Franklin plans to make to its security policies
and standards before implementation.
14.2 PHYSICAL SECURITY
a. IBM will:
1. provide physical security controls at IBM facilities;
2. protect servers and devices on IBM's premises from unauthorized
access;
3. perform an annual audit and reconciliation of the tapes under IBM's
control and promptly notify the appropriate Franklin and IBM personnel
if discrepancies are discovered;
4. resolve discrepancies discovered during the annual tape audit and
inform Franklin of the resolution; and
5. implement controls for and provide effective elimination of residual
information on removable storage media before disposal or reuse
outside of ▇▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇ will:
1. provide physical security controls at the Franklin premises; and
2. protect servers and devices on Franklin premises from unauthorized
access.
14.3 LOGICAL ACCESS CONTROL
a. IBM will:
1. install, maintain and upgrade new or existing data access control
software;
2. implement protection requirements identified by Franklin for operating
system resources, application resources and End User data;
3. control the establishment, change, deactivation, reset and removal of
logon Ids and associated access authorities for IBM GS employees;
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4. provide Franklin with periodic reporting on logical access control
services and privileged user authorities, as set forth in the
Procedures Manual;
5. capture and maintain audit records for a mutually agreed retention
period, and provide record retention reports to the Franklin Project
Executive upon reasonable request;
6. promptly inform Franklin of any security issues as IBM becomes aware
and recommend possible remedial action;
7. schedule and notify Franklin through the change management process of
security or integrity software fixes that must be applied to the
systems for which IBM has security responsibility;
8. provide and support encryption products (i.e., hardware and/or
software) as defined in the Information Security Controls Document;
9. maintain security for and distribution of encryption keys;
10. review, approve, and grant requests for privileged user authorities;
11. periodically review privileged user authorities and remove those for
which management authorization no longer exists;
12. control and be responsible for the security officer/security
administrator user profiles (i.e., OS/400 - QSECOFR and ROOT) on those
systems for which IBM has security responsibility;
13. provide Franklin's applications support personnel with access to
system functions required to support their applications;
14. perform periodic security health checks to validate:
(a) access control settings,
(b) authorized privileged users,
(c) operating system resource protection, and
(d) installation and operation of virus control programs on the
appropriate platforms; and
20. control addition, update and deletion of user definitions and
passwords.
▇. ▇▇▇▇▇▇▇▇ will:
1. provide physical and logical system access necessary for IBM to
provide the Services;
2. review and provide IBM with feedback on logical access controls and
provide IBM with designations of privileged user authorities;
3. control and administer End Users' id and password access to
applications;
4. provide IBM with information regarding the system logon IDs for
Franklin personnel (i.e., reverification) and regarding Franklin's
removal of individuals who no longer have a business need and/or are
no longer authorized by management to access the system;
5. promptly acknowledge receipt of security exposures notified to
Franklin by IBM and inform IBM of Franklin's acceptance or rejection
of IBM's recommended remedial action or other remedial action Franklin
implements;
6. take appropriate corrective action to remedy security violations
notified to Franklin by IBM;
7. define and implement the protection requirements for application
resources via the access control software;
8. define and implement the protection requirements for End User data via
the access control software;
9. establish the process criteria for resetting passwords and disclosing
such passwords to authorized personnel; and
10. implement and maintain security controls for those subsystems and
applications which do not use the access control software for their
security.
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15.0 BUSINESS RECOVERY SERVICES
During the Term, Franklin will receive Business Recovery Services ("BR
Services") from IBM's Business Continuity and Recovery Services unit. Those
Services are described in Schedule M.
16.0 OTHER SERVICES AND RESPONSIBILITIES
a. IBM will:
1. provide Franklin with technical and quality specifications for
supplies, if any, required by IBM to perform the services;
2. maintain contact with vendors providing data processing,
telecommunications and end user Services or products related to IBM's
provision of the Services in order for IBM to keep abreast of
technological product developments that may be of value to Franklin;
3. assist Franklin in the review of vendor proposals affecting IBM's
provision of the Services, including telecommunications and data
processing proposals, so as to facilitate existing and future systems
compatibility with changing industry standards.
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