Exhibit 1.01
OTCBB and OTC EQUITIES
REVOCATION OF DELEGATION
AND ASSET TRANSFER AND
SERVICES AGREEMENT
THIS OTCBB and OTC EQUITIES
TRANSFER AND SERVICES AGREEMENT ( Agreement ) is effective as of
October 1 st , 2005, (“Effective
Date”)(subject to Section 48 hereunder), by and between
National Association of Securities Dealers, Inc.
(“NASD”), a Delaware corporation having its principal
place of business located at 1735 K Street, N.W., Washington, D.C.
20006, and The Nasdaq Stock Market, Inc. (“Nasdaq”), a
Delaware corporation having its principal place of business located
at One Liberty Plaza, New York, New York, 10006. Nasdaq and NASD
may hereafter be referred to collectively as the
“Parties.”
RECITALS
WHEREAS, pursuant to the Plan Of Allocation and
Delegation Of Functions by NASD to Subsidiaries (“Delegation
Plan”), NASD previously delegated to Nasdaq the
responsibility of operating the Over The Counter Bulletin Board
(“OTCBB”) and Over The Counter Equities (“OTC
Equities”) businesses (collectively the
“Businesses” ); and
WHEREAS, upon execution of this Agreement, the Parties
will revoke the delegation of responsibility for operating the
Businesses under the Delegation Plan and transfer certain assets of
the Businesses as described in this Agreement; and
WHEREAS, the Parties intend for NASD to outsource to
Nasdaq the operation of the Businesses as they exist as of
September 30, 2004, was executed or as further modified by
Enhancements or mutual agreement of the parties, upon the terms set
forth in this Agreement and
WHEREAS , the Parties further intend to provide for the
ability of NASD or its designated agent to continue to operate the
Businesses after expiration or termination of any outsourcing
arrangements between the Parties related to the
Businesses.
NOW, THEREFORE,
the parties desire to set forth in
writing the terms and conditions of their understanding and
agreement of their respective responsibilities for the operation of
the Businesses and the provision of other, related
services.
TERMS AND
CONDITIONS
In consideration of the mutual
covenants and conditions set forth in this Agreement and other good
and valuable consideration, the sufficiency of which is hereby
acknowledged, the parties agree as follows:
Section 1.
Definitions. The
following initially capitalized words or phrases shall have the
meanings set forth below when used in this Agreement:
Section 1.a. Acceptance
Testing. “Acceptance Testing” shall mean a
series of tests to be conducted by NASD and Nasdaq or their agents
of changes to the OTC Systems, including without limitation,
Enhancements, new releases, modifications and Other Services agreed
to by the parties to be performed by Nasdaq to evaluate whether the
Enhancements, new releases, modifications and Other Services
satisfy the functional, operational, and performance requirements
set forth in the BRD or this Agreement. Acceptance Testing shall be
performed within the time frames set forth in the applicable
Project Plan as defined in the Statement of Procedures (
“SOP” ) attached hereto as Exhibit 1.a. A
description of Acceptance Testing is contained in the
SOP.
Section 1.b.
Build. A
“Build” shall mean a fully testable configuration of
components that provides defined functionality for one specific
portion of a computer application as mutually agreed upon by the
parties. Enhancements, modifications, releases and Other Services
as agreed by the parties will be developed through a series of
interrelated Builds.
Section 1.c. Business
Continuity Plan. The
“Business Continuity Plan” (“BCP”) is a
document, which identifies procedures relating to an emergency or
significant business disruption. Such procedures must be reasonably
designed to enable the NASD to meet its obligations to customers,
vendors, members or others and shall be developed in accordance
with SEC guidance on BCPs. The BCP must, at a minimum, address: (1)
data back-up and recovery (hard copy and electronic); (2) all
mission critical systems; (3) financial and operational
assessments; (4) alternate communications between employees, NASD,
customers, vendors, members, others and the Businesses; (5)
alternate communications among those employees of the Businesses
(both Nasdaq’s and NASD’s if applicable) necessary to
operate the BCP in accordance with the SEC guidance; (6) alternate
physical location of Businesses’ employees necessary to
operate the Businesses in accordance with the BCP; (7) regulatory
reporting; and (8) communications with regulators. A copy of the
current version of the BCP is attached hereto at Exhibit
1.c.
Section 1.d. Business
Requirements. The
term “Business Requirements” shall mean the defined
business purposes (including without limitation, functional,
performance and operational elements) that the development and
operation of the OTC Systems is meant to satisfy. A copy of the
current Business Requirements are contained in the Business
Requirements Documents (“ BRD ”) copies
of which are attached hereto as Exhibit 1.d.
Section 1.e. Business
Subsystems. “Business Subsystems” shall mean
those Systems, which are a subset of the OTC Systems, which relate
to operation of the Businesses and which do not relate to the
operation of other businesses or applications of Nasdaq. Business
Subsystems along with any derivatives thereof or modifications
thereto shall be owned by NASD.
Section 1.f. Change
Procedures. “Change Procedures” shall have the
meaning given to it in Exhibit 6.b.
Section 1.g. Combined OTC
Software. “Combined OTC Software” shall mean
the Software (object and source code) licensed or developed by
Nasdaq (or a contracted service provider) for functions related to
the Businesses and which satisfies functionality for other Nasdaq
businesses which is set forth in Exhibit 1.z., and which is also
included in the BRD. Combined OTC Software shall be owned by
Nasdaq.
Section 1.h. Commercially
Reasonable .
“Commercially Reasonable” shall mean that a party will
make such efforts as are reasonable in the light of the standards
of the industry and of the other party’s reasonable
expectations, provided, however, that meeting the standard
of commercially reasonable does not and will not require a party to
disregard its own interests. Meeting a standard of commercially
reasonable may require a party to incur minor losses for the other
party’s sake but in no event will it require the party to
imperil its own existence or to make a total effort to fulfill the
obligation irrespective of all other considerations.
Section 1.i. Confidential
Information. “Confidential Information” shall
have the meaning given to it in Section 18.
Section 1.j. Core
Services. “Core
Services” shall have the meaning given to it in Section
6.a.
Section 1.k. Cure
Period. “Cure
Period” shall have the meaning given to it in Section
15.a.
Section 1.l.
Data. “Data” shall mean information that
is collected, processed, distributed or stored by the OTC Systems
pursuant or related to the operation of the Businesses either now
or in the future including without limitation, all security and
archival procedures associated with the storage, communication and
protection of such information. Data shall also include databases
that are used solely to support the Businesses and are not shared
with other Nasdaq Systems. At the time of execution of this
Agreement the following are examples of Data:
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Businesses data
including trades, quotes and positions (this should include all
OTCBB data on a real-time as well as a T+1 basis)
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Businesses
billing data
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Businesses
company information
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OTCBB.com
ecommerce database
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Businesses
participant Data
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OTC Equities
trades (this should include all OTC Equities data on a real-time as
well as a T+1 basis)
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Section 1.m. Delegation
Plan. “Delegation Plan” shall have the
meaning set forth in the recitals of this Agreement. A copy of the
Delegation Plan as amended for the purposes of this transaction is
attached hereto at Exhibit 1.m.
Section 1.n. Development
Testing. “Development Testing” shall mean the
series of development tests conducted by Nasdaq as set forth in
detail in the SOP.
Section 1.o. Disaster Recovery
Plan. “Disaster
Recovery Plan” or “DRP” shall mean that plan of
contingency for the seamless failover of the operation of the
Businesses to an alternative site or step-by-step procedures to get
the Businesses up and operational at a backup site within a
designated time in the event of a failure of the OTC Systems or the
Business Subsystems. Currently the BCP attached at Exhibit 1.c.
contains the DRP.
Section 1.p. Due
Date. “Due
Date” shall have the meaning given to it in Section
12.a.
Section 1.q.
Enhancements. “Enhancements” shall mean any
improvement, enhancement, addition or modification to and of the
OTC Systems or any component(s) thereof, excluding those related
solely to the maintenance of the OTC Systems which do not affect
functionality.
Section 1.r. Fully
Operational. “Fully Operational” shall mean the
condition of the OTC Systems when performing all of their
designated functions as more fully set forth in this Agreement, the
TDD, OPM and the BRD and in accordance with the Minimum System
Performance and Minimum Operational Standards.
Section 1.s. Historical
Data. “Historical Data” shall mean
information that was collected, processed, distributed or stored by
or pursuant to the operation of the OTC Systems, or any predecessor
thereof, pursuant to the operation of the Businesses prior to the
Effective Date of this Agreement, including without limitation, all
databases, security and archival procedures associated with the
storage, communication, and protection of such information. At the
time of execution of this Agreement the following are examples of
Historical Data :
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Businesses data
including trades, quotes and positions (this should include all
OTCBB data on a T+1 basis)
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Businesses
company information
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•
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OTCBB.com
ecommerce database
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Businesses
participant Data
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Businesses
billing data
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OTC Equities
trades (this should include all OTC Equities data on a real-time as
well as a T+1 basis)
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Section 1.t. Independent OTC
Software. “Independent OTC Software” shall
mean the Software (object and source code) licensed by NASD or
developed by
Nasdaq or NASD (or their contracted service
provider) for functions related to the OTC System or in conjunction
with the OTC Systems as set out in the BRD, paid for by NASD, which
is not NASD OTC Software, Nasdaq OTC Software or Combined OTC
Software. All rights title and interest in and to the Independent
OTC Software along with any derivatives thereof and modifications
thereto shall belong to NASD. A listing of Independent OTC Software
is attached hereto at Exhibit 1.z.
Section 1.u. Minimum
Operational Standards. “Minimum Operational Standards”
shall mean the lowest level at which the OTC Systems can operate
and still be Fully Operational. The Minimum Operational Standards
shall be those operational standards which existed on September 30,
2004, and are set forth in further detail in the SOP.
Section 1.v. Minimum
Performance Standards. “Minimum Performance Standards”
shall mean the lowest level at which the Services can be performed
while ensuring that the OTC Systems remain Fully Operational. The
Minimum Performance Standards shall be those system performance
standards which existed on September 30, 2004, and are set forth in
further detail in the OPM.
Section 1.w. Nasdaq’s
OTCBB/OTC Equities Product Manager. “Nasdaq’s OTCBB/OTC Equities Product
Manager” shall mean the individual so designated by Nasdaq as
NASD’s primary point of contact for all technical/operational
questions and information requests related to Nasdaq’s
provision of services hereunder and to oversee that the operations
procedures are followed to ensure the accuracy of the Businesses
processing, in accordance with the SEC and NASD rules, guidelines
and best practices. Nasdaq shall notify NASD promptly following a
change to the identity of Nasdaq’s OTCBB/OTC Equities Product
Manager.
Section 1.x. Nasdaq
Systems. “Nasdaq Systems” shall mean all of
the applications that Nasdaq, or a Nasdaq affiliate, or any agent
on behalf of Nasdaq or any Nasdaq affiliate, operates in the
performance of Nasdaq’s business. For the purposes of
clarification, unless specifically set forth in the Change Order
document, Nasdaq Systems shall not include Business Subsystems or
Independent OTC Software. Nasdaq Systems and all derivatives
thereof and modifications thereto are owned by Nasdaq.
Section 1.y. Nasdaq OTC
Software. “Nasdaq OTC Software” shall mean the
Software (object and source code) other than NASD OTC Software and
Independent Software which is set forth in Exhibit 1.z and which is
licensed or developed by Nasdaq (or a contracted service provider),
is used to operate the Businesses, and has the functionality set
forth in the BRD. Nasdaq OTC Software and all derivatives thereof
and modifications thereto shall be owned by Nasdaq.
Section 1.z. NASD OTC
Software. “NASD
OTC Software” shall mean the Software (object and source
code) licensed by NASD or developed by Nasdaq or NASD (or their
contracted service provider) for functions solely related the
Businesses or Independent OTC Software and which are also included
in the BRD. NASD OTC Software and all derivatives thereof and
modifications thereto shall be owned by NASD. NASD OTC Software is
specifically set forth in Exhibit 1.z.
Section 1.aa. NASD’s
OTCBB/OTC Equities Product Manager. “NASD’s OTCBB/OTC Equities Product
Manager” shall mean the individual so designated by NASD as
Nasdaq’s primary point of contact for all
technical/operational questions and information requests related to
Nasdaq’s provision of services hereunder. NASD shall notify
Nasdaq promptly following a change to the identity of NASD’s
OTCBB/OTC Equities Product Manager.
Section 1.bb. NASD’s
OTCBB/OTC Equities Operations Manager. NASD’s OTCBB/OTC Equities Operations
Manager” shall mean the individual designated by NASD to set
up and direct the operations policies and procedures that support
the Businesses in accordance with the OPM, SEC and NASD rules,
guidelines and industry best practices.
Section 1.cc. OTCBB and OTC
Equities Business. “OTCBB and OTC Equities Business”
means all activities of or related to operating the business of the
OTCBB and the OTC Equities including without limitation, trade
reporting, comparison, quote collection and dissemination of
over-the-counter securities quoted on either the OTCBB or OTC
Equities (including Pink Sheets), and Technology and OTC Operations
Services related to or in support of trade reporting, comparison,
quote collection and dissemination services related to the trading
of over-the-counter securities as defined in Section
1.x.
Section 1.dd. OTCBB Eligible
Securities. “OTCBB Eligible Securities” shall
have the meaning given to it in NASD Rule 6530 as such rule may be
amended from time-to-time. A current copy of NASD Rule 6530 is
attached hereto at Exhibit 1.dd.
Section 1.ee. OTC Equity
Security . “OTC
Equity Security” shall have the meaning given to it in NASD
Rule 6610 as such rule may be amended from time-to-time. A current
copy of NASD 6610 is attached hereto at Exhibit 1.ee. The
definition of OTC Equity Security shall also include non-Nasdaq
securities as defined in NASD Rule 6710(c) to the extent such
securities are not included in the Nasdaq Stock Market nor traded
on any national securities exchange nor included in a Transaction
Reporting Plan pursuant to SEC Rule 240.11Aa3-1 or SEC Rule 242.601
and direct participation programs as defined in NASD Rule 6910(c)
that are subject to the provisions of the NASD Rule 6900
series.
Section 1.ff. OTC Operations
Services . “OTC
Operations Services” shall mean responsibilities for Listing
Qualification Services, User Services and Subscriber Services (as
such terms are described below), including without limitation, the
following as they relate to the Businesses:
(i) automated (A) handling of
quotations, transaction reports, and comparisons of transactions,
(B) trade reporting services described in the OTC Operations
Procedures Manual (“OPM”) attached hereto as Exhibit
1.ff., and (C) dissemination of trade and quote data;
(ii) collecting, processing,
consolidating, and providing to NASD Regulation, Inc. (or otherwise
as designated by NASD) the information requisite to operation of
the surveillance audit trail related to subsection (i)(A), as set
forth in the OPM;
(iii) OTC Data integrity functions
as set forth in the OPM;
(iv) services provided by Nasdaq
under this Agreement of or relating to the quoting requirements and
quoting of securities on the Businesses, including without
limitation, quoting requirements, actions to assure OTC Data
integrity, billing and customer support functions (“Listing
Qualification Services”). The Listing Qualification Services
that Nasdaq shall provide to NASD under this Agreement are set out
in the OPM;
(v) services provided by Nasdaq of
or relating to the facilitation of the use of the OTC Systems by
approved individuals and entities, including without limitation,
trading operations, MarketWatch, assistance with necessary
Interfaces, customer support and billing (“User
Services”). The User Services that Nasdaq shall provide to
NASD under this Agreement are set out in the OPM;
(vi) services provided by Nasdaq of
or relating to the facilitation of the use of the Data of the
Businesses, including without limitation, OTC Operations,
assistance with necessary Interfaces, billing, OTC data audits and
customer support (“Subscriber Services”). The
Subscriber Services that Nasdaq shall provide to NASD under this
Agreement are set out in the OPM; and
(vii) all other day to day
operational support as set forth in the OPM.
Section 1.gg. OTC
Systems. “OTC
Systems” shall mean the systems comprised of Nasdaq OTC
Software, NASD OTC Software, Combined OTC Software, Independent OTC
Software, and certain third party Software that have the
functionality as set forth in the most recent version of the BRD
and the TDD. The most current versions of the BRD and TDD are
attached hereto as Exhibits 1.d. and 1.rr. respectively.
Section 1.hh. Preventative
Maintenance. “Preventative Maintenance” shall
mean the resources required by Nasdaq to undertake activities
designed to forestall the OTC Systems not being Fully
Operational.
Section 1.ii. Regulatory
Fees. “Regulatory Fees” shall mean the
NASD fees associated with the regulation of OTCBB and OTC Equities
securities that accrued prior to the Effective Date.
Section 1.jj. Remedial
Maintenance .
“Remedial Maintenance” shall mean the resources
required by Nasdaq to keep the OTC Systems Fully Operational as
soon as commercially reasonable after a problem is detected and in
accordance with the Emergency Procedures attached hereto at Exhibit
13.a.
Section 1.kk. Revised
Operational Support Fee. “Revised Operational Support Fee”
shall have the meaning given to it in Section 10.c.
Section 1.ll.
Services. “Services” shall mean the Core
Services, Enhancements, Other Services, Transition Support and
additional services Nasdaq shall provide NASD in accordance with
Section 6 and as agreed to by the parties.
Section 1.mm. Significant
Business Interruption . “Significant Business
Interruption” shall be defined by way of example and without
limitation, data center outage, OTC Systems or Business Subsystems
component failure, network outage or degradation that makes the OTC
Systems or Business Subsystems unable to perform at or above the
Minimum Performance Standards, inability to perform Core Services
at or above the Minimum Performance Standards or inaccessibility of
support site to key support personnel of NASD or Nasdaq.
Section 1. nn.
Software. “Software” shall mean the object and
source code (excluding Nasdaq OTC Software and Combined OTC
Software which shall include the object code, only, with regard to
licensing of the same to NASD either during or following the Term
of this Agreement) versions of any applications programs, operating
system software, computer software languages, utilities, other
computer programs and Related Documentation, in whatever form or
media, including the tangible media upon which such applications
programs, operating systems software, computer software languages,
utilities, other computer programs and Related Documentation are
recorded or printed.
Section 1.oo.
Subsystem. A
“Subsystem” shall mean a computer system or systems
that are organized into significant functional elements that
comprise distinct performance and operation objectives. The OTC
Systems is made up of Subsystems including without limitation
Business Subsystems.
Section 1.pp. System
Testing. “System Testing” shall mean the
series of tests described in the SOP to determine whether all of
the portions of a completed software program work together to
satisfy its stated Business Requirements and Technical
Specifications as set out in the BRD.
Section 1.qq. Technological
Services. “Technological Services” shall mean
those services necessary to ensure that the OTC System and Business
Subsystems remain Fully Operational, including without limitation
project support, engineering and development services,
Telecommunication, Network Services, technical support inclusive of
system Interfaces, Preventive and Remedial Maintenance,
Enhancements, error correction and bug fixes, Acceptance Testing,
BRD updates, Development Testing, Performance Analysis, System
Testing, User Testing, capacity planning, Disaster Recovery, and
Business Continuity.
Section 1.rr. Technical Design
Document. “Technical Design Document” or
“TDD” is a detailed description of the Technical
Specifications which define the specific requirements each
component of the overall system must meet in order for the overall
business requirements of the system to be met, including, without
limitation, types of hardware or software, communications, systems
interfaces, data management and information flows within the
program, and the Minimum Performance Standards for each Subsystem.
The parties acknowledge that they have been provided with a copy of
the current version of the TDD entitled “Nasdaq Automated
Confirmation Transaction Design Specification” which was last
revised on July 18, 2005, prior to execution of this
Agreement.
Section 1.ss. Technical
Specifications .
“Technical Specifications” shall mean detailed
descriptions of the parts and configuration of each piece of a
computer system which comprise the OTC Systems and the Business
Subsystems including, without limitation, types of hardware or
software, communications, systems interfaces, data management and
information flows within the program. Technical Specifications
define the specific requirements each component must meet in order
for the overall Business Requirements of the system to be met.
Unless otherwise set forth herein, Technical Specifications shall
be maintained by Nasdaq and shall be maintained and updated to
reflect the then current Business Requirements contained in the
BRD.
Section 1.tt.
Term. Absent any
qualification to the contrary herein, “Term” shall mean
the Initial Term, plus any Renewal Term plus any Transition Period.
“Initial Term” and “Renewal Term” shall
have the meanings given to them in Section 14.
Section 1.uu. Transition
Period. “Transition Period” shall have the
meaning given to it in Section 7.
Section 1.vv. Transition
Support. “Transition Support” shall consist
of the provision of Core Services, Other Services and Enhancements
in accordance with this Agreement.
Section 1.ww.
Users. “Users” shall mean NASD,
Businesses’ participants, NASD vendors and NASD subscribers
in connection with the Businesses and NASD internal
staff.
Section 1.xx.
Website. “Website” shall mean any domain
name, trade dress, trademark, service mark, hardware used to run
any website of the Businesses’ website, object code and
source code of any software that is used to run and maintain the
website (other than interfaces between Nasdaq Systems and the
website), all data which is used on the website or from which the
data on the website derived, and all reports and records generated
on, by or through the Businesses’ website.
Section 2 . Transfer and Sale
of Businesses
Section 2.a.i.
Transfer. The Parties
hereby revoke the portion of the Delegation Plan delegating
responsibility from NASD to Nasdaq for conducting the Businesses
and hereby transfer the assets of the Businesses to NASD, subject
to the terms and conditions of this Agreement.
Section 2.a.ii.
Sale. Nasdaq hereby
represents and warrants that it has the legal right and title to,
and does in fact transfer to NASD all rights, title and interest in
and to all of the assets of the Businesses, tangible or intangible,
including without limitation NASD OTC Software, that exists as of
the Effective Date, Websites, Data, Historical Data, the BRD, and
the Assets listed in Exhibit 2.a. In addition, Nasdaq transfers to
NASD all rights, title and interest in and to documentation
relating to and regarding the Businesses Subsystems (including
without limitation all internal and external management reports and
economic analysis reports), all revenue streams generated by the
Businesses, any business opportunities, or portions thereof,
related to the Businesses (regardless of whether those business
opportunities have been exercised), and all quid pro quo
consideration generated from the Businesses and goodwill associated
with each asset and existing in the Business and any residual value
of the Businesses not otherwise addressed in this Agreement, in
such percentage as the foregoing are attributable to the
Businesses. Further, in the event the SEC determines that markets
can own symbols assigned to companies, as between NASD and Nasdaq,
NASD will own any symbols assigned to companies that trade in the
over-the-counter markets and are not listed on The Nasdaq Stock
Market or an exchange. All assets described in this section shall
collectively be referred to as the “Businesses’
Assets”. Exhibit 2.a. list specifically enumerated Business
Assets transferred pursuant to this Agreement. In the event the
parties discover additional assets that should have been considered
to be the Businesses’ Assets but are not listed in this
Agreement or Exhibit 2.a., the parties shall reform Exhibit 2.a. to
reflect the transfer and sale of such additional asset(s) under
this Agreement. Nasdaq will assign to NASD all third party
agreements necessary to effectuate the purposes of this Section
2.a. ii. including without limitation agreements related to the
operation of the Websites to the extent each relevant vendor
consents to such assignment. In addition, to the extent that the
Businesses have ownership rights in any names, trademarks, trade
names, trade dress, service marks, domain names or copyrights
(other than copyrights in source or object code) that relate solely
to the Businesses and do not contain a word, phrase, design or mark
that is used by Nasdaq in any other context in an ordinary
non-source identifying capacity, Nasdaq hereby transfers to NASD
such assets AS IS with no warranty of any kind. By way of example
and not limitation, in the event there were to be a mark that was
identified as “Nasdaq OTCBB”, Nasdaq would retain use
of the trademark “Nasdaq”; NASD would retain use of the
term “OTCBB”; and neither party would be permited to
use the mark “Nasdaq OTCBB” without the other’s
permission. In the event the parties cannot reach agreement as to
whether additional assets are Businesses’ Assets, they will
use the Dispute Resolution procedures set out in Section 30 herein
to so determine.
Section 2.a.iii. Assignment of
Agreements. Nasdaq
and NASD shall use commercially reasonable efforts to cooperate
with each other either to assign specified portions of
Nasdaq’s Workstation II Agreements as well as their
Distributor Agreements, or to give NASD third party beneficiary
rights under those agreements. In the event the parties agree that
Nasdaq will assign portions of the agreements to NASD and a claim
arises directly under the portion of the agreement which was
assigned by Nasdaq under this Section 2.a.iii. and a competent
legal authority with jurisdiction over the matter determines that
Nasdaq can no longer enforce its rights under the portion of the
agreement that was assigned to NASD, NASD will, as part of the
assignments, agree to indemnify Nasdaq up to and to the extent of
protection that Nasdaq would have had if a portion of the portion
of the agreement had not been assigned to NASD.
Section 2.b.
Upon execution of this Agreement,
all right, title and interest in and to the intellectual property
listed in Exhibit 2.a. will be transferred by Nasdaq to NASD.
Nasdaq agrees to use commercially reasonable efforts to give NASD
and any persons designated by NASD any assistance reasonably
required in order to perfect any of the intellectual property
rights assigned within five (5) business days following a request
by NASD.
Section 2.c. Consideration for
Transfer of Businesses. The parties hereto acknowledge and agree that
NASD’s agreement to outsource the operation of the Business
to Nasdaq, in accordance with this Agreement, the waiver of
Regulatory Fees from NASD to Nasdaq, the receipt and sufficiency of
which is acknowledged by Nasdaq, as well as NASD’s assumption
of the responsibility for the operation of the Businesses shall
serve as adequate and fair consideration for the transfer of the
Businesses’ Assets. As further consideration for the transfer
of certain assets in the Businesses from Nasdaq to NASD, NASD
agrees that it will waive any fee incurred by Nasdaq for the
regulation of the Businesses but not billed prior to the Effective
Date.
Section 3. Protocols and
Interface Use; Symbol Assignment Procedures; License to use NASD
OTC Enhancements and Historical Data.
3.a. Protocols and Interface
Use.
3.a.i.
During the Term of this Agreement,
Nasdaq shall provide protocols and interfaces and related services
(collectively “Interfaces”) necessary for operating the
Businesses directly to authorized users of the Businesses
(“User or Users”) on terms and conditions determined
solely and exclusively by Nasdaq, however, in no event shall Nasdaq
charge Users more for these Interfaces than it charges its own
customers for the same or similar Interfaces. A current listing of
the Interfaces is attached hereto at Exhibit 3.a. Exhibit 3.a.
shall be updated as new Interfaces are developed and implemented.
Fees for the Interfaces shall be determined solely and exclusively
by Nasdaq. All revenue generated from the provision of Interfaces
to Users by Nasdaq shall belong to Nasdaq. Nasdaq reserves the
right to terminate access to the Interfaces to Users who fail to
pay any of the fees owed for the provision of Interfaces to the
Businesses to Nasdaq. Ten (10) business days prior to withdrawing
access to the
Interfaces from a User, Nasdaq shall provide
NASD with written notice of its intent to withdraw access to the
Interfaces. If such User, or NASD, pays Nasdaq all amounts due on
User’s account, including without limitation all amounts that
accrue during the ten day notice period and all amounts relating to
the provision of Interfaces for the Businesses, Nasdaq shall not
withdraw access to the Interfaces from said User. NASD assumes no
liability for the quality or implementation of the Interfaces and
Nasdaq hereby agrees to indemnify, defend and hold NASD harmless
from third party claims based upon the quality or implementation of
the Interfaces.
3.a.ii.
Nasdaq hereby grants a perpetual,
royalty-free, world-wide license and right to use, during the Term,
all of the formats of the protocols and the Interfaces listed on
Exhibit 3.b. to support the Businesses (“ Protocol
License ”). Nasdaq hereby grants to NASD a perpetual,
royalty-free, world-wide license and right to NASD to use and
sublicense the formats of the Interfaces and Protocols listed on
Exhibit 3.a. and 3.b. at the expiration or termination of the Term,
in support of the Businesses. Exhibit 3.b. is a current list of the
Protocol Licenses. Exhibit 3.b. shall be amended and updated from
time to time by Nasdaq with nine (9) months’ notice to NASD
to reflect the retirement and/or substitution of any protocol(s) or
Interface(s). All changes to Interfaces or Protocols shall follow
the Enhancement process set out in Section 6. Nasdaq shall support
all Protocols during the Term. In the event NASD agrees to any
changes proposed by Nasdaq to any of the Protocols or Interfaces
listed in Exhibit 3.a. or 3.b., Nasdaq shall pay all costs incurred
by a user associated with any user acceptance testing necessary as
a result of the change..
3.b. Symbol Assignment
Procedures. The
Parties shall coordinate the assignment of symbols to securities,
counterparties and participants to ensure uniqueness in the market
place and to avoid conflicts that could effect the operations of
the Nasdaq System or the OTC Systems and subsystems. Nasdaq shall
not issue a symbol in either the Businesses or any other business
area in which Nasdaq operates which conflicts with symbols already
issued in the Businesses or with any symbol which has previously
been issued by NASD. In the event a Nasdaq listed entity wishes to
use a symbol which is already in use by the Businesses or which has
already been issued by NASD, Nasdaq and NASD will work together to
reach a solution.
3.c.
NASD hereby grants to Nasdaq a
royalty-free, world-wide license and right to use, during the Term,
the NASD OTC Software, Data, Historical Data, the BRD, and any and
all other of the Businesses’ Assets for use in meeting
Nasdaq’s obligations under this Agreement.
3.d.
Nasdaq hereby grants to NASD a
perpetual, royalty-free, world-wide license and right to use, and
sublicense the TDD and OPM for use in the Businesses.
Section 4
. Collection and Pass Through
of Revenue. Commencing on the Effective Date and continuing
until such time as NASD collects such revenue directly, on the
first of each month during the Term, Nasdaq will pass through to
NASD the revenue streams collected for the prior month as described
on Exhibit 4 that are generated by the
Businesses and actually collected by Nasdaq
subsequent to the Effective Date (“NASD Revenues”).
NASD Revenues includes OTCBB.com historical report fees, OTCBB
position fees, OTC/OTCBB ACT fees (Compare/Accept fees, T+1/T+N
transactions Locked-in/QSR fees, Internalized Trade Reporting fees,
Cancel/Correct fees, Autolock Automated Give Up (AGU) fees), and
OTCBB/OTC data feed fees (6.25% of Level One Data Feed fees).
Nasdaq shall use commercially reasonable efforts to collect such
pass through revenue, but in any event, not less than the level of
effort that it uses to collect its own revenue. Nasdaq will not be
responsible to NASD for any revenue that is generated by the
Businesses but not actually collected by Nasdaq, unless such
failure to collect and/or pass through is a result of the
negligence of Nasdaq. In the event Nasdaq fails to collect any
revenue that is generated by the Businesses as a result of
Nasdaq’s negligence, the Core Services Fees shall be offset
by such amount which was not collected as a result of
Nasdaq’s negligence. The parties agree that in the event that
Nasdaq receives a preference claim in bankruptcy that seeks return
of any revenue passed through to NASD hereunder, Nasdaq will have
sole discretion as to any settlement or defense of such claim. Upon
final resolution of such claim by settlement or court order, NASD
will promptly refund to Nasdaq an amount equal to the amount of
such settlement multiplied by the percentage of revenue passed
through to NASD under which such claim is based (i.e. Nasdaq
settles a preference claim for $100.00 of which they had passed
through revenue of $15. NASD’s obligation is to pay $15 to
Nasdaq).
4.a. Monthly
Accounting. Commencing on the first of each month starting
the month after the Effective Date, and continuing through the
Term, Nasdaq shall send NASD all NASD Revenues collected during the
previous month along with a monthly accounting reflecting NASD
Revenues (both collected and uncollected) for that month (
Revenue Report ). If NASD disputes any of the NASD
Revenues or Nasdaq’s collection thereof, it will notify
Nasdaq of its dispute within ten (10) business days of its receipt
of the NASD Revenues. Nasdaq’s OTCBB/OTC Equities Product
Manager(s) and NASD’s OTCBB/OTC Equities Product Manager will
then attempt to resolve such discrepancies. If the parties are
unable to resolve any such dispute within twenty (20) business days
of NASD’s receipt of such NASD Revenues, then the parties
will then resolve any remaining disagreements through the
procedures set forth in Section 30 herein. All NASD Revenues may be
paid by electronic funds transfer
4.b. Late Fees.
Nasdaq shall pay a late fee charge
equal to one half of one percent (1/2%) per month from the date
such revenues were due on any NASD Revenues collected or which
should have been collected but were not due to Nasdaq’s
negligence, and which were not remitted to NASD (i) in accordance
with Section 12 or (ii) following the resolution of the dispute
pursuant to the procedures set forth in Section 30, as
appropriate.
4.c. Billing Tax
System. Nasdaq will
maintain the billing tax application for NASD. All tax decisions
will be made by NASD, communicated in writing to Nasdaq, and
entered into the billing tax system by Nasdaq. Nasdaq will prepare
and send to NASD, and NASD will review a monthly report showing
billing tax information. NASD will have five (5) business days
following transmission of the report to notify
Nasdaq of any errors. If NASD does not respond
within such 5 days the report shall be deemed to be accurate as is.
Nasdaq shall not have any liability for a data entry error that was
shown on the report and which was not brought to Nasdaq’s
attention by NASD. Nasdaq will remain liable for failures to
correct data entry errors brought to their attention by NASD and
failures to follow NASD’s instructions with respect to the
correction of initial data entry errors.
Section 5. Sharing of
Revenue. If, during
the Initial Term, NASD implements fees which relate solely to
issuers, trade reporting, comparison, quote collection and
dissemination of OTCBB Eligible Securities and OTC Equity
Securities and which are not related to adjustments
or modifications to pre-existing fees (“New Fees”),
NASD will remit to Nasdaq (if NASD collects fees directly) or
Nasdaq shall withhold from passing through to NASD (if Nasdaq
collects fees on NASD’s behalf) fifteen percent (15%) of the
incremental increase in gross revenues driven solely by the new
fees during the Initial Term. Nasdaq shall report such additional
fees and provide an accounting of any such additional fees in a
separate section on the Revenue Report in accordance with Section 4
supra . In the event NASD decides to implement New Fees and
needs Nasdaq to bill for such New Fees, the parties will handle the
matter as an Enhancement and as part of the Change Control
Procedures.
Section 6. Service
Levels. During the
Term of this Agreement, Nasdaq shall provide Services to the
Businesses via the OTC Systems with a service level that is not
less than the service level that it provides to its critical
systems such as ACT. In the event NASD believes that Nasdaq fails
to meet the standards set out in this Section for the provision of
Services, including without limitation Core Services, NASD shall
withhold payment of the Core Services fee and the parties shall
resort to Dispute Resolution to determine whether Nasdaq is in fact
failing to meet the standards. During such time NASD shall pay the
Core Services fee to a third party escrow agent agreed to by the
parties. If Dispute Resolution results in an agreement or
determination that Nasdaq is not failing to meet the standards the
third party escrow service shall remit to Nasdaq the Core Services
fees. If Dispute Resolution results in a determination that Nasdaq
is in fact failing to meet the standards, NASD shall not be liable
for the Core Services fee in the month (or any portion thereof) in
which Nasdaq did not meet it Service Levels. Nasdaq warrants and
represents that the services performed by Nasdaq (and, if relevant,
its subcontractors) for NASD will be of good and workman-like
quality, but in no event less than generally accepted industry
standards good and workman-like quality. Nasdaq shall perform the
Services set forth in this Section 6 upon payment and other terms
set forth in this Agreement:
6.a. Core
Services. The
following services under this Section 6.a. shall be defined for the
purposes of this Agreement as “Core
Services”:
6.a.i.
Nasdaq shall provide to NASD and
NASD shall accept services and program support described herein and
as further set out in the SOP, the OPM, the Change Procedures and
the Emergency Procedures. Such services and program support shall
be provided via the OTC Systems and shall include adequate
resources, including
personnel, to support all aspects of the
Businesses, including but not limited to Technological Services,
OTC Operations Services, Production, Disaster Recovery, Business
Continuity, Remedial Maintenance, Preventative Maintenance, website
maintenance and operation, error correction, bug fixes, support as
necessary for Interfaces, Subsystems, business continuity, disaster
recovery and capacity planning as more fully set forth in this
Agreement and the Exhibits; project support; technical support;
engineering and development services and other services as agreed
to by the parties to the OTC Systems in order to ensure that the
Businesses operate in accordance with this Agreement, the OPM and
the BRD, up to the Minimum Service Levels agreed to by the parties
in the SOP, but in any event, not less than the service level that
Nasdaq provides to its critical systems such as ACT and the quoting
functionality of SuperMontage and in accordance with the Emergency
Procedures.
6.a.ii.
Preparation and Delivery of
Documents. Nasdaq warrants and represents as of the date of
execution of this Agreement, the documents that it is obligated to
provide to NASD prior to execution of this Agreement including
without limitation, the BRD, DRP, BCP and the OPM, are up-to-date,
complete and accurate statements of the Business Rules,
Technological Services and OTC Operations Services that it
currently performs in furtherance of the Businesses.
6.a.ii.A. Business
Requirements Document . Nasdaq has prepared and delivered to NASD a
Business Requirements Document (“ BRD ”)
for NASD’s acceptance for each of the Businesses, broken up
in to two sections (i) Business Requirements and (ii) Technical
Specifications. NASD has reviewed the BRD for the purposes of
ensuring that it captures all of the operational and technical
elements of the OTC Systems and the Business Subsystems and
contains the necessary information as set out herein. NASD hereby
approves the BRD. Nasdaq shall update the BRD and Technical Design
Document during the Term as changes are made to the Businesses and
prior to any work beginning on any Enhancement.
6.a.ii.A.1.
In the event NASD elects to take
over updating all or any portion of the BRD, Nasdaq shall provide
appropriate training, not to exceed 3 days, consulting, data,
procedures and documentation for the BRD to NASD or its designated
agent in order to allow NASD or its designated agent to take over
updating all or any portion of the BRD. Any work beyond the three
days will be completed at a time and materials basis at the rate of
the Nasdaq group doing the work. In the event NASD does take over
updating all or any portion of the BRD, the parties shall meet and
negotiate in a commercially reasonable fashion any reduction in the
budget for Core Services. In the event the Parties cannot agree to
a reduction or an amount for a reduction, the Parties shall resort
to the Dispute Resolution procedures.
6.a.ii.B. Business Continuity
Plan. (a) Nasdaq must
create and maintain a written business continuity plan identifying
procedures relating to an emergency or significant business
disruption. Such procedures must be reasonably designed to enable
Nasdaq to provide the Services at or above the Minimum Performance
Standards under and in accordance with this Agreement and provide
for NASD to meet its obligation to operate the
Businesses.
(b) During such time as Services are
outsourced to Nasdaq, Nasdaq must update its plan with respect to
such outsourced Services in the event of any material change to the
Nasdaq’s operations, structure, business or location with
respect to the delivery of Services under this Agreement. Nasdaq
must conduct an annual review of its business continuity plan to
determine whether any modifications are necessary in light of
changes to its operations, structure, business, or
location.
(c) If Nasdaq relies on another
entity for any one of the specifically enumerated elements of their
BCP, or any mission critical system, Nasdaq’s business
continuity plan must address this relationship.
(d) Nasdaq will provide NASD current
business continuity plans (BCP) and procedures for the Business
Subsystems and the OTC Systems which shall be agreed on by the
parties using commercially reasonable discretion on or before the
date of execution of this Agreement. NASD will make any necessary
modifications and return the updated BCP to Nasdaq who shall
incorporate NASD’s changes. This procedure shall continue
until such time as the parties have, using commercially reasonable
discretion, agreed on the BCP. Nasdaq must designate a member of
senior management to approve the plan and he or she shall be
responsible for conducting the required annual review. The member
of senior management must also be an officer.
(e) For purposes of this Section,
the following terms shall have the meanings specified
below:
(1) “Mission critical
system” means any system that is necessary to ensure that the
Services provided by Nasdaq under this Agreement meet or exceed the
Minimum Performance Standards.
(2) “Financial and operational
assessment” means a set of written procedures that allows
Nasdaq to identify changes in its operational, financial, and
credit risk exposures.
6.a.ii.C. Disaster Recovery
Plan. Nasdaq will
provide NASD with a current copy of the DRP and procedures that
support the OTC Systems and the Business Subsystems which shall be
agreed to by the parties in the exercise of their mutually
commercially reasonable discretion on or before the date of
execution of this Agreement. NASD will review the DRP to ensure
that it satisfies current SEC criteria and NASD’s internal
audit requirements for the Businesses. NASD will make any necessary
modifications and return the updated Disaster Recovery information
to NASDAQ for review. In the event of a significant business
disruption, the updated disaster recovery plan will be in effect.
If the NASD updates require any operation or system enhancements,
they will be done in accordance with the terms and conditions of
this agreement. NASD shall not be liable for the cost of any Core
Services unless and until such time as the DRP has been delivered
by Nasdaq and accepted by NASD.
6.a.iii.
Preparation and Delivery of
OTC Operations Procedures Manual. Prior to the date of
execution of this Agreement, Nasdaq shall prepare and deliver to
NASD an OTC Operations Procedures Manual which shall contain the
procedures and policies necessary to perform the OTCBB Operations
Services for NASD’s acceptance. NASD shall review each
department’s operational procedures for the purposes of
ensuring that it accurately reflects the daily operations performed
by each department including but not limited to maintaining
appropriate checks and balances at a service level that is not less
than the service level that it provides to its critical operations
such as ACT and the quoting functionality of SuperMontage. In the
event NASD identifies deficiencies in the OPM during its initial
review or thereafter, Nasdaq shall use commercially reasonable
efforts to remedy such deficiency at no additional cost to NASD.
Once approved by NASD, Nasdaq shall update the OPM during the Term
as changes are made to the Businesses or at the direction of
NASD’s Operations Manager. NASD shall not be liable for the
cost of any Core Services unless and until such time as the OPM has
been delivered by Nasdaq and accepted by NASD.
6.a.iv. System
Operation. Nasdaq
will perform all Services and provide all infrastructures necessary
to ensure that the OTC Systems will remain Fully Operational during
the Term of this Agreement. The infrastructure requirement shall
include, but is not limited to, sufficient bandwidth capacity to
accommodate a full load from each of the Businesses simultaneously
and in conjunction with other Nasdaq applications which share
bandwidth with the Businesses’ full load.
6.a.v. System
Infrastructure. Nasdaq will maintain the infrastructure of the
OTC Systems at or above a level necessary to accommodate the
Businesses in accordance with the operating levels and Minimum
Performance Standards set out in this Agreement during the Term (
Infrastructure ). Infrastructure may include, but is
not limited to: (i) the server platform(s) upon which the OTC
Systems are launched and operated; (ii) adequate facilities for
equipment and staff under normal operating and disaster recovery
conditions; (iii) utilities (including backup contingencies); (iv)
Network Support; and (v) auxiliary supplies and services necessary
to sustain the daily operation of the OTC Systems and any
Enhancements thereto, including, without limitation, power
generation equipment, batteries, cooling facilities and related
items.
6.a.vi. Software
Maintenance. Nasdaq
will furnish all Remedial and Preventative Maintenance services as
may be reasonably required to satisfy its obligations hereunder or
requested by NASD hereunder and necessary to keep any and all
software comprising or relating the OTC Systems or any subsequent
Releases, in Fully Operational condition during the Term of this
Agreement. Such maintenance shall include, but is not limited to:
(i) configuration; capacity management; reliability and performance
tuning; (ii) elimination of system anomalies; reasonable changes to
accommodate alterations made in third-party operation systems,
applications, infrastructure, networks and utilities; (iii)
reasonable changes to accommodate alterations in processing volume
requirements; (iv) reasonable revisions required to accommodate
changing NASD Business Requirements. The parties in good faith will
determine if the changes made under sections (iii) and (iv) must be
done on a time and material basis and the increase, if any, in the
cost of Core Services.
6.b.
Enhancements . Nasdaq
may, from time to time, create and install Enhancements to the OTC
Systems. Nasdaq shall follow the procedures set out in Exhibit 6.b.
Section A. when making Enhancements to the OTC Systems.
Additionally, NASD may request Enhancements to the OTC Systems in
accordance with the process set forth in Exhibit 6.b. (“
Change Procedures ”). Subject to the terms of
this Agreement, Nasdaq will perform all Enhancements requested by
NASD. NASD shall set the priority for Enhancements. In the absence
of NASD setting any such priority, Enhancements shall be done in
the following order, SEC Enhancements, NASD Rules Driven
Enhancements, and Industry Enhancements. To the extent commercially
reasonable, Nasdaq will create Enhancements to the OTC Systems
using an open architecture approach. Enhancements funded in full or
in part by NASD shall be done on a time and materials basis in
accordance with the rates and manner as set out in Section 10.b.
Additionally, if NASD requests an Enhancement, Nasdaq shall include
the cost for resources and the cost of materials to support the
Enhancement and net change in Core Services fees in any estimate
that is submitted to NASD under the Change Procedures. If such
Change Order is accepted by NASD, any additional cost for resources
and cost of materials to support the Enhancement on an ongoing
basis shall be added to the annual fee for Core Services. In the
event NASD accepts the Change Order, Nasdaq shall amend the BRD
(unless the NASD has chosen to do the requirements work) and TDD to
reflect the Enhancement prior to commencing work on the
Enhancement.
6.b.i. Funding and Noncompete
Designation. Any
Enhancement which is fully funded by NASD other than an Enhancement
to NASD OTC Software or Independent OTC Software which shall be
owned by NASD and which shall not be used in any manner by Nasdaq
unless the parties agree in a separate writing to a license
agreement, shall be considered to be a “NASD
Enhancement” for the purposes of Section 17
(“Noncompete”). Any Enhancement partially funded by
NASD, other than an Enhancement to NASD OTC Software or Independent
OTC Software which shall be owned by NASD and which shall not be
used in any manner by Nasdaq unless the parties agree in a separate
writing to a license agreement, shall be considered a
“Partially Funded Enhancement” for the purposes of
Section 17 (“Noncompete”). Any Enhancement fully funded
by Nasdaq shall be considered a “Nasdaq Enhancement”
shall not be subject to the restrictions of Section 17
(“Noncompete”). The parties shall use commercially
reasonable efforts to determine the allocation of funding of
Enhancements prior to any work being started on the Enhancement. In
the event the Parties do not agree to the allocation of funding for
an Enhancement the parties agree to use the Dispute Resolution
procedures set out in Section 30 herein to determine the allocation
of costs. Nasdaq may commence work on any such Enhancement and the
allocation of costs shall be as determined under the Dispute
Resolution Process. Other than with respect to Businesses
Subsystems and Independent OTC Software, NASD shall have a
perpetual, world-wide, royalty free, irrevocable right and license
to use in support of the Businesses, the business rules and
requirements behind any Enhancement which was initiated or fully
funded by NASD. In the event Nasdaq elects to use an NASD
Enhancement, Nasdaq shall reimburse to NASD fifty percent (50%) of
the total development cost associated with such
Enhancement.
6.b.ii. Nasdaq Initiated
Enhancements. If
Nasdaq initiates an Enhancement that will or could be used in the
operation of the Businesses, it will provide NASD with a detailed
description of the Enhancement, including the Business
Requirements, net effect on Core Services fees and Technical
Specifications. Following such notice, NASD shall notify Nasdaq in
writing whether it accepts or rejects such Enhancement. In the
event NASD rejects any Nasdaq Initiated Enhancement, NASD shall not
be liable for the cost of development of such Enhancement or any
incremental cost caused by such Enhancement and Nasdaq shall
continue to operate the Businesses as they existed prior to the
Enhancement at no additional charge to NASD. In the event NASD
accepts such Enhancement, the Parties will negotiate in good faith
with regard to funding and timing of the Enhancements. Factors
which will be taken into consideration with respect to funding
decisions include but are not limited to: (A) the primary purpose
for such Enhancement; (B) the percentage of use attributable to the
Businesses given the nature and extent of Nasdaq applications using
or which could use the Enhancement; (C) the nature of the
Enhancement; and (D) whether the Businesses could operate in
substantially the same manner and with substantially the same level
of effectiveness without the Enhancement. In the event NASD rejects
any Nasdaq Initiated Enhancement, NASD shall not be liable for the
cost of development of such Enhancement or any incremental cost
caused by such Enhancement. All Enhancements to the OTC Systems
must be coordinated with NASD thirty (30) days prior to the date
upon which work is scheduled to begin. All Enhancements to the OTC
Systems must be fully tested in accordance with this Agreement.
NASD must approve and accept any Enhancement which causes a User to
make a technical or operational change prior to the date upon which
work is begun on such Enhancements. Such approval shall not be
unreasonably withheld or delayed.
6.b.iii. NASD Initiated
Enhancements. If NASD
proposes Enhancements to the OTC Systems which relate to more than
the Businesses Subsystems, excluding Independent Software, the
parties shall use commercially reasonable efforts to determine the
funding of such Enhancements. Work shall not be started on an NASD
Initiated Enhancement until such time as the parties have agreed on
funding. The Parties will use the Change Procedures set out in
Exhibit 6.b. Time frames for delivery of these Enhancements shall
be in a commercially reasonable time frame as agreed to by the
parties. If such an Enhancement is fully funded by NASD it shall be
a “NASD Enhancement” for purposes of Section 17 (
Noncompete ).
6.b.iii.A. NASD Rules
Driven/Required Enhancements. If NASD proposes Enhancements that are required
as a result of rule changes, Nasdaq shall use commercially
reasonable efforts to develop and support such Enhancements within
the timeframes established therefore as mutually agreed to by the
Parties in the exercise of their commercially reasonable
discretion. Time frames for delivery of these Enhancements shall be
as set forth in the Rule upon which the Enhancement is based. A
NASD Rules Driven Enhancement shall be fully funded by NASD and, to
the extent such
Enhancements are not Independent OTC Software
and fall outside of the Business Subsystems, such Enhancements
shall be a “NASD Enhancement” for purposes of Section
17 ( Noncompete ). In the event Nasdaq elects to use
Enhancements which were fully funded by NASD, Nasdaq shall
reimburse to NASD fifty percent (50%) of the total development cost
associated with such Enhancement prior to implementing such
Enhancement (either in development, testing or production).
Additionally, at such time as Nasdaq implements such Enhancement
the parties shall negotiate in good faith with regard to any
reduction in Core Services fees associated with such Enhancement.
With respect to Enhancements which are owned by NASD and that NASD
agr
