MASTER SERVICES AGREEMENT

Exhibit 10.71

MASTER SERVICES AGREEMENT

This MASTER SERVICES AGREEMENT (this “ Agreement ”), is made and effective as of October 22, 2008 (the “ Effective Date ”), by and between Amgen Inc., a Delaware corporation having a place of business at One Amgen Center Drive, Thousand Oaks, CA 91320 (“ Company ”), and International Business Machines Corporation, a New York corporation having a place of business at One New Orchard Road, Armonk, NY 10504 (“ Supplier ”) (each a “ Party ”, and collectively, the “ Parties ”).

RECITALS

WHEREAS, Company is engaged in the business of the research, development and commercialization of human therapeutics;

WHEREAS, Supplier is in the business of, amongst other things, performing outsourcing services with respect to management of information technology systems; and

WHEREAS, pursuant to the terms of this Agreement, Company intends to establish a framework within which Company may engage Supplier to provide services to Company from time to time, which framework shall govern the relationship between the Parties in respect of such services.

NOW THEREFORE, in consideration of the promises and mutual covenants set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

ARTICLE 1

DEFINITIONS

Section 1.1 Definitions .

Abandonment . “ Abandonment ” means the [ * ] by Supplier to (i) provide or perform [ * ], or (ii) comply with [ * ] of Supplier hereunder, in each case, [ * ].

Accept or Acceptance . “ Accept ” or “ Acceptance ” means to accept a Deliverable in accordance with the acceptance criteria and acceptance testing procedures applicable to such Deliverable.

Affected Contractors . “ Affected Contractors ” means those individuals or entities who are subject to Company Contractor Agreements and who are identified as “affected contractors” in Exhibit 19 (Affected Personnel).

Affected Employees . “ Affected Employees ” means those Company employees identified as “affected employees” in Exhibit 19 (Affected Personnel).

Affected Personnel . “ Affected Personnel ” means, collectively, Affected Contractors and Affected Employees.

Affiliate . “ Affiliate ” means any entity Controlling, Controlled by or under common Control with a Party, but only for so long as such Control continues, where “Control” means: (i) the ownership of at least fifty percent (50%) of the equity or beneficial interest of such entity, or the right to vote for or appoint a majority of the board of directors or other governing body of such entity; or (ii) the power to directly or indirectly direct or cause the direction of the management and policies of such entity by any means whatsoever.

Applicable Laws . “ Applicable Laws ” means Company Laws with respect to Company, and Supplier Laws and Legal Compliance Obligations with respect to Supplier.

 

Note: Redacted portions have been marked with [*]. The redacted portions are subjects to a request for confidential treatment that has been submitted to the Securities and Exchange Commission.

ARD Countries . “ ARD Countries ” means those jurisdictions that have implemented ARD Laws and in which Company or one of its Affiliates employs Affected Employees.

ARD Laws . “ ARD Laws ” means (1) the European Community Council Directive (77/187/EEC) of February 14, 1977 as consolidated by Council Directive 2001/23/EC of March 12, 2001, in each case as amended from time to time, and legislation and Laws implementing such directives in any country in which a Company Service Location or a Supplier Service Location is located or where Transitioned Employees are employed; and (2) equivalent legislation and Laws dealing with the same subject matter as such directives in each of Turkey and Switzerland.

Assigned Contracts . “ Assigned Contracts ” means the third-party agreements that are assigned, in whole or in part, to Supplier and identified as “Assigned Contracts” in Exhibit 11 (Assigned and Managed Contracts).

Authorized User . “ Authorized User ” means any individual (e.g., an employee, contractor, subcontractor, agent or representative of Company) who is designated by Company to receive or use the Services.

Base Charges . “ Base Charges ” means the base Charges applicable to the Services or to a Project as further defined in Exhibit 1 (Definitions) or the applicable Order.

Charges . “ Charges ” means the costs and fees for Services as further defined in Exhibit 4 (Pricing).

cGMP . “ cGMP ” means (i) the applicable regulatory requirements, as amended from time to time, for current good manufacturing practices, including without limitation those promulgated by the Food and Drug Administration under the United States Federal Food, Drug and Cosmetic Act, 21 CFR § 210 et seq . or under the Public Health Service Act, Biological Products, 21 CFR §§ 600-610, the European Medicines Agency or Health Canada under the Food and Drugs Act (Canada), R.S. 1985, CF-27 and its associated regulations; (ii) any applicable guidance documents published by a Governmental Authority; and (iii) current industry practice consistent and in accordance therewith.

Company Competitor . “ Company Competitor ” means those companies identified in Exhibit 27 (Company Competitors).

Company Data . “ Company Data ” means all information entered in Software or Equipment by or on behalf of Company, including information relating to Company’s customers and vendors, and information derived from such information, including as stored in or processed through the Equipment or Software.

Company Group . “ Company Group ” means Company and its Affiliates who are receiving Services under this Agreement.

Company Laws . “ Company Laws ” means Laws to the extent applicable to the Services that are (i) identified by Company or Supplier as being applicable to Company and (ii) applicable to the collection, use, storage, or transfer of Company Data including without limitation the Laws set forth in Exhibit 20 (Company Laws) (as modified from time-to-time in accordance with Section 9.2 ).

Company Provided Equipment . “ Company Provided Equipment ” means Equipment owned or leased by Company.

Company Provided Materials . “ Company Provided Materials ” means Company Provided Equipment, Company Software, and all other materials provided by Company.

Company Service Location . “ Company Service Location ” means any facility or location to which Supplier shall provide the Services, including the facilities set forth in Exhibit 7 (Sites).

Company Software . “ Company Software ” means Software owned by Company.

 

Compliance Requirements . “ Compliance Requirements ” means the requirements of the Securities and Exchange Commission Act of 1934 and all amendments thereto, including the Sarbanes-Oxley Act of 2002, Regulation AB, and any similar, future SEC requirements, and any requirements and rules pertaining thereto established by Law, including requirements imposed by auditing standards or reporting requirements promulgated by the American Institute of Certified Public Accountants, the Public Company Accounting Oversight Board or the Securities and Exchange Commission.

Confidential Information . “ Confidential Information ” of a Party means all information, unless specifically identified by such Party as non-confidential, regardless of how communicated or stored, concerning the operations, affairs, products and businesses of such Party, the financial affairs of such Party, and the relations of such Party with its customers, employees and service providers, including without limitation, confidential or proprietary information, trade secrets, data, drafts, documents, communications, plans, know-how, formulas, improvements, designs, estimates, calculations, test results, specimens, schematics, drawings, tracings, studies, specifications, surveys, facilities, photographs, documentation, software, equipment, processes, programs, reports, orders, maps, models, agreements, ideas, methods, discoveries, inventions, patents, concepts, research, development, business and financial information, customer or client lists, account information, procedures, computer information and databases, business plans, budget forecasts, business arrangements, financial information and estimates, personnel data, and long-term plans and goals. “ Confidential Information ” of Company shall include (i) all information relating to the Services and Orders, including the terms and conditions of this Agreement, (ii) the specifications, designs, documents, correspondence, Software, documentation, data and other materials and work products produced by or for Supplier in the course of performing the Services, (iii) Deliverables and Company Data, and (iv) other Company information or data stored or otherwise or communicated, and obtained, received, transmitted, processed, stored, archived, maintained or derived by Supplier under this Agreement or in connection with the Services. “ Confidential Information ” of Supplier shall include (i) all information concerning the operations, affairs and businesses of Supplier, the financial affairs of Supplier, and the relations of Supplier with its other customers, employees and suppliers (including customer lists, customer (other than Company) information, account information, and consumer markets), and (ii) Software owned by Supplier and provided to Company by or through Supplier.

Control Objectives . “ Control Objectives ” means, collectively, as applicable to the Services and Systems (1) those control objectives included in Exhibit 24 (Compliance Requirements and Control Objectives), (2) additional control objectives established by Supplier (or Supplier Personnel) after the Effective Date that are relevant to the Services; and (3) those control objectives established by Company pursuant to Section 18.3(E) of this Agreement.

Core Software Deliverables . “ Core Software Deliverables ” means all Software Deliverables that are (i) specifically identified as Core Software Deliverables in an Order or (ii) designed to be used in Company’s core business of research, development, manufacturing, or commercialization of human therapeutics.

Critical Affected Personnel . “ Critical Affected Personnel ” means Affected Personnel who are identified as “critical affected personnel” in Exhibit 19 (Affected Personnel).

Direct Damages . “ Direct Damages ” means actual, direct damages incurred by the claiming entity directly and naturally resulting from or arising out of a breach of this Agreement. Direct Damages include, by way of example but without limitation, the following: (i) costs of [ * ]; (ii) costs of replacing [ * ]; (iii) [ * ] incurred by Company [ * ]; (iv) the costs incurred by Company to correct any [ * ], (v) the difference in the amounts to be [ * ], (vi) the [ * ], (vii)   [ * ]; and (viii) the costs and expenses incurred by Company to [ * ]. A Party shall not be precluded from establishing that a particular damage is a Direct Damage on the basis that (i)   [ * ], or (ii) the Parties [ * ].

Deliverables . “ Deliverables ” means any and all tangible work product, reports, data, specifications, designs, documents, correspondence, Software, documentation, and other materials, and other deliverables identified in an Order, including Transition Deliverables, Transformation Deliverables, Software Deliverables and Non-Software Deliverables.

 

Note: Redacted portions have been marked with [*]. The redacted portions are subject to a request for confidential treatment that has been submitted to the Securities and Exchange Commission.

Equipment . “ Equipment ” means the computer, telecommunications and other equipment (without regard to the entity owning or leasing such equipment) used by Supplier to provide the Services. Equipment includes the following: (1) computer equipment, including associated attachments, features, accessories, peripheral devices and other computer equipment; and (2) telecommunications equipment, including private branch exchanges, multiplexors, modems, CSUs/DSUs, hubs, bridges, routers, switches and other telecommunications equipment.

Event of Deteriorating Supplier Condition . “ Event of Deteriorating Supplier Condition ” means any of the following events: (i) Supplier or its Global Technology Services division ceases to do business as a going concern, makes an assignment of all or substantially all of its assets for the benefit of creditors, is insolvent or the subject of receivership, or any substantial part of Supplier’s property is or becomes subject to any levy, seizure, assignment or sale for or by any creditor or governmental agency without being released or satisfied within a reasonable time thereafter; (ii) Supplier’s auditors issue an opinion expressing doubt as to whether Supplier can maintain itself as a “going concern,” or Supplier’s credit is downgraded to a Moody rating of “Baa1” or below; (iii) any judgment or tax lien is filed or issued against Supplier that materially impacts Supplier’s ability to provide the Services to Company, and such judgment or tax lien is not resolved or satisfied within a reasonable time thereafter; (iv) voluntary bankruptcy proceedings or involuntary bankruptcy proceedings that have not been dismissed within ninety (90) days of commencement, are commenced by or against Supplier; (v) Supplier sells all or substantially all of its assets, or a material portion of its assets related to the Services except in connection with a Change of Control as permitted under this Agreement; (vii) there is a material adverse change in the business, financial condition or prospects of Supplier’s Global Technology Services division that is reasonably likely to result in a delay in the performance of Supplier’s obligations hereunder, or a reduction in the quality of such performance; (viii) the [ * ]; (ix) Supplier fails to [ * ]; (x) Supplier’s [ * ] is not approved by Company (acting in good faith); and (xi) within thirty (30) days after Company’s delivery of written notice to Supplier, Supplier fails to [ * ].

Governmental Authorities . “ Governmental Authorities ” means any national, state or local, U.S. or foreign, governmental, regulatory or judicial authority having jurisdiction over Company, Supplier, this Agreement or any Services.

[ * ]

Intellectual Property . “ Intellectual Property ” means: (i) patents, patent applications and statutory invention registrations (in the case of Non-Software Deliverables, based on inventions embodied therein); (ii) copyrights, including registrations and applications for registration thereof; (iii) trade secrets; and (iv) any other rights similar to the foregoing.

Law(s) . “ Law(s) ” means all federal, state, provincial, regional, territorial and local laws, statutes, ordinances, regulations, rules, executive orders, supervisory requirements, directives, circulars, opinions, interpretive letters and other official releases of or by any government, or any authority, department or agency thereof, including the United States Securities and Exchange Commission and the Public Accounting Oversight Board. “ Laws ” shall include Laws relating to data privacy trans-border data flow or data protection, such as the implementing legislation and regulations of the European Union member states under the European Union Directive 95/46/EC, and any and all of Canada’s federal and provincial privacy laws. Laws shall include Company Laws and Supplier Laws.

Legal Compliance Obligations . “ Legal Compliance Obligations ” means Supplier’s obligations under Section 9.1 and Section 9.3 .

Managed Contracts . “ Managed Contracts ” means the Third-Party agreements for which Supplier assumes management responsibility that are identified as “Managed Contracts” in Exhibit 11 (Assigned and Managed Contracts) or identified by Company from time to time.

Non-Core Software Deliverables . “ Non-Core Software Deliverables ” means all Software Deliverables other than Core Software Deliverables.

 

Note: Redacted portions have been marked with [*]. The redacted portions are subject to a request for confidential treatment that has been submitted to the Securities and Exchange Commission.

Non-Software Deliverables . “ Non-Software Deliverables ” means literary works or other works of authorship created for and required to be delivered to Company under this Agreement, including the Transition Plan, Transformation Plan, Change Request Authorizations, Orders, Policies and Procedures Manual, business requirements documents, design documents, manuals, training materials and documentation, but excluding Software.

Out-of-Pocket Expenses . “ Out-of-Pocket Expenses ” means reasonable, demonstrable and actual invoiced expenses for Equipment, materials, supplies or Services provided to or for Company as identified in this Agreement, but not including Supplier’s overhead costs (or allocations thereof), internal administrative expenses or other mark-ups, in each case, (A) that are due and payable to a Third Party by Supplier and (B) (i) that are approved in advance by Company, or (ii) for which Supplier is entitled to be reimbursed as a Pass-Through Expense in accordance with Exhibit 4 (Pricing) of this Agreement. Out-of-Pocket Expenses shall be calculated at Supplier’s actual incremental expense and shall be net of all refunds, returns, rebates and allowances.

Pass-Through Expenses . “ Pass-Through Expenses ” has the meaning set forth in Exhibit 4 (Pricing).

Personnel . “ Personnel ” of a Party means such Party’s directors, officers, employees, Subcontractors (with respect to Supplier only), consultants, representatives and agents, excluding the other Party, who contribute to the performance of such Party’s obligations under this Agreement.

Pre-Existing Rights . “ Pre-Existing Rights ” means any and all Software and other Intellectual Property rights (i) owned by or licensed to a Party and incorporated in or required to operate any Deliverable, and (ii) that is pre-existing on the Effective Date or the effective date of the applicable Order governing the development of such Deliverable, as applicable.

SAS 70 Gap Period . “ SAS 70 Gap Period ” means the period of time between the issuance of a SAS 70 Type 2 Report by the service auditor and the date of the assessment by Company of the adequacy of Company’s controls pursuant to the Compliance Requirements.

SAS 70 Type 2 Report . “ SAS 70 Type 2 Report ” means a written opinion of a service auditor, issued in accordance with and subject to the requirements of SAS 70, covering each Supplier facility where Services are performed and addressing (1) whether Supplier’s description of its controls presents fairly, in all material respects, the relevant aspects of Supplier’s controls that had been placed in operation as of a specified date, (2) whether such controls were suitably designed to achieve the Control Objectives, and (3) whether the controls that were tested were operating with sufficient effectiveness to provide reasonable, but not absolute, assurance that the Control Objectives were achieved during the period specified; together with the service auditor’s (a) description of the Control Objectives, (b) report on the operating effectiveness of the controls, and (c) description of the tests of the operating effectiveness of the controls that may be relevant to specified assertions in Company’s financial statements, and the results of those tests. The SAS 70 Type 2 Report will contain any additional information that may be required under SAS 70 and will contain a paragraph stating that the SAS 70 Type 2 Report is intended to be used by customers of Supplier and such customers’ independent auditors.

Service Level Credit . “ Service Level Credit ” means the applicable credit against the Charges payable by Supplier to Company hereunder for failure of Supplier to meet a particular Service Level.

Service Level Default . “ Service Level Default ” means in respect of each Critical Service Level or Key Measurement that (i) Supplier’s Service Level Performance fails to [ * ]; or (ii) Supplier’s Service Level Performance fails to [ * ]; or (iii) Measurement data for the [ * ] . All capitalized terms used in but not defined in this definition or in the body of this Agreement are defined in Exhibit 1 (Definitions).

Software . “ Software ” means the object code 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

 

Note: Redacted portions have been marked with [*]. The redacted portions are subject to a request for confidential treatment that has been submitted to the Securities and Exchange Commission.

system software, computer software languages, utilities, other computer programs and related documentation are recorded or printed, together with all corrections, improvements, updates and releases thereof.

Software Deliverables . “ Software Deliverables ” mean all Deliverables that include Software that are required to be delivered to Company under this Agreement or an Order, including Core Software Deliverables and Non-Core Software Deliverables.

Subcontractor . “ Subcontractor ” means any individual or entity (other than Supplier), including an Affiliate of Supplier, that performs Services under this Agreement (including any Order).

Supplier Laws . “ Supplier Laws ” means all Laws applicable to Supplier in its capacity as a provider of IT services and all Laws that are generally applicable to Supplier, which Laws may include HIPAA, the Sarbanes-Oxley Act of 2002, the Gramm-Leach-Bliley Act and well-known Laws governing privacy.

Supplier Proprietary Software . “ Supplier Proprietary Software ” means the Software (which may include Tools) and related documentation (1) owned by Supplier and (2) any enhancements, modifications or derivatives thereof owned by Supplier, in each case, (a) that are used in connection with the Services, and (b) excluding Core Software Deliverables. The Supplier Proprietary Software includes the Software designated as “Supplier Proprietary Software” in Exhibit 10 (Equipment and Software Lists).

Supplier Service Location . “ Supplier Service Location ” means each facility of Supplier from which Supplier provides the Services, as set forth in Exhibit 17 (Supplier Service Locations).

Supplier Software . “ Supplier Software ” means, collectively, the Supplier Proprietary Software and the Supplier Third Party Software.

Supplier Third Party Software . “ Supplier Third Party Software ” means the Software (which may include Tools) and related documentation licensed or leased by Supplier from a Third Party that are used (1) in connection with the Services or (2) with any Supplier Proprietary Software. The Supplier Third Party Software includes the Software designated as “Supplier Third Party Software” in Exhibit 10 (Equipment and Software Lists).

System . “ System ” means the computing infrastructure, including Software, Tools and Equipment, used by Supplier to provide the Services, and to access, process or store any Company Data.

Third Party . “ Third Party ” means a legal entity, company or person that is not a Party, or an Affiliate of a Party, to this Agreement. Personnel of a Party or Subcontractors, or of an Affiliate of a Party, shall be considered “ Third Parties ” hereunder.

Tools . “ Tools ” means any testing, monitoring or other tools or utilities and related know-how, methodologies, processes, technologies, or algorithms.

Tower . “ Tower ” means a general grouping of related Services that are described within Exhibit 2 (Statement of Work), namely “Cross-Functional”, “Messaging, Directory, & Collaboration”, “Application Hosting”, “Managed Network”, or “End-User”.

Transitioned Contractors . “ Transitioned Contractors ” means Affected Contractors whose contractor agreements are either terminated or assigned pursuant to Section 11.5(B) .

Transitioned Employees . “ Transitioned Employees ” means Affected Employees who either accept an offer of employment with Supplier or whose employment is transitioned to Supplier pursuant to relevant ARD Laws (or the equivalent in countries outside of the EU) and become employed by Supplier effective as of the start of business on the Effective Date or such other date as to which the Parties mutually agree.

 

Transitioned Personnel . “ Transitioned Personnel ” means, collectively, Transitioned Employees and Transitioned Contractors.

Use . “ Use ” means the right to load, execute, store, transmit, display, copy and perform.

Wind-down Expenses . “ Wind-down Expenses ” means (1) Supplier’s actual out-of-pocket reasonable costs and expenses related to the displacement of assets [ * ] due to Company’s early termination, excluding overhead and general expenses, markups and opportunity costs; and (2) Supplier’s then-current net book value (using straight-line depreciation method) of Equipment, Software and materials used in and procured specifically for the delivery of Services under this Agreement, excluding costs and expenses for Transition and Transformation, provided in each case, that Supplier shall have an obligation to mitigate the foregoing, and that Wind-down Expenses shall be [ * ] and shall be subject to audit by Company in accordance with this Agreement. In the event a Section of this Agreement specifically provides for (i) the purchase of (or option to purchase) Equipment or the assumption of leases by Company, and (ii) payment of Wind-down Expenses, the provisions of such Section governing the purchase of (or option to purchase) Equipment or the assumption of leases by Company shall prevail over this definition.

Section 1.2 Other Defined Terms Used in this Agreement .

 

 

Note: Redacted portions have been marked with [*]. The redacted portions are subject to a request for confidential treatment that has been submitted to the Securities and Exchange Commission.

 

 

Section 1.3 Other Defined Terms Used in the Exhibits .

 

 

 

 

 

 

 

 

Those terms, acronyms and phrases utilized in the biotechnology and pharmaceutical industry, information technology (“ IT ”) services industry, or other pertinent business context that are not otherwise defined in this Agreement shall be interpreted in accordance with their generally understood meaning in such industries or business contexts.

Section 1.4 Incorporation and References .

 

(A)

Incorporation of Exhibits, Schedules and Appendices

The Exhibits, Schedules and Appendices attached hereto are hereby incorporated into this Agreement by reference and deemed part of this Agreement for all purposes. All references to this “ Agreement ” shall include such Exhibits, Schedules and Appendices.

 

(B)

References

 

(1)

References to any Law means references to such Law in changed or supplemented form, or to a newly-adopted Law replacing a previous Law.

 

(2)

References to and the use of the word “include” and its derivatives (such as “including” and “includes”) means “include without limitation.”

 

(3)

References to and the use of the word “days” means calendar days, unless otherwise specified.

 

(4)

References to and the use of the word “hours” means hours as determined on a 24x7 basis and not business hours, unless otherwise specified.

 

(5)

References to “ Supplier ” include Supplier Personnel, Equipment providers, Software providers and service providers, where such entities are performing the Services or services related to the Services.

 

(6)

References to “ Company ” include Company and members of Company Group.

Section 1.5 Headings and Cross-References . The Article and Section headings and the table of contents used in this Agreement are for reference and convenience only and shall not enter into the interpretation of this Agreement. Any reference herein to a particular Article or Section number or Exhibit, Schedule or Appendix means that the reference is to the specified Article, Section, Exhibit, Schedule or Appendix of this Agreement, except to the extent that the cross-reference expressly refers to another document.

Section 1.6 Interpretation of Documents . In the event of a conflict or inconsistency between the terms of this Agreement and the Exhibits, Schedules or Appendices, the terms of this Agreement shall prevail.

Section 1.7 Local Country Agreements . The Parties acknowledge and agree that this Agreement is intended to provide the framework for a global relationship. As deemed appropriate by Supplier and Company taking into account the Services and the country or region outside of the United States that is involved, the Parties will enter into one or more local country agreements to this Agreement between Supplier or corresponding Supplier Affiliates, and Company or Company Affiliate for the purpose of memorializing the implementation of this Agreement with respect to such entities and effecting the intent of the Parties under this Agreement (each, a “ Local Country Agreement ”). All references herein to this Agreement shall be deemed to include all Local Country Agreements. Supplier will agree to perform or cause to be performed the performance obligations under this Agreement, including the Local Country Agreements. Company and Supplier agree to be and remain liable and responsible to the other for all obligations undertaken by its Affiliates, respectively, under such Local Country Agreements, and that the execution of any Local Country Agreement will in no way either enlarge or reduce the obligations of either Company or Supplier under this Agreement, including with respect to the provision of Services to any Company Affiliate, except (i) provisions in a particular Local Country Agreement that are expressly acknowledged to be an amendment to this Agreement for purposes of such Local Country Agreement, which will include the listing of any provisions of applicable local law in the country for which the Local Country Agreement is entered identified by either Party as non-waivable, or (ii) terms for transition of Affected Personnel located in the country for which the Local Country Agreement is signed. No Local Country Agreement may be signed or, once signed, be modified or amended, without the consent of each of Supplier and Company.

ARTICLE 2

TERM

Section 2.1 Term . The term of this Agreement (the “ Initial Term ”, together with any Renewal Terms, and as extended pursuant to Section 29.6 , the “ Term ”) shall commence on the Effective Date and shall expire at midnight (Pacific Time) on the fifth (5th) anniversary of January 18, 2009, unless this Agreement is extended pursuant to Section 2.2 or earlier terminated in accordance with this Agreement.

Section 2.2 Extension . On written notice to Supplier no less than one hundred twenty (120) days prior to the expiration of the Initial Term or then-current Renewal Term, Company shall have the right to extend the Term for one (1) year extensions (each a “ Renewal Term ”) on the terms and conditions (including the Charges) then in effect. Company shall have three (3) such extension options of one (1) year each.

Section 2.3 Termination Charges . In the event that Company does not elect to extend the Term after the Initial Term or any Renewal Term, or upon expiration of the final Renewal Term, [ * ], which at the time of such expiration, is [ * ]. Section 29.2 (Termination for Convenience) sets forth the applicability of fees associated with Company’s termination for convenience.

 

Note: Redacted portions have been marked with [*]. The redacted portions are subject to a request for confidential treatment that has been submitted to the Securities and Exchange Commission.

ARTICLE 3

TRANSITION

Section 3.1 General .

 

(A)

Commencing on the Effective Date and ending on completion of the Transition Plan (the “ Transition Period ”), Supplier shall plan, prepare for and conduct transition activities in accordance with the Transition Plan (the “ Transition ”). Except with respect to those costs identified as Company’s responsibility in Exhibit 4 (Pricing), Supplier’s responsibilities with respect to the Transition shall include paying all costs associated with the Transition and otherwise performing such tasks as are required to enable Supplier to provide the Services, including following the Transition Completion Date.

 

(B)

During the Transition Period, Company shall perform those tasks that are designated to be the responsibility of Company in the Transition Plan.

 

(C)

Except as otherwise provided in Exhibit 4 (Pricing) or required for Company to complete those tasks which are designated to be the responsibility of Company in the Transition Plan, Company shall not incur any charges, fees, costs or expenses in connection with the Transition.

Section 3.2 Transition Plan .

 

(A)

General

The Transition shall be conducted in accordance with a written plan (the “ Transition Plan ”) which, at a minimum, shall include:

 

(1)

a detailed description of the IT operations being transitioned to Supplier;

 

(2)

a detailed description of the Transition activities and responsibilities to be performed by Supplier in order for Supplier to properly complete the Transition;

 

(3)

a detailed description of the deliverables (“ Transition Deliverables ”) and milestones (“ Transition Milestones ”) to be completed by Supplier;

 

(4)

a detailed description of any tasks that Company is required to complete in connection with the Transition;

 

(5)

a detailed description of the technology, methods, procedures, Supplier Personnel and organization that Supplier shall use to perform the Transition;

 

(6)

a detailed schedule and workplan of all Transition activities to be completed in connection with the Transition, including the dates on which each such activity and any Transition Milestones and Transition Deliverables shall be completed;

 

(7)

for certain Transition Milestones and Transition Deliverables, the applicable Transition Milestone or Deliverable Credit (each a “ Transition Milestone Credit ”) that shall be paid to Company if the Transition Milestone or Transition Deliverable is not achieved by Supplier, other than for the reasons set forth in Section 16.2 (Savings Clause), in accordance with the schedule set forth in the Transition Plan, which Transition Milestone Credits available for payment by Supplier to Company shall in the aggregate equal at least [ * ] and Transition Milestone Credits payable by Supplier to Company shall in the aggregate not exceed [ * ];

 

Note: Redacted portions have been marked with [*]. The redacted portions are subject to a request for confidential treatment that has been submitted to the Securities and Exchange Commission.

(8)

a detailed description of the potential risks associated with the Transition and the risk mitigation strategies that shall be employed by Supplier to eliminate or minimize such risks;

 

(9)

a process and set of standards and completion criteria acceptable to Company to which Supplier shall adhere in the performance of the Transition and that shall enable Company to determine whether Supplier has successfully completed the Transition activities and Transition Deliverables associated with each Transition Milestone; and

 

(10)

any other information and planning necessary to ensure that the Transition takes place on schedule and without disruption to Company’s business or IT operations.

 

(B)

Completion of the Transition Plan

Supplier shall be responsible for preparing the Transition Plan. The initial draft of the Transition Plan as of the Effective Date is included in Exhibit 22 (Transition and Transformation). No later than thirty (30) days prior to the Commencement Date, Supplier shall finalize the Transition Plan which Transition Plan shall not be considered final until Accepted by Company. Supplier shall cooperate and work closely with Company in finalizing the Transition Plan (including incorporating Company’s reasonable comments) and the final Transition Plan and any subsequent changes to the Transition Plan shall be subject to Acceptance by Company in accordance with schedule set forth in Exhibit 22 (Transition and Transformation).

Section 3.3 Performance of the Transition .

 

(A)

General

Supplier shall perform the Transition in accordance with the Transition Plan and in such a manner so as to not disrupt Company’s IT and business operations (except to the extent that Supplier has provided Company with reasonable advance written notice of such disruption and Company has agreed in writing that such disruption is acceptable). Supplier shall provide all cooperation and assistance reasonably required and requested by Company in connection with Company’s evaluation and testing of the Transition Deliverables.

 

(B)

Transition Manager

Supplier shall, in accordance with Section 11.2(D) , designate an individual to manage the Transition (the “ Supplier Transition Manager ”) on a dedicated, full-time basis during the Transition Period. The Supplier Transition Manager shall (1) report to the Supplier Project Executive, (2) serve as the single point of accountability for Supplier for the Transition and (3) have day-to-day authority for ensuring that the Transition is completed in accordance with the Transition Plan. The Supplier Transition Manager shall be one of the Key Supplier Personnel.

 

(C)

Meeting and Reporting Requirements

The Supplier Transition Manager shall meet at least once each week with the individual designated to manage the Transition for Company (the “ Company Transition Manager ”) to report on Supplier’s progress in performing the Transition and meeting the requirements of the Transition Plan. As part of each weekly meeting, Supplier shall provide Company with a written status report that shall include (1) an updated Gantt chart

 

detailing the then-current status of all Transition activities, including the Transition Deliverables, against the Transition Plan, (2) a list of Tools or Software that shall be added (whether temporarily or permanently) to Company’s IT environment during the forthcoming month and (3) any issues or problems that Supplier is experiencing in connection with the Transition and any efforts or remedial actions that Supplier is undertaking to resolve such issues or problems. The Supplier Transition Manager shall also meet at least once each week with the Company Transition Manager and the transition managers of applicable Third Party Vendors to report on, lead and coordinate such Third Party Vendors’ efforts in connection with the requirements of the Transition Plan. The meetings described in this Section shall take place at the time and place designated by Company, and with agendas specified by Company.

 

(D)

Company’s Right to Participate in the Transition

Company reserves the right to monitor, test and otherwise participate in the Transition. Supplier shall immediately notify Company if such monitoring, testing or participation has caused (or in Supplier’s reasonable opinion may cause) a problem or delay in the Transition and work with Company to prevent or circumvent such problem or delay.

Section 3.4 Completion of the Transition .

 

(A)

The Transition shall not be considered to be complete until all Transition Deliverables have been Accepted by Company.

 

(B)

If any Transition Deliverable with an associated Transition Milestone Credit is not Accepted by Company or any Transition Milestone with an associated Transition Milestone Credit is not completed by Supplier on or before the applicable Transition Milestone due to the fault of Supplier, Supplier shall pay to Company the applicable Transition Milestone Credit, as set forth in Exhibit 22 (Transition and Transformation), for each applicable period that the Transition Deliverable is not Accepted by Company or such Transition Milestone is not completed by Supplier.

 

(C)

If any Transition Deliverable with an associated Transition Milestone Credit is not Accepted by Company or any Transition Milestone with an associated Transition Milestone Credit is not completed by Supplier on or before the applicable Transition Milestone due to the fault of Company, then for the period of delay Company shall reimburse Supplier for any Out-of-Pocket Expenses associated with such delay.

Section 3.5 [ * ].

ARTICLE 4

SERVICES

Section 4.1 Description of the Services .

 

(A)

General

Commencing on the Effective Date and continuing throughout the Term, Supplier shall provide to Company the following services, functions and responsibilities, as they may evolve or be supplemented, enhanced, modified or replaced (collectively, the “ Services ”):

 

(1)

the services, functions and responsibilities described in this Agreement, including (a) the services, functions, responsibilities and Deliverables described in Exhibit 2 (Statement of Work), (b) the services, functions and responsibilities

 

Note: Redacted portions have been marked with [*]. The redacted portions are subject to a request for confidential treatment that has been submitted to the Securities and Exchange Commission.

relating to the Transition, including Transition Deliverables (and, if applicable, the Transformation, including Transformation Deliverables), and (c) the Termination/Expiration Assistance;

 

(2)

the services, functions and responsibilities described in any Order approved in writing by Company;

 

(3)

the services, functions and responsibilities described in any Change Request Authorization approved in writing by Company;

 

(4)

the IT infrastructure-related services, functions and responsibilities forming part of the Services and performed in the ordinary course during the twelve (12) month period preceding the Effective Date by Affected Personnel and Third Party Vendors who were transitioned to Supplier or displaced, or whose functions were displaced, in each case, as a result of this Agreement, even if such IT-related services, functions and responsibilities are not specifically described in this Agreement; and

 

(5)

the IT-related services, functions, projects and responsibilities reflected in those categories of the Company Base Case that Supplier is assuming pursuant to this Agreement, as set forth in Exhibit 4 (Pricing).

 

(B)

Implied Services

If any facilities, Equipment, Software, services, functions, responsibilities or Deliverables not specifically described in this Agreement are required for the proper performance and provision of the Services, such facilities, Equipment, Software, services, functions, responsibilities or Deliverables shall be deemed to be implied by and included within the scope of the Services (and delivered to Company at no additional charge) to the same extent and in the same manner as if expressly described in this Agreement.

 

(C)

Supplier Responsibility

 

(1)

Supplier shall be responsible for the provision of the Services in accordance with the terms of this Agreement even if, by agreement of the Parties, such Services are actually performed by persons other than Supplier Personnel acting under the management and direction of Supplier, including Company Personnel and Third Party Vendors, except to the extent that such Company Personnel or Third Party Vendors other than Supplier fail to satisfactorily follow the reasonable management and direction of Supplier and such failure results in a deficiency in delivery of the Services, subject to Section 16.2 (Savings Clause).

 

(2)

Except as otherwise expressly provided in this Agreement, Supplier shall be responsible for providing the facilities, Personnel, Equipment, Software, materials, technical knowledge, training, expertise and other resources necessary for the proper performance of the Services.

 

(3)

Supplier shall ensure that all Services, Equipment, networks, Software, enhancements, upgrades, modifications, and other resources (collectively, the “ Resources ”) utilized by Supplier or approved by Supplier for utilization by Company in connection with the Services shall be integrated and interfaced as necessary for performance of the Services in accordance with the Service Levels, and shall be compatible with the services, systems, items, and other resources that are being provided to, recommended to, or approved for use by, Company by Third Party Vendors as of the Effective Date (collectively, the

 

“ Third-Party Resources ”) to the extent Company provides Supplier with all relevant information regarding these Third Party Resources prior to the Effective Date.

 

(4)

Supplier shall ensure that none of the Services or other Resources provided to Company by Supplier shall be adversely affected by, or shall adversely affect, those of any such Third Party Resources identified by Company pursuant to Section 4.1(C)(3) , whether as to functionality, speed, service levels, interconnectivity, reliability, availability, performance, security, response times, or similar measures. To the extent that any interfaces need to be developed or modified in order for the Resources to integrate successfully, and be compatible, with the Third-Party Resources, Supplier shall develop or modify such interfaces as part of the Services.

Section 4.2 Obligation to Evolve the Services and Keep Technology Current .

 

(A)

Supplier shall cause the Services and the methods, processes and technologies being used to provide the Services, as approved by Company, to evolve and to be reasonably modified, enhanced, supplemented and replaced as necessary for the Services and the methods, processes and technologies being used to provide the Services to keep pace with advances in the methods, processes, technologies, Software and Equipment being used to deliver similar services, where such advances are at the time pertinent and in general use within the IT industry or among other customers of Supplier or Company’s competitors. Any changes to the methods, processes, technologies, Software and Equipment used to provide the Services in accordance with this Section shall be deemed to be included within the scope of the Services to the same extent and in the same manner as if expressly described in this Agreement. Without limiting the foregoing, the Parties acknowledge and agree that any changes to the scope of the Services (other than changes to the methods, processes, technologies, Software and Equipment used to provide the Services) shall be implemented in accordance with the Change Control Procedure.

 

(B)

Supplier shall meet with Company at least once during every sixty (60) day period during the Term to inform Company of any new methods, processes, technologies, Software or Equipment Supplier is developing or of which Supplier is otherwise aware that could reasonably be expected to have an impact on Company’s IT or business operations.

Section 4.3 Non-Exclusivity; Right to In-Source and Re-Source the Services .

 

(A)

Supplier acknowledges and agrees that this Agreement does not give Supplier any exclusive rights with respect to the provision of any services, including the Services, or products to Company.

 

(B)

At any time during the Term, Company has the right to perform itself, or retain third parties to perform, any of the Services. To the extent Company in-sources or re-sources any of the Services pursuant to this Section: (1) Supplier shall cooperate with Company in accordance with Article 7 and (2) the Charges shall be reduced in accordance with the process and methodology described in Exhibit 4 (Pricing). At Company’s request, Supplier shall assist Company in identifying qualified third-party service providers.

 

Section 4.4 Support for Acquisitions and Divestitures .

 

(A)

Acquisition Support

 

(1)

With respect to a potential acquisition by Company, upon Company’s request, Supplier shall provide acquisition support (including assessments of any technology environments to be acquired, potential integration approaches, and the impact of the acquisition on the Services, Service Levels, Charges and other aspects of this Agreement) as reasonably necessary to assist with Company’s assessment of the portion of the acquisition to which the Services relate. Such support shall be provided within the timeframe reasonably requested by Company or as required by the timing of the transaction.

 

(2)

As requested by Company and as it relates to the Services, Supplier shall transition the IT environment of the acquired entity to Company’s environment.

 

(3)

As requested by Company, Supplier shall provide Supplier Personnel to staff vacancies and to provide management for the information technology functions needed to support an acquisition, including to the extent necessary, on-site support at any location of the acquired entity.

 

(4)

Supplier shall provide acquisition support as described in this Section 4.4(A) as part of the Services to the extent that such acquisition support may be provided using applicable resources then primarily assigned to the performance of the Services according to the Service Levels and baselines, and without adversely impacting Supplier’s ability or costs to perform such Services. If acquisition support will require the use of different or additional resources beyond that which Supplier is then using to provide the Services in accordance with the baselines and Service Levels, then such request for acquisition support shall be subject to the Change Control Procedure.

 

(B)

Divestitures

 

(1)

In the event that Company divests an entity or business unit, Supplier shall, at Company’s request, for a period of two (2) years from the effective date of such divestiture (or such shorter time period as Company may require) or until termination of expiration of this Agreement, whichever is earlier, continue to provide the Services to such divested entity or business unit at the Charges and on the terms and conditions then in effect. At Company’s request, Supplier shall separately invoice such divested entity. To the extent applicable, Services and Deliverables for Company and its divested entity shall be combined for purposes of determining Charges. Supplier shall not unreasonably withhold consent to novation of this Agreement in part as relates to the divested entity or business unit in favor of the divested entity or business unit or the acquirer thereof.

 

(2)

Services provided to divested entities under Section 4.4(B)(1) shall be performed (A) until the termination or expiration of this Agreement, whichever is earlier, (B) under the terms of this Agreement, and (C) in the event this Agreement is not novated in favor of the divested entity or business unit or the acquirer thereof, and the divested entity or the purchaser of the divested entity is unable to provide adequate assurance of payment to the reasonable satisfaction of Supplier, Company shall remain liable in all respects under this Agreement, including the Charges. Supplier and Company shall address any increases or decreases in the scope of Services that might result (e.g., the need to create separate instances of technology for separate locations where Services would be delivered/received) in accordance with the Change Control Procedure.

 

Section 4.5 Service Recipients . Supplier shall provide the Services to: (A) Company and (B) such other entities as Company designates from time to time (“ Company Service Recipients ”). For purposes of this Agreement, Services provided to such entities shall be deemed to be Services provided to Company.

Section 4.6 Acceptance . All Deliverables provided by Supplier to Company as part of the Services under this Agreement shall be subject to Company’s review and acceptance (or rejection) in accordance with Exhibit 6 (Governance).

ARTICLE 5

TRANSFORMATION

Section 5.1 Transformation Objectives . Supplier shall be required to conduct transformation activities to enable Company to achieve the transformation objectives set forth in the Transformation Plan (collectively, the “ Transformation Objectives ”), which objectives shall include performing all Transformation activities necessary to provide the Services as set forth in Exhibit 2 (Statement of Work) (“ Transformation ”).

Section 5.2 Transformation Projects . Supplier shall complete the Transformation projects described in the Transformation Plan (each a “ Transformation Project ”) to achieve the Transformation Objectives. Except as otherwise provided in Exhibit 4 (Pricing) or required for Company to complete those tasks that are designated to be the responsibility of Company in the Transformation Plan, Company shall not be responsible for any charges, fees, costs or expenses incurred in connection with the Transformation.

Section 5.3 Transformation Plan . The initial draft of the transformation plan describing all Transformation Projects as of the Effective Date is included in Exhibit 22 (Transition and Transformation) (the “ Transformation Plan ”). Within sixty (60) days of the Effective Date, Supplier shall revise and finalize the Transformation Plan for Company’s review, comment and approval. Supplier shall cooperate and work closely with Company in finalizing the Transformation Plan (including incorporating Company’s reasonable comments) and the final Transformation Plan and any subsequent changes to the Transformation Plan shall be subject to written approval by Company. The Transformation Plan shall include:

 

(A)

a detailed description of how the Services and Company’s associated IT environment, operations and business processes shall be transformed by Supplier via the Transformation Projects to achieve the Transformation Objectives;

 

(B)

a detailed description of the Transformation Projects;

 

(C)

a detailed description of each deliverable (“ Transformation Deliverables ”) and milestone (each a “ Transformation Milestone ”) to be completed by Supplier in connection with each Transformation Project;

 

(D)

a detailed description of any tasks that Company is required to complete in connection with each Transformation Project;

 

(E)

a detailed description of the methods and procedures, Personnel and organization Supplier shall use to complete the Transformation Projects;

 

(F)

a detailed schedule and work plan of all Transformation Projects to be completed in connection with the Transformation, including the date on which each Transformation Project and each associated Transformation Deliverable and Transformation Milestone shall be completed;

 

(G)

a detailed description of the potential risks associated with the Transformation and the risk mitigation strategies that shall be employed by Supplier to eliminate or minimize such risks;

 

(H)

a process and set of standards acceptable to Company to which Supplier shall adhere in the performance of the Transformation and shall enable Company to determine whether Supplier has successfully completed the Transformation Projects, Transformation Deliverables and Transformation Milestones; and

 

(I)

any other information and planning necessary to ensure that the Transformation takes place on schedule and without disruption to Company’s business or IT operations.

Section 5.4 Completion of the Transformation Projects .

 

(A)

Supplier shall complete the Transformation Projects in accordance with the Transformation Plan in such a manner so as to not disrupt Company’s business and IT operations (except to the extent that Supplier has provided Company with reasonable advance written notice of such disruption and Company has agreed in writing that such disruption is acceptable). Company shall reasonably cooperate with Supplier in connection with the Transformation Projects and perform those tasks identified as Company tasks in the Transformation Plan.

 

(B)

Supplier recognizes that its failure to meet the Transformation Milestones may have a material adverse impact on the business and operations of Company. Accordingly, if Supplier fails to meet a Transformation Milestone or Transformation Deliverable for which there is an associated Transformation Milestone Credit or Deliverable Credit, other than for the reasons set forth in Section 16.2 (Savings Clause), then, in addition to any other remedies available to Company under this Agreement, at Law or in equity, Company may elect to recover the applicable Transformation Milestone Credits or Deliverable Credits, which Transformation Milestone Credits and Deliverable Credits available for payment by Supplier to Company shall in the aggregate equal at least [ * ] and Transformation Milestone Credits and Deliverable Credits payable by Supplier to Company shall in the aggregate not exceed [ * ].

Section 5.5 Company-Requested Delays . Company shall have the right to request that Supplier delay any Transformation Projects for any reason at any time during the Term. If Company elects to delay any part of the Transformation Plan and such delay results in demonstrable increased costs to Supplier, Company shall pay such increased costs to Supplier; provided, however, that Supplier has used commercially reasonable efforts to mitigate such increased costs, Supplier has notified Company in advance of such increased costs and Company has approved in writing such increased costs. In addition, Company shall not incur any increase in Supplier’s costs to the extent that Company’s decision to delay any such Transformation activities is based on Supplier’s failure to perform its obligations in accordance with the terms of this Agreement.

Section 5.6 [ * ].

ARTICLE 6

PROJECTS

Section 6.1 General . To the extent that any Projects include activities or components that otherwise fall within the scope of the Services, such activities and components shall be provided by Supplier within the Base Charges.

Section 6.2 Project Requests . Company may initiate a request for Supplier to perform a particular Project, as such term is defined in Exhibit 4 (Pricing), by providing such request in writing (each such

 

Note: Redacted portions have been marked with [*]. The redacted portions are subject to a request for confidential treatment that has been submitted to the Securities and Exchange Commission.

request, a “ Project Request ”) to Supplier in accordance with the procedures set forth in the Policies and Procedures Manual. In engaging Supplier to perform a Project, Company shall enter into one or more written Orders (each an “ Order ”) pursuant to which such particular Project shall be performed. Supplier shall, within a reasonable timeframe specified in such Project Request, prepare and deliver to Company a proposed Order as described in Section 6.3 .

Section 6.3 Orders . Each Order prepared by Supplier for Company’s consideration shall be in the form presented in the Policies and Procedures Manual contained in Exhibit 6.2 of Exhibit 6 (Governance) attached hereto and shall, at a minimum, contain the following information:

 

(A)

a detailed description of the scope of work to be performed by Supplier to complete and implement the Project, including any required Deliverables;

 

(B)

any specific performance standards that shall apply to the completion and implementation of such Project, including Supplier’s agreement to meet applicable Service Levels;

 

(C)

an anticipated schedule for completing and implementing the Project and any related Deliverables, including milestones and credits for failing to achieve milestone deadlines;

 

(D)

the types of Supplier Personnel, or the specific Supplier Personnel, if known, who shall be assigned to each activity specified in the Order, including the location of such Personnel;

 

(E)

Supplier’s proposed productivity measures for the activities specified in the Order;

 

(F)

a description of the acceptance criteria and acceptance testing procedures to be used by Company in connection with any acceptance testing of such Project and any related Deliverables;

 

(G)

the estimated number of person-hours needed to complete the Project, or the fixed charge for the Project, as applicable;

 

(H)

To the extent that any activities associated with the Project do not fall within the scope of the Services, a description of such activities, an explanation of why such activities are not included in the Services and the estimated number of person-hours associated with such activities (to the extent relevant to the pricing of the Project);

 

(I)

any increase or decrease in the Base Charges on an ongoing basis caused by such Project (which adjustments shall be made in accordance with the mechanism therefore in Exhibit 4 (Pricing)), the date any such Base Charges adjustments would go into effect, and the reasons for such adjustments; and

 

(J)

any adjustment in the Service Levels on an ongoing basis caused by such Project, the date any such Service Level adjustments would go into effect, and the reasons for such adjustments.

Each Party shall bear its own costs in connection with preparation of any Project Requests and Orders. Supplier shall not commence performing any Services in connection with a Project, and Company shall not be responsible for any Charges applicable to such Project, until the Company Contract Executive has provided Supplier with written approval of the Order. Any change to an Order shall be made pursuant to a Change Request approved in writing by Company pursuant to Section 17.5 .

Section 6.4 In-Flight Projects . Supplier shall provide the services, functions and responsibilities necessary to complete and implement the in-flight projects described in Exhibit 9 (Current and Planned Projects). Such in-flight projects, including all activities associated with the management thereof, shall be performed by Supplier within the Base Charges.

 

ARTICLE 7

MULTI-VENDOR ENVIRONMENT; COOPERATION WITH THIRD PARTIES

Section 7.1 General .

 

(A)

Supplier acknowledges that it is performing the Services in a multi-vendor environment and agrees that its responsibilities shall include leading and coordinating the efforts of any third-party vendors providing services or products to Company (collectively, “ Third Party Vendors ”), which leadership and coordination efforts shall include proactively communicating with Third Party Vendors regarding Services issues and coordination issues, acting as the single point of intake and resolution for Third Party Vendors’ questions and issues, scheduling meetings for the discussion and exchange of information as appropriate, and providing guidance to Third Party Vendors with respect to Supplier’s and Company’s IT environment as it relates to the Services. Supplier further agrees to cooperate with Company and Third Party Vendors so as to allow such Third Party Vendors to provide any services (including services similar to the Services) or products in an integrated and seamless manner without disruption to Company’s business or IT operations.

 

(B)

Supplier’s cooperation with Company and any Third Party Vendors shall include:

 

(1)

providing access to the facilities being used by Supplier to provide the Services (as necessary for Company or a Third Party Vendor to perform its work);

 

(2)

providing access to Company’s technical environment and the Equipment and Software being used by Supplier to provide the Services (to the extent permitted under any underlying agreements with third parties and as necessary for Company or a Third Party Vendor to perform its work);

 

(3)

providing to Third Party Vendors copies of such reports as are provided to Company pursuant to this Agreement, and providing such information, data (including performance data) and cooperation as are necessary for Third Party Vendors to create reports for Company’s use;

 

(4)

cooperating with Company and Third Party Vendors (including by providing any performance information or data obtained by Supplier in the conduct of its own root cause analysis pursuant to Section 10.2 ) in performing root cause analysis of problems with the Services or Company’s IT environments, whether the ultimate responsibility for performing such root cause analysis lies with Supplier or with any such Third Party Vendor; and

 

(5)

providing Company and Third Party Vendors such information and data regarding the Equipment, Software, Tools and operating environment, System constraints, processes and other operating parameters as a person with reasonable commercial skills and expertise would find reasonably necessary for Company or a Third Party Vendor to perform its work.

Section 7.2 Compliance with Supplier’s Policies . To the extent that any Third Party Vendors retained by Company (other than pursuant to Managed Contracts) require any access as described in this Section, Company shall cause such Third Party Vendors to comply with Supplier’s reasonable security and confidentiality requirements and with Supplier’s reasonable work standards, methodologies and procedures, as these have been provided by Supplier to Company and such Third Party Vendors. Supplier shall use reasonable efforts to cause Third Party Vendors under Managed Contracts to comply with such requirements, standards, methodologies and procedures.

 

Section 7.3 Problems and Delays . Supplier shall immediately notify Company if an act or omission of a Third Party Vendor may cause a problem or delay in providing the Services and shall work with Company to prevent or circumvent such problem or delay.

ARTICLE 8

REQUIRED CONSENTS

Section 8.1 Supplier Required Consents . Supplier, with the cooperation of Company, shall obtain and maintain any licenses, consents, authorizations or approvals that are necessary or required for Supplier to provide the Services (collectively, the “ Supplier Required Consents ”), including those consents set forth in the Transition Plan or Exhibit 11 (Assigned and Managed Contracts) and those consents that are necessary to allow:

 

(A)

Supplier to (1) grant any licenses or rights of use to Supplier Proprietary Software or (2) assign any of its interests in the Software Deliverables or Non-Software Deliverables, in each case, as described in Article 14 ;

 

(B)

Company to use any Supplier Equipment;

 

(C)

Company to take an assignment to any Equipment leases pursuant to Section 29.7(B)(3) ; and

 

(D)

Supplier to take an assignment to any Assigned Contracts pursuant to Section 12.2 .

Section 8.2 Company Required Consents . Company, with the cooperation of Supplier, shall obtain and maintain those consents set forth in the Transition Plan or Exhibit 11 (Assigned and Managed Contracts) and the following licenses, consents, authorizations or approvals (collectively, the “ Company Required Consents ”, and together with the Supplier Required Consents, the “ Required Consents ”) that are necessary to allow:

 

(A)

Company to grant any of the licenses or rights described in Article 14 ; and

 

(B)

Supplier to use any of the Company Provided Equipment as permitted in this Agreement.

Section 8.3 Compliance with Required Consents . Supplier and Company shall comply with the requirements of each of the Required Consents.

Section 8.4 Costs and Fees . Each Party shall pay any costs, expenses and fees (including license, re-licensing, transfer or upgrade fees or termination charges) as may be required to obtain the Parties’ respective Required Consents.

Section 8.5 Alternative Approaches . If either Party is unable to obtain a Required Consent, then, unless and until such Required Consent is obtained, Supplier and Company shall determine and adopt, subject to Company’s prior approval, such alternative approaches as are necessary and sufficient to provide the Services without such Required Consent. If such alternative approaches are required for a period longer than sixty (60) days following the Effective Date, the Parties shall utilize the Change Control Procedure to increase or decrease the Charges to reflect any increase in the costs and expenses of one Party due to the other Party’s failure to obtain a Required Consent. If Supplier fails to obtain a Supplier Required Consent within sixty (60) days of the Effective Date and such failure has a material adverse impact on Company’s receipt of the Services, [ * ] The failure to obtain any Supplier Required Consent shall not relieve Supplier of its obligations under this Agreement and Supplier shall not be entitled to any additional compensation or reimbursement of any amounts in connection with obtaining or failing to obtain any Supplier Required Consent or implementing any alternative approach required by such failure.

 

Note: Redacted portions have been marked with [*]. The redacted portions are subject to a request for confidential treatment that has been submitted to the Securities and Exchange Commission.

ARTICLE 9

COMPLIANCE WITH LAWS AND COMPANY POLICIES

Section 9.1 Compliance with Laws . In performing under this Agreement, Supplier shall

 

(A)

comply with all Supplier Laws;

 

(B)

Monitor the issuance of and notify Company of new Laws applicable to the performance of the Services [ * ];

 

(C)

upon becoming aware of new Laws applicable to the performance of the Services [ * ], either due to notification by Company, Supplier’s own awareness of such, or from a third-party source, provide Company with Supplier’s recommendations, and the basis for such recommendations, for changes in the Services or proposals that no changes in the Services are required to comply with such new Laws or changes in Law;

 

(D)

exercise its expertise to assist Company in identifying Laws that may apply to [ * ] the Services, and suggest to Company approaches that Supplier may take with respect to the Services so as to comply with such Laws;

 

(E)

perform changes to the Services to comply with new or changed Laws to the extent such changes have been authorized in accordance with the Change Control Procedure;

 

(F)

upon Company’s approval of such approaches, develop the means to implement the approaches within the Services procedures and techniques to comply with such Laws, and implement such procedures and techniques in accordance with the Change Control Procedure; and

 

(G)

comply with Company’s instructions or requirements in this Agreement; or, in accordance with the Change Control Procedure, as otherwise specified by Company in writing or required by Law; or assist Company in complying with Company Laws as specified in this Agreement or as otherwise specified by Company in writing or required by Law.

Supplier shall have no responsibility to Company for the accuracy of Company’s interpretation of Company Laws. In meeting its obligations under this Section 9.1 , Supplier shall not be deemed to be providing legal advice to Company.

Section 9.2 Changes in Applicable Laws . Each Party shall promptly notify the other Party of any changes in Applicable Laws of which it becomes aware that may impact Supplier’s delivery of [ * ]. Supplier shall comply with additional or new Legal Compliance Obligations applicable to Company or to the Services upon becoming aware thereof, provided that, (i) such compliance shall be implemented in accordance with Change Control Procedure, and (ii) if such compliance will require the use of different or additional resources beyond that which Supplier is then using to provide the Services in accordance with the Service Levels, then the Charges shall be modified accordingly in accordance with the Change Control Procedure. Supplier shall provide reasonable cooperation to Company in Company’s efforts to comply with Company Laws. Supplier shall remain fully informed of changes to Supplier Laws.

Section 9.3 Compliance with Company Policies . Company shall be solely responsible for reviewing, approving, modifying and granting waivers with respect to policies governing (A) Company’s standards, practices, processes, procedures and controls, including those policies set forth in Exhibit 23 (Company Policies), (B) the Services and any activities, including the use of Deliverables, affecting Company’s compliance with Applicable Laws, and (C) associated technologies, architectures and standards,

 

Note: Redacted portions have been marked with [*]. The redacted portions are subject to a request for confidential treatment that has been submitted to the Securities and Exchange Commission.

methodologies and procedures to be used by Supplier in providing the Services to Company that support Company’s regulatory compliance programs (collectively, “ Company Policies ”). The Company Policies include those policies, procedures and practices relating to regulatory compliance and regulated Systems, as set forth in Exhibit 2 (Statement of Work) and Exhibit 24 (Compliance Requirements and Control Objectives). Company shall make available to Supplier in writing any Company Policies in existence as of the Effective Date and any new or revised Company Policies created or revised by Company during the Term provided that if such created or revised policies shall require a change in scope of the Services, such change shall be implemented through the Change Control Procedure. Supplier shall implement all Company Policies applicable to its delivery of the Services, including those created or revised following the Effective Date, and shall deliver the Services in accordance with the Company Policies. The Company Policies applicable to Supplier’s delivery of the Services shall be deemed included as part of the Policies and Procedures Manual as of the time they are made available to Supplier and shall be added by Supplier to the Policies and Procedures Manual upon its next revision, provided , however , that to the extent that modifications to the Services are required to adapt to any new or revised Company Policies, then such revised Company Policies shall become applicable to Supplier’s delivery of the Services as set forth in the Change Request authorizing the modification to the Services.

Section 9.4 Obligation to Perform . Supplier shall perform the Services regardless of changes in Applicable Laws unless performance of such Services would be unlawful. If changes in Applicable Laws prevent Supplier from performing its obligations under this Agreement, Supplier shall develop and, upon Company’s approval in accordance with the Change Control Procedure, implement a suitable workaround until such time as Supplier can perform its obligations under this Agreement without such workaround. In the event such workaround is required due to a change in Supplier Laws, the cost of such change shall be borne by Supplier. In the event such workaround is required due to a change in Company Laws or Company Policies, and such change results in a material increase in the costs to Supplier in delivering the Services, then Supplier shall be entitled to an equitable increase in the applicable Charges under the Change Control Procedure.

Section 9.5 Notification of Failure . If Supplier (i) becomes aware of any material failure to comply with any Applicable Laws, any of the Company Policies, or any of Supplier’s obligations under this Agreement or (ii) becomes aware of any other situation that may reasonably be expected to lead to, has had, or should have been expected to have, any material adverse impact on the Services, or Supplier’s ability to perform its obligations hereunder, then Supplier shall immediately inform Company in writing of such failure or situation and the impact or expected impact and recommend means for addressing such, and Supplier and Company shall meet to discuss Supplier’s recommended means and to formulate an action plan to minimize or eliminate the impact of such failure or situation.

Section 9.6 Evidence of Compliance . Supplier shall furnish any evidence Company reasonably requests in writing that is related to Supplier’s compliance with Applicable Laws or with Company Policies at any time during the Term and, to the extent related to obligations that survive the Term, the period of such survival. The substance, form and timing of such evidence shall be subject to Company’s reasonable satisfaction.

Section 9.7 Licenses . Supplier shall obtain and maintain all applicable authorizations, permits, certificates and licenses required of Supplier in connection with its obligations under this Agreement.

Section 9.8 Remote Computing Service . The Parties agree that in performing the Services contemplated under this Agreement, the parties intend for (i) Supplier to be a “remote computing service” as defined in the Stored Communications Act, 18 U.S.C. §2711, and (ii) Company to be the “subscriber” of the Services for purposes of 18 U.S.C. §2702.

ARTICLE 10

SERVICE LEVELS AND CUSTOMER SATISFACTION

Section 10.1 General . Supplier shall perform the Services at least (i) at the same level and with at least the same degree of accuracy, quality, completeness, timeliness, responsiveness, security and

 

efficiency as was provided prior to the Effective Date by or for Company, and (ii) at the level of the quantitative performance standards for required availability, response times, or other performance standards for the Services (“ Service Levels ”) set forth in Exhibit 3 (Service Level Management). At all times Supplier’s level of performance shall be at least equal to the Service Levels and to standards satisfied by well-managed operations performing services similar to the Services.

Section 10.2 Failure to Perform .

 

(A)

If Supplier fails to meet a Service Level, Supplier shall immediately (1) investigate, assemble and preserve pertinent information with respect to, and report on the causes of, the problem, including performing a root cause analysis of the problem; (2) advise Company, as and to the extent requested by Company, of the status of remedial efforts being undertaken with respect to such problem; (3) minimize the impact of and correct the problem and begin meeting the Service Level; and (4) take appropriate preventive measures so that the problem does not recur.

 

(B)

Supplier recognizes that its failure to meet certain Service Levels may have a material adverse impact on the business and operations of Company. In the event that Supplier fails to meet such Service Levels for reasons other than those that are excused pursuant to Section 10.4 , then in addition to any other remedies available to Company under this Agreement, at law or in equity, Company may elect to recover the applicable Service Level Credit for such failure to meet such Service Level.

Section 10.3 Cooperation with Third Parties . In order for Supplier to provide the Services in accordance with the Service Levels, Supplier may be required to coordinate its efforts with Third Party Vendors. With respect to Service Level failures caused by Third Party Vendors: (A) Supplier shall provide a single point of contact for the management of the prompt resolution of such Service Level failures; and (B) except as set forth in Section 10.4 , Supplier’s failure to meet such Service Levels shall not be excused and Supplier shall remain responsible for the performance of the Services in accordance with the Service Levels.

Section 10.4 Excused Performance . To the extent Supplier demonstrates to Company’s reasonable satisfaction that any Service Level Default or any failure to achieve a milestone or Deliverable deadline (e.g., Transition, Transformation or pursuant to an Order) is directly attributable to: (A) a Force Majeure Event; (B) a breach of this Agreement by Company that prevents Supplier from meeting the applicable Service Level or milestone or Deliverable; or (C) acts or omissions of Company or a Third Party Vendor, provided that (1) Supplier was unable to alert Company of the consequences of such acts or omissions or (2) Company disregarded any such alert by Supplier as to the consequences of such acts or omissions or fails to take necessary corrective actions requested of Company in writing and within the control of Company, (3) Supplier complied with the requirements of the DRP, and (4) Supplier was unable to take other reasonable steps to avert such consequences, then such Service Level shall be measured excluding the time (or other appropriate unit of measure) that the foregoing was in effect or such milestone or Deliverable deadline shall be extended in respect of the time that the foregoing was in effect.

Section 10.5 Periodic Reviews . At least annually and as more fully described in Exhibit 3 (Service Level Management), Company and Supplier shall review the Service Levels and shall make adjustments to them as appropriate to reflect improved performance capabilities associated with advances in the technology and methods used to perform the Services. The Parties expect and understand that the Service Levels shall be improved over time as further described in Exhibit 3 (Service Level Management).

Section 10.6 Measurement and Monitoring Tools . Supplier shall, with respect to each Service Level, prior to the date that such Service Level takes effect, implement and test measurement and monitoring Tools and procedures acceptable to Company to measure and report Supplier’s performance of the Services against the applicable Service Levels. Such measurement and monitoring Tools and procedures shall permit reporting at a level of detail sufficient to verify Supplier’s compliance with the Service Levels. Supplier shall also provide Company with (i) on-line, real time access to the data used by

 

Supplier to calculate its performance against the Service Levels and (ii) documentation relating to the measurement and monitoring tools and procedures utilized by Supplier to generate such data. Given the nature of Company’s multi-vendor environment, any such data may be shared by Company with Third Party Vendors, provided that such Third Party Vendors have executed appropriate non-disclosure agreements or are otherwise bound by confidentiality obligations. The use of any such data by the Third Party Vendors shall be limited to managing the provision and delivery of services, products and resources to Company and resolving any issues or problems relating to the provision and delivery of any such services, products or resources. Company shall not be required to pay any amount in addition to the Charges for (A) such measurement and monitoring Tools or (B) any resources utilized in connection with such measurement and monitoring Tools.

Section 10.7 Third Party Vendor Performance Data . Supplier acknowledges and agrees that it may receive performance data from Third Party Vendors and such performance data shall be Confidential Information of Company. Supplier further agrees that it shall use such performance data only for managing the provision and delivery of services, products and resources and resolving any problems or issues that relate to such services, products and resources. Supplier shall not use any such performance data for any other purpose, except as otherwise agreed by Company.

Section 10.8 Service Level Reporting . No later than the tenth (10th) business day of each month during the Term, Supplier shall provide Company with a monthly performance report describing Supplier’s performance of the Services in the preceding month, which report shall be made available to Company in an online, electronic form (the “ Monthly Service Level Report ”). The Monthly Service Level Report shall:

 

(A)

for each area of the Services, assess the degree to which Supplier has attained or failed to attain the Service Levels;

 

(B)

explain any Service Level Defaults and include a plan for corrective action where appropriate;

 

(C)

describe any Service Level Credits that have been incurred by Supplier due to any Service Level Defaults;

 

(D)

identify any problems or issues that are being caused by the acts or omissions of any Third Party Vendors and the steps being taken to resolve any such problems or issues; and

 

(E)

include such documentation and other information as Company may reasonably request to verify compliance with the Service Levels.

Any failure by Supplier to report on Supplier’s success or failure to meet any Service Level, including if such failure results from Supplier’s failure to implement, or delay in implementing, appropriate measurement and monitoring Tools pursuant to Section 10.6 , shall be deemed to be a Service Level Default with respect to the applicable Service Level.

Section 10.9 Quarterly Reporting . No later than ten (10) days after the end of each calendar quarter during the Term, Supplier shall provide Company with a quarterly analysis and report identifying and analyzing service trends and providing observations and suggestions for the continuous improvement of the Services.

Section 10.10 Customer Satisfaction Surveys .

 

(A)

As set forth in Exhibit 13 (Customer Satisfaction Surveys), Supplier shall, on a periodic basis throughout the Term, survey a representative sample of Authorized Users to ascertain their level of satisfaction with Supplier’s management and provision of the

 

Services. The representative sample, survey format and questions shall be as described in Exhibit 13 (Customer Satisfaction Surveys) and shall be subject to Company’s review and approval.

 

(B)

Supplier shall, within thirty (30) days of the completion of the applicable customer satisfaction survey, (1) conduct a root cause analysis as to the cause of any dissatisfaction; (2) develop an action plan to address and improve the level of satisfaction; (3) present such plan to Company for its review, comment and approval; and (4) take action in accordance with the approved plan and as necessary to improve the level of satisfaction. Supplier’s action plan developed hereunder shall set forth the specific measures to be taken by Supplier and the dates by which each such measure shall be completed. Following implementation of such action plan, Supplier shall conduct a follow-up survey with the affected management to confirm that the cause of any dissatisfaction has be