Business Services Agreement

Exhibit 10.1

 

WSI CONFIDENTIAL

 

SERVICES AGREEMENT

 

This Services Agreement (“Agreement”), dated September 30, 2004 (“Effective Date”), is by and between Williams-Sonoma, Inc. a California corporation, having a principal place of business at 3250 Van Ness Avenue, San Francisco, CA 94109 (“WSI”) and International Business Machines Corporation, a New York corporation having a place of business at 425 Market Street, San Francisco, CA 94105 (“IBM”).

 

W I T N E S S E T H:

 

WHEREAS, WSI and IBM have engaged in negotiations and discussions regarding the IT Optimization Services that have culminated in the formation of the contractual relationship described in this Agreement;

 

WHEREAS, IBM desires to provide to WSI, and WSI desires to obtain from IBM, the services described in this Agreement on the terms and conditions set forth in this Agreement.

 

NOW, THEREFORE, for and in consideration of the agreements set forth below, WSI and IBM agree as follows:

 

ARTICLE 1. DEFINITIONS AND CONSTRUCTION

 

1.1 Definitions. The following defined terms used in this Agreement shall have the meanings specified below:

 

(a) “Acceptance Criteria” shall mean the acceptance criteria set forth in Schedule E, in an applicable Project, or in the Policies and Procedures Manual.

 

(b) “Acceptable Use Policy” means the Acceptable Use Policy for IBM e-business Services, located on the Internet at www.ibm.com/services/e-business/aup.html, as of the Effective Date, and any subsequent modification.

 

(c) “Affected Employee” shall mean an employee of WSI who is, as of the Effective Date, performing Services to be provided by IBM and who is made available by WSI to be considered for offer of employment by IBM.

 

(d) “Affiliate” shall mean, generally, with respect to any entity, any other entity Controlling, Controlled by or under common Control with such entity at the time in question.

 

(e) “Benchmarked Level” has the meaning set forth in section 14.9.

 

(f) “Change(s)” shall have the meaning set forth in the Project Change Request Process.

 

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(g) “Charges” shall mean the fees and any other amounts payable by WSI to IBM pursuant to this Agreement.

 

(h) “Confidential Information” shall have the meaning set forth in Section 10.

 

(i) “Control” shall mean, with respect to any entity, the legal, beneficial, or equitable ownership, directly or indirectly of fifty percent (50%) or more of the capital stock (or other ownership interest, if not a corporation) of such entity ordinarily having voting rights.

 

(j) “Deliverable” shall mean the completed Materials (identified as Deliverables in Schedule A or in any PCR, or identified as Deliverables pursuant to a Project as described in Schedule E) which are delivered by IBM to WSI during the course of IBM’s performance of Services under this Agreement.

 

(k) “Derivative Work” shall mean a work based on one or more preexisting works, including but not limited to a modification, expansion or adaptation, that, if prepared without authorization of the owner of the copyright of such preexisting work, would constitute a copyright infringement under applicable law, but excluding the preexisting work.

 

(l) “Disputed Charges Cap” shall have the meaning set forth in Section 14.7

 

(m) “E-Commerce End Users” shall mean WSI’s customers accessing (via the Internet or otherwise) the Services and WSI Content.

 

(n) “Effective Date” means the first date on which the Agreement has been executed by each of the Parties.

 

(o) “Force Majeure Event” shall have the meaning set forth in Section 13.1.

 

(p) “Harmful Code” shall mean any computer code, programming instruction or set of instructions (i) intentionally designed and/or constructed with the ability to disrupt, harm or otherwise impede in any manner the operation of WSI’s environment or the Deliverables, or (ii) that could disable WSI’s environment or the Deliverables or impair in any way its operation based on the elapsing of a period of time, advancement to a particular date, or other similar occurrence. Harmful Code shall not include programming code, programming instruction or set of instructions that is included as part of the Deliverables to ensure that WSI uses the product in accordance with the license terms (but not payment terms) granted to WSI.

 

(q) “Hired Employee” shall mean each Affected Employee (as defined in Schedule F) who accepts IBM’s offer of employment in accordance with Schedule F, and who completes the IBM application and pre-employment process and who joins IBM.

 

(r) “IBM Agent(s)” shall mean the agents, subcontractors and other representatives of IBM, but excluding IBM employees

 

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(s) “IBM Components” means the IBM and third-party hardware and software used by IBM to perform the Services, including but not limited to those described in Schedules A and G.

 

(t) “IBM Consents” shall mean all licenses, consents, access rights, authorizations and approvals relating to IBM Components that are specified in the Agreement.

 

(u) “IBM Managed Hosting Environment” shall mean, together, the IBM Managed Services and the physical infrastructure provided and managed by IBM to provide such Services, as described in Schedule A, Part IV and Schedule G, Part III.

 

(v) “IBM Project Executive” shall have the meaning set forth in Section 7.2.

 

(w) “IBM Service Location(s)” shall mean any IBM service location set forth in Schedule G, as may be changed from time to time pursuant to Section 2.6.

 

(x) “Intellectual Property Rights” shall mean all rights (including moral rights) in all patents and patent applications, trade secrets, trademarks (whether register or unregistered), service marks, trade names, and copyrights (including rights in computer software).

 

(y) “Invention” shall mean any idea, concept, design, technique, invention, discovery, or improvement, whether or not patentable, that an employee of a Party first conceives or reduces to practice during the Term and in performance under this Agreement and for which a patent application is filed.

 

(z) “Key Positions” shall have the meaning set forth in Section 7.3.

 

(aa) “Losses” shall mean, with respect to any indemnification under Article 20, all costs, damages, and attorney fees paid or payable to any third party asserting the claim that is the subject of the indemnification pursuant to any settlement approved by the indemnitor, or a final judgment or award by a court of competent jurisdiction with respect to such claim.

 

(bb) “Materials” shall mean literary works or other tangible expressions of authorship (such as specifications, design documents and analyses reduced to writing, programs, program listings, software, programming tools, documentation, reports, drawings, machine readable text and files and similar work product). The term Material does not include generally available commercial software.

 

(cc) “New Service” shall have the meaning set forth in Schedule A.

 

(dd) “Parties” shall mean WSI and IBM, collectively.

 

(ee) “Party” shall mean either WSI or IBM, as the case may be.

 

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(ff) “Project” shall mean any New Service which IBM and WSI agree should be a Project and performed in accordance with the provisions of Schedule E, Part I.

 

(gg) “Project Change Request Process” or “PCR” shall mean the written description of the change management process applicable to any Changes under this Agreement as set forth in Schedule A, Section 3.6.

 

(hh) “Project Staff” shall mean the personnel of IBM and IBM Agents who provide the Services.

 

(ii) “Reports” shall have the meaning set forth in Section 9.3.

 

(jj) “Representative Sample” shall mean the meaning set forth in Section 14.9.

 

(kk) “Service Category” shall mean the Services that IBM is to provide in connection with each of the following: (i) Groupware, (i) Middleware and Application Support, (iii) Database Support, (iv) Managed Hosting, and (v) ODCS Services.

 

(ll) “Service Levels” shall have the meaning set forth in Section 5.1.

 

(mm) “Service Level Credit” shall have the meaning set forth in Section 5.1.

 

(nn) “Service Location(s)”shall mean any WSI Service Location or IBM Service Location, as applicable.

 

(oo) “Service Recipients” shall mean those WSI Affiliates Controlled by WSI and listed in Schedule N or other WSI Affiliates, added from time to time upon request by WSI.

 

(pp) “Services” shall mean the services, tasks, functions and responsibilities described in this Agreement which are the responsibility of IBM as they may be modified through the Project Change Request Process during the Term in accordance with this Agreement.

 

(qq) “Start Date” means October 16, 2004, meaning the date whereupon the Services and Charges shall commence.

 

(rr) “Term” shall have the meaning set forth in Section 17.1.

 

(ss) “Termination Assistance Period” shall mean a period of time designated by WSI, commencing on the date a determination is made by WSI pursuant to this Agreement that there will be an expiration or termination of this Agreement for cause or for convenience in accordance with the terms of this Agreement and continuing for up to three (3) months after the expiration or termination of this Agreement, during which period IBM shall provide the Termination Assistance Services in accordance with the terms and conditions of this Agreement.

 

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(tt) “Termination Assistance Services” shall mean (i) the Services to the extent WSI reasonably requests such Services during the Termination Assistance Period, (ii) IBM’s reasonable cooperation with WSI or another service provider designated by WSI in the transfer of the Services to WSI or such other service provider in order to facilitate the transfer of the Services to WSI or such other service provider, and (iii) any services reasonably requested by WSI in order to facilitate the transfer of the Services to WSI or another service provider designated by WSI, all of the foregoing subject to the further terms set forth in Article 19.

 

(uu) “Transition Plan” shall have the meaning set forth in Section 2.5.

 

(vv) “Transition Services” shall have the meaning set forth in Section 2.5.

 

(ww) “Type I Materials” shall have the meaning set forth in Section 11.1(a).

 

(xx) “Type II Materials” shall have the meaning set forth in Section 11.1(b).

 

(yy) “Type III Materials” shall have the meaning set forth in Section 11.1(c).

 

(zz) “Type IV Materials” shall have the meaning set forth in Section 11.1(d).

 

(aaa) “Wind Down Costs” shall mean the costs reasonably incurred by IBM as a direct result of a termination with respect to IBM Components (software and hardware) and IBM Project Staff previously dedicated to the provision of the Services, including: (i) non-cancelable license fees, license termination fees, or other non-cancelable charges for licensed software; (ii) the fair market value of (x) any dedicated IBM-owned IBM Component that is not redeployed or sold and (y) a percentage of any IBM-owned shared IBM Components based on the pro-rata portion of the Component(s) dedicated to WSI that is not re-deployed or sold; (iii) salaries and associated employee benefit costs for a reasonable number of dedicated IBM employees for up to ninety (90) days pending the redeployment or separation of such employee (provided, there shall be no cost to WSI for employees redeployed prior to the effective date of such termination), or severance payments due and payable to dedicated IBM employees under the applicable written IBM severance plans; (iv) non-cancelable lease payments, lease termination fees, or other non-cancelable charges for leased IBM Components, including a percentage of any IBM-leased IBM Components based on the pro-rata portion of such Component(s) dedicated to WSI (and that is not re-deployed or sold); (v) IBM moving expenses incurred in order to move out of the WSI facilities, but excluding expenses associated with transportation to or moving into successor non-WSI facilities. In those circumstances in which IBM is entitled to recover Wind Down Costs under this Agreement, IBM shall submit a detailed estimate of the anticipated Wind Down Costs, together with ways in which such costs may be mitigated or reduced, within thirty (30) days after the event triggering such Wind Down Costs. The Parties shall then review in good faith and agree upon the Wind Down Costs to be paid by WSI. The Wind Down Cost to be recovered by IBM shall be reduced to the extent WSI or its designees assume financial obligations that IBM would otherwise have incurred as a result of such termination. In addition, IBM shall use commercially

 

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reasonable efforts to minimize any Wind Down Cost by, among other things, redeploying the resources in question or terminating the underlying obligations.

 

(bbb) “WSI Agents” shall mean the agents, subcontractors, and other representatives of WSI, but excluding WSI employees.

 

(ccc) “WSI Competitors” shall mean those entities listed on Schedule K, as such Schedule may be updated from time to time by mutual agreement of the Parties.

 

(ddd) “WSI Components” means software or hardware used by or provided by WSI. WSI Components shall not include IBM Components.

 

(eee) “WSI Consents” shall mean all licenses, consents, access rights, authorizations and approvals that are necessary to allow IBM and IBM Agents the right or license to access, use and/or modify (including creating Derivative Works) hardware, software, firmware and other products used by WSI and necessary for IBM to perform the Services without misappropriating or infringing such party’s patents, copyrights, trade secrets or other rights in and to its hardware, software, firmware, middleware or other products.

 

(fff) “WSI Content” shall mean (i) information displayed on WSI websites including, but not limited to (1) information surrounding products and categories, (2) editorial content that appears on the sites in the form of articles, recipes, tips, projects, (3) customer service information such as privacy policy, shipping information, and frequently asked questions, and (ii) information, software, and data that WSI provides for the Services, including, without limitation, any hypertext markup language files, scripts, programs, recordings, sound, music, graphics, images, applets or servlets that WSI or its subcontractors or Service Recipients create, install, upload or transfer in or through the IBM Managed Hosting Environment.

 

(ggg) “WSI Data” shall mean any data or information of WSI or any Service Recipient that is provided to, obtained by, or processed by IBM in connection with this Agreement or the performance of its obligations, including, but not limited to data and information with respect to the businesses, customers and customer accounts, operations, facilities, products, orders, rates, consumer markets, assets, and expenditures of WSI or any Service Recipient, but excluding IBM products, IBM Materials, and the Confidential Information or proprietary or intellectual property of IBM, IBM Affiliates or IBM Agents.

 

(hhh) “WSI Project Executive” shall have the meaning set forth in Section 7.1.

 

(iii) “WSI Service Location(s)” shall mean any WSI service location set forth in Schedule J, as may be changed from time to time.

 

(jjj) “WSI Third Party Contractors” shall have the meaning set forth in Section 2.2.

 

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1.2 Other Terms. The terms defined in this Article include the plural as well as the singular and the derivatives of such terms. Unless otherwise expressly stated, the words “herein,” “hereof,” and “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section, subsection or other subdivision. Article, Section, Subsection, Schedule and Exhibit references refer to articles, sections and subsections of, and schedules and exhibits to, this Agreement. The words “include” and “including” shall not be construed as terms of limitation. The words “day,” “month,” and “year” mean, respectively, calendar day, calendar month and calendar year.

 

1.3 Associated Contract Documents. This Agreement includes each of the following Schedules and their attachments and/or Exhibits, all of which are attached to this Agreement and incorporated into this Agreement by this reference:

 

Schedule A		Services and Support Responsibilities
Schedule B		Service Levels
Schedule C		Charges
Schedule D		Transition
Schedule E		Projects
Schedule F		Affected Employees
Schedule G		Components, Supported Systems, and Infrastructure Documentation
Schedule H		WSI Safety and Security Policies
Schedule I		Approved IBM Subcontractors
Schedule J		Service Locations
Schedule K		WSI Competitors
Schedule L		Key Positions
Schedule M		WSI Travel Expense Policies
Schedule N		Service Recipients

 

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ARTICLE 2. SERVICES

 

2.1 Generally. Commencing as of the Effective Date and continuing throughout the Term, IBM shall provide to WSI, the Services set forth in this Agreement and in Schedules A-E and G and their respective attachments. The Services shall also include the following:

 

(a) the services, functions or responsibilities not specifically described in this Agreement but that are an inherent part of or are required for proper performance or provision of the Services in accordance with this Agreement, such services, functions and responsibilities shall be deemed to be included within the scope of the Services, as if such services, functions or responsibilities were specifically described in this Agreement except for any services, functions and responsibilities expressly identified as WSI’s responsibility therein; and

 

(b) the information technology related services, functions and responsibilities reasonably related to the Services described in this Agreement and performed during the twelve (12) months preceding the Effective Date by the Hired Employees, even if the service, function, or responsibility is not specifically described in this Agreement unless the Agreement specifically provides otherwise; except to the extent that such services, functions and responsibilities were thereafter no longer expected to be performed by the Hired Employees after such twelve (12) months.

 

2.2 Non-Exclusive Services. The Parties agree that IBM is not the exclusive provider of Services to WSI, and, except as set forth herein, the type and amount of Services purchased by WSI shall be at WSI’s discretion. Notwithstanding anything in this Agreement, WSI shall have the right, at its sole discretion, to contract with third party contractors (“WSI Third Party Contractors”) to perform any or all of the types of services described in this Agreement, or perform such services for itself, subject to the minimum revenue commitment set forth in Schedule C, Part I, Section 6.0 (Additional or Reduced Resources; Limitations and Resource Minimums), the payment of applicable Wind-Down fees and Termination for convenience fees and limitations.

 

2.3 Additional and New Services. WSI may from time to time during the Term request that IBM perform new or additional services as part of the Services. Such request shall be made in accordance with the Project Change Request Process. Upon receipt of such request, IBM shall propose an estimate for the additional or new services using the existing pricing mechanisms if applicable, or an agreed unit price, or as a Project, subject to WSI’s acceptance.

 

2.4 Users of the Services. IBM shall provide the Services solely to WSI and to any Service Recipients; provided WSI is responsible for the performance of WSI’s obligations under this Agreement with respect to the Services provided to such Service Recipients.

 

2.5 Transition. IBM shall perform transition services to accomplish the transition of the Services to IBM (the “Transition Services”). The Transition Services shall be performed in accordance with the transition plans set forth in Schedule D (“Transition Plan”).

 

2.6 Service Locations.

 

(a) The Services shall be provided to and from (i) the WSI Service Locations, and/or (ii) the IBM Service Locations. Changes to the IBM Service Locations shall go

 

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through the Project Change Request Process. Provision of the Services by IBM from a service location other than (1) a WSI facility, or (2) as set forth on Schedule J must be approved by WSI, which approval shall not be unreasonably withheld. Notwithstanding, an IBM relocation request will be deemed reasonable by WSI for IBM’s provision of the Services from another IBM location in the United States, if IBM can reasonably demonstrate that such IBM location has the same or substantially similar (i) security; (ii) Service Level commitments; and (iii) SAS-70 audit requirements as set forth in Section 15.3. The IBM Project Executive will inform the WSI Project Executive of (i) any relocation from one IBM Service Location to another prior to such relocation, and (ii) which Services are being provided from which IBM Service Locations. Except as otherwise agreed by WSI, for changes in IBM Service Locations requested by IBM, IBM shall be responsible for incidental costs related to such change, and any incremental expenses incurred by WSI as a result of a relocation requested by IBM to an IBM Service Location. In addition, such change shall not increase the Charges. The provision of Services by a limited number of employees for a short duration from a location other than an IBM Service Location (e.g. member of the Project Staff working from home for a short period of time) shall not require consent from WSI.

 

(b) In the event that WSI relocates a WSI Service Location, or the portion of a WSI Service Location used by IBM to provide the Services, WSI will provide IBM with space and support in the new WSI Service Location that is comparable to the space and support provided in the previous location, and reimburse IBM for any one time or ongoing expenses incurred as a result of the relocation, provided that such expenses shall be mutually agreed upon by IBM and WSI prior to the relocation.

 

(c) A party’s use of a Service Location provided by the other party does not constitute or create a leasehold interest.

 

2.7 Use of WSI Service Locations.

 

(a) IBM will use the WSI Service Locations for the sole purpose of providing the Services. When the WSI Service Locations are no longer required for performance of the Services, IBM will return the WSI Service Location to WSI in substantially the same condition as when IBM began use of the Service Location subject to reasonable wear and tear.

 

(b) WSI will provide

 

(i) during the Term, for the IBM Project Executive and any necessary project office administrative staff (not to exceed five persons), and

 

(ii) for the period of time required for the Pre-Transformation Services, for the on-site Services staff (not to exceed five persons) and the Hired Employees, work-space, office furniture and badge access in the WSI Service Locations described in Schedule J. Project Staff using the office facilities provided by WSI will be accorded reasonable access to the communications wiring in such facilities (including fiber, copper and wall jacks) and the use of certain shared office equipment and services, such as

 

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photocopiers, local and long distance telephone service for WSI-related calls, telephone handsets, mail service, internet connectivity, office support service (e.g., janitorial), heat, light, and air conditioning; provided that such access and usage shall be solely for and in connection with the provision of Services.

 

2.8 IBM Cooperation. IBM and IBM Agents shall reasonably cooperate with and work in good faith with WSI or WSI Third Party Contractors in the performance of the Services.

 

2.9 Change in Provision of Services. In the event IBM discontinues its performance of all or substantially all of the ODCS or Managed Hosting services, or changes the manner in which IBM performs such services, IBM will replace such services with alternate services at equal or better Service Levels for the same or lower Charges (e.g., IBM will not charge WSI any additional Transition Charges, Fixed Charges or Variable Charges).

 

ARTICLE 3. WSI OBLIGATIONS

 

IBM’s failure to perform its obligations under this Agreement or to meet the Service Levels shall be excused if and to the extent such IBM non-performance is directly caused by WSI’s failure to perform its responsibilities in this Agreement, and provided IBM notifies WSI of such failure and its inability to perform under such circumstances, and IBM uses commercially reasonable efforts to perform notwithstanding WSI’s failure. In such event, the Parties will use reasonable commercial efforts to reach agreement through the Project Change Request Process regarding required Changes to this Agreement to address such failure and will work to control the impact of such delay. The Project Executives of both parties shall meet and discuss how the Project Staff can be reasonably utilized on other Deliverables for the Services not impacted by the WSI delay. WSI acknowledges that delays caused by WSI may affect the schedule, Deliverables, and Charges but shall not affect WSI’s obligation to pay amounts due and payable. Notwithstanding the foregoing, such failures or delays of WSI as set forth above shall not constitute a material breach of the Agreement by WSI.

 

ARTICLE 4. DELIVERY AND ACCEPTANCE

 

4.1 Delivery. Any Deliverables specified in a Schedule or as agreed to pursuant to a PCR or as part of a Project will be delivered to WSI for evaluation and acceptance in accordance with the dates specified in this Agreement.

 

4.2 Acceptance of Deliverables. For each Deliverable, WSI shall have an acceptance period specified in a Schedule, a PCR or in a Project, from the date on which IBM delivers the individual Deliverable to examine and test the Deliverable to determine whether the Deliverable meets the applicable Acceptance Criteria; or, if no such number of days is so specified for any Deliverable, WSI shall have an acceptance period of five (5) business days (“Acceptance Period”). A Deliverable shall be deemed to have been accepted if WSI (a) issues a written acceptance, or (b) uses the Deliverable in production for WSI’s business operations.

 

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ARTICLE 5. SERVICE LEVELS

 

5.1 Service Levels. Quantitative levels of performance (“Service Levels”) for certain of the Services shall be set forth in Schedule B. IBM’s level of performance shall be consistent with the Service Levels. IBM recognizes that its failure to meet a Service Level may have a material adverse impact on the business and operations of WSI and that the damage from IBM’s failure to meet a Service Level is not susceptible of precise determination. Accordingly, in the event that IBM fails to meet a Service Level, then as WSI’s sole and exclusive monetary remedy with respect to such failure, IBM shall pay as liquidated damages the applicable credit set forth in Schedule B (“Service Level Credit”), subject to the terms set forth in this Agreement and in such Schedule.

 

5.2 Root Cause Analysis. Upon receipt of a notice from WSI with respect to IBM’s failure to meet a specific Service Level(s), IBM shall, as soon as reasonably practicable, (a) to the extent necessary, perform a root-cause analysis to identify the cause of such failure, (b) provide WSI with a report detailing the cause of, and procedure for avoiding reoccurrence of such failure, and (c) correct the cause of such failure or if not susceptible to correction, use appropriate measures to prevent the recurrences of such failures.

 

5.3 Measurement and Monitoring Tools. IBM shall implement the measurement and monitoring tools and procedures required to measure and report IBM’s performance of the Service Level(s). Such measurement and monitoring and procedures and the backup documentation to be provided to WSI to verify that IBM’s performance of the Services is in compliance with the Service Levels shall be described in Schedule A.

 

ARTICLE 6. SECURITY

 

IBM shall maintain and enforce at the IBM Service Locations, commercially reasonable safety and security procedures, the procedures described in Schedule A and any other procedures agreed upon by the Parties.

 

ARTICLE 7. PROJECT STAFF

 

7.1 WSI Project Executive. WSI shall appoint an individual (the “WSI Project Executive”) who, from the date of this Agreement, shall serve as the primary WSI representative under this Agreement. The WSI Project Executive shall (a) have overall responsibility for managing and coordinating the performance of WSI’s obligations under this Agreement, and (b) be authorized to act for and on behalf of WSI with respect to all matters relating to this Agreement. Notwithstanding the foregoing, the WSI Project Executive may, upon written notice to the IBM Project Executive, delegate some of his or her responsibilities to other WSI employees, as the WSI Project Executive deems appropriate.

 

7.2 IBM Project Executive. IBM shall appoint an individual (the “IBM Project Executive”) who, from the date of this Agreement, shall serve as the primary IBM representative under this Agreement. IBM’s appointment of any IBM Project Executive

 

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shall be subject to WSI’s prior approval, which shall not be unreasonably withheld. The IBM Project Executive shall (a) have overall responsibility for managing and coordinating the performance of IBM’s obligations under this Agreement, and (b) be authorized to act for and on behalf of IBM with respect to all matters relating to this Agreement.

 

7.3 Key Positions. IBM acknowledges that select members of the Project Staff filling the key positions designated in Schedule L (“Key Positions”) are critical to the Parties in providing the Services hereunder. With respect to Key Positions, the Parties agree as follows:

 

(a) Each individual in a Key Position may be dedicated to the WSI account on a part-time or full-time basis, as described in Schedule L;

 

(b) Before assigning an individual to a Key Position, whether as an initial assignment or as a replacement, IBM shall (i) notify WSI of the proposed assignment, (ii) introduce the individual to the WSI Project Executive and other appropriate representatives of WSI as the two Project Executives agree, (iii) provide WSI with a resume, (iv) allow WSI to interview the individual, and (v) obtain WSI’s approval for such assignment. IBM shall only assign an individual to an Key Position who is approved by WSI;

 

(c) Other than in the case of death, disability, illness, family or medical leave, or cessation of employment with IBM, IBM shall not replace or reassign individuals in Key Positions from the date of his or her assignment to WSI under this Agreement through the period set forth in Schedule L unless WSI consents to such reassignment or replacement of such individual; and

 

(d) IBM shall not assign any individual in a Key Position to the account of a WSI Competitor on a full or part-time basis without WSI’s consent (a) while such individual is assigned to WSI under this Agreement, and (b) for a period of six (6) months following the date that such individual is removed from, or ceases to provide Services. IBM shall not be in violation of this provision if an individual in a Key Position is assigned to work for a client of IBM that subsequently acquires or merges with or is acquired by a WSI Competitor.

 

7.4 Replacement and Retention.

 

(a) If WSI decides that any member of the Project Staff should not continue in that position, then WSI shall give IBM written notice to that effect. After receipt of such notice, IBM shall have a reasonable period of time in which to consult with WSI and investigate the matters stated in such notice, discuss its findings with WSI and resolve any problems with such person. If, following such period, WSI requests replacement of such person, IBM shall replace that person with another person of suitable ability and qualifications; provided, however, that in the event a member of the Project Staff has violated or allegedly violated its confidentiality obligations or applicable laws, WSI can require immediate removal of such member without the investigation described above.

 

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Nothing in this provision shall operate or be construed to limit IBM’s responsibility for the acts or omissions of the members of the IBM Project Staff. Any removal of an individual in a Key Position pursuant to this Section 7.4 shall be deemed consent by WSI as required by Section 7.3(c).

 

(b) IBM shall maintain backup procedures and conduct the replacement of members of the Project Staff in such a manner so as to provide a reasonable and orderly succession for any member who is replaced.

 

(c) WSI and IBM both agree that it is in their best interests to minimize the turnover rate of the Project Staff. Accordingly, if WSI and IBM agree that IBM’s turnover rate or WSI’s requests for replacement personnel is adversely impacting or may adversely impact IBM’s provision of the Services, then the Parties shall meet to discuss the extent of and the reasons for the turnover rate and/or replacement requests, and, if appropriate, the Parties shall mutually agree on a program to decrease the turnover rate and/or replacement requests, including, if applicable, changes to the schedules affected by WSI’s requests for replacement of personnel. In any event, notwithstanding transfer or turnover of personnel, except as otherwise agreed to by the Parties, IBM remains obligated to perform the Services in accordance with this Agreement.

 

7.5 IBM Employee Agreements. IBM has (a) (i) entered into a non-disclosure agreement with each IBM employee that is a member of the Project Staff and (ii) will cause such IBM employees to maintain and enforce the confidentiality provisions of this Agreement both during and after their assignment to the WSI account, and (b) to the extent necessary to comply with IBM’s obligations hereunder, has entered into an agreement with each of the IBM employees performing the Services which assigns, transfers and conveys to IBM all of such IBM employee’s right, title and interest in and to any Materials (including any Deliverables) created pursuant to this Agreement, including all Intellectual Property Rights in and to such Materials.

 

7.6 Subcontractors.

 

(a) IBM shall not delegate or subcontract any of its material obligations under this Agreement or any obligations in which the subcontractor would have direct access to WSI’s Confidential Information without WSI’s prior written consent, and WSI shall have the right to approve or disapprove the use of the proposed subcontractors in its reasonable discretion. The subcontractors set forth on Schedule I as of the Effective Date shall be deemed to be accepted by WSI. Notwithstanding its approval of a subcontractor, WSI may request IBM to remove a subcontractor from the WSI account, subject to Section 7.4.

 

(b) No subcontracting shall release IBM from its responsibility for its obligations under this Agreement. IBM shall be responsible for the work and activities of IBM Agents providing services to IBM in connection with IBM’s provision of the Services, including compliance with the terms of this Agreement.

 

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(c) IBM’s use, in the ordinary course of business, of third party services or products, including individual programmers and other personnel, that are not material to any particular function constituting a part of the Services, that do not allow such subcontractor to have direct access to WSI’s Confidential Information, and that do not result in a material change in the way IBM conducts its business shall not constitute a delegation or subcontracting of IBM’s responsibilities under this Agreement. Nonetheless, if WSI expresses any concerns to IBM about any such third party services or products, IBM shall discuss such concerns with WSI and work in good faith to resolve WSI’s concerns on a mutually acceptable basis.

 

(d) IBM shall (i) enter into a non-disclosure agreement with each of IBM Agents providing services to IBM in connection with IBM’s provision of the Services and cause each such IBM Agent to enter into non disclosure agreement with its employees which include provision for the protection of WSI’s Confidential Information, that are no less restrictive than those set forth in the non-disclosure agreement executed by and between IBM and WSI, and (ii) to the extent necessary to comply with IBM’s obligations hereunder, enter into an agreement with each of the IBM Agents which assigns, transfers and conveys to IBM all of such IBM Agent’s right, title and interest in and to any Materials (including any Deliverables) created pursuant to this Agreement, including all Intellectual Property Rights in and to such Materials.

 

7.7 Conduct of IBM Personnel. While at the WSI Service Locations, IBM shall, and shall cause IBM Agents to, (a) comply with the standard rules and regulations and WSI Safety and Security Policies regarding safety and health, security, personal and professional conduct generally applicable to such WSI Service Locations as set forth in Schedule J, which may be updated from time to time by WSI, subject to IBM’s prior consent to such updates, which consent shall not be unreasonably withheld, and (b) otherwise conduct themselves in a reasonably businesslike manner.

 

7.8 Hired Employees. The employment of certain employees of WSI by IBM, as contemplated by the provisions of Schedule F, shall be effected in accordance with the terms and conditions set forth in Schedule F.

 

7.9 IBM Personnel. Except as otherwise expressly set forth in this Agreement, the Parties intend to create an independent contractor relationship and nothing in this Agreement shall operate or be construed as making WSI or IBM partners, joint venturers, principals, joint employers, agents or employees of or with the other. No officer, director, employee, agent, Affiliate, contractor or subcontractor retained by IBM to perform work on WSI’s behalf hereunder shall be deemed to be an officer, director, employee, agent, Affiliate, contractor or subcontractor of WSI for any purpose. IBM, not WSI, has the right, power, authority and duty to supervise and direct the activities of the IBM Project Staff and to compensate such IBM Project Staff personnel for any work performed by them on WSI’s behalf pursuant to this Agreement. IBM, and not WSI, shall be responsible and therefore solely liable for all acts and omissions of IBM Project Staff.

 

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ARTICLE 8. THIRD PARTY CONSENTS

 

8.1 Responsibility.

 

(a) WSI shall be responsible for obtaining all WSI Consents. At WSI’s request, IBM will assist WSI in obtaining the Consents. WSI shall pay all transfer, license, re-licensing or termination charges or expenses associated with obtaining any WSI Consents or terminating any licenses or agreements as to which WSI is unable to obtain such WSI Consents.

 

(b) IBM shall be responsible for obtaining all IBM Consents. IBM shall pay all transfer, license, re-licensing or termination Charges or expenses associated with obtaining any IBM Consents or terminating any licenses or agreements as to which IBM is unable to obtain such IBM Consents.

 

8.2 Contingent Arrangements. If, despite using all commercially reasonable efforts, WSI is unable to obtain a WSI Consent, then, unless and until such WSI Consent is obtained, IBM shall use commercially reasonable efforts to determine and adopt, subject to WSI’s prior approval through the Project Change Request Process, alternative approaches to performing the Services.

 

ARTICLE 9. MANAGEMENT AND CONTROL

 

9.1 Policy and Procedures Manual.

 

(a) As part of the Services, and at no additional cost to WSI, IBM shall deliver to WSI for its review, comment and approval (i) an outline of the topics to be addressed in the Policy and Procedures Manual within thirty (30) days after the Effective Date, and (ii) a final draft of the Policy and Procedures Manual within ninety (90) days after the Effective Date (the “Policy and Procedures Manual”). At a minimum, the Policy and Procedures Manual shall include the following:

 

(i) a detailed description of the Services and the manner in which each will be performed by IBM, including (A) the equipment, software and systems to be procured, operated, supported or used; (B) documentation (including operations manuals, user guides, specifications, policies/procedures and the disaster recovery plans) providing further details regarding such Services; and (C) the specific activities to be undertaken by IBM in connection with the Services, including, where appropriate, the direction, supervision, monitoring, staffing, reporting, planning and oversight activities to be performed by IBM under this Agreement;

 

(ii) the procedures for WSI/IBM interaction and communication, including: (i) call lists; (ii) procedures for and limits on direct communication by IBM with WSI personnel; (iii) problem management and escalation procedures; (iv) priority and project procedures; (v) acceptance testing; (vi) quality assurance procedures and checkpoint reviews; (vii) the Project Change Request Procedures; and (viii) interaction

 

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and communication regarding annual and quarterly financial objectives, budgets, and performance goals;

 

(iii) WSI’s existing and applicable procedures to the extent to be used by IBM and as agreed by the Parties;

 

(iv) quality assurance processes and procedures to ensure that the Services are performed in an accurate and timely manner, in accordance with the Service Levels and IBM’s obligations under this Agreement including verification, checkpoint reviews, testing, acceptance and other procedures for WSI to assure the quality and timeliness of IBM’s performance; and

 

(v) practices and procedures addressing such other issues and matters as WSI shall require.

 

(b) IBM shall incorporate any reasonable comments or suggestions of WSI into the Policy and Procedures Manual and shall deliver a final revised version to WSI within fifteen (15) days of its receipt of such comments and suggestions for WSI’s approval. The Policy and Procedures Manual will be delivered and maintained by IBM in hard copy and electronic formats and will be accessible electronically to WSI in a manner consistent with WSI’s security policies.

 

(c) IBM shall perform the Services in accordance with WSI’s then-current policies and procedures until the Policy and Procedures Manual is finalized and agreed upon by the Parties. Thereafter, IBM shall perform the Services in accordance with the Policy and Procedures Manual and this Agreement. In the event of a conflict between the provisions of this Agreement and the Policy and Procedures Manual, the provisions of this Agreement shall control unless the Parties expressly agree otherwise and such agreement is set forth in the relevant portion of the Policy and Procedures Manual.

 

(d) IBM shall promptly modify and update the Policy and Procedures Manual as is necessary to reflect changes in the operations or procedures described therein. IBM shall provide the proposed changes in the manual to WSI for review, comment and approval. To the extent any such change could (i) increase WSI’s total costs of receiving the Services; (ii) require material changes to WSI facilities, systems, software or equipment; (iii) have a material adverse impact on the functionality, interoperability, performance, accuracy, speed, responsiveness, quality or resource efficiency of the Services, or (iv) violate or be inconsistent with WSI standards, WSI may withhold such approval in its sole discretion.

 

(e) IBM shall own all right, title and interest in the Policy and Procedures Manual, provided, however, that WSI shall be the sole and exclusive owner of all portions of the Policy and Procedures Manual provided by WSI. For those portions not owned by WSI, the Policy and Procedures Manual shall be deemed a Type II Material.

 

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9.2 Project Change Request Process.

 

(a) All Changes shall be implemented in accordance with the Project Change Request Process.

 

(b) IBM shall update the Project Change Request Process as necessary and shall provide such updated Project Change Request Process to WSI for its approval.

 

(c) In the event the Parties cannot reach agreement on a Change request, the Parties will resolve such dispute in accordance with Article 23.

 

9.3 Governance. WSI and IBM agree to jointly establish a governance structure to provide advice and counsel to the WSI and IBM Project Executives as set forth in Schedule A.

 

9.4 Reports. IBM shall provide WSI with reports as detailed in Schedule A in the format and at the frequencies provided therein. In addition, from time to time, the parties may agree in writing upon additional Reports to be generated by IBM and delivered to WSI on an ad hoc or periodic basis.

 

9.5 Meetings. During the Term, representatives of the Parties shall meet periodically as described in Schedule A and as requested by the WSI Project Executive to discuss matters arising under this Agreement. Unless otherwise agreed to by the parties prior to a meeting, each Party shall bear its own costs in connection with the attendance and participation of such Party’s management representatives in such meetings. WSI agrees to pay IBM actual travel costs for any WSI-requested travel for IBM personnel who are not regularly scheduled to attend such management meetings (e.g. delivery personnel, IBM technical personnel).

 

ARTICLE 10. CONFIDENTIALITY

 

10.1 Confidential Information. IBM and WSI each acknowledge and agree that the rights and obligations with respect to Confidential Information (as such term is defined in the AECI) exchanged between the Parties shall be as set forth in the Agreement for the Exchange of Confidential Information (“AECI”), as modified, agreement #9765141. The Parties agree that for the purposes of Confidential Information exchanged pursuant to this Agreement, the confidentiality period shall be five (5) years following disclosure.

 

10.2 Exceptions.

 

(a) WSI has advised IBM that it intends to file the Agreement with the Securities and Exchange Commission (“SEC”). [***] WSI agrees that prior to making

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[***]

Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

 

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the filing with the SEC, WSI will file a confidential treatment request with the SEC’s Freedom of Information Act Desk (the “FOIA Desk”) and therein it will seek to redact at a minimum:

 

(i)

[***]

 

(ii)

[***]

 

(iii)

[***]

 

(iv)

[***]

 

(v)

[***]

 

(vi)

[***]

 

(vii)

[***]

 

(viii)

[***]

 

(ix)

[***]

 

together with such other terms of the Agreement that WSI reasonably considers contain confidential and sensitive commercial information. [***]

 

(b) [***]

 

10.3 Exceptions. Notwithstanding anything in the Agreement (including Section 24.12) or the AECI, the existence of this Agreement and the relationship of the Parties shall not be Confidential Information.

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[***]

Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

 

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ARTICLE 11. OWNERSHIP AND LICENSING

 

11.1 Materials. All Materials shall be identified as a Type I, Type II, Type III, or Type IV Material or otherwise as agreed to by the Parties in writing. In the event a Material is not identified, such Material shall be a Type IV Material. Ownership or licensing of the Materials as set forth in this Section 11.1 does not affect either Party’s confidentiality obligations under the AECI with respect to the other’s Confidential Information.

 

(a) “Type I Materials” shall mean those Materials created during the performance of the Services, in which WSI shall have all right, title and interest (including United States and foreign copyrights). All such Materials shall be considered works for hire owned by WSI. If any such Material may not be considered a work made for hire under applicable law, IBM hereby irrevocably assigns to WSI upon payment in full for such Material as such payment is defined in this Agreement , all of IBM’s right, title and interest in and to such Material, including United States and, to the extent applicable, foreign copyrights. IBM agrees to execute any documents and take other actions reasonably requested by WSI, at WSI’s cost, to effectuate the purposes of this Section. IBM shall have the right to retain one copy of the Type I Materials. WSI grants IBM (i) an irrevocable, non-exclusive, worldwide, paid-up license to use, execute, reproduce, display, perform, and distribute (internally and externally) copies of and prepare Derivative Works based on Type I Materials, and (ii) the right to authorize others to do any of the former.

 

(b) “Type II Materials” shall mean those Materials created during the performance of the Services or otherwise (such as existing prior to the Effective Date), in which IBM or third parties shall have all right, title and interest (including United States and foreign copyrights). IBM shall deliver one copy of the Type II Materials to WSI. IBM grants to WSI an irrevocable, non-expiring, non-exclusive, worldwide, paid-up license to use, execute, reproduce, display, perform and distribute, to WSI Affiliates only copies of Type II Materials. WSI agrees to execute any documents and take other actions reasonably requested by IBM, at IBM’s cost, to effectuate the purposes of this Section.

 

(c) “Type III Materials” shall mean those Materials created during the performance of the Services in which WSI shall have all right, title and interest (including United States and foreign copyrights). All such Materials shall be considered works for hire owned by WSI. If any such Material may not be considered a work made for hire under applicable law, IBM irrevocably assigns to WSI, upon payment in full for such Material as such payment is defined in this Agreement, all of IBM’s right, title and interest in and to such Materials, including United States and, to the extent applicable, foreign copyrights. IBM agrees to execute any documents and take other actions reasonably requested by WSI at WSI’s cost to effectuate the purposes of this Section. IBM shall have the right to retain one copy of the Type III Materials solely for the purposes of demonstrating compliance with this Agreement; provided, however, that IBM shall have no license or ownership rights to Type III Materials.

 

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(d) “Type IV Materials” shall mean those Materials created during the performance of the Services or otherwise (such as existing prior to the Effective Date), in which IBM or third parties shall have all right, title and interest (including United States and foreign copyrights). IBM shall deliver one copy of the Type IV Materials to WSI. WSI agrees to execute any documents and take other actions reasonably requested by IBM, at IBM’s cost, to effectuate the purposes of this Section. IBM grants to WSI an irrevocable, non-expiring, non-exclusive, worldwide, paid-up license to (i) use, execute, reproduce, display, perform, make derivative works and distribute, to WSI Affiliates only, copies of Type IV Materials; and (ii) the right to authorize third parties to do any of the former solely on behalf of and for the benefit of WSI for the sole purpose of receiving and using the Services or the Deliverables, provided that (1) WSI shall be responsible for causing such third party to comply with the terms of this Agreement, (2) WSI shall enter into a non-disclosure agreement with each such third party that is no less restrictive than the terms set forth in the AECI; and (3) for purposes of this Agreement, access and use by such third parties under this licenses shall be deemed access and use by WSI. Any WSI created modifications, enhancements or derivatives of Type IV Materials shall be and be treated as Type IV Materials.

 

11.2 Pre-Existing Materials. Except as expressly set forth in this Agreement, nothing in this Agreement shall be deemed a transfer of any rights, title and interests in and to any inventions however embodied, know how, works in any media, software, information, trade secrets, materials, property or proprietary interest (including patents) owned prior to this Agreement, or that a Party created or acquired independently of its obligations pursuant to this Agreement (collectively, “Preexisting Materials”).

 

11.3 Invention Rights.

 

(a) IBM shall be the owner of all Inventions made, conceived or reduced to practice solely by personnel of IBM (“IBM Inventions”). IBM grants to WSI an irrevocable, nonexclusive, worldwide, paid-up license under IBM Inventions (including any patent applications filed on or patents issued claiming IBM Inventions). The license scope is to (i) make, have made, use, have used, sell, or transfer items and to practice and have practiced methods and (ii) grant sublicenses to IBM Inventions to WSI subsidiaries.

 

(b) WSI shall be the owner of all Inventions made, conceived or reduced to practice solely by personnel of WSI (“WSI Inventions”). WSI grants to IBM an irrevocable, nonexclusive, worldwide, paid-up license under WSI Inventions (including any patent applications filed on or patents issued claiming WSI Inventions). The license scope is to (i) make, have made, use, have used, sell, or transfer items and to practice and have practiced methods and (ii) grant sublicenses to WSI Inventions to IBM subsidiaries.

 

(c) IBM and WSI shall jointly own all Inventions made, conceived or reduced to practice by personnel of both IBM and WSI and resulting patents. Each Party may license to others or assign its rights under such joint Inventions without accounting to the other Party.

 

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11.4 Covenant Not To Sue. IBM hereby agrees that neither it nor its subsidiaries will assert against WSI, its subsidiaries WSI Third Party Contractors or WSI customers any claim that WSI’s use of the Services or Deliverables in the manner contemplated hereunder infringe any Subject Patent. The foregoing covenant shall not apply to claims relating to (a) any equipment, device, program, material, apparatus, process or method not provided by IBM hereunder, (b) any modification (made other than by IBM or at IBM’s specific written direction) to the Services or Deliverables that results in infringement of a Subject Patent, where without such modification there would be no infringement of an Subject Patent, (c) any combination of the Services or Deliverables, or any part thereof, (made other than by IBM) with any other equipment, device, program, material, apparatus, process or method that results in infringement of a Subject Patent where without such combination there would be no infringement of such Subject Patent, or (d) any patent other than a Subject Patent. “Subject Patent” shall mean any patent or patent application that is licensable by IBM or its subsidiaries (but not if the grant of a license under such patent or application requires payment to a third party other than IBM or its subsidiaries), where such patent or application is necessarily infringed by the Services or Deliverables. The covenant not to assert granted above shall terminate immediately if WSI asserts any patent it owns against IBM or its subsidiaries to the extent such assertion relates to products or deliverables of the type provided by IBM to WSI under this Agreement. IBM agrees on behalf of itself and its subsidiaries not to assign any Subject Patent unless the assignee agrees to be bound by the foregoing covenant as if it were named in place of IBM.

 

11.5 General Rights. Each Party agrees to reproduce copyright legends which appear on any portion of the Materials which may be owned by the other Party or third parties.

 

11.6 License Rights.

 

(a) Excluding those WSI Components covered by a WSI Required Consent, WSI hereby grants to IBM, its Affiliates and Agents a nontransferable, non-exclusive, limited license to access and use the WSI Components necessary for IBM to perform all of its obligations as set forth in this Agreement solely in connection with the Services as provided under this Agreement and for no other purpose or customer of IBM or IBM Agents. Except as necessary to perform the Services, IBM agrees not to download or otherwise copy, reverse assemble, reverse compile, decompile or otherwise translate the software portions of the WSI Components. Upon request, WSI will provide to IBM evidence of any such rights, licenses, or of any WSI Consents. IBM will adhere to reasonable terms and conditions pertaining to WSI Components as notified in writing to IBM. IBM agrees not to remove or alter any copyright or other proprietary notice on or in any WSI Component without WSI’s consent.

 

(b) IBM grants WSI a nonexclusive, nontransferable, nonexclusive limited license to access and use the IBM Components (including hardware and software), solely in connection with the Services as provided under this Agreement. WSI agrees not to download or otherwise copy, reverse assemble, reverse compile, decompile, or otherwise translate the software portions of the IBM Components, other than to make one copy for

 

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backup purposes. Upon request, IBM will provide to WSI evidence of any such rights, licenses, or of any IBM Consents. If IBM provides as an IBM Component a Microsoft Corporation product, the terms and conditions of the Microsoft Customer License Terms will also apply for such products. Such terms are located on the Internet at http://www-3.ibm.com/services/e-business/hosting/microsoftlicense.html. WSI agrees not to remove or alter any copyright or other proprietary notice on or in any IBM Component without IBM’s consent.

 

11.7 Residuals. Nothing contained in this Agreement shall restrict a Party from the use of residuals developed or provided by the other or jointly by both Parties during a project. The term “residuals” means non-confidential ideas, concepts, know-how or techniques related to information technology in intangible form and which are retained in such person’s unaided memories. Notwithstanding anything to the contrary in this Agreement, this Section 11.7 shall not in any way limit or affect Section 5 of the AECI.

 

ARTICLE 12. WSI DATA AND WSI CONTENT.

 

12.1 WSI Data and WSI Content. WSI Data and WSI Content are and shall remain the property of WSI. IBM shall promptly deliver WSI Data and WSI Content to WSI in the format, on the media and in the timing prescribed by WSI (a) at any time at WSI’s request, (ii) at the termination or expiration of this Agreement and/or the completion of all requested Termination Assistance Services, or (iii) with respect to particular WSI Data or WSI Content, at such earlier date that such data are no longer required by IBM to perform the Services. Thereafter, IBM shall return or destroy, as directed by WSI, all copies of the WSI Data and WSI Content in IBM’s possession or under IBM’s control within ten (10) business days and deliver to WSI written certification of such return or destruction signed by the IBM Project Executive. IBM shall be excused from performance to the extent that it is unable to perform due to its return of the WSI Data or WSI Content as required by this Section 12.1. To the extent WSI Data and WSI Content are Confidential Information, IBM shall comply with the obligations set forth in the AECI and this Agreement relating to Confidential Information. To the extent WSI Data and WSI Content are not Confidential Information, IBM shall take reasonable precautions to protect WSI Data and WSI Content and shall divulge such Data and WSI Content only to members of the Project Staff on a “need to know” basis. WSI Data and WSI Content shall not be utilized by IBM for any purpose other than the performance of Services under this Agreement nor shall WSI Data or WSI Content be sold, assigned, leased, commercially exploited or otherwise provided to any third party by or on behalf of IBM. IBM shall not possess or assert any lien or other right against or to WSI Data and WSI Content.

 

12.2 WSI Content. Except as provided herein, WSI is solely responsible for all Content including, without limitation:

 

(a) its selection, creation, design, licensing, accuracy, maintenance, testing, and support;

 

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(b) all copyright, patent and trademark clearances in all applicable jurisdictions and usage agreements for any and all Content;

 

(c) the selection of controls on the access and use of Content; and

 

(d) the selection, management and use of any public and private keys and digital certificates it may use with the Services.

 

12.3 Suspected Violations of IBM Acceptable Use Policy (“AUP”).

 

(a)

[***]

 

(b)

[***]

 

(c)

[***]

 

(d)

[***]

 

ARTICLE 13. CONTINUED PROVISION OF SERVICES

 

13.1 Force Majeure If and to the extent that a Party’s performance of any of its obligations pursuant to this Agreement is prevented, hindered or delayed directly or indirectly by fire, flood, earthquake, elements of nature or acts of God, acts of war, terrorism, riots, civil disorders, rebellions or revolutions, or any other similar cause beyond the reasonable control of such Party (each a “Force Majeure Event”), and such non-performance, hindrance or delay could not have been prevented by reasonable precautions, then the non-performing, hindered or delayed Party shall be excused for such non-performance, hindrance or delay, as applicable, of those obligations affected (the “Affected Services”) by the Force Majeure Event for as long as the Force Majeure Event continues and, except as otherwise provided in this Section, such Party continues to use its commercially reasonable efforts to recommence performance whenever and to whatever extent possible without delay, including through the use of alternate sources, workaround plans or other means. The Party whose performance is prevented, hindered or delayed by a Force Majeure Event shall promptly notify the other Party of the occurrence of the Force Majeure Event and describe in reasonable detail the nature of the Force Majeure Event. During the Force Majeure Event, WSI will continue to pay IBM’s charges for the Services.

 

13.2 Alternate Source. In the event of a Force Majeure Event, WSI may procure such Affected Services from an alternate source. If any Force Majeure Event prevents, hinders or delays IBM’s performance of the Services for more than thirty (30) consecutive days, WSI may (until IBM is able to provide the Affected Services) procure such Services from an alternate source and IBM will reimburse WSI for an

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[***]

Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

 

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amount equivalent to the amount IBM receives from WSI for such Affected Services, plus any additional reasonable amounts paid by WSI to such alternate provider for such services, for the lesser of 180 days or the remainder of the Term. If IBM procures an alternate source to provide the Affected Services, IBM shall be responsible for all payments to the alternate source provider. If the Force Majeure Event continues to prevent performance of the Services for more than one-hundred eighty (180) days, WSI may, by paying IBM’s Wind Down costs, terminate the Affected Services as of the date specified by WSI in a termination notice to IBM.

 

ARTICLE 14. PAYMENTS

 

14.1 Charges. IBM will charge WSI for Services in accordance with the Charges and terms set forth in Schedule C.

 

14.2 Travel Related Expenses. Travel-related expenses incurred by IBM, if any, (“Travel Expenses”) shall be subject to WSI’s travel policies set forth in Schedule M. Unless otherwise approved in advance by WSI, travel time shall not be charged to WSI.

 

14.3 Incidental Expenses. IBM acknowledges that, except as expressly provided otherwise in Schedule A, incidental expenses that IBM incurs in performing the Services (“Incidental Expenses”), not including Travel Expenses are included in IBM’s Charges. Accordingly, such IBM expenses are not separately reimbursable by WSI, unless WSI has agreed in writing in advance to reimburse IBM for the expense.

 

14.4 Payment Terms. Payment for all invoices is due thirty (30) days from receipt of invoice unless the amount in question is disputed pursuant to Section 14.7. All Charges and payments shall be in U.S. Dollars.

 

14.5 Time Limitation. [***]

 

14.6 Credits. To the extent a credit may be due to WSI pursuant to this Agreement, IBM shall provide WSI with an appropriate credit against amounts then due and owing. If no further payments are due to IBM, IBM shall pay such amounts to WSI within forty-five (45) days after the date the credit has accrued.

 

14.7 Disputed Charges.

 

(a) WSI shall pay undisputed Charges when those payments are due, and may withhold payment of fees disputed by WSI in good faith as set forth in this Section.

 

(b) Erroneous Invoices: WSI may withhold any disputed amounts WSI believes reasonably and in good faith were invoiced by IBM erroneously (e.g., material

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[***]

Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

 

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calculation errors), and for which WSI provides IBM with written notice, promptly following receipt of such invoice, of the erroneous invoice and a reasonably detailed description of the errors therein.

 

(c) Fixed Charges:

 

(i) During the first six (6) months following the Start Date, WSI may withhold any disputed amounts invoiced as Fixed Charges as described in Schedule C (Charges); and

 

(ii) Following the first six (6) months after the Start Date, WSI may not withhold any further Fixed Charges as described in Schedule C.

 

(d) Non-Fixed Charges: WSI may withhold payment of any other invoiced charges WSI disputes in good faith, up to the following caps ((a), (b), and (c), individually and in the aggregate, the ‘Disputed Charges Cap’):

 

(i) Up to 25% of the charges in any given month; and

 

(ii) one month’s average Charges (without placing in escrow); and

 

(iii) one additional month’s average Charges placed in an interest bearing escrow account with a third party financial institution.

 

(e) In all events, WSI will:

 

(i) provide IBM, on or before the date payment is due, with a detailed description of the particular charges in dispute and a reasonably thorough explanation of the reason why WSI disputes such Charges; and

 

(ii) pay IBM all Charges in excess of the Disputed Charges Cap under protest without waiver of any rights. Each Party agrees to continue performing its obligations under this Agreement while any dispute is being resolved in accordance with Article 23 except to the extent the issue in dispute precludes performance.

 

(f) Neither the failure to dispute any Charges or amounts prior to payment nor the failure to withhold any amount shall constitute, operate or be construed as a waiver of any right WSI may otherwise have to dispute any of the Charges or amount or recover any amount previously paid.

 

14.8 Taxes. Except as otherwise provided below, there shall be added to the Charges charged by IBM, and WSI shall pay, any federal, state or local sales, use, excise or other tax or amount, which may be levied or based upon the Services provided under this Agreement, excluding taxes based on or measured by IBM’s gross revenues (other than sales, use and other excise taxes) or taxes based on or measured by IBM’s net income, or IBM’s employee-related taxes. Taxes payable by WSI shall be billed as separate items on IBM’s invoices or on separate invoices, which in either event shall also include the detailed tax information.

 

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14.9 Benchmarking Reviews.

 

(a) From time to time during the Term after the second anniversary of the Effective Date (but no more often than once in any twelve month period for each Service Category), WSI may, at its expense and subject to this Section, engage (on a non-contingency basis only, and reflecting the requirements herein) the services of an independent third party (a “Benchmarker”) to compare the quality and cost of the Services, for a single Service Category, or a combination of Service Categories against the quality and cost of well managed information technology service providers performing similar services to ensure that WSI is obtaining pricing and levels of service that are competitive with market rates, prices and service levels, given the nature, volume and type of Services provided by IBM hereunder (“Benchmarking”).

 

(b) Any Benchmarker engaged by WSI shall execute a non-disclosure agreement satisfactory to IBM and WSI. IBM shall cooperate fully with WSI and the Benchmarker, provide all reasonable data relating to the provision of the Services requested by the Benchmarker (but in no event shall IBM be required to provide IBM cost data or data relating to other IBM customers), provide reasonable access to the Benchmarker during such effort, all at IBM’s cost and expense. The Benchmarking shall be conducted so as not to unreasonably disrupt IBM’s operations under this Agreement.

 

(c) The Benchmarker shall perform a price-based benchmark, comparing the total charges, in aggregate, applicable to the Benchmarked Services, against the total charges applicable to similar services with respect to the selected entities in the Representative Sample as such term is defined below. The comparison must determine and account for differences in the scope or circumstances of service delivery that impede a true “like for like” comparison. Consequently, the Benchmarker shall “normalize” the data used to perform the comparison in order to account for differences between the volume of services, scope of services, service levels, complexity, degree of standardization, terms and conditions, financing provided by IBM, asset purchases associated with the execution of this Agreement, service delivery and receipt location(s), and other relevant factors and those applicable to the entities comprising the Representative Sample. Such normalization must ensure that the results of the Benchmark provide as accurate a comparison as reasonably possible by making appropriate adjustments to all data relating to each of the selected entities in the Representative Sample to account for any and all differences between the Services performed by IBM and the services received by the respective entity, including any additional and/or value added services performed by IBM and not received by such entity. IBM may elect to disclose to the Benchmarker additional measuring or estimating data, which the Benchmarker shall consider and account for in its normalization calculations. For the purposes of this Section:

 

(i) “Representative Sample” for Benchmarked Services shall mean a sample of a minimum of five (5) entities proposed by the Benchmarker that shall only include customers outsourced by top tier outsourcers in the same geographic location with similar scope, service levels and volume and similar complexity as the Benchmarked Services.

 

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(ii) “Benchmarked Level” shall mean the average total charges attributable to the Benchmarked Services among those entities comprising the Representative Sample.

 

(d) Prior to performing the comparison, the Benchmarker shall meet with the Parties to review and explain its Benchmark methodology, including how each of entities in the Representative Sample matches and does not match the relevant factors of this Agreement and how the normalization approach will be applied. The Benchmarker shall provide a written summary of the Benchmark methodology and shall perform the Benchmark in strict adherence thereto.

 

(e) If the Benchmark Results indicate that the Benchmarked Level is within [***]

 

(f) If the Benchmarker finds that the [***]

 

(g) Review and Dispute. WSI shall provide IBM with a copy of the Benchmarker’s report and IBM shall have thirty (30) days to review such report, and contest the Benchmarker’s findings. As part of such review, either Party may request the Benchmarker to provide the data on which the findings are based. If the Parties are unable to agree upon the validity of the Benchmarker’s findings, the matter shall be resolved pursuant to the dispute resolution procedures set forth in Article 23. Reductions in IBM’s Charges shall be implemented on a prospective basis thirty (30) days after the date the Benchmarker’s final report was first provided to IBM.

 

ARTICLE 15. AUDITS

 

15.1 Audits. IBM shall provide and shall cause IBM Agents to provide WSI and any of WSI’s external auditors with access at reasonable times and upon reasonable notice but in any event not to exceed two (2) times per year without prior written consent by IBM to the IBM Project Staff, and to the data and records relating to the Services for the purposes of performing audits of IBM solely to verify (a) the accuracy of any Charges charged on a time and materials basis, Incidental Expenses and/or Travel Expenses; (b) that the Services are being provided in accordance with the Service Levels; and (c) once per year, to the extent applicable to the Services, an audit of the safety and security procedures set forth in Article 6 and Section 12.1 at IBM Service Locations. IBM shall provide to such WSI and such auditors such assistance as they reasonably require. WSI’s auditors and other representatives shall sign a non-disclosure agreement containing obligations substantially similar to those described in the AECI and shall comply with IBM’s reasonable security requirements. Notwithstanding the foregoing, IBM shall not be obligated to provide access to its personnel records, costing data or research and development. Audits shall not be performed on a contingency fee basis and shall not be performed by a competitor of IBM. For purposes of this Article 15,

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[***]

Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

 

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a competitor of IBM shall mean, as of the Effective Date, (a) Electronic Data Systems Corporation; (b) Computer Sciences Corporation; (c) Affiliated Computer Services, Inc.; (d) Hewlett-Packard Company; (e) Unisys; (f) Perot Systems Corporation; (g) NCR Corporation; (h) Accenture; and (i) Cap Gemini Ernst & Young (with respect to any non-audit personnel of Cap-Gemini Ernst & Young). Affiliates and successors in interest (as a result of merger, acquisition, divestiture or restructuring) to any of the foregoing firms and any other entities added by mutual agreement of the Parties will also be deemed to be competitors of IBM for purposes of this Article 15.

 

15.2 Quality Assurance and Internal Controls. IBM shall develop and implement quality assurance and internal control processes and procedures, including implementing tools and methodologies, to ensure that the Services are performed in an accurate and timely manner, in accordance with (i) the Service Levels and other requirements of this Agreement, (ii) the laws applicable to IBM as an information technology services provider, and (iii) industry standards applicable to the performance of the Services. Such processes, procedures and controls shall include verification, checkpoint reviews, testing, acceptance, and other procedures as set forth in the Services to assure the quality and timeliness of IBM’s performance. Without limiting the generality of the foregoing, IBM will:

 

(a) Maintain a control environment in day-to-day operations, to assure that the following fundamental control objectives are met: (1) financial and operational information relating to the provision of the Services is valid, complete and accurate; (2) the Services are performed consistent with the requirements of this Agreement as set forth in the Service Levels; (3) assets are safeguarded; and (4) actions and decisions of IBM are in compliance with laws applicable to IBM as an information technology services provider;

 

(b) Build the following basic control activities into work processes at the IBM Service Locations and to the extent set forth in the Services: (1) accountability clearly defined and understood; (2) access properly controlled; (3) adequate supervision; (4) policies, procedures and responsibilities documented; (5) adequate training and education; and (6) adequate separation of duties;

 

(c) Maintain an internal audit function to sufficiently monitor the processes and systems used to provide the Services (i.e., perform audits, track control measures, communicate status to management, drive corrective action, etc.). If the findings of any audit of the IBM internal control environment by IBM’s internal audit function of IBM’s operating practices or procedures for the Services reveal, in IBM’s reasonable opinion, any material financial or operational risk to WSI that relates to the Services, IBM shall provide WSI with information reasonably required for WSI to understand the nature of the risk; provided however that IBM shall not be obliged to provide WSI a copy of the report containing such findings.

 

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15.3 SAS 70 Audit.

 

(a) In addition to its other obligations under this Section, IBM will perform, to cover each year of the Term, an annual Type II Statement of Auditing Standards (“SAS”) 70 audit (or any required alternative equivalent audit) required for IBM to meet its Sarbanes-Oxley compliance certification requirements, with respect to each IBM facility at or from which the Services are provided (as of the Effective Date, Boulder, CO and Southbury, CT). IBM shall promptly provide its annual SAS 70 report and any other interim SAS 70 report(s) that cover the facilities set out in Schedule J which IBM utilizes to provide the Services to WSI as soon as reasonably practicable after the report is delivered to IBM, but in no event to exceed 30 days after the report is delivered to IBM. All such report(s) shall be general in nature (i.e. not customer specific). In the event that any such audit determines that a material deficiency exists, IBM will, upon learning of such determination, notify WSI regarding such material deficiency and IBM will, with WSI cooperation as may be required by the nature of the deficiency, take commercially reasonable actions to remediate such deficiency.

 

(b) If in the event the Parties disagree regarding IBM’s SAS 70 (or any equivalent) compliance requirements with laws applicable to IBM, WSI will initiate the Dispute Resolution process. If through the results of such process it is determined that IBM is not compliant, IBM will perform an additional such audit or, if IBM fails to perform such additional audit, WSI may perform, and IBM will be responsible to reimburse WSI for the reasonable fees for such audit.

 

15.4 Charges. If, as a result of an audit, WSI determines that IBM has (i) overcharged WSI, it shall notify IBM of the amount of such overcharge and IBM shall promptly pay to WSI the amount of the overcharge, or (ii) undercharged WSI, WSI shall notify IBM of the amount of such undercharge and WSI shall pay to IBM the amount of the undercharge. If IBM disagrees with the result of the audit, such dispute shall be resolved in accordance with the Dispute Resolution Process.

 

15.5 Record Retention. IBM shall retain records and supporting documentation set forth above in this Section, for a period of two years from termination or expiration of the Agreement.

 

ARTICLE 16. REPRESENTATIONS AND WARRANTIES

 

16.1 By WSI. WSI represents, warrants and covenants that:

 

(a) WSI has all requisite corporate power and authority to execute, deliver and perform its obligations under this Agreement and the execution, delivery and performance of this Agreement has been duly authorized by WSI;

 

(b) WSI shall comply in all material respects with, and is responsible to identify and make interpretations of, all applicable global, transnational, federal, state, local or other laws and regulations to the extent in effect and applicable to WSI in connection with its obligations under this Agreement;

 

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(c) WSI shall use commercially reasonable efforts through the use of industry standard virus protection software and other customary procedures to protect its environment and to screen any Deliverable provided or made available to WSI by IBM hereunder to avoid introducing any Harmful Code; and

 

(d) WSI’s use of the Services and all Content will comply with the Acceptable Use Policy, in accordance with Section 12.3.

 

(e) Service Recipients are not third party beneficiaries to this Agreement (except to the extent expressly set forth in Articles 20 and 21) an, therefore, the Service Recipients will not make any claim or be a party to any action or lawsuit against IBM or its Affiliates or their employees, officers or directors arising out of this Agreement. The Service Recipients will direct all formal communications regarding the Services through and to WSI, and not through or to IBM. WSI further represents, warrants and covenants that any and all Service Recipients shall be WSI Affiliates Controlled by WSI. IBM shall be entitled to claim from WSI as direct damages all costs, damages and attorney fees incurred by IBM, or paid or payable pursuant to any settlement, or a final judgment award by a court of competent jurisdiction, arising from claims against IBM by Service Recipients.

 

16.2 By IBM. IBM represents, warrants and covenants that:

 

(a) IBM has all requisite corporate power and authority to execute, deliver and perform its obligations under this Agreement and the execution, delivery and performance of this Agreement has been duly authorized by IBM;

 

(b) IBM shall comply with all applicable global, transnational, federal, state, local or other laws and regulations to the extent in effect and applicable to IBM’s performance of the Services under this Agreement in it’s capacity as an information technology services provider and, except as otherwise provided by this Agreement, shall obtain all applicable permits and licenses required of IBM to comply with its obligations under this Agreement;

 

(c) The Services will be performed in a professional and workmanlike manner in accordance with reasonable industry standards applicable to services of a similar scope and nature and the Service Levels;

 

(d) IBM will use adequate numbers of qualified individuals with suitable training, education, experience, competence and skill to perform the Services;

 

(e) IBM will use commercially reasonable efforts through the use of industry standard virus protection software and other customary procedures to prevent the introduction of Harmful Code into WSI’s environment and any Deliverables; provided that IBM’s sole obligation under this warranty and WSI’s exclusive remedy is for IBM to replace any such Deliverable with the same Deliverable not containing such Harmful Code; and

 

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(f) IBM shall not insert into the Deliverables any code that could be invoked to disable or otherwise shut down such Deliverable intentionally, without the consent of WSI, and shall not invoke any such disabling code at any time, including upon expiration or termination of this Agreement.

 

16.3 DISCLAIMER.

 

(a) EXCEPT FOR THE EXPRESS WARRANTIES CONTAINED IN THIS ARTICLE 16, NEITHER PARTY MAKES, AND EACH PARTY DISCLAIMS, ANY REPRESENTATIONS, CONDITIONS OR WARRANTIES TO THE OTHER PARTY, WHETHER EXPRESS OR IMPLIED, AND EACH EXPLICITLY DISCLAIMS ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING THE IMPLIED WARRANTIES OF NON-INFRINGEMENT, MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.

 

(b) IBM does not warrant uninterrupted or error-free operations of a Deliverable or Service or that IBM will find or correct all defects.

 

(c) IBM does not warrant any third party software or third party hardware.

 

(d) WSI acknowledges that IBM does not control the transfer of data over telecommunications facilities, including the internet. Except as set forth herein or in Schedule A, IBM does not warrant the secure operation of the Services or that it will be able to prevent third-party disruptions or warrant that WSI’s Content is safe from intrusions, virus threats, or any other security exposure.

 

ARTICLE 17. TERM

 

17.1 Term. The term of this Agreement (“Term”) shall commence on the Effective Date and shall continue for a period of five (5) years from the Start Date (“Initial Term Expiration Date”).

 

17.2 Renewal. WSI may elect to renew this Agreement for two (1) year terms (each a “Renewal Term”) at the terms and conditions set forth in this Agreement. Unless this Agreement is terminated earlier pursuant to Article 18, WSI shall notify IBM pursuant to this Section at least six months prior to the Initial Term Expiration Date or the expiration of the applicable Renewal Term of its desire to renew this Agreement. In the event WSI desires to renew the Agreement after the expiration of the two Renewal Terms or renegotiate the terms and conditions of the Agreement during the Initial Term or any Renewal Term, WSI shall provide IBM at least nine (9) months but not more than eighteen months notice prior to the Initial Term Expiration Date or the expiration of the applicable Renewal Term. The parties shall negotiate in good faith and IBM shall respond to any proposed changes to the Agreement within sixty (60) days of WSI’s request. If the parties cannot reach agreement on the proposed changes to the terms and conditions, WSI shall have the right to renew the Agreement in accordance with the renewal terms set forth above if WSI has not renewed for each of the two Renewal Terms. If at any time WSI provides IBM with notice that it does not desire to

 

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renew this Agreement, this Agreement shall expire on the Initial Agreement Expiration Date or the expiration of the Renewal Term, as applicable.

 

ARTICLE 18. TERMINATION

 

18.1 Termination of Agreement

 

(a) For Cause by WSI. If IBM (i) materially breaches this Agreement, and (1) does not cure such breach within thirty (30) days of receipt of a notice of default or (2) with respect to a breach that cannot with due diligence be cured within thirty (30) days of notice thereof, IBM fails to proceed promptly and diligently to correct the breach and develop within thirty (30) days of notice of breach a complete plan for curing the breach acceptable to WSI, (ii) commits numerous breaches of its duties or obligations which in the aggregate constitute a material breach and continues to commit breaches of this Agreement during the sixty (60) days after IBM’s receipt of notice from WSI that IBM is in jeopardy of WSI terminating under this Section, then WSI may, by giving notice to IBM, terminate this Agreement, in whole or in part, as of the termination date specified in the notice.

 

(b) For Failure to Meet Service Levels. WSI may, by giving notice to IBM within 90 days of such event, as its sole remedy terminate the agreement in the event of a Service Level Termination Event as set forth in Schedule B without payment of the Termination Fee, and WSI will pay IBM’s actual Wind-Down costs.

 

(c) For Cause by IBM. If WSI (i) materially breaches this Agreement and (a) does not cure such breach within thirty (30) days of receipt of a notice of default or (b) with respect to a breach that cannot with due diligence be cured within thirty (30) days of notice thereof, WSI fails to proceed promptly and diligently to correct the breach and develop within thirty (30) days of notice of breach a complete plan for curing the breach acceptable to IBM, then IBM may, by giving notice to WSI, terminate this Agreement in whole or in part, as of the termination date specified in the notice.

 

18.2 For Convenience by WSI. Subject to the time restrictions and other terms and conditions set forth in Schedule C, Part 1, Part 8.0(b), WSI may terminate this Agreement in whole (or in part only as set forth herein) for convenience by giving IBM 90 days prior written notice. WSI may terminate the Service Categories for convenience as described in and according to the terms set forth in Schedule C, Part I, Section 8.0.

 

18.3 Calculation of Termination Charge. Set forth in Schedule C are the termination charges that would be payable to IBM if WSI terminates this Agreement pursuant to Section 18.2.

 

18.4 Partial Termination: Termination Charge Adjustment. If WSI terminates a portion of the Services pursuant to Section 18.2, the Termination Charge applicable to the remaining Services as a whole shall be adjusted in accordance with Schedule C.

 

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18.5 Termination Charge. Except as otherwise specifically set forth in this Article, no termination fee shall be payable by WSI in connection with the expiration or a termination for cause of this Agreement.

 

18.6 Effect of Termination. In the event WSI terminates this Agreement, IBM shall stop all work as of the date of termination set forth in the notice of termination. WSI shall owe IBM for all Services performed and all Travel and Incidental Expenses incurred up to the effective date of termination set forth in the notice of termination. WSI shall not be obligated to pay for Services, Travel Expenses, or Incidental Expenses after the effective date of the termination to IBM unless WSI is obligated to pay additional Charges or Travel or Incidental Expenses in exercising its option under Section 19.1. Upon any termination of this Agreement each party shall also promptly return to the other all Materials owned by the other (except for copies authorized under this Agreement), all Confidential Information of other Party and provide to the other written confirmation that all such items have been returned or destroyed.

 

ARTICLE 19. TERMINATION ASSISTANCE

 

19.1 Termination Assistance Services. IBM shall, upon WSI’s request during any Termination Assistance Period, provide the Termination Assistance Services. To the extent that (1) Termination Assistance Services are performed prior to the expiration or termination date and (2) the IBM resources are already providing Services to WSI and the Parties agree that such resources can be used to provide the Termination Assistance Services, then IBM will provide the Termination Assistance Services as part of the Services. The quality and level of performance of the Services, including the Service Levels, during the Termination Assistance Period shall not be degraded. If the Termination Assistance Services provided prior to expiration/termination require resources not providing Services to WSI prior to expiration/termination, WSI shall pay mutually agreed to hourly rates plus Travel Expenses as set forth in Schedule C and Incidental Expenses pre-approved by WSI. To the extent that Termination Assistance Services are performed in the 3-month period after the expiration or termination date, then WSI shall pay IBM the regular IBM hourly rate for such resources, plus Travel Expenses and Incidental Expenses.

 

ARTICLE 20. INDEMNITIES

 

20.1 Indemnity by IBM. IBM will indemnify, defend and hold harmless WSI, its Affiliates and their respective officers, directors, and employees, by paying any and all Losses due to:

 

(a) [***]

 

(i) [***]

 

(ii) [***]

 

(iii) [***]

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[***]

Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

 

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(b) for fines and penalties arising from IBM’s failure to comply with laws applicable to IBM, as provided in Section 16.2(b);

 

(c) third party claims relating to or arising from IBM’s failure to provide any IBM Consents in accordance with Article 8.1.;

 

(d) third party claims brought by WSI’s customers due to breaches of IBM’s obligations under the AECI; and

 

(e) (i) violation by IBM of Federal, state, local, international or other laws or regulations or any common law protecting persons or members of a protected class or category, including laws or regulations prohibiting discrimination or harassment on the basis of a protected characteristic, unless and to the extent such violation is attributable to the wrongful action of WSI (ii) liability arising or resulting from a Hired Employee’s employment with IBM , (iii) payment of wages that become due and owing to any Hired Employee from and after such Hired Employee’s employment date with IBM, (iv) employee pension or welfare benefits of any Hired Employee which accrued from and after such Hired Employee’s employment date with IBM, (v) any aspects of any Hired Employee’s employment relationship with IBM or the termination of such relationship, including claims for breach of an express or implied contract of employment and (vi) representations (oral or written) to WSI’s employees, including the Affected Employees or other actions with respect to the Affected Employees by IBM, in connection with the selection of the Affected Employees, job offers or employment with IBM or IBM Agents or the terms and conditions of job offers with IBM or IBM Agents (including compensation and employee benefits), unless such representations were expressly authorized in writing by WSI.

 

20.2 Exclusions. IBM has no obligation regarding any claim set forth in Section 20.1 to the extent and only to the extent the claim is based on any of the following:

 

(a) any tangible item provided by WSI which is incorporated into a Deliverable or IBM Component at WSI’s written request;

 

(b) IBM’s compliance with any designs, specifications or written instructions provided by WSI or by a third party on WSI’s behalf under this Agreement if such designs, specifications or instructions would have caused an infringement or misappropriation regardless of IBM’s implementation of such designs, specification or instructions;

 

(c) WSI’s modification (or a modification made by a third party on WSI’s behalf) of a Deliverable or IBM Component unless such modifications is made by or on behalf of WSI at IBM’s specific written direction;

 

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(d) use of a Deliverable or IBM Component other than in accordance with this Agreement;

 

(e) the combination, operation, or use (unless such combination, operation or use was at IBM’s specific written direction) of a Deliverable or IBM Component with other programs or the combination, operation or use (unless such combination, operation or use was at IBM’s specific written direction) of a Deliverable or IBM Component with any product, data, apparatus, or business method that IBM did not provide, if such infringement or misappropriation would have been avoided by the use of the Deliverables or IBM Components without such programs, products, data, apparatus or business method; or

 

(f) the distribution, operation or use of a Deliverable or IBM Component for the benefit of a third party outside of WSI or its Affiliates (which shall not include the use by WSI customers of the WSI websites implemented through the Deliverables, or IBM Components or Services).

 

20.3 Limitation. The indemnity set forth in Section 20.1 shall not apply to [***]

 

20.4 By WSI. WSI will indemnify, defend and hold harmless IBM and its Affiliates, and their respective officers, directors, employees, by paying any and all Losses due to:

 

(a) third party claims relating to or arising from WSI’s failure to provide any WSI Consents in accordance with Article 8.1.,

 

(b) third party claims arising from or in connection with infringement or misappropriation of any Intellectual Property Right by a WSI Component;

 

(c) brought by an E-Commerce End User related to the Content;

 

(d) for fines and penalties arising from WSI’s failure to comply with laws applicable to WSI, as provided in Section 16.1(b); and

 

(e) (i) violation by WSI of Federal, state, local, international or other laws or regulations or any common law protecting persons or members of a protected class or category, including laws or regulations prohibiting discrimination or harassment on the basis of a protected characteristic, unless and to the extent such violations is attributable to wrongful action of IBM (ii) liability arising or resulting from a Hired Employee’s employment with WSI, (iii) payment of wages that become due and owing to any Hired Employee from and before such Hired Employee’s employment date with WSI, (iv) employee pension or welfare benefits of any Hired Employee which accrued from such

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[***]

Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

 

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Hired Employee’s employment date with WSI, (v) any aspects of any Hired Employee’s employment relationship with WSI or the termination of such relationship, including claims for breach of an express or implied contract of employment and (vi) representations (oral or written) to WSI’s employees, including the Affected Employees or other actions with respect to the Affected Employees by WSI, in connection with the selection of the Affected Employees, job offers or employment with IBM or IBM Agents or the terms and conditions of job offers with IBM or IBM Agents (including compensation and employee benefits), unless such representations were expressly authorized in writing by IBM

 

20.5 Exclusions. WSI has no obligation regarding any claim set forth in Section 20.4 to the extent and only to the extent the claim is based on any of the following:

 

(a) any tangible item provided by IBM which is incorporated into a WSI Component at IBM’s written request;

 

(b) WSI’s compliance with any designs, specifications or written instructions provided by IBM or by a third party on IBM’s behalf under this Agreement if such designs, specifications or instructions would have caused an infringement or misappropriation regardless of WSI’s implementation of such designs, specification or instructions;

 

(c) IBM’s modification (or a modification made by a third party on IBM’s behalf) of a WSI Component unless such modifications is made by or on behalf of IBM at WSI’s specific written direction;

 

(d) use of a WSI Component other than in accordance with this Agreement;

 

(e) the combination, operation, or use (unless such combination, operation or use was at WSI’s specific written direction) of a WSI Component with other programs or the combination, operation or use (unless such combination, operation or use was at WSI’s specific written direction) of a WSI Component with any product, data, apparatus, or business method that WSI did not provide, if such infringement or misappropriation would have been avoided by the use of the WSI Components without such programs, products, data, apparatus or business method; or

 

(f) the distribution, operation or use of a WSI Component for the benefit of a third party outside of IBM or its Affiliates.

 

20.6 Additional Indemnities. IBM and WSI each will indemnify, defend and hold harmless the other and their respective Affiliates, officers, directors, employees, by paying any and all Losses to the extent they arise from or in connection with a third party claim for any of the following: (a) the death or bodily injury of any agent, employee, customer, business invitee, business visitor or other person to the extent that the indemnifying Party is legally liable to such third party for such claim; (b) the damage, loss or destruction of any real or tangible personal property to the extent that the indemnifying Party is legally liable to such third party for such claim and (c) for

 

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taxes (and interest and penalties assessed thereon) against a Party that are obligations of the other Party pursuant to Article 14.

 

20.7 Infringement. In the event that (a) [***] (b) [***]

 

(a) [***]

 

(b) [***]

 

(c) [***]

 

[***]

 

20.8 Exclusive Remedy. [***]

 

20.9 Indemnification Procedures. If any third party claim is commenced against a party entitled to indemnification under Sections 20.1, 20.4 or 20.5, the indemnified Party shall give notice to the indemnifying Party as promptly as practicable. After such notice, if the indemnifying Party shall acknowledge in writing to the indemnified Party that this Agreement applies with respect to such claim, then the indemnifying Party shall be entitled, if it so elects, in a notice promptly delivered to the indemnified Party, to immediately take control of the defense and investigation of such claim and to employ and engage attorneys to handle and defend the same, at the indemnifying Party’s sole cost and expense. The indemnified Party shall cooperate, in all reasonable respects with the indemnifying Party and its attorneys in the investigation, trial and defense of such Claim and any appeal arising therefrom; provided, however, that the indemnified Party may, at its own cost and expense, participate, through its attorneys or otherwise, in such investigation, trial and defense of such claim and any appeal arising therefrom. No settlement of a claim that requires either the payment of money by the indemnified Party, which is not otherwise covered by the indemnifying Party’s obligations, or an admission of fault by the indemnified Party shall be entered into without the consent of the indemnified Party. After notice by the indemnifying Party to the indemnified Party of its election to assume full control of the defense of any such claim, the indemnifying Party shall not be liable to the indemnified Party for any legal expenses incurred thereafter by such indemnified Party in connection with the investigation and defense of that claim. If the indemnifying Party does not assume full control over the defense of a claim subject to such investigation and defense as provided in this Section, the indemnifying Party may participate in such defense, at its sole cost and expense, and the indemnified Party shall have the right to defend the claim in such manner as it may deem appropriate, and the indemnifying Party will pay reasonable attorney’s fees and costs of investigation incurred by the indemnified Party.

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[***]

Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

 

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ARTICLE 21. LIMITATION OF LIABILITY

 

21.1 Direct Damages. In the event either Party is held liable to the other Party for actual, direct damages arising out of or relating to its performance or failure to perform under this Agreement, the entire liability of such Party and it’s respective Affiliates, employees, officers and directors, regardless of the basis of the claim (including breach, negligence, misrepresentation, or other contract or tort claim), shall be limited in the aggregate for all claims and causes of actions under this Agreement (the “Liability Cap”) to an amount equal to the Charges paid by WSI to IBM under this Agreement attributable to the Services (either through a prepayment or monthly payments, or a combination thereof) provided during the twelve months preceding the assertion of the first claim or cause of action, [***]

 

21.2 Exclusions. The limitation of liability in subsection 21.1 (Direct Damages) above does not apply to:

 

(a) WSI’s failure to pay Charges due and owing to IBM under this Agreement;

 

(b) any damages for bodily injury (including death) and damage to real property and tangible personal property for which a Party is legally liable;

 

(c) WSI’s or IBM’s obligation to indemnify the other under this Agreement, as provided in Section 20;

 

(d) Any damages associated with WSI’s or IBM’s infringement or violation of the other Party’s Intellectual Property Rights granted under this Agreement, including WSI’s or IBM’s breach of the license rights granted in Article 11;

 

21.3 Consequential Damages. In no event will IBM, WSI, or their respective Affiliates, employees, officers, and directors have any liability under this Agreement, regardless of the basis on which IBM or WSI is entitled to claim damages (including breach, negligence, misrepresentation, or other contract or tort claim), for any special, incidental, punitive, or indirect damages, for any economic consequential damages (including lost profits or savings), or for loss of, or damage to, data, even if foreseeable or even if WSI or IBM has been advised of the possibility of such damages.

 

21.4 Exclusions. The limitation of liability in subsection 21.3 above does not limit the type of damages as to a third party which may be included in Losses for which the indemnitor is responsible as set forth in Article 20, and does not apply to:

 

(a) WSI’s failure to pay Charges due and owing to IBM under this Agreement; and

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[***]

Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

 

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(b) Any damages associated with WSI’s or IBM’s infringement or violation of the other Party’s Intellectual Property Rights granted under this Agreement, including WSI’s or IBM’s breach of the license rights granted in Article 11.

 

ARTICLE 22. INSURANCE AND RISK OF LOSS

 

22.1 Risk of Loss. IBM is responsible for risk of loss of and damage to equipment owned, leased, or rented by WSI that is located on IBM’s premises and any loss of and damage to software owned by or licensed to WSI that is in IBM’s possession at the time of such loss or damage. WSI is responsible for risk of loss of and damage to equipment owned, leased, or rented by IBM that is located on WSI’s premises and any loss of and damage to software owned by or licensed to IBM that is in WSI’s possession at the time of such loss or damage.

 

22.2 Insurance. Prior to the commencement of the Services, IBM shall procure the following insurance coverage, at its own expense, with respect to the performance of the Services. The insurance shall be issued by financially responsible and properly licensed insurance carriers rated at least A-, Class X by Best’s Rating Guide, with minimum limits as set forth below except for subsection (d) below where IBM uses its captive insurance company. Such insurance shall be maintained in full force and effect for the Term of this Agreement.

 

(a) Workers’ Compensation. Statutory Workers Compensation as required by state law and/or Employer’s Liability insurance with a minimum limit of $1,000,000.

 

(b) Commercial General Liability and Umbrella Liability Insurance. Including products, completed operations and contractual liability insurance against the liability assumed above with the following minimum limits for bodily injury and property damage on an occurrence basis: $10,000,000 per occurrence.

 

(c) Commercial Business Automobile Insurance and Umbrella Liability. Including owned, leased, or hired autos subject to minimum limits of $10,000,000 for bodily injury and physical damage.

 

(d) All Risk Property Insurance. To cover IBM’s risk-of-loss under section 22.1 covering loss or damage to IBM owned or leased IBM Components used to provide the Services and under IBM’s possession or control in an amount equal to 100% of the full replacement value thereof.

 

(e) Crime/Fidelity Bond. Employee dishonesty insurance and computer fraud insurance arising out of or in connection with any fraudulent or dishonest acts committed by IBM employees, acting alone or with others, for an insured amount of $1,000,000 per occurrence.

 

(f) Professional Liability Insurance. covering acts, errors or omissions arising out of the Services for an insured amount of not less than of $5,000,000 per occurrence and in the aggregate.

 

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22.3 Terms of Insurance Policies. Notwithstanding IBM’s indemnification duties as outlined above, WSI shall be named as an additional insured under IBM’s Commercial General Liability and Commercial Automobile Liability policies for any claims and losses arising out of IBM’s performance of the Services. The insurers shall agree that IBM’s insurance is primary and any insurance maintained by WSI shall be excess and non-contributing to IBM’s insurance except for premise liability on WSI premises where IBM is not in control of the premise.

 

22.4 Certificate of Insurance. No later than the Start Date, IBM shall furnish a certificate from each insurance company evidencing that the above insurance policies are in force and are in compliance with the terms of this Article. Such certificates shall state the policy numbers, dates of expiration and limits of liability. Notice of material change to the policies required herein will be provided upon request.

 

22.5 Waiver of Subrogation. IBM agrees to waive subrogation against WSI for any injuries to IBM’s employees arising out of or in any way related to IBM’s performance of the Services or for damage or loss to IBM’s personal property. IBM shall require that all of its insurers providing the coverages required above waive subrogation in favor of WSI for any claims arising out of or in any way related to IBM’s performance of the Services or IBM’s property covered by IBM’s property insurance that is used in performance of the Services except where not allowable by country law and not for the insurance required under subsection (f) above.

 

22.6 IBM’s Own Risk. IBM acknowledges and agrees that WSI is not required to provide any insurance coverage, including but not limited to Workers’ Compensation, Commercial General Liability, Commercial Automobile, Commercial Excess/Umbrella Liability, Risk Replacement, Crime/Fidelity Bond, Professional liability and Pollution Liability and Cleanup on behalf of IBM. None of the requirements contained herein as to types, limits, and approval of insurance coverage to be maintained by IBM are intended to and shall not in any manner limit the liabilities and obligations assumed by IBM under the Agreement. IBM may utilize reasonable deductibles given its size and financial stability. IBM is responsible to pay any loss amount within its deductible, up to the maximum amount of the deductible.

 

ARTICLE 23. DISPUTE RESOLUTION

 

23.1 Informal Dispute Resolution. Prior to the initiation of formal dispute resolution procedures as to any dispute (except as provided in subsection (f)), the Parties shall first attempt to resolve each dispute informally, as follows:

 

(a) The Parties agree that the WSI Project Executive and the IBM Project Executive shall attempt in good faith to resolve all disputes (except as provided in subsection (f)). In the event the WSI Project Executive and the IBM Project Executive are unable to resolve a dispute in an amount of time that either Party deems reasonable under the circumstances (for payment disputes, not to exceed ten days), such Party may refer the dispute for resolution to the WSI Chief Information Officer and IBM Project Director, Retail Industry upon written notice to the other Party.

 

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(b) The Parties agree that the WSI Chief Information Officer and the IBM Director, Retail Industry, shall attempt in good faith to resolve all disputes (except as provided in subsection (f)). In the event the WSI Chief Information Officer and the IBM Director, Retail Industry are unable to resolve a dispute in an amount of time that either Party deems reasonable under the circumstances (for payment disputes, not to exceed ten days), such Party may refer the dispute for resolution to the WSI Chief Operating Officer and IBM Vice-President, Retail Industry (the “Senior Corporate Executives”) below upon written notice to the other Party.

 

(c) Within five (5) business days of a notice under subsection (b) above referring a dispute for resolution by the Senior Corporate Executives, the WSI Project Executive and the IBM Project Executive will each prepare and provide to the Senior Corporate Executives, summaries of the relevant information and background of the dispute, along with any appropriate supporting documentation, for their review. The designated representatives will confer as often as they deem reasonably necessary in order to gather and furnish to the other all information with respect to the matter in issue which the Parties believe to be appropriate and germane in connection with its resolution. The representatives shall discuss the problem and negotiate in good faith in an effort to resolve the dispute without the necessity of any formal proceeding. The specific format for the discussions will be left to the discretion of the designated representatives, but may include the preparation of agreed-upon statements of fact or written statements of position.

 

(d) During the course of negotiations under this Section, all reasonable requests made by one Party to another for information that is not privileged or confidential, reasonably related to the dispute, will be honored in order that each of the Parties may be fully advised of the other’s position.

 

(e) Formal proceedings for the resolution of a dispute may not be commenced until the earlier of (i) the Senior Corporate Executives under subsection (c) above concluding in good faith that amicable resolution through continued negotiation of the matter does not appear likely, or (ii) thirty (30) days after the notice under subsection (c) above referring the dispute to senior corporate executives.

 

(f) Notwithstanding anything to the contrary in this Agreement, nothing in this Article shall prevent either Party from instituting formal proceedings, and each Party is authorized to institute formal proceedings at any time (including before, during or after any of the informal proceedings) to: (i) avoid the expiration of any applicable limitations period, (ii) obtain equitable relief, (iii) preserve a superior position with respect to other creditors, or (iv) resolve a Party’s Intellectual Property Rights, or (v) obtain relief with respect to a Party’s breach or alleged breach of Article 10 or Article 11.

 

23.2 Non-Binding Mediation.

 

(a) Any dispute that cannot be resolved pursuant to Section 23.1(and not excluded by Section 23.1(f)) will be addressed by non-binding mediation by a mutually acceptable mediator to be chosen by WSI and IBM within forty-five (45) days after

 

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written notice by one of the Parties is delivered to the other Party demanding non-binding mediation. Neither Party may unreasonably withhold consent to the selection of a mediator, however, either Party may request a postponement of the non-binding mediation until each has completed specified but limited discovery with respect to such dispute. Each Party shall bear its own costs related to the preparation for, and participation in non-binding mediation, but WSI and IBM agree to share the costs of any non-binding mediation arising under this Agreement equally. The mediation shall occur in the San Francisco, California area.

 

(b) Any dispute which is not resolved through non-binding mediation pursuant to this Section within three (3) months of the date of the initial demand therefor may then be submitted to the courts for resolution. The use of non-binding mediation pursuant to this Section will not be construed under the doctrines of laches, waiver or estoppel to affect adversely the rights of either Party.

 

23.3 Continued Performance. Each Party agrees that it shall, unless otherwise directed by the other Party, continue performing its obligations under this Agreement while any dispute is being resolved; provided that this provision shall not operate or be construed as extending the Term or prohibiting or delaying a Party’s exercise of any right it may have to terminate the Term as to all of any part of the Services.

 

ARTICLE 24. GENERAL

 

24.1 Governing Law. This Agreement and performance under it shall be governed by and construed in accordance with the applicable laws of the State of California without regard to it conflicts of law provisions. Except as prohibited by applicable law, IBM and WSI expressly waive any right to a trial by jury in any proceeding arising under this Agreement.

 

24.2 Binding Nature and Assignment. This Agreement will be binding on the Parties and their respective successors and permitted assigns. Neither Party may, or will have the power to, assign this Agreement without the prior written consent of the other, except in the following circumstances:

 

(a) Neither Party may assign this Agreement, in whole or in part, without the prior written consent of the other. Any attempt to do so is void. Neither Party will unreasonably withhold such consent.

 

(b) Notwithstanding subsection (a), the assignment of this Agreement, in whole or in part, to (i) an Affiliate of WSI, (ii) an entity acquiring Control of WSI, (iii) an entity into which WSI is merged, or (iv) an entity acquiring all or substantially all of WSI’s assets, does not require the consent of IBM.

 

(c) Notwithstanding subsection (a), the assignment of this Agreement, in whole or in part to (i) an Affiliate of IBM, provided that IBM remains liable for all obligations under this Agreement notwithstanding performance by such Affiliate; (ii) an entity acquiring Control of IBM, (iii) an entity into which IBM is merged, or (iv) an entity acquiring all or substantially all of IBM’s assets, does not require the consent of

 

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WSI. IBM is also permitted to assign its rights to payments under this Agreement without obtaining WSI’s consent.

 

(d) Any attempted assignment that does not comply with the terms of this Section shall be null and void.

 

24.3 Entire Agreement; Amendment. This Agreement, including any Schedules, exhibits and attachments referred to herein and attached hereto, each of which is incorporated herein, constitutes the entire agreement between the Parties with respect to the subject matter hereof. There are no agreements, representations, warranties, promises, covenants, commitments or undertakings other than those expressly set forth herein. This Agreement supersedes all prior agreements (except for (i) the AECI and (ii) the Transaction Documents executed by the Parties prior to and relating to the Services), representations, warranties, promises, covenants, commitments or undertaking, whether written or oral, with respect to the subject matter contained in this Agreement. No amendment, modification, change, waiver, or discharge hereof shall be valid unless in writing and signed by an authorized representative of the Party against which such amendment, modification, change, waiver, or discharge is sought to be enforced.

 

24.4 Notices. Except as otherwise provided by this Agreement, all notices, requests, consents, approvals, agreements, authorizations, acknowledgments, waivers and other communications required or permitted under this Agreement shall be in writing, and shall be deemed given when sent by facsimile, confirmed by the recipient, to the facsimile number specified below or delivered by hand to the address specified below. A copy of any such notice shall also be sent by express air mail on the date such notice is transmitted by telecopy to the address specified below:

 

In the case of WSI:

 

Williams-Sonoma, Inc.

3250 Van Ness Avenue

San Francisco, CA 94109

Facsimile: [***]

Attention to: [***]

With a copy to: General Counsel

 

In the case of IBM:

 

IBM Corporation

415 Market Street

San Francisco, CA 94105

Facsimile: [***]

Attention to: [***]

With a copy to: Regional Counsel

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[***]

Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange Commission.

 

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Either Party may change its address or telecopy number for notification purposes by giving the other Party ten (10) days’ notice of the new address or telecopy number and the date upon which it shall become effective.

 

24.5 Counterparts. This Agreement may be executed in several counterparts, all of which taken together shall constitute one single agreement between the Parties hereto.

 

24.6 Headings. The Article and Section headings and the table of contents used herein are for reference and convenience only and shall not be considered in the interpretation of this Agreement.

 

24.7 Relationship of Parties. IBM’s relationship with WSI is that of an independent contractor, and nothing in this Agreement will be construed to create a partnership, joint venture, or employer-employee relationship between IBM and WSI. IBM is not an agent of WSI and is not authorized to make any representation, contract or commitment on behalf of WSI, unless specifically requested or authorized to do so in writing by WSI.

 

24.8 Severability. In the event that any provision of this Agreement conflicts with the law under which this Agreement is to be construed or if any such provision is held invalid or unenforceable by a court with jurisdiction over the Parties, such provision shall be deemed to be void. The remaining provisions of this Agreement and the application of the challenged provision to persons or circumstances other than those as to which it is invalid or unenforceable shall not be affected thereby, and each such provision shall be valid and enforceable to the full extent permitted by applicable laws.

 

24.9 Consents and Approval. Except where expressly provided as being in the sole discretion of a Party, where agreement, approval, acceptance, consent, confirmation, notice or similar action by either Party is required under this Agreement, such action shall not be unreasonably delayed or withheld. An approval or consent given by a Party under this Agreement shall not relieve the other Party from responsibility for complying with the requirements of this Agreement, nor shall it be construed as a waiver of any rights under this Agreement, except as and to the extent otherwise expressly provided in such approval or consent.

 

24.10 Waiver of Default; Cumulative Remedies. A delay or omission by either Party hereto to exercise any right or power under this Agreement shall not be construed to be a waiver thereof. A waiver by either of the Parties hereto of any of the covenants to be performed by the other or any breach thereof shall not be construed to be a waiver of any succeeding breach thereof or of any other covenant herein contained. All waivers must be in writing and signed by the Party waiving its rights. Except as otherwise expressly provided herein, all remedies provided for in this Agreement shall

 

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be cumulative and in addition to and not in lieu of any other remedies available to either Party at law, in equity or otherwise.

 

24.11 Survival. Any provision of this Agreement which contemplates performance or observance subsequent to any termination or expiration of this Agreement shall survive any termination or expiration of this Agreement and continue in full force and effect.

 

24.12 Publicity. Each Party agrees that, without the prior written consent of the other Party, neither Party shall: (i) use in advertising, publicity, or otherwise the name of the other Party or any trade name, trademark, service mark, symbol or any abbreviation, contraction or simulation thereof owned by the other Party, or (ii) represent, directly or indirectly, that any product or any service provided by one Party has been approved or endorsed by the other Party. Notwithstanding the foregoing, the Parties may agree, upon mutual written consent, to issue a press release announcing this Agreement and any other matters the Parties deem desirable.

 

24.13 Export. The Parties acknowledge that certain Software and technical data to be provided hereunder and certain transactions hereunder may be subject to export controls under the laws and regulations of the United States and other jurisdictions. No Party shall export or re-export any such items or any direct product thereof or undertake any transaction in violation of any such laws or regulations.

 

24.14 Third Party Beneficiaries. This Agreement is entered into solely between, and may be enforced only by, WSI and IBM. Except to the extent expressly set forth in Articles 20 and 21, with respect to Affiliates this Agreement shall not be deemed to create any rights or causes of action in or on behalf of any third parties, including without limitation employees, vendors and customers of a Party, Agents, Affiliates, or WSI Service Recipients or to create any obligations of a Party to any such third parties.

 

24.15 Order of Precedence. In the event of a conflict, this Agreement shall take precedence over the Schedules and Exhibits attached hereto.

 

24.16 Non-Competition. Except as set forth herein, IBM shall retain the right to market and perform services similar to the Services to third parties. No term of this Agreement shall limit either Party from developing competing or non­competing products either under internal development or under contract to or in partnership with other entities. Except as set forth in Section 10.2, or the AECI, neither Party may use the Confidential Information of the other Party in the development of such products.

 

24.17 Business Contact Information. WSI agrees that, solely to the extent necessary for the provision of Services pursuant to this Agreement, IBM may use and share, within IBM, its Affiliates and IBM Agents, on its behalf, data about WSI or its Affiliates that WSI may provide to IBM under this Agreement (for example, addresses, contact names and other information). WSI also agrees that, solely to the extent necessary for the provision of Services pursuant to this Agreement, such business contact data may be transferred to the foregoing entities in any applicable country

 

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whether or not a member of the European Economic Union. This provision is not intended to and does not waive or modify any rights or obligations the parties may have with respect to such data pursuant to the terms of the Agreement for the Exchange of Confidential Information between WSI and IBM including any obligations pertaining to disclosures to third parties.

 

24.18 Time for Bringing Cause of Action. Neither Party will bring a legal action arising out of or related to this Agreement more than three years after such party knew or should have known of the cause of action, but in no event later than the applicable statutory time period.

 

24.19 No Sale or Lease of Goods: No goods are sold or leased by IBM under this Agreement. If WSI desires to purchase or lease goods from IBM, such purchase or lease will be governed by a separate mutually acceptable written agreement between WSI and IBM or an IBM Affiliate.

 

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IN WITNESS WHEREOF, each of WSI and IBM has caused this Agreement to be signed and delivered by its duly authorized representative.

 

 

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Reference:
Security Exchange Commission - Edgar Database, EX-10.1 2 dex101.htm SERVICES AGREEMENT, Viewed August 15, 2022, View Source on SEC.