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.

 

13

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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.

 

14

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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

 

15

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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.

 

16

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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

--------------------------------------------------------------------------------

[***]  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.

 

17

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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.

--------------------------------------------------------------------------------

[***]  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.

 

18

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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.

 

19

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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.

 

20

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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

 

21

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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;

 

22

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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

--------------------------------------------------------------------------------

[***]  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.

 

23

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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

--------------------------------------------------------------------------------

[***]  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.

 

24

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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.

 

25

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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.

 

26

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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,

--------------------------------------------------------------------------------

[***]  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.

 

27

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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.

 

28

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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;

 

29

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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

 

30

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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) [***]

--------------------------------------------------------------------------------

[***]  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.

 

33

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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;

 

34

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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

--------------------------------------------------------------------------------

[***]  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.

 

35

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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

 

36

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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.

--------------------------------------------------------------------------------

[***]  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.

 

37

--------------------------------------------------------------------------------

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

--------------------------------------------------------------------------------

[***]  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.

 

38

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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.

 

39

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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.

 

40

--------------------------------------------------------------------------------

(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

 

41

--------------------------------------------------------------------------------

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

 

42

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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

--------------------------------------------------------------------------------

[***]  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.

 

43

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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

 

44

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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

 

45

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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.

 

46

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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.

 

WILLIAMS-SONOMA, INC.

By:   /s/    EDWARD A. MUELLER         

Name:

  Edward A. Mueller

Title:

  Chief Executive Officer INTERNATIONAL BUSINESS MACHINES CORPORATION By:  
/s/    STEPHEN J. FENN         

Name:

  Stephen J. Fenn

Title:

  Vice President, Retail Industry September 30, 2004

 

47

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--------------------------------------------------------------------------------

 

Services Agreement

between

WSI and IBM

 

--------------------------------------------------------------------------------

 

Schedule A

 

Services and Support Responsibilities

 

WSI/-IBM Confidential

  Page 1 of 58      

--------------------------------------------------------------------------------

 

Table of Contents

 

Part I: General Services

   3

1.0

  

Introduction

   3

2.0

  

Documentation

   3

3.0

  

Governance Structure and Process

   4

4.0

  

Systems Management (SMC) Controls

   7

5.0

  

Other Services

   8

6.0

  

Service Hours

   9

Part II: IBM Pre-Transformation Services

   10

1.0

  

Mid-Range Services Introduction

   10

2.0

  

Data Network Services

   22

3.0

  

Security

   23

4.0

  

Groupware Services

   26

5.0

  

Reports

   27

Part III: Post-Transformation – On-Demand Data Center (ODCS) Services

   28

1.0

  

Network

   28

2.0

  

Components

   28

3.0

  

ODCS Services and Support Responsibilities

   29

4.0

  

Security

   40

5.0

  

Storage Management

   43

6.0

  

ODCS Change management

   45

7.0

  

ODCS Reports

   45

Part IV: Post-Transformation – IBM Managed Hosting Services

   47

1.0

  

Solution Description

   47

2.0

  

Managed Hosting Monitoring Software

   47

3.0

  

Managed Hosting Services: IBM Responsibilities

   48

4.0

  

Security Obligations

   55

5.0

  

Reports

   55

6.0

  

WSI Responsibilities

   56

 

WSI/-IBM Confidential

  Page 2 of 58      

--------------------------------------------------------------------------------

Part I: General Services

 

1.0 Introduction

 

This Schedule describes the duties and responsibilities of IBM and the
responsibilities of WSI related to IBM’s provision of the Services, including
the respective roles and responsibilities pertaining to

 

a. the Pre-Transformation environment, comprised of:

 

  1. IBM Managed Operations (MO) Services described in Part II; and

 

b. the Post-Transformation environment, comprised of

 

  1. IBM On-Demand Data Center (ODCS) Services described in Part III, and

 

  2. IBM Managed Hosting Services described in Part IV.

 

c. The Pre-Transformation environment means WSI’s current environment existing
as of the Effective Date supported with IBM’s Managed Operations (MO) Services,
and before the WSI environment(s) are migrated to IBM’s ODCS and e-Business
Managed Hosting environment, respectively.

 

d. Those Transition activities required to implement, respectively, the

 

  1. Pre-Transformation services (Transition Phase 1, as further described in
the Transition Plan described in Schedule D, Part I); and

 

  2. Post-Transformation environments and services (Transition Phase 2, as
further described in Schedule D, Parts II and III) are described in Schedule D
(Transition).

 

e. IBM will provide the Services in accordance with the descriptions contained
in the Schedules and the Policy and Procedures Manual. WSI is responsible for
supporting IBM’s provision of the Services in accordance with the descriptions
contained in the Schedules and the Policy and Procedures Manual.

 

f. All Services will be performed in the English language.

 

2.0 Documentation

 

a. WSI and IBM agree that the Policy and Procedures Manual will incorporate
appropriate implementation details and procedures for each phase of the
Services. An outline of an IBM Policy and Procedures Manual is attached as
Appendix A-1.

 

b. With respect to the MO Services, until such time as WSI and IBM complete and
approve the Policy and Procedures Manual, IBM will use the WSI procedures
existing as of the Effective Date to the extent that the procedures and
processes are applicable to the new operating environment.

 

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c. During the Term, WSI and IBM may agree on different or additional Services
and in such event will amend this Schedule and the Policy and Procedures Manual,
in writing, according to this Agreement.

 

d. WSI is responsible for providing documentation for operations procedures and
processes relating to the supported software and systems.

 

3.0 Governance Structure and Process

 

3.1 Introduction

 

WSI and IBM agree that the effective implementation and administration of this
Agreement will be facilitated by ongoing management involvement. This
involvement will be enhanced by the governance structure and process set forth
in this Section.

 

3.2 Intent

 

The intent of the governance structure and process is to enhance and facilitate:

 

a. the effective implementation of this Agreement including the establishment of
a strategy for communicating and planning for major organization changes (i.e.,
people, processes, functions) associated with this Agreement;

 

b. the development of organizational relationships through formal tools and
techniques to support WSI’s and IBM’s:

 

  1. IT goals and objectives; and

 

  2. business goals, plans and strategies;

 

c. effective operating protocols and an expeditious process for the resolution
of certain disputes; and

 

d. periodic senior management review of and recommitment to the relationship.

 

3.3 Objectives

 

The objectives of the governance structure and process are to continually
validate that:

 

a. the results and benefits derived from this Agreement are consistent with
WSI’s and IBM’s expectations and objectives;

 

b. the goals, objectives, strategies, and plans of WSI and IBM are fully
understood by the other;

 

c. an effective relationship management process exists including a
communication, decision making, and issue resolution process; and

 

d. this Agreement continues to provide a living value proposition to WSI and IBM
throughout the Term.

 

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3.4 Project Executives

 

IBM and WSI will each appoint an individual (the Project Executive) who has the
authority to represent and bind IBM and WSI, respectively, in connection with
all aspects of this Agreement. The IBM Project Executive shall be considered a
Key Position as defined in article 7.0 of the Agreement.

 

3.5 Structure

 

WSI and IBM agree to jointly establish a governance structure to provide advice
and counsel to the WSI and IBM Project Executives in general accordance with the
structure set forth below. During Transition, IBM and WSI will adjust the titles
and roles described in this section to map the structure described herein to
WSI’s management structure.

 

a. Management Board

 

  1. WSI and IBM will jointly create a board of management employees from (A)
WSI and (B) IBM (the Management Board), who will focus on WSI’s and IBM’s
long-term strategic plans as they relate to the Services (and other services
being provided by IBM that may relate or affect WSI’s receipt of the Services)
and ensure that such plans remain consistent with the goals, objectives,
strategies and plans of WSI and IBM. Within 60 days after the Effective Date,
WSI and IBM will identify the titles of the initial members of the Management
Board and will agree upon a process for replacement or addition of the
Management Board members.

 

  2. The Management Board will:

 

(a) convene as required, but at a minimum semiannually, to promote effective
relationship management and validate progress towards joint strategic
initiatives;

 

(b) conduct annual reviews of the operating and strategic plans prepared by the
Project Executives;

 

(c) share global strategies (as WSI deems appropriate), and jointly develop new
or adjust the existing WSI and IBM information technology strategy;

 

(d) consider and recommend amendments to the Agreement necessary to maintain
alignment of WSI’s and IBM’s expectations and shared goals;

 

(e) upon WSI’s or IBM’s request, assist in resolving any disputes or significant
issues arising from the interpretation or implementation of this Agreement; and

 

(f) review the overall operational performance of this Agreement as well as
issues effecting joint mutual action.

 

b. Advisory Council

 

  1. WSI and IBM will jointly create a council consisting of information
technology managers and representatives from

 

(a) WSI and information technology managers and appropriate WSI subcontractors
and vendors, and

 

(b) representatives from IBM and appropriate IBM subcontractors and vendors ((a)
and (b) collectively, the Advisory Council)

 

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  2. Within 60 days after the Effective Date, WSI and IBM will identify the
titles of the initial members of the Advisory Council and will agree upon a
process for replacement of the Advisory Council members.

 

  3. The Advisory Council will:

 

(a) conduct (commencing within 30 days after the Advisory Council is created)
monthly reviews of operational performance, progress towards project objectives,
and organizational linkages required for efficient, interdependent performance
where required, and convene quarterly to develop, prioritize and approve
tactical plans;

 

(b) review the operating and strategic plans prepared by the Project Executives
prior to presenting such plans to the Management Board for review;

 

(c) provide advice on workload forecasting and demand management;

 

(d) provide advice on technology direction and input to the Management Board;

 

(e) provide sufficient interface to WSI’s line of business and the IBM
organization; and

 

(f) sponsor appropriate working groups as deemed necessary to address
operational or technical issues, and to enhance WSI’s and IBM’s relationship.

 

c. Operations Team:

 

  1. WSI and IBM will jointly create an operations team, which will consist of
management personnel and IS managers and representatives.

 

  2. The operations team will conduct a weekly operations meeting, and other
regular meetings (including a daily meeting) as reasonably required by WSI, to
discuss daily performance and planned or anticipated activities and changes.

 

3.6 Project Change Request (PCR) Process

 

Changes that represent an amendment to the Services must be in a writing signed
by authorized representatives of both parties, according to the process set
forth below (the PCR Process). IBM and WSI will collaboratively conduct the
following PCR process, and select a tool or set of tools to manage the process,
as follows:

 

1. Requests for changes and responses will be made only by Project Executives.
Prior to submitting requests, the Project Executives will discuss the proposed
change and determine if the PCR Process is appropriate or whether the change can
be handled in a more expeditious manner.

 

2. Requests will be made in writing, using an agreed to format, to the
appropriate Project Executive.

 

3. The response to the change request will be made in writing, using an agreed
to format, within five (5) business days of agreed definition of WSI
requirements where resource pricing is based on existing pricing metrics,
otherwise 10 business days.

 

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4. In the event of a request from WSI, IBM’s response will delineate how the
change affects Services, timeline, and/or fees. If IBM proposes an increase in
fees, supporting detail for the proposed increase will be provided that
demonstrates how IBM’s cost of providing the Service is impacted by the request.

 

5. If development of a response requires significant investigation that results
in incremental costs to the investigating party, the parties may meet and
determine an appropriate charge for the investigation.

 

6. A mutually signed request will be required to implement a Change.

 

7. In the event agreement on the change request cannot be reached, either party
may choose to follow the Dispute Resolution Process.

 

8. Additionally, WSI and IBM agree that:

 

(a) A mutually signed PCR will be deemed an amendment to this Agreement;

 

(b) Day-to-day change management that does not constitute an amendment to the
Services will be addressed via the Change Management Process defined in section
4.0(d); and

 

(c) Any modification of the Services requested by WSI as a result of laws
applicable to WSI will be considered a PCR covered by this Section.

 

3.7 Reports

 

a. During Phase One Transition, IBM will continue to provide WSI with the same
periodic reports pertaining to the Services that WSI provided prior to the
Effective Date, and IBM will provide WSI with drafts of the form for the
periodic reports IBM will provide WSI during the Term.

 

  1. Upon completion of Phase One Transition, IBM will begin providing WSI with
the periodic reports described in Parts II, III, and IV, respectively.

 

4.0 Systems Management (SMC) Controls

 

IBM will provide to WSI, and IBM and WSI will mutually agree on and use, the
procedures for the standard set of disciplines for managing information systems
included within the Services. The SMC procedures, in some combination, apply to
all the Services provided, and they will be implemented, as described in this
Schedule, to each Service being provided. IBM’s SMC responsibilities will
consist of the following processes.

 

a. Availability management is the process for coordinating the appropriate
skills, information, tools and procedures required to manage the availability of
interactive networks and their supporting hardware and software components.

 

b.

Batch management is the process for controlling production batch work including
the scheduling of resources, the processing of data and transactions and the
distribution of data output/information between end users. WSI instructions on
what, when and how to

 

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schedule and recover will be provided to IBM and included in the Policy and
Procedures Manual. IBM will perform and control setup and scheduling in
accordance with the Policy and Procedures Manual.

 

c. Capacity management is the process for the development and maintenance of
tactical and strategic plans to verify that the operating environments
accommodate WSI’s growing or changing business requirements.

 

d. The Change Management Process is the process for the planning, testing,
coordinating, implementing and monitoring of changes affecting service delivery
and the operating environments without adversely impacting service delivery.

 

e. Configuration management is the process for processing hardware and software
configuration changes and maintaining lists and diagrams of system
configurations. IBM will provide revised configurations for those components for
which IBM has responsibility to WSI, upon WSI’s reasonable request.

 

f. Inventory management is the process for maintaining a record of the IBM and
WSI equipment (including incoming and outgoing) for those environments for which
IBM is providing Services. This activity includes tracking by machine location,
maintaining available configuration data and providing necessary information to
permit maintenance vendor coordination.

 

g. Performance management is the process for monitoring, measuring, analyzing
and reporting systems performance as compared to the Service Levels. Where
warranted, IBM may request WSI to make changes to the hardware and software to
enable system performance improvement.

 

h. The Problem Management Process is the process for identifying, recording,
tracking, and correcting issues impacting service delivery, recognizing
recurring problems, addressing procedural issues and containing or minimizing
the impact of problems that occur.

 

i. Recovery management is the process for planning, establishing and testing the
recovery procedures required to re-establish the functionality of systems
included in the Services in the event of a system failure. The intent of this
process is to anticipate and minimize the impact of systems resource failure
through the development of predefined, documented procedures and
software/hardware recovery capabilities. WSI and IBM will agree on the
procedures for recovery. The Policy and Procedures Manual will contain such
procedures.

 

j. IBM will perform the functions requested by WSI to support WSI’s activities
to comply with Sarbanes-Oxley obligations, such as quarterly testing,
maintenance, and validation of WSI’s standard operating procedures. In the event
that such functions represent tasks, duties, functions not otherwise included in
the Services, IBM will perform such functions pursuant to a PCR.

 

5.0 Other Services

 

a. Supplies Specifications

 

IBM will provide WSI with the technical and quality specifications for the
supplies, if any, required by IBM to perform the Services. For the Services
performed at WSI locations, WSI is responsible for providing all printed forms,
printer paper, toner cartridges, print ribbons, and all End User supplies and
consumables.

 

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b. Technology

 

IBM will assist WSI in the review of vendor proposals affecting IBM’s provision
of the Services to facilitate existing and future systems compatibility with
changing industry standards. IBM will consult with WSI regarding new data
network and data processing systems, as appropriate.

 

c. Vendor Liaison and Product Assessment

 

IBM will maintain contact with vendors providing data processing and
telecommunications services or products related to IBM’s provision of the
Services to keep abreast and apprise WSI of the latest technological product
developments.

 

d. Service Review Meetings

 

IBM will participate in service review meetings with vendors and service
providers under contract with WSI and who interact with IBM relative to the
Services, as WSI reasonably requests.

 

6.0 Service Hours

 

IBM will provide each of the Services during the Service Hours specified in the
following chart.

 

SERVICE

--------------------------------------------------------------------------------

 

SERVICE HOURS

--------------------------------------------------------------------------------

 

NOTES

--------------------------------------------------------------------------------

Pre-Transformation  

5x12 coverage, except for servers

designated as 7x24 coverage:

 

5x12 coverage means 6 a.m. – 6 p.m.

Pacific Time, Monday-Friday

 

Server coverage designation is set

forth in Schedule G, Appendix G-6

  IBM will provide coverage outside the Service Hours as described in Part II,
section 1.1, “Exception Process” ODCS  

7x24, except as follows:

 

for Sev-3 and Sev-4 support for

Groupware, Database Support,

Middleware and Application

Support, support is 6 a.m. – 6 p.m.

Pacific Time, Monday-Friday

    Managed Hosting  

7x24, except as follows:

 

for Sev-3 and Sev-4 support for

Groupware, Database Support,

Middleware and Application

Support, support is 6 a.m. – 6 p.m.

Pacific Time, Monday-Friday

   

 

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Part II: IBM Pre-Transformation Services

 

1.0 Mid-Range Services Introduction

 

a. IBM will provide the following Managed Operations Midrange Services to WSI
(the MO Midrange Services). This responsibility will include establishing and
maintaining a properly trained and adequately staffed data center staff,
including necessary management and support staff.

 

b. IBM will manage and support, as further described herein, the following
midrange systems, including storage environment: UNIX, AS400, and Intel, for the
supported servers listed in Schedule G, Part I, sections 2, 3, and 4.

 

c. IBM will provide midrange Services during the Service Hours, except for the
regularly scheduled maintenance periods set forth in the Policy and Procedures
Manual. Service Hour coverage (designated for each server as either “5 x 12” or
“7 x 24” coverage) for each applicable server is set forth in Schedule G. For
problems occurring outside the Service Hours, IBM will log problems and problems
will be serviced upon resumption of the Service Hours and prioritized according
to Severity Level.

 

d. IBM will develop regular scheduled maintenance windows, in consultation with
WSI to conform to WSI business processes.

 

1.1 Problem Management Services

 

a. IBM will:

 

  1. Monitor (utilizing WSI’s automated monitoring tools existing as of the
Effective Date) and log issues related to system alerts, and respond according
to the Service Hours;

 

  2. provide Level-2 technical support, and receive calls for support from:

 

(a) during the WSI help desk support hours, the WSI’s Level-1 Help Desk and

 

(b) after WSI help desk support hours, one identified WSI User from each WSI
call center/WSI warehouse;

 

  3. assign/validate a severity code to the problem:

 

(a) Severity 1 - critical impact. Critical system, network or key application
outage with critical impact on service delivery. Examples include total loss of
production service to entire customer set, impact to one or more Service Level
commitments, or WSI delivery schedule impact. Severity 1 problem support is
available 24 x 7 for those systems designated as 24x7 coverage, otherwise during
the Service Hours.

 

  (i) Exception Process: Severity 1 / Severity 2 Coverage for “5x12” designated
servers:

 

Upon WSI request (process to be documented in the Policy and Procedures Manual
during Transition), IBM will provide off-hour coverage for a “5x12” coverage
server, such service provided at the overtime rate of 150% times the applicable
Hourly Rate in Schedule C, Table C-4.

 

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(b) Severity 2 - major impact. Key component, application, critical end user
functions, or network is down, degraded, or unusable with potential critical
impact on service delivery. Examples include service performance degradation,
where service delivery is impacted or partial customer set affected. Severity 2
problem support is available 24 x 7 for those systems designated as 24 x 7
coverage, otherwise during the Service Hours;

 

(c) Severity 3 - minor impact. A component, minor application or procedures is
down, unusable, or difficult to use causing some operational impact, but no
immediate impact on service delivery. Examples include service outage but
alternative workaround available, problems that degrade service but do not
prevent delivery of service, potential exposure to ability to deliver service,
or scattered WSI users are affected. Severity 3 problem support is available
during the Service Hours; and

 

(d) Severity 4 - no impact. Service component or procedure that is not critical
to the WSI is unusable where an alternative workaround is available and deferred
resolution is acceptable. Examples include no impact to service delivery, no
production services are affected, or individual customers are affected. Severity
4 problem support is available during the Service Hours;

 

  4. utilize the developed Problem Management Process and Change Management
Process, including any updates, as applicable;

 

  5. escalate problems related to the Services in accordance with the
established problem escalation procedures;

 

  6. implement Services recovery processes;

 

b. WSI Responsibilities:

 

  1. provide support for problems not related to the Services;

 

  2. serve as the initial point of contact for questions and problems (via
telephone, e-mail, etc.) from WSI’s end users;

 

  3. provide WSI help desk personnel with adequate functional knowledge to
interface with IBM to resolve problems;

 

  4. communicate problems and questions related to the Services, and service
requests to IBM in accordance with the agreed processes and procedures;

 

  5. track WSI’s resolution of problems determined to be caused by WSI that may
impact IBM’s provision of the Services, and notify IBM of the resolution, as
appropriate;

 

  6. assist IBM in the investigation of the likely causes of problems impacting
IBM’s provision of the Services, to the extent such investigation involves WSI’s
responsibilities; and

 

  7. ensure WSI personnel are available as appropriate to assist with problem
determination and resolution.

 

1.2 Systems Management Control (SMC) Operations

 

Operation services provide for the management of the midrange environment
(including the storage environment) using the appropriate SMC disciplines (for
example, performance management, problem management, change management).

 

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a. Availability management:

 

  1. IBM will:

 

(a) assist WSI in defining WSI’s availability requirements;

 

(b) develop an availability plan;

 

(c) track, analyze and report on availability;

 

(d) provide any applicable hardware maintenance in accordance with the equipment
manufacturer’s specifications;

 

(e) recommend availability improvements.

 

  2. WSI responsibilities:

 

(a) provide access to appropriate WSI personnel to interface with IBM personnel,
as required, to isolate or resolve network, operational or software problems
affecting IBM’s ability to provide the Services.

 

b. Batch Management Services:

 

  1. For WSI’s UNIX, AS-400 and Intel systems, IBM will maintain production
schedules and cooperate with WSI in responding to special processing requests
and new processing requirements.

 

  2. IBM will:

 

(a) schedule, control and monitor the running of production jobs and maintain
turnover logs in the data center using scheduling and quality control procedures
as specified in the Policy and Procedures Manual;

 

(b) prioritize and schedule batch jobs subject to WSI’s schedule parameters
including automated scheduling features in WSI’s applications software and WSI’s
specific directions;

 

(c) obtain WSI approval for and distribute major production control schedules
before implementation, as specified in the Policy and Procedures Manual;

 

(d) update the scheduler database, as required, to reflect changes to the
production environment;

 

(e) monitor scheduler related incidents, and develop and recommend refinements
and revisions to the scheduler database;

 

(f) For special requests, IBM will:

 

(i) coordinate and modify schedules for special requests (subject to applicable
Service Levels attainment relief),

 

(ii) notify WSI if special requirements will affect the timely completion of
other tasks; and

 

(iii) to the extent reasonably possible, process all special request activities
within the requested time frames and in the sequence WSI defines.

 

  3. WSI responsibilities:

 

(a) review and approve the schedule for batch job submission;

 

(b) provide requirements for job ABEND restart instructions;

 

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(c) provide change requirements to the batch schedule in accordance with the
change management process contained in the Policy and Procedures Manual; and

 

(d) assist in scheduling and coordinating test time.

 

c. Batch Processing Operations:

 

  1. IBM will make available, monitor and process on-line and batch applications
as applicable for each platform, including scheduled, unscheduled and on-request
services. Batch applications apply to UNIX, AS-400, and Intel systems.

 

  2. IBM will:

 

(a) support the production environment;

 

(b) provide computer room operations support and perform console monitoring
activities;

 

(c) operate and provide application availability to present and future WSI
applications software to support the operating schedules of WSI in accordance
with the Service Levels;

 

(d) with the approval of the WSI Project Executive, schedule systems maintenance
so as to minimize interference with WSI’s business operations; and

 

(e) monitor job submissions to verify that these jobs are successfully
completed.

 

  3. WSI will be responsible for selecting, or defining the batch processing
requirements for all applications software. IBM agrees to operate the batch
processing for the applications software.

 

d. Capacity planning:

 

  1. IBM will:

 

(a) monitor and document WSI’s current workloads and provide the information to
WSI for WSI’s use in determining WSI short-term capacity requirements. IBM will,
during Pre-Transformation, use the WSI capacity planning procedures to report,
forecast and plan capacity as reflected in the Policy and Procedures Manual.

 

  2. WSI responsibilties:

 

(a) project future trends and capacity requirements for new projects and provide
such information to IBM as it pertains to the Services.

 

e. Change management:

 

  1. IBM will:

 

(a) with WSI, develop procedures for handling all planned and emergency changes
affecting the midrange environment including review, approval, communication and
proper documentation;

 

(b) communicate changes made by IBM affecting the midrange environment in
accordance with the change management procedures contained in the Policy and
Procedures Manual;

 

(c) record and track approved change requests;

 

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(d) schedule or manage testing and implementation of approved changes, including
communication to and coordination with affected WSI business units;

 

(e) evaluate planned changes to the midrange environment and advise WSI of any
requirements to support such changes;

 

(f) provide automation scripts, where possible, for tasks associated with a
change;

 

(g) receive and handle notification of related change activity;

 

(h) track change history of managed resources; and

 

(i) provide standard change management reports.

 

  2. WSI responsibilities:

 

(a) assist IBM in developing procedures for handling all planned and emergency
changes affecting the midrange environment including review, approval,
communication and proper documentation; and

 

(b) notify IBM of any planned or emergency changes to WSI’s midrange environment
affecting IBM’s provision of the Services.

 

f. Configuration management:

 

  1. IBM will:

 

(a) document as required, and inherit and maintain documentation as available,
for the following:

 

(i) operating systems configuration;

 

(ii) network operating systems configuration at IBM Service Locations;

 

(iii) backup and restore processes; and

 

(iv) hardware configuration reports.

 

  2. WSI responsibilities:

 

(a) provide IBM with available documentation existing as of the Effective Date
and future requirements for the following:

 

(i) operating systems configuration;

 

(ii) network operating systems configuration;

 

(iii) backup and restore processes; and

 

(iv) hardware configuration reports.

 

g. Performance management:

 

  1. IBM will:

 

(a) monitor midrange performance using WSI’s measurements and indicators
existing as of the Effective Date;

 

(b) take appropriate resolution action (for example, tuning) when midrange
performance is impacted;

 

(c) with WSI, establish a schedule for performing midrange maintenance (for
example, virus detection, backup, DASD cleanup, and testing) and modifications
and enhancements, in accordance with WSI backup and maintenance windows existing
as of the Effective Date, or as otherwise mutually agreed;

 

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(d) advise WSI of any required system configurations and/or modifications
necessary to enable IBM to meet the Service Levels; and

 

(e) provide standard performance reports.

 

  2. WSI responsibilities:

 

(a) assist IBM in establishing schedules for performing midrange maintenance
(for example, virus detection, backup, DASD cleanup and testing) and
modifications and enhancements.

 

h. Problem Management:

 

  1. IBM will, as part of IBM’s performance of problem management procedures
generally set forth in Section 1.1:

 

(a) perform problem management tasks including real-time midrange monitoring,
problem identification, reporting, logging, tracking, resolution, communication
and escalation for problems using the WSI tools existing or planned as of the
Effective Date (e.g. Remedy) until implementation of the IBM tools;

 

(b) with WSI’s assistance establish backup and recovery processes and procedures
for critical functions, including:

 

(i) utilize WSI’s alert and paging processes and procedures and incorporate, as
necessary, additional IBM processes, and

 

(ii) maintain the WSI plan for recovery of data due to unplanned operational
types of failures such as equipment malfunction, temporary power disturbances
and abnormal termination;

 

  2. WSI responsibilities:

 

(a) assign (in compliance with Severity definitions in Section 1.1) a
priority/Severity level for each problem;

 

(b) assist IBM in establishing backup and recovery processes and procedures for
critical functions,

 

(c) provide to IBM a list of the WSI personnel for purposes of assisting with
problem resolution and escalation, if required, including any updates as they
occur; and

 

(d) make appropriate WSI personnel are available to interface with IBM to
resolve complex problems affecting IBM’s provision of the Services.

 

1.3 Operating Systems Technical Support

 

a. IBM will manage the operating systems technical environment of the WSI
servers listed in Schedule G, Appendix G-6. Included in such responsibilities,
IBM will:

 

  1. perform all technical system support operations, including DASD management,
maintain existing scripts and write minor modifications (as determined by IBM to
support the WSI environment existing as of the Effective Date according to the
Service Levels. Additional WSI scripting requests to be addressed via the PCR
process, minor request, e.g., copying a group of files, will be performed at no
charge), capacity planning, and configuration and performance tuning for the
operating system software;

 

  2. perform problem troubleshooting and diagnose problems;

 

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  3. coordinate and work with WSI and 3rd party application teams to identify
and resolve problems that affect multiple components of an operating
environment;

 

  4. apply (e.g., for security patches) preventive maintenance and program
temporary fixes and patches (provided to IBM for no additional charge by the
applicable vendor) in a timely manner to correct operating system defects;

 

  5. apply releases, upgrades, replacements;

 

  6. provide systems administrative support, including administrative ID and
root ID administration, and installation, configuration and management of
changes that require root or administrator level access, for example,
installation of third party software patches, and

 

  7. support the operating systems and subsystems, compilers, programming
languages, products and operational tools.

 

1.4 File Services

 

IBM will manage files on the servers.

 

a. IBM will:

 

  1. keep files under IBM’s control, current and available during scheduled
access times;

 

  2. initiate and complete required file transfers, including monitoring error
logs and resolving errors (for example, handling line transmission errors) for
all processed files, according to the procedures specified in the Policy and
Procedures Manual;

 

  3. verify, using tools and procedures specified in the Policy and Procedures
Manual, the receipt of incoming files and the processing and transmission of
outgoing files;

 

  4. document, maintain and, as appropriate, update and execute mutually
approved file backup and recovery procedures;

 

  5. provide a recovery procedure for restoring the data image to a previous
level within a mutually agreed time frame; and

 

  6. conduct regularly scheduled backup and recovery procedures as specified in
the Policy and Procedures Manual and monitor successful completion of the
backups, and take corrective action, as required.

 

b. WSI responsibilities:

 

  1. define requirements for job recovery management; and

 

  2. define requirements for file backup and recovery procedures.

 

1.5 Tape Management Services

 

IBM will provide tape management services.

 

a. IBM will:

 

  1. retain tapes for a mutually agreed retention period;

 

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  2. rotate tapes, as required, for off-site storage;

 

  3. log and track physical tapes that are checked in and out of the data center
by WSI or a third party in accordance with the procedures specified in the
Policy and Procedures Manual;

 

  4. prepare tapes for hand-off to WSI’s off-site storage vendor (WSI retains
responsibility for 3rd party storage facility charges);

 

  5. notify the IBM or third party tape storage provider when it is time to
scratch or return a tape in accordance with the procedures specified in the
Policy and Procedures Manual;

 

  6. complete tape mounts in accordance with production processing requirements;

 

  7. provide tape specifications to WSI;

 

  8. maintain adequate supplies for the tape environment;

 

  9. provide a sufficient scratch tape pool to service required processing
needs;

 

  10. notify WSI when additional tapes and other supplies are required;

 

  11. retrieve archived tapes and restore required files and data sets within
mutually agreed time frames;

 

  12. upon WSI’s reasonable request, allow WSI to review tape management
operations, including mailing and receipt control; and

 

  13. report tape utilization to WSI in a timely manner to facilitate
re-ordering of tapes.

 

b. WSI responsibilities:

 

  1. define requirements for off-site tape storage and archiving;

 

  2. be financially responsible for the required off-site tape storage
facilities and storage services;

 

  3. validate tapes as part of handover to IBM;

 

  4. provide tapes as IBM requests that meet the IBM-provided tape
specifications; and

 

  5. be responsible for the costs associated with the transportation of tapes
between the data center and an off-site storage facility.

 

1.6 Database Management Services

 

a. IBM will perform physical database support for the database environments set
forth in Schedule G, Part I, section 5.0, as set forth below. WSI is responsible
for the performance of logical DBA functions. Databases will be categorized as
follows

 

b. A Type 1 Database means (i) a production database or (ii) a non-production
databases for which WSI requires IBM to perform the support functions described
below. For Type 1 Databases IBM will:

 

(a) Provide database software support as specified herein for Severity 1 and
Severity 2 service issues on a 24 x 7 basis. IBM will provide database software
support for Severity 3 and Severity 4 service issues during the Service Hours.

 

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(b) control and manage database software administration IDs and object owner
IDs;

 

(c) use reasonable efforts to monitor the availability of database software
(up/down status) 24 x 7 and post exceptions to a web site accessible through
IBM’s e-business Hosting Connection password protected web portal;

 

(d) use reasonable effort to monitor database replication processes and
procedures;

 

(e) provide system level database replication and database software
troubleshooting and problem determination;

 

(f) apply fixes, PTFs and patches;

 

(g) install minor release upgrades to installed database replication software
and database software using the standard change control procedures (a minor
release upgrade is any change by the software manufacturer to the release number
to the right of the point, e.g.: X.y);

 

(h) implement database configuration changes required by WSI;

 

(i) provide pruning, rotation and/or archiving of application and database log
files; and

 

(j) perform performance tuning of database software WSI Components based on
documented tuning parameters, procedures, and performance metrics provided by
WSI.

 

(k) Create database objects;

 

(l) Manage database space and participate in planning for changes in the size of
databases due to business growth or reduction and applications development
projects, and review WSI’s plans on a regular basis;

 

(m) provide physical database support for the WSI database environments

 

(n) in cooperation with WSI, monitor and report database performance and
database space utilization and identify and recommend practical modifications
for improved performance;

 

(o) maintain mutually agreed database backup procedures, provided by WSI, to
recover from a database outage or corrupted database within time frames
specified in the Policy and Procedures Manual;

 

(p) maintain physical database definitions and make such definitions available
to WSI upon request;

 

(q) assist in problem determination and resolution of issues, including
escalation to the software vendor.

 

c. Type 2 Databases are non-production databases where physical task
responsibilities are automated for promotion of versions. For Type 2 Databases,
IBM will perform all of the Type 1 Database tasks listed above, with the
exception of reduced scope for the following:

 

  1. perform minor troubleshooting activities only, e.g., providing
troubleshooting assistance to WSI troubleshooting activities

 

  2. the following physical task assumptions apply:

 

(a) application of database patch sets are assumed to occur as follows: average
of 1 patch per database per 2-month period

 

(b) execution of DDL (Data Definition Language) to create database objects is
assumed to be occur as follows: average of 3 executions per database per week

 

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(c) actions to manage database space are assumed to occur as follows: average of
2 times per database per week

 

d. Type 1 and 2 Databases: WSI responsibilities:

 

  1. define database backup and recovery requirements;

 

  2. provide requirements for changes and upgrades to the databases;

 

  3. define and approve database security requirements; and

 

  4. be responsible for logical database administration and data modeling and
cooperate with IBM during physical database design and review.

 

  5. provide troubleshooting, problem determination, and problem resolution for
applications and provide application-level assistance to IBM for database
software problem determination;

 

  6. perform database capacity and performance tuning

 

  7. plan and implement database data loads/exports/imports strategy

 

1.7 Middleware Support Services

 

a. IBM will provide support for the middleware, as set forth in Schedule G, Part
I, Section 6, as follows:

 

  1. provide monitoring of the software using WSI monitoring tools existing as
of the Effective Date;

 

  2. perform, with WSI assistance, software and infrastructure troubleshooting
and problem detection;

 

  3. implement software configuration changes/updates;

 

  4. administer changes to application thresholds and processes being monitored;

 

  5. perform any log file rotation, pruning, and archiving;

 

  6. provide software support 24 x 7 for those systems designated as 24 x 7
coverage, otherwise during the Service Hours;

 

  7. install minor upgrades, as follows:

 

(a) install vendor-provided fixes and/or patches;

 

(b) install vendor-provided releases and upgrades where installation can be
fully executed by a list of commands and does not include (i) reconfiguration or
(ii) data migration;

 

  8. perform the following pursuant to a PCR:

 

(a) install releases or upgrades where such installations will include
reconfiguration or data migration;

 

(b) problem resolution for failures of vendor provided fixes and patches;

 

and

 

  9. provide problem solution documentation.

 

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  10. assist WSI with load testing and software performance tuning activities.

 

b. WSI Responsibilities:

 

  1. provide documentation on suggested performance-related
parameter/configuration settings;

 

  2. provide a single point of contact for all application software related
issues;

 

  3. retain ownership and management of application software end user ID
administration, including password resets;

 

  4. procure and keep current service contracts with the software manufacturer
for maintenance and support including upgrades and updates/fixes. IBM will be
named as a primary technical contact in the service agreement(s) for software
supported by IBM;

 

  5. provide the appropriate support information for WSI contact and software
manufacturer support contact (e.g., IDs, contact names, telephone numbers,
license numbers);

 

  6. establish single point of contact with software manufacturer.

 

1.8 Application Software Support

 

a. General: IBM will provide ongoing support for only the supported applications
software (the “Supported Software”) identified in Schedule G, Appendix G-2. IBM
will:

 

  1. monitor the availability of Supported Software (up/down status) in
accordance with the Service Hours and post exceptions to a web site accessible
through IBM’s e-business Hosting Connection password-protected web portal;

 

  2. provide troubleshooting and problem determination, and problem resolution
and documentation;

 

  3. apply fixes, PTFs and patches provided by WSI or the vendor to correct
problems, as necessary, within the framework of the change control procedures;

 

  4. install minor release upgrades using the standard change control procedures
(a minor release upgrade is any change by the software manufacturer to the
release number to the right of the point, e.g.: X.y);

 

  5. implement configuration changes required by WSI;

 

  6. Administer changes to application thresholds and processes being monitored;

 

  7. Monitor alerts; and

 

  8. provide pruning, rotation and/or archiving of log files.

 

b. WSI responsibilities:

 

  1. porting WSI application data and Content.

 

1.9 Application Monitoring Services

 

a. IBM will provide application monitoring for the monitors listed in Appendix
G-3, using the processes in use by WSI as of the Effective Date.

 

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b. IBM will:

 

  1. perform 24x7 monitoring of selected application thresholds and/or
processes;

 

  2. administer and support monitoring tools and infrastructure;

 

  3. notify WSI by agreed process when selected thresholds are exceeded or
selected process exceptions are detected;

 

  4. perform problem analysis and resolution as follows:

 

(a) provide 1st level assessment;

 

(b) provide 2nd level support, if required, for infrastructure problems and for
the applications as set forth in Schedule G, Appendix G-2;

 

  5. create log records when selected thresholds are exceeded or selected
process exceptions are detected;

 

  6. administer changes to application thresholds and/or processes being
monitored;

 

  7. apply maintenance to monitoring tools;

 

  8. perform configuration management of monitoring console;

 

c. WSI Responsibilities:

 

  1. provide/ be financially responsible for (including licensing) any required
monitoring agents for WSI applications;

 

  2. designate and request changes to application thresholds and/or processes;

 

  3. perform 2nd level problem analysis and resolution for WSI applications not
otherwise listed in section 1.7;

 

  4. assist IBM in the investigation of problems to the extent such
investigation involves WSI responsibilities.

 

1.10 Storage Management Services

 

IBM will manage the WSI Storage Area Network (SAN) and the Network Attached
Storage (NAS) existing as of the Effective Date, as described in Schedule G,
Part I, section 4.0.

 

a. IBM will:

 

  1. manage the current setup of intelligent external storage devices in a
Storage Area Network (“SAN”);

 

  2. manage Filesystems:

 

(a) Modifying file system sizes;

 

(b) Verifying mount point availability;

 

(c) Repairing defective file systems; and

 

(d) Modifying Filesystem permissions.

 

  3. verify availability and sufficient capacity of file systems during Service
Hours;

 

  4. report disk space utilization;

 

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  5. manage server file migration to new disk or new disk configuration as
required;

 

  6. provide support for Hierarchical Storage Management product(s);

 

  7. provide support for Storage Archive service(s);

 

  8. manage intelligent external storage devices in the Storage Area Network;
and

 

  9. manage fiber channel switches and fiber channel directors in a Storage Area
Network.

 

  10. provide tape management functions for tape library operations WSI’s
established storage management procedures;

 

  11. maintain and provide the storage management procedures to WSI, including
any updates,

 

  12. mount / dismount tapes as required for DASD backup;

 

  13. support scratch tape maintenance;

 

  14. reply to storage management console messages, as appropriate;

 

  15. rotate WSI tapes, as required, for off-site storage;

 

  16. monitor and manage tape pool resources and have adequate media available
to meet peak load, planned growth and anticipated tape volume fluctuations;

 

  17. prepare weekly backups to designated off-site tape storage facility, as
per WSI requirement and retrieve as required to perform the Services;

 

b. WSI Responsibilities:

 

  1. provide transportation of WSI tapes to / from the off-site storage facility
(non-disaster recovery site, if applicable).

 

  2. maintain adequate tape supplies for sufficient scratch tape pool to service
required processing.

 

2.0 Data Network Services

 

2.1 Connectivity Service

 

a. IBM will be responsible for the Data Network Services providing connectivity
between IBM data centers and WSI’s MPLS network, as further described in
Appendix G-4 (Network Diagram), and as follows:

 

  1. WSI is responsible to provide MPLS connectivity to the local exchange
carriers (identified by IBM) in Boulder CO and Southbury CT.

 

  2. IBM is responsible for ‘last mile’ connectivity (as may be required) from
the above referenced local exchange carriers to the IBM Service Locations in
Boulder CO and Southbury CT. Such connectivity will connect to a WSI-provided
router in the Boulder CO and Southbury CT IBM Service Locations, respectively.

 

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  3. WSI is responsible for the management of the above-referenced WSI routers
out to the MPLS network.

 

  4. IBM will manage the premise LAN connectivity in each respective data center
to the WSI routers.

 

b. Connectivity will be based on TCP/IP protocols for the Data Network. Support
for other communications protocols will be provided by means of encapsulating in
the Data Network. Communications protocols that do not lend themselves to this
encapsulation will be handled on a case-by-case basis. IBM will support through
this service WSI’s current TCP/IP addressing standards.

 

2.2 Regulatory Changes

 

IBM will perform data network modifications as required to maintain compliance
with IBM Regulatory Requirements and WSI Regulatory Requirements applicable to
the data network.

 

2.3 Data Network

 

a. IBM will:

 

  1. manage and maintain all firewalls and gateway devices that connect the IBM
Data Network to the WSI Data Network;

 

b. WSI responsibilities:

 

  1. appoint a WSI focal point to work with IBM to resolve data network
operational problems, order data network services and products, and authorize
others to do so.

 

3.0 Security

 

3.1 Security Management

 

a. IBM will:

 

  1. provide an IBM focal point with responsibility for day-to-day security
management;

 

  2. during the Transition Phase 1 Period, with WSI’s assistance, IBM will
integrate WSI’s security policies existing as of the Effective Date with IBM’s
GSD-331 Security Guidelines;

 

  3. in conjunction with WSI, review security policies and procedures for
effectiveness and recommend improvements;

 

  4. review changes made or requested by WSI to its security policies and
standards and advise WSI whether or not such changes:

 

(a) can be implemented, and

 

(b) if implemented, will be considered a New Service; and

 

  5. maintain and update the information security policies as IBM deems
necessary.

 

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b. WSI responsibilities:

 

  1. provide a WSI focal point with responsibility for day-to-day security
management;

 

  2. during the Transition Phase 1 Period, perform a review of each Hired
Employee’s system access authorizations to confirm the need for the same access
requirements following the Effective Date and advise IBM of any required
changes;

 

  3. during the Transition Phase 1 Period, assist IBM in developing the
information security policies;

 

  4. provide IBM with WSI’s security audit history (both internal and external)
and security policies, standards and practices in effect as of the Effective
Date and any updates as they occur;

 

  5. communicate the security procedures to end users; and

 

  6. notify IBM of changes WSI plans to make to its security policies and
standards before implementation.

 

3.2 Physical Security

 

a. IBM will:

 

  1. during the Transition Phase 1 Period, with WSI’s assistance, perform a
baseline inventory of removable storage media (for example, tapes, disks) for
which IBM has security responsibility;

 

  2. provide physical security controls at IBM facilities;

 

  3. restrict access to data processing areas at IBM locations to authorized
personnel only;

 

  4. protect LAN servers and infrastructure devices on IBM’s premises from
unauthorized access;

 

  5. provide secure storage for removable storage media under IBM’s control; and

 

  6. implement controls for and provide effective elimination of residual
information on removable storage media before disposal or reuse outside of WSI.

 

b. WSI responsibilities:

 

  1. during the Transition Phase 1 Period, assist IBM in performing a baseline
inventory of removable storage media for which IBM has security responsibility;

 

  2. provide physical security controls at the WSI Facilities;

 

  3. restrict access to data processing areas at WSI Facilities to authorized
personnel only; and

 

  4. protect LAN servers and infrastructure devices at the WSI Facilities from
unauthorized access.

 

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3.3 Logical Access Control

 

a. IBM will:

 

  1. [***]

 

  2. [***]

 

  3. [***]

 

  4. [***]

 

  5. [***]

 

  6. [***]

 

  7. [***]

 

  8. [***]

 

  9. [***]

 

  10. [***]

 

b. [***]

 

  1. [***]

 

  2. [***]

 

  3. [***]

 

  4. [***]

 

  5. [***]

 

  6. [***]

 

3.4 SB-1386, Visa/MasterCard CISP Compliance

 

a. IBM will assist WSI to maintain existing WSI compliance level (as of the
Effective Date) with SB-1386 VISA/MasterCard CISP requirements as such
requirements relate to the Services, as follows:

 

  1. Major Enhancements (e.g., implementing new security software,
implementation of additional security policies) will be performed pursuant to
the PCR process;

 

  2. Minor enhancements (e.g., re-configuring existing security software) will
be performed on an as-available effort to the extent that IBM can provide the
service using existing staff without affecting Service Levels.

--------------------------------------------------------------------------------

[***] 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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4.0 Groupware Services

 

a. IBM will provide support services for the applications listed in Schedule G,
Part I, Section 9.0 (collectively known as Groupware) in accordance with Part
II, section 1.7, and

 

b. IBM will:

 

  1. manage and support specified Groupware servers from one or more IBM
delivery locations,

 

  2. recommend configuration changes relating to utilization of Groupware
environment,

 

  3. provide Groupware server levels 2 and 3 technical support and problem
determination/resolution,

 

  4. provide Groupware server support procedures development and maintenance,

 

  5. execute processes and procedures as defined by WSI to support Groupware
server performance and availability,

 

  6. provide Groupware administrative services,

 

  7. configure Groupware environment to conform to agreed to architecture
standards,

 

  8. provide Groupware application native security administration and reporting,

 

  9. provide reasonable assistance to WSI third party vendors in problem
resolution and integration (e.g. Active Directory integration),

 

  10. provide support for server side (non-software) antivirus availability
services,

 

  11. provide server side antivirus updates for engine and virus pattern files,

 

  12. provide fax integration support pertaining to Microsoft Exchange,

 

  13. work with WSI to define naming conventions, and

 

  14. create, modify and delete groups as directed by WSI,

 

c. WSI Responsibilities;

 

  1. provide a weekly scheduled maintenance window to allow for normal server
maintenance,

 

  2. participate in a jointly agreed to change and problem management process
for reporting problems,

 

  3. provide that each WSI site has sufficient network bandwidth to meet minimum
performance and response time requirements,

 

  4. approve configuration changes to optimize utilization of Groupware
environment, and

 

  5. approve naming conventions.

 

d. The PCR process will apply to;

 

  1. Major changes to Groupware implementation, such as the implementation of a
new software package.

 

  2. Major Groupware upgrades and testing.

 

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5.0 Reports

 

a. IBM will provide reports as follows:

 

b. During Transition Phase 1, IBM will provide WSI with the same periodic
reports pertaining to the Services that WSI provided prior to the Effective
Date, and IBM will provide WSI with drafts of the form for the periodic reports
IBM will provide WSI during the Term, and to include, at a minimum, the
following:

 

  1. a monthly performance report documenting IBM’s performance with respect to
the Service Levels and the Service Level Objectives;

 

  2. a monthly report of the ongoing and planned changes performed during the
previous month;

 

  3. a monthly report summarizing WSI’s usage of Resource Units;

 

  4. a monthly report summarizing hours expended for Groupware Support)

 

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Part III: Post-Transformation - On-Demand Data Center (ODCS) Services

 

1.0 Network

 

The ODCS Services will be delivered from the IBM Service Locations set forth in
Schedule G, and IBM will provide network connectivity to WSI’s MPLS hub as
further described in Schedule G, Appendix G-4 (WSI Network Diagram).

 

2.0 Components

 

2.1 IBM Components

 

a. IBM will provide, operate, maintain and support the IBM Components described
in Schedule G, Part II, section 1.0 (IBM Components), and according to the
volumes and baselines set forth in Schedule G, Part II, sections 3.0, 4.0, 5.0,
6.0 and 7.0.

 

b. IBM will support the current release (“N”) and the release immediately
preceding the current release (“N-1”) of the systems software IBM Components.

 

2.2 ODCS “Virtual Server” (LPAR) Architecture

 

a. IBM will install and provide a scalable, partitioned server platform as
described herein (the “ODCS” architecture). The ODCS services provide server and
infrastructure IBM Components that are logically partitioned into independent
virtual servers, including storage and operating system software IBM Components.
For each virtual server IBM will provide processing power measured in central
processing unit (CPU) hours, as further described in Schedule C.

 

  1. IBM will:

 

(a) create virtual server(s) (in the amounts specified in Schedule G, Part II)
by dividing processors, memory, and hardware resources into multiple
environments, each with its own operating system, so that each environment can
be operated independently;

 

(b) install operating system software IBM Components (as specified in Schedule
G, Part II) including software object modules consisting of a pre-defined
combination of base operating system, applicable fixes, selected security
patches, tools, and agents;

 

(c) provide a limited number of operating system User IDs and provide group
administration of such operating system User IDs;

 

(d) operate virtual servers including starting and stopping of base operating
systems, management of system startup files, processes, and log files, and
monitoring of event logs; and

 

(e) Take mutually agreed-upon action to resolve errors and problems.

 

b. Virtual server disk storage:

 

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  1. IBM will

 

(a) provide disk storage for virtual servers in RAID levels designated in
agreement with WSI,

 

an amount sufficient to support the operating system software IBM Components;
and the additional disk storage allocated for each virtual server, as further
described in Schedule C.

 

(b) initialize and manage disk storage devices including initial setup,
configuration, and connectivity between virtual servers and a disk storage
location;

 

(c) manage all changes to file system structures including sizes, additions, and
deletions;

 

(d) perform catalog management for data stored on disk storage devices; and

 

(e) perform cleanup of system logs and journals.

 

  2. WSI is responsible for, with IBM assistance, determining the additional
disk storage needed for the WSI workload requirements and, as applicable and in
accordance with the procedures set forth in Schedule C, ordering additional disk
storage needed for each virtual server.

 

2.3 ODCS-Dedicated and ODCS-Shared Environment: Utilization Plan

 

a. IBM will provide the ODCS Services in a combination of shared and dedicated
environments:

 

  1. the ODCS dedicated environment, utilizing the WSI Components listed in
Schedule G. IBM will install and manage the WSI Components at the IBM e-business
Hosting Center.

 

  2. the ODCS shared environment, wherein IBM will provide hardware capacity

 

b. ODCS shared environment: means IBM’s logical server environment described in
section 2.2 above.

 

c. ODCS-dedicated to ODCS-Shared Migration Plan: IBM will migrate WSI’s systems
to the ODCS shared environment according to a mutually agreed to Transition
Plan.

 

2.4 WSI Components

 

a. WSI is responsible for providing the WSI Components listed in Schedule G,
Part II, section 2.0.

 

3.0 ODCS Services and Support Responsibilities

 

3.1 Introduction

 

a. Beginning on the agreed applicable cut-over date (from Pre-Transformation to
Post-Transformation) for each system, IBM will perform the On-Demand Services,
and WSI is responsible for supporting IBM’s provision of the Services during the
Term, as set forth below.

 

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b. IBM shall have sole root access (privileged access with authority to perform
system-level functions or security administration) for all IBM Components, WSI
Components, including all virtual servers.

 

3.2 Services Management

 

IBM will provide the ODCS Services Management Level 2 and Level 3 Support as
follows:

 

a. IBM will:

 

  1. provide a help function via a toll free telephone number, an email contact
point, and the IBM Services Connection Portal to answer questions, receive
service requests, and handle problems related to the ODCS services;

 

  2. assign a severity code to the problem as follows and prioritize calls in
accordance with such assignment;

 

  3. maintain and provide to WSI the Problem Management Procedures and Change
Management Process, including any updates, as applicable;

 

  4. escalate problems related to the Services in accordance with the
established problem escalation procedures;

 

  5. remotely monitor the applicable WSI problem management tool queue assigned
to the IBM support group;

 

  6. implement Services recovery processes;

 

  7. monitor the ODCS environment for selective alert conditions and notify WSI
of those conditions that will materially impact the Services; and

 

  8. perform problem management (including root cause analysis) for the [***],
including problem determination for hardware problems, placing hardware service
calls as required, and managing to resolution.

 

b. WSI Responsibilities:

 

  1. serve as the initial point of contact for all questions and problems (via
telephone, e-mail, etc.) from WSI end users; except that during hours where WSI
help desk is not available, WSI end users (one designated WSI end user per WSI
Call Center and Warehouse) may call the IBM help desk directly for questions
related to status of the Services;

 

  2. WSI’s help desk personnel shall have access to, and facilitate and provide
IBM access to (i) WSI resources who have the requisite functional knowledge and
skills in system commands to navigate through directories, move data, grant
privileges, and perform functions with appropriate software and (ii) be
available to interface with IBM to resolve problems;

 

  3. follow mutually agreed to processes for problems and questions related to
status of planned changes, in process PCRs and changes to monthly utilization
forecasts;

--------------------------------------------------------------------------------

[***] 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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  4. provide information and data to support Services entitlement (e.g., to
permit IBM to validate that the person making the request has the authority to
do so), as required;

 

  5. resolve problems that occur outside of IBM’s area of responsibility) that
may impact IBM’s provision of the ODCS, and notify IBM of the resolution, as
appropriate;

 

  6. assist IBM in the investigation of the likely causes of problems impacting
IBM’s provision of the Services, to the extent such investigation involves WSI
responsibilities; and

 

  7. provide access to appropriate WSI personnel on a 24 x 7 basis to assist
with problem determination and resolution, as appropriate. For example, during a
Severity 1 or Severity 2 problem that is application related (server is up, OS
is up but end user has no function), IBM will require access to WSI resources to
participate in problem determination.

 

3.3 IBM Server Management

 

a. System Administration:

 

  1. IBM will:

 

(a) install and support the server operating system, system management software
and operating system utilities including minor upgrades such as a program
temporary fix (“PTF”) or a maintenance upgrade;

 

(b) perform major operating system software upgrades no more than once per year,
as determined by IBM, with WSI’s participation in scheduling within the planned
IBM maintenance windows;

 

(c) provide systems administrative support, including administrative ID and root
ID administration, and installation, configuration and management of changes
that require root or administrator level access, for example, installation of
third party software patches;

 

(d) manage the operating system configuration including:

 

(i) performing the initial server configuration;

 

(ii) modifying configuration files;

 

(iii) documenting the system configuration; and

 

(iv) controlling access to system configuration files;

 

(e) manage the operating system file systems including:

 

(i) creating, maintaining and deleting volumes and directory structures;

 

(ii) modifying file system sizes;

 

(iii) verifying mount point availability;

 

(iv) repairing defective file systems; and

 

(v) modifying file system permissions;

 

(vi) monitoring and reducing operating system log files to prevent file systems
from overfilling;

 

(f) manage operating system processes (for example, continuously running system
subtasks, or daemons) including:

 

(i) refreshing processes, as required;

 

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(ii) establishing startup sequences;

 

(iii) maintaining system clock synchronization; and

 

(iv) changing process priorities, as appropriate;

 

(g) recommend operating system updates and configuration modification;

 

(h) apply operating system patch set updates, as required;

 

(i) maintain tools for remote management and alert monitoring;

 

(j) maintain operational support procedures;

 

(k) maintain the hardware and software configuration server information;

 

(l) manage system IDs and domain structure;

 

(m) manage operating system security including:

 

(i) enabling passwords for servers to use to connect with other servers on the
network;

 

(ii) adhering to standard security processes and procedures including:

 

(1) supporting trusted third party security servers authentication;

 

(2) synchronizing security information among servers;

 

(3) creating and modifying system login/logon scripts; and

 

(4) assigning account, workgroup and print managers;

 

(n) define print queues;

 

(o) administer file system directory distribution and replication; and

 

(p) provide health check and trending reports that include the following:

 

(i) CPU

 

(ii) memory

 

(iii) disk

 

(iv) server red action list (i.e., servers that have exceeded the defined
thresholds).

 

  2. WSI Responsibilities:

 

(a) review and confirm documentation (for example, application flows, firewall
requirements) and any updates, as required, to enable IBM to provide the
Services;

 

(b) review and confirm all application data space management and perform all
application data transfers, updates, deletes and application space clean-up; and

 

(c) adhere to the Change Management Procedures when performing changes to WSI’s
software and libraries.

 

b. System Operations and Monitoring:

 

  1. IBM will:

 

(a) initiate subsystem/daemon/processes processing (operating system);

 

(b) manage subsystem/daemon/processes processing dependencies (operating
system);

 

(c) perform subsystem/daemon/processes processing recovery (operating system);

 

(d) manage operating system resource availability;

 

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(e) manage subsystem/daemon/processes resource availability (operating system);

 

(f) perform production operating system IPL / reboot;

 

(g) restart subsystem/daemon/processes, as required;

 

(h) monitor operating systems, devices, subsystems/daemons/processes;

 

(i) perform root cause analysis, resolution and / or escalation for systems
based upon predefined triggers;

 

(j) execute and reply to console commands;

 

(k) execute recovery procedures for operating systems and devices;

 

(l) perform automated startup and shutdown of the operating system; and

 

(m) perform automated startup and shutdown of the subsystems/daemons/processes
(not including WSI’s applications).

 

  2. WSI Responsibilities:

 

(a) initiate, manage, and perform application monitoring and recovery;

 

(b) manage application subsystem/daemon/processes and resource availability; and

 

(c) manage WSI’s network services and components.

 

c. Situational Management:

 

  1. IBM will:

 

(a) develop and implement processes to expedite technical problem recovery;

 

(b) document and maintain a recovery plan;

 

(c) maintain ODCS problem management tools and Problem Management Procedures and
provide and / or communicate such tools and procedures to WSI, as mutually
agreed;

 

(d) engage the technical recovery team in accordance with the established
processes;

 

(e) implement and manage bridge calls as necessary;

 

(f) record events in a timely and accurate manner; and

 

(g) provide escalation notification in accordance with the established problem
escalation procedures.

 

  2. WSI Responsibilities:

 

(a) update the WSI contact list for ODCS Services problem management, including
names and telephone, pager and fax numbers, for use by IBM to contact WSI
personnel, as necessary, to assist with problem determination and resolution;
and

 

(b) adhere to the Problem Management Procedures as provided and / or
communicated by IBM, to be further defined in the Policy and Procedures Manual.

 

d. Server Operating Software Support:

 

  1. IBM will:

 

(a) install, upgrade (minor upgrades, major upgrades no more than once per year)
and maintain host operating system and its program product software as per the
standard ODCS environment software stack;

 

(b) install, upgrade and maintain subsystem/daemons/processes and their related
program products; and

 

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(c) provide or obtain new versions and releases, upgrades, replacements or
additional IBM Component operating system software and its program products and
support the ODCS environment compilers, programming languages, program products
and operational tools.

 

  2. WSI Responsibilities:

 

(a) upgrade, with IBM assistance, WSI software, as necessary, to remain
compatible with the host operating system and its program product software as
per the standard ODCS environment software stack. For example, in the event that
an operating system requires an upgrade (N & N-1 currency) IBM will provide WSI
with at least 6 months prior notice, and IBM may request that WSI participate in
the upgrade process, by, for example, applying required application patches or
upgrades and testing/validating that the WSI application operates properly with
the new OS level, all prior to applying changes on the production systems. In
the event that WSI elects not to upgrade, IBM will endeavor to accommodate WSI’s
election. In the event that such upgrade is, after IBM and WSI investigation and
analysis, deemed required to maintain compatibility with IBM’s then-standard
software stack, the parties will address the exception according to the
available options (IBM to assist WSI in developing options) and make appropriate
or required changes to the Services (e.g., by adjusting services, associated
charges, or Service Levels) and associated charges.

 

e. Performance and capacity management:

 

  1. IBM will:

 

(a) define ODCS environment performance indicators;

 

(b) monitor, collect, and analyze server performance data and utilization data
for CPU, memory, and disk space;

 

(c) tune server performance, as appropriate;

 

(d) compile configuration data and workload usage patterns;

 

(e) establish thresholds and exception reporting procedures;

 

(f) provide advice on workload balancing solutions in order to optimize
processor resources;

 

(g) monitor and document WSI’s current workloads and provide the information to
WSI (in the form of ODCS environment reports) for WSI’s use in determining
future processing and storage capacity requirements;

 

(h) schedule processing and storage capacity changes / loads; and

 

(i) provide to WSI the standard ODCS environment processing and storage capacity
utilization reports.

 

  2. WSI Responsibilities:

 

(a) define WSI’s current and future performance and processing and storage
capacity requirements;

 

(b) request additional and/or decreased processing and storage capacity; and

 

(c) test server performance, processing and storage capacity and throughput for
new or changed applications before promoting such applications into the ODCS
environment or WSI Components.

 

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f. Configuration management:

 

IBM will be responsible for the design, definition, installation and maintenance
(i.e., configuration changes) of the logical configuration of the ODCS
environment.

 

g. Change management

 

  1. IBM will:

 

(a) define and maintain the ODCS Change Management Process;

 

(b) record and track approved change requests;

 

(c) schedule and manage the testing and implementation of changes to the ODCS
environment;

 

(d) provide automation scripts, where appropriate, for tasks associated with a
change;

 

(e) except for changes made by IBM to the ODCS environment on an emergency
basis, schedule change activities with the goal of minimizing interruptions to
the Services, and

 

notify WSI of planned and ongoing changes to the ODCS environment that are
reasonably likely to have a material effect on WSI’s receipt of the Services;
and

 

(f) provide WSI with prompt notification of changes made by IBM on an emergency
basis.

 

  2. WSI Responsibilities:

 

(a) provide change requirements to IBM in accordance with the ODCS Change
Management Process;

 

(b) discuss with IBM any anticipated changes that are reasonably likely to have
a material effect on IBM’s provision of the Services, and

 

(c) provide IBM with prompt notification of changes made by WSI on an emergency
basis.

 

3.4 Middleware Support Services

 

a. IBM will provide support for the middleware, as set forth in Schedule G, Part
II, Section 6, as follows:

 

  1. provide monitoring of the software using WSI monitoring tools existing as
of the Effective Date;

 

  2. perform, with WSI assistance, software and infrastructure troubleshooting
and problem detection;

 

  3. implement WSI requested software configuration changes/updates;

 

  4. administer changes to application thresholds and processes being monitored;

 

  5. perform any log file rotation, pruning, and archiving;

 

  6. install minor upgrades, as follows:

 

(a) install vendor-provided fixes and/or patches;

 

(b) install vendor-provided releases and upgrades where installation can be
fully executed by a list of commands and does not include (i) reconfiguration or
(ii) data migration;

 

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  7. perform the following pursuant to a PCR:

 

(a) install releases or upgrades where such installations will include
reconfiguration or data migration;

 

(b) problem resolution for failures of vendor provided fixes and patches;

 

and

 

  8. provide problem solution documentation.

 

  9. assist WSI with load testing and software performing tuning activities.

 

b. WSI Responsibilities:

 

  1. provide documentation on suggested performance-related
parameter/configuration settings;

 

  2. provide a single point of contact for all application software related
issues;

 

  3. retain ownership and management of application software end user ID
administration, including password resets;

 

  4. procure and keep current service contracts with the software manufacturer
for maintenance and support including upgrades and updates/fixes. IBM will be
named as a primary technical contact in the service agreement(s) for software
supported by IBM;

 

  5. provide the appropriate support information for WSI contact and software
manufacturer support contact (e.g., IDs, contact names, telephone numbers,
license numbers);

 

  6. establish single point of contact with software manufacturer.

 

3.5 Application Software Support

 

a. General: IBM will provide ongoing support for only the Supported Software
identified in Schedule G, Appendix G-2.

 

b. IBM will:

 

  1. use reasonable efforts to monitor the availability of Supported Software
(up/down status) in accordance with the Service Hours and post exceptions to a
web site accessible through IBM’s e-business Hosting Connection
password-protected web portal;

 

  2. provide troubleshooting and problem determination, and problem resolution
and documentation;

 

  3. apply fixes, PTFs and patches provided by WSI or the vendor to correct
problems, as necessary, within the framework of the IBM change control
procedures;

 

  4. install minor release upgrades using the standard change control procedures
(a minor release upgrade is any change by the software manufacturer to the
release number to the right of the point, e.g.: X.y);

 

  5. implement configuration changes required by WSI;

 

  6. Administer changes to application thresholds and processes being monitored;

 

  7. Monitor alerts; and

 

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  8. provide pruning, rotation and/or archiving of log files.

 

c. WSI responsibilities:

 

  1. porting WSI application data and Content.

 

3.6 Application Monitoring Services

 

a. IBM will provide the following application monitoring services for the
monitors listed in Schedule G, Appendix G-3.

 

b. IBM will:

 

  1. perform 24x7 monitoring (at the same or equivalent level as performed by
WSI as of the Transition Date) of selected application thresholds and/or
processes;

 

  2. administer and support monitoring tools and infrastructure;

 

  3. notify WSI by agreed process when selected thresholds are exceeded or
selected process exceptions are detected;

 

  4. perform problem analysis and resolution as follows:

 

(a) provide 1st level assessment;

 

(b) provide 2nd level support for (a) infrastructure problems and (b) the
applications as set forth in Schedule G, Appendix G-2;

 

  5. create log records when selected thresholds are exceeded or selected
process exceptions are detected;

 

  6. administer changes to application thresholds and/or processes being
monitored;

 

  7. apply maintenance to monitoring tools;

 

  8. perform configuration management of monitoring console;

 

c. WSI Responsibilities:

 

  1. provide/ be financially responsible for (including licensing) any required
monitoring agents for monitors not listed in Schedule G, Appendix G-3;

 

  2. designate and request changes to application thresholds and/or processes;

 

  3. perform 2nd level problem analysis and resolution for WSI applications
designated as WSI-Supported in Schedule G, Appendix G-3;

 

  4. assist IBM in the investigation of problems to the extent such
investigation involves WSI responsibilities.

 

3.7 Database Management Services

 

a. General:

 

  1. IBM will provide ongoing physical database software support according to
the classifications set forth below and the baselines in Schedule G, Part II,
section 5.0.

 

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  2. Support for database clusters consisting of more than two (2) servers or
geographic load-balanced databases is not included in this support.

 

b. WSI is responsible for the performance of logical DBA functions.

 

c. Databases will be categorized as follows:

 

  1. A Type 1 Database means (i) a production database or (ii) a non-production
databases for which WSI requires IBM to perform the support functions described
below. For Type 1 Databases IBM will:

 

(a) Provide database software support as specified herein for Severity 1 and
Severity 2 service issues on a 24 x 7 basis. IBM will provide database software
support for Severity 3 and Severity 4 service issues during the Service Hours.

 

(b) control and manage database software administration IDs and object owner
IDs;

 

(c) use reasonable efforts to monitor the availability of database software
(up/down status) 24 x 7 and post exceptions to a web site accessible through
IBM’s e-business Hosting Connection password protected web portal;

 

(d) use reasonable effort to monitor database replication processes and
procedures;

 

(e) provide system level database replication and database software
troubleshooting and problem determination;

 

(f) apply fixes, PTFs and patches;

 

(g) install minor release upgrades to installed database replication software
and database software using the standard change control procedures (a minor
release upgrade is any change by the software manufacturer to the release number
to the right of the point, e.g.: X.y);

 

(h) implement database configuration changes required by WSI;

 

(i) provide pruning, rotation and/or archiving of application and database log
files; and

 

(j) perform performance tuning of database software WSI Components based on
documented tuning parameters, procedures, and performance metrics provided by
WSI.

 

(k) Create database objects;

 

(l) Manage database space;

 

(m) participate in planning for changes in the size of databases due to business
growth or reduction and applications development projects, and review WSI’s
plans on a regular basis;

 

(n) provide physical database support for the WSI database environments

 

(o) in cooperation with WSI, monitor and report database performance and
database space utilization and identify and recommend practical modifications
for improved performance;

 

(p) maintain mutually agreed database backup procedures, provided by WSI, to
recover from a database outage or corrupted database within time frames
specified in the Policy and Procedures Manual;

 

(q) maintain physical database definitions and make such definitions available
to WSI upon request; and

 

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(r) assist in problem determination and resolution of issues, including
escalation to the software vendor.

 

d. Type 2 Databases are non-production databases where physical task
responsibilities are automated for promotion of versions. For Type 2 Databases
IBM will perform all of the Type 1 database tasks listed above, with the
exception of reduced scope for the following:

 

  1. perform minor troubleshooting activities only, e.g., providing
troubleshooting assistance to WSI troubleshooting activities

 

  2. the following physical task assumptions apply:

 

(a) application of database patch sets are assumed to occur as follows: average
of 1 patch per database per 2-month period

 

(b) execution of DDL (Data Definition Language) to create database objects is
assumed to be occur as follows: average of 3 executions per database per week

 

(c) actions to manage database space are assumed to occur as follows: average of
2 times per database per week

 

e. Type 1 and 2 Databases: WSI responsibilities:

 

  1. define database backup and recovery requirements;

 

  2. provide requirements for changes and upgrades to the databases;

 

  3. define and approve database security requirements;

 

  4. be responsible for logical database administration and data modeling and
cooperate with IBM during physical database design and review.

 

  5. provide troubleshooting, problem determination, and problem resolution for
applications and provide application-level assistance to IBM for database
software problem determination;

 

  6. perform database capacity and performance tuning; and

 

  7. plan and implement database data loads/exports/imports strategy.

 

3.8 Groupware Support

 

IBM will perform the Groupware support services described in Part II, section
4.0, for the applications listed therein, in the ODCS environment.

 

3.9 Periods of Maintenance

 

a. IBM’s scheduled maintenance hours are each Saturday between 11:00 p.m. and
3:00 a.m. Sunday, Pacific Time, with one maintenance period each month from
11:00 p.m. Saturday to 5:00 a.m. Sunday, Pacific Time. WSI will be notified in
advance of specific maintenance scheduled to be performed, if any, in each
maintenance period. Maintenance will be subject to WSI approval as follows: IBM
will defer, upon WSI request, maintenance to be performed on WSI environments
except:

 

  1. When other IBM customers would, in IBM’s reasonable judgment, be impacted
by such delay or deferral; or

 

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  2. when such delay or deferral materially interferes with IBM’s, in IBM’s
reasonable judgment, ability to deliver the Services in a manner that meets the
Service Levels;

 

b. IBM may need to perform maintenance that requires additional time outside of
the scheduled maintenance hours. IBM agrees to use commercially reasonable
efforts to perform such extended maintenance no more than quarterly. In the
event that extended maintenance is required, IBM will provide WSI with thirty
(30) calendar day’s notice of the dates and times of such extended maintenance.

 

c. IBM will use reasonable efforts to perform and schedule maintenance
activities in a manner to minimize impact to WSI’s production environments,
including exercising redundancy, local and geographic load balancing, and
clustering capability to avoid downtime. IBM will schedule maintenance on
redundant systems such that maintenance is not performed coterminously on
redundant components, unless mutually agreed by WSI;

 

d. In each event that the IBM Project Executive is aware of a potential that
Services may be interrupted by maintenance activities, the IBM Project Executive
will notify WSI in advance, and will manage such activities to minimize impact
on WSI.

 

e. IBM reserves the right to interrupt access to the ODCS environment if
necessary to perform emergency maintenance; provided, however, IBM will use
commercially reasonable measures to notify WSI. Scheduled maintenance hours may
be adjusted from time to time upon notice to and reasonable approval of WSI.

 

4.0 Security

 

4.1 Physical Security Controls

 

a. IBM will:

 

  1. maintain a process to manage access to the ODCS environment including a
periodic process to review personnel with authorized access;

 

  2. monitor the ODCS environment for unauthorized access;

 

  3. define and implement procedures for providing physical security for
portable storage media including a secure environment that meets the
manufacturer’s specifications (for example, air conditioned);

 

  4. as provided by WSI, accept from WSI the initial media inventory of media
for which IBM will provide media management and maintain a copy;

 

  5. perform a periodic reconciliation of the media inventory for media managed
by IBM and advise WSI of any discrepancies;

 

  6. upon WSI’s request, destroy residual information on WSI’s media managed by
IBM; and

 

  7. implement procedures for handling WSI media managed by IBM designed to
protect data from unauthorized disclosure or misuse that include a process for:

 

(a) verifying proper labeling;

 

(b) moving media; and

 

(c) mounting storage media.

 

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b. WSI Responsibilities:

 

  1. define and provide to IBM:

 

(a) data classification criteria, and

 

(b) data encryption preferences;

 

  2. provide to IBM an inventory of WSI’s media for which IBM will provide media
management. WSI and IBM will sign the initial media inventory and both will
maintain a copy;

 

  3. promptly respond to security exposures when notified by IBM or otherwise;

 

  4. use reasonable efforts to provide and maintain virus and malicious software
avoidance, detection, and elimination software for the WSI Components; and

 

  5. promptly notify IBM of any security exposures or concerns with regard to
the ODCS environment or WSI Components of which WSI becomes aware.

 

4.2 Logical Access Controls

 

a. IBM will:

 

  1. [***]

 

  2. [***]

 

  3. [***]

 

  4. [***]

 

  5. [***]

 

  6. [***]

 

  7. [***]

 

  8. [***]

 

  9. [***]

 

  10. [***]

 

  11. [***]

 

  12. [***]

 

  13. [***]

 

  14. [***]

 

  15. [***]

 

  16. [***]

--------------------------------------------------------------------------------

[***] 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. WSI Responsibilities:

 

  1. [***]

 

  2. [***]

 

4.3 Additional Security Obligations

 

a. IBM will:

 

  1. [***]

 

  2. [***]

 

  3. [***]

 

  4. [***]

 

  5. [***]

 

b. WSI Responsibilities:

 

  1. [***]

 

  2. [***]

 

c. [***]

 

4.4 Security Risk and Issue Management

 

a. IBM will:

 

  1. [***]

 

  2. [***]

 

  3. [***]

 

4.5 SB-1386, Visa/MasterCard CISP Compliance

 

a. [***]

 

  1. [***]

 

  2. [***]

 

  3. [***]

 

  4. [***]

 

  5. [***]

 

  6. [***]

 

  7. [***]

 

  8. [***]

 

  9. [***]

 

  10. [***]

 

  11. [***]

 

  12. [***]

--------------------------------------------------------------------------------

[***] 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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5.0 Storage Management

 

5.1 Storage Management Technical Support

 

a. IBM will:

 

  1. manage the Storage Area Network (“SAN”);

 

  2. manage Filesystems:

 

(a) Modifying file system sizes;

 

(b) Verifying mount point availability;

 

(c) Repairing defective file systems; and

 

(d) Modifying Filesystem permissions.

 

  3. verify availability and sufficient capacity of the file systems during
scheduled service times;

 

  4. report disk space utilization

 

  5. manage intelligent external storage devices in the Storage Area Network;
and

 

  6. plan, implement and manage fiber channel switches and fiber channel
directors in a Storage Area Network.

 

  7. maintain and provide the storage management procedures to WSI, including
any updates,

 

  8. reply to storage management console messages, as appropriate;

 

  9. provide disk storage in accordance with the gigabyte allocations set forth
in Schedule G, Part II, section 4.0. Disk storage allocations may be increased
or decreased according to the methodology set forth in Schedule C.

 

  10. perform storage device preparation and initialization;

 

  11. manage space / utilization rate of storage hardware;

 

  12. perform catalog management, backup and recovery of data stored on storage
devices; and

 

  13. configure and perform initial setup of intelligent external storage
devices in a Storage Area Network (“SAN”)

 

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5.2 Tape Operations Support

 

a. IBM will:

 

  1. provide tape management functions for tape library operations for the ODCS
environment consistent with IBM’s established storage management procedures;

 

  2. maintain and provide to WSI, including any updates, IBM’s established
storage management procedures, as applicable;

 

  3. adhere to WSI’s define requirements for off-site weekly and daily backup
tape storage and archiving;

 

  4. provide the required off-site weekly backup tape storage facility and
services;

 

  5. mount / dismount tapes as required for DASD backup;

 

  6. support scratch tape maintenance;

 

  7. reply to storage management console messages, as appropriate;

 

  8. conduct annual audits and comparisons between the tape library physical
inventory and the tape library management inventory;

 

  9. retain ODCS environment tapes for three (3) weeks for ODCS environment
recovery purposes;

 

  10. rotate ODCS environment tapes, as required, for off-site storage;

 

  11. store tapes and supporting documentation, as appropriate, at the off-site
storage facility;

 

  12. provide tape specifications to WSI;

 

  13. maintain adequate tape supplies for the ODCS environment and provide a
sufficient scratch tape pool to service required processing;

 

  14. monitor and manage tape pool resources and have adequate media available
to meet peak load, planned growth and anticipated tape volume fluctuations;

 

  15. send weekly backups to designated off-site tape storage facility and
retrieve as required to perform the Services;

 

  16. manage off-site storage of ODCS environment tape media for backup and
recovery; and

 

  17. provide transportation of ODCS environment tapes to / from the off-site
storage facility (non-disaster recovery site, if applicable).

 

b. WSI Responsibilities:

 

  1. conform to IBM’s storage management procedures as follows: IBM will provide
detailed information on IBM’s storage management tape backup, offsite storage
procedures, and the procedures will be adjusted by mutual agreement during
Transition; and

 

  2. as part of the boarding activities data transfer to IBM ODCS during
Transformation transition, address any required tape conversion via a PCR (e.g.,
reel tape media or other older tape types in ODCS non-supported formats).

 

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5.3 Backup and Restore Management

 

a. IBM will:

 

  1. perform an initial full backup and daily incremental backups;

 

  2. define, document and maintain backup and restore procedures, hardware and
software;

 

  3. provide to WSI the procedures, including any updates, for backing up WSI’s
databases; and

 

  4. develop and maintain a plan that enables the recovery of data due to
unplanned operational types of failures such as equipment malfunction, temporary
power disturbances and abnormal termination.

 

  5. Backup processes and standard retention policies will be mutually agreed
and documented in the Policy and Procedures Manual.

 

6.0 ODCS Change management

 

a. IBM will:

 

  1. define and maintain the ODCS Change Management Process;

 

  2. record and track approved change requests;

 

  3. schedule and manage the testing and implementation of changes to the ODCS
environment;

 

  4. provide automation scripts, where appropriate, for tasks associated with a
change;

 

  5. except for changes made by IBM to the ODCS environment on an emergency
basis, schedule change activities with the goal of minimizing interruptions to
the Services, and

 

  6. notify WSI of planned and ongoing changes to the ODCS environment that are
reasonably likely to have a material effect on WSI’s receipt of the Services;
and

 

  7. provide WSI with prompt notification of changes made by IBM on an emergency
basis.

 

b. WSI Responsibilities:

 

  1. provide change requirements to IBM in accordance with the ODCS Change
Management Process;

 

  2. discuss with IBM any anticipated changes that are reasonably likely to have
a material effect on IBM’s provision of the Services, and

 

  3. provide IBM with prompt notification of changes made by WSI on an emergency
basis.

 

7.0 ODCS Reports

 

IBM will provide (a) the following standard ODCS environment reports, and (b)
such additional reports as agreed by the Parties, to WSI electronically via the
IBM Services Connection Portal or as otherwise agreed. IBM will notify the WSI
Project Executive of the web portal address to

 

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enable WSI’s access to the reports. Portal information is expected to become
available within 10 business days of a system being brought online in the ODCS
environment. [Note to draft: WSI wants to make sure that the terms relating to
the 5 day acceptance period for deliverables does not start until reports are
available on the portal]

 

a. Service Level Agreement Reports for the Service Levels and Service Level
Objectives as set forth in Schedule B

 

b. Health Check Reports

 

  1. CPU;

 

  2. Memory;

 

  3. Disk; and

 

  4. Server Red Action List (This report is a component of each of the above
reports and reflects those Server resources that have exceeded the established
thresholds.).

 

c. Capacity Management Report

 

  1. Monitors and documents WSI’s current workloads and provides the information
to WSI (in the form of standard reports) for WSI’s use in determining future
capacity requirements.

 

d. Consumption Report

 

  1. Provides WSI’s monthly resource usage data (i.e., number of LPARs, CPU
hours, gigabytes).

 

e. A monthly report summarizing hours expended for those Services for which a
pre-defined block of hours is allocated (e.g., Groupware support).

 

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Part IV: Post-Transformation – IBM Managed Hosting Services

 

1.0 Solution Description

 

a. IBM will provide the WSI Managed Hosting Services in the IBM Service
Locations in Boulder CO and Southbury CT.

 

b. The WSI Managed Hosting Services will be provided:

 

  1. using the IBM Components described in Part III section 2.1, ODCS
architecture and virtual server infrastructure described herein in Part III,
section 2.2, and including the ODCS Services described in Part III, sections
3.0, 4.0, 5.0, and 6.0 (ODCS Services);

 

  2. and using the additional IBM Components listed in Schedule G, Part III,
sections 1.0 and the WSI Components listed in Schedule G, Part III, section 2.0;
and

 

  3. with the following additional services as described herein:

 

(a) validate compatibility of WSI site infrastructure design with IBM Managed
Hosting service delivery and architecture and security policies;

 

(b) [***]

 

(c) [***]

 

(d) dedicated load balancing, as described in section 3.5, using the IBM
Components described in Schedule G, Part III, section 1.0;

 

(e) Akamai EdgeSuite (Enterprise Edition) services;

 

(f) database software support;

 

(g) middleware software support; and

 

(h) e-business Hosting Connection portal.

 

2.0 Managed Hosting Monitoring Software

 

a. IBM will provide and maintain the following monitoring software, up to the
number of instances set forth in Schedule G, Part III, section 1.5:

 

  1. operating system monitoring software [***] to monitor selected thresholds
and processes;

 

  2. Webserver monitoring software [***] to provide a Knowledge Module library
of scripts for monitoring processes; and

 

  3. database monitoring software [***].

 

b. IBM will maintain the monitoring software at the version and release levels
at the initial install, and may provide version or release upgrades via a PCR.

--------------------------------------------------------------------------------

[***] 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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c. IBM will apply maintenance, fixes, and patches to the monitoring software as
reasonably determined by IBM. Upon expiration or termination, WSI is responsible
for certifying in writing to IBM that WSI’s use of software IBM Components has
ceased and that WSI has retained no copy of such software IBM Components.

 

3.0 Managed Hosting Services: IBM Responsibilities

 

3.1 Internet Connectivity

 

a. Front End Connectivity: IBM will provide a primary internet connection
between the WSI e-Business environment and the Internet [***]

 

b. IBM will provide access to bandwidth utilization reports through the IBM
e-business Hosting Connection portal, in addition to IBM’s monthly utilization
reports.

 

3.2 Dedicated routers and switches

 

a. IBM will install and manage the dedicated routers and switches specified in
Schedule G, Part III, section 1.0 to enable network connectivity between the
components of WSI’s hosting environment at the IBM e-business Hosting Center.

 

b. [***]

 

c. IBM will:

 

  1. install and operate the firewall IBM Components, implement firewall
settings defined by IBM and WSI, and test one (1) path to each firewall
component;

 

  2. monitor the firewall Base Component availability 24 x 7 each day of the
year using TCP/IP PING;

 

  3. store at least sixty (60) days of firewall log data (for example,
application and database requests) per firewall Base Component and (for WSI
dedicated devices only) provide to WSI security vendor as required;

 

  4. implement changes to firewall settings requested by WSI; and

 

  5. back up WSI-specified firewall settings and restore such settings in the
event of a failure.

 

3.3 Dedicated On-Demand Servers and Virtual Server (LPAR) Services

 

IBM will provide the Managed Hosting Services utilizing (a) the Dedicated
On-Demand and (b) the Shared On-Demand (Virtual Server) environments as further
described in Part III section 2.2 and 2.3.

 

IBM will store at least sixty (60) days of system log data.

--------------------------------------------------------------------------------

[***] 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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3.4 Backup and restore: ODCS Storage

 

IBM will provide the storage services described in Part III, section 5.1, except
that storage capacity for Managed Hosting is as defined in Schedule G, Part III,
section 4.0.

 

3.5 Dedicated load balancing

 

a. IBM will provide [***]

 

b. load balancing: IBM will provide [***]

 

3.6 Server Monitoring

 

IBM will install monitoring software to enable server monitoring of the LPARs /
virtual servers specified in Schedule G, Part III, section 3.0. IBM will:

 

a. Monitor server IP addresses (up to 5 per Server) and URLs (up to 10 per Web
Server), 24 x 7 each day of the year, using ping and standard HTTP protocol;

 

b. monitor selected operating system thresholds and processes 24 x 7 each day of
the year;

 

c. respond to exceptions, perform problem determination, attempt problem
resolution; and

 

d. post monitoring exceptions to a web site accessible through the IBM
e-business Hosting Connection and notify WSI when WSI intervention or decisions
are required.

 

3.7 IBM e-business Hosting Connection

 

IBM e-business Hosting Connection is [***]

 

3.8 Database Management Services

 

a. IBM will provide Type 1 Database support as described in Part III, section
3.7, for the Managed Hosting services, for the database software and according
to the baselines listed in Schedule G, Part III, section 5.

 

b. In addition, the Services provided hereunder will provide custom database
administration support outside of regular DBA activities, including configuring
and maintaining high availability databases and remote database replication,
according to the Monthly Support hours set forth in Schedule C Part IV, section
4.0.

 

c. IBM will provide the following physical database Transition Phase 2 support
services up to the maximum number of Transition Part 2 hours set in Schedule C,
Part IV, section 4.0. WSI is responsible for providing the database software WSI
Components and any required licenses. IBM will:

 

  1. install database software specified in Schedule G;

 

  2. configure database software in accordance with WSI requirements as provided
in the database survey;

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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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  3. create directory structure and/or execute database definitions;

 

  4. assist WSI in defining application data replication direction and methods;

 

  5. install database replication software on the source and target database
servers, based on customer requirements, and replication method selected;

 

  6. setup database replication monitoring and control scripts;

 

  7. establish connectivity between database instances and data servers and
notify WSI when database software is ready for use by applications; and

 

  8. install any certificates or keys provided by WSI necessary for
authentication functions associated with the database software.

 

3.9 Custom Middleware Software Support

 

a. IBM will provide Middleware support as described in this Section for the
supported Middleware Software listed in Schedule C and according to the Monthly
Support hours listed in Schedule C, Part IV, section 5.0, consisting of
Websphere Business Integrator (WBI) and Websphere Application Server (WAS). IBM
will:

 

  1. Install and configure the Middleware Software per the directions provided
by WSI or their contracted developers

 

  2. provide monitoring of the Middleware software if required by using existing
IBM provided and/or WSI monitoring tools

 

  3. Assist WSI with troubleshooting and problem detection related to Middleware
Software;

 

  4. assist with performance tuning of the Middleware Software when requested;

 

  5. provide Middleware software support 24 x 7 for those systems designated as
24 x 7 coverage, otherwise during the Service Hours;

 

  6. install minor upgrades, as follows:

 

(a) install vendor-provided fixes and/or patches;

 

(b) install vendor-provided releases and upgrades where installation can be
fully executed by a list of commands and does not include (i) reconfiguration or
(ii) data migration;

 

  7. perform the following pursuant to a PCR:

 

(a) install releases or upgrades where such installations will include
reconfiguration or data migration;

 

(b) problem resolution for failures of vendor provided fixes and patches; and

 

  8. provide problem solution documentation.

 

b. WSI Responsibilities:

 

  1. provide documentation on suggested performance-related
parameter/configuration settings;

 

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  2. provide a single point of contact for all application software related
issues;

 

  3. retain ownership and management of application software end user ID
administration, including password resets;

 

  4. procure and keep current service contracts with the software manufacturer
for maintenance and support including upgrades and updates/fixes. IBM will be
named as a primary technical contact in the service agreement(s) for software
supported by IBM;

 

  5. provide the appropriate support information for WSI contact and software
manufacturer support contact (e.g., IDs, contact names, telephone numbers,
license numbers);

 

  6. establish single point of contact with software manufacturer;

 

c. Middleware Transition Support: IBM will provide Transition Phase 2 support
for the supported Middleware Software according to the Transition Support hours
listed in Schedule C, Part IV, section 5.0. IBM will:

 

  1. install the middleware software ;

 

  2. configure the middleware software in accordance with WSI requirements; and

 

  3. install any certificates or keys provided by WSI necessary for
authentication functions associated with the middleware software.

 

3.10 Application Support Services

 

a. General: IBM will provide ongoing support for only the supported e-Commerce
applications software, [***] (together, the “Supported Applications”).

 

b. IBM will:

 

  1. install and configure the Supported Applications per the directions
provided by WSI or their contracted developers;

 

  2. assist WSI in software performance tuning when requested;

 

  3. provide software support during the Service Hours;

 

  4. perform the following pursuant to a PCR:

 

(a) install releases or upgrades where such installations will include
reconfiguration or data migration;

 

(b) problem resolution for failures of vendor provided fixes and patches;

 

and

 

(c) provide problem solution documentation.

 

c. WSI Responsibilities:

 

  1. provide documentation on suggested performance-related
parameter/configuration settings;

--------------------------------------------------------------------------------

[***] 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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  2. provide a single point of contact for all application software related
issues;

 

  3. retain ownership and management of application software end user ID
administration, including password resets;

 

  4. procure and keep current service contracts with the software manufacturer
for maintenance and support including upgrades and updates/fixes. IBM will be
named as a primary technical contact in the service agreement(s) for software
supported by IBM;

 

  5. provide the appropriate support information for WSI contact and software
manufacturer support contact (e.g., IDs, contact names, telephone numbers,
license numbers);

 

  6. establish single point of contact with software manufacturer.

 

d. Application Transition Support: IBM will provide Transition Phase 2 support
for the Supported Applications, according to the Transition Support hours listed
in Schedule C, Part IV, section 5.0. IBM will:

 

  1. install the Supported Applications;

 

  2. configure the Supported Applications in accordance with WSI requirements;
and

 

  3. install any certificates or keys provided by WSI necessary for
authentication functions associ-ated with the Supported Applications.

 

3.11 Akamai Services: Akamai EdgeSuite Enterprise Edition

 

IBM will provide the Akamai Services set forth in this Section in support of the
existing WSI e-commerce environment and the managed hosting environment as
described in Part IV of this Schedule A.

 

a. “Akamai Services” are an integrated suite of Internet infrastructure services
that include Content delivery, Content management and storage, Content
targeting, application delivery, and business intelligence that are delivered
using Akamai’s globally distributed network platform (“Akamai Network”).

 

b. IBM will provide Akamai “EdgeSuite Enterprise Edition” which includes the
features and functions described above for use across Akamai Services. IBM will
provide the Committed Information Rate (“CIR”) and additional bandwidth above
the CIR pursuant to the charging methodology set forth in Schedule C, Part IV,
Section 3.0.

 

c. EdgeSuite Delivery

 

EdgeSuite Delivery provides delivery of hypertext transfer protocol (HTTP)
Content over the Akamai Net-work and the following related functions:

 

  1. delivery of streaming Content (Windows Media, QuickTime, and Real formats);

 

  2. delivery of secure Content (SSL objects);

 

  3. last mile acceleration (compression);

 

  4. global map;

 

  5. access to the Akamai portal at control.akamai.com;

 

  6. basic cache control;

 

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  7. Content control utility; and

 

  8. Customer support line 24 x 7 each day of the year to receive problem
notifications related to Akamai Services from authorized WSI representatives.

 

d. Akamai Services: Secure Content delivery

 

  1. Delivery of secure Content over the Akamai Network is included in the
aggregate CIR provided with EdgeSuite Enterprise Edition. IBM will provide one
(1) single-domain SSL certificate licensed for use on the Akamai Network for
EdgeSuite Enterprise Edition.

 

  2. NetStorage: NetStorage allows EdgeSuite Delivery customers to store Content
on Akamai NetStorage facilities for storage, delivery or site failover. A
committed volume of storage (“CVS”) of [***] of NetStorage is included for
EdgeSuite Enterprise Edition.

 

  3. Access control: The access control feature allows WSI to move control of
access and authentication to Akamai Network edge servers rather than requiring
that access control be done through origin servers.

 

  4. Advanced cache control: Advanced cache control enables control of the way
different web site objects are cached on Akamai Network edge servers including
flexible cache keys that enable caching based on cookies, query strings, path
parameters, path components, and other request attributes and cookie handling,
redirect handling, and header handling that enable the edge servers to
accommodate more complex origin site configurations and function.

 

  5. Dynamic Content assembly: The dynamic Content assembly feature allows WSI
to use Akamai’s edge assembly technologies to improve caching of dynamic Content
such as personalized web pages and may be based on data provided by the Content
targeting feature. The dynamic Content assembly advanced feature includes edge
assembly of Content using edge side includes (ESI) to dynamically assemble HTML
fragments to create customized pages at the Akamai Network edge servers and edge
transformations of Content using extensible stylesheet language transformations
(XSLT).

 

  6. Site failover: The site failover feature provides a continued serving of
Content in the event of a problem at WSI’s origin web site, including:

 

(a) monitoring of origin server availability and re-routing of origin server
requests (in the event of an origin server failure) and

 

(b) configuration of edge servers to either serve a default piece of Content
(specified by WSI in advance), or the most recent expired version of Content
currently in cache if an origin server cannot be reached.

 

  7. Content targeting: the Content targeting feature allows identification of
web site visitors’ geographic location, connection speed, device type, and other
specified information so that web site visitor’s Content may be targeted at
Akamai Network edge servers.

 

  8. SureRoute: The SureRoute feature identifies alternate paths from Akamai
Network edge servers to WSI’s origin servers and uses these alternate paths to
either improve the performance of Content delivery, or to provide for failover
in the event that the most

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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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direct route is congested or unavailable. The SureRoute advanced feature
includes one (1) SureRoute map to link one or more origin servers with identical
Content to Akamai Network edge servers.

 

  9. Secure Content delivery: the secure Content delivery feature enables
serving of secure Content by Akamai Network edge servers. Using the SSL
certificates assigned to Akamai, edge servers establish secure sessions with
client computers to server cached Content or fetch Content from WSI’s origin
server via persistent SSL connections. The secure Content delivery advanced
feature includes provisioning of one (1) single-domain SSL certificate licensed
for use on the Akamai Network.

 

  10. Enhanced DNS: The Enhanced DNS feature uses Akamai’s distributed network
of domain name servers to respond to DNS queries for WSI’s domain.

 

  11. Last mile accelerator: Last mile accelerator provides selective
compression of Content before it is delivered to end users to enhance
performance.

 

e. EdgeSuite Support

 

  1. IBM will:

 

  2. designate a focal point to work with WSI to facilitate the activation of
EdgeSuite Services;

 

  3. conduct a discovery meeting to review WSI’s web hosting environment and
identify tools needed to Akamaize WSI’s Content;

 

  4. provide User Identifications to WSI that will enable WSI representatives to
obtain Akamai Services reports from the Akamai portal at control.akamai.com;

 

  5. notify WSI when IBM has activated Akamai Services for WSI use;

 

  6. provide access to IBM’s call management center 24 x 7 x 365 to WSI’s
designated support personnel via an IBM-provided toll free number; and

 

  7. provide assistance with questions regarding WSI’s use of EdgeSuite
Services, problem de-termination and problem coordination for EdgeSuite
Services, and logging and tracking of incidents.

 

f. Akamai disclaimer: WSI understands and agrees that new technology,
configuration changes, software upgrades and routine maintenance, among other
items, can create new and unknown security exposures. Moreover, computer
“hackers” and other third parties continue to employ increasingly sophisticated
techniques and tools, resulting in ever growing challenges to individual
computer system security. IBM’s performance EdgeSuite Services as described in
this SOW does not constitute any representation or warranty by IBM about the
security of WSI’s Content while loaded on or being transmitted through Akamai’s
server network including, but not limited to, any representation or warranty
that WSI’s Content is safe from intrusions, virus threats, or any other security
exposure.

 

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4.0 Security Obligations

 

4.1 Security Coordinator

 

IBM will designate a security coordinator who will coordinate WSI and IBM work
activities related to hosting security. IBM will:

 

a. conduct periodic reviews of security practices and processes for the hosting
infrastructure and related Services;

 

b. review and document deviations from IBM standard e-business hosting security
policies;

 

c. coordinate WSI and IBM work activities required to respond to security
incident notifications received from IBM;

 

d. perform vulnerability risk assessment for proposed changes to the hosting
infrastructure and related Services;

 

e. schedule and coordinate the implementation of security-related changes to the
hosting infrastructure and related Services; and

 

f. conduct an annual review of WSI’s hosting security policies and processes and
document any changes.

 

4.2 Security Obligations

 

a. IBM will:

 

  1. [***]

 

  2. [***]

 

  3. [***]

 

  4. [***]

 

b. WSI is responsible for [***]

 

  1. [***]

 

  2. [***]

 

5.0 Reports

 

IBM will provide (a) the following standard Managed Hosting reports, and (b)
such additional reports as agreed by the Parties, to WSI electronically via the
IBM Services Connection Portal or as otherwise agreed. IBM will notify the WSI
Project Executive of the web portal address to enable WSI’s access to the
reports.

 

a. Service Level Agreement Reports for the Service Levels and Service Level
Objectives as set forth in Schedule B

 

b. Health Check Reports

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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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  1. CPU;

 

  2. Memory;

 

  3. Disk; and

 

  4. Server Red Action List (This report is a component of each of the above
reports and reflects those Server resources that have exceeded the established
thresholds.).

 

c. Capacity Management Report

 

  1. Monitors and documents WSI’s current workloads and provides the information
to WSI (in the form of standard reports) for WSI’s use in determining future
capacity requirements.

 

d. Consumption Report

 

  1. Provides WSI’s monthly resource usage data (i.e., number of LPARs, CPU
hours, gigabytes).

 

  2. Monthly report summarizing hours expended for those Services for which a
pre-defined block of hours is allocated (e.g., Middleware Support and Database
Support).

 

e. Transaction Level Monitoring Report

 

f. LPAR Availability Report

 

6.0 WSI Responsibilities

 

6.1 WSI Responsibilities: Managed Hosting

 

a. WSI Responsibilities:

 

  1. add nodes to firewall WSI Components if requested by IBM;

 

  2. perform file system cleanup for application data, application objects,
application journals and receivers, and application IFS objects and directories;

 

  3. authorize the removal of WSI data from storage volumes prior to requesting
storage de-allocation

 

  4. provide WSI End User support, including administration of application user
IDs and groups and end user password resets;

 

  5. provide IBM with troubleshooting, problem determination, and problem
resolution for WSI-supported applications, and provide application-level
assistance for WSI supported applications for database and middleware software
performance tuning and problem determination.

 

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Appendix A-1 : Policy and Procedures Manual Outline

 

DOCUMENT CONTROL

 

DOCUMENT OVERVIEW

 

PURPOSE OF THIS DOCUMENT

 

HOW THIS DOCUMENT IS ORGANIZED

 

OVERVIEW OF THE REVIEW AND APPROVAL PROCESS

 

HOW TO SUBMIT COMMENTS

 

SERVICES OVERVIEW

 

PROCESS SPECIFICATIONS

 

REQUEST MANAGEMENT

 

DESKSIDE SUPPORT

 

IMAC MANAGEMENT

 

IMAGE TEST COORDINATION

 

ROOT CAUSE ANALYSIS

 

SOFTWARE DISTRIBUTION

 

ASSET MANAGEMENT

 

IT SECURITY

 

AVAILABILITY MANAGEMENT

 

BACKUP AND RECOVERY

 

BATCH MANAGEMENT

 

CAPACITY PLANNING

 

CHANGE MANAGEMENT

 

CONFIGURATION INFORMATION MANAGEMENT

 

DATABASE MANAGEMENT

 

ESCALATION MANAGEMENT

 

FACILITIES MANAGEMENT

 

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OPERATIONS MANAGEMENT

 

PERFORMANCE AND CAPACITY MANAGEMENT

 

PROBLEM MANAGEMENT

 

SERVICE LEVEL MANAGEMENT

 

SITUATION MANAGEMENT

 

STORAGE MANAGEMENT

 

SYSTEM ADMINISTRATION

 

TAPE MANAGEMENT

 

USER ADMINISTRATION

 

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--------------------------------------------------------------------------------

 

Services Agreement

 

between

 

WSI and IBM

 

--------------------------------------------------------------------------------

 

Schedule B

 

Service Levels

 

IBM/WSI Confidential

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Table of Contents

 

1.0

   Introduction    3

2.0

   Definitions    3

3.0

   Measurement and Validation of Service Levels    4

4.0

   Reporting and Root Cause Analysis    4

5.0

   Service Level Credits    5

5.1

   Service Level Credit Calculation    5

5.2

   Single Incident / Multiple Failures    5

5.3

   Exclusions to Service Level Credits    6

6.0

   Service Level Termination Event    6

7.0

   Service Level Review    7

Exhibit B-1

   8

Service Level Measurements

   8

1.0

   Introduction    8

2.0

   Availability Service Levels    8

3.0

   Invoicing Batch Job Completion Service Level    9

4.0

   Problem Resolution Time Service Levels    9

Exhibit B-2

   11

Service Objectives

   11

1.0

   Introduction    11

2.0

   Managed Hosting Akamai Service Objective    11

3.0

   Network (internet connectivity) Service Objective    11

4.0

   ODCS / Managed Hosting LPAR Availability Service Objective    12

5.0

   Managed Hosting Services Transaction Availability Service Objective    12

6.0

   Problem Response Time Service Objectives    13

 

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1.0 Introduction

 

a. This Schedule describes IBM’s duties, obligations and responsibilities
related to IBM’s Service Levels for defined Services and certain of WSI’s
responsibilities.

 

b. This Schedule includes;

 

  1. Exhibit B-1, which describes those specific Service Level measurements that
IBM will provide to WSI as part of the Services, and which are subject to
Service Level Credits, and

 

  2. Exhibit B-2, which describes Service Objectives that IBM will provide to
WSI as part of the Services. Such Service Objectives are not subject to Service
Level Credits.

 

2.0 Definitions

 

a. “Actual Uptime” means, of the Scheduled Hours, the aggregate number of hours
in any month during which each system is actually available for use by WSI.

 

b. “At Risk Amount” has the meaning set forth in Section 5.0 of this Schedule B.

 

c. “Availability” - means the percentage calculated by adding Actual Uptime and
Excusable Downtime, dividing the sum by the Scheduled Hours, and multiplying the
result by 100. For purposes of determining whether IBM’s performance meets any
Availability Service Level, IBM’s Availability performance for each month of the
Term will be measured based on a monthly average, calculated once monthly within
ten business days following the end of the applicable calendar month.

 

d. “Excusable Downtime” means the aggregate number of hours in any month during
which each system is down during Scheduled Hours due to: 1) any of the items
listed in Section 5.3 of this Schedule B; 2) a Scheduled Outage; or 3) any other
situation that is not attributable to IBM’s failure to exercise due care in
performing its responsibilities.

 

e. “Peak” means, during the Term, the periods beginning November 1st and ending
January 31st.

 

f. “Off-Peak” means, during the Term, the periods beginning February 1st and
ending October 31st.

 

g. “Scheduled Hours” means the days of the week and the hours per day for which
IBM has committed in Exhibit B-1 to an Availability Service Level for a system
and during which periods such Availability Service Level will apply.

 

h. “Scheduled Outage” means of the Scheduled Hours, the aggregate number of
hours in any month during which each system is scheduled to be unavailable for
use by WSI due to such things as preventive maintenance or upgrades. Scheduled
Outages will be mutually agreed by WSI and IBM.

 

i. “Service Level Credit” has the meaning set forth in Section 5.1 of the
Services Agreement.

 

j. “Service Levels” means the service delivery criteria established for certain
of the Services, as set forth in Schedule B and Exhibit B-1.

 

k. “Service Level Termination Event” has the meaning set forth in Section 6.0 of
this Schedule B.

 

l. “Service Objectives” means the service delivery targets established for
certain of the Services, as set forth in Exhibit B-2 to this Schedule B. Service
Objectives are not subject to Service Level Credits.

 

m. “Severity Code” - means the severity designation assigned to a problem call
(for example, Severity Level 1, Severity Level 2).

 

n.

“Severity 1” – critical impact. Critical system, network or key application
outage with critical impact on service delivery. Examples include total loss of
production service to entire customer set, impact to one or more Service Level
commitments, or WSI delivery schedule impact. Severity 1 problem

 

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support is available 24 x 7 for those systems designated as 24 x 7 coverage,
otherwise during the Service Hours.

 

o. “Severity 2” – major impact. Key component, application, critical end user
functions, or network is down, degraded or unusable with potential critical
impact on service delivery. Examples include service performance degradation,
where service delivery is impacted or partial customer set affected. Severity 2
problem support is available 24 x 7 for those systems designated as 24 x 7
coverage, otherwise during the Service Hours.

 

p. “Severity 3” – minor impact. A component, minor application or procedure is
down, unusable or difficult to use causing some operational impact, but no
immediate impact on service delivery. Examples include service outage but
alternative workaround available, problems that degrade service but do not
prevent delivery of service, potential exposure to ability to deliver service,
or scattered WSI users are affected. Severity 3 problem support is available
during the Service Hours.

 

q. “Severity 4” - no impact. Service component or procedure that is not critical
to WSI is unusable where an alternative workaround is available and deferred
resolution is acceptable. Examples include no impact to service delivery, no
production services are affected, or individual customers are affected. Severity
4 problem support is available during the Service Hours.

 

r. “Weighting Factor” has the meaning set forth in Section 5.0 of this Schedule
B.

 

3.0 Measurement and Validation of Service Levels

 

a. IBM’s performance of the Services will be measured according to the Service
Levels set forth in Exhibit B-1 and the Service Objectives set forth in Exhibit
B-2, and using the measurement methodologies and tools in use by WSI as of the
Start Date. Such WSI methodologies and tools will be superseded with IBM
measurement methodologies and tools during the Transition Phase 2 process to the
ODCS / Managed Hosting Services. Such Service Levels are applicable to the
Services production systems and exclude corresponding test systems. During the
initial three (3) months of the Term, if there is a discrepancy between the
Service Level measurements set forth on Exhibit B-1 and the actual Service Level
measurements attained by IBM, the Parties will review and may mutually agree on
applicable adjustments to such Service Levels, if any.

 

b. In the event the Parties add new Service Levels after the Start Date, IBM and
WSI will either (a) mutually agree upon such Service Levels, or (b) establish
Service Levels after a mutually agreed measurement period. In the event the
parties elect (b), New Service Levels will be established by taking into account
the levels achieved by IBM during the applicable measurement period and the
performance levels required by any applicable agreements between WSI and the
recipients of the Services.

 

4.0 Reporting and Root Cause Analysis

 

a. IBM will submit to WSI on the 10th day of each month a standard report or set
of standard reports assessing IBM’s performance during the previous calendar
month against the Service Levels and Service Objectives.

 

b. IBM will promptly report to WSI problems related to the Services that
reasonably could be expected to have a material adverse effect on WSI’s
operations.

 

c. IBM will also be responsible for promptly investigating failures to meet the
Service Levels by:

 

  1. initiating problem investigations to identify root causes of failures
related to not achieving the Service Levels;

 

  2. promptly providing WSI with a report detailing the cause of, and procedure
for, avoiding reoccurrence of such failure; and

 

  3. making written recommendations to WSI for improvement in procedures related
to the Services.

 

d.

IBM will identify root causes, correct problems and attempt to minimize
recurrences of missed Service Levels for which IBM is responsible. WSI agrees to
correct problems and attempt to minimize

 

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the recurrence of problems for which WSI is responsible and that prevent IBM
from meeting the Service Levels.

 

5.0 Service Level Credits

 

5.1 Service Level Credit Calculation

 

a. For failure to meet a Service Level, the Service Level Credit will be
determined as follows:

 

  1. Except as set forth in Section 5.1(b)(2), the At Risk Amount means [***]
(“At Risk Amount”).

 

  2. A Weighting Factor is assigned to each Service Level, and the total of the
Weighting Factors for all Service Levels shall be equal to 100%. Service Level
assigned weighting factors are specified in the tables set forth in Exhibit B-1
to this Schedule (“Weighting Factor”).

 

  3. Subject to (b), (c), and (d) below, failure to meet a Service Level for any
month will result in a Service Level Credit amount that will be determined by
[***]

 

For example, if the Monthly Service Charges are [***] and IBM has failed to meet
a Service Level with a [***] the applicable credit would be:

 

[***]

 

[***]

 

b. During the initial [***] period following the Start Date, in the event IBM
fails to meet a Service Level, the Service Level Credit calculation shall be
modified as follows:

 

  1. The Service Level measurement for all Service Levels shall be adjusted to
[***]

 

  2. The At Risk Amount for a Peak Month shall be limited to [***] or for a
Non-Peak Month, [***]

 

  3. Any failure by IBM to meet a Service Level shall not be included in the
calculation giving rise to a Service Level Termination Event as set forth in
Section 6.0 of this Schedule B.

 

c. As part of the Transition Phase 2 activities, as each of the WSI systems
subject to System Availability Service Levels set forth in Exhibit B-1 are
accepted and promoted into production mode in the ODCS environment at IBM’s
facility, each such Service Level will be subject to a [***]

 

d. During the ODCS / Managed Hosting phase of the Term, applicable Service
Levels and associated Service Level Credits for the affected systems, if any,
will not apply or be payable by IBM during any month in which WSI’s CPU Hour
usage exceeds [***] as set forth in Schedule C.

 

e. On a monthly basis for each calendar month of the Term, the amount of Service
Level Credits, if any, to which WSI is entitled will be [***]. Service Level
Credits, if any, will be reflected in IBM’s invoice in the calendar month
following the month for which any such amounts are calculated.

 

f. Any Service Level Credits owed from IBM to WSI upon the expiration or
termination of the Services will be paid within [***] following the effective
date of expiration or termination. If the Monthly Service Charges for a subject
month has not been incurred, or for any other reason has been credited or waived
except in the event of prepayment, WSI shall [***]

 

5.2 Single Incident / Multiple Failures

 

Failure to meet multiple Service Levels arising out of a related series of
events will be treated as a failure in the highest weighted Service Level among
the related Service Levels affected by the related series of events for the
purpose of calculating the Service Level Credit payable by IBM hereunder. For
example, if a system for which there is an Availability Service Level is
unavailable and a Service Level Credit is generated, no additional Service Level
Credit will be generated for any

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confidential redacted portion has been omitted and filed separately with the
Securities and Exchange Commission.

 

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system for which there is an Availability Service Level operating on the
affected system and that is unavailable as a result. In the event IBM fails to
meet multiple Service Levels arising out of a single incident (excluding a Force
Majeure event), the Service Level Credit(s) payable by IBM will be limited to
the failure of the applicable Service Levels listed in Exhibit B-1 in either
Section 2.0 (Availability Service Levels), or Section 3.0 (Invoicing Batch Job
Completion Service Level), or Section 4.0 (Problem Resolution Time Service
Levels). In such event, WSI will chose which Service Level Credit(s) (either
Section 2.0, or 3.0 or 4.0), will be payable by IBM.

 

5.3 Exclusions to Service Level Credits

 

a. IBM will be relieved of responsibility in accordance with the provisions of
this Agreement for meeting any Service Levels and for any associated Service
Level Credits to the extent caused by outages or performance problems out of
IBM’s control, including:

 

  1. the actions or inaction of WSI or its Affiliates, WSI third-party vendors
and suppliers;

 

  2. WSI’s failure to promptly obtain and provide to IBM any Required Consents;

 

  3. WSI’s prioritization of available resources, provided IBM, upon becoming
aware, has informed WSI that such prioritization will adversely impact IBM’s
performance of the Services;

 

  4. period of time associated with maintenance and / or repair of a failed WSI
Component, excluding IBM’s applicable responsibilities set forth in Schedule A;

 

  5. periods of time associated with emergency maintenance activities;

 

  6. the first manifestation of a latent error or defect in WSI or third party
components or software (and any related repeated instances pending the
applicable vendors correction of the defect) if such latent error or defect was

 

(a) unknown to IBM; and

 

(b) not disclosed in any information provided to IBM by WSI, or distributed by
the third party licensor, manufacturer, or distributor; and

 

(c) not preventable or discoverable through normal testing or maintenance
procedures; and

 

(d) not preventable by required security measures or measures to protect against
malicious code and viruses.

 

  7. circumstances (including denial of service attacks or acts against parties,
including carriers and IBM’s other vendors) that constitute a Force Majeure
Event;

 

  8. problems with WSI provided applications, Content, or errors in WSI
programming, Content installation or integration, or to system administration,
commands, file transfers performed by WSI representatives, or activities
directed by WSI and due to work performed at specific WSI request, excluding
IBM’s responsibilities set forth in Schedule A; and

 

  9. WSI’s performance of any technical security integrity review, penetration
test, or vulnerability scan pursuant to Attachment A, Part 4, Section 4.0,
“Security Obligations”.

 

6.0 Service Level Termination Event

 

In accordance with Section 18.1(b) of the Services Agreement, WSI shall have the
option to terminate this Agreement if IBM fails to perform in accordance with
the Service Levels as follows;

 

[***]

 

[***]

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confidential redacted portion has been omitted and filed separately with the
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7.0 Service Level Review

 

Not less than annually, WSI and IBM will review the Service Levels and mutually
agree, subject to ninety (90) days prior written notice, whether to:

 

a. add to, delete or change the Services to be measured and the corresponding
Service Levels to reflect changes in WSI’s business operations;

 

b. reallocate the Weighting Factors of the Service Levels provided no single
Service Level Weighting Factor may be increased by more than 10 percentage
points per year, provided however, in the event the total number of Service
Levels decrease, such reallocated Weighting Factors will be mutually agreed
between the parties and shall be equivalent to the total Weighting Factor of
100%; and

 

c. improve the existing Service Levels, where warranted, to reflect operational
or technical improvements.

 

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Exhibit B-1

 

Service Level Measurements

 

1.0 Introduction

 

a. [***]

 

b. [***]

 

2.0 Availability Service Levels

 

Availability Service Levels are measured beginning with the earlier of (a) IBM’s
receipt of a trouble ticket from WSI’s help desk during the Pre-Transformation
(BAU) phase and with IBM’s receipt of a trouble ticket generated directly from
WSI through a phone call to IBM’s help desk or through IBM’s On demand Data
Center Services web portal during the ODCS / Managed Hosting (IBM) phase or (b)
notification of a Server failure received from IBM’s automated monitoring system
during the ODCS / Managed Hosting (IBM) phase. In the Pre-Transformation (BAU)
phase, the trouble ticket system used is WSI’s internal system as of the Start
Date. In the ODCS / Managed Hosting (IBM) phase, the trouble ticket system used
is IBM’s trouble ticket system.

 

AVAILABILITY SERVICE LEVELS

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

[***]

[***]

 

[***]

 

[***]

 

[***]

 

[***]

[***]

 

[***]

 

[***]

 

[***]

 

[***]

[***]

 

[***]

 

[***]

 

[***]

 

[***]

[***]

 

[***]

 

[***]

 

[***]

 

[***]

[***]

 

[***]

 

 

[***]

 

[***]

 

[***]

[***]

[***]

 

[***]

 

[***]

 

[***]

 

[***]

[***]

[***]

 

[***]

 

[***]

 

[***]

 

[***]

[***]

[***]

 

[***]

 

[***]

 

[***]

 

[***]

[***]

 

[***]

 

[***]

 

[***]

 

[***]

[***]

[***]

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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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3.0 Invoicing Batch Job Completion Service Level

 

The Invoicing Batch Job Completion Service Level is measured beginning with the
earlier of (a) IBM’s receipt of a trouble ticket from WSI’s help desk during the
Pre-Transformation (BAU) phase and with IBM’s receipt of a trouble ticket
generated directly from WSI through a phone call to IBM’s help desk or through
IBM’s On demand Data Center Services web portal during the ODCS / Managed
Hosting (IBM) phase or (b) notification of a Server failure received from IBM’s
automated monitoring system during the ODCS / Managed Hosting (IBM) phase. In
the Pre-Transformation (BAU) phase, the trouble ticket system used is WSI’s
internal system as of the Start Date. In the ODCS / Managed Hosting (IBM) phase,
the trouble ticket system used is IBM’s trouble ticket system.

 

BATCH JOB COMPLETION SERVICE LEVEL

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

[***]

[***]

 

[***]

 

[***]

 

[***]

 

[***]

[***]

[***]

 

4.0 Problem Resolution Time Service Levels

 

a. “Problem Resolution Time” means, (i) during the Pre-Transformation (BAU)
phase, the elapsed time from the time IBM receives a trouble ticket from WSI’s
help desk, or (ii) during the ODCS / Managed Hosting phase, the elapsed time
from the earlier of the time IBM receives a trouble ticket generated directly
from WSI through a phone call to IBM’s help desk or through the On demand Data
Center Services web portal or from notification of a Server failure received
from IBM’s automated monitoring system, to the time IBM personnel resolve the
problem or provide an acceptable workaround and record the action in the problem
ticket. If no resolution action is recorded in the problem ticket, the
resolution time will be calculated from the time the problem ticket was
time-stamped opened to the time the problem ticket was time-stamped closed.

 

b. IBM’s Problem Resolution Time Service Levels by severity code are:

 

PROBLEM RESOLUTION TIME SERVICE LEVELS

 

[***]

 

[***]

 

[***]

 

[***]

[***]

 

[***]

 

[***]

 

[***]

[***]

 

[***]

 

[***]

 

[***]

[***]

 

[***]

 

[***]

 

[***]

[***]

 

[***]

 

[***]

 

[***]

[***]

           

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confidential redacted portion has been omitted and filed separately with the
Securities and Exchange Commission.

 

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c. Problem Resolution Time for Severity 1 and Severity 2 problems will be
calculated as follows:

 

  1. Problem Resolution Time = {(total number of problem tickets (by Severity 1
or Severity 2 severity code) closed within criteria / total number of problem
tickets (by Severity 1 or Severity 2 severity code) opened) x 100}.

 

  2. Problem Resolution Time will be measured using the information contained in
IBM’s closed problem tickets for problems related to the Services for the
applicable measurement period and will exclude Excusable Downtime.

 

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Exhibit B-2

 

Service Objectives

 

1.0 Introduction

 

a. This Exhibit B-2 describes Service Objectives that IBM will provide to WSI as
part of the Services. Such Service Objectives are not subject to Service Level
Credits.

 

2.0 Managed Hosting Akamai Service Objective

 

a. IBM will provide the following Service Objectives for the Akamai Services:

 

  1. Service Objectives:

 

[***]

 

  2. Availability: [***]

 

  3. Performance: [***]

 

3.0 Network (internet connectivity) Service Objective

 

a. Service Objective: IBM’s Service Objective for Monthly Network Availability
is 99.99%.

 

b. “Monthly Network Availability Percentage” means the amount, expressed as a
percentage, equal to the total number of minutes in the applicable month, minus
the Excusable Downtime minutes for that month, divided by the total number of
minutes in that month.

 

c. Monthly Excess Latency: “Excess Latency” means average Latency for a calendar
month in excess of sixty (60) milliseconds round trip time across the open
Internet between the IBM Measurement Centers within the Shared Network,
excluding Excusable Downtime.

 

d. Monthly “Excess Packet Loss” means a Packet Loss in excess of one half of one
percent (0.5%) for a calendar month within the Shared Network, excluding
Excusable Downtime.

 

e. Definitions applicable to this Network (Internet Connectivity) Service
Objective:

 

  1. “Core Switches” means the Internet facing switches or routers that are
located at IBM’s e-business Hosting Center.

 

  2. “IBM Measurement Center” means IBM selected locations from which IBM
conducts polling for purposes of Service Objectives specified herein. Polling
takes place 24x7 each day of the year. The IBM Measurement Center records are
the only source for measurement and are restricted to the 48 contiguous United
States.

 

  3. “IP Backbone” means the Internet protocol (IP) infrastructure and consists
of Internet service points of presence (“POPs”) in the United States (excluding
Alaska, Hawaii, the Commonwealth of Puerto Rico and the United States Virgin
Islands) and the telecommunications equipment and facilities that interconnect
wiring within the POPs;

 

  4. “Latency” means the average length of time, in milliseconds, of all round
trip packet times measured between all IBM Measurement Centers in the Shared
Network.

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confidential redacted portion has been omitted and filed separately with the
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  5. “Measurement Interval” means a block of time of up to fifteen (15) minutes
that is used for the purposes of determining the start and stop time of outages
or performance problems.

 

  6. “Network Outage” means the period (measured in minutes) during which an IBM
Measurement Center is unable to complete a round trip transmission of an ICMP
ping protocol from that IBM Measurement Center, across the open Internet, to the
Core Switch at the IBM e-business Hosting Center where the WSI’s Internet
connection is located. A failure by a single IBM Measurement Center to complete
a round trip transmission will not constitute a Network Outage provided that at
least one other IBM Measurement Center can complete a round trip transmission
within a Measurement Interval. A Network Outage begins when all polling attempts
from all IBM Measurement Centers fail within one Measurement Interval. A Network
Outage ends when the first successful poll following the Network Outage begin
time is reported by an IBM Measurement Center.

 

  7. “Packet Loss” means the percentage of failed attempts to contact a Core
Switch within the Shared Network as compared to the total attempts to contact a
Core Switch within the Shared Network. Packet Loss is calculated by dividing
unsuccessful attempts by the total attempts for the calendar month: Unsuccessful
attempts/Total attempts = Packet Loss.

 

  8. “Shared Network” means the part of the network originating with the Core
Switches, through the IP Backbone of the ISPs that provide service directly to
the IBM e-business Hosting Center(s), to the IBM Measurement Centers.

 

4.0 ODCS / Managed Hosting LPAR Availability Service Objective

 

a. Definitions applicable to this LPAR Availability Service Objective:

 

  1. “LPAR Availability” equals the percentage of time a WSI LPAR is operational
and includes CPU, major subsystems and network gateways.

 

  2. IBM’s LPAR Availability Service Objective(s) are as follows:

 

(a) [***]

 

(b) [***]

 

(c) [***]

 

each measured monthly.

 

  3. LPAR Availability for WSI LPAR will be calculated as follows:

 

LPAR Availability = [total monthly minutes – monthly Excusable Downtime minutes]
divided by the total monthly minutes.

 

b. IBM will monitor LPAR uptime/downtime on a continuous basis using the ODCS
environment automated tools. If an LPAR is not available, a problem ticket will
be opened automatically (i.e., time-stamped open) and a technical alert will be
generated. When the problem is resolved, the problem ticket will be time-stamped
closed.

 

c. LPAR Availability will be measured using the information contained in IBM’s
closed problem tickets. Problem tickets will only include problem tickets for
problems related to the Services for the applicable measurement period,
excluding Excusable Downtime.

 

5.0 Managed Hosting Services Transaction Availability Service Objective

 

a. IBM will provide a transaction availability service objective (“Transaction
SO”) for five (5) Scripted Transactions that are initiated at a WSI Identified
Address, based on the applicable Transaction SO Target Percentage (as such terms
are defined below).

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b. “Scripted Transaction” means a connection request with up to five (5)
actions, developed mutually by WSI and IBM to run on WSI’s application and
simulate a WSI end user experience ending in an expected result. Scripted
Transactions may be written as HTTP or HTTPS requests that connect to WSI’s IP
address or URL, or Windows-compliant client application requests.

 

c. Transaction SO monitoring will be done through WSI’s Internet facing
environment. To qualify for this Transaction SO, all devices that influence the
path over which the Scripted Transaction flows must be IBM Managed Devices. “IBM
Managed Device” means a non-server Component for which IBM is performing
management responsibilities as set forth in Schedule G.

 

d. Disclaimer: WSI is responsible for determining the security settings for any
server where Scripted Transactions are sent for purposes of providing this
Transaction SO. WSI acknowledges that if WSI allows access to any server via a
non-secure protocol, Scripted Transactions may be viewable in clear text, and
WSI accepts all responsibility for instances of unauthorized viewing of such
Scripted Transactions, and any resulting harm or damage that may occur and
waives any and all claims against IBM for costs, damage or harm that WSI may
incur as a result of, or related to, this Transaction SLA.

 

e. Definitions applicable to this Transaction SO:

 

  1. “WSI Identified Address” means an IP address or universal resource
locator(s) (URL) that has been selected by WSI and approved by IBM.

 

  2. “Monthly Availability Percentage” equals:

 

[total monthly minutes – monthly Excusable Downtime minutes] / total monthly
minutes

 

  3. “Transaction Outage” means the period (measured in minutes) during which a
Scripted Transaction does not complete with the expected result. The inability
of a single IBM Measurement Center to confirm that a Scripted Transaction has
completed with the expected result will not constitute a Transaction Outage,
provided at least one other IBM Measurement Center confirms that a Scripted
Transaction completes with the expected result within the same Measurement
Interval. A Transaction Outage is confirmed when all polling attempts from all
IBM Measurement Centers conducted within a Measurement Interval result in
failure of a Scripted Transaction to complete with the expected result.
Measurement of a Transaction Outage begins at the first poll within a confirmed
Transaction Outage Measurement Interval that indicates a Scripted Transaction
has failed to complete with the expected result. Measurement of a Transaction
Outage ends at the first poll following the Transaction Outage begin time that
indicates a Scripted Transaction has completed with the expected result.

 

f. “Transaction SO Target Percentage” means the applicable percentage set forth
below:

 

  1. [***]

 

  2. [***]

 

  3. [***]

 

6.0 Problem Response Time Service Objectives

 

a. “Problem Response Time” means, (i) during the Pre-Transformation (BAU) phase,
the elapsed time from the time IBM receives a trouble ticket from WSI’s help
desk, or (ii) during the ODCS / Managed Hosting phase, the elapsed time from the
time IBM receives a trouble ticket generated directly from WSI through a phone
call to IBM’s help desk or through IBM’s On demand Data Center Services web
portal, to the time IBM personnel acknowledge the problem ticket by recording a
specific action in the problem ticket. If no acknowledgment action is recorded
in the problem ticket, the response time

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will be calculated from the time the problem ticket was time-stamped opened to
the time a problem resolution action was recorded in the problem ticket or the
problem ticket was time-stamped closed.

 

b. IBM’s Problem Response Time Service Objectives by severity code are:

 

Severity Code

--------------------------------------------------------------------------------

  

Problem

Response Time

--------------------------------------------------------------------------------

[***]

   [***]

[***]

   [***]

[***]

   [***]

[***]

   [***]

[***]

    

 

c. Problem Response Time for Severity 1 and Severity 2 problems will be
calculated as follows:

 

  1. Problem Response Time = {(total number of problem tickets (by Severity 1 or
Severity 2 severity code) closed within criteria / total number of problem
tickets (by Severity 1 or Severity 2 severity code) opened} x 100}.

 

  2. Problem Response Time will be measured using the information contained in
IBM’s closed problem tickets. Problem tickets will include all closed problem
tickets for the applicable measurements period and will exclude Excusable
Downtime.

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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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--------------------------------------------------------------------------------

 

Services Agreement

 

between

 

WSI and IBM

 

--------------------------------------------------------------------------------

 

Schedule C

 

Charges

 

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--------------------------------------------------------------------------------

 

PART I CHARGES: GENERAL TERMS

   3

1.0

  

Introduction

   3

2.0

  

Resource Units and Measurement Methodology

   3

3.0

  

Charges, Credits and Payments

   3

4.0

  

Economic Change Adjustment

   6

5.0

  

Calculation of ARCs and RRCs

   6

6.0

  

Additional or Reduced Resources: Limitations and Resource Minimums

   7

7.0

  

Financial Assumptions

   7

8.0

  

Termination Charge

   7

9.0

  

Technology Normalization

   8

PART II: Pre-Transformation Services: Charges, Resource Units and Measurement
Methodology

   9

10.0

  

Fixed Charges

   9

11.0

  

Variable Charges

   9

12.0

  

Additional or Reduced Resources

   9

Part III A: ODCS Services: Establishing and Managing Baselines, Processing and
Storage Capacity

   10

1.0

  

Fixed Charge

   10

2.0

  

Variable Charges

   10

Part III B: ODCS Services: Charges

   11

1.0

  

Fixed Charge

   11

2.0

  

Variable Charges

   11

Part IV: Managed Hosting Services

   12

1.0

  

Fixed Charges

   12

2.0

  

Variable Charges

   12

3.0

  

Akamai Service Charges

   12

4.0

  

Custom Database support

   12

5.0

  

Custom Middleware and Application Software support

   12

6.0

  

Database Support, Middleware and Application Support: Adjustment of Hours

   14

General

   15

Exhibit C-2: Financial Responsibilities Matrix

   23

 

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PART I CHARGES: GENERAL TERMS

 

1.0 Introduction

 

a. This Schedule describes the methodology for calculating the Services charges.
The Monthly Service Charge (MSC), Additional Resource Charges (ARCs), Reduced
Resource Credits (RRCs), Transition Charges, Economic Change Adjustment, and any
other charge provisions set forth in this Agreement are intended in the
aggregate to compensate IBM for the resources used to provide the Services. In
addition, this Schedule describes the measures of resource utilization and the
tracking of such usage.

 

b. Attached to this Schedule are the following:

 

  1. [***]

 

c. [***]

 

2.0 Resource Units and Measurement Methodology

 

2.1 General

 

a. As of the Start Date and each month thereafter, IBM will measure, track and
report on WSI’s usage of Resource Units in the categories set forth herein using
the processes and procedures in the Procedures Manual.

 

b. As of the Start Date, the quantity of Resource Units for each category of
resources provided to WSI under this Agreement will be specified in Schedule G,
Parts I, II, and III, as a Baseline.

 

3.0 Charges, Credits and Payments

 

3.1 General

 

a. WSI is financially responsible for all costs and expenses associated with its
responsibilities in this Agreement. The Fixed Charges, Variable Charges and all
other charges payable by WSI under this Agreement do not include such costs and
expenses.

 

b. All periodic charges will be computed on a calendar month basis.

 

  1. IBM will on or about the beginning of each month provide an invoice (the
“Monthly Services Charge”, or MSC) to WSI for the Services for such month
(Billing Month). Such invoice will include the amounts for (i) the monthly fixed
charge as set forth in Table C-5, (ii) the forecasted variable charges, (iii)
any applicable Hourly or Project charges, and (iv) the reconciliation of
variable charges and credits for the month that is two (2) months prior to the
Billing Month.

 

c. Payment Terms: [***]

 

d. [***]

 

[***]

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Page 3 of 24

General

--------------------------------------------------------------------------------

Prepayment Credit Calculation

[***]

[***]

[***]

[***]

[***]

 

[***]

 

  3. Standard Payment Option

 

Standard payment option is as described in Section 3.1 b-c.

 

e. If WSI does not make a selection of any of the above, beginning January of
the next calendar year, IBM will invoice WSI in accordance with the Standard
Payment Option.

 

f. Late Payment Fee

 

  1. If any payments or portions thereof are not received by IBM on or before
the Payable Date (“Late Payment”), IBM may impose a late fee (the “Late Payment
Fee”) for the period between the Payable Date and the date IBM receives such
payment in full, subject to the terms set forth below

 

  2. The Late Payment Fee will be equal to the lesser of [***]

 

  3. With respect to WSI’s election of the Annual Prepayment Option as described
in Schedule C (Charges), such Late Payment Fee shall be imposed if any payment
or portion thereof is not received within [***] after the Payable Date.

 

  4. With respect to any other payments as described in Schedule C (Charges),
IBM will not impose a the Late Payment Fee unless [***]

 

  5. With respect to any payment, IBM will [***]

 

g. Economic Change Adjustment

 

IBM will invoice WSI for the Economic Change Adjustment in accordance with
Section 4.0 (Economic Change Adjustment).

 

h. Other Charges

 

IBM will invoice WSI as applicable for [***] and any other agreed upon charges.

 

3.2 New Service

 

a. If WSI requests that IBM perform services:

 

[***]

 

b. [***]

 

c. New Services Process

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General

--------------------------------------------------------------------------------

If WSI requests that IBM perform [***]

 

  2. Development of an amendment to the Services.

 

[***]

[***]

[***]

 

(d) WSI will promptly provide IBM with information as IBM reasonably requests in
order to prepare the PCR.

 

(e) The PCR shall include

 

(i) pricing (either as fixed price, a time and materials price estimate for new
Charges/expenses, or a new Baselined service, as required for the New Service,
if any) and a breakdown of such Charges/expenses by items of consumption (e.g.,
license and maintenance fees for IBM Provided Software, number of hours of
services, price, service type, etc.);

 

(ii) a description of any additional Service Levels to be associated with the
New Service (or changes to existing Service Levels);

 

(iii) a schedule for commencing and completing the New Service;

 

(iv) a description of the new systems to be provided by IBM in connection with
the New Service;

 

(v) a description of any other resources, including resource unit utilization,
necessary to provide the New Service;

 

(vi) any additional components, systems, or labor resources to be provided by
WSI, and any WSI facilities requirements; and

 

(vii) in the case of any Deliverables to be created through the provision of the
proposed New Services, any ownership rights therein that differ from the
provisions of the Agreement.

 

(f) Acceptance of PCR. WSI may accept or reject any proposed PCR. IBM will not
perform any New Services for which a PCR is required unless the PCR is signed by
WSI.

 

(g) Upon mutual execution of the PCR for New Services, the scope of the Services
in the Agreement will be expanded to include such New Services.

 

3.3 Projects

 

If WSI requests IBM to perform a New Service, which IBM and WSI agree should be
a Project, IBM and WSI will develop a detailed plan describing the project (the
Project Plan), as further described in Schedule E. The Project Plan will state
IBM’s charges for such Project, such as applicable Hourly Rates (using the rates
in Schedule C unless a required skill is not on the rate table), a fixed price,
or an adjustment to the charges set forth in this Agreement.

 

3.4 Additional/Reduced Resources: Charges and Credits

 

a. Monthly Variable Charges

 

  1. Additional Resource Charges

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General

--------------------------------------------------------------------------------

IBM will invoice (or credit, as applicable) WSI each month of the Term (as part
of the Monthly Invoice), for the ARCs (net of RRCs), if any, applicable for the
prior month.

 

  2. Reduced Resource Credits

 

IBM will provide WSI with a credit against the Monthly Invoice for each month of
the Term for the RRCs, if any, applicable for the prior month.

 

b. Other Credits

 

IBM will pay any amounts due and owing to WSI pursuant to this Agreement by
either paying such amount to WSI or by providing WSI with a credit against IBM’s
invoice to WSI under this Agreement

 

4.0 Economic Change Adjustment

 

a. IBM will calculate and apply an adjustment to the charges based upon economic
changes (an Economic Change Adjustment or ECA) as described below beginning in
[***]. The ECA will be payable on a [***]. The ECA will be determined as soon as
practicable after the end of each calendar year using the formula below (the ECA
Factor).

 

b. IBM will invoice WSI for the ECA, if any, beginning [***] and monthly
thereafter, subject to a cap of [***] cumulative from the Base Year (for
example, the cap applied for calendar year [***] is [***] measured against the
Base Year Index, for calendar year [***] is [***] measured against the Base Year
Index). [***]

 

c. WSI and IBM agree to use the December unadjusted Consumer Price Index, as
published in the Summary Data from the Consumer Price Index News Release by the
Bureau of Labor Statistics, U.S. Department of Labor, For All Urban Consumers
(Price Index), for purposes of determining actual inflation. In the event such
Price Index is no longer published or its content and format is substantially
changed, WSI and IBM will substitute another comparable index published at least
annually by a mutually agreeable source. [***]

 

d. Actual Inflation

 

IBM will calculate the ECA by [***] (the Base Year Index). For each calendar
year of the Term, the [***]

 

e. ECA Factor

 

[***] Calculate the ECA Factor as follows:

 

ECA Factor

[***]

 

[***]

  [***]

[***]

 

[***]

  [***]

[***]

 

[***]

  [***]

 

(Inflation Sensitivity factor = 60%)

 

5.0 Calculation of ARCs and RRCs

 

For WSI’s usage of Resource Units (RUs), IBM will calculate ARCs and RRCs as set
follows:

 

a. IBM will compare the quantity of RUs actually used during the applicable
measurement period (the Actual RUs), with the Baseline for that category.

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General

--------------------------------------------------------------------------------

b. If the Actual RUs exceeds the Baseline for such period, WSI will pay IBM an
ARC with the current or future charges (or, if no future charges will be due,
make payment to IBM) equal to the product of the ARC Rate for the applicable
category, as set forth in Exhibit C-3, multiplied by the difference between the
Actual RUs for that category and the Baseline.

 

c. If the Actual RUs are lower than the Baseline for such period, IBM will pay
WSI an RRC equal to the product of the RRC Rate for the applicable category, as
set forth in Exhibit C-3, multiplied by the difference between the Actual RUs
for that category and the Baseline.

 

d. For all RUs, the ARC rate equals the RRC rate.

 

6.0 Additional or Reduced Resources: Limitations and Resource Minimums

 

Notwithstanding the foregoing, during each year of the Term, WSI’s Charges may
only be reduced to the lesser of [***]

 

7.0 Financial Assumptions

 

a. IBM will provide the Services to WSI during the Service Hours, as defined in
Schedule A.

 

b. If WSI requests IBM perform any of the following and IBM agrees to do so, IBM
will provide such Services as a Project, or will consider such request a New
Service:

 

  1. Services or support outside of the Service Hours, (except the off-hours
problem resolution support, which will be provided according to the terms set
forth in Schedule A, Part II, section 1.1); and

 

  2. Support for hardware or software not included within the Services.

 

c. IBM will bear the risk of achieving and will retain the benefit of
efficiencies gained by IBM in its delivery of the Services.

 

8.0 Termination Charge

 

a. In the event WSI elects to terminate this Agreement [***]

 

b. WSI may terminate [***] after the Start Date.

 

c. WSI may terminate [***]

 

  1. providing IBM at least [***] advance written notice as set forth below
[***] and

 

  2. paying to IBM the applicable Termination Fee as set forth in Table C-1.

 

d. [***]

 

e. Termination Charge

 

  1. Upon IBM’s receipt of WSI’s notification of its Termination of this
Agreement for its convenience, IBM will invoice WSI and WSI will pay for such
Termination Charge on or before the effective date of such termination.

 

  2. [***]

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General

--------------------------------------------------------------------------------

  3. [***]

 

  4. [***]

 

(a) [***]

 

(b) [***]

 

(c) [***]

 

(d) [***]

 

(e) [***]

 

9.0 Technology Normalization

 

[***]

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General

--------------------------------------------------------------------------------

 

PART II: Pre-Transformation Services: Charges, Resource Units and Measurement
Methodology

 

10.0 Fixed Charges

 

a. [***]

 

11.0 Variable Charges

 

a. [***]

 

b. [***]

 

11.2 Pre-Transformation Resource Units

 

a. [***]

 

b. Storage

 

     [***]

 

c. Database

 

     [***]

 

d. Middleware Support

 

     [***]

 

11.3 Groupware Services

 

     [***]

 

12.0 Additional or Reduced Resources

 

[***]

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Pre-Transformation

--------------------------------------------------------------------------------

 

Part III A: ODCS Services: Establishing and Managing Baselines, Processing and
Storage Capacity

 

1.0 Fixed Charge

 

  1. IBM will provide [***]

 

2.0 Variable Charges

 

a. IBM will, [***]

 

b. [***]

 

c. [***]

 

d. [***]

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ODCS Services

--------------------------------------------------------------------------------

 

Part III B: ODCS Services: Charges

 

1.0 Fixed Charge

 

a. [***]

 

2.0 Variable Charges

 

     [***]

 

2.1 Dedicated Environment

[***]

 

2.2 Shared Environment

 

a. [***]

 

2.3 Additional Resource Units

[***]

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ODCS Services

--------------------------------------------------------------------------------

 

Part IV: Managed Hosting Services

 

1.0 Fixed Charges

 

  1. WSI will pay IBM [***]

 

2.0 Variable Charges

 

a. Managed Hosting Charges

 

[***]

 

b. Additional Monthly Variable Charges

 

[***]

 

[***]

 

3.0 Akamai Service Charges

 

[***]

 

4.0 Custom Database support

 

IBM will provide custom physical database services [***].

 

Custom Database Support (in hours)

       

[***]

 

[***]

 

[***]

 

[***]

[***]

           

[***]

 

[***]

 

[***]

 

[***]

[***]

 

[***]

 

[***]

 

[***]

[***]

           

[***]

 

[***]

 

[***]

 

[***]

[***]

 

[***]

 

[***]

 

[***]

 

5.0 Custom Middleware and Application Software support

 

IBM will provide middleware and application software support as generally
described in Schedule A, Part IV, sections 3.9 and 3.10, for the Managed Hosting
Services [***].

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Managed Hosting Services

--------------------------------------------------------------------------------

Custom Middleware Support (in hours)

[***]

    

[***]

    

[***]

    

[***]

[***]

[***]

[***]

    

[***]

    

[***]

    

[***]

[***]

    

[***]

    

[***]

    

[***]

[***]

[***]

    

[***]

    

[***]

    

[***]

[***]

    

[***]

    

[***]

    

[***]

[***]

[***]

    

[***]

    

[***]

    

[***]

[***]

    

[***]

    

[***]

    

[***]

[***]

[***]

    

[***]

    

[***]

    

[***]

[***]

           

[***]

    

[***]

Custom Application Support (in hours)

[***]

    

[***]

    

[***]

    

[***]

[***]

[***]

[***]

    

[***]

    

[***]

    

[***]

[***]

    

[***]

    

[***]

    

[***]

[***]

[***]

           

[***]

    

[***]

[***]

    

[***]

    

[***]

    

[***]

[***]

[***]

    

[***]

    

[***]

    

[***]

[***]

    

[***]

    

[***]

    

[***]

[***]

[***]

    

[***]

    

[***]

    

[***]

[***]

    

[***]

    

[***]

    

[***]

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Managed Hosting Services

--------------------------------------------------------------------------------

6.0 Database Support, Middleware and Application Support: Adjustment of Hours

 

Database and the Middleware and Application support hours will be reviewed [***]

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Managed Hosting Services

--------------------------------------------------------------------------------

 

Exhibit C-1

 

General

 

All items listed on these Exhibits are expressed in US Dollars unless otherwise
specified in this Agreement. All years are calendar years beginning on January 1
at 00:01 hours Pacific Time and ending on December 31 at 24:00 hours Pacific
Time, except for the first year 2004, which is from October 16, 2004 through and
including December, and the last year of the Term 2009, which commences in
January 2009 and terminates on October 15, 2009.

 

Williams-Sonoma Inc.

 

IBM Project Office Address:

 

Start Date: October 16, 2004

Expiration Date: October 15, 2009

NOTE: the table C-1 Charges represented represent full monthly charge for the
months depicted. Actual Charges will be adjusted for any partial months.

 

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Tables

--------------------------------------------------------------------------------

[***]

    

[***]

    

[***]

    

[***]

    

[***]

    

[***]

    

[***]

    

[***]

[***]

    

[***]

    

[***]

    

[***]

    

[***]

    

[***]

    

[***]

    

[***]

[***]

    

[***]

    

[***]

    

[***]

    

[***]

    

[***]

    

[***]

    

[***]

[***]

    

[***]

    

[***]

    

[***]

    

[***]

    

[***]

    

[***]

    

[***]

[***]

    

[***]

    

[***]

    

[***]

    

[***]

    

[***]

    

[***]

    

[***]

[***]

    

[***]

    

[***]

    

[***]

    

[***]

    

[***]

    

[***]

    

[***]

[***]

    

[***]

    

[***]

    

[***]

    

[***]

    

[***]

    

[***]

    

[***]

[***]

    

[***]

    

[***]

    

[***]

    

[***]

    

[***]

    

[***]

    

[***]

[***]

    

[***]

    

[***]

    

[***]

    

[***]

    

[***]

    

[***]

    

[***]

[***]

    

[***]

    

[***]

    

[***]

    

[***]

    

[***]

    

[***]

      

[***]

    

[***]

    

[***]

    

[***]

    

[***]

    

[***]

    

[***]

      

[***]

    

[***]

    

[***]

    

[***]

    

[***]

    

[***]

    

[***]

      

[***]

    

[***]

    

[***]

    

[***]

    

[***]

    

[***]

    

[***]

      

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Tables

--------------------------------------------------------------------------------

[***]

  [***]     [***]     [***]     [***]     [***]     [***]     [***]  

[***]

  [ ***]   [ ***]   [ ***]   [ ***]   [ ***]   [ ***]   [ ***]

[***]

  [ ***]   [ ***]   [ ***]   [ ***]   [ ***]   [ ***]   [ ***]

[***]

  [ ***]   [ ***]   [ ***]   [ ***]   [ ***]   [ ***]   [ ***]

[***]

  [ ***]   [ ***]   [ ***]   [ ***]   [ ***]   [ ***]   [ ***]

[***]

  [ ***]   [ ***]   [ ***]   [ ***]   [ ***]   [ ***]   [ ***]

[***]

  [ ***]   [ ***]   [ ***]   [ ***]   [ ***]   [ ***]   [ ***]

[***]

  [ ***]   [ ***]   [ ***]   [ ***]   [ ***]   [ ***]   [ ***]

[***]

  [ ***]   [ ***]   [ ***]   [ ***]   [ ***]   [ ***]   [ ***]

[***]

                                         

[***]

  [ ***]   [ ***]   [ ***]   [ ***]   [ ***]   [ ***]   [ ***]

[***]

  [ ***]   [ ***]   [ ***]   [ ***]   [ ***]   [ ***]   [ ***]

[***]

  [ ***]   [ ***]   [ ***]   [ ***]   [ ***]   [ ***]   [ ***]

[***]

  [ ***]   [ ***]   [ ***]   [ ***]   [ ***]   [ ***]   [ ***]

[***]

  [ ***]   [ ***]   [ ***]   [ ***]   [ ***]   [ ***]   [ ***]

[***]

                                         

[***]

  [ ***]   [ ***]   [ ***]   [ ***]   [ ***]   [ ***]   [ ***]

[***]

  [ ***]   [ ***]   [ ***]   [ ***]   [ ***]   [ ***]   [ ***]

[***]

  [ ***]   [ ***]   [ ***]   [ ***]   [ ***]   [ ***]   [ ***]

[***]

                                         

[***]

  [ ***]   [ ***]   [ ***]   [ ***]   [ ***]   [ ***]   [ ***]

[***]

  [ ***]   [ ***]   [ ***]   [ ***]   [ ***]   [ ***]   [ ***]

[***]

  [ ***]   [ ***]   [ ***]   [ ***]   [ ***]   [ ***]   [ ***]

[***]

                                         

[***]

  [ ***]   [ ***]   [ ***]   [ ***]   [ ***]   [ ***]   [ ***]

[***]

  [ ***]   [ ***]   [ ***]   [ ***]   [ ***]   [ ***]   [ ***]

[***]

                                         

[***]

  [ ***]   [ ***]   [ ***]   [ ***]   [ ***]   [ ***]   [ ***]

[***]

  [ ***]   [ ***]   [ ***]   [ ***]   [ ***]   [ ***]   [ ***]

[***]

  [ ***]   [ ***]   [ ***]   [ ***]   [ ***]   [ ***]   [ ***]

[***]

                                         

[***]

  [ ***]   [ ***]   [ ***]   [ ***]   [ ***]   [ ***]   [ ***]

[***]

  [ ***]   [ ***]   [ ***]   [ ***]   [ ***]   [ ***]   [ ***]

[***]

  [ ***]   [ ***]   [ ***]   [ ***]   [ ***]   [ ***]   [ ***]

[***]

  [ ***]   [ ***]   [ ***]   [ ***]   [ ***]   [ ***]   [ ***]

[***]

  [ ***]   [ ***]   [ ***]   [ ***]   [ ***]   [ ***]   [ ***]

[***]

  [ ***]   [ ***]   [ ***]   [ ***]   [ ***]   [ ***]   [ ***]

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Tables

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[***]

                           

[***]

                           

[***]

  [***]   [***]   [***]   [***]   [***]   [***]   [***]

[***]

                           

[***]

                           

[***]

  [***]   [***]   [***]   [***]   [***]   [***]   [***]

[***]

  [***]   [***]   [***]   [***]   [***]   [***]   [***]

[***]

  [***]   [***]   [***]   [***]   [***]   [***]   [***]

[***]

  [***]   [***]   [***]   [***]   [***]   [***]   [***]

[***]

  [***]   [***]   [***]   [***]   [***]   [***]   [***]

[***]

  [***]   [***]   [***]   [***]   [***]   [***]   [***]

[***]

                           

[***]

                           

[***]

  [***]   [***]   [***]   [***]   [***]   [***]   [***]

[***]

  [***]   [***]   [***]   [***]   [***]   [***]   [***]

[***]

                           

[***]

  [***]   [***]   [***]   [***]   [***]   [***]   [***]

[***]

  [***]   [***]   [***]   [***]   [***]   [***]   [***]

[***]

  [***]   [***]   [***]   [***]   [***]   [***]   [***]

[***]

  [***]   [***]   [***]   [***]   [***]   [***]   [***]

[***]

  [***]   [***]   [***]   [***]   [***]   [***]   [***]

[***]

  [***]   [***]   [***]   [***]   [***]   [***]   [***]

[***]

  [***]   [***]   [***]   [***]   [***]   [***]   [***]

[***]

  [***]   [***]   [***]   [***]   [***]   [***]   [***]

[***]

                           

[***]

  [***]   [***]   [***]   [***]   [***]   [***]   [***]

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confidential redacted portion has been omitted and filed separately with the
Securities and Exchange Commission.

 

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[***]      [***]      [***]      [***]      [***]      [***]      [***]     
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Exhibit C-2: Financial Responsibilities Matrix

 

Financial Responsibilities Matrix

 

Description

--------------------------------------------------------------------------------

  

Responsibility

--------------------------------------------------------------------------------

  

IBM

--------------------------------------------------------------------------------

  

WSI

--------------------------------------------------------------------------------

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        [***]

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Financial Responsibilities Matrix

 

Description

--------------------------------------------------------------------------------

  

Responsibility

--------------------------------------------------------------------------------

  

IBM

--------------------------------------------------------------------------------

  

WSI

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[***]

         

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        [***]

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Although particular items, which are not within the Services of this Agreement,
may be identified in the Financial Responsibilities Matrix above, there is no
intent to imply that items which are not identified are within the Services.
WSI’s and IBM’s financial responsibilities are defined fully in the Schedules to
this Agreement.

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--------------------------------------------------------------------------------

 

Services Agreement

 

between

 

WSI and IBM

 

--------------------------------------------------------------------------------

 

Schedule D

 

Transition

 

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Table of Contents

 

Part 1: Pre-Transformation: Transition Phase 1 Plan

    

1.0

   Transition Activities    3

2.0

   Transition Phase 1 Overview    3

3.0

   General Roles and Responsibilities    4

4.0

   Human Resources Transition Plan    5

Part II: WSI IT Optimization: Transition Phase 2 Plan

    

1.0

   Introduction    6

2.0

   ODCS Services: Dedicated and Shared Environments    6

3.0

   AIX Systems [***]: Transition Phase 2 Plan    6

4.0

   Intel Systems: Transition Phase 2 Plan    6

5.0

   iSeries (AS/400) Transition Phase 2 Plan    6

6.0

   E-Commerce Transition Phase 2    7

7.0

   Transition Phase 2 Activities: General    7

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Introduction

 

a. This Schedule sets forth an outline of:

 

  1. in Part I, the Transition Phase 1 activities IBM will perform during the
Transition Phase 1 Period, estimated to be completed by first ninety (90) days
after the Effective Date, and

 

  2. in Part II, the Transition Phase 2 activities IBM will perform in planned
stages during the Term.

 

Part 1: Pre-Transformation: Transition Phase 1 Plan

 

1.0 Transition Activities

 

a. Within thirty (30) days after the Start Date, a team of the appropriate IBM
and WSI employees and their Subcontractors (the Transition Team) will draft a
detailed Transition Phase 1 Plan. The Transition Phase 1 Plan will identify,
describe, and document:

 

  1. the specific objectives of each portion of the Transition Phase 1 Plan;

 

  2. the equipment, software and resources WSI and IBM require to complete the
Transition during the Transition Phase 1 Period;

 

  3. the technical assumptions and dependencies inherent in the Transition Phase
1 Plan;

 

  4. any unique Transition Phase 1 requirements related to the WSI facilities;
and

 

  5. the required time frames, activity dates and people responsible for
individual tasks throughout the Transition Phase 1 Period.

 

b. The Transition Phase 1 Plan will specify WSI’s and IBM’s respective
Transition Phase 1 responsibilities. It will contain descriptions and schedules
for the required tasks.

 

c. Upon completion of the Transition Phase 1 Plan, the Transition Team will meet
regularly as mutually agreed, and will review and update the Transition Phase 1
Plan to reflect mutually agreed upon changes such as revisions to schedules,
resource requirements, dependencies, and priorities.

 

2.0 Transition Phase 1 Overview

 

a. Transition Objectives

 

In general, the Transition Phase 1 objectives include:

 

  1. transferring the Services from WSI to IBM with minimal disruption to WSI’s
operations;

 

  2. identifying and addressing any business or technical issues or both that
may impact Transition Phase 1;

 

  3. implementing the SMC disciplines described in Schedule A (Services) into
WSI’s operating environments to maintain the appropriate controls and to provide
the agreed levels of Service to WSI;

 

  4. providing Transition Phase 1 status updates and information to WSI’s
management;

 

  5. developing the Policy and Procedures Manual, including establishing quality
and customer satisfaction processes and procedures;

 

  6. identifying IBM and WSI employee training requirements;

 

  7. identifying and establishing the system and process linkages IBM requires
to provide the Services.

 

b. Transition Phase 1 Methodology

 

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IBM’s Transition Phase 1 methodology provides that:

 

  1. WSI and IBM will each appoint an individual (each a Transition Manager and
collectively the Transition Managers) who will be responsible for overseeing the
completion of its Transition Phase 1 Plan responsibilities and coordinating
activities with the other. The IBM Transition Manager and the WSI Transition
Manager will work together to facilitate the completion of the Transition Phase
1 Plan activities according to the agreed schedule and processes, and will meet
regularly to review the status of the Transition Phase 1 Plan activities and to
address any issues.

 

  2. Transition Team members will be assigned specific tasks to be accomplished
within the time frames set forth in the Transition Phase 1 Plan. Required
coordination will take place through the Transition meetings chaired by the
Transition Managers. The Transition Managers will determine the frequency and
location of all scheduled meetings.

 

  3. Each Transition Team member will present issues, concerns and comments to
the attention of the Transition Managers at the scheduled meetings or as
necessary. The plan for resolving issues, including the identification of the
responsible team members and the scheduled dates for resolution, will be agreed
to at the Transition meetings.

 

3.0 General Roles and Responsibilities

 

a. IBM Responsibilities

 

IBM will take the leadership role in the development and implementation of the
Transition Phase 1 Plan. IBM will establish a Transition project office, manage
Transition status meetings, and track and report on the status of all tasks. IBM
will provide regular updates to WSI management describing the following:

 

  1. activities scheduled during the current reporting period;

 

  2. activities planned for the next reporting period; and

 

  3. change control activity:

 

(a) cumulative,

 

(b) approved,

 

(c) rejected,

 

(d) in progress, concerns, and

 

(e) recommendations.

 

b. WSI Responsibilities

 

WSI is responsible for assigning the appropriate employees to the Transition
Team to assist IBM in the development and implementation of the Transition Phase
1 Plan. WSI is responsible for providing the resources necessary to perform its
responsibilities set forth in the Transition Phase 1 Plan, including:

 

  1. assigning the appropriate employees and Subcontractors to develop, jointly
with IBM under IBM’s leadership and direction, individual Transition Phase 1
Plan chapters and identify the tasks required to complete Transition Phase 1;

 

(a) Transition Project Manager

 

(b) Appropriate subject matter experts from the following areas to provide input
and approvals for Transition Plan development (and execution, as required by the
plan)

 

(c) WSI Application Support Team

 

(d) WSI Network team

 

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(e) WSI Security

 

(f) Other roles as may be jointly determined.

 

  2. providing representation and input from the End User organizations as
required to define the criteria for the Phase 1 Transition of operations;

 

  3. providing IBM’s employees with access to the WSI Facilities and systems
affected by the Transition Phase 1 or required by IBM in order to provide the
Services;

 

  4. providing, to the extent available, current documentation related to
Transition Phase 1; and

 

  5. approve Transition Phase 1 Plan.

 

4.0 Human Resources Transition Plan

 

[***]

 

4.1 Human Resources Transition Timeline

 

a. Timeline assumes that IBM is permitted to:

 

[***]

 

b. [***]

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Part II: WSI IT Optimization: Transition Phase 2 Plan

 

1.0 Introduction

 

[***]

 

2.0 ODCS Services: Dedicated and Shared Environments

 

IBM will provide the ODCS services in [***] versions (as further described in
Schedule A):

 

a. [***]

 

b. [***]

 

3.0 AIX Systems [***]: Transition Phase 2 Plan

 

3.1 Overview: device migration

 

a. [***]

 

3.2 Overview: workload migration

 

a. [***]

 

3.3 AIX: new project capacity

 

[***]

 

a. [***]

 

b. [***]

 

c. [***]

 

3.4 Other “existing Unix” migration

 

a. [***]

 

4.0 Intel Systems: Transition Phase 2 Plan

 

4.1 Intel: Server Consolidation

 

a. [***]

 

b. [***]

 

c. [***]

 

4.2 Intel: New Project Capacity

 

a. [***]

 

5.0 iSeries (AS/400) Transition Phase 2 Plan

 

[***]

 

5.1 Activities Q3-4, 2004

 

a. [***]

 

5.2 Activities Q1, 2005

 

a. [***]

 

5.3 Activities Q2, 2005

 

a. [***]

 

b. [***]

--------------------------------------------------------------------------------

[***] 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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5.4 Activities 2007

 

a. [***]

 

6.0 E-Commerce Transition Phase 2

 

6.1 Activities

 

a. [***]

 

b. [***]

 

c. [***]

 

d. [***]

 

6.2 LPARs

 

a. [***]

 

b. [***]

 

c. [***]

 

7.0 Transition Phase 2 Activities: General

 

7.1 Services Migration Activities – ODCS

 

a. IBM will:

 

[***]

 

b. WSI responsibilities:

 

[***]

 

7.2 Additional Transition Phase 2 Activities: Managed Hosting Environment

 

a. [***]

 

b. WSI is responsible for:

 

[***]

--------------------------------------------------------------------------------

[***] 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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--------------------------------------------------------------------------------

 

Services Agreement

 

between

 

WSI and IBM

 

--------------------------------------------------------------------------------

 

Schedule E

 

Projects

 

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--------------------------------------------------------------------------------

 

Table of Contents

 

Part I: General

    

1.0

  

Introduction

   3

2.0

  

Project Management Process

   3

Part II: Projects

    

Project 1: WSI Server Consolidation Project

    

1.0

  

Project Scope and Approach

   7

2.0

  

Definitions

   7

3.0

  

Phase 1: Server Study

   7

4.0

  

Phase 2: Application Assessment

   8

5.0

  

Phase 3: Implementation

   9

6.0

  

Server Consolidation Scope

   10

7.0

  

Estimated Schedule

   11

8.0

  

Server List by Wave

   11

 

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Part I: General

 

1.0 Introduction

 

This Schedule describes

 

a. in Part I, the overall Project management process that will be implemented in
order to support delivery of Projects and

 

b. in Part II, the Projects to be performed under this Agreement.

 

c. Any additional Projects may be added pursuant to the PCR process.

 

2.0 Project Management Process

 

a. A Project is work performed by IBM under the Agreement that spans a specific
period of time within the Term of the Agreement and is defined by the
achievement of defined target outcomes or objectives. IBM will perform all
Projects under a Project Change Request (PCR). Projects will be subject to
charges in addition to the charges set forth in the Agreement to the extent that
(i) the Project is not a Project specifically within the scope of the Agreement
such as the Server Consolidation Project; (ii) the Project consists of New
Services; (iii) the Project consists of material changes to the scope of the
Services and the Agreement does not set forth a pricing methodology to address
such material changes (e.g., Services in excess of the volume of Services
provided under the Agreement; and Services on an expedited basis); or (iv) the
Project consists of Services for which the parties expressly agree not to use
the charging methodology set forth in the Agreement.

 

b. IBM’s Project management process is based upon the premise that the IBM
Project Executive has overall responsibility and accountability to meet agreed
upon quality, cost, schedule and technical objectives of the Project.

 

c. WSI and IBM will each assign an individual to a Project (each a Project
Manager and collectively the Project Managers) who has the authority to
represent and bind WSI and IBM, respectively, for that Project and who will have
specific operational roles as described below and further delineated in the
Project Plan. A Project Manager may be assigned to oversee more than one Project
at a time. WSI and IBM will each provide the other reasonable advance written
notice of a change to their respective Project Manager and will discuss any
objections the other has to such change.

 

d. WSI and IBM will develop a Project Plan as specified in Section 4.0 below, as
applicable. Upon WSI’s and IBM’s signature of such Project Plan, the Project
Plan will be assigned a sequential number and will be attached to, and become a
part of, this Schedule, for example, Project Plan E-1 (Title), Project Plan E-2
(Title). The terms and conditions of this Agreement will apply to all Projects,
except to the extent expressly amended by the applicable Project Plan.

 

2.2 Project Managers

 

a. IBM Responsibilities

 

The IBM Project Manager will:

 

  1. be the single-point-of-contact to WSI for establishing and maintaining
communications through the WSI Project Manager regarding the Project;

 

  2. develop the detailed Project Plan in conjunction with the WSI Project
Manager;

 

  3. measure, track and evaluate progress against the Project Plan;

 

  4. maintain files of the Project Plan and any associated documentation;

 

  5. manage the Project for IBM including planning, directing, and monitoring
all Project activities;

 

  6. establish the IBM Project team and, in conjunction with the WSI Project
Manager, orient team members regarding the Project management process and the
Project Plan, including individual responsibilities, Deliverables, and
schedules;

 

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  7. provide operational guidance to, manage and be accountable for the
performance of IBM’s employees and Subcontractors assigned to the Project;

 

  8. define and monitor the support resources required for the Project;

 

  9. implement all changes consistent with the Project change control process
set forth in Section 2.4 (Project Change Control) of this Schedule and Schedule
A Part I, section 3.6;

 

  10. resolve deviations from the Project Plan with the WSI Project Manager;

 

  11. address the resolution of Project issues;

 

  12. plan, schedule, conduct and participate in periodic Project planning,
review, status meetings, as applicable, including review of the work products
being produced;

 

  13. coordinate and schedule the attendance of IBM’s employees and
Subcontractors, as appropriate, at such periodic planning, review, and status
meetings; and

 

  14. provide periodic written status reports to WSI that provide information
such as schedule status, technical progress, issue identification and related
action plans.

 

b. WSI Responsibilities

 

WSI Project Manager responsibilities:

 

  1. be the single-point-of-contact for the management of WSI’s obligations
under the Project;

 

  2. serve as the interface between the Project team members and WSI’s business
functions, units, or Affiliates participating in the Project;

 

  3. define WSI’s business and technical requirements for each Project;

 

  4. assist IBM in IBM’s development of the detailed Project Plan and validate
that the Project Plan meets WSI’s business and technical requirements;

 

  5. establish the WSI Project team and, in conjunction with the IBM Project
Manager, orient team members regarding the Project management process and the
Project Plan, including individual responsibilities, Deliverables, and
schedules;

 

  6. provide operational guidance to, manage and be accountable for the
performance of WSI’s employees and Subcontractors assigned to the Project;

 

  7. implement all changes consistent with the Project change control process
set forth in Section 2.4 (Project Change Control) of this Schedule and Schedule
A Part I, Section 3.6;

 

  8. participate in and provide necessary support during periodic Project
planning, review, and status meetings, as scheduled by IBM;

 

  9. obtain and provide information, data, decisions and approvals, within the
agreed time period, which, for existing Projects, will be within five business
days of IBM’s request, unless otherwise mutually agreed;

 

  10. coordinate and schedule the attendance of WSI employees and
Subcontractors, as appropriate, at planning, review, and status meetings
scheduled by IBM;

 

  11. assist in the resolution of Project issues and escalate within WSI’s
management as needed;

 

  12. assist IBM in resolution of deviations from the Project Plan;

 

  13. participate in periodic Project reviews, as requested by IBM; and

 

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  14. review the Deliverables to determine if they meet the Completion Criteria
set forth in the applicable Project Plan and, within the specified time frame,
inform the IBM Project Manager in writing of the results of such review.

 

2.3 Project Plan

 

A Project Plan should contain the following information:

 

a. Project Managers

 

This section will identify WSI’s and IBM’s respective Project Managers including
name, address, telephone number, pager number, and fax number.

 

b. Purpose and Scope of Work

 

This section will provide a summary of the overall purpose of the Project and
define the scope of work to be performed.

 

c. Assumptions and Dependencies

 

This section will describe any key assumptions or dependencies upon which the
Project was based or is dependent upon for successful completion, or both.

 

d. Definitions

 

This section will define any terms specific to the Project.

 

e. IBM Responsibilities

 

This section will describe the responsibilities that IBM is required to perform
in order to complete the Project.

 

f. WSI Responsibilities

 

This section will describe the responsibilities that WSI is required to perform
in order to complete the Project.

 

g. Required Equipment and Materials

 

This section will list all required equipment and materials including, hardware
and software, that WSI or IBM must provide in order to facilitate completion of
the Project.

 

h. Deliverables

 

This section will provide a description of any items to be delivered by IBM
under the Project.

 

i. Estimated Schedule

 

This section will provide the estimated schedule for completion of the Project,
including any milestones and target dates for completion.

 

j. Completion Criteria

 

This section will state the criteria that IBM must meet in order to satisfy its
obligations under the Project.

 

k. Charges

 

This section will specify the applicable charges, if any, for the Project (for
example, included within the Annual Services Charge or performed for additional
charges on a fixed price or time and materials basis).

 

l. Additional or Unique Terms and Conditions

 

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--------------------------------------------------------------------------------

This section will identify terms and conditions, if any, in addition to or
different from the terms and conditions of this Agreement.

 

2.4 Project Change Control

 

A Project may be changed only by a writing signed by authorized representatives
of WSI and IBM. Either WSI or IBM may request a change to a Project subject to
the following Project change control process:

 

a. All requests for a change to a Project will be submitted in writing by the
requesting Project Manager (a Project Change Request or PCR). The PCR will
reference the Project, describe at a reasonable level of detail the change, the
rationale for the change and the impact the change may have on the Project both
if it is accepted and if it is rejected.

 

b. The Project Managers will review the Project Change Request and either:

 

  1. approve the change by authorized representatives of WSI and IBM signing the
PCR. Upon such approval, the change will be implemented; or

 

  2. agree in writing to submit the PCR for further investigation, and WSI to
pay IBM for any WSI authorized charges, if any, for IBM’s investigation. Such
investigation will determine the technical merits and the effect on price,
schedule, and other terms and conditions that may result from the implementation
of the PCR. WSI and IBM will then agree to mutually approve or reject the PCR.
If WSI and IBM do not agree, either IBM or WSI may submit such PCR to the
Project Executives for resolution; or

 

  3. reject the PCR. If rejected, the PCR will be returned to the requesting
Project Manager along with the reason for rejection.

 

2.5 Project Completion

 

IBM will notify WSI in writing when the Completion Criteria for a Deliverable or
a Project has been met. The parties shall utilize the Acceptance Process set
forth in Appendix E-1 to document project completion criteria.

 

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Part II: Projects

 

Project 1: WSI Server Consolidation Project

 

1.0 Project Scope and Approach

 

IBM will employ IBM’s “IT Optimization Methodology” to consolidate WSI servers,
as further described below, as a part of the migration from WSI’s
Pre-Transformation Phase to the Post-Transformation Phases (ODCS and Managed
Hosting) described in Schedule A.

 

While IBM is executing the Server Consolidation project as set forth below, IBM
will continue to provide the general ongoing support functions described in
Schedule A, including application support (i.e., Groupware support).

 

The scope of the Server Consolidation project includes any application work for
the applications supported by IBM (set forth in Schedule G, Appendix G-2) that
will run on the consolidated servers (e.g., Groupware).

 

2.0 Definitions

 

a. “Acceptance Criteria” refers to the test plan, test scripts and test data
(and where applicable, performance metrics) which will be used throughout the
migration project to verify that the objectives of the project have been met,
and hence signify completion.

 

b. “Application Code” refers to all necessary source code, build scripts,
makefiles etc. required to build the Applications to be migrated.

 

c. “Application Data” refers to all necessary data containers/files required by
Applications which are to be migrated.

 

d. “Applications” refers to the WSI’s various applications (both homegrown
applications, and commercial packages) to be consolidated.

 

e. “Code Synchronization Point” shall mean any designated point during the
project at which IGS/SO and/or WSI may provide IBM with updated Application Code
and/or updated Acceptance Criteria.

 

f. “Phase” refers to a portion of the Server Consolidation implementation
project discussed in this document. Phases 1, 2, and 3 are repeated for each of
the waves of servers to be consolidated (see below).

 

g. “Wave” refers to a set of servers being consolidated and moved into
production in a new environment. [***]

 

3.0 Phase 1: Server Study

 

3.1 Validate Data

 

IBM will:

 

a. re-validate IBM’s preliminary analysis – review completed data collection
spreadsheets and questionnaires;

 

b. conduct onsite interviews at WSI – including conducting a workshop and/or
interviewing key personnel for additional required information regarding WSI’s
architecture, server, application, and application support information;

 

c. Re-verify consolidation solutions; and

 

d. validate solutions with WSI.

 

3.2 Server Consolidation/IT Optimization Analysis

 

--------------------------------------------------------------------------------

[***]  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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--------------------------------------------------------------------------------

IBM will:

 

a. analyze the server infrastructure and application information to verify
servers identified for consolidation using proprietary tools and techniques,
based on infrastructure and application information; and

 

b. identify a sequenced approach to consolidation.

 

3.3 Solution Design

 

IBM will:

 

a. Based on above, provide solution design; and

 

b. Finalize sequenced approach to consolidation schedule.

 

3.4 Provide Server Study Report

 

IBM will:

 

a. Document inventory;

 

b. Document general findings;

 

c. Document recommendations for consolidation; and

 

d. Document rationale for any servers not included.

 

3.5 Deliver Solution Design

 

IBM will:

 

a. provide a summary of activities;

 

b. revalidate conclusions reached; and

 

c. revalidate final recommendations.

 

4.0 Phase 2: Application Assessment

 

4.1 Perform Detailed Assessment

 

a. IBM will:

 

  1. assess all WSI applications (including to provide a data collection
worksheet to assist WSI in the collection of the data needed to complete this
activity);

 

  2. conduct interviews and Application Code Analysis to provide IBM Application
Engineers “AE(s)” with further information about the application(s) through;

 

(a) code analysis,

 

(b) interviews with WSI Subject Matter Experts,

 

(c) examination of documentation,

 

(d) and observing applications in production use.

 

  3. analyze the Application Code (using IBM proprietary tools and methods) to
determine application scope and complexity; and

 

  4. provide WSI with a Situational Analysis Questionnaire. WSI is responsible
for collecting the necessary information required by the IBM AE(s).

 

b. IBM AE(s) will:

 

  1. perform Application Code inventory;

 

  2. perform Application Code complexity analysis;

 

  3. perform third-party product usage analysis;

 

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  4. create the Application Code Inventory document;

 

  5. define Migration Approach; and

 

  6. analyze third party applications used and determine any need for
modifying/replacement so that the ported application will work in the new
environment.

 

4.2 Prepare and Deliver Application Assessment Report

 

IBM will:

 

a. document the results of the assessments, its recommendations, and
implementation recommendations in a formal report document.

 

b. The specific activities to be performed are:

 

  1. document inventory;

 

  2. situation analysis;

 

  3. migration / consolidation approach;

 

  4. third party application requirements;

 

  5. test requirements;

 

  6. provide an estimate of WSI resources required to support, identifying types
of skills and the estimated amount of time required to support Consolidation
Project activities;

 

  7. prepare migration assessment report; and

 

  8. prepare a high-level project plan.

 

4.3 Implementation Planning

 

IBM will:

 

a. revalidate servers to be consolidated.

 

b. confirm that each application has been analyzed.

 

c. create a high-level project plan that will:

 

  1. document the consolidations of these servers with their associated
applications; and

 

  2. document WSI consolidation priorities and time frames based on IBM
recommendations.

 

5.0 Phase 3: Implementation

 

IBM will implement the plan to move, consolidate, test and deploy the binary
code and data files, as follows:

 

5.1 Implementation Activities - General

 

a. System Build: IBM to provide the hardware and software environment to support
the baseline, development and production environments.

 

b. Baseline Test: performed by IBM with WSI assistance to produce valid
acceptance criteria and test plans. Baseline Test confirms that the application
source-code provided is operational and complete, and allows IBM to review the
applications as they go through the Acceptance Testing process.

 

c. Test Script Creation – performed by WSI with IBM assistance to produce valid
acceptance criteria and test plans.

 

d. Migration/Port/Recompile Stage: IBM will move binaries, files, user accounts,
install Commercial off the Shelf applications (COTS).

 

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5.2 Validation

 

a. Data Port for Testing – A subset of data will be ported for testing purposes.

 

b. Reset User Accounts and System Test Stage – IBM will run the previously
specified Acceptance Tests against the ported applications running on the target
platforms until the applications meet the success criteria defined by the
Acceptance Tests. Once an application has been tested, they will be moved to the
appropriate LPAR(s) on production-ready systems for final Acceptance and
Consolidation Testing.

 

c. Acceptance and Consolidation Test Stage – IBM and WSI is responsible for
performing the final Acceptance Test on the applications. Test results will be
validated against the Acceptance Test Criteria. IBM will make corrections to any
applications that fail to produce the expected results. Once all of the
applications within a given WSI Line of Business have been validated against the
Acceptance Test Criteria, they will be scheduled for deployment and cutover to
production. For multiple applications that will be consolidated to a single LPAR
integration testing may be required. This work will be a component of Acceptance
Testing.

 

d. Reset Domains, Final Data Port and Deployment Stage – IBM will plan and
execute the final deployment/cutover to production of all applications and data.

 

5.3 Application Deployment

 

a. Production Cutover Planning – develop cut-over plans for network, scheduling,
acceptance testing, contingency (fall back) strategy, sign-off process and
following support planning.

 

b. Resume Infrastructure Support after Cutover: day to day activities required
for supporting the infrastructure.

 

6.0 Server Consolidation Scope

 

[***]

 

a. [***]

 

b. [***]

 

c. [***]

 

d. [***]

 

6.2 Consolidation Scheduling

 

[***]

 

[***]

  [***]   [***]   [***]   [***]   [***]    [***]    [***]    [***] [***]   [***]
  [***]   [***]   [***]   [***]    [***]    [***]    [***] [***]   [***]   [***]
  [***]   [***]   [***]    [***]    [***]    [***] [***]   [***]   [***]   [***]
  [***]   [***]    [***]    [***]    [***] [***]   [***]   [***]   [***]   [***]
  [***]    [***]    [***]    [***] [***]   [***]   [***]       [***]            
[***]    [***]

 

[***]

 

[***]

  [***]   [***]   [***]   [***]   [***]    [***]    [***]    [***] [***]   [***]
  [***]   [***]   [***]   [***]    [***]    [***]    [***] [***]   [***]   [***]
  [***]   [***]   [***]    [***]    [***]    [***] [***]   [***]   [***]   [***]
  [***]   [***]    [***]    [***]    [***] [***]   [***]   [***]   [***]   [***]
  [***]    [***]    [***]    [***] [***]   [***]   [***]       [***]            
[***]    [***]

--------------------------------------------------------------------------------

[***]  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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6.3 Scope Definition and Limit

 

a. Assumptions:

 

  1. [***]

 

  2. [***]

 

  3. [***]

 

  4. [***]

 

  5. [***]

 

  6. [***]

 

  7. [***]

 

  8. [***]

 

  9. [***]

 

  10. [***]

 

b. The following are out-of-scope activities:

 

  1. [***]

 

  2. [***]

 

  3. [***]

 

  4. [***]

 

  5. [***]

 

  6. [***]

 

c. WSI Responsibilities:

 

  1. [***]

 

  2. [***]

 

  3. [***]

 

  4. [***]

 

7.0 Estimated Schedule

 

a. [***]

 

8.0 Server List by Wave

 

Schedule G Attachment G-6 sets forth the list of servers designated for Wave 1,
Wave 2 and Wave 3 consolidation; the actual list is subject to change via the
PCR process.

--------------------------------------------------------------------------------

[***]  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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--------------------------------------------------------------------------------

 

--------------------------------------------------------------------------------

 

Services Agreement

 

between

 

WSI and IBM

 

--------------------------------------------------------------------------------

 

Schedule F

 

Affected Employees

 

IBM / WSI Confidential

   Page 1 of 5

--------------------------------------------------------------------------------

 

Table of Contents

 

1.0

  

Introduction

   3

2.0

  

Employment Terms

   3

Exhibit F-1

   4

Affected Employees

   4

Exhibit F-2

   5

Hired Employees

   5

 

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--------------------------------------------------------------------------------

1.0 Introduction

 

This Schedule describes the responsibilities of IBM and WSI with respect to the
Affected Employees and Hired Employees.

 

a. Defined Terms

 

[***]

 

2.0 Employment Terms

 

a. Offers of Employment

 

Before the Effective Date:

 

[***]

 

b. [***]

 

[***]

 

c. Vacation and Holidays

 

[***]

 

d. [***]

 

[***]

 

e. [***]

 

[***]

 

f. [***]

 

[***]

 

g. [***]

 

[***]

 

h. [***]

 

[***]

 

i. [***]

 

[***]

 

j. Other Responsibilities

 

[***]

--------------------------------------------------------------------------------

[***] 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.

 

IBM / WSI Confidential

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--------------------------------------------------------------------------------

Exhibit F-1

 

Affected Employees

 

[***]

 

Affected Employees

[***]

  [***]   [***]   [***]

[***]

  [***]   [***]   [***]

[***]

  [***]   [***]    

[***]

  [***]   [***]    

[***]

  [***]   [***]    

[***]

  [***]   [***]    

[***]

  [***]   [***]    

[***]

  [***]   [***]   [***]

[***]

  [***]   [***]   [***]

[***]

  [***]   [***]    

[***]

  [***]   [***]    

[***]

  [***]   [***]   [***]

[***]

  [***]   [***]    

[***]

  [***]   [***]    

[***]

  [***]   [***]    

[***]

  [***]   [***]    

[***]

  [***]   [***]   [***]

[***]

  [***]   [***]    

[***]

  [***]   [***]    

[***]

  [***]   [***]    

[***]

  [***]   [***]   [***]

--------------------------------------------------------------------------------

[***]  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.

 

IBM / WSI Confidential

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--------------------------------------------------------------------------------

Exhibit F-2

 

Hired Employees

 

Hired Employees

Name

--------------------------------------------------------------------------------

  

Employee Identification

Number

--------------------------------------------------------------------------------

[***]

                                       

--------------------------------------------------------------------------------

[***]  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.

 

IBM / WSI Confidential

   Page 5 of 5

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

 

Services Agreement

 

Between

 

WSI and IBM

 

--------------------------------------------------------------------------------

 

Schedule G:

 

Components, Supported Systems, and Infrastructure Documentation

 

IBM/WSI Confidential    Page 1 of 87       

--------------------------------------------------------------------------------

 

Table of Contents

 

Part I: IBM Pre-Transformation Services

   4

Section 1: IBM Components

   4     

1.1    IBM Components

   4

Section 2: WSI Components

   4     

2.1    WSI SAN Environment

   4     

2.2    WSI NAS Environment

   5     

2.3    WSI Software: List

   6     

2.4    WSI Servers

   6

Section 3: Supported Servers

   6     

3.1    Intel Servers: Non-eCommerce

   6     

3.2    Intel Servers: eCommerce

   8     

3.3    UNIX HA Servers:

   8     

3.4    UNIX Servers

   9     

3.5    UNIX Partitions

   10     

3.6    AS/400 LPAR

   11

Section 4: Storage

   11     

4.1    Intel SAN/NAS/ Local Storage Management

   11     

4.2    UNIX SAN/NAS Local Storage Management

   12     

4.3    AS/400 Storage

   12

Section 5: Database

   12     

5.1    Intel Type 1 Database Instances

   12     

5.2    UNIX Database Instances

   13

Section 6: Middleware

   13     

6.1    Intel MQSeries Instances

   13     

6.2    UNIX MQSeries Instances

   14     

6.3    iSeries – AS/400

   14

Section 7: Jobs and Batch Operations

   15

Section 8: Application Monitoring and/or Support

   15

Section 9: Groupware

   15

Section 10: WSI Service Locations

   16     

10.1 IBM on Site Support

   16     

10.2 IBM Remote Support

   16

Part II: Post Transformation, On Demand Data Center (ODCS) Services

   17

Section 1: IBM Components

   17     

1.1    [***]

   17     

1.2    [***]

   17

Section 2: WSI Components

   17     

2.1    [***] Hardware

   17     

2.2    WSI Components: Software

   17

Section 3: Supported Servers

   18     

3.1    Intel CPU Hours and Virtual Machines (VM)

   18

--------------------------------------------------------------------------------

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confidential redacted portion has been omitted and filed separately with the
Securities and Exchange Commission.

 

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   Page 2 of 87      Pre-Transformation Services

--------------------------------------------------------------------------------

    

3.2    AIX Partitions and CPU Hours – Dedicated and Shared

   18     

3.3    AS/400 CPU Hours and LPARs

   20

Section 4: Storage

   21     

4.1    [***]

   21     

4.2    AS/400 Storage

   22

Section 5: Database

   22     

5.1    Intel Database VMs and Type 1 Database: SQL Instances

   22     

5.2    Type 1 Database: Oracle-AIX and Oracle-Intel Instances

   23     

5.3    Type 2 Database: Oracle-AIX and Oracle-Intel Instances

   23     

5.4    AIX Database Partitions[***]

   24      [***]    24

Section 6: Middleware

   25     

6.1    Intel MQseries Instances

   25     

6.2    AIX MQ Series and AIX WebSphere Application Server Instances

   25     

6.3    AS/400 MQSeries and AS/400 Mimix Instances

   26

Section 7: Jobs and Batch Operations

   27     

7.1    AIX Production Control Jobs

   27     

7.2    AS/400 Production Control Jobs

   27     

7.3    Intel Batch Jobs

   27

Section 8: Application Monitoring and/or Support

   27

Part III: Post Transformation: IBM Managed Hosting Services

   28

Section 1: IBM Components

   28     

1.1    Boulder Site - Production Environment

   28     

1.2    Boulder Site – Integration/Test and QA Environment

   29     

1.3    Southbury Site - Production Environment – Southbury Site

   30     

1.4    Internet Connectivity

   31     

1.5    IBM Provided Software

   31

Section 2: WSI Components

   32     

2.1    WSI Components

   32     

2.2    WSI Software

   32

Section 3: Supported Servers

   32     

3.1    AIX Partitions, Intel VMs and CPU Hours (Dedicated and Shared)

   32

Section 4: Storage

   36     

4.1    AIX and Intel Storage (in 8 GB Blocks)

   36

Section 5: Database

   39

Section 6: Middleware Support

   40

Appendix G-1: WSI Software

   41

Appendix G-2: IBM Supported Software

   46

Appendix G-3: Monitored Software

   49

Appendix G-4: WSI Network Diagram

   67

Appendix G-5: Pre-Transformation Database Reference (Type 1/ Type 2)

   68

Appendix G-6: WSI Server List

   70

--------------------------------------------------------------------------------

[***] 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.

 

IBM/WSI Confidential

   Page 3 of 87      Pre-Transformation Services

--------------------------------------------------------------------------------

Part I: IBM Pre-Transformation Services

 

Section 1: IBM Components

 

1.1 IBM Components

 

[***]

 

Section 2: WSI Components

 

[***]

 

2.1 WSI SAN Environment

 

[***]

--------------------------------------------------------------------------------

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confidential redacted portion has been omitted and filed separately with the
Securities and Exchange Commission.

 

IBM/WSI Confidential

   Page 4 of 87      Pre-Transformation Services

--------------------------------------------------------------------------------

[***]

 

2.2 WSI NAS Environment

 

[***]

--------------------------------------------------------------------------------

[***] 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.

 

IBM/WSI Confidential

   Page 5 of 87      Pre-Transformation Services

--------------------------------------------------------------------------------

[***]

 

2.3 WSI Software: List

 

[***]

 

2.4 WSI Servers

 

[***]

 

Section 3: Supported Servers

 

Categorization of Servers: Low, Medium, High

 

  • Low = Infrastructure, File/Print and Unknown Servers

 

  • Medium = Application, Web and Mail Servers

 

  • High = Database Server

 

Appendix G-6 designates server categorization (Low, Medium, or High) by
individual Server. Appendix G-6 is listed for individual server identification
purposes only, and not to provide a baseline of total servers in scope by server
type. Server Baseline volumes are provided pursuant to the following Tables in
this section 3.

 

3.1 Intel Servers: Non-eCommerce

 

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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.

 

IBM/WSI Confidential

   Page 6 of 87      Pre-Transformation Services

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2004

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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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   Page 7 of 87      Pre-Transformation Services

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    [***]   [***]   [***]   [***]   [***]   [***]   [***]       [***]   [***]  
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3.2 Intel Servers: eCommerce

 

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3.3 UNIX HA Servers:

 

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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.

 

IBM/WSI Confidential

   Page 8 of 87      Pre-Transformation Services

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3.4. UNIX Servers

 

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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.

 

IBM/WSI Confidential

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3.5 UNIX Partitions

 

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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.

 

IBM/WSI Confidential

   Page 10 of 87      Pre-Transformation Services

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3.6 AS/400 LPAR

 

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Section 4: Storage

 

4.1 Intel SAN/NAS/ Local Storage Management

 

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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.

 

IBM/WSI Confidential

   Page 11 of 87      Pre-Transformation Services

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4.2 UNIX SAN/NAS Local Storage Management

 

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4.3 AS/400 Storage

 

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Section 5: Database

 

5.1 Intel Type 1 Database Instances

 

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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.

 

IBM/WSI Confidential

   Page 12 of 87      Pre-Transformation Services

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5.2 UNIX Database Instances

 

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Section 6: Middleware

 

6.1 Intel MQSeries Instances

 

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   Page 13 of 87      Pre-Transformation Services

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6.2 UNIX MQSeries Instances

 

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6.3 iSeries – AS/400

 

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   Page 14 of 87      Pre-Transformation Services

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Section 7: Jobs and Batch Operations

 

[***]

 

Section 8: Application Monitoring and/or Support

 

Appendix G-2 sets forth the Supported Applications, and

Appendix G-3 sets forth the Monitored Applications.

 

Section 9: Groupware

 

IBM will provide Groupware support services as described in Schedule A, Part II,
Section 4.0, for the following applications:

 

a. [***]

 

b. [***]

 

c. [***]

 

d. [***]

 

e. [***]

 

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i. [***]

 

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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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   Page 15 of 87      Pre-Transformation Services

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Section 10: WSI Service Locations

 

10.1 IBM on Site Support

 

Data Centers

Rocklin, CA – Primary Production Data Center

San Francisco, CA – Production and Backup

 

10.2 IBM Remote Support

 

eCommerce Collocation Facilities: AT&T Ashburn, VA

 

Call Centers:

Camp Hill, PA

Las Vegas, NV

Oklahoma City, OK

 

Distribution Centers:

Memphis, TN

Olive Branch

 

IBM/WSI Confidential

   Page 16 of 87      Pre-Transformation Services

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Part II: Post Transformation, On Demand Data Center (ODCS) Services

 

Section 1: IBM Components

 

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Section 2: WSI Components

 

2.1 [***] Hardware

 

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2.2 WSI Components: Software

 

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   Page 17 of 87      ODCS Services

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Section 3: Supported Servers

 

3.1 Intel CPU Hours and Virtual Machines (VM)

 

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3.2 AIX Partitions and CPU Hours – Dedicated and Shared

 

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   Page 19 of 87      ODCS Services

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3.3 AS/400 CPU Hours and LPARs

 

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Securities and Exchange Commission.

 

IBM/WSI Confidential

   Page 20 of 87      ODCS Services

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Section 4: Storage

 

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   Page 21 of 87      ODCS Services

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4.2 AS/400 Storage

 

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Section 5: Database

 

5.1 Intel Database VMs and Type 1 Database: SQL Instances

 

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[***] Confidential treatment has been requested for the bracketed portions. The
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   Page 22 of 87      ODCS Services

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5.2 Type 1 Database: Oracle-AIX and Oracle-Intel Instances

 

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5.3 Type 2 Database: Oracle-AIX and Oracle-Intel Instances

 

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   Page 23 of 87      ODCS Services

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5.4 AIX Database Partitions

 

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[***] Confidential treatment has been requested for the bracketed portions. The
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   Page 24 of 87      ODCS Services

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Section 6: Middleware

 

6.1 Intel MQseries Instances

 

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6.2 AIX MQ Series and AIX WebSphere Application Server Instances

 

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   Page 25 of 87      ODCS Services

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6.3 AS/400 MQSeries and AS/400 Mimix Instances

 

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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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   Page 26 of 87      ODCS Services

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Section 7: Jobs and Batch Operations

 

7.1 AIX Production Control Jobs

 

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7.2 AS/400 Production Control Jobs

 

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7.3 Intel Batch Jobs

 

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Section 8: Application Monitoring and/or Support

 

Appendix G-2 sets forth the Supported Applications, and

 

Appendix G-3 sets forth the Monitored Applications.

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   Page 27 of 87      ODCS Services

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Part III: Post Transformation: IBM Managed Hosting Services

 

Section 1: IBM Components

 

1.1 Boulder Site - Production Environment

 

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1.2 Boulder Site – Integration/Test and QA Environment

 

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1.4 Internet Connectivity

 

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1.5 IBM Provided Software

 

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Section 2: WSI Components

 

2.1 WSI Components

 

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2.2 WSI Software

 

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Section 3: Supported Servers

 

3.1 AIX Partitions, Intel VMs and CPU Hours (Dedicated and Shared)

 

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Section 4: Storage

 

4.1 AIX and Intel Storage (in 8 GB Blocks)

 

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Section 5: Database

 

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[***] Confidential treatment has been requested for the bracketed portions. The
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IBM/WSI Confidential

   Page 39 of 87      Managed Hosting Services

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Section 6: Middleware Support

 

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[***] Confidential treatment has been requested for the bracketed portions. The
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IBM/WSI Confidential

   Page 40 of 87      Managed Hosting Services

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Appendix G-1: WSI Software

 

WSI Supported Software

 

               

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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
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IBM/WSI Confidential

   Page 41 of 87      Appendices

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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.

 

IBM/WSI Confidential

   Page 42 of 87      Appendices

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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.

 

IBM/WSI Confidential

   Page 43 of 87      Appendices

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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.

 

IBM/WSI Confidential

   Page 44 of 87      Appendices

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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.

 

IBM/WSI Confidential

   Page 45 of 87      Appendices

--------------------------------------------------------------------------------

Appendix G-2: IBM Supported Software

 

IBM Supported Software

 

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[***] Confidential treatment has been requested for the bracketed portions. The
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   Page 46 of 87      Appendices

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[***] Confidential treatment has been requested for the bracketed portions. The
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Securities and Exchange Commission.

 

IBM/WSI Confidential

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[***] Confidential treatment has been requested for the bracketed portions. The
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IBM/WSI Confidential

   Page 48 of 87      Appendices

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Appendix G-3: Monitored Software

 

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[***] Confidential treatment has been requested for the bracketed portions. The
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Securities and Exchange Commission.

 

IBM/WSI Confidential

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[***] Confidential treatment has been requested for the bracketed portions. The
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Securities and Exchange Commission.

 

IBM/WSI Confidential

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[***] Confidential treatment has been requested for the bracketed portions. The
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IBM/WSI Confidential

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[***] Confidential treatment has been requested for the bracketed portions. The
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IBM/WSI Confidential

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[***] Confidential treatment has been requested for the bracketed portions. The
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Appendix G-4: WSI Network Diagram

 

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Appendix G-5: Pre-Transformation Database Reference (Type 1/ Type 2)

 

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Appendix G-6: WSI Server List

 

WSI Servers

 

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[***] Confidential treatment has been requested for the bracketed portions. The
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Securities and Exchange Commission.

 

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Securities and Exchange Commission.

 

IBM/WSI Confidential

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confidential redacted portion has been omitted and filed separately with the
Securities and Exchange Commission.

 

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Securities and Exchange Commission.

 

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--------------------------------------------------------------------------------

 

Services Agreement

 

between

 

WSI and IBM

 

--------------------------------------------------------------------------------

 

Schedule H

 

WSI Safety and Security Policies

 

IBM / WSI Confidential

   Page 1 of 5

--------------------------------------------------------------------------------

Safety in the Workplace

 

WE ARE CONCERNED WITH THE GENERAL WELFARE AND SAFETY OF OUR ASSOCIATES AND
CUSTOMERS. SAFETY BEGINS WITH YOU. WE ENCOURAGE YOU TO TAKE AN ACTIVE INTEREST
IN SAFETY AND IN PERFORMING YOUR WORK IN A SAFE WAY.

 

Safety Procedures

 

Periodic inspections are performed to identify and correct potential safety
hazards. However, if you discover a safety hazard (for example: frayed carpet or
unstable furniture), inform your manager/supervisor. He/she will notify the
proper department.

 

General Guidelines

 

Specific safety programs and procedures may exist at your location. Ask your
managers/supervisor. Please adhere to the following guidelines to prevent
accidents and promote a safe working environment:

 

  • Use the proper technique when lifting: Bend your knees, grasp the load
firmly, lift using leg muscles and keep your back straight. Do not lift awkward
or heavy items alone; request assistance.

 

  • Keep your work area clean and free of obstructions, such as spills or cords.

 

  • Use ladders to retrieve out-of-reach items; do not climb on shelves, racks,
chairs, desks, etc.

 

  • Keep fire exits and electrical panel boxes clear of obstructions at all
times.

 

  • Use appropriate cutting tools when opening boxes. Cut away from your body
and replace dull blades.

 

Accident Reporting

 

In the event of a work-related associate injury or accident, notify your
manager/supervisor or Human Resources representative regardless of how minor the
accident may appear. In the event of an emergency requiring immediate medical
assistance, call 911. Otherwise, if medical treatment is required, your
manger/supervisor or Human Resources representative will refer you to the
closest participating medical facility.

 

First-Aid Kits

 

In the event of minor injuries, first-aid kits are provided at al Company
locations.

 

Fire and Evacuation Plans

 

Fire safety is everyone’s business. Always know the location of exits and the
location of your fire extinguishers. If you must evacuate, use the nearest safe
emergency exit. Direct associates, customers and guests who need assistance.
Once outside, keep a safe distance away from the structure and follow the
instructions of emergency personnel.

 

Use of Fire Extinguishers

 

Always call the fire department when a fire has occurred. Extinguishers should
only be used on small fires, such as a small trashcan. For a larger fire, call
911 and evacuate.

 

Hazardous Materials

 

You may be required to work with chemical substances (such as cleaning supplies)
during your employment. Always use the product properly and follow the
instructions on the label. If you require further information on a product, ask
your manager/supervisor to obtain the Material Safety Data Sheet (MSDS) for the
product.

 

Smoking

 

In an effort to provide a safe and healthy work environment, smoking is
prohibited in all Company locations. Smoking by associates, vendors and visitors
is not allowed in any Company facility, whether owned or leased.

 

IBM / WSI Confidential

   Page 2 of 5

--------------------------------------------------------------------------------

WILLIAMS-SONOMA, INC. ELECTRONIC COMMUNICATION POLICY

 

The Williams-Sonoma, Inc. (WSI’s) Electronic Communication Policy applies to all
WSI associates, vendors and contractors who, on behalf of the company, access or
exchange information via WSI’s equipment or networks. This policy supersedes any
previous policy issued or written by WSI or its affiliates prior to November 15,
2001.

 

Purpose of the Policy

 

This policy protects WSI and all associates by defining and clarifying
acceptable and unacceptable uses of the company’s electronic communication
system, as well as other related issues. It is designed to minimize the risk of
physical damage to our system, protect the company from liability due to
associate misuse of the system, and avoid any resulting disruption of business.

 

Scope – WSI’s Electronic Communication System

 

This policy covers all forms of communication, including but not limited to the
use of:

 

  • Email

 

  • Voicemail

 

  • Faxes

 

  • Company cell phones

 

  • Internet

 

  • Company computers and equipment

 

Our electronic communication system and all information contained or
communicated via this system are WSI property, and are intended for
business-related purposes.

 

If you use this system, be aware that the electronic communication system and it
contents are not private. Information in these systems is backed up periodically
and can be retrieved at the discretion of management.

 

The Internet can be a powerful business tool. It gives associates access to a
wealth of information from their desktop. This information-rich environment can
help associates make informed decisions, which in turn will help improve their
business and, ultimately, help WSI achieve it s objectives. Internet access is a
privilege, not a right, and inappropriate use of the Internet will not be
tolerated by WSI.

 

Reasonable personal use of the WSI electronic communication system which is not
abusive or excessive and which does not interfere with the associate’s ability
to perform his or her job, is permitted. The determination as to whether
personal use interferes with job performance is the responsibility of the
associate’s manager.

 

Password protection is vital and associates must keep their passwords private.
Associates are responsible for all activity involving their user ID and
password. Sharing a user ID or using another associate’s user ID or password is
prohibited.

 

Associates in possession of WSI equipment are expected to protect the equipment
from loss, damage or theft. Upon resignation or termination of employment, or at
any time upon request, the associate may be asked to produce the equipment for
return or inspection.

 

Acceptable and Unacceptable Uses of WSI’s Electronic Communication System

 

Acceptable uses for the electronic communication systems include the
transmission of business-related information and information regarding
WSI-sponsored activities.

 

IBM / WSI Confidential

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Unacceptable us of our electronic communication systems includes, but is not
limited to:

 

  • transmission of non-business communication, except in the limited
circumstances permitted in this policy

 

  • transmission or disclosure of any non-public or confidential business
information

 

  • chain letters or mass distribution of email

 

  • solicitation and fundraising

 

  • playing games

 

  • jokes or personal opinions on religion, political affiliations or lifestyles

 

  • threats to or harassment of nay third party

 

  • derogatory, obscene or abusing language regarding such matters as religious
orientation, race, color gender, national origin, sex, sexual orientation, age,
and/r disabilities of other persons

 

  • posting personal ads

 

  • participation in “chat” sessions outside the course and scope of your
employment

 

  • viewing, downloading, emailing or forwarding pornographic or erotic
materials

 

  • gambling

 

  • engaging in political activities outside the course and scope of your
employment

 

  • running a private business

 

  • illegal activity

 

  • transmitting or reviewing harassing or offensive material

 

Usage Monitoring:

 

All associates Internet activities are recorded and may be monitored by
authorized WSI personnel. WSI has implemented software that attempts to deny
user access to Web pages containing inappropriate content. Do not assume that
because you can access a Web site, it is appropriate to do so on WSI time or
equipment. In some situations, WSI may be required to publicly disclose
electronic information, even if such information is marked private. Your actions
on the Internet represent the company and every visit to a Web site leaves a
record of a visit from WSI.

 

WSI specifically reserves the right to review all documents, records, stored
materials and Internet activities maintained or transmitted on the company’s
electronic communication system, and to download or copy such files whenever
deemed appropriate by WSI.

 

Downloading:

 

Many documents, programs, and images downloaded from the Internet contain
computer viruses that could damage data on the workstation and spread to other
computers that access the file. It is your responsibility to help keep viruses
off WSI systems. You can protect your systems and other by using virus software
provided by IT that scans your hard drive regularly and always scan for viruses
before copying downloaded files to a network drive or a diskette. Contact the IT
Help Desk at x4000 for specific virus-scanning instructions for your computer.
Associates must also comply with all software licenses, copyrights and all other
laws, regulations and statutes governing intellectual property.

 

Use of Personal Equipment

 

While at work, associates are expected to exercise the same discretion in using
personal equipment as expected for the use of WSI’s electronic communication
system. Excessive use of personal equipment during the workday, regardless of
the equipment use, can interfere with associate productivity, and be distracting
to others. WSI will not be liable for the loss of personal equipment brought
into the workplace.

 

IBM / WSI Confidential

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Consequences of Misuse

 

Inappropriate use of any of the WSI electronic communication system or personal
equipment is cause for disciplinary action up to and including immediate
termination of employment, civil litigation or criminal prosecution.

 

IBM / WSI Confidential    Page 5 of 5

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Services Agreement

 

between

 

WSI and IBM

 

--------------------------------------------------------------------------------

 

Schedule I

 

Approved IBM Subcontractors

 

IBM / WSI Confidential    Page 1 of 2

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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.

 

IBM / WSI Confidential    Page 2 of 2

--------------------------------------------------------------------------------

 

--------------------------------------------------------------------------------

 

Services Agreement

 

between

 

WSI and IBM

 

--------------------------------------------------------------------------------

 

Schedule J

 

Service Locations

 

IBM / WSI Confidential    Page 1 of 2

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A. WSI Service Locations:

 

1. IBM on Site Support

 

Data Centers

Rocklin, CA – Primary Production Data Center

San Francisco, CA – Production and Backup

 

2. IBM Remote Support

 

eCommerce Collocation Facilities: AT&T Ashburn, VA

 

Call Centers:

Camp Hill, PA

Las Vegas, NV

Oklahoma City, OK

 

Distribution Centers:

Memphis, TN

Olive Branch

 

B. IBM Service Locations:

 

1. IBM Data Center, Boulder CO

 

2. IBM Data Center, Southbury CT

 

IBM / WSI Confidential    Page 2 of 2

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--------------------------------------------------------------------------------

 

Services Agreement

 

between

 

WSI and IBM

 

--------------------------------------------------------------------------------

 

Schedule K

 

WSI Competitors

 

IBM / WSI Confidential    Page 1 of 2

--------------------------------------------------------------------------------

[***]

--------------------------------------------------------------------------------

[***] 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.

 

IBM / WSI Confidential    Page 2 of 2

--------------------------------------------------------------------------------

 

--------------------------------------------------------------------------------

 

Services Agreement

 

between

 

WSI and IBM

 

--------------------------------------------------------------------------------

 

Schedule L

 

Key Positions

 

IBM / WSI Confidential

   Page 1 of 2

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1. IBM Project Executive

 

  • Full-time position

 

  • Minimum 12 month assignment

 

IBM / WSI Confidential

   Page 2 of 2

--------------------------------------------------------------------------------

 

--------------------------------------------------------------------------------

 

Services Agreement

 

between

 

WSI and IBM

 

--------------------------------------------------------------------------------

 

Schedule M

 

WSI Travel Policies

 

IBM / WSI Confidential

   Page 1 of 2

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WSI POLICY ON REIMBURSEMENT OF

TRAVEL COSTS TO

CONSULTANTS/CONTRACTORS

 

Travel Arrangements

 

IBM will use its travel agency for all airline, hotel and rental car
reservations. IBM will use WSI’s preferred hotel partners or hotels with
comparable rates.

 

Airfare

 

Consultants must follow the WSI Travel policy of lowest available airfare.
Should the contractor feel that he/she is able to provide lower airfare, an
itinerary must be provided in the reimbursement documentation showing the
reduced amount from the American Express quote. In all cases, the Airline
itinerary must accompany documentation.

 

Per Diem for Meals and Ground transportation

 

Meals and ground transportation will be reimbursed at $55 per day. This does not
include travel to and from the airport which is reimbursed for actual charges.

 

Lodging

 

Contractors are required to stay at Williams-Sonoma preferred hotels using the
Williams-Sonoma contracted rate.

 

Ground Transportation

 

WSI will not reimburse for rental cars for consultants staying in San Francisco.
Taxis and shuttles may be used as transportation to and from the airport and
will be reimbursed for actual charges, which may not exceed $45 each way. Other
ground transportation is part of the Pier Diem. (See Per Diem above.) The
preferred hotels provide morning transportation to the WSI offices. Most hotels
are within walking distance of the offices. Public transportation including
buses, trolleys and cable cars are available for commuting to the downtown area.

 

Reimbursement

 

To receive reimbursement, the vender must provide a spreadsheet showing airfare,
hotel cost (for room and tax only), per diem and charge to and from the airport.
Receipts are required for hotel charges only. In addition, the Airline itinerary
(showing changes) is required as stated above. Williams-Sonoma will not
reimburse charges that are not covered by this policy.

 

IBM / WSI Confidential

   Page 2 of 2

--------------------------------------------------------------------------------

 

--------------------------------------------------------------------------------

 

Services Agreement

 

between

 

WSI and IBM

 

--------------------------------------------------------------------------------

 

Schedule N

 

Service Recipients

 

IBM / WSI Confidential

   Page 1 of 2

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Pottery Barn, including PBteen and PB Kids

 

Williams-Sonoma Home

 

Hold Everything

 

West Elm

 

Williams-Sonoma Direct, Inc.

 

IBM / WSI Confidential

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