Exhibit 10.1

Privileged Attorney-Client

Communication

INFORMATION TECHNOLOGY SERVICES

AGREEMENT

between

ADVANCED MEDICAL OPTICS, INC.

and

INTERNATIONAL BUSINESS MACHINES CORPORATION

*CONFIDENTIAL PORTIONS HAVE BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION

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TABLE OF CONTENTS

 

          Page

Article I DEFINITIONS AND CONSTRUCTION

   1

1.01

   Definitions.    1

1.02

   References.    11

1.03

   Headings.    11

1.04

   Interpretation of Documents.    11

Article II TERM

   11

2.01

   Initial Term.    11

2.02

   Renewal and Extension of Agreement    12

Article III DESIGNATED SERVICES

   12

3.01

   Generally.    12

3.02

   Provision of Technology and Improved Practices.    12

3.03

   Licenses and Permits.    13

3.04

   Changes in Law and Regulations.    13

3.05

   Technical Architecture and Product Standards.    14

3.06

   Steering Committee.    14

3.07

   Insourcing / Changes in AMO’s Business.    15

3.08

   Disaster Recovery Plan.    16

3.09

   Acquisition Services.    16

Article IV TRANSITION

   17

4.01

   Transition Services.    17

4.02

   Extensions to the Transition Schedule.    18

4.03

   Transition Milestones.    18

Article V CHANGES TO IBM SERVICES

   19

5.01

   Changes to Services.    19

5.02

   Third Party Services.    20

5.03

   Additional Business Units.    20

Article VI CUSTOMER RESPONSIBILITIES

   21

6.01

   AMO Manager.    21

6.02

   Use of the AMO Facilities; Provision of Resources.    21

Article VII AMO Equipment

   21

7.01

   AMO Equipment.    21

Article VIII SERVICE LEVELS

   22

8.01

   Designated Service Levels.    22

8.02

   Out-of-Scope Service Levels.    22

8.03

   Adjustment of Service Levels.    22

8.04

   Reports.    23

 

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8.05

   Root-Cause Analysis and Escalation.    23

8.06

   Measurement and Monitoring Tools.    23

8.07

   Service Level Credits.    24

Article IX CUSTOMER SATISFACTION

   24

9.01

   Not used.    24

9.02

   Cost Savings.    24

Article X SERVICE LOCATIONS

   24

10.01

   Service Locations.    24

10.02

   Safety and Security Procedures.    24

10.03

   Systems and Data Security.    25

10.04

   Security Relating to IBM Staff.    26

10.05

   Security Relating to Others.    27

10.06

   Security Audits.    27

Article XI HUMAN RESOURCES

   27

11.01

   Human Resources; Non-Solicitation.    27

Article XII PROJECT STAFF

   28

12.01

   IBM Project Executive.    28

12.02

   IBM Key Employees.    28

12.03

   Project Staff.    29

12.04

   Subcontractors.    29

12.05

   Conduct of IBM Personnel.    30

12.06

   Non-Competition.    31

Article XIII OPERATING PROCEDURES

   31

13.01

   Process Interface Manual.    31

13.02

   Change Control Procedures.    32

Article XIV SOFTWARE AND PROPRIETARY RIGHTS

   33

14.01

   AMO Software.    33

14.02

   IBM Software.    33

14.03

   IBM Tools.    33

14.04

   Developed Software.    34

14.05

   Work Product.    35

14.06

   Changes and Upgrades to Software.    36

14.07

   Acceptance.    36

Article XV DATA

   37

15.01

   Ownership of AMO Data.    37

15.02

   Correction of Errors.    37

15.03

   Return of AMO Data.    37

Article XVI CONSENTS

   37

16.01

   Consents.    37

 

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Article XVII CONTINUED PROVISION OF SERVICES    38

17.01

   Force Majeure.    38

17.02

   Alternate Source.    38

17.03

   No Payment for Unperformed Services.    39

17.04

   Performed Services in Arrears.    39

Article XVIII PAYMENTS TO IBM

   39

18.01

   Charges.    39

18.02

   Charges All Inclusive.    39

18.03

   Adjustments to Charges.    39

18.04

   Rights of Set-Off.    39

18.05

   Proration.    40

18.06

   Refundable Items.    40

18.07

   Unused Credits.    40

18.08

      40

18.09

   Taxes.    40 Article XIX PAYMENT SCHEDULE AND INVOICES    41

19.01

   Charges.    41

19.02

   Payment of Invoices.    41

19.03

   Disputed Charges/Credits    42 Article XX CONFLICTS OF INTEREST; AUDITS    43

20.01

   Conflicts of Interest.    43

20.02

   Record Retention.    43

20.03

   Services.    43

20.04

   Charges.    44

20.05

   Conduct of Audits.    44 Article XXI CONFIDENTIALITY    45

21.01

   General Obligations.    45

21.02

   Attorney-Client Privilege.    46

21.03

   Unauthorized Acts.    47 Article XXII REPRESENTATIONS AND WARRANTIES    47

22.01

   By AMO.    47

22.02

   By IBM.    48

22.03

   Disclaimer.    49 Article XXIII ADDITIONAL COVENANTS    49

23.01

   By AMO.    49

23.02

   By IBM.    50 Article XXIV DISPUTE RESOLUTION    51

24.01

   Steering Committee Resolution of Disputes.    51

24.02

   Executive Level Resolution.    51

24.03

   Mediation of Disputes.    51

 

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24.04

   Exceptions    52

24.05

   Continuity of Services.    52

Article XXV TERMINATION

   52

25.01

   Termination by AMO    52

25.02

   Termination by IBM    53

25.03

   Termination for Insolvency.    54

25.04

   Termination Charges / Wind-Down Costs    54

Article XXVI TERMINATION ASSISTANCE

   55

26.01

   Termination Assistance Services.    55

26.02

   Exit Rights.    55

Article XXVII INDEMNITIES

   57

27.01

   Indemnity by AMO.    57

27.02

   Indemnity by IBM.    58

27.03

   Obligation to Replace.    59

27.04

   Indemnification Procedures.    59

Article XXVIII DAMAGES

   60

28.01

   Direct Damages.    60

28.02

   Consequential Damages.    60

28.03

   Limitation on Liability.    60

Article XXIX INSURANCE

   60

29.01

   Insurance.    60

29.02

   Risk of Loss.    61

Article XXX MISCELLANEOUS PROVISIONS

   62

30.01

   Assignment.    62

30.02

   Nonperformance    62

30.03

   Notices.    63

30.04

   Counterparts.    64

30.05

   Consents, Approvals and Requests.    64

30.06

   Severability.    64

30.07

   Waivers.    64

30.08

   Publicity.    64

30.09

   Entire Agreement.    64

30.10

   Amendments.    65

30.11

   Survival.    65

30.12

   Third Party Beneficiaries.    65

30.13

   Governing Law.    65

30.14

   Sole and Exclusive Venue.    66

30.15

   Covenant of Further Assurances.    66

30.16

   Negotiated Terms.    66

30.17

   Export.    66

30.18

   Federal Regulations; California Regulations.    66

 

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SCHEDULES

 

Schedule A

   Statement of Work

Schedule B

   Service Levels

Schedule C

   Charges

Schedule D

   Transition

Schedule E

   Machines

Schedule F

   Software

Schedule G

   IBM Key Employees

Schedule H

   Pre-Approved Subcontractors

 

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INFORMATION

TECHNOLOGY SERVICES AGREEMENT

This Information Technology Services Agreement (the “Agreement”) dated as of
June 26, 2007, is by and between ADVANCED MEDICAL OPTICS, INC. a Delaware
corporation, having an office address at 1700 East Saint Andrew Place, Santa
Ana, CA 92705 (“AMO”) and INTERNATIONAL BUSINESS MACHINES CORPORATION, a New
York corporation having an office address at 294 Route 100, Somers, NY 10589
(“IBM”).

RECITALS:

IBM desires to provide to AMO, and AMO desires to obtain from IBM, services
relating to information technology as described in this Agreement, on the terms
and conditions set forth in this Agreement; and

AMO and IBM are desirous of forming a relationship to be governed by this
Agreement with respect to the provision by IBM to AMO, and certain other
designated entities, of services relating to information technology as described
in this Agreement.

In consideration of the agreements set forth below, AMO and IBM agree as
follows:

ARTICLE I

DEFINITIONS AND CONSTRUCTION

1.01 Definitions.

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

“Additional Designated IBM Service Location(s)” means any location other than a
Designated IBM Service Location or an AMO Service Location from which IBM
provides the Covered Services.

“Affiliate” means a Person that directly or indirectly, through one or more
intermediaries, controls, or is controlled by, or is under common control with,
a specified Person.

“AMO” means Advanced Medical Optics, Inc.

“AMO Agents” means the subcontractors of AMO, other than IBM and IBM Staff.

“AMO Competitor or AMO Competitors” means the following entities and any of
their successors and Affiliates as communicated in writing by AMO to IBM from
time to time: ***. AMO may update the foregoing list up to four (4) times each
Contract Year with entities that have a material presence in development,
manufacturing, and marketing of medical devices for the eye and contact lens
care products.

 

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“AMO Controlled Affiliate” means any person, partnership, joint venture,
corporation, or other form of enterprise, domestic or foreign, including
subsidiaries, of, or in, which AMO directly or indirectly owns a *** percent or
more equity or other interest therein including functional entities and units
thereof.

“AMO Data” means all data and information (where such information is stored or
transmitted electronically) submitted to IBM or IBM Staff by the AMO Entities or
agents of the AMO Entities in connection with this Agreement or residing on the
IBM Provided Systems in connection with this Agreement, including with respect
to such data, data and information owned by the AMO Entities (where such
information is stored or transmitted electronically) relating to the AMO
Entities’ customers, employees, technology, operations, facilities, consumer
markets, products, capacities, systems, procedures, security practices,
research, development, business affairs and finances, ideas, concepts,
innovations, inventions, designs, business methodologies, improvements, trade
secrets, copyrightable subject matter, patents and other intellectual property
and proprietary information.

“AMO Entities” means, collectively, (1) AMO, (2) all AMO Controlled Affiliates,
and (3) such other entities or units of AMO or Business Third Parties as may be
specified by AMO to receive the Covered Services pursuant to this Agreement.

“AMO Equipment” means all Equipment that is owned or leased by an AMO Entity and
that is at any IBM Designated Service Location, any Additional IBM Designated
Service Location or any other facility of IBM or any IBM Staff in connection
with this Agreement.

“AMO Manager” shall have the meaning set forth in Section 6.01.

“AMO Proprietary Software” means the Software and Related Documentation owned,
acquired or developed by any of the AMO Entities and used to provide the Covered
Services, as set forth in Schedule F (Software) and that is mutually agreed to
in writing by the parties from time to time to be used to provide the Covered
Services.

“AMO Service Location(s)” means any one of the AMO service locations set forth
in the SOW.

“AMO Software” means the AMO Proprietary Software and the AMO Third Party
Software.

“AMO Third Party Software” means the Software and Related Documentation that is
licensed or leased by any of the AMO Entities from a third party and used to
provide the Covered Services, as set forth in Schedule F (Software) and that is
mutually agreed to in writing by the parties from time to time to be used to
provide the Covered Services.

“AMO’s Regulatory Requirements” means the laws, rules and regulations on an
international, Federal, state and local level to which the AMO Entities are
required to submit or voluntarily submit from time to time by reason of the
nature of their business.

“Annual Services Charge” or “ASC” means, for the Designated Services, the
recurring fixed charge to AMO , which is associated with the Service Levels, the
IBM responsibilities, and the quantity of Resource Units set forth in the
Baselines established as of the Effective Date, as the same is further described
and specified in Schedule C (Charges).

 

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“Authorized Users” means users of the Services, as specified by AMO, within and
outside the AMO Entities including their employees, consultants, business units,
suppliers, customers, partners, contractors, and joint ventures.

“Baseline” means the quantity of Resource Units included in the Annual Services
Charges, as set forth in Schedule C (Charges).

“Business Third Parties” means any Person with whom AMO or any AMO Controlled
Affiliate conducts business or who assists AMO and/or any AMO Controlled
Affiliate in the conduct of their business.

“Change(s)” means any change, action, or decision of IBM with respect to the
provision of the Covered Services or to the Software or Equipment used to
provide the Covered Services, the Services, or to the Service Levels, and which
requires the AMO Entities to change the way they conduct their operation or
their Application Software, increases charges or costs to AMO, or adversely
affects the regulatory compliance of AMO.

“Change Control Procedures” means the written description of the change control
procedures applicable to any Changes under this Agreement.

“Change in Control” means, respectively, the (1) consolidation or merger of IBM
or or AMO, with or into any entity, (2) sale, transfer or other disposition of
all or substantially all of the assets of IBM (provided that it shall not be
deemed a change of control if such sale, transfer or other disposition is to a
wholly owned subsidiary of IBM), or (3) acquisition by any entity, or group of
entities acting in concert, of beneficial ownership of *** or more of the
outstanding voting securities or partnership interests of IBM or AMO.

“Change Order” shall have the meaning set forth in Section 13.02(1).

“Change Schedule” shall have the meaning set forth in Section 13.02(1).

“Charges” means the Transition Charge, Annual Services Charges and any other
amounts payable by AMO to IBM pursuant to this Agreement or any part thereof.

“Claim” means any written demand or claim, or any civil, criminal,
administrative or investigative action or proceeding.

“Confidential Information” of AMO or IBM means all information and documentation
of AMO and IBM, respectively, whether disclosed to or accessed by AMO or IBM in
connection with this Agreement (1) with respect to AMO, including, all AMO Data
and all information of AMO or their customers, suppliers, contractors and other
third parties doing business with AMO, and any other information of AMO or their
customers, suppliers, contractors and all other third parties doing business
with AMO that is not permitted to be disclosed to third parties under local laws
or regulations; and (2) with respect to AMO and IBM, the terms of this Agreement
including any subsequent pricing and statements of work hereunder; and (3) with
respect to IBM,

 

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any information developed without reference to AMO or without reference to or
use of AMO’s information; and (4) with respect to IBM, any materials, software
or solutions developed for AMO or any of the AMO Entities (excluding (a) all
reports required hereunder, all Work Product and all Developed Software, and
(b) all information listed in item (1) that is incorporated or contained in such
materials, software or solutions) provided that if disclosed in tangible form
such items are clearly marked as confidential or proprietary or, if orally
disclosed, IBM confirms the confidential nature of such information within
thirty (30) days of such disclosure.

“Consents” means all licenses, consents, authorizations and approvals that are
necessary to allow (1) IBM and IBM Staff to use (a) AMO Entities’ owned and
leased assets, (b) the services provided for the benefit of the AMO Entities
under the AMO Entities’ third party services contracts, (c) the AMO Software,
(d) any IBM Software and Tools and (e) any assets owned or leased by IBM,
(2) IBM to manage and administer the AMO Third Party Software pursuant to
Section 14.01, and (3) IBM and IBM Staff to (a) use any third party services
retained by IBM to provide the Covered Services and (b) assign to the AMO
Entities the Developed Software and the Work Product.

“Contract Managers” means the AMO Manager and the IBM Project Executive,
collectively.

“Contract Year” means each twelve (12) month period commencing on the Transition
Date and thereafter upon the completion of the immediately preceding Contract
Year.

“Covered Services” means the Services, the Termination Assistance Services, or
both.

“Data and Systems Safeguards” shall have the meaning set forth in
Section 10.03(1).

“Default Cure Period” shall have the meaning set forth in Section 25.01(4).

“Default Notice” means a notice of default provided by a Party to the other
Party, which shall include a reasonably detailed description of the nature of
the default.

“Designated IBM Service Location(s)” means any IBM service location expressly
set forth in the SOW.

“Designated Service Levels” means the service levels and standards for the
performance of the Designated Services set forth in Schedule B (Service Levels).

“Designated Services” shall have the meaning set forth in Section 3.01.

“Developed Software” means any Software, modifications or enhancements to
Software and Related Documentation developed pursuant to a project or the Change
Control Procedures under this Agreement, or at the written request of and
developed specifically for any of the AMO Entities under this Agreement, by or
on behalf of (1) IBM, (2) IBM Staff, (3) IBM and the AMO Entities or AMO Agents
jointly, (4) IBM Staff and the AMO Entities or AMO Agents jointly or (5) IBM,
IBM Staff, the AMO Entities and AMO Agents jointly. Developed Software shall be
further classified as either “Developed AMO Software” or “Developed IBM
Software”, as such terms are defined in Section 14.04 (Developed Software).
“Disclosing Party” shall have the meaning set forth in Section 21.01.

 

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“Dispute” shall have the meaning set forth in Section 24.01.

“Disputed Charges Cap” shall have the meaning set forth in Section 19.03(2).

“DRP” means the disaster recovery plan as described in Part 4 (Disaster Recovery
Services) of Schedule A (Statement of Work).

“Effective Date” shall have the meaning set forth in Section 2.01.

“End Date” means the later of (1) the expiration or termination of this
Agreement or (2) the last day of the Termination Assistance Period.

“Equipment” means (i) computers and related equipment or hardware, including
central processing units, servers and other processors, controllers, personal
computers, notebook computers, printers, engineering work stations, routers,
modems, related interconnectivity and communications equipment,
telecommunications equipment (voice, data and video), telephone handsets, PBX
switchboards, panels, cables, storage devices, printers, terminals, LAN
switches, SAN equipment, storage subsystems, tape and other backup and/or
archive equipment, other peripherals and input and output devices, and other
tangible mechanical and electronic equipment intended for the processing, input,
output, storage, manipulation, communication, transmission and retrieval of
information and data and (ii) any associated peripherals and connecting
equipment, either owned or leased, used in connection with the items described
in clause (i) above.

“Extraordinary Event” shall have the meaning set forth in Section 3.07(2).

“Force Majeure Event” shall have the meaning set forth in Section 17.01.

“Governmental Approval” means any license, consent, permit, approval or
authorization of any person or entity, or any notice to any person or entity,
the granting of which is required by applicable law, rule or regulation,
including AMO’s Regulatory Requirements, for the initiation or consummation of
the transactions contemplated by this Agreement.

“IBM Equipment” means the Equipment leased or owned by IBM and IBM Staff that
are used by IBM and IBM Staff to provide the Covered Services.

“IBM Governmental Approval” means any license, consent, permit, approval or
authorization of any person or entity, or any notice to any person or entity,
the granting of which is required by any law, rule or regulation relating to
IBM’s business or the provision of the Covered Services. For the avoidance of
doubt, “IBM Governmental Approval” shall not include any license, consent,
permit, approval or authorization of any person or entity, or any notice to any
person or entity, the granting of which is required by any law, rule or
regulation specifically relating to AMO’s receipt of the Covered Services or to
the development, manufacturing and marketing of medical devices for eye and
contact lens care products.

 

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“IBM Key Employees” means the IBM Project Executive and such other individuals
specified in Schedule G (IBM Key Employees), collectively.

“IBM Project Executive” shall have the meaning set forth in Section 12.01.

“IBM Proprietary Software” means all the Software and Related Documentation
owned or developed by or on behalf of IBM identified in the SOW as to be used in
connection with the Covered Services and any additional Software and Related
Documentation owned or developed by or on behalf of IBM that the Parties may
mutually agree from time to time be used in connection with the Covered
Services; and does not include any Developed AMO Software.

“IBM Provided Systems” means all computer equipment and software of IBM and
IBM’s licensors, suppliers and subcontractors used in connection with any of the
Covered Services (all of the foregoing including source and object code,
operating systems, databases, BIOS and other chips, microcode, firmware,
applications programs, utilities, files, archives, tools, screen designs, report
forms, compilers, personal computers, LANS, WANs, intranets and internets).

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

“IBM Staff” means both (i) the employees of IBM and (ii) the subcontractors of
IBM and their employees.

“IBM Third Party Software” means all the Software and Related Documentation
licensed or leased by IBM from a third party that is used in connection with
(1) the Covered Services or (2) any IBM Proprietary Software.

“Improved Technology” means any information technology developments, including
new developments or enhancements in methodologies, processes, Software,
Equipment, telecommunications services or other information technology and
services, that could reasonably be expected to have an impact on AMO’s or any of
the AMO Controlled Affiliates’ businesses, to the extent known and made
available within IBM or by IBM.

“Indemnified Component” shall have the meaning set forth in Section 27.03.

“Indemnified Party” shall have the meaning set forth in Section 27.04.

“Indemnifying Party” shall have the meaning set forth in Section 27.04.

“Industry Specific Data Security Laws” shall have the meaning set forth in
Section 10.03(1).

“Information Security Controls (ISeC) Document” or “ISeC Document” means the
document, developed by IBM with AMO’s assistance, that describes the security
policies and technical controls that IBM will implement, as requested by AMO, on
IBM-managed systems, servers, and networks, as further described in Part 3
(Enterprise Security Management Services) of Schedule A (Statement of Work).

 

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“Initial Agreement Expiration Date” shall have the meaning set forth in
Section 2.01.

“Initial Term” shall have the meaning set forth in Section 2.01.

“Interest” means interest at a rate of *** more than the prime rate as
established by a source selected by AMO and reasonably approved by IBM, but in
no event to exceed the highest lawful rate of interest.

“Issue Date” shall have the meaning set forth in Section 24.01.

“Judgments” means any judgment, writ, order, injunction, award or decree of or
by any court, justice or magistrate, including any bankruptcy court or judge.

“Losses” means and includes any and all losses, assessments, fines, penalties,
liabilities, deficiencies, interest, payments, costs and expenses (including
costs of settlement, and reasonable and actual attorneys’ fees, accounting fees,
and expert costs and fees) incurred or accrued in connection with Claims that
are the subject of indemnification under this Agreement, paid to third parties,
and finally awarded by a court or included as part of a settlement approved by
the Indemnifying Party.

“Modified Services” means any changes to the Designated Services requested by
AMO that do not materially alter the scope of the Designated Services or do not
otherwise increase the cost of the Designated Services to IBM or adversely and
materially affect IBM’s ability to meet the Service Levels.

“Out-of-Scope Service(s)” means any service that is outside the scope of the
Designated Services.

“Out-of-Scope Service Level(s)” means any service level and standard of
performance as may be established by IBM and AMO in connection with an
Out-of-Scope Service, as described in Section 8.02.

“Parties” means AMO and IBM, collectively.

“Party” means either AMO or IBM, as applicable.

“Payable Date” shall have the meaning set forth in Section 19.02(1).

“Person” means any (i) human being or (ii) general or limited partnership,
corporation, limited liability company, firm, association or other legal entity.

“Pre-Approved Subcontractors” shall have the meaning set forth in
Section 12.04(3).

“Privileged Work Product” shall have the meaning set forth in Section 21.02.

“Process Interface Manual” shall have the meaning set forth in Section 13.01.

“Project Staff” means the employees of IBM and IBM Staff who provide the Covered
Services.

 

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“Recipient” shall have the meaning set forth in Section 21.01.

“Related Documentation” means, with respect to Software and Tools, all
materials, documentation, specifications, technical manuals, user manuals, flow
diagrams, file descriptions and other written information that describes the
function and use of such Software or Tools, as applicable.

“Resource Unit” or “RU” means a unit of resource for which IBM and AMO have
established a Baseline, as set forth in Schedule C (Charges).

“Retained Costs” shall have the meaning set forth in Section 18.02.

“Service Level Termination Event” shall have the meaning set forth in Schedule B
(Service Levels).

“Service Level Credits” means the performance credits set forth in Schedule B
(Service Levels).

“Service Levels” means the Designated Service Levels and the Out-of-Scope
Service Levels, collectively.

“Service Location(s)” means any AMO Service Location, Designated IBM Service
Location or Additional Designated IBM Service Location, as applicable.

“Services” means the Designated Services and those Out-of-Scope Services
actually provided by IBM and/or IBM Staff, collectively.

“Services Tower” means a grouping of related Services, as set forth in Part 2
(Services Towers) of Schedule A (Statement of Work).

“Software” means the source code and object code version of any applications
programs, operating system software, computer software languages, utilities,
other computer programs and Related Documentation, in whatever form or media,
including the tangible media upon which such applications programs, operating
system software, computer software languages, utilities, other computer programs
and Related Documentation are recorded or printed, together with all
corrections, improvements, updates and releases thereof.

“SOW” means the description of the Designated Services as set forth in Schedule
A (Statement of Work).

“Steering Committee” shall have the meaning set forth in Section 3.06.

“Subcontractors” means any Person providing a portion of the Covered Services
for or on the behalf of IBM with respect to IBM’s performance of the Covered
Services under this Agreement.

“System Software” means those programs, including documentation and materials,
that perform tasks basic to the functioning of the Equipment and that are
required to operate AMO

 

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Software, IBM Software, and Developed Software. It also includes software
utilities and tools that are used to manage, measure, monitor, and provide
alerts regarding Equipment or network performance, utilization, or capacity.

“Systems” means the Software and the Equipment, collectively, used to provide
the Covered Services.

“Term” means the Initial Term and any renewal or extension of the Initial Term
pursuant to Section 2.02.

“Termination Assistance Period” means a period of time designated by AMO,
commencing on the date a determination is made that there will be an expiration
or termination of this Agreement and continuing for up to *** after the
expiration or termination of this Agreement, during which IBM shall provide the
Termination Assistance Services in accordance with Article 26.

“Termination Assistance Services” means the following services: (1) the
Services, to the extent AMO requests such Services or any part of the Services
during the Termination Assistance Period, (2) IBM’s cooperation with AMO or
another service provider designated by AMO in the transfer of the Services to
AMO or such other service provider in order to facilitate the transfer of the
Services to AMO or such other service provider and (3) any Out-of-Scope Services
reasonably requested by AMO in order to facilitate the transfer of the Services
to AMO or another service provider designated by AMO.

“Tools” means any tools, know-how, methodologies, processes, technologies or
algorithms and Related Documentation used by IBM to develop Software, test
Software, engineer business processes or perform any other function in providing
the Covered Services.

“Transition Acceptance Criteria” means the mutually agreed written requirements
IBM is required to meet to satisfy its obligations for the Transition
Deliverables or Transition Milestones as set forth in the Transition Plan.

“Transition Charge” means the non-recurring Charge(s) applicable to the
Transition Services as set forth in Schedule C (Charges).

“Transition Date” means the date IBM has performed all functions and services
necessary to accomplish the transition of AMO’s Designated Services to IBM and
to enable AMO to commence its testing of the Transition Services, as such date
is set forth in Section 4.01.

“Transition Deliverable” means the completion of a task or activity or the
delivery of a report, statement or other work product (whether in written,
electronic or other form) described in the Transition Plan, and pursuant to
which: (i) a Transition Services Credit may be payable in accordance with
Section 6 of Schedule D (Transition); or (ii) AMO may terminate the Agreement or
any affected Services Tower in the event that IBM fails to meet the Transition
Acceptance Criteria by the corresponding Completion Date associated with such
Transition Deliverable and as further described in Section 7 of Schedule D
(Transition).

 

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“Transition Milestone” means those Transition Services milestones identified in
Section 8 of Schedule D, (Transition), and, pursuant to which: (i) a Transition
Services Credit may be payable in accordance with Section 6 of Schedule D
(Transition); or (ii) AMO may terminate the Agreement or any affected Services
Tower in the event that IBM fails to meet the Transition Acceptance Criteria by
the corresponding Completion Date associated with such Transition Milestone and
as further described in Section 8 of Schedule D (Transition).

“Transition Phase” means the period of time commencing on the Effective Date and
ending on the Transition Date, during which IBM provides the Transition Services
to AMO.

“Transition Plan” means the transition plan as set forth in Schedule D
(Transition).

“Transition Schedule” means the schedule for the transition of services and
functions to IBM from AMO, as set forth in the Transition Plan.

“Transition Services” shall have the meaning set forth in Section 4.01.

“Transition Services Credits” means the performance credits set forth in
Schedule D (Transition).

“Use” means the right to load, execute, store, transmit, display, perform, copy,
maintain, modify, enhance, create derivative works, make and have made.

“Wind Down Costs” means expenses that are incurred by IBM as a result of a
termination of this Agreement with respect to Software, IBM Equipment, personnel
and third party contracts including: (i) with respect to IBM Third Party
Software, (a) non-cancelable license fees, (b) license termination fees,
(c) other non-cancelable charges, and (d) the unamortized amount of any one time
license charges prorated over a period starting from the date the cost was
incurred through the End Date (as of the date the cost was incurred) not
assigned or redeployed by IBM; (ii) non-cancelable lease payments, lease
termination fees, or other non-cancelable charges for IBM-leased Equipment that
are dedicated to the provision of the Covered Services; (iii) the fair market
value of any dedicated IBM-owned IBM Equipment that are not redeployed or sold;
(iv) salaries and associated employee benefit and relocation costs for the IBM
personnel dedicated to the provision of the Covered Services as of the time of
termination of this Agreement for up to sixty (60) days pending the redeployment
or separation of such personnel; (v) severance payments due and payable to IBM
personnel dedicated to the provision of the Covered Services under the
applicable written IBM severance plans; (vi) unrecovered start-up and Transition
expenses; and (vii) termination charges, minimum charges or other non-cancelable
charges, or charges similar to the other Wind Down Costs described in this
definition, for the third party contracts described above. In those
circumstances in which IBM is entitled to recover Wind Down Costs under this
Agreement, IBM shall submit an estimate of the anticipated Wind Down Costs,
together with ways in which such expenses may be mitigated or reduced, within
thirty (30) days after the event triggering such Wind Down Costs. Wind Down
Costs to be recovered by IBM shall be reduced to the extent AMO or its designees
assume financial obligations that IBM would otherwise have incurred as a result
of such termination. Further, for the avoidance of doubt following a Force
Majeure Event, Wind Down Costs will not include any amounts related to Equipment
and Software that are rendered unusable as a result of such Force Majeure Event.

 

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“Work Product” shall have the meaning set forth in Section 14.05.

1.02 References.

In this Agreement, the Exhibits and the Schedules to this Agreement:

 

  (1) shall be incorporated into and deemed part of this Agreement and all
references to this Agreement shall include Exhibits and the Schedules to this
Agreement;

 

  (2) references to any law, legislative act, rule or regulation means
references to such law, legislative act, rule or regulation in changed or
supplemented form or to a newly adopted law, legislative act, rule or regulation
replacing a previous law legislative act, rule or regulation; and

 

  (3) references to and mentions of the word “including” or the phrase “e.g.”
means “including, without limitation.”

1.03 Headings.

The Article and Section headings, Table of Contents and Tables of Exhibits and
Schedules are for reference and convenience only and shall not be considered in
the interpretation of this Agreement.

1.04 Interpretation of Documents.

In the event of a conflict between this Agreement and the terms of any of the
Schedules or Exhibits, the terms of this Agreement shall prevail.

ARTICLE II

TERM

2.01 Initial Term.

The initial term of this Agreement shall begin on July 1, 2007 (the “Effective
Date”) and continue until 12:00 A.M. (Pacific Time) on November 30, 2012 (the
“Initial Agreement Expiration Date”), or such earlier date upon which this
Agreement may be terminated in accordance with its terms (the “Initial Term”).
The Initial Term includes the Transition Phase, as such is set forth in Article
IV. Unless this Agreement is renewed in accordance with Section 2.02, this
Agreement shall terminate at the end of the Initial Agreement Expiration Date or
at the end of the then-current Renewal Term, as may be applicable.

 

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2.02 Renewal and Extension of Agreement

AMO may in its sole discretion, renew this Agreement for up to one (1) year
(“Renewal Term”) by giving IBM not less than one hundred twenty (120) days
notice in writing prior to the expiration of the Initial Term.

ARTICLE III

DESIGNATED SERVICES

3.01 Generally.

Beginning as of the Effective Date and continuing throughout the Term, IBM shall
be responsible for providing to the AMO Entities, as directed by AMO:

 

  (1) the services described in the SOW;

 

  (2) those services otherwise identified in this Agreement as being the
responsibility of IBM (including the Transition Services, but excluding the
Termination Assistance Services);

 

  (3) any services, functions or responsibilities not specifically described in
this Agreement, but which are an inherent and customary part of, and are
required for, the proper performance and delivery of the services described in
(1) and (2) above.

((1) through (3) together with any Modified Services thereto are collectively
referred to herein as the “Designated Services”).

3.02 Provision of Technology and Improved Practices.

(1) In providing the Covered Services to the AMO Entities, IBM may (a) implement
technology changes and introduce proven methodologies in connection with the
provision of the Covered Services, to improve the quality and cost effectiveness
of the Covered Services; provided, however, that prior to IBM implementing any
change that: (i) may have an adverse effect on the Covered Services, or any AMO
Entity’s ability to access, receive or use the Covered Services, (ii) adversely
affects the manner in which the Covered Services are performed (iii) increase
the Charges incurred by an AMO Entity to access, receive, or use the Covered
Services, (iv) involves a change in the Designated IBM Service Location(s), or
(v) would result in the installation of any Software on the AMO Equipment; IBM
shall do so only upon AMO’s approval, subject to the Change Control Procedures
and at no additional cost except as expressly agreed by AMO, (b) provide to AMO
for AMO’s evaluation in connection with the Covered Services, where possible at
no additional cost, the Improved Technology the parties agree to evaluate, and
(c) meet with AMO at least once during every ninety (90) day period during the
Term in accordance with the procedures agreed upon by the AMO Manager and the
IBM Project Executive to advise AMO of its activities in conformance with this
Section, to discuss the Improved Technology and to inform AMO of any new
information technology IBM is

 

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developing or information technology trends and directions of which IBM is
otherwise aware that could reasonably be expected to have an impact on AMO’s or
any of its AMO Controlled Affiliates’ businesses. If AMO elects to incorporate
any Improved Technology into the Covered Services hereunder, any such Improved
Technology shall be provided to AMO hereunder, subject to the Change Control
Procedures set forth in Section 13.02.

(2) IBM shall, during the Term, (a) identify ways and means to continuously
improve the Service Levels, (b) apply, subject to the Change Control Procedures
***, improvements, techniques and tools (collectively, called “Improved
Practices”) to improve the Service Levels and to benefit AMO either
operationally or financially, (c) timely advise AMO of such Improved Practices,
and (d) include such Improved Practices in the reports provided to AMO pursuant
to Section 8.04.

3.03 Licenses and Permits.

 

  (1) IBM shall obtain and maintain all IBM Governmental Approvals.

 

  (2) IBM shall be excused from its failure to perform an obligation under this
Agreement if and to the extent its performance of such obligation is prevented
as a direct result of AMO’s failure to obtain and maintain all Governmental
Approvals specifically relating to the AMO Entities’ receipt of the Covered
Services or to the development, manufacturing and marketing of medical devices
for eye and contact lens care products.

3.04 Changes in Law and Regulations.

 

  (1) In performing the Covered Services, IBM shall comply with all laws,
regulations and other governmental regulatory requirements applicable to IBM’s
business or its provision of the Covered Services, provided that for the
Industry Specific Data Security Laws IBM is only responsible for complying with
the information and instructions provided by AMO in accordance with
Section 10.03(1). In the event of any changes in law, legislative enactments and
regulatory requirements, including AMO’s Regulatory Requirements, that may
relate to the AMO Entities’ use of the Covered Services or IBM’s delivery of the
Covered Services, IBM and AMO shall work together to identify the impact of such
changes on how the AMO Entities use, and IBM delivers, the Covered Services. IBM
shall be responsible for any fines and penalties arising from any noncompliance
with any law, legislative enactment or regulatory requirement applicable to
IBM’s business or its provision of the Covered Services, except to the extent
such noncompliance was caused by any AMO Entity and provided that, if any such
violation relates to a change to any AMO Regulatory Requirement, AMO has
informed IBM of such changed requirements, processes for implementation to
accommodate such changes, and if additional resources are required for
implementation of such accommodations as determined by the Steering Committee in
good faith, AMO will pay IBM the reasonable amounts for such resources as
determined by the Steering Committee in good faith.

 

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  (2) IBM shall, to the extent practicable using commercially reasonable
efforts, perform the Covered Services regardless of changes in law, legislative
enactments or regulatory requirements, including AMO’s Regulatory Requirements
(provided, however, that AMO shall have informed IBM from time to time in
writing of the: (i) then-current AMO Regulatory Requirements and (ii) with
respect to the Industry Specific Data Security Laws, the associated safeguard
requirements provided by AMO in accordance with Section 10.03(1)). If such
changes prevent IBM from performing a substantial part of its obligations under
this Agreement, IBM may develop and, upon AMO’s approval, implement a suitable
workaround until such time as IBM can perform its obligations under this
Agreement without such workaround; provided, however, that if such workaround
results in a material increase in the applicable Charges to AMO under this
Agreement, then AMO shall have the right to terminate this Agreement with
respect to the affected portions of the Covered Services (including all other
Covered Services within the same general category, type or tower of services)
without regard to Section 25.01; provided, however, that AMO *** to IBM. Upon
the implementation of such workaround, the Parties shall negotiate and implement
an equitable adjustment to the applicable Charges.

3.05 Technical Architecture and Product Standards.

Subject to the Change Control Procedures, IBM shall comply with AMO’s
information management technical architecture and product standards as may be in
effect from time to time during the Term and communicated to IBM by AMO in
writing.

3.06 Steering Committee.

 

  (1) AMO and IBM will work together with the goal of establishing a mutually
satisfying relationship in which IBM will supply high quality Services to AMO
that consistently meet or exceed the Service Levels. The Parties will create a
Steering Committee consisting of the AMO Manager and IBM Project Executive and
such additional participants as they shall agree. The Steering Committee shall
make all decisions unanimously. The Steering Committee will meet periodically as
mutually agreed for purposes of carrying out the activities under the Agreement.
The Steering Committee will discuss coordination of IBM’s work under this
Agreement; provided that, AMO has the right to set priorities in scheduling such
work if such priorities do not adversely affect IBM’s ability to meet the
Service Levels.

 

  (2) At least once every Contract Year, or on request by AMO after at least
thirty (30) days’ notice, IBM shall meet with AMO in order to (1) explain how
the Systems work and should be operated, (2) explain how the Covered Services
are provided and (3) provide such training and documentation as AMO may require
to understand and operate the Systems and understand and provide the Covered
Services after the expiration or termination of this Agreement.

 

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3.07 Insourcing / Changes in AMO’s Business.

(1) Insourcing

Upon at least ninety (90) days’ notice to IBM from AMO, AMO or the AMO Entities
may insource or obtain from a third party any portion of the Designated
Services, provided that AMO or the AMO Entities may only insource or obtain from
third parties in the aggregate a maximum of *** of the Designated Services, with
the determination of the actual percentage of the Designated Services insourced
to be determined in good faith by the Steering Committee. Notwithstanding the
foregoing, AMO or the AMO Entities may, upon at least thirty (30) days’ notice
to IBM from AMO but without any such cap, insource or obtain from a third party
all, or any portion, of those portions of the Covered Services not including the
Designated Services. In the event AMO or an AMO Entity contracts with a third
party to perform any of the Covered Services, IBM shall cooperate in good faith
with AMO or the AMO Entity and any such third party, to the extent reasonably
required by AMO or the AMO Entity. Any insourcing of the Covered Services
arising out of this Section may result in an appropriate reduction in the
Charges as shall be determined in good faith by the Steering Committee, with
such determination taking into account any applicable Wind Down Costs; provided,
however, any changes to the Charges that result from AMO insourcing or obtaining
from a third party any portion of the Designated Services will not reduce the
Annual Services Charge during any year remaining in the Term by more than thirty
percent (30%) of the original Annual Services Charge for each such year.

IBM will be excused from the performance of the particular insourced portion of
the Covered Services, including applicable Service Levels to the extent that
such Service Levels apply solely to the insourced portion of the Covered
Services. For Service Levels that apply to more than just the insourced portion
of the Covered Services and that are materially and adversely affected by such
insourcing, the Steering Committee shall determine in good faith any required
stabilization period or modification to such Service Level. AMO will reimburse
IBM for any mutually agreed, documented added costs or expenses that are
(i) incurred by IBM in the performance of its remaining portion of the Covered
Services and (ii) directly related to or resulting from the performance of the
insourced portion of the Covered Services by such third party.

(2) Changes in AMO’s Business

If AMO experiences a significant change in the scope or nature of its business
which increase or decrease utilization by the AMO Entities of any resources
associated with a Baseline set forth in Schedule C (Charges) by more than ten
percent (10%), and such change(s) are expected to continue for six (6) or more
months, such event shall be deemed an “Extraordinary Event”. Examples of the
kinds of events that might cause an Extraordinary Event include (i) changes in
the AMO’s products or markets; (ii) changes in AMO’s market priorities, and
(iii) mergers, acquisitions, or divestitures involving AMO Entities.

If an Extraordinary Event occurs, AMO may elect to have the affected Charges and
Baselines equitably adjusted, subject to the limitations described below. Such
equitable adjustments will be determined in good faith by the Steering
Committee, based on IBM’s net

 

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costs (including appropriate indirect and overhead costs) and related profit
that either (i) can be eliminated by IBM in the event of an reduction or
(ii) will be unavoidably incurred by IBM in the event of an increase. IBM and
AMO entered into this Agreement based upon the original Annual Services Charges,
ARCs, RRCs, and Baselines and terms of the Agreement set forth as of the
Effective Date. To the extent any changes to the Charges or Baselines would
result from reductions to the AMO Entities’ utilization of any billable
resources (as measured by the Baselines), such changes to the affected Charges
and Baselines as a result of an Extraordinary Event will not:

 

  (a) reduce a Baseline during any year remaining in the Term by more than fifty
percent (50%) of the applicable original Baseline for each such year; or

 

  (b) reduce the Annual Services Charge during any year remaining in the Term by
more than fifty percent (50%) of the original Annual Services Charge for each
such year.

Previously paid Charges and previously issued credits will not be affected by a
change resulting from an Extraordinary Event. Upon the Parties’ agreement to the
adjustments resulting from an Extraordinary Event, IBM and AMO will amend this
Agreement to reflect such adjustments. No adjustments will be effective until
IBM’s and AMO’s execution of such amendment.

3.08 Disaster Recovery Plan.

IBM shall develop and deliver to AMO on or prior to the Transition Date, at no
additional cost, and cause to be maintained throughout the Term, a DRP
acceptable to AMO and conforming with AMO’s Regulatory Requirements to the
extent that AMO has advised IBM of such requirements in writing, which DRP shall
pertain to the Covered Services as specified by AMO. The specifications for the
DRP are as set forth in Part 4 (Disaster Recovery Services) of Schedule A
(Statement of Work).

3.09 Acquisition Services.

At AMO’s written request, IBM shall, in accordance with the written instructions
of AMO, arrange the purchase by, and delivery to, AMO of hardware, software,
and/or other Equipment as agreed upon by the Parties. Upon receipt of such
requests and agreement on the items to be purchased, IBM shall acquire such
items for AMO using commercially reasonable efforts to obtain the largest
possible discounts and incentives, including the use of IBM’s or its Affiliates’
volume purchase or value added reseller agreements, if any and to the extent
permissible under those agreements. Upon the written request of AMO, IBM shall
provide a written quote to AMO that details the current estimated price
(including its then existing applicable discounts and incentives) that IBM
believes it can obtain for those items identified in such request. AMO will pay
to IBM from which the products are sourced (“Supplier”) the direct cost of such
items and the shipping and handling costs as may be applicable, which costs
shall incorporate the benefit of any rebates, discounts, or incentives of any
kind received by IBM or its Affiliates (“Direct Cost”). AMO will pay to Supplier
a markup from such Direct Cost as

 

16

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agreed to in writing by the Parties, and the corresponding amounts received by
IBM from Supplier in connection with AMO’s payments to the Supplier hereunder
shall be IBM’s sole compensation for its services under this Section. AMO will
purchase directly from the Suppliers and acquire a license or title directly
from such Supplier, and IBM shall not under any circumstances obtain title or
possession of any of the products purchased under this Section, unless otherwise
set forth in a separate written agreement between the parties.

ARTICLE IV

TRANSITION

4.01 Transition Services.

 

  (a) IBM shall perform the functions and services set forth in the Transition
Plan necessary to accomplish the transition of AMO’s Designated Services to IBM
(the “Transition Services”) on or before November 30, 2007, (the “Transition
Date”). The Transition Services shall be performed in accordance with the
Transition Plan set forth in Schedule D (Transition) and using IBM’s
commercially reasonable best efforts to minimize disruption to the AMO Entities’
businesses. IBM shall designate an individual for each of the AMO facilities and
functions being transitioned, as applicable, in accordance with this Agreement
who shall be responsible for managing and implementing the Transition Services
with respect to such functions or services. Until the completion of the
applicable Transition Services, each such individual shall review with the AMO
Manager the status of the Transition Services for which that individual is
responsible as often as may be reasonably requested by the AMO Manager.

 

  (b) The Transition Services will be completed in phases in accordance with the
specific milestones set forth in the Transition Plan, and AMO shall have the
right to test and reject such portions of the Services in accordance with the
acceptance/rejection periods of subsection (c) below. IBM shall cooperate and
lend all reasonable assistance to AMO in its testing.

 

  (c)

IBM will notify AMO when the Transition Acceptance Criteria for a Transition
Deliverable or Transition Milestone has been met, and AMO shall have the
opportunity, as set forth in the Transition Plan, to evaluate or test any
Transition Deliverable or Transition Milestone set forth in Schedule D
(Transition). If during the established period for testing of Transition
Deliverable or the applicable Services, AMO believes the Transition Deliverable
or the applicable Services fail to conform to the Transition Acceptance
Criteria, AMO shall notify IBM of such failures in writing, describing in
reasonable detail as to the reasons for such belief and the revisions AMO
requests to be made, and IBM shall consider AMO’s request for such revisions
and, as soon as reasonably feasible, but in no event more than ten (10) business
days after receipt of such notice,

 

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complete such revisions as agreed to by IBM, and redeliver the Transition
Deliverable or modify the applicable Services, and the Transition Deliverable or
Transition Milestone will be deemed to be met, subject to the Dispute Resolution
Process. Any extensions to the Transition Schedule due to the Services’ failure
to conform to the Transition Acceptance Criteria shall be in accordance with
Section 4.02(2) and the commencement date for Charges shall be deferred in
accordance with the provisions of Section 4.03. In connection with its testing
of Services under Section 4.01, AMO shall not (a) unreasonably withhold its
acceptance of transitioned Services or (b) specify unreasonable defects or
non-conformities.

4.02 Extensions to the Transition Schedule.

 

  (1) To the extent the Transition Schedule is delayed at the request of AMO or
as a result of actions or omissions of AMO, AMO Agents or AMO Entities or as a
result of AMO’s Regulatory Requirements, then (a) IBM shall extend the
Transition Schedule for a period of time equal to the duration of such delay,
(b) the Initial Agreement Expiration Date shall be modified by adding an
equivalent number of days to such Initial Agreement Expiration Date according to
the number of days the Transition Schedule is so extended, and (c) IBM shall
invoice and AMO shall pay to IBM, both pursuant to Article 19, *** IBM incurs
with so extending the Transition Schedule.

 

  (2) Upon notice from AMO to IBM that AMO desires to extend the Transition
Schedule as a result of delays caused by IBM or IBM Staff or upon any failure of
the Services to conform to their applicable specifications as set forth in
Section 4.01(c), (a) IBM shall extend the Transition Schedule for the period of
time so requested by AMO, and (b) in case the extension of the Transition
Schedule results in failure of IBM to meet a Transition Milestone, Charges shall
be determined as provided in Section 4.03.

 

  (3) In the event AMO and IBM mutually agree to extend the Transition Schedule
as a result of delays on the part of both Parties, the Steering Committee shall
determine an appropriate sharing of costs, if any, that each Party incurs as a
result of the extension and the partial or total deferral of Charges in case
Transition Milestones are not met as a result of the extension.

 

  (4) In the event either Party incurs costs in connection with the extension of
the Transition Schedule for which the other Party will be responsible pursuant
to this Section, the Party incurring the costs shall be obligated to use all
commercially reasonable efforts to minimize such costs.

4.03 Transition Milestones.

If IBM fails to achieve any Transition Milestones by the completion dates
therefor set forth in Schedule D (Transition), and the Transition Schedule has
been extended for all or part of the Services in accordance with
Section 4.02(2), all *** for the period during which the Transition Schedule has
been so extended.

 

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ARTICLE V

CHANGES TO IBM SERVICES

5.01 Changes to Services.

AMO may from time to time during the Term request IBM to perform Modified
Services or to perform an Out-of-Scope Service. Upon receipt of such a request
from AMO, IBM shall, as soon as reasonably possible, but in no event more than
thirty (30) days from receipt of AMO’s request, provide AMO with (included
within the Annual Services Charges at no additional cost to AMO):

 

  (1) a written description of the work IBM anticipates performing in connection
with such Out-of-Scope Service or Modified Services;

 

  (2) a schedule for commencing and/or completing such Out-of-Scope Service or
Modified Services;

 

  (3) IBM’s prospective Charges, including a detailed breakdown of any
applicable Charges for an Out-of-Scope Service, or any changes to the applicable
Charges that may result from Modified Services;

 

  (4) when appropriate, a description of any new or changed Software and/or
Equipment to be provided in connection with such Out-of-Scope Service or
Modified Services;

 

  (5) when appropriate, the Software and Equipment and run-time requirements
necessary to develop and operate any new Software and/or Equipment in connection
with any such Out-of-Scope Service or Modified Services;

 

  (6) a written description of the human resources necessary to develop and
operate or provide the Out-of-Scope Service or Modified Services;

 

  (7) when appropriate, a list of any existing Software and/or Equipment
included in or to be used in connection with such Out-of-Scope Service or
Modified Services; and

 

  (8) when appropriate, acceptance test criteria and procedures for any new
Software or any products, package or services to be used in performing the
Out-of-Scope Service or Modified Services.

 

  (9) when appropriate, Out-of-Scope Service Levels as may be mutually agreed
upon for any Out-of-Scope Service.

 

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  (10) when appropriate, adjusted Service Levels as may be mutually agreed upon
for any Modified Services.

If the Parties are unable to mutually agree upon whether any particular request
is deemed an Out-of-Scope Service or Modified Services, such issue shall be
resolved by the Steering Committee. If the Steering Committee is unable to
agree, then the rest of the dispute resolution process set forth in Article 24
shall be followed. IBM shall not begin performing any Out-of-Scope Service or
Modified Services until AMO has provided IBM with written authorization to
perform the Out-of-Scope Services or Modified Services from the AMO Manager. All
Out-of-Scope Services and Modified Services shall be made through the Change
Control Procedures.

5.02 Third Party Services.

Notwithstanding any request made to IBM by AMO pursuant to Section 5.01, AMO
shall have the right to contract with a third party to perform any Out-of-Scope
Service, including systems operations and related services, to augment or
supplement the Covered Services or to interface with the Software used to
provide the Covered Services and the Equipment used to provide the Covered
Services. Upon AMO’s request, IBM shall assist AMO in identifying qualified
third party suppliers to provide Out-of-Scope Services. In the event AMO
contracts with a third party to perform any Out-of-Scope Service, IBM shall
reasonably cooperate in good faith with AMO and any such third party (provided
that AMO will reimburse IBM for any mutually agreed, reasonable (as determined
by the Steering Committee) documented added costs or expenses that are
(i) incurred by IBM in the performance of the Covered Services and (ii) directly
related to or resulting from the performance of the Out-of Scope Services by
such third party), to the extent reasonably required by AMO, including by
providing:

 

  (1) in writing, applicable requirements, standards and policies for the
Designated Services, to the extent available, so that the enhancements or
developments of such third party may be operated by IBM or any other third party
and are compatible with the Systems, to the extent necessary to provide the
Covered Services;

 

  (2) assistance and support services to such third party; and

 

  (3) access to the Software used to provide the Covered Services and the
Equipment used to provide the Covered Services, to the extent permitted under
any underlying agreements regarding such Software, and that such access is
required for the Out-of-Scope Service and does not adversely affect IBM’s
ability to perform its obligations pursuant to this Agreement.

5.03 Additional Business Units.

AMO reserves the right to add existing or new business units to this Agreement,
provided however, that the Parties shall negotiate in good faith with regard to
any additional mutually-agreeable Charges that may be due to IBM as a result of
the inclusion of such additional business units. AMO shall share such
information with IBM as may be necessary for AMO and IBM to jointly determine
which resources will be required to meet AMO’s needs. AMO shall not be obligated
to obtain the Covered Services from IBM with respect to any additional entity or
business unit or pursuant to an acquisition.

 

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ARTICLE VI

CUSTOMER RESPONSIBILITIES

6.01 AMO Manager.

Prior to the Effective Date, AMO shall appoint an individual (the “AMO Manager”)
who shall serve as the primary AMO representative under this Agreement. The AMO
Manager shall (1) have overall responsibility for managing and coordinating the
performance of AMO’s obligations under this Agreement, and (2) be authorized to
act for and on behalf of AMO with respect to all matters relating to this
Agreement. Notwithstanding the foregoing, the AMO Manager may, upon notice to
IBM, delegate such of his or her responsibilities to other AMO employees, as the
AMO Manager deems appropriate.

6.02 Use of the AMO Facilities; Provision of Resources.

Matters relating to IBM’s use and AMO’s provision of the AMO facilities and
resources are set forth in the SOW.

ARTICLE VII

AMO EQUIPMENT

7.01 AMO Equipment.

The AMO Entities and their lessors shall retain all rights, title and interest
in and to all AMO Equipment, and, at all times, IBM’s possession of AMO
Equipment shall be as a bailee under a bailment for hire. IBM shall, at its
expense, protect and defend the applicable AMO Entity’s and lessor’s title and
rights to the AMO Equipment in connection with IBM’s obligations under this
Agreement (including, its obligations under this Article 7). IBM agrees to take
(and require all IBM Staff to take) all acts reasonably required to ensure that
the AMO Equipment shall (i) be clearly marked or tagged at all times as AMO’s
property; (ii) be and remain personal property and not become a fixture to real
property; (iii) be subject to inspection by AMO at any time with reasonable
prior notice; (iv) be used solely as contemplated herein and as per AMO’s
instructions; (v) not be opened or modified in any manner except as expressly
set forth or contemplated in the SOW; (vi) not be rented, sold, leased or
otherwise transferred (or used for the benefit of IBM or any third party);
(vii) not be transferred from the applicable IBM Designated Service Location or
Additional IBM Designated Service Location without AMO’s written consent;
(viii) not be reverse assembled, reverse compiled or reverse engineered; (ix) be
installed in a safe place and environment that meets the manufacturer’s
operating specifications for the AMO Equipment; and (x) not be encumbered by a
security interest of any creditor of IBM in any manner (by assignment for the
benefit of creditors or filing of any UCC statement or otherwise) or subject to
any lien or judgment. IBM shall return the AMO Equipment upon request by AMO and
will bear all risk of loss or damage, other than for reasonable wear and tear,
to the AMO Equipment until it is returned to the AMO selected carrier. AMO shall
in its sole

 

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discretion determine the manner and procedure for the shipment of AMO Equipment
to and from IBM and will pay all associated shipping costs. IBM waives any legal
or equitable right it may have to withhold the AMO Equipment and, upon request
by AMO, agrees to execute all documents or instruments evidencing the applicable
AMO Entity’s and its lessor’s ownership of and/or rights to the AMO Equipment.
IBM shall immediately notify AMO of any loss or damage to the AMO Equipment and
shall repair or replace any damaged AMO Equipment to the extent caused by IBM
less normal wear and tear. Notwithstanding the foregoing, AMO remains
responsible for acquiring any maintenance agreements for the AMO Equipment
necessary for IBM to meet IBM’s obligations under the Agreement, including
Service Levels affected by the AMO Equipment. If AMO requests the return of a
piece of AMO Equipment during performance of any of the Covered Services, IBM
shall provide written notice to AMO within 5 days indicating which if any of the
Covered Services it will not be able to perform. If following such notice, AMO
elects to have such equipment returned, IBM shall be excused from its failure to
perform such Covered Services; provided that the Steering Committee shall
determine in good faith the appropriate reduction in the Charges.

ARTICLE VIII

SERVICE LEVELS

8.01 Designated Service Levels.

IBM shall perform the Designated Services in accordance with the Designated
Service Levels as set forth in the SOW.

8.02 Out-of-Scope Service Levels.

IBM shall provide the Out-of-Scope Services at least at the Out-of-Scope Service
Levels applicable to such Out-of-Scope Services, as such may be established
pursuant to Section 5.01.

8.03 Adjustment of Service Levels.

Service Levels shall be subject to periodic review by the AMO Manager and IBM
Project Executive with respect to the accomplishment of the following
objectives: (i) to eliminate any Performance Credits deemed unnecessary by AMO,
(ii) to reduce IBM costs deemed unnecessary by AMO in association with a
corresponding reduction or deletion of a particular Service Level, and thereby
achieve ongoing continuity and stabilization of the Charges, (iii) to determine
that the Service Levels are reasonable and attainable and (iv) to achieve the
ongoing superior quality of Covered Services provided to AMO. Accordingly,
during the last calendar quarter of every Contract Year, the AMO Manager and IBM
Project Executive (1) shall review the Service Levels for the twelve (12) month
period prior to the end of the third calendar quarter of such Contract Year,
(2) with respect to any Service Levels that require periodic adjustment pursuant
to this Agreement or are no longer appropriate because of an increase, decrease
or change in the Services, including changes resulting from actions taken by IBM
to comply with Section 3.02, or actions of AMO, as shown in such review, shall
adjust the Service Levels for the subsequent Contract Year to reflect any such
increase, decrease or change in the Services as established by such review and
(3) with respect to all other Service Levels, subject to such review, may adjust
the Service Levels for the subsequent Contract Year to reflect any increases,

 

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decreases or changes in such Services shown in such review. In addition, either
Party may, at any time upon notice to the other Party, initiate negotiations to
review and, upon approval of the AMO Manager and IBM Project Executive, adjust
any Service Level which such Party in good faith believes is inappropriate at
the time in view of the then prevailing Service Level.

8.04 Reports.

IBM shall provide to AMO, in a mutually agreed form, the reports set forth in
Schedule B (Service Levels) and the SOW in accordance with the report delivery
schedule set forth therein. AMO may require IBM to modify the form or content or
schedule for delivery of such reports, or add additional reports. If AMO
requires IBM to add additional reports 90 days or more after the Transition Date
and such additional reports require IBM to use additional resources to create
such reports (as determined by the Steering Committee), then AMO shall pay IBM
for the documented, reasonable costs that are incurred by IBM to create such
additional reports.

8.05 Root-Cause Analysis and Escalation.

 

  (a) In the event that IBM fails to provide the Covered Services in accordance
with an applicable Service Level, IBM shall, as soon as reasonably practicable
or whenever requested by AMO, if later (1) perform a root-cause analysis to
identify the cause of such failure, (2) promptly thereafter provide AMO with a
report detailing the cause of, and procedure for correcting, such failure,
(3) use commercially reasonable efforts to promptly implement such procedure and
(4) provide AMO in a timely manner with reasonable assurances that such failure
will not recur following the completion of the implementation of the procedure.

 

  (b) In the event of a recurring failure to comply with required Service
Levels, IBM will commit to escalation procedures within IBM’s organization. Such
escalation procedures will include the direct, on-site involvement of a senior
manager of IBM, who is at least two (2) organizational levels above the IBM
Project Executive, and to whom the IBM Project Executive ultimately reports.
This senior manager will report directly to AMO on a weekly basis regarding the
steps to correct the failure, and will meet bi-weekly with AMO until such time
as the failure is corrected.

8.06 Measurement and Monitoring Tools.

On or prior to the Transition Date, IBM shall implement the measurement and
monitoring tools and procedures described in the SOW required to measure and
report, as contemplated by Section 8.04, IBM’s performance of the Services
against the applicable Service Levels. Such measurement and monitoring tools and
procedures shall (1) permit reporting at a level of detail sufficient to verify
compliance with the Service Levels and (2) be subject to audit by AMO or its
designee, in accordance with the provisions of Section 20.03 of this Agreement.

 

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8.07 Service Level Credits.

In the event of a failure to provide the Services in accordance with the
applicable Service Levels, IBM shall incur the Service Level Credits, as set
forth in Schedule B (Service Levels).

ARTICLE IX

CUSTOMER SATISFACTION

9.01 Not used.

9.02 Cost Savings.

After the initial Contract Year, AMO may annually request IBM to reassess the
costs of service delivery and ways to achieve corresponding reductions in AMO’s
charges by modifying or reducing the nature or scope of the Covered Services,
the applicable Service Levels, or other requirements under the Agreement or by
other means. If requested by AMO, IBM will prepare a proposal regarding any such
opportunities within a reasonable time period and with a reasonable level of
detail. However, AMO will not be obligated to accept any such proposal, and IBM
will not be obligated to implement any changes to the terms, conditions, or
pricing, until the Agreement is appropriately amended in writing.

ARTICLE X

SERVICE LOCATIONS

10.01 Service Locations.

The Covered Services shall be provided (1) to the AMO Service Locations,
(2) from the Designated IBM Service Locations and (3) from the Additional
Designated IBM Service Locations; provided, however, that the provision of
Covered Services from an Additional Designated IBM Service Location must be
approved in writing by AMO in its reasonable discretion. Unless mutually agreed
otherwise by the Parties, any documented, actual incremental expenses incurred
by AMO as a result of a relocation to, or use of, an Additional Designated IBM
Service Location shall at AMO’s election, be paid by IBM or reimbursed to AMO by
IBM. IBM Staff located at an AMO Service Location shall not provide or market
services to any AMO Competitors.

10.02 Safety and Security Procedures.

 

  (1)

IBM shall maintain and enforce at the Service Locations safety and security
procedures that are at least equal to the highest of the following: (1) with
respect to the Designated IBM Service Locations only, the procedures of the
applicable Designated IBM Service Location immediately prior to the Effective
Date (provided that in no case shall such procedures be less than applicable and
generally accepted industry standards for locations similar to such Designated
IBM Service Locations), as reasonably amended by AMO pursuant to the Change
Control Procedures from time to time during the Term; (2) with respect to AMO

 

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Service Locations only, the procedures in effect at such location immediately
prior to the Effective Date and as amended by AMO pursuant to the Change Control
Procedures from time to time during the Term; and (3) any higher standard
otherwise agreed upon by the Parties in writing subject to the Change Control
Procedures.

 

  (2) IBM shall exercise due care and diligence in the performance of its
obligations under this Agreement. IBM is responsible for the safe performance of
the Covered Services, and shall ensure, with the reasonably necessary
cooperation of AMO, AMO Entities and AMO Agents, that the Covered Services are
performed in accordance with such safety and environmental practices and
procedures as are necessary, appropriate and customary in connection with the
Covered Services, and shall implement and maintain at all times such safety and
environmental practices and procedures, taking all reasonable precautions to
protect the personnel and property of the AMO Entities as well as the personnel
and property of IBM and third parties in connection with the provision of the
Covered Services. IBM shall be responsible for safety and environmental
precautions and procedures used by IBM in connection with the Covered Services,
and the AMO Entities shall not be responsible for IBM’s failure to employ such
safety or environmental precautions and procedures; provided, however, that the
AMO Entities shall be responsible for all safety and environmental conditions
for all AMO Service Locations under their respective control, and IBM shall only
have responsibility with respect to AMO Service Locations as set forth in
subsection (3) below.

 

  (3) Prior to the commencement of the Covered Services, AMO shall provide IBM
with, and IBM will become familiar with, the work, safety and environmental
written guidelines established by AMO for the AMO Service Locations where the
Covered Services are to be performed. In its performance of the Covered Services
under the Agreement, IBM shall comply in all respects with (a) AMO’s written
information security policy, (b) the written work, safety and environmental
guidelines established by AMO or the applicable AMO Controlled Affiliates for
the AMO Service Locations at which the Covered Services are being performed,
(c) with the requirements of AMO’s written drug and alcohol policy, (d) with the
requirements of AMO’s written business practices and ethical standards, and all
other written policies and procedures, each of which is contained in the AMO
Employee Handbook, a copy of which shall be provided to IBM, as may be updated
from time to time. IBM shall comply in all respects with all updates to the
foregoing requirements, guidelines and policies as each is updated from time to
time by AMO and the applicable AMO Controlled Affiliates effective upon receipt
by IBM of such updates, provided that if there are any material changes
required, additional charges may result.

10.03 Systems and Data Security.

 

  (1)

IBM shall comply with during the Term policies and safeguards against the
(a) unauthorized alteration or use of, or access to, the Systems, or (b) the
destruction, loss, alteration or unauthorized disclosure or use of the AMO Data
in the

 

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possession or control of IBM or that is otherwise available to IBM (the “Data
and Systems Safeguards”), as set forth in the Information Security Controls
(ISeC) Document (to be provided by AMO within 45 days following the Effective
Date, provided that if such ISeC Document materially alters the scope of the
Designated Services, the Steering Committee shall determine in good faith AMO’s
reimbursement of IBM’s documented, reasonable costs that are incurred by IBM to
implement such additional Data and System Safeguards), the SOW, and such
additional data and systems safeguards as provided by AMO from time to time. If
such additional safeguards require IBM to use additional resources (as
determined by the Steering Committee), then AMO shall pay IBM for the
documented, reasonable costs that are incurred by IBM to implement such
additional safeguards. With respect to the Covered Services, the Data and
Systems Safeguards shall be implemented and enforced at each AMO Service
Location, Designated IBM Service Location and Additional Designated IBM Service
Location, as the case may be, and such Data and Systems Safeguards shall be no
less rigorous than (i) those data security practices defined in the AMO Employee
Handbook that may be in effect from time to time, ; provided, however, that AMO
shall be responsible for identifying, interpreting, and informing IBM of
safeguard requirements corresponding to the laws, regulations and other
governmental regulatory requirements regarding data security that are specific
to medical data and medical devices to the extent such laws, regulations and
requirements are applicable to AMO or the development, manufacturing, and/or
marketing of medical devices for the eye and contract lens care products
worldwide (“Industry Specific Data Security Laws”). In the event IBM intends to
implement a change to the Data and Systems Safeguards (other than pursuant to
AMO’s request), IBM shall notify AMO and, upon AMO’s approval with respect to
those changes that would adversely impact the Covered Services or the security
of AMO Data, implement such change. In the event IBM discovers or IBM Staff
discover or is or are notified of a breach or potential breach of security
relating to the AMO Data, IBM shall immediately (1) notify the AMO Manager of
such breach or potential breach and (2) if the applicable AMO Data was in the
possession of IBM or IBM Staff at the time of such breach or potential breach,
IBM shall (a) investigate and use commercially reasonable efforts to cure the
breach or potential breach and (b) provide AMO with assurance satisfactory to
AMO that such breach or potential breach will not recur.

 

  (2) IBM shall ensure that all of the IBM Staff assigned to perform the Covered
Services have read, and will comply with, the Data and Systems Safeguards set
forth in the ISeC Document and the SOW, as well as the provisions concerning
data security practices defined in the AMO Employee Handbook.

10.04 Security Relating to IBM Staff.

IBM has established and shall maintain during the Term security procedures,
reasonably acceptable to AMO, substantially in the form of ISeC Document and the
SOW, to restrict access to AMO Data such that the IBM Staff providing services
do not have access to AMO Data, except to the extent that such access is
necessary for the performance of IBM Staff’s job functions in providing the
Covered Services.

 

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10.05 Security Relating to Others.

 

  (1) If IBM provides the Covered Services to AMO from a Service Location that
is also used by IBM to provide services to other IBM customers, IBM shall comply
with the security procedures reasonably acceptable to AMO, substantially in the
form of ISeC Document and the SOW, to restrict access in any such shared
environment such that the other IBM customers do not have access to AMO Data.

 

  (2) IBM shall ensure that all of the IBM Staff assigned to perform the Covered
Services have read and will comply with such security procedures.

10.06 Security Audits.

AMO and AMO Agents may, pursuant to Section 20.03 and 20.05 and at its expense,
perform audits to monitor IBM’s compliance with the data and physical security
procedures and the Data and Systems Safeguards in effect at the Service
Locations with respect to the Covered Services and Systems as described in this
Section. AMO shall provide to IBM a copy of the results, including any findings
and recommendations made by AMO’s auditors, of such audits.

ARTICLE XI

HUMAN RESOURCES

11.01 Human Resources; Non-Solicitation.

 

  (1) IBM shall supply all IBM Staff necessary to supply the Covered Services.

 

  (2) No personnel transfers from AMO to IBM or from IBM to AMO are contemplated
under this Agreement.

 

  (3)

Neither Party will, during the term of this Agreement and for *** after the End
Date, without the prior written consent of the other Party, directly or
indirectly, for or on behalf of any person, as principal, agent or otherwise,
solicit or induce, any person employed or engaged by the other Party to leave
that Party’s employment or engagement, or hire or contract with any such person
who becomes known to such Party in connection with its performance of this
Agreement (provided that such person is, in the case of AMO, a member of the
Project Staff that has worked more than *** performing any of the Covered
Services or a Key IBM Personnel, or in the case of IBM, an employee of any AMO
Entity that has worked more than *** performing any of AMO’s obligations
hereunder). Notwithstanding the foregoing, this Section 11.01(3) shall not
preclude either Party from hiring any person employed by the other Party where
such person independently responds to an employment opportunity broadcast by the
Party to the general public (e.g., via newspaper, magazine, broadcast, Internet,
etc.). In the event a Party, or any Affiliate of such Party, hires

 

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or contracts with any person of the other Party in violation this
Section 11.01(3), such Party agrees to pay to the other Party, as an exclusive
remedy and as liquidated damages and not as a penalty, an amount equal to all
compensation, including salary, wages, bonuses, benefits and commissions, that
such employee received from the other Party during the immediately preceding ***
period, provided that if the person worked for the other Party for a period of
fewer than ***, the payment will be *** the average monthly compensation for the
period worked.

ARTICLE XII

PROJECT STAFF

12.01 IBM Project Executive.

Prior to the Effective Date, IBM shall appoint an individual (the “IBM Project
Executive” or “IBM PE”) who shall serve on-site at the AMO headquarters
facility, on a full-time basis, as the primary IBM representative under this
Agreement. IBM’s appointment of any IBM Project Executive shall be subject to
AMO’s prior approval. The IBM Project Executive shall (1) have overall
responsibility for oversight of all aspects of the delivery of the Covered
Services and for managing and coordinating the performance of IBM’s resources
and obligations under this Agreement and (2) be authorized to act for and on
behalf of IBM with respect to all matters relating to this Agreement, other than
entering into contracts or amendments to this Agreement.

12.02 IBM Key Employees.

With respect to the IBM Key Employees identified in Schedule G (IBM Key
Employees), the Parties agree as follows:

 

  (1) Initially, each IBM Key Employee shall be dedicated to the AMO account on
a full-time basis. However, such staffing level is based on an expectation of
the substantial growth and expansion of the Covered Services in support of AMO’s
business requirements. Should such substantial growth and expansion not occur,
or be significantly delayed, IBM may, in consultation with AMO, reduce the
amount of time and effort the IBM Key Employees devote to the provision and
delivery of the Covered Services to a level reasonably necessary for the
performance of their respective duties under this Agreement.

 

  (2) Before assigning an individual to a IBM Key Employee position, whether as
an initial assignment or as a replacement, IBM shall (a) notify AMO of the
proposed assignment, (b) introduce the individual to appropriate representatives
of AMO, (c) consistent with IBM’s reasonable personnel practices, provide AMO
with a résumé and any other information regarding the individual that may be
reasonably requested by AMO and (d) obtain AMO’s approval for such assignment.

 

  (3)

IBM shall not replace or reassign (a) the IBM Project Executive for *** from the
later of the Effective Date or the date on which the IBM Project Executive was

 

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assigned to the AMO account or (b) the other IBM Key Employees for *** from the
later of Effective Date and the date on which any such IBM Key Employee was
designated as a IBM Key Employee, unless AMO consents in writing to such
reassignment or replacement or such IBM Key Employee (i) voluntarily resigns
from IBM, (ii) is dismissed by IBM for misconduct, (iii) unsatisfactory
performance with respect to his or her duties and responsibilities to IBM, or to
AMO pursuant to this Agreement, (iv) dies or is unable to work due to his or her
disability, or (v) indicates in a signed writing to AMO that he/she is seeking
reassignment due to personal reasons and not at the direction of IBM.

 

  (4) If AMO decides for any reason that is not unlawful that any IBM Key
Employee should not continue in that position, AMO may, in its sole good faith
discretion and upon notice to IBM, require removal of such IBM Key Employee. IBM
shall, as soon as reasonably practicable, replace such IBM Key Employee.

 

  (5) IBM shall maintain backup procedures and conduct the replacement
procedures for the IBM Key Employees in such a manner so as to assure an orderly
succession for any IBM Key Employee who is replaced. Upon request, after a
determination that a IBM Key Employee will be replaced, IBM shall make such
procedures available to AMO.

12.03 Project Staff.

IBM shall appoint individuals with suitable training and skills to perform the
Covered Services to the Project Staff. IBM shall provide AMO with a list of all
IBM employees assigned to the Project Staff at the end of every ninety (90) day
period after the Effective Date. Except as otherwise approved by AMO (in its
sole discretion), IBM personnel located on the AMO premises may only provide
services on such premises in support of operations of AMO. IBM shall notify AMO
as soon as possible after dismissing or reassigning any member of the Project
Staff. IBM shall use commercially reasonable efforts to minimize the turnover of
its Project Staff and shall provide AMO with reasonable advance notice prior to
any dismissal or reassignment of any member of its Project Staff.

12.04 Subcontractors.

 

  (1) Without the prior written approval of AMO, which may or may not be given
in AMO’s reasonable discretion, IBM shall not delegate or subcontract any of its
responsibilities under this Agreement pursuant to (a) any subcontract for any of
the Covered Services involving, or likely to involve, the payment of *** or more
per year or (b) multiple subcontracts with the same subcontractor for any of the
Covered Services involving, or likely to involve, the payment in the aggregate
of *** or more per year.

 

  (2)

As a part of IBM’s proposal seeking AMO’s written approval for utilizing
Subcontractors (“IBM’s Subcontractor Proposal”), IBM shall inform AMO whether or
not (i) the proposed Subcontractor is to be authorized to further subcontract
responsibilities under IBM’s agreement with AMO and (ii) in the

 

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event the proposed Subcontractor is to be so authorized, to what extent an
AMO-approved Subcontractor shall be allowed to further subcontract any of the
Covered Services. IBM is and will remain responsible for Subcontractors to the
same extent as if IBM performed such obligations. IBM’s Subcontractor Proposal
shall also include a list of (a) the subcontractor(s) containing the firm
name(s); (b) a description of the work to be subcontracted; (c) an explanation
of why that work is to be subcontracted; and (d) descriptive information about
each proposed Subcontractor’s ability to perform the work. Any AMO-approved
Subcontractor from IBM’s Subcontractor Proposal will be required to adhere to
the standards, policies and procedures in effect between IBM and AMO. AMO shall
inform IBM in writing of AMO’s decision in response to each IBM’s Subcontractor
Proposal within ten (10) days of AMO’s receipt of such Proposal.

 

  (3) IBM agrees to utilize those Subcontractors as listed in Schedule H
(Pre-Approved Subcontractors) in accordance with the description therein of the
services that they are pre-approved to provide (the “Pre-Approved
Subcontractors”). The Parties acknowledge and agree that the Pre-Approved
Subcontractors, including without limitation the global data network and
telecommunications providers, are an integral and material part of the Covered
Services hereunder. Accordingly, IBM agrees to provide AMO with prior written
notice as soon as reasonably possible. Any replacement of a Pre-Approved
Subcontractor shall be with a substantially-similar subcontractor acceptable to
AMO in AMO’s sole discretion. IBM shall not replace any Pre-Approved
Subcontractor with another subcontractor prior to obtaining AMO’s written
approval designating such replacement as a Pre-Approved Subcontractor.

 

  (4) No subcontracting shall release IBM from responsibility for its
obligations under this Agreement. IBM shall be responsible for each of its
Subcontractors, to the same extent as if they were IBM employees, including for
compliance with the terms of this Agreement. IBM shall be responsible for all
payments to its Subcontractors. Prior to the performance of any Covered Services
by any Subcontractor, such Subcontractor shall have entered into a nondisclosure
agreement with IBM that protects the Confidential Information of AMO and that
contains provisions at least as stringent as those set forth in Article 21.

 

  (5) IBM shall promptly pay for all services, materials, equipment and labor
provided by its Subcontractors and used by IBM in providing the Covered Services
pursuant to the terms of IBM’s contract with such subcontractors and shall keep
the AMO Entities’ premises free of all liens connected with any failure to pay
for such services, materials, equipment and labor.

12.05 Conduct of IBM Personnel.

While at the AMO Service Locations, IBM and IBM Staff shall (1) comply with the
requests, standard rules and regulations of AMO regarding safety, health,
security, personal and professional conduct generally applicable to such AMO
Service Locations as communicated by AMO from time to time in writing and
(2) otherwise conduct themselves in a businesslike

 

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manner. Prior to the performance of any Covered Services by any of the Key
Employees, Project Staff or IBM Staff, such individual or entity shall have
executed a nondisclosure agreement with IBM that protects the Confidential
Information of AMO and that contains provisions at least as stringent as those
set forth in Article 21. IBM is and will remain responsible for all IBM Staff to
the same extent as if IBM performed such obligations. Upon receipt of notice
from AMO that a particular member of the Project Staff is not conducting himself
or herself in accordance with this Section, IBM shall promptly (a) investigate
the matter and take appropriate action which may include (i) removing the
applicable person from the Project Staff and providing AMO with prompt notice of
such removal and (ii) replacing the applicable person with a similarly qualified
individual or (b) take other appropriate disciplinary action to prevent a
recurrence. If there are repeat violations of this Section by a particular
member of the Project Staff, IBM shall promptly remove the individual from the
Project Staff as set forth above.

12.06 Non-Competition.

IBM shall not assign a IBM Key Employee or member of the Project Staff (who is
primarily dedicated to the AMO account, except those providing help desk
services) to the account of any AMO Competitor without AMO’s prior written
consent (1) while such IBM Key Employee or member of the Project Staff, as the
case may be, is assigned to the AMO account and (2) for a period of ***
following the date that such IBM Key Employee or member of the Project Staff, as
the case may be, is removed from, or ceases to provide services in connection
with, the AMO account. The Parties agree that the inadvertent use and/or
disclosure of the Confidential Information of AMO in such circumstances is
possible and that because of the confidential and sensitive nature of such
Confidential Information and because the use and/or disclosure of, or even the
appearance of the use and/or disclosure of, such Confidential Information in
certain circumstances may cause irreparable damage to the AMO Entities and their
reputation, or to customers of the AMO Entities, the foregoing restrictions are
deemed reasonable.

ARTICLE XIII

OPERATING PROCEDURES

13.01 Process Interface Manual.

On or before the Transition Date, IBM shall deliver to AMO, in the form and
scope reasonably approved in advance by AMO, a management procedures manual (the
“Process Interface Manual”) for the Covered Services to be provided by IBM. IBM
shall prepare and provide to AMO updates, reasonably approved by AMO, to such
Process Interface Manual to reflect any changes in the procedures described
therein as soon as reasonably practicable after such changes are made. The
Process Interface Manual and all such updates shall be included in the Annual
Services Charge.

 

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13.02 Change Control Procedures.

Subject to Section 5.01, both Parties agree to adhere to the Change Control
Procedures set forth below with respect to proposed or requested changes to the
Covered Services hereunder. In addition, IBM agrees that:

 

  (1) No Change shall be implemented without AMO’s prior approval, except as may
be necessary on a temporary basis to maintain the continuity of the Covered
Services. Except for permitted Changes and/or, as applicable, approved Changes
in the Services by IBM as described in Section 3.02, if either Party requests a
modification of the Agreement, including (i) a Change to the scope of the
Services, Baselines, Service Levels, Service Level Credits, or Charges, (ii) a
Change to the Schedules or Exhibits to the Agreement, (iii) a Change to the
Process Interface Manual, (iv) the addition of Out-of-Scope Services, (v) a
Change to the features, functionality, scalability or performance of the
Services, or (vi) any other Change to the terms of the Agreement, the requesting
Party’s Contract Manager or his or her designee shall submit a written proposal
in the form established by the Contract Managers (called a “Change
Order”)describing such desired change. Such Party’s Contract Manager shall
review the proposal and reject or accept the proposal in writing within a
reasonable period of time, but in no event more than thirty (30) days after
receipt of the proposal. If the proposal is rejected, the writing shall include
the reasons for rejection. If the proposal is accepted, the Parties shall
mutually agree on the changes to be made to the Agreement, the applicable
Schedule or Exhibits and/or the Policy and Procedures Guide. All such Changes
shall be made only in a written Change Order signed by the Contract Manager of
each of the Parties or his or her designee (authorized in writing by the
applicable Party), and thereafter embodied in the applicable documents by
appropriate written addenda thereto executed by IBM and AMO.

 

  (2) With respect to all Changes, IBM shall (a) other than those Changes made
on a temporary basis to maintain the continuity of the Covered Services,
schedule Changes so as not to unreasonably interrupt the AMO Entities’ business
operations, (b) prepare and deliver to AMO each month a rolling Schedule (the
“Change Schedule”) for ongoing and planned Changes for the next three (3) month
period and (c) monitor the status of Changes against the Change Schedule.

 

  (3) With respect to any Change made on a temporary basis to maintain the
continuity of the Covered Services, IBM shall document and provide to AMO
notification of the Change no later than the next business day after the Change
is made. IBM shall update the Change Control Procedures as necessary and shall
provide such updated Change Control Procedures to AMO for its approval.

 

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ARTICLE XIV

SOFTWARE AND PROPRIETARY RIGHTS

14.01 AMO Software.

AMO hereby grants to IBM a non-exclusive, non-transferable, limited right to
have access to and Use of solely to provide the Covered Services: (1) the AMO
Proprietary Software, (2) to the extent permissible under the applicable third
party agreements, the AMO Third Party Software and (3) to the extent permissible
under the applicable third party agreements, any Related Documentation in AMO’s
possession on or after the Effective Date. IBM may, to the extent permissible
under the applicable third party agreements, sublicense to IBM Staff the right
to have access to and Use the AMO Software solely to provide those services that
such IBM Staff are responsible for providing to IBM with respect to this
Agreement. To the extent that AMO is unable to grant the rights needed under
this Section as required to perform the Services, the Parties will develop a
workaround, and if the creation or use of such workaround requires IBM to use
additional resources (as determined by the Steering Committee), then AMO shall
pay IBM for the documented, reasonable costs that are incurred by IBM to create
and/or use such workaround.

14.02 IBM Software.

IBM shall provide AMO and the AMO Controlled Affiliates with a non-exclusive,
non-transferable (except as set forth in Section 30.01), limited right to have
access to and use of during the Term and the Termination Assistance Period
solely in its business operations to the extent necessary or expedient to
receive the Covered Services: (1) the IBM Proprietary Software and (2) to the
extent permissible under the applicable third party agreements, the IBM Third
Party Software being used to provide the Covered Services. IBM shall provide the
other AMO Entities and the Authorized Users with a non-exclusive,
non-transferable (except as set forth in Section 30.01), limited right to have
access to and use (as end-users of the Systems) during the Term and the
Termination Assistance Period solely in connection with AMO’s or any AMO
Affiliates’ business operations to the extent necessary to gain the full benefit
of the Covered Services: (1) the IBM Proprietary Software and (2) to the extent
permissible under the applicable third party agreements, the IBM Third Party
Software being used to provide the Covered Services. Excluding all IBM Software
expressly identified in the SOW (which is hereby approved by AMO for use in
performing the Covered Services as indicated in the SOW) and IBM Software used
at a IBM Service Location or IBM Software that is widely used by IBM with its
other customers, AMO shall have the right to approve any IBM Software prior to
IBM’s use of such IBM Software to provide the Covered Services. Upon AMO’s
request, IBM shall provide AMO with a list of all IBM Proprietary Software and
all IBM Third Party Software being used to provide the Covered Services as of
the date of such request.

14.03 IBM Tools.

IBM shall provide AMO and the AMO Controlled Affiliates with access to and use
of the Tools during the Term and the Termination Assistance Period solely in its
business operations to the extent necessary or expedient to receive the Covered
Services. AMO shall have the right to approve any Tools that are not widely used
by IBM with its other customers prior to IBM’s use of such Tools to provide the
Covered Services.

 

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14.04 Developed Software.

 

  (1) Developed AMO Software. As between AMO and IBM, all Developed Software
that is (a) a modification, enhancement or derivative of the AMO Software
(called “Developed AMO Software”) (b) newly developed software that does not
modify or enhance then-existing Software that IBM develops for AMO on a project
basis; and (c) modifications to, or upgrades or enhancements (derivative works)
of, Third Party Software provided by AMO under this Agreement shall be owned by
AMO. AMO shall have all right, title and interest, including worldwide ownership
of trade secret, copyright, patent and other proprietary rights in and to the
Developed AMO Software and all copies made therefrom. To the extent that any of
the Developed AMO Software is not deemed a “work for hire” by operation of law,
IBM hereby irrevocably assigns, transfers and conveys, and shall cause IBM Staff
to assign, transfer and convey, to AMO, without further consideration, all of
its or their right, title and interest in and to such Developed AMO Software,
including all rights of patent, copyright, trade secret or other proprietary
rights in such materials. IBM acknowledges, and shall cause IBM Staff to
acknowledge, that AMO and the successors and permitted assigns of AMO shall have
the right to obtain and hold in their own names any intellectual property rights
in and to the Developed AMO Software. IBM agrees to execute, and shall cause IBM
Staff to execute, any documents or take any other actions as may reasonably be
necessary, or as AMO may reasonably request, at AMO’s expense, to perfect AMO’s
ownership of any such Developed AMO Software. Subject to the limitations with
respect to Confidential Information under Article XXI (CONFIDENTIALITY), AMO
hereby grants IBM an irrevocable, fully paid-up, non-exclusive, worldwide
license to use Developed AMO Software solely to provide the Services during the
Term and the Termination Assistance Period, which includes the right to
sublicense and otherwise permit third parties to do any of the foregoing.

 

  (2)

Developed IBM Software. The following Software developed pursuant to this
Agreement by IBM or its subcontractors (alone or jointly with others) shall be
considered “Developed IBM Software”: (a) modifications to, or upgrades or
enhancements (derivative works) of, IBM Software; (b) newly developed software
that does not modify or enhance then-existing Software for which IBM does not
charge AMO on a project basis; and (c) modifications to, or enhancements
(derivative works) of, Third Party Software provided by IBM under this
Agreement. As between the Parties, IBM shall have all rights, title and interest
in and to Developed IBM Software and all copies made from it. IBM hereby grants
to AMO a perpetual, worldwide, fully paid-up, non-exclusive, worldwide license
to: (i) use all Developed IBM Software (other than with respect to the Software
which IBM is not entitled to license to AMO under IBM’s license with the third
party and which AMO is not entitled to use under its own license agreements with
the third party) solely to provide services similar to the Services

 

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for itself and any other Service; and (ii) permit third parties to use all
Developed IBM Software (other than with respect to the Third Party Software that
IBM is not entitled under its license agreement with the Third Party Software
vendor to license to third parties unless such third parties are entitled to use
under their own license agreements with the third party); and for (i) and
(ii) that is developed specifically for use in the AMO IT environment, or that
is otherwise necessary for AMO to maintain Service continuity after
transitioning responsibility for the Services to a third party, solely to
provide services similar to the Services for AMO and any other Service
Recipients.

14.05 Work Product.

All copyrights, literary works or other works of authorship including manuals,
training materials and documentation developed or created by IBM or any IBM
Staff as expressly set forth in this Agreement or the SOW specifically and
exclusively for AMO, or at the written request of and specifically for any of
the AMO Entities pursuant to a project or the Change Control Procedures under
this Agreement, but excluding Developed IBM Software and excluding any IBM
Preexisting IP incorporated into any of the foregoing (collectively herein
referred to as “Work Product”) shall be exclusively owned by AMO. AMO shall have
all right, title and interest, including worldwide ownership of copyright, in
and to the Work Product and all copies made from them. To the extent any of the
Work Product is not deemed a “work for hire” by operation of law, IBM hereby
irrevocably assigns, transfers and conveys, and shall cause IBM Staff to assign,
transfer and convey, to AMO without further consideration all of its or their
right, title and interest in and to such Work Product, including all rights of
trade secret, copyright, patent and other proprietary rights in and to such
materials. IBM acknowledges, and shall cause IBM Staff to acknowledge, that AMO
and the successors and permitted assigns of AMO shall have the right to obtain
and hold in their own name any rights in and to such Work Product. IBM agrees to
execute, and shall cause IBM Staff to execute, any documents or take any other
actions as may reasonably be necessary, or as AMO may reasonably request, at
AMO’s expense, to perfect AMO’s ownership of any such Work Product. Nothing in
either Section 14.04 or 14.05 will be interpreted or construed to assign to AMO
(and, except as licensed to the AMO Entities, AMO Agents and Authorized Users
under this Agreement, IBM reserves all right, title and interest that IBM may
have or acquire in) any proprietary software, tools, utilities, methodologies,
processes, documentation and other items (i) that are developed by or on behalf
of IBM in performance of the Covered Services (including all modifications,
enhancements, and derivative works of the IBM Software and/or Tools made by or
on behalf of AMO under Sections 14.02 and/or 14.03) excluding all Work Product,
Developed AMO Software and any AMO Data or other materials or information
provided by AMO to IBM for use in connection with such development (“IBM
Developed IP”), or (ii) that was created or acquired by IBM prior to the
Effective Date, or is developed or acquired by IBM outside the scope of this
Agreement (and without the use of AMO Confidential Information), and inserted or
incorporated within any Work Product or Developed IBM Software with the prior
written consent of AMO (“IBM Preexisting IP”). To the extent: (i) any Work
Product or Developed IBM Software contains any IBM Preexisting IP, or (ii) IBM
Developed IP has been provided to AMO under this Agreement or has been used to
provide Covered Services to AMO under this Agreement, or (iii) use of any Work
Product or Developed IBM Software requires any IBM Developed IP or IBM
Preexisting IP, IBM grants to AMO a royalty-free, worldwide, non-exclusive
license to

 

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such IBM Developed IP or IBM Preexisting IP, during the Term and the Termination
Assistance Period solely in connection with internal use of the Work Product,
Developed IBM Software or IBM Developed IP that is actually provided to AMO
under this Agreement or is actually used to provide Covered Services to AMO
under this Agreement. AMO hereby grants IBM an irrevocable, fully paid-up,
non-exclusive, worldwide license to use the Work Product solely to provide the
Services during the Term and the Termination Assistance Period, which includes
the right to sublicense and otherwise permit third parties to do any of the
foregoing.

14.06 Changes and Upgrades to Software.

Except as may be approved in writing by AMO, IBM shall not make any changes or
modifications to the Software used to provide the Covered Services that would
adversely alter the functionality of the Systems or degrade the performance of
the Systems, except as may be necessary on a temporary basis to maintain the
continuity of the Covered Services.

Subject to the Change Control Procedures, IBM shall, at AMO’s option, and with
AMO’s prior written approval, install for AMO in connection with the Covered
Services any upgrade, modification or enhancement to the Systems at the
then-current level at the time such upgrade, modification or enhancement is
available.

14.07 Acceptance.

For each Covered Service and any Developed Software or Work Product deliverable
to be provided by IBM hereunder, and any upgrade, modification or enhancement to
the Systems, AMO shall have the right to review and to perform acceptance
testing of each such deliverable. IBM shall deliver to AMO each such deliverable
not less than thirty (30) days prior to the date such deliverable is scheduled
to be placed into productive use by or for the benefit of AMO, and AMO shall
complete its review and testing within such period, provided that AMO reserves
the right to extend the test period. IBM shall also provide AMO with such
assistance as AMO may reasonably require to conduct acceptance testing of
applicable deliverables.

If during the above period for acceptance review, the deliverable contains
defects or fails to conform to the applicable specifications for such
deliverable, AMO shall provide IBM notice of all such defects and/or failures
(collectively, “Errors”). Unless otherwise agreed, IBM shall, as soon as
reasonably feasible, but in no event more than thirty (30) days after receipt of
such notice), correct the Errors and redeliver the deliverable to AMO. AMO shall
thereupon have thirty (30) days within which to reconduct acceptance review and
testing to determine whether the Errors previously identified have been
corrected and whether any other Errors have been introduced.

In the event IBM fails to timely deliver or redeliver a deliverable for
acceptance review and testing, or if after AMO timely notifies IBM of one or
more Errors, IBM does not timely correct same so that the deliverable is capable
of functioning in accordance with the agreed upon standards, (i) AMO shall not
be obligated to pay for such Developed Software, Work Product and/or for the
portion of the Charges associated with IBM’s and/or IBM Staff’s preparation of a
deliverable as determined by the Steering Committee in good faith, and (ii) for
deliverables that have a material impact on AMO’s business or systems, AMO may,
upon the second or any subsequent rejection and notwithstanding the limitations
set forth in Section 3.07, insource or procure a third party to provide such
deliverables.

 

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ARTICLE XV

DATA

15.01 Ownership of AMO Data.

Notwithstanding anything else in this Agreement, all AMO Data is, or will be,
and shall remain, the exclusive property of AMO and shall be deemed Confidential
Information of AMO. Without AMO’s approval (as AMO may grant in its sole
discretion), the AMO Data shall not be, (1) used or copied by IBM or IBM Staff
other than solely for the provision of the Covered Services, (2) disclosed,
sold, assigned, leased or otherwise provided (other than disclosure solely as
necessary for the provision of the Covered Services and in any such event
subject to all of the provisions of Article 21) to third parties by IBM or IBM
Staff, or (3) commercially exploited by or on behalf of IBM or IBM Staff. IBM
hereby irrevocably assigns, transfers and conveys, and shall cause IBM Staff to
assign, transfer and convey, to AMO without further consideration all of its and
their right, title and interest in and to the AMO Data.

15.02 Correction of Errors.

At IBM’s expense, IBM shall promptly correct any errors or inaccuracies in the
AMO Data produced by or residing on any of the Systems and the reports delivered
to AMO under this Agreement, caused by IBM or IBM Staff, by restoring the data
based on the latest available back-ups; provided, however, that if IBM
materially breaches its obligations to backup data pursuant to the SOW, IBM will
be responsible for restoring data to the level of its back-up obligations,
subject to the limits in Article XXVIII. At AMO’s request and expense, IBM shall
otherwise promptly correct any other errors or inaccuracies in the AMO Data or
such reports.

15.03 Return of AMO Data.

Upon request by AMO at any time during the Term and upon expiration or
termination of this Agreement, IBM shall (1) promptly return to AMO, in the
format and on the media requested by AMO, including the original format and
media in or on which the AMO Data was generated, all or any part of the AMO Data
and (2) erase or destroy all other AMO Data in IBM’s possession. Any archival
tapes containing AMO Data shall be used by IBM and IBM Staff solely for back-up
purposes.

ARTICLE XVI

CONSENTS

16.01 Consents.

All Consents that are the responsibility of IBM under this Agreement as set
forth in Schedule F (Software) shall be obtained and maintained by IBM with
AMO’s cooperation, and IBM shall pay any costs of obtaining and maintaining such
Consents. All Consents that are the

 

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responsibility of AMO or AMO Entities under this Agreement as set forth in
Schedule F (Software) shall be obtained and maintained by AMO, and AMO shall pay
any costs of obtaining and maintaining such Consents.

ARTICLE XVII

CONTINUED PROVISION OF SERVICES

17.01 Force Majeure.

If, and to the extent that, a Party’s performance of any of its obligations
pursuant to this Agreement, other than an obligation to make timely payment of
undisputed amounts owed to a Party hereunder, is prevented, hindered or delayed
by fire, flood, earthquake, elements of nature or acts of God, acts of war,
declared or undeclared, terrorism, riots, civil disorders, rebellions or
revolutions, or any other similar cause beyond the reasonable control of such
Party (each, a “Force Majeure Event”), whether or not foreseeable, and such
non-performance, hindrance or delay could not have been prevented by reasonable
(at such time) 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 by the Force Majeure Event for as long as such Force
Majeure Event continues and such Party continues to use its diligent 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 immediately notify the other Party of the occurrence of the Force
Majeure Event and describe in reasonable detail the nature of the Force Majeure
Event. The occurrence of a Force Majeure Event does not excuse, limit or
otherwise affect IBM’s obligation to provide either normal recovery procedures
or any other disaster recovery services described in Part 4 (Disaster Recovery
Services) of Schedule A (Statement of Work).

17.02 Alternate Source.

If any Force Majeure Event prevents, hinders or delays performance of the
Covered Services for more than seven (7) days, AMO, notwithstanding
Section 3.07, in consultation with IBM, may procure such Covered Services from
an alternate source and, provided that AMO continues to pay the Charges due IBM
under this Agreement, IBM shall reimburse AMO for the actual, documented,
reasonable (under the circumstances in light of time frames and maintenance of
continuity) payments to such alternate source for such Covered Services until
such time as IBM is able to restore the Covered Services, but in no event for
longer than the earlier of (a) 180 days from the start of the delay, or (b) the
remaining Term. If the Force Majeure Event continues to prevent, hinder or delay
performance of the Covered Services for more than thirty (30) days, then until
such time that IBM is able to recommence the Covered Services, AMO may terminate
this Agreement (or portion thereof) as of a date specified by AMO in a
termination notice to IBM, and will pay IBM Wind-Down Costs excluding any
amounts related to Equipment and Software that are rendered unusable. If the
Force Majeure Event continues, or is expected to continue, to prevent, hinder or
delay performance of the Covered Services for more than sixty (60) days and AMO
has procured such Covered Services from an alternate source, IBM may terminate
this Agreement (or portion thereof) by providing AMO with one hundred and twenty
(120) days prior written notice.

 

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17.03 No Payment for Unperformed Services.

Except as provided in Section 17.01, nothing in this Article shall limit AMO’s
obligation to pay any of the Charges due IBM under this Agreement; provided,
however, that if IBM fails to provide the Covered Services in accordance with
this Agreement due to the occurrence of a Force Majeure Event, and IBM is not
reimbursing AMO for its procurement of such Covered Services from an alternate
source as provided for in Section 17.02, the Charges shall be adjusted in a
manner such that AMO is not responsible for the payment of any Charges for
Covered Services that IBM fails to so provide in accordance with this Agreement.

17.04 Performed Services in Arrears.

To the extent that IBM has any rights to discontinue the Covered Services
because of AMO’s unexcused non-payment of any undisputed portion(s) of the
Charges, such rights shall be the same as those provided in Section 25.02(1).

ARTICLE XVIII

PAYMENTS TO IBM

18.01 Charges.

In consideration of IBM providing the Designated Services, AMO shall pay to IBM
the Charges as specified in Schedule C (Charges), together with other amounts as
described in this Agreement. All Charges are expressed in and are payable in
United States Dollars (US$).

18.02 Charges All Inclusive.

Except as may be expressly set forth in this Agreement there shall be no other
charges, fees, costs expenses or any other amounts payable by AMO to IBM under
this Agreement.

18.03 Adjustments to Charges.

Except as may be otherwise expressly provided in this Agreement, there shall be
no adjustments to the Charges.

18.04 Rights of Set-Off.

With respect to any amount that IBM does not dispute in good faith should be
reimbursed or paid to AMO, AMO may upon notice to IBM deduct the entire amount
owed to AMO against the Charges otherwise payable or expenses owed to IBM under
this Agreement.

 

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18.05 Proration.

All periodic Charges under this Agreement are to be computed on a calendar month
basis and shall be prorated on a per diem basis for any partial month.

18.06 Refundable Items.

In the event IBM receives during the Term any refund, credit or other rebate
(including deposits) in connection with an AMO Third Party Contract that is
attributable to periods prior to the Effective Date or for which AMO retained
financial responsibility after the Effective Date, then IBM shall promptly
(1) notify AMO of such refund, credit or rebate and (2) pay to AMO the full
amount of such refund, credit or rebate.

18.07 Unused Credits.

Any unused credits against future payments owed to either Party by the other
pursuant to this Agreement shall be paid to the applicable Party within thirty
(30) days of the earlier of the expiration or termination of this Agreement.

18.08 Not Used

18.09 Taxes.

 

  (1) IBM is solely responsible for payment of any income, sales, service,
withholding, value-added, use, intangible or similar taxes, duties, levies,
imposts, deductions, assessments, fees or similar charges however designated,
based upon or measured by (i) IBM’s cost in acquiring equipment, materials,
supplies or services furnished to and used or consumed by IBM in providing and
performing the Covered Services, (ii) the value or cost or use of all IBM
Equipment, IBM Software, and other IBM resources used or consumed by IBM,
however, described, and (iii) IBM’s revenues, income and/or profit. Each Party
shall bear sole responsibility for all taxes, assessments and other real or
personal property-related levies on its owned or leased real or personal
property, for franchise or similar taxes on its business, for employment taxes
on its employees, and for intangible taxes on property it owns or license.

 

  (2) Notwithstanding Section 18.09(1) immediately above, AMO shall be
responsible for any existing and future value added, services, income, sales,
use, consumption, and/or gross receipts tax that are assessed on the provision
of the Covered Services by IBM to the AMO Entities under the Agreement
(including telecommunications taxes for network access (for example,
telecommunications line) and services). AMO shall be responsible for and pay the
amount of any such tax to IBM, or as the law otherwise requires, in addition to
the Charges.

 

  (3)

The Parties shall reasonably cooperate, and instruct any of the Parties’
entities to cooperate, as and to the extent reasonably requested by either
Party, in connection with the filing of tax returns and any governmental audit,
litigation or other proceeding with respect to tax items attributable to the
Covered Services. Each

 

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Party’s cooperation shall include (a) upon the other Party’s request, the
provision, at reasonable rates, of existing records and information not
considered to be a Party’s Confidential Information that are reasonably relevant
to such other Party’s tax return, audit, litigation or other proceeding relating
to these tax items and liabilities, (b) making reasonably available, at
reasonable rates, employees having knowledge about these tax items and
liabilities, and (c) the preservation of any information, records or documents
mutually agreed to by the Parties in advance until the expiration of any
applicable tax statute of limitations or extensions thereof (but shall not
destroy any of the information, records or documents until the expiration has
been confirmed in writing by the other Party; provided, however, that, if a
proceeding has been instituted for which the information, records or documents
are required prior to the expiration of the applicable statute of limitations,
the information, records or documents shall be retained until there is a final
determination with respect to that proceeding). Nothing herein contained shall
interfere with the right of the AMO Entities or IBM to arrange its tax affairs
in whatever manner it deems appropriate nor oblige the AMO Entities or IBM to
disclose any information relating to its tax affairs or any computations in
respect thereof.

ARTICLE XIX

PAYMENT SCHEDULE AND INVOICES

19.01 Charges.

IBM shall invoice AMO during each month of the Term for the monthly pro rata
portion of the Annual Services Charges for the Designated Services to be
performed in accordance with this Agreement during that month, and any other
Charges incurred during the month as set forth in the Agreement (for example,
one-time charges associated with Transition) . Other Charges associated with the
Covered Services will be invoiced in the period after AMO incurs such Charges,
or as otherwise set forth in the Agreement.

19.02 Payment of Invoices.

 

  (1) Subject to Section 19.03 (Disputed Charges/Credits) below, AMO shall pay
each invoice, by wire transfer or other electronic means acceptable to IBM to an
account specified by IBM, on or before the date (called the “Payable Date”) as
established below:

 

  (a) with respect to the monthly pro rata portion of the Annual Services
Charges, the last day of the calendar month in which AMO receives the invoice
for such monthly pro rata portion of the Annual Services Charges from IBM,
provided AMO receives such invoice on or before the *** day of the month,
otherwise *** after AMO’s receipt of such invoice; and

 

  (b) with respect to any other Charges, *** after AMO’s receipt of such
invoice.

 

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  (2) If any payments or portions thereof are not received by IBM within ***
after the Payable Date, AMO will also pay IBM a late fee for each day between
and including the *** day after the Payable Date and the date IBM receives such
late payment in full. The amount of the late fee will be invoiced to AMO and
payable in accordance with Section 19.02(1) above. The late fee will be
calculated on the past due amount based on the lesser of:

 

  (a) *** of such payments for every thirty (30) days or portion thereof; or

 

  (b) the maximum amount permissible by the applicable law.

 

  (3) In respect of disputed invoices where IBM amends an invoice in
satisfaction of the dispute or provides documentation required to substantiate
invoice details, the time period for payment specified in this Section shall
govern from the date of receipt of the amended invoice or the required
documentation. IBM shall provide invoices with varying degrees of detail (e.g.,
per End-User, product, department, project, site), as reasonably requested by
AMO.

19.03 Disputed Charges/Credits

 

  (1) Payment of Undisputed Amounts. In the event that AMO or IBM disputes the
accuracy or applicability of a charge or credit or other financial arrangement
described in this Agreement, the disputing Party shall notify the other Party of
such dispute as soon as practicable after the discrepancy has been discovered.
The Parties will investigate and attempt to resolve the dispute pursuant to
Sections 24.01 and/or 24.02. Any undisputed amounts contained in or applicable
to an invoice or otherwise payable or creditable will be paid and any undisputed
credit amounts will be promptly credited by AMO or IBM as applicable. Unpaid and
uncredited monies withheld in accordance with Section 19.03(2) will not be
considered a basis for monetary default under or breach of the Agreement.

 

  (2) Withholding of Disputed Amounts. AMO may withhold payment of particular
Charges that AMO disputes in good faith with respect to any invoice, up to an
amount equal to *** of the Charges reflected in such invoice, provided that AMO
may not withhold in the aggregate at any time an amount equal to *** the
then-current monthly pro rata portion of the Annual Services Charge (the
“Disputed Charges Cap”). Disputed charges in excess of the Disputed Charges Cap
shall be paid to IBM when due without prejudice to AMO’s rights. AMO shall
provide IBM, as soon as reasonable prior to the Payable Date, a reasonably
detailed explanation of the basis for its dispute and withholding its payment of
the Charges associated with such dispute. AMO and IBM shall both pursue a prompt
and expeditious resolution of the dispute.

 

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ARTICLE XX

CONFLICTS OF INTEREST; AUDITS

20.01 Conflicts of Interest.

Except as otherwise expressly provided herein, neither IBM nor any director,
employee or agent of IBM or IBM Staff shall give to or receive from any
director, employee or agent of AMO or any of the AMO Controlled Affiliates any
significant gift, significant entertainment or other favor of significant value
outside of the normal course of business, or any commission, fee or rebate.
Likewise, neither IBM nor any director, employee or agent of IBM or IBM Staff
directly involved in providing the Covered Services shall, without prior written
notification thereof to AMO, enter into any business relationship with any
director, employee or agent of AMO or any of the AMO Controlled Affiliates,
unless such person is acting for and on behalf of AMO or any of the AMO
Controlled Affiliates.

20.02 Record Retention.

IBM and IBM Staff shall maintain complete and accurate records in connection
with this Agreement and all transactions related thereto, including all
routinely prepared records and supporting documentation appropriate or necessary
to document the Covered Services performed by IBM and the Charges paid or
payable by AMO under this Agreement for a period of *** after the termination or
expiration of this Agreement.

20.03 Services.

Upon reasonable advance notice from AMO, and subject to the provisions of
Section 20.05 hereof, IBM shall provide AMO, its auditors (including internal
audit staff and external auditors) and any of the AMO Entities’ regulators with
access to, and any assistance that they may reasonably require, with respect to,
the appropriate portions of the Service Locations and the Systems and any of the
records described in Section 20.02, for the purpose of performing audits or
inspections to verify the performance of the Covered Services in accordance with
the terms of the Agreement, the Systems, the adequacy of the IBM security
systems, procedures and the Data and Systems Safeguards, and the business of the
AMO Entities relating to the Covered Services and any of the records relating
thereto. If any audit by an auditor designated by AMO or a regulatory authority
results in IBM being notified that IBM or IBM Staff are not in compliance with
any law, regulation, or audit requirement that is the responsibility of IBM
under this Agreement, if IBM or IBM Staff is in fact not in compliance, IBM
shall, and shall cause IBM Staff to, promptly comply with such audit. IBM shall
bear the expense of any such action that is (1) required by a law, regulation or
other audit requirement relating to IBM’s business or (2) necessary due to IBM’s
noncompliance with any law, regulation or audit requirement imposed on IBM. To
the extent the expense is not payable by IBM pursuant to the preceding sentence,
AMO shall bear the expense of any such compliance that is (a) required by a law,
regulation or other audit requirement relating to the AMO Entities’ businesses
or (b) necessary due to the AMO Entities’ noncompliance with any law, regulation
or audit requirement imposed on the AMO Entities.

 

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20.04 Charges.

Upon reasonable advance notice from AMO, and subject to the provisions of
Section 20.05 hereof, IBM shall provide AMO and its auditors with access to
audit, review and copy such records and supporting documentation relating to the
Charges (other than the Annual Services Charges, or other fixed Charges) as may
be reasonably requested by AMO to determine if such Charges are accurate and in
accordance with this Agreement.

 

  (1) If, as a result of such audit, AMO determines that IBM has overcharged or
undercharged AMO, AMO shall notify IBM of the amount of such
overcharge/undercharge (with appropriate documentation) and IBM shall promptly
pay to AMO the amount of the overcharge, net of undercharges, plus Interest
calculated from the date of receipt by IBM of notice of the net overcharged
amount until the date of payment to AMO. In the event that IBM disputes in good
faith the amount of any overcharge, such disputes will be handled pursuant to
Article 24 of this Agreement and no credit shall be given until final resolution
of such dispute. In the event that the audit reveals that any fees or expenses
have been net under-billed, IBM shall include such net amount in the following
invoice.

 

  (2) In addition to AMO’s rights set forth in Section 20.04(1), in the event
any such audit reveals a net overcharge to AMO of more than *** the amount of
the total cost of such audit, IBM shall issue to AMO a credit against the
Charges and shall reimburse AMO an amount equal to the cost of such audit.

20.05 Conduct of Audits.

Any third party auditor designated by AMO shall (i) not be engaged primarily in
the business of providing information technology infrastructure support
services, including deskside support, help desk, IMAC, hardware or software
deployment, outsourcing or related consulting services (other than an accounting
or auditing firm that has a separate business unit performing such services,
provided that no employees or agents of that business unit are involved in such
audit), (ii) must execute a reasonable nondisclosure agreement with IBM that
protects the Confidential Information of IBM and contains provisions at least as
stringent as those set forth in Article 21, and (iii) will not be engaged on a
contingency fee basis. Any audit conducted under this Agreement shall be
conducted during normal business hours upon at least thirty (30) days advance
written notice, or upon lesser notice if IBM and AMO agree in the Policy and
Procedures Guide that certain audits, such as security audits, may be conducted
on shorter notice; provided that IBM shall not be required to make such records
available for inspection more than once per year unless otherwise provided for
under this Agreement or AMO requests in good faith more frequent inspections,
based on having reasonable grounds to suspect IBM may be in material breach of
IBM’s obligations under the Agreement, or unless required to meet AMO’s
regulatory requirements. In no event shall AMO or its auditors or regulators be
entitled to, or have any access to, proprietary information of IBM, the books of
IBM, or records pertaining to IBM’s other customers or any affiliate of IBM that
is not performing a portion of the Covered Services. Subject to the provisions
of Section 20.04(2), any audit conducted pursuant to this Agreement shall be at
the sole expense of AMO, shall apply only to the previous twelve (12)

 

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months, and shall be subject to all of IBM’s policies and reasonable
instructions relating to safety, security and standards of appearance and
conduct while on IBM’s premises and shall be conducted expeditiously and in a
manner designed to minimize, to the extent reasonably practicable, any
interference with or disruption of the normal business operations of IBM, and in
no event shall any audit be conducted in a manner that interferes with IBM’s
other customers. If any audit activities interfere with IBM’s performance of the
Covered Services, or impairs IBM’s performance of the Covered Services in
accordance with the Service Levels, IBM shall be relieved of such performance
obligations to the extent caused by such audit activity. If the assistance
required of IBM causes IBM to expend additional resources or incur additional
costs not within the scope of the Covered Services and Baselines to provide such
assistance, AMO shall reimburse IBM for such reasonable and necessary costs in
connection with all such audits in excess of one audit in each calendar year.

ARTICLE XXI

CONFIDENTIALITY

21.01 General Obligations.

All Confidential Information relating to or obtained from the AMO Entities or
IBM shall be held in confidence by the recipient of such Confidential
Information (the “Recipient”) to the same extent and in at least the same manner
as the Recipient protects its own confidential or proprietary information, for
five (5) years from the date of initial disclosure; provided, however, that
Confidential Information regarding AMO’s product development in the field of
Ophthalmology shall be subject to the terms of this Agreement for ten (10) years
from the date of initial disclosure. Neither AMO nor IBM shall disclose,
publish, copy, release, transfer or otherwise make available Confidential
Information of, or obtained from, the other in any form to, the Party which
disclosed such Confidential Information (the “Disclosing Party”) in any form to,
or for the use or benefit of, any person or entity without the Disclosing
Party’s consent. Each of AMO and IBM shall, however, be permitted to disclose
relevant aspects of the other’s Confidential Information to its officers,
directors, professional advisors, contractors, subcontractors and employees and
to the officers, directors, professional advisors, contractors, subcontractors
and employees of its Affiliates to the extent that such disclosure is not
restricted under this Agreement, any Consents or any Governmental Approvals and
only to the extent that such disclosure is reasonably necessary for the
performance of its duties and obligations, or the preservation of its rights,
under this Agreement; provided, however, that the Recipient shall take
commercially reasonable measures to ensure that Confidential Information of the
Disclosing Party is not disclosed or duplicated in contravention of the
provisions of this Agreement by such officers, directors, agents, professional
advisors, contractors, subcontractors and employees, by, among other things,
requiring such officers, directors, agents, professional advisors,
subcontractors and employees to enter into confidentiality and nondisclosure
agreements that protect the Disclosing Party’s Confidential Information and that
contain provisions at least as stringent as those contained in this Article 21;
provided, however, that AMO may not disclose IBM Confidential Information to
third parties that provide services similar to or in competition with IBM, even
in connection with IBM’s performance of the Covered Services The foregoing

 

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is not intended to, and shall in no manner, restrict or be in derogation of any
license granted by IBM to AMO pursuant to Section 14.05 of this Agreement, ***.
The obligations in this Section shall not restrict any disclosure pursuant to
any applicable law or by order of any court or government agency (provided that
the Recipient shall give prompt notice to the Disclosing Party of such order in
such time as to permit the Disclosing Party to participate in the response to
any such order) and shall not apply with respect to information that (1) is
independently developed by the Recipient without violating the Disclosing
Party’s proprietary rights as shown by the Recipient’s written records, (2) is
or becomes publicly known (other than through unauthorized disclosure), (3) is
disclosed by the owner of such information to a third party free of any
obligation of confidentiality, (4) is already known by the Recipient at the time
of disclosure, as shown by the Recipient’s written records, and the Recipient
has no obligation of confidentiality other than pursuant to this Agreement or
any confidentiality agreements entered into before the Effective Date between
AMO and IBM, (5) is rightfully received by a Party free of any obligation of
confidentiality, or (6) with respect solely to a particular disclosure, such
disclosure is approved in writing by the Disclosing Party. In addition, the
Recipient may use in its business activities the ideas, concepts and know-how
related to information technology and abstracted from Disclosing Party’s
Confidential Information which are retained in the unaided memories of
Recipient’s employees who have had access to the Confidential Information under
this Agreement. Nothing in this paragraph permits Recipient (a) to disclose the
source of information, or any of Discloser’s financial, statistical or personnel
data or business plans of the Discloser, or (b) to disclose any of Discloser’s
Information outside of the Recipient (or its contractors pursuant to similar
confidentiality terms) except such ideas, concepts and know-how which are
inherently disclosed by use in Recipient’s products or services. IBM will have
the right to compile and use statistical analyses and reports utilizing
aggregated data derived from and relating to the AMO Entities’ use of the
Covered Services (but excluding the AMO Data), both internal and external to
IBM, so long as the information and data contained in such analyses and reports
do not in any way identify any AMO Entity or disclose any AMO Data or any
Confidential Information of any AMO Entity.

21.02 Attorney-Client Privilege.

IBM recognizes that it may obtain access to documents, data and databases
created by and for the AMO Entities and associated communications related
thereto (collectively, “Privileged Work Product”) which are confidential
attorney work product or subject to the attorney-client privilege and which are
clearly marked or identified as such. In addition to the obligations in Sections
21.01 and 21.03, IBM shall not reveal Privileged Work Product to third parties
and IBM shall institute commercially reasonable safeguards to prevent the
disclosure of Privileged Work Product to third parties. The only Project Staff
who may have access to Privileged Work Product shall be those for whom such
access is necessary for the purpose of providing services to the AMO Entities as
provided in this Agreement. IBM recognizes that some or all of the Privileged
Work Product may have been prepared in anticipation of litigation and that IBM
is performing the Covered Services in respect of Privileged Work Product as an
agent of the AMO Entities, and that all matter related thereto may be protected
from disclosure by Rule 26 of the United States Federal Rules of Civil Procedure
(or any similar law in other local jurisdictions). Should IBM ever be notified
of any judicial or other proceeding seeking to obtain access to Privileged Work
Product, IBM shall immediately notify AMO and take such reasonable actions as
may be specified by AMO to resist providing such access, and AMO shall

 

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have the right to require IBM to retain mutually accepted counsel to so
represent IBM, provided that AMO shall reimburse IBM for reasonable attorneys’
fees and expenses incurred in resisting such access.

21.03 Unauthorized Acts.

Without limiting either Party’s rights in respect of a breach of this Article,
each Party shall:

 

  (1) promptly notify the other Party of any unauthorized possession, use or
knowledge, or attempt thereof, of the other Party’s Confidential Information by
any person or entity that may become known to such Party;

 

  (2) promptly furnish to the other Party full details of the unauthorized
possession, use or knowledge, or attempt thereof, and reasonably assist the
other Party in investigating or preventing the recurrence of any unauthorized
possession, use or knowledge, or attempt thereof, of Confidential Information
and, if the unauthorized possession, use or knowledge is by a person or entity
other than an employee, director, representative, agent or subcontractor of such
Party, at the expense of the other Party;

 

  (3) reasonably cooperate with the other Party in any litigation and
investigation against third parties deemed necessary by the other Party to
protect its proprietary rights and, if the unauthorized possession, use or
knowledge is by a person or entity other than an employee, director,
representative, agent or subcontractor of such Party, at the expense of the
other Party; and

 

  (4) if the unauthorized possession, use or knowledge is by an employee,
director, representative, agent or subcontractor of such Party, promptly use
commercially reasonable efforts to (and, generally with respect to all others,
use commercially reasonable efforts to) prevent a recurrence of any such
unauthorized possession, use or knowledge, or attempt thereof, of Confidential
Information.

ARTICLE XXII

REPRESENTATIONS AND WARRANTIES

22.01 By AMO.

AMO represents and warrants that:

 

  (1) AMO is a corporation, validly existing and in good standing under the laws
of Delaware;

 

  (2) AMO has all requisite corporate power and authority to execute, deliver
and perform its obligations under this Agreement;

 

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  (3) AMO is duly licensed, authorized or qualified to do business and is in
good standing in every jurisdiction in which a license, authorization or
qualification is required for the ownership or leasing of its assets or the
transaction of business of the character transacted by it, except where the
failure to be so licensed, authorized or qualified would not have a material
adverse effect on AMO’s ability to fulfill its obligations under this Agreement;

 

  (4) the execution, delivery and performance of this Agreement has been duly
authorized by AMO;

 

  (5) AMO is in compliance with all applicable Federal, state, local or other
laws and regulations applicable to AMO in connection with its obligations under
this Agreement and has obtained all applicable permits, licenses and
Governmental Approvals required of AMO in connection with its obligations under
this Agreement; and

 

  (6) there is no outstanding litigation, arbitrated matter or other dispute to
which AMO is a party which, if decided unfavorably to AMO, would reasonably be
expected to have a potential or actual material adverse effect on AMO’s or IBM’s
ability to fulfill its respective obligations under this Agreement.

22.02 By IBM.

IBM represents and warrants that:

 

  (1) IBM is a corporation duly organized, validly existing and in good standing
under the laws of New York;

 

  (2) IBM has all requisite corporate power and authority to execute, deliver
and perform its obligations under this Agreement;

 

  (3) IBM is duly licensed, authorized or qualified to do business and is in
good standing in every jurisdiction in which a license, authorization or
qualification is required for the ownership or leasing of its assets or the
transaction of business of the character transacted by it, except where the
failure to be so licensed, authorized or qualified would not have a material
adverse effect on IBM’s ability to fulfill its obligations under this Agreement;

 

  (4) the execution, delivery and performance of this Agreement has been duly
authorized by IBM;

 

  (5) IBM is in compliance with all applicable Federal, state, local or other
laws and regulations applicable to IBM as an information technology services
provider and has obtained all applicable permits, licenses and IBM Government
Approvals required of IBM in connection with its obligations under this
Agreement;

 

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  (6) there is no outstanding litigation, arbitrated matter or other dispute to
which IBM is a party which, if decided unfavorably to IBM, would reasonably be
expected to have a potential or actual material adverse effect on AMO’s or IBM’s
ability to fulfill its respective obligations under this Agreement;

 

  (7) the IBM Proprietary Software does not infringe upon the proprietary rights
of any third party, and IBM has obtained and will obtain all rights necessary to
grant in full the licenses to the IBM Software and Tools granted by IBM under
this Agreement without any additional consideration, and to permit the AMO
Entities and Authorized Users to use any and all of the Covered Services
provided however that the sole remedy for this warranty is the indemnity
provision in Section 27.02 and Section 27.03; and

 

  (8) All Project Staff or any other individuals who will perform any portion of
the Covered Services shall be trained and certified (and shall maintain any
additional training and certification requirements during the term of this
Agreement) in accordance with industry standards for persons providing such
services.

22.03 Disclaimer.

EXCEPT AS SPECIFIED IN SECTION 22.01 AND SECTION 22.02, NEITHER AMO, THE AMO
ENTITIES NOR IBM MAKES ANY OTHER WARRANTIES WITH RESPECT TO THE SERVICES, THE
TERMINATION ASSISTANCE SERVICES OR THE SYSTEMS AND EACH EXPLICITLY DISCLAIMS ALL
OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING THE IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A SPECIFIC PURPOSE.

IBM does not warrant uninterrupted or error-free operation of Equipment or
Software or that it will find or correct all defects. IBM is not responsible for
the integrity of data transmitted over public communications lines. IBM does not
warrant the accuracy of any advice, report, data or other product delivered to
AMO. IBM is not responsible for loss of records or data, except as expressly
stated in Section 15.02.

ARTICLE XXIII

ADDITIONAL COVENANTS

23.01 By AMO.

AMO covenants and agrees with IBM that during the Term and the Termination
Assistance Period:

 

  (1) AMO shall comply with all applicable Federal, state, local or other laws
and regulations applicable to AMO in connection with its obligations under this
Agreement and shall obtain all applicable permits and governmental licenses
required of AMO in connection with its obligations under this Agreement.

 

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23.02 By IBM.

IBM covenants and agrees with AMO that during the Term and the Termination
Assistance Period:

 

  (1) IBM shall comply with all applicable Federal, state, local or other laws
and regulations applicable to IBM as an information technology services provider
and shall obtain all applicable permits and governmental licenses required of
IBM in connection with its obligations under this Agreement;

 

  (2) None of the IBM Proprietary Software, the Developed Software, the Work
Product, or other items created by, or on behalf of, IBM and furnished to AMO
hereunder will infringe upon the proprietary rights of any third party (except
such infringements as may result from modifications by AMO or AMO Agents);
provided, however, that the sole remedy for breach of this covenant is the
indemnification obligations in Section 27.02 and Section 27.03;

 

  (3) IBM and IBM Staff will use commercially reasonable efforts to not code or
knowingly or negligently introduce viruses or similar items into any of the
Systems. IBM agrees that, in the event a virus or similar item is found to have
been introduced into any of the Systems by IBM, IBM shall use its commercially
reasonable efforts at no additional charge to assist AMO in correcting and
reducing the effects of the virus or similar item and, if the virus or similar
item causes a loss of operational efficiency or loss of data, to assist AMO to
the same extent to mitigate and restore such losses; the foregoing, coupled with
Section 15.02, states IBM’s sole and exclusive remedy with regard to viruses;

 

  (4) Without the consent of AMO, IBM and/or IBM Staff (i) shall not insert into
the Software used to provide the Covered Services any code that would have the
effect or ability of disabling or otherwise shutting down all or any portion of
the Covered Services, other than code which is inserted into commercially
available products to ensure that the purchaser or licensee uses the product in
accordance with the license agreement, and (ii) with respect to any disabling
code that may be part of the Software used to provide the Covered Services, IBM
and/or IBM Staff shall not invoke such disabling code at any time, including
upon expiration or termination of this Agreement, without AMO’s consent; and

 

  (5) The Covered Services shall be provided in conformity with the Service
Levels set forth in the SOW; provided, however, that the sole remedy for breach
of this covenant is the Service Level Credits set forth in Schedule B (Service
Levels).

 

  (6) The Systems and the Covered Services shall conform to the Transition
Acceptance Criteria and shall operate in conformity therewith.

 

  (7)

the IBM Provided Systems shall be maintained in accordance with the
specifications of the respective vendors of the hardware and software components
thereof, and IBM shall, at no additional charge to AMO, keep all IBM Provided
Systems properly maintained and current relative to the software and hardware

 

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maintenance recommendations of the respective vendors, including any engineering
changes and software enhancements or updates and revisions to correct errors in
the components of the IBM Provided Systems provided or recommended by such
vendors.

 

  (8) the Covered Services shall be rendered in a professional and workmanlike
manner in accordance with the requirements of the SOW and the Service Levels and
in accordance with the generally accepted best practices used in well managed
operations performing services similar to the Services, provided, however, to
the extent that a Service Level defines the required level of IBM’s performance
for any portion of the Covered Services, this Section shall not impose upon IBM
an obligation to perform at a level higher than such Service Level.

ARTICLE XXIV

DISPUTE RESOLUTION

24.01 Steering Committee Resolution of Disputes.

Except as provided in Section 24.04, the Steering Committee members shall
attempt within ten (10) days after the date (the “Issue Date”) an issue is
presented in writing by one Party to the other, in good faith to resolve any
dispute, controversy or claim related to this Agreement, including any dispute
over the breach, interpretation, or validity, but not the termination, of this
Agreement.

24.02 Executive Level Resolution.

If the Steering Committee cannot so resolve any such dispute referred to in
Section 24.01 within such ten (10) day period, or if there is a dispute over
termination, AMO and IBM shall attempt to resolve the dispute through the
personal interaction of the Chief Financial Officer of AMO and IBM’s Partnership
Executive Program senior executive responsible for the long-term relationship
between IBM and AMO. If either Party has reorganized its company at the time the
dispute arises, such that either of the positions described above does not exist
any longer, the individual dedicated to the dispute resolution effort shall be
of equivalent rank and stature to the person who would have been dedicated, had
there been no reorganization. The Parties shall have an additional twenty
(20) days from the Issue Date to resolve the dispute through executive
interaction if the dispute was considered by the Steering Committee and not
resolved.

24.03 Mediation of Disputes.

 

  (a) Except as provided in Section 24.04, if any Disputes arising between any
of the Parties hereto in connection with this Agreement (including regarding its
existence, validity or termination) cannot be resolved under Sections 24.01 and
24.02 within thirty (30) days from the Issue Date, such Disputes may be referred
for non-binding mediation.

 

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  (b) Neither the existence of any dispute, controversy or claim nor the fact
that mediation is pending thereunder shall relieve any Party of its respective
obligations under this Agreement.

24.04 Exceptions

Neither Party will be required to mediate any dispute relating to actual or
threatened (i) unauthorized disclosure of a Party’s Confidential Information or
(ii) violation of a Party’s proprietary rights. Either Party will be entitled to
seek in any court of competent jurisdiction injunctive, preliminary or other
equitable relief, in addition to damages, including court costs and fees of
attorneys and other professionals, to remedy any actual or threatened violation
of its rights with respect to which mediation is not required hereunder.

24.05 Continuity of Services.

In the event of a dispute between IBM and AMO, IBM shall, subject to
Section 19.02(4), continue to so perform its obligations under this Agreement in
good faith during the resolution of such dispute unless and until this Agreement
is terminated in accordance with its provisions, provided, however, that AMO is
in compliance with the terms of Section 19.03 (Disputed Charges/Credits).

ARTICLE XXV

TERMINATION

25.01 Termination by AMO

AMO may terminate the Agreement, or, as specified below, any Services Tower, for
any of the following reasons:

 

  (1) Termination for Convenience.

AMO may terminate this Agreement, or any Services Tower, for convenience at any
time by giving IBM written notice of the termination at least *** prior to the
termination date specified in the notice. If AMO terminates a Services Tower,
then the Annual Services Charges shall be adjusted by an amount as set forth in
Schedule C (Charges).

 

  (2) Termination due to Change in Control of AMO.

In the event of a Change in Control of AMO, AMO may terminate this Agreement by
giving IBM notice of the termination at least *** prior to the termination date
specified in the notice. IBM, however, may not terminate this Agreement due to a
Change in Control of AMO or any AMO Entity.

 

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  (3) Termination due to Change in Control of IBM.

In the event of a Change in Control of IBM, AMO may terminate this Agreement by
giving IBM written notice of the termination at least *** prior to the
termination date specified in the notice.

 

  (4) AMO’s Termination Rights for Cause.

Subject to the provisions of Section 17.1, if IBM: (a) defaults in the
performance of any of its material obligations under this Agreement, and does
not cure such default within thirty (30) days of receipt (the “Default Cure
Period”) of a notice of default specifying the nature of the default (the
“Default Notice”), provided that if such breach is not capable of being cured
within the Default Cure Period and IBM is using its commercially reasonable best
efforts to cure, IBM shall have an additional thirty (30) days to cure, or
(b) commits numerous breaches of its duties hereunder, which in the aggregate
become material even if such breaches are not themselves material, and such
breaches are not cured within the Default Cure Period following a Default
Notice; AMO may, by giving notice to IBM, terminate this Agreement in whole, or
any affected Services Tower, as of the termination date specified in the Default
Notice. If AMO terminates any Services Tower of the Covered Services pursuant to
this Section, then the Annual Services Charges shall be adjusted by an amount
set forth in Schedule C (Charges).

 

  (5) Termination for Transition Services Defaults

AMO may terminate the Agreement, or any affected Services Tower, in the event of
a Transition Services Default, provided that such failure is not the result of a
failure by AMO, or an AMO Agent, to perform its dependencies as set forth in the
Transition Plan with respect to such Transition Deliverable or Transition
Milestone, upon ten (10) days prior written notice to IBM given within thirty
(30) days after the occurrence of such failure and, in any case, prior to the
Transition Date (as such date may be extended by agreement of the Parties); and
provided, however, that IBM shall have a minimum of fifteen (15) days to cure
such failure.

 

  (6) Termination Due to a Service Level Termination Event

AMO may terminate this Agreement, or any affected Services Tower, due to the
occurrence of a Service Level Termination Event, upon ninety (90) days prior
written notice to IBM given not later than 180 days after the occurrence of such
Service Level Termination Event.

 

  (7) Termination Due to Force Majeure Failure

AMO may terminate this Agreement, or any affected Services Tower, under the
circumstances set forth in Section 17.02 (Alternate Source).

25.02 Termination by IBM

IBM may terminate this Agreement, or, as specified below, any Services Tower,
for any of the following reasons:

 

  (1) IBM’s Termination Rights for Cause.

 

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IBM may terminate this Agreement immediately if AMO fails to pay to IBM when due
under this Agreement any amounts other than as permitted pursuant to
Section 19.03 (Disputed Charges/Credits) and such failure remains uncured for a
period of ten (10) days after sending AMO a Default Notice thereof.

 

  (2) Termination Due to Force Majeure Failure

IBM may terminate this Agreement, or any affected Services Tower, under the
circumstances set forth in Section 17.02 (Alternate Source).

25.03 Termination for Insolvency.

Either Party may terminate this Agreement upon written notice to the other Party
if the other Party ceases to function as a going concern, becomes insolvent,
makes an assignment for the benefit of creditors, files a petition in
bankruptcy, permits a petition in bankruptcy to be filed against it and such
petition or proceeding is not terminated or dismissed within sixty (60) days of
such filing, or admits in writing its inability to pay its debts as they mature,
or if a receiver is appointed for a substantial part of its assets.

25.04 Termination Charges / Wind-Down Costs

 

  (1) Upon Termination by AMO

 

  (a) In the event of a termination by AMO pursuant to Section 25.01(1) for
convenience, Section 25.01(2) for Change in Control of AMO, or Section 25.01(3)
for Change in Control of IBM, AMO shall pay IBM the applicable Termination Fee
and Wind-Down Costs.

 

  (b) In the event of a termination by AMO pursuant to, Section 25.01(7) for a
Force Majeure failure, AMO shall pay IBM Wind-Down Costs excluding any amounts
related to Equipment and Software that are rendered unusable, but will not be
responsible for a Termination Fee.

 

  (c) In the event of a termination by AMO pursuant to Section 25.01(4) for
cause, Section 25.01(5) for a Transition Services Default, or Section 25.01(6)
for a Service Level Termination Event, AMO will not be responsible for payment
of a Termination Fee or Wind-Down Costs.

 

  (2) Upon Termination by IBM

In the event of a termination by IBM pursuant to Section 25.02, IBM may seek all
remedies available to IBM under law and in equity, except as limited by the
terms of this Agreement.

 

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ARTICLE XXVI

TERMINATION ASSISTANCE

26.01 Termination Assistance Services.

Upon AMO’s request, and regardless of the reason for the full or partial
termination or expiration of this Agreement, IBM shall during the Termination
Assistance Period, provide the Termination Assistance Services based on the
Annual Services Charges (and the charges agreed to in writing for any Out of
Scope Services) being paid by AMO at the time of such termination or expiration.
If termination is by IBM in accordance with Section 25.06, then Termination
Assistance Services will be provided upon payment in advance by AMO for such
services. IBM’s quality and level of performance during the Termination
Assistance Period shall not be degraded and, at AMO’s request, Termination
Assistance Services shall be provided either to AMO or to another supplier of
AMO’s choosing; provided, however, that IBM is not obligated to provide
Termination Assistance Services if such Services will unreasonably and
materially interfere with IBM’s ability to perform the Covered Services (unless
AMO provides IBM in advance the appropriate written relief from any Covered
Service or Service Level commitments). After the expiration of the Termination
Assistance Period and for a period of *** thereafter, IBM shall (1) be
reasonably available to answer questions from AMO regarding the Services on an
“as needed” basis at IBM’s then standard billing rates, (2) deliver to AMO any
remaining AMO-owned reports and documentation still in IBM’s possession, and
(3) deliver to AMO, at no additional cost to AMO, a copy of the in-use version
and release of the AMO Software. IBM’s assistance after the expiration of the
Termination Assistance Period shall include, but not be limited to, consulting
services, software configuration and reviewing all supported Application and
System Software with a new service provider. In the event that AMO has selected
or is contemplating the selection at a new party to provide the services
contemplated under this Agreement, IBM shall provide the Termination Assistance
Services to such party or parties as identified by AMO.

In all instances, to the extent IBM is utilizing agents and/or authorized
subcontractors to provide the Covered Services, IBM shall ensure that such
agents and/or subcontractors continue to provide the Covered Services at the
same quality level during the Termination Assistance Period as provided during
the Term.

26.02 Exit Rights.

Upon the End Date:

 

  (1) The rights granted to IBM and IBM Staff in Section 14.01 shall immediately
terminate and IBM shall, and shall cause IBM Staff to, (i) deliver to AMO, at no
cost to AMO, a current copy of the AMO Software in the form in use as of the End
Date and (ii) destroy or erase all other copies of the AMO Software in IBM’s or
IBM Staff’ possession. IBM shall, upon AMO’s request, certify to AMO that all
such copies have been destroyed or erased.

 

  (2)

Each Party shall, and shall cause its employees, agents, subcontractors,
directors and representatives to deliver to the other Party, at no cost to the
other Party, all

 

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Confidential Information of the other Party, including in the case of AMO the
AMO Data, and any copies thereof and all other copies of the other Party’s
Confidential Information in such Party’s or its employees’, agents’,
subcontractors’, directors’ or representatives’ possession. Each Party shall,
upon the other Party’s request, certify to the other Party that all such
Confidential Information and any copies thereof have been destroyed or returned.
If requested by AMO, IBM shall deliver the AMO Data in a non-proprietary format
of AMO’s designation, and AMO shall reimburse IBM for the mutually agreed costs,
if any, reasonably incurred by IBM to accomplish the foregoing formatting.

 

  (3) IBM shall (i) deliver to AMO a copy of all of the (x) Developed AMO
Software and (y) Work Product, in the form in use as of the End Date, and
(ii) destroy or erase all other copies of the Developed AMO Software and the
Work Product in IBM’s possession.

 

  (4) Upon AMO’s request, with respect to (i) any agreements for maintenance,
disaster recovery services or other necessary third party services dedicated
solely to AMO being used by IBM or IBM Staff to provide the Services as of the
End Date (to the extent permitted therein) and (ii) any other contracts or
agreements dedicated solely to AMO and used by IBM to supply the Services, to
the extent permitted therein, IBM shall, and shall cause IBM Staff to, transfer
or assign such agreements (or the applicable portions thereof) to AMO or its
designee, at AMO’s expense, on terms and conditions acceptable to all applicable
parties.

 

  (5) Upon AMO’s request, IBM shall sell to AMO or its designee (i) the IBM
Equipment dedicated solely to AMO’s use and being used by IBM or IBM Staff to
perform the Services as of the End Date; and (ii) any assets transferred by AMO
to IBM or IBM Staff, all free and clear of all liens, security interests or
other encumbrances, ***.

 

  (6) AMO shall have the right but not the obligation to assume contracts, or
the applicable portions thereof, (to the extent permitted therein) for any
Covered Services provided by third parties for IBM (including IBM Third Party
Software) that are dedicated solely to AMO’s use and used by IBM to provide
Covered Services to AMO.

 

  (7) AMO shall have the right but not the obligation to assume IBM’s leases (to
the extent permitted therein) for any Equipment dedicated solely to AMO’s use
and used by IBM to provide the Covered Services.

 

  (8) IBM shall perform an orderly turnover and assistance with all necessary
non-proprietary data and work processes used or collected by IBM in its
provision of Covered Services to AMO.

 

  (9) With respect to the agreements, contracts, and leases mentioned in items
(4), (6) and (7), IBM shall use commercially reasonable efforts to obtain the
right to assign to AMO such agreements, contracts, and leases (or the applicable
portions thereof).

 

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ARTICLE XXVII

INDEMNITIES

27.01 Indemnity by AMO.

AMO shall defend IBM against and indemnify and hold harmless IBM from and
against, any Losses and Judgments arising out of or relating to any third party
Claim:

 

  (1) That the AMO Proprietary Software or any other materials or items created
by, or on behalf of (except as created by IBM or any IBM Staff), AMO and
provided to IBM hereunder infringes upon the proprietary rights of any third
party, except to the extent, and only to the extent, that such infringement is
caused by (a) IBM or IBM Staff’ misuse or modification thereof; (b) IBM or IBM
Staff’ failure to use corrections or modifications thereof provided by the AMO
Entities or AMO Agents; (c) IBM or IBM Staff’ use thereof in combination with
any product or information not furnished by the AMO Entities or AMO Agents or
(d) written information, directions, specifications or materials provided by IBM
or IBM Staff.

 

  (2) Relating to any amounts, including taxes, interest and penalties, assessed
against IBM that are the obligation of AMO pursuant to Article 18.

 

  (3) Relating to personal injury (including death) or tangible property damage
resulting from AMO’s or AMO Agent’s acts or omissions for which AMO or AMO
Agents are legally liable, except to the extent attributable to the acts or
omissions of IBM or IBM Staff.

 

  (4) Relating to AMO’s failure to obtain and maintain all Governmental
Approvals specifically relating to AMO Entities’ receipt of the Covered Services
or to the development, manufacturing and marketing of medical devices for eye
and contact lens care products.

 

  (5) Relating to (a) a violation of Federal, state, local or other laws or
regulations for the protection of persons or members of a protected class or
category of persons by AMO, including unlawful discrimination or (b) claims of
an employee of AMO for wages or benefits.

 

  (6) Relating to testing the security risks, exposures and vulnerabilities of
the IP addresses AMO provides to IBM; providing the results of such testing to
AMO; or AMO’s use or disclosure of such results.

 

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27.02 Indemnity by IBM.

IBM shall defend AMO and the AMO Controlled Affiliates against and indemnify and
hold harmless AMO and the AMO Controlled Affiliates from and against, Losses and
Judgments arising out of or relating to any third party Claim:

 

  (1) That the Tools, the Developed Software, the Work Product, the IBM
Proprietary Software, any enhancements or modifications to the AMO Software
performed by IBM or IBM Staff or any other resources or items (other than
non-IBM resources or items) provided to the AMO Entities by IBM or IBM Staff
infringe upon the copyright, patent, trademark, or trade secret rights of any
third party except to the extent, and only to the extent, that such infringement
is caused by (a) AMO, the AMO Entities’ or AMO Agents’ misuse or modification
thereof (b) AMO, the AMO Entities’ or AMO Agents’ failure to use corrections or
modifications thereof provided by IBM or IBM Staff, (c) written information,
directions, specifications or materials provided by AMO, the AMO Entities or AMO
Agents, (d) AMO’s combination(s) of such resources or items with products, data
or apparatus not provided by IBM, (e) use of such resources or items, by the AMO
Entities and AMO Agents, in other than their specified operating environment, or
(f) the distribution, operation or use of such resources or items, by the AMO
Entities and AMO Agents, for the benefit of a third party outside AMO’s
enterprise, except as specifically contemplated by this Agreement.

 

  (2) Relating to IBM’s or a IBM Agent’s failure to obtain or maintain the IBM
Governmental Approvals.

 

  (3) Relating to (a) a violation of applicable Federal, state, local or other
laws or regulations for the protection of persons or members of a protected
class or category of persons by IBM or IBM Staff, including unlawful
discrimination, except to the extent caused by the tortious or unlawful conduct
of AMO, or (b) claims of an employee of IBM or any IBM Staff for wages or
benefits in connection with the performance of any of the Covered Services.

 

  (4) Relating to any amounts, including taxes, interest and penalties, assessed
against the AMO Entities that are the obligation of IBM or IBM Staff pursuant to
Article 18.

 

  (5) Relating to personal injury (including death) or tangible property damage
resulting from IBM’s or any IBM Staff’s acts or omissions for which IBM or IBM
Staff is legally liable, except to the extent attributable to the acts or
omissions of an AMO Entity or AMO Agent.

 

  (6) Subject to Section 27.01(2), relating to any liabilities or expenses
connected with IBM’s breach of its contracts with third parties by failure to
promptly pay for any and all services, materials, equipment or labor provided by
such third parties and used by IBM in providing the Covered Services.

 

  (7) Relating to any misappropriation by IBM or any IBM Staff of AMO Data.

 

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27.03 Obligation to Replace.

In addition to the obligations of Section 27.02, in the event that the AMO
Entities’ use of the Developed Software, the Work Product, the IBM Software, any
enhancements or modifications to the AMO Software performed by IBM or IBM Staff
or any other materials or items provided to the AMO Entities by IBM or IBM Staff
(each, as applicable, the “Indemnified Component”; collectively, the
“Indemnified Components”) (1) infringes upon the copyright, patent, trademark or
trade secret rights of any third party or (2) is enjoined or any AMO Entity’s
use of any of the Covered Services is enjoined due to any such Indemnified
Component, IBM shall, within thirty (30) days after notification such
infringement or order, and at IBM’s own cost and expense and in such a manner as
to minimize disturbance to AMO business activities:

 

  (1) obtain for the AMO Entities the right to continue using the Indemnified
Component;

 

  (2) modify the Indemnified Component so that it is not longer infringing
(provided that such modification will not substantially degrade the performance
or quality of the affected component of the Covered Services);

 

  (3) replace the Indemnified Component with a non-infringing functional
equivalent; or

 

  (4) if none of the foregoing can be accomplished by IBM with commercially
reasonable efforts, and only in such event, then remove the item from the
Covered Services, in which case IBM’s charges shall be equitably adjusted to
reflect such removal.

27.04 Indemnification Procedures.

If any third party Claim is commenced against a Party entitled to
indemnification under any section of this Agreement (the “Indemnified Party”),
notice thereof shall be given to the Party that is obligated to provide
indemnification (the “Indemnifying Party”) as promptly as practicable. If, after
such notice, the Indemnifying Party shall acknowledge 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, but in no event less than ten (10) days prior to the date on which a
response to such Claim is due, to immediately take control of the defense and
investigation of such Claim and to employ and engage attorneys reasonably
acceptable to the Indemnified Party to handle and defend the same, at the
Indemnifying Party’s sole cost and expense. The Indemnified Party shall
cooperate, at the cost of the Indemnifying Party, 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 involves a
remedy other than the payment of money by the Indemnifying Party and an
obligation to cease using the infringing items shall be entered into without the
prior consent of the Indemnified Party, which shall not be unreasonably
withheld, delayed or conditioned. After notice by the Indemnifying Party to the
Indemnified Party of its election to assume full control of

 

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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 defense of that Claim.

ARTICLE XXVIII

DAMAGES

28.01 Direct Damages.

Subject to Section 28.03 below, regardless of the basis of any claim (whether an
action in contract or tort), each of the Parties shall be liable to the other,
for any direct damages arising out of or relating to its performance or failure
to perform under this Agreement in an aggregate amount not to exceed ***.

28.02 Consequential Damages.

Subject to Section 28.03 below, neither Party shall be liable for, nor will the
measure of damages include, any indirect, incidental, punitive, special
exemplary, or consequential damages arising out of or relating to its
performance or failure to perform under this Agreement, whether in an action in
contract or tort and even if such Party has been advised of the possibility of
such damages.

28.03 Limitation on Liability.

 

  (1) In connection with *** the limitations set forth in Section 28.01 shall
not apply.

 

  (2) IBM’s total aggregate limitation of liability together under this Article
28 shall not in total exceed ***. AMO’s total aggregate limitation of liability
together under this Article 28 shall not in total exceed *** plus the amount of
any unpaid Charges owed to IBM by AMO hereunder.

ARTICLE XXIX

INSURANCE

29.01 Insurance.

 

  (1) Without in any way limiting or expanding IBM’s liability pursuant to
Section 27.02 and/or Article XXVIII (DAMAGES), IBM, during the Term, shall
maintain the following insurance and all insurance that may be required under
the applicable laws, ordinances and regulations of any governmental authority
with financially sound companies:

 

  (a) Workers’ Compensation and Employer’s Liability Insurance as prescribed by
applicable law or otherwise, including insurance covering liability under the
Longshore’s and Harbor Workers’ Act, the Jones Act and the Outer Continental
Shelf Lands Act, if applicable.

 

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  (b) Commercial General Liability Insurance including the following coverages:

Product and Completed Operations Liability; and

Broad Form Property Damage Liability.

The limit of liability of such insurance shall not be less than $5 Million U.S.
Dollars combined single limit per occurrence as respects bodily injury and
property damage.

 

  (c) Automobile Bodily Injury and Property Damage Liability Insurance, such
insurance to extend to owned, non-owned, and hired automobiles used in the
performance of this Agreement. The limits of liability of such insurance shall
not be less than $2 Million U.S. Dollars combined single limit per occurrence as
respects bodily injury and property damage.

 

  (2) The insurance specified in this Article shall include AMO as an additional
insured with respect to operations performed under this Agreement. Any
cancellation or material alteration of the aforesaid shall not relieve IBM of
its continuing obligation to maintain insurance coverage in accordance with this
Article.

 

  (3) Pursuant to a request by AMO, IBM shall provide AMO with certificates of
the insurance coverages and endorsements set forth in this Section.

 

  (4) Without in any way limiting IBM’s liability pursuant to Article 28.02, IBM
make commercially reasonable efforts to ensure that Subcontractors obtain the
insurance coverages and endorsements set forth in this Section, excepting that
both the AMO Entities and IBM shall be named as additional insureds therein.

 

  (5) IBM shall supply evidence of Professional Liability (E&O Insurance) of not
less than $5 Million U.S. Dollars.

 

  (6) IBM shall include AMO as an additional insured on its General Liability
policy.

29.02 Risk of Loss.

IBM is responsible for the risk of loss of, or damage to, any property of the
AMO Entities at a Designated IBM Service Location or an Additional Designated
IBM Service Location, except to the extent such loss or damage was caused by the
acts or omissions of the AMO Entities or an Agent of the AMO Entities. AMO is
responsible for the risk of loss of, or damage to, any property of IBM at an AMO
Service Location, except to the extent such loss or damage was caused by the
acts or omissions of IBM or an IBM Staff.

 

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ARTICLE XXX

MISCELLANEOUS PROVISIONS

30.01 Assignment.

 

  (1) Neither Party shall, without the consent of the other Party, assign this
Agreement, except that (a) AMO may assign this Agreement to an AMO Controlled
Affiliate or pursuant to a reorganization or Change in Control of AMO without
such consent and (b) IBM may assign this Agreement without such consent to a
wholly owned subsidiary of IBM provided that such assignee expressly assumes in
writing all of IBM’s obligations hereunder (including, without limitation, IBM’s
obligations with respect to the then-current Project Staff). Upon AMO’s
assignment of this Agreement to an AMO Controlled Affiliate or pursuant to a
reorganization or Change in Control of AMO, AMO shall be released from any
obligation or liability under this Agreement, provided that such assignee
expressly assumes AMO’s obligations hereunder and subject to receipt by IBM of
assurances that are reasonably satisfactory to IBM of the financial standing and
credit worthiness of such AMO Controlled Affiliate. The consent of a Party to
any assignment of this Agreement shall not constitute such Party’s consent to
further assignment. This Agreement shall be binding on the Parties and their
respective successors and permitted assigns. Any assignment in contravention of
this subsection shall be void.

 

  (2) In the event that AMO divests an entity or business unit of AMO, IBM
shall, for a period of up to *** from the effective date of such divestiture, at
AMO’s request, continue to provide the Covered Services to such divested AMO
entity or business unit at the Charges then in effect, subject to receipt by IBM
of assurances that are reasonably satisfactory to IBM of the financial standing
and creditworthiness of such divested AMO entity or business unit. Upon AMO’s
election to have IBM continue to provide the Covered Services to such divested
AMO entity or business unit at the Charges then in effect, AMO shall be released
from any obligation or liability under this Agreement with respect to the
portion of the Covered Services provided to such divested entity or business
unit, provided that such divested entity or business unit of AMO expressly
assumes AMO’s obligations hereunder with respect thereto.

30.02 Nonperformance

Notwithstanding anything to the contrary in the Agreement, if and to the extent
that either Party fails to perform any of its obligations under this Agreement
due to (a) the other Party’s failure to perform any of its obligations under
this Agreement, (b) the actions of the other Party’s Affiliates or agents (i.e.,
AMO Agents or IBM Agents, as applicable) or vendors, or (c) in the case of IBM,
AMO’s direction to allocate IBM Staff to perform the Covered Services other than
as directed by IBM (provided that IBM notified the AMO Manager of such adverse
impact and AMO continued to direct such allocation), and such Party provides the
other Party reasonable notice of such nonperformance and uses commercially
reasonable efforts to perform notwithstanding the events described in clauses
(a)-(c) of this Section, then such Party shall be excused from such
nonperformance.

 

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30.03 Notices.

Except as otherwise specified in 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 telecopy to the telecopy number
specified below or delivered by hand to the address specified below. A copy of
any such notice shall also be sent by overnight express mail on the date such
notice is transmitted by telecopy to the addresses specified below:

In the case of AMO:

1700 East St Andrews Place

Santa Ana, CA 92614

Attention: CIO

Telecopy No.: ***

With a copy to:

Aimee Weisner, Esq.

General Counsel

Telecopy No.: ***

In the case of IBM:

IBM Corporation

600 Anton Blvd

Costa Mesa, CA 92626

Attention: AMO Project Executive

Telecopy No.: ***

With a copy to:

IBM Corporation

Maildrop 4210

294 Route 100

Somers, NY 10589

Attention: Associate General Counsel, IGS Americas

Telecopy No: ***

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 will become effective.

 

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30.04 Counterparts.

This Agreement may be executed in any number of counterparts, each of which will
be deemed an original, but all of which taken together shall constitute one
single agreement between the Parties.

30.05 Consents, Approvals and Requests.

Except as specifically set forth in this Agreement, all consents and approvals
to be given by either Party under this Agreement shall not be unreasonably
withheld or delayed and each Party shall make only reasonable requests under
this Agreement. Except as specifically set forth in this Agreement or in a
signed writing between the Parties, all consents and approvals to be given by
either Party under this Agreement shall be effective only if made in a writing
signed by the Party giving the consent or approval.

30.06 Severability.

If any provision of this Agreement is held by a court of competent jurisdiction
to be contrary to law, then the remaining provisions of this Agreement, if
capable of substantial performance, shall remain in full force and effect.

30.07 Waivers.

No delay or omission by either Party to exercise any right or power it has under
this Agreement shall impair or be construed as a waiver of such right or power.
A waiver by any Party of any breach or covenant shall not be construed to be a
waiver of any succeeding breach or any other covenant. All waivers must be
signed by the Party waiving its rights.

30.08 Publicity.

Each Party shall (1) submit to the other all advertising, written sales
promotions, press releases and other publicity matters relating to this
Agreement in which the other Party’s name or mark is mentioned or which contains
language from which the connection of said name or mark may be inferred or
implied and (2) not publish or use such advertising, sales promotions, press
releases or publicity matters without the other Party’s prior written consent.

30.09 Entire Agreement.

This Agreement and the schedules and exhibits identified in this Agreement
(which are hereby incorporated by reference) represent the entire agreement
between the Parties with respect to its subject matter, and there are no other
representations, understandings or agreements between the Parties relative to
such subject matter. Notwithstanding anything else herein, in the event of any
conflict between any term, condition or provision of this Agreement and any
schedule or exhibit, the terms, conditions and provisions of this Agreement
shall prevail.

 

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30.10 Amendments.

No amendment to, or change, waiver or discharge of, any provision of this
Agreement shall be valid unless in writing and signed by an authorized
representative of each of the Parties.

30.11 Survival.

The terms of Sections 11.01(3), 12.06, 15.01, 18.03, 18.04, 18.06, 18.09, 19.02,
20.04 (for a period of one year after the End Date), 20.05 (for a period of one
year after the End Date) and Articles 7, 14 (for the period and to the extent
set forth therein), 21, 23 (to the extent set forth therein), 24, 25, 26, 27, 28
and 30, together with those other provisions by their terms or purpose are
intended to survive the expiration or earlier termination, shall survive the
expiration or termination of this Agreement.

30.12 Third Party Beneficiaries.

 

  (1) Each Party intends that this Agreement shall not benefit, or create any
right or cause of action in or on behalf of, any person or entity other than the
Parties.

 

  (2) Any AMO Entity other than AMO, and any divested entities and operations as
permitted in this Agreement shall communicate and interact with IBM, and bring
all actions, claims, demands (including actions for injunctive relief) and other
disputes with respect to IBM, this Agreement and the Covered Services, through
AMO acting in its individual capacity and/or as agent of the aggrieved Person
and/or such divested entities and operations. IBM’s Affiliates shall communicate
and interact with AMO, and bring all actions, claims, demands (including actions
for injunctive relief) and other disputes with respect to AMO, this Agreement
and the Covered Services, through IBM acting in its individual capacity and/or
as agent of the aggrieved Person. Notwithstanding the foregoing, any such Person
shall be considered a third party beneficiary of this Agreement, and may take
any action necessary to enforce directly its rights under this Agreement (i) in
any instance in which the action, claim or demand could have been appropriately
brought by IBM or AMO under this Agreement, but for procedural or other
administrative reasons must be brought, filed or otherwise made in the name of
such third party beneficiary or; (ii) in any instance where the third party
beneficiary is seeking on its own behalf to enforce the indemnification
obligations of a Party pursuant to Article XXVII (INDEMNITIES). For the
avoidance of doubt, in no event shall this Section be interpreted to expand a
Party’s liability or obligations or waive any defense a Party may otherwise
assert under the other provisions of the Agreement.

30.13 Governing Law.

This Agreement and the rights and obligations of the Parties under this
Agreement shall be governed by and construed in accordance with the laws of the
State of California, without giving effect to its principles of conflicts of
laws.

 

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30.14 Sole and Exclusive Venue.

Subject to Section 24.04, each Party irrevocably agrees that any legal action,
suit or proceeding brought by it in any way arising out of this Agreement must
be brought solely and exclusively in the United States District Court for the
Central District of California or in the state courts of the State of California
located in Orange County, California, and irrevocably accepts and submits to the
sole and exclusive jurisdiction of each of the such courts in personam,
generally and unconditionally with respect to any action, suit or proceeding
brought by it or against it by the other Party; provided, however, that this
Section shall not prevent a Party against whom any legal action, suit or
proceeding is brought by the other Party in the state courts of the State of
California from seeking to remove such legal action, suit or proceeding,
pursuant to applicable Federal law, to the district court of the United States
for the district and division embracing the place where the action is pending in
the state courts of the State of California, and in the event an action is so
removed each Party irrevocably accepts and submits to the jurisdiction of the
aforesaid district court. Each Party hereto further irrevocably consents to the
service of process from any of the aforesaid courts by mailing copies thereof by
registered or certified mail, postage prepaid, to such Party at its address
designated pursuant to this Agreement, with such service of process to become
effective thirty (30) days after such mailing.

30.15 Covenant of Further Assurances.

AMO and IBM covenant and agree that, subsequent to the execution and delivery of
this Agreement and, without any additional consideration, each of AMO and IBM
shall execute and deliver any further legal instruments that are or may become
necessary to effectuate the purposes of this Agreement.

30.16 Negotiated Terms.

The Parties agree that the terms and conditions of this Agreement are the result
of negotiations between the Parties and that this Agreement shall not be
construed in favor of or against any Party by reason of the extent to which any
Party or its professional advisors participated in the preparation of this
Agreement.

30.17 Export.

AMO and IBM shall not knowingly export or re-export any personal computer
system, hardware, software, technical data or sub-elements under this Agreement,
directly or indirectly, to any destinations prohibited by the U.S. Government.
The term “technical data” in this context, means such data as is defined as
technical data by applicable U.S. export regulations.

30.18 Federal Regulations; California Regulations.

 

  (1) IBM also agrees and covenants that none of its employees, or employees of
its Subcontractors, who provide Covered Services to the AMO Entities pursuant to
this Agreement in the United States are unauthorized aliens as defined in the
Immigration Reform and Control Act of 1986.

 

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  (2) “Segregated Facilities”, as used in this provision, means any waiting
rooms, work areas, rest rooms and wash rooms, restaurants and other eating
areas, time clocks, locker rooms and other storage or dressing areas, parking
lots, drinking fountains, recreation or entertainment areas, transportation, and
housing facilities provided for employees, that are segregated by explicitly
directive or are in fact segregated on the basis of race, color, religion or
national origin because of habit, local custom or otherwise.

 

  (3) IBM certifies that it does not and will not maintain or provide for its
employees any Segregated Facilities at any of its establishments, and that it
does not and will not permit its employees to perform their services at any
location under its control where Segregated Facilities are maintained. IBM
understands and agrees that maintaining or providing Segregated Facilities for
its employees or permitting its employees to perform their services at any
locations under its control where Segregated Facilities are maintained is a
violation of the Equal Opportunity Clause contained at 48 C.F.R.
Section 52.222.26.

 

  (4) The following applies to any person who engages in the business, or acts
in the capacity, of a contractor under California Bus. & Prof Code Section 7026:

Contractors are required by law to be licensed and regulated by the Contractors’
State License Board which has jurisdiction to investigate complaints against
contractors if a complaint regarding a patent act or omission is filed within
four years of the date of the alleged violation. A complaint regarding a latent
act or omission pertaining to structural defects must be filed within 10 years
of the date of the alleged violation. Any questions concerning a contractor may
be referred to the Registrar, Contractors’ State License Board, P.O. Box 26000,
Sacramento, California 95826.

REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

 

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Each of AMO and IBM has caused this Agreement to be signed and delivered by its
duly authorized representative.

 

ADVANCED MEDICAL OPTICS, INC. (“AMO”) By:  

/s/ Richard A. Meier

Name:   Richard A. Meier Title:   COO & CFO Date:   6/26/07 INTERNATIONAL
BUSINESS MACHINES CORPORATION (“IBM”) By:  

/s/ Bruce Kroyer

Name:   Bruce Kroyer Title:   Business Development Executive Date:   6/27/07

 

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