Document:

Exhibit 10.15

 

AMENDED AND RESTATED EMPLOYMENT
AGREEMENT

 

THIS AMENDED
AND RESTATED EMPLOYMENT AGREEMENT is made as of the 22nd day of December, 2008
by and between RUSSELL GOLDSMITH (“Goldsmith”), on the one hand, and CITY
NATIONAL BANK, a National Bank (“CNB”), and CITY NATIONAL CORPORATION (“Parent
Corporation”), on the other hand and supersedes the Employment Agreement dated
as of June 30, 2006 by and between Goldsmith, CNB and Parent Corporation.

 

1.                                       Employment.  CNB and Parent Corporation (collectively the
“Employer”) hereby employ Goldsmith, and Goldsmith hereby accepts employment,
under the terms and conditions hereafter set forth.

 

2.                                       Duties.  Goldsmith shall be employed as the Chairman
of the Board of Directors and Chief Executive Officer of CNB and Chief
Executive Officer and President of the Parent Corporation and his powers and
duties shall be consistent with such offices and positions.  As Chief Executive Officer of Employer,
Goldsmith shall supervise, control and be responsible for all aspects of the
business and affairs of Employer and its subsidiaries.

 

3.                                       Place
of Service.  Substantially all of
Goldsmith’s duties shall be performed in Los Angeles and Beverly Hills,
California, and unless mutually agreed upon by Goldsmith and Employer, Goldsmith
shall be headquartered in Beverly Hills, California.

 

4.                                       Term.  Subject to the provisions for termination as
hereinafter provided, the term of this Agreement shall commence as of December 22,
2008 (the “Start Date”) and shall terminate July 15, 2010.

 

5.                                       Annual
Base Compensation.  Employer shall
pay Goldsmith as annual base compensation (the “Annual Base Compensation”),
payable in equal semimonthly payments, the sum of Nine Hundred Seventy-Eight
Thousand Five Hundred Twenty-Eight Dollars ($978,528) during the term of this
Agreement.

 

6.                                       Bonus
Compensation.

 

(a)                                  Goldsmith shall
participate in the Parent Corporation’s Amended and Restated 1999 Variable
Bonus Plan and/or any other cash bonus or incentive compensation plan of Employer
established for corporate executive officers of Employer, including corporate
officers who are members of the Executive Committee and the Strategy and
Planning Committee, in each case as determined by the Compensation, Nominating
and Governance Committee of the Parent Corporation (or, in the absence of a
Compensation, Nominating and Governance Committee, the Board of Directors or
another committee of directors designated by the Board of Directors as
responsible for matters relating to executive compensation) (such body, whether
a committee or the entire board, is hereinafter referred to as the
“Committee”).  The aggregate amount of
annual bonus or incentive compensation (the “Annual Bonus”) paid to Goldsmith
pursuant to all such bonus plans for any year (including the fiscal year ending
December 31, 2006 and the fiscal year during which his employment is
terminated) shall not be less than the Target Bonus Amount for that fiscal year
if plan goals for the year are achieved, scaled up ratably to two hundred
percent (200%) of the Target Bonus Amount for such fiscal year if one hundred
thirty percent (130%) of

 

 

plan goals are achieved and scaled down ratably to thirty-five percent
(35%) of the Target Bonus Amount for such fiscal year if eighty five percent
(85%) of plan goals are achieved.

 

(b)                                 For each fiscal year
during the term of this Agreement, the “Target Bonus Amount” shall be equal to
the product of the Target Bonus Percentage for that fiscal year and Goldsmith’s
Annual Base Compensation as of December 31 of the year for which the bonus
is being paid, as calculated below.  The
“Target Bonus Percentage” for each such fiscal year shall be as specified
below:

 

	
  Fiscal year ended

  December 31,

  	
   

  	
  Target Bonus

  Percentage

  	
   

  	
  Target Bonus

  Amount

  	
   

  
	
  2006

  	
   

  	
  125

  	
  %

  	
  $

  	
  1,223,160.00

  	
   

  
	
  2007

  	
   

  	
  137

  	
  %

  	
  1,340,583.36

  	
   

  
	
  2008

  	
   

  	
  143

  	
  %

  	
  1,399,295.04

  	
   

  
	
  2009

  	
   

  	
  149

  	
  %

  	
  1,458,006.72

  	
   

  
	
  2010

  	
   

  	
  155

  	
  %

  	
  1,516,718.40

  	
   

  
							

 

(c)                                  In determining the
Annual Bonus payable to Goldsmith for any year in which he was not employed by
Employer for the entire year, the Annual Bonus for the portion of such fiscal
year preceding the termination of his employment shall be an amount equal to (i) the
amount which the Annual Bonus would have been had the plan goals achieved
through the month ending immediately following the date of termination of his
employment been the plan goals for the entire fiscal year, the fiscal year had
ended at the end of such month and Goldsmith’s Annual Base Compensation had
been the Annual Base Compensation payable to him as of the following December 31
had his employment continued through the following December 31, (ii) multiplied
by a fraction, the numerator of which is the number of months in the fiscal
year through the end of the month immediately following the date of termination
of Goldsmith’s employment and the denominator of which is 12.

 

(d)                                 Unless Goldsmith
elects to defer receipt thereof, each Annual Bonus shall be paid no later than March 15
of the fiscal year following the fiscal year for which the bonus is being paid;
provided, however, that if the employment of Goldsmith is
terminated prior to the end of the fiscal year for which the bonus is being
paid, the Annual Bonus for the partial year preceding the termination of his
employment shall be paid no later than March 15 following the termination
of his employment and any amounts payable under any subparagraphs of Paragraph
10 as an Annual Bonus applicable to any portion of a fiscal year of less than
twelve months shall be paid no later than March 15 following the end of
the period for which such amount is payable.

 

7.                                       Stock
Awards.

 

(a)                                  Annual Stock
Awards.  In each fiscal year
beginning in 2007 and continuing during the employment term, upon the earlier
to occur of (i) the date the Employer generally grants annual stock awards
to other corporate officers who are members of the Employer’s Executive
Committee and Strategy and Planning Committee, and (ii) March 15, the
Employer granted or shall grant to Goldsmith an annual stock award (an “Annual
Stock Award”) having an aggregate Deemed Value, on the grant date, of
$2,410,000 for March 2007 and of $2,350,000 for each March thereafter
during the term of this Agreement. 
One-half of the Deemed Value of each

 

2

 

Annual Stock Award shall be payable in the form of non-qualified stock
options and the other half shall be payable in the form of restricted stock or
restricted stock units, as determined by the Committee on each grant date in accordance
with this Agreement.

 

(b)                                 Performance Stock
Options.

 

(i)                                     On
July 14, 2006, the Employer granted to Goldsmith non-qualified stock options
with a Deemed Value of $500,000 (the “Initial Options”), and no later than July 31
of each subsequent fiscal year during the term of this Agreement, beginning in July 2007,
if the Parent Corporation’s TSR for the three years ending on the immediately
preceding June 30 is sufficient to place Parent Corporation in at least
the twenty-fifth (25th) percentile of Peer Banks ranked by TSR, the Employer
granted or shall grant to Goldsmith stock options having the Deemed Value
corresponding to the Parent Corporation’s TSR percentile for each fiscal year
specified below:

 

	
  Three year period

  Ended June 30,

  	
   

  	
  TSR

  Percentile

  	
   

  	
  Deemed Value

  	
   

  
	
  2007

  	
   

  	
  Below 25

  	
   

  	
  $

  	
  0

  	
   

  
	
   

  	
   

  	
  25 to below 50

  	
   

  	
  250,000

  	
   

  
	
   

  	
   

  	
  50 to below 75

  	
   

  	
  500,000

  	
   

  
	
   

  	
   

  	
  75 to below 90

  	
   

  	
  750,000

  	
   

  
	
   

  	
   

  	
  90 and above

  	
   

  	
  900,000

  	
   

  
	
  2008

  	
   

  	
  Below 25

  	
   

  	
  $

  	
  0

  	
   

  
	
   

  	
   

  	
  25 to below 50

  	
   

  	
  300,000

  	
   

  
	
   

  	
   

  	
  50 to below 75

  	
   

  	
  600,000

  	
   

  
	
   

  	
   

  	
  75 to below 90

  	
   

  	
  850,000

  	
   

  
	
   

  	
   

  	
  90 and above

  	
   

  	
  1,000,000

  	
   

  
	
  2009

  	
   

  	
  Below 25

  	
   

  	
  $

  	
  0

  	
   

  
	
   

  	
   

  	
  25 to below 50

  	
   

  	
  350,000

  	
   

  
	
   

  	
   

  	
  50 to below 75

  	
   

  	
  700,000

  	
   

  
	
   

  	
   

  	
  75 to below 90

  	
   

  	
  950,000

  	
   

  
	
   

  	
   

  	
  90 and above

  	
   

  	
  1,100,000

  	
   

  

 

3

 

	
  Three year period

  Ended June 30,

  	
   

  	
  TSR

  Percentile

  	
   

  	
  Deemed Value

  	
   

  
	
  2010

  	
   

  	
  Below 25

  	
   

  	
  $

  	
  0

  	
   

  
	
   

  	
   

  	
  25 to below 50

  	
   

  	
  400,000

  	
   

  
	
   

  	
   

  	
  50 to below 75

  	
   

  	
  800,000

  	
   

  
	
   

  	
   

  	
  75 to below 90

  	
   

  	
  1,050,000

  	
   

  
	
   

  	
   

  	
  90 and above

  	
   

  	
  1,200,000

  	
   

  
							

 

(ii)                                  “Peer
Banks” means, for each three year measurement period, the component companies
included in the SNL Mid Cap Bank Index during the entire measurement period, or
if the SNL Mid Cap Bank Index is no longer maintained or is no longer
appropriate, in the reasonable judgment of the Committee, the Peer Banks shall
instead be the companies included in any other reasonably comparable index
prepared by a third party or the Committee of publicly-traded financial
companies with market capitalizations in the $1.0 billion to $5.0 billion
range, or such other range of market capitalizations such that Employer falls
between the 25th and 75th percentile in terms of size of market capitalization.

 

(iii)                               “Performance
Stock Options” means stock options granted pursuant to this subparagraph 7(b).

 

(iv)                              “TSR”
shall be determined for a company, including the Parent Corporation and each of
the Peer Banks, as follows:

 

(Price
End – Price Begin) + Dividends

Price Begin

 

with “Price Begin” equal to the company’s closing price per share of
common stock on its principal exchange or trading market on the first trading
day in the three year measurement period (adjusted to give effect to stock
splits and stock dividends during the measurement period), “Price End” equal to
the company’s closing price per share of common stock on its principal exchange
or trading market on the final trading day in the three year measurement
period, and “Dividends” equal to the aggregate cash dividend per share of
common stock paid during the three year measurement period.

 

(c)                                  Valuation
Methodologies.  As used herein, the
“Deemed Value” of any stock options shall be as determined by the Committee on
the grant date in accordance with the City National Valuation Methodology for
Option Awards in effect on such grant date and the “Deemed Value” of any
restricted stock or restricted stock unit award shall be the Fair Market Value
(as defined in the Current Plan) of the Parent Corporation’s common stock,
$1.00 par value per share, on the grant date. 
The City National Valuation Methodology for Option Awards in effect as
of the date hereof is attached hereto as Appendix B.  The City National Valuation Methodology for
Option Awards may be changed from time to time by the Committee, in its sole
discretion, provided that no such change will apply to stock options granted to
Goldsmith unless such change generally applies to stock options granted to
other corporate officers who are members of the Employer’s Executive Committee
and Strategy and Planning Committee.

 

4

 

(d)                                 Stock Option Terms.  Stock options included in an Annual Stock
Award or Performance Stock Options shall be issued in accordance with the terms
of this Agreement and the Parent Corporation’s Amended and Restated 2002
Omnibus Plan, as amended, or such other stock plan of the Parent Corporation as
may then be in effect and pursuant to which Goldsmith is then eligible to
receive stock awards (such plan being the “Current Plan”), shall, subject to
the other terms of this Agreement:

 

(i)                                     vest
twenty-five percent (25%) each year, commencing on the first anniversary of the
grant; provided that the Initial Options shall vest twenty-five percent (25%)
each July 14, commencing on July 14, 2007;

 

(ii)                                  have
an exercise price equal to the Fair Market Value (as defined in the Current
Plan) on the grant date;

 

(iii)                               be
non-qualified stock options;

 

(iv)                              not
be entitled to any Dividend Equivalents (as defined in the Current Plan); and

 

(v)                                 expire
ten (10) years following the grant date, and

 

shall otherwise be issued on terms and conditions consistent with stock
options then being issued by the Committee to other corporate officers who are
members of Employer’s Executive Committee and Strategy and Planning Committee.

 

All stock
options which are granted to Goldsmith on or after July 24, 2002, and
which are vested at the time of termination of Goldsmith’s employment with the
Employer, will remain outstanding until the expiration of their terms, (i) if
Goldsmith’s employment is terminated (A) on account of retirement after
Goldsmith has attained age sixty-two (62), (B) pursuant to subparagraphs
10(b) (without good cause), 10(c) (disability) or 10(d) (death)
hereof, or (C) pursuant to Sections 5(a) and 6(b) and (c) (death
or disability), 5(c) and 6(a) (Good Reason), or 6(a) (without
Cause) of the Amended Employment Agreement (as defined in subparagraph 10(e)) after
a Change of Control (as defined in Section 2 of the Amended Employment
Agreement); or (ii) upon the occurrence of a Change of Control Event as
defined in the Current Plan, subject in the case of this clause (ii) to
any provisions of the Current Plan and its stock option agreements regarding
acceleration or termination of stock options upon a Change of Control Event.

 

All stock
options which are granted to Goldsmith and are not vested at the time of termination
of Goldsmith’s employment with the Employer will expire upon termination of Goldsmith’s
employment except:  (1) any stock
options included the Initial Awards (as defined in subparagraph 7(f)) will vest
on the terms specified in subparagraph 7(f), and (2) all other stock options
shall immediately vest on the terms specified in Goldsmith’s stock option award
agreements and the Current Plan, as each may be amended and revised from time
to time on terms consistent with other stock options then being issued by the
Committee to other corporate officers who are members of Employer’s Executive
Committee and Strategy and Planning Committee. 
As of the date hereof, such terms would permit immediate vesting only on
the earlier of (i) the occurrence of a Change of Control Event (as such
term is defined in the Current

 

5

 

Plan) subject in the case of this clause (i) to any provisions of
the Current Plan and its stock option agreements regarding acceleration or
termination of stock options upon a Change of Control Event, or (ii) the
date Goldsmith’s employment is terminated by reason of subparagraphs 10(c) (disability)
or 10(d) (death).  Further, stock
option grants made prior to the date hereof which have not vested at the time
of Goldsmith’s retirement at age sixty-two (62) will immediately vest in full
upon Goldsmith’s retirement at age sixty-two (62).  All stock option grants after the date hereof
that are not vested at the time of termination due to retirement at age
sixty-two (62) will expire.

 

(e)                                  Restricted Stock
Terms.  Restricted stock and
restricted stock unit awards included in an Annual Stock Award shall be issued
in accordance with the terms of this Agreement and the Current Plan, shall:

 

(i)                                     be
subject to forfeiture restrictions that lapse twenty-five percent (25%) each
year, commencing on the second anniversary of the grant;

 

(ii)                                  be
in the form of Restricted Stock Awards or restricted stock units treated as
“Share Awards” (each within the meaning of the Current Plan), at the discretion
of the Committee; and

 

(iii)                               if
restricted stock, be entitled to Dividend Equivalents (as defined in the
Current Plan) or if restricted stock units, be entitled to dividend equivalent
units, and

 

shall otherwise be issued on terms and conditions consistent with
restricted stock and restricted stock unit awards then being issued by the
Committee to other corporate officers who are members of Employer’s Executive
Committee and Strategy and Planning Committee.

 

Upon the
termination of Goldsmith’s employment with Employer, all restricted stock and restricted
stock units granted to Goldsmith for which forfeiture restrictions have not yet
lapsed will, for no consideration, be forfeited to the Parent Corporation,
except:  (1) any forfeiture restrictions
on shares of restricted stock or restricted stock units included the Initial
Awards (as defined in subparagraph 7(f)) will lapse on the terms specified in
subparagraph 7(f), and (2) forfeiture restrictions on all other shares of
restricted stock and all other restricted stock units shall immediately lapse
on the terms specified in Goldsmith’s restricted stock award and restricted
stock unit award agreements and the Current Plan, as each may be amended and
revised from time to time on terms consistent with other shares of restricted
stock and restricted stock units then being issued by the Committee to other
corporate officers who are members of Employer’s Executive Committee and
Strategy and Planning Committee.  As of
the date hereof, such terms would permit the immediate lapse of forfeiture
restrictions only on the earlier of (i) subject to the discretion of the
Committee, the occurrence of a Change of Control Event (as such term is defined
in the Current Plan), or (ii) the date Goldsmith’s employment is
terminated by reason of subparagraphs 10(c) (disability) or 10(d) (death).  Further, grants of restricted stock and
restricted stock units made prior to the date hereof for which forfeiture
restrictions have not yet lapsed at the time of Goldsmith’s retirement at age
sixty-two (62) will immediately lapse upon retirement after Goldsmith has
attained age sixty-two (62); provided, however, that with respect to any such
restricted stock units that constitute a “deferred compensation plan” within
the meaning of Section 409A of the Code, the settlement of such restricted
stock units shall be

 

6

 

delayed until the earlier of (A) the first day of the seventh
month following the termination of Goldsmith’s employment if Goldsmith is a
“specified employee” within the meaning of Section 409A of the Code and (C) Goldsmith’s
death.  All grants of restricted stock
and restricted stock units after the date hereof for which forfeiture
restrictions have not yet lapsed at the time of termination due to retirement
at age sixty-two (62) will, for no consideration, be forfeited to the Parent
Corporation.

 

(f)                                    Vesting of
Initial Awards.

 

(i)                                     “Initial
Awards” means the Initial Options and those other Annual Stock Awards and
Performance Stock Options awarded to Goldsmith from June 30, 3006 until
the aggregate Deemed Value of all such Initial Options, Annual Stock Awards and
Performance Stock Options, at the time each is granted, equals $4,200,000.  Initial Awards shall not include any Annual
Stock Awards or Performance Stock Options, or other stock options, shares of restricted
stock and restricted stock units, awarded to Goldsmith either before the date
of this Agreement (other than the Initial Options) or after the Deemed Value of
the Annual Stock Awards and Performance Stock Options, at the time each is
granted, equals $4,200,000.

 

(ii)                                  All
Initial Awards which, at the time of termination of Goldsmith’s employment with
the Employer, are not vested or for which forfeiture restrictions have not
lapsed, shall immediately vest, and forfeiture restrictions shall immediately
lapse, (A) if Goldsmith’s employment is terminated (I) on account of
retirement after Goldsmith has attained age sixty-two (62), (II) pursuant
to subparagraphs 10(b) (without good cause or by Goldsmith for good
reason), 10(c) (disability) or 10(d) (death) hereof, or (III) pursuant
to Sections 5(a) and 6(b) and (c) (death or disability), 5(c) and
6(a) (Good Reason), or 6(a) (without Cause) of the Amended Employment
Agreement (as defined in subparagraph 10(e)) after a Change of Control (as
defined in Section 2 of the Amended Employment Agreement); or (B) upon
the occurrence of a Change of Control Event as defined in the Current Plan,
subject in the case of this clause (B) to any provisions of the Current
Plan and its stock option agreements regarding acceleration or termination of
stock options upon a Change of Control Event.

 

8.                                       Fringe
Benefits and Reimbursement of Expenses. 
Employer shall provide Goldsmith with such medical and other health,
dental, accidental life and disability insurance, and he shall be entitled to
all employee and fringe benefits and reimbursement of expenses and to participate
in all benefit plans (including stock plans) as are consistent with his
position and duties and those previously provided to the Chief Executive
Officer of Employer; provided, however, that future stock awards
and stock option grants to Goldsmith shall be on the terms specified in
Paragraph 7 of this Agreement.  Goldsmith
shall also be entitled to receive a supplemental retirement benefit as set
forth in Appendix A to this Agreement.

 

9.                                       Extent
of Service.  Goldsmith shall devote
his time, attention and energies to the business of Employer and shall not,
during the term of this Agreement, be engaged in any other activity which will
materially interfere with the performance of his duties hereunder.  Time expended by Goldsmith on philanthropic
activities, as a general partner of Sunbar Properties, as a passive investor in
real estate ventures and other investments, or in managing the existing properties
of

 

7

 

Goldsmith Entertainment Corporation shall be deemed not to interfere
with the performance of his duties hereunder.

 

10.                                 Termination
of Employment.

 

(a)                                  Termination by
Employer for Good Cause.  Employer
may terminate the employment of Goldsmith for “good cause” by written notice to
Goldsmith.  For purposes of this
Agreement, “good cause” shall mean only (i) conviction of a crime directly
related to his employment hereunder, (ii) conviction of a felony involving
moral turpitude, (iii) willful and gross mismanagement of the business and
affairs of Employer, or (iv) willful and material breach of any material
provision of this Agreement.  In the
event the employment of Goldsmith is terminated pursuant to this subparagraph
10(a), Employer shall have no further liability to Goldsmith other than for
compensation accrued through the date of termination but not yet paid.

 

In the event
Employer contends that it has good cause to terminate Goldsmith pursuant to
clause (iii) or (iv) of the second sentence of this subparagraph
10(a), Employer shall provide Goldsmith with written notice specifying in
reasonable detail the services or matters which it contends Goldsmith has not
been adequately performing, or the material provisions of this Agreement of
which Goldsmith is in violation and the acts constituting such violation, why Employer
has good cause to terminate this Agreement, and what Goldsmith should do to
adequately perform his obligations hereunder. 
If within thirty (30) days of receipt of the notice Goldsmith performs
the required services or modifies his performance to correct the matters
complained of, Goldsmith’s breach will be deemed cured, and Goldsmith’s
employment shall not be terminated.  However,
if the nature of the service not performed by Goldsmith or the matters
complained of are such that more than thirty (30) days are reasonably required
to perform the required service or to correct the matters complained of, then
his breach will be deemed cured if he commences to perform such service or to
correct such matters within the thirty (30) day period and thereafter
diligently prosecutes such performance or correction to completion.  If Goldsmith does not perform the required
services or modify his performance to correct the matter complained of within
the thirty (30) day period or the extension thereof, Employer shall have the
right to terminate this Agreement at the end of the thirty (30) day period or
extension thereof.  It is understood that
Goldsmith’s performance hereunder shall not be deemed unsatisfactory solely on
the basis of any economic performance of Employer because this performance will
depend in part on a variety of factors over which Goldsmith has little control.

 

(b)                                 Termination by
Employer Without Good Cause or by Goldsmith for Good Reason.  Employer may terminate the employment of
Goldsmith without “good cause” (as defined in subparagraph 10(a) above) at
any time during the term hereof by giving written notice to Goldsmith specifying
therein the effective date of termination. 
Upon such notice being given, Goldsmith’s stock options, restricted
stock and restricted stock units shall be treated as provided in Paragraph
7.  In the event the employment of
Goldsmith is terminated pursuant to this subparagraph 10(b) without good
cause, Employer shall be obligated to pay to Goldsmith (which shall be in lieu
of any other amounts which would be payable to Goldsmith on account of such
termination pursuant to any separation pay plan or policy of Employer) (i) in
a lump sum within 30 days of the effective date of termination, the Annual Base
Compensation and Annual Bonus he would have been paid had he remained in the
employ of the Employer hereunder, and had the term hereof extended, for a period
of three years from the effective date of termination, provided

 

8

 

that (x) the Annual Bonus for any fiscal year ending after the
date of termination (including the fiscal year during which the termination of
employment occurs and any portion of a fiscal year for which he is entitled to
an Annual Bonus under this subparagraph) shall be computed by multiplying
Goldsmith’s Annual Base Compensation (in case of an Annual Bonus for a partial
year, the amount which the Annual Base Compensation would have been as of the
following December 31 had his employment continued through such December 31)
by (in lieu of percentages of Annual Base Compensation set forth in subparagraphs
6(a) and (b)) the highest percentage of Annual Base Compensation
previously used in determining any prior Annual Bonus paid or payable to
Goldsmith, (y) the Annual Bonus applicable to any portion of a fiscal year
of less than twelve months shall be an amount determined as provided in the
preceding subclause (x) multiplied by a fraction, the numerator of which
is the number of months of the fiscal year with respect to which Goldsmith is
entitled to the Annual Bonus pursuant to this subparagraph (with each partial
month being deemed a whole month) and the denominator of which is 12, and (z) subparagraph
6(c) shall be disregarded and have no force or effect, and (ii)   service credit in calculating his supplemental
retirement benefit he would have received hereunder had he remained in the
employ of the Employer for such three-year period , (iii) in a lump sum
within 30 days of the effective date of termination, an amount equal to the
contributions to Goldsmith’s account in the Employer’s Profit Sharing Plan
which Goldsmith would receive if Goldsmith’s employment continued for three
years after the effective date of termination assuming for this purpose that (A) all
such contributions are fully vested, (B) the Executive’s compensation is
Goldsmith’s compensation for the year immediately preceding the year in which
the effective date of termination occurs, and, (C) the Company’s
contribution to the Profit Sharing Plan in each such year is in an amount equal
to the greatest amount contributed by the Company in any of the three years
ending prior to the effective date of termination and (iv) for three years
following the effective date of termination (the “Benefits Period”), Employer
shall provide Goldsmith, his spouse and eligible dependents with medical,
prescription, vision and dental insurance coverage (the “Health Care
Benefits”), life insurance and long-term disability coverage no less favorable
to those which Goldsmith and his spouse and eligible dependents were receiving
immediately prior to the effective date of termination; provided,
however, that the Health Care Benefits
shall be provided during the Benefits Period in such a manner that such
benefits are excluded from Goldsmith’s income for federal income tax
purposes.  Notwithstanding the foregoing
clause (iii) of the immediately preceding sentence, if long-term
disability insurance coverage is an employee benefit which Goldsmith would have
received had he remained in the employ of Employer, Employer’s obligation to
provide Goldsmith with comparable long-term disability insurance coverage for
such three-year period shall be subject to Goldsmith being insurable at the
effective date of termination of his employment.  Goldsmith shall have no duty to mitigate
damages, and Employer shall have no right to offset any compensation paid to
Goldsmith for services rendered as an employee of a third party or independent
contractor after the termination of his employment against any amounts which
are payable under this Agreement or the Amended Employment Agreement.

 

If Goldsmith
terminates employment at any time within six (6) months after, without his
consent, either (i) he is removed as Chief Executive Officer of either CNB
or Parent Corporation or as Chairman of the Board of Directors of CNB, or any
of these titles is removed from him, (ii) there is any material reduction
in his Annual Base Compensation, (iii) the Employer requires him to be
based at any office other than the corporate headquarters or moves the
corporate headquarters to any location which is more than 35 miles from the
location where it was based

 

9

 

immediately prior thereto, or (iv) there is a Material Breach by
Employer (as defined below), such termination by Goldsmith shall for purposes
of this Agreement be treated in the same manner as a termination by the
Employer of his employment without good cause and shall be deemed to be a
termination of employment pursuant to this subparagraph 10(b).

 

A “Material Breach by Employer” shall be deemed to exist if:

 

(i)                                     there
is a material breach of this Agreement by Employer;

 

(ii)                                  within
thirty (30) days following the material breach Goldsmith provides Employer with
written notice specifying in reasonable detail the basis for his belief that
there has been a material breach of this Agreement; and

 

(iii)                               within
thirty (30) days of receipt of the notice Employer has not cured the material
breach or, if the nature of the material breach is such that more than thirty
(30) days are reasonably required to cure the material breach, then the
Employer has not commenced performance of a cure within the thirty (30) day
period or has not thereafter diligently prosecuted such performance to
completion.

 

(c)                                  Termination by
Disability.  Employer may terminate
the employment of Goldsmith during the term hereof or the term of the Amended
Employment Agreement (as hereinafter defined) by written notice to Goldsmith if
Goldsmith shall become incapable of fulfilling his obligations hereunder
because of injury or physical or mental illness which shall exist or may reasonably
be anticipated to exist for a period of twelve (12) consecutive months or for
an aggregate of twelve (12) months during any twenty-four (24) month
period.  In the event the employment of
Goldsmith is terminated by Employer pursuant to this subparagraph 10(c) because
of injury or physical or mental illness, Employer shall be obligated to pay
Goldsmith (or his personal representatives) from and after the termination of
his employment the same amounts and provide him with the same benefits for the
same periods it would have paid or provided him had his employment been
terminated without cause pursuant to subparagraph 10(b) as of the date his
employment is terminated pursuant to this subparagraph 10(c).  If the employment of Goldsmith is terminated
pursuant to this subparagraph 10(c), Goldsmith’s stock options, restricted
stock and restricted stock units will be treated as provided in Paragraph 7.

 

(d)                                 Termination by
Death.  Except for compensation
accrued but not paid at the date of death and as provided in this subparagraph
10(d), the death of Goldsmith during the term of this Agreement shall terminate
this Agreement and the Amended Employment Agreement (as hereinafter
defined).  In the event of the death of
Goldsmith during the term hereof or the term of the Amended Employment
Agreement (as hereinafter defined), Employer shall be obligated to pay to
whomever he shall have designated in writing to Employer, or if no designation
has been made by him, to Goldsmith’s wife, if she is then living, or if she is
not then living, to his estate, the same amounts and provide the same benefits
Employer would have paid or provided Goldsmith pursuant to subparagraph 10(b) had
his employment been terminated without cause on the date of his death.  If the employment of Goldsmith is terminated
pursuant to this subparagraph 10(d), Goldsmith’s stock options, restricted
stock and restricted stock units will be treated as provided in Paragraph 7.

 

10

 

(e)                                  Change
of Control.  Attached to this
Agreement as Annex A is a copy of an Employment Agreement dated as
December 22, 2008 between Parent Corporation and Goldsmith (the “Amended
Employment Agreement”).  Upon the
Effective Date (as defined in the Amended Employment Agreement) during the term
of Goldsmith’s employment with Employer, the Amended Employment Agreement shall
become effective with (notwithstanding the provisions of the Amended Employment
Agreement to the contrary) the following modifications:  (i) the “Change of Control Period” as defined
in the Amended Employment Agreement shall not terminate prior to the end of the
term of this Agreement; (ii) the term thereof (referred to therein as the
“Employment Period”) shall be the greater of three years, as provided therein,
or the then remaining term of this Agreement; (iii) Paragraphs 3 and 5 and
subparagraph 10(g) of this Agreement shall remain in full force and effect;
(iv) clause (B) of Section 4(a)(i) and all of Section 4(b)(i) (except for the last
sentence thereof) of the Amended Employment Agreement shall be of no force or
effect, all direct or indirect references in the Amended Employment Agreement
to Annual Base Salary or base salary (including, without limitation, references
to Section 4(b) in clause (ii) of Section 5(c) of the Amended Employment
Agreement) shall be deemed to refer to the Annual Base Compensation described
and determined and computed in accordance with Paragraph 5 hereof and the
reference in clause (iii) of Section 5(c) of the Amended Employment Agreement
shall be deemed a reference to Paragraph 3 hereof; and (v) termination of
employment on account of the death or disability of Goldsmith as provided in
subparagraphs 10(c) and 10(d) hereof, respectively, shall remain in full force
and effect and the provisions of the Amended Employment Agreement dealing with
termination of employment on account of Goldsmith’s death or disability and the
effects thereof shall be of no force or effect. 
In all other respects the terms of the Amended Employment Agreement will
thereafter govern the employment of Goldsmith, and subparagraphs 10(a), 10(b)
and 10(f) hereof shall be of no further force or effect (except to the extent
subparagraph 10(b) is incorporated into subparagraph 10(c) and 10(d) for
determining amounts payable or benefits to be provided pursuant to subparagraph
10(c) and 10(d)).

 

(f)                                    Termination
Upon Expiration.  At least six (6)
months prior to the end of the term hereof, a person designated by the Board of
Directors of Parent Corporation shall meet with Goldsmith for purposes of
negotiating an extension of the term of this Agreement.  If by the ninetieth (90th) day prior to the
end of the term hereof Employer and Goldsmith have not agreed in writing to an
extension of the term hereof or renewal of this Agreement and during such
negotiations Employer offered Goldsmith an extension of this Agreement with a
term of at least three years and compensation at least equivalent to the
eightieth percentile for chief executive officers of Employer’s peer group,
Goldsmith’s employment shall terminate as of the end of the term hereof and
Employer shall be obligated to pay and provide Goldsmith with, from and after
the expiration of the term hereof, (i) in a lump sum within 30 days of the
effective date of termination, the Annual Base Compensation for a period of
twelve (12) months from the end of the term of this Agreement, (ii) in a lump
sum within 30 days of the effective date of termination, the Annual Bonus he
would have been paid hereunder if the term of this Agreement was extended for
twelve months, provided that (x) the Annual Bonus shall be computed by
multiplying Goldsmith’s Annual Base Compensation by (in lieu of the Target
Bonus Amounts set forth in Paragraph 6) the highest percentage of Annual Base
Compensation previously used in determining any prior Annual Bonus paid to
Goldsmith, (y) the Annual Bonus applicable to any portion of a fiscal year of
less than twelve months shall be an amount determined as provided in the
preceding subclause (x) multiplied by a fraction, the numerator of which is the
number of 

 

11

 

months of the fiscal year with
respect to which Goldsmith is entitled to the Annual Bonus pursuant to this
subparagraph (with each partial month being deemed a whole month) and the
denominator of which is 12, and (z) subparagraph 6(c) shall be disregarded and
have no force or effect, and (iii) for one year following the effective date of
termination, Employer shall provide Goldsmith, his spouse and eligible
dependents with the Health Care Benefits, life insurance and long-term
disability benefits no less favorable to those which Goldsmith and his spouse
and eligible dependents were receiving immediately prior to the effective date
of termination; provided, however, that the
Health Care Benefits shall be provided during the Benefits Period in such a
manner that such benefits are excluded from Goldsmith’s income for federal
income tax purposes.  If by the ninetieth
(90th) day prior to the end of the term hereof Employer and Goldsmith have not
agreed in writing to an extension of the term hereof or a renewal of this
Agreement and during such negotiations the Employer did not offer Goldsmith an
extension of the term hereof of at least three years and compensation at least
equivalent to the eightieth percentile for chief executive officers of
Employee’s peer group, Goldsmith’s employment shall terminate as of the end of
the term hereof and Employer shall pay Goldsmith, the same amounts and provide
him with the same benefits at the same time it would have paid and provided him
pursuant to subparagraph 10(b) had his employment been terminated without cause
immediately prior to the end of the term hereof, including, without limitation,
the vesting of stock options and the lapsing of forfeiture restrictions on
restricted stock awards and restricted stock units to the extent specified in
Paragraph 7, in each case, at such time(s) and in such form(s) as such amounts
and benefits would be paid or provided to Goldsmith pursuant to subparagraph
10(b) and Paragraph 7, as applicable, had his employment been terminated
without cause immediately prior to the end of the term hereof.  For purposes of this subparagraph 10(f), the
“Employer’s peer group” shall consist of ten banks comparable to CNB as to size
and performance and as agreed to by Employer and Goldsmith and the compensation
which shall be employed in determining whether the compensation offered
Goldsmith was at least equivalent to the eightieth percentile for chief
executive officers of Employer’s peer group compensation shall mean the total
compensation (all forms of pay disclosed in the proxy statements).  If Goldsmith and Employer shall be unable to
agree by the ninetieth (90th) day prior to the end of the term hereof as to the
identity of the banks constituting the “Employer’s peer group”, the ten
companies constituting Employer’s peer group shall be determined by Semler
Brossy Consulting Group or any similar firm agreed to by Employer and Goldsmith.

 

(g)                                 Office
Space and Secretarial Support.  From
and after the expiration of the term of this Agreement or the Amended
Employment Agreement or if Goldsmith’s employment is terminated other than
pursuant to subparagraph 10(a) (or Section 5(a) of the Amended Employment
Agreement if it is then in effect) for cause or other than pursuant to
subparagraph 10(d) on account of his death, Employer shall provide Goldsmith
(at no cost or expense to Goldsmith) for a period of three years with an office
in his current office site in Beverly Hills, California or nearby of size,
furnishings and other appointments and exclusive personal secretarial support
comparable to that provided Goldsmith at any time during the one hundred twenty
(120) day period prior to the expiration of the term or termination of his
employment.

 

(h)                                 Section
409A.  Notwithstanding the foregoing
provisions of this Agreement, in the event that Goldsmith is a “specified
employee” within the meaning of Section 409A of the Code (as determined in accordance
with the methodology established by the Company as in effect on the effective
date of termination), amounts that constitute “nonqualified deferred 

 

12

 

compensation” within the
meaning of Section 409A of the Code that would otherwise be payable during the
six-month period immediately following the effective date of termination (including
the supplemental retirement benefit set forth in Appendix A to this
Agreement) shall instead be paid, with interest on any delayed payment at the
applicable federal rate provided for in Section 7872(f)(2)(A) of the Code, on
the first business day after the date that is six months following the
Executive’s “separation from service” within the meaning of Section 409A; provided
that no such interest shall accrue with respect to any equity awards not
settled during such six month period or with respect to any severance pay that
would have been paid in installments under Section 10 of the Employment
Agreement dated June 30, 2006 between Goldsmith CNB and Parent Corporation.

 

11.                                 Entire
Agreement; Modification; Waiver. 
This Agreement constitutes the entire agreement between the parties
pertaining to the subject matter contained therein and supersedes all prior and
contemporaneous agreements, representations and understandings of the
parties.  No supplement, modification or
amendment of this Agreement shall be binding unless executed in writing by both
parties.  No waiver of any of the
provisions of this Agreement shall be deemed, or shall constitute, a waiver of
any other provisions, whether or not similar, nor shall any waiver constitute a
continuing waiver.  No waiver shall be
binding unless executed in writing by the party making the waiver.  Notwithstanding the foregoing, this Agreement
shall not supersede and shall be subject to the Waiver and Amendment Agreement
letter dated as of November 14, 2008 by and between the Employer and Goldsmith.

 

12.                                 Separability
Clause.  The invalidity or
unenforceability of any provision hereof shall in no way affect the validity or
enforceability of any other provision hereof.

 

13.                                 Benefit.  Except as herein and otherwise specifically
provided, this Agreement shall be binding upon and inure to the benefit of the
parties, their personal representatives, heirs, administrators, executors,
successors, and permitted assigns.

 

14.                                 Notices.  Any notice, request, or other communication
required to be given pursuant to the provisions of this Agreement shall be in
writing and shall be deemed to be duly given if delivered in person or mailed
by registered or certified United States mail, postage prepaid, and mailed to
the parties at the following addresses:

 

	
  EMPLOYER

  	
   

  	
  RUSSELL
  GOLDSMITH

  
	
  City
  National Bank

  	
   

  	
  Mr. Russell
  Goldsmith

  
	
  400 No.
  Roxbury Drive

  	
   

  	
  400 N.
  Roxbury Drive

  
	
  Beverly
  Hills, CA 90210

  	
   

  	
  Beverly
  Hills, CA 90210

  
	
  Attn:
  Michael B. Cahill

  	
   

  	
   

  
	
  General Counsel

  	
   

  	
  with copy
  to:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Jeannemarie
  O’Brien

  
	
   

  	
   

  	
  Jeremy L.
  Goldstein

  
	
   

  	
   

  	
  Wachtell,
  Lipton, Rosen & Katz

  
	
   

  	
   

  	
  51 West 52nd
  Street

  
	
   

  	
   

  	
  New York,
  New York 10019-6150

  

 

13

 

The parties
hereto may change the above addresses from time to time by giving notice
thereof to each other in conformity with this Paragraph 14.

 

15.                                 Confidentiality.  Goldsmith covenants and agrees with Employer
that Goldsmith shall not, during or after the term of this Agreement, disclose
to anyone any confidential information concerning the business or operations of
Employer which Goldsmith may acquire in the course of or incident to the performance
of his duties hereunder, including, without limitation, processes, customer
lists, business or trade secrets, or methods or techniques used by Employer in
its business or operations.

 

16.                                 Construction.  This Agreement shall be governed by, and construed
in accordance with, the laws of the State of California.

 

17.                                 Captions.  The paragraph headings and captions contained
herein are for reference purposes and convenience only and shall not in any way
affect the meaning or interpretation of this Agreement.

 

18.                                 Counterparts.  This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

 

19.                                 Amendments.  This Agreement shall not be modified,
amended, or in any way altered except by an instrument in writing and signed by
both of the parties hereto.

 

20.                                 Mandatory
Arbitration.  At the request of
Goldsmith or Employer, any dispute, claim, controversy of any kind (whether in
contract or tort, statutory or common law, legal or equitable) now existing or
hereafter arising out of, pertaining to or in connection with this Agreement
and/or any renewals, extensions, or amendments thereto, shall be resolved
through final and binding arbitration conducted by a single arbitrator at a
location determined by the arbitrator in Los Angeles or Beverly Hills,
California, and administered by the American Arbitration Association (“AAA”) in
accordance with the Federal Arbitration Act, 9 U.S.C. §1, et seq., and the then
existing Commercial Arbitration Rules of the AAA.  Judgment upon any award rendered by the
arbitrator may be entered in any State or Federal courts having jurisdiction
thereof.

 

21.                                 Section
409A.  The Agreement is intended to
comply with the requirements of Section 409A of the Code or an exemption or
exclusion therefrom and, with respect to amounts that are subject to Section
409A of the Code, shall in all respects be administered in accordance with
Section 409A of the Code.  Each payment
under this Agreement shall be treated as a separate payment for purposes of
Section 409A of the Code.  In no event
may Goldsmith, directly or indirectly, designate the calendar year of any
payment to be made under this Agreement. 
If Goldsmith dies following the effective date of termination and prior
to the payment of the any amounts delayed on account of Section 409A of the
Code, such amounts shall be paid to the personal representative of Goldsmith’s
estate within 30 days after the date of Goldsmith’s death.  All reimbursements and in-kind benefits
provided under this Agreement that constitute deferred compensation within the
meaning of Section 409A of the Code shall be made or provided in accordance
with the requirements of Section 409A of the Code, including, without
limitation, 

 

14

 

that (i) in no event shall
reimbursements by Employer under this Agreement be made later than the end of
the calendar year next following the calendar year in which the applicable fees
and expenses were incurred, provided, that Goldsmith shall have submitted an
invoice for such fees and expenses at least 10 days before the end of the
calendar year next following the calendar year in which such fees and expenses
were incurred; (ii) the amount of in-kind benefits that Employer is obligated
to pay or provide in any given calendar year shall not affect the in-kind
benefits that Employer is obligated to pay or provide in any other calendar
year; (iii) Goldsmith’s right to have Employer pay or provide such
reimbursements and in-kind benefits may not be liquidated or exchanged for any
other benefit; and (iv) in no event shall Employer’s obligations to make such
reimbursements or to provide such in-kind benefits apply later than Goldsmith’s
remaining lifetime (or if longer, through the 20th anniversary of the Start
Date).  Notwithstanding the foregoing, in
no event shall the effective date of termination occur until Goldsmith
experiences a “separation from service” within the meaning of Section 409A of
the Code, and the date on which such separation from service takes place shall
be the “effective date of termination.” 
“Separation from Service” shall mean a “separation from service” within
the meaning of Section 409A of the Code, as determined by the Committee in
accordance with Section 1.409A-1(h) of the Treasury Regulations.  For purposes of determining whether a
Separation from Service has occurred, Goldsmith shall be considered to have
separated from service as an employee when the facts and circumstances indicate
that Goldsmith and the Employer reasonably anticipate that either (i) no
further services will be performed for the Employer (including any affiliates)
after a certain date, or (ii) that the level of bona fide services Goldsmith
will perform for the Employer (including any affiliates) after such date
(whether as an employee or as an independent contractor) will permanently
decrease to no more than 20% of the average level of bona fide services
performed by Goldsmith (whether as an employee or an independent contractor)
over the immediately preceding 36-month period (or the full period of services
to the Employer if Goldsmith has been providing services to the Employer less
than 36 months). Within the time period permitted by the applicable treasury
regulations (or such later time as may be permitted under Section 409A or any
IRS or Department of Treasury rules or other guidance issued thereunder),
Employer may, in consultation with Goldsmith, modify the Agreement in the least
restrictive manner necessary in order to exclude such compensation from the
definition of “deferred compensation” within the meaning of such Section 409A
or in order to comply with the provisions of Section 409A, other applicable
provisions(s) of the Code and/or any rules, regulations or other regulatory
guidance issued under such statutory provisions and without any diminution in
the value of the payments to Goldsmith. 
CNB and Parent Corporation are not providing any tax advice to
Goldsmith.

 

15

 

IN WITNESS
WHEREOF, the parties hereto have executed this Employment Agreement as of the
date first above written at Beverly Hills, California.

 

 

	
   

  	
   

  	
  CITY
  NATIONAL BANK

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  RUSSELL
  GOLDSMITH

  	
   

  	
   

  	
  MICHAEL B.
  CAHILL

  
	
   

  	
   

  	
   

  	
  Executive
  Vice President and General

  
	
   

  	
   

  	
   

  	
  Counsel

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  CITY
  NATIONAL CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  MICHAEL B.
  CAHILL

  
	
   

  	
   

  	
   

  	
  Executive
  Vice President and General

  
	
   

  	
   

  	
   

  	
  Counsel

  

 

16

 

APPENDIX A TO EMPLOYMENT AGREEMENT

FOR RUSSELL GOLDSMITH

 

SUPPLEMENTAL RETIREMENT BENEFIT

 

The purpose of
this Appendix A to the Employment Agreement is to provide a supplemental
retirement benefit for Russell Goldsmith (“Goldsmith”), which shall be in
addition to any benefits which he may be entitled to receive under qualified
retirement plans of the Employer.

 

ARTICLE I

 

DEFINITIONS

 

All
capitalized terms used herein which are defined in the Employment Agreement
shall have the meaning set forth therein. 
In addition, the following terms shall have the meaning set forth below:

 

“Change of
Control” shall have the meaning set forth in Annex A to the Employment
Agreement.

 

“Final Average
Compensation” shall mean the average of the sum of the Annual Base Compensation
and Annual Bonus which Goldsmith earns during the highest three out of his last
five calendar years of employment with the Employer.

 

“Normal
Retirement Date” shall mean the date on which Goldsmith attains age 62, which
will be February 14, 2012.  Goldsmith was
born on February 14, 1950.

 

“Surviving
Spouse” shall mean Goldsmith’s spouse at the time of his termination of
employment with the Employer, if she remains alive after Goldsmith’s death.

 

“Years of
Service” shall mean complete and partial years of service with the Employer,
measured from Goldsmith’s commencement date on October 15, 1995 to the most
recent anniversary of his commencement date.

 

ARTICLE II

 

ACCRUAL AND VESTING OF SUPPLEMENTAL RETIREMENT BENEFIT

 

2.1                                 Goldsmith
shall accrue the right to receive an annual supplemental retirement benefit in
the form of a single life annuity for his lifetime commencing at his Normal
Retirement Date based on the following formula:

 

1.5432%
multiplied times Years of Service (up to a maximum of 25.2% after 16.33 Years
of Service) multiplied times Final Average Compensation

 

2.2                                 Under
the formula set forth in Section 2.1, if Goldsmith retires on his Normal
Retirement Date, he will be entitled to receive the maximum annual supplemental
retirement 

 

 

benefit in the form of a single
life annuity equal to 25.2% multiplied times his Final Average Compensation.

 

2.3                                 In
the event of a Change of Control, Goldsmith shall receive credit for five
additional Years of Service, but there will be no change in the maximum
supplemental retirement benefit.

 

2.4                                 Goldsmith
will have a fully vested right to his accrued supplemental retirement benefit
after eight Years of Service (including his past service).  There will be no partial vesting prior to
completion of eight Years of Service.

 

ARTICLE III

 

PAYMENT OF SUPPLEMENTAL RETIREMENT BENEFIT

 

3.1                                 Goldsmith’s
accrued annual supplemental retirement benefit shall be paid in equal monthly
installments commencing on the first day of the month following his termination
of employment with the Employer for any reason other than his death.

 

3.2                                 If
Goldsmith is married when he terminates employment with the Employer, the
normal form of payment of his supplemental retirement benefit will be an
actuarially reduced 100% joint and survivor annuity payable to Goldsmith during
his lifetime and continuing thereafter during the lifetime of his Surviving
Spouse.

 

3.3                                 If
Goldsmith is not married when he terminates employment with the Employer, the
normal form of payment of his supplemental retirement benefit will be a single
life annuity payable to Goldsmith during his lifetime with payments terminating
upon his death.

 

3.4                                 Goldsmith
shall be entitled to elect an optional form of payment of his supplemental
retirement benefit, and to change any such election, upon written notice filed
with the Employer at any time up to six months preceding his termination of
employment, or in the event of a separation or divorce from his spouse or the
death of his spouse at any time up to the date of his termination of
employment.  Any new election or change
of election which is made after the date provided herein shall have no force or
effect.  No change in the form of payment
will be permitted for any reason after commencement of supplemental retirement
benefit payments.  The optional forms of
payment which Goldsmith may elect within the times specified above are a lump
sum payment to be paid on the first day of the month following his termination
of employment, a single life annuity payable during his lifetime with no
payments to his Surviving Spouse after his death, and any other optional form
of payment which the Employer may permit in its discretion.

 

3.5                                 There
shall be an actuarial reduction in Goldsmith’s supplemental retirement benefit
in the event that he terminates employment with the Employer prior to his
Normal Retirement Date and an actuarial increase in his supplemental retirement
benefit in the event that he terminates employment with the Employer after his
Normal Retirement Date.  In either event,
the payment of his supplemental retirement benefit shall commence on the first
day of the month following his termination of employment.

 

2

 

3.6                                 If
Goldsmith retires prior to his Normal Retirement Date, and his supplemental
retirement benefit is paid in the form of a 100% joint and survivor annuity,
there would be actuarial reductions for both early retirement and the 100%
joint and survivor annuity.

 

3.7                                 The
actuarial reduction and actuarial equivalence factors are set forth in Schedule
1 hereto.

 

ARTICLE IV

 

PRE-RETIREMENT SPOUSAL DEATH BENEFIT

 

4.1                                 If
Goldsmith dies while he remains employed with the Employer and has a Surviving
Spouse, his Surviving Spouse will be entitled to receive a benefit in the form
of a single life annuity payable for her lifetime which is the actuarial
equivalent of the single life annuity for his lifetime which Goldsmith would
have been entitled to receive if he had terminated employment with the Employer
in the month before he died.  This
benefit shall be payable to Goldsmith’s Surviving Spouse in equal monthly
payments commencing on the first day of the month following his death.

 

4.2                                 Goldsmith
shall be entitled to elect, upon written notice filed with the Employer at any
time before his death, that his Surviving Spouse shall receive a lump sum
payment to be paid on the first day of the month following his death which is
the actuarial equivalent of the single life annuity which would otherwise be
paid to her pursuant to Section 4.1, using the actuarial reduction and actuarial
equivalence factors set forth in Schedule 1 hereto.

 

ARTICLE V

 

SECTION 409A

 

5.1                                 The
Agreement is intended to comply with the requirements of Section 409A of the
Code or an exemption or exclusion therefrom and, with respect to amounts that
are subject to Section 409A of the Code, shall in all respects be administered
in accordance with Section 409A of the Code except for amounts payable under
this Agreement that are “grandfathered” amounts within the meaning of Section
409A of the Code.  “Grandfathered”
amounts are amounts that were earned and vested by Goldsmith within the meaning
of Section 409A prior to December 31, 2004. 
No modification to this Agreement as set forth in Section 5.2 shall
apply to any “grandfathered” amounts and the payments of any “grandfathered”
amounts to Goldsmith under this Agreement shall be made without regard to such
modifications.

 

5.2                                 Any
election of an optional form of benefit under this Agreement shall comply with
the requirements of Section 409A of the Code, which shall generally include the
following: (a) the election shall not take effect until at least 12 months
after the date on which the election is made; (b) the new benefit commencement
date shall be at least five years after the benefit commencement date that otherwise
would have applied; and (c) the election must be made at least 12 months prior
to the benefit commencement date that would otherwise have applied.  Each payment under this Agreement shall be
treated as a separate payment for purposes of Section 409A of the Code to the
extent permitted thereunder.  In no event
may Goldsmith, directly or indirectly, designate the calendar year of any
payment to be made under this 

 

3

 

Agreement.  Notwithstanding the foregoing provisions of
this Agreement, in the event that Goldsmith is a “specified employee” within
the meaning of Section 409A of the Code (as determined in accordance with the
methodology established by the Company as in effect on the date of termination),
amounts that constitute “nonqualified deferred compensation” within the meaning
of Section 409A of the Code that would otherwise be payable during the
six-month period immediately following the effective date of termination shall
instead be paid, with interest on any delayed payment at the applicable federal
rate provided for in Section 7872(f)(2)(A) of the Code, on the first business
day after the date that is six months following Goldsmith’s “separation from
service” within the meaning of Section 409A. 
If Goldsmith dies following the date of termination and prior to the
payment of the any amounts delayed on account of Section 409A of the Code, such
amounts shall be paid to the personal representative of Goldsmith’s estate on
the first day of the month following his death. 
In no event shall the effective date of termination occur until
Goldsmith experiences a “separation from service” within the meaning of Section
409A of the Code, and the date on which such separation from service takes
place shall be the effective date of termination for purposes of this
Agreement.  “Separation from Service”
shall mean a “separation from service” within the meaning of Section 409A of
the Code, as determined by the Committee in accordance with Section 1.409A-1(h)
of the Treasury Regulations.  For
purposes of determining whether a Separation from Service has occurred,
Goldsmith shall be considered to have separated from service as an employee
when the facts and circumstances indicate that Goldsmith and the Employer
reasonably anticipate that either (i) no further services will be performed for
the Employer (including any affiliates) after a certain date, or (ii) that the
level of bona fide services Goldsmith will perform for the Employer (including
any affiliates) after such date (whether as an employee or as an independent
contractor) will permanently decrease to no more than 20% of the average level
of bona fide services performed by Goldsmith (whether as an employee or an
independent contractor) over the immediately preceding 36-month period (or the
full period of services to the Employer if Goldsmith has been providing
services to the Employer less than 36 months).  
Within the time period permitted by the applicable treasury regulations
(or such later time as may be permitted under Section 409A or any IRS or
Department of Treasury rules or other guidance issued thereunder), Employer
may, in consultation with Goldsmith, modify the Agreement in the least
restrictive manner necessary in order to exclude such compensation from the
definition of “deferred compensation” within the meaning of such Section 409A
or in order to comply with the provisions of Section 409A, other applicable
provisions(s) of the Code and/or any rules, regulations or other regulatory
guidance issued under such statutory provisions and without any diminution in
the value of the payments to Goldsmith.

 

5.3                                 Pursuant
to the limited transition relief made available in accordance with Notice
2007-86 and subsequent guidance, Goldsmith may make an election in writing
filed with the Employer to receive payments of the supplemental retirement
benefit and/or the pre-retirement spousal death benefit in a lump sum or other
optional form of payment without being subject to the requirements under
Section 409A described in the first sentence of Section 5.2.  Any such election for amounts subject to
Section 409A shall become effective on January 1, 2009 and shall not apply with
respect to amounts that would otherwise be payable in 2008.

 

4

 

SCHEDULE 1

 

Supplemental Retirement Benefit

for Russell Goldsmith

 

Actuarial Reduction Factors

 

Early Retirement Reduction Factors

 

	
  Years of Age Prior to

  Normal Retirement Date

  	
   

  	
  Reduction Factor

  	
   

  
	
  1

  	
   

  	
  93

  	
  %

  
	
  2

  	
   

  	
  86

  	
  %

  
	
  3

  	
   

  	
  79

  	
  %

  
	
  4

  	
   

  	
  72

  	
  %

  
	
  5

  	
   

  	
  65

  	
  %

  
	
  6

  	
   

  	
  58

  	
  %

  
	
  7

  	
   

  	
  51

  	
  %

  
	
  8

  	
   

  	
  48

  	
  %

  
	
  9

  	
   

  	
  45

  	
  %

  

 

5

 

100% Joint & Survivor Annuity Reduction Factors at
Normal Retirement Date

 

	
  Spouse Years of Age Younger

  	
   

  	
  Reduction Factor

  	
   

  
	
  0

  	
   

  	
  85.75

  	
  %

  
	
  1

  	
   

  	
  84.97

  	
  %

  
	
  2

  	
   

  	
  84.26

  	
  %

  
	
  3

  	
   

  	
  83.45

  	
  %

  
	
  4

  	
   

  	
  82.71

  	
  %

  
	
  5

  	
   

  	
  82.04

  	
  %

  
	
  6

  	
   

  	
  81.32

  	
  %

  
	
  7

  	
   

  	
  80.56

  	
  %

  
	
  8

  	
   

  	
  79.87

  	
  %

  
	
  9

  	
   

  	
  79.19

  	
  %

  
	
  10

  	
   

  	
  78.53

  	
  %

  

 

Actuarial Equivalence

 

Mortality

 

	
  Prior
  to Normal Retirement Age:

  	
   

  	
  1983
  Group Annuity Mortality for males or females

  
	
  After
  Normal Retirement Age:

  	
   

  	
  1983
  Group Annuity Mortality for males or females

  

 

Interest:  To Calculate
Lump Sum Payment or Actuarial Increase for Late Retirement

 

	
  Prior
  to Normal Retirement Date:

  	
   

  	
  6.0%
  per annum

  
	
  After
  Normal Retirement Date:

  	
   

  	
  6.0%
  per annum

  

 

6

 

APPENDIX B TO EMPLOYMENT AGREEMENT

FOR RUSSELL GOLDSMITH

 

CITY NATIONAL VALUATION METHODOLOGY FOR OPTION AWARDS

 

The
City National Valuation Methodology for Option Awards is used to calculate the “Deemed
Value” of each stock option award on the grant date.  As of the date hereof, the City National
Valuation Methodology uses the Black-Scholes Model to value the options
granted.  The assumptions input into the
model include expected term, volatility, grant date, grant price, risk-free
interest rate, and dividend yield. 
Option awards shall be granted with an exercise price not less than the
fair market value of the Parent Corporation’s stock (within the meaning of the
applicable stock option plan) on the date of grant.  The other inputs have the following terms:

 

Expected Term:  The
expected term of the option in years (i.e., the number of years that the
company estimates that options will be outstanding prior to exercise or
forfeiture) is based on the expected term analysis done by the Parent
Corporation for other corporate officers who are members of the Employer’s
Executive Committee and Strategy and Planning Committee (“Executives”)(1).  This analysis is currently based on guidance
from PriceWaterhouseCoopers.  Based on a
total of ten years of stock option grants from any given year of grant and
updated on a quarterly basis, the Parent Corporation calculates the total
options granted for each period less those forfeited prior to vesting.  For each year after vesting, the number of
options exercised is calculated and any remaining unexercised options are
assumed to have been exercised evenly over the remaining periods.  The total of all options exercised for each
period is multiplied by the number of years after grant.  The sum of these totals is divided by the
number of options granted for the average number of years to exercise.

 

Volatility: 
Expected volatility is based on the historical volatility of the Parent
Corporation’s stock price, over a period equal to the “expected term of the
option” (as calculated in the “expected term” analysis) on a monthly
basis.  Historical volatility data is
obtained from Bloomberg.  The Parent
Corporation believes the most recent historical stock activity is most representative
of future activity.

 

Dividend Yield: 
Dividend yield is an assumed dividend yield rate of the Parent
Corporation at the time of grant obtained from Bloomberg based on the expected
life calculated.  Actual dividend
payments will depend upon a number of factors, including future financial
results, and may differ substantially from the assumption.

 

Risk-free interest rate: 
Risk-free investment rate for the weighted average life of the
outstanding option is interpolated based on the U.S. Treasury Note yield curve
in effect at the time of grant.  Data is
obtained from Bloomberg.

 

(1) For
valuation purposes, the Parent Corporation has divided colleagues into two
groups that have different exercise and forfeiture behavior.  Colleagues who are past or current members of
the Executive Committee comprise one group. 
All remaining colleagues make up the other group.

 

7

 

ANNEX A

EMPLOYMENT AGREEMENT

 

AGREEMENT
by and between City National Corporation, a Delaware corporation (the “Company”)
and Russell Goldsmith (the “Executive”), dated as of December 22, 2008.

 

The
Board of Directors of the Company (the “Board”), has determined that it is in
the best interest of the Company and its shareholders to assure that the
Company will have the continued dedication of the Executive, notwithstanding
the possibility, threat or occurrence of a Change of Control (as defined below)
of the Company.  The Board believes it is
imperative to diminish the inevitable distraction of the Executive by virtue of
the personal uncertainties and risks created by a pending or threatened Change
of Control and to encourage the Executive’s full attention and dedication to
the Company currently and in the event of any threatened or pending Change of
Control, and to provide the Executive with compensation and benefits
arrangements upon a Change of Control which ensure that the compensation and
benefits expectations of the Executive will be satisfied and which are
competitive with those of other corporations. 
Therefore, in order to accomplish these objectives, the Board has caused
the Company to enter into this Agreement.

 

NOW,
THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:

 

1.                                       CERTAIN DEFINITIONS.  (a) 
The “Effective Date” shall mean the first date during the Change of Control
Period (as defined in Section 1(b)) on which a Change of Control (as
defined in Section 2) occurs. 
Anything in this Agreement to the contrary notwithstanding, if the
Executive’s employment with the Company is terminated prior to the date on
which the Change of Control occurs, and if it is reasonably demonstrated by the
Executive that such termination of employment (i) was at the request of a
third party who has taken steps reasonably calculated to effect a Change of
Control or (ii) otherwise arose in connection with or anticipation of a Change
of Control, then for all purposes of this Agreement the “Effective Date” shall
mean the date immediately prior to the date of such termination of employment.

 

(b)                                 The “Change of Control Period” shall mean the
period commencing on the date hereof and ending on the second anniversary of
the date hereof; provided, however that commencing on the date one year after
the hereof, and on each annual anniversary of such date (such date and each
annual anniversary thereof shall be hereinafter referred to as the “Renewal
Date”), unless previously terminated, the Change of Control Period shall be
automatically extended so as to terminate two years from such Renewal Date,
unless at least 60 days prior to the Renewal Date the Company shall give notice
to the Executive that the Change of Control Period shall not be so extended.

 

2.                                       CHANGE OF CONTROL.  For
the purpose of this Agreement, a “Change of Control” shall mean:

 

(a)                                  The acquisition by any individual, entity or
group (within the meaning of Section 13(d)(3) or 14(d)(2) or the
Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”)
of beneficial ownership (within the meaning of Rule 13d-3 promulgated

 

 

under
the Exchange Act) of 20% of more of either (i) the then outstanding shares
of common stock of the Company (the “Outstanding Company Common Stock”) or (ii) the
combined voting power of the then outstanding voting securities of the Company
entitled to vote generally in the election of directors (the “Outstanding
Company Voting Securities”); provided, however, that for purposes of this
subsection (a), the following acquisitions shall not constitute a Change of
Control:  (i) any acquisition
directly from the Company, (ii) any acquisition by the Company, (iii) any
acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by the Company, (iv) any
acquisition by any corporation pursuant to a transaction which complies with
clauses (i), (ii) and (iii) of subsection (c) of this Section 2,
or (v) any acquisition by the Goldsmith family or any trust or partnership
for the benefit of any member of the Goldsmith family; or

 

(b)                                 Individuals who, as of the date hereof,
constitute the Board (the “Incumbent Board”) cease or any reason to constitute
at least a majority of the Board; provided, however, that any individual
becoming a director subsequent to the date hereof whose election, or nomination
for election by the Company’s shareholders, was approved by a vote of at least
a majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial assumption of
office occurs as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than the
Board; or

 

(c)                                  Consummation of a reorganization, merger or
consolidation or sale or other disposition of all or substantially all of the
assets of the Company (a “Business Combination”), in each case, unless,
following such Business Combination, (i) all or substantially all of the
individuals and entities who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and Outstanding Company Voting Securities
immediately prior to such Business Combination beneficially own, directly or
indirectly, more than 50% of, respectively, the then outstanding shares of
common stock and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors, as the case
may be, of the corporation resulting from such Business Combination (including,
without limitation, a corporation which as a result of such transaction owns
the Company of all or substantially all of the Company’s assets either directly
or through one or more subsidiaries) in substantially the same proportions as
their ownership, immediately prior to such Business Combination of the
Outstanding Company Common Stock and Outstanding Company Voting Securities, as
the case may be, (ii) no Person (excluding any corporation resulting from
such Business Combination or any employee benefit plan (or related trust) of
the Company or such corporation resulting from such Business Combination)
beneficially owns, directly or indirectly, 20% or more of, respectively, the
then outstanding shares of common stock of the corporation resulting from such
Business Combination or the combined voting power of the then outstanding
voting securities of such corporation except to the extent that such ownership
existed prior to the Business Combination and (iii) at least a majority of
the members of the board of directors of the corporation resulting from such
Business Combination were members of the Incumbent Board at the time of the
execution of the initial agreement, or of the action of the Board, providing
for such Business Combination; or

 

2

 

(d)                                 Approval by the shareholders of the Company
of a complete liquidation or dissolution of the Company.

 

3.                                       EMPLOYMENT PERIOD.  The
Company hereby agrees to continue the Executive in its employ, and the
executive hereby agrees to remain in the employ of the Company subject to the
terms and conditions of this Agreement, for the period commencing on the
Effective Date and ending on the third anniversary of such date (the “Employment
Period”).

 

4.                                       TERMS OF EMPLOYMENT.  (a) 
POSITION AND DUTIES.

 

(i)                                     During the Employment Period, (A) the
Executive’s position (including status, offices, titles and reporting
requirements), authority, duties and responsibilities shall be at least
commensurate in all material respects with the most significant of those held,
exercised and assigned at any time during the 120-day period immediately
preceding the Effective Date and (B) the Executive’s services shall be
performed at the location where the Executive was employed immediately
preceding the Effective Date or any office or location less than 35 miles from
such location.

 

(ii)                                  During the Employment Period, and excluding
any periods of vacation and sick leave to which the Executive is entitled, the
Executive agrees to devote reasonable attention and time during normal business
hours to the business and affairs of the Company and, to the extent necessary
to discharge the responsibilities assigned to the Executive hereunder, to use
the Executive’s reasonable best efforts to perform faithfully and efficiently
such responsibilities.  During the
Employment Period it shall not be a violation of this Agreement for the
Executive to (A) serve on corporate, civic or charitable boards or
committees, (B) deliver lectures, fulfill speaking engagements or teach at
educational institutions and (C) manage personal investments, so long as
such activities do not significantly interfere with the performance of the
Executive’s responsibilities as an employee of the Company in accordance with
this Agreement.

 

It
is expressly understood and agreed that to the extent that any such activities
have been conducted by the Executive prior to the Effective Date, the continued
conduct of such activities (or the conduct of activities similar in nature and
scope thereto) subsequent to the Effective Date shall not thereafter be deemed
to interfere with the performance of the Executive’s responsibilities to the
Company.

 

(b)                                 COMPENSATION.  (i) 
BASE SALARY.  During the Employment
Period, the Executive shall receive an annual base salary (“Annual Base Salary”)
at least equal to twelve times the highest monthly base salary paid or payable,
including any base salary which has been earned but deferred, to the Executive
by the Company and its affiliated companies in respect of the twelve-month period
immediately preceding the month in which the Effective Date occurs.  The Annual Base Salary shall be paid at such
intervals as the Company pays executive salaries generally.  During the Employment Period, the Annual Base
Salary shall be reviewed no more than 12 months after the last salary increase
awarded to the Executive prior to the Effective Date and thereafter at least
annually.  Any increase in Annual Base
Salary shall not serve to limit or reduce any other obligation to the Executive
under this Agreement.  Annual Base Salary
shall not be reduced after any such increase and the term Annual Base Salary as
utilized in this

 

3

 

Agreement
shall refer to Annual Base Salary as so increased.  As used in this Agreement, the term “affiliated
companies” shall include any company controlled by, controlling or under common
control with the Company.

 

(ii)                                  ANNUAL BONUS.  In
addition to Annual Base Salary, the Executive shall be awarded, for each fiscal
year ending during the Employment Period, an annual bonus (the “Annual Bonus”)
in cash at least equal to the Executive’s highest bonus under the Company’s
annual incentive plans for the last three full fiscal years prior to the
Effective Date (annualized in the event that the Executive was not employed by
the Company for the whole of such fiscal year) (the “Recent Annual Bonus”).  Each such Annual Bonus shall be paid no later
than two and a half months following the fiscal year for which the Annual Bonus
is awarded, unless the Executive shall elect to defer the receipt of such
Annual Bonus.

 

(iii)                               INCENTIVE, SAVINGS AND RETIREMENT PLANS. 
During the Employment Period, the Executive shall be entitled to
participate in all incentive, savings and retirement plans, practices, policies
and programs applicable generally to other peer executive of the Company and
its affiliated companies, but in no event shall such plans, practice, policies
and programs provide the Executive with incentive opportunities (measured with
respect to both regular and special incentive opportunities, to the extent, if
any, that such distinction is applicable), savings opportunities and retirement
benefit opportunities, in each case, less favorable, in the aggregate, than the
most favorable of those provided by the Company and its affiliated companies
for the Executive under such plans, practices, policies and programs as in
effect at any time during the 120-day period immediately preceding the
Effective Date or if more favorable to the Executive, those provided generally
at any time after the Effective Date to other peer executives of the Company
and its affiliated companies.

 

(iv)                              WELFARE BENEFIT PLANS. 
During the Employment Period, the Executive and/or the Executive’s
family, as the case may be, shall be eligible for participation in and shall
receive all benefits under welfare benefit plans, practices, policies and
programs provided by the Company and its affiliated companies (including,
without limitation, medical, prescription, dental, disability, employee life,
group life, accidental death and travel accident insurance plans and programs)
to the extent applicable generally to other peer executives of the Company and
its affiliated companies, but in no event shall such plans, practices, policies
and programs provide the Executive with benefits which are less favorable, in
the aggregate, than the most favorable of such plans, practices, policies and
programs in effect for the Executive at any time during the 120-day period
immediately preceding the Effective Date or, if more favorable to the
Executive, those provided generally at any time after the Effective Date to the
other peer executive of the Company and its affiliated companies.

 

(v)                                 EXPENSES.  During the Employment Period,
the Executive shall be entitled to receive prompt reimbursement for all
reasonable expenses incurred by the Executive in accordance with the most
favorable policies, practices and procedures of the Company and its affiliated
companies in effect for the Executive at any time during the 120-day period
immediately preceding the Effective Date or, if more favorable to the
Executive, as in effect generally at any time thereafter with respect to other
peer executives of the Company and its affiliated companies.

 

4

 

(vi)                              FRINGE BENEFITS. 
During the Employment Period, the Executive shall be entitled to fringe
benefits, including, without limitation, tax and financial planning services,
payment of club dues, and if applicable, automobile allowance and/or use of an
automobile and payment of related expenses, in accordance with the most
favorable plans, practices, programs and policies of the Company and its
affiliated companies in effect for the Executive at any time during the 120-day
period immediately preceding the Effective Date or, if more favorable to the
Executive, as in effect generally at any time thereafter with respect to other
peer executives of the Company and it’s affiliated companies.

 

(vii)                           OFFICE AND SUPPORT STAFF. 
During the Employment Period, the Executive shall be entitled to an
office or offices of a size and with furnishings and other appointments, and to
exclusive personal secretarial and other assistance, at least equal to the most
favorable of the foregoing provided to the Executive by the Company and its
affiliated companies at any time during the 120-day period immediately
preceding the Effective Date or, if more favorable to the Executive, as
provided generally at any time thereafter with respect to other peer executives
of the Company and its affiliated companies.

 

(viii)                        VACATION.  During the Employment Period,
the Executive shall be entitled to paid vacation in accordance with the most
favorable plans, policies, programs and practices of the Company and its
affiliated companies as in effect for the Executive at any time during the
120-day period immediately preceding the Effective Date or, if more favorable
to the Executive, as in effect generally at any time thereafter with respect to
other peer executives of the Company and its affiliated companies.

 

5.                                       TERMINATION OF EMPLOYMENT.  (a) 
DEATH OR DISABILITY.  The Executive’s
employment shall terminated automatically upon the Executive’s death during the
Employment Period.  If the Company
determines in good faith that the Disability of the Executive has occurred
during the Employment Period (pursuant to the definition of Disability set
forth below), it may give to the Executive written notice in accordance with Section 12(b) of
this Agreement of its intention to terminate the Executive’s employment.  In such event, the Executive’s employment
with the Company shall terminate effective on the 30th day after receipt of
such notice by the Executive (the “Disability Effective Date”), provided that,
within the 30 days after such receipt, the Executive shall not have returned to
full-time performance of the Executive’s duties.  For purposes of this Agreement, “Disability”
shall mean the absence of the Executive from the Executive’s duties with the
Company on a full-time basis for 180 consecutive business days as a result of
incapacity due to mental or physical illness which is determined to be total
and permanent by a physician selected by the Company of its insurers and
acceptable to the Executive or the Executive’s legal representative.

 

(b)                                 CAUSE.  The Company may terminate the
Executive’s employment during the Employment Period for Cause.  For purposes of this Agreement, “Cause” shall
mean:

 

(i)                                     the willful and continued failure of the
Executive to perform substantially the Executive’s duties with the Company or
one of its affiliated (other than any such failure resulting from incapacity
due to physical or mental illness), after a written demand for substantial
performance is delivered to the Executive by the Board or the Chief Executive
Officer of the Company which specifically identifies the manner in

 

5

 

which
the Board or Chief Executive Officer believes that the Executive has not
substantially performed the Executive’s duties, or

 

(ii)                                  the willful engaging by the Executive in
illegal conduct or gross misconduct which is materially and demonstrably
injurious to the Company.

 

For
purposes of this provision, no act or failure to act, on the part of the
Executive, shall be considered “willful” unless it is done, or omitted to be
done, by the Executive in bad faith or without reasonable belief that the
Executive’s action or omission was in the best interests of the Company.  Any act, or failure to act, based upon
authority given pursuant to a resolution duly adopted by the Board or upon the
instructions of the Chief Executive Officer or a senior officer of the Company
or based upon the advice of counsel for the Company shall be conclusively
presumed to be done, or omitted to be done, by the Executive in good faith and
in the best interests of the Company. 
The cessation of employment of the Executive shall not be deemed to be
for Cause unless and until there shall have been delivered to the Executive a
copy of a resolution duly adopted by the affirmative vote of not less than
three-quarters of the entire membership of the Board at a meeting of the Board
called and held for such purpose (after reasonable notice is provided to the
Executive and the Executive is given an opportunity, together with counsel, to
be heard before the Board), finding that, in the good faith opinion of the
Board, the Executive is guilty of the conduct described in subparagraph (i) or
(ii) above, and specifying the particulars thereof in detail.

 

(c)                                  GOOD REASON.  The Executive’s employment may
be terminated By the Executive for Good Reason. 
For purpose of this Agreement, “Good Reason” shall mean:

 

(i)                                     the assignment to the Executive of any duties
inconsistent in any respect with the Executive’s position (including status,
offices, titles and reporting requirement), authority, duties or
responsibilities as contemplated by Section 4(a) of this Agreement,
or any other action by the Company which results in a diminution in such
position, authority, duties or responsibilities, excluding for this purpose an
isolated, insubstantial and inadvertent action not taken in bad faith and which
is remedied by the Company promptly after receipt of notice thereof given by
the Executive;

 

(ii)                                  any failure by the Company to comply with any
of the provisions of Section 4(b) of this Agreement, other than in
isolated, insubstantial and inadvertent failure not occurring in bad faith and
which is remedied by the Company promptly after receipt of notice thereof given
by the Executive;

 

(iii)                               the Company’s requiring the Executive to be
based at any office or location other than as provided in Section 4(a)(i)(B) hereof
or the Company’s requiring the Executive to travel on Company business to a
substantially greater extent than required immediately prior to the Effective
Date;

 

(iv)                              any purported termination by the Company of
the Executive’s employment otherwise than as expressly permitted by this
Agreement; or

 

(v)                                 any failure by the Company to comply with and
satisfy Section 11(c) of this Agreement.

 

6

 

For
purposes of this Section 5(c), any good faith determination of “Good
Reason” made by the Executive shall be conclusive.  Anything in the Agreement to the Contrary
notwithstanding, a termination by the Executive for any reason during the
30-day period immediately following the first anniversary of the Effective Date
shall be deemed to be a termination for Good Reason for all purposes of this
Agreement.

 

(d)                                 NOTICE OF TERMINATION.  Any
termination by the Company for Cause, or by the Executive for Good Reason,
shall be communicated by Notice of Termination to the other party hereto given
in accordance with Section 12(b) of this Agreement.  For purposes of this Agreement, a “Notice of
Termination” means a written notice which (i) indicates the specific
termination provision in this Agreement relied upon, (ii) to the extent
applicable, sets forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination of the Executive’s employment under the
provision so indicated and (iii) if the Date of Termination (as defined
below) is other than the date of receipt of such notice, specifies that
termination date (which date shall be not more than thirty days after the
giving of such notice).  The failure by
the Executive or the Company to set forth in the notice of Termination any fact
or circumstance which contributes to a showing of Good Reason or Cause shall
not waive any right of the Executive or the Company, respectively, hereunder or
preclude the Executive or the Company, respectively, from asserting such fact
or circumstance in enforcing the Executive’s or the Company’s rights hereunder.

 

(e)                                  DATE OF TERMINATION.  “Date
of Termination” means (i) if the Executive’s employment is terminated by
the Company for Cause, or by the Executive for Good Reason, the date of receipt
of the Notice of Termination or any later date specified therein, as the case
may be, (ii) if the Executive employment is terminated by the Company
other than for Cause or Disability, the Date of Termination shall be the date
on which the Company notifies the Executive of such termination and (iii) if
the Executive’s employment is terminated by reason of death or Disability, the
Date of Termination shall be the date of death of the Executive or the
Disability Effective Date, as the case may be. 
Notwithstanding the foregoing, in no event shall the Date of Termination
occur until the Executive experiences a “separation from service” within the
meaning of Section 409A of the Code, and the date on which such separation
from service takes place shall be the “Date of Termination.”  “Separation from Service” shall mean a “separation
from service” within the meaning of Section 409A of the Code, as
determined by the Company in accordance with Section 1.409A-1(h) of
the Treasury Regulations.  For purposes of determining whether a
Separation from Service has occurred, the Executive shall be considered to have
separated from service as an employee when the facts and circumstances indicate
that the Executive and the Company reasonably anticipate that either (i) no
further services will be performed for the Company (including any affiliates)
after a certain date, or (ii) that the level of bona fide services the
Executive will perform for the Company (including any affiliates) after such
date (whether as an employee or as an independent contractor) will permanently
decrease to no more than 20% of the average level of bona fide services
performed by the Executive (whether as an employee or an independent
contractor) over the immediately preceding 36-month period (or the full period
of services to the Company if the Executive has been providing services to the
Company less than 36 months).

 

6.                                       OBLIGATIONS OF THE COMPANY UPON TERMINATION.  (a) 
GOOD REASON; OTHER THAN FOR CAUSE, DEATH OR DISABILITY.  If, during the

 

7

 

Employment Period, the Company
shall terminate the Executive’s employment other than for Cause or Disability
or the Executive shall terminate employment for Good Reason:

 

(i)                                     the
Company shall pay to the Executive in a lump sum in cash within 30 days after
the Date of Termination the aggregate of the following amounts:

 

A.                                   the
sum of (1) the Executive’s Annual Base Salary through the Date of Termination
to the extent not theretofore paid, (2) the product of (x) the higher of (i)
the Recent Annual Bonus and (ii) the Annual Bonus paid or payable, including
any bonus or portion thereof which has been earned but deferred (and annualized
for any fiscal year consisting of less than twelve full months or during which
the Executive was employed for less than twelve full months), for the most
recently completed fiscal year during the Employment Period, if any (such
higher amount being referred to as the “Highest Annual Bonus”) and (y) a
fraction, the numerator of which is the number of days in the current fiscal year
through the Date of Termination, and the denominator of which is 365 (the “Pro
Rata Bonus”) and (3) any accrued vacation pay, in each case to the extent not
theretofore paid (the sum of the amounts described in clauses (1)  and (3) shall be hereinafter referred to as
the “Accrued Obligations”); provided, that notwithstanding the foregoing, if
the Executive has made an irrevocable election under any deferred compensation
arrangement subject to Section 409A of the Code to defer any portion of the
Annual Base Salary described in clause (1) above, then for all purposes of this
Section 6 (including, without limitation, Sections 6(b) through 6(d)), such
deferral election, and the terms of the applicable arrangement shall apply to
the same portion of the amount described in such clause (1), and such portion
shall not be considered as part of the “Accrued Obligations” but shall instead
be an “Other Benefit” (as defined below); and

 

B.                                     the
amount equal to the product of (1) three and (2) the sum of (x) the Executive’s
Annual Base Salary and (y) the Highest Annual Bonus; and

 

C.                                     an
amount equal to the contributions to the Executive’s account in the Company’s
Profit Sharing Plan which the Executive would receive if the Executive’s
employment continued for three years after the Date of Termination assuming for
this purpose that (1) all such contributions are fully vested, (2) the
Executive’s compensation is that required by Sections 4(b)(i) and 4(b)(ii),
and, (3) the Company’s contribution to the Profit Sharing Plan in each such
year is in an amount equal to the greatest amount contributed by the Company in
any of the three years ending prior to the Effective Date.

 

(ii)                                  for
three years after the Executive’s Date of Termination, or such longer period as
may be provided by the terms of the appropriate plan, program, practice or
policy (the “Benefits Period”), the Company shall continue medical,
prescription, vision and dental insurance benefits (“Health Care Benefits”) and
life insurance benefits to the Executive and/or the Executive’s family at least
equal to those which would have been provided to them in accordance with the
plans, programs, practices and policies described in Section 4(b)(iv) of the
Agreement if the Executive’s employment has not been terminated or, if more
favorable to the Executive, as in effect generally at any time thereafter with
respect to other peer executives of the Company and its affiliated companies
and their families, provided, however, that if the Executive becomes reemployed
with another employer and is eligible to receive medical or other welfare
benefits under another employer provided plan, the medical and other welfare
benefits 

 

8

 

described herein shall be
secondary to those provided under such other plan during such applicable period
of eligibility; provided, however,
that the Health Care Benefits shall be provided during the Benefits Period in
such a manner that such benefits are excluded from the Executive’s income for
federal income tax purposes.

 

(iii)                               the
Company shall, at its sole expense as incurred, provide the Executive with
reasonable outplacement services the scope and provider of which shall be
selected by the Executive in his sole discretion, provided that such
outplacement benefits shall end not later than the last day of the second
calendar year that begins after the Date of Termination; and

 

(iv)                              to
the extent not theretofore paid or provided, the Company shall timely pay or
provide to the Executive any other amounts or benefits required to be paid or
provided or which the Executive is eligible to receive under any plan, program,
policy or practice or contract or agreement of the Company and its affiliated
companies (such other amounts and benefits shall be hereinafter referred to as
the “Other Benefits”).

 

Notwithstanding the foregoing
provisions of this Section 6, in the event that the Executive is a “specified
employee” within the meaning of Section 409A of the Code (as determined in
accordance with the methodology established by the Company as in effect on the
Date of Termination) (a “Specified Employee”), amounts that constitute
“nonqualified deferred compensation” within the meaning of Section 409A of the
Code that would otherwise be payable or provided under Section 6 during the
six-month period immediately following the Date of Termination shall instead be
paid, with interest on any delayed payment at the applicable federal rate
provided for in Section 7872(f)(2)(A) of the Code (“Interest”) determined as of
the Date of Termination, or provided on the first business day after the date
that is six months following the Executive’s Date of Termination (the “Delayed
Payment Date”) ; provided that no such interest shall accrue with respect to
any equity awards not settled during such six month period.

 

(b)                                 DEATH.  If the Executive’s employment is terminated
by reason of the Executive’s death during the Employment Period, this Agreement
shall terminate without further obligations to the Executive’s legal
representatives under this Agreement, other than for payment of Accrued
Obligations (subject to the proviso set forth in Section 6(a)(1)(A) to the
extent applicable), the Pro Rata Bonus and the timely payment or provision of
Other Benefits.  Accrued Obligations and
the Pro Rata Bonus shall be paid to the Executive’s estate or beneficiary, as
applicable, in a lump sum in cash within 30 days of the Date of
Termination.  With respect to the
provision of Other Benefits, the term Other Benefits as utilized in this
Section 6(b) shall include, without limitation, and the Executive’s estate
and/or beneficiaries shall be entitled to receive, benefits at least equal to
the most favorable benefits provided by the Company and affiliated companies to
the estates and beneficiaries of peer executives of the Company and such
affiliated companies under such plans, programs, practices and policies
relating to death benefits, if any, as in effect with respect to other peer
executives and their beneficiaries at any time during the 120-day period immediately
preceding the Effective Date or, if more favorable to the Executive’s estate
and/or the Executive’s beneficiaries, as in effect on the date of Executive’s
death with respect to other peer executive of the Company and its affiliated
companies and their beneficiaries.

 

9

 

(c)                                  DISABILITY.  If the Executive’s employment is terminated
by reason of the Executive’s Disability during the Employment Period, this
Agreement shall terminate without further obligations to the Executive, other
than for payment of Accrued Obligations (subject to the proviso set forth in
Section 6(a)(1)(A) to the extent applicable), the Pro Rata Bonus and the timely
payment or provision of Other Benefits. 
Accrued Obligations and Pro Rata Bonus shall be paid to the Executive in
a lump sum in cash within 30 days of the Date of Termination; provided that in
the event that the Executive is a Specified Employee, the Pro Rata Bonus shall
be paid, with Interest, on the Delayed Payment Date.  With respect to the provision of Other
Benefits, the term Other Benefits as utilized in this Section 6(c) shall
include, and the Executive shall be entitled after the Disability Effective
Date to receive, disability and other benefits at least equal to the most
favorable of those generally provided by the Company and its affiliated
companies to disabled executives and/or their families in accordance with such
plans, programs, practices and policies relating to disability, if any, as in
effect generally with respect to other peer executives and their families at
any time during the 120-day period immediately preceding the Effective Date or,
if more favorable to the Executive and/or the Executive’s family, as in effect
at any time thereafter generally with respect to other peer executives of the
Company and its affiliated companies and their families.

 

(d)                                 CAUSE;
OTHER THAN FOR GOOD REASON.  If the
Executive’s employment shall be terminated for Cause during the Employment
Period, this Agreement shall terminate without further obligations to the
Executive other than the obligation to pay to the Executive (x) his Annual Base
Salary through the Date of Termination, (y) the timely delivery of the Other
Benefits, in each case to the extent theretofore unpaid.  If the Executive voluntarily terminates
employment during the Employment Period, excluding a termination for Good
Reason, this Agreement shall terminate without further obligations to the
Executive, other than for Accrued Obligations (subject to the proviso set forth
in Section 6(a)(1)(A) to the extent applicable), the Pro Rata Bonus and the
timely payment or provision of Other Benefits. 
In such case, timely payment or provision of Other Benefits.  In such case, all Accrued Obligations and the
Pro Rata Bonus shall be paid to the Executive in a lump sum in cash within 30
days of the Date of Termination; provided that in the event that the Executive
is a Specified Employee, the Pro Rata Bonus shall be paid, with Interest, on
the Delayed Payment Date.

 

7.                                       NON-EXCLUSIVITY
OF RIGHTS.  Nothing in this Agreement
shall prevent or limit the Executive’s continuing or future participation in
any plan, program, policy or practice provided by the Company or any of its
affiliated companies and for which the Executive may qualify, nor, subject to
Section 12(f), shall anything herein limit or otherwise affect such rights as
the Executive may have under any contract or agreement with the Company or any
of its affiliated companies.  Amounts
which are vested benefits or which the Executive is otherwise entitled to
receive under any plan, policy, practice or program of or any contract or
agreement with the Company or any of its affiliated companies at or subsequent
to the Date of Termination shall be payable in accordance with such plan, policy,
practice or program or contract or agreement except as explicitly modified by
this Agreement.

 

8.                                       FULL
SETTLEMENT.  The Company’s obligation
to make the payment provided for in this Agreement and otherwise to perform its
obligations hereunder shall not be affected by any set-off, counterclaim,
recoupment, defense or other claim, right or action which the Company may have
against the Executive or others.  In no
event shall the Executive be 

 

10

 

obligated to seek other
employment or take any other action by way of mitigation of the amounts payable
to the Executive under any of the provisions of this Agreement and such amounts
shall not be reduced whether or not the Executive obtains other employment.  The Company agrees to pay as incurred (within
10 days following the Company’s receipt of an invoice from the Executive), at
any time from the Change of Control through the Executive’s remaining lifetime
(or, if longer, through the 20th anniversary of the Change of Control), to the
full extent permitted by law, all legal fees and expenses which the Executive
may reasonably incur as a result of any contest (regardless of the outcome
thereof) by the Company, the Executive or others of the validity or enforceability
of, or liability under, any provision of this Agreement or any guarantee of
performance thereof (including as a result of any contest by the Executive
about the amount of any payment pursuant to this Agreement), plus in each case
Interest determined as of the date such legal fees and expenses were
incurred.  In order to comply with
Section 409A of the Code, in no event shall the payments by the Company under
this Section 8 be made later than the end of the calendar year next following
the calendar year in which such fees and expenses were incurred, provided, that the Executive shall have submitted an invoice
for such fees and expenses at least 10 days before the end of the calendar year
next following the calendar year in which such fees and expenses were
incurred.  The amount of such legal fees
and expenses that the Company is obligated to pay in any given calendar year
shall not affect the legal fees and expenses that the Company is obligated to
pay in any other calendar year, and the Executive’s right to have the Company
pay such legal fees and expenses may not be liquidated or exchanged for any
other benefit.

 

9.                                       CERTAIN
ADDITIONAL PAYMENTS BY THE COMPANY.

 

(a)                                  Anything
in this Agreement to the contrary notwithstanding and except as set forth
below, in the event it shall be determined that any Payment would be subject to
the Excise Tax, then the Executive shall be entitled to receive an additional
payment (the “Gross-Up Payment”) in an amount such that, after payment by the
Executive of all taxes (and any interest or penalties imposed with respect to
such taxes), including, without limitation, any income taxes (and any interest
and penalties imposed with respect thereto) and Excise Tax imposed upon the
Gross-Up Payment, but excluding any income taxes, interest and penalties
imposed pursuant to Section 409A of the Code, the Executive retains an amount
of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments.  Notwithstanding the foregoing provisions of
this Section 9(a), if it shall be determined that the Executive is entitled to
the Gross-Up Payment, but that the Parachute Value of all Payments does not
exceed 110% of the Safe Harbor Amount, then no Gross-Up Payment shall be made
to the Executive and the amounts payable under this Agreement shall be reduced
so that the Parachute Value of all Payments, in the aggregate, equals the Safe
Harbor Amount.  The reduction of the
amounts payable hereunder, if applicable, shall be made by reducing the
payments and benefits under the following sections in the following order: (i)
Section 6(a)(i)(B) and (ii) Section 6(a)(i)(C). 
For purposes of reducing the Payments to the Safe Harbor Amount, only
amounts payable under this Agreement (and no other Payments) shall be
reduced.  If the reduction of the amount
payable under this Agreement would not result in a reduction of the Parachute
Value of all Payments to the Safe Harbor Amount, no amounts payable under the
Agreement shall be reduced pursuant to this Section 9(a) and the Executive
shall be entitled to the Gross-Up Payment. 
The Company’s obligation to make Gross-Up Payments under this Section 9
shall not be conditioned upon the Executive’s termination of employment.

 

11

 

(b)                                 Subject
to the provisions of Section 9(c), all determinations required to be made under
this Section 9, including whether and when a Gross-Up Payment is required, the
amount of such Gross-Up Payment and the assumptions to be utilized in arriving
at such determination, shall be made by Ernst & Young LLP, or such other
nationally recognized certified public accounting firm as may be designated by
the Executive (the “Accounting Firm”). 
The Accounting Firm shall provide detailed supporting calculations both
to the Company and the Executive within 15 business days of the receipt of
notice from the Executive that there has been a Payment or such earlier time as
is requested by the Company.  In the
event that the Accounting Firm is serving as accountant or auditor for the
individual, entity or group effecting the Change of Control, the Executive may
appoint another nationally recognized accounting firm to make the
determinations required hereunder (which accounting firm shall then be referred
to as the Accounting Firm hereunder). 
All fees and expenses of the Accounting Firm shall be borne solely by
the Company.  Any determination by the
Accounting Firm shall be binding upon the Company and the Executive.  As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the initial
determination by the Accounting Firm hereunder, it is possible that Gross-Up
Payments that will not have been made by the Company should have been made (the
“Underpayment”), consistent with the calculations required to be made
hereunder.  In the event the Company
exhausts its remedies pursuant to Section 9(c) and the Executive thereafter is
required to make a payment of any Excise Tax, the Accounting Firm shall
determine the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Company to or for the benefit of the
Executive.

 

(c)                                  The
Executive shall notify the Company in writing of any claim by the Internal
Revenue Service that, if successful, would require the payment by the Company
of the Gross-Up Payment.  Such
notification shall be given as soon as practicable, but no later than 10
business days after the Executive is informed in writing of such claim.  The Executive shall apprise the Company of
the nature of such claim and the date on which such claim is requested to be
paid.  The Executive shall not pay such
claim prior to the expiration of the 30-day period following the date on which
the Executive gives such notice to the Company (or such shorter period ending
on the date that any payment of taxes with respect to such claim is due).  If the Company notifies the Executive in
writing prior to the expiration of such period that the Company desires to
contest such claim, the Executive shall:

 

(i)                                     give
the Company any information reasonably requested by the Company relating to
such claim,

 

(ii)                                  take
such action in connection with contesting such claim as the Company shall
reasonably request in writing from time to time, including, without limitation,
accepting legal representation with respect to such claim by an attorney
reasonably selected by the Company,

 

(iii)                               cooperate
with the Company in good faith in order effectively to contest such claim, and

 

(iv)                              permit
the Company to participate in any proceedings relating to such claim;

 

12

 

provided, however, that the Company shall bear and pay directly all
costs and expenses (including additional interest and penalties) incurred in
connection with such contest, and shall indemnify and hold the Executive harmless,
on an after-tax basis, for any Excise Tax or income tax (including interest and
penalties) imposed as a result of such representation and payment of costs and
expenses.  Without limitation on the
foregoing provisions of this Section 9(c), the Company shall control all
proceedings taken in connection with such contest, and, at its sole discretion,
may pursue or forgo any and all administrative appeals, proceedings, hearings
and conferences with the applicable taxing authority in respect of such claim
and may, at its sole discretion, either pay the tax claimed to the appropriate
taxing authority on behalf of the Executive and direct the Executive to sue for
a refund or to contest the claim in any permissible manner, and the Executive
agrees to prosecute such contest to a determination before any administrative
tribunal, in a court of initial jurisdiction and in one or more appellate
courts, as the Company shall determine; provided, however, that, if the Company pays such claim and directs
the Executive to sue for a refund, the Company shall indemnify and hold the
Executive harmless, on an after-tax basis, from any Excise Tax or income tax
(including interest or penalties) imposed with respect to such payment or with
respect to any imputed income in connection with such payment; and provided, further, that
any extension of the statute of limitations relating to payment of taxes for
the taxable year of the Executive with respect to which such contested amount
is claimed to be due is limited solely to such contested amount.  Furthermore, the Company’s control of the
contest shall be limited to issues with respect to which the Gross-Up Payment
would be payable hereunder, and the Executive shall be entitled to settle or contest,
as the case may be, any other issue raised by the Internal Revenue Service or
any other taxing authority.

 

(d)                                 If,
after the receipt by the Executive of a Gross-Up Payment or payment by the
Company of an amount on the Executive’s behalf pursuant to Section 9(c), the
Executive becomes entitled to receive any refund with respect to the Excise Tax
to which such Gross-Up Payment relates or with respect to such claim, the
Executive shall (subject to the Company’s complying with the requirements of
Section 9(c), if applicable) promptly pay to the Company the amount of such
refund (together with any interest paid or credited thereon after taxes
applicable thereto).  If, after payment
by the Company of an amount on the Executive’s behalf pursuant to Section 9(c),
a determination is made that the Executive shall not be entitled to any refund
with respect to such claim and the Company does not notify the Executive in
writing of its intent to contest such denial of refund prior to the expiration
of 30 days after such determination, then the amount of such payment shall
offset, to the extent thereof, the amount of Gross-Up Payment required to be
paid.

 

(e)                                  Any
Gross-Up Payment, as determined pursuant to this Section 9, shall be paid by
the Company to the Executive within five days of the receipt of the Accounting
Firm’s determination; provided that,
the Gross-Up Payment shall in all events be paid no later than the end of the
Executive’s taxable year next following the Executive’s taxable year in which
the Excise Tax (and any income or other related taxes or interest or penalties
thereon) on a Payment are remitted to the Internal Revenue Service or any other
applicable taxing authority or, in the case of amounts relating to a claim
described in Section 9(c) that does not result in the remittance of any federal,
state, local and foreign income, excise, social security and other taxes, the
calendar year in which the claim is finally settled or otherwise resolved.  Notwithstanding any other provision of this
Section 9, the Company may, in its sole discretion, withhold and pay over 

 

13

 

to the Internal Revenue Service
or any other applicable taxing authority, for the benefit of the Executive, all
or any portion of any Gross-Up Payment, and the Executive hereby consents to
such withholding.

 

(f)                                    Definitions.  The following terms shall have the following
meanings for purposes of this Section 9.

 

(i)                                     “Excise
Tax” shall mean the excise tax imposed by Section 4999 of the Code, together
with any interest or penalties imposed with respect to such excise tax.

 

(ii)                                  “Parachute
Value” of a Payment shall mean the present value as of the date of the change
of control for purposes of Section 280G of the Code of the portion of such
Payment that constitutes a “parachute payment” under Section 280G(b)(2), as
determined by the Accounting Firm for purposes of determining whether and to
what extent the Excise Tax will apply to such Payment.

 

(iii)                               A
“Payment” shall mean any payment or distribution in the nature of compensation
(within the meaning of Section 280G(b)(2) of the Code) to or for the benefit of
the Executive, whether paid or payable pursuant to this Agreement or otherwise.

 

(iv)                              The
“Safe Harbor Amount” means 2.99 times the Executive’s “base amount,” within the
meaning of Section 280G(b)(3) of the Code.

 

10.                                 CONFIDENTIAL
INFORMATION.  The Executive shall
hold in a fiduciary capacity for the benefit of the Company all secret or
confidential information, knowledge or data relating to the Company or any of
its affiliated companies, and their respective businesses, which shall have
been obtained by the Executive during the Executive’s employment by the Company
or any of its affiliated companies and which shall not be or become public
knowledge (other than by acts by the Executive or representative of the
Executive in violation of this Agreement). 
After termination of the Executive’s employment with the Company, the
Executive shall not, without the prior written consent of the Company or as may
otherwise be required by law or legal process, communicate or divulge any such
information, knowledge or data to anyone other than the Company and those
designated by it.  In no event shall an
asserted violation of the provisions of this Section 10 constitute a basis for
deferring or withholding any amounts otherwise payable to the Executive under
this Agreement.

 

11.                                 SUCCESSORS.  (a) 
This Agreement is personal to the Executive and without the prior
written consent of the Company shall not be assignable by the Executive
otherwise than by will or the laws of descent and distribution.  This Agreement shall inure to the benefit of
and be enforceable by the Executive’s legal representative.

 

(b)                                 This
Agreement shall inure to the benefit of and be binding upon the Company and its
successors and assigns.

 

(c)                                  The
Company will require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the business
and/or 

 

14

 

assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the
same extent that the Company would be required to perform it if no such
succession had taken place.  As used in
this Agreement, “Company” shall mean the Company as hereinbefore defined and
any successor to its business and /or assets as aforesaid which assumes and
agrees to perform this Agreement by operation of law, or otherwise.

 

12.                                 MISCELLANEOUS.  (a) 
This Agreement shall be governed by and construed in accordance with the
laws of the State of Delaware, without reference to principles of conflict of
laws.  The captions of this Agreement are
not part of the provisions hereof and shall have no force or effect.  This Agreement may not be amended or modified
otherwise than by a written agreement executed by the parties hereto or their
respective successors and legal representatives.

 

(b)                                 All
notices and other communications hereunder shall be in writing and shall be
given by hand delivery to the other party or by registered or certified mail,
return receipt requested, postage prepaid, addressed as follows:

 

	
  IF TO THE
  EXECUTIVE:

  	
   

  	
  Russell
  Goldsmith

  
	
   

  	
   

  	
  400 North
  Roxbury Drive

  
	
   

  	
   

  	
  Beverly
  Hills, CA 90210

  
	
   

  	
   

  	
   

  
	
  IF TO THE
  COMPANY:

  	
   

  	
  City
  National Bank

  
	
   

  	
   

  	
  400 North
  Roxbury Drive

  
	
   

  	
   

  	
  Beverly
  Hills, CA 90210

  
	
   

  	
   

  	
  Attention:
  General Counsel

  

 

or to such other address as
either party shall have furnished to the other in writing in accordance
herewith.  Notice and communications
shall be effective when actually received by the addressee.

 

(c)                                  The
invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provision of this Agreement.

 

(d)                                 The
Company may withhold from any amounts payable under this Agreement such
Federal, state, local or foreign taxes as shall be required to be withheld
pursuant to any applicable law or regulation.

 

(e)                                  The
Executive’s or the Company’s failure to insist upon strict compliance with any
provision of this Agreement or the failure to assert any right the Executive or
the Company may have hereunder, including, without limitation, the right of the
Executive to terminate employment for Good Reason pursuant to Section
5(c)(l)-(v)of this Agreement, shall not be deemed to be a waiver of such
provision or right or any other provision or right of the Agreement.

 

(f)                                    The
Executive and the Company acknowledge that, except as may otherwise be provided
under any other written agreement between the Executive and the Company, the
employment of the Executive by the Company is “at will” and, subject to Section
1(a) hereof, prior to the Effective Date, the Executive’s employment and/or
this Agreement may 

 

15

 

be terminated by either the
Executive or the Company at any time prior to the Effective Date, in which case
the Executive shall have no further rights under this Agreement.  From and after the Effective Date this
Agreement shall supersede any other agreement between the parties with respect
to the subject matter hereof.  From and
after the date hereof, this Agreement shall supersede the Employment Agreement
by and between City National Corporation, a Delaware corporation (the
“Company”) and Russell Goldsmith (the “Executive”), dated as of the 31st day of
March, 1997.  Notwithstanding the
foregoing, this Agreement shall not supersede and shall be subject to the
Waiver and Amendment Agreement letter dated as of November 14, 2008 by and
between the Employer and Goldsmith.

 

(g)                                 The
Agreement is intended to comply with the requirements of Section 409A of the
Code or an exemption or exclusion therefrom and, with respect to amounts that
are subject to Section 409A of the Code, shall in all respects be administered
in accordance with Section 409A of the Code. 
Each payment under this Agreement shall be treated as a separate payment
for purposes of Section 409A of the Code. 
In no event may the Executive, directly or indirectly, designate the
calendar year of any payment to be made under this Agreement.  If the Executive dies following the Date of
Termination and prior to the payment of the any amounts delayed on account of
Section 409A of the Code, such amounts shall be paid to the personal
representative of the Executive’s estate within 30 days after the date of the
Executive’s death.  All reimbursements
and in-kind benefits provided under this Agreement that constitute deferred
compensation within the meaning of Section 409A of the Code shall be made or
provided in accordance with the requirements of Section 409A of the Code, including,
without limitation, that (i) in no event shall reimbursements by the Company
under this Agreement be made later than the end of the calendar year next
following the calendar year in which the applicable fees and expenses were
incurred, provided, that the Executive shall have submitted an invoice for such
fees and expenses at least 10 days before the end of the calendar year next
following the calendar year in which such fees and expenses were incurred; (ii)
the amount of in-kind benefits that the Company is obligated to pay or provide
in any given calendar year shall not affect the in-kind benefits that the
Company is obligated to pay or provide in any other calendar year; (iii) the
Executive’s right to have the Company pay or provide such reimbursements and
in-kind benefits may not be liquidated or exchanged for any other benefit; and
(iv) in no event shall the Company’s obligations to make such reimbursements or
to provide such in-kind benefits apply later than the Executive’s remaining
lifetime (or if longer, through the 20th anniversary of the Effective
Date).  Prior to the Effective Date but
within the time period permitted by the applicable Treasury Regulations (or
such later time as may be permitted under Section 409A or any IRS or Department
of Treasury rules or other guidance issued thereunder), the Company may, in
consultation with the Executive, modify the Agreement, in the least restrictive
manner necessary and without any diminution in the value of the payments to the
Executive, in order to cause the provisions of the Agreement to comply with the
requirements of Section 409A of the Code, so as to avoid the imposition of taxes
and penalties on the Executive pursuant to Section 409A of the Code.

 

16

 

IN WITNESS
WHEREOF, the Executive has hereunto set the Executive’s hand and, pursuant to
the authorization from its Board of Directors, the Company has caused these
presents to be executed in its name on its behalf, all as of the day and year
first above written.

 

 

	
   

  	
   

  
	
   

  	
  Russell
  Goldsmith

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CITY
  NATIONAL CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   

  	
  Michael B.
  Cahill

  
	
   

  	
   

  	
  Executive
  Vice President and General 

  Counsel

  

 

17Exhibit 10.1

 

EXECUTION VERSION

 

Subject to a request for confidential treatment, certain
portions of this agreement have been intentionally omitted.  The omitted
portions subject to the confidential treatment request are designated by three
asterisks ([***]).  A complete version of this agreement has been
separately filed with the Securities and Exchange Commission.

 

MASTER SERVICES AGREEMENT

BY AND BETWEEN

SERVICEMASTER CONSUMER SERVICES, L.P.

AND

INTERNATIONAL BUSINESS MACHINES CORPORATION

 

This Master Services
Agreement (“Master Agreement”) is entered into as of December 11,
2008 (the “Effective Date”), between

 

1.             ServiceMaster Consumer Services, L.P., a Delaware
limited partnership (“Customer”)

 

AND

 

2.             International Business Machines Corporation, a New York
corporation (“Service Provider”).

 

The Parties agree to the
terms and conditions set forth in this Master Agreement (including the Exhibits
and Schedules referenced in this Master Agreement), and in each
Transaction Document (including the Schedules referenced in each
Transaction Document) executed by the Parties and referencing this Master
Agreement.  Each Transaction Document,
the Schedules and Exhibits referenced in each Transaction
Document and this Master Agreement are incorporated into this Master Agreement,
and the several Transaction Documents, together with the Schedules
attached thereto, and this Master Agreement, together with the Exhibits  attached hereto, and the Procedures Manuals and all Change
Orders, are herein collectively referred to as the “Agreement.”

 

Signed
for and on behalf of ServiceMaster Consumer Services, L.P.:

By: ServiceMaster Consumer Services, Inc., its General Partner

 

 

	
  By:

  	
  /s/
  Steven J. Martin

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
  Steven
  J. Martin

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
  President

  	
   

  
						

 

 

Signed
for and on behalf of International Business Machines Corporation:

 

	
  By:

  	
  /s/
  Justin Dragoo

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
  Justin
  Dragoo

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
  VP
  Global Technology Services

  	
   

  
						

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  1.

  	
  PURPOSE AND STRUCTURE OF AGREEMENT

  	
  1

  
	
   

  	
   

  	
   

  
	
   

  	
  1.1.

  	
  Purpose of Agreement

  	
  1

  
	
   

  	
  1.2.

  	
  Structure of Agreement

  	
  1

  
	
   

  	
   

  	
   

  
	
  2.

  	
  TERM OF AGREEMENT

  	
  2

  
	
   

  	
   

  	
   

  
	
   

  	
  2.1.

  	
  Term of Agreement and Renewal

  	
  2

  
	
   

  	
  2.2.

  	
  Termination Assistance Services

  	
  2

  
	
   

  	
   

  	
   

  
	
  3.

  	
  THE SERVICES

  	
  3

  
	
   

  	
   

  	
   

  
	
   

  	
  3.1.

  	
  Obligation to Provide Services

  	
  3

  
	
   

  	
  3.2.

  	
  Compliance

  	
  4

  
	
   

  	
  3.3.

  	
  Performance and Service Levels

  	
  6

  
	
   

  	
  3.4.

  	
  Step-In Rights

  	
  7

  
	
   

  	
  3.5.

  	
  Disaster Recovery Services

  	
  8

  
	
   

  	
  3.6.

  	
  Additional Services

  	
  9

  
	
   

  	
  3.7.

  	
  New Services

  	
  11

  
	
   

  	
  3.8.

  	
  Service Provider to Provide and Manage Necessary
  Resources

  	
  12

  
	
   

  	
  3.9.

  	
  Reports

  	
  12

  
	
   

  	
  3.10.

  	
  Locations

  	
  12

  
	
   

  	
   

  	
   

  
	
  4.

  	
  CHARGES; NEW SERVICES; INVOICES; AND PAYMENTS

  	
  14

  
	
   

  	
   

  	
   

  
	
   

  	
  4.1.

  	
  Charges

  	
  14

  
	
   

  	
  4.2.

  	
  Taxes

  	
  14

  
	
   

  	
  4.3.

  	
  Tariffs, Duties and Import/Export Compliance and
  Fees

  	
  15

  
	
   

  	
  4.4.

  	
  Invoices and Invoice Payment

  	
  15

  
	
   

  	
  4.5.

  	
  Market Currency Procedures

  	
  15

  
	
   

  	
  4.6.

  	
  Service Level Credits

  	
  16

  
	
   

  	
  4.7.

  	
  Rights of Set-Off

  	
  16

  
	
   

  	
  4.8.

  	
  Disputed Charges/Credits

  	
  16

  
	
   

  	
  4.9.

  	
  Changes in Customer Business

  	
  17

  
	
   

  	
   

  	
   

  
	
  5.

  	
  COVENANTS

  	
  17

  
	
   

  	
   

  	
   

  
	
   

  	
  5.1.

  	
  Covenant of Cooperation and Good Faith

  	
  17

  
	
   

  	
  5.2.

  	
  Services

  	
  17

  
	
   

  	
  5.3.

  	
  Continuous Improvement

  	
  18

  
	
   

  	
  5.4.

  	
  No Solicitation

  	
  18

  
	
   

  	
  5.5.

  	
  Export; Regulatory Approvals

  	
  18

  
	
   

  	
  5.6.

  	
  Disabling Code

  	
  19

  

 

i

 

	
   

  	
  5.7.

  	
  Services Not to be Withheld

  	
  19

  
	
   

  	
   

  	
   

  
	
  6.

  	
  REPRESENTATIONS AND WARRANTIES

  	
  19

  
	
   

  	
   

  	
   

  
	
   

  	
  6.1.

  	
  Representations and Warranties of Customer

  	
  19

  
	
   

  	
  6.2.

  	
  Representations and Warranties of Service Provider

  	
  20

  
	
   

  	
  6.3.

  	
  Pass-Through Warranties

  	
  22

  
	
   

  	
  6.4.

  	
  Disclaimer

  	
  22

  
	
   

  	
   

  	
   

  
	
  7.

  	
  TRANSITION

  	
  23

  
	
   

  	
   

  	
   

  
	
   

  	
  7.1.

  	
  Transition and Transformation Plan

  	
  23

  
	
   

  	
  7.2.

  	
  Critical Transition Milestones

  	
  23

  
	
   

  	
  7.3.

  	
  Affected Employees

  	
  23

  
	
   

  	
   

  	
   

  
	
  8.

  	
  GOVERNANCE

  	
  23

  
	
   

  	
   

  	
   

  
	
  9.

  	
  RELATIONSHIP PROTOCOLS

  	
  24

  
	
   

  	
   

  	
   

  
	
   

  	
  9.1.

  	
  Non-Exclusive; Alternate Service Providers

  	
  24

  
	
   

  	
  9.2.

  	
  Personnel Resources

  	
  24

  
	
   

  	
  9.3.

  	
  Use of Subcontractors

  	
  26

  
	
   

  	
  9.4.

  	
  Contract Management

  	
  27

  
	
   

  	
  9.5.

  	
  Required Consents

  	
  27

  
	
   

  	
  9.6.

  	
  Change Control Procedures

  	
  28

  
	
   

  	
  9.7.

  	
  Inspections and Audits

  	
  28

  
	
   

  	
   

  	
   

  
	
  10.

  	
  TECHNOLOGY; INTELLECTUAL PROPERTY RIGHTS

  	
  33

  
	
   

  	
   

  	
   

  
	
   

  	
  10.1.

  	
  Customer Software

  	
  33

  
	
   

  	
  10.2.

  	
  Service Provider Software

  	
  33

  
	
   

  	
  10.3.

  	
  Service Provider Materials

  	
  34

  
	
   

  	
  10.4.

  	
  Customer Group Materials

  	
  34

  
	
   

  	
  10.5.

  	
  Deliverables

  	
  35

  
	
   

  	
  10.6.

  	
  Additional Licenses to Customer

  	
  36

  
	
   

  	
  10.7.

  	
  Obligations Regarding Materials

  	
  38

  
	
   

  	
  10.8.

  	
  Knowledge Capital

  	
  38

  
	
   

  	
  10.9.

  	
  Limitation on Grants of Rights

  	
  38

  
	
   

  	
  10.10.

  	
  Assignment

  	
  38

  
	
   

  	
  10.11.

  	
  Sale of an Affiliate

  	
  39

  
	
   

  	
   

  	
   

  
	
  11.

  	
  CONFIDENTIALITY AND DATA

  	
  39

  
	
   

  	
   

  	
   

  
	
   

  	
  11.1.

  	
  Company Information

  	
  39

  
	
   

  	
  11.2.

  	
  Obligations

  	
  39

  
	
   

  	
  11.3.

  	
  Exclusions

  	
  41

  
	
   

  	
  11.4.

  	
  Data Ownership; Customer Data

  	
  41

  

 

ii

 

	
   

  	
  11.5.

  	
  Loss of or Unauthorized Access to Company
  Information; Intrusions

  	
  42

  
	
   

  	
  11.6.

  	
  Limitation

  	
  42

  
	
   

  	
  11.7.

  	
  Injunctive Relief

  	
  43

  
	
   

  	
   

  	
   

  
	
  12.

  	
  TERMINATION

  	
  43

  
	
   

  	
   

  	
   

  
	
   

  	
  12.1.

  	
  Termination by Customer

  	
  43

  
	
   

  	
  12.2.

  	
  Termination by Service Provider

  	
  45

  
	
   

  	
  12.3.

  	
  Termination Charges

  	
  45

  
	
   

  	
  12.4.

  	
  Termination Assistance Services

  	
  45

  
	
   

  	
  12.5.

  	
  Other Rights Upon Termination

  	
  47

  
	
   

  	
  12.6.

  	
  Survival of Selected Provisions

  	
  48

  
	
   

  	
   

  	
   

  
	
  13.

  	
  LIABILITY

  	
  48

  
	
   

  	
   

  	
   

  
	
   

  	
  13.1.

  	
  Liability Caps

  	
  48

  
	
   

  	
  13.2.

  	
  Exclusions

  	
  48

  
	
   

  	
  13.3.

  	
  Direct Damages

  	
  49

  
	
   

  	
  13.4.

  	
  Notification Cap

  	
  49

  
	
   

  	
  13.5.

  	
  Remedies

  	
  49

  
	
   

  	
   

  	
   

  
	
  14.

  	
  INDEMNITIES

  	
  49

  
	
   

  	
   

  	
   

  
	
   

  	
  14.1.

  	
  Indemnity by Service Provider

  	
  49

  
	
   

  	
  14.2.

  	
  Indemnity by Customer

  	
  51

  
	
   

  	
  14.3.

  	
  Indemnification Procedures

  	
  53

  
	
   

  	
   

  	
   

  
	
  15.

  	
  INSURANCE AND RISK OF LOSS

  	
  54

  
	
   

  	
   

  	
   

  
	
   

  	
  15.1.

  	
  Service Provider Insurance

  	
  54

  
	
   

  	
  15.2.

  	
  Risk of Property Loss

  	
  56

  
	
   

  	
  15.3.

  	
  Waiver of Subrogation

  	
  57

  
	
   

  	
   

  	
   

  
	
  16.

  	
  DISPUTE RESOLUTION

  	
  57

  
	
   

  	
   

  	
   

  
	
   

  	
  16.1.

  	
  Disputes in General

  	
  57

  
	
   

  	
  16.2.

  	
  Continued Performance

  	
  57

  
	
   

  	
  16.3.

  	
  Exceptions to Dispute Resolution Procedures

  	
  57

  
	
   

  	
  16.4.

  	
  Governing Law

  	
  57

  
	
   

  	
   

  	
   

  
	
  17.

  	
  GENERAL

  	
  58

  
	
   

  	
   

  	
   

  
	
   

  	
  17.1.

  	
  Relationship of Parties

  	
  58

  
	
   

  	
  17.2.

  	
  Entire Agreement, Updates, Amendments and
  Modifications

  	
  58

  
	
   

  	
  17.3.

  	
  Force Majeure

  	
  58

  
	
   

  	
  17.4.

  	
  Waiver

  	
  59

  
	
   

  	
  17.5.

  	
  Severability

  	
  59

  
	
   

  	
  17.6.

  	
  Counterparts

  	
  59

  

 

iii

 

	
   

  	
  17.7.

  	
  Binding Nature and Assignment

  	
  59

  
	
   

  	
  17.8.

  	
  Notices

  	
  60

  
	
   

  	
  17.9.

  	
  No Third Party Beneficiaries

  	
  61

  
	
   

  	
  17.10.

  	
  Rules of Construction

  	
  61

  
	
   

  	
  17.11.

  	
  Further Assurances

  	
  61

  
	
   

  	
  17.12.

  	
  Expenses

  	
  62

  
	
   

  	
  17.13.

  	
  Savings Clause

  	
  62

  
	
   

  	
  17.14.

  	
  Jury Trial Waiver

  	
  62

  
	
   

  	
  17.15.

  	
  Currency

  	
  62

  
	
   

  	
  17.16.

  	
  Consents and Approvals

  	
  62

  
	
   

  	
  17.17.

  	
  Professional Advice

  	
  62

  
	
   

  	
  17.18.

  	
  Resale

  	
  63

  

 

iv

 

EXHIBITS TO THE MASTER AGREEMENT

 

Exhibit

 

	
  1

  	
   

  	
  Definitions [portions omitted]

  
	
   

  	
   

  	
   

  
	
  2

  	
   

  	
  List of Transaction Document Schedules [portions omitted]

  
	
   

  	
   

  	
   

  
	
  3

  	
   

  	
  Form of Transaction Document [portions omitted]

  
	
   

  	
   

  	
   

  
	
  4

  	
   

  	
  Governance and Change Control [portions omitted]

  
	
   

  	
   

  	
   

  
	
  5

  	
   

  	
  [Reserved]

  
	
   

  	
   

  	
   

  
	
  6

  	
   

  	
  Form of Auditor Confidentiality Agreement

  
	
   

  	
   

  	
   

  
	
  7

  	
   

  	
  Dispute Resolution Procedures [portions omitted]

  
	
   

  	
   

  	
   

  
	
  8

  	
   

  	
  Procedures Manual Requirements [portions omitted]

  
	
   

  	
   

  	
   

  
	
  9

  	
   

  	
  Customer Security Requirements [portions omitted]

  
	
   

  	
   

  	
   

  
	
  10

  	
   

  	
  Market Currency Procedures [portions omitted]

  
	
   

  	
   

  	
   

  
	
  10.1

  	
   

  	
  Benchmarking Services Agreement [portions omitted]

  
	
   

  	
   

  	
   

  
	
  11

  	
   

  	
  Policies [portions omitted]

  
	
   

  	
   

  	
   

  
	
  12

  	
   

  	
  Form of Business Associate Agreement

  
	
   

  	
   

  	
   

  
	
  13

  	
   

  	
  Customer Competitors [portions omitted]

  

 

i

 

1.             PURPOSE AND STRUCTURE OF AGREEMENT

 

1.1.     Purpose
of Agreement

 

(a)           Generally.

 

(i)            Customer desires to
enter into an agreement for the provision by Service Provider of the Services
to the Customer Group.

 

(ii)           Service Provider has
successfully developed, implemented and provided the Services or services
similar to the Services to Third Party customers of Service Provider on a scale
similar to or larger than contemplated by this Agreement; has the trained
personnel and the business processes and systems necessary to provide the
Services to the Customer  Group; and
desires to provide such Services to the Customer Group.

 

(iii)          The purposes and
objectives of Service Provider and Customer for entering into the Agreement
include:  (A) reducing the costs to
Customer of the activities encompassed by the Services while measurably
improving the quality of the performance of such activities including through
the application of Service Provider’s expertise and best practices; (B) increasing
the flexibility and scalability of resources available to Customer; (C) increasing
the speed of execution of new initiatives relating to the Services; and (D) better
aligning the support functions comprising the Services with core business
operating needs.

 

(b)           Construction
of this Section.  The provisions of
this Section 1.1 are
intended to be a statement of the purposes and objectives of the Agreement and
are not intended to alter the plain meaning of the terms and conditions of the
Agreement or to require either Party to undertake performance obligations not
required by the Agreement.  To the extent
that the terms and conditions of the Agreement are unclear or ambiguous, such
terms and conditions are to be interpreted and construed consistent with the
purposes set forth in this Section 1.1.

 

1.2.     Structure
of Agreement

 

(a)           Components
of the Agreement.  The Agreement
consists of:

 

(i)            the provisions set
forth in this Master Agreement and the Exhibits herein;

 

(ii)           the initial Transaction
Document(s) for procurement of Services executed simultaneously with the
Master Agreement and the Schedules referenced therein; and

 

(iii)          any subsequent
Transaction Documents executed by the Parties pursuant to this Master
Agreement, including the Schedules referenced in each such Transaction
Document.

 

1

 

(b)           Definitions.
In the Agreement (including each Transaction Document and the Schedules
thereto), all capitalized terms shall have the meanings set forth in the “Definitions”
Exhibit.  Other capitalized terms
defined elsewhere in this Agreement shall have the meaning ascribed to such
terms when capitalized throughout this Agreement.

 

(c)           Transaction
Documents.  The Services will be
described in one or more Transaction Documents executed by the Parties pursuant
to this Master Agreement and are the subject of this Master Agreement.  Each Transaction Document shall be in the
form of the “Form of Transaction Document” Exhibit and
include the set of Schedules described in the “List of Transaction Document
Schedules” Exhibit with such additions and deletions as the
Parties may agree.

 

(d)           Deviations
from Master Agreement, Priority.  In
the event of a conflict, the terms of Transaction Documents, including the
Schedules referenced therein, shall be governed by the terms of this Master
Agreement, including the Exhibits, unless an individual Transaction Document
expressly and specifically notes the deviations from the terms of the Master
Agreement and Exhibits for the purposes of such Transaction Document on the “Deviations
From Terms of Master Agreement” Schedule to such Transaction
Document; provided, that the foregoing rule shall not apply to
Transaction Document No. 1, the terms of which shall govern the Master
Agreement.  In the event of a conflict,
the terms of each Transaction Document shall govern the terms of the Schedules
referenced therein.  In the event of a
conflict, the terms of this Master Agreement shall govern the terms of the
Exhibits.  In the event of a conflict,
the Master Agreement and its Exhibits and the applicable Transaction Document
and its Schedules shall govern any Change Order, unless the Change Order
expressly and specifically references the provisions of such documents which
are to be superseded or amended.

 

2.             TERM OF AGREEMENT

 

2.1.     Term
of Agreement and Renewal

 

The Term of
the Agreement will begin as of the Effective Date and will terminate upon the
later of (i) the seventh (7th) anniversary of the Effective
Date and (ii) the latest termination date provided for in an effective
Transaction Document, unless earlier terminated or extended in accordance with
the provisions of the Agreement. 
Customer, at its option exercised by written notice to Service Provider
delivered at least ninety (90) days prior to the then-scheduled expiration
date, may renew the Term of the Agreement for up to an additional twelve (12)
months on the terms, conditions and pricing then in effect (the “Extension
Period”).  Customer may exercise its
renewal right for the entire twelve (12) month period or in increments of at
least six (6) consecutive months each. 
Any further renewals of the Term beyond twelve (12) additional months
will be at Service Provider’s then applicable commercial terms and conditions,
including pricing, or as otherwise agreed between the Parties.

 

2.2.     Termination
Assistance Services

 

Customer may
request and Service Provider will provide the Termination Assistance Services
in accordance with Section 12.4
for up to twenty-four (24) months (the 

 

2

 

“Termination Assistance Period”), upon not less than forty-five
(45) days prior written notice before the scheduled termination or expiration
of the provision of the Services, or if applicable, upon written notice given
within thirty (30) days after the effective date of a notice of termination for
any reason by either Party.  Any such
Termination Assistance Services shall be on the terms, conditions and pricing
in effect at the time of the commencement of such Services.  After the transfer of the Services to
Customer or to Customer’s designee, Service Provider shall continue to provide
the Termination Assistance Services as requested by Customer for the remainder
of the Termination Assistance Period. Notwithstanding anything to the contrary
in the Agreement, the Termination Assistance Period shall not continue beyond
the eighth (8th) anniversary of the Effective Date, unless otherwise
agreed in writing by the Parties, which writing shall specify any changes in
the Charges.

 

3.             THE SERVICES

 

3.1.     Obligation
to Provide Services

 

(a)           Obligation
to Provide Services.  Starting on the
Commencement Date of each Transaction Document and continuing during the term
of each such Transaction Document, Service Provider shall provide the Services
described in each such Transaction Document to, and perform the Services for,
the members of the Customer Group in accordance with the applicable Transaction
Document and this Agreement.

 

(b)           Responsibilities.
Service Provider and Customer will perform their respective duties, obligations
and responsibilities set forth in the responsibility matrix (“Responsibilities”)
included in each Transaction Document as part of the “Services Description”
Schedule (each, a “Responsibility Matrix”). Customer’s failure to
perform a Responsibility or any other duty, obligation or responsibility
inherent in such Responsibility will excuse Service Provider’s obligation to
perform its corresponding obligations under this Agreement only if [***] and
demonstrates that:  [***].  In the event of [***], Service Provider will
be excused from performance of those Services impacted by Customer’s failure to
perform only to the extent that, and for so long as, [***]; provided,
that Service Provider takes reasonable steps to mitigate the effects of
Customer’s failure to perform. 
[***]  In emergency circumstances
where written consent is not possible, verbal consent given by Customer is
permissible.

 

(c)           Additional
Affiliates or Other Customer Group Members. 
If Customer merges with or otherwise acquires a Person which is a Third
Party (a “Customer Acquisition”), then such entity will, subject to the
specific restrictions set forth herein, become subject to this Agreement as a
member of the Customer Group if requested by Customer in its sole
discretion.  If so requested by Customer,
such entity will become subject to this Agreement, with all rights and benefits
and subject to all obligations of the members of the Customer Group under this
Agreement, on the date specified by Customer; provided, that [***]
unless Service Provider otherwise agrees. 
At Customer’s election, (i) the Services shall be provided to the
acquired entity and [***], or (ii) the Parties will renegotiate in good
faith all affected Charges to account for any increased or decreased volumes
resulting from the integration of such Customer Acquisition in accordance with
the Change Control Procedures.  Service
Provider acknowledges that the unit charges for affected Resource Units will be
reduced as a result of 

 

3

 

[***] such
Customer Acquisition.  If the Customer
Acquisition is a party to an agreement with Service Provider and the services
under such agreement are integrated with the Services, then any [***].

 

(d)           Divestiture
of Other Customer Group Members.  If
Customer divests any member of the Customer Group or other operation or entity
during the Term and Customer desires that Service Provider continue to provide
some or all of the Services for such Customer Group member or other operation
or entity, Service Provider will continue to provide Customer and/or such
divested Customer Group member or other operation or entity with such Services,
if such divested Customer Group member or other operation or entity (i) used
the Services prior to being divested, and (ii) after being divested, uses
either essentially the same Services as before being divested, or otherwise
does not require Service Provider to modify its systems or processes used to
perform and provide the Services by more than an immaterial amount.  Service Provider shall charge Customer for
the continuing performance and delivery of such Services based on the existing
charging methodologies for the Charges. 
At Customer’s request, if the divested Customer Group member or other
operation or entity [***], Service Provider shall enter into a separate
agreement with such divested entity for provision of such services on the
substantially the same terms as the Agreement, except to the extent that the
divested entity and Service Provider agree otherwise.  In such case, this Agreement shall be
modified to reflect the reduction in Services and Charges provided to and to be
paid by the divested entity under such separate agreement and all liabilities
under such separate agreement shall be the sole responsibility of the divested
entity.  Service Provider shall not be
required to provide the Services to any divested Customer Group member,
operation or entity for more than the lesser of [***] following the effective
date of such divestiture or the remainder of the Term including any Extension
Period.

 

3.2.     Compliance

 

(a)           Generally.  Service Provider shall perform the Services
in compliance with:

 

(i)            the Agreement,
including the Procedures Manuals;

 

(ii)           all Laws applicable to
Service Provider as a provider of information technology and personnel to
perform information technology and business process outsourcing, including
those Laws which regulate the transport of Customer Data by Service Provider
and its subcontractors between the United States and Service Provider Locations
outside the United States and among any such Locations;

 

(iii)          all Customer Compliance
Directives; and

 

(iv)          all policies and
procedures of general application of the Customer Group as set forth in the “Policies”
Exhibit, as published by Customer from time to time and delivered to
Service Provider, subject to the Change Control Procedures, and paragraph (e) below, Sections 3.6 and 3.7, as applicable.  For
the avoidance of doubt, the Change Control Procedures shall govern the method 

 

4

 

of implementation and pricing with respect to
such implementation, but will not grant Service Provider any right to refuse to
implement changes to Customer’s policies and procedures.

 

(b)           Customer
Compliance Directives.  From time to
time Customer may instruct Service Provider in writing as to the manner of
Service Provider’s performance of the Services so as to enable the Customer
Group to comply with any Laws (including any guidance, bulletins, white papers,
pronouncements, reports or similar communications issued by any Governmental
Authority or applicable self-regulatory or industry body (including the PCI
Security Standards Council), whether or not such guidance, bulletins, white
papers, pronouncements, reports or similar communications have the force of
law, to the extent determined by Customer in its sole discretion) applicable to
the portion of the operations of the Customer Group performed by Service
Provider as part of the Services, (collectively, the “Customer Compliance
Requirements”).  Such instructions
are referred to as “Customer Compliance Directives.”  Service Provider is authorized to act and
rely on, and shall promptly implement, each Customer Compliance Directive in
the performance and delivery of the Services, subject to the Change Control
Procedures, and paragraph (e)
below, Sections 3.6
and 3.7, as
applicable.  Customer may also notify
Service Provider of any Customer Law or changes in the Customer Laws that are
applicable to the Services and Service Provider shall work with Customer to the
extent necessary to identify the impact of such Customer Law or changes in the
Customer Laws on the Services and suggest changes to the Services to address
the Customer Law or changes in the Customer Law.  All changes shall be subject to Change
Control Procedures, and paragraph (e)
below, Sections 3.6
and 3.7, as
applicable.  For the avoidance of doubt,
the Change Control Procedures shall govern the method of implementation and
pricing with respect to any Customer Compliance Directives, but will not grant
Service Provider any right to refuse to implement such Customer Compliance
Directives.  In addition, Service
Provider shall notify Customer if Service Provider personnel performing the
Services have actual knowledge of any failure of the Services to comply with
the Customer Compliance Requirements of which Service Provider personnel has
actual knowledge and cooperate with Customer to resolve such noncompliance.

 

(c)           Development
and Maintenance of Procedures Manual. 
The operational policies and procedures applicable to the provision of
the Services described in each Transaction Document shall be set forth in an
operational Procedures Manual to be developed by Service Provider in accordance
with the “Procedures Manual Requirements” Exhibit and the “Transition
and Transformation Plan” Schedule, subject to the review and written
comment of Customer (each, a “Procedures Manual”).  Service Provider will incorporate all
reasonable comments of Customer; provided, that in the case of
procedures that are related to Customer Compliance Directives or Customer
Compliance Requirements, or will likely have the effect of increasing the
Charges or Customer’s retained costs, as reasonably demonstrated by Customer,
Customer shall have the right to approve such procedures and any changes to
such procedures, which approval will not be unreasonably withheld.  Service Provider will be responsible for the
accurate and proper preparation of the Procedures Manuals and will prepare and
provide to Customer, in both print and electronic formats, proposed updates
thereto as necessary to reflect any substantive changes therein or improvements
thereto within a reasonable time prior to the implementation of such
changes.  The processes and procedures
contained in the Procedures Manuals shall include such detail and be of such
quality as to reasonably ensure that the 

 

5

 

Services could
be performed accurately and in a timely manner by an unrelated Third Party.
Either Party may, from time to time, request updates or amendments to the
Procedures Manuals.  Service Provider
will perform its obligations under this Section 3.2(c), at no additional cost to Customer.

 

(d)           Security
Requirements.  Customer’s
requirements for logical security applicable to Service Provider’s delivery of
the Services and Customer’s guidelines for physical security at the Locations
are set forth in the “Customer Security Requirements” Schedule to
the applicable Transaction Document (the “Security Requirements”), with
which Service Provider shall comply. 
Customer may notify Service Provider in writing from time to time of
changes, updates, modifications or amendments of the Security Requirements and
Service Provider shall comply with such updated Security Requirements, subject
to the Change Control Procedures, and paragraph (e) below, Sections 3.6 and 3.7,
as applicable.  For the avoidance of
doubt, the Change Control Procedures shall govern the method of implementation
and pricing of such changes, updates, modifications and amendments, but will
not grant Service Provider any right to refuse to implement them.

 

(e)           Regulatory
Changes.  To the extent that Service
Provider must change the Services as result of changes in its compliance
requirements referred to in Section 3.2(a)(ii), Service Provider shall notify Customer of such
changes as far in advance as reasonably practical and shall implement such
changes [***] using the Change Control Process, if applicable.  Service Provider shall, with Customer’s
direction and approval, conform the Services in a timely manner to any change
in Customer Compliance Requirements as instructed by Customer pursuant to a
Customer Compliance Directive. 
Implementation of such Customer Compliance Directive [***]. With respect
to new or revised Customer Compliance Directives that implement Customer
Compliance Requirements that are unique to the Customer Group and require more
than de minimis changes in the Services or
increases in the resources required to perform the Services, the Charges may be
adjusted pursuant to the Change Control Procedures.  Such changes and adjustments shall:  (i) be integrated in a cost-effective
manner and without disruption of Customer’s ongoing operations (as modified by
such changes); (ii) equitably account for [***] any changes in the
Services or Service Levels resulting from such changes; and (iii) provide
modified Charges [***].  If
implementation of such changes in Customer Compliance Directives and the
resulting changes and adjustments represent [***], then Customer shall have the
right [***].

 

3.3.     Performance
and Service Levels

 

Service
Provider agrees that the performance of the Services will meet or exceed each
of the applicable Service Levels set forth in the “Service Level Agreement”
Schedule to a Transaction Document, subject to the limitations and in
accordance with the provisions set forth in the Agreement and the applicable
Transaction Document and “Service Level Agreement” Schedule.

 

6

 

3.4.     Step-In
Rights

 

(a)           Subject
to Section 3.4(n),
Customer shall be entitled to exercise, in its sole discretion and in addition
to any other remedies it may have, the Step-In Rights set forth in this Section below
(the “Step-In Rights”) if:

 

(i)            as a result of Service
Provider’s failure in the performance of its obligations under this Agreement,
Customer has the right to terminate the Agreement or the applicable Transaction
Document in whole or with respect to the affected Services in accordance with Sections 12.1(a) (Material Breach), 12.1(c) (Persistent Breach), 12.1(d) (Failure of Critical
Services) or 12.1(j)(Transition
Failure); or

 

(ii)           Customer determines in
good faith that a Force Majeure Event affecting Service Provider creates an
immediate and material threat either to the business and/or to the operational
effectiveness of the Customer Group;

 

and, in each
case, Customer believes in good faith that there are no other alternative
methods to assure the proper performance of the Services in the time available.

 

(b)           Customer
may exercise the Step-In Rights by providing Service Provider notice in writing
of the following:  (i) the affected
Services and the action Customer proposes to take; (ii) the reason for
such action; (iii) the date Customer wishes to commence such action; (iv) the
time period which Customer believes will be necessary for such action; (v) whether
Customer then intends a Third Party to exercise such Step-In Rights on its
behalf or to assist in it exercising such Step-In Rights; and (vi) to the
extent practicable, the effect on Service Provider and its obligation to
provide the Services during the period such action is being taken (the “Step-In
Notice”).

 

(c)           As
soon as practicable following receipt of the Step-In Notice, the Contract
Managers shall meet to discuss the potential exercise of the Step-In Rights
and:

 

(i)            any alternative course
of action which Service Provider may undertake to remedy the event giving rise
to the Step-In Rights; and

 

(ii)           the manner in which
Customer shall exercise its Step-In Rights, including how it will engage any
Third Party to act on its behalf.

 

(d)           Customer
may immediately exercise its Step-In Rights and take the actions set forth in
the Step-In Notice and any consequential additional action as it believes is
necessary to assure the proper performance of the Services, if the Contract
Managers fail to reach agreement within (i) the period specified in the “Disaster
Recovery Requirements” Schedule for full recovery of the Services
covered by the Step-In Notice if such Services were affected by a disaster, or (ii) if
no such period is specified, four (4) Business Days.  Service Provider shall give all reasonable
assistance to Customer while it is exercising its Step-In Rights.  In addition, prior to the exercise of the
Step-In Rights, Service Provider shall cooperate with Customer as reasonably
requested in connection with the Customer Group’s efforts to mitigate harm to
its operations resulting from the circumstances described in the Step-In
Notice.

 

7

 

(e)           If Customer engages
a Third Party in exercising its Step-In Rights, Customer shall procure that
such Third Party complies with Customer’s obligations of confidentiality under
this Agreement.  Any such Third Party
shall abide by Service Provider’s security and health and safety requirements
of general application while on Service Provider’s premises or Locations.

 

(f)            Customer shall use,
and shall procure that any Third Party engaged by it in relation to its
exercise of Step-In Rights hereunder uses, when exercising those rights,
reasonable efforts not to disrupt any other Services provided by Service
Provider; and

 

(g)           Service Provider
shall [***] in relation to which Customer has exercised its Step-In Rights
during the period that it is exercising such rights.

 

(h)           During the period in
which Customer is exercising its Step-In Rights, [***].  If Customer requests the use of any
additional assets, resources or employees of Service Provider, [***].

 

(i)            If the exercise of
Step-In Rights by Customer prevents Service Provider from providing any part of
the Service (for purposes of this paragraph, the “Affected Services”),
Service Provider shall be relieved of its obligations to provide the Affected
Services.

 

(j)            Customer’s Step-In
Rights will cease on the earlier of: [***], unless otherwise mutually agreed
between the Parties.

 

(k)           Before ceasing to
exercise the Step-In Rights, Customer shall notify Service Provider in writing
specifying the date of such cessation (the “Step-out Notice”).

 

(l)            Service Provider
will, following receipt of a Step-Out Notice, meet with Customer to discuss the
findings of Customer as a result of the exercise of its rights hereunder.
Following that meeting Service Provider will develop a plan to deliver the
Services in accordance with the Agreement (which it will provide to Customer
within ten (10) Business Days of the meeting) and will devote sufficient
resources to implement the plan.  On the
cessation date indicated in the Step-out Notice, Service Provider will
recommence performance of the Services in accordance with the Agreement.

 

(m)          Customer’s Step-In
Rights shall not be applicable to IBM Shared Services Centers.

 

(n)           Customer’s rights
and remedies under this Section 3.4
shall be in addition to any other remedies Customer may have in connection with
the circumstances giving rise to Customer’s exercise of its Step-In Rights.

 

3.5.         Disaster
Recovery Services

 

(a)           Service Provider shall, from the applicable
Commencement Date for Disaster Recovery Services, provide Disaster
Recovery Services under a Transaction Document 

 

8

 

in accordance
with the “Disaster Recovery Requirements” Schedule to a
Transaction Document.

 

(b)           After initial
acceptance by Customer of the Disaster Recovery Plan and any related systems,
Service Provider will perform testing of the Disaster Recovery Plan at least
once per Contract Year and promptly provide Customer with the results of such
tests.  Customer will be permitted, in
its discretion, to participate in such tests. 
Service Provider will select the test times at its sole discretion.  If the Disaster Recovery Plan fails to meet
the success criteria set forth in the applicable “Disaster Recovery
Requirements” Schedule to any Transaction Document (“DRP Success Criteria”),
Service Provider will promptly remedy any identified failures and within thirty
(30) days of the initial test, or as otherwise agreed by Customer, conduct
another test of the Disaster Recovery Plan. 
If, [***], there are [***] (a “DR Test Failure”), then Customer
may [***]

 

(c)           Service Provider
shall immediately notify Customer of the occurrence of circumstances that may
constitute a disaster.  Upon Customer’s
determination of a disaster and request to Service Provider, Service Provider
shall promptly implement the Disaster Recovery Plan.  During any disaster, Service Provider will
notify Customer daily of the status of the disaster.

 

(d)           Either Party may
retain a Third Party to provide or restore Services in the event that a
disaster prevents performance of the Services in accordance with the Agreement
for longer than the recovery time objectives or other time periods set forth in
the applicable “Disaster Recovery Requirements” Schedule,
[***].  Customer will [***] during such
time.  Customer will use commercially
reasonable efforts to minimize the charges to be incurred for such replacement
services.  Customer will [***] during
such time.

 

(e)           Upon conclusion of a
disaster, Service Provider will as soon as reasonably practicable, provide Customer
with an incident report detailing the reason for the disaster and all actions
taken by Service Provider to resolve the disaster.

 

3.6.         Additional
Services.

 

(a)           Upon the written
request of Customer, Service Provider shall provide Additional Services to the
Customer Group.

 

(b)           Within thirty (30)
days of its receipt of a request from Customer for Additional Services pursuant
to Section 3.6(a), Service Provider shall prepare and
deliver to Customer a written offer to perform the Additional Services in the
manner lawfully specified by Customer, which proposal shall include the
following:

 

(i)            a detailed description of the implementation services and
on-going services that Service Provider anticipates performing in connection
with such Additional Services;

 

(ii)           a commercially reasonable schedule and Transition and
Transformation Plan for implementing the Additional Services (if the Additional
Services are necessary to enable the Customer Group to comply with any Law, 

 

9

 

then, to the extent commercially reasonable,
such schedule shall provide for implementation of such Additional Services in a
manner to enable timely compliance by the Customer Group with such Law; Service
Provider shall notify Customer as soon as practicable if it determines that it
will not be able to implement the Additional Services to enable such timely
compliance and shall use commercially reasonable efforts to identify and
propose to Customer an alternative method of enabling such compliance);

 

(iii)          Service Provider’s proposed charges for such Additional
Services in accordance with Section 3.6(d), including a
detailed breakdown of any such charges (which shall be quoted as a fixed fee
and/or on a “time and materials” basis reflecting Service Provider’s Hourly
Rates, as requested by Customer);

 

(iv)          to the extent applicable, an estimate of Service Provider’s
skills necessary to provide such Additional Services, including implementation
and on-going services;

 

(v)           to the extent applicable, a description of any new or
additional Software, tools, Equipment or other resources required for Service
Provider to implement and provide such Additional Services;

 

(vi)          Service Provider’s proposed acceptance test criteria,
procedures, Service Levels, and Service Level Credits for such Additional
Services, each of which shall be commercially reasonable;

 

(vii)         the name and title of Service Provider employee who would
serve as project manager in connection with the implementation of such
Additional Services;

 

(viii)        a statement of the anticipated effects of the Additional
Services on the performance of the existing Services;

 

(ix)           alternative methods of providing the Additional Services
in a more cost-effective or otherwise more advantageous manner; and

 

(x)            any other information reasonably requested by Customer.

 

(c)           Upon Customer’s
written acceptance of Service Provider’s proposal to perform Additional
Services, which acceptance must be provided to Service Provider within sixty
(60) days of Customer’s receipt of a proposal in accordance with Section 3.6(b), Service Provider will
prepare and the Parties will execute a Change Order reflecting the terms of
their agreement with respect to such Additional Services consistent with this Section 3.6.

 

(d)           Except as the
Parties may otherwise agree in writing, Service Provider’s charges for the
Additional Services shall be established as follows:

 

(i)            with respect to the implementation of any Additional
Services, Service Provider shall implement such Additional Services, including
making 

 

10

 

any necessary changes to the Services and the
related systems used by Service Provider to perform the Services, and Customer
shall pay [***] charges for such implementation; and

 

(ii)           with respect to Additional Services that require the
on-going application of resources of Service Provider following implementation
of such Additional Services, the Charges shall be adjusted [***].

 

Any Dispute
with respect to the applicability, amount or [***] of any charges payable by
Customer pursuant to this subsection (d) may, at the option of either Party, be resolved in accordance
with the expedited dispute resolution process set forth in the “Dispute
Resolution Procedures” Exhibit. 
If any Dispute arises as to whether the services requested are
Additional Services [***], then Customer shall pay to Service Provider [***]
until such Dispute is resolved and shall have no obligation to pay any other
additional charges for the disputed services until such resolution has
occurred.  Within ten (10) days
following resolution of such Dispute, the applicable Party shall pay to the
other Party all amounts determined to be due, plus interest at the rate of
[***] per annum (but not exceeding the maximum rate permitted by Law in any
case), from the date such amounts were paid (in the case of amounts to be
repaid to Customer) or the date on which such amounts originally would have
been due (in the case of amounts to be paid to Service Provider).  Service Provider shall perform the requested
services in full until such Dispute is resolved.

 

(e)           Notwithstanding
anything to the contrary in Section 3.6(d), if the Parties execute a Change Order with respect to
any Additional Services in accordance with Section 3.6(c), the charges that apply to
such Additional Services shall be those set forth in such Change Order.  However, if Service Provider fails to prepare
and deliver to Customer a proposal in accordance with Section 3.6(b) upon receipt of a request
from Customer pursuant to Section 3.6(a) with respect to any Additional Services, or if Service
Provider refuses to execute a Change Order with respect to any Additional
Services in accordance with Section 3.6(c), Service Provider shall nevertheless be required to
provide the Additional Services pursuant to Section 3.6(a) in exchange for charges
determined pursuant to Section 3.6(d),
provided, that Service provider has the technical capability and
resources to perform such Additional Services.

 

3.7.         New Services.

 

(a)           The Parties may
agree pursuant to the Change Control Procedure that Service Provider will
provide New Services to the Customer Group. 
New Services may be activities that are performed on an on-going basis
for the remainder of the Term or activities that are performed on a one-time or
a project basis.  Further, Customer’s
request for a New Service may include a request for Service Provider to
correspondingly reduce or eliminate one or more existing elements of the
Services then being provided under this Agreement that are being replaced by
the New Services.

 

(b)           Service Provider
will not begin performing any New Service until the Parties have agreed upon
the terms and conditions of such New Service pursuant to the Change Control
Procedure.  Upon the Parties’ execution
of a Change Order pursuant to such Change Control Procedure in accordance with
the foregoing sentence with respect to any New Services, 

 

11

 

such New
Services shall be included within the scope of the Services to the same extent
and in the same manner as if specifically described in the “Services
Description” Schedule.

 

(c)           The Parties agree
that changes during the Term in functions, responsibilities, activities, tasks
and projects that are within the scope of the Services will not be deemed to be
Additional Services or New Services if such functions, responsibilities,
activities, tasks and projects evolved or were supplemented and enhanced during
the Term by Service Provider in its sole discretion.

 

3.8.                            Service
Provider to Provide and Manage Necessary Resources

 

Except as
otherwise expressly provided in the Agreement or an applicable Transaction
Document, Service Provider will have the responsibility and obligation to
provide and administer, manage, support, maintain and pay for all resources
(including personnel, hardware, software, facilities, services and other items,
however described) necessary or appropriate for Service Provider to provide,
perform and deliver the Services as described in the Agreement.

 

3.9.                            Reports

 

Service
Provider will provide those reports identified in this Agreement, the
Transaction Documents and in the “Reports” Schedule to a
Transaction Document, and such additional reports as agreed by the Customer
Contract Manager and the Service Provider Contract Manager during the
Transition period and from time to time during the Term (“Reports”), in
accordance with the requirements (including any timing requirements) set forth
in the Transaction Documents and in the “Reports” Schedule to a
Transaction Document.

 

3.10.                     Locations

 

(a)           Location
Designation and Changes.

 

(i)            Service Provider shall provide the Services at the
Customer Locations specified in the “Locations” Schedule to a
Transaction Document.  The Parties shall
use the Change Control Procedure to add, change and delete such Customer
Locations.  For the avoidance of doubt,
the Change Control Procedures shall govern the method of implementation and
pricing with respect to any Customer Location Change, but will not grant
Service Provider any right to refuse to implement such Customer Location
Change. Customer agrees that it will notify Service Provider no less than one
hundred and twenty (120) days in advance of any proposed Customer Location
Change, unless under the circumstances it is not possible to do so, in which
case Customer will notify Service Provider as soon as possible.

 

(ii)           Service Provider shall provide the Services from the
Service Provider Locations specified in the “Locations” Schedule
to a Transaction Document.  Service
Provider agrees that it will notify Customer no less than one hundred and
twenty (120) days in advance of any proposed Service Provider Location Change,
unless such change is necessary to maintain continuity of 

 

12

 

Services in response to a disaster or other
emergency and it is impossible to do so, in which case Service Provider will
notify Customer as soon as possible.  In
any case, a Service Provider Location Change will require Service Provider to provide
to Customer with such notice, an analysis of the operational, technical,
security, regulatory and other effects of such Service Provider Location Change
on the Services and the operations of the Customer Group.  Service Provider shall [***], except as
otherwise agreed by the Parties. 
Customer shall have the right to approve any Service Provider Location
Change that [***] Customer may withhold its approval, in its sole discretion,
of any Service Provider Location Change that would result in either of the
effects described in clauses (B) and (C) of the preceding
sentence.  All Service Provider Location
Changes shall be subject to the Change Control Procedure; provided, that
the Change Control Procedure shall govern the method of implementation, but shall
not provide Customer any approval right with respect to a Service Provider
Location Change, except as provided above.

 

(b)           Use of Customer
Facilities.  Service Provider may, to
the extent set forth in the “Customer Facilities” Schedule occupy
space at a Customer facility, subject to the following:

 

(i)            Service Provider may occupy such space solely for
purposes of providing the Services and not for the provision or marketing of
services to other customers or clients of Service Provider.

 

(ii)           Customer agrees to supply reasonable office services and
supplies, such as water, sewer, heat, lights, air conditioning,
electricity and office equipment for Service Provider employees occupying such
space to the extent set forth in the applicable Transaction Document; provided,
however, that Service Provider personnel will supply their own cell phones,
pagers, computers and printers.  Office
space will be provided in accordance with Customer’s space standards, which
Customer may revise from time to time in its sole discretion.  Charges to Service Provider for such services
and office space, if any, shall be set forth in the “Charges” Schedule
to the applicable Transaction Document.

 

(iii)          Service Provider will be responsible for the conduct,
welfare and safety of its employees, subcontractors and agents while in
Customer facilities and will take all reasonable precautions to prevent the
occurrence of any injury to persons or property or any interference with
Customer’s operations while occupying such space.

 

(iv)          When working at any Customer facility, Service Provider
personnel will comply with Customer’s standard workplace security,
administrative, safety and other rules, regulations, policies and procedures,
including the Security Requirements, applicable to Customer’s own employees and
communicated to Service Provider. 
Customer will make such policies and procedures available to Service
Provider and will notify Service Provider of any subsequent modifications or
amendments thereto.

 

13

 

(c)           Shared Service
Locations.  If Service Provider
provides the Services to Customer from a Location that is shared with a Third
Party or Third Parties or from a Location from which Service Provider provides
services to a Third Party or Third Parties, then Service Provider shall share
with Customer its process to restrict access in any such shared environment to
Customer’s Company Information and shall implement such process during the
Term.

 

4.                                      CHARGES; NEW SERVICES; INVOICES; AND PAYMENTS

 

4.1.                            Charges

 

Customer
agrees to pay to Service Provider the Charges as specified in the “Charges”
Schedule to a Transaction Document, together with the other amounts as
described in this Section 4.

 

4.2.                            Taxes

 

(a)           Responsibility.  Customer shall be responsible for Taxes
imposed on, based on, or measured by any consideration for any provision of
services or transfer of property by Service Provider to Customer pursuant to
this Agreement.  Customer shall not be
responsible for (i) any taxes not within the scope of the term Taxes as
defined in this Agreement, or (ii) any Taxes on any amounts (including
taxes) that are previously paid or incurred by Service Provider and that are
passed through to and reimbursed by Customer or that are paid directly by
Customer to a Third Party service provider. 
Service Provider shall be responsible for all Taxes that are imposed on
Service Provider’s acquisition, ownership, or use of property or services in
the course of providing property or services to Customer, it being understood
and agreed that this provision shall not relieve Customer of its responsibility
and liability for Taxes under this Section 4.2 that are imposed upon any transfer or lease of such
property from Service Provider to Customer.

 

(b)           Exemptions.  Notwithstanding anything to the contrary in
this Agreement,  Customer will not pay or
reimburse Service Provider for any Taxes related to the provision of goods or
services for which Customer provides Service Provider with a valid and
applicable exemption certificate, multi-state benefit certificate, resale
certificate, or other reasonable evidence of exemption.  Service Provider will make all reasonable
efforts to ensure that any exemption from any Tax that is available to Customer
will be utilized when Service Provider makes any purchase on behalf of
Customer.

 

(c)           Withholding Taxes.  Service Provider shall be responsible for any
Withholding Tax liability asserted by any tax authority against Customer as a
result of payments made by Customer to Service Provider under the terms of this
Agreement.  Customer shall provide notice
to Service Provider of any assertion of Withholding Tax liability by any tax
authority and shall make available to Service Provider on a timely basis valid
evidence of any Withholding Tax paid by Customer to such tax authority.

 

(d)           Cooperation.  The Parties agree to reasonably cooperate
with each other to enable each to more accurately determine its own Tax
liabilities and to minimize such Taxes incurred in connection with this
Agreement to the extent legally possible. 
Service Provider’s 

 

14

 

invoices shall
separately state the amounts of any Taxes Service Provider is collecting from
Customer in accordance with the terms of the “Charges” Schedule
to a Transaction Document.

 

4.3.                            Tariffs,
Duties and Import/Export Compliance and Fees

 

[***] shall be
responsible for all tariffs, duties and import/export compliance and fees with
respect to the Services, including timely and properly making all filings and
applications, obtaining all licenses and paying all fees and charges.

 

4.4.                            Invoices
and Invoice Payment

 

(a)           Invoices.  Service Provider shall render, by means of an
electronic file, an invoice or invoices in a form specified by Customer and
otherwise in reasonable detail for the Charges incurred in each month. Service
Provider will use commercially reasonable diligent efforts to (i) identify
and obtain invoices for Pass-Through Charges, if any, that a Third Party
Provider does not provide to Service Provider in a timely manner, and (ii) include
all Pass-Through Charges incurred in the month corresponding to each invoice in
such invoice(s). Service Provider shall report each month to Customer on the
status of late Third Party Provider invoices and Service Provider’s efforts to
obtain them.  [***]

 

(b)           Payment.  Unless otherwise provided in a Transaction
Document, all amounts, other than Disputed Charges, due to Service Provider and
set forth on a Fixed Charges invoice delivered to Customer by the tenth (10th)
day of each month pursuant to paragraph (a) above and the applicable Transaction Document shall be due and
payable [***].  All amounts, other than
Disputed Charges, due to Service Provider and set forth on a Variable Charges
invoice delivered pursuant to paragraph (a) above and the applicable Transaction Document shall be due and
payable within [***].  Service Provider
shall not invoice Customer, and Customer will not be obligated to pay, any
Pass-Through Charges that are not properly invoiced within [***] of the month
to which such Charges correspond. 
Customer’s payment may be made by wire transfer to an account designated
by Service Provider..

 

(c)           Invoices in
Arrears.  No invoice for Charges for
any of the Services shall be delivered to Customer until after the Services
that are the subject of such invoice have been provided to the Customer
Group.  However, any Services that are
expressly stated in the Agreement as invoiced, prepaid or paid in advance shall
be excluded from the limitation of this provision to the extent, but only to
the extent, expressly set forth in the Agreement.

 

(d)           No Payments to
Service Provider or Affiliates.  If
Service Provider is responsible for issuing payments on behalf of any member of
the Customer Group, Service Provider shall not issue any payment to itself or
any of its Affiliates without the express prior approval of Customer.

 

4.5.                            Market
Currency Procedures

 

Customer may
require and Service Provider will perform annual reviews of technology and best
practices and a benchmarking assessment and related adjustment of Charges as
set forth in the “Market Currency Procedures” Exhibit.

 

15

 

4.6.                            Service
Level Credits

 

If Service
Provider fails to provide the Services in accordance with the Service Levels
set forth in any “Service Level Agreement” Schedule to a
Transaction Document, Service Provider shall apply the resulting Service Level
Credits against the Charges owed to Service Provider in the manner set forth in
the “Service Level Agreement” Schedule.  In the event a Service Level Credit is
subject to [***] rights, such Service Level Credits shall be accrued and paid
when [***] as set forth in the “Service Level Agreement” Schedule.  The Service Level Credits represent credits
for the reduced value of the Services, are not liquidated damages or penalties,
shall not limit or diminish any of the remedies granted to Customer hereunder,
including the termination rights granted to Customer in this Agreement, and
Customer shall be entitled to pursue all remedies that it may have against
Service Provider for the event or events giving rise to such Service Level
Credits.  Except to the extent otherwise
provided in the “Service Level Agreement” Schedule, any Service
Credits paid shall be offset against any damages awarded in the event that
Customer successfully pursues any claim arising out of the circumstances
resulting in the Service Level default. 
Alternatively, at its sole election, Customer may return to Service
Provider any Service Level Credits received and pursue such remedies as
Customer may have under the Agreement, at law or in equity against Service
Provider for the event or events giving rise to such Service Level Credits.

 

4.7.                            Rights
of Set-Off

 

With respect
to any amount that should be reimbursed to or is otherwise payable to Customer
pursuant to this Agreement, Customer may deduct the entire undisputed amount
owed to Customer against the Charges otherwise payable or expenses owed to
Service Provider under this Agreement.

 

4.8.                            Disputed
Charges/Credits

 

In the event
that Customer disputes the accuracy or applicability of a charge or credit or
other financial arrangement described in this Agreement, Customer shall notify
Service Provider of such Dispute as soon as practicable after the discrepancy
has been discovered.  The Parties will
investigate and resolve the Dispute using the Dispute Resolution
Procedures.  Monies that are the subject
of a good faith Dispute may be withheld [***] and will not be considered a
basis for monetary default under, or a breach of, the Agreement (the “Disputed
Charges”).  All other Charges in
excess of the cap which are the subject of a good faith dispute shall be paid
by Customer subject to Customer’s reservation of all rights to contest such
Charges.  If as a result of the Dispute
Resolution Procedures, Service Provider is required to refund any disputed
amounts paid to Service Provider by Customer pursuant to the preceding
sentence, then, Service Provider shall pay to Customer all amounts determined
to be due, plus interest at the rate of [***] per annum (but not exceeding the
maximum rate permitted by Law in any case), from the date such amounts were
paid by Customer.  In addition to the
foregoing, Customer may withhold any monies which are charged in error when
such errors are manifest on the face of the invoice, including obvious
mathematical errors.  [***]

 

16

 

4.9.                            Changes
in Customer Business

 

(a)           If during the Term,
Customer experiences significant changes in the scope or nature of its business
which have or are reasonably expected to have the effect of causing a
substantive and sustained decrease in the amount of Service Provider resources
used in performing the Services under one or more Transaction Documents, such
changes shall be governed by this Section 4.9; provided, that such decreases are not due to
Customer’s resuming the provision of such Services by itself or Customer
transferring the provision of such Services to another Third Party provider,
except as permitted by this Agreement. 
Examples of the kinds of events that might cause such substantial
decreases include:  (i) changes in
Customer’s products or markets; (ii) mergers, acquisitions or
divestitures; (iii) changes in market priorities; (iv) reduction in
demand for Customer’s products; or (v) general business or economic
downturn.

 

(b)           Customer will notify
Service Provider of any event or discrete set of events which Customer believes
qualifies under this Section 4.9,
and Service Provider will identify any changes that can be made to accommodate
such decrease of resource requirements in a cost-effective manner without
disruption to Customer’s ongoing operations, and the cost savings that will
result therefrom, if any, in a plan that will be submitted to Customer within
sixty (60) days for review and acceptance. 
Such changes shall:

 

(i)            be based on [***]; and

 

(ii)           provide for changes to the Charges and other terms that
have been determined [***].

 

(c)           Upon acceptance by
Customer, Service Provider will make any applicable adjustments to the Charges
and the related Baselines and other terms to reflect the foregoing and
distribute an amended “Charges” Schedule and executed Change
Order to the affected Transaction Documents to the Parties.

 

5.                                      COVENANTS

 

5.1.                            Covenant
of Cooperation and Good Faith

 

The Parties covenant to timely and diligently cooperate in good faith
to effect the terms of this Agreement. 
Except as otherwise provided herein, neither Party shall unreasonably
withhold or delay any consent, approval or request by the other Party required
under the Agreement.

 

5.2.                            Services

 

Service Provider shall render the Services using personnel that have
the necessary knowledge, training, skills, experience, qualifications and
resources to provide and perform the Services in accordance with this
Agreement, and shall render the Services in a prompt, professional, diligent,
workmanlike manner consistent with industry standards applicable to the
performance of such Services.

 

17

 

5.3.                            Continuous
Improvement

 

Service Provider shall diligently and continuously strive to improve
the performance and delivery of the Services by Service Provider and the
elements of the policies, processes, procedures and systems that are used by
Service Provider to perform and deliver the Services, subject to the approval
of Customer in accordance with the Change Control Procedures.  From time to time, Customer may request that
Service Provider work together with Customer and/or Third Parties to identify
ways to achieve reductions in the cost of delivering the Services and
corresponding reductions in the Charges. 
If so requested, Service Provider will at its own expense, promptly
prepare and deliver to Customer within sixty (60) days a detailed proposal
identifying all viable means of achieving the desired reductions without, to
the extent practically possible, adversely impacting business objectives or
requirements identified by Customer. 
Customer will not be obligated to accept or implement any such proposal.

 

5.4.                            No
Solicitation

 

(a)           Unless otherwise
specifically contemplated by this Agreement, the Parties agree, [***] not to solicit
or hire any of the employees of the other Party or its Affiliates to whom they
have been introduced in connection with this Agreement.

 

(b)           Notwithstanding
paragraph (a), above, either Party may make general solicitations to the public
(including solicitations by way of job posting web sites) or solicitations by a
retained Third Party, and hire or contract with any such person that responds
to such a general solicitation so long as the Third Party is not directed by
the Party or one of its Affiliates to make such solicitation directly to the
persons to which the limitation of paragraph (a) above applies.

 

5.5.                            Export;
Regulatory Approvals

 

(a)           Export Laws.  The Parties acknowledge that any products,
software, and technical information (including services and training) provided
by the Customer Group to Service Provider and its subcontractors under the
Agreement may be subject to U.S. and other countries’ export laws and
regulations and any use or transfer of such products, software, and technical
information must be authorized under those regulations.  Each Party agrees that it will not use,
distribute, transfer, or transmit any products, software or technical
information (even if incorporated into other products) in violation of U.S. and
other countries’ export laws and regulations. 
Neither Party will directly or indirectly “export” or “reexport”
software or “technical data” disclosed to it by the other Party or the direct
product of such software or “technical data” to any country, or citizen of any
country, prohibited by U.S. or other countries’ export laws.

 

(b)           Approvals.  Except as otherwise provided for in the
Agreement, Service Provider will timely obtain and maintain all necessary
approvals, licenses and permits required by Law applicable to its business and
its provision of the Services.

 

18

 

5.6.                            Disabling
Code

 

Service Provider covenants that Service Provider will take commercially
reasonable diligent steps (and, in any case, not less than the measures it
takes with respect to software developed or licensed for its own usage) to
ensure that there is no Disabling Code introduced into any Service Provider
Software or Deliverables.  Service
Provider further covenants that with respect to any Disabling Code that may be
part of the Service Provider Software, Customer Software or Deliverables,
Service Provider will not invoke Disabling Code at any time, including upon
expiration or termination of the Agreement or any Transaction Document for any
reason.

 

5.7.                            Services
Not to be Withheld

 

(a)           Prohibition.  Service Provider shall not [***] refusal by
Service Provider to provide or perform [***] Services in breach of Service
Provider’s obligations under the terms of the Agreement and/or any Transaction
Document.  For the purposes of the
definition of “Abandon” or “Abandonment” in this Section 5.7,

 

(i)            [***]; and

 

(ii)           [***].

 

(b)           Injunctive Relief.  If Service Provider breaches or threatens to
breach Section 5.7(a)
[***], Service Provider agrees that Customer will be irreparably harmed, and,
without any additional findings of irreparable injury or harm or other
considerations of public policy, Customer shall have the right to apply to any
court of competent jurisdiction for and, provided that Customer follows the
appropriate procedural requirements (e.g., notice),
Service Provider shall not oppose the granting of an injunction compelling
specific performance by Service Provider of its obligations under the Agreement
and/or the applicable Transaction Document with respect to such [***] Services (i) except
to require that Customer establish that Service Provider has [***] and (ii) except
to the extent that the injunctive relief granted [***].  [***], Customer shall not be required to post
any bond or other security in connection with any such injunction.  Customer’s rights under this paragraph shall
be in addition to any other remedy available under this Agreement, at law or in
equity (including the right to recover damages).

 

6.                                      REPRESENTATIONS AND WARRANTIES

 

6.1.                            Representations
and Warranties of Customer

 

Customer represents and warrants to Service Provider as follows as of
the Effective Date and as of the Execution Date of each Transaction Document:

 

(a)           Organization;
Power.  Customer (i) is a
limited partnership duly organized, validly existing and in good standing under
the laws of the State of Delaware, and (ii) has full partnership power to
own, lease, license and operate its properties and assets and to conduct its
business as currently conducted and to enter into this Agreement.

 

19

 

(b)           Authorized
Agreement.  This Agreement has been,
and each Transaction Document will be, duly authorized, executed and delivered
by Customer and constitutes or will constitute, as applicable, a valid and
binding agreement of Customer, enforceable against Customer in accordance with
its terms.

 

(c)           No Default.  Neither the execution and delivery of this
Agreement or any Transaction Document by Customer, nor the consummation of the
transactions contemplated hereby or thereby, shall result in the breach of any
term or provision of, or constitute a default under, any organizational
document of Customer or any agreement (subject to any applicable consent) or
Law to which Customer is a Party or which is otherwise applicable to Customer.

 

(d)           Consents.  Except as otherwise provided in this
Agreement (including Section 9.5,
Required Consents), no authorizations or other consents, approvals or notices
of or to any Person are required in connection with (i) the execution,
delivery and performance by Customer of this Agreement or any Transaction
Document, (ii) the use by Service Provider of the Customer Assets to
perform the Services in accordance with the applicable provisions of this
Agreement, or (iii) the validity and enforceability of this Agreement and
any Transaction Document.

 

(e)           No Litigation.  There is no action, suit, proceeding or
investigation pending or, to Customer’s knowledge, threatened, that questions
the validity of the Agreement or Customer’s right to enter into this Agreement
or any Transaction Document or to consummate any of the transactions
contemplated by them.

 

6.2.                            Representations
and Warranties of Service Provider

 

Service Provider represents and warrants to Customer as follows as of
the Effective Date and as of the Execution of each Transaction Document:

 

(a)           Organization;
Power.  Service Provider (i) is
a corporation, duly organized, validly existing and in good standing under the
laws of New York, and (ii) has full corporate power to own, lease, license
and operate its properties and assets and to conduct its business as currently
conducted and to enter into this Agreement.

 

(b)           Authorized
Agreement.  This Agreement has been
and each Transaction Document will be duly authorized, executed and delivered
by Service Provider and constitutes or will constitute, as applicable, a valid
and binding agreement of Service Provider, enforceable against Service Provider
in accordance with its terms.

 

(c)           No Default.  Neither the execution and delivery of this
Agreement or any Transaction Document by Service Provider, nor the consummation
of the transactions contemplated hereby or thereby, shall result in the breach
of any term or provision of, or constitute a default under, any charter
provision or bylaw, agreement (subject to any applicable consent) or Law to
which Service Provider is a Party or that is otherwise applicable to Service
Provider.

 

(d)           Consents.  Except as otherwise provided in this
Agreement (including Section 9.5,
Required Consents), no authorizations or other consents, approvals or notices
of or 

 

20

 

to any Person
are required in connection with (i) the execution, delivery and
performance by Service Provider of this Agreement or any Transaction Document, (ii) the
use by Customer of the Service Provider Assets and the development,
implementation or operation of the Service Provider Software and Service
Provider Systems necessary for Service Provider to perform the Services in
accordance with the applicable provisions of this Agreement, or (iii) the
validity and enforceability of this Agreement.

 

(e)           No Infringement.  Service Provider represents and warrants that
(i) the Service Provider Assets  and
any Deliverable or information provided
as part of the Services  by Service Provider (or any Service Provider
agent, contractor, subcontractor or representative)(collectively,
the “Covered Resources”), and Customer’s use thereof (or access or exercise of any other rights granted under this agreement with
respect to such Covered Resources) or any Third Party’s use (or such
access or exercise) thereof authorized by Service Provider in any circumstance,
and (ii) the Services, and the Customer Group’s receipt thereof, shall not
infringe or misappropriate the Intellectual Property Rights of any Third Party,
or otherwise conflict with the rights of any Third Party; provided, however, that Service
Provider makes no representation or warranty to the extent that any
infringement or misappropriation is caused by: 
(i) modification of such Covered Resource by Customer, the other
members of the Customer Group, its and their Affiliates, and the respective
current, future and former officers, directors, employees, agents, successors
and assigns of each of the foregoing, and each of the foregoing persons or
entities, except as authorized by Service Provider in
writing; (ii) any such person’s use of such Covered Resource in
combination with any product or equipment not owned or provided by Service
Provider, except where Service Provider knew that such combination would be or
was used by such person and did not object (Service
Provider will be deemed to have knowledge of such combinations only if they are
described or referred to in,  or are
reasonably apparent from, the Agreement or any documentation exchanged by
Service Provider, its Affiliates and subcontractors and the members of the
Customer Group and, in each case, their respective representatives); (iii) resources
provided by Customer or the Customer Group for use by Service Provider and/or
its subcontractors; (iv) business processes that were used by the Customer
Group before they were taken over in whole or in part by Service Provider; or (v) Services
or the results thereof conforming to or based upon designs or specifications
provided by members of the Customer Group or at the direction of members of the
Customer Group.  Service Provider has
obtained, and will obtain, all rights and licenses required from Third Parties
to (x) operate, use, license and provide the Service Provider Assets, (y) provide
the Services, and (z) otherwise perform its obligations under this
Agreement.  Service Provider shall
maintain in full force and effect the rights and licenses described in this
paragraph for the entire Term and for the duration of the provision of
Termination Assistance Services.

 

(f)            Performance Warranty.  The Services will conform to the description
of the Services set forth in each Transaction Document and to general industry
standards for the Services provided by Service Provider pursuant to this
Agreement.

 

(g)           Data Processing
and Transfers.  With respect to each
transfer of Personally Identifiable Information, Service Provider (i) has
full legal authority in each jurisdiction where Personally Identifiable
Information will be Processed to Process such Personally Identifiable
Information; and (ii) will use such Personally Identifiable Information
for purposes not 

 

21

 

incompatible
with those for which it was collected or subsequently authorized by the data
subject; and (iii) has complied, and will comply, with all applicable Laws
which may regulate the transfer of Customer Data by Service Provider and its
subcontractors between the United States and Service Provider Locations outside
the United States and among any such Locations; provided, that Service
Provider makes no representation or warranty with respect to any such transfers
that occur solely as a result of the business operations of the Customer Group
(and not as a result of Service Provider’s operations relating to its provision
of the Services).

 

(h)           Compliance with
Immigration Laws.  Service Provider
will at all times comply with all applicable Laws relating to the screening,
hiring and employment of all labor forces used in connection with its provision
of the Services, including those relating to citizenship or legal work status,
including the U.S. Immigration Reform and Control Act of 1986, as amended, and
its successors, if any, and any implementing regulations therefor.  Service Provider will not assign Services to
be performed to any Service Provider personnel who are not legally permitted to
perform such Services under such Laws, and if any Service Provider personnel
performing any of the Services is discovered not to be so permitted, Service
Provider will immediately remove such personnel from performing Services
hereunder and replace such personnel with personnel who is so permitted.

 

(i)            No Litigation.  There is no action, suit, proceeding or
investigation pending or, to Service Provider’s knowledge, threatened, that
questions the validity of the Agreement or Service Provider’s right to enter
into this Agreement or any Transaction Document or to consummate any of the
transactions contemplated by them.

 

6.3.                            Pass-Through
Warranties

 

In the event Service Provider purchases or procures any Third Party
products or services for Customer in connection with the provision of the
Services, in addition to the foregoing representations, warranties and
covenants, Service Provider shall pass-through or assign to Customer the rights
Service Provider obtains from the manufacturers and/or vendors of such products
and services (including warranty and indemnification rights), all to the extent
that such rights are assignable.

 

6.4.                            Disclaimer

 

EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT OR IN ANY
TRANSACTION DOCUMENT, THE PARTIES MAKE NO REPRESENTATIONS, WARRANTIES OR
CONDITIONS (STATUTORY OR OTHERWISE), EXPRESS OR IMPLIED, REGARDING ANY MATTER,
INCLUDING THE MERCHANTABILITY, SUITABILITY, FITNESS FOR A PARTICULAR USE OR
PURPOSE, OR RESULTS TO BE DERIVED FROM THE USE OF ANY SERVICE, SOFTWARE,
HARDWARE, DELIVERABLES OR OTHER MATERIALS PROVIDED UNDER THIS AGREEMENT.

 

22

 

7.                                      TRANSITION

 

7.1.                            Transition
and Transformation Plan

 

In accordance with the “Transition and Transformation Planning
Process” Schedule to each Transaction Document, Service Provider
will prepare a transition and transformation plan, which shall set forth: (i) all
Transition Services necessary to completely migrate the Services to, or
implement the Services by, Service Provider; (ii) an allocation of
responsibilities between the Parties for the performance of such Transition
Services; (iii) the transition of the administration, management,
operation under and financial responsibility for applicable Third Party
Agreements from Customer to Service Provider; (iv) the transition to
Service Provider of the performance of and responsibility for the other
functions, responsibilities and tasks currently performed by members of the
Customer Group (or by a Third Party on behalf of members of the Customer Group)
which comprise the Services; (v) Service Levels applicable to the
Transition Services; (vi) the Services, projects, tasks, responsibilities
and timelines for activities to be performed in connection with the evolution,
integration and transformation of the functions comprising the Services in
accordance with the agreed upon plan; and (vii) such other information and
planning as are necessary to ensure that the Transition and Transformation
takes place on schedule and without disruption to Customer’s operations (each,
a “Transition and Transformation Plan”).

 

7.2.                            Critical
Transition Milestones

 

Each Transition and Transformation Plan shall include those milestones
that are critical to the success of the Transition (the “Critical Transition
Milestones”).  For each Critical
Transition Milestone, the Transition and Transformation Plan shall set
forth:  (a) the transition
activities that must be completed by Service Provider in order for the Critical
Transition Milestone to be deemed to have been achieved (the “Critical
Transition Activities”); (b) the applicable acceptance criteria; and (c) the
date by which the Critical Transition Milestone must be achieved.  A Critical Transition Milestone will be
deemed to have been achieved at such time as each Critical Transition Activity
included within the Critical Transition Milestone has satisfied all applicable
acceptance criteria.

 

7.3.                            Affected
Employees

 

Customer may agree in any Transaction Document to provide Service
Provider with the opportunity to offer employment to certain of the employees
of the Customer Group in connection with the execution of the Agreement and one
or more Transaction Documents.  The “Affected
Employees” Schedule to a Transaction Document shall set forth the
Parties’ agreement with respect to such employees.

 

8.                                      GOVERNANCE

 

Customer’s account will be governed in accordance with the “Account
Governance” Exhibit.  The
Services shall include all Service Provider obligations set forth in the “Account
Governance” Exhibit, and all other project management, governance
and related management activities described herein and in the Transaction
Documents or Schedules thereto, and shall be performed by Service Provider at
no additional cost to Customer.

 

23

 

9.                                      RELATIONSHIP PROTOCOLS

 

9.1.                            Non-Exclusive;
Alternate Service Providers

 

Unless otherwise expressly provided in any Transaction Document, the
relationship between the Parties is non-exclusive.  Subject to Customer’s obligation to satisfy
any minimum revenue commitment set forth in the applicable Transaction
Document, during the Term Customer shall have the right to retain Third Party
vendors to perform any service, function, responsibility, activity or task
whether or not it is within the scope of the Services or would constitute an
Additional Service or New Service, or to perform any such services, functions,
responsibilities or tasks (whether all or a part of the Services or the New
Services) internally.  Service Provider
shall provide reasonable cooperation (using the resources then applied by Service
Provider to provide the Services) with any such Third Party vendors and
Customer as requested from time to time.

 

9.2.                            Personnel
Resources

 

(a)           Key Personnel and
Knowledge Workers.

 

(i)            The Parties will designate as “Key Personnel” in
the “List of Key Personnel” Schedule to a Transaction Document (A) a
certain number of Service Provider employees serving in management positions
critical to the management of Customer account, including the Service Provider
Contract Manager and (B) a certain number of Service Provider employees
serving in operational positions whose knowledge of the elements of Customer
account are critical to the everyday operations of the business of Customer (collectively, “Key Service Provider Positions”).  Service Provider will cause each of them to
be dedicated full-time to the provision of the Services.  The Parties may, from time to time in
accordance with the Change Control Procedures, agree to change the positions
designated as Key Service Provider Positions.

 

(ii)           Service Provider will not assign Key Personnel to work on
accounts of Customer Competitors while such employees are Key Personnel and
[***] thereafter.  Service Provider,
other than for cause or as necessary to comply with Law, may not remove a
person from his or her position in a Key Service Provider Position without
Customer’s prior written consent.  If any
person designated as Key Personnel leaves his or her employment with Service
Provider for reasons that are beyond the reasonable control of Service Provider
(e.g., death, disability, illegal or
wrongful activity), Service Provider may temporarily replace such person with a
qualified person without Customer’s approval until a permanent replacement has
been identified and approved by Customer.

 

(iii)          Key Personnel may not be transferred or re-assigned until a
suitable replacement has been introduced to and approved by Customer. Any
replacement of Key Personnel must be conducted in accordance with a mutually
agreed upon transition plan, which shall include at least the following:

 

24

 

(A) technical
requirements (if not already defined), (B) a timetable for integration of
the replacement personnel into the Key Service Provider Position, and (C) replacement
methodology designed to minimize the loss of knowledge as a result of losing
the Key Personnel.  [***] will assume all
costs and expenses associated with the (1) departure or re-assignment of
all Key Personnel and (2) development and implementation of the transition
plan, including costs and expenses associated with “knowledge transfer,”
integration and training of replacement personnel.

 

(b)        Customer Requested Replacement of Service Provider
Personnel.  If Customer determines in
its discretion and for reasons that are not unlawful, that the continued
assignment to Customer account of any Service Provider personnel is not in the
best interests of Customer, then the Customer Contract Manager may request by
notice that Service Provider replace any such individual with another qualified
individual.  After receipt of such
notice, Service Provider will immediately temporarily suspend such person’s
assignment to Customer account and promptly investigate the matter.  If Service Provider is not able to address
the matter to Customer’s reasonable satisfaction within ten (10) days,
Service Provider will remove such individual from Customer account and replace
such individual with Service Provider personnel possessing qualifications and
skills appropriate to the position in accordance with Section 9.2(a)(iii).

 

(c)         Background Investigations.  To the extent permitted by applicable Law,
and in accordance with Service Provider’s background screening policies as set
forth in the Attachment 11-9 to the “Policies” Exhibit,
Service Provider will perform or arrange for a background investigation of all
of Service Provider’s personnel who will perform any of the Services or will
have access to any of Customer’s Company Information.  Customer may also require Service Provider to
expand the background investigation or apply additional screening criteria,
which shall also be included in the Attachment 11-9 to the “Policies”
Exhibit.  The incremental
administrative and investigation costs associated with such request shall be
[***] .  Further, Service Provider will
ensure that all Service Provider subcontractors perform or arrange for a
background investigation in accordance with such subcontractors’ comparable
background screening policies of all Service Provider subcontractors’ personnel
who will perform any of the Services and who will have access to any of Customer’s
Company Information, provided, that with respect to [***], any expanded
or additional screening requested by Customer shall be [***].  Service Provider shall not assign any
personnel to Customer’s account or otherwise permit any of its personnel to have
access to Customer’s Company Information who have not met the background
screening criteria consistent with this paragraph.

 

(d)        Independent Contractor.  Neither Service Provider nor Service Provider’s
employees are or shall be deemed to be employees of Customer.  Service Provider shall be solely responsible
for the payment of compensation (including provision for employment taxes,
federal, state and local income taxes, workers compensation and any similar
taxes) associated with the employment of Service Provider’s employees.  Service Provider shall also be solely
responsible for obtaining and maintaining all requisite work permits, visas,
and any other documentation.  Service
Provider represents that Service Provider, its employees, and those 

 

25

 

Service
Provider subcontractors authorized by Customer under this Agreement, are
authorized to perform services under this Agreement.

 

9.3.                            Use of
Subcontractors

 

(a)         The Parties will develop and prepare a list of
subcontractors that the Parties agree may be engaged by Service Provider to
perform and deliver the part or portion of the Services indicated on such list
as a subcontractor to Service Provider (the “Approved Subcontractors”),
which will be set forth in the “Approved Subcontractors” Schedule
to a Transaction Document.

 

(b)        With respect to proposed subcontractors which are not
Approved Subcontractors, Service Provider shall notify Customer in writing of
any proposal by Service Provider to delegate or subcontract a function,
responsibility or task to a subcontractor, or to change subcontractors for any
function, responsibility or task (i) that could have [***] on the Customer
Business as conducted by any member of the Customer Group, (ii) where the
subcontractor will interface directly with the members of the Customer Group, (iii) where
the subcontractor will perform any Services outside the United States, (iv) where
the proposed subcontract value would exceed [***] in any calendar year, (v) where
the subcontractor will perform any of the [***] Services, (vi) where the
subcontractor will perform, [***] Services or (vii) where the subcontract
does not comply with the requirements of paragraph (c) below. Upon
Customer’s request, Service Provider shall promptly provide to Customer such
information as it may reasonably request regarding the proposed new or
replacement subcontractors to permit Customer to determine whether to grant its
consent to such delegation or change or subcontract.  Such information shall include the scope of
the Services to be delegated, the experience, financial status, resources, and
reason for selection of the proposed subcontractors, and whether and to what
extent any of the factors set forth in the first sentence of this paragraph are
implicated by the proposed subcontract. 
Subject to Service Provider’s timely provision of the foregoing
information to Customer, Customer shall be deemed to have accepted such
delegation or subcontract or change that is the subject of the notification by Service
Provider to Customer, if Customer has not notified Service Provider in writing
of its objection to such delegation or subcontract on or before the thirtieth
(30th) day after receipt of all such information from Service Provider.  If Customer timely notifies Service Provider
of its objection in accordance with this Section, Service Provider shall not
effect the proposed delegation change or subcontract.  Service Provider shall not disclose any
Company Information of the Customer Group to any subcontractor unless and until
such subcontractor has agreed in writing to protect the confidentiality of such
Company Information in a manner at least equivalent to that required of Service
Provider by Article 11. 
[***] shall be financially and administratively responsible for
obtaining all Required Consents necessary in connection with the performance of
any part of the Services by any subcontractor [***].

 

(c)         Service Provider’s Agreements with Subcontractors.  Service Provider shall provide in its
agreements with Service Provider’s subcontractors such written provisions as
are sufficient to enable Service Provider to comply with the provisions of this
Agreement.  Such provisions include the
subcontractor’s obligation to keep confidential the Company Information of the
Customer Group and to assign to Customer any Intellectual Property Rights to
the extent that such rights are to be assigned to or owned by Customer pursuant
to the terms 

 

26

 

of this Agreement.  Service
Provider will ensure that its agreements with Service Provider subcontractors
providing any of the Services include service level requirements relating to
the Services performed by a Service Provider subcontractor that are no less
stringent than the Service Levels under this Agreement for those Services.  In addition, where Services are being
provided solely for the benefit of Customer, each new subcontract hereunder
shall contain provisions specifying that the Service Provider subcontractor
specifically agrees that Service Provider shall have the right to assign such
subcontract to Customer, unless otherwise approved in writing in advance by
Customer,  Service Provider shall cause
all subcontracts with Service Provider Affiliates, other than subcontracts with
IBM Global Finance, to contain provisions specifying that the Service Provider
Affiliate specifically agrees that Service Provider shall have the right to
assign such subcontract to Customer.

 

(d)        Responsibility of Service Provider.  Service Provider shall remain primarily
liable and obligated to Customer for the timely and proper performance of all
of its obligations hereunder, even if such obligations are delegated to a
Customer-approved subcontractor, and for the proper and timely performance and actions
of any person or entity to which it delegates or subcontracts any such
obligation.

 

(e)         Replacement. 
In the event that Customer determines that it is not in the best
interests of Customer for a subcontractor to continue performing any part or
portion of the Services, then Customer shall discuss with Service Provider and,
if Service Provider cannot address Customer’s concern to its reasonable
satisfaction, Service Provider shall promptly remove such subcontractor from
providing any Services under the Agreement upon request by Customer; [***]
Service Provider shall submit a reasonable replacement plan to Customer within
ten (10) business days of Customer’s request.  Service Provider will revise the plan to
incorporate reasonable changes required by Customer within ten (10) days
following Service Provider’s receipt of such changes. Upon approval of the plan
by Customer, Service Provider shall immediately implement such plan in
accordance with its terms.  If Customer
requests that Service Provider remove a subcontractor [***].  If the requested removal is for cause, then
[***].  For purposes of this paragraph, “cause”
shall mean (1) any material breach of this Agreement by subcontractor  or (2) any non-compliance with the
obligations set forth in Section 3.2(a)(ii).

 

9.4.                            Contract
Management

 

The “Third Party
Agreements” Schedule to a Transaction Document (if any) shall set
forth those Third Party Agreements that shall be managed (“Managed
Agreements”) or assumed (“Assumed Agreements”) by Service Provider in
connection with the provision of the Services. 
The “Third Party Agreements” Schedule or “Service
Provider Software” Schedule may also include a list of Third Party
Software or services that Service Provider will obtain on Customer’s behalf
pursuant to one or more new or existing agreements between Service Provider and
a Third Party for such product or service (“Service Provider Third Party
Agreements”).

 

9.5.                            Required
Consents

 

(a)      Unless otherwise expressly provided in any Transaction Document
(i) Customer shall have the financial responsibility for obtaining all
Required Consents 

 

27

 

necessary
for Service Provider to manage the Managed Agreements, assume the Assumed
Agreements or use the Customer Assets to perform the Services as contemplated
by the Agreement, and (ii) Service Provider shall have the management and
administrative responsibility for timely obtaining, or causing to be timely
obtained, all such Customer Required Consents and the management,
administrative and financial responsibility for obtaining all Required Consents
necessary for the use by Customer of the Service Provider Assets and the
development, implementation, operation or use of the Service Provider Software
and Service Provider Systems necessary for Service Provider to perform the
Services and the Customer Group to receive the Services in accordance with the
applicable provisions of this Agreement. 
Customer will cooperate, and cause the other members of the Customer
Group to cooperate, with Service Provider in obtaining such Required Consents.

 

(b)        Service Provider will provide Customer with advice and
counsel regarding Service Provider’s experience and agreements with the persons from which any Customer Required
Consents must be obtained and the benefit of any relationship of Service
Provider with each such person to the extent permitted under Service Provider’s
agreements with such Third Party
Provider.

 

(c)         For all Third Party Agreements allocable to this Agreement
entered into after the Effective Date, the Party having financial
responsibility for the product or service to which the Third Party Agreement
relates shall bear the costs, if any, of obtaining any associated Required
Consents.

 

(d)        If any Required Consent is not obtained with respect to any
lease governing leased Equipment, any license or other agreement governing
Third Party Software or any Third Party Agreement, then, unless and until such
Required Consent is obtained, the Parties will cooperate with each other in achieving
a reasonable alternative arrangement to continue processing Customer’s work,
which does not degrade service to Customer or result in any additional cost or
expense to Customer.

 

(e)         If and when requested by Customer, Service Provider will
provide Customer with documentary evidence of Required Consents obtained by
Service Provider.

 

9.6.                            Change Control
Procedures

 

The procedures that shall govern the process by which a Party may
propose or request (i) any Change (“Contract Change Control”), and (ii) a
change in the material day-to-day operational interactions between the Parties
(“Operational Change Control”) (collectively, “Change Control
Procedures”), are set forth in the “Change Control Process” Exhibit.

 

9.7.                            Inspections and
Audits

 

(a)    Service Provider Records. 
Service Provider shall maintain, at all times during the Term and at no
additional charge to Customer, complete and accurate records and supporting
documentation pertaining to: (i) all Charges and financial matters under
this Agreement; (ii) all Deliverables and other information reasonably
necessary to confirm Service Provider’s performance of the Services ;and (iii) Service
Provider’s internal controls relating to the Services and those controls
provided for in any Transaction Document or in the Procedures 

 

28

 

Manual
to be executed by Service Provider and relating to Customer’s control over the
activities of Service Provider (collectively, “Service Provider Records”),
all in a manner sufficient to permit the audits in accordance with this Section 9.7.  Service Provider may redact from the Service
Provider Records information pertaining to another client of Service Provider.

 

(b)        Operational Audits. 
Service Provider shall provide, upon seven (7) days’ prior written
notice, or in the case of investigations based on Customer’s good faith
allegation of fraud, intentional misconduct, Security Breach or violation of
Law, one (1) Business Day’s prior written notice, or such shorter period
as may be required by law or requested by any Governmental Authority, to
Customer and to internal and external auditors, inspectors, regulators and
other representatives that Customer may designate from time to time (“Customer
Auditors”) access in accordance with Section 9.7(e)(i) to
perform operational audits and inspections of Service Provider, its
subcontractors and their respective facilities (“Operational Audits”),
to: (i) verify the integrity of the Customer Data, (ii) examine the
systems that process, store, support and transmit that data, (iii) verify
whether the Services comply with Customer Compliance Directives; (iv) examine
the controls related to the Services (e.g., financial
and accounting controls, organizational controls, input/output controls, system
modification controls, processing controls, system design controls, and logical
and physical access controls) and conduct walkthroughs (as defined by the
Public Company Accounting Oversight Board (“PCAOB”) and other testing
and review procedures related to the Services); (v) examine the security,
disaster recovery and back-up practices and procedures related to the Services,
(vi) examine Service Provider’s development of Deliverables; (vii) facilitate
Customer’s  compliance with Customer
Compliance Requirements; and (viii) examine, test and assess Service
Provider’s systems, policies and procedures relating to intrusion detection and
interception with respect to Service Provider systems used to provide the
Services.  Audits will occur no more than
once each calendar quarter for audits of Service Provider’s compliance with
this Agreement, except in the case of audits based on Customer’s good faith
allegation of fraud, tortious intentional misconduct, Security Breach or violation
of Law and audits requested by Governmental Authorities, which shall be
permitted upon Customer’s request.

 

(c)         Financial Audits. 
Service Provider shall provide, upon seven (7) days’ prior written
notice,  or in the case of investigations based on Customer’s
good faith allegation of fraud, intentional misconduct, Security Breach or violation
of Law, one (1) Business Day’s prior written notice, or such shorter
period as may be required by law or requested by any Governmental Authority, to
Customer and Customer Auditors access in accordance with Section 9.7(e)(i)
to perform financial audits and inspections (“Financial Audits”) to (i) verify
the accuracy and completeness of the Service Provider Records, and  (ii) verify the accuracy and completeness of Service
Provider’s invoices.  If a Financial
Audit reveals that errors have been made in connection with the Charges, then
the Parties will work together to correct the error and any overpayments
revealed by the Financial Audit will be promptly paid by Service Provider or
credited to Customer.  In addition, if
the Financial Audit reveals any overpayment that is greater than [***] of the
amount that was actually due for the period being audited, Service Provider,
subject to the opportunity to dispute the Financial Audit findings in good
faith, shall [***].  Financial Audits may
occur as often as may be reasonably required for audits relating to the
Customer Group’s financial reporting and legal requirements.

 

29

 

(d)        Service Provider Audits and Reporting.

 

(i)          Common Processes Audit.  Once in the fourth quarter of each  calendar year, Service Provider shall cause a
Statement of Auditing Standards No. 70 (“SAS 70”) audit covering
the common processes and controls performed by Service Provider at the Service
Provider Shared Services Center Location listed in each Transaction Document
for at least the preceding six (6) month period to be completed by an
independent, nationally recognized firm qualified to perform such audits.  The audit shall be a multi-client SAS 70
Type II audit covering Service Provider common processes applicable to multiple
customers at the Service Provider Shared Services Center Location and does not
cover transaction processing services to Customer.  In the year in which transition of Services
to Service Provider occurs under each Transaction Document, a SAS 70 will
be provided only if transition is completed in sufficient time to allow six (6) months
of Service Provider performance of the covered Services prior to September 30.  A copy of each of the resulting audit reports
shall be delivered to Customer during the last quarter of each calendar
year.  At Customer’s request, the Parties
will meet to review the results of such SAS 70 audit report(s) within
ten (10) days after their delivery to Customer.  In addition, Service Provider will provide
Customer within five (5) Business Days of its request, a certificate of an
officer of Service Provider certifying that there has been no change in such
controls and systems or the successful operation of such controls and systems
since the date of the most recent opinion of Service Provider’s independent
auditors.

 

(ii)         Customer Specific Audits. At
Customer’s request and expense, at least once in the fourth quarter of each
calendar year or as specified in the “Services Description” Schedule
to a Transaction Document or as requested by Customer, Service Provider shall
cause a SAS 70 Type II audit covering the processes and controls specific
to the Services and set forth in each Transaction Document to be completed by
an independent, nationally recognized firm qualified to perform such
audits.  A copy of each of the resulting
audit reports shall be delivered to Customer during the last quarter of each
calendar year.  At Customer’s request,
the Parties will meet to review the results of such reports within ten (10) days
after their delivery to Customer.  In
addition, Service Provider will provide Customer within five (5) Business
Days of its request, a certificate of an officer of Service Provider certifying
that there has been no change in such controls and systems or the successful
operation of such controls and systems since the date of the most recent
opinion of such independent auditors.

 

(iii)        Qualified Opinions.  If Service Provider is unable to timely
deliver to Customer any audit report described in (d) (i) and (ii) above
which does not identify any significant deficiency or material weakness,
Service Provider shall (A) provide Customer, on the date such report is
delivered, or is due to be delivered, with a written statement describing the
circumstances giving rise to any delay in delivering such report or any such
significant deficiency or material weakness identified in such report, (B) promptly
take such actions as shall be necessary to resolve such circumstances and
deliver an unqualified report as 

 

30

 

promptly as
practicable thereafter, and (C) permit Customer and its external auditors
to perform such procedures and testing of Service Provider’s controls and
processes as are reasonably necessary for their assessment of the operating
effectiveness of Service Provider’s controls and of Customer’s internal
controls applicable to the Services and the related business functions of
Customer.    Customer shall have the
right to provide all reports delivered hereunder to its investors, attorneys,
accountants and other advisors, who shall be entitled to rely thereon and to
otherwise disclose such matters as it determines to be necessary or desirable.

 

(e)         General Principles Regarding Audits.

 

(i)          Access.  Service Provider shall provide Customer
Auditors with reasonable access to: (A) the parts of any Location at which
Service Provider is providing the Services; (B) Service Provider Assets
used by Service Provider to provide the Services; (C) Service Provider
personnel providing the Services; (D) Service Provider subcontractors and
agents who perform any portion of the Services (including to such entity’s
personnel, facilities, records, systems, controls, processes and procedures);
and (E) all Service Provider Records. Customer Audits will be conducted in
a manner that does not unreasonably disrupt or delay Service Provider’s
performance of services for its other customers.  Service Provider shall be relieved
of its obligations under this Agreement to the extent that the activities of
the Customer Auditors adversely affect its performance of the Services; provided,
that Service Provider shall notify Customer of any such adverse affect and
Service Provider shall use its commercially reasonable efforts to perform it
obligations not withstanding such interference.  Customer’s
access to the Service Provider Records shall include the right to inspect and
photocopy same, the right to retain copies of such Service Provider Records
outside of the Service Provider Locations and/or other Service Provider or
Service Provider subcontractor premises with appropriate safeguards, if such
retention is deemed necessary by Customer and the right to install audit
software. Customer will indemnify and hold harmless Service Provider against
all Losses resulting from the installation or operation of such audit software
and Service Provider shall be relieved of its obligations under this Agreement
to the extent that such installation or operation adversely affects its
performance of the Services; provided, that Service Provider shall
notify Customer of any such adverse affect and Service Provider shall use its
commercially reasonable efforts to perform it obligations notwithstanding such
interference.

 

(ii)         Confidentiality.  Prior to being permitted access, unless
otherwise agreed to by the Parties, each Customer Auditor (other than
representatives of Governmental Authorities) shall execute a non-disclosure
agreement with Customer and Service Provider in the form attached as the “Form of
Auditor Confidentiality Agreement” Exhibit or, if such form is
not acceptable to such Customer Auditor, such other form as is reasonably
acceptable to the Parties and such auditor or inspector.  Service Provider agrees that the form of non-

 

31

 

disclosure
agreement between Customer and Deloitte & Touche (acting in their
capacity as independent public accountants) in the form attached to the “Form of
Auditor Confidentiality Agreement” Exhibit shall be acceptable
in lieu of an agreement with Service Provider. 
For the avoidance of doubt, Customer shall be responsible to Service
Provider for any breach by Deloitte & Touche of its obligations under
such agreement. Service Provider may require Customer Auditors to comply with
the security requirements of Service Provider that are generally applied to all
auditors or inspectors of its other customers. 
External auditors engaged by Customer to perform audits pursuant to this
Section 9.7 shall not be engaged by Customer on a contingent fee
basis.  Any external auditors  shall not be competitors of Service Provider
with respect to the Services audited, provided, that the foregoing
limitation shall not apply to PriceWaterhouseCoopers, Ernst & Young,
Deloitte & Touche and KPMG acting in the capacity of independent
public accountants.

 

(iii)        Copies of Audit Reports; Notice of
Deficiency.  Upon completion of any
Service Provider Audit, Service Provider shall provide Customer:  (A) a copy of the Service Provider Audit
reports, and (B) written notice of any deficiencies or material weaknesses
found and/or reported as a result of the Service Provider Audit.  Upon completion of any Operational Audit
and/or Financial Audit (collectively, “Customer Audits”), Customer shall
notify Service Provider of any deficiencies or material weaknesses found as a
result of the Customer Audit, and provide Service Provider with copies of
portions of Customer Audit reports reflecting or based upon information
obtained from Service Provider.

 

(iv)       Limitation on Disclosure.  Notwithstanding the provisions of this Section 9.7, neither Service Provider nor Service
Provider agents, will be required to provide Customer Auditors under this Section 9.7 or other provisions of the Agreement
providing generally for audits with (A) audit reports or information or
findings resulting or obtained from audits, investigations or reviews to the
extent such audits, investigations or reviews were performed by Service Provider
or Service Provider agents’ outside auditors or corporate internal audit staff
or business controls functions, (B) reports, findings or information
constituting attorney client privileged materials, attorney work product or
were otherwise undertaken at the direction of counsel, (C) disclosure of
such reports, findings or information which would violate the privacy rights of
employees under applicable Law or Service Provider’s obligations of
confidentiality to Third Parties, or information about Service Provider costs
(including costs of Service Provider Affiliates, Service Provider agents and
subcontractors and suppliers) of obtaining goods and services or providing the
Services except to the extent such costs are the basis upon which Customer is charged
(e.g., reimbursable expenses,
out-of-pocket costs, pass-through expenses, or cost-plus fees), or (D) information
about other Service Provider clients.

 

32

 

(f)         Action Plan. 
As part of the Services, in the event any Customer or Service Provider
Audit reveals a significant deficiency or material weakness, the Party
responsible for such control(s) or implementation shall promptly remedy
such weakness or deficiency.  For
significant deficiencies and material weaknesses for which Service Provider is
responsible, Service Provider shall provide Customer with a plan of action to
correct the significant deficiency or material weakness, which plan of action
shall be subject to Customer’s written approval and shall, at a minimum,
include:  (i) details of actions to
be taken by Service Provider and/or its subcontractors to correct the
significant deficiency or material weakness, and (ii) target dates for
successful correction of the significant deficiency or material weakness (“Action
Plan”).  Service Provider shall
provide the Action Plan within ten (10) Business Days of Service Provider’s
identification or Customer’s notice of such significant deficiency or material
weakness. Service Provider shall also periodically provide Customer with notice
of (A) Service Provider’s successful completion of each action identified
in the Action Plan; and (B) any delays in Service Provider’s completion of
the actions identified in the Action Plan, accompanied by an explanation of the
cause of such delay.

 

(g)        Cost of Audits. 
The costs of audits shall be borne as follows:  [***].

 

(h)        Document Retention. 
Service Provider shall retain all records, documents and data specified
by Customer as required to be maintained by it for such period as may be
specified in any Transaction Document or otherwise communicated to it by
Customer (but in any event, at least three (3) years after performance of
the Services).  All such records,
documents and data shall be maintained in such form (for example, in paper or
electronic form) as may be specified in any Transaction Document or, if not so
specified, in the form in which they are generated and stored in the ordinary
course, or as Customer may direct.  Prior
to deleting or destroying any such records, Service Provider shall first offer
to provide such records to Customer in the form in which they then exist.

 

10.                               TECHNOLOGY; INTELLECTUAL PROPERTY RIGHTS

 

10.1.                     Customer Software

 

The
list of Customer-Owned Software and Customer-Licensed Software, if any, that is
necessary for Service Provider to use to perform the Services shall be
identified in a “Customer Software” Schedule to a Transaction
Document.  The “Customer Software”
Schedule shall be updated as provided therein and shall set forth all
Customer Software to be operated and/or used by Service Provider in support of
the Services covered by a Transaction Document.

 

10.2.                     Service Provider Software

 

The list of Service Provider Software that is
necessary for Service Provider to use to perform the Services shall be
identified in a “Service Provider Software” Schedule to a
Transaction Document.  Service Provider
shall not introduce any additional Service Provider Software into the Customer
Systems or the dedicated information technology environments used by Service
Provider and its subcontractors to provide the Services without Customer’s
prior written approval.

 

33

 

10.3.                     Service Provider Materials

 

Service
Provider shall be the sole and exclusive owner of, including United States and
foreign intellectual property rights practiced by and/or incorporated in (1) all
Materials owned by Service Provider as of the Effective Date; (2) all
Materials, the ownership of which is acquired by Service Provider from Third
Parties after the Effective Date; (3) all Materials developed by Service
Provider after the Effective Date, including such Materials jointly developed
by Service Provider and/or its subcontractors with the Customer Group under
this Agreement; and (4) all Derivative Works prepared by Service Provider
after the Effective Date based upon Materials that are owned, licensed and/or
developed by Service Provider and/or its subcontractors, including such
Materials jointly developed with the Customer Group under this Agreement, but
excluding from items (1) through (4) the Customer Group Derivative
Works and the intellectual property rights practiced and/or embedded in such
Derivative Works (collectively the “Service Provider Materials”).  Service Provider hereby grants to the members
of the Customer Group the following license rights with respect to the Service
Provider Materials:

 

(a)         a worldwide, internal, non-exclusive, non-transferable,
fully paid-up license during the Term to use, execute, reproduce (as necessary
to support the Customer Group’s authorized use of such Service Provider
Materials), display, perform and distribute (internally within the Customer
Group, and to the Third Parties and Affiliates described in paragraph (b) below),
such Materials and to the extent necessary for the exercise of such license in
such Service Provider Materials, all Intellectual Property Rights: (i) on
which such Service Provider Materials so licensed depend, (ii) that are
practiced by and/or incorporated into any such Service Provider Materials
and/or the Customer Group Derivative Works by Service Provider or its
subcontractors (i.e., developed by Service
Provider and/or its subcontractors), or (iii) that are necessary for the
use and maintenance of any such Service Provider Materials and/or such Customer
Group Derivative Works, in each case solely in the internal business operations
of the Customer Group (the “Customer Business”) by the Customer Group as
necessary and/or appropriate for receipt and use of the Services by the
Customer Group; and

 

(b)        the right to sublicense to Third Parties and Affiliates of
the Customer Group, at no charge, to do any of the foregoing as necessary
and/or appropriate for the members of the Customer Group to receive and use the
Services in the Customer Business; provided, that any such Third Party
and Affiliate has first executed agreements as required by this Agreement, to
protect Service Provider’s intellectual property rights in such Materials
including confidentiality provisions.

 

Such
licenses include an obligation for Service Provider to deliver all such
Materials upon request by Customer but only to the extent such delivery is
reasonably necessary and/or appropriate for receipt and use of the Services by
the Customer Group.

 

10.4.                     Customer Group Materials

 

(a)         The members of the Customer Group shall be the sole and
exclusive owners of (i) all Materials owned by the members of the Customer
Group as of the Effective Date, (ii) all Materials, the ownership of which
is acquired by the members of the Customer Group from Third Parties after the
Effective Date, (iii) all Materials developed by the members 

 

34

 

of
the Customer Group after the Effective Date, including United States and
foreign intellectual property rights practiced by and/or incorporated in such
Materials, and (iv) all the Customer Group Derivative Works including all
United States and foreign intellectual property rights practiced by and/or
incorporated in such Derivative Works, whether or not jointly developed with
Service Provider and/or its subcontractors (collectively, “Customer Group
Materials”).

 

(b)        Customer hereby grants to Service Provider and the Approved
Subcontractors a worldwide, fully paid-up, non-exclusive license during the
Term to use, execute, reproduce, display, perform, distribute copies of,
maintain, modify, enhance, and prepare Derivative Works based upon, such
Customer Group Materials, for the sole purpose of providing the Services
pursuant to the Agreement.

 

(c)         Customer’s and its Affiliates’ trademarks, trade names and
logos under which Customer and its Affiliates market their services, together
with Customer’s and its Affiliates’ copyrights and know-how (collectively, the “Customer
Marks”) are the sole and exclusive property of Customer and/or its
Affiliates.  This Agreement does not
convey any right to use the Customer Marks except insofar as necessary to
perform the Services under this Agreement.

 

10.5.                     Deliverables

 

(a)         Service Provider agrees to provide the Customer Group with
any and all technical information, computer or other specifications (including
source and object code), end user and programmer documentation, works of
authorship or other creative works or data, written, oral or otherwise
expressed, relating to materials (i) delivered by Service Provider or any
of its employees, agents or subcontractors (“Service Provider Representatives”)
to Customer Group in fulfillment of its obligations under  a Transaction Document, Change Order or other
written agreement under the Agreement, or (ii),which are an enhancement to or
modification or derivative work of any of the Customer Software or Customer
Business Applications (collectively, the “Deliverables”).  Deliverables do not include Service Provider
Materials.  Customer shall own all right,
title and interest in and to the Deliverables, including all Intellectual
Property Rights therein, except as otherwise specified in the applicable “Deviations
from Terms of Master Agreement” Schedule.

 

(i)          Service Provider expressly
acknowledges that the Parties have agreed that all aspects of the Deliverables
and all work in process in connection therewith are to be  considered “works made for hire” within the
meaning of the United States Copyright Act of 1976, as amended (the “Act”), and
that Customer is to be the “author” within the meaning of such Act.  All such copyrightable Deliverables, as well
as all copies of such Deliverables in whatever medium fixed or embodied, shall
be owned exclusively by Customer at its creation, and Service Provider hereby
expressly disclaims any interest in any of them.  Customer hereby grants to Service Provider a
non-exclusive limited license during the Term to use, display, copy and make
Derivative Works of the Work Product solely for the purpose of providing the
Services to Customer under the applicable Transaction Document.

 

35

 

(ii)         In the event (and to the extent) that the Deliverables
created by Service Provider and its Service Provider Representatives hereunder
or any part or element thereof is found as a matter of law not to be a “work
made for hire” within the meaning of the Act, Service Provider hereby
irrevocably conveys and assigns (and in the case of Deliverables not yet
developed, hereby covenants upon their development to irrevocably convey and
assign) to Customer the sole and exclusive right, title and interest in the
ownership to all such Deliverables, and all copies of any of them, without
further consideration, and agrees to assist Customer to register, and from time
to time to enforce, all Intellectual Property Rights and other rights and
protections relating to the Deliverables created hereunder in any and all
countries.  Service Provider
acknowledges, and will cause all Service Provider Representatives to
acknowledge, that Customer will have the right to obtain and hold in its own
name the Intellectual Property Rights in and to the Deliverables.  Service Provider shall place proprietary
rights notices in favor of Customer on the Deliverables at Customer’s request.

 

(b)        Customer hereby grants to Service Provider a worldwide, [***]
non-exclusive license to use, execute, reproduce, display, perform, distribute
copies of, maintain, modify, enhance, and prepare Derivative Works based upon,
such Deliverables and to have others perform the same on Service Provider’s
behalf, provided, that:

 

(i)          [***]

 

10.6.                     Additional
Licenses to Customer

 

(a)         Commercially Available Service Provider Materials.  With respect to those Service Provider
Materials which are generally commercially available and which are used by
Service Provider and/or its subcontractors to provide the Services as of the
end of the Term, Service Provider hereby grants to the members of the Customer
Group a license which may be exercised at the expiration or earlier termination
of the Term to all such Materials (which license shall permit a Third Party
designated by Customer to use such Materials solely for the members of the
Customer Group’s benefit) [***].

 

(b)        Commercially Unavailable Service Provider Materials.  With respect to those Service Provider
Materials that are not generally commercially available and which are used by
Service Provider to provide the Services, but not including the Service
Provider Materials listed in the “Commercially Unavailable Service Provider
Tools” Schedule (the “Commercially Unavailable Service Provider
Tools”), Service Provider hereby grants to the members of the Customer Group a
worldwide, non-exclusive, non-transferable, license to such Service Provider
Materials [***] (i) to use, execute, reproduce (as necessary to support
the members of the Customer Group’s authorized use of such Service Provider
Materials), display, perform, distribute (internally within the Customer Group
and to the Third Parties and Affiliates described in (ii) below),
maintain, modify, enhance and prepare Derivative Works based upon, such
Materials and to the extent necessary for the exercise of such license in such
Service Provider Materials, all intellectual property: (A) on which such
Service Provider Materials so licensed depend, (B) that is practiced by
and/or incorporated into any such licensed Service Provider Materials and/or
the Customer Group Derivative Works by Service Provider or its 

 

36

 

subcontractors
(e.g., developed by Service Provider
and/or its subcontractors), or (C) that is necessary for the use and
maintenance of any such licensed Service Provider Materials and/or such
Customer Group Derivative Works, exercisable from and after the date on which
Service Provider is obligated to provide Termination Assistance Services, in
each case solely in connection with the Customer Business in connection with
the continued receipt and use by the Customer Group of services which are the
same as or similar to the Services, and (ii) to sublicense to Third
Parties and/or any Affiliates of the Customer Group, [***] to do any or all of
the foregoing; provided, that such Third Party or Affiliate has first
executed agreements as required by this Agreement, to protect Service Provider’s
intellectual property rights in such Service Provider Materials including the
confidentiality provisions.  As requested
by Customer, Service Provider shall provide maintenance for such Service
Provider Materials [***] to a Transaction Document or as the Parties may
otherwise agree in good faith.

 

(c)         [***]Licenses to Certain Materials.  Notwithstanding any other provisions in this
Agreement to the contrary, Service Provider hereby grants to the members of the
Customer Group a worldwide, [***] non-exclusive, non-transferable, [***]
license (i) to use, execute, reproduce (as necessary to support the
members of the Customer Group’s authorized use of such Service Provider
Materials), perform, distribute (internally within the Customer Group, to the
other Authorized Users and to the Third Parties and Affiliates described in (ii) below),
maintain, modify, enhance and prepare Derivative Works based upon, (A) the
Procedures Manual, (B) the Internal Use Code [***], (C) the Customer
Solution, and (D) to the extent necessary for the exercise of such license
in such Service Provider Materials, the intellectual property: (1) on
which such Service Provider Materials so licensed depend, (2) that is
practiced by and/or incorporated into any such licensed Service Provider
Materials and/or the Customer Group Derivative Works by Service Provider or its
subcontractors (e.g., developed by Service
Provider and/or its subcontractors), or (3) that is necessary for the use
and maintenance of any such licensed Service Provider Materials and/or such
Customer Group Derivative Works, in connection with the performance of and/or
the receipt by and/or use by the Customer Group of services which are the same
as or similar to the Services, and (ii) to sublicense to Third Parties
and/or any Affiliates of the Customer Group, [***] to do any or all of the
foregoing; provided, that such third party or Affiliate has first
executed agreements as required by this Agreement, to protect Service Provider’s
intellectual property rights in such Service Provider Materials including the
confidentiality provisions.  [***]

 

(d)        Delivery of Materials; No License to Source Code.  Such licenses include an obligation for
Service Provider to deliver all such Materials upon request by the Customer; provided,
however, that Service Provider shall not be obligated to [***] unless (i) expressly
provided in this Agreement, or (ii) [***] is provided under Service
Provider’s standard terms and conditions for such Materials.

 

(e)         “Customer Solution” means, with respect to a Tower, (i) the
functional, operational, technical, architecture and performance requirements
developed by the Parties and/or their respective Affiliates, contractors and
subcontractors for the information technology systems and other services
employed by Service Provider and/or the members of the Customer Group to
perform, provide, deliver, receive and/or use the Services; (ii) the
business and operating policies, and procedures employed by Service Provider
and/or the members of the Customer Group to be employed to provide, perform,
deliver, receive and/or use the Services; 

 

37

 

and (iii) the
work plans, work flows, and/or charters developed by Parties with respect to
the development, implementation, performance, delivery, receipt and use of the
Services by the Parties, or either of them, with respect to the development,
implementation and operation of the items described in (i) and (ii) above.

 

10.7.                     Obligations
Regarding Materials

 

(a)         Legends.  The
Parties shall reproduce copyright, patent and other legends which appear on any
portion of the Service Provider Materials or the Customer Materials, as
applicable,  and any Materials owned by
any and all Third Parties.

 

(b)        No Exclusion. 
The Agreement shall not preclude Service Provider from developing
materials or providing services which are competitive with the Customer
Materials, except to the extent any of the same may infringe or use any of the
Customer Group’s Intellectual Property Rights (including the Deliverables,
except as otherwise provided in Section 10.5).

 

(c)         No Implied Licenses. 
Neither the Agreement nor any disclosure made hereunder grants any
license to either Party under any Intellectual Property Rights of the other
Party, except for the licenses expressly granted under the Agreement.

 

10.8.                     Knowledge
Capital

 

Nothing in this Agreement will preclude Service Provider from
marketing, developing or using for itself or others, services or products that
are the same as or similar to those provided to the Customer Group by Service
Provider pursuant to this Agreement, as long as such services or products do not
include any Customer Software, Customer Company Information, Customer Data or
Customer Group Company Information.

 

10.9.                     Limitation
on Grants of Rights

 

Any ownership or license rights herein granted to either Party in the Agreement
are limited by and subject to any Intellectual Property Rights owned by, and
terms and conditions of any license agreements with, applicable Third Party
Providers (excluding Service Provider and its Affiliates and its or their
permitted subcontractors); provided, however, to the extent any
of the Materials (including all Intellectual Property Rights embodied therein)
are not owned by or licensed to the Party with an obligation to grant a license
or transfer ownership of such Materials to the other Party (as described in
this Section 10), the Party with the obligation to grant such
license or transfer such ownership shall take such action as shall be necessary
or required to fulfill such obligations and promptly and timely grant such
license or transfer such ownership.

 

10.10.              Assignment

 

To the extent ownership of any of the Materials (including all
Intellectual Property Rights therein) is not, by operation of law, vested in
the Party to which ownership has been granted (as described in this Section 10),
each Party agrees to, and to cause its Affiliates to (and with respect to
Service Provider, cause Service Provider’s subcontractors to) assign and 

 

38

 

hereby assigns, without further consideration, the ownership of all
right, title and interest in such Materials (including all other Intellectual
Property Rights embodied therein) to the other Party and shall execute such
other documents, including patent assignments, and shall provide such
additional information, all as may be reasonably necessary to permit the
assignee Party to obtain and perfect in its own name all Intellectual Property
Rights therein and thereto.

 

10.11.              Sale
of an Affiliate

 

Customer may extend to (a) a Customer Group member that is sold or
otherwise transferred to a third party, (b) a business unit of any
Customer Group member that is sold or otherwise transferred to a third party,
or (c) a business unit of any Customer Group member that is distributed
via a stock dividend or other distribution to the shareholders of such Customer
Group member (collectively a “Transferred Affiliate”), a sublicense in
each case for such Transferred Affiliate’s use for its business only (but
including the right to sublicense to an outsourcing services provider for use
solely in providing services to the Transferred Affiliate), of the rights in
Materials granted to Customer pursuant to this Section 10; provided,
however, (i) Service Provider must have provided Services to such
Transferred Affiliate directly from Service Provider or through Customer, and (ii) such
Transferred Affiliate must agree in writing to continue to be bound by the
obligations set forth in this Section 10 and other provisions of
the Agreement that protect Service Provider’s Intellectual Property Rights in
such Materials, including provisions that appropriately limit the use (by or
for such Transferred Affiliate only) and number of copies of such Materials.

 

11.                               CONFIDENTIALITY AND DATA

 

11.1.                     Company
Information

 

Service
Provider  and Customer  each
acknowledge that the other Party may possess and may continue to possess
Company Information, which has commercial value in such other Party’s business
and is not in the public domain.  Such
Company Information may have been discovered or developed by such other Party
or provided to it by a Third Party, and such other Party may hold property
rights in such information by assignment, license or otherwise.

 

11.2.                     Obligations

 

(a)         Customer and Service Provider will each refrain from
unauthorized storage, disclosure and use and will hold as confidential through
use of the same level of care (including both facility physical security and
electronic security) to prevent unauthorized access by, storage, disclosure,
publication, dissemination to and/or use by Third Parties of, the Company
Information of the other Party as it employs to avoid unauthorized access,
storage, disclosure, publication, dissemination or use of its own information
of a similar nature, but in no event less than a reasonable standard of
care.  The concept of a “reasonable
standard of care,” in the case of Company Information of the Customer Group in
the possession of Service Provider, shall include compliance by Service
Provider with the provisions of the “Customer Security Requirements” Schedule
and all Laws referred to in Section 3.2(a)(ii).  Notwithstanding the foregoing confidentiality
and similar obligations in this Section 11.2 (but subject to the
Parties’ obligations with regard to compliance with Law as set forth in Section 

 

39

 

3.2),
the Parties may disclose to and permit use of the Company Information by (i) in
the case of Customer, other members of the Customer Group, the ultimate parent
company of Customer and any direct or indirect wholly or partially owned
subsidiaries of such ultimate parent company, and (ii) in the case of
Service Provider, to Affiliates and subcontractors of Service Provider that are
performing the Services, and (iii) in the case of both Parties and the other
members of the Customer Group, the ultimate parent company of either Customer
or Service Provider and their subsidiaries, their respective legal counsel,
auditors, contractors and subcontractors, banks and other financing sources and
their representatives where:  (A) such
disclosure and use is reasonably necessary, and is only made with respect to
such portion of the Company Information that is reasonably necessary, to permit
Service Provider and members of the Customer Group to perform their obligations
or exercise their rights hereunder, for the ultimate parent company of Customer
to manage its investment in Customer and its other such subsidiaries, or for
their respective legal counsel, auditors, contractors and subcontractors to
provide the Services to or on behalf of the members of the Customer Group or
for the Customer Group to use the Services or to assist with the management
activities of the ultimate parent company of Customer; (B) such auditors,
contractors, subcontractors, banks and other financing sources and their
representatives are bound in writing by obligations of confidentiality,
non-disclosure and the other restrictive covenants set forth in this Section 11.2,
at least as restrictive and extensive in scope as those set forth in this Section 11.2
(Service Provider agrees that the “Form of Auditor Confidentiality
Agreement” Exhibit shall be sufficient with respect to Customer
Auditors); and (C) Service Provider in the case of Customer Company
Information, and Customer in the case of Service Provider Company Information,
assumes full responsibility for the acts or omissions with respect to the
security and confidentiality of Company Information of the persons and entities
to which each makes disclosures of the Company Information of the other Party
no less than if the acts or omissions were those of Service Provider and
Customer respectively.  If requested by
Customer, Service Provider shall enter into a Business Associate Agreement in
the “Form of Business Associate Agreement” Exhibit.

 

(b)        Without limiting the generality of the foregoing, neither
Party will disclose the material commercial terms of the Agreement or the
material substantive positions of the Parties in the negotiation of the
Agreement, except to the extent permitted by this Section 11.2
and/or to enforce the terms of the Agreement, without the prior written consent
of the other Party.  Furthermore, except
as set forth in the Agreement, neither Service Provider nor Customer will
acquire any right in or assert any lien against the other Party’s Company
Information, and/or refuse to promptly return, provide a copy in the format
reasonably requested of, or destroy such Company Information upon the request
of the disclosing Party.

 

(c)         Notwithstanding any other provision of the Agreement,
neither Party nor the persons and entities to which a Party makes authorized
disclosures of the Company Information of the other Party shall be restricted
in disclosing and using knowledge, ideas, know-how and experience, including
processes, methods, techniques and concepts developed, conceived or acquired by
either Party, its Affiliates or their respective contractors and subcontractors
in the course of the performance of the Agreement and the performance and use
of the Services, which are retained in the minds of employees who have had
access to the other Party’s Company Information (without reference to any
physical or electronic embodiment of such information), unless such disclosure
and/or use (i) shall infringe any of the patent rights, copyrights or mask
works rights or Trade Secrets which are a part of the other Party’s Company 

 

40

 

Information, (ii) shall
constitute a violation of any applicable Law or (iii) shall involve the
use, disclosure or reproduction of any Customer Data.

 

11.3.                     Exclusions

 

Notwithstanding
the foregoing and excluding the Customer Group Personally Identifiable
Information, Section 11.2 shall not apply to any information which
Service Provider or Customer can demonstrate was or is:  (a) at the time of disclosure to it, in
the public domain; (b) after disclosure to it, published or otherwise
becomes part of the public domain as permitted by this Agreement or through no
fault of the receiving Party; (c) without a breach of duty owed to the
disclosing Party, is in the possession of the receiving party at the time of
disclosure to it; (d) received after disclosure to it from a Third Party
who had a lawful right to and, without a breach of duty owed to the disclosing
Party, did disclose such information to it; or (e) independently developed
by the receiving Party without reference to or use of, including any actions
authorized in Section 11.2(a), the Company Information of the
disclosing Party.  Further, either Party
may disclose the other Party’s Company Information to the extent required by
Law (including in filings made under the Securities Act of 1933, as amended,
and the Securities Exchange Act of 1934, as amended), or the rules of any
national stock exchange or any listing agreement with such stock exchange to
which such Party is or has elected to become subject.  However, in the event of disclosure pursuant
to an order of Court or governmental agency, and subject to compliance with
Law, the recipient of such Company Information shall give the disclosing Party
prompt notice to permit the disclosing Party an opportunity, if available, to
obtain a protective order or otherwise protect the confidentiality of such
information, all at the disclosing Party’s cost and expense; provided,
that Customer shall not be obligated to delay the filing or effectiveness of
any registration statement under the Securities Act of 1933, as amended, or the
offering or sale of any securities pursuant to any such registration statement
to accommodate such opportunity.  The
receipt of Company Information under the Agreement will not limit or restrict
assignment or reassignment of employees of Service Provider and the Customer
Group within or between the respective Parties and their Affiliates.

 

11.4.                     Data
Ownership; Customer Data

 

(a) All
Company Information of the Parties (including, in the case of Customer Group,
Customer Data, records and reports related to the Customer Group and the
Customer Business) whether in existence at the Execution Date of a Transaction
Document or compiled thereafter in the course of performing the Services, shall
be treated by the Parties (including the subcontractors of Service Provider) as
the exclusive property of the applicable Party and the furnishing of such
Company Information, or access to such items, by any Party shall not grant any
express or implied interest in the receiving Party and/or its subcontractors
relating to such Company Information, and the use by the receiving party and
its subcontractors’ of such Company Information shall be limited to such use as
is necessary for the performance of such Party’s obligations under the
Agreement.

 

(b) Upon
request at any time and from time to time and without regard to the default
status of the Parties under the Agreement, each Party and/or its subcontractors
shall promptly deliver to the other Party the Company Information of such Party
(including, in the case of Customer Group, all data, records and related
reports regarding the members of the 

 

41

 

Customer Group and the Customer Business) in such format as may be
reasonably requested by such Party and in such hard copy as exists on the date
of the request.

 

11.5.                     Loss
of or Unauthorized Access to Company Information; Intrusions

 

(a)         Safeguards. 
Service Provider shall comply with the security safeguards set forth in
the “Customer Security Requirements” Exhibit.

 

(b)        Security Assessment. 
Without limiting the generality of the foregoing, Service Provider’s
information security policies set forth in the “Customer Security
Requirements” Exhibit shall also address (i) regular
assessment and re-assessment of the risks to the security of Customer Data and
systems acquired or maintained by Service Provider and its agents and
contractors, including (A) identification of internal and external threats
that could result in a Security Breach, (B) assessment of the likelihood
and potential damage of such threats, taking into account the sensitivity of
such data and systems, and (C) assessment of the sufficiency of policies,
procedures, and information systems of Service Provider and its agents and
subcontractors, and other arrangements in place, to control risks; and (ii) protection
against such risks.

 

(c)         Media.  Service
Provider shall remove all Customer Data from any media taken out of service and
shall destroy or securely erase such media in accordance with the Security
Requirements and otherwise in a manner designed to protect against unauthorized
access to or use of any Customer Data in connection with such destruction or
erasure.

 

(d)        Security Breach. 
In the event Service Provider becomes aware of any Security Breach
caused by Service Provider acts or failure to act in accordance with the terms
of this Agreement, Service Provider shall, [***].  In the event that Service Provider becomes
aware of any Security Breach which is not caused by Service Provider acts or
failure to act other than in accordance with the terms of this Agreement,
Service Provider shall promptly (and in any event, within no less than [***])
notify Customer of such Security Breach, and the Parties shall reasonably
cooperate with Customer and, at Customer’s request, any law enforcement or
regulatory officials, credit reporting companies, and credit card associations,
with respect to the investigation and remediation of such Security Breach
[***].

 

(e)         Intrusion Detection/Interception.  Service Provider will provide Customer and
its representatives with reasonable access to Service Provider’s systems,
policies and procedures relating to intrusion detection and interception with
respect to Service Provider systems used to provide the Services for the
purpose of examining, testing and assessing those systems, policies and
procedures in accordance with Section 9.7.

 

11.6.                     Limitation

 

The covenants
of confidentiality and other restrictive covenants set forth herein (a) will
apply after the Effective Date to any Company Information disclosed to the
receiving Party before and after the Effective Date and (b) will continue
and must be maintained from the Effective Date through the termination of the
Services and (i) with respect to Trade Secrets, until such Trade Secrets
no longer qualify as Trade Secrets under applicable Law; (ii) with respect
to Confidential Information, for a period equal to the longer of [***] after
termination of the 

 

42

 

Parties’ relationship under the Agreement, or as long as required by
applicable Law; and (iii) with respect to Personally Identifiable Information,
in perpetuity.

 

11.7.                     Injunctive
Relief

 

Service
Provider acknowledges that its violation of Sections 11 may cause
irreparable harm, the amount of which would be impossible to estimate, thus
making any remedy at law or in damages inadequate.  Service Provider therefore agrees that
Customer shall have the right to apply to any court of competent jurisdiction
for an injunction compelling specific performance by Service Provider of its
obligations under the Agreement and/or the applicable Transaction Document.  If Customer is not in default of its payment
obligations under the Agreement, Customer shall not be required to post any
bond or other security in connection with any such injunction.  This right will be in addition to any other
remedy available under this Agreement, at law or in equity (including the right
to recover damages).

 

12.                               TERMINATION

 

12.1.                     Termination
by Customer

 

Customer may
terminate the Agreement or any Transaction Document as specified below in whole
or, in the case of termination pursuant to Sections 12.1(a),
(b), (c), (d), in part, with respect to the affected
Services, or in the case of termination pursuant to Sections  (e),
(i), (j), (k) and (l), in part, with respect to the
affected Tower, for any of the following reasons:

 

(a)         Material Breach. 
Upon written notice, if a material breach of the Agreement or any
Transaction Document by Service Provider that remains uncured for thirty (30)
days after receipt of written notice thereof by Customer to Service Provider;

 

(b)        Service Level Termination Event.  Upon written notice, upon the occurrence of a
Service Level Termination Event, as defined in the “Service Level
Methodology” Schedule to a Transaction Document;

 

(c)         Persistent Breach. 
Upon written notice, if there exists a series of non-cured breaches or
persistent, repeated breaches (relating to the same Services, whether cured or
non-cured) of the Agreement and/or any Transaction Document by Service Provider
that in the aggregate constitute a material breach of this Agreement or any
Transaction Document; provided, that all breaches which Customer is
basing its termination pursuant to this subsection shall have occurred within
the [***] period immediately preceding the notice of termination;

 

(d)        Failure of Critical Services.  Upon written notice, if, as a result of any
act or omission of Service Provider or its subcontractors, any Critical Service
is not performed in accordance with the Agreement and performance of such
Critical Service is not resumed in accordance with the Agreement within the
period specified in the “Critical Services” Schedule to the
applicable Transaction Document, if any;

 

43

 

(e)         Convenience. 
For convenience with respect to any part of the Services upon one
hundred eighty (180) days written notice of the effective date of such
termination, by Customer to Service Provider;

 

(f)         Insolvency. 
Upon written notice to Service Provider if Service Provider admits in
writing that it is unable to pay its debts or enters into or files (or has
filed or commenced against it) a petition, arrangement, application, action or
other proceeding seeking relief or protection under the bankruptcy laws of the
United States or any similar laws of the United States or any state of the United
States, and such proceeding is not dismissed or stayed within thirty (30) days;

 

(g)        Change of Control of Service Provider.  In the event of a Change of Control of
Service Provider upon [***] written notice to Service Provider given not later
than [***] after Service Provider’s written notice to Customer of the
occurrence of such Change of Control;

 

(h)        Damages Cap Exceeded. 
Service Provider causes damages to Customer in excess of [***]of any of
the damages caps set forth in [***] and Service Provider does not agree to
[***];

 

(i)          Force Majeure Failure.  In the event (1) any Force Majeure Event
lasts longer than (A) the period specified in the “Disaster Recovery
Requirements” Schedule to a Transaction Document for full recovery
of the affected Services, or (B) if no such period is specified, [***],
and such Force Majeure Event substantially prevents, hinders or delays Service
Provider’s performance of any material portion of the Services under any
Transaction Document, then Customer may upon written notice terminate the
affected Transaction Document in whole or in part with respect to the affected
Tower; or (2) Service Provider does not, on or before the [***] day
following commencement of a Force Majeure Event which continues beyond such
[***] day (A) agree to extend for an additional [***] the period during
which Service Provider will [***], then Customer may upon written notice
terminate the Tower which includes the affected Services;

 

(j)          Transition Failure. 
If (i) the final Critical Transition Milestone specified in the
applicable Transition and Transformation Plan is not achieved within [***] of
the date specified in such Transition and Transformation Plan, other than as a
result of Customer’s failure to perform its obligations under the Agreement
(including its responsibilities and dependencies specified in the Transition
and Transformation Plan), or (ii) during the Transition, Service Provider
fails to comply with its obligations with respect to the provision of
Transition Services and such failure causes a material adverse impact on the
operations or businesses of Customer, then Customer may terminate this
Agreement, at Customer’s election by providing notice to Service Provider given
within ninety (90) days after the date of the event giving rise to Customer’s
right to terminate specified in Customer’s election to so terminate, effective
as of the date such notice is given or a later date specified in such notice;

 

(k)         Failure to Agree on Benchmark Adjustments.  Under the circumstances set forth in the “Market
Currency Procedures” Exhibit; or

 

44

 

(l)          Termination for Regulatory Change.  Under the circumstances set forth in Section 3.2(e).

 

In the event
of any termination, Customer’s notice to Service Provider shall specify a
termination date no less than ninety (90) days after the date of the notice
(or such longer period as may be specified in this Section 12.1,
above), and, upon the cessation of the Services, the Charges for the portion of
the Services so terminated shall be removed from the “Charges” Schedule
to the Transaction Document and any other terms shall be equitably adjusted to
reflect the termination of such portion of the Services.  Customer’s right to terminate the Agreement or
any Transaction Document under this Section 12.1 shall be subject
to Customer’s payment of the applicable Termination Charges as specified in Section 12.3.

 

12.2.                     Termination
by Service Provider

 

Service
Provider may terminate this Agreement if, and only if, Customer does not pay
amounts when due hereunder or comply with the payment obligations set forth in Section 4.8
(Disputed Charges/Credits)  within [***] after receiving such notice.  In the event of a termination by Service
Provider pursuant to this Section, Customer shall pay to Service Provider as
its exclusive remedy (in addition to any accrued and unpaid charges) the
Termination Charge described in Section 12.3.

 

12.3.                     Termination
Charges

 

(a)         Payment of Termination Charges.  In the event of a termination of the
Agreement or any Transaction Document pursuant to Sections 12.1 or 12.2,
Customer shall pay Service Provider the applicable Termination Charge, if any,
specified in the “Charges” Schedule to a Transaction Document [***].

 

(b)        Cessation of Charges. 
Except as set forth in Sections 12.3(a) and 12.4(d),
Customer shall not be obligated to pay any Charges that would otherwise accrue
and be payable by Customer pursuant to the Agreement or any Transaction
Document after the effective date of the expiration or termination of the
Agreement or any such Transaction Document.

 

12.4.                     Termination
Assistance Services

 

(a)         Cooperation. 
The Parties agree that Service Provider will cooperate with the members
of the Customer Group to assist in the orderly transfer of the services,
functions, responsibilities, tasks and operations comprising the Services under
each Transaction Document provided by Service Provider thereunder to one or
more members of the Customer Group itself or a Successor Service Provider in
connection with the expiration or earlier termination of the Agreement and/or
each Transaction Document for any reason, however described.  The Services include Termination Assistance
Services and the Termination Assistance Services shall include (i) providing
the members of the Customer Group and their respective agents, contractors and
consultants, as necessary, with the services described in the “Termination
Assistance Services” Schedule to a Transaction Document and such
other portions of the Services as Customer may request; and (ii) providing
the members of the Customer Group and Third Parties participating in the
transition activities, with access to the Procedures Manual developed for
Customer, materials, equipment, software and other 

 

45

 

resources (including human resources) used by
Service Provider to deliver the Services, as reasonably necessary to support
the transition of the relevant Services from Service Provider to performance by
the members of the Customer Group or one or more Successor Service Providers of
functions to replace such Services; provided, however, that such Third Parties
comply with Service Provider’s security and confidentiality requirements,
including execution of a confidentiality agreement consistent with each of the
terms hereof.  Neither the Term of the
Agreement nor the term of any Transaction Document shall be deemed to have
expired or terminated until the Termination Assistance Services thereunder are
completed and the Services are fully transferred to Customer or Customer’s designee.

 

(b)        Commencement. 
Upon Customer’s request Service Provider shall provide Termination
Assistance Services in connection with migrating the work of the Customer Group
to the members of the Customer Group or a Successor Service Provider commencing
up to one (1) year prior to expiration, or upon and after any notice of
termination of or non-renewal of the Agreement or any Transaction
Document.  In no event will Customer’s
holding of monies in compliance with Section 4.8 be considered a
failure by Customer to pay amounts due and payable hereunder. Further, Service
Provider shall provide the Termination Assistance Services in accordance with
this Section 12.4 even in the event of Customer’s material breach,
including an uncured payment default, with or without an attendant termination
for cause by Service Provider, so long as Customer  pays
Service Provider  for the Termination Assistance
Services in accordance with this Section 12.4.  [***]

 

(c)         Duration. Termination Assistance Services shall be
provided through the effective date of the expiration or termination of each
Transaction Document being terminated. Upon request by Customer, the effective
date of such expiration or termination, the Termination Assistance Services shall
be provided for the remainder of the Termination Assistance Period as set forth
in Section 2.2.

 

(d)        Charges.  If any
Termination Assistance Services provided by Service Provider requires the
utilization of additional resources that Service Provider would not otherwise
use in the performance of the Agreement and applicable Transaction Document(s),
but for which there is a current Baseline or other applicable Charging Mechanic,
Customer will pay Service Provider for such usage at the then-current
applicable Transaction Document(s) Charges and in the manner set forth in
the applicable Transaction Document(s). 
If the Termination Assistance Services requires Service Provider to
incur costs that Service Provider would not otherwise incur in the performance
of the other Services under the Agreement and applicable Transaction
Document(s), then Service Provider shall notify Customer of the identity and
scope of the activities requiring that Service Provider incur such costs and
the projected amount of the charges that will be payable by Customer for the
performance of such assistance.  Such
charges shall be commercially reasonable and consistent with the other
Charges.  Upon Customer’s authorization,
Service Provider shall perform the assistance and invoice Customer for such Charges.  Customer shall pay Service Provider for
authorized, additional charges incurred to provide such assistance to Customer
in accordance with Section 4.4(b).

 

46

 

12.5.                     Other
Rights Upon Termination

 

At the
expiration or earlier termination of the Agreement and/or any Transaction
Document for any reason, however described, Service Provider agrees in each
such instance, as applicable:

 

(a)         Hardware.  Unless
otherwise agreed pursuant to a Transaction Document, upon Customer’s request,
Service Provider agrees to sell to Customer or its designee for[***], the
Service Provider Equipment owned by Service Provider then currently being used
by Service Provider primarily dedicated to perform the Services or the portion
of the Services covered by the Transaction Document, as applicable.  In the case of such Service Provider
Equipment that Service Provider is leasing, Service Provider agrees to permit
Customer or its designee to either buy-out the lease on the Service Provider
Equipment and purchase the Service Provider Equipment from the lessor or, to
the extent it is permitted to do so under any such lease, assume the lease(s) and
secure the release of Service Provider thereon. 
Customer shall be responsible for any sales, use or similar taxes
associated with such purchase of such Service Provider Equipment or the
assumption of such leases.

 

(b)        Service Provider Licensed Software.  Unless otherwise agreed pursuant to a
Transaction Document, if Service Provider has licensed or purchased and is
using any generally commercially available Service Provider Licensed Software
to provide the Services to the Customer Group at the date of expiration or
termination of the Agreement and/or any Transaction Document, Customer may
elect in its sole discretion to take a transfer or an assignment of any and all
of the licenses for such software and any attendant maintenance agreement used
by Service Provider primarily to provide the Services, which licenses and
maintenance agreements shall in all cases be kept current and fully paid by
Service Provider through the date of transfer to Customer.  To the extent any such licenses for Service
Provider Software and the attendant current maintenance agreements are not
primarily used to provide the Services or are not transferable by Service
Provider to Customer, Service Provider shall procure for Customer, in Customer’s
name, and at Customer’s expense, a license for such Service Provider Software
and a maintenance agreement for such Service Provider Software.  In both of the instances described in the
preceding two sentences such license and maintenance agreements shall be for a
scope of use and hardware level appropriate for Customer’s operations at the
time of transfer and/or delivery to Customer.

 

(c)         Service Provider Employees.  Upon the date of expiration or termination of
the Agreement or any Transaction Document for any reason, the Customer Group or
its designee shall have the right to make offers of employment to any or all Service
Provider employees performing Services hereunder or under such Transaction Document.
 Promptly after either Party sends the
other Party written notice of termination or expiration with the prior consent
of each Service Provider employee (each of whom Service Provider will notify of
Customer’s interest), subject to the agreement of Service Provider employee(s),
Service Provider agrees to supply Customer with the names and resumes requested
by Customer for the purpose of exercising its rights under this Section 12.5,
at no charge.  Subject to applicable Law,
Customer’s rights under this Section 12.5 will take precedence over
any Service Provider/employee employment contract or covenant that may
otherwise limit an employee’s right to accept employment with the Customer
Group.

 

47

 

(d)        Return of Data. 
Service Provider and/or its subcontractors shall promptly deliver to
Customer the Company Information (including all data, records and related
reports regarding the Customer Group, the Customer Business and the Services)
in such format as may be reasonably requested by Customer and in such hard copy
as then exists.

 

12.6.                     Survival
of Selected Provisions

 

(a)         Survival. 
Notwithstanding the expiration or earlier termination of the Services,
the Agreement or any Transaction Document for any reason however described, the
following Sections of the Agreement shall survive any such expiration or
termination:  Section 10.3, Section 10.4,
Section 10.5, Section 10.6, Section 10.7, Section 10.8,
Section 10.10,  Section 11.2,
Section 11.3, Section 11.4, Section 11.6, Section 12.3,
Section 12.4, Section 12.5, Section 12.6, Section 13,
Section 14, Section 0, and Section 17.  Upon termination or expiration of the
Agreement, all rights and obligations of the Parties under the Agreement shall
expire, except those rights and obligations under those Sections specifically
designated to survive in this Section 12.6(a).

 

(b)        Claims.  Except
as specifically set forth in the Agreement, all claims by any Party accruing
prior to the expiration or termination date shall survive the expiration or
earlier termination of the Agreement, subject to any applicable statute of
limitations.

 

13.                               LIABILITY

 

13.1.                     Liability
Caps

 

(a)         Direct Damages Cap. 
Except as provided in Section 13.2, the liability of each
party in the aggregate for all claims arising under or relating to this
Agreement, regardless of the form of action, whether based on contract,
warranty, tort (including negligence), statute or otherwise, including
liability arising out of or resulting from the performance or non-performance
by Service Provider and its subcontractors of the Services and its obligations
under the Agreement, shall be limited to [***] the “Direct Damages Cap”).

 

(b)        [***]

 

(c)         Excluded Damages. 
Neither Party shall be liable for damages that constitute [***], even if
such Party has been advised of the possibility of such losses or damages. For
avoidance of doubt, [***], shall not apply to profit or revenue associated with
amounts payable to Service Provider hereunder.

 

13.2.                     Exclusions

 

(a)         Circumstances to which Direct Damages Cap Does Not Apply:
 [***]  Notwithstanding Section 13.1, the
Direct Damages Cap (the limitations on the types and amounts of damages set
forth in Section 13.1) shall not apply to damages or other payments
arising out of any of the following, and no such damages or payments shall be
included in calculating the Direct Damages Caps [***].

 

48

 

(b)        Circumstances to which “Excluded Damages” Provision Does Not
Apply [***].  Notwithstanding the
limitation on the types of damages pursuant to Section 13.1(c), each
Party shall also be subject to damages other than Direct Damages [***] arising
out of the following: [***].

 

(c)         [***].

 

13.3.                     Direct
Damages

 

(a)         Except as provided in Section 13.2(a) and (b),
neither Party shall have any liability, whether based on contract, tort
(including negligence), warranty, guarantee or any other legal or equitable
grounds, to the other Party for any damages other than Direct Damages.  “Direct Damages” shall mean [***].

 

(b)        [***]

 

13.4.                     [***]

 

[***]

 

13.5.                     Remedies

 

At its option,
either Party may seek all remedies available to it under law and in equity,
including injunctive relief in the form of specific performance to enforce the
Agreement and/or actions for damages.

 

14.                               INDEMNITIES

 

14.1.                     Indemnity
by Service Provider

 

Service
Provider will indemnify and hold harmless Customer, the other members of the
Customer Group, its and their Affiliates, and the respective current, future
and former officers, directors, employees, agents, successors and assigns of
each of the foregoing, and each of the foregoing persons or entities (the “Customer
Indemnitees”) on demand, from and against any and all Losses incurred by
any of them, and shall defend the Customer Indemnitees against all Claims
arising from or in connection with:

 

(a)         all Claims that any Covered Resources or Customer Group’s use thereof (or access to  or exercise of any other rights granted under
this agreement with respect to such Covered Resources) in connection
with the Services or any Third Party’s use (or access to  or exercise of any other rights granted under
this agreement with respect to such Covered Resources) thereof
authorized by Service Provider in any circumstance, infringes or misappropriates
the Intellectual Property Rights of a Third Party; provided, however,
that Service Provider shall have no liability or obligation to any of the
Customer Indemnitees under this Section 14.2 to the extent that the
claim of infringement or misappropriation is caused by:  (i) such Customer Indemnitee’s modification of such Covered Resource, except as authorized by Service Provider in
writing; (ii) such Customer Indemnitee’s use of such Covered Resource in combination with any product or
equipment not owned or provided by Service Provider,

 

49

 

except where Service
Provider knew that such combination would be or was used by Customer or such
Customer Indemnitee and did not object (Service Provider will be deemed to have
knowledge of such combinations only if they are described or referred to in,  or are reasonably apparent from, the Agreement
or any documentation exchanged by Service Provider, its Affiliates and
subcontractors and the members of the Customer Group and, in each case, their
respective representatives); (iii) resources provided by the
Customer or Customer Group for use by Service Provider and/or its
subcontractors; (iv) business processes that were used by the Customer
Group before they were taken over in whole or in part by Service Provider; (v) Services
or the results thereof conforming to or based upon designs or specifications
provided by members of the Customer Group or at the direction of members of the
Customer Group; or (vi) Customer Indemnitees use of “information” which is
not a Deliverable or Software in a manner not authorized by Service Provider in
writing.  If any Covered Resource provided by
Service Provider hereunder is held to constitute, or in Service Provider’s
reasonable judgment is likely to constitute, an infringement or
misappropriation, Service Provider will in addition to its indemnity
obligations, at its expense and option, and after consultation with Customer
regarding Customer’s preference in such event, either:  (w) procure
the right for Customer Indemnitees to continue using such Covered
Resource; (x) replace such Covered Resource with
a non-infringing equivalent, provided that such replacement does not result in
a degradation of the functionality, performance or quality of the Covered Resource; (y) modify such Covered Resource, or have such Covered
Resource modified, to make it non-infringing, provided that such
modification does not result in a degradation of the functionality, performance
or quality of the Covered Resource; or (z) create
a feasible workaround that would not have any adverse impact on the Customer
Group;

 

(b)        all Claims by employees of Service Provider, its Affiliates
or subcontractors arising out of or relating to this Agreement, except to the
extent of any indemnification obligation of Customer to any Service Provider
Affiliate or subcontractor or to the extent caused by the negligence or willful
misconduct of any member of the Customer Group or any of their Affiliates or
contractors (but excluding Service Provider and its Affiliates and
subcontractors from such exception);

 

(c)         all Claims arising out of, resulting from or related to any
act or omission of Service Provider in its capacity as an employer of a Person
and arising out of or relating to (i) Laws for the protection of Persons
who are members of a protected class or category of Persons, (ii) sexual
discrimination or harassment, and (iii) any other aspect of the employment
relationship or its termination (including claims for breach of an express or
implied contract of employment) which arose when the Person asserting the
claim, demand, charge, actions, cause of action or other proceeding was an
employee of or candidate for employment by Service Provider;

 

(d)        all Claims for bodily injuries, death or damage to tangible
personal or real property, to the extent caused by negligent, grossly negligent
or reckless acts or omissions or tortious willful misconduct of Service
Provider or any of its Affiliates or subcontractors;

 

(e)         all Claims (i) by Governmental Authorities for fines
and penalties arising from a violation by Service Provider, its Affiliates or
subcontractors of the Laws applicable to Service Provider, as set forth in Section 3.2(a)(ii),
(excluding any such violation to the extent 

 

50

 

caused by a member of the Customer Group) and
(ii) by Third Parties arising from such a violation to the extent that the
resulting Losses are of the type which such Law applicable to Service Provider
was intended or is generally understood to be intended to avoid, prevent or
mitigate;

 

(f)         all Claims for Service Provider’s tax liabilities arising
from Service Provider’s provision of Services, as set forth in Section 4.2;

 

(g)        all Claims arising out of the failure of Service Provider to
obtain Required Consents which are the responsibility of Service Provider in
accordance with Section 9.5, except to the extent that any such
failure or inability results from Customer’s failure to perform any of its
obligations under the Agreement;

 

(h)        all Claims that any personnel supplied by Service Provider,
its Affiliates and/or their permitted subcontractors under the Agreement is an
employee or agent of Customer, except to the extent that Customer’s actions
other than in accordance with the Agreement or Service Provider’s direction are
determined to have created an employer-employee or agency relationship with
such personnel, including, (i) the cost of any employee benefits Customer
is required to provide to or pay for on behalf of any personnel supplied by
Service Provider, its Affiliates and/or their permitted subcontractors, and (ii) any
Claim brought by any personnel supplied by Service Provider, its Affiliates
and/or permitted subcontractors against Customer based upon the employer-employee
relationship;

 

(i)          any Claim resulting from Service Provider’s
misappropriation of confidential information in breach of its obligations under
Section 11.4 with respect to Customer Company Information
(excluding circumstances in which the unavailability of Customer Data is
directly caused by technical or other operational problems, or any of the
circumstances referred to in Section 17.13); and

 

(j)          any Claims resulting from Service Provider’s breach of its
representations, warranties or covenants set forth in Sections 6.2(a), 6.2(b) and
6.2(i).

 

14.2.                     Indemnity
by Customer

 

Customer will
indemnify and hold harmless Service Provider and its Affiliates, and the
respective current, future and former officers, directors, employees, agents,
successors and assigns of each of the foregoing, and each of the foregoing
persons or entities (the “Service Provider Indemnitees”) on demand, from
and against any and all Losses incurred by any of them and shall defend the
Service Provider Indemnitees against all Claims arising from or in connection
with:

 

(a)         all Claims that any Customer Software, or Service Provider’s
use thereof in accordance with the terms of this Agreement, infringes or
misappropriates the Intellectual Property Rights of a Third Party; provided, however,
that Customer shall have no liability or obligation to any of the Service
Provider Indemnitees under this Section 14.2(a) to the extent
that the claim of infringement or misappropriation is caused by:  (i) such Service Provider Indemnitee’s
modification of such Customer Software, except as authorized by Customer in
writing; (ii) such Service Provider Indemnitee’s use of such item in
combination with any 

 

51

 

product or equipment not owned or provided by
Customer, except where Customer knew that such combination would be used by
Service Provider or such Service Provider Indemnitee and did not object (Customer will be deemed to have knowledge of such combinations
only if they are described in or reasonably inferred from the Agreement or any
documentation exchanged by Service Provider, its Affiliates and subcontractors
and the members of the Customer Group and, in each case, their respective
representatives); or (iii) any Customer Software incorporated in
any Work Product.  If any Customer
Software provided by Customer hereunder is held to constitute, or in Customer’s
reasonable judgment is likely to constitute, an infringement or
misappropriation, Customer will in addition to its indemnity obligations, at
its expense and option, and after consultation with Service Provider regarding
Service Provider’s preference in such event, either:  (w) procure the right for Service
Provider Indemnitees to continue using such Customer Software; (x) replace
such Customer Software with a non-infringing equivalent, provided that such
replacement does not result in a degradation of the functionality, performance
or quality of the deliverable or item; (y) modify such Customer Software,
or have such Customer Software modified, to make it non-infringing, provided
that such modification does not result in a degradation of the functionality,
performance or quality of the Customer Software; or (z) create a feasible
workaround that would not have any adverse impact on Service Provider;

 

(b)        all Claims by employees of Customer, its Affiliates or
subcontractors  (excluding Service
Provider and its Affiliates and their subcontractors) arising out of or
relating to this Agreement, except to the extent of any indemnification
obligation of Service Provider to any Customer Indemnitee or to the extent
caused by the negligence or willful misconduct of Service Provider, its
Affiliates or their subcontractors;

 

(c)         all Claims arising out of, resulting from or related to any
act or omission of any member of the Customer Group in its capacity as an
employer of a Person and arising out of or relating to (i) Laws for the
protection of Persons who are members of a protected class or category of
Persons, (ii) sexual discrimination or harassment, and (iii) any
other aspect of the employment relationship or its termination (including
claims for breach of an express or implied contract of employment) which arose
when the Person asserting the claim, demand, charge, actions, cause of action
or other proceeding was an employee of or candidate for employment by any
member of the Customer Group;

 

(d)        all Claims for bodily injuries, death or damage to tangible
personal or real property, to the extent caused by negligent, grossly negligent
or reckless acts or omissions or tortious willful misconduct of Customer or any
of its Affiliates or subcontractors (excluding Service Provider and its
Affiliates and their subcontractors);

 

(e)         all Claims (i) by Governmental Authorities for fines
and penalties arising from a violation by Customer, its Affiliates or
subcontractors (excluding Service Provider and its Affiliates and their
subcontractors) of the Laws applicable to Customer (excluding any such
violation to the extent caused by Service Provider, its Affiliates or subcontractors)
and (ii) by Third Parties arising from such a violation to the extent that
the resulting Losses are of the type which such Law applicable to Customer was
intended or is generally understood to be intended to avoid, prevent or
mitigate;

 

52

 

(f)         all Claims arising out of the failure of Customer to obtain,
or cause to be obtained, any consent or approval required for Service Provider
and its permitted subcontractors to use the Customer Assets, or any component
thereof, to the full extent provided in the Agreement, including any failure or
inability to obtain Required Consents which are the responsibility of Customer
in accordance with Section 9.5;

 

(g)        any Claims resulting from Customer’s breach of its
representations, warranties or covenants set forth in Sections 6.1(a), 6.1(b) and
6.1(e);

 

(h)        all Claims for Customer’s tax liabilities, if any, as set
forth in Section 4.2;

 

(i)          all Claims that any Customer personnel is an employee or
agent of Service Provider, except to the extent that Service Provider’s actions
other than in accordance with the Agreement or Customer’s direction are
determined to have created an employer-employee or agency relationship with
such personnel, including, (i) the cost of any employee benefits Service
Provider is required to provide to or pay for on behalf of any Customer personnel,
and (ii) any Claim brought by any Customer personnel against Service
Provider based upon the employer-employee relationship; and

 

(j)          any Claim resulting from Customer’s misappropriation of
confidential information in breach of its obligations under Section 11.4
with respect to Service Provider Company Information.

 

14.3.                     Indemnification
Procedures

 

An indemnified
Party under this Section 14 shall promptly notify the indemnifying
Party of any Claim with respect to which it seeks indemnity under this Section 14.  An indemnifying Party may participate, at its
own expense, in the defense of such Claim. 
If it so elects within a reasonable time after receipt of such notice,
an indemnifying Party may, except as provided in the immediately following
sentence and the last sentence of this paragraph, assume the defense of such
Claim, with counsel reasonably satisfactory to the indemnified Party to
represent the indemnified Party and shall pay the fees and disbursements of
such counsel related to such proceeding. 
In any such proceeding, any indemnified Party shall have the right to
retain its own counsel, but the fees and expense of such counsel shall be at
the expense of such indemnified Party unless, (a) the indemnifying Party
and the indemnified Party shall have mutually agreed otherwise, or (b) the
named Parties to any such proceeding (including any impleaded parties) include
both the indemnifying Party and the indemnified Party and representation of
both Parties by the same counsel would be inappropriate due to actual or
potential conflicting interests between them. 
It is agreed that the indemnifying Party shall not, in respect of the
legal expense of any indemnified Party in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the fees and
expenses of more than one separate firm (in addition to any local counsel) for
all such indemnified Parties and that all such fees and expenses shall be
reimbursed as they are incurred.  The
indemnifying Party shall not be liable for any settlement of any proceeding
effected without its written consent.  No
indemnifying Party shall, without the prior written consent of the indemnified
Party, effect any settlement of any pending or threatened proceeding in respect
of which any indemnified Party is or could have been a party and indemnity
could have been sought hereunder by such indemnified 

 

53

 

Party (i) if such settlement: (A) involves any form of relief
other than the payment of money, (B) any finding or admission of any
violation of any Law or any of the rights of any person, or (C) has any
adverse effect on any other Claims that have been or may be made against the
indemnified Party, or (ii) if such settlement involves only the payment of
money, unless it includes an unconditional release of such indemnified Party of
all liability on all indemnified claims that are the subject of such
proceeding.  An indemnified Party may
assume control of the defense of any Claim if (1) it irrevocably waives
its right to indemnity under this Section 14, or (2) without
prejudice to its full right to indemnity under this Section 14 (aa) the
indemnifying Party fails to provide reasonable assurance to the indemnified
Party of its financial capacity to defend or provide indemnification with
respect to such Claim, (bb) the indemnified Party determines in good faith
that there is a reasonable likelihood that a Claim would materially and
adversely affect it or any other indemnitees other than as a result of monetary
damages that would be fully reimbursed by an indemnifying Party under the
Agreement, or (cc) the indemnifying Party refuses or fails to timely
assume the defense of such Claim.

 

An indemnifying
Party required to provide an indemnity to an indemnified Party under this Section 14
shall have no obligation for any Claim under this Section if:

 

(x)            the indemnified Party fails to timely
notify the indemnifying Party of such Claim as provided above, but only to the
extent that the defense of such Claim is prejudiced by such failure;

 

(y)           the indemnified Party fails to tender
control of the defense of such Claim to the indemnifying Party as provided in
this Section 14.3; or

 

(z)            the indemnified Party fails to
provide the indemnifying Party with reasonable cooperation in the defense of
such Claim (the cost thereof to be borne by the indemnifying Party).

 

The indemnified Party shall mitigate the Losses, using commercially
reasonable efforts,  associated with any
Claim for which it seeks indemnification pursuant to this Section.

 

15.                               INSURANCE AND RISK OF LOSS

 

15.1.                     Service
Provider Insurance

 

During the
Term of the Agreement, Service Provider shall maintain and keep in force, at
its own expense and without limiting its indemnity obligations as set forth in Section 14,
the following minimum insurance coverages and limits in accordance with this
Agreement in forms and with insurance companies qualified to do business in the
states where the Services are performed:

 

(a)         workers’ compensation insurance, with statutory limits as
required by the various Laws applicable to the employees of Service Provider
and any Service Provider subcontractor that provides or performs any of the
Services;

 

(b)        employer’s liability insurance, for employee bodily injuries
and deaths, with a limit of [***] each accident.  Excess liability insurance may be used to
satisfy the limit 

 

54

 

requirement in this paragraph (b).  Such excess liability policy shall exceed the
underlying policy without gaps in limits and provide coverage as broad as the
underlying insurance coverage;

 

(c)         commercial general liability insurance, covering claims for
bodily injury, death and property damage, including premises and operations,
independent contractors, products, services and completed operations (as
applicable to the Services), personal injury, contractual, and broad-form
property damage liability coverages, with limits as follows:  (i) occurrence/aggregate limit of [***]
for bodily injury, death and property damage per occurrence and [***] combined
aggregate; or (ii) split liability, without aggregate limits, of (A) [***]
for bodily injury per person; (B) [***] for bodily injury per occurrence;
and (C) [***] per occurrence for property damage.  Excess liability insurance may be used to
satisfy the limit requirement in this paragraph (c).  Such excess liability policy shall exceed the
underlying policy without gaps in limits and provide coverage as broad as the
underlying insurance coverage. Customer shall be named as an additional insured
under this policy;

 

(d)        commercial automobile liability insurance, covering owned,
non-owned and hired vehicles, with limits as follows:  (i) combined single limit of [***] for
bodily injury, death and property damage per occurrence; or (ii) split
liability limits of (A) [***] for bodily injury per person; (B) [***]
for bodily injury per occurrence; and (C) [***] for property damage.  Excess liability insurance may be used to
satisfy the limit requirements in this paragraph (d).  Such excess liability policy shall exceed the
underlying policy without gaps in limits and provide coverage as broad as the
underlying insurance coverage. Customer shall be named as an additional insured
under this policy;

 

(e)         all-risk property insurance, on a replacement cost basis,
covering the real and personal property of Service Provider which Service
Provider is obligated to insure by the Agreement; such real and personal
property may include buildings, equipment, furniture, fixtures and supply
inventory;

 

(f)         professional liability errors and omissions insurance, with
a limit of [***] per occurrence and in the aggregate; such insurance shall
include coverage for claims and losses with respect to network risks (such as
data breaches, unauthorized access/use, ID theft, damage/loss/theft of data)
and intellectual property infringement such as copyrights, trademarks,
servicemarks, and trade dress; the retroactive coverage date shall be no later
than the policy effective date.  IBM will
continue such insurance coverages for the Term of the Agreement and for a
period of two (2) years following the termination of the Agreement, as
long as such coverage remains commercially available and financially viable in
the market place; and

 

(g)        Employee dishonesty coverage for loss of money, securities
and other tangible property belonging to Customer Group resulting directly from
a fraudulent or  dishonest act of IBM employees
while performing professional services for Customer in a minimum amount of not
less than [***] per occurrence and in the aggregate.

 

Service
Provider shall deliver certificates of insurance verifying such coverage, in a
form acceptable to Customer, prior to the Commencement Date.  Following the 

 

55

 

Commencement Date, Service Provider shall provide certificates of
insurance verifying such coverage upon Customer’s written request.  Service Provider agrees to provide, in a form
acceptable to Customer, renewals of such certificates of insurance upon receipt
of such renewals.  Receipt and/or
acceptance by Customer of any certificate of insurance that does not satisfy
the coverage criteria set forth in this Section 15, shall not
operate as a waiver of Service Provider’s obligations hereunder.

 

The required
insurance shall be provided by insurance companies [***].  Should any of the policies described herein
be canceled before the expiration date thereof, the insurer affording coverage
will endeavor to mail 30 days written notice to the certificate holder named
herein, but failure to mail such notice shall impose no obligation of liability
of any kind upon the insurer affording coverage, its agents or representatives.  No such cancellation or any material
modification shall affect Service Provider’s obligation to maintain the
insurance coverages required by the Agreement. 
Service Provider and any subcontractors performing any portion of the
Services under this Agreement shall name Customer as an additional insured on
all policies described above other than the workers’ compensation, property and
crime insurance policies.  All liability
insurance policies described in paragraphs (a) through (e) above
shall be written on an “occurrence” policy form, except for Errors & Omissions
coverage, which is on a claims made basis. 
Customer shall be named as loss payee as its interest may appear on the
property and crime insurance policies of Service Provider.  Service Provider shall be responsible for payment
of any and all deductibles, self-insured retentions, and self-insurance carried
by Service Provider under its insurance program(s).  The coverage afforded under any insurance
policy obtained by Service Provider pursuant to the Agreement shall be primary
with respect to Service Provider’s acts or omissions.  Service Provider shall not perform under the
Agreement without the prerequisite insurance. 
If Service Provider fails to comply with any of the insurance
requirements herein, upon written notice to Service Provider by Customer and a thirty
(30) day cure period, Customer shall have the right, but not the obligation, to
provide or maintain any such insurance, and to deduct the cost thereof from any
amounts due and payable to Service Provider under this Agreement, or, in the
event there are no such amounts due and payable, Service Provider shall
reimburse Customer for such costs on demand.

 

The Parties do
not intend to shift all risk of loss to insurance.  The naming of Customer as additional insured
is not intended to be a limitation of Service Provider’s liability and shall in
no event be deemed to, or serve to, limit Service Provider’s liability to
Customer to available insurance coverage or to the policy limits specified in
this Section 15 nor to limit Customer’s rights to exercise any and
all remedies available to Customer under contract, at law or in equity.

 

15.2.                     Risk
of Property Loss

 

Service
Provider and Customer each shall be responsible for damages to their respective
tangible personal or real property (whether owned or leased), and each Party
agrees to look only to their own insuring arrangements (if any) with respect to
such damages; provided, however, that either Party shall be
responsible for damages to tangible property under its and/or its Affiliates
and/or subcontractors control.

 

56

 

15.3.                     Waiver
of Subrogation

 

Service
Provider waives all rights to recover against Customer for any loss or damage
to its tangible personal property (whether owned or leased) from any cause
covered by insurance maintained by Service Provider, including any deductible
or self-insured retention.  Service
Provider will cause its insurers to issue appropriate waivers of subrogation
rights endorsements to the [***] policies maintained by Service Provider, provided,
however, that with respect to the worker’s compensation policy, such waiver of
subrogation shall not apply in instances of [***].

 

16.                               DISPUTE RESOLUTION

 

16.1.                     Disputes
in General

 

The Parties
will resolve all Disputes in accordance with the procedures described in the “Dispute
Resolution Procedures” Exhibit.

 

16.2.                     Continued
Performance

 

Except where
directly prevented from doing so by the matter in Dispute, the Parties agree to
continue performing their respective obligations under this Agreement while any
Dispute is being resolved unless and until such obligations are terminated by
the termination or expiration of the Agreement.

 

16.3.                     Exceptions
to Dispute Resolution Procedures

 

Notwithstanding
any other provision of the Agreement, either Party may resort to court action
for injunctive relief at any time if, in such Party’s good faith belief, the
Dispute Resolution Procedures would permit or cause irreparable injury to such
Party, or any Third Party claiming against such Party, due to delay arising out
of the Dispute Resolution Procedures.

 

16.4.                     Governing
Law

 

All rights and
obligations of the Parties relating to this Agreement shall be governed by and
construed in accordance with the Law of the State of Tennessee without giving effect to any choice-of-law provision or rule (whether
of the State of Tennessee or any
other jurisdiction) that would cause the application of the Laws of any other
jurisdiction.  Each Party shall bring any
suit, action or other proceeding with respect to the Agreement in a Federal
District Court located in Memphis,
Tennessee, unless the jurisdiction of such courts are improper, in which
event a Party may bring such suit, action or other proceeding in any court of
competent jurisdiction in Memphis,
Tennessee.  Service Provider
consents to the exclusive jurisdiction of any state or federal court empowered
to enforce this Agreement located in Memphis, Tennessee, and waives any
objection thereto on the basis of personal jurisdiction or venue.  The Parties waive their respective rights to
trial by jury of any cause of action, claim, counterclaim or cross-complaint in
any action, proceeding and/or hearing brought by either Party against the other
on any matter whatsoever arising out of, or in any way connected with, this
Agreement.

 

57

 

17.                               GENERAL

 

17.1.                     Relationship
of Parties

 

(a)         No Joint Venture. 
The Agreement (including the Transaction Documents) shall not be
construed as constituting either Party as partner, joint venture or fiduciary
of the other Party or to create any other form of legal association that would
impose liability upon one Party for the act or failure to act of the other
Party, or as providing either Party with the right, power or authority (express
or implied) to create any duty or obligation of the other Party.

 

(b)        Publicity.  Each
Party will submit to the other Party for approval all advertising, written
sales promotion, press releases and other publicity matters relating to the
Agreement in which the other Party’s name or marks are mentioned or language
from which the connection of such name or marks may be inferred or implied, and
will not publish or use such advertising, sales promotion, press releases, or
publicity matters without prior written approval of the other Party.

 

17.2.                     Entire
Agreement, Updates, Amendments and Modifications

 

The Agreement
(including the Transaction Documents) constitutes the entire agreement of the
Parties with regard to the Services and matters addressed therein, and all
prior agreements, letters, proposals, discussions and other documents regarding
the Services and the matters addressed in the Agreement (including the
Transaction Documents) are superseded and merged into the Agreement (including
the Transaction Documents).  Updates,
amendments, corrections and modifications to the Agreement, including the
Transaction Documents, and waivers of its terms, may not be made orally, but
shall only be made by a written document signed by both Parties.  Any terms and conditions varying from the
Agreement (including the Transaction Documents) on any order or written
notification from either Party shall not be effective or binding on the other
Party.

 

17.3.                     Force
Majeure

 

(a)         Generally.
Each Party will be excused from performance under this Agreement (including, in
the case of Service Provider, its obligation to meet any affected Service
Levels) for any period and to the extent that it is prevented from or delayed
in performing any obligations pursuant to this Agreement, in whole or in part,
as a result of a Force Majeure Event.  If
either Party is prevented from, or delayed in performing any of its obligations
under this Agreement by a Force Majeure Event, it shall promptly notify the
other Party verbally (to be confirmed in writing within twenty-four (24) hours
of the inception of the delay) of the occurrence of a Force Majeure Event and
describe, in reasonable detail, the circumstances constituting the Force
Majeure Event and of the obligations, the performance of which are thereby
delayed or prevented.  The Party claiming
that a Force Majeure Event has occurred shall continue to use commercially
reasonable efforts to mitigate the impact or consequence of the event on the
other Party and to recommence performance whenever and to whatever extent commercially
reasonable without delay.  The affected
Party shall provide the other Party with daily updates (and more frequent
updates if requested) as to the status of its 

 

58

 

efforts to recommence performance and written
notice upon conclusion of the Force Majeure Event.

 

(b)        Implementation of Disaster Recovery Plan.  Notwithstanding any other provision of this
Section, a Force Majeure Event shall obligate and require Service Provider to
commence and implement all of the Services relating to the security
requirements pursuant to Section 3.2(d) and to the disaster
recovery requirements set forth in the Disaster Recovery Plan, except to the
extent such performance is also affected by the Force Majeure Event.

 

(c)         Extended Nonperformance.  If a Force Majeure Event substantially
prevents, hinders or delays Service Provider’s performance of any Services for
more than (i) the period specified in the “Disaster Recovery Requirements”
Schedule for full recovery of the Services, or (ii) if no such
period is specified, three (3) Business Days, then Customer may procure
replacement services from an alternate source[***], Customer shall not be
obligated to pay Service Provider the Charges for the portion of the applicable
Services that are the subject of a termination notice pursuant to Section 12.1(i)(2) beyond
the date of such termination.

 

17.4.                     Waiver

 

No waiver of
any breach of any provision of the Agreement shall constitute a waiver of any
prior, concurrent or subsequent breach of the same or any other provisions
hereof.

 

17.5.                     Severability

 

If any
provision of the Agreement shall be held to be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby, and such
provision shall be deemed to be restated to reflect the Parties’ original
intentions as nearly as possible in accordance with applicable Law(s).

 

17.6.                     Counterparts

 

The Master
Agreement and each Transaction Document may be executed in counterparts.  Each such counterpart shall be an original
and together shall constitute but one and the same document.  The Parties agree that a photographic or
facsimile copy of the signature evidencing a Party’s execution of this
Agreement shall be effective as an original signature and may be used in lieu
of the original for any purpose.

 

17.7.                     Binding
Nature and Assignment

 

The Agreement
will be binding on the Parties and their respective successors and permitted
assigns.  Except as provided in this Section 17.7,
neither Party may, or will have the power to, assign the Agreement (or any
rights thereunder) by operation of law or otherwise without the prior written
consent of the other, except that a Party may assign its rights and delegate
its duties and obligations under this Agreement without such consent (a) to
an Affiliate or (b) as a whole as part of the sale or transfer of all or
substantially all of its assets and business, including by merger or
consolidation, to or with a Person (i) that agrees in writing to be bound
by the terms and conditions of this Agreement and (ii) the senior
unsecured debt of which is rated at least as highly by one or more “Nationally
Recognized Statistical Rating Organizations” 

 

59

 

(as defined by the rules and regulations of the United States
Securities and Exchange Commission) as the senior unsecured debt of Customer as
of the Effective Date.  Any attempted assignment
that does not comply with the terms of this Section 17.7 shall be
null and void.

 

17.8.                     Notices

 

(a)         Whenever one Party is required or permitted to give a
notice, communication or consent to the other Party under the Agreement, such
notice, communication or consent will be in writing unless otherwise
specifically provided herein and will be deemed given when delivered by hand,
one (1) day after being given to an express courier with a reliable
system for tracking delivery, or five (5) days after the day of
mailing, when mailed by United States mail or registered or certified mail,
return receipt requested, postage prepaid.

 

(b)        Notifications will be addressed as follows:

 

	
  In the case of Service Provider:

   

  [***]

  IBM Project Executive

  860 Ridge Lake Blvd

  Memphis, TN 38120

  	
   

  	
  with a copy to:

   

  [***]

  VP, Assistant General Counsel

  Global Technology Services

  IBM Corporation

  294 Rt. 100

  Somers, New York 10589

  
	
   

  	
   

  	
   

  
	
  In the case of Customer:

   

  Customer Contract Manager

  ServiceMaster Consumer Services, L.P.

  860 Ridge Lake Boulevard

  Memphis, Tennessee 38120

  	
   

  	
  with a copy to:

   

  ServiceMaster Consumer Services, L.P.

  860 Ridge Lake Boulevard

  Memphis, Tennessee 38120

  Attention: General Counsel

  
	
   

  	
   

  	
   

  
	
  In addition, notices of Security Breaches shall be provided to the
  following Customer Group personnel by telephone with confirmation by
  electronic mail:

  	
   

  	
  The Vice President of Compliance and Ethics;

   

  [***]

  Director of Security and Compliance

  [***]

   

  [***]

  Deputy General Counsel

  [***]

  

 

60

 

Either Party
hereto may from time to time change its address for notification purposes by
giving the other prior written notice of the new address and the date upon
which it will become effective.

 

17.9.                     No
Third Party Beneficiaries

 

(a)         The Parties do not intend, nor will any Section hereof
be interpreted, to create for any Third Party beneficiary rights with respect
to either of the Parties, except, subject to paragraph (b) below, each
member of the Customer Group shall be a Third Party beneficiary under the
Agreement, and the Third Parties identified in Section 14 will have
the rights and benefits described in that Section.

 

(b)        [***]For avoidance of doubt, any action, claim, or dispute of
or by a member of the Customer Group or a divested entity or operation or any
indemnified party under Section 14 shall be subject to any and all
limitations and defenses available to Service Provider under this Agreement or
otherwise, as well as the Dispute Resolution Procedures.  All rights of the members of the Customer
Group and each divested entity or operation, or any beneficiary under Section 14,
are, and shall remain throughout the Term and thereafter, subject to any
waiver, amendment, change, or other modification to this Agreement agreed
between Service Provider and Customer, irrespective of any reliance or change
in position of the members of the Customer Group or any approval of any such
Customer Group member, divested entity or operation, or indemnified party
pursuant to Section 14, and no consent, agreement or approval of
such Customer Group member, divested entity or operation, or indemnified party
pursuant to Section 14 shall be required for such waiver,
amendment, change or other modification.

 

17.10.              Rules of
Construction

 

Interpretation
of the Agreement shall be governed by the following rules of
construction:  (a) words in the
singular shall be held to include the plural and vice versa and words of one
gender shall be held to include the other gender as the context requires, (b) the
word “including” and words of similar import shall mean “including, without
limitation,” (c) provisions shall apply, when appropriate, to successive
events and transactions, (d) the headings contained herein are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement, (e) the words “herein,” “hereto,” “hereinafter”
and words of similar import refer to the Agreement as a whole, and (f) the
Agreement was drafted with the joint participation of both Parties and shall be
construed neither against nor in favor of either, but rather in accordance with
the fair meaning hereof.  In the event of
any apparent conflicts or inconsistencies between the provisions of the Master
Agreement, the Exhibits, the Transaction Documents, the Schedules or other
attachments to the Agreement and Transaction Documents, such provisions shall
be interpreted so as to make them consistent to the extent possible, and if
such is not possible, the provisions of Section 1.2(d) shall
control.

 

17.11.              Further
Assurances

 

During the
Term and at all times thereafter, each Party shall provide to the other Party,
at its request, reasonable cooperation and assistance (including the execution
and delivery 

 

61

 

of affidavits, declarations, oaths, assignments, samples, specimens and
any other documentation) as necessary to effect the terms of the Agreement.

 

17.12.              Expenses

 

Each Party
shall be responsible for the costs and expenses associated with the preparation
or completion of the Agreement and the transactions contemplated hereby except
as specifically set forth in the Agreement.

 

17.13.              Savings
Clause

 

In no event
will Service Provider be liable for any failure or delay in performing any
obligations hereunder (including Service Levels), or any resulting damages or
Losses, to the extent caused by (a) failure of a member of the Customer
Group or their contractors to perform their respective Responsibilities or
other obligations under the Agreement or provide resources under this Agreement
when required, (b) tortious acts of a member of the Customer Group or
their contractors (excluding Service Provider, its Affiliates and their
subcontractors), or (c) any member of the Customer Group’s failure to
obtain all licenses and permits required by Law in connection with the Customer
Business.

 

17.14.              Jury
Trial Waiver

 

Each Party
hereby waives any rights it might otherwise have to trial by jury.

 

17.15.              Currency

 

All references
to payments or credits in the Agreement shall refer to payments or credits in
United States dollars and all payments and credits between the Parties pursuant
to the Agreement shall be transacted in United States dollars unless a
different currency is expressly agreed upon by the Parties with respect to a specific
matter.

 

17.16.              Consents
and Approvals

 

The Parties
agree that in any instance where a consent, approval or agreement is required
of a Party in order for the other Party to perform under or comply with the
terms and conditions of the Agreement, then such Party will not unreasonably
withhold or delay such consent, approval or agreement and, where consent,
approval or agreement cannot be provided, the Party shall notify the other
Party in a timely manner.

 

17.17.              Professional
Advice

 

Notwithstanding
anything to the contrary in this Agreement, Service Provider will not be
required to provide, and nothing in this Agreement will be construed as
provision by Service Provider of, any legal, audit, attest, tax or other
similar professional advice.

 

62

 

17.18.              Resale

 

Neither
Customer nor any member of the Customer Group may resell any of the Services
provided under this Agreement to any Third Party.

 

 

63

 

EXHIBITS TO THE MASTER AGREEMENT

 

Exhibit

 

	
  1

  	
  Definitions [portions omitted]

  
	
   

  	
   

  
	
  2

  	
  List of Transaction Document Schedules [portions omitted]

  
	
   

  	
   

  
	
  3

  	
  Form of Transaction Document [portions omitted]

  
	
   

  	
   

  
	
  4

  	
  Governance and Change Control [portions omitted]

  
	
   

  	
   

  
	
  5

  	
  [Reserved]

  
	
   

  	
   

  
	
  6

  	
  Form of Auditor Confidentiality Agreement

  
	
   

  	
   

  
	
  7

  	
  Dispute Resolution Procedures [portions omitted]

  
	
   

  	
   

  
	
  8

  	
  Procedures Manual Requirements [portions omitted]

  
	
   

  	
   

  
	
  9

  	
  Customer Security Requirements [portions omitted]

  
	
   

  	
   

  
	
  10

  	
  Market Currency Procedures [portions omitted]

  
	
   

  	
   

  
	
  10.1

  	
  Benchmarking Services Agreement [portions omitted]

  
	
   

  	
   

  
	
  11

  	
  Policies [portions omitted]

  
	
   

  	
   

  
	
  12

  	
  Form of Business Associate Agreement

  
	
   

  	
   

  
	
  13

  	
  Customer Competitors [portions omitted]

  

 

i

 

Subject
to a request for confidential treatment, certain portions of this agreement
have been intentionally omitted.  The omitted portions subject to the
confidential treatment request are designated by three asterisks ([***]). 
A complete version of this agreement has been separately filed with the
Securities and Exchange Commission.

 

Exhibit 1

Definitions

 

This is Exhibit 1, Definitions, to that certain Master
Services Agreement, dated as of December 11, 2008, between ServiceMaster
Consumer Services, L.P. and International Business Machines corporation.

 

The following terms used in the Agreement shall have the meanings
indicated:

 

1.01      [***]

 

1.02      Action Plan has the meaning set
forth in Section 9.7(f) of the Master Agreement.

 

1.03      [***]

 

1.04      Additional Services means
information technology functions, tasks and activities that are reasonably
related to, but fall outside of the then existing scope of the Services.

 

1.05      Affiliate means, with respect to a
Party, any entity that controls, is controlled by or is under common control
with a Party.  For purposes of this
definition, the term “control” (including with correlative meanings, the terms “controlled
by” and “under common control with”) means the possession directly or
indirectly of the power to direct or cause the direction of the management and
policies of an entity, whether through the ownership of voting securities, by
trust, management agreement, contract or otherwise.  A Person or entity will be conclusively
deemed to “control” another person or entity, if it is the “beneficial owner,” as
defined pursuant to Section 12 of the Securities Exchange Act of
1934, as amended, and the related rules and regulations, of securities of
that entity having the power to cast more than fifty percent (50%) of the votes
entitled to be cast for the election of directors or similar managers of such
entity.

 

1.06      Agreement means the Master Services
Agreement, all Exhibits thereto, all Transaction Documents executed
pursuant to the Master Agreement, all Schedules thereto, the Procedures
Manuals and all Change Orders, which documents are incorporated into the “Agreement”
by this reference.

 

1.07      Affected Services has the meaning
set forth in Section 3.4(i) of the Master Agreement.

 

1.08      Approved Subcontractors has the
meaning set forth in Section 9.3(a) of the Master Agreement.

 

1.09      Assumed Agreements has the meaning
set forth in Section 9.4 of the Master Agreement.

 

1

 

1.10      Audits means collectively and
individually, Customer Audits, Service Provider Audits, Operational Audits and
Financial Audits.

 

1.11      Baselines has the meaning set forth
in the “Charges” Schedule to a Transaction Document.

 

1.12      Benchmarker refers to each of the
persons identified in the “List of Approved Benchmarkers” Schedule
to a Transaction Document that may participate in the Benchmarking Process.

 

1.13      Benchmarking Process refers to the
benchmarking process described in the “Market Currency Procedures” Exhibit.

 

1.14      [***]

 

1.15      Business Day means each Monday
through Friday, other than national holidays recognized by Customer.

 

1.16      Change  means:  (1) any change to (a) the Services,
(b) the Service Levels, (c) the Service Provider Assets, or (d) the
Customer Asset that, in each case, would alter the (i) functionality,
Service Levels or technical environment of the Service Provider Assets used to
provide the Services, (ii) manner in which the Services are provided, (iii) composition
of the Services or (iv) cost to Customer or Service Provider of the
Services; (2) any change to (a) the Locations or (b) the
Security Requirements, Disaster Recovery Plan or Customer Compliance
Requirements; (3) any change that disrupts the provision of the Services;
or (4) any amendment, modification, addition or deletion proposed by a
Party to this Agreement.

 

1.17      Change Control Procedures has the
meaning set forth in Section 9.6 of the Master Agreement.

 

1.18      Change of Control means the
transfer of Control (as defined in the definition of “Affiliate”), or
sale of all or substantially all of the assets (in one or more transactions),
of a Party or other designated person or entity, from the person or persons
that hold such Control of such Party or other designated person or entity on
the Effective Date to another person or persons, but shall not include a transfer
of Control, or such a sale of assets, to an Affiliate of such Party or the loss
of Control by such person or persons without a resulting transfer to another
person or persons (e.g., pursuant
to the issuance of voting securities representing Control in a broadly-distributed
public offering) or other designated person or entity.

 

1.19      Change Order means a document that
amends the Agreement, and which is executed pursuant to the Change Control
Procedure, in substantially the form set forth in the “Change Control
Process” Exhibit.

 

1.20      Charges has the meaning set forth
in the “Charges” Schedule to a Transaction Document.

 

1.21      Claim means any civil, criminal,
administrative or regulatory action or proceeding commenced or threatened by a
Third Party, including Governmental Authorities and regulatory agencies.

 

2

 

1.22      Commencement Date means the date on
which Service Provider begins to provide Services under a Transaction Document
to the Customer Group as agreed upon by the Parties, and as set forth in the “Transition
and Transformation Plan” Schedule to such Transaction Document.  There may be a separate Commencement Date for
a particular Service or set of Services.

 

1.23      Company Information means
collectively the Confidential Information and Trade Secrets of a Party and/or a
designated group including such Party, and with respect to the Customer Group
includes the Customer Data.

 

1.24      Confidential Information means with
respect to a Party or a designated group including such Party, any and all
proprietary information of the disclosing Party, of such group and/or of Third
Parties in the possession of the disclosing Party and/or such group that is
marked as confidential or otherwise identified as confidential by the disclosing
Party, or information disclosed orally or visually, or in written or other form
of tangible information or materials without an appropriate letter, proprietary
stamp or legend, if it would be apparent to a reasonable person, familiar with
the disclosing Party’s business and industry, that such information or
materials are of a confidential nature. 
For the avoidance of doubt, and subject to the preceding sentence,
Confidential Information also includes (i) information which has been
disclosed to such Party and/or such group by a Third Party to whom such Party
owes a duty of confidentiality, and (ii) with respect to the Customer
Group, the Customer Data as well as other confidential and proprietary
non-public information of the Customer Group including the financial and other
terms of this Agreement and the Services, which Service Provider has heretofore
obtained or may obtain during the Term of this Agreement, or which has been or
may be developed by Service Provider expressly for Customer.

 

1.25      Contract Change Control has the
meaning set forth in Section 9.6 of the Master Agreement.

 

1.26      Contract Year  means
each twelve-month period commencing on the Effective Date or any anniversary of
the Effective Date during the Term.

 

1.27      [***]

 

1.28      Critical Transition Activities has
the meaning set forth in Section 7.2 of the Master Agreement.

 

1.29      Critical Transition Milestones has
the meaning set forth in Section 7.2 of the Master Agreement.

 

1.30      Customer means ServiceMaster
Consumer Services, L.P., a Delaware limited partnership.

 

1.31      Customer Assets means the
equipment, Software, goods and other assets which are owned, leased or licensed
by Customer and provided to Service Provider for use in connection with the
provision of the Services.

 

1.32      Customer Audits has the meaning set
forth in Section 9.7(e)(iii) of the Master Agreement.

 

3

 

1.33      Customer Auditors has the meaning
set forth in Section 9.7(b) of the Master Agreement.

 

1.34      Customer Business has the meaning
set forth in Section 10.3(a) of the Master Agreement.

 

1.35      Customer Business Applications
means the application software owned or licensed by members of the Customer
Group and listed on the “Customer Business Applications” Schedule to
a Transaction Document.

 

1.36      Customer Competitors means  those entities set forth in the “Customer Competitors”
Exhibit.

 

1.37      Customer Data means (i) all
data and information generated, provided or submitted by, or caused to be
generated, provided or submitted by, the Customer Group in connection with the
Services; (ii) all data and information regarding the business of Customer
collected, generated or submitted by, or caused to be generated, provided or
submitted by, Service Provider and/or its Affiliates and subcontractors; (iii) all
such data and information processed or stored, and/or then provided to or for
the Customer Group, as part of the Services, including data contained in forms,
reports and other similar documents provided by Service Provider as part of the
Services; and (iv) Personally Identifiable Information.  For the avoidance of doubt, Customer Data
does not include internal data of Service Provider generated in connection with
the performance of Services and not reasonably related to its obligations under
this Agreement (e.g., Service Provider personnel
or cost data, internal reviews, or similar information or data).

 

1.38      Customer Group means individually
and collectively (i) Customer, (ii) any existing and future direct
and indirect subsidiaries of ServiceMaster Global Holdings Inc. (or its
successor), (iii) any other Persons or entities in which a Customer Group
member has an ownership interest and which are authorized by Customer to use
all or any portion of the Services, including joint ventures in which a
Customer Group member has an ownership interest, and (iv) independently-owned
franchisees of Customer Group members which are authorized by Customer to use
all or any portion of the Services.

 

1.39      Customer Group Materials has the
meaning set forth in Section 10.4(a) of the Master Agreement.

 

1.40      Customer Indemnitees has the
meaning set forth in Section 14.1 of the Master Agreement.

 

1.41      Customer-Licensed Software means
Software owned by Third Parties and licensed to Customer and used by Service
Provider to deliver the Services, or used by Customer on Service Provider
Assets.

 

1.42      Customer Marks has the meaning set
forth in Section 10.4(c) of the Master Agreement.

 

1.43      Customer-Owned Software means the
Software owned by any member of the Customer Group and used by Service Provider
to deliver the Services.

 

4

 

1.44      Customer Software means the
Customer-Licensed and Customer-Owned Software listed on the “Customer
Software” Schedule to a Transaction Document that will be used by
Service Provider in performing and providing Services under the Agreement.

 

1.45      Customer Solution has the meaning
set forth in Section 10.6(e) of the Master Agreement.

 

1.46      Customer Systems means the computer
hardware, software, data networks and systems used and operated by the Customer
Group for its information technology requirements, excluding the Service
Provider Information System.

 

1.47      Deliverables has the meaning set
forth in Section  10.5 of the Master Agreement.

 

1.48      Derivative Work means a derivative work as
defined in Title 17 U.S.C. § 101, as amended.

 

1.49      [***]

 

1.50      Direct Damages has the meaning set
forth in Section 13.3 of the Master Agreement.

 

1.51      Direct Damages Cap has the meaning
set forth in Section 13.1(a) of the Master Agreement.

 

1.52      Disabling Code means computer
programming code which has the principal function of permitting improper use,
access, deletion or modification of, or disabling, deactivating, damaging or
shutting down one or more software programs or systems and/or hardware or
hardware systems, including “time bombs,” “protect codes,” “data destruction
keys,” “trap doors” and similar code or devices.

 

1.53      Disaster Recovery Plan means the
disaster recovery plan set forth in “Disaster Recovery Requirements” Schedule
to a Transaction Document.

 

1.54      Disaster Recovery Services means
those services described in Section 3.5 of the Master Agreement and
the “Disaster Recovery Requirements”
Schedule to a Transaction Document.  The Disaster Recovery Services are part of
the Services.

 

1.55      Dispute means any dispute,
controversy or Claim, arising out of, or relating to, the Agreement, including
situations or circumstances in which the Parties are required to mutually agree
on additions, deletions or changes to terms, conditions or Charges, but are
unable to do so.

 

1.56      Dispute Resolution Procedures means
the process for resolving Disputes set forth in the “Dispute Resolution
Procedures” Exhibit.

 

1.57      Disputed Charges has the meaning
set forth in Section 4.8 of the Master Services Agreement.

 

5

 

1.58      [***]

 

1.59      Effective Date means the date of
the execution of the Master Agreement by the Parties thereto as set forth in
the first paragraph of the Master Agreement.

 

1.60      Execution Date means the date of
execution of a Transaction Document by the Parties as set forth on the initial page thereof.

 

1.61      Extension Period has the meaning
set forth in Section 2.1 of the Master Agreement.

 

1.62      Exhibit means an attachment to
the Master Agreement as such attachment may be amended from time to time.

 

1.63      [***]

 

1.64      Financial Audits has the meaning
set forth in Section 9.7(c) of the Master Agreement.

 

1.65      Fixed Charges has the meaning set
forth in the “Charges” Schedule to a Transaction Document.

 

1.66      Force Majeure Event means an event(s) meeting
both of the following criteria:

 

(a)                                  Caused
by any of the following:  (i) catastrophic
weather conditions or other extraordinary elements of nature or acts of God; (ii) extraordinary
acts of government, acts of war, acts of terrorism, insurrection, riots,
national or regional strikes or labor disputes, civil disorders or rebellion;
and (iii) epidemics, quarantines and embargoes; provided, however, that the
Parties expressly acknowledge and agree that Force Majeure Events do not
include the regulatory acts of Governmental Authorities; and

 

(b)                                 The
non-performing Party is without fault in causing or failing to prevent the
occurrence of such event, and such occurrence could not have been circumvented
by reasonable precautions and could not have been mitigated through performance
of the Disaster Recovery Services.

 

1.67      GAAP means generally accepted accounting principles
prevailing from time to time in the United States.

 

1.68      Governmental Authority means any
nation or government, any federal, state, province, territory, city, town,
municipality, county, local or other political subdivision thereof or thereto,
any quasi-Governmental Authority, and any court, tribunal, arbitral body,
taxation authority, department, commission, board, bureau, agency,
instrumentality thereof or thereto or otherwise which exercises executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.

 

6

 

1.69      Internal Use Code means computer
programming code (including both source and object code versions) that is not
generally commercially available, incorporated by or on behalf of the Service
Provider and/or its subcontractors into the Customer Systems to cause and/or
enable the components of the Customer Systems to be integrated, compatible
and/or interoperable, and/or to remediate and/or provide work-arounds for any
failure of the Customer Systems to operate as necessary to perform and provide
the Services in accordance with this Agreement, but does not include software
tools used to generate computer programming code or to provide monitoring or
diagnostic functionality.

 

1.70      Intellectual Property Rights  means any and all intellectual property rights existing
from time to time under any Law including patent law, copyright law,  trade secret law, trademark law (together
with all of the goodwill associated therewith) and any and all other
proprietary rights, and any and all applications, renewals, extensions and
restorations of any of the foregoing, now or hereafter in force and effect
worldwide.  For purposes of this
definition, rights under patent law shall include rights under any and all
patent applications and patents (including letters patent and inventor’s
certificates) anywhere in the world, including any provisionals, substitutions,
extensions, supplementary patent certificates, reissues, renewals, divisions,
continuations in part (or in whole), continued prosecution applications,
requests for continued examination, and other similar filings or stages thereof
provided for under the laws of the United States, or of any other country.

 

1.71      Key Personnel means those Service
Provider employees set forth in “List of Key Personnel” Schedule
to a Transaction Document.

 

1.72      Key Service
Provider Positions has the meaning set forth in Section 9.2(a)(i) of the
Master Agreement.

 

1.73      Law
means all applicable laws (including those arising under common law), statutes,
codes, rules, regulations, reporting or licensing requirements, ordinances and
other pronouncement having the effect of law of the United States, any foreign
country or any domestic or foreign state, county, city or other political
subdivision, including those promulgated, interpreted or enforced by any
governmental or regulatory authority, and any order of a court or governmental
agency of competent jurisdiction.

 

1.74      Locations means the locations at
and from which Service Provider will provide and perform the Services as set
forth in the “Locations” Schedule to a Transaction Document.

 

1.75      Losses means all judgments,
settlements, awards, damages, losses, charges, liabilities, penalties, interest
claims (including taxes and all related interest and penalties incurred
directly with respect thereto), however described or denominated, arising out
of a Claim against a Party or any person entitled to indemnity pursuant to Article 14
of this Agreement in each case that a court, arbitrator or other tribunal
finally awards to the party making the Claim or which are included in the
amount of any settlement with such party and consented to by the Party
responsible for such settlement in accordance with Section 14.3,
and all related reasonable costs, expenses and other charges (including all
reasonable attorneys’ fees and reasonable costs of litigation, hearings, 

 

7

 

proceedings,
internal and external investigations, document and data productions and
discovery, settlements, judgments, awards, interest and penalties), however
described or denominated.

 

1.76      Malware means computer software,
code or instructions that:  (a) has
the principal function of adversely affect the operation, security or integrity
of a computing, telecommunications or other digital operating or processing
system or environment, including other programs, data, databases, computer
libraries and computer and communications equipment, by altering, destroying,
disrupting or inhibiting such operation, security or integrity; (b) without
functional purpose, self-replicate written manual intervention; (c) purport
to perform a useful function but which actually perform either a destructive or
harmful function, or perform no useful function and utilize substantial computer,
telecommunications or memory resources; or (d) without authorization
collect and/or transmit to third parties any information or data; including
such software, code or instructions commonly known as viruses, Trojans, logic
bombs, worms and spyware.

 

1.77      Managed Agreements means Third
Party Agreements for which Customer retains financial responsibility, but which
Service Provider manages, administers, and maintains.

 

1.78      Master Agreement means the Master
Services Agreement by and between the Parties dated December 11, 2008, and
the attached Exhibits.

 

1.79      Materials means computer programs,
computer program listings, computer program tools, or computer program
documentation, reports and drawings, as well as user manuals, charts, graphs
and other written documentation and machine-readable text and files, including,
computer programming code (including source code and object code) and all other
works of authorship.

 

1.80      New Services means the functions,
responsibilities, activities, tasks and projects outside the scope of the
Services  that Service Provider may provide to
Customer on terms to be agreed upon pursuant to Section 3.7 of the
Master Agreement and set forth in a Change Order.

 

1.81      [***]

 

1.82      Open Source Software means software
that (a) requires a licensor to cause source code to be distributed with
the software or made available to any Third Party when the software is
distributed or otherwise provided in any fashion to a third party; (b) restricts
or impairs in any way Customer’s ability to license the software pursuant to
terms of Customer’s choosing; (c) impacts in any fashion or limit Customer’s
ability to enforce its patent or other intellectual property rights against any
Third Party in any manner; or (d) Customer’s rights to will be terminated
or affected in any manner if Customer asserts any of its intellectual property
rights against any Third Party in connection with such software or
otherwise.  Without limitation of the
foregoing, Open Source Software shall include software subject to any version
of the General Public License or the Lesser General Public License, or any
license which has been certified as an “open source” license by the Open Source
Initiative.

 

1.83      Operational Audits has the meaning
set forth in Section 9.7(b) of the Master Agreement.

 

8

 

1.84      Operational Change
Control has the meaning set forth in Section 9.6 of the Master
Agreement.

 

1.85      Party or Parties
means Customer and/or Service Provider, as Parties to the Master Agreement.

 

1.86      Pass-Through Charges
has the meaning set forth in the “Charges” Schedule to a
Transaction Document.

 

1.87      PCAOB has the meaning
set forth in Section 9.7(b) of the Master Agreement.

 

1.88      Person means an individual, corporation, limited liability
company, partnership, trust, association, joint venture, unincorporated
organization or entity of any kind or nature, or a Governmental Authority.

 

1.89      Personally Identifiable
Information means personally identifiable information of individuals that
is defined as “personal information” (or an equivalent term) under the
Gramm-Leach-Bliley Act, the Health Insurance Portability and Accountability Act
of 1996, the European Data Protection Directive, or any similar state Law, and
any information that may be used to track, locate or identify such individuals
(or which is otherwise protected by Law), which is generated by or disclosed to
Service Provider or its subcontractors in connection with the Services, and
includes such information of Customer Group employees and of individuals who
seek to obtain, obtain or have obtained products or services from any member of
the Customer Group, which products and services are used or intended to be used
for personal, family or household purposes.

 

1.90      Prime Rate means the
U.S. prime rate as published in the Wall Street Journal under the
heading “Money Rates.”

 

1.91      Processing means any
operation or set of operations which is performed upon Personally Identifiable
Information, whether or not by automatic means, such as collection, recording,
organization, storage, adaptation or alteration, retrieval, consultation, use,
disclosure by transmission, dissemination or otherwise making available,
alignment or combination, blocking, erasure or destruction.

 

1.92      Remedial Actions has
the meaning set forth in Section 13.4 of the Master Agreement.

 

1.93      Required Consents
means any consents or approvals or other arrangements to be obtained by a Party
under the Agreement (a) to allow a Party or its designees to assume
financial, support, operational, management and/or administrative
responsibility for any software licenses, software maintenance agreements,
hardware licenses, hardware leases, space leases, hardware maintenance
agreements, network, support and services agreements and similar arrangements; (b) to
allow for the transfer of any of the contractual arrangements described in (a) above
from one Party or its Affiliates to another Party or its Affiliates; and (c) to
permit access, use and other rights for a Party with respect to software,
hardware, equipment, services, facilities and similar items.

 

9

 

1.94      Resource Units has
the meaning set forth in the “Charges” Schedule to a Transaction
Document.

 

1.95      SAS 70 has the
meaning set forth in Section 9.7(d)(i) of the Master
Agreement.

 

1.96      Security Breach means
(A) any circumstance pursuant to which applicable Law requires
notification of such breach to be given to affected parties or other activity
in response to such circumstance; or (B) any actual, attempted, suspected
or threatened circumstance that compromises, or could reasonably be expected to
compromise, either Physical Security or Systems Security (as such terms are
defined below) in a fashion that either does or could reasonably be expected to
permit unauthorized Processing, use, disclosure or acquisition of or access to
any Customer Data, Customer Software, Deliverables or any Company Information
developed, maintained, processed or transmitted by Service Provider or its
agents or subcontractors in connection with the Services.  Physical Security means physical security at
any Location housing systems maintained by Service Provider or its agents or
subcontractors in connection with the Services and in the course of physical
transportation of assets used by Service Provider in performing the Services
and physical media including Customer Company Information.  Systems Security means security of computer,
electronic or telecommunications systems of any variety (including data bases,
hardware, software, storage, switching and interconnection devices and
mechanisms), and networks of which such systems are a part or communicate with,
used directly or indirectly by Service Provider or its agents or subcontractors
in connection with the Services. 
Physical Security and Systems Security are the specific security
measures required pursuant to the “Customer Security Requirements” Exhibit.

 

1.97      Security Requirements
has the meaning set forth in Section 3.2(d) of the Master
Agreement.

 

1.98      Service Level Agreement
means the schedule to a Transaction Document specifying the service level
methodology and the Service Levels applicable to the Services described in such
Transaction Document, remedies for Service Provider’s failure to comply with
such Service Levels, including the applicable Service Level Credits, procedures
for modifying and improving Service Levels and related provisions.

 

1.99      Service Level Credits
has the meaning set forth in the “Service Level Agreement” Schedule
to a Transaction Document.

 

1.100    Service Level has the
meaning set forth in the “Service Level Agreement” Schedule to a
Transaction Document.  Each “Service
Level Agreement” Schedule shall be promptly updated and modified
from time to time by the Parties to reflect changes to the Service Levels
related to the associated Transaction Document.

 

1.101    Service Level Termination
Event has the meaning set forth in the “Service Level Methodology” Schedule
to a Transaction Document.

 

1.102    Service Provider means
International Business Machines Corporation.

 

10

 

1.103    Service Provider Assets
means the equipment, software, goods and other assets which are owned, leased
or licensed by Service Provider, its Affiliates or subcontractors and provided
to the Customer Group or otherwise by Service Provider, its Affiliates or
subcontractors and used  in connection
with the provision of the Services, but excluding the Customer Assets.

 

1.104    Service Provider Audits
means the audits described in Section 9.7(d)(i).

 

1.105    Service Provider Equipment
means the computer equipment, peripheral devices, storage media, cabling,
connectors, extenders and other equipment provided by or through and used by
Service Provider in connection with the provision of the Services, but
excluding the Customer Assets.

 

1.106    Service Provider
Indemnitees has the meaning set forth in Section 14.2 of the
Master Agreement.

 

1.107    Service Provider
Information System means the hardware, software, data network(s) and
systems provided and/or used (whether owned, under contract and/or licensed) by
Service Provider to perform and provide the Services that Service Provider uses
to perform and/or provide the Services.

 

1.108    Service Provider Licensed
Software means Service Provider Software developed by Third Parties and
licensed to Service Provider.

 

1.109    Service Provider Location
has the meaning set forth in the “Locations” Schedule to a
Transaction Document

 

1.110    Service Provider Materials
has the meaning set forth in Section 10.3 of the Master Agreement.

 

1.111    Service Provider Records
has the meaning set forth in Section 9.7(a) of the Master
Agreement.

 

1.112    Service Provider
Representatives has the meaning set forth in Section 10.5(a) of
the Master Agreement.

 

1.113    Service Provider Shared
Services Center means a Location (other than a Customer Location) at which
Service Provider provides services to multiple customers.

 

1.114    Service Provider Software
means the Software used by Service Provider or its subcontractors in providing
the Services and (i) owned by Service Provider before the Effective Date
or acquired by Service Provider after the Effective Date, (ii) developed
by Service Provider ; or (iii) Service Provider Licensed Software.

 

1.115    Services means the
services, functions, responsibilities, activities, tasks and projects (i) to
be performed by Service Provider and set forth in the Agreement, including the “Services
Description” Schedule to a Transaction Document, as they may evolve
and be supplemented and enhanced during the Term; (ii) that are an
inherent, necessary, or customary part of the 

 

11

 

Services
described in clause (i), or (iii) that were performed in the normal course
of business by Customer’s personnel who were transitioned to Service Provider
or displaced or whose functions were displaced as a result of the transactions
contemplated by the Agreement to the extent such services, functions,
responsibilities, activities, tasks and projects are reasonably related to the
Services described in clause (i) and were performed by transitioned or
displaced personnel during the twelve (12) months immediately prior to the
Execution Date of the Transaction Document, provided, that such
services, functions, responsibilities, tasks and/or project are identified by
Customer to Service Provider in writing not later than eighteen (18) months
after the applicable Execution Date in order to be performed for the remainder
of the term of the applicable Transaction Document.

 

1.116    Software or software
means any computer programming code consisting of instructions or statements in
a form readable by individuals (source code) or machines (object code), and
related documentation and supporting materials therefor, in any form or medium,
including electronic media.

 

1.117    Successor Service Provider
means an entity that provides services to Customer similar to the Services
following the termination or expiration of the Agreement.

 

1.118    Tax or Taxes  means federal,
state and local sales, use, excise, telecommunications, and other similar types
of transfer taxes, fees or charges (including any related penalties, additions
to tax, and interest), however designated or imposed, which are in the nature
of a transaction tax, fee or charge, but not including any taxes, duties, fees
or charges imposed on or measured by net or gross income or gross receipts,
capital stock or net worth or in the nature of an income, capital, franchise,
or net worth tax.

 

1.119    Term means the term of
the Master Agreement as specified in Section 2.1 of the Master
Agreement.

 

1.120    Termination Assistance
Services means the functions, responsibilities, activities, tasks and
projects Service Provider is requested by Customer to perform in anticipation
of and in connection with the termination or expiration of the Agreement in
order to achieve an orderly transfer without interruption of Services from
Service Provider to Customer or to Customer’s designee, the services described
in the “Termination Assistance Services” Schedule to a
Transaction Document and, as requested by Customer during the Termination
Assistance Period, all or a portion of all other Services until such Services
are transferred to Customer or to Customer’s designee.  Upon transfer of all or a portion of the
Services to Customer or to Customer’s designee, Termination Assistance Services
will be performed with respect to the transferred Services as specific skills
are requested by Customer in consideration of the Charges set forth in Section 12.4(d).  The Termination Assistance Services are part
of the Services.

 

1.121    Termination Charge
means the [***] set forth in the “Charges” Schedule to a
Transaction Document.

 

1.122    Third Party  means a Person, business or entity other than a member of
the Customer Group or Service Provider or its Affiliates.

 

12

 

1.123    Third Party Agreements
means those agreements for which Service Provider has undertaken operational,
management, use, access or administrative responsibility in connection with the
provision of the Services, and pursuant to which a member of the Customer Group
has contracted with a Third Party Provider to obtain any Third Party products,
software and/or services that will be used, accessed and/or managed in
connection with the Services.  Third
Party Agreements are listed on “Third Party Agreements” Schedule
to a Transaction Document for such Transaction Document, which schedule shall
be promptly updated and modified from time to time by the Parties to reflect
the then-current Third Party Agreements.

 

1.124    Third Party Provider means
a business or entity other than a member of the Customer Group or Service
Provider or its Affiliates that provides products, software and/or services
under a Third Party Agreement.

 

1.125    Tower means a
functionally-related group of Services designated as a Services “Tower”
pursuant to a Transaction Document (e.g., helpdesk
or network services).

 

1.126    Trade Secrets means
with respect to a Party and/or designated group including such Party,
information related to the services and/or business of the disclosing Party of
such group and/or of a Third Party which (a) derives economic value,
actual or potential, from not being generally known to or readily ascertainable
by other persons who can obtain economic value from its disclosure or use; and (b) is
the subject of efforts by the disclosing Party and/or such group that are
reasonable under the circumstances to maintain its secrecy, including (i) marking
any information clearly and conspicuously with a legend identifying its
confidential or proprietary nature; (ii) identifying any oral presentation
or communication as confidential immediately before, during or after such oral
presentation or communication; or (iii) otherwise, treating such
information as confidential or secret. 
Assuming the criteria in sections (a) and (b) above are
met, Trade Secrets include, but are not limited to, technical and nontechnical
data, formulas, patterns, compilations, computer programs and software,
devices, drawings, processes, methods, techniques, designs, programs, financial
plans, product plans, and lists of actual or potential customers and suppliers.

 

1.127    Transferred Affiliate
has the meaning set forth in Section 10.11 of the Master Agreement.

 

1.128    Transformation means
the evolution and integration of the functions comprising the Services during
and after Transition, as described in the “Transition and Transformation
Plan” Schedule to a Transaction Document.

 

1.129    Transition means the
transition or implementation of resources and operational responsibilities for
performance of the Services to Service Provider.

 

1.130    [***]

 

1.131    Transition Services
means the tasks described in the “Transition and Transformation Plan” Schedule
to a Transaction Document.

 

1.132    [***]

 

13

 

1.133    Variable Charges has
the meaning set forth in the “Charges” Schedule to a Transaction
Document.

 

1.134    [***]

 

1.135    Withholding Taxes  means foreign,
federal, and state and local taxes, fees, or charges which are imposed on or by
reference to gross or net income or gross or net receipts and are required
under Law to be withheld by Customer from payments made to Service Provider
under this Agreement (including any related penalties and interest thereon).

 

14

 

Subject to a request for confidential treatment, certain portions of
this agreement have been intentionally omitted.  The omitted portions
subject to the confidential treatment request are designated by three asterisks
([***]).  A complete version of this agreement has been separately filed
with the Securities and Exchange Commission.

 

Exhibit 2

List of Transaction Document Schedules

 

This is Exhibit 2, List of Transaction Document Schedules,
to that certain Master Services Agreement, dated as of December 11, 2008,
between ServiceMaster Consumer Services, L.P. and International Business
Machines Corporation.

 

	
  Schedule

  	
   

  	
  Schedule Title

  
	
  A

  	
   

  	
  Transaction
  Document Definitions

  
	
  B

  	
   

  	
  Services
  Description

  
	
  B-1

  	
   

  	
  Statement
  of Work

  
	
  B-2

  	
   

  	
  Customer
  Business Applications

  
	
  C

  	
   

  	
  Key
  Personnel Provisions

  
	
  C-1

  	
   

  	
  Knowledge
  Worker Provisions

  
	
  C-2

  	
   

  	
  List
  of Key Personnel

  
	
  D

  	
   

  	
  Service
  Level Agreement

  
	
  D-1

  	
   

  	
  Service
  Level Methodology

  
	
  D-2

  	
   

  	
  Service
  Levels

  
	
    D-2-A

  	
   

  	
  Measured
  Applications and Expected Uptime

  
	
  D-3

  	
   

  	
  Critical
  Services

  
	
  D-4

  	
   

  	
  Managed
  Agreements

  
	
  E

  	
   

  	
  Charges

  
	
  E-1

  	
   

  	
  Pricing
  Methodology

  
	
  E-2

  	
   

  	
  Critical
  Transition and Transformation Milestone Payment and Credit Schedule

  
	
  E-3

  	
   

  	
  Monthly
  Base Charges/ARC-RRC

  
	
  E-4

  	
   

  	
  [Reserved]

  
	
  E-5

  	
   

  	
  [Reserved]

  
	
  E-6

  	
   

  	
  Rate
  Card

  
	
  E-7

  	
   

  	
  Resource
  Unit Definitions

  
	
  E-8

  	
   

  	
  Financial
  Responsibility Matrix

  
	
  E-9

  	
   

  	
  Termination
  Charges

  
	
  E-10

  	
   

  	
  Form of
  Invoice

  
	
  F

  	
   

  	
  Transition
  and Transformation Plan

  
	
  F-1

  	
   

  	
  Transition
  and Transformation Planning Process

  
	
  F-2

  	
   

  	
  High
  Level Transition and Transformation Plan

  
	
  F-3

  	
   

  	
  Transition
  and Transformation Critical Milestones

  
	
  G

  	
   

  	
  Customer
  Software

  

 

1

 

	
  Schedule

  	
   

  	
  Schedule Title

  
	
  H

  	
   

  	
  Service
  Provider Software

  
	
  I

  	
   

  	
  Third-Party
  Agreements

  
	
  J

  	
   

  	
  Reports

  
	
  J-1

  	
   

  	
  Standard
  Reports

  
	
  K

  	
   

  	
  List
  of Approved Benchmarkers

  
	
  L

  	
   

  	
  Technical
  Architecture and Product Standards

  
	
  M

  	
   

  	
  Disaster
  Recovery Requirements

  
	
  M-1

  	
   

  	
  Disaster
  Recovery Requirements - General

  
	
  M-1-a

  	
   

  	
  Disaster
  Declaration Event [***]

  
	
  M-1-b

  	
   

  	
  Common
  BCRS Shared Services

  
	
  M-2-a

  	
   

  	
  Terminex
  [***] Specs

  
	
  M-2-b

  	
   

  	
  Terminex
  [***] Services

  
	
  M-2-c

  	
   

  	
  Terminex
  [***]

  
	
  M-3

  	
   

  	
  Terminex
  [***]Specs

  
	
  M-4-a

  	
   

  	
  AHS
  Specs

  
	
  M-4-b

  	
   

  	
  AHS
  Services

  
	
  M-4-c

  	
   

  	
  AHS
  Disaster Recovery Program

  
	
  M-5

  	
   

  	
  JDE
  [***]Specs

  
	
  M-6

  	
   

  	
  JDE
  [***] Specs

  
	
  M-7

  	
   

  	
  Terminex
  [***]Specs

  
	
  M-8

  	
   

  	
  Lawn
  [***]Specs

  
	
  M-9

  	
   

  	
  Land
  [***]Specs

  
	
  M-10

  	
   

  	
  Land
  [***]Specs

  
	
  M-11

  	
   

  	
  BSC
  AD [***]Specs

  
	
  N

  	
   

  	
  Termination
  Assistance Services

  
	
  O

  	
   

  	
  Projects

  
	
  P

  	
   

  	
  Affected
  Employees

  
	
  P-1

  	
   

  	
  Terms
  for Affected Employees

  
	
  P-2

  	
   

  	
  List
  of Affected Employees

  
	
  Q

  	
   

  	
  Service
  Locations

  
	
  R

  	
   

  	
  Commercially
  Unavailable Service Provider Tools

  
	
  S

  	
   

  	
  Customer
  Facilities

  
	
  T

  	
   

  	
  Approved
  Subcontractors

  

 

2

 

Subject
to a request for confidential treatment, certain portions of this agreement
have been intentionally omitted.  The omitted portions subject to the
confidential treatment request are designated by three asterisks ([***]). 
A complete version of this agreement has been separately filed with the
Securities and Exchange Commission.

 

Exhibit 3

Form of Transaction Document

 

1.             INTRODUCTION

 

This Transaction
Document is effective as of
                  
      , 20[    ] (the “Execution Date”), and is made by [                          ] (“Customer”) and [                            ] (“Service Provider”).  This “Transaction Document” and its Schedules
are incorporated into that certain Master Services Agreement dated December 11,
2008, between ServiceMaster Consumer Services, L.P. and International Business
Machines Corporation.  The terms and
conditions that are specific to this Transaction Document are set forth in Section 4
below.  Any terms and conditions that
deviate from or are in conflict with the Master Agreement are set forth in the “Deviations
from Terms of the Master Agreement” Schedule hereto.  In the event of a conflict between the provisions
of this Transaction Document and the Master Agreement, the provisions of Section 1.2(d) of
the Master Agreement shall control such conflict.

 

2.             DEFINITIONS

 

Capitalized terms herein have the meanings set forth in the Master
Agreement, the “Definitions” Exhibit to the Master
Agreement, or the “Definitions” Schedule to the Transaction
Document, unless otherwise defined herein.

 

3.             SERVICES, CHARGES AND CREDITS

 

3.1          Services

 

Service
Provider will provide to the Customer Group the Services in accordance with the
Master Agreement (including the Exhibits thereto) and this Transaction
Document (including the Schedules hereto).  The scope and composition of the Services and
the responsibilities of the Parties with respect to the Services described in
this Transaction Document are defined in the Master Agreement, this Transaction
Document, and Schedules  A through [    ]
attached hereto.

 

3.2          Charges

 

The “Charges”
Schedule to this Transaction Document sets forth the pricing and
charging methodologies for the Services. 
Further, the “Service Level Agreement” Schedule to this
Transaction Document sets forth certain credits which may be payable to
Customer to Service Provider.

 

1

 

4.             TERM/COMMENCEMENT DATE/SURVIVAL/RENEWAL

 

4.1          Term and Commencement
Date

 

[The
term of this Transaction Document shall begin on the Execution Date and shall
continue for [          
full calendar months] thereafter
(the “Transaction Document Expiration Date”), subject to Section 12
of the Master Agreement (“Transaction Document Term”).  For purposes of this Transaction Document,
the Commencement Date shall be the date set forth in the “Transition and
Transformation Plan” Schedule to this Transaction Document.]

 

4.2          Survival

 

Upon the expiration
or earlier termination of this Transaction Document, the following Sections of
this Transaction Document shall survive any such expiration or termination in
accordance with their terms:  [                                                              ]

 

4.3          [Renewal

 

Sixteen (16)
months prior to the expiration date of this Transaction Document or any agreed
upon extension thereof, or such earlier date requested by Customer, Service
Provider will deliver to Customer a proposal for the extension of the Transaction
Document Term (the “Renewal Proposal”). 
The Renewal Proposal will provide Customer with sufficient detail to
allow Customer to make an informed decision as to whether to extend the
Transaction Document Term.  Customer will
provide Service Provider notice at least [***] prior to the expiration date of
this Transaction Document as to whether Customer desires to extend the
Transaction Document Term.  If Customer
indicates in such notice that it does not desire to extend the Transaction
Document Term, the Transaction Document will expire on the Transaction Document
Expiration Date.  If Customer indicates
in such notice that it desires to extend the Transaction Document Term, the
Parties will negotiate in good faith the terms and conditions applicable to,
and the duration of, such extension.  If
the Parties have not agreed upon the applicable terms and conditions with
respect to such extension by the date that is [***] prior to the Transaction
Document Expiration Date, then Customer may extend the Transaction Document
Term in accordance with the provisions of Section 2.2 of the Master
Agreement.]

 

[There may be additional terms and conditions
specific to this Transaction Document.]

 

2

 

SCHEDULES

 

Table of
Schedules

 

	
  Schedule

  	
   

  	
  Schedule Title

  (List of Schedules is an Example: Additional Schedules and

  Deletions of one or more of the List Schedules may be

  Appropriate)

  
	
  A

  	
   

  	
  Transaction Document
  Definitions

  
	
  B

  	
   

  	
  Services Description

  
	
  B-1

  	
   

  	
  Statement of Work

  
	
  B-2

  	
   

  	
  Customer Business
  Applications

  
	
  C

  	
   

  	
  Key Personnel Provisions

  
	
  C-1

  	
   

  	
  Knowledge Worker
  Provisions

  
	
  C-2

  	
   

  	
  List of Key Personnel

  
	
  D

  	
   

  	
  Service Level Agreement

  
	
  D-1

  	
   

  	
  Service Level Methodology

  
	
  D-2

  	
   

  	
  Service Levels

  
	
  D-2-A

  	
   

  	
  Measured Applications and Expected
  Uptime

  
	
  D-3

  	
   

  	
  Critical Services

  
	
  D-4

  	
   

  	
  Managed Agreements

  
	
  E

  	
   

  	
  Charges

  
	
  E-1

  	
   

  	
  Pricing Methodology

  
	
  E-2

  	
   

  	
  Critical Transition and
  Transformation Milestone Payment and Credit Schedule

  
	
  E-3

  	
   

  	
  Monthly Base
  Charges/ARC-RRC

  
	
  E-4

  	
   

  	
  [Reserved]

  
	
  E-5

  	
   

  	
  [Reserved]

  
	
  E-6

  	
   

  	
  Rate Card

  
	
  E-7

  	
   

  	
  Resource Unit Definitions

  
	
  E-8

  	
   

  	
  Financial Responsibility
  Matrix

  
	
  E-9

  	
   

  	
  Termination Charges

  
	
  E-10

  	
   

  	
  Form of Invoice

  
	
  F

  	
   

  	
  Transition and
  Transformation Plan

  
	
  F-1

  	
   

  	
  Transition and
  Transformation Planning Process

  
	
  F-2

  	
   

  	
  High Level Transition and
  Transformation Plan

  
	
  F-3

  	
   

  	
  Transition and
  Transformation Critical Milestones

  
	
  G

  	
   

  	
  Customer Software

  
	
  H

  	
   

  	
  Service Provider Software

  
	
  I

  	
   

  	
  Third-Party Agreements

  

 

3

 

	
  Schedule

  	
   

  	
  Schedule Title

  (List of Schedules is an Example: Additional Schedules and

  Deletions of one or more of the List Schedules may be

  Appropriate)

  
	
  J

  	
   

  	
  Reports

  
	
  J-1

  	
   

  	
  Standard Reports

  
	
  K

  	
   

  	
  List of Approved
  Benchmarkers

  
	
  L

  	
   

  	
  Technical Architecture and
  Product Standards

  
	
  M

  	
   

  	
  Disaster Recovery Requirements

  
	
  M-1

  	
   

  	
  Disaster Recovery
  Requirements - General

  
	
  M-1-a

  	
   

  	
  Disaster Declaration Event
  [***]

  
	
  M-1-b

  	
   

  	
  Common BCRS Shared
  Services

  
	
  M-2-a

  	
   

  	
  Terminex [***]Specs

  
	
  M-2-b

  	
   

  	
  Terminex [***]Services

  
	
  M-2-c

  	
   

  	
  Terminex [***]

  
	
  M-3

  	
   

  	
  Terminex [***]Specs

  
	
  M-4-a

  	
   

  	
  AHS Specs

  
	
  M-4-b

  	
   

  	
  AHS Services

  
	
  M-4-c

  	
   

  	
  AHS Disaster Recovery
  Program

  
	
  M-5

  	
   

  	
  JDE [***]Specs

  
	
  M-6

  	
   

  	
  JDE [***]Specs

  
	
  M-7

  	
   

  	
  Terminex [***]Specs

  
	
  M-8

  	
   

  	
  Lawn [***]Specs

  
	
  M-9

  	
   

  	
  Land [***]Specs

  
	
  M-10

  	
   

  	
  Land [***]Specs

  
	
  M-11

  	
   

  	
  BSC AD [***]Specs

  
	
  N

  	
   

  	
  Termination Assistance
  Services

  
	
  O

  	
   

  	
  Projects

  
	
  P

  	
   

  	
  Affected Employees

  
	
  P-1

  	
   

  	
  Terms for Affected
  Employees

  
	
  P-2

  	
   

  	
  List of Affected Employees

  
	
  Q

  	
   

  	
  Service Locations

  
	
  R

  	
   

  	
  Commercially Unavailable
  Service Provider Tools

  
	
  S

  	
   

  	
  Customer Facilities

  
	
  T

  	
   

  	
  Approved Subcontractors

  

 

4

 

THE PARTIES ACKNOWLEDGE THAT THEY HAVE READ
THIS TRANSACTION DOCUMENT, UNDERSTAND IT, AND AGREE TO BE BOUND BY ITS TERMS
AND CONDITIONS.  FURTHER, THE PARTIES
AGREE THAT THE COMPLETE AND EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN THE
PARTIES RELATING TO THIS SUBJECT SHALL CONSIST OF 1) THIS TRANSACTION DOCUMENT,
2) ITS SCHEDULES, AND 3) THE MASTER AGREEMENT (INCLUDING THE EXHIBITS THERETO),
INCLUDING THOSE AMENDMENTS MADE EFFECTIVE BY THE PARTIES IN THE FUTURE.  THIS STATEMENT OF THE AGREEMENT BETWEEN THE
PARTIES SUPERSEDES ALL PROPOSALS OR OTHER PRIOR AGREEMENTS, ORAL OR WRITTEN,
AND ALL OTHER COMMUNICATIONS BETWEEN THE PARTIES RELATING TO THE SUBJECT
DESCRIBED HEREIN.

 

	
  Accepted by: 

  	
   

  	
  Accepted by:

  	 

	
   

  	
   

  	
   

  	 

	
  [CUSTOMER]

  	
   

  	
  [SERVICE PROVIDER]

  	 

	
   

  	
   

  	
   

  	 

	
  By:

  	
   

  	
   

  	
  By:

  	
   

  	 

	
   

  	
         Authorized Signature

  	
   

  	
   

  	
         Authorized Signature

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	 

	
  Name (Type or Print)

  	
  Date

  	
   

  	
  Name (Type or Print)

  	
  Date

  
									

 

5

 

EXECUTION VERSION

 

Subject
to a request for confidential treatment, certain portions of this agreement
have been intentionally omitted.  The omitted portions subject to the
confidential treatment request are designated by three asterisks ([***]). 
A complete version of this agreement has been separately filed with the
Securities and Exchange Commission.

 

Exhibit 4

Governance and Change Control

 

This is Exhibit 4, Governance and
Change Control, to that certain Master Services Agreement, dated as of December 11,
2008, between ServiceMaster Consumer Services, L.P. and International Business
Machines Corporation.  Unless defined in
this Exhibit, capitalized terms have the meanings set forth in the Master
Agreement or the “Definitions” Exhibit to the Master
Agreement.

 

1.                                      OVERVIEW

 

1.1           Purpose. 
The purpose of this Exhibit 4 is to establish and agree on
the formal procedures for:

 

(a)           managing the relationship between Customer and Service
Provider with respect to the Agreement, including the Transaction Document, and
the Project Schedules (all such attachments and schedules collectively known as
the Agreement);

 

(b)           facilitating the continued alignment of the interests of
the Parties; and

 

(c)           enabling the relationship to be maintained at the
appropriate level within each Party.

 

1.1.1        To
further such purpose, this Exhibit 4 establishes the governance
operating model with four major components. 
The four components are further described in more detail in Section 4
below:

 

(a)           Governance organization and staffing;

 

(b)           Decision-making rights;

 

(c)           Governance processes; and

 

(d)           Standard reporting and tools.

 

1.1.2        Service
Provider shall be responsible for supporting the development and implementation
of the governance operating model by (a) using industry leading practices,
and (b) leveraging its expertise, templates, tools and personnel
resources.

 

1.1.3        Customer
shall be responsible for: (a) defining its overall governance strategy and
(b) participating in the development and implementation of the governance
operating  model as set forth
herein.

 

1.2           Objectives Of Governance

 

1.2.1        The
objectives of the governance model provided herein are: [***]

 

1.3           Operating Principles.  A set of operating principles will be agreed
upon within [***].  These operating
principles will be developed collaboratively working with the Service 

 

1

 

Provider and will define directional
statements regarding how the Parties expect to manage the relationship.

 

2.                                      GOVERNANCE OPERATING MODEL

 

2.1           Governance Operating Model Purpose.  The governance operating model describes the
organizational and process components necessary to achieve effective
governance.  These components consist of
the following: [***]

 

2.2           Governance Organization and Staffing

 

2.2.1        Each
Party’s Responsible Executive shall have the duties as described in Sections
2.2.8(a) and (b) below, respectively.  Unless specifically stated otherwise or
implied by its context, the Responsible Executives shall be deemed to include
their respective delegated representatives.

 

2.2.2        The
Responsible Executives shall together establish appropriate communication,
management and interface processes among the Customer Governance Organization,
Customer corporate, Customer business units, Service Provider and any Third
Parties within the terms of the Agreement.

 

2.2.3        [***]
Service Provider Responsible Executive shall provide information requested by
Customer so that Customer may develop and deliver a communications package to
the Customer stakeholders that describe the purpose and intent of the
relationship, key deal elements, scope of Services, Service Provider Key Personnel,
roles and responsibilities, high-level decision rights and the fundamentals of
the applicable High Level Transition and Transformation Plan.

 

2.2.4        As
of the Effective Date, Customer shall designate the Customer Responsible
Executive.  Service Provider shall
designate its Responsible Executive as of the Effective Date, and shall
designate the Service Provider Service Delivery Manager [***].

 

2.2.5        Service
Provider shall put in place a Service Provider Governance Organization that
contains the roles required for the performance of its obligations under the Agreement
and to fulfill the objectives of governance as described herein.

 

2.2.6        Customer
shall put in place a Customer Governance Organization that contains the roles
required for the performance of its obligations under the Agreement and to
fulfill the objectives of governance as described herein.

 

2.2.7        Customer
reserves the right to use selected Third Parties within the Customer Governance
Organization.  The roles within the
Customer Governance Organization that shall be performed by such Third Parties
shall be determined solely by Customer. 
In the event that Customer employs Third Parties within the Customer
Governance Organization, such Third Parties shall not be Service Provider
Competitors and shall adhere to the confidentiality and security provisions of
the Agreement.

 

2.2.8        The
Parties shall work together to confirm the responsibilities for the following
roles [***]

 

2

 

(a)           Key Roles and Responsibilities of the Customer Governance
Organization:

 

	
  Position/Role

  	
   

  	
  Area of Responsibility

  	
   

  
	
  Customer
  Responsible Executive

  	
   

  	
  [***]

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  

 

(b)           Key Roles and Responsibilities of Service Provider
Governance Organization:

 

	
  Position/Role

  	
   

  	
  Area of Responsibility

  	
   

  
	
  Service Provider Responsible Executive

  	
   

  	
  [***]

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  

 

2.2.9        In
addition to the roles and responsibilities mentioned above, various joint
oversight committees will also be established by the Responsible Executives to
provide a formal mechanism for working together in a collaborative
fashion.  These joint committees and
protocols are defined in Appendix 4-C.

 

2.3           Governance Decision-Making Rights

 

2.3.1        A
decision-making rights model shall be finalized by the Customer Governance
Organization, in collaboration with Service Provider, under the direction of
the Responsible Executives [***].

 

2.3.2        The
decision-making rights model facilitates decision-making relative to the
Services being provided, as it pertains to the Customer stakeholders, the
Customer Governance Organization, Service Provider and other potential Third
Parties.  The model focuses on “who
participates in a decision” and “who facilitates the decision.”  The final model implemented will be the
result of collaboration between Service Provider and Customer.

 

3

 

2.4           Governance Processes and Priorities

 

2.4.1        The Table set forth in Appendix
4-B hereto lists certain governance processes that are required to be in
place to effectively govern the Agreement. 
Customer will work with Service Provider to review and complete the High
Priority Governance Processes.  Customer
will implement the agreed-upon High Priority Governance Processes with Service
Provider’s assistance and collaboration. 
Appendix 4-B also lists certain medium and low priority
governance processes that are required for
the long-term governance of the Services.

 

2.4.2        [***]
the Parties will jointly develop the Governance Process Functional
Responsibilities Matrix.  Service
Provider and Customer shall jointly work to create and finalize the detailed
governance processes which shall ensure that the inputs, touch points, and
collaboration identified in Appendix 4-B occur between Customer and
Service Provider.  The Joint Governance
Processes shall be documented and maintained by Customer after collaboration
with the Service Provider and shall form part of the Procedures Manual.

 

2.4.3        Subject
to the preceding paragraph, the timing for implementation of such processes is
indicated below [***]

 

2.5           Standard Reporting and Tools

 

2.5.1        Standard Reporting

 

(a)           [***]
the Parties shall meet to define detailed reporting requirements for reports to
be delivered to Customer using the standard reports defined in Appendix 4-D
as the basis for such meeting.

 

(b)           [***]

 

(i)            [***]

 

(c)           [***]
The content and delivery schedule for all reports will be in accordance with
the requirements set forth in Appendix 4-D.

 

2.5.2        Governance Tools

 

(a)           [***]
Service Provider will:

 

(i)            Provide all necessary data in an automated fashion, to
the extent practicable, to produce the desired governance reports as agreed
upon between the Parties and as outlined in Appendix 4-D.  [***]

 

(ii)           Assist Customer in ensuring that the information [***] is
presented accurately on reports consistent with Service Provider’s data
provided to the Customer.

 

(iii)          Work with the Customer to use the [***]tool jointly to
manage various governance processes (issue management, service level
management, etc.) and decisions.

 

(b)           [***]

 

(c)           [***]
If necessary, Service Provider shall implement additional Service Provider performance
monitoring and reporting tools or systems [***].

 

4

 

3.                                      PROGRAM MANAGEMENT

 

3.1           Customer PMO.  [***] Customer shall establish the Customer
PMO.  [***]  The Customer PMO shall coordinate its
activities with the Service Provider PMO function.

 

3.2           Service Provider PMO.  [***]Service Provider shall establish a
Service Provider PMO.

 

3.2.1        It
is expected that at a minimum the Service Provider will provide the following
Services as part of its PMO [***]

 

3.3           Transition Management Office

 

3.3.1        [***]
Service Provider shall establish a Service Provider TMO to manage and execute
the Transition and Transformation Projects necessary for the commencement of
the delivery of Services.  [***] The
Service Provider TMO shall remain in-place for the duration of the Transition
and Transformation Projects required for the commencement of the applicable
Services.

 

3.3.2        The
Service Provider TMO responsibilities, in coordination with the PMOs, include
[***]

 

3.3.3        The
PMOs

 

(a)           shall
coordinate their efforts to Transition the Services from Customer to Service
Provider.  The PMOs shall also monitor
and support the Transition and Transformation Projects [***]; and

 

(b)           shall
also be responsible for the entire project initiation and authorization
governance process, [***];

 

3.3.4        [***]
The PMOs shall coordinate the resources of their respective organizations and
provide prioritization.

 

3.3.5        [***]
Customer shall identify and communicate to Service Provider the Customer personnel
who shall serve as the Customer single point(s) of contact for each of the
various Service Provider PMO responsibilities, Service Provider TMO
responsibilities and the governance processes described in Section 2.4
above.  Such Customer personnel shall be
responsible to the Customer Governance Organization in the execution of their
responsibilities as such responsibilities relate to the Services.

 

3.4           Projects and Additional Services or New Services.  Projects and/or Additional Services or New
Services may be requested by Customer in accordance with the Agreement.  Operationally, the Parties shall implement the
Project Initiation and Authorization process. 
[***] In all cases, Service Provider shall work with the Customer
Governance Organization and the Project requestor to ensure the justification
and authorization steps are followed.

 

5

 

3.5           Acceptance Process for Deliverables

 

3.5.1        Acceptance Criteria.

 

(a)           The
Acceptance Criteria shall be set forth in the applicable Schedule to the
Transaction Document or the applicable Project Schedule.  [***] Unless otherwise specified in the
applicable Project Schedule, Service Provider shall provide a copy of each
Deliverable to Customer [***].

 

(b)           Service
Provider shall provide, successfully complete and obtain Customer’s acceptance
of each Deliverable by or on the due date for such Deliverable set forth in the
applicable Transition and Transformation Plan, Project or other schedule that
contains Deliverables.

 

(c)           Unless
otherwise agreed by the Parties, each Deliverable shall be accompanied by a
Deliverable Form.  [***]

 

(d)           [***]
Acceptance of any particular Deliverable by Customer in accordance with the
provisions of this Section 3.5 shall not, and shall not be deemed
to, release Service Provider from its [***] other obligations set forth in the
Transaction Document or the Project Schedule, or constitute a waiver by
Customer of any of its rights under the Transaction Document or the Project
Schedule (e.g., Project Statement of Work).

 

3.5.2        Review and Acceptance of Deliverables

 

(a)           [***]
If a Deliverable is submitted to Customer and Customer does not respond [***], unless
the Parties agree in writing, Service Provider shall escalate to the Customer
Responsible Executive for prompt decision on whether the Deliverable is
accepted or rejected.  If a Deliverable
is escalated to the Customer Responsible Executive and the Customer Responsible
Executive does not respond [***].

 

(b)           In
the event that Customer rejects the Deliverable, Customer shall, at the time of
rejection, provide an explanation of why the Deliverable was not accepted.  Service Provider shall then address any
issues and resubmit the Deliverable and the Deliverable Form to Customer
for approval and Customer shall then approve or reject the Deliverable; provided
that Service Provider remains obligated to complete the Deliverable and obtain
Customer’s approval prior to the applicable Commencement Date or other due date
set forth in the applicable Transition and Transformation Plan, Project or
other schedule, including as such periods may be extended in accordance with
the provisions of this Exhibit 4. 
[***]

 

(c)           If
Service Provider submits a particular Deliverable to Customer for review and
approval after the Deliverable due date or Customer rejects such Deliverable
(subject to the expiration of the applicable cure period, if any), Customer
shall have the option to require Service Provider to re-attempt to correct any
non-conforming Deliverable in accordance with the process described in this
subsection or to cancel the applicable Project Schedule (e.g.,
Project Work Order).  [***]

 

6

 

3.5.3        Failure to Meet Deliverable Due Dates

 

(a)           [***]
If there is a Dispute regarding which Party is responsible for the delay, the
Dispute will be resolved in accordance with the Dispute Resolution Procedures.  Service Provider shall use commercially
reasonable efforts to meet the timeline [***].

 

(b)           [***]

 

3.5.4        Deliverables [***]

 

Unless otherwise provided in
the applicable Project Schedule, [***] All documentation included with a
Deliverable shall be sufficient to all a reasonably knowledgeable information
technology professional to use and maintain the Deliverables as warranted.

 

3.6           Transition and Transformation Reporting

 

3.6.1        [***]
the Service Provider Transition and Transformation Manager  shall provide Customer with a written
status report [***]in accordance with Appendix 4-D, including the
following:

 

3.6.2        [***]
the Customer Responsible Executive shall facilitate a Critical Transition and
Transformation Milestone review work session with appropriate participants from
both organizations [***].  Such work
session will be the major focus of the Transition Oversight Committee as
illustrated in Appendix 4-C.

 

4.                                      KEY GOVERNANCE PROCESSES

 

4.1           Change Control

 

4.1.1        Introduction

 

(a)           This
section describes the Change Control Procedures to be followed by Customer and
Service Provider when either Party wishes to make a Change to the existing
Services.  The purpose of the Change
Control Procedures does not include: [***]

 

(b)           The
Parties may by joint written amendment to the Agreement amend or waive any part
of the Change Control Procedures.  Any
proposed modification to the Change Control Procedures shall be recorded in a
Change Request and such Change Request shall be subject to the Change Control
Procedures described below.

 

(c)           [***]

 

(d)           The key steps in the Change Control
Procedure will include, at a minimum [***]

 

4.1.2        Change Control Requirements

 

(a)           The
Change Control Procedure shall incorporate, and Service Provider shall comply
with, the following change control requirements:

 

7

 

(i)            [***]

 

(ii)           [***]

 

(iii)          No Change shall be implemented without Customer’s approval [***].

 

4.1.3        Change Control Procedures

 

(a)           Either
Service Provider or Customer may initiate a Change Request by delivering to the
other’s Responsible Executive or his/her nominated representative a Change Order
that describes the proposed Change and sets forth the basis for such
change.  Service Provider shall assign a
unique number to any such request and shall register the Change Order in the
Change Order Log as described in Section 4.1.11 below.

 

(b)           [***]

 

4.1.4        Change Orders

 

(a)           [***]
Service Provider shall prepare and submit to Customer [***] Preliminary
Specification Report.  Each such
Preliminary Specification Report shall contain, to the extent relevant [***]

 

4.1.5        Preliminary Specification Report Review

 

(a)           Customer
and Service Provider shall review the Preliminary Specification Report and
Customer shall [***];

 

(b)           [***]
Where Customer has instructed Service Provider to prepare a Detailed
Specification Report, [***] Service Provider shall prepare and submit a
Detailed Specification Report including [***]

 

4.1.6        Detailed Specification Report Review

 

(a)           Once
submitted by Service Provider, Customer shall review the Detailed Specification
Report [***]:

 

(b)           [***]
submit such Preliminary Specification Report and other appropriate information
for review and approval.

 

4.1.7        [***]

 

4.1.8        Effectiveness of a Change

 

(a)           Upon
the approval of either a Preliminary Specification Report or a Detailed
Specification Report by both Responsible Executives, the contents of such
approved Change shall be deemed to be agreed and incorporated into the
Agreement on the date of the last signature or as the Parties may otherwise
agree.  All services added or modified by
a Change Order shall be “Services” under the Agreement, and the performance of
Change Orders shall in all respects be governed by the Agreement.  [***]

 

8

 

(b)           Neither
Party shall have any obligation to commence or comply with any proposed Change,
perform services that would be covered by any proposed Change, or pay any
charges that would be covered by any proposed Change, until such time as the
Parties’ Responsible Executives have approved the appropriate Change Order.  Disputes regarding a proposed Change shall be
subject to the Dispute Resolution Procedures.

 

(c)           [***]
All acceptance of work under Change Orders shall be subject to the Section 3.5
(Acceptance Process for Deliverables) above.

 

4.1.9        Change Management Reporting Requirements

 

Service Provider shall provide
Customer [***] a summary specifying the status of all pending Change
Orders.  [***]

 

4.1.10      Immediate Changes

 

(a)           Subject
to the provisions of this Section 4.1.10, Service Provider shall
immediately perform any Immediate Change upon Customer’s request.

 

(b)           Notwithstanding
any other process described in this Exhibit, if a proposed Change requested by
Customer is an Immediate Change, then [***]

 

4.1.11      Change Order Log

 

(a)           Service
Provider shall maintain a Change Order Log of Change Orders throughout the term
of the Agreement or Transaction Document as appropriate.  The Change Order Log shall include the
following level of detail: [***]

 

(b)           The
status of the Change Order in the Change Control Procedure shall be categorized
as one of the following stages: [***]

 

4.2           Issue Management and Dispute Resolution

 

4.2.1        Issue Management

 

(a)           Operationally,
the Parties shall implement an Issues Management Process according to the
timeframes indicated in Appendix 4-B and Section 2.4 of this
Exhibit 4.  [***]

 

(b)           Service
Provider shall [***]

 

(c)           [***]
Service Provider shall add the agreed upon tools, forms and documented
processes (including any changes made by Customer) to the Procedures Manual.

 

(d)           [***]
The Parties will work together in good faith to resolve any issues using the
Issues Management Process.

 

9

 

4.3           Customer Satisfaction Management

 

[***] the Responsible
Executives shall appoint the appropriate representatives from the respective
teams to take responsibility for measuring, managing and reporting on Customer
satisfaction in accordance with the process to be developed as part of the work
activities defined in Appendix 4-B.

 

4.3.1        Introduction

 

(a)           This
section describes [***] the development and conduct of satisfaction surveys
throughout the Term including End User Satisfaction Surveys, and [***] Satisfaction
Surveys.

 

(b)           [***]
shall develop each of the satisfaction surveys including the survey questions and
methodology for [***] review and approval.

 

(c)           [***]
the Parties shall review each of the surveys and agree to any required changes
including as to the content and timing of such surveys.  [***] shall update each of the surveys to
reflect any change agreed to by the Parties.

 

(d)           End
User Satisfaction Surveys shall be administered in accordance with [***] shall
conduct such End User Satisfaction Surveys [***] and provide the results of
such surveys to [***].

 

(e)           [***]

 

4.3.2        General Requirements

 

[***]

 

4.3.3        End User Satisfaction Survey

 

(a)           [***]
conduct End User Satisfaction Survey, using Service Desk surveying methodology
including [***]

 

4.3.4        [***]
Satisfaction
Survey

 

[***]

 

5.                                      GOVERNANCE DELIVERABLES

 

In connection with the Parties’
obligations hereunder, the Service Provider and Customer shall implement the
Deliverables set forth in Appendices 2-A 2-B, 2-C, 2-D, and 2-E to this
Exhibit 4.  [***].

 

10

 

APPENDIX
4-A GOVERNANCE TRANSITION DELIVERABLES

 

[***] [four pages omitted]

 

1

 

APPENDIX
4-B GOVERNANCE PROCESS PRIORITY MATRIX

 

[***] [six pages omitted]

 

1

 

APPENDIX
4-C GOVERNANCE JOINT COMMITTEES AND PROTOCOLS

 

[***] [eight
pages omitted]

 

1

 

APPENDIX 4-D STANDARD GOVERNANCE REPORTS

 

[***] [five pages omitted]

 

1

 

APPENDIX 4-E PROCEDURES MANUAL

 

[***] [one page omitted]

 

1

 

APPENDIX 4-F DELIVERABLE ACCEPTANCE FORM

 

[***] [two pages omitted]

 

1

 

Subject
to a request for confidential treatment, certain portions of this agreement
have been intentionally omitted.  The omitted portions subject to the
confidential treatment request are designated by three asterisks ([***]). 
A complete version of this agreement has been separately filed with the
Securities and Exchange Commission.

 

Exhibit 6

Form of Auditor Confidentiality Agreement

 

This is Exhibit 6, Form of Auditor Confidentiality Agreement, to that certain Master
Services Agreement, dated as of December 11, 2008, between ServiceMaster
Consumer Services, L.P. and International Business Machines Corporation.

 

Attachments.        The
following attachments are incorporated by reference in this Exhibit:

 

(a)           Attachment 6-1,
Confidentiality Agreement for use with Deloitte & Touche LLP; and

 

(b)           Attachment 6-2,
Mutual Non-Disclosure Agreement for use with all other Customer Auditors.

 

1

 

Exhibit 6

Attachment 6-1

 

CONFIDENTIALITY AGREEMENT

 

This Confidentiality Agreement (the “Agreement”), effective as of
                  
    , 200  , is entered into between
                                                                      
(the “Company”) and Deloitte & Touche LLP (“Deloitte & Touche”).

 

WHEREAS, Deloitte & Touche has been engaged to perform certain
audit services (the “Services”) for the Company; and

 

WHEREAS, in connection with the provision of such Services, the Company
may disclose to Deloitte  & Touche certain information which the
Company considers to be confidential, proprietary or non-public business
information or trade secrets of the Company, or information of a third party
which the Company is obligated to keep confidential (the “Confidential
Information”); and

 

WHEREAS, the Company desires for Deloitte  &
Touche to maintain the confidentiality of any Confidential Information
disclosed by the Company to Deloitte & Touche, and Deloitte &
Touche desires to maintain the confidentiality of such Confidential
Information, in each case on the terms and conditions set forth herein.

 

NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Company and Deloitte &
Touche hereby agree as follows:

 

1.  Deloitte & Touche
shall protect the confidentiality of the Confidential Information from third
parties by exercising at least the same degree of care as Deloitte &
Touche employs in maintaining the confidentiality of its own confidential,
proprietary or non-public business information or trade secrets, but in no
event less than a reasonable degree of care.

 

2.  There shall be no obligation
of confidentiality with respect to any information which: (a) is required
to be disclosed by Deloitte & Touche by any law, regulation, judicial
or administrative process, or is disclosed by Deloitte & Touche in
accordance with applicable professional standards or in connection with
litigation pertaining to this Agreement or the Services, (b) has otherwise
become publicly available (including, without limitation, any information filed
with any governmental agency and available to the public) other than as the
result of a disclosure by Deloitte & Touche in breach hereof, (c) becomes
available to Deloitte & Touche on a nonconfidential basis from a
source other than the Company which Deloitte & Touche believes is not
prohibited from disclosing such information to Deloitte & Touche by
obligation to the Company, (d) is known by Deloitte & Touche
prior to its receipt from the Company hereunder without any obligation of
confidentiality with respect thereto, or (e) is developed by Deloitte &
Touche independently of any disclosures made by the Company to Deloitte &
Touche of such information hereunder.

 

3.  Deloitte & Touche
agrees that Confidential Information disclosed hereunder to Deloitte &
Touche by the Company shall be used by Deloitte & Touche solely in
connection with the provision of the Services and will not be provided to third
parties by Deloitte & Touche,

 

 

except as otherwise provided herein or, in connection with the
provision of the Services, to subcontractors and to affiliates or related
entities of Deloitte & Touche that agree to abide by the terms
hereof.  The Company acknowledges and
agrees that any Confidential Information that comes to the attention of
Deloitte & Touche in the course of performing the Services may be
considered and used by Deloitte & Touche in the context of responding
to its professional obligations as the independent accountants for the Company.

[Note:  The language highlighted immediately above
will appear only in versions of Confidentiality Agreements intended for use
with attest clients.]

 

4.  The obligations set forth
herein with respect to Confidential Information shall continue in full force
and effect for a period of three (3) years from the effective date of this
Agreement.

 

5.  Neither the Company nor
Deloitte & Touche may assign, transfer or delegate any of its rights
hereunder (including, without limitation, interests or claims relating to this
Agreement) without the prior written consent of the other party.

 

6.  DELOITTE &
TOUCHE AND THE COMPANY HEREBY IRREVOCABLY WAIVE, TO THE FULLEST EXTENT
PERMITTED BY LAW, ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM (WHETHER IN CONTRACT, STATUTE, TORT (SUCH AS NEGLIGENCE), OR
OTHERWISE) RELATING TO THIS AGREEMENT.

 

7.  This Agreement shall be
governed by and construed in accordance with the laws of the State of New York
(without giving effect to its choice of law principles).

 

IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized representatives effective as of the date
first set forth above.

 

[COMPANY]

 

 

	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
					

 

 

DELOITTE & TOUCHE LLP

 

 

	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
					

 

2

 

Exhibit 6

Attachment 6-2

 

Mutual Non-Disclosure Agreement

 

This Non-Disclosure Agreement
(“Agreement”) is effective as of the “Effective Date” set forth below by and
between ServiceMaster Consumer Services Limited Partnership and its “Affiliates”
(“SVM”), International Business Machines Corporation (“IBM”), and the
undersigned Company and its Affiliates (“Company”). “Affiliates” mean those
entities, under common control of or with, or controlled by, each Party.  SVM , IBM, and Company (individually, “Party”
and together, “Parties”) agree to protect the “Confidential Information” (as
defined below).

 

1.     Confidential Information.  The
Parties intend to establish a business relationship.  In connection with any and all such efforts, “Confidential
Information” means any and all information concerning a Party’s business and
its customers, including, without limitation, any and all current and future
technical, operational or financial information (whether published or
unpublished), marketing or business plans, business results, forecasts,
customer names and information, vendor names and information, employee names
and information, contracts, practices and procedures, trade secrets, know-how,
software, reports, methods, documents, drawings, designs, tools, models,
inventions, patent disclosures, and requests for proposals, requests for
information, or other information that may be disclosed or accessed by or
between the Parties, whether in written, verbal, electronic, visual, or other
form that is designated as Confidential Information by the disclosing Party.
Notwithstanding the foregoing, information that is disclosed or accessed
without being specifically designated as confidential, shall be deemed
Confidential Information if it would be apparent to a reasonable person that
such information is of a confidential or proprietary nature. This Agreement
applies to all Confidential Information disclosed or accessed by or between the
Parties.

 

2.     Disclosure of Confidential Information.  Each
Party will use the Confidential Information of the other Party only for the
purpose of and in connection with the Parties’ business relationship and not
for its own benefit or the benefit of another, without the prior written
consent of the disclosing Party. Each Party shall hold in confidence, and shall
not disclose (or permit or allow its employees or agents to disclose) to any
person outside its organization (except as provided below), any Confidential Information
of the other Party. Each Party shall protect the other Party’s Confidential
Information using the same degree of care it uses to protect its own
Confidential Information of like kind (but not less than a reasonable degree of
care). Each Party shall disclose Confidential Information received by it under
this Agreement only to employees and agents of such Party who have a need to
know such Confidential Information in the course of the performance of their
duties and who are bound by a written agreement, enforceable by the disclosing
Party (which contains confidentiality provisions no less strict than what is
set forth in this Agreement), to protect such Confidential Information. Each
Party shall adopt and maintain programs and procedures that are reasonably
calculated to protect such Confidential Information and shall be responsible
for any disclosure or misuse of Confidential Information that results from a
failure to comply with this Agreement. Each Party will promptly report to the
other Party any actual or suspected violation of the terms of this Agreement
and will take all reasonable steps to prevent, control, or remedy any such
violation.

 

3.     Limitation on Obligations.  The
obligations of each Party shall not apply, and neither Party shall have any
further obligations, with respect to any Confidential Information of the other
Party to the extent such Party can demonstrate, by clear written evidence, that
the disclosing Party’s Confidential Information: (a) is generally known to
the public at the time of disclosure or becomes generally known through no
wrongful act of such Party; (b) is in such Party’s possession at the time
of disclosure other than as a result of such Party’s breach of this Agreement; (c) becomes
known to such Party through disclosure by sources other than the disclosing
Party; or (d) is independently developed by such Party without access to,
reference to, or reliance upon the disclosing Party’s Confidential Information.
A Party’s Confidential Information shall remain confidential under this
Agreement even if it is required to be disclosed by the other Party in order to
comply with any applicable laws or regulations, valid court orders, or
governmental requests. Each Party shall provide prior written notice of such
disclosure to the other Party, if possible, and shall take all reasonable and
lawful actions to avoid or minimize the extent of such disclosure.

 

4.     Termination.  This
agreement shall remain in effect until the later of: the consummation of a
business relationship between the Parties in the form of a written agreement
relating to the Confidential Information exchanged under this Agreement or
three (3) years from the Effective Date.

 

5.     Publicity. 
Neither Party will issue or release any articles, advertising, publicity
or other matter relating to any Confidential Information of the other Party
(including the fact that a meeting or discussion has taken place between the
Parties) or mention or imply the name of the other Party, except as may be
required by law and then only after providing the other Party with a reasonable
opportunity to review and comment on such publicity.

 

6.     Ownership of Confidential Information.  Each
Party is and shall remain the exclusive owner of its Confidential Information
and all patent, copyright, trade secret, trademark and other intellectual
property rights therein.  No license or
conveyance of any such rights to either Party is granted or implied under this
Agreement.  Subject to the obligations of
this Agreement, no Party will be precluded from independently developing
technology or pursuing business opportunities similar to those covered by this
Agreement.

 

7.     Miscellaneous.

 

(a) Each Party warrants
that it has the right to disclose its Confidential Information, but makes no
representation or warranty regarding the accuracy or completeness of its
Confidential Information. This Agreement imposes no obligation on a Party to
exchange Confidential Information or to purchase, sell, license, transfer, or
otherwise make or use of any technology, services, or products.

 

(b) Each Party will
adhere to all applicable laws and regulations of the U.S. Export Administration
and will not export or re-export any technical data or products received from
the other Party, or the direct product of such technical data, to any
proscribed person or country listed in the U.S. Export Administration
regulations unless properly authorized by the U.S. government.

 

(c) Each Party
acknowledges that injury for improper disclosure of Confidential Information
may be irreparable; and therefore, the injured Party is entitled to seek
immediate equitable relief, including a temporary restraining order, a
temporary injunction, and/or a preliminary injunction.

 

(d) This
Agreement is made under, and will be construed according to, the laws of the
State of Tennessee, except for the conflict of laws provisions.  Each Party submits to the personal
jurisdiction of any federal or state court located in Memphis, Shelby County,
Tennessee.

 

(e) This
Agreement does not create any agency or partnership relationship. This
Agreement is not assignable or transferable without the prior written consent
of the other Party. This Agreement supersedes all prior agreements, written or
verbal between the Parties, relating to such Party’s Confidential Information. All
additions or modifications to this Agreement must be made in writing and signed
by both Parties.  This Agreement will be
binding upon and inure to the benefit of the Parties and their respective
heirs, successors and assigns.

 

The
Parties have executed this Agreement, effective as of the Effective Date, by
their duly authorized representatives.

 

	
  Effective
  Date:

  	
   

  	
   

  

 

 

	
  ServiceMaster
  Consumer Services Limited

  Partnership, By its General Partner,

  	
  IBM:

  	
  [Company]

  
	
  ServiceMaster
  Consumer Services, Inc.

  	
   

  	
   

  
	
  By:

  	
  By:

  	
  By:

  
	
  Name:

  	
  Name:

  	
  Name:

  
	
  Title:

  	
  Title:

  	
  Title:

  
	
  Address:  860 Ridge Lake Blvd.,
  Suite 300

  	
  Address:

  	
  Address:

  
	
  City,
  State, Zip: Memphis,
  Tennessee 38120

  	
  City, State, Zip:

  	
  City, State, Zip:

  

 

Confidential

© 2008 by The ServiceMaster
Company. All rights reserved.

 

 

Subject
to a request for confidential treatment, certain portions of this agreement
have been intentionally omitted.  The omitted portions subject to the
confidential treatment request are designated by three asterisks ([***]). 
A complete version of this agreement has been separately filed with the
Securities and Exchange Commission.

 

Exhibit 7

Dispute Resolution Procedures

 

This is Exhibit 7, Dispute Resolution Procedures, to that certain Master Services
Agreement, dated as of December 11, 2008, between ServiceMaster Consumer
Services, L.P. and International Business Machines Corporation.

 

1.0          Defined Terms

 

Unless defined in this Exhibit, capitalized terms have the meanings set
forth in the Master Agreement or the “Definitions” Exhibit to
the Master Agreement.

 

2.0          Dispute Resolution
Procedures

 

2.1           General.  Except as otherwise stated in the Agreement,
the Parties will follow the Dispute Resolution Procedures set forth in this Exhibit to address all Disputes arising between the
Parties.

 

2.2           Timely
Resolution of Disputes.  Customer and
Service Provider shall at all times exercise reasonable, good faith efforts to
resolve all Disputes in a timely, amicable, and efficient manner.

 

2.3           Escalation
Procedure.

 

(a)           Responsible
Executives.  [***]

 

(b)           [***]

 

(c)           [***]

 

[***]

 

2.4           Litigation.  If the Dispute [***] then either Party may
initiate litigation.

 

2.5           Expedited
Resolution.  If a Dispute arises:
[***] then either Party may immediately initiate litigation with respect to
such breach.  The resolution of such
Dispute otherwise shall be governed by the Agreement and the remaining
provisions of this Exhibit.

 

3.0                               Miscellaneous

 

3.1           Confidentiality.  The proceedings of all negotiations as part
of the Dispute Resolution Procedures shall at all times be privately
conducted.  The Parties agree that all
information, materials, statements, conduct, communications, negotiations,
mediations, offers of

 

1

 

settlement, documents, decisions, and awards
of either Party, in whatever form and however disclosed or obtained in
connection with the Dispute Resolution Procedures:

 

(a)           shall
at all times be Confidential Information;

 

(b)           shall not be offered into evidence, disclosed, or used for
any purpose other than negotiations to settle the applicable Dispute; and

 

(c)           will
not constitute an admission or waiver of rights.

 

3.2           Tolling.
The exercise of these Dispute Resolution Procedures to resolve a Dispute shall
toll the running of any statue of limitations applicable to that Dispute,
effective as of the initial meeting pursuant to these Dispute Resolution
Procedures specifically regarding the Dispute.

 

3.4           No
Waiver of Right of Termination.  The
requirements of these Dispute
Resolution Procedure are not and will not constitute a waiver of any
right of termination under the Agreement.

 

3.5           Consent.  The Parties
unconditionally agree that any order, judgment or award of a court or tribunal
issued under these Dispute Resolution Procedures may be enforced against any
Party in or by any jurisdiction where the Party is located or where Services
under the Agreement are being performed. 
Further, the Parties unconditionally agree that, with respect to any
order, judgment or award of a court or tribunal for injunctive or equitable
relief issued under these Dispute Resolution Procedures (and subject to the
provisions of the Agreement limiting or prohibiting a Party’s ability to obtain
injunctive or equitable relief), such order, judgment or award may also be
enforced against a Party’s Affiliates in or by any jurisdiction in where the
Affiliates are located or where Services under the Agreement are being
performed.  The Parties and their
respective Affiliates hereby consent generally to the jurisdiction of any court
of competent jurisdiction for any action filed by a Party to enforce any such
order, judgment or award for injunctive or equitable relief and waive all
formalities and any objection that any such action or proceeding has been
brought in an inconvenient forum.

 

3.6           Governing
Law.  The law governing
the Master Agreement shall govern this Exhibit.

 

2

 

Subject
to a request for confidential treatment, certain portions of this agreement
have been intentionally omitted.  The omitted portions subject to the
confidential treatment request are designated by three asterisks ([***]). 
A complete version of this agreement has been separately filed with the
Securities and Exchange Commission.

 

Exhibit 8

Form of Procedures Manual

 

This is Exhibit 8, Form of Procedures Manual, to that certain Master Services
Agreement, dated as of December 11, 2008, between ServiceMaster Consumer
Services, L.P. and International Business Machines Corporation.  Unless
defined in this Exhibit,
capitalized terms have the meanings set forth in the Master Agreement or the “Definitions”
Exhibit to the Master Agreement.

 

Exhibit 8 begins on the following page. [***] [24 pages omitted]

 

1

 

Subject
to a request for confidential treatment, certain portions of this agreement
have been intentionally omitted.  The omitted portions subject to the
confidential treatment request are designated by three asterisks ([***]). 
A complete version of this agreement has been separately filed with the
Securities and Exchange Commission.

 

Exhibit 9

Customer Security Requirements

 

This is Exhibit 9, Customer Security Requirements, to that certain Master Services
Agreement, dated as of December 11, 2008, between ServiceMaster Consumer
Services, L.P. and International Business Machines Corporation.  Unless
defined in this Exhibit,
capitalized terms have the meanings set forth in the Master Agreement or the “Definitions”
Exhibit to the Master Agreement.

 

1.             Generally.  This Exhibit 9 and its attachments
and the “Additional Customer Security Requirements” Schedule to
each Transaction Document (if any) set forth the Security Requirements.  The Security Requirements are part of the
Services and Service Provider must comply with the Security Requirements in
accordance with Section 3.2(d) of the Master Agreement.  In the event of a conflict among the various
documents setting forth the Security Requirements and the “PCI and SOX
Requirements” Attachment, the “PCI and SOX Requirements” Attachment
controls.  In the event of a conflict
between the “PCI and SOX Requirements” Attachment and the “Services
Description” Schedule, the “Services Description” Schedule
controls.  Service Provider shall compile
the obligations contained in the attachments below into the ISEC document in
accordance with the Transition and Transformation Plan.  Customer shall approve the ISEC.  Upon Customer’s approval of the ISEC
document, the ISEC document replaces all of the attachments below.  In the event of a conflict between the Customer
approved ISEC document and the “Services Description” Schedule,
the “Services Description” Schedule controls.

 

2.             Attachments.  The following attachments are incorporated by
reference in this Exhibit:

 

(a)                                  Attachment 9-1, ServiceMaster Information Security Policy
revision 1.8 (if there is a conflict between the ServiceMaster Information
Security Policy and a brand-specific Information Security Policy, the
brand-specific policy controls); [portions omitted]

 

(b)                                 Attachment 9-2, ServiceMaster Clean Information Security
Policies dated April 28, 2005, revision 1.1, and the ServiceMaster Clean “Restricted
Data” Policy, dated December 1, 2008; [portions omitted]

 

(c)                                  Attachment 9-3, Merry Maids Information Security Policies
dated October 26, 2006, revision 1.0; [portions omitted]

 

(d)                                 Attachment 9-4, American Home Shield Information Security
Policies, dated January 5, 2004; [portions omitted]

 

(e)                                  the
privacy polices and background screening requirements set forth in the “Policies”
Exhibit; and

 

1

 

(f)                                    Attachment 9-5, Customer Group’s “PCI and SOX Requirements.”
[portions omitted]

 

3.             Malware.  Service Provider will not intentionally code
Malware into the Services, the Customer Systems interfacing with the Services,
the Service Provider Information Systems and operating environments and
processes used by Service Provider to provide the Services, including the
Deliverables and other materials delivered by or on behalf of Service Provider
to the Customer Group, the customers of the Customer Group and/or the Third
Party Providers.  [***]

 

4.             Massachusetts Information
Security Regulation.  Prior to the
effective date of the Massachusetts Information Security Regulation, and as
required by the Massachusetts Information Security Regulation or as reasonably
required by Customer thereafter, Service Provider shall deliver to Customer (i) a
written certification that Service Provider has a written, comprehensive
information security program that is in compliance with the Massachusetts
Information Security Regulation, and (ii) written certifications from each
Service Provider subcontractor who will store or maintain Personal Information
(as defined in the Massachusetts Information Security Regulation) about a
resident of the Commonwealth of Massachusetts that such subcontractor has a
written, comprehensive information security program that is in compliance with
the Massachusetts Information Security Regulation.

 

2

 

Subject
to a request for confidential treatment, certain portions of this agreement
have been intentionally omitted.  The omitted portions subject to the
confidential treatment request are designated by three asterisks ([***]). 
A complete version of this agreement has been separately filed with the
Securities and Exchange Commission.

 

Exhibit 9

 

Attachment 9-1

 

Attachment
9-1, ServiceMaster Information Security Policy
revision 1.8, begins on the next page.

 

[***] [eight pages omitted]

 

 

Subject
to a request for confidential treatment, certain portions of this agreement
have been intentionally omitted.  The omitted portions subject to the
confidential treatment request are designated by three asterisks ([***]). 
A complete version of this agreement has been separately filed with the
Securities and Exchange Commission.

 

Exhibit 9

 

Attachment
9-2

 

Attachment
9-2, ServiceMaster Clean Information
Security Policies dated April 28, 2005 revision 1.1 and the ServiceMaster Clean
“Restricted Data” Policy dated December 1, 2008, begins on the next page.

 

[***] [25
pages omitted]

 

 

Subject
to a request for confidential treatment, certain portions of this agreement
have been intentionally omitted.  The omitted portions subject to the
confidential treatment request are designated by three asterisks ([***]). 
A complete version of this agreement has been separately filed with the
Securities and Exchange Commission.

 

Exhibit 9

Attachment 9-3 

 

Attachment
9-3, Merry Maids Information Security Policies dated
October 26, 2006 revision 1.0, begins on the next page.  

 

[***] [21 pages omitted] 

 

 

Subject
to a request for confidential treatment, certain portions of this agreement
have been intentionally omitted.  The omitted portions subject to the
confidential treatment request are designated by three asterisks ([***]). 
A complete version of this agreement has been separately filed with the
Securities and Exchange Commission.

 

Exhibit 9

Attachment 9-4 

 

Attachment
9-4, American Home Shield Information Security
Policies dated January 5, 2004, begins on the next page. 

 

[***] [27 pages omitted] 

 

 

Subject
to a request for confidential treatment, certain portions of this agreement
have been intentionally omitted.  The omitted portions subject to the
confidential treatment request are designated by three asterisks ([***]). 
A complete version of this agreement has been separately filed with the
Securities and Exchange Commission.

 

Exhibit 9

Attachment 9-5

 

Attachment
9-5, Customer Group’s “PCI and SOX Requirements,”
begins on the next page. 

 

[***] [14 pages omitted] 

 

 

Subject
to a request for confidential treatment, certain portions of this agreement
have been intentionally omitted.  The omitted portions subject to the
confidential treatment request are designated by three asterisks ([***]). 
A complete version of this agreement has been separately filed with the
Securities and Exchange Commission.

 

Exhibit 10

Market Currency Procedures

 

1.             Introduction.  This
is Exhibit 10, Market Currency Procedures, to that certain
Master Services Agreement, dated as of December 11, 2008, between
ServiceMaster Consumer Services, L.P. and International Business Machines
Corporation.

 

2.             Definitions.  Capitalized
terms herein have the meanings set forth in the Master Agreement, the “Definitions”
Exhibit to the Master Agreement, or the “Definitions” Schedule
to the Transaction Document, unless otherwise defined herein.

 

3.             Annual Technology Reviews.  Within
thirty (30) days of each anniversary of the Effective Date, Service Provider
shall, in accordance with procedures agreed upon by the Customer and the
Service Provider Account Managers, identify for Customer any technologies that
have emerged (within Service Provider’s organization or, to the knowledge of
Service Provider, within the applicable market generally), that, if implemented
by Customer (or by Service Provider on Customer’s behalf) could materially
benefit Customer in terms of price reductions or performance improvement.  If requested by Customer, within sixty (60)
days Service Provider shall provide Customer with proposals for the
implementation of such technology or technologies in a manner consistent with
the Change Control Procedures and, as applicable, the Additional Services or
New Services requirements set forth in Sections 3.6 and 3.7 of
the Master Agreement.

 

4.             Annual Best Practices Reviews.  Within
thirty (30) days of each anniversary of the Effective Date, Service Provider
shall identify for Customer any best practices that have emerged (within
Service Provider’s organization or, to the knowledge of Service Provider, within
the applicable market generally), that, if implemented by Customer (or by
Service Provider on Customer’s behalf) could materially benefit Customer in
terms of price reductions or performance improvement. If requested by Customer,
within sixty (60) days Service Provider shall provide Customer with proposals
for the implementation of such best practices in a manner consistent with the
Change Control Procedures and, as applicable, the Additional Services or New
Services requirements set forth in Sections 3.6 and 3.7 of the
Master Agreement.

 

5.             Benchmarking Process and Procedures.

 

5.1.          Initiating
Benchmarking.  Any time after [***]
the Benchmarking Process may be initiated by Customer at any time by giving at
least ninety (90) days’ prior notice to Service Provider.  The Benchmarking Process shall not be carried
out more frequently than once every [***] and may be conducted on the Services
provided under a Transaction Document . 
Customer shall select the Benchmarker from the list of Benchmarkers set
forth on the “List of Approved Benchmarkers” Schedule to the
applicable Transaction Document, such list to be reviewed annually and updated
by the Parties upon mutual agreement. 
Only market-leading Benchmarkers are eligible for selection for
inclusion on the “List of Approved Benchmarkers” Schedule.  The Benchmarker shall be required to enter
into a benchmarking agreement (the “Benchmarking Agreement”) with
Customer and Service Provider in the form attached as 

 

1

 

Exhibit 10.1 or, if such form is not
acceptable to the Benchmarker, then in a form reasonably acceptable to the
Parties and the Benchmarker providing for the conduct of the Benchmarking
Process in accordance with this Agreement and otherwise including customary
terms for a professional services engagement. 
[***]

 

5.2.          Benchmarking
Process Methodology.  Customer,
Service Provider and the Benchmarker shall conduct the Benchmarking Process
according to the following methodology:

 

(a)           The
Benchmarker shall select a representative sampling of other outsourced
organizations that have outsourced services that share substantially similar
attributes with respect to size, investments, scope and nature of overall
services, quality standards and Service Levels, technology, payment and
performance credit structure and geographic scope of overall services (“Comparators”).  There shall be eight (8) Comparators or
such lesser number if the Comparator information available to the Benchmarker
is comprised of a lesser number of Comparators as agreed by the Parties.  The Benchmarker shall make adjustments to the
Comparators as necessary to permit a normalized comparison and will review with
both Parties the Benchmark methodology and the representative sample selection.

 

(b)           For
each Comparator used to calculate the Benchmark Results (as defined below), the
Benchmarker shall disclose to Customer and Service Provider the demographic
data (e.g., the total number of resource units
and/or other basis on which charges are based, a description of the quality of
services and service environment and other similar data) reasonably necessary
for the Parties to understand the basis upon which the Benchmarker determined
that the Comparators chosen by the Benchmarker comply with the requirements set
forth above.  Due to the confidential
nature of Comparator data and nondisclosure agreements to which such data may
be subject, the Benchmarker shall not be required to disclose the name of the
Comparators.

 

(c)           The
data used by the Benchmarker in the Benchmarking Process will be reasonably
current, i.e., based on services provided to
Customer and the Comparators no more than twelve (12) months prior to the start
of the Benchmarking Process.

 

(d)           The
Benchmarker shall compare each Comparator’s contracted charges, service levels
and scope with Service Provider’s contracted Charges, Service Levels and scope
with respect to the subject Services. 
The Benchmarker shall compare the applicable Service Levels with the
Comparator’s committed service levels for each element of the Services where
such comparison is meaningful and objective.

 

(e)           The
Benchmarker shall use normalization techniques, which, at minimum, shall
include the normalization factors set forth in paragraph (f),
below.  The Benchmarker shall fully
explain and provide its normalization data, factors and techniques to Service
Provider and Customer.

 

(f)            In
carrying out the normalization process, the Benchmarker shall consider the
following normalization factors:

 

[***]

 

2

 

The Benchmarker shall also consider any other factors other than those
set out in paragraph (f) above, which the Benchmarker or either
Party reasonably believe could, if not taken into consideration, result in the
Benchmarking arriving at an unfair view of the Comparators.

 

(g)           Customer
and Service Provider agree (i) that the Benchmarker will conduct the
Benchmarking Process in accordance with the Benchmarker’s own policies,
methodologies, and practices, and (ii) to consult with each other
regularly and cooperate reasonably with the Benchmarker in the Benchmarking
Process activities; Customer and Service Provider shall have the opportunity to
participate in all discussions either Party may have with the Benchmarker
relating to the Benchmarking Process.

 

(h)           Customer
will be permitted to disclose price and cost information under this Agreement
to the Benchmarker, subject to execution of a Benchmarking Agreement in the
form of Exhibit 10.1 or, if another form of Benchmarking Agreement
is executed, execution or inclusion in such other agreement of an appropriate
confidentiality agreement in accordance with Section 9.7(e)(ii) of
the Master Agreement.  Service Provider
shall not be obligated to disclose to the Benchmarker data with respect to any
other customers of Service Provider.

 

(i)            All
information provided to and obtained from the Benchmarker shall be provided to
both Service Provider and Customer unless otherwise agreed by the Parties.  Such information shall be deemed to be
confidential information of the providing Party (or, if such information
originated with the Benchmarker and is not the Company Information of either
Party, of both Parties) under the Agreement and shall be subject to the
confidentiality agreement executed with the Benchmarker.

 

5.3.          Benchmark
Results.

 

(a)           The
Benchmarker shall provide the data, analysis and findings, including any
supporting documentation, for the Services to Service Provider and
Customer  throughout the Benchmarking
Process.

 

(b)           The
Benchmarker shall prepare the complete “Benchmark Results” (i.e., a normalized analysis of the Comparators charges to
the Charges) promptly, but no later than ninety (90) days after the
commencement of the Benchmarking Process by the Benchmarker.  If the Benchmarker is for any reason unable
to complete the Benchmarking Process within the time period set forth in this
Section, the Parties will reasonably extend such period to allow the
Benchmarker to complete the Benchmarking Process.

 

5.4.          Benchmark
Review.  Upon completion of the
Benchmarking Process, Customer and Service Provider shall review the Benchmark
Results during the thirty (30) day period following delivery to Customer and
Service Provider of the Benchmark Results, and shall in good faith discuss any
appropriate adjustments to the Service Levels or Charges under this Agreement,
and, pursuant to the Benchmarking Dispute process set forth below, identify and
resolve any disagreements or variances from the Benchmark Results, including
but not limited to how the normalization factors were considered and
applied.  [***].

 

3

 

Either Party may dispute in good faith whether the Benchmarker has
followed the Benchmarking Methodology in carrying out the Benchmarking (a “Benchmarking
Dispute”) by providing a reasonably detailed written notice of its
objections to the Benchmarking Results to the other Party and the Benchmarker; provided,
that neither Party may initiate a Benchmarking Dispute later than fifteen (15)
Business Days following receipt of the Benchmarking Results.  Upon the initiation of a Benchmarking
Dispute, the Parties shall meet with the Benchmarker within ten (10) days
to discuss the Benchmarking Results and resolve the Benchmarking Dispute.  If any Benchmarking Dispute is not resolved
to the satisfaction of Customer or Service Provider within thirty (30) days of
initiation of the Benchmarking Dispute, then [***].

 

5.5.          Access
and Confidentiality.  Any Benchmarker
engaged by Customer shall agree in writing to be bound by the applicable
confidentiality and security provisions specified in the Benchmarking
Agreement.  Each Party shall reasonably
co-operate with the Benchmarker and shall provide reasonable access to the
Benchmarker during such effort to permit Benchmarker to perform the
Benchmarking.

 

5.6.          Cooperation
and Assistance.  Each Party will
provide, and ensure that its subcontractors (excluding in the case of Customer,
Service Provider and its subcontractors) provide, all reasonably necessary
cooperation, information, documents and assistance reasonably required to
perform the Benchmarking Process.

 

5.7.          No
Increase in Charges.  The
Benchmarking Process shall not result in any increase in any Charges to
Customer.

 

 

4

 

Subject
to a request for confidential treatment, certain portions of this agreement
have been intentionally omitted.  The omitted portions subject to the
confidential treatment request are designated by three asterisks ([***]). 
A complete version of this agreement has been separately filed with the
Securities and Exchange Commission.

 

Exhibit 10.1

Benchmarking Services Agreement

 

This is Exhibit 10.1, Benchmarking Services Agreement, to that certain Master Services Agreement,
dated as of December 11, 2008, between ServiceMaster Consumer Services,
L.P. and International Business Machines Corporation.

 

This
Benchmarking Services Agreement (the “Agreement”) is entered into as of [insert date] (the “Effective
Date”), by and among International Business Machines Corporation, having a
principal place of business at New Orchard Road, Armonk, New York (“IBM”),
ServiceMaster Consumer Services, L.P., having a principal place of business at
860 Ridge Lake Boulevard, Memphis, Tennessee 38120 (“ServiceMaster”),
(IBM and ServiceMaster may be individually referred to herein as a “Principal”
and collectively as the “Principals”), and [insert
benchmarker], having a principal place of
business at [insert benchmarker’s address] (“Consultant”). 
The Principals and Consultant may individually be referred to as “Party”
and together may collectively be referred to as the “Parties.”

 

In consideration of the
mutual agreements below, and intending to be legally bound, the Principals and
Consultant agree as follows:

 

1)            SERVICES

 

a)             Services.  Consultant shall perform and deliver the
services, including the reports such as the benchmarking report (“Deliverables”),
described in and in accordance with the requirements, delivery dates, and
milestones set forth in this Agreement and the statement of work attached
hereto as Exhibit A (collectively the “Services”).

 

b)            Benchmark
Methodologies.  Consultant
shall conduct the benchmarking process in accordance with the methodology and
process (the “Benchmark Methodology”) described in Section 5 of the
“Market Currency Procedures” Exhibit to the Master Services Agreement,
dated as of [insert date],
between ServiceMaster and IBM (the “MSA”), which Section 5 is reproduced
in Exhibit B.

 

c)             Consultant’s Personnel. 
Consultant shall perform the Services using only Consultant’s benchmarking
analysts identified in Exhibit A. 
Consultant shall not assign, subcontract or delegate to another entity
or person any of Consultant’s obligations to be performed hereunder or under Exhibit A
without the express prior written consent of the Principals.

 

2)            CONFIDENTIALITY

 

a) As between IBM
and Consultant, the use of confidential information disclosed between IBM and
Consultant in connection with the Services shall be governed by IBM’s
Procurement Agreement for the Exchange of Confidential Information attached
here as Exhibit C.

 

b) As between IBM
and ServiceMaster, the use of confidential information disclosed between IBM
and ServiceMaster in connection with the Services shall be governed by the
Master Agreement.

 

1

 

c) As between
Consultant and ServiceMaster, the use of confidential information disclosed
between Consultant and ServiceMaster in connection with the Service shall be
governed by a non-disclosure agreement attached here as Exhibit D.

 

3)            CONSULTANT WORK
PRODUCT

 

a)             All works,
reports, documentation, Deliverables and the like prepared, developed,
conceived or delivered by Consultant as part of or in connection with the
Services, and all tangible embodiments thereof, shall be considered “Consultant
Work Product.”  Consultant Work Product
does not include any information, report or documentation or any tangible
embodiment thereof, including but not limited to any confidential information
of the Parties even if incorporated into any Consultant Work Product, and any
confidential information of the Parties will remain subject to the protections
of Section 2 above, even if so incorporated.  Consultant Work Product shall and may be used
only for the benefit of the Principals. 
In no event shall Consultant reuse or store for any purpose, including
in any database, any information, report or documentation owned or delivered by
a Principal hereunder, except as required to perform the Services.  Notwithstanding the foregoing, Consultant
shall be allowed to retain a single copy of all Consultant Work Product for
archival purposes.

 

b)            Nothing contained in this Agreement shall
preclude Consultant from rendering services to third parties or developing work
products that are competitive with, or functionally comparable to, the Services
provided that in rendering any services to third parties, Consultant may not
use any Work Product (excluding any portions of Consultant Work Product that
comprise Consultant’s Pre-existing Elements as defined below), confidential
information of Principals or information, reports or documentation owned by
either of the Principals.

 

c)             Each Principal shall exclusively retain its
rights in any proprietary material that such Principal supplies to Consultant
and in any other intellectual property owned by it prior to or independent of
this Agreement.  If a Principal provides
Consultant with materials owned or controlled by that Principal or with use of,
or access to, such materials, Principal grants to Consultant all rights and
licenses with respect thereto that are necessary for Consultant to fulfill its
obligations under this Agreement.

 

d)            Consultant shall retain all rights, title and
ownership to any and all of its pre-existing materials or derivatives thereof,
which may include measurement templates, toolsets, methodologies, published
documents, data gathering questionnaires, data and metrics, databases or any
other information, material or intellectual capital (“Pre-existing Elements”).  The Principals shall have no ownership or
title to any material developed by Consultant independently of this
Agreement.  Accordingly, if any
Consultant Work Product contains any Pre-existing Elements or other Consultant
proprietary property, Consultant hereby grants to the Principals a perpetual,
worldwide, fully paid-up limited license to use such Pre-existing Elements or
other Consultant proprietary property for internal purposes only as described
in Section 4 below.

 

e)             Subject to
Sections 2, 3(c), (d) and, (f), the Principals shall have joint title and
ownership and all intellectual property rights, including copyrights, trade
secret and other proprietary rights, without duty to account for royalties, in
all Consultant Work Product.  Subject to
pre-existing rights and other rights in the sections referred to above, to the
extent that exclusive title and/or ownership rights may not originally vest in
the Principals as contemplated herein, Consultant hereby irrevocably assigns
all right title and interest, including intellectual property and ownership
rights, in the Consultant Work Product to the Principals.  Consultant is granted a non-exclusive,
limited, fully paid-up license to use the Consultant Work Product during the
term of this Agreement solely to the extent necessary to deliver the Services
described hereunder and any subject Statement of Work; provided, however, the Parties agree that such 

 

2

 

assignment and ownership rights by Consultant to the Principals shall
be subject to the further limitations set forth in Section 4 below.

 

f)             Consultant Work Product (other than
Pre-existing Elements) shall be deemed confidential information of both
Principals under the terms and conditions of Section 2 above.

 

4)            USE OF CONSULTANT
WORK PRODUCT.

 

Each Principal may use, reproduce, display, and distribute copies of,
and prepare derivative works of the Consultant Work Product for that Principal’s
internal use only.  Such restriction
shall not apply to each Principal’s use of its own respective proprietary
information contained in such Consultant Work Product.  Consultant confidential information pursuant
to Section 2 above, including specific comparator profiles from Consultant’s
database, may not be distributed by either Principal to persons other than
active members of the benchmarking team during the Term, as defined below, or
to those persons as may be necessary to effectuate the Dispute Resolution
Process, including a Principal’s counsel, unless authorized in writing by
Consultant.  Notwithstanding the
foregoing, each Principal may disclose the Deliverables to its outside
auditors, attorneys, accountants and other advisors, so long as they are
obligated to maintain the confidentiality of such Deliverables by contract, law
or professional obligations, and governmental or regulatory bodies as required
by law, provided, that in such circumstances, the Principal required to make
such disclosure will provide the other Principal with notice of such
requirement and will reasonably cooperate with them if requested, to prevent,
or minimize the extent of, any such required disclosure.

 

5)            FEES

 

The fees payable for the Services are as set forth in the Exhibit A,
article III (the “Fees”).  [***] Except as otherwise
expressly set forth in Exhibit A, all costs and expenses relating to
Consultant’s performance of the Services are included in the Fees. Subject to Section 3(d) above,
the Fees shall also cover each Principal’s rights granted in Section 3(e) with
respect to the Deliverables and any assignments of such Deliverables to the
Principals. All payments will be made in accordance with Exhibit A.  The making of any payment(s) by [***], or the receipt thereof by
Consultant does not constitute acceptance of any Deliverables or Services.  [***] may withhold payments or
portions thereof that it disputes in good faith.   Consultant shall be responsible for any
national, state and local sales, use, excise, ad valorem, value-added,
services, consumption, and other taxes and duties on any goods or services used
or consumed by it in providing the Deliverables and for any taxes on its
income. [***] shall be responsible
for any national, state and local sales, use, excise, ad valorem, value-added,
and other similar taxes and duties imposed on the receipt of the Services.

 

6)            INDEPENDENT
CONTRACTOR

 

Each
of the Principals and the
Consultant is acting as an independent contractor, responsible for its own
actions or inactions.  Nothing in this
Agreement will be construed to create an agency or employment relationship
among any of the Principals or Consultant or their respective employees.  None of the Parties are authorized to enter
into contracts, agreements or obligations on behalf of any other Party.

 

7)            TERM

 

This Agreement is
effective as of the Effective Date and will continue until terminated in
accordance with Section 8 below or until Consultant has completed the
Services (“Term”).

 

3

 

8)            TERMINATION

 

a)             Termination.  If a Consultant or either Principal
materially breaches this Agreement (the “Defaulting Party”), and  the Defaulting Party does not cure such
breach within [***] after written
notice of material breach, a non-defaulting Party may terminate this Agreement
upon written notice to the Defaulting Party.

 

b)            Effect of Termination.  In addition to the provisions relating to
confidential information, upon any termination or expiration of this
Agreement:  (i) Consultant will
deliver to the Principals all Consultant Work Product, including any
work-in-progress at the time of termination or expiration, (ii) Consultant
will cease using and return all confidential information provided by the
Principals during the provision of the Services, as provided for in this
Agreement, and (iii) [***] shall pay Consultant any amounts otherwise owed for
work-in-progress, services and expenses incurred prior to the effective date of
termination.

 

9)            REPRESENTATIONS,
WARRANTIES, COVENANTS AND LIMITATION OF LIABILITY

 

a)             Consultant hereby
represents, warrants, and covenants that all Services (i) will be
performed in a timely, professional and workmanlike manner in accordance with
applicable industry standards and practices; (ii) will be performed in
accordance with the agreed Benchmark Methodologies and any specifications and
requirements set forth in this Agreement including Exhibit A and Exhibit B;
and (iii) will comply with all applicable laws.

 

b)            In addition, Consultant
hereby represents, warrants, and covenants that (i) it has and will have
all rights, titles, licenses, intellectual property, permissions and approvals
necessary in connection with its performance under this Agreement and to grant
Principals the rights granted hereunder; and (ii) none of the Services nor
the provision or utilization thereof as contemplated under this Agreement, do
or will infringe, violate, trespass or in any manner contravene or breach or
constitute the unauthorized use or misappropriation of any intellectual
property of any third party.

 

c)             The Principals recourse with
respect to any liability or obligation of Consultant, as described in Section 9(d) below
shall be limited to the assets of Consultant, and the Principals shall have no
recourse against, and shall bring no claim against, any partner or employee of
Consultant, or any partner or employee of its parent company, or any of the
assets of such partners or employees with respect to any such liability or
obligation of Consultant set forth in Section 9(d) below.

 

d)            WITH THE EXCEPTION OF
DAMAGES ARISING FROM BREACH OF SECTION 2 ABOVE OR THE INDEMNITY
OBLIGATIONS UNDER SECTION 11 BELOW, NONE OF THE PARTIES HERETO SHALL BE
LIABLE FOR ANY CONSEQUENTIAL, INDIRECT, SPECIAL OR INCIDENTAL DAMAGES, SUCH AS
DAMAGES FOR LOST PROFITS, BUSINESS FAILURE OR LOSS ARISING OUT OF USE OF THE
DELIVERABLES OR THE SERVICES OR OTHERWISE IN CONNECTION WITH THIS AGREEMENT,
WHETHER OR NOT ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. EXCEPT FOR LIABILITY
FOR PERSONAL INJURY OR DEATH OR FOR DAMAGE TO TANGIBLE PROPERTY CAUSED BY THE
NEGLIGENCE OR WILLFUL MISCONDUCT OF A PARTY OR ITS EMPLOYEES, A BREACH OF SECTION 2
ABOVE OR THE INDEMNITY OBLIGATIONS UNDER SECTION 11 BELOW, THE TOTAL
LIABILITY OF ANY PARTY ARISING OUT OF THIS AGREEMENT AND THE PROVISION OF THE
SERVICES SHALL BE LIMITED TO THE FEES PAID OR PAYABLE UNDER THIS AGREEMENT.

 

4

 

10)          DISCLAIMER.

 

EXCEPT AS
EXPRESSLY SET FORTH IN THIS AGREEMENT, NEITHER THE PRINCIPALS NOR CONSULTANT
MAKE ANY OTHER WARRANTY, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION ANY
IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. THE
INFORMATION IN THE DELIVERABLES HAS BEEN OBTAINED FROM SOURCES THAT CONSULTANT
BELIEVES TO BE RELIABLE. ALL DELIVERABLES ARE RELEVANT AS OF THE DATE OF
DELIVERY HEREUNDER. CONSULTANT HAS NO OBLIGATION TO ADVISE EITHER PRINCIPAL OF
ANY CHANGES IN THE INFORMATION OR VIEWS CONTAINED IN THE DELIVERABLES AFTER
DELIVERY.

 

11)          INDEMNITY

 

a)             General Indemnity. 
Each Party  (the “Indemnitor”)
shall defend, indemnify and hold harmless (including payment of reasonable
attorney’s fees) each of the other Parties (each an “Indemnitee”), at the
Indemnitor’s expense, and each of the Indemnitee’s corporate affiliates and
their respective officers, directors, agents and employees (the “Indemnified
Parties”) against all claims, demands and/or judgments made or recovered
against either of the Indemnitees for damages to real or tangible personal
property or for bodily injury or death to any person arising out of, or in
connection with, this Agreement, to the extent that such damage, injury or
death was caused by the negligence or wrongful acts of employees, affiliated  companies, subcontractors or agents of
Indemnitor.

 

b)            Intellectual
Property Indemnity. Consultant shall defend, indemnify and hold each of the
Principals  harmless, at Consultant’s
expense, from any claims, demands and/or judgments made or recovered against
either of the Principles for any violation of legally protected rights of any
third parties, including but not limited to, patents, copyright, trade secret,
unfair competition, or any and all other claims arising out of the assignment
of or use by either of the Principals of the Deliverables and/or Services, in
the form provided by Consultant, and any other information furnished by or
created by Consultant in performing Services pursuant to this Agreement.

 

c)             Procedures. The Indemnified Parties agree to provide the Indemnitor with timely
notice in writing of any such claim, as defined in Section 11(a) and (b) above.  The Indemnitor’s obligation to indemnify the
Indemnified Parties shall not be waived by the Indemnified Parties’ failure to
meet this notice requirement, except to the extent Indemnitor is prejudiced
thereby.  The Indemnified Parties shall
permit the Indemnitor the sole control of any such defense or settlement, and
shall reasonably cooperate with Indemnitor at Indemnitor’s expense.  Indemnitor shall have no obligation under
this Section for any claim of infringement based on any modification
of  materials by the Indemnified Parties
or any third party (excluding those retained by or acting on behalf of
Indmenitor), or for use of the Consultant Work Product in breach of Section 4
above.

 

d)            Insurance requirements

 

a)
Consultant, at its sole cost and expense, shall maintain in effect at all times
during the rendering of services, insurance specified below with insurers
having a Best’s rating of at least [***] under forms of policy satisfactory to the Principals:

 

i.
Full statutory coverage for Workers’ Compensation and Disability Insurance for
all its employees as required by law, and Employers Liability with limits of at
least [***] and
Disability Insurance for all its employees as required by law. [***]

 

5

 

ii.
Errors and Omissions or Professional liability coverage with a [***]

 

iii.
Commercial General Liability Insurance with at least [***]

 

iv. Owned, Non-Owned and
Hired Automobile Liability Insurance with at least [***]

 

b) [***]Certificates of insurance evidencing all
these coverages shall be provided to each of the Principals upon execution of
this Agreement. Consultant’s insurer shall endeavor to provide each of
the Principals with thirty (30) days’ written notice of cancellation, or intent
to non-renew.

 

12)          GENERAL

 

a)             Entire
Agreement.  This
Agreement and all Exhibits, attached hereto and made an integral part hereof,
constitute the complete agreement and understanding between the Parties with
respect to the subject matter hereof, and supersedes all prior agreements and
understandings between the Parties.  In
the event of a conflict between the terms and conditions of this Agreement or
the Exhibit, the terms and conditions of this Agreement shall control.  IBM and ServiceMaster do not intend to modify
the provisions of the MSA relating to the benchmarking process contemplated by
this Agreement and, in the event of a conflict, the provisions of the MSA shall
control.

 

b)            Nonexclusivity.  This Agreement with Consultant is
non-exclusive and Principals may in their sole discretion enter into
arrangements with third parties to perform any of the Services.

 

c)             Survival.  Any provision of this Agreement which, by its
nature, would survive termination or expiration of this Agreement will survive
any such termination or expiration of this Agreement, including Sections 2
(Confidentiality), 3 (Consultant Work Product), 6 (Independent Contractor), 8(b) (Effect
of Termination), 9 (Representations, Warranties, Covenants and Limitation of
Liability), 11 (Indemnity), and 12 (General).

 

d)            Governing Law.  All rights
and obligations of the Parties relating to this Agreement shall be governed by
and construed in accordance with the Law of the State of Tennessee without
giving effect to any choice-of-law provision or rule (whether of the State
of Tennessee or any other jurisdiction) that would cause the application of the
laws of any other jurisdiction.  Each
Party shall bring any suit, action or other proceeding with respect to the Agreement
in a Federal District Court located in Memphis, Tennessee, unless the
jurisdiction of such courts are improper, in which event a Party may bring such
suit, action or other proceeding in any court of competent jurisdiction in
Memphis, Tennessee.

 

e)             Publicity.

 

(i)  Consultant
shall not use any ServiceMaster corporate name or logo, including, by way of
illustration but not of limitation, in advertising, press releases,
publicizing, marketing or selling services and/or products, without the prior
written consent of ServiceMaster.

 

(ii) 
Consultant is
similarly prohibited from using the IBM logo or IBM Corporation’s name or the
name of any of its affiliates, subsidiaries or divisions solely in relation to
this specific Agreement or the Services, without the prior written consent of
IBM. For clarification purposes, this section (ii) is not an implied
authorization to Consultant for use of the IBM logo or IBM Corporation’s name
or the name of any of its affiliates, subsidiaries or divisions, unless such
use has been authorized in writing.

 

6

 

(iii) Neither
Principal shall use the name of Consultant in any announcements, press releases
or advertisements, or for any commercial purpose, without the prior written
consent of Consultant.

 

f)             No Assignment. 
None of the Parties to this Agreement shall assign, transfer or delegate
its rights or obligations under this Agreement without the prior written
consent of the other Party, which consent shall not be unreasonably withheld.

 

g)            Force Majeure.  A delay by any Party in the performance of
its obligations under the Agreement shall not be deemed a default of the
Agreement to the extent that such delay is attributable to a Force Majeure
Event, as defined below, and could not have prevented by the non-performing
Party by means of the exercise of reasonable precautions.  If a Force Majeure Event prevents, hinders or
delays for more than thirty (30) consecutive days performance of Services,
either Principal may terminate the affected part of the Agreement or the entire
Agreement. The term “Force Majeure Event” shall mean an act of war or
terrorism, a riot, civil disorder, or rebellion, a fire, flood, earthquake, or
similar act of God or a strike, lockout or similar labor dispute that is beyond
the reasonable control of the affected Party.

 

h)            Employee
Hiring. Each Principal and Consultant agrees not to hire any of the other’s
employees or agents who are involved with the Services during the term of this
Agreement and for twelve (12) months thereafter, without prior written consent.
For purposes of this section “to hire” means to hire as an employee or
otherwise to engage or retain as an independent contractor. This provision
shall not restrict the right of any Party to solicit or recruit generally in
the media and shall not prohibit either Party from hiring an employee of the
other who answers any advertisement or who otherwise voluntarily applies for
hire without having been initially personally solicited or recruited by the
hiring Party.

 

7

 

IN WITNESS WHEREOF, the Parties have caused
this Benchmarking Services Agreement to be executed by their duly authorized
employees.

 

 

	
  CONSULTANT

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
   

  
	
   

  	
   

  
	
  SERVICEMASTER CONSUMER SERVICES,
  L.P.

  	
   

  
	
  BY: SERVICEMASTER CONSUMER
  SERVICES, INC.,

  	
   

  
	
  ITS GENERAL PARTNER

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
   

  
	
   

  	
   

  
	
  INTERNATIONAL
  BUSINESS MACHINES CORPORATION

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
   

  
	
   

  	
   

  

 

8

 

EXHIBIT A

STATEMENT OF WORK

 

This is Exhibit A, Statement of Work, to that certain
Benchmarking Services Agreement, dated as of [insert
date], by and among International
Business Machines Corporation, ServiceMaster Consumer
Services, L.P., and [insert
benchmarker]. 
Capitalized terms have the meaning set forth in the Benchmark Services
Agreement.

 

I.
Benckmarking Deliverables

 

This
Statement of Work includes a detailed price benchmark of the [insert description of the IBM Services to be benchmarked] in the Master Services Agreement.  Consultant shall complete and provide
ServiceMaster and IBM with the following Deliverables:

 

[***]

 

II. Benchmarking Timeline

 

The
following table contains a high-level overview of the proposed project schedule
and milestones:

 

	
  Project Milestone

  	
   

  	
  Duration

  	
   

  	
  Timing

  	
   

  
	
  [***]

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [***]

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [***]

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [***]

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [***]

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [***]

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [***]

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [***]

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

III.  Fees:

 

[***] Consultant
fees and expenses to perform the Services. 
Consultant will provide the Deliverables and Services to ServiceMaster
and IBM for the Fees identified in this Statement of Work.  The Fees for Deliverables and Services
specified in this Statement of Work and accepted by [***] plus
the payment of the applicable taxes will be the only amount due to Consultant
from [***]
under the Benchmarking Services Agreement.

 

The Fees for Consultant’s
performance under this Statement of Work are:

 

Total

 

[***]

 

Consultant will
invoice these fixed fees as follows:

 

A-1

 

	
  Milestone

  	
   

  	
  Rate

  	
   

  
	
  [***]

  	
   

  	
  [$       ]

  	
   

  
	
  [***]

  	
   

  	
  [$       ]

  	
   

  
	
  Total Benchmark Fees (excluding travel and
  expenses)

  	
   

  	
  [$       ]

  	
   

  

 

Extended Hourly Rates

 

In the event that [***] requires additional support beyond the scope
of this Statement of Work, Consultant will make its consultants available on a
time and materials basis at the following rates (exclusive of related travel
expenses):

 

	
  Consultant Name

  	
   

  	
  Hourly Rate

  	
   

  
	
   

  	
   

  	
  [$      ]

  	
   

  
	
   

  	
   

  	
  [$      ]

  	
   

  
	
   

  	
   

  	
  [$      ]

  	
   

  
	
   

  	
   

  	
  [$      ]

  	
   

  

 

[***] shall not be responsible for any additional charges not
authorized by it in advance and in writing.

 

IV. Payment Terms:

 

[***] will pay all undisputed items [***] from receipt of the
invoice.  If there are disputes regarding
any fees or costs on any invoice, the disputing party will give prompt written
notice to Consultant, and the parties will work diligently and in good faith to
resolve any such dispute.  Upon resolution,
Consultant will issue an amended invoice (if applicable).

 

V. Benchmarking Analysts:

 

[Insert
Names]

 

A-2

 

EXHIBIT B

BENCHMARK METHODOLOGY

 

This is Exhibit B, Benchmark Methodology, to that certain
Benchmarking Services Agreement, dated as of [insert
date], by and among International
Business Machines Corporation, ServiceMaster Consumer
Services, L.P., and [insert
benchmarker]. 
Capitalized terms have the meaning set forth in the Benchmark Services
Agreement.

 

Benchmarking Process and Procedures.

 

[***] [four pages omitted]

 

B-1

 

EXHIBIT C

IBM’S PROCUREMENT AGREEMENT FOR THE EXCHANGE OF CONFIDENTIAL
INFORMATION

 

Exhibit C begins on the next page.

 

C-1

 

 

Procurement
Agreement for the Exchange of Confidential Information

 

Agreement #4905AT0021

 

This
Agreement will provide protection for information to be exchanged between us
which we do not wish to become public (“Information”) while maintaining our
ability to conduct our respective business activities. The parties to this
Agreement, Code X Inc. and International Business Machines. agree that either
party may disclose business Information (business plans and financial,
statistical and personnel data), and technical Information. If the non-IBM
entity that is a party to this Agreement (“Supplier”) discloses technical
Information, the parties will enter into a Supplier Technical Information
Supplement for Disclosure (“Supplement”). Each of us agrees that the following
terms will apply when one of us (“Discloser”) discloses Information to the
other (“Recipient”) under this Agreement. Exchanges of Information between the
parties will be covered on or after April 15, 2005.

 

1.0          Disclosure

 

Information
may be disclosed: i) in writing; ii) by delivery of items; iii) by authorized
access to Information, such as may be contained in a data base; or iv) by oral
and/or visual presentation. All materials containing Information must have a
restrictive marking of the Discloser at the time of disclosure. Information
disclosed orally must be summarized in a writing provided to the Recipient
within thirty (30) days of disclosure. An disclosures of information other than
those made pursuant to this Agreement will be deemed to be non-confidential.

 

The
Supplier will not disclose any technical Information not described in a signed
Supplement or which Supplier does not have the right to disclose to the
Recipient. Each time Supplier wishes to disclose specific technical Information
to Recipient, a Supplement will be issued to this Agreement before disclosure.
The Supplement will contain initial and final disclosure dates, a
non-confidential description of the technical information to be disclosed and
any additional or different terms and conditions. The Supplement must be signed
by the Supplier and the Recipient.

 

2.0
Protection

 

For
two (2) years after the date of disclosure, the Recipient will: i) use the
same care and discretion to avoid disclosure of the Discloser’s Information as
the Recipient uses with its own similar information which it does not wish to
disclose; and ii) use the Discloser’s Information only to further IBM’s
procurement and development activities.

 

3.0
Exceptions

 

The
Recipient may disclose Information to: i) its employees and employees of its
parent and majority owned affiliates who have a need to know; and ii) any other
party with the Discloser’s prior written consent. Before disclosure to any of
the above parties, the Recipient must have an appropriate agreement with such
party sufficient to require that party to treat Information in accordance with
this Agreement. The Recipient may disclose Information to the extent required
by law, but must give the Discloser reasonable prior notice to allow the
Discloser a reasonable opportunity to obtain a protective order. The Recipient
may disclose and use the ideas, concepts, know-how and techniques related to
Recipient’s business activities which are contained in the Discloser’s
Information and retained in the memories of Recipient’s employees who have had
access to the Information pursuant to this Agreement. No obligation under this
Agreement will apply to Information that is: i) already in Recipient’s
possession or received by Recipient without a non-disclosure obligation; ii)
developed independently by Recipient; iii) publicly available when received, or
thereafter becomes publicly available through no fault of the Recipient; or iv)
disclosed by Discloser to a third party without a non-disclosure obligation.

 

4.0
General

 

This
Agreement does not require either party to disclose or to receive Information.
Neither party may assign or otherwise transfer its rights or delegate its
duties or obligations under this Agreement without the prior written consent of
the other.  Any attempt to
do so will be void. The receipt of Information pursuant to this Agreement will
not prevent or in any way limit the Recipient from: i) developing,
manufacturing and marketing products or services which may be competitive with
products or services of the Discloser: ii) providing products or services to
others who compete with the Discloser: or iii) assigning and re-assigning its
employees in any way it may choose. Only a written agreement signed by both of
us can modify this Agreement. Either of us may terminate this Agreement by
providing one month’s written notice to the other. Any provisions of this
Agreement which by their nature extend beyond its termination remain in effect
until fulfilled and apply to our respective successors and authorized assigns.
This Agreement is governed by the laws of the country in which the disclosure
occurs, except: (i) in Australia, this Agreement will be governed by the
laws of the State or Territory in which the disclosure occurs: (ii) in the
United Kingdom, this Agreement will be governed by the laws of England: (iii) in
Albania, Armenia, Azerbaijan, Belarus, Bosnia-Herzegovina, Bulgaria, Croatia,
Former Yugoslav Republic of Macedonia, Georgia, Hungary, Kazakhstan,
Kyrgyzstan, Moldova, Montenegro, Poland, Romania, Russia, Serbia, Slovakia,
Slovenia, Tajikistan, Turkmenistan, Ukraine, and Uzbekistan, this Agreement
will be governed by the laws of Austria, unless otherwise provided by the local
law: (iv) in Estonia, Latvia, and Lithuania, Finnish law shall apply: (v) in
Canada, the laws of the Province of

 

 

	
  Form Title:
  Procurement Agreement For Exchange Of

  	
  Page 1 of 2

  	
  Form Release:
  8/98

  
	
  Confidential
  Information (PAECI)

  	
   

  	
   

  
	
  Form.
  Owner: Global Procurement

  	
   

  	
  Revision:
  2/05

  

 

C-1

 

Procurement
Agreement for the Exchange of Confidential information

 

Agreement #4905AT0021

 

Ontario
govern this Agreement; and (vi) in the United States (including if any
part of the disclosure is performed within the United States or if the
Information is of United States origin) and Puerto Rico, and People’s Republic
of China, the laws of the State of New York govern this Agreement. Each party
hereby agrees to waive its rights to a jury trial. This Agreement, including
its Supplements (if any), is the complete and exclusive agreement regarding our
disclosures of Information. Neither this Agreement nor any disclosure of
Information hereunder grants the Recipient any right or license under any
trademark, copyright or patent now or hereafter owned or controlled by the Discloser.
THE DISCLOSER PROVIDES INFORMATION SOLELY ON AN “AS IS” BASIS.

 

5.0 Export And Import Laws

 

The Recipient will comply with all applicable government export and import
laws and regulations. Further, the Recipient agrees that unless authorized by
applicable government license or regulation, including but not limited to any
U.S. authorization, the Recipient will not directly or indirectly export or
re-export, at any time, any technical information or software furnished or
developed under this, or any other.
Agreement between the parties, or its direct product, to any prohibited country
(including release of such technical information or software to nationals,
wherever they may be located, of any prohibited country) as specified in
applicable export, embargo, and sanctions regulations. This Section will
survive after termination or expiration of this Agreement and will remain in
effect until fulfilled.

 

This
Agreement and its Supplements, where applicable, are the complete and exclusive
agreement regarding our disclosures of Information, and replace any prior oral
or written communications between us. By signing below for our respective
enterprises, each of us agrees to the terms of this Agreement. Once signed, any reproduction of this
Agreement made by reliable means (for example, photocopy or facsimile) is
considered an original.

 

 

	
  ACCEPTED AND AGREED TO:

  	
   

  	
  ACCEPTED AND AGREED TO:

  
	
  IBM

  	
   

  	
  Code X Inc.

  
	
  By:

  	
   

  	
  By:

  
	
  Buyer
  Signature

  	
  Date

  	
   

  	
  Supplier
  Signature

  	
  Date

  
	
  Dan Reinhard

  	
   

  	
  Ranjit
  K. Sen

  
	
  Printed Name

  	
   

  	
  Printed
  Name

  
	
  Procurement Solution Advisor

  	
   

  	
  President/CEO

  
	
  Title &
  Organization

  	
   

  	
  Title & Organization

  
	
   

  	
   

  	
   

  
	
  Buyer
  Address:

  	
   

  	
  Supplier
  Address:

  
	
  2455
  South Road

  	
   

  	
  501
  East Franklin Street

  
	
  Mail
  Station P528

  	
   

  	
  Suite 300

  
	
  Poughkeepsie,
  NY 12601

  	
   

  	
  Richmond,
  VA 23219

  
	
  USA

  	
   

  	
  USA

  
					

 

	
  Form Title:
  Procurement Agreement For Exchange Of

  	
  Page 2 of 2

  	
  Form Release:
  8/98

  
	
  Confidential
  Information (PAECI)

  	
   

  	
   

  
	
  Form.
  Owner: Global Procurement

  	
   

  	
  Revision:
  2/05

  

 

C-2

 

EXHIBIT D

NON-DISCLOSURE AGREEMENT

 

This
Non-Disclosure Agreement (“Agreement”) is effective as of the “Effective Date”
set forth below by and between ServiceMaster Consumer Services Limited
Partnership and its “Affiliates” (“SVM”) and the undersigned Company and its
Affiliates (“Company”). “Affiliates” mean those entities, under common control
of or with, or controlled by, each Party. 
SVM and Company (individually, “Party” and together, “Parties”) agree to
protect the “Confidential Information” (as defined below).

 

1.                                       Confidential Information.  The Parties intend to establish a business
relationship.  In connection with any and
all such efforts, “Confidential Information” means any and all information
concerning a Party’s business and its customers, including, without limitation,
any and all current and future technical, operational or financial information
(whether published or unpublished), marketing or business plans, business
results, forecasts, customer names and information, vendor names and information,
employee names and information, contracts, practices and procedures, trade
secrets, know-how, software, reports, methods, documents, drawings, designs,
tools, models, inventions, patent disclosures, and requests for proposals,
requests for information, or other information that may be disclosed or
accessed by or between the Parties, whether in written, verbal, electronic,
visual, or other form that is designated as Confidential Information by the
disclosing Party. Notwithstanding the foregoing, information that is disclosed
or accessed without being specifically designated as confidential, shall be
deemed Confidential Information if it would be apparent to a reasonable person
that such information is of a confidential or proprietary nature. This Agreement
applies to all Confidential Information disclosed or accessed by or between the
Parties.

 

2.                                       Disclosure of Confidential Information.  Each Party will use the Confidential
Information of the other Party only for the purpose of and in connection with
the Parties’ business relationship and not for its own benefit or the benefit
of another, without the prior written consent of the disclosing Party. Each
Party shall hold in confidence, and shall not disclose (or permit or allow its
employees or agents to disclose) to any person outside its organization (except
as provided below), any Confidential Information of the other Party. Each Party
shall protect the other Party’s Confidential Information using the same degree
of care it uses to protect its own Confidential Information of like kind (but
not less than a reasonable degree of care). Each Party shall disclose
Confidential Information received by it under this Agreement only to employees
and agents of such Party who have a need to know such Confidential Information
in the course of the performance of their duties and who are bound by a written
agreement, enforceable by the disclosing Party (which contains confidentiality
provisions no less strict than what is set forth in this Agreement), to protect
such Confidential Information. Each Party shall adopt and maintain programs and
procedures that are reasonably calculated to protect such Confidential
Information and shall be responsible for any disclosure or misuse of
Confidential Information that results from a failure to comply with this
Agreement. Each Party will promptly report to the other Party any actual or suspected
violation of the terms of this Agreement and will take all reasonable steps to
prevent, control, or remedy any such violation.

 

3.                                       Limitation on Obligations.  The obligations of each Party shall not
apply, and neither Party shall have any further obligations, with respect to
any Confidential Information of the other Party to the extent such Party can
demonstrate, by clear written evidence, that the disclosing Party’s
Confidential Information: (a) is generally known to the public at the time
of disclosure or becomes generally known through no wrongful act of such Party;
(b) is in such Party’s possession at the time of disclosure other than as
a result of such Party’s breach of this Agreement; (c) becomes known to
such Party through disclosure by sources other than the disclosing Party; or (d) is
independently developed by such Party without access to, reference to, or
reliance upon the disclosing Party’s Confidential Information. A Party’s
Confidential Information shall remain confidential under this Agreement even if
it is required to be disclosed by the other Party in order to comply with any
applicable laws or regulations, valid court orders, or governmental requests.
Each Party shall provide prior written notice of such disclosure to the other
Party, if possible, and shall take all reasonable and lawful actions to avoid
or minimize the extent of such disclosure.

 

4.                                       Termination. 
This agreement shall remain in effect until the later of: the
consummation of a business relationship between the Parties in the form of a
written agreement relating to the Confidential Information exchanged under this
Agreement or three (3) years from the Effective Date.

 

5.                                       Publicity. 
Neither Party will issue or release any articles, advertising, publicity
or other matter relating to any Confidential Information of the other Party
(including the fact that a meeting or discussion has taken place between the Parties)
or mention or imply the name of the other Party, except as may be required by
law and then only after providing the other Party with a reasonable opportunity
to review and comment on such publicity.

 

6.                                       Ownership of Confidential Information.  Each Party is and shall remain the exclusive
owner of its Confidential Information and all patent, copyright, trade secret,
trademark and other intellectual property rights therein.  No license or conveyance of any such rights
to either Party is granted or implied under this Agreement.  Subject to the obligations of this Agreement,
no Party will be precluded from independently developing technology or pursuing
business opportunities similar to those covered by this Agreement.

 

7.                                       Miscellaneous.

 

 (a) Each
Party warrants that it has the right to disclose its Confidential Information,
but makes no representation or warranty regarding the accuracy or completeness
of its Confidential Information. This Agreement imposes no obligation on a
Party to exchange Confidential Information or to purchase, sell, license,
transfer, or otherwise make or use of any technology, services, or products.

 

 (b) Each
Party will adhere to all applicable laws and regulations of the U.S. Export
Administration and will not export or re-export any technical data or products
received from the other Party, or the direct product of such technical data, to
any proscribed person or country listed in the U.S. Export Administration
regulations unless properly authorized by the U.S. government.

 

 (c) Each
Party acknowledges that injury for improper disclosure of Confidential
Information may be irreparable; and therefore, the injured Party is entitled to
seek immediate equitable relief, including a temporary restraining order, a
temporary injunction, and/or a preliminary injunction.

 

(d) This
Agreement is made under, and will be construed according to, the laws of the
State of Tennessee, except for the conflict of laws provisions. Each Party
submits to the personal jurisdiction of any federal or state court located in Memphis,
Shelby County, Tennessee.

 

(e) This
Agreement does not create any agency or partnership relationship. This
Agreement is not assignable or transferable without the prior written consent
of the other Party. This Agreement supersedes all prior agreements, written or
verbal between the Parties, relating to such Party’s Confidential Information.
All additions or modifications to this Agreement must be made in writing and
signed by both Parties.  This Agreement
will be binding upon and inure to the benefit of the Parties and their
respective heirs, successors and assigns.

 

The
Parties have executed this Agreement, effective as of the Effective Date, by
their duly authorized representatives.

 

	
  ServiceMaster
  Consumer Services Limited Partnership

  	
   

  	
   

  
	
  By its
  General Partner, ServiceMaster Consumer Services, Inc.

  	
   

  	
  [Company]

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Address:

  	
  860
  Ridge Lake Blvd., Suite 300

  	
   

  	
  Address:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  City,
  State, Zip: Memphis,
  Tennessee 38120

  	
   

  	
  City,
  State, Zip: 

  	
   

  
	
   

  	
   

  	
   

  
	
  Effective
  Date:

  	
   

  	
   

  	
   

  
							

 

Proprietary and Confidential © 2008 by The ServiceMaster
Company.  All rights reserved.

 

D-1

 

Exhibit 11

Policies

 

This is Exhibit 11, Policies, to that certain Master Services Agreement, dated as of December 11,
2008, between ServiceMaster Consumer Services, L.P. and International
Business Machines Corporation.  Unless defined in this Exhibit, capitalized terms have the meanings set
forth in the Master Agreement or the “Definitions” Exhibit to
the Master Agreement.  Attached to this Exhibit 11
are the Customer Group policies and procedures of general application.  These policies and procedures are part of the
Services and Service Provider must comply with these policies and procedures in
accordance with Section 3.2 of the Master Agreement.  Where a policy or procedure refers to a duty
or obligation of Customer or a member of the Customer Group, that duty or
obligation also applies to Service Provider.

 

The following attachments are incorporated by reference in this
Exhibit:

 

Attachment 11-1, ServiceMaster Handbook dated May 1,
2007 [portions omitted]

 

Attachment 11-2, ServiceMaster BSC IT Change Management
Policy revision 5.1 [portions omitted]

 

Attachment 11-3, ServiceMaster Document Retention
Requirements dated July 14, 2008 (in the event of a conflict between Attachment 11-3 and Section 9.7(h) of the
Master Agreement, Section 9.7(h) controls) [portions omitted]

 

The Customer Group policies and procedures of
general application also include the following privacy policies and background
screening requirements, which are incorporated by reference in
this Exhibit (in the event of conflict between Attachments 11-4 through 11-8 and “Customer Security
Requirements” Exhibit, the “Customer Security Requirements” Exhibit controls):

 

Attachment 11-4, Merry Maids Privacy Policy printed March 6,
2008

 

Attachment 11-5, ServiceMaster Privacy Policy printed March 6,
2008

 

Attachment 11-6, Terminix Privacy Policy printed March 6,
2008

 

Attachment 11-7, TruGreen Privacy Policy printed March 6,
2008

 

Attachment 11-8, AHS Privacy Policy printed March 6,
2008

 

Attachment 11-9, ServiceMaster Background Screening Requirements [portions omitted]

 

1

 

Subject
to a request for confidential treatment, certain portions of this agreement
have been intentionally omitted.  The omitted portions subject to the
confidential treatment request are designated by three asterisks ([***]). 
A complete version of this agreement has been separately filed with the
Securities and Exchange Commission.

 

Exhibit 11

 

Attachment 11-1

 

Attachment
11-1, ServiceMaster
Handbook dated May 1, 2007 begins on the next page.

 

[***] [89 pages
omitted]

 

 

Subject
to a request for confidential treatment, certain portions of this agreement
have been intentionally omitted.  The omitted portions subject to the
confidential treatment request are designated by three asterisks ([***]). 
A complete version of this agreement has been separately filed with the
Securities and Exchange Commission.

 

Exhibit 11

 

Attachment 11-2

 

Attachment
11-2, ServiceMaster
BSC IT Change Management Policy revision 5.1 begins on the next page.

 

[***] [six pages
omitted]

 

 

Subject
to a request for confidential treatment, certain portions of this agreement
have been intentionally omitted.  The omitted portions subject to the
confidential treatment request are designated by three asterisks ([***]). 
A complete version of this agreement has been separately filed with the Securities
and Exchange Commission.

 

Exhibit 11

 

Attachment 11-3

 

Attachment
11-3, ServiceMaster
Document Retention Requirements dated July 14, 2008 begins on the next page.

 

[***] [one
page omitted]

 

 

MERRY MAIDS

 

Privacy Policy

 

Your Privacy

 

At ServiceMaster, we are committed to protecting your online privacy.  We use the information we collect about you
online to process orders and to provide a more personalized shopping experience.  Please read on for more details about the
online privacy policies for each of our ServiceMaster Quality Service Network
web sites, including:

 

www.AllAboutHome.com 

www.AmericanHomeShield.com 

www.AmeriSpec.com 

www.FurnitureMedic.com 

www.MerryMaids.com 

corporate.servicemaster.com 

www.Terminix.com 

www.TruGreen.com 

www.ServiceMasterClean.com

 

What
information do we collect? How do we use it?

 

At ServiceMaster when you request information
about a product or service or register with one of our sites, we may need to
know specific information about you.  This
enables us to process your registration/requests and reply to your needs
promptly.

 

Our site’s registration and survey forms
require users to give us contact information (like your name, email and
address) and demographic information (like your zip code, age, or income level).  We use customer contact information from
these registration and survey forms to send you information about our company,
promotional materials and information from our partners.  Users may opt-out of receiving future
mailings; see the “Choice/Opt-Out” section below.  Demographic and profile data is also
collected at our site.  We use this data
to tailor your experience at our sites and distribute content that we think you
might be interested in.

 

We run contests on our site in which we ask
visitors for contact information (like your email address) and demographic
information (like your zip code, age, or income level).  We use contact data from our contests to send
users promotional material from our partners. 
Users may opt-out of receiving future mailings; see the “Choice/Opt-Out”
section below.  Demographic and profile
data is also collected at our site.  We
use this data to tailor your experience at our site, distribute content that we
think you might be interested in, and display the content according to your
preferences.  When you enter a contest or
other promotional feature, we may ask for your contact information so we can
administer the contest and notify winners.

 

When you order products or services from the
ServiceMaster Quality Service Network web sites, we need to know your name,
email address, mailing address, credit card number, and expiration date.  This allows us to process and fulfill your
order and to notify you of your order status. 
To 

 

 

learn more about our encryption policies,
please review the section on “How does ServiceMaster protect customer
information?”

 

This site contains links to other
ServiceMaster Quality Network sites.  ServiceMaster
is not responsible for the privacy practices or the content of such Web sites.  We will not pass your information along to
the linked site; however, we cannot protect your information if you provide
information to that site.

 

We monitor customer traffic patterns and site
usage to help us develop the design and layout of the ServiceMaster Quality
Service Network web sites (listed above).

 

We may also use the information we collect to
occasionally notify you about important changes to the web site, new
ServiceMaster services, and special offers and information we think you’ll find
valuable.  If you would rather not
receive this information, please contact us through one of the channels
identified in the “Choice/Opt-Out” section.

 

How does
ServiceMaster protect customer information?

 

When you place orders or access your account
information, we use a secure server.  This
secure server software, SSL (secure sockets layer) encrypts all information you
input before it is sent to us.  Furthermore,
all of the customer transactional data we collect is protected against
unauthorized access with the use of digital certificates.  ServiceMaster digital certificates are issued
by VeriSign, one of the most established signers of digital certificates.  To learn more about ServiceMaster online
security, simply click on the “Security” icon in your browser tool bar.

 

What about “cookies”?

 

“Cookies” are small pieces of information
that are stored by your browser on your computer’s hard drive.  Our cookies do not contain any personally
identifying information.  Most web
browsers automatically accept cookies, but you can usually change your browser
to prevent that.  Even without accepting
cookies, you can still use most of the features throughout the ServiceMaster
Quality Service Network web sites.

 

Our site uses cookies to ensure customers do
not see the same advertisement or content repeatedly.  We use cookies to deliver information
specific to your interests and to save your password so you don’t have to
reenter it each time you visit our site.

 

Will
ServiceMaster disclose the information it collects to outside parties?

 

ServiceMaster does not sell, trade, or rent
your personal information to others.  We
may choose to do so in the future with trustworthy third parties, but you can
request that we do not by emailing us at communications@merrymaids.com.  (If you use more than one email address to
shop with us, send this message from each email account you use.) Also,
ServiceMaster may provide aggregate statistics about our customers, sales,
traffic patterns, and related site information to reputable third-party
vendors, but these statistics will include no personal identifying information.

 

 

Choice/Opt-Out

 

Our site provides users the opportunity to
opt-out of receiving communications from ServiceMaster and our partners at the
point where we request information about the visitor.

 

This site allows the following options for removing
your information from our database.  If
you do so, you will not receive future communications from us.

 

	
  1

  	
   

  	
  You can send
  email to communications@merrymaids.com

  
	
  2

  	
   

  	
  You can send
  mail to the following postal address:

  
	
   

  	
   

  	
  ServiceMaster
  Corporate Communications

  
	
   

  	
   

  	
  3250 Lacey
  Road, Suite 600

  
	
   

  	
   

  	
  Downers
  Grove, IL 60515

  
	
  3.

  	
   

  	
  You can call
  the following telephone number:

  
	
   

  	
   

  	
  (630)
  663-2000

  
	
  4

  	
   

  	
  You can fax
  us at:

  
	
   

  	
   

  	
  (630)
  663-2001

  

 

Correct/Update

 

This site gives users the following options
for changing and modifying information previously provided.

 

	
  1

  	
   

  	
  You can send
  email to communications@merrymaids.com

  
	
  2

  	
   

  	
  You can send
  mail to the following postal address:

  
	
   

  	
   

  	
  ServiceMaster
  Corporate Communications

  
	
   

  	
   

  	
  3250 Lacey
  Road, Suite 600

  
	
   

  	
   

  	
  Downers
  Grove, IL 60515

  
	
  3.

  	
   

  	
  You can call
  the following telephone number:

  
	
   

  	
   

  	
  (630)
  663-2000

  
	
  4

  	
   

  	
  You can fax
  us at:

  
	
   

  	
   

  	
  (630)
  663-2001

  

 

Your consent

 

By using our Web site, you consent to the
collection and use of this information by ServiceMaster.  If we decide to change our privacy policy, we
will post those changes on this page so that you are always aware of what
information we collect, how we use it, and under what circumstances we disclose
it.

 

Tell us what
you think

 

ServiceMaster welcomes your questions and
comments about privacy.  Please send
email to communications@merrymaids.com

 

 

Contacting the
Web Site

 

If you have any questions about this privacy
statement, the practices of this site, or your dealings with this Web site, you
can contact:

 

ServiceMaster Corporate Communications 

3250 Lacey Road, Suite 600 

Downers Grove, IL 60515
 communications@merrymaids.com

Phone: (630) 663-2155 

Fax: (630) 663-2159

 

Home | Maid Service Directory | Services |
Gift Cards | Cleaning Tips | Franchise Opportunities | About Us 

Careers | Contact Corporate Office | Site Map | Privacy Policy

 

Terminix© Merry Maids© TruGreen ChemLawn©
AmeriSpec© American Home Shield© Furniture Medic© ServiceMaster Clean©

 

Services provided by independently owned and operated
franchises or corporate-owned branches. 
Employment hiring and screening practices may vary.  Please contact your local Merry Maids office
for more details.

 

 

SERVICEMASTER

 

Privacy Policy

 

The ServiceMaster Family of Brands is
committed to protecting the privacy of our users’ personal information.  To better protect your privacy, we have
instituted the security and privacy practices outlined in this policy.  We provide this notice explaining our
information practices and the choices you can make about the way your
information is used.

 

Our privacy policy contains the following
information:

 

Information that the ServiceMaster Family of
Brands collects and how it is used 

Disclosure of information to outside parties 

Information that partners collect 

Our use of cookies 

Commitment to the security of your information 

How to update/change your preferences 

Changes to our privacy policy 

Tell us what you think

 

Information
the ServiceMaster Family of Brands collects and how it is used

 

The ServiceMaster Family of Brands collects
certain information to enable you to take full advantage of our offerings when
you register at our site, order products or services, participate in our
contests, surveys, promotions, or activities, or otherwise communicate with us.  If you choose, you can visit the
ServiceMaster Family of Brands without providing us with any information about
yourself.  The ServiceMaster Family of
Brands collects both personally identifiable and non-personally identifiable
information from users of its website.

 

Personally Identifiable Information

 

When you register with the ServiceMaster
Family of Brands, we require you to give us contact information (such as your
name, e-mail address, and physical address) and demographic information (such
as your age and gender).

 

When you order products or services from our
site, we also may need to collect some additional purchase information from
you, including credit card information, description of your repair or
installation, and information about your home (e.g., number of rooms, size and
age of house, and lawn size).

 

We may require additional information for
specific promotions or contests run on our site.

 

We use the customer contact information we
collect to connect you with a service provider, and to send you, if you so
choose, information about our company, newsletters, promotional materials, and
information from the service provider network.

 

 

We may also use the information we collect,
in combination with outside records, to notify you about important changes to
the website, new ServiceMaster Family of Brands services and products, and
special offers and information we think you’ll find valuable.

 

We may send you information in conjunction
with third-party partners that we think is relevant to your interests.

 

We use information gathered at the time of
purchase to process your order, to enable the provider to fulfill your order,
and to notify you of your order status.  A
customer care representative or service provider may contact you in order to
fulfill a service you purchased or to provide information you requested.

 

Non-personally Identifiable Information

 

We may collect certain non-personally
identifiable information about you when you visit our site, such as the type of
browser you are using (e.g., Netscape, Internet Explorer), the type of
operating system you are using, the referring site from which you came (e.g., a
partner site), and the domain name of your internet service provider (e.g.,
America Online, Earthlink).

 

We use the non-personally identifiable
information that we collect in the aggregate to improve the design and content
of our site.  We also use this
information to analyze site usage.

 

Disclosure of
information to outside parties

 

To process your requests for products or
services, we will need to share some of the personally identifiable information
you provided (e.g., contact information and information about particular
service needs) with service providers in the provider network.

 

If you choose to receive promotions,
newsletters, and/or other types of correspondence from us, the correspondence
that you receive will originate from the ServiceMaster Family of Brands or the
provider network, and your personally identifiable information will continue to
be solely maintained by the ServiceMaster Family of Brands.

 

If you registered with the ServiceMaster
Family of Brands through a third-party website or if you registered with a
third-party website through the ServiceMaster Family of Brands, we may need to
report certain information to that website, as is necessary.

 

If you come to the ServiceMaster Family of
Brands via a co-branded partner and transact business with us, the information
you provide may be collected and used by the ServiceMaster Family of Brands, as
well as by the co-branded partner from which you came.  The ServiceMaster Family of Brands is not
responsible for the use that the co-branded partner makes with this
information.

 

To help you identify when you are on the
ServiceMaster Family of Brands website, we place our logo in the upper left
corner to indicate that you are within the ServiceMaster Family of Brands.

 

The ServiceMaster Family of Brands may be
obligated to disclose personally identifiable information to law enforcement or
agencies, even though such agencies may not comply with the 

 

 

terms of our privacy policy.  The ServiceMaster Family of Brands will
disclose information to such agencies in response to legal process or when we
believe in good faith that the law requires it, for example, in response to a
court order, subpoena, or a law enforcement agency’s request.

 

Finally, the ServiceMaster Family of Brands
may provide aggregate statistics about our customers, sales, traffic patterns,
and related site information to reputable third-party vendors, partners,
service providers, or to the press.  Aggregate
statistics contain only non-personally identifiable information.

 

Information
partners collect

 

Our site contains links to other websites
whose information practices may be different than ours.  You should consult the other sites’ privacy
policies, as we have no control over information that you may submit or that
the third parties collect on those sites.

 

We may offer promotions or content that is
sponsored by, or co-branded with, identified third parties.  By virtue of these relationships, these third
parties may obtain personally identifiable information that you submit.  The ServiceMaster Family of Brands has no
control over the third party’s use of this information.

 

Our use of
cookies

 

The ServiceMaster Family of Brands website
uses cookies, a technology that stores small pieces of information on your hard
drive, to personalize content and keep track of your purchases during your
visit.  Each time your browser visits a
website, the site sends all cookies relevant to that website; cookies are used
to maintain a session between you and the web server.

 

Commitment to
the security of your information

 

When you place orders or access your account
information, we use a secure server.  The
secure server software, SSL (Secure Sockets Layer), encrypts all information
you input before it is sent to us.  Furthermore,
digital certificates protect all of the customer transactional data we collect
against unauthorized access.  The Home
Service Center’s digital certificates are issued by VeriSign, one of the most
established issuers of digital certificates. 
Additionally, we use firewall security and limit data access to protect
your personally identifiable information.

 

How to
update/change your preferences

 

The ServiceMaster Family of Brands may send
communications, promotional information, and/or newsletters to our registrants.  You can choose to not receive communications
from us.  We provide the following
options for reviewing and updating the personally identifiable information that
we collect and maintain, including options for communications, news, and
special offers.  To review and update
your choices, please do one of the following:

 

·                  Edit your user
profile.

 

·                  Call a customer
care specialist at 1-888-WE SERVE (1-888-937-3783).

 

 

Changes to
privacy policy

 

If we materially change our privacy policy,
we will post changes on this page so that you are always aware of what
information we collect, how we use it, and under what circumstances we disclose
it.  We will also post a notice on our
homepage that our privacy policy has been changed.

 

Tell us what
you think

 

Still have questions about our privacy
practices? Let us know.  We welcome your
questions and comments.

 

Last updated 

June 28, 2006

 

	
  Servicemaster

  	
   

  	
  Corporate
  Information

  	
   

  	
  ServiceMaster.com

  

 

Corporate Home Page | Investor
Relations | Careers | Press Room Contact Us | Privacy Policy | Help 

Franchise Opportunities

 

ServiceMaster Family of Brands

Terminix® Merry Maids® TruGreen®  ServiceMaster
Clean®

InStar® Services Group American Home Shield® Furniture Medic® AmeriSpec®

 

Brand names are registered trademarks of The
ServiceMaster Company and its affiliates.

 

©2000– 2008 The ServiceMaster Company.  All Rights Reserved.

 

 

TERMINIX

 

Ultimate
Protection

1-800-233-5917

 

Termite Control

Pest Control

Customer Service

Learning Center

Commercial

 

Privacy
Information

 

At ServiceMaster, we are
committed to protecting your privacy.  We
use the information we collect about you to process orders and to provide a
more personalized shopping experience.  Please
read on for more details about our privacy policy for all ServiceMaster Quality
Service Network Web sites, including:

 

www.AllAboutHome.com

www.AmericanHomeShield.com 

www.AmeriSpec.com

www.FurnitureMedic.com

www.MerryMaids.com

www.ServiceMaster.com

www.Terminix.com

www.TruGreen.com

www.weservegift.com

 

What
information do we collect? How do we use it?

 

When you request information
about a product or service or register with one of our sites, we may need to
know specific information about you.  This
enables us to process your registration/ requests and reply to your needs
promptly.

 

Our site’s registration and
survey forms require users to give us contact information (like your name,
e-mail and address) and demographic information (like your zip code, age or
income level).  We use customer contact
information from these registration and survey forms to send you information
about our company, promotional materials and information from our partners.  Users may opt-out of receiving future
mailings; see the choice/opt-out section below. 
Demographic and profile data is also collected at our site.  We use this data to tailor your experience at
our sites and distribute content that we think you might be interested in.

 

We run contests on our site
in which we ask visitors for contact information (like your e-mail address) and
demographic information (like your zip code, age, income level).  We use contact data from our contests to send
users promotional data from our partners. 
Users may opt-out of receiving future mailings; see the choice/ opt-out
section below.

 

 

Demographic and profile data
is also collected at our site.  We use
this data to tailor your experience at our site, distribute content that we
think you might be interested in, and display the content according to your
preferences.  When you enter a contest or
promotional feature, we may ask for your contact information so we can
administer the contest and notify winners.

 

When you order products or
services from the ServiceMaster Quality Service Network Web sites, we need to
know your name, e-mail address, mailing address, credit card number, and
expiration date.  This allows us to
process and fulfill your order and to notify you of your order status.  To learn more about our encryption policies,
please review the section on How does ServiceMaster protect customer
information.

 

This site contains links to
other sites.  ServiceMaster is not
responsible for the privacy practices or the content of such web sites.  We will not pass your information along to
the linked site; however, we cannot protect your information if you provide it
to that site.

 

We monitor customer traffic
patterns and site usage to help us develop the design and layout of the
ServiceMaster Quality Service Network Web sites (listed above).  We may also use the information we collect to
occasionally notify you about important changes to the Web site, new
ServiceMaster services, and special offers and information we think you’ll find
valuable.  If you would rather not
receive this information, please contact us through one of the channels
identified in the choice/ opt-out section.

 

Note to Parents: Your child’s
privacy is important to us and that is why we take additional measures to
protect the privacy of the younger visitors to our Web site.  We have created a children’s area, “Just For
Kids,” in which we offer content specially designed for children.  Currently, we do not collect any personally
identifiable information in the children’s area of our site.  If we do in the future, we will do so
consistent with the requirements of the Children’s Online Privacy Protection
Act (COPPA).

 

How
does ServiceMaster protect customer information?

 

When you place orders or
access your account information, we use a secure server.  This secure server software, SSL (Secure
Sockets Layer) encrypts all information you input before it is sent to us.  Furthermore, all of the customer
transactional data we collect is protected against unauthorized access with the
use of digital certificates.  ServiceMaster’s
digital certificates are issued by VeriSign, one of the most established
signers of digital certificates.  To
learn more about ServiceMaster’s online security simply click on the “Security”
icon in your browser tool bar.

 

What
about cookies?

 

“Cookies” are small pieces
of information that are stored by your browser on your computer’s hard drive.  Our cookies do not contain any personally
identifying information.  Most Web
browsers automatically accept cookies, but you can usually change your browser
to prevent that.  Even without accepting
cookies, you can still use most of the features throughout the ServiceMaster
Quality Service Network Web sites.

 

 

Our site uses cookies to
keep track of your shopping cart and to make sure you don’t see the same
advertisement or content repeatedly.  We
use cookies to deliver information specific to your interests and to save your
password so you don’t have to re-enter it each time you visit our site.

 

Will
ServiceMaster disclose information it collects to outside parties?

 

ServiceMaster does not sell,
trade, or rent your personal information to others.  We may choose to do so in the future with
trustworthy third parties, but you can request that we do not by emailing us at
customercare@svm.com (If you use more than one e-mail address to shop with us,
send this message from each e-mail account you use).  Also, ServiceMaster may provide aggregate
statistics about our customers, sales, traffic patterns, and related site
information to reputable third-party vendors, but these statistics will include
no personal identifying information.

 

Choice
/ Opt-Out

 

Our site provides users the
opportunity to opt-out of receiving communications from ServiceMaster and our
partners at the point where we request information about the visitor.  This site allows us the following options for
removing your information from the database. 
If you do so, you will not receive future communications from us.

 

You can send email to
customercare@svm.com

 

You can send mail to the
following postal address:

ServiceMaster Consumer Services

Unsubscribe, Mail Stop A4-1831

860 Ridge Lake Boulevard

Memphis, TN 38120

You can call the following telephone number: 1-800 WE SERVE

 

Correct
/ Update

 

This site gives users the
following options for changing and modifying information previously provided.

 

You can send email to
customercare@svm.com

 

You can send mail to the
following postal address:

ServiceMaster Consumer Services

Unsubscribe, Mail Stop A4-1831

860 Ridge Lake Boulevard

Memphis, TN 38120

 

You can call the following
telephone number: 1-800 WE SERVE

 

 

Your
Consent

 

By using our Web site, you
consent to the collection and use of this information by ServiceMaster.  If we decide to change our privacy policy, we
will post those changes on this page so that you are always aware of what
information we collect, how we use it, and under what circumstances we disclose
it.

 

Tell
us what you think

 

ServiceMaster welcomes your
questions and comments about privacy.  Please
send e-mail to customercare@svm.com.

 

Contacting
the Web Site

 

If you have any questions
about this privacy statement, the practices of this site, or your dealings with
this Web site, you can contact:

ServiceMaster Consumer Services, A4-1831

860 Ridge Lake Boulevard

Memphis, TN 38120

ConsumerServices@svm.com

1-800 WE SERVE ext. 1000

 

Careers 

Media Area

Pest Control Companies

Account Login

Contact Us

Site Map

 

© 2007 The Terminix
International Company Limited Partnership. 
All rights reserved.  Site Map.  Legal. 
Privacy.

 

Terminix is another
ServiceMaster Solution.  Visit these
ServiceMaster links on the World Wide Web. 
Jobs on the ServiceMaster Team | About ServiceMaster | ServiceMaster
Home

Schedule and Purchase all your home’s other services from one location.

Terminix® | Merry Maids® | TruGreen
ChemLawn® | ServiceMaster
Clean®

American Home Shield® | Furniture Medic® | AmeriSpec®

 

 

TruGreen

 

Privacy
Policy

 

The TruGreen Companies is
committed to protecting the privacy of our users’ personal information.  To better protect your privacy, we have
instituted the security and privacy practices outlined in this policy.  We provide this notice explaining our
information practices and the choices you can make about the way your
information is used.  Our privacy policy
contains the following information:

 

Information The TruGreen
Companies collects and how it is used

Disclosure of information to outside parties

Information partners collect

Our use of cookies

Commitment to the security of your information

How to update/change your preferences

Changes to our privacy policy

 

Information
The TruGreen Companies collects and how it is used

 

The TruGreen Companies
collects certain information to enable you to take full advantage of our
offerings when you register at our site, order products or services,
participate in our contests, surveys, promotions, or activities, or otherwise
communicate with us.  If you choose, you
can visit The TruGreen Companies without providing us with any information
about yourself.  The TruGreen Companies
collects both personally identifiable and non-personally identifiable
information from users of its website.

 

Personally
Identifiable Information

 

When you register with The
TruGreen Companies, we require you to give us contact information (such as your
name, e-mail address, and physical address).

 

We may require additional
information for specific promotions or contests run on our site.

 

We use the customer contact
information we collect to connect you with a service provider, and to send you,
if you so choose, information about our company, newsletters, promotional
materials, and information from the service provider network.

 

We may also use the
information we collect, in combination with outside records, to notify you
about important changes to the website, new TruGreen Companies services and
products, and special offers and information we think you’ll find valuable.  We may send you information in conjunction
with third-party partners that we think is relevant to your interests.

 

We use information gathered
at the time of purchase to process your order, to enable the provider to
fulfill your order, and to notify you of your order status.  A customer care representative or service
provider may contact you in order to fulfill a service you purchased or to
provide information you requested.

 

 

Non-personally
Identifiable Information

 

We may collect certain
non-personally identifiable information about you when you visit our site, such
as the type of browser you are using (e.g., Netscape, Internet Explorer), the
type of operating system you are using, the referring site from which you came
(e.g., a partner site), and the domain name of your internet service provider
(e.g., America Online, EarthLink).

 

We use the non-personally
identifiable information that we collect in the aggregate to improve the design
and content of our site.  We also use
this information to analyze site usage.

 

Disclosure
of information to outside parties

 

To process your requests for
products or services, we will need to share some of the personally identifiable
information you provided (e.g., contact information and information about
particular service needs) with service providers in the provider network.

 

If you choose to receive
promotions, newsletters, and/or other types of correspondence from us, the
correspondence that you receive will originate from The TruGreen Companies or
the provider network, and your personally identifiable information will
continue to be solely maintained by The TruGreen Companies.

 

If you registered with The
TruGreen Companies through a third-party website or if you registered with a
third-party website through The TruGreen Companies, we may need to report
certain information to that website, as is necessary.

 

If you come to The TruGreen
Companies via a co-branded partner and transact business with us, the
information you provide may be collected and used by The TruGreen Companies, as
well as by the co-branded partner from which you came.  The TruGreen Companies is not responsible for
the use that the co-branded partner makes with this information.

 

To help you identify when
you are on The TruGreen Companies website, we place our logo in the upper left
corner to indicate that you are within our website.

 

The TruGreen Companies may
be obligated to disclose personally identifiable information to law enforcement
or agencies, even though such agencies may not comply with the terms of our
privacy policy.  The TruGreen Companies
will disclose information to such agencies in response to legal process or when
we believe in good faith that the law requires it, for example, in response to
a court order, subpoena, or a law enforcement agency’s request.

 

Finally, The TruGreen
Companies may provide aggregate statistics about our customers, sales, traffic
patterns, and related site information to reputable third-party vendors,
partners, service providers, or to the press. 
Aggregate statistics contain only non-personally identifiable
information.

 

 

Information
partners collect

 

Our site contains links to
other websites whose information practices may be different than ours.  You should consult the other sites’ privacy
policies, as we have no control over information that you may submit or that
the third parties collect on those sites.

 

We may offer promotions or
content that is sponsored by, or co-branded with, identified third parties.  By virtue of these relationships, these third
parties may obtain personally identifiable information that you submit.  The TruGreen Companies has no control over
the third party’s use of this information.

 

Our
use of cookies

 

The TruGreen Companies
website uses cookies, a technology that stores small pieces of information on
your hard drive, to personalize content and keep track of your purchases during
your visit.  Each time your browser
visits a website, the site sends all cookies relevant to that website; cookies
are used to maintain a session between you and the web server.

 

Commitment
to the security of your information

 

When you place orders or
access your account information, we use a secure server.  The secure server software, SSL (Secure
Sockets Layer), encrypts all information you input before it is sent to us.  Furthermore, digital certificates protect all
of the customer transactional data we collect against unauthorized access.  The TruGreen Companies digital certificates
are issued by VeriSign, one of the most established issuers of digital
certificates.  Additionally, we use
firewall security and limit data access to protect your personally identifiable
information.

 

How
to update/change your preferences

 

The TruGreen Companies may
send communications, promotional information, and/or newsletters to our registrants.  You can choose to not receive communications
from us.  We provide the following
options for reviewing and updating the personally identifiable information that
we collect and maintain, including options for communications, news, and
special offers.  To review and update
your choices, please send us an e-mail with your changes, titled “Profile
Update”.  You may also call a customer
care specialist at 1-800-TRUGREEN.  You
may also unsubscribe from our e-mail list at any time.

 

Changes
to our privacy policy

 

If we materially change our
privacy policy, we will post changes on this page so that you are always
aware of what information we collect, how we use it, and under what
circumstances we disclose it.

 

Privacy Policy | Site Map |
Lawn Care Directory | Product Use Statement

 

© 2000–2008  The TruGreen Companies L.L.C.  All rights reserved.

 

 

Terminix® Merry Maids®
TruGreen® TruGreen LandCare®

ServiceMaster Clean® InStar® Services Group American Home Shield®

Furniture Medic® AmeriSpec® TruGreen Careers 
Privacy Policy

 

 

AHS - AMERICAN HOME SHIELD

 

Privacy Policy/Your Policy
Rights

 

At American Home Shield, we are committed to
protecting your privacy.  We use the
information we collect about you to process orders and to provide a more
personalized shopping experience.

 

What information do we collect? How do we use it?

 

When you request information about a product or
service or register with our site, we may need to know specific information
about you.  This enables us to process
your registration/requests and promptly reply to your needs.

 

When you order products or services from American
Home Shield, we need to know your name, e-mail address, mailing address, credit
card number and expiration date.  This
allows us to process and fulfill your order and to notify you of your order
status.  To learn more about our
encryption policies, please review the section “How does American Home Shield
protect customer information?”

 

This site contains links to other sites.  American Home Shield is not responsible for
the privacy practices or the content of such Web sites.  We will not pass your information along to
the linked site.  However, we cannot
protect your information if you provide it to that site.

 

We monitor customer traffic patterns and site usage
to help us develop the design and layout of American Home Shield’s web sites.

 

We may also use the information we collect to
occasionally notify you about important changes to the Web site, new American
Home Shield services, and special offers and information we think you’ll find
valuable.  If you would rather not
receive this information, please contact us through one of the channels
identified in the choice/opt-out section.

 

How does American Home Shield protect customer
information?

 

When you place orders, we use a secure server.  This secure server software, SSL (Secure
Sockets Layer) encrypts all information you input before it is sent to us.  Furthermore, customer transactional data we
collect is protected against unauthorized access with the use of digital
certificates.  American Home Shield’s
digital certificates are issued by VeriSign, one of the most established
signers of digital certificates.

 

Will American Home Shield disclose the information
it collects to outside parties?

 

American Home Shield does not sell, trade or rent your
personal information to others.  We may
choose to do so in the future with trustworthy third parties, but you can
request that we do not by e-mailing us at customercare@ahslink.com.  (If you use more than one e-mail address to
shop with us, send this message from each e-mail account you use.) Also,
American Home Shield may provide aggregate statistics about our customers,
sales, traffic patterns, and related site 

 

 

information to reputable third-party vendors.  However, these statistics will not include
personal identifying information.

 

Choice/Opt-Out

 

Our site provides users the opportunity to opt-out
of receiving communication from American Home Shield and our partners when we
request information about a visitor.

 

This site allows the following options for removing
your information from our database.  If
you do so, you will not receive future communication from us.

 

·      You can send e-mail to
customercare@ahslink.com

 

·      You can call the following telephone
number: 1-800-776-4663

 

Correct/Update

 

This site gives users the following options for
changing and modifying

information previously provided.

 

·      You can send e-mail to
customercare@ahslink.com

 

·      You can call the following
telephone number: 1-800-776-4663

 

Your consent

 

By using our Web site, you consent to the collection
and use of this information by American Home Shield.  If we decide to change our privacy policy, we
will post those changes on this page so that you are always aware of what
information we collect, how we use it and under what circumstances we disclose
it.

 

Contacting the Web site

 

If you have any questions about this privacy
statement, the practices of this site or your dealings with this web site, you
can contact us at:

 

customercare@ahslink.com

1-800-776-4663

 

Special Notice to California Residents

 

American Home Shield customers residing in
California who have submitted personal information to us may request
information about our disclosures of certain categories of personal information
to third parties for their direct marketing purposes.  All requests for disclosure information must
be submitted to us at customerprivacy@ahslink.com.  Within 30 days of receiving such a request,
we will provide a list of the categories of personal information disclosed to
third parties for third-party direct marketing purposes during the immediately
preceding calendar year, along with the names and addresses of these third
parties.  This request 

 

 

may be made no more than once per calendar year.  Pursuant to California law, we reserve our
right not to respond to requests submitted to addresses other than those
specified in this paragraph.

 

©
2006 American Home Shield Corporation and its licensed subsidiaries.  

All rights reserved.  Privacy Policy |
Contact Us | Sitemap

 

 

Subject
to a request for confidential treatment, certain portions of this agreement
have been intentionally omitted.  The
omitted portions subject to the confidential treatment request are designated
by three asterisks ([***]).  A complete
version of this agreement has been separately filed with the Securities and
Exchange Commission.

 

Exhibit 11

 

Attachment 11-9

 

Attachment 11-9, ServiceMaster Background Screening Requirements begins on the next page.

 

[***] [seven pages omitted] 

 

 

 

Subject
to a request for confidential treatment, certain portions of this agreement
have been intentionally omitted.  The
omitted portions subject to the confidential treatment request are designated
by three asterisks ([***]).  A complete
version of this agreement has been separately filed with the Securities and
Exchange Commission.

 

Exhibit
12

Form of Business Associate Agreement

This is Exhibit 12, Form of Business Associate Agreement, to that
certain Master Services Agreement, dated as of December 11, 2008, between ServiceMaster
Consumer Services, L.P. and International Business Machines Corporation.  

Exhibit
12 begins on the next page.

 

1

 

Subject to a request for confidential treatment,
certain portions of this agreement have been intentionally omitted.  The
omitted portions subject to the confidential treatment request are designated
by three asterisks ([***]).  A complete version of this agreement has been
separately filed with the Securities and Exchange Commission.

 

FORM OF BUSINESS ASSOCIATE
ADDENDUM

 

 

This Business Associate Addendum (“Addendum”)
supplements and is made a part of the Master Service Agreement  (the “Agreement”), dated as of December 11,
2008, by and between ServiceMaster Consumer Services, L.P. (“Customer”) and
International Business Machines Corporation 
(“IBM”).  

 

Recitals

 

A.                                   Customer and IBM are Parties to the
Agreement pursuant to which IBM provides certain services to Customer.  In connection with those services, the
members of the Customer Group may disclose to IBM certain health information
held by such entities (“Protected Health Information,” as defined at 45 C.F.R.
§ 160.103) that is subject to protection under the Health Insurance Portability
and Accountability Act of 1996 (“HIPAA”) and certain regulations promulgated
thereunder by the United States Department of Health and Human Services at 45
C.F.R. Parts 160 through 164 (“HIPAA Regulations”). 

 

B.                                     The purpose of this Addendum is to help
facilitate  compliance by the members
of  the Customer Group with the
requirements of the HIPAA Privacy Rule (45 C.F.R. Part 164) and the proposed
HIPAA Security Rule (67 Fed. Reg. 53267,  
August 14, 2002) when (i) a member of the Customer Group is a “covered
entity,” and (ii) IBM is the recipient of Protected Health Information from
such entity under the Agreement and is acting as a “business associate” of such
entity, as those terms are defined in the HIPAA Regulations.  

 

C.                                     The Customer acknowledges that IBM may
act in a capacity other than as a business associate and that this Addendum
only applies to the extent that IBM is acting as a business associate for the
members of the Customer Group. 
Hereinafter though, IBM will be referred to as “Business Associate.”

 

IN CONSIDERATION OF THE FOREGOING, and the mutual promises and
covenants contain herein, the Parties agree as follows:

 

Agreement

 

1.                                      Definitions. 
Unless
otherwise provided in this Addendum, capitalized terms have the same meaning as
set forth in the HIPAA Regulations or the Agreement.

 

2.                                      Applicability. 
This
Addendum shall be applicable to Protected Health Information (i) received by
Business Associate from the members of the Customer 

 

 

Group,
(ii) created or received by Business Associate on behalf of the members of
the Customer Group, or (iii) or otherwise obtained by Business Associate
in the course of providing the Services under the Agreement.

 

3.                                      Scope
of Use of Protected Health Information.  Business Associate shall not
use or disclose Protected Health Information for any purpose other than:

 

(i)                                     As permitted or
required by the Agreement or to carry out the activities specified in the
Agreement;

(ii)                                  For management
and administrative activities of Business Associate; and

(iii)                               As
otherwise  “Required by Law”, as defined
in 45 C.F.R. § 164.103.

 

4.                    Safeguards for the Protection of Protected Health Information.  Business
Associate shall process Protected Health Information on behalf of the members
of the Customer Group and in accordance with Customer’s instructions. Business
Associate shall follow Customer’s instructions by implementing and maintaining
operational and technological safeguards mutually agreed to in applicable
statements of work or in comparable contract documents describing the services
to be performed. Customer agrees that the specified safeguards are appropriate
for the Customer Group’s requirements. Customer also confirms that Customer is
solely responsible for ensuring that specified processing and safeguarding
instructions comply with data protection laws applicable to the Customer Group.

 

5.                                      Reporting
of Unauthorized Uses or Disclosures. 
Business Associate shall immediately notify Customer of any use or
disclosure of Protected Health Information of which Business Associate becomes
aware that is not provided for or permitted in the Agreement, including this
Addendum.

 

6.                                      Use
of Subcontractors.  To the extent
that Business Associate discloses Protected Health Information to one or more
subcontractors or agents, Business Associate shall cause each such
subcontractor and agent to sign an agreement with Business Associate containing
provisions and conditions related to the protection and confidentiality of
Protected Health Information (including the obligation to notify Customer of
unauthorized uses or disclosures of Protected Health information as set forth
in Section 5, above) at least as restrictive as those that apply to
Business Associate under the Agreement and this Addendum.   Business Associate shall provide Customer
with copies of such written agreements.

 

7.                                      Authorized
Access to and Amendment of Protected Health Information.    Within twenty (20) days of any request by
Customer, Business Associate shall make available to Customer all Protected
Health Information held by Business Associate. 
Additionally, within twenty (20) days of any request by Customer,
Business Associate shall incorporate any amendments Customer makes to Protected
Health Information.  The requirements of
this section may be satisfied by Business Associate providing electronic access
to Customer of Customer data maintained or processed by Business Associate.

 

 

8.                                      Accounting
of Disclosures of Protected Health Information.  Business Associate shall
keep records of disclosures of Protected Health Information made by Business
Associate (the “Disclosure Accounting”) on an ongoing basis for a period of six
(6) years, except for disclosures exempt from accounting in 45 C.F.R. §
164.524.  Business Associate shall
provide the Disclosure Accounting to Customer within forty-five (45) days of
receiving a written request therefor from Customer.

 

9.                                      Health
and Human Services.  Business
Associate shall make its internal practices, books and records related to the
use and disclosure of Protected Health Information under the Agreement and this
Addendum available to Secretary of the Department of Health and Human Services
as required by HIPAA and the HIPAA Regulations for the purpose of determining
Customer’s compliance with 45 CFR § 164.500 et. seq.

 

10.                               Future
Confidentiality of Protected Health Information.  Upon the expiration or
earlier termination of the Agreement for any reason, if feasible, Business
Associate shall return to Customer, or, at Customer’s direction, destroy, all
Protected Health Information in any form. 
If such return or destruction is not feasible, Business Associate shall
notify Customer and extend the protections of this Addendum to the Protected
Health Information and shall limit further uses and disclosures to those
purposes that make the return or destruction of the Protected Health Information
infeasible.  This provision shall apply
to Protected Health Information that is in the possession of agents or
subcontractors of Business Associate.

 

11.                               Termination
of the Agreement.  Customer may
terminate those portions of the Agreement which require Business Associate to
use or disclose Protected Health Information in the event Business Associate
breaches a material term of this Addendum. 
Such termination shall be in accordance with and subject to any rights
to cure and payment obligations specified in the Agreement.

 

12.                                 Amendment.  If HIPAA or the HIPAA Regulations are amended
or interpreted in any manner that renders this Business Associate Agreement
inconsistent therewith, Customer may, on thirty (30) days written notice to
Business Associate (or any shorter notice period necessary to comply with such
amendment or interpretation), amend this Business Associate Agreement to the
extent necessary to comply with such amendments or interpretations, subject to Section 3.2(e) of
the Master Agreement.

 

12.                               Effect
on Agreement.  The sole
purpose of this Addendum is to facilitate Customer’s compliance with 45 CFR §
164.504.  This Addendum is not intended
to, nor shall it be construed to, reduce or diminish any of Business
Associate’s or Customer’s obligations under the Agreement.  Accordingly, except as to the extent
expressly inconsistent with this Addendum, all other terms of the Agreement
shall remain in full force and effect and shall not be modified, diminished or
reduced hereby.  In the event of a
conflict between the provisions of this Business Associate Agreement and the

 

 

Agreement,
then the more restrictive provisions shall apply. There are no intended third
party beneficiaries under this Addendum, other than the members of the Customer
Group.

 

13.                               Assignment.  The
Addendum will be binding on the Parties and their respective successors and
permitted assigns.  Neither Party may, or
will have the power to, assign the Addendum (or any rights hereunder) except in
accordance with Section 17.7 of the Master Agreement.  Any attempted assignment that does not comply
with the terms of this paragraph shall be null and void.

 

IN
WITNESS WHEREOF, the Parties hereto have caused this Business Associate
Addendum to be executed as of the date and year hereinafter written.

 

SERVICEMASTER
CONSUMER SERVICES, L.P.

 

 

	
  By:

  	
   

  
	
   

  	
   

  
	
  Name:

  	
   

  
	
   

  	
   

  
	
  Title:

  	
   

  
	
   

  	
   

  
	
  Date:

  	
   

  
				

 

 

INTERNATIONAL
BUSINESS MACHINES CORPORATION

 

 

	
  By:

  	
   

  
	
   

  	
   

  
	
  Name:

  	
   

  
	
   

  	
   

  
	
  Title:

  	
   

  
	
   

  	
   

  
	
  Date:

  	
   

  
				

 

 

Subject to a request for confidential treatment,
certain portions of this agreement have been intentionally omitted.  The
omitted portions subject to the confidential treatment request are designated
by three asterisks ([***]).  A complete version of this agreement has been
separately filed with the Securities and Exchange Commission.

 

Exhibit 13

Customer Competitors

 

This is Exhibit 13,
Customer Competitors, to that certain Master Services Agreement, dated as of December 11,
2008, between ServiceMaster Consumer Services, L.P. and International Business
Machines Corporation.  Unless defined in this Exhibit, capitalized terms have the meanings set
forth in the Master Agreement or the “Definitions” Exhibit to
the Master Agreement.  This Exhibit 13
lists the entities that are Customer Competitors.  Customer may modify this Exhibit 13 [***].

 

American Home Shield

[***]

 

Terminix

[***]

 

TruGreen

[***]

 

TruGreen LandCare

[***]

 

SM Clean

[***]

 

Merry Maids

[***]

 

1

 

Subject to a request for confidential treatment, certain
portions of this agreement have been intentionally omitted.  The omitted
portions subject to the confidential treatment request are designated by three
asterisks ([***]).  A complete version of this agreement has been
separately filed with the Securities and Exchange Commission.

 

TRANSACTION DOCUMENT NO. 1

 

1.                                      INTRODUCTION

 

This Transaction Document No. 1 is effective as
of December 11, 2008 (the “Execution Date”), and is made by ServiceMaster
Consumer Services, L.P. and International Business Machines Corporation.  This Transaction Document and its Schedules
are incorporated into that certain Master Services Agreement, dated as of December 11,
2008, between ServiceMaster Consumer Services, L.P. and International Business
Machines Corporation.  Section 1.2(d) of
the Master Agreement sets forth the order of precedence in the event of a
conflict between the provisions of this Transaction Document and the Master
Agreement.

 

2.                                      DEFINITIONS

 

Unless otherwise defined herein, capitalized terms
have the meanings set forth in the Master Agreement, the “Definitions” Exhibit to
the Master Agreement, or the “Definitions” Schedule to the
Transaction Document.

 

3.                                      SERVICES, CHARGES AND
CREDITS

 

3.1                               Services

 

Service Provider shall
provide the Services to the Customer Group in accordance with the Master
Agreement (including the Exhibits thereto) and this Transaction Document
(including the Schedules hereto).  The
scope and composition of the Services and the responsibilities of the Parties
with respect to the Services described in this Transaction Document are defined
in the Master Agreement, this Transaction Document, and Schedules A through T
attached hereto.

 

3.2                               Charges

 

The “Charges” Schedule
to this Transaction Document sets forth the pricing and charging methodologies
for the Services.  Further, the “Service
Level Agreement” Schedule to this Transaction Document sets forth
certain credits which may be payable by Service Provider to Customer.

 

4.                                      TERM/COMMENCEMENT DATE/SURVIVAL/RENEWAL

 

4.1                               Term and Commencement Date

 

The term of this Transaction
Document will begin as of the Execution Date and will terminate on the seventh
(7th) anniversary of the Execution Date (“Transaction Document Expiration
Date”), unless earlier terminated in accordance with Section 12
of the Master Agreement or extended in accordance with the provisions of this Section 4.1
(“Transaction Document Term”). 
Customer, at its option exercised by written notice to Service Provider
delivered at least [***] prior to the then-scheduled expiration date, may renew
the term of this Transaction Document for up to an additional twelve (12)
months on the terms, conditions and pricing then in effect.  Customer may exercise its renewal right for
the entire twelve (12) month period or in increments of at least six (6) consecutive
months each.  Any 

 

1

 

further renewals of the Transaction Document Term
beyond twelve (12) additional months will be at Service Provider’s then
applicable commercial terms and conditions, including pricing, or as otherwise
agreed between the Parties.

 

4.2                               Quality Programs

 

The Service Provider
operations engaged in performing the Services, upon completion of the
Transition and Transformation Plan, will be, and shall at all times during the
Term remain, certified as [***] compliant by the Service Provider’s Transition
Transformation Service Delivery Group, which performs metrics reporting and [***]
appraisal services. The scope of services provided by this group includes
review, assessment, training and certification of end to end processes for the
entire delivery function to ensure compliance with [***].  Certification of the environment includes the
processes and defined projects with associated deliverables.   Service Provider shall manage the provision
of the Services consistently with the principles of the IT Infrastructure
Library.

 

4.3                               Knowledge Worker Provisions

 

In addition to the
requirements under Section 3.9 of the Master Agreement, Service
Provider shall provide knowledge workers with the specific skills described in
the “Knowledge Worker Provisions” Schedule.

 

4.4                               DR Test Failure Termination Right

 

Customer may exercise the
termination right set forth in third sentence of Section 3.5(b) of
the Master Agreement with respect to the Services comprising the Disaster
Recovery Services Tower if a DR Test Failure occurs with respect to any of the
Disaster Recovery Plans relating to the systems referred to in the “Disaster
Recovery Requirements” Schedule and its attachments.

 

4.5                               Final Critical Transition Milestone

 

For purposes of Section 12.1(j) (Transition
Failure) of the MSA, the “final Critical Transition Milestone” shall be
Critical Transition Milestone 10-M (Transition Completion, [***]), as described
in the “Transition and Transformation Critical Milestones” Schedule.

 

2

 

SCHEDULES

 

Table of Schedules

 

	
  Schedule

  	
   

  	
  Schedule Title

  
	
  A

  	
   

  	
  Transaction Document
  Definitions [portions omitted]

  
	
  B

  	
   

  	
  Services Description 

  
	
  B-1

  	
   

  	
  Statement of Work
  [portions omitted]

  
	
  B-2

  	
   

  	
  Customer Business
  Applications [portions omitted]

  
	
  C

  	
   

  	
  Key Personnel Provisions

  
	
  C-1

  	
   

  	
  Knowledge Worker
  Provisions [portions omitted]

  
	
  C-2

  	
   

  	
  List of Key Personnel
  [portions omitted]

  
	
  D

  	
   

  	
  Service Level Agreement

  
	
  D-1

  	
   

  	
  Service Level Methodology
  [portions omitted]

  
	
  D-2

  	
   

  	
  Service Levels [portions
  omitted]

  
	
  D-2-A

  	
   

  	
  Measured Applications and
  Expected Uptime [portions omitted]

  
	
  D-3

  	
   

  	
  Critical Services
  [portions omitted]

  
	
  D-4

  	
   

  	
  Managed Agreements [portions
  omitted]

  
	
  E

  	
   

  	
  Charges

  
	
  E-1

  	
   

  	
  Pricing Methodology
  [portions omitted]

  
	
  E-2

  	
   

  	
  Critical Transition and
  Transformation Milestone Payment and Credit Schedule

  
	
  E-3

  	
   

  	
  Monthly Base
  Charges/ARC-RRC [portions omitted]

  
	
  E-4

  	
   

  	
  [Reserved]

  
	
  E-5

  	
   

  	
  [Reserved]

  
	
  E-6

  	
   

  	
  Rate Card [portions
  omitted]

  
	
  E-7

  	
   

  	
  Resource Unit Definitions
  [portions omitted]

  
	
  E-8

  	
   

  	
  Financial Responsibility
  Matrix [portions omitted]

  
	
  E-9

  	
   

  	
  Termination Charges
  [portions omitted]

  
	
  E-10

  	
   

  	
  Form of Invoice
  [portions omitted]

  
	
  F

  	
   

  	
  Transition and
  Transformation Plan

  
	
  F-1

  	
   

  	
  Transition and
  Transformation Planning Process [portions omitted]

  
	
  F-2

  	
   

  	
  High Level Transition and
  Transformation Plan [portions omitted]

  
	
  F-3

  	
   

  	
  Transition and
  Transformation Critical Milestones [portions omitted]

  
	
  G

  	
   

  	
  Customer Software
  [portions omitted]

  
	
  H

  	
   

  	
  Service Provider Software
  [portions omitted]

  
	
  I

  	
   

  	
  Third-Party Agreements
  [portions omitted]

  
	
  J

  	
   

  	
  Reports [portions omitted]

  
	
  J-1

  	
   

  	
  Standard Reports [portions
  omitted]

  
	
  K

  	
   

  	
  List of Approved
  Benchmarkers [portions omitted]

  

 

3

 

	
  Schedule

  	
   

  	
  Schedule Title

  
	
  L

  	
   

  	
  Technical Architecture and
  Product Standards [portions omitted]

  
	
  M

  	
   

  	
  Disaster Recovery
  Requirements [portions omitted]

  
	
  M-1

  	
   

  	
  Disaster Recovery
  Requirements - General [portions omitted]

  
	
  M-1-a

  	
   

  	
  Disaster Declaration Event
  Fee [portions omitted]

  
	
  M-1-b

  	
   

  	
  Common BCRS Shared
  Services [portions omitted]

  
	
  M-2-A

  	
   

  	
  Terminex [***] Specs
  [portions omitted]

  
	
  M-2-b

  	
   

  	
  Terminex [***] Services
  [portions omitted]

  
	
  M-2-c

  	
   

  	
  Terminex [***] [portions
  omitted]

  
	
  M-3

  	
   

  	
  Terminex [***] Specs
  [portions omitted]

  
	
  M-4-a

  	
   

  	
  AHS Specs [portions
  omitted]

  
	
  M-4-b

  	
   

  	
  AHS Services [portions
  omitted]

  
	
  M-4-c

  	
   

  	
  AHS Disaster Recovery
  Program [portions omitted]

  
	
  M-5

  	
   

  	
  JDE [***] Specs [portions
  omitted]

  
	
  M-6

  	
   

  	
  JDE [***] Specs [portions
  omitted]

  
	
  M-7

  	
   

  	
  Terminex [***] Specs
  [portions omitted]

  
	
  M-8

  	
   

  	
  Lawn [***] Specs [portions
  omitted]

  
	
  M-9

  	
   

  	
  Land [***] Specs [portions
  omitted]

  
	
  M-10

  	
   

  	
  Land [***] Specs [portions
  omitted]

  
	
  M-11

  	
   

  	
  BSC AD [***] Specs
  [portions omitted]

  
	
  N

  	
   

  	
  Termination Assistance
  Services [portions omitted]

  
	
  O

  	
   

  	
  Projects [portions
  omitted]

  
	
  P

  	
   

  	
  Affected Employees

  
	
  P-1

  	
   

  	
  Terms for Affected
  Employees [portions omitted]

  
	
  P-2

  	
   

  	
  List of Affected Employees
  [portions omitted]

  
	
  Q

  	
   

  	
  Service Locations
  [portions omitted]

  
	
  R

  	
   

  	
  Commercially Unavailable
  Service Provider Tools [portions omitted]

  
	
  S

  	
   

  	
  Customer Facilities
  [portions omitted]

  
	
  T

  	
   

  	
  Approved Subcontractors
  [portions omitted]

  

 

4

 

THE PARTIES ACKNOWLEDGE THAT THEY HAVE READ THIS TRANSACTION DOCUMENT,
UNDERSTAND IT, AND AGREE TO BE BOUND BY ITS TERMS AND CONDITIONS.  FURTHER, THE PARTIES AGREE THAT THE COMPLETE
AND EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN THE PARTIES RELATING TO THIS
SUBJECT SHALL CONSIST OF (1) THIS TRANSACTION DOCUMENT, (2) ITS
SCHEDULES, AND (3) THE MASTER AGREEMENT (INCLUDING THE EXHIBITS THERETO),
INCLUDING THOSE AMENDMENTS MADE EFFECTIVE BY THE PARTIES IN THE FUTURE.  THIS STATEMENT OF THE AGREEMENT BETWEEN THE
PARTIES SUPERSEDES ALL PROPOSALS OR OTHER PRIOR AGREEMENTS, ORAL OR WRITTEN,
AND ALL OTHER COMMUNICATIONS BETWEEN THE PARTIES RELATING TO THE SUBJECT
DESCRIBED HEREIN.

 

	
  Accepted
  by: 

  	
   

  	
  Accepted
  by: 

  
	
   

  	
   

  	
   

  
	
  SERVICEMASTER
  CONSUMER SERVICES, L.P. 

  By: ServiceMaster Consumer Services, Inc., 

  its General Partner

  	
   

  	
  INTERNATIONAL
  BUSINESS MACHINES 

  CORPORATION

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Steven J. Martin 

  	
   

  	
  By:

  	
  /s/ Justin Dragoo 

  
	
   

  	
  Authorized Signature

  	
   

  	
   

  	
  Authorized Signature

  
	
   

  	
   

  	
   

  
	
  Steven
  J. Martin 

  	
   

  	
  Justin
  Dragoo, VP Global Technology Services 

  
	
  Name
  (Type or Print) 

  	
   

  	
  Name
  (Type or Print)

  
	
  December 13,
  2008 

  	
   

  	
  December 13,
  2008 

  
	
  Date

  	
   

  	
  Date

  

 

5

 

Subject to a request for confidential
treatment, certain portions of this agreement have been intentionally
omitted.  The omitted portions subject to the confidential treatment
request are designated by three asterisks ([***]).  A complete version of
this agreement has been separately filed with the Securities and Exchange
Commission.

 

SCHEDULE A

DEFINITIONS

 

This is Schedule A, Definitions, to
Transaction Document No. 1 to that certain Master Services Agreement,
dated as of December 11, 2008, between ServiceMaster Consumer Services,
L.P. and International Business Machines Corporation.  The following terms used in Transaction
Document No. 1 have the meanings indicated below.

 

A.01        “AAA Rules” means the American
Arbitration Association’s Commercial Arbitration Rules.

 

A.02        “Acceptance Criteria” means the
acceptance criteria applicable to each Deliverable provided or developed by
Service Provider, including Critical Transformation and Transition Milestones and Projects, as
specified by the Parties in accordance with the “Governance and Change
Control” Exhibit.

 

A.03        “ACD Agent” has the meaning set
forth in the “Network” section of Schedule E-7.

 

A.04        “Add/Change” has the meaning set
forth in the “End User” section of Schedule E-7.

 

A.05        “Affected Employees” means the
individuals listed in the “List of Affected Employees” Schedule,
who are employed by a member of the Customer Group prior to the Effective Date
and to whom Service Provider or Network Services Provider shall  consider for offers of employment pursuant
to the “Terms for Affected Employees” Schedule.

 

A.06        “Allocation of Pool Percentage”
means the portion of the Pool Percentage that is specified for any particular
CPI in the event of a Service Level Default for such Service Level.  Any such portion shall not exceed [***] of
the At Risk Amount.

 

A.07        “Annual Satisfaction Survey”
means the annual survey of Customer designated managers / stakeholders
receiving the Services from Service Provider.

 

A.08        “Application Development Resource
Baseline” is described in Schedule E-3 and in the “Application
Development and Maintenance” section of Schedule E-7.

 

A.09        “Application Development Services”
has the meaning set forth in the “Application Development and Maintenance”
section of Schedule E-7.

 

A.10        “Arbitration Notice” means a
written notice requesting arbitration in accordance with Section 3(a)(iii)(D) of
the “Service Level Methodology” Schedule.

 

A.11        “ARC” means an additional
resource charge to Customer by Service Provider pursuant to the ARC/RRC process
described in Section 2.4 and Section 2.5 of Schedule
E-1 for Resource Unit usage above the ARC Point.

 

A.12        “ARC Point” means the threshold
point Resource Unit consumption must exceed before an ARC will be applied.  [***]

 

1

 

A.13        “ARC Rate” means the monetary
rate per unit to be charged by Service Provider to Customer for any Resource
Unit consumption for each applicable Resource Unit [***] according to the
formulas defined in Section 2.4(b) of Schedule E-1.

 

A.14        “ARC/RRC Measurement Period”
means the period of time over which applicable Resource Units are to be
measured, to determine the applicability of an ARC or RRC.

 

A.15        “ARC/RRC Rates” means the ARC
Rates and the RRC Rates.

 

A.16        “At Risk Amount” means, for any
month during the Term, [***] of the [***] for such month, which is the
amount that Service Provider will have at risk for all Service Level Credits in
such month.

 

A.17        “Base Charges” means all of the
recurring monthly Charges described in Section 2.2 of Schedule E-1.

 

A.18        [***]

 

A.19        “Baseline Data” means the actual
data measured during a Measurement Period [***].

 

A.20        “Blackberry ID” has the meaning
set forth in the “Messaging” section of Schedule E-7.

 

A.21        “Change Control Procedures” means
the process and procedures to be followed by Customer and Service Provider in
accordance with the “Governance
and Change Control” Exhibit when either Party wishes to
make a Change to the existing Services.

 

A.22        “Change Management Procedure”
means a detailed procedure describing how operational IT or Service delivery
Changes will be made to meet the Customer’s business needs within the accepted
timeframes and subject to specific approvals.

 

A.23        “Change Order Log” means a
historical log of Change Orders throughout the Term.

 

A.24        “Change Threshold” means [***]
occurring during a Business Day.

 

A.25        “Charge Mechanics” means the
specific mechanics, formulas or specified rates, such as ARCs, RRCs, rate
cards, [***] Pass-Through Charges, out-of-pocket expenses and other specifics
used to calculate or govern the Charges.

 

A.26        “Chargeable Project Work” means
Project activities to the extent such performance is (i) requested and
approved by Customer as evidenced by a signed Project Work Order, and (ii) are
not activities otherwise required to be performed by Service Provider pursuant
to its obligations under the Master Agreement. 
Service Provider is compensated for Chargeable Project Work as specified
in Section 3.2 of Schedule E-1.

 

A.27        “Charges” Schedule
describes the methodology for calculating all of the Charges payable by
Customer to Service Provider with respect to the Services that Service Provider
shall deliver to Customer pursuant to the Master Agreement.

 

A.28        “COBRA” means continuation
coverage required under Section 4980 of the Internal Revenue Code, Part 6
of Title I of ERISA or applicable state law.

 

2

 

A.29        “Compound Service Level” means a
single Service Level that is comprised of two or more independent service
metrics, conditions, components or elements which are separately tracked,
measured and reported on, and which all together comprise the Compound Service
Level.  A Compound Service Level may be a
CPI, KPI or GPI.

 

A.30        “Consulting and Non-IT Projects”
means consulting and other non-information technology Projects that are not
otherwise included in the Services.

 

A.31        “Continuation Period” means the
period beginning on the Hire Date and ending [***] thereafter.

 

A.32        “Core Third Party Agreements”
means those Proposed Transferred Agreements identified as “core” agreements in
the “Third Party Agreements” Schedule.

 

A.33        “Critical Performance Indicators”
or “CPIs” means those Service Levels which are (i) described in the
applicable “Service Level Matrix” Schedule
as a CPI and (ii) for which a Service Level Credit may be payable.  Each CPI has an Expected Service Level and a
Minimum Service Level associated with it, unless otherwise specified.

 

A.34        “Critical Transition and
Transformation Milestone” means a milestone specified in Schedule F-3.

 

A.35        “Cross-Tower Services” means
Services that affect multiple Towers .

 

A.36        “Customer Authorized User” means
a person authorized by Customer to receive Services.

 

A.37        “Customer Business Applications”
means the software applications listed in the “Customer Business
Applications” Schedule.

 

A.38        “Customer Governance Organization”
means the Customer governance organization described in Section 2.2
of the “Governance and Change Control” Exhibit.

 

A.39        “PMOs” mean the Customer PMO and
the Service Provider PMO.

 

A.40        “Customer PMO” means Customer’s
program management office that oversees all Service delivery in accordance with
the “Governance and Change Control” Exhibit.

 

A.41        “Database Instance” has the
meaning set forth in the “Server, Storage and Database” section of Schedule E-7.

 

A.42        [***]

 

A.43        [***]

 

A.44        “Deliverable Form” means the form
attached as Appendix 4-F to the “Governance and Change Control” Exhibit.

 

A.45        “Designated CPI” means those CPIs
which are designated in the “Service Level Methodology” Schedule
as the subject of a Service Level Termination Event pursuant to Section 2(c)(iv) of
the “Service Level Methodology” Schedule.

 

3

 

A.46        “Detailed Specification Report”
means the detailed specification report prepared by Service Provider as part of
the Change Control Procedures.

 

A.47        “Detailed Transformation and Transition Plan” means a fully
detailed written draft of the proposed final Transformation and Transition Plan
as further described in Section 3.2(a) of Schedule F-1.

 

A.48        “Disaster Recovery” has the
meaning set forth in the “Disaster Recovery” section of Schedule E-7.

 

A.49        [***]

 

A.50        [***]

 

A.51        “Early Rebadge Fixed Fees” has
the meaning set forth in Schedule E-3.

 

A.52        “Email ID” has the meaning set
forth in the “Messaging” section of Schedule E-7.

 

A.53        “Emergency Change” means an
operational change to the environment necessary to maintain continuity of
Services prior to providing notice to Customer or obtaining Customer’s approval
of such change.

 

A.54        “Employee Service” means the
duration of employment with Customer, its Affiliates or predecessors from an
employee’s date of hire with Customer (or its Affiliate or predecessor) until
the Hire Date as service with Service Provider.

 

A.55        “End User Satisfaction Survey”
means end-user satisfaction surveys conducted in accordance with the “Governance
and Change Control” Exhibit.

 

A.56        “Enhancement”  means a routine, stand alone change or
improvement that does not impact a system beyond the element of the system
being changed or modified, that does not require integration testing, but may
require cross-functional review, where the change or improvement can be
completed in less than [***].  Any such
change or improvement taking [***]or more is considered a Project.

 

A.57        [***]

 

A.58        “Expected Service Level Default”
means a recurring failure of Service Provider to meet the Expected Service
Level for the same CPI or KPI [***] during a Service Level Reporting Period.

 

A.59        “Expected Service Level” means
the expected level of performance for a CPI or a KPI, as applicable, as set
forth in the applicable “Service Level Matrix” Schedule.

 

A.60        “General Performance Indicators”
or “GPIs” means those Service Levels which are described in the applicable “Service
Level Matrix” Schedule as a GPI.  Each General Performance Indicator has a
Minimum Service Level associated with it unless otherwise specified.  No Service Level Credits are available in
connection with GPIs.

 

A.61        “Governance and Change Control”
means the Exhibit by which Service Provider will provide Customer with the
performance reporting for the Services as specified in the “Service Level
Agreement” Schedule.

 

4

 

A.62        “Governance Process Functional
Responsibilities Matrix” means a process responsibility matrix that details
the responsibilities of each of the Parties related to a given process
identified in the “Governance and Change Control” Exhibit.

 

A.63        “Governance Transition Deliverables”
are set forth in Appendix 4-A of the “Governance and Change Control”
Exhibit.

 

A.64        “Handset” has the meaning set
forth in the “Network” section of Schedule E-7.

 

A.65        “Help Desk Seat” has the meaning
set forth in the “End User” section of Schedule E-7.

 

A.66        “High Level Transformation and
Transition Plan” means
an initial high level project plan for the Transformation and Transition
Project prepared by Service Provider in accordance with Schedule F-1.

 

A.67        “High Priority Governance Processes”
means those high priority governance processes identified as such in Appendix
4-B of the “Governance and Change Control” Exhibit.

 

A.68        “Hire Date” means the date on
which a Transitioned Employee begins employment with Service Provider.  Except for employees on a Leave of Absence,
the Hire Date for the Transitioned Employees will be determined in accordance
with the “Transformation and Transition Plan” Schedule.

 

A.69        “IMAC” has the meaning set forth
in the “End User” section of Schedule E-7.

 

A.70        “Immediate Change” means any
proposed Change requested by Customer (i) that is reasonably required to
comply with any Customer Law, Customer Compliance Directive or any system or
business requirement as requested by Customer that Customer reasonably deems
appropriate to avoid a substantial impact to its systems or business, and (b) there
is insufficient time to prepare a Change Order for such Change in accordance
with normal Change Control Procedures or if the applicable charges (if any) are
not agreed to prior to Customer’s requirement to commence work related to such
Change.

 

A.71        “Incident” means an event or
issue that may cause interruption or reduction in quality of the Services to an
End User.

 

A.72        “Problem Management” means the
process by which Problems are identified, communicated, managed, tracked, and
resolved.

 

A.73        [***]

 

A.74        “Infrastructure Project Resource
Baseline” is described in Schedule E-3 and in the “Other” section of
Schedule E-7.

 

A.75        “Install” has the meaning set
forth in the “End User” section of Schedule E-7.

 

A.76        “IP Telephony Port” has the
meaning set forth in the “Network” section of Schedule E-7.

 

A.77        “ISEC” means the Information
Security Controls document described in the “Procedures Manual” Exhibit.

 

5

 

A.78        “Issues Management Process” means
the issues management process used to track and resolve all Services
performance and operational issues and other non-operational issues according
to the timeframes indicated in Appendix 4-B and Section 2.4
of the “Governance and Change Control” Exhibit.

 

A.79        “Key Performance Indicators” or “KPIs”
means those Service Levels which are described in the applicable “Service
Level Matrix” Schedule as a KPI.  Each Key Performance Indicator has an
Expected Service Level and Minimum Service Level associated with it, unless
otherwise specified.  No Service Level
Credits are available in connection with KPIs.

 

A.80        [***]

 

A.81        “Leave of Absence” or “LOA”
means an approved leave of absence for short term disability and/or the Family
Medical Leave Act pursuant to the Customer Group’s applicable policies.

 

A.82        “LOA Offer Date” means a date
within [***] after any employee on an LOA is removed from leave status.

 

A.83        [***]

 

A.84        “Massachusetts Information Security
Regulation” means the Massachusetts Standards for the Protection of
Personal Information of Residents of the Commonwealth, 201 CMR 17.00-17.04.

 

A.85        “Measurement Period” means the
[***]of measurements during which Baseline Data will be measured, which may be
used by Customer and Service Provider to determine Service Level Expected
and/or Minimum Service Levels, under [***]3(a) of the “Service
Level Methodology” Schedule. 
Service Provider will measure, collect and report to Customer the
relevant measurements during such period.

 

A.86        “Measurement Window” means the
periodic evaluation and reporting frequency for each individual Service Level
as specified in the applicable “Service Level Matrix” Schedule (e.g., monthly,
quarterly, semi-annually, annually).

 

A.87        [***]

 

A.88        “Minimum Service Level Default”
means a single failure of Service Provider to meet the applicable Minimum
Service Level for a specific CPI or KPI in the applicable Measurement Window (e.g., monthly).

 

A.89        “Minimum Service Level” means the
minimum level of performance set forth in the applicable “Service Level
Matrix” Schedule with respect to each
CPI, KPI or GPI.

 

A.90        “Monthly Performance Scorecard Report”
means the report describing Service Provider’s performance of the Services in
the preceding month in accordance with Section 2.5.1(b) of the
“Governance and Change Control” Exhibit.

 

A.91        “Move” has the meaning set forth
in the “End User” section of Schedule E-7.

 

A.92        “Network Printer” has the meaning
set forth in the “End User” section of Schedule E-7.

 

A.93        “Offer Date” means the date
agreed to by the Parties in accordance with the “Transformation and
Transition Plan” Schedule, except for Customer employees on Leaves
of Absence.

 

6

 

A.94        “Operating System Instance” has
the meaning set forth in the “Server, Storage and Database” section of Schedule E-7.

 

A.95        “Operational” means, with respect
to a personal computer (including peripherals), and/or an PDA/handheld device,
the point in time after which installation and configuration of the unit by
Service Provider have occurred and the unit user has expressly acknowledged in
writing that the unit has been successfully installed and configured.

 

A.96        “Patch Management” means the
process of receiving, reviewing, installing and tracking software updates
issued by a software or hardware provider.

 

A.97        “PBX Voice Port” has the meaning
set forth in the “Network” section of Schedule E-7.

 

A.98        “Performance Trend/Improvement Report”
means a report illustrating Service Provider’s performance with respect to each
Service Level as a trend analysis against [***].

 

A.99        “Personal Computer” has the
meaning set forth in the “End User” section of Schedule E-7.

 

A.100      “Pool Percentage” means [***] of the
At Risk Amount or, for any period during which one or more Special CPIs has
been established by Customer, [***].  For
avoidance of doubt, the applicable percentage points shall be apportioned by
Customer across the CPIs such that the individual pool percentages shall total
an amount not greater than [***], as applicable; provided, that at least
[***] shall be allocated across the Special CPIs, if any.

 

A.101      “Preliminary Specification Report”
means the preliminary specification report prepared by Service Provider in
accordance with the Change Control Procedures.

 

A.102      “Problems” means the unknown
underlying cause of one or more Incidents.

 

A.103      “Process Leader” means the lead Service Provider SME.

 

A.104      “Process Owner” means the designated lead Customer SME.

 

A.105      “Productive Hours” means the number
of productive hours actually worked by a Service Provider employee or Service
Provider subcontractor employee, excluding non-productive time (which includes
travel, vacation, holiday, training, education, marketing, administrative staff
meetings, medical leave and military leave) to provide the Services.

 

7

 

A.106      “Project” is a group of related,
phased activities that may span multiple days, weeks, or months that are
documented through written Project Work Orders, which may have defined
milestones and Deliverables, and are required for Service Provider to perform
the Services.  As part of the Services,
Service Provider shall provide the services, functions, responsibilities and
materials necessary to manage, perform and complete the Projects that

 

(a)             are in progress as of the Commencement Date, which are
described in the “Project” Schedule, 

(b)            are approved but not yet in
progress as of the Commencement Date that are agreed to at that time by the
Parties, based upon the approach that they used in agreeing to the Projects
described in the preceding clause (a), which are described in the “Project”
Schedule, and

(c)             encompass future initiatives, as required to provide the
Services.

 

If Service Provider intends to make Changes to the Projects in progress
(as of the Commencement Date) described in subsection (a), Service Provider
shall describe its plans for Change in detail and any such Change will be
addressed through the Change Control Procedures.  Service Provider shall report on the level of
effort expended on Projects on a monthly basis.

 

A.107      “Project Initiation and Authorization”
process to request project services according to the timeframes indicated in Appendix
4-B and Section 2.4 of in the “Governance and Change Control”
Exhibit.

 

A.108      [***]

 

A.109      [***]

 

A.110      “Project Rates” means charges
calculated using the hourly rates set forth in Schedule E-6.

 

A.111      “Project Schedule” refers to a
“Project Work Order.”

 

A.112      “Project Work Order” means the
documentation authorizing the specific requirements, including scope,
acceptance criteria, milestones, Service Locations, pricing or resource
affiliation for a particular Project.

 

A.113      “Proposed Transferred Agreements”
means those Managed Agreements identified as “Proposed to be Assumed,” if any,
in the “Third Party Agreements” Schedule.

 

A.114      “Remote Locations” means those
locations identified with an “N” in the “IBM on site” column in the “Customer
Facilities” Schedule.

 

A.115      “Required Modification” means a
software or hardware update that is required to eliminate a program error,
ensure reliability, ensure legal compliance or that is required to enable
system compatibility.

 

A.116      “Resource Baseline” for each applicable
category of Service, means that quantity of Resource Units that is included in
the monthly Base Charges set forth in Schedule E-3.  The Resource Baselines for each month of the
Term are set forth in Schedule E-5.

 

8

 

A.117      “Resource Unit” means, for each
applicable Service, the individual unit of resource consumption included in the
Resource Baseline and used to calculate adjustments to Base Charges in the form
of either an ARC or a RRC, as applicable, for Resource Unit consumption
[***]according to the formulas defined in Section 2.4(b) of Schedule
E-1.

 

A.118      “Responsible Executive” has the
meaning set forth in Section 2.2.8(a) of the “Governance
and Change Control” Exhibit.

 

A.119      “Retained Expenses” are those
expenses and costs for which Customer is financially responsible.

 

A.120      “Root Cause Analysis” means the
process to identify the root cause of Problems and developing a plan for
corrective actions.

 

A.121      “Router” has the meaning set forth
in the “Network” section of Schedule E-7.

 

A.122      “RRC” means a reduced resource
credit issued to Customer by Service Provider pursuant to the ARC/RRC process
described in Section 2.4 and Section 2.5 of Schedule
E-1.

 

A.123      “RRC Point” means the threshold point
at which Resource Unit consumption must be reduced below the Resource Baseline
before a RRC will be applied. [***]

 

A.124      “RRC Rate” means the monetary rate
per unit to be credited by Service Provider to Customer for any Resource Unit
consumption for each applicable Resource Unit [***] according to the formulas
defined in Section 2.4(b) of Schedule E-1.

 

A.125      “Ruggedized Mobile Device” has the
meaning set forth in the “End User” section of 

Schedule E-7.

 

A.126      “Senior Executives” means the
senior official from each Party (or the Party’s parent company) designated in Section 2.3(c)(iii) of
the “Dispute Resolution Procedures” Exhibit.

 

A.127      “Service Authorization” means a
request in the form of a Project Work Order or similar approval for the
provision of certain services that authorizes a change in the volume of certain
Resource Units which will trigger an ARC or RRC.  For certain non-Project related Resource
Units the requirement for a Service Authorization shall be satisfied via the
mutually agreed upon process by which End Users are authorized to request a
service from Service Provider.

 

A.128      “Service Level Commencement Date”
means the Commencement Date, or such other date delineated in the applicable “Service
Level” Schedule, upon which a CPI may
be subject to Service Level Credits.

 

A.129      [***]

 

A.130      “Service Level Credit” means the
financial credits incurred by Service Provider in favor of Customer for Service
Level Defaults for CPIs determined in accordance with the provisions of Section 6(a) of
the “Service Level Methodology” Schedule.

 

A.131      “Service Level Default” means a
Minimum Service Level Default or Expected Service Level Default.

 

9

 

A.132      “Service Level Improvement Date”
means the date beginning [***] after each applicable Service Level Commencement
Date.

 

A.133      “Service Level” Schedule sets forth certain Service Levels against which Service
Provider’s performance of the Services will be measured.  Also referred to as the “Service Level Matrix.”

 

A.134      “Service Level Reporting Period”
means each [***] beginning on each applicable Service Level Commencement Date
and continuing (rolling) monthly throughout the Term.  [***]

 

A.135      “Service Level Termination Event”
has the meaning provided in Section 2(c)(iv) of the “Service
Level Methodology” Schedule.

 

A.136      “Service Level Type” are listed in
the “Service Level” Schedule.

 

A.137      “Service Provider Benefit Plans” As
of the Hire Date, the Transitioned Employees shall be immediately eligible to
participate in all employee benefit savings and defined contribution programs,
plans or policies generally maintained for similarly situated employees of
Service Provider (as the same may be modified from time to time, “Service
Provider Benefit Plans”).

 

A.138      “Service Provider Governance
Organization” means the Service Provider governance organization described
in Section 2.2 of the “Governance and Change Control” Exhibit.

 

A.139      “Service Provider PMO” means the
Program Management Office established by Service Provider to oversee all
Services (including Services effective as of the Effective Date and Services
added after the Effective Date) in accordance with the “Governance and
Change Control” Exhibit.

 

A.140      “Service Request” means a request
for assistance or performance in connection with the Services.

 

A.141      [***]

 

A.142      “SMEs” means subject matter experts.

 

A.143      “Special CPI” means a CPI defined
by Customer, in accordance with Section 3(a)(iii) of the “Service
Level Methodology” Schedule, [***].

 

A.144      “Storage” has the meaning set forth
in the “Server, Storage and Database” section of Schedule E-7.

 

A.145      “Support” means labor and
associated maintenance activities as required for Service Provider to perform
or provide the Services, or for Customer to receive the Services.

 

A.146      “Switch” has the meaning set forth
in the “Network” section of Schedule E-7.

 

A.147      “Telecom Expense Management” has
the meaning set forth in the “Network” section of Schedule E-7.

 

A.148      “Termination Charges” means the
charges for certain termination events, as provided in Schedule E-8.

 

A.149      “Thin Client Device” has the
meaning set forth in the “End User” section of Schedule E-7.

 

10

 

A.150      “Transferred Agreements” means the
Proposed Transferred Agreements which are actually assumed or replaced by or
otherwise transferred to Service Provider.

 

A.151      “Transformation and Transition Charges”
means Service Provider’s Charges for the provision of the Transformation and
Transition Services, as set forth in “Pricing” Schedule.

 

A.152      “Transformation and Transition Project”
has the meaning
set forth in Section 2.1 of Schedule F-1.

 

A.153      “Transformation
and Transition Project” means the project undertaken by Service Provider to
facilitate the transfer of operational responsibility for the Services from
Customer and its third party vendors to Service Provider.

 

A.154      “Transition Management Office”
means the TMO established in accordance with the “Governance and Change
Control” Exhibit by Service Provider to manage and execute the
Transition and Transformation projects necessary for the commencement of the
delivery of Services associated with a Transaction Document.

 

A.155      [***]

 

A.156      “Transitioned Employees” means all
Affected Employees who become Service Provider employees in accordance with the
Master Agreement, the “Terms for Affected Employees” Schedule and
the “List of Affected Employees” Schedule.

 

A.157      [***]

 

A.158      [***]

 

A.159      [***]

 

A.160      [***]

 

A.161      “Variable Charges” means,
collectively, the ARCs/RRCs and Charges attributable to Chargeable Project
Work.

 

A.162      “Vendor” means the Third Party
service provider under any Proposed Transferred Agreement or Third Party
Agreement.

 

A.163      “Voicemail Box” has the meaning set
forth in the “Network” section of Schedule E-7.

 

A.164      “WAN Device” has the meaning set
forth in the “Network” section of Schedule E-7.

 

A.165      “WARN Act” means the Transitioned
Employees for compliance with the Worker Adjustment and Retraining Act of 1988,
as amended.

 

A.166      [***]

 

A.167      “Wireless Access Point” or  “WAP” has the meaning set forth in the
“Network” section of Schedule E-7.

 

11

 

SCHEDULE B

SERVICES
DESCRIPTION

 

This
is Schedule B, Services Description, to Transaction Document No. 1
to that certain Master Services Agreement, dated as of December 11, 2008,
between ServiceMaster Consumer Services, L.P. and International Business Machines
Corporation.  Unless otherwise defined
herein, capitalized terms have the meanings set forth in the Master Agreement,
the “Definitions” Exhibit to the Master Agreement, or the “Definitions”
Schedule to the Transaction Document.

 

This Schedule B describes
the Services applicable to the Transaction Document and defines the
responsibilities of the Parties in the execution of these Services.  Service Provider shall perform the Services
in accordance with the Agreement including the detailed processes and timetables
specified in this Schedule B, in the Service Levels set forth in the “Service
Level Agreement” Schedule, and the Procedures Manual.

 

Schedule
B consists of the “Statement
of Work” Schedule and the “Customer Business Applications”.

 

1

 

Subject to a request for confidential treatment, certain
portions of this agreement have been intentionally omitted.  The omitted
portions subject to the confidential treatment request are designated by three
asterisks ([***]).  A complete version of this agreement has been
separately filed with the Securities and Exchange Commission.

 

SCHEDULE B-1

STATEMENT
OF WORK

 

This
is Schedule B-1, Statement of Work, to Transaction Document No. 1
to that certain Master Services Agreement, dated as of December 11, 2008,
between ServiceMaster Consumer Services, L.P. and International Business
Machines Corporation.  Unless otherwise
defined herein, capitalized terms have the meanings set forth in the Master
Agreement, the “Definitions” Exhibit to the Master
Agreement, or the “Definitions” Schedule to the Transaction
Document.  Notwithstanding Section 17.10
of the Master Agreement, the titles and headings in the matrices below shall be
part of the Agreement.

 

1.0          Introduction

 

This Schedule describes the major functions, tasks
and activities related to the provision of information technology (IT) infrastructure
and application development and maintenance Services to be provided to Customer
by Service Provider, including:

 

·                  Networking
and Telecommunication (including telecomm expense management)

 

·                  Help
Desk and Desktop (including deskside support)

 

·                  Data
Center Hosting and Server Management (including remote server management)

 

·                  Security
(including Disaster Recovery Services)

 

·                  Messaging
Services

 

·                  Application
Development, Support and Maintenance

 

·                  Data
Management and Business Intelligence

 

·                  Franchises
Services (for ServiceMaster Clean and Merry Maids, including application
development, support and maintenance, quality assurance (QA) of Service
Provider Software, implementation assistance, application training, Third Party
vendor advocacy, and user support).

 

Service
Provider and Customer have the Responsibilities set forth in the Responsibility
Matrix below in connection with the Services described in this Schedule.  Where a Party is to “approve” or “authorize”
a matter, it may approve or reject that matter in its discretion.  Approvals and rejections must be in
writing.  Where a Party is to “recommend,”
“develop,” or “define” a matter, the Party shall provide the product of such
effort to the other Party in writing. 
Unless otherwise indicated in the Agreement, Service Provider shall
provide all Services to all Customer Locations listed on the “Customer
Facilities” Schedule.

 

Unless
specified otherwise, the Parties’ obligations shall be consistent with the “Financial
Responsibility Matrix” Schedule.  All
Service Provider tasks and responsibilities listed in the Responsibility Matrix
include the timely creation, updating, maintenance and provisions of all
appropriate project plans, project time and cost estimates, technical
specifications, management documentation and management reporting in a form and
format that is acceptable to Customer. 
Where Service Provider is responsible for documentation or documenting a
task, Service Provider shall also document in the Procedures Manual all Service
Provider recommendations or changes to the Services that are approved by
Customer.

 

1

 

2.0          Responsibility
Matrix

 

Subject
to the detailed descriptions contained in this Schedule, Service Provider and
Customer shall be responsible for the tasks with an “X” in the respective
columns as set forth in the table below.

 

[***] [omitted 64 pages]

 

2

 

Subject to a request for
confidential treatment, certain portions of this agreement have been
intentionally omitted.  The omitted portions subject to the confidential
treatment request are designated by three asterisks ([***]).  A complete
version of this agreement has been separately filed with the Securities and
Exchange Commission.

 

SCHEDULE B-2

CUSTOMER
BUSINESS APPLICATIONS

 

This
is Schedule B-2, Customer Business Applications, to Transaction Document
No. 1 to that certain Master Services Agreement, dated as of December 11,
2008, between ServiceMaster Consumer Services, L.P. and International Business
Machines Corporation.  Unless otherwise
defined herein, capitalized terms have the meanings set forth in the Master
Agreement, the “Definitions” Exhibit to the Master
Agreement, or the “Definitions” Schedule to the Transaction
Document.

 

This
Schedule B-2 sets forth the Customer Business Applications by Customer
business unit.  Service Provider shall
maintain all of the Customer Business Applications set forth on this Schedule
B-2 and ensure that the Customer Business Applications are available for
use by Customer at all times.  [***]

 

Customer
may update this Schedule B-2 from time to time to reflect changes in the
Customer Business Applications portfolio in accordance with the Change Control
Procedures.

 

[***]

 

[***] [omitted 15 pages]

 

1

 

SCHEDULE C

KEY
PERSONNEL PROVISIONS

 

This is Schedule C, Key Personnel
Provisions, to Transaction Document No. 1 to that certain Master Services
Agreement, dated as of December 11, 2008, between ServiceMaster Consumer
Services, L.P. and International Business Machines Corporation.  Unless otherwise defined herein, capitalized
terms have the meanings set forth in the Master Agreement, the “Definitions”
Exhibit to the Master Agreement, or the “Definitions” Schedule
to the Transaction Document.

 

Schedule C consists of the “Knowledge Worker
Provisions” Schedule and the “List of Key Personnel” Schedule.

 

1

 

Subject to a request for
confidential treatment, certain portions of this agreement have been
intentionally omitted.  The omitted portions subject to the confidential
treatment request are designated by three asterisks ([***]).  A complete
version of this agreement has been separately filed with the Securities and
Exchange Commission.

 

SCHEDULE C-1

KNOWLEDGE WORKER PROVISIONS

 

This
is Schedule C-1, Knowledge Worker Provisions, to Transaction Document No. 1
to that certain Master Services Agreement, dated as of December 11, 2008,
between ServiceMaster Consumer Services, L.P. and International Business
Machines Corporation.  Unless otherwise
defined herein, capitalized terms have the meanings set forth in the Master
Agreement, the “Definitions” Exhibit to the Master
Agreement, or the “Definitions” Schedule to the Transaction
Document.

 

Service
Provider shall provide the specified personnel with the specific requirements
or skills described in the table below in accordance with Section 4.3
of Transaction Document No. 1.

 

[***]

 

1

 

Subject to a request for confidential treatment, certain portions of
this agreement have been intentionally omitted.  The omitted portions
subject to the confidential treatment request are designated by three asterisks
([***]).  A complete version of this agreement has been separately filed
with the Securities and Exchange Commission.

 

SCHEDULE
C-2

LIST OF
KEY PERSONNEL

 

This is Schedule C-2, List of Key Personnel, to Transaction
Document No. 1 to that certain Master Services Agreement, dated as of December 11,
2008, between ServiceMaster Consumer Services, L.P. and International Business
Machines Corporation.  Unless otherwise
defined herein, capitalized terms have the meanings set forth in the Master
Agreement, the “Definitions” Exhibit to the Master Agreement,
or the “Definitions” Schedule to the Transaction Document.

 

The Service Provider personnel in the table below are Key Personnel
under Section 9.2(a) of the Master Agreement.  Service Provider shall provide the Key
Personnel beginning on the date indicated in the “Start Date” for the duration
indicated in the “Minimum Time Commitment” column.  Service Provider shall locate the Key
Personnel in the cities indicated in the “Primary Location” column so that the
Key Personnel are readily available for in-person meetings in those cities.  Where “TBD” is listed in the “Name” column,
Service Provider shall identify and appoint Key Personnel satisfactory to
Customer no later than ten (10) days from the Execution Date, or such
reasonable time as agreed by the Parties.

 

[***]

 

1

 

SCHEDULE D

SERVICE
LEVEL AGREEMENT

 

This
is Schedule D, Service Level Agreement, to Transaction Document No. 1
to that certain Master Services Agreement, dated as of December 11, 2008,
between ServiceMaster Consumer Services, L.P. and International Business
Machines Corporation.  Unless otherwise
defined herein, capitalized terms have the meanings set forth in the Master
Agreement, the “Definitions” Exhibit to the Master
Agreement, or the “Definitions” Schedule to the Transaction
Document.

 

Schedule
D consists of the “Service Level Methodology” Schedule,
the “Service Levels” Schedule, the “Critical Services” Schedule
and the “Managed Agreements” Schedule.

 

1

 

Subject to a request for confidential treatment, certain
portions of this agreement have been intentionally omitted.  The omitted
portions subject to the confidential treatment request are designated by three
asterisks ([***]).  A complete version of this agreement has been
separately filed with the Securities and Exchange Commission.

 

SCHEDULE
D-1

SERVICE LEVEL METHODOLOGY

 

This
is Schedule D-1, Service Level Methodology, to Transaction Document
No. 1 to that certain Master Services Agreement, dated as of December 11,
2008, between ServiceMaster Consumer Services, L.P. and International Business
Machines Corporation.  Unless otherwise
defined herein, capitalized terms have the meanings set forth in the Master
Agreement, the “Definitions” Exhibit to the Master
Agreement, or the “Definitions” Schedule to the Transaction
Document.

 

1.                                      General Provisions.

 

(a)                                  General.

 

(i)                                     The Service Levels measure
whether Service Provider is meeting certain agreed, measurable criteria for the
Services that Service Provider is contractually committed to provide to
Customer.  Service Provider shall
monitor, measure, collect, record and report to Customer its performance
beginning on each Service Level Commencement Date and thereafter during the
Term (including any Termination Assistance Period prior to handover to Customer
or Customer’s Successor Service Provider) against all Service Levels then in
effect.

 

(ii)                                  The “Service Level Matrix” Schedule sets forth certain Service Levels
against which Service Provider’s performance of the Services shall be
measured.  Service Provider shall perform
the Services at or above the levels of performance indicated for CPIs, KPIs and
GPIs as set forth in this Schedule D-1 and the applicable “Service
Level Matrix” Schedule, and if Service
Provider fails to do so and is not otherwise excused from such failure, Service
Provider shall take the corrective actions and may be subject to the other
remedial measures specified in this Schedule D-1 and the Agreement.

 

(iii)                               Service Provider shall
perform the Services that are not subject to expressly defined Service Levels
at a level of service that meets or exceeds the greater of [***].

 

(iv)                              Service Provider shall be
responsible for, and have in place as of each applicable Service Level
Commencement Date, all of the measuring, monitoring and reporting capabilities
necessary for measuring, monitoring and reporting Service Provider’s
performance against the Service Levels as described in Section 5
below.

 

(v)                                 Except as otherwise stated in
the applicable “Service Level Matrix”
Schedule, all Service Levels shall be measured by Service Provider [***].  Service Provider shall report to Customer its
performance against Service Levels upon the Measurement Window frequency
specified for each Service Level in the applicable “Service Level Matrix” Schedule.

 

(vi)                              For a Compound Service
Level, satisfaction of each and every metric, condition, component or element
is necessary for the satisfaction of the corresponding Service Level.  Customer may create a Compound Service Level
from separate, pre-existing Service Levels. 
Where a Compound Service Level is created from a number of separate,
pre-existing Service 

 

1

 

Levels, the Allocation of Pool Percentage for such Compound Service
Level shall not exceed [***].

 

(vii)                           Service Provider will
promptly investigate and remediate all failures associated with Service Levels
in accordance with Section 8 below.

 

(viii)                        Service Provider will
provide Customer with the performance reporting for the Services as specified
in this Schedule D-1, the “Reports” Schedule, and the
“Governance and Change Control” Exhibit.

 

(ix)                                Service Provider will
minimize recurrences of all performance-related failures for which it is
responsible in accordance with Section 8 below.  Service Provider will also be responsible for
reporting to Customer any problems, such as outages, that appear likely to
result in a failure to meet any Service Level, within [***] of Service
Provider becoming aware of any such problem.

 

(x)                                   Customer will have the right
to receive Service Level Credits and ultimately to terminate the Services
notwithstanding any of the aforesaid efforts of Service Provider, if and to the
extent such rights accrue in accordance with the Agreement or this Schedule D-1.

 

(xi)                                Customer and Service
Provider will each provide a single point of contact for the prompt resolution
of all Service Level Defaults and all failures to provide Services to Customer
in accordance with the “Service Level Agreement” Schedule and the
Agreement.

 

(b)                                 Reporting of Performance Measures.

 

Commencing on the Service
Level Commencement Date and continuing throughout the Term, including during
any Termination Assistance Period:

 

(i)                                     Service Provider shall
assemble and create the reports described in the “Reports” Schedule
and the “Service Level Agreement” Schedule on the performance of
the Services, in order to assist in the effective management of the Services
and support the improvement of the Service Levels as described herein.

 

(ii)                                  Service Provider shall
provide detailed supporting information for each report to Customer in
electronic form suitable for use on a personal computer.  In addition, Service Provider shall make such
information available to Customer on-line using commonly available
technology.  The raw data and detailed
supporting information shall be deemed to be Customer Confidential Information,
and Customer may access such information on-line at any time during the Term; provided,
that IBM may retain a copy of such data solely for its accounting records,
subject to the provisions of Section 11 of the Master Agreement.

 

(iii)                               Commencing with the first
Service Level Commencement Date, within ten (10) calendar days after the
last day of each month during the Term, Service Provider will provide a monthly
performance report for CPIs and KPIs that reports various metrics, including:

 

(A)                              Service Provider’s
performance against and calculations with respect to each Service Level during
the preceding month;

 

(B)                                the Performance
Trend/Improvement Report; and

 

2

 

(C)                                potential problems of which
Service Provider is aware that could reasonably be expected to result in a
failure to meet a Service Level and remedial actions including summaries of the
reports submitted to Customer in accordance with Service Provider’s obligation
to periodically submit Service Level reports and Service Level Credits.

 

Notwithstanding the above,
Service Provider shall only be required to report on GPIs upon the request of
Customer, and upon such request, Service Provider shall produce the monthly
performance report within ten (10) days. 
Service Provider shall only be required to provide within ten (10) Business
Days Performance Trend/Improvement Reports on GPIs upon the request of
Customer.

 

(iv)                              If any monthly performance
report provided by Service Provider to Customer does not have reasonably
sufficient detail and accuracy for Customer to determine whether Service
Provider achieved or failed to achieve the Target Service Level and/or Minimum
Service Level for each Service Level in the immediately preceding Measurement
Window, then Customer may provide written notice thereof to Service Provider,
which notice must contain reasonable detail of the deficiencies in the subject
monthly performance report.  If within ten
(10) days after receiving such a notice Service Provider fails to deliver
to Customer a revised or replacement monthly performance report containing
reasonably sufficient detail and accuracy for Customer to determine whether
Service Provider achieved or failed to achieve a Service Level in the
applicable Measurement Window [***].

 

2.                                      Service Level Obligations.

 

(a)                                  Service Level Obligations.

 

The metrics, measurement
standards, and other pertinent features for CPIs, KPIs and GPIs are described
in “Service Level Matrix” Schedule.

 

(b)                                 Commencement of Service Level Obligations.

 

The Parties agree that
Service Provider will begin delivering the Services in accordance with the
Service Levels as of each applicable Service Level Commencement Date for a
particular Service.  Unless otherwise
agreed in writing, Service Provider is not accountable for Service Level
performance prior to each applicable Service Level Commencement Date.

 

(c)                                  Service Level Defaults, Service Level Termination Event, and Excused
Performance.

 

(i)                                     CPIs, KPIs and GPIs Generally.

 

The Parties acknowledge and
agree that all Service Levels are important to the proper support and operation
of Customer’s business.  However, certain
of the Service Levels are of particular importance to Customer’s business and
are therefore designated as CPIs and KPIs. 
Certain of the Service Levels, while important to Customer’s business
operations, are less critical to Customer and are designated as GPIs.

 

(ii)                                  CPI Service Level Defaults.

 

Service Provider’s
performance that results in a Service Level Default with respect to a CPI (to
the extent not excused pursuant to paragraph (v), below) shall:

 

3

 

(A)                              entitle Customer to receive
a Service Level Credit;

 

(B)                                be escalated to the Operations
Oversight Committee; and

 

(C)                                result in Service Provider
promptly preparing a formal written recovery plan designed to prevent the
reoccurrence of such Service Level Default and, once approved by Customer,
Service Provider shall promptly implement at Service Provider’s sole cost, such
approved plan.

 

(iii)                               KPI Service Level Defaults.

 

Service Provider’s
performance that results in a Service Level Default with respect to a KPI (to
the extent not excused pursuant to paragraph (v), below) shall:

 

(A)                              be escalated to the Operations
Oversight Committee; and

 

(B)                                result in Service Provider
promptly preparing a formal written recovery plan designed to prevent the
reoccurrence of such Service Level Default and, once approved by Customer, Service
Provider shall promptly implement at Service Provider’s sole cost, such
approved plan.

 

(iv)                              Service Level Termination Events.

 

A Service Level Termination
Event shall be deemed to exist if Service Provider fails to meet the [***] in
any Service Level Reporting Period.  [***].  [***]. Customer shall have available to it
all of the remedies set forth in the Agreement for the occurrence of a Service
Level Termination Event.

 

(v)                                 [***]

 

(d)                                 [***] [omitted
2 pages]

 

3.                                      Additions, Modifications, Deletions and
Reclassifications of Service Levels.

 

[***] [omitted 4 pages]

 

4.                                      [***] Service Levels.

 

(a)                                  [***] Availability and Dates.

 

[***]

 

(b)                                 [***]Methodology.

 

[***]

 

4

 

5.                                      Measuring Tools.

 

(a)                                  Commencing on
each applicable Service Level Commencement Date, Service Provider shall
provide, implement, maintain and utilize the necessary measurement and
monitoring tools and procedures required to measure and report on Service
Provider’s performance of the Services against the applicable Service Levels.  Service
Provider’s measurement and monitoring of Service Level performance shall permit
reporting at a level of detail reasonably sufficient to permit Customer to
verify compliance with the Service Levels, and shall be subject to audit by
Customer pursuant to the Agreement. 
Service Provider shall provide Customer with information about and
access to such procedures upon request for purposes of verification.

 

(b)                                 Notwithstanding
the foregoing, any new tools required for new Service Levels added after the Execution
Date shall be identified in the Change Order or other documentation approving
such new Service Level.  In connection
therewith, Service Provider shall be obligated to propose a commercially
reasonable measuring tool or methodology for a Service Level, and if it fails
to do so, such tool or methodology shall be determined using the dispute
resolution procedure set forth in the Agreement.

 

(c)                                  If, after the Execution
Date or the implementation of tools for new Service Levels or the tools Service
Provider is required to implement pursuant to Section 5(a) above
for existing Service Levels, one Party desires to use a different measuring
tool or methodology for a Service Level, such Party shall request such change
through the Change Control Procedures. 
If the other Party approves the new measuring tool or methodology, the
Parties will reasonably adjust the Service Level measurements to account for
any increased or decreased sensitivity in the new measuring tools, provided
that if the Parties cannot agree on the required adjustment, either Party may
escalate the matter in accordance with the governance procedures set forth in
the “Governance and Change Control” Exhibit, and if the dispute
is not resolved thereby, the matter shall be resolved in accordance with the Dispute
Resolution Procedures.  It is not
anticipated that changes in the measuring tools or methodologies will drive
changes in Service Levels; rather, the need to collect and accurately reflect
the performance data should drive the development or change in measuring tools
or methodologies.

 

6.                                      Service Level Credits [***].

 

(a)                                  Service Level Credit Calculation.

 

Subject to Section 6(f) below,
for each CPI Target Service Level Default or Minimum Service Level Default,
Service Provider shall accrue to Customer a Service Level Credit that will be
computed in accordance with the following formula:

 

Performance Credit = A × B

 

Where A is the At Risk Amount; and

 

Where B is 
the Allocation of Pool Percentage for the applicable CPI.

 

For example only, assume that Service
Provider fails to meet the Minimum Service Level for a CPI, the At Risk Amount
is [***]% of the [***], and the [***] for the month
in which the Service Level Default occurred were $[***].  Additionally, assume that the Allocation of
Pool Percentage for such CPI is [***]%.  The Performance Credit due to Customer for
such Service Level Default would be computed as follows:

 

5

 

A (the At Risk Amount) is $[***] ($[***]  ×  [***]%);

 

Multiplied by B (the Allocation of Pool
Percentage for such CPI), which is [***];

 

Yields a Performance Credit = $[***]

 

(b)                                 Multiple Defaults.

 

[***].

 

(c)                                  Notice of Service Level Credits.

 

Service Provider shall
notify Customer in writing if Customer becomes entitled to a Service Level
Credit, which notice shall be provided monthly and shall describe the Service
Level Default for the month that is the subject of the monthly CPI report.

 

(d)                                 [***]

 

(e)                                  Reconciliation of Service Level Credits [***].

 

Upon occurrence of the
events giving rise to a Service Level Credit, Service Provider shall owe a debt
to Customer for the applicable Service Level Credit amount.  [***]. 
Service Provider shall credit to Customer against the next monthly
invoice:

 

(A)                              all accrued Service Level
Credits [***], and

 

(B)                                all accrued Service Level
Credits [***].

 

If there will be no further
invoices, Service Provider will pay the amount of such Service Level Credits to
Customer within thirty (30) calendar days. 
[***]

 

(f)                                    Cumulative Remedies and Waivers.

 

The exercise by Customer of
its rights under this Schedule D-1, including the right to receive
Service Level Credits [***], shall be without prejudice
to its other rights or remedies under the Agreement or at law or equity,
including Customer’s right to claim and collect damages and Customer’s right to
terminate the Agreement in whole or in part in accordance with the
Agreement.  [***]

 

(g)                                 No Liquidated Damages.

 

Service Level Credits shall
not constitute liquidated damages for the corresponding failure to perform, and
Customer shall be free to pursue any and all remedies available under the
Agreement with respect thereto, provided, that any such credits actually
paid by Service Provider to Customer shall be offset against any damages
awarded to Customer for claims arising from the corresponding failure to
perform.

 

7.                                      Annual Review.

 

Within twelve (12) months
after each applicable Service Level Commencement Date, and at least annually
thereafter (after all initial Service Level Commencement Dates have passed, the
Parties shall 

 

6

 

agree
to synchronize to a single date for future use), or at either Party’s request,
Service Provider and Customer will review the Service Levels and any proposed
adjustments to them as appropriate pursuant to the Change Control Procedures to
reflect any improved performance capabilities associated with advances in the
technology and methods used to perform the Services or material changes in
volumes and metrics used to determine the Service Levels.  The Parties will also review any other
considerations relating to the Service Levels raised by either Party.  As
part of this review process, the Parties may jointly:  (a) determine and agree on the addition
and/or removal of Service Levels, (b) revise the categorization of Service
Levels, and (c) revise the results of the automatic continuous improvement
adjustment developed for a particular Service Level pursuant to Section 4
above or improve a particular Service Level not subject to the automatic
continuous improvement adjustments of Section 4 above.

 

8.                                      Investigation and Correction.

 

Service Provider shall
promptly investigate and correct each failure to meet the Service Levels
(whether or not such failure constitutes a Service Level Default) by:

 

[***]

 

 

7

 

Subject to a request for
confidential treatment, certain portions of this agreement have been intentionally
omitted.  The omitted portions subject to the confidential treatment
request are designated by three asterisks ([***]).  A complete version of
this agreement has been separately filed with the Securities and Exchange
Commission.

 

SCHEDULE D-2

SERVICE LEVELS

 

This
is Schedule D-2, Service Levels, to Transaction Document No. 1 to
that certain Master Services Agreement, dated as of December 11, 2008, between
ServiceMaster Consumer Services, L.P. and International Business Machines
Corporation.  Unless otherwise defined
herein, capitalized terms have the meanings set forth in the Master Agreement,
the “Definitions” Exhibit to the Master Agreement, or the “Definitions”
Schedule to the Transaction Document.

 

[***] [omitted 15 pages]

 

1

 

Subject to a request for
confidential treatment, certain portions of this agreement have been intentionally
omitted.  The omitted portions subject to the confidential treatment
request are designated by three asterisks (***).  A complete version of
this agreement has been separately filed with the Securities and Exchange
Commission.

 

Schedule D-2-A

Measured Applications and Expected Uptime

 

[***] [omitted 2 pages]

 

2

 

Subject to a request for
confidential treatment, certain portions of this agreement have been
intentionally omitted.  The omitted portions subject to the confidential
treatment request are designated by three asterisks ([***]).  A complete
version of this agreement has been separately filed with the Securities and
Exchange Commission.

 

SCHEDULE D-3

CRITICAL SERVICES

 

This
is Schedule D-3, Critical Services, to Transaction Document No. 1
to that certain Master Services Agreement, dated as of December 11, 2008,
between ServiceMaster Consumer Services, L.P. and International Business
Machines Corporation.  Unless otherwise
defined herein, capitalized terms have the meanings set forth in the Master
Agreement, the “Definitions” Exhibit to the Master
Agreement, or the “Definitions” Schedule to the Transaction
Document.

 

[***]

 

1

 

Subject to a request for
confidential treatment, certain portions of this agreement have been
intentionally omitted.  The omitted portions subject to the confidential
treatment request are designated by three asterisks ([***]).  A complete
version of this agreement has been separately filed with the Securities and
Exchange Commission.

 

SCHEDULE D-4

MANAGED AGREEMENTS

 

This
is Schedule D-4, Managed Agreements, to Transaction Document No. 1
to that certain Master Services Agreement, dated as of December 11, 2008,
between ServiceMaster Consumer Services, L.P. and International Business
Machines Corporation.  Unless otherwise
defined herein, capitalized terms have the meanings set forth in the Master
Agreement, the “Definitions” Exhibit to the Master
Agreement, or the “Definitions” Schedule to the Transaction
Document.

 

The
Parties agree as follows with respect to the Managed Agreements:

 

[***] [omitted 2 pages]

 

1

 

SCHEDULE E

CHARGES

 

1.                                      GENERAL

 

This is Schedule E, Charges, to Transaction
Document No. 1 to that certain Master Services Agreement, dated as of December 11,
2008, between ServiceMaster Consumer Services, L.P. and International Business
Machines Corporation.  Unless otherwise
defined herein, capitalized terms have the meanings set forth in the Master
Agreement, the “Definitions” Exhibit to the Master
Agreement, or the “Definitions” Schedule to the Transaction
Document.

 

2.                                      ATTACHMENTS

 

The following attached Schedules are
incorporated by reference herein:

 

2.1.                            Schedule E-1:   Pricing Methodology [portions omitted]

 

2.2.                            Schedule E-2:   Critical
Transition Milestone Payment and Credit Schedule [portions omitted]

 

.3.                                   Schedule E-3:   Pricing
Table [portions omitted]

 

.4.                                   Schedule E-4:   [Reserved]

 

2.5.                            Schedule E-5:   [Reserved]

 

2.6.                            Schedule E-6:   Rate
Card [portions omitted]

 

2.7.                            Schedule E-7:   Resource
Unit Definitions [portions omitted]

 

2.8.                            Schedule E-8:   Financial
Responsibilities Matrix [portions omitted]

 

2.9.                            Schedule E-9:   Termination
Fees [portions omitted]

 

2.10.                     Schedule E-10:   Form of
Invoice [portions omitted]

 

1

 

Subject to a request for confidential treatment, certain
portions of this agreement have been intentionally omitted.  The omitted
portions subject to the confidential treatment request are designated by three
asterisks ([***]).  A complete version of this agreement has been
separately filed with the Securities and Exchange Commission.

 

SCHEDULE E-1

PRICING METHODOLOGY

 

This
is Schedule E-1, Pricing Methodology, to Transaction Document No. 1
to that certain Master Services Agreement, dated as of December 11, 2008,
between ServiceMaster Consumer Services, L.P. and International Business
Machines Corporation.  Unless otherwise
defined herein, capitalized terms have the meanings set forth in the Master
Agreement, the “Definitions” Exhibit to the Master Agreement,
or the “Definitions” Schedule to the Transaction Document.

 

1.             OVERVIEW

 

1.1.         General

 

This
Schedule E-1 describes the methodology for calculating all of the
Charges as set forth in the other attachments to Schedule E.  In addition, this Schedule E-1 describes
the methodology for measuring and tracking the resources provided by Service
Provider and consumed by Customer for the purpose of calculating the Variable
Charges.  All Charges described in this Schedule
E-1 are stated in U.S. Dollars and are to be invoiced in U.S. Dollars
[***].  If there is any Dispute about the
interpretation of this Schedule E-1 or any of the other attachments to Schedule
E (that are not clarified in the Master Agreement, Transaction Document
No. 1 or other Exhibits or Schedules to the Master Agreement or
Transaction Document No. 1) at any time, the Parties agree to use the
pricing rules set forth in Section 1.3, below, as a basis for
settling the Dispute and that any ambiguity shall be interpreted and construed
in accordance with such rules.

 

The
Charges described in Schedule E and its attachments fully compensate
Service Provider for providing the Services (as a whole) and for all of the
resources and materials used to provide the Services.  If the Services are changed pursuant to the
Change Control Procedures, the Charges herein will be adjusted only to the
extent specifically stated in a signed Change Order agreed upon pursuant to the
Change Control Procedures.  Customer
shall not be responsible for the payment (whether to Service Provider or any
other service provider) of any Charges, fees or other amounts not expressly
described or referenced in Schedule E and its attachments, or in any
Change Order executed in accordance with the Change Control Procedures, in
connection with the Services.  In
determining the Charges, Service Provider has taken into account all of its
capital, operational, one-time start-up and all other incidental costs of
providing all of the Services and the Charges represent Service Provider’s sole
method of recovering such costs.

 

1.2.         Reporting

 

Service
Provider shall supply Customer with copies of the Reports and, where available,
electronic files that provide a detailed, auditable record of the resource
usage for each Resource Unit (and any other measurement of usage of the
Services provided in this Schedule E-1 or otherwise in the Agreement) on
a monthly basis, as described in Section 3.9 of the Master
Agreement, Section 6.2 of this Schedule and the “Reports” Schedule.  Notwithstanding that reports will be provided
to Customer on a monthly basis, Service Provider agrees that there may be
portions of the reports where data is calculated and provided based on weekly
activity.  This information shall be
provided to Customer with each invoice that Service Provider submits to
Customer.

 

1

 

1.3.         Pricing Rules and Default

 

The
Charges are calculated or governed by specific Charge Mechanics.  The Charge Mechanics are set forth in this Schedule
E-1, the other attachments to Schedule E or elsewhere in the
Master Agreement.  If no Charge Mechanic
is provided for a Service, except any New Services or Additional Services, then
such Service is provided in consideration of the Base Charges.

 

2.                                      BASE CHARGES

 

2.1.         Service Towers

 

The
Base Charges, as set forth in this Article 2, are listed for the
Resource Baselines for each Tower for each month of each Contract Year as set
forth in Schedule E-3.

 

2.2.         Calculation and Payment of Base Charges

 

Service
Provider shall invoice Customer as set forth in Section 6
below.  The Base Charges set forth in Schedule
E-3, shall be prorated for any initial partial month (e.g., if the applicable Commencement Date
is mid-month) and final partial month of the Term, as necessary.

 

2.3.         ARCs/RRCs

 

Customer
shall pay, in addition to the Base Charges, any applicable ARCs calculated in
accordance with Section 2.4 below, and shall receive a credit for
any RRCs calculated in accordance with Section 2.4 below.  The ARCs and RRCs will be included in the
Variable Charges invoice as set forth in Section 6 of this Schedule
E-1. Each ARC and RRC shall be listed as a separate line item on each such
monthly invoice, and Service Provider shall include on or with each such
invoice detail sufficient to enable Customer to validate the correct
calculation and application of the ARCs and RRCs.

 

2.4.         Calculation of ARCs/RRCs

 

(a)           General.  As of the Effective Date, the Resource Units,
Resource Baselines, [***] ARC/RRC Rates and ARC/RRC Measurement Periods for
each of the Towers are as set forth in Schedules E-3 and E-7, as
applicable.  The Resource Baselines are
monthly amounts for Resource Units that are measured on a monthly basis, unless
otherwise agreed.

 

(b)           Calculation.  Within ten (10) Business Days following
the end of each applicable ARC/RRC Measurement Period, Service Provider shall
calculate and provide to Customer the ARCs and RRCs invoice applicable to such
ARC/RRC Measurement Period ([***], as applicable, for each of the Resource
Units as specified in Schedule E-3) in accordance with the following
formulas:

 

(i)                                     ARC Measurement

 

(A)      If the actual Resource Unit consumption is equal to or
less than the ARC Point, then there will be no ARC.

 

(B)        If the actual Resource Unit consumption is greater
than the ARC Point, then the ARC calculation will be:

 

ARC
= (Actual Resource Unit consumption – ARC Point) × applicable ARC/RRC Rate.

 

2

 

(C)        For example, if

 

[***]Then:

 

[***]

 

(ii)                                  RRC Measurement

 

(A)      If the actual Resource Unit consumption is equal to or
greater than the RRC Point, then there will be no RRC.

 

(B)        If the actual Resource Unit consumption is less than
the RRC Point, then the RRC calculation will be:

 

RRC
= (RRC Point – actual Resource Unit consumption) × applicable ARC/RRC Rate.

 

(C)        For example, if

 

[***]Then:

 

[***]

 

2.5.         ARCs/RRCs Forecast

 

Upon
Customer’s reasonable request, Service Provider shall provide reasonable
forecast estimates of Customer’s consumption of Resource Units and applicable
forecasted ARC/RRC impacts.

 

2.6.         [***]

 

(a)           [***]

 

(b)           [***]

 

(c)           [***]

 

3.                                      PRICE
VARIABILITY

 

3.1.         Organic Growth and Shrinkage

 

(a)           If at a “trigger date,” which is the
end of either of the following periods: [***], the Resource Unit volume for a
Resource Baseline is, in the aggregate, either [***] above or [***] below the
Resource Baseline for such Resource Unit, and such volume change is anticipated
to be sustained over the next [***] and not associated with a one-time event or
a seasonal cycle, then upon Customer’s request and within a reasonable time
after the trigger date not to exceed [***], the Parties shall negotiate in good
faith and agree upon equitable adjustments to the Resource Baseline, and the
resulting Base Charge for such Resource Baseline and ARC and RRC Rates, to
reflect the volume change anticipated by Customer to continue, applying the
methodology described in paragraph (c) below.

 

(b)           Upon successful completion of the
renegotiations, the ARCs and RRCs will be calculated using the adjusted Resource
Baselines, Base Charges and ARC and RRC Rates and applied retroactively
beginning with the first month immediately following the trigger date.

 

3

 

(c)           In the event that Resource Baselines
are to be reset under the terms of this Section 3.1, the following
methodology will be used: the fixed costs contained within the total Charges
for the applicable Resource Units will be analyzed to determine the level of
fixed costs that reasonably could be shed or must be added for Service Provider
to provide the revised volumes.  Once the
new fixed cost is determined, the remaining variable portion will be applied
against the revised Resource Baselines to calculate the adjusted Base Charge
and ARC/RRC rates, consistent with the existing Base Charge and ARC/RRC
rates.  Nothing in this Section 3.1
relieves Service Provider of its obligation to provide the Services associated
with a Resource Baseline during the negotiation of an equitable adjustment to
the Base Charges associated with such Resource Baseline in accordance with this
section.

 

3.2.         Growth by Acquisition

 

If,
a Customer Acquisition results in an increase in Resource Unit consumption of
[***] or more, Service Provider will review the Charges for the Services with a
view to providing an equitable adjustment in accordance with Section 3.1(c) above
as a result of such Customer Acquisition.

 

3.3.         [***]

 

4.                                      PROJECT CHARGES

 

4.1.         Transformation and Transition Charges

 

(a)           The Transformation and Transition
Charges fully compensate Service Provider for performance of all Transformation
and Transition activities set forth in the “Transition and Transformation
Plan” Schedule, including Service Provider’s travel and living
expenses associated with such Transformation and Transition activities.

 

(b)           Service Provider shall invoice the
Transformation and Transition Charges in the amounts and at the times set forth
in Schedule E-2, subject to any Acceptance Criteria as described in the
“Transition and Transformation Critical Milestones” Schedule.

 

4.2.         Chargeable Project Work

 

(a)           Permitted Chargeable Project Work.  Only the following Chargeable Project Work
reviewed and approved by Customer as evidenced by a signed Project Work Order
shall be available for invoicing to Customer:

 

(i)                                     Application Development Projects: These Projects are charged via the Base
Charges and include any applicable ARCs that may be incurred as a result of an
overage in the Application Development Resource Baseline. Further details on
the Charge Mechanics for the Application Development Resource Unit are
specified in Schedule E-7.

 

(ii)                                  Infrastructure Projects: These Projects are charged via the Base
Charges and include any applicable ARCs that may be incurred as a result of an
overage in the Infrastructure Project Resource Baseline.  Further details on the Charge Mechanics for
the Infrastructure Projects Resource Unit are specified in Schedule E-7.

 

4

 

(iii)                               Consulting and Non-IT Projects: Consulting and Non-IT Projects are
charged as specified in paragraph (c) below.  To the extent there is an information
technology component to these Consulting and Non-IT Projects, such information
technology-specific activities in the Project shall be chargeable using the applicable
Application Development or Infrastructure Projects Resource Units as specified
in (i) and (ii) above.

 

(b)           Limitation on Chargeable Project
Work.  No work other than Chargeable
Project Work shall otherwise be chargeable under this Section 4.2.  Any time or resources that Service Provider
personnel or resources expend on (i) the Services, (ii) activities
that do not relate to approved Project-related Services; (iii) activities
that were not approved by Customer, if so required under the Master Agreement
or pursuant to the Change Control Procedures; and (iv) Project management
activities, shall not be billed to Customer as Chargeable Project Work.

 

(c)           Chargeable Project Work Charge
Mechanics and Rates.  The Charges for
Chargeable Project Work may be structured [***], or in accordance with another
economic model designated in the applicable mutually agreed Project Work
Order.  For Application Development and
Infrastructure Projects the Charge Mechanics specified in Section 4.2(a)(i) and
(ii) apply.  For Consulting
and Non-IT Projects the charges will be calculated using the Project
Rates.  [***].

 

(d)           Measurement and Invoicing of
Chargeable Project Work.  Service
Provider shall provide, with each monthly invoice, a chronological, itemized
listing of the Chargeable Project Work activities performed during the prior
month, showing the date of such Project Services, the applicable Project, the
number of hours expended by each person on each item, a description of the item
of work, and the rate at which those hours are billed.  Task descriptions shall identify each task in
a sufficient manner to permit Customer to ascertain the benefit derived from
such task or service.

 

5.                                      PASS-THROUGH
CHARGES

 

[***]  Any Pass-Through Charges to be added after
the Execution Date must be added through the Change Control Procedures.

 

With
each Service Provider invoice containing Pass-Through Charges, Service Provider
shall provide to Customer accurate copies of all such Third Party invoices for
Pass-Through Charges.

 

Service
Provider shall transfer to Customer all rebates, credits, and other monetary
benefits arising out of the Pass-Through Charges.  If any such rebates, credits, or other
monetary benefits are attributable to similar expenses incurred by Service
Provider for multiple customers, then the portion of such rebates, credits, or
other monetary benefits payable to Customer shall be pro-rated to reflect the
volume of applicable Pass-Through Charges attributable to Customer relative to
the volumes of such similar expenses attributable to other Service Provider
customers.

 

6.                                      INVOICE FORMAT
AND PROCESS

 

6.1.         Sections 4.4(a) through
(c) of Master Agreement Superseded

 

Sections
4.4(a) through (c) of
the Master Agreement do not apply to Transaction Document No. 1 and are
superseded by this Section 6.

 

5

 

6.2.         Invoice Format

 

Each
invoice provided by Service Provider to Customer shall conform with the format
and invoice specifications set forth in Schedule E-10 to Transaction
Document No. 1.  Such invoices shall
be delivered in both hard copy and electronic format, and shall be accompanied
by supporting information, in a format mutually agreed between the Parties,
sufficient for Customer to verify the total Charges due.  Customer requires central delivery of a
single monthly management report, in hard copy form and electronic form open to
analysis (e.g., Excel
spreadsheets), that consolidates all invoice information as well as separate
detail to support each separate invoice and any additional reporting described
in “Reports” Schedule.

 

6.3.         Invoice Errors

 

Service
Provider must promptly advise Customer of any incorrect calculation in Service
Provider’s favor (e.g., any
Resource Units which were incorrectly included in its calculation of the
Charges) and provide Customer with a credit reversing the effect of the error,
promptly, regardless of when it is discovered. 
Equally, if Customer discovers any such errors, upon receipt of
appropriate documentation of such error, Service Provider must provide a credit
to reverse the effect of the error.

 

6.4.         Accrual Support

 

Customer
may require from time to time support and information from Service Provider
regarding accrual of liabilities in respect of the Services, often in
connection with unbilled Charges for Services provided by Service
Provider.  Service Provider agrees to
promptly provide Customer with such accrual support and information.

 

6.5.         Timing of Invoices and Due Dates

 

(a)           [***]

 

(b)           [***]

 

(c)           Invoicing
and Payment of Variable Charges.  All
amounts, other than Disputed Charges, due to Service Provider and set forth on
a Variable Charges invoice delivered  in
accordance with this Schedule E-1 shall be due and payable within [***]
of Customer’s receipt of such invoice.

 

(d)           Pass-Through Charges.  Service Provider will use commercially
reasonable diligent efforts to (i) identify and obtain invoices for
Pass-Through Charges, if any, that a Third Party Provider does not provide to
Service Provider in a timely manner, and (ii) include all Pass-Through
Charges incurred in the month corresponding to each invoice in the applicable
Variable Charges invoice(s).  Service
Provider shall report each month to Customer on the status of late Third Party
Provider invoices and Service Provider’s efforts to obtain them.  [***] 
Service Provider shall not invoice Customer, and Customer will not be
obligated to pay, any Pass-Through Charges that are not properly invoiced
within [***] after the end of the month to which such Charges correspond.

 

(d)           Payment
by Wire Transfer.  Customer’s payment
of any Service Provider invoice may be made by wire transfer to an account
designated by Service Provider.

 

(e)           [***].

 

6

 

7.                                      FINANCIAL
RESPONSIBILITIES MATRIX

 

Except
as otherwise set forth in the Master Agreement, Schedule E-8 outlines
both Customer’s and Service Provider’s financial responsibilities regarding the
resources used to provide the Services. 
[***]

 

8.                                      TERMINATION
CHARGES

 

Schedule
E-9 sets forth the
Termination Charges, if any, that correspond to specific scenarios through
which the Master Agreement may be terminated by Customer or Service Provider
prior to its expiration date. 
[***].  The Termination Charges
are specified on a monthly basis.  [***].

 

9.                                      RETAINED
EXPENSES

 

Service
Provider will work with Customer in seeking ways to reduce and minimize
retained expenses.  For Managed
Agreements, Service Provider agrees to manage the vendors associated with the
Managed Agreements in a manner consistent with Customer’s service delivery
model and practices in place prior the Execution Date.  Service Provider agrees not to materially
deviate from the aforementioned service delivery model and practices in a
manner that results in an increase in the retained expenses of the Customer
Group associated with those Managed Agreements. For example, Service Provider
will not dispatch or route work to vendors that would not have otherwise been
dispatched or routed to those vendors by Customer prior to the Execution Date.

 

7

 

SCHEDULE E-2

CRITICAL
TRANSITION MILESTONE PAYMENTS AND CREDITS

 

This
is Schedule E-2, Critical Transition Milestone Payments and Credits, to
Transaction Document No. 1 to that certain Master Services Agreement,
dated as of December 11, 2008, between ServiceMaster Consumer Services,
L.P. and International Business Machines Corporation.  Unless otherwise defined herein, capitalized
terms have the meanings set forth in the Master Agreement, the “Definitions”
Exhibit to the Master Agreement, or the “Definitions” Schedule
to the Transaction Document.

 

The payments and credits associated with
Transition are set forth in Schedule F-3.

 

1

 

Subject to a request for
confidential treatment, certain portions of this agreement have been
intentionally omitted.  The omitted portions subject to the confidential
treatment request are designated by three asterisks ([***]).  A complete
version of this agreement has been separately filed with the Securities and
Exchange Commission.

 

SCHEDULE E-3

PRICING
TABLES

 

This
is Schedule E-3, Pricing Tables, to Transaction Document No. 1 to
that certain Master Services Agreement, dated as of December 11, 2008, between
ServiceMaster Consumer Services, L.P. and International Business Machines
Corporation.  Unless otherwise defined
herein, capitalized terms have the meanings set forth in the Master Agreement,
the “Definitions” Exhibit to the Master Agreement, or the “Definitions”
Schedule to the Transaction Document.

 

Schedule
E-3 begins on the next page.

 

[***] [omitted 33 pages]

 

1

 

Subject to a request for
confidential treatment, certain portions of this agreement have been
intentionally omitted.  The omitted portions subject to the confidential
treatment request are designated by three asterisks ([***]).  A complete
version of this agreement has been separately filed with the Securities and
Exchange Commission.

 

SCHEDULE E-6

RATE
CARD

 

This
is Schedule E-6, Rate Card, to Transaction Document No. 1 to that
certain Master Services Agreement, dated as of December 11, 2008, between
ServiceMaster Consumer Services, L.P. and International Business Machines
Corporation.  Unless otherwise defined
herein, capitalized terms have the meanings set forth in the Master Agreement,
the “Definitions” Exhibit to the Master Agreement, or the “Definitions”
Schedule to the Transaction Document.

 

Schedule
E-6 begins on the next page.

 

[***] [omitted 4
pages]

 

1

 

Subject to a request for
confidential treatment, certain portions of this agreement have been
intentionally omitted.  The omitted portions subject to the confidential
treatment request are designated by three asterisks ([***]).  A complete
version of this agreement has been separately filed with the Securities and
Exchange Commission.

 

SCHEDULE
E-7

RESOURCE UNIT DEFINITIONS

 

This is Schedule E-7, Resource Unit
Definitions, to Transaction Document No. 1 to that certain Master Services
Agreement, dated as of December 11, 2008, between ServiceMaster Consumer
Services, L.P. and International Business Machines Corporation.

 

I.              INTRODUCTION

 

This Schedule E-7 describes the measures of Resource
Unit utilization and the tracking of such utilization for the Services.  Not all types of hardware and equipment are
represented with a Resource Unit; however, support for all Customer IT hardware
and equipment is included in the Services as set forth in the “Statement of
Work” Schedule and Service Provider is fully compensated for such support
via the Charges as set forth in Schedule E-1.

 

II.            DEFINITIONS

 

Unless otherwise defined herein, capitalized terms
have the meanings set forth in the Master Agreement, the “Definitions” Exhibit to
the Master Agreement, or the “Definitions” Schedule to the Transaction
Document.

 

III.           RESOURCE BASELINES

 

The Resource Baselines for each month of the Term
are set forth in Schedule E-3 to the Master Agreement.

 

[***] [omitted 18 pages]

 

1

 

Subject to a request for
confidential treatment, certain portions of this agreement have been
intentionally omitted.  The omitted portions subject to the confidential
treatment request are designated by three asterisks ([***]).  A complete
version of this agreement has been separately filed with the Securities and
Exchange Commission.

 

SCHEDULE E-8

FINANCIAL RESPONSIBILITY MATRIX

 

This is Schedule E-8, Financial
Responsibility Matrix, to Transaction Document No. 1 to that certain
Master Services Agreement, dated as of December 11, 2008, between
ServiceMaster Consumer Services, L.P. and International Business Machines
Corporation.  Unless otherwise defined
herein, capitalized terms have the meanings set forth in the Master Agreement,
the “Definitions” Exhibit to the Master Agreement, or the “Definitions”
Schedule to the Transaction Document.

 

Schedule E-8 begins on the next page.

 

[***] [omitted 16 pages]

 

1

 

Subject to a request for
confidential treatment, certain portions of this agreement have been
intentionally omitted.  The omitted portions subject to the confidential
treatment request are designated by three asterisks ([***]).  A complete
version of this agreement has been separately filed with the Securities and
Exchange Commission.

 

SCHEDULE E-9

TERMINATION FEES

 

This is Schedule E-9, Termination Fees, to
Transaction Document No. 1 to that certain Master Services Agreement,
dated as of December 11, 2008, between ServiceMaster Consumer Services,
L.P. and International Business Machines Corporation.  Unless otherwise defined herein, capitalized
terms have the meanings set forth in the Master Agreement, the “Definitions”
Exhibit to the Master Agreement, or the “Definitions” Schedule
to the Transaction Document.

 

Schedule E-9 begins on the next page.

 

[***] [omitted 8 pages]

 

1

 

Subject to a request for
confidential treatment, certain portions of this agreement have been
intentionally omitted.  The omitted portions subject to the confidential
treatment request are designated by three asterisks ([***]).  A complete
version of this agreement has been separately filed with the Securities and
Exchange Commission.

 

SCHEDULE E-10

FORM OF INVOICE

 

1.             GENERAL

 

This
is Schedule E-10, Form of Invoice, to Transaction Document No. 1
to that certain Master Services Agreement, dated as of December 11, 2008,
between ServiceMaster Consumer Services, L.P. and International Business
Machines Corporation.  Unless otherwise
defined herein, capitalized terms have the meanings set forth in the Master
Agreement, the “Definitions” Exhibit to the Master
Agreement, or the “Definitions” Schedule to the Transaction
Document.

 

2.             MINIMUM REQUIREMENTS

 

Service
Provider shall provide invoices to Customer for the Charges in accordance with
the Agreement and this Schedule E-10.  Service Provider’s invoices to Customer must
conform to the form and format that satisfies Customer’s billing and accounting
obligations to other Customer business units and Customer’s direct billing
obligations or approved allocation methods, as provided to Service Provider
from Customer.  Service Provider will
submit a single summary invoice for payment purposes with the Charges further
summarized by [***].  [***].  The Parties will work together to revise
invoicing procedures and invoice content as appropriate to minimize Taxes or
administrative costs and to comply with Laws. 
Customer may, from time to time, modify the requirements specified in
this Schedule E-10, which modifications will be implemented in
accordance with the Change Control Procedures, to the extent such requests are
reasonable and technically feasible.

 

3.             SUPPORTING DOCUMENTATION

 

Service
Provider shall submit with each invoice detailed documentation sufficient to
support the Charges on the invoice.  At a
minimum, Service Provider’s invoice and supporting documentation must
[***].  [***].

 

4.             ALLOCATION GUIDELINES

 

Within
ninety (90) days of the Execution Date, Customer shall provide Service Provider
the necessary details, including any formulaic allocation models, to enable
Service Provider to invoice the Charges to various Customer business units as
requested by Customer.

 

1

 

5.             SAMPLE INVOICE

 

The
following samples illustrate Service Provider’s standard invoice format.

 

[***] [omitted 2 pages]

 

2

 

SCHEDULE F

TRANSITION AND TRANSFORMATION PLAN

 

This
is Schedule F, Transition and
Transformation Plan, to Transaction Document No. 1 to that certain
Master Services Agreement, dated as of December 11, 2008, between
ServiceMaster Consumer Services, L.P. and International Business Machines
Corporation.  Unless otherwise defined
herein, capitalized terms have the meanings set forth in the Master Agreement,
the “Definitions” Exhibit to the Master Agreement, or the “Definitions”
Schedule to the Transaction Document.

 

Schedule
F consists of the “Transition
and Transformation Planning Process” Schedule, the “High Level Transition and Transformation Plan”
Schedule and the “Transition
and Transformation Critical Milestones” Schedule.

 

1

 

Subject to a request for
confidential treatment, certain portions of this agreement have been
intentionally omitted.  The omitted portions subject to the confidential
treatment request are designated by three asterisks ([***]).  A complete
version of this agreement has been separately filed with the Securities and
Exchange Commission.

 

SCHEDULE
F-1

TRANSFORMATION AND TRANSITION

 

This is Schedule F-1, Transformation and
Transition, to Transaction Document No. 1 to that certain Master Services
Agreement, dated as of December 11, 2008, between ServiceMaster Consumer
Services, L.P. and International Business Machines Corporation.

 

1.             INTRODUCTION

 

1.1           Objective

 

This
Schedule F-1 sets out the Parties’ responsibilities for the
Transformation and Transition, and migration of the Services from Customer and
its third party vendors to Service Provider.

 

1.2           Transformation and Transition Plan

 

Service
Provider shall perform the Transformation and Transition activities
attributable to Service Provider and set out in this Schedule F-1
(including without limitation the activities set out in Schedule F-2 and
the Detailed Transformation and Transition Plan), and take primary
responsibility for the coordination of the activities of both Parties as is
necessary to ensure that operational responsibility for the Services is
successfully transitioned to Service Provider and transformed on schedule and
minimizing disruption to the Customer’s business.

 

1.3           Definitions

 

Unless
otherwise defined herein, capitalized terms have the meanings set forth in the
Master Agreement, the “Definitions” Exhibit to the Master Agreement, or
the “Definitions” Schedule to the Transaction Document.

 

2.             TRANSITION PROJECT
OVERVIEW & OBJECTIVES

 

2.1           Overview

 

Service
Provider will undertake the Transformation and Transition Project to facilitate
the transfer of operational responsibility for the Services from Customer and
its third party vendors to Service Provider. 
The Transformation and Transition Project will last approximately 6
months, including activity before and after the actual transfer of Services to
Service Provider.

 

2.2           Objectives

 

The
primary objectives of the Transformation and Transition Project are:

 

(a)           [***];

 

(b)           [***];

 

(c)           [***]

 

1

 

(d)           [***].

 

3.             TRANSITION PLAN

 

3.1           High Level Transformation and Transition Plan

 

An
initial high level project plan for the Transformation and Transition Project
prepared by Service Provider and approved by Customer as of the Execution Date
is set forth in the “High Level Transformation and Transition Plan” Schedule.

 

3.2           Detailed Transformation and Transition Plan

 

(a)           Service Provider shall
provide to Customer within [***] after the Execution Date the Detailed
Transformation and Transition Plan. 
[***]:

 

(i)            [***]; and

 

(ii)           [***].

 

(b)           Customer shall propose in
writing within [***] of receipt of the draft Transformation and Transition Plan
all reasonable modifications necessary to make the Detailed Transformation and
Transition Plan delivered by Service Provider agreeable to it so that
performance of the Detailed Transformation and Transition Plan may
commence.  The Parties shall mutually
agree on the final Detailed Transformation and Transition Plan within [***]
after Customer proposes any modifications to Service Provider’s draft of such
plan.  If the Parties are unable to agree
a Detailed Transformation and Transition Plan within such period, the
outstanding matters shall be referred to the governance procedures set forth in
the “Governance and Change Control” Exhibit.

 

4.             TRANSITION CHARGES AND
CREDITS

 

4.1           Transformation and Transition Charges

 

[***].

 

4.2           Critical Transformation and Transition Milestones

 

(a)           The Critical Transformation
and Transition Milestones for the Transformation and Transition Project and the
due date for each such Critical Transformation and Transition Milestone are set
out in the table in Schedule F-3. 
Due dates assume timely performance by Customer of its responsibilities
in the Transformation and Transition Plan, including transition of regions (as
applicable) to Service Provider’s responsibility.

 

(b)           [***].

 

(c)           [***].

 

4.3           Failure to Achieve Critical Transformation and Transition Milestones

 

[***].

 

4.4           Critical Transformation and Transition Milestone Credits

 

2

 

[***]

 

4.5           Acceptance Criteria

 

(a)           In respect of each
Deliverable required to be delivered by Service Provider as part of the
Transformation and Transition Project as specified in the Detailed
Transformation and Transition Plan, Service Provider shall include the
Acceptance Criteria reflecting the requirements of Section 5.1(b) below
within the Detailed Transformation and Transition Plan.  After Customer approval of the Detailed
Transformation and Transition Plan, any subsequent changes to the Acceptance
Criteria, and subsequent dependencies or timing issues, shall be agreed between
the Parties in accordance with the Change Control Procedures.

 

(b)           The Acceptance Criteria
will, where appropriate, include the testing procedures and criteria for
testing whether or not the Deliverable in question meets the relevant
requirements (as set out in this Schedule F-1 or otherwise agreed
between the Parties), including:

 

(i)            details of the criteria to
be met and the results which must be produced if the Deliverable is to be
considered to have met the Acceptance Criteria; and

 

(ii)           the identity of the Party
who shall undertake the acceptance tests.

 

5.             TRANSITION REPORTING

 

During
the Transformation and Transition Period, Service Provider shall provide a
[***] report to Customer and attend meetings/conference calls with Customer to
discuss the same, including:

 

(a)           [***];

 

(b)           [***];

 

(c)           [***];

 

(d)           [***]; and

 

(e)           [***].

 

6.             TRANSITION SCHEDULE CHANGES

 

6.1           Customer Requested Changes

 

Upon
written notice from Customer specifying that Customer desires Service Provider
to delay suspend, extend or modify the timing of Transformation and Transition
Project activities, Service Provider will accommodate such request for the
requested period of time not to exceed [***] unless mutually agreed by the
Parties.  The completion dates for the
Critical Transformation and Transition Milestones and other date specific
activities set out in the High Level Transformation and Transition Plan and the
Detailed Transformation and Transition Plan shall be extended on a day-for-day
basis, or such other duration as agreed between the Parties, equal to the
length of the Transformation and Transition Project schedule extension,
suspension or modification requested by Customer, not to exceed [***] unless
mutually agreed by the Parties.

 

3

 

6.2           Financial Impacts

 

(a)           [***].

 

(b)           [***]

 

(c)           [***]

 

7.             PROGRAM MANAGEMENT

 

7.1           Requirements of the Detailed Transformation and Transition Plan

 

The
Detailed Transformation and Transition Plan will include, without limitation:

 

(a)           [***];

 

(b)           [***];

 

(c)           [***]; and

 

(d)           [***].

 

7.2           Service Teams

 

[***].

 

7.3           Key Transformation and Transition Plan Deliverables

 

[***]

 

(a)           [***];

 

(b)           [***];

 

(c)           [***];

 

(d)           [***]

 

(e)           [***].

 

7.4           Program Wide Change Management

 

Customer
and Service Provider shall be jointly responsible for developing an integrated
change management program for Customer’s internal change management process
that incorporates other related Customer initiatives. Service Provider shall
participate on Customer’s teams and workgroups and at Customer’s direction
develop relevant materials and communications, provide counsel on strategy and
facilitate the alignment of Transformation and Transition activities in support
of the change management program, in accordance with the Transformation and
Transition Plan.

 

4

 

Subject to a request for
confidential treatment, certain portions of this agreement have been
intentionally omitted.  The omitted portions subject to the confidential
treatment request are designated by three asterisks ([***]).  A complete
version of this agreement has been separately filed with the Securities and
Exchange Commission.

 

SCHEDULE F-2

HIGH
LEVEL TRANSITION AND TRANSFORMATION PLAN

 

This
is Schedule F-2, High Level Transition and Transformation Plan, to
Transaction Document No. 1 to that certain Master Services Agreement,
dated as of December 11, 2008, between ServiceMaster Consumer Services,
L.P. and International Business Machines Corporation.  Unless otherwise defined herein, capitalized
terms have the meanings set forth in the Master Agreement, the “Definitions”
Exhibit to the Master Agreement, or the “Definitions” Schedule
to the Transaction Document.

 

Schedule
F-2 begins on the next page.

 

[***] [omitted 36
pages]

 

1

 

Subject to a request for confidential
treatment, certain portions of this agreement have been intentionally
omitted.  The omitted portions subject to the confidential treatment
request are designated by three asterisks ([***]).  A complete version of
this agreement has been separately filed with the Securities and Exchange
Commission.

 

SCHEDULE F-3

TRANSITION
AND TRANSFORMATION CRITICAL MILESTONES

 

This
is Schedule F-3, Transition and Transformation Critical Milestones, to
Transaction Document No. 1 to that certain Master Services Agreement,
dated as of December 11, 2008, between ServiceMaster Consumer Services,
L.P. and International Business Machines Corporation.  Unless otherwise defined herein, capitalized
terms have the meanings set forth in the Master Agreement, the “Definitions”
Exhibit to the Master Agreement, or the “Definitions” Schedule
to the Transaction Document.

 

Schedule
F-3 begins on the next page.

 

1

 

Customer will accept each
Transition and Transformation Milestone when Service Provider meets the
Acceptance Criteria for such Transition and Transformation Milestone.  Acceptance Criteria will be developed in
additional detail and agreed to during the development of the Detailed Transition
and Transformation Plan.  For this Schedule
F-3 only, “ED” means December 11, 2008.

 

[***] [omitted 8
pages]

 

[***]

 

1

 

Customer
Responsibilities Mapping

 

The following tables
provide a definitive list of Customer responsibilities for start up,
transition, and transformation.  These
will be included in the Detailed Transformation and Transition Plan.

 

[***]

 

2

 

Subject to a request for
confidential treatment, certain portions of this agreement have been
intentionally omitted.  The omitted portions subject to the confidential
treatment request are designated by three asterisks ([***]).  A complete
version of this agreement has been separately filed with the Securities and
Exchange Commission.

 

SCHEDULE G

CUSTOMER
SOFTWARE

 

This is Schedule G,
Customer Software, to Transaction Document No. 1 to that certain Master
Services Agreement, dated as of December 11, 2008, between ServiceMaster
Consumer Services, L.P. and International Business Machines Corporation.  Unless otherwise defined herein, capitalized
terms have the meanings set forth in the Master Agreement, the “Definitions”
Exhibit to the Master Agreement, or the “Definitions” Schedule
to the Transaction Document.

 

This Schedule G sets
forth the Customer Software to be used by Service Provider in the provision of
the Services under Section 10.1 of the Master Agreement.  The Parties shall update this Schedule G
within thirty (30) days after the last Commencement Date to correct any errors
in the table below and to update any information listed as “to be provided” in
accordance with the Change Control Procedures. 
From time to time during the Term, but not less than annually, Service
Provider shall update this Schedule G to reflect the actual Customer
Software products and number of licenses/seats required by Service Provider to
provide the Services.

 

Where a number of licenses
is specified in the column labeled “Number of Licenses/Seats,” the number
represents the quantity of software licenses that Customer will provide to
Service Provider.  If additional software
licenses are needed by Service Provider, the cost of such additional licenses
will be borne by the Party indicated in the “Growth” column of the “Software
Schedule” of the “Financial Responsibility Matrix” Schedule.  All other costs associated with the Customer
Software are specified in the “Financial Responsibility Matrix” Schedule.

 

[***] [omitted 15 pages]

 

1

 

Subject to a request for
confidential treatment, certain portions of this agreement have been
intentionally omitted.  The omitted portions subject to the confidential
treatment request are designated by three asterisks ([***]).  A complete
version of this agreement has been separately filed with the Securities and
Exchange Commission.

 

SCHEDULE H

SERVICE
PROVIDER SOFTWARE

 

This is Schedule H,
Service Provider Software, to Transaction Document No. 1 to that certain
Master Services Agreement, dated as of December 11, 2008, between ServiceMaster
Consumer Services, L.P. and International Business Machines Corporation.  Unless otherwise defined herein, capitalized
terms have the meanings set forth in the Master Agreement, the “Definitions”
Exhibit to the Master Agreement, or the “Definitions” Schedule
to the Transaction Document.

 

Pursuant
to Section 10.2 of the Master Agreement, the table below sets forth
the Service Provider Software to be used by Service Provider in the provision
of the Services.  Service Provider shall
provide Customer with the cooperation, information and access reasonably
necessary for Customer to evaluate any additional Service Provider Software
added in compliance with Section 10.2 of the Master Agreement.  Upon request, and except for the software set
forth in the “Commercially Unavailable Tools” Schedule, Service
Provider will provide to Customer a listing of all Service Provider Software by
name, Version, Maintenance Release and as applicable, patch level promoted into
production, and the Equipment on which such Service Provider Software is
installed and the physical location of such Equipment.

 

[***] [omitted 4
pages]

 

1

 

Subject to a request for
confidential treatment, certain portions of this agreement have been
intentionally omitted.  The omitted portions subject to the confidential
treatment request are designated by three asterisks ([***]).  A complete
version of this agreement has been separately filed with the Securities and
Exchange Commission.

 

SCHEDULE I

CUSTOMER
THIRD PARTY AGREEMENTS

 

This
is Schedule I, Customer Third Party Agreements, to Transaction Document No. 1
to that certain Master Services Agreement, dated as of December 11, 2008,
between ServiceMaster Consumer Services, L.P. and International Business
Machines Corporation.  Unless otherwise
defined herein, capitalized terms have the meanings set forth in the Master
Agreement, the “Definitions” Exhibit to the Master
Agreement, or the “Definitions” Schedule to the Transaction
Document.

 

Customer
will provide Service Provider with updates to this Schedule I in
accordance with the Change Control Procedures.

 

Assumed Agreements:

 

As of the Execution Date,
there are no Assumed Agreements.

 

Managed
Agreements:

 

The
Managed Agreements as of the Execution Date are listed in the table beginning
on the next page.  In addition to those
agreements listed in that table, all [***] are also Managed
Agreements; however, only the Managed Agreements that are specifically
listed in the table in this Schedule I are subject to the Service Level
identified as [***] in the “Service
Levels” Schedule.

 

Where the column in the
table (beginning on the next page) titled [***] contains an “X,” with
respect to that Managed Agreement, it means: 
(1) for CPI Service Levels as of the Execution Date, that Managed
Agreement is excluded from the measurement of Service Provider’s performance
under the Service Level identified as [***] in the “Service Levels”
Schedule and (2) as of the Execution Date, that Managed Agreement
does not impact Service Provider’s performance under any CPI Service Level.

 

Schedule
I continues on the next page.

 

[***] [omitted 12
pages]

 

1

 

Subject to a request for
confidential treatment, certain portions of this agreement have been
intentionally omitted.  The omitted portions subject to the confidential
treatment request are designated by three asterisks ([***]).  A complete
version of this agreement has been separately filed with the Securities and
Exchange Commission.

 

SCHEDULE J

REPORTS

 

This
is Schedule J, Reports, to Transaction Document No. 1 to that
certain Master Services Agreement, dated as of December 11, 2008, between
ServiceMaster Consumer Services, L.P. and International Business Machines
Corporation.  Unless otherwise defined
herein, capitalized terms have the meanings set forth in the Master Agreement,
the “Definitions” Exhibit to the Master Agreement, or the “Definitions”
Schedule to the Transaction Document.

 

This Schedule J and
the attached Schedule J-1 set forth the Reports which Service Provider
shall provide to Customer in accordance with Section 3.9 of the
Master Agreement.  As of the Commencement
Date, Service Provider shall provide all operational reports relevant to the
management of the Services, which were provided by the portion of Customer’s
organization responsible for the functions comprising the Services prior to the
Commencement Date, all performance reports specified in the “Service Level
Agreement” Schedule, and such other reports as needed as Customer
may request from time to time.

 

Service Provider shall
provide its “standard” reports as set forth in Schedule J-1 and the
additional reports identified in the table below.  Unless specified otherwise by Customer, the
default date by which Service Provider shall start delivering such reports is: (1) for
Reports with respect to Service Level performance, the applicable Service Level
Commencement Date specified in the “Service Level Agreement” Schedule
and (2) for Reports with respect to other matters, not later than [***] after Service Provider
assumes responsibility for performing the related task, activity, function or
responsibility.  Service Provider shall
prepare and deliver the Reports as part of the Services [***].  Service Provider shall be responsible for
performing all tasks necessary to create and deliver the Reports.

 

[***] [omitted 8 pages]

 

1

 

Subject to a request for
confidential treatment, certain portions of this agreement have been
intentionally omitted.  The omitted portions subject to the confidential
treatment request are designated by three asterisks ([***]).  A complete
version of this agreement has been separately filed with the Securities and
Exchange Commission.

 

Schedule J-1

Standard Reports

 

IBM
Standard Reports

 

[***] [omitted 10
pages]

 

1

 

Subject to a request for
confidential treatment, certain portions of this agreement have been
intentionally omitted.  The omitted portions subject to the confidential
treatment request are designated by three asterisks ([***]).  A complete
version of this agreement has been separately filed with the Securities and
Exchange Commission.

 

SCHEDULE K

LIST
OF APPROVED BENCHMARKERS

 

This is Schedule K,
List of Approved Benchmarkers, to Transaction Document No. 1 to that
certain Master Services Agreement, dated as of December 11, 2008, between
ServiceMaster Consumer Services, L.P. and International Business Machines
Corporation.  Unless otherwise defined
herein, capitalized terms have the meanings set forth in the Master Agreement,
the “Definitions” Exhibit to the Master Agreement, or the “Definitions”
Schedule to the Transaction Document.

 

This Schedule K
sets forth the Benchmarkers that Customer may engage in accordance with Section 4.5
of the Master Agreement.  The Parties
shall review this list annually and this Schedule K may be updated as
agreed in writing by the Parties.

 

[***]

 

1

 

Subject to a request for
confidential treatment, certain portions of this agreement have been
intentionally omitted.  The omitted portions subject to the confidential
treatment request are designated by three asterisks ([***]).  A complete
version of this agreement has been separately filed with the Securities and
Exchange Commission.

 

SCHEDULE L

TECHNICAL
ARCHITECTURE AND PRODUCT STANDARDS

 

This
is Schedule L, Technical Architecture and Product Standards, to
Transaction Document No. 1 to that certain Master Services Agreement,
dated as of December 11, 2008, between ServiceMaster Consumer Services,
L.P. and International Business Machines Corporation.  Unless otherwise defined herein, capitalized
terms have the meanings set forth in the Master Agreement, the “Definitions”
Exhibit to the Master Agreement, or the “Definitions” Schedule
to the Transaction Document.

 

[***]

 

1

 

Subject to a request for
confidential treatment, certain portions of this agreement have been
intentionally omitted.  The omitted portions subject to the confidential
treatment request are designated by three asterisks ([***]).  A complete
version of this agreement has been separately filed with the Securities and
Exchange Commission.

 

SCHEDULE M

DISASTER RECOVERY REQUIREMENTS

 

This
is Schedule M, Disaster Recovery Requirements, to Transaction Document No. 1
to that certain Master Services Agreement, dated as of December 11, 2008,
between ServiceMaster Consumer Services, L.P. and International Business
Machines Corporation.  Unless otherwise
defined herein, capitalized terms have the meanings set forth in the Master
Agreement, the “Definitions” Exhibit to the Master
Agreement, or the “Definitions” Schedule to the Transaction
Document.

 

Schedule
M consists of:

 

	
  M-1

  	
   

  	
  Disaster Recovery
  Requirements - General [portions omitted]

  
	
  M-1-a

  	
   

  	
  Disaster Declaration Event
  Fee [portions omitted]

  
	
  M-1-b

  	
   

  	
  Common BCRS Shared
  Services [portions omitted]

  
	
  M-2-a

  	
   

  	
  Terminex [***] Specs
  [portions omitted]

  
	
  M-2-b

  	
   

  	
  Terminex [***] Services
  [portions omitted]

  
	
  M-2-c

  	
   

  	
  Terminex [***] [portions
  omitted]

  
	
  M-3

  	
   

  	
  Terminex [***] Specs
  [portions omitted]

  
	
  M-4-a

  	
   

  	
  AHS Specs [portions
  omitted]

  
	
  M-4-b

  	
   

  	
  AHS Services [portions
  omitted]

  
	
  M-4-c

  	
   

  	
  AHS Disaster Recovery
  Program [portions omitted]

  
	
  M-5

  	
   

  	
  JDE [***] Specs [portions
  omitted]

  
	
  M-6

  	
   

  	
  JDE [***] Specs [portions
  omitted]

  
	
  M-7

  	
   

  	
  Terminex [***] Specs
  [portions omitted]

  
	
  M-8

  	
   

  	
  Lawn [***] Specs [portions
  omitted]

  
	
  M-9

  	
   

  	
  Land [***] Specs [portions
  omitted]

  
	
  M-10

  	
   

  	
  Land [***] Specs [portions
  omitted]

  
	
  M-11

  	
   

  	
  BSC AD [***] Specs
  [portions omitted]

  

 

1

 

Subject to a request for
confidential treatment, certain portions of this agreement have been
intentionally omitted.  The omitted portions subject to the confidential
treatment request are designated by three asterisks ([***]).  A complete
version of this agreement has been separately filed with the Securities and
Exchange Commission.

 

SCHEDULE M-1

DISASTER RECOVERY REQUIREMENTS – GENERAL

 

This
is Schedule M-1, Disaster Recovery Requirements - General, to
Transaction Document No. 1 to that certain Master Services Agreement,
dated as of December 11, 2008, between ServiceMaster Consumer Services,
L.P. and International Business Machines Corporation.  Unless otherwise defined herein, capitalized
terms have the meanings set forth in the Master Agreement, the “Definitions”
Exhibit to the Master Agreement, or the “Definitions” Schedule
to the Transaction Document.

 

1.             GENERAL

 

Service
Provider shall provide the Disaster Recovery Services as part of the Services
in accordance with this Schedule, the Attachments to this Schedule
and Section 3.5 of the Master Agreement.  All Attachments are incorporated into this
Schedule by reference.  Terms defined in
an Attachment to this Schedule apply to all Attachments to this Schedule,
unless otherwise defined therein.  In the
event of a conflict between the terms of an Attachment and this Schedule,
the terms of this Schedule control.

 

[***] [omitted 13 pages]

 

1

 

Subject to a request for
confidential treatment, certain portions of this agreement have been
intentionally omitted.  The omitted portions subject to the confidential
treatment request are designated by three asterisks ([***]).  A complete
version of this agreement has been separately filed with the Securities and
Exchange Commission.

 

SCHEDULE M-1-a

DISASTER DECLARATION EVENT FEES

 

[***]

 

1

 

Subject to a request for confidential
treatment, certain portions of this agreement have been intentionally
omitted.  The omitted portions subject to the confidential treatment
request are designated by three asterisks ([***]).  A complete version of
this agreement has been separately filed with the Securities and Exchange
Commission.

 

Schedule
M-1-b

 

to

 

Schedule
M

 

Master
Services Agreement

 

[***] [omitted 4 pages]

 

1

 

Subject to a request for
confidential treatment, certain portions of this agreement have been
intentionally omitted.  The omitted portions subject to the confidential
treatment request are designated by three asterisks ([***]).  A complete
version of this agreement has been separately filed with the Securities and
Exchange Commission.

 

Schedule M-2-a

 

to

 

Schedule M

 

[***] [omitted 2 pages]

 

1

 

Subject to a request for
confidential treatment, certain portions of this agreement have been
intentionally omitted.  The omitted portions subject to the confidential
treatment request are designated by three asterisks ([***]).  A complete
version of this agreement has been separately filed with the Securities and
Exchange Commission.

 

Schedule
M-2-b

 

 to

 

Schedule
M

 

[***]
[omitted 4 pages]

 

1

 

Subject to a request for
confidential treatment, certain portions of this agreement have been
intentionally omitted.  The omitted portions subject to the confidential
treatment request are designated by three asterisks ([***]).  A complete
version of this agreement has been separately filed with the Securities and
Exchange Commission.

 

Schedule M-2-c

 

To

 

Schedule M

 

Disaster Recovery Services

 

[***] [omitted 4 pages]

 

1

 

Subject to a request for
confidential treatment, certain portions of this agreement have been
intentionally omitted.  The omitted portions subject to the confidential
treatment request are designated by three asterisks ([***]).  A complete
version of this agreement has been separately filed with the Securities and
Exchange Commission.

 

Schedule
M-3 to the Disaster Recovery Requirements

 

The terms of the Master
Services Agreement and its Schedules and Transaction Documents apply to this
transaction.

 

[***]
[omitted 3 pages]

 

 

AHS
Disaster Recovery Program                                                                                               

 

Subject to a request for
confidential treatment, certain portions of this agreement have been
intentionally omitted.  The omitted portions subject to the confidential
treatment request are designated by three asterisks ([***]).  A complete
version of this agreement has been separately filed with the Securities and
Exchange Commission.

 

Schedules M-4-a, M-4-b, M-4-c

 

To

 

Schedule M

 

[***] [omitted 32 pages]

 

1

 

 

Subject to a request for
confidential treatment, certain portions of this agreement have been
intentionally omitted.  The omitted portions subject to the confidential
treatment request are designated by three asterisks ([***]).  A complete
version of this agreement has been separately filed with the Securities and
Exchange Commission.

 

Schedule
M-5 to the Disaster Recovery Requirements

 

The terms of the Master
Services Agreement and its Schedules and Transaction Documents apply to this
transaction.

 

[***]
[omitted 3 pages]

 

 

Subject to a request for
confidential treatment, certain portions of this agreement have been
intentionally omitted.  The omitted portions subject to the confidential
treatment request are designated by three asterisks ([***]).  A complete
version of this agreement has been separately filed with the Securities and
Exchange Commission.

 

Schedule
M-6 to the Disaster Recovery Requirements

 

The terms of the Master
Services Agreement and its Schedules and Transaction Documents apply to this
transaction.

 

[***]
[omitted 3 pages]

 

 

Subject to a request for
confidential treatment, certain portions of this agreement have been
intentionally omitted.  The omitted portions subject to the confidential
treatment request are designated by three asterisks ([***]).  A complete
version of this agreement has been separately filed with the Securities and
Exchange Commission.

 

Schedule
M-7 to the Disaster Recovery Requirements

 

The terms of the Master
Services Agreement and its Schedules and Transaction Documents apply to this
transaction.

 

[***]
[omitted 3 pages]

 

 

Subject to a request for
confidential treatment, certain portions of this agreement have been
intentionally omitted.  The omitted portions subject to the confidential
treatment request are designated by three asterisks ([***]).  A complete
version of this agreement has been separately filed with the Securities and
Exchange Commission.

 

Schedule
M-8 to the Disaster Recovery Requirements

 

The terms of the Master
Services Agreement and its Schedules and Transaction Documents apply to this
transaction.

 

[***]
[omitted 3 pages]

 

 

Subject to a request for
confidential treatment, certain portions of this agreement have been
intentionally omitted.  The omitted portions subject to the confidential
treatment request are designated by three asterisks ([***]).  A complete
version of this agreement has been separately filed with the Securities and
Exchange Commission.

 

Schedule
M-9 to the Disaster Recovery Requirements

 

The terms of the Master
Services Agreement and its Schedules and Transaction Documents apply to this
transaction.

 

[***]
[omitted 3 pages]

 

 

Subject to a request for
confidential treatment, certain portions of this agreement have been
intentionally omitted.  The omitted portions subject to the confidential
treatment request are designated by three asterisks ([***]).  A complete
version of this agreement has been separately filed with the Securities and
Exchange Commission.

 

Schedule
M-10 to the Disaster Recovery Requirements

 

The terms of the Master
Services Agreement and its Schedules and Transaction Documents apply to this
transaction.

 

[***]
[omitted 3 pages]

 

 

Subject to a request for
confidential treatment, certain portions of this agreement have been
intentionally omitted.  The omitted portions subject to the confidential
treatment request are designated by three asterisks ([***]).  A complete
version of this agreement has been separately filed with the Securities and
Exchange Commission.

 

Schedule
M-11 to the Disaster Recovery Requirements

 

The terms of the Master
Services Agreement and its Schedules and Transaction Documents apply to this
transaction.

 

[***]
[omitted 8 pages]

 

 

Subject to a request for
confidential treatment, certain portions of this agreement have been
intentionally omitted.  The omitted portions subject to the confidential
treatment request are designated by three asterisks ([***]).  A complete
version of this agreement has been separately filed with the Securities and
Exchange Commission.

 

SCHEDULE N

TERMINATION ASSISTANCE SERVICES

 

1.                                      GENERAL

 

This
is Schedule N, Termination Assistance Services, to Transaction Document No. 1
to that certain Master Services Agreement, dated as of December 11, 2008,
between ServiceMaster Consumer Services, L.P. and International Business
Machines Corporation.  Unless otherwise
defined herein, capitalized terms have the meanings set forth in the Master
Agreement, the “Definitions” Exhibit to the Master
Agreement, or the “Definitions” Schedule to the Transaction
Document.

 

2.                                      TERMINATION ASSISTANCE

 

2.1.                            General

 

During
each Termination Assistance Period, Service Provider shall provide the
Termination Assistance Services in accordance with this Schedule and Section 12.4
of the Master Agreement.

 

2.2.                            Access to Resources

 

In
providing Termination Assistance Services, Service Provider shall provide to
one or more members of the Customer Group itself or one or more Successor
Service Providers, or their representatives, contractors and consultants,
reasonable access to, use of and information relating to [***] for the sole purpose of transitioning the
Services to Customer or a Successor Service Provider.

 

2.3.                            Removal of Property

 

During
the Termination Assistance Period, Service Provider shall:

 

(a)                             provide reasonable prior written notice to Customer identifying any
resources that Service Provider, or any Third Party acting on behalf of Service
Provider, intends to remove from any Customer premises and identify such
resources with sufficient detail as to inform Customer of the nature and ownership
of such resources; and

 

(b)                            only remove resources from any Customer premises in accordance with the
agreed upon schedule set forth in the relevant Termination Assistance Plan and
comply with removal procedures reasonably established by Customer and provided
in writing to Service Provider.

 

2.4.                            Bid Assistance

 

Service
Provider shall provide reasonable assistance to Customer with respect to
conducting a bid process for performance of the Services.  Without limiting Service Provider’s
obligation to provide Customer Data or any other obligation under the
Agreement, Service Provider shall, to the extent information is reasonably
available, provide information, including: 
[***].

 

1

 

2.5.                            Knowledge Transfer

 

Service
Provider shall transfer knowledge regarding the Services, Customer’s
requirements, and related topics so as to facilitate the provision of the
Services by Customer or a Successor Service Provider, including by:

 

[***]

 

2.6.                            Operational Transition

 

Service
Provider shall perform the following activities required to facilitate the
transition of operational responsibility for the Services:

 

[***]

 

3.                                      TERMINATION ASSISTANCE PLANS

 

(a)                             The purpose of each Termination Assistance Plan is to:

 

(i)            ensure an orderly migration of the Services
during the Termination Assistance Period;

 

(ii)           ensure that the Services continue without
interruption or adverse effect and to facilitate the orderly transfer of the
Services to Customer, one or more members of the Customer Group, or one or more
Successor Service Providers;

 

(iii)          facilitate the transfer of certain assets
used to provide the Services, from Service Provider to Customer or any
Successor Service Provider in accordance with the Agreement; and

 

(iv)          enable effective and lawful transfer of
identified staff from Service Provider to Customer or any Successor Service
Provider in accordance with the Agreement.

 

(b)                            Service Provider shall prepare the Termination Assistance Plan and
address in such plan, at a minimum, items (i) through (iv) of the
preceding paragraph and the following information and procedures:

 

[***]

 

4.                                      TERMINATION ASSISTANCE SERVICES CHARGES

 

Termination
Assistance Services will be charged in accordance with Section 12.4(d) of
the Master Agreement.

 

5.                                      ADDITIONAL RIGHTS AND OBLIGATIONS

 

During
the Termination Assistance Period and in any event by the end of such
Termination Assistance Period:

 

[***]

 

2

 

6.                                      DISPUTES REGARDING TERMINATION ASSISTANCE
SERVICES

 

Any
Dispute regarding the Termination Assistance Services will be resolved in
accordance with the Dispute Resolution Procedures.

 

3

 

Subject to a request for
confidential treatment, certain portions of this agreement have been
intentionally omitted.  The omitted portions subject to the confidential
treatment request are designated by three asterisks ([***]).  A complete
version of this agreement has been separately filed with the Securities and
Exchange Commission.

 

SCHEDULE O

PROJECTS

 

This
is Schedule O, Projects, to Transaction Document No. 1 to that
certain Master Services Agreement, dated as of December 11, 2008, between
ServiceMaster Consumer Services, L.P. and International Business Machines
Corporation.  Unless otherwise defined
herein, capitalized terms have the meanings set forth in the Master Agreement,
the “Definitions” Exhibit to the Master Agreement, or the “Definitions”
Schedule to the Transaction Document.

 

This Schedule R sets forth the in-flight
Projects as of the Execution Date. 
Service Provider shall assume and complete these Projects in accordance
with the applicable Transition and Transformation Plan or as authorized by
Customer under a Project Work Order. 
[***].  Customer may update this Schedule
R from time to time as necessary to accurately reflect the then-current
in-flight Projects.

 

[***] [omitted 3 pages]

 

1

 

SCHEDULE P

AFFECTED EMPLOYEES

 

This
is Schedule P, Affected Employees, to Transaction Document No. 1 to
that certain Master Services Agreement, dated as of December 11, 2008,
between ServiceMaster Consumer Services, L.P. and International Business
Machines Corporation.  Unless otherwise
defined herein, capitalized terms have the meanings set forth in the Master
Agreement, the “Definitions” Exhibit to the Master
Agreement, or the “Definitions” Schedule to the Transaction
Document.

 

Schedule
P consists of the “Terms
for Affected Employees” Schedule and the “List of Affected
Employees” Schedule.

 

1

 

Subject to a request for
confidential treatment, certain portions of this agreement have been
intentionally omitted.  The omitted portions subject to the confidential
treatment request are designated by three asterisks ([***]).  A complete
version of this agreement has been separately filed with the Securities and
Exchange Commission.

 

SCHEDULE P-1

TERMS FOR AFFECTED EMPLOYEES

 

This
is Schedule P-1, Terms for Affected Employees, to Transaction Document No. 1
to that certain Master Services Agreement, dated as of December 11, 2008,
between ServiceMaster Consumer Services, L.P. and International Business
Machines Corporation.  Unless otherwise
defined herein, capitalized terms have the meanings set forth in the Master
Agreement, the “Definitions” Exhibit to the Master
Agreement, or the “Definitions” Schedule to the Transaction
Document.  Where this Schedule
refers to a duty or obligation of the Service Provider, Service Provider will
cause Network Services Provider to comply with that duty or obligation as it
relates to an Affected Employee to be transitioned to the Network Services
Provider as set forth in the “List of Affected Employees” Schedule.

 

1.                                       Hiring
Requirements.  On the
Offer Date or LOA Offer Date, as applicable, Service Provider shall extend
offers of employment to fifty (50) of the Affected Employees who have the
skills and experience required for the job, as determined by Service Provider
in accordance with its hiring process used in the normal course of
business.    In the event that there are
not fifty (50) suitable candidates, Service Provider will fill the open positions
through its normal staffing process. 
Service Provider will discuss with Customer any ‘non-offer’ decisions so
that Customer may fully understand Service Provider’s decision making in this
regard.  Customer shall reasonably
cooperate with Service Provider in connection with the process described in
this Section 2 and in Section 3 below.  Any information obtained by Service Provider
under this Schedule is Company Information of the Customer Group.

 

2.                                       Transition
Process.  The process by which any or
all of the Affected Employees become Transitioned Employees is as follows:

 

(a)                                  Service
Provider acknowledges that Customer has provided Service Provider with
information reasonably requested by Service Provider as permitted by applicable
Law, but that Customer makes no representation as to any background screening
information provided and that Service Provider is responsible for the
evaluation of the Affected Employees suitability.

 

(b)                                 Service
Provider shall extend such offers of employment to the Affected Employees on
the Offer Date, except for employees on a Leave of Absence to whom Service
Provider shall extend such offer on the LOA Offer Date.

 

(c)                                  All Affected
Employees who receive an offer of employment from Service Provider must accept
or decline such offer no later than ten (10) Business Days thereafter
(unless otherwise agreed by the Parties for certain employees, such as
employees on vacation, if any).  Those
Affected Employees who reject Service Provider’s offer of employment, or who
are not offered employment as set forth in Section 2 above, will
not become Service Provider employees.

 

(d)                                 All Affected
Employees who accept Service Provider’s offer of employment are Transitioned
Employees.  Service Provider shall
commence the employment of the Transitioned Employees on the Hire Date, unless
the Transitioned Employee is on a Leave of Absence that ends after the Hire
Date, in which event Service Provider shall commence employment within five (5) Business
Days after the Transitioned Employee accepted Service Provider’s offer of
employment, provided that such acceptance must occur within six months of the
Execution Date.

 

1

 

3.                                       Terms of
Employment.  Service
Provider shall employ the Transitioned Employees according to the following
provisions:

 

(a)                                  Terms of Offer.  Offers of employment by a Service Provider to
an Affected Employee shall be for [***].

 

(b)                                 Positions.  The Affected Employee shall be offered a
position as of the Hire Date within a commuting distance that is not more than
[***] farther than the commuting distance of the Affected Employee on the date
immediately preceding the Hire Date.  To
the extent that Service Provider’s offer of employment requires a new commuting
distance that exceeds the preceding limitation, Service Provider shall offer
[***] to facilitate the move consisting of a minimum of the following:  [***]. 
Service Provider shall not relocate a Transitioned Employee or his or
her assigned work location without the Transitioned Employee’s consent (or
condition future employment upon granting such consent) during the Continuation
Period, unless the site of the assigned work location is changed by not more
than [***].  If Service Provider desires
to relocate by more than [***] any Transitioned Employee or his or her assigned
work location and such Transitioned Employee does not consent to such
relocation, Service Provider may terminate the employment of such Transitioned
Employee, [***].  [***]

 

(c)                                  Work Days.  The Transitioned Employees working at the
Customer Locations shall be available to work on the same work days in effect
for Customer employees.  This subsection
shall not prevent Service Provider from requiring Transitioned Employees to
work as required by Service Provider, including on Customer’s scheduled
holidays.

 

(d)                                 Job
Opportunities.  If a
Transitioned Employee is no longer needed to provide Services to Customer, then
Service Provider shall use commercially reasonable efforts to identify other
job opportunities for such individuals within Service Provider’s organization.

 

(e)                                  Continuation
Period.  Service Provider may not
adversely change the terms of employment of, and may not terminate, any
Transitioned Employees during the Continuation Period, other than changes in
plans or policies generally maintained for similarly situated employees of
Service Provider; provided that Service Provider may terminate a Transitioned
Employee (i) for cause or (ii) without cause, if such Transitioned
Employee’s job functions comprise Services that are terminated by Customer in
whole or in part for convenience during such period.

 

(f)                                    Non-compete
Agreements.  Service
Provider shall waive any requirement that would otherwise be applicable for
Transitioned Employees to execute non-competition agreements.

 

4.                                       Compensation.

 

[***]

 

5.                                       Employee
Benefits.

 

[***]
[omitted 2 pages]

 

2

 

6.                                       Backfilling.  The Parties shall agree in good faith
regarding the backfilling of positions of Customer personnel that are leaving
or terminated prior to the Commencement Date, including whether each such
position should be backfilled and the respective obligations of each Party, if
any, with respect to any particular backfilling.

 

7.                                       WARN Act
Requirements.  Upon hiring
the Transitioned Employees, Service Provider shall be responsible with respect
to Transitioned Employees for compliance with the WARN Act.

 

8.                                       Employee Rights.

 

(a)                                  Nothing herein
expressed or implied shall confer upon any employee of any member of the
Customer Group or their Affiliates, or Service Provider or its Affiliates, or
upon any legal representative of such employee, or upon any collective
bargaining agent, any rights or remedies, including any right to employment or
continued employment for any specified period, of any nature or kind whatsoever
under or by reason of this Schedule or the Agreement.

 

(b)                                 Nothing in this
Schedule or the Agreement shall be deemed to confer upon any person (nor any
beneficiary thereof) any rights under or with respect to any plan, program, or
arrangement described in or contemplated by this Schedule or the Agreement, and
each person (and any beneficiary thereof) shall be entitled to look only to the
express terms of any such plan, program, or arrangement for his or her rights
thereunder.

 

(c)                                  Nothing in this
Schedule or the Agreement shall cause Service Provider or its Affiliates, or
any member of the Customer Group or their Affiliates to have any obligation to
provide employment or any employee benefits to any individual who is not an
Transitioned Employee or to continue to employ any Transitioned Employee for
any period of time other than the retention periods set forth herein.

 

3

 

Subject to a request for
confidential treatment, certain portions of this agreement have been
intentionally omitted.  The omitted portions subject to the confidential
treatment request are designated by three asterisks ([***]).  A complete
version of this agreement has been separately filed with the Securities and
Exchange Commission.

 

SCHEDULE P-2

LIST OF AFFECTED EMPLOYEES

 

This
is Schedule P-2, List of Affected Employees, to Transaction Document No. 1
to that certain Master Services Agreement, dated as of December 11, 2008,
between ServiceMaster Consumer Services, L.P. and International Business
Machines Corporation.  Unless otherwise
defined herein, capitalized terms have the meanings set forth in the Master
Agreement, the “Definitions” Exhibit to the Master
Agreement, or the “Definitions” Schedule to the Transaction
Document.

 

Schedule
P-2 begins on the
next page.

 

1

 

The
following Customer employees are Affected Employees.

 

[***]

 

2

 

Subject to a request for
confidential treatment, certain portions of this agreement have been
intentionally omitted.  The omitted portions subject to the confidential
treatment request are designated by three asterisks ([***]).  A complete
version of this agreement has been separately filed with the Securities and
Exchange Commission.

 

SCHEDULE Q

LOCATIONS

 

This
is Schedule Q, Locations, to Transaction Document No. 1 to that
certain Master Services Agreement, dated as of December 11, 2008, between
ServiceMaster Consumer Services, L.P. and International Business Machines
Corporation.  Unless otherwise defined
herein, capitalized terms have the meanings set forth in the Master Agreement,
the “Definitions” Exhibit to the Master Agreement, or the “Definitions”
Schedule to the Transaction Document.

 

This
Schedule Q sets forth the Service Provider Locations from which Service
Provider shall perform the indicated Services. 
Services will be delivered out of these Locations or an equivalent class
of service center in the event of a relocation.

 

[***] [omitted 2 pages]

 

1

 

Subject to a request for
confidential treatment, certain portions of this agreement have been
intentionally omitted.  The omitted portions subject to the confidential
treatment request are designated by three asterisks ([***]).  A complete
version of this agreement has been separately filed with the Securities and
Exchange Commission.

 

SCHEDULE R

COMMERCIALLY UNAVAILABLE SERVICE PROVIDER TOOLS

 

This
is Schedule R, Commercially Unavailable Service Provider Tools, to
Transaction Document No. 1 to that certain Master Services Agreement,
dated as of December 11, 2008, between ServiceMaster Consumer Services,
L.P. and International Business Machines Corporation.  Unless otherwise defined herein, capitalized
terms have the meanings set forth in the Master Agreement, the “Definitions”
Exhibit to the Master Agreement, or the “Definitions” Schedule
to the Transaction Document.

 

The
following table sets forth the Commercially Unavailable Service Provider Tools
in accordance with Section 10.6(b) of the Master
Agreement.  Information related to
Customer residing in these Commercially Unavailable Service Provider Tools
retains its classification as Customer Company Information.  Service Provider shall provide Customer with
access to any Customer Company Information residing in a Commercially
Unavailable Service Provider Tool and shall, upon Customer’s request provide
Customer with copies of any Customer Company Information in a standard
(non-proprietary) electronic format as specified by Customer.

 

[***] [omitted 2 pages]

 

1

 

Subject to a request for
confidential treatment, certain portions of this agreement have been
intentionally omitted.  The omitted portions subject to the confidential
treatment request are designated by three asterisks ([***]).  A complete
version of this agreement has been separately filed with the Securities and
Exchange Commission.

 

SCHEDULE S

CUSTOMER
FACILITIES

 

This
is Schedule S, Customer Facilities, to Transaction Document No. 1
to that certain Master Services Agreement, dated as of December 11, 2008,
between ServiceMaster Consumer Services, L.P. and International Business
Machines Corporation.  Unless otherwise
defined herein, capitalized terms have the meanings set forth in the Master
Agreement, the “Definitions” Exhibit to the Master
Agreement, or the “Definitions” Schedule to the Transaction
Document.

 

Service
Provider shall provide [***]
Services to the Customer facilities (listed beginning on the next page) where
indicated by an “Y” in the column labeled [***].  Service Provider shall provide [***] Services to the Customer facilities (listed
beginning on the next page) where indicated by an “Y” in the column labeled [***].  [***] Services and [***] Services mean those activities and tasks
described in [***] of the “Services
Description” Schedule.

 

Where
indicated by a “Y” in the column labeled “IBM On Site (Y/N),” Service Provider
shall provide the Services using Service Provider personnel who are physically
on-site at the applicable Customer facility during the business hours specified
in the table below, as determined by the classification of the Customer
facility indicated under the column labeled “Location Type.”

 

[***]

 

Schedule
S continues on the
next page.

 

[***] [omitted 25 pages]

 

1

 

Subject to a request for
confidential treatment, certain portions of this agreement have been
intentionally omitted.  The omitted portions subject to the confidential
treatment request are designated by three asterisks ([***]).  A complete
version of this agreement has been separately filed with the Securities and
Exchange Commission.

 

SCHEDULE T

APPROVED
SUBCONTRACTORS

 

This
is Schedule T, Approved Subcontractors, to Transaction Document No. 1
to that certain Master Services Agreement, dated as of December 11, 2008,
between ServiceMaster Consumer Services, L.P. and International Business
Machines Corporation.  Unless otherwise
defined herein, capitalized terms have the meanings set forth in the Master
Agreement, the “Definitions” Exhibit to the Master
Agreement, or the “Definitions” Schedule to the Transaction
Document.

 

The
subcontractors listed in the table below are Approved Subcontractors under Section 9.3
of the Master Agreement.  Service
Provider shall provide project management and technical direction for all
subcontractors.  [***].

 

[***]

 

1

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00151-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00151-of-00352.parquet"}]]