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                                                                   EXHIBIT 10.55

                              CALLAWAY GOLF COMPANY
                  CHIEF EXECUTIVE OFFICER EMPLOYMENT AGREEMENT

         This Chief Executive Officer Employment Agreement ("Agreement") is
entered into as of July 29 , 2005, by and between CALLAWAY GOLF COMPANY, a
Delaware corporation, (the "Company") and GEORGE FELLOWS ("Employee").

         1. TERM. The Company hereby employs Employee and Employee hereby
accepts employment pursuant to the terms and provisions of this Agreement for
the period commencing August 1, 2005, and ending December 31, 2008, unless this
Agreement is earlier terminated as hereinafter provided. Upon expiration of this
Agreement Employee's status shall be one of at-will employment. Should the
Company fail by August 31, 2008 to offer Employee a new employment agreement on
substantially the same economic terms and with a term running until at least
December 31, 2010, then Employee shall have the right for thirty (30) days
(i.e., until September 30, 2008) to treat such failure to act on the Company's
part as grounds for termination of this Agreement by Employee for good reason
pursuant to Section 7(c). At all times during the term of this Agreement,
Employee shall be considered an employee of the Company within the meaning of
all federal, state and local laws and regulations, including, but not limited
to, laws and regulations governing unemployment insurance, workers'
compensation, industrial accident, labor and taxes.

         2. TITLES; POSITIONS.

            (a) Employee shall serve as President and Chief Executive Officer of
the Company. Employee's duties shall be the usual and customary duties of the
offices in which Employee serves. Employee shall report solely to the Board of
Directors.

            (b) It is agreed that Employee shall be appointed immediately upon
the start of his employment to fill a vacancy on the Board of Directors, and
that Employee shall be nominated for election by the shareholders as a Director
at the first annual meeting of shareholders held thereafter. If elected by the
shareholders at that meeting, and so long as Employee continues to meet the
standards required of a Director, Employee shall continue to be nominated for
election as a Director at each subsequent annual meeting of shareholders during
the term of Employee's employment with the Company.

         3. SERVICES TO BE EXCLUSIVE. During the term hereof, Employee agrees to
devote Employee's full productive time and best efforts to the performance of
Employee's duties hereunder pursuant to the supervision and direction of the
Company's Board of Directors. Employee further agrees, as a condition to the
performance by the Company of each and all of its obligations hereunder, that so
long as Employee is employed by the Company, Employee will not directly or
indirectly render services of any nature to, otherwise become employed by, or
otherwise participate or engage in any other business without the Company's
prior written consent. Nothing herein contained shall be deemed to preclude
Employee from having outside personal investments, involvement with appropriate
community and charitable activities, continuing to serve on the two boards of
directors previously disclosed as of the date Employment commences, or from
devoting a reasonable amount of time to such matters, provided that this shall
in no manner interfere with or derogate from Employee's work for the Company.

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         4. COMPENSATION.

            (a) Base Salary. The Company agrees to pay Employee a base salary at
the rate of $850,000 per year (prorated for any partial years of employment
including 2005), payable in equal installments on regularly scheduled Company
pay dates as they may be adjusted from time to time.

            (b) Annual Bonus. The Company shall provide Employee an opportunity
to earn an annual bonus based upon participation in the Company's applicable
bonus plan as it may or may not exist from time to time. Employee acknowledges
that currently all bonuses are discretionary. However, and notwithstanding the
foregoing, (i) it is agreed that during the term of this Agreement Employee
shall have a target annual bonus opportunity equal to 100% of Employee's annual
Base Salary paid in the pertinent year, based upon the achievement of realistic
performance goals determined by the Board of Directors and/or its compensation
committee in consultation with Employee, and (ii) Employee is guaranteed an
annual bonus for services rendered in 2005 of no less than 65% of the base
salary paid to Employee in 2005, such bonus to be paid at the same time as any
bonus earned in 2005 paid to any other officer of the Company but no later than
March 30, 2006.

            (c) Long Term Incentive.

                (i) Effective upon the date Employee commences employment with
the Company pursuant to this Agreement, the Company shall award to Employee long
term incentive compensation in the form of 160,000 restricted shares of the
Company's Common Stock and options to purchase up to 400,000 shares of the
Company's Common Stock at the market price of such stock on the date of grant.
The restricted stock shall vest on December 31, 2008. One-third of the options
shall vest on each anniversary of the grant date. These grants of restricted
stock and options shall be governed by the terms and conditions of written
equity award agreements, which shall be separately executed concurrently with
this Agreement.

                (ii) Commencing January 1, 2007, the Company shall provide
Employee an opportunity to participate in the Company's applicable long term
incentive plan as it may or may not exist from time to time.

         5. EXPENSES AND BENEFITS.

            (a) Reasonable and Necessary Expenses. In addition to the
compensation provided for in Section 4, the Company shall reimburse Employee for
all reasonable, customary and necessary expenses incurred in the performance of
Employee's duties hereunder. Employee shall first account for such expenses in
accordance with the policies and procedures set by the Company from time to time
for reimbursement of such expenses. The amount, nature, and extent of such
expenses shall always be subject to the control, supervision and direction of
the Company.

            (b) Paid Time Off. Employee shall accrue paid time off in accordance
with the terms and conditions of the Company's Paid Time Off Program, as stated
in the Company's Employee Handbook, and as may be modified from time to time.
Subject to the maximum accrual permitted under the Paid Time Off Program,
Employee shall accrue paid time off at the rate of thirty (30) days per year.
The time off may be taken any time during the year subject to prior approval by
the Company. The Company reserves the right to pay Employee for unused, accrued
benefits in lieu of providing time off.

            (c) Insurance. During Employee's employment with the Company
pursuant to this Agreement, the Company shall provide for Employee to:

                                        2                         George Fellows

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                (i) participate in the Company's health insurance and disability
insurance plans as the same may be modified from time to time;

                (ii) receive, if Employee is insurable under usual underwriting
standards, term life insurance coverage on Employee's life, payable to whomever
Employee directs, in an amount equal to $3,000,000 in coverage, provided that
Employee completes the required health statement and application and that
Employee's physical condition does not prevent Employee from qualifying for such
insurance coverage under reasonable terms and conditions; and

            (d) Retirement. Employee shall be permitted to participate in the
Company's 401(k) retirement investment plan, employee stock purchase plan and
executive deferred compensation plan pursuant to the terms of such plans, as the
same may be modified from time to time, to the extent such plans are offered to
other officers of the Company from time to time.

            (e) Estate Planning and Other Perquisites. To the extent the Company
provides tax and estate planning and related services, or any other perquisites
and personal benefits to other officers generally from time to time, such
services and perquisites shall be made available to Employee on the same terms
and conditions.

            (f) Country Club Membership. Employee shall be provided with access
to a country club in accordance with the Company's country club use policy, as
modified from time to time. The club membership itself shall belong to, and be
the property of, the Company, not Employee.

            (g) Temporary Living Expenses. For a reasonable period of time
commencing with the date of employment and ending no later than July 31, 2006,
the Company shall provide the following benefits. To the extent such benefits
are taxable as compensation to Employee, the Company shall provide a gross up
payment equal to all such taxes plus any taxes payable in connection with the
gross up payment.

                (i) The Company shall provide for Employee's use a mutually
agreed upon, furnished apartment near the Company's headquarters in Carlsbad,
California.

                (ii) The Company shall provide for Employee's use a mutually
agreed upon automobile for use while in California.

                (iii) The Company shall reimburse Employee for the actual and
reasonable cost of round trip first class air travel for Employee and/or
Employee's spouse between San Diego and New York.

            (h) Relocation. Should Employee choose to relocate his principal
residence to San Diego County, California, to a location proximate the Company's
headquarters, then Employee and the Company shall agree upon a reasonable
relocation package consistent with the Company's practices and industry norms.

         6. TAXES. Employee acknowledges that Employee is responsible for all
taxes related to Employee's compensation except for those taxes for which the
Company is obligated to pay under applicable law or regulation, or as provided
in Sections 5(g) and 9(c) of this Agreement. Employee agrees that the Company
may withhold from Employee's compensation any amounts that the Company is
required to withhold under applicable law or regulation.

                                       3                          George Fellows

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         7. TERMINATION.

            (a) Termination by the Company Without Substantial Cause. Employee's
employment under this Agreement may be terminated by the Company at any time
without substantial cause. In the event of a termination by the Company without
substantial cause, Employee shall be entitled to receive (i) any compensation
(including Paid Time Off) accrued and unpaid as of the date of termination; (ii)
a lump sum amount equal to Employee's target annual bonus opportunity pro rated
for service through the date of termination; and (iii) the immediate vesting of
all unvested stock-based long term incentive compensation, whether in the form
of options, restricted stock, performance shares, stock appreciation rights or
otherwise constituted. In addition to the foregoing and subject to the
provisions thereof, Employee shall be eligible to receive Special Severance as
described in subsection 7(g) and Incentive Payments as described in subsection
7(h).

            (b) Termination by the Company for Substantial Cause or by Employee
Without Good Reason. Employee's employment under this Agreement may be
terminated immediately and at any time by the Company for substantial cause or
by Employee without good reason. In the event of such a termination, Employee
shall be entitled to receive (i) any compensation (including Paid Time Off)
accrued and unpaid as of the date of termination; and (ii) no other severance.
"Substantial cause" shall mean for purposes of this subsection Employee's (i)
continued failure to substantially perform Employee's duties after a written
demand for substantial performance has been delivered to Employee by the Board
of Directors; (ii) material breach of this Agreement that is not cured to the
reasonable satisfaction of the Board of Directors within fifteen (15) days after
delivery of written notice describing the breach; (iii) misconduct, including
but not limited to, use or possession of illegal drugs during work and/or any
other action that is damaging or detrimental in a significant manner to the
Company; (iv) conviction of, or plea of guilty or nolo contendere to, a felony;
or (v) failure to cooperate with, or any attempt to obstruct or improperly
influence, any investigation authorized by the Board of Directors or any
governmental or regulatory agency entity.

            (c) Termination by Employee for Good Reason. Employee's employment
under this Agreement may be terminated immediately by Employee for good reason
at any time. In the event of a termination by Employee for good reason, Employee
shall be entitled to receive (i) any compensation (including Paid Time Off)
accrued and unpaid as of the date of termination; (ii) a lump sum amount equal
to Employee's target annual bonus opportunity pro rated for service through the
date of termination; and (iii) the immediate vesting of all unvested stock-based
long term incentive compensation, whether in the form of options, restricted
stock, performance shares, stock appreciation rights or otherwise constituted.
In addition to the foregoing and subject to the provisions thereof, Employee
shall be eligible to receive Special Severance as described in subsection 7(g)
and Incentive Payments as described in subsection 7(h). "Good Reason" shall mean
for purposes of this subsection a material breach of this Agreement by the
Company.

            (d) Termination Due to Permanent Disability. Subject to all
applicable laws, Employee's employment under this Agreement may be terminated
immediately by the Company in the event Employee becomes permanently disabled.
Permanent disability shall be defined as Employee's failure to perform or being
unable to perform all or substantially all of Employee's duties under this
Agreement for a continuous period of more than six (6) months on account of any
physical or mental disability, either as mutually agreed to by the parties or as
reflected in the opinions of three qualified physicians, one of which has been
selected by the Company, one of which has been selected by Employee, and one of
which has been selected by the two other physicians jointly. In the event of a
termination by the Company due to Employee's permanent disability, Employee
shall be entitled to (i) any compensation (including Paid Time Off) accrued and
unpaid as of the date of termination; (ii) severance payments equal to
Employee's then current base salary at the same rate and on the same schedule as
in effect at the time of termination for a period of six (6) months from the
date of termination; (iii) a lump sum amount equal to Employee's target annual
bonus opportunity

                                       4                          George Fellows

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pro rated for service through the date of termination; (iv) the immediate
vesting of all unvested stock-based long term incentive compensation, whether in
the form of options, restricted stock, performance shares, stock appreciation
rights or otherwise constituted, held by Employee that would have vested had
Employee remained employed pursuant to this Agreement for a period of six (6)
months from the date of such termination; (v) the payment of premiums owed for
COBRA insurance benefits for a period of twelve (12) months from the date of
termination; and (vi) no other severance. The Company shall be entitled to take
as an offset against any amounts due pursuant to subsections (i) and (ii) above,
any amounts received by Employee pursuant to disability or other insurance, or
similar sources, provided by the Company.

            (e) Termination by Mutual Agreement of the Parties. Employee's
employment pursuant to this Agreement may be terminated at any time upon the
mutual agreement in writing of the parties. Any such termination of employment
shall have the consequences specified in such agreement.

            (f) Pre-Termination Rights. The Company shall have the right, at its
option, to require Employee to vacate Employee's office or otherwise remain off
the Company's premises and to cease any and all activities on the Company's
behalf without such action constituting a termination of employment or a breach
of this Agreement.

            (g) Special Severance.

                (i) Amount in the Event of a Termination Pursuant to Sections
7(a) or 7(c). In the event of a termination pursuant to Sections 7(a) or 7(c) of
this Agreement, Special Severance shall consist of a total amount equal to 1.0
times the sum of Employee's then current annual base salary and annual target
bonus, payable in equal installments on the same pay schedule as in effect at
the time of termination over a period of twenty-four (24) months from the date
of termination; the payment of premiums owed for COBRA and/or CalCOBRA insurance
benefits for a period of twenty-four (24) months from the date of termination;
and no other severance.

                (ii) Amount in the Event of a Termination Pursuant to Section 9.
In the event of a termination pursuant to Section 9 of this Agreement, then
Special Severance shall consist of a total amount equal to 1.5 times the sum of
Employee's then current annual base salary and annual target bonus, payable in
equal installments on the same pay schedule as in effect at the time of
termination over a period of thirty-six (36) months from the date of
termination; the payment of premiums owed for COBRA and/or CalCOBRA insurance
benefits for a period of thirty-six (36) months from the date of termination;
and no other severance.

                (iii) Amount in the Event of a Subsequent Change in Control.
Notwithstanding any other provisions to the contrary, if a Change in Control (as
defined in Exhibit A) occurs within six (6) months following a termination of
Employee's employment under this Agreement pursuant to Sections 7(a) or 7(c),
and that Change in Control is the direct result of discussions or undertakings
that were ongoing as of the date of such termination, then the amount of Special
Severance shall be calculated in accordance with Section 7(g)(ii).

                (iv) Conditions on Receiving Special Severance. Notwithstanding
anything else to the contrary, it is expressly understood that any obligation of
the Company to pay Special Severance pursuant to this Agreement shall be subject
to Employee's continued compliance with the terms and conditions of Sections 8
and 11; Employee's continued forbearance from directly, indirectly or in any
other way, disparaging the Company, its officers or employees, vendors,
customers, products or activities, or otherwise interfering with the Company's
press, public and media relations; and the execution by Employee, prior to
receiving any Special Severance, of a release in the form attached hereto as
Exhibit B.

                                       5                          George Fellows

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            (h) Incentive Payments.

                (i) Amount in the Event of a Termination Pursuant to Sections
7(a) or 7(c). In the event of a termination pursuant to Sections 7(a) or 7(c) of
this Agreement, Employee shall be offered the opportunity to receive Incentive
Payments in a total amount equal to 1.0 times the sum of Employee's then current
annual base salary and target bonus, payable in equal installments on the same
pay schedule in effect at the time of termination over a period of twenty-four
(24) months from the date of termination.

                (ii) Amount in the Event of a Termination Pursuant to Section 9.
In the event of a termination pursuant to Section 9 of this Agreement, Employee
shall be offered the opportunity to receive Incentive Payments in a total amount
equal to 1.5 times the sum of Employee's then current annual base salary and
annual target bonus, payable in equal installments on the same pay schedule as
in effect at the time of termination over a period of thirty-six (36) months
from the date of termination.

                (iii) Amount in the Event of a Subsequent Change in Control.
Notwithstanding any other provisions to the contrary, if a Change in Control (as
defined in Exhibit A) occurs within six (6) months following a termination of
Employee's employment under this Agreement pursuant to Sections 7(a) or 7(c),
and that Change in Control is the direct result of discussions or undertakings
that were ongoing as of the date of such termination, then the amount of
available Incentive Payments shall be calculated in accordance with Section
7(h)(ii).

                (iv) Terms and Conditions for Incentive Payments. Employee may
receive Incentive Payments so long as Employee chooses not to engage (whether as
an owner, employee, agent, consultant, or in any other capacity) in any business
or venture that competes with the business of the Company or any of its
affiliates. If Employee chooses to engage in such activities, then the Company
shall have no obligation to make further Incentive Payments commencing upon the
date which Employee chooses to do so. For purposes of this Section, Employee
shall not be deemed to "own" an entity if Employee holds less than 2% beneficial
ownership interests of a firm, corporation or venture.

                (v) Sole Consideration. Employee and the Company agree and
acknowledge that the sole and exclusive consideration for the Incentive Payments
is Employee's forbearance as described in this subsection 7(h). In the event
that this subsection 7(h) is deemed unenforceable or invalid for any reason,
then the Company will have no obligation to make Incentive Payments for the
period of time during which it has been deemed unenforceable or invalid. The
obligations and duties of this subsection 7(h) shall be separate and distinct
from the other obligations and duties set forth in this Agreement, and any
finding of invalidity or unenforceability of this subsection 7(h) shall have no
effect upon the validity or invalidity of the other provisions of this
Agreement.

            (i) Treatment of Special Severance and Incentive Payments; Catch-Up
Payments. Any Special Severance and Incentive Payments shall be subject to usual
and customary employee payroll practices and all applicable withholding
requirements. If required pursuant to Section 409A of the Internal Revenue Code
of 1986, or any regulations or other binding guidance promulgated thereunder, to
delay the payment of any Special Severance or Incentive Payments for six months
following termination, then on the day following the end of such six-month
period the Company shall make a Catch-Up Payment equal to the total amount of
such payments that would have been made during the six-month period but for the
application of Section 409A plus interest calculated at the one-year Treasury
Bill rate.

                                       6                          George Fellows

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            (j) Other. Except for the amounts specifically provided pursuant to
this Section 7, Employee shall not be entitled to any further compensation,
bonus, damages, restitution, relocation benefits, or other severance benefits
upon termination of employment. The amounts payable to Employee pursuant to
these Sections shall not be treated as damages, but as compensation to which
Employee may be entitled by reason of termination of employment under the
applicable circumstances. The Company shall not be entitled to set off against
the amounts payable to Employee pursuant to this Section 7 any amounts earned by
Employee in other employment after termination of Employee's employment with the
Company pursuant to this Agreement, or any amounts which might have been earned
by Employee in other employment had Employee sought such other employment. The
provisions of this Section 7 shall not limit Employee's rights under or pursuant
to any other agreement or understanding with the Company regarding any pension,
profit sharing, insurance or other employee benefit plan of the Company to which
Employee is entitled pursuant to the terms of such plan.

         8. OTHER EMPLOYEE DUTIES AND OBLIGATIONS.

            In addition to any other duties and obligations set forth in this
Agreement, Employee shall be obligated as follows:

            (a) Compliance with Company Policy. Employee shall be required to
comply with all policies and procedures of the Company as such shall be adopted,
modified or otherwise established by the Company from time to time, including
but not limited to the Company' Code of Conduct.

            (b) Trade Secrets and Confidential Information.

                (i) As used in this Agreement, the term "Trade Secrets and
Confidential Information" means information, whether written or oral, not
generally available to the public, regardless of whether it is suitable to be
patented, copyrighted and/or trademarked, which is received from the Company
and/or its affiliates, either directly or indirectly, including but not limited
to concepts, ideas, plans and strategies involved in the Company's and/or its
affiliates' products, the processes, formulae and techniques disclosed by the
Company and/or its affiliates to Employee or observed by Employee, the designs,
inventions and innovations and related plans, strategies and applications which
Employee develops during the term of this Agreement in connection with the work
performed by Employee for the Company and/or its affiliates; and third party
information which the Company and/or its affiliates has/have agreed to keep
confidential.

                (ii) While employed by the Company, Employee will have access to
and become familiar with Trade Secrets and Confidential Information. Employee
acknowledges that Trade Secrets and Confidential Information are owned and shall
continue to be owned solely by the Company and/or its affiliates. Employee
agrees that Employee will not, at any time, whether during or subsequent to
Employee's employment by the Company and/or its affiliates, use or disclose
Trade Secrets and Confidential Information for any competitive purpose or
divulge the same to any person other than the Company or persons with respect to
whom the Company has given its written consent, unless Employee is compelled to
make disclosure by governmental process. In the event Employee believes that
Employee is legally required to disclose any Trade Secrets or Confidential
Information, Employee shall give reasonable notice to the Company prior to
disclosing such information and shall assist the Company, at the Company's sole
cost and expense, in taking such legally permissible steps as are reasonable and
necessary to protect the Trade Secrets or Confidential Information, including,
but not limited to execution by the receiving party of a non-disclosure
agreement in a form acceptable to the Company.

                                       7                          George Fellows

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                (iii) Employee agrees to execute such secrecy, non-disclosure,
patent, trademark, copyright and other proprietary rights agreements, if any, as
the Company may from time to time reasonably require.

                (iv) The provisions of this subsection 8(b) shall survive the
termination or expiration of this Agreement, and shall be binding upon Employee
in perpetuity.

            (c) Assignment of Rights.

                (i) As used in this Agreement, "Designs, Inventions and
Innovations," whether or not they have been patented, trademarked, or
copyrighted, include, but are not limited to designs, inventions, innovations,
ideas, improvements, processes, sources of and uses for materials, apparatus,
plans, systems and computer programs relating to the design, manufacture, use,
marketing, distribution and management of the Company's and/or its affiliates'
products.

                (ii) As a material part of the terms and understandings of this
Agreement, Employee agrees to assign to the Company all Designs, Inventions and
Innovations developed, conceived and/or reduced to practice by Employee, alone
or with anyone else, in connection with the work performed by Employee for the
Company during Employee's employment with the Company, regardless of whether
they are suitable to be patented, trademarked and/or copyrighted.

                (iii) Employee agrees to disclose in writing to the Board of
Directors any Design, Invention or Innovation relating to the business of the
Company and/or its affiliates, which Employee develops, conceives and/or reduces
to practice in connection with any work performed by Employee for the Company,
either alone or with anyone else, while employed by the Company and/or within
twelve (12) months of the termination of employment. Employee shall disclose all
Designs, Inventions and Innovations to the Company, even if Employee does not
believe that he or she is required under this Agreement, or pursuant to
California Labor Code Section 2870, to assign Employee's interest in such
Design, Invention or Innovation to the Company. If the Company and Employee
disagree as to whether or not a Design, Invention or Innovation is included
within the terms of this Agreement, it will be the responsibility of Employee to
prove that it is not included.

                (iv) Pursuant to California Labor Code Section 2870, the
obligation to assign as provided in this Agreement does not apply to any Design,
Invention or Innovation to the extent such obligation would conflict with any
state or federal law. The obligation to assign as provided in this Agreement
does not apply to any Design, Invention or Innovation that Employee developed
entirely on Employee's own time without using the Company's equipment, supplies,
facilities or Trade Secrets and Confidential Information except those Designs,
Inventions or Innovations that either relate at the time of conception or
reduction to practice to the Company's and/or its affiliates' business, or
actual or demonstrably anticipated research of the Company and/or its
affiliates; or result from any work performed by Employee for the Company and/or
its affiliates.

                (v) Employee agrees that any Design, Invention and/or Innovation
which is required under the provisions of this Agreement to be assigned to the
Company shall be the sole and exclusive property of the Company. Upon the
Company's request, at no expense to Employee, Employee shall execute any and all
proper applications for patents, copyrights and/or trademarks, assignments to
the Company, and all other applicable documents, and will give testimony when
and where requested to perfect the title and/or patents (both within and without
the United States) in all Designs, Inventions and Innovations belonging to the
Company.

                (vi) The provisions of this subsection 8(c) shall survive the
termination or expiration of this Agreement, and shall be binding upon Employee
in perpetuity.

                                       8                          George Fellows

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            (d) Competing Business. To the fullest extent permitted by law,
Employee agrees that, while employed by the Company, Employee will not, directly
or indirectly (whether as employee, agent, consultant, holder of a beneficial
interest, creditor, or in any other capacity), engage in any business or venture
which conflicts with Employee's duties under this Agreement, including services
that are directly or indirectly in competition with the business of the Company
or any of its affiliates, or have any interest in any person, firm, corporation,
or venture which engages directly or indirectly in competition with the business
of the Company or any of its affiliates. For purposes of this section, the
ownership of interests in a broadly based mutual fund shall not constitute
ownership of the stocks held by the fund, and Employee shall not be deemed to
"own" an entity if Employee holds less than 2% beneficial ownership interests of
a firm, corporation or venture.

            (e) Other Employees. Except as may be required in the performance of
Employee's duties hereunder, Employee shall not cause or induce, or attempt to
cause or induce, any person now or hereafter employed by the Company or any of
its affiliates to terminate such employment. This obligation shall remain in
effect while Employee is employed by the Company and for a period of one (1)
year thereafter.

            (f) Suppliers. While employed by the Company, and for one (1) year
thereafter, Employee shall not cause or induce, or attempt to cause or induce,
any person or firm supplying goods, services or credit to the Company or any of
its affiliates to diminish or cease furnishing such goods, services or credit.

            (g) Conflict of Interest. While employed by the Company, Employee
shall comply with all Company policies regarding actual or apparent conflicts of
interest with respect to Employee's duties and obligations to the Company.

            (h) Non-Disparagement. While employed by the Company, and for one
(1) year thereafter, Employee shall not in any way undertake to harm, injure or
disparage the Company, its officers, directors, employees, agents, affiliates,
vendors, products, or customers, or their successors, or in any other way
exhibit an attitude of hostility toward them.

            (i) Surrender of Equipment, Books and Records. Employee understands
and agrees that all equipment, books, records, customer lists and documents
connected with the business of the Company and/or its affiliates are the
property of and belong to the Company. Under no circumstances shall Employee
remove from the Company's facilities any of the Company's and/or its affiliates'
equipment, books, records, documents, lists or any copies of the same without
the Company's permission, nor shall Employee make any copies of the Company's
and/or its affiliates' books, records, documents or lists for use outside the
Company's office except as specifically authorized by the Company. Employee
shall return to the Company and/or its affiliates all equipment, books, records,
documents and customer lists belonging to the Company and/or its affiliates upon
termination of Employee's employment with the Company.

         9. RIGHTS UPON A CHANGE IN CONTROL.

            (a) Notwithstanding anything in this Agreement to the contrary, if
upon or at any time during the term of this Agreement there is a Termination
Event (as defined below) that occurs within one (1) year following any Change in
Control (as defined in Exhibit A) and Employee provides notice to the Company
during that one (1) year period of Employee's intent to terminate his Employment
pursuant to this Section 9, then Employee shall be treated as if Employee had
been terminated by the Company without substantial cause pursuant to Section
7(a).

            (b) A "Termination Event" shall mean the occurrence of any one or
more of the following, and in the absence of Employee's permanent disability
(defined in Section 7(d)),

                                       9                          George Fellows

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Employee's death, or any of the factors enumerated in Section 7(b) providing for
termination by the Company for substantial cause, accompanied by the giving of
notice by Employee as described in Section 9(a) of this Agreement:

                (i) the termination or material breach of this Agreement by the
Company;

                (ii) a failure by the Company to obtain the assumption of this
Agreement by any successor to the Company or any assignee of all or
substantially all of the Company's assets or business;

                (iii) any material diminishment in the title, position, duties,
responsibilities or status that Employee had with the Company, as a publicly
traded entity, immediately prior to the Change in Control;

                (iv) any reduction, limitation or failure to pay or provide any
of the compensation, reimbursable expenses, stock options, incentive programs,
or other benefits or perquisites provided to Employee under the terms of this
Agreement or any other agreement or understanding between the Company and
Employee, or pursuant to the Company's policies and past practices as of the
date immediately prior to the Change in Control; or

                (v) any requirement that Employee relocate or any assignment to
Employee of duties that would make it unreasonably difficult for Employee to
maintain the principal residence Employee had immediately prior to the Change in
Control.

            (c) In the event of a Change in Control, Employee shall be
indemnified by the Company for certain excise tax obligations, as more
specifically set forth in Exhibit C to this Agreement.

         10. MISCELLANEOUS.

            (a) Assignment. This Agreement shall be binding upon and shall inure
to the benefit of the parties hereto and the successors and assigns of the
Company. Employee shall have no right to assign Employee's rights, benefits,
duties, obligations or other interests in this Agreement, it being understood
that this Agreement is personal to Employee.

            (b) Entire Understanding. This Agreement sets forth the entire
understanding of the parties hereto with respect to the subject matter hereof,
and no other representations, warranties or agreements whatsoever as to that
subject matter have been made by Employee or the Company. This Agreement shall
not be modified, amended or terminated except by another instrument in writing
executed by the parties hereto. This Agreement replaces and supersedes any and
all prior understandings or agreements between Employee and the Company
regarding employment.

            (c) Notices. Any notice, request, demand, or other communication
required or permitted hereunder, shall be deemed properly given when actually
received or within five (5) days of mailing by certified or registered mail,
postage prepaid, to Employee at the address currently on file with the Company,
and to the Company at:

            Company:  Callaway Golf Company
                      2180 Rutherford Road
                      Carlsbad, California  92008
                      Attn:  Steven C. McCracken
                      Senior Executive Vice President, Chief Legal Officer

                                       10                         George Fellows

<PAGE>
or to such other address as Employee or the Company may from time to time
furnish, in writing, to the other.

            (d) Headings. The headings of the several sections and paragraphs of
this Agreement are inserted solely for the convenience of reference and are not
a part of and are not intended to govern, limit or aid in the construction of
any term or provision hereof.

            (e) Waiver. Failure of either party at any time to require
performance by the other of any provision of this Agreement shall in no way
affect that party's rights thereafter to enforce the same, nor shall the waiver
by either party of any breach of any provision hereof be held to be a waiver of
any succeeding breach of any provision or a waiver of the provision itself.

            (f) Applicable Law. This Agreement shall constitute a contract under
the internal laws of the State of California and shall be governed and construed
in accordance with the laws of said state as to both interpretation and
performance.

            (g) Severability. In the event any provision or provisions of this
Agreement is or are held invalid, the remaining provisions of this Agreement
shall not be affected thereby.

            (h) Advertising Waiver. While employed by the Company and for a
reasonable time thereafter, Employee agrees to permit the Company and/or its
affiliates, and persons or other organizations authorized by the Company and/or
its affiliates, to use, publish and distribute advertising or sales promotional
literature concerning the products of the Company and/or its affiliates, or the
machinery and equipment used in the manufacture thereof, in which Employee's
name and/or pictures of Employee taken in the course of Employee's provision of
services to the Company and/or its affiliates, appear. Employee hereby waives
and releases any claim or right Employee may otherwise have arising out of such
use, publication or distribution.

            (i) Employee's Legal Fees. The Company agrees to reimburse Employee
for actual and reasonable fees incurred by Employee for legal or other
professional services provided with regard to the negotiation and execution of
this Agreement, provided that such reimbursement, in the aggregate, shall not
exceed $35,000.

            (j) Counterparts. This Agreement may be executed in one or more
counterparts which, when fully executed by the parties, shall be treated as one
agreement.

         11. IRREVOCABLE ARBITRATION OF DISPUTES.

            (a) EMPLOYEE AND THE COMPANY AGREE THAT ANY DISPUTE, CONTROVERSY OR
CLAIM ARISING HEREUNDER OR IN ANY WAY RELATED TO THIS AGREEMENT, ITS
INTERPRETATION, ENFORCEABILITY, OR APPLICABILITY, OR RELATING TO EMPLOYEE'S
EMPLOYMENT, OR THE TERMINATION THEREOF, THAT CANNOT BE RESOLVED BY MUTUAL
AGREEMENT OF THE PARTIES SHALL BE SUBMITTED TO BINDING ARBITRATION. THIS
INCLUDES, BUT IS NOT LIMITED TO, ALLEGED VIOLATIONS OF FEDERAL, STATE AND/OR
LOCAL STATUTES, CLAIMS BASED ON ANY PURPORTED BREACH OF DUTY ARISING IN CONTRACT
OR TORT, INCLUDING BREACH OF CONTRACT, BREACH OF THE COVENANT OF GOOD FAITH AND
FAIR DEALING, VIOLATION OF PUBLIC POLICY, VIOLATION OF ANY STATUTORY,
CONTRACTUAL OR COMMON LAW RIGHTS, BUT EXCLUDING WORKERS' COMPENSATION,
UNEMPLOYMENT MATTERS, OR ANY MATTER FALLING WITHIN THE JURISDICTION OF THE STATE
LABOR COMMISSIONER. THE PARTIES AGREE THAT ARBITRATION IS THE PARTIES' ONLY
RECOURSE FOR SUCH CLAIMS AND HEREBY WAIVE THE RIGHT TO PURSUE SUCH CLAIMS IN ANY
OTHER FORUM, UNLESS OTHERWISE PROVIDED BY LAW. ANY COURT ACTION INVOLVING A
DISPUTE WHICH IS NOT SUBJECT TO ARBITRATION SHALL BE STAYED PENDING ARBITRATION
OF ARBITRABLE DISPUTES.

                                       11                         George Fellows

<PAGE>

            (b) EMPLOYEE AND THE COMPANY AGREE THAT THE ARBITRATOR SHALL HAVE
THE AUTHORITY TO ISSUE PROVISIONAL RELIEF. EMPLOYEE AND THE COMPANY FURTHER
AGREE THAT EACH HAS THE RIGHT, PURSUANT TO CALIFORNIA CODE OF CIVIL PROCEDURE
SECTION 1281.8, TO APPLY TO A COURT FOR A PROVISIONAL REMEDY IN CONNECTION WITH
AN ARBITRABLE DISPUTE SO AS TO PREVENT THE ARBITRATION FROM BEING RENDERED
INEFFECTIVE.

            (c) ANY DEMAND FOR ARBITRATION SHALL BE IN WRITING AND MUST BE
COMMUNICATED TO THE OTHER PARTY PRIOR TO THE EXPIRATION OF THE APPLICABLE
STATUTE OF LIMITATIONS.

            (d) THE ARBITRATION SHALL BE CONDUCTED PURSUANT TO THE PROCEDURAL
RULES STATED IN THE NATIONAL RULES FOR RESOLUTION OF EMPLOYMENT DISPUTES OF THE
AMERICAN ARBITRATION ASSOCIATION ("AAA"). THE ARBITRATION SHALL BE CONDUCTED IN
SAN DIEGO BY A FORMER OR RETIRED JUDGE OR ATTORNEY WITH AT LEAST 10 YEARS
EXPERIENCE IN EMPLOYMENT-RELATED DISPUTES, OR A NON-ATTORNEY WITH LIKE
EXPERIENCE IN THE AREA OF DISPUTE, WHO SHALL HAVE THE POWER TO HEAR MOTIONS,
CONTROL DISCOVERY, CONDUCT HEARINGS AND OTHERWISE DO ALL THAT IS NECESSARY TO
RESOLVE THE MATTER. THE PARTIES MUST MUTUALLY AGREE ON THE ARBITRATOR. IF THE
PARTIES CANNOT AGREE ON THE ARBITRATOR AFTER THEIR BEST EFFORTS, AN ARBITRATOR
FROM THE AMERICAN ARBITRATION ASSOCIATION WILL BE SELECTED PURSUANT TO THE
AMERICAN ARBITRATION ASSOCIATION NATIONAL RULES FOR RESOLUTION OF EMPLOYMENT
DISPUTES. THE COMPANY SHALL PAY THE COSTS OF THE ARBITRATOR'S FEES.

            (e) THE ARBITRATION WILL BE DECIDED UPON A WRITTEN DECISION OF THE
ARBITRATOR STATING THE ESSENTIAL FINDINGS AND CONCLUSIONS UPON WHICH THE AWARD
IS BASED. THE ARBITRATOR SHALL HAVE THE AUTHORITY TO AWARD DAMAGES, IF ANY, TO
THE EXTENT THAT THEY ARE AVAILABLE UNDER APPLICABLE LAW(s). THE ARBITRATION
AWARD SHALL BE FINAL AND BINDING, AND MAY BE ENTERED AS A JUDGMENT IN ANY COURT
HAVING COMPETENT JURISDICTION. EITHER PARTY MAY SEEK REVIEW PURSUANT TO
CALIFORNIA CODE OF CIVIL PROCEDURE SECTION 1286, ET SEQ.

            (f) IT IS EXPRESSLY UNDERSTOOD THAT THE PARTIES HAVE CHOSEN
ARBITRATION TO AVOID THE BURDENS, COSTS AND PUBLICITY OF A COURT PROCEEDING, AND
THE ARBITRATOR IS EXPECTED TO HANDLE ALL ASPECTS OF THE MATTER, INCLUDING
DISCOVERY AND ANY HEARINGS, IN SUCH A WAY AS TO MINIMIZE THE EXPENSE, TIME,
BURDEN AND PUBLICITY OF THE PROCESS, WHILE ASSURING A FAIR AND JUST RESULT. THE
ARBITRATOR SHALL ALLOW REASONABLE DISCOVERY AS PROVIDED IN THE CALIFORNIA
ARBITRATION ACT, BUT SHALL CONTROL THE AMOUNT AND SCOPE OF DISCOVERY.

            (g) THE PROVISIONS OF THIS SECTION SHALL SURVIVE THE EXPIRATION OR
TERMINATION OF THE AGREEMENT, AND SHALL BE BINDING UPON THE PARTIES.

THE PARTIES HAVE READ SECTION 11 AND IRREVOCABLY AGREE TO ARBITRATE ANY DISPUTE
IDENTIFIED ABOVE.

                   /s/ GF  (EMPLOYEE)       /s/ RSB  (COMPANY)
                   --------                 ----------

                                       12                         George Fellows

<PAGE>

         IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed effective the date first written above.

EMPLOYEE                                     COMPANY
                                             Callaway Golf Company,
                                             a Delaware corporation

/s/ George Fellows                           By:  /s/ Ronald S. Beard
---------------------                        ---------------------------
George Fellows                               Ronald S. Beard

                                       13                         George Fellows

<PAGE>

                                                                       EXHIBIT A

                                CHANGE IN CONTROL

         A "Change in Control" means the following and shall be deemed to occur
if any of the following events occurs:

         1. Any person, entity or group, within the meaning of Section 13(d) or
14(d) of the Securities Exchange Act of 1934 (the "Exchange Act") but excluding
the Company and its affiliates and any employee benefit or stock ownership plan
of the Company or its affiliates and also excluding an underwriter or
underwriting syndicate that has acquired the Company's securities solely in
connection with a public offering thereof (such person, entity or group being
referred to herein as a "Person") becomes the beneficial owner (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of 30% or more of
either the then outstanding shares of Common Stock or the combined voting power
of the Company's then outstanding securities entitled to vote generally in the
election of directors; or

         2. Individuals who, as of the effective date hereof, constitute the
Board of Directors of the Company (the "Incumbent Board") cease for any reason
to constitute at least a majority of the Board of Directors of the Company,
provided that any individual who becomes a director after the effective date
hereof whose election, or nomination for election by the Company's shareholders,
is approved by a vote of at least a majority of the directors then comprising
the Incumbent Board shall be considered to be a member of the Incumbent Board
unless that individual was nominated or elected by any Person having the power
to exercise, through beneficial ownership, voting agreement and/or proxy, 20% or
more of either the outstanding shares of Common Stock or the combined voting
power of the Company's then outstanding voting securities entitled to vote
generally in the election of directors, in which case that individual shall not
be considered to be a member of the Incumbent Board unless such individual's
election or nomination for election by the Company's shareholders is approved by
a vote of at least two-thirds of the directors then comprising the Incumbent
Board; or

         3. Consummation by the Company of the sale or other disposition by the
Company of all or substantially all of the Company's assets or a reorganization
or merger or consolidation of the Company with any other person, entity or
corporation, other than

            (a) a reorganization or merger or consolidation that would result in
the voting securities of the Company outstanding immediately prior thereto (or,
in the case of a reorganization or merger or consolidation that is preceded or
accomplished by an acquisition or series of related acquisitions by any Person,
by tender or exchange offer or otherwise, of voting securities representing 5%
or more of the combined voting power of all securities of the Company,
immediately prior to such acquisition or the first acquisition in such series of
acquisitions) continuing to represent, either by remaining outstanding or by
being converted into voting securities of another entity, more than 50% of the
combined voting power of the voting securities of the Company or such other
entity outstanding immediately after such reorganization or merger or
consolidation (or series of related transactions involving such a reorganization
or merger or consolidation), or

            (b) a reorganization or merger or consolidation effected to
implement a recapitalization or reincorporation of the Company (or similar
transaction) that does not result in a material change in beneficial ownership
of the voting securities of the Company or its successor; or

         4. Approval by the shareholders of the Company or an order by a court
of competent jurisdiction of a plan of liquidation of the Company.

                                       14                         George Fellows

<PAGE>

                                                                       EXHIBIT B

                       RELEASE OF CLAIMS - GENERAL RELEASE

         This Release of Claims - General Release ("Release") is effective as of
the date provided for in Section 10 below, and is made by and between GEORGE
FELLOWS ("Employee"), pursuant to the Chief Executive Officer Employment
Agreement (the "Agreement") to which this document is attached, and CALLAWAY
GOLF COMPANY (the "Company"), a Delaware corporation. This Release is entered
into in light of the fact that Employee's employment with the Company will
terminate and Employee will be eligible to receive Special Severance pursuant to
Section 7 of the Agreement.

         1. Consideration. In consideration for the payment of Special
Severance, Employee agrees to the terms and provisions set forth in this
Release.

         2. Release.

            (a) Employee hereby irrevocably and unconditionally releases and
forever discharges the Company, its predecessors, successors, subsidiaries,
affiliates and benefit plans, and each and every past, present and future
officer, director, employee, representative and attorney of the Company, its,
predecessors, successors, subsidiaries, affiliates and benefit plans, and their
successors and assigns (collectively referred to herein as the "Releasees"),
from any, every, and all charges, complaints, claims, causes of action, and
lawsuits of any kind whatsoever, including, to the extent permitted under the
law, all claims which Employee has against the Releasees, or any of them,
arising from or in any way related to circumstances or events arising out of
Employee's employment by the Company, including, but not limited to, harassment,
discrimination, retaliation, failure to progressively discipline Employee,
termination of employment, violation of state and/or federal wage and hour laws,
violations of any notice requirement, violations of the California Labor Code,
or breach of any employment agreement, together with any and all other claims
Employee now has or may have against the Releasees through and including
Employee's date of termination from the Company, provided, however, that
Employee does not waive or release the right to enforce the Agreement, the right
to enforce any stock option, restricted stock, retirement, welfare or other
benefit plan, agreement or arrangement, or any rights to indemnification or
reimbursement, whether pursuant to charter and by-laws of the Company or its
affiliates, applicable state laws, D&O insurance policies or otherwise. EMPLOYEE
ALSO SPECIFICALLY AGREES AND ACKNOWLEDGES THAT EMPLOYEE IS WAIVING ANY RIGHT TO
RECOVERY AGAINST RELEASEES BASED ON STATE OR FEDERAL AGE, SEX, PREGNANCY, RACE,
COLOR, NATIONAL ORIGIN, MARITAL STATUS, RELIGION, VETERAN STATUS, DISABILITY,
SEXUAL ORIENTATION, MEDICAL CONDITION OR OTHER ANTI-DISCRIMINATION LAWS,
INCLUDING, WITHOUT LIMITATION, TITLE VII, THE AMERICANS WITH DISABILITIES ACT,
THE CALIFORNIA FAIR HOUSING AND EMPLOYMENT ACT, THE AGE DISCRIMINATION IN
EMPLOYMENT ACT OF 1967, THE FAMILY MEDICAL RIGHTS ACT, THE CALIFORNIA FAMILY
RIGHTS ACT OR BASED ON THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OR THE WORKER
ADJUSTMENT AND RETRAINING NOTIFICATION ACT, ALL AS AMENDED, WHETHER SUCH CLAIM
BE BASED UPON AN ACTION FILED BY EMPLOYEE OR A GOVERNMENTAL AGENCY.

            (b) Employee understands that rights or claims under the Age
Discrimination in Employment Act of 1967 (29 U.S.C. Section 621, et seq.) that
may arise after the date this Release is executed are not waived. Nothing in
this Release shall be construed to prohibit Employee from exercising Employee's
right to file a charge with the Equal Employment Opportunity Commission or from
participating in any investigation or proceeding conducted by the Equal
Employment Opportunity Commission.

                                       15                         George Fellows

<PAGE>
            (c) Employee understands and agrees that if Employee files such a
charge, the Company has the right to raise the defense that the charge is barred
by this Release.

         3. Employee also waives all rights under section 1542 of the Civil Code
of the State of California. Section 1542 provides as follows:

                           A general release does not extend to claims which the
                           creditor does not know or suspect to exist in his
                           favor at the time of executing the release, which if
                           known by him must have materially affected his
                           settlement with the debtor.

         4. Governing Law. This Release shall be construed and enforced in
accordance with the internal laws of the State of California.

         5. Binding Effect. This Release shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, personal
representatives, successors and assigns.

         6. IRREVOCABLE ARBITRATION OF DISPUTES.

            (a) EMPLOYEE AND THE COMPANY AGREE THAT ANY DISPUTE, CONTROVERSY OR
CLAIM ARISING HEREUNDER OR IN ANY WAY RELATED TO THIS RELEASE, ITS
INTERPRETATION, ENFORCEABILITY, OR APPLICABILITY, OR RELATING TO EMPLOYEE'S
EMPLOYMENT, OR THE TERMINATION THEREOF, THAT CANNOT BE RESOLVED BY MUTUAL
AGREEMENT OF THE PARTIES SHALL BE SUBMITTED TO BINDING ARBITRATION. THIS
INCLUDES, BUT IS NOT LIMITED TO, ALLEGED VIOLATIONS OF FEDERAL, STATE AND/OR
LOCAL STATUTES, CLAIMS BASED ON ANY PURPORTED BREACH OF DUTY ARISING IN CONTRACT
OR TORT, INCLUDING BREACH OF CONTRACT, BREACH OF THE COVENANT OF GOOD FAITH AND
FAIR DEALING, VIOLATION OF PUBLIC POLICY, VIOLATION OF ANY STATUTORY,
CONTRACTUAL OR COMMON LAW RIGHTS, BUT EXCLUDING WORKERS' COMPENSATION,
UNEMPLOYMENT MATTERS, OR ANY MATTER FALLING WITHIN THE JURISDICTION OF THE STATE
LABOR COMMISSIONER. THE PARTIES AGREE THAT ARBITRATION IS THE PARTIES' ONLY
RECOURSE FOR SUCH CLAIMS AND HEREBY WAIVE THE RIGHT TO PURSUE SUCH CLAIMS IN ANY
OTHER FORUM, UNLESS OTHERWISE PROVIDED BY LAW. ANY COURT ACTION INVOLVING A
DISPUTE WHICH IS NOT SUBJECT TO ARBITRATION SHALL BE STAYED PENDING ARBITRATION
OF ARBITRABLE DISPUTES.

            (b) EMPLOYEE AND THE COMPANY AGREE THAT THE ARBITRATOR SHALL HAVE
THE AUTHORITY TO ISSUE PROVISIONAL RELIEF. EMPLOYEE AND THE COMPANY FURTHER
AGREE THAT EACH HAS THE RIGHT, PURSUANT TO CALIFORNIA CODE OF CIVIL PROCEDURE
SECTION 1281.8, TO APPLY TO A COURT FOR A PROVISIONAL REMEDY IN CONNECTION WITH
AN ARBITRABLE DISPUTE SO AS TO PREVENT THE ARBITRATION FROM BEING RENDERED
INEFFECTIVE.

            (c) ANY DEMAND FOR ARBITRATION SHALL BE IN WRITING AND MUST BE
COMMUNICATED TO THE OTHER PARTY PRIOR TO THE EXPIRATION OF THE APPLICABLE
STATUTE OF LIMITATIONS.

            (d) THE ARBITRATION SHALL BE CONDUCTED PURSUANT TO THE PROCEDURAL
RULES STATED IN THE NATIONAL RULES FOR RESOLUTION OF EMPLOYMENT DISPUTES OF THE
AMERICAN ARBITRATION ASSOCIATION ("AAA"). THE ARBITRATION SHALL BE CONDUCTED IN
SAN DIEGO BY A FORMER OR RETIRED JUDGE OR ATTORNEY WITH AT LEAST 10 YEARS
EXPERIENCE IN EMPLOYMENT-RELATED DISPUTES, OR A NON-ATTORNEY WITH LIKE
EXPERIENCE IN THE AREA OF DISPUTE, WHO SHALL HAVE THE POWER TO HEAR MOTIONS,
CONTROL DISCOVERY, CONDUCT HEARINGS AND OTHERWISE DO ALL THAT IS NECESSARY TO
RESOLVE THE MATTER. THE PARTIES MUST MUTUALLY AGREE ON THE ARBITRATOR. IF THE
PARTIES CANNOT AGREE ON THE ARBITRATOR AFTER THEIR BEST EFFORTS, AN ARBITRATOR
FROM THE JUDICIAL ARBITRATION AND MEDIATION

                                       16                         George Fellows

<PAGE>

SERVICE WILL BE SELECTED PURSUANT TO THE AMERICAN ARBITRATION ASSOCIATION
NATIONAL RULES FOR RESOLUTION OF EMPLOYMENT DISPUTES. THE COMPANY SHALL PAY THE
COSTS OF THE ARBITRATOR'S FEES.

            (e) THE ARBITRATION WILL BE DECIDED UPON A WRITTEN DECISION OF THE
ARBITRATOR STATING THE ESSENTIAL FINDINGS AND CONCLUSIONS UPON WHICH THE AWARD
IS BASED. THE ARBITRATOR SHALL HAVE THE AUTHORITY TO AWARD DAMAGES, IF ANY, TO
THE EXTENT THAT THEY ARE AVAILABLE UNDER APPLICABLE LAW(s). THE ARBITRATION
AWARD SHALL BE FINAL AND BINDING, AND MAY BE ENTERED AS A JUDGMENT IN ANY COURT
HAVING COMPETENT JURISDICTION. EITHER PARTY MAY SEEK REVIEW PURSUANT TO
CALIFORNIA CODE OF CIVIL PROCEDURE SECTION 1286, ET SEQ.

            (f) IT IS EXPRESSLY UNDERSTOOD THAT THE PARTIES HAVE CHOSEN
ARBITRATION TO AVOID THE BURDENS, COSTS AND PUBLICITY OF A COURT PROCEEDING, AND
THE ARBITRATOR IS EXPECTED TO HANDLE ALL ASPECTS OF THE MATTER, INCLUDING
DISCOVERY AND ANY HEARINGS, IN SUCH A WAY AS TO MINIMIZE THE EXPENSE, TIME,
BURDEN AND PUBLICITY OF THE PROCESS, WHILE ASSURING A FAIR AND JUST RESULT. IN
PARTICULAR, THE PARTIES EXPECT THAT THE ARBITRATOR WILL LIMIT DISCOVERY BY
CONTROLLING THE AMOUNT OF DISCOVERY THAT MAY BE TAKEN (E.G., THE NUMBER OF
DEPOSITIONS OR INTERROGATORIES) AND BY RESTRICTING THE SCOPE OF DISCOVERY ONLY
TO THOSE MATTERS CLEARLY RELEVANT TO THE DISPUTE. HOWEVER, AT A MINIMUM, EACH
PARTY WILL BE ENTITLED TO AT LEAST ONE DEPOSITION AND SHALL HAVE ACCESS TO
ESSENTIAL DOCUMENTS AND WITNESSES AS DETERMINED BY THE ARBITRATOR.

            (g) THE PROVISIONS OF THIS SECTION SHALL SURVIVE THE EXPIRATION OR
TERMINATION OF THE RELEASE, AND SHALL BE BINDING UPON THE PARTIES.

THE PARTIES HAVE READ SECTION 6 AND IRREVOCABLY AGREE TO ARBITRATE ANY DISPUTE
IDENTIFIED ABOVE.

               ______ (EMPLOYEE)        ______ (COMPANY)

         7. Counterparts. This Release may be executed in one or more
counterparts which, when fully executed by the parties, shall be treated as one
agreement.

         8. Advice of Counsel. The Company hereby advises Employee in writing to
discuss this Release with an attorney before executing it. Employee further
acknowledges that the Company will provide Employee twenty-one (21) days within
which to review and consider this Release before signing it. Should Employee
decide not to use the full twenty-one (21) days, then Employee knowingly and
voluntarily waives any claims that he was not in fact given that period of time
or did not use the entire twenty-one (21) days to consult an attorney and/or
consider this Release.

         9. Right to Revoke. The parties acknowledge and agree that Employee may
revoke this Release for up to seven (7) calendar days following Employee's
execution of this Release and that it shall not become effective or enforceable
until the revocation period has expired. The parties further acknowledge and
agree that such revocation must be in writing addressed to Steven C. McCracken,
Senior Executive Vice President and Chief Legal Officer, Callaway Golf Company,
2180 Rutherford Road, Carlsbad, California 92008, and received no later than
midnight on the seventh day following the execution of this Release by Employee.
If Employee revokes this Release under this section, it shall not be effective
or enforceable, and Employee will not receive the consideration described in
Section 1 above.

         10. Effective Date. If Employee does not revoke this Release in the
timeframe specified in Section 9 above, the Release shall become effective at
12:01 a.m. on the eighth day after it is fully executed by the parties.

                                       17                         George Fellows

<PAGE>

         11. Severability. In the event any provision or provisions of this
Release is or are held invalid, the remaining provisions of this Release shall
not be affected thereby.

         IN WITNESS WHEREOF, the parties hereto have executed this Release on
the dates set forth below, to be effective as of the date set forth in Section
10 above.

EMPLOYEE                                    COMPANY
                                            Callaway Golf Company,
                                            a Delaware corporation

                                            By:
----------------------------------             ---------------------------------
George Fellows                                 [Authorized Signature]

Dated:                                      Dated:
      ----------------------------                ------------------------------

                                       18                         George Fellows

<PAGE>

                                                                       EXHIBIT C

                               TAX INDEMNIFICATION

         Pursuant to Section 9(c) of Employee's Employment Agreement ("Section
9"), the Company agrees to indemnify Employee with respect to certain excise tax
obligations as follows:

         1. Definitions. For purposes of Section 9 and this Exhibit C, the
following terms shall have the meanings specified herein:

            (a) "Claim" shall mean any written claim (whether in the form of a
tax assessment, proposed tax deficiency or similar written notification) by the
Internal Revenue Service or any state or local tax authority that, if
successful, would result in any Excise Tax or an Underpayment.

            (b) "Code" shall mean the Internal Revenue Code of 1986, as amended.
All references herein to any section, subsection or other provision of the Code
shall be deemed to refer to any successor thereto.

            (c) "Excise Tax" shall mean (i) any excise tax imposed by Section
4999 of the Code or any comparable federal, state or local tax, and (ii) any
interest and/or penalties incurred with respect to any tax described in Section
1(c)(i) above.

            (d) Gross-Up Payment shall mean a cash payment as specified in
Section 2 of this Exhibit C.

            (e) "Overpayment" and "Underpayment" shall have the meanings
specified in Section 4 of this Exhibit C.

            (f) "Payment" shall mean any payment, benefit or distribution
(including, without limitation, cash, the acceleration of the granting, vesting
or exercisability of stock options or other incentive awards, or the accrual or
continuation of any other payments or benefits) granted or paid to or for the
benefit of Employee by the Company or by any person or persons whose actions
result in a Taxable Event (as defined in this Section), or by any person
affiliated with the Company or such person(s), whether paid or payable pursuant
to the terms of this Agreement or otherwise. Notwithstanding the foregoing, a
Payment shall not include any Gross-Up Payment required under Section 9 and this
Exhibit C

            (g) "Taxable Event" shall mean any change in control or other event
which triggers the imposition of any Excise Tax on any Payment.

         2. In the event that any Payment is determined to be subject to any
Excise Tax, then Employee shall be entitled to receive from the Company a
Gross-Up Payment in an amount such that, after the payment of all income taxes,
Excise Taxes and any other taxes imposed with respect to the Gross-Up Payment
(together with payment of all interest and penalties imposed with respect to any
such taxes), Employee shall retain a net amount of the Gross-Up Payment equal to
the Excise Tax imposed with respect to the Payments.

         3. All determinations required to be made under Section 9 and this
Exhibit C, including, without limitation, whether and when a Gross-Up Payment is
required and the amount of such Gross-Up Payment, and the assumptions to be
utilized in arriving at such determinations, shall be made by a mutually agreed
upon nationally recognized accounting firm that is not serving as accountant or
auditor for the individual, entity or group effecting the Taxable Event to which
a possible Gross-Up Payment is related (the "Accounting Firm"). The Accounting
Firm shall provide detailed supporting

                                       19                         George Fellows

<PAGE>

calculations to the Company and to Employee regarding the amount of Excise Tax
(if any) which is payable, and the Gross-Up Payment (if any) required hereunder,
with respect to any Payment or Payments, with such calculations to be provided
at such time as may be requested by the Company, but in no event later than
fifteen (15) business days following receipt of a written notice from Employee
that there has been a Payment that may be subject to an Excise Tax. All fees and
expenses of the Accounting Firm shall be borne solely by the Company. Any
Gross-Up Payment as determined pursuant to Section 9 and this Exhibit C shall be
paid by the Company to Employee within five (5) business days after receipt of
the Accounting Firm's determination. If the Accounting Firm determines that no
Excise Tax is payable by Employee, the Accounting Firm shall furnish Employee
with a written opinion that failure to disclose, report or pay the Excise Tax on
Employee's federal or other applicable tax returns will not result in the
imposition of a negligence penalty, understatement penalty or other similar
penalty. All determinations by the Accounting Firm shall be binding upon the
Company and Employee in the absence of clear and indisputable mathematical
error. Following receipt of a Gross-Up Payment as provided herein, Employee
shall be obligated to properly and timely report his Excise Tax liability on the
applicable tax returns or reports and to pay the full amount of Excise Tax with
funds provided through such Gross-Up Payment. Notwithstanding the foregoing, if
the Company reasonably determines that the Employee will be unable or otherwise
may fail to make such Excise Tax payment, the Company may elect to pay the
Excise Tax to the Internal Revenue Service and/or other applicable tax authority
on behalf of the Employee, in which case the Company shall pay the net balance
of the Gross-Up Payment (after deduction of such Excess Tax payment) to the
Employee.

         4. As a result of uncertainty in the application of Section 4999 of the
Code, it is possible that a Gross-Up Payment will not have been made by the
Company that should have been made (an "Underpayment") or that a Gross-Up
Payment is made that should not have been made (an "Overpayment"). In the event
that Employee is required to make a payment of any Excise Tax, due to an
Underpayment, the Accounting Firm shall determine the amount of Underpayment
that has occurred and any such Underpayment shall be promptly paid by the
Company to Employee in which case Employee shall be obligated to make a timely
payment of the full amount of the applicable Excise Tax to the applicable tax
authority, provided, however, the Company may elect to pay the Excise Tax to the
applicable tax authority on behalf of Employee consistent with the provisions of
Section 3 of this Exhibit C, in which case the Company shall pay the net balance
of the Underpayment (after deduction of such Excise Tax payment) to Employee. In
the event that the Accounting Firm determines that an Overpayment has been made,
any such Overpayment shall be repaid by Employee to the Company within ninety
(90) days after written demand to Employee by the Company, provided, however,
that Employee shall have no obligation to repay any amount of the Overpayment
that has been paid to, and not recovered from, a tax authority, provided
further, however, in such event the Company may direct Employee to prosecute a
claim for a refund of such amount consistent with the principles set forth in
Section 5 of this Exhibit C.

         5. Employee shall notify the Company in writing of any Claim. Such
notice (a) shall be given as soon as practicable, but in no event later than
fifteen (15) business days, following Employee's receipt of written notice of
the Claim from the applicable tax authority, and (b) shall include a compete and
accurate copy of the tax authority's written Claim or otherwise fully inform the
Company of the nature of the Claim and the date on which any payment of the
Claim must be paid, provided that Employee shall not be required to give notice
to the Company of facts of which the Company is already aware, and provided
further that failure or delay by Employee to give such notice shall not
constitute a breach of Section 9 or this Exhibit C except to the extent that the
Company is prejudiced thereby. Employee shall not pay any portion of a Claim
prior to the earlier of (a) the expiration of thirty (30) days following the
date on which Employee gives the foregoing notice to the Company, (b) the date
that any Excise Tax payment under the Claim is due, or (c) the date the Company
notifies Employee that it does not intend to contest the Claim. If, prior to
expiration of such period, the Company notifies Employee in writing that it
desires to contest the Claim, Employee shall:

                                       20                         George Fellows

<PAGE>

            (a) give the Company any information reasonably requested by the
Company relating to the Claim;

            (b) take such action in connection with contesting the Claim as the
Company shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to the Claim by
an attorney selected and compensated by the Company who is reasonably acceptable
to Employee;

            (c) cooperate with the Company in good faith in order to effectively
contest the Claim; and

            (d) permit the Company to participate (at its expense) in any and
all proceedings and conferences pertaining to the Claim;

provided, however, that the Company shall bear and pay directly all costs and
expenses (including, without limitation, additional interest and penalties and
attorneys' fees) incurred in connection with any such contest, and shall
indemnify and hold Employee harmless, on an after-tax basis, for any Excise Tax
or income tax (including, without limitation, interest and penalties with
respect thereto) and all costs imposed or incurred in connection with such
contests. Without limitation upon the foregoing provisions of this Section 5,
and except as provided below, the Company shall control all proceedings
concerning any such contest and, at its sole option, may pursue or forego any
and all administrative appeals, proceedings, hearings and conferences with tax
authorities pertaining to the Claim. At the written request of the Company, and
upon payment to Employee of an amount at least equal to the Claim plus any
additional amount necessary to obtain the jurisdiction of the appropriate
tribunal and/or court, Employee shall pay the same and sue for a refund or
otherwise contest the Claim in any permissible manner as directed by the
Company. Employee agrees to prosecute any contest of a Claim 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 requests Employee to pay the Claim and sue for a refund, the
Company shall indemnify and hold Employee harmless, on an after-tax basis, from
any Excise Tax or income tax (including, without limitation, interest and
penalties with respect thereto) and costs imposed or incurred in connection with
such contest or with respect to any imputed income attributable to any advances
or payments by the Company hereunder. Any extension of the statute of
limitations relating to assessment of any Excise Tax for the taxable year of
Employee which is the subject of a Claim is to be limited solely to the Claim.
Furthermore, the Company's control of a contest as provided hereunder shall be
limited to issues for which a Gross-Up Payment would be payable hereunder, and
Employee shall be entitled to settle or contest, as the case may be, any other
issue raised by the Internal Revenue Service or any other tax authority.

         6. If Employee receives a refund from a tax authority of all or any
portion of an Excise Tax paid by or on behalf of Employee with amounts advanced
by the Company pursuant to Section 9 and this Exhibit C, Employee shall promptly
pay to the Company the amount of such refund (together with any interest paid or
credited thereon after taxes applicable thereto). Employee shall, if so directed
by the Company, file and otherwise prosecute a claim for refund of any Excise
Tax payment made by or on behalf of Employee with amounts advanced by the
Company pursuant to Section 9 and this Exhibit C, with any such refund claim to
be effected in accordance with the principles set forth in Section 5 of this
Exhibit C. If a determination is made that Employee shall not be entitled to any
refund and the Company does not notify Employee in writing of its intent to
contest such denial of refund prior to the expiration of thirty (30) days after
such determination, then Employee shall have no further obligation hereunder to
contest such denial or to repay to the Company the amount involved in such
unsuccessful refund claim. The amount of any advances which are made by the
Company in connection with any such refund claim hereunder, to the extent not
refunded by the applicable tax

                                       21                         George Fellows

<PAGE>

authority to Employee, shall offset, as appropriate consistent with the purposes
of Section 9 and this Exhibit C, the amount of any Gross-Up Payment required
hereunder to be paid by the Company to Employee.

                                       22                         George Fellowsexv10w1

 

	 	 	 
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EXHIBIT 10.1

AGREEMENT

FOR BUSINESS PROCESS AND SUPPORT SERVICES

BETWEEN

NISOURCE CORPORATE SERVICES COMPANY

AND

INTERNATIONAL BUSINESS MACHINES CORPORATION

 

 

	 	 	 
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TABLE OF CONTENTS

Page

	 	 	 	 	 
	1. RECITALS/STRUCTURE OF AGREEMENT/TERM
	 	 	1	 
	1.1 Recitals
	 	 	1	 
	1.2 Structure of Agreement
	 	 	2	 
	1.3 Term of Agreement
	 	 	2	 
	1.4 Extension of Services
	 	 	2	 
	 
	 	 	 	 
	2. DEFINITIONS
	 	 	3	 
	2.1 Definitions Exhibit
	 	 	3	 
	2.2 Other Terms
	 	 	3	 
	 
	 	 	 	 
	3. THE SERVICES
	 	 	3	 
	3.1 Obligation to Provide Services
	 	 	3	 
	3.2 Service Levels/Service Credits
	 	 	4	 
	3.3 Business Continuity Planning Services and Disaster Recovery Services
	 	 	5	 
	3.4 Audits
	 	 	5	 
	3.5 Service Provider Cooperation with Authorized User Examinations
	 	 	8	 
	3.6 Equipment and Facilities
	 	 	8	 
	3.7 Security
	 	 	12	 
	3.8 Technical Architecture/Technology Refresh/Technology and Business Process Evolution
	 	 	12	 
	3.9 Customer Owned Software — Existing
	 	 	13	 
	3.10 Third Party Provider Software — Existing
	 	 	14	 
	3.11 Service Provider Software/New Service Provider Software Added During the Term
	 	 	14	 
	3.12 Software Licenses/Changes to the Software-Substitutions and Additions
	 	 	15	 
	3.13 Software Currency
	 	 	17	 
	3.14 Terms of Acquisition by Service Provider of Third Party Provider Software
	 	 	18	 
	3.15 Third Party Contracts — Compliance, Substitutions and Additions
	 	 	18	 
	3.16 New Services
	 	 	18	 
	3.17 Affiliates, Acquisitions and Divestitures
	 	 	19	 
	3.18 Viruses
	 	 	20	 
	3.19 Compliance with Laws, Regulations and Policies
	 	 	20	 
	 
	 	 	 	 
	4. WARRANTIES/REPRESENTATIONS/COVENANTS
	 	 	23	 
	4.1 Work Standards
	 	 	23	 
	4.2 Non-Infringement
	 	 	23	 
	4.3 Disabling Code
	 	 	23	 
	4.4 Authorization and Enforceability
	 	 	23	 
	4.5 Maintenance/Deliverables Conformance to Specifications
	 	 	24	 
	4.6 Efficiency and Cost Effectiveness
	 	 	24	 
	4.7 Software Ownership or Use
	 	 	24	 
	4.8 Inducements
	 	 	24	 
	4.9 Disclaimer
	 	 	24	 
	4.10 Regulatory Approvals and Licenses
	 	 	25	 
	4.11 Date Warranty
	 	 	25	 
	4.12 Covenant of Cooperation and Good Faith
	 	 	25	 
	4.13 Absence of Litigation
	 	 	25	 
	4.14 No Solicitation
	 	 	25	 
	4.15 Service Provider to Provide and Manage Necessary Resources
	 	 	26	 
	4.16 Functionality, Performance, Capabilities, etc.
	 	 	26	 
	4.17 Export; Immigration
	 	 	26	 
	4.18 IP Rights License
	 	 	27	 

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	4.19 Services Not to be Withheld
	 	 	27	 
	4.20 Service Provider Disqualification
	 	 	27	 
	4.21 ISO 9001
	 	 	27	 
	 
	 	 	 	 
	5. TRANSFER, TRANSITION AND TRANSFORMATION
	 	 	28	 
	5.1 Transition Plans
	 	 	28	 
	5.2 Transformation Plan
	 	 	29	 
	5.3 Affected Employees
	 	 	29	 
	 
	 	 	 	 
	6. GOVERNANCE
	 	 	30	 
	6.1 Relationship Management and Contract Governance Model
	 	 	30	 
	6.2 Meetings
	 	 	30	 
	6.3 Procedures Manual(s)/Training Materials
	 	 	30	 
	6.4 Change Control Process
	 	 	31	 
	6.5 Reports
	 	 	32	 
	 
	 	 	 	 
	7. SERVICE PROVIDER PERSONNEL
	 	 	33	 
	7.1 Account Executive
	 	 	33	 
	7.2 Replacement of Personnel
	 	 	33	 
	7.3 Key Service Provider Personnel and Positions
	 	 	33	 
	7.4 Service Provider Personnel Requirements
	 	 	34	 
	7.5 Retention of Experienced Personnel
	 	 	34	 
	 
	 	 	 	 
	8. RELATIONSHIP PROTOCOLS
	 	 	35	 
	8.1 Annual Updating of Exhibits and Schedules
	 	 	35	 
	8.2 Required Consents
	 	 	35	 
	8.3 Appointment as Attorney In Fact
	 	 	36	 
	8.4 Conflicts of Interests
	 	 	37	 
	8.5 Alternate Providers/Non-Exclusive
	 	 	37	 
	8.6 Use of Subcontractors
	 	 	38	 
	 
	 	 	 	 
	9. CHARGES; INVOICES; PAYMENT; BENCHMARKING; ETC.
	 	 	39	 
	9.1 Fees/Credits/Inflation Adjustment
	 	 	39	 
	9.2 Invoicing and Payment
	 	 	40	 
	9.3 Taxes
	 	 	41	 
	9.4 Customer Satisfaction
	 	 	42	 
	9.5 Benchmarking
	 	 	42	 
	9.6 Data Transport — Market Watch
	 	 	42	 
	9.7 New Services
	 	 	43	 
	9.8 Disputed Fees/Credits
	 	 	43	 
	 
	 	 	 	 
	10. INTELLECTUAL PROPERTY RIGHTS
	 	 	43	 
	10.1 Reserved
	 	 	43	 
	10.2 Service Provider Materials; Materials Developed by Service Provider or Jointly Developed
	 	 	43	 
	10.3 Customer Materials
	 	 	45	 
	10.4 Derivative Works of Service Provider Materials Developed Solely by Customer
	 	 	45	 
	10.5 Limitation
	 	 	45	 
	10.6 Assignment
	 	 	45	 
	10.7 Licenses to Third Parties
	 	 	46	 
	10.8 Sale of an Affiliate
	 	 	46	 
	10.9 Licenses to Customer
	 	 	46	 
	10.10 Obligations Regarding Materials
	 	 	46	 
	10.11 Moral Rights
	 	 	46	 

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	11. CONFIDENTIALITY AND DATA
	 	 	46	 
	11.1 Company Information
	 	 	46	 
	11.2 Obligations
	 	 	47	 
	11.3 Exclusions
	 	 	48	 
	11.4 Data Ownership
	 	 	48	 
	11.5 Loss of or Unauthorized Access to Company Information; Intrusions
	 	 	49	 
	11.6 Data Privacy
	 	 	49	 
	11.7 Limitation
	 	 	50	 
	 
	 	 	 	 
	12. TERMINATION
	 	 	50	 
	12.1 Termination by the Customer
	 	 	50	 
	12.2 Termination by Service Provider
	 	 	52	 
	12.3 Termination/Expiration Assistance
	 	 	52	 
	12.4 Other Rights Upon Termination
	 	 	53	 
	12.5 Effect of Partial Termination
	 	 	56	 
	12.6 Effect of Termination/Survival of Selected Provisions
	 	 	56	 
	 
	 	 	 	 
	13. LIABILITY
	 	 	57	 
	13.1 Liability Caps
	 	 	57	 
	13.2 Exclusions and Exceptions
	 	 	57	 
	13.3 Direct Damages and Cover Fees
	 	 	59	 
	13.4 Savings Clause/Dependencies
	 	 	59	 
	13.5 Service Credits
	 	 	59	 
	13.6 Fraud and Theft
	 	 	59	 
	13.7 Excused Performance
	 	 	59	 
	 	 	 	 	 
	14. INDEMNITIES
	 	 	60	 
	14.1 Service Provider Indemnity Obligations
	 	 	60	 
	14.2 Indemnity by the Customer
	 	 	62	 
	14.3 Employment Actions
	 	 	64	 
	14.4 Exclusive Remedy
	 	 	64	 
	14.5 Indemnification Procedures
	 	 	64	 
	14.6 Governmental Claims
	 	 	65	 
	 
	 	 	 	 
	15. INSURANCE AND RISK OF LOSS
	 	 	66	 
	15.1 Service Provider Insurance
	 	 	66	 
	15.2 Risk of Property Loss
	 	 	67	 
	15.3 Mutual Waiver of Subrogation
	 	 	67	 
	 
	 	 	 	 
	16. DISPUTE RESOLUTION
	 	 	67	 
	16.1 Dispute Resolution Procedures
	 	 	67	 
	16.2 Continued Performance
	 	 	69	 
	16.3 Expedited Dispute Resolution
	 	 	69	 
	 
	 	 	 	 
	17. GENERAL
	 	 	69	 
	17.1 Relationship of Parties; Publicity
	 	 	69	 
	17.2 Entire Agreement, Updates, Amendments and Modifications
	 	 	70	 
	17.3 Force Majeure
	 	 	70	 
	17.4 Waiver
	 	 	71	 
	17.5 Severability
	 	 	71	 
	17.6 Counterparts
	 	 	71	 
	17.7 Governing Law
	 	 	71	 
	17.8 Binding Nature and Assignment
	 	 	72	 
	17.9 Notices
	 	 	72	 

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	17.10 No Third Party Beneficiaries
	 	 	73	 
	17.11 Other Documents
	 	 	73	 
	17.12 Liens
	 	 	73	 
	17.13 Headings
	 	 	73	 
	17.14 Remarketing
	 	 	74	 
	17.15 Commencement of Actions
	 	 	74	 
	17.16 Currency
	 	 	74	 
	17.17 Consents and Approvals
	 	 	74	 
	17.18 Professional Advice
	 	 	74	 
	17.19 Duty to Mitigate
	 	 	74	 
	17.20 Remedies
	 	 	74	 

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EXHIBITS AND SCHEDULES

Exhibits to this Agreement

	 	 	 
	Exhibit	 	Title
	1

	 	Definitions
	 
	 	 
	2

	 	Statements of Work by Service Tower
	 
	 	 
	 

	 	- Schedule 2.1 — IT
	 
	 	 
	 

	 	- Schedule 2.2 — F&A
	 
	 	 
	 

	 	- Schedule 2.3 — HR
	 
	 	 
	 

	 	- Schedule 2.4 — Supply Chain
	 
	 	 
	 

	 	- Schedule 2.5 — Meter to Cash
	 
	 	 
	 

	 	- Schedule 2.6 — Call Centers
	 
	 	 
	 

	 	- Schedule 2.7 — Sales Centers
	 
	 	 
	 

	 	- Schedule 2.8 — WMS
	 
	 	 
	3

	 	Service Levels
	 
	 	 
	 

	 	Schedule 3.1 — Service Level Management Methodology
	 
	 	 
	 

	 	- Schedule 3.2 — Service Level Agreements by Service Tower
	 
	 	 
	 

	 	- Schedule 3.2.1 – IT
	 
	 	 
	 

	 	- Schedule 3.2.2 — F&A
	 
	 	 
	 

	 	- Schedule 3.2.3 — HR
	 
	 	 
	 

	 	- Schedule 3.2.4 — Supply Chain
	 
	 	 
	 

	 	- Schedule 3.2.5 — Meter to Cash
	 
	 	 
	 

	 	- Schedule 3.2.6 — Call Centers
	 
	 	 
	 

	 	- Schedule 3.2.7 — Sales Centers
	 
	 	 
	 

	 	- Schedule 3.3 — Service Level Definitions by Service Tower
	 
	 	 
	 

	 	- Schedule 3.3.1 — IT
	 
	 	 
	 

	 	- Schedule 3.3.2 — F&A
	 
	 	 
	 

	 	- Schedule 3.3.3 — HR
	 
	 	 
	 

	 	- Schedule 3.3.4 — Supply Chain
	 
	 	 
	 

	 	- Schedule 3.3.5 — Meter to Cash
	 
	 	 
	 

	 	- Schedule 3.3.6 — Call Centers
	 
	 	 
	 

	 	- Schedule 3.3.7 — Sales Centers
	 
	 	 
	4

	 	Pricing, Invoicing & Payment

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	Exhibit	 	Title
	 

	 	- Schedule 4.1 — Pricing Methodology
	 
	 	 
	 

	 	- Schedule 4.2 — Pricing Tables
	 
	 	 
	 

	 	- Schedule 4.3 — Termination Matrix
	 
	 	 
	 

	 	- Schedule 4.4 — Form of Invoice & Supporting Data
	 
	 	 
	 

	 	- Schedule 4.5 — Reserved
	 
	 	 
	 

	 	- Schedule 4.6 — Customer’s Financial Base Case
	 
	 	 
	 

	 	- Schedule 4.7 — [Reserved]
	 
	 	 
	5

	 	Benchmarking
	 
	 	 
	 

	 	- Schedule 5.1 — Benchmarking Methodology
	 
	 	 
	 

	 	- Schedule 5.2 — Approved Benchmarkers by Service Tower
	 
	 	 
	 

	 	- Schedule 5.2.1 — IT
	 
	 	 
	 

	 	- Schedule 5.2.2 — F&A
	 
	 	 
	 

	 	- Schedule 5.2.3 — HR
	 
	 	 
	 

	 	- Schedule 5.2.4 — Supply Chain
	 
	 	 
	 

	 	- Schedule 5.2.5 — Meter to Cash
	 
	 	 
	 

	 	- Schedule 5.2.6 — Call Centers
	 
	 	 
	 

	 	- Schedule 5.2.7 — Sales Centers
	 
	 	 
	6

	 	Service Categories by Service Tower
	 
	 	 
	 

	 	- Schedule 6.1 — IT
	 
	 	 
	 

	 	- Schedule 6.2 — F&A
	 
	 	 
	 

	 	- Schedule 6.3 — HR
	 
	 	 
	 

	 	- Schedule 6.4 — Supply Chain
	 
	 	 
	 

	 	- Schedule 6.5 — Meter to Cash
	 
	 	 
	 

	 	- Schedule 6.6 — Call Centers
	 
	 	 
	 

	 	- Schedule 6.7 — Sales Centers
	 
	 	 
	7

	 	Human Resources
	 
	 	 
	 

	 	- Schedule 7.1 — Transfer Provisions
	 
	 	 
	 

	 	- Schedule 7.2 — Reserved
	 
	 	 
	 

	 	- Schedule 7.3 — Affected Employees
	 
	 	 
	 

	 	- Schedule 7.4 — Key Service Provider Personnel and Positions
	 
	 	 
	8

	 	Governance

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	Exhibit	 	Title
	9

	 	Service Locations
	 
	 	 
	 

	 	- Schedule 9.1 — Service Provider Service Delivery Locations
	 
	 	 
	 

	 	- Schedule 9.2 — Customer Service Recipient Locations
	 
	 	 
	10

	 	Form of Procedures Manual(s)
	 
	 	 
	11

	 	Current and Planned Projects by Service Tower
	 
	 	 
	 

	 	- Schedule 11.1 — IT
	 
	 	 
	 

	 	- Schedule 11.2 — F&A
	 
	 	 
	 

	 	- Schedule 11.3 — HR
	 
	 	 
	 

	 	- Schedule 11.4 — Supply Chain
	 
	 	 
	 

	 	- Schedule 11.5 — Meter to Cash
	 
	 	 
	 

	 	- Schedule 11.6 — Call Centers
	 
	 	 
	 

	 	- Schedule 11.7 — Sales Centers
	 
	 	 
	12

	 	Equipment Assets
	 
	 	 
	13

	 	Software Assets
	 
	 	 
	14

	 	Third Party Contracts
	 
	 	 
	15

	 	Reports
	 
	 	 
	16

	 	Customer Satisfaction
	 
	 	 
	 

	 	- Schedule 16.1 — Form of Initial Survey
	 
	 	 
	 

	 	- Schedule 16.2 — Continuous Customer Satisfaction
	 
	 	 
	17

	 	Business Continuity Planning
	 
	 	 
	18

	 	Disaster Recovery
	 
	 	 
	 

	 	- Schedule 18.1 — Disaster Recovery Plan(s)
	 
	 	 
	 

	 	- Schedule 18.2 — Designated Critical Services
	 
	 	 
	19

	 	Standards, Policies & Procedures
	 
	 	 
	 

	 	- Schedule 19.1 — Reserved
	 
	 	 
	 

	 	- Schedule 19.2 — Safety and Security Procedures
	 
	 	 
	 

	 	- Schedule 19.3 — Record Retention Policies
	 
	 	 
	 

	 	- Schedule 19.4 — Compliance Requirements and Customer Internal
Controls Requirements Policy
	 
	 	 
	 

	 	- Schedule 19.5 — Reserved
	 
	 	 
	20

	 	Competitors
	 
	 	 
	 

	 	- Schedule 20.1 — Service Provider Competitors

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	Exhibit	 	Title
	 

	 	- Schedule 20.2 — Customer Competitors
	 
	 	 
	21

	 	Service Provider Use Of Customer Facilities
	 
	 	 
	22

	 	Transition by Service Tower
	 
	 	 
	 

	 	- Schedule 22.1 — Transition Management Methodology
	 
	 	 
	 

	 	- Schedule 22.2 — Transition Plans & Milestones
	 
	 	 
	 

	 	- Schedule 22.2.1 — IT
	 
	 	 
	 

	 	- Schedule 22.2.2 — F&A
	 
	 	 
	 

	 	- Schedule 22.2.3 — HR
	 
	 	 
	 

	 	- Schedule 22.2.4 — Supply Chain
	 
	 	 
	 

	 	- Schedule 22.2.5 — Meter to Cash
	 
	 	 
	 

	 	- Schedule 22.2.6 — Call Centers
	 
	 	 
	 

	 	- Schedule 22.2.7 — Sales Centers
	 
	 	 
	23

	 	Transformation by Service Tower
	 
	 	 
	 

	 	- Schedule 23.1 — Transformation Management Methodology
	 
	 	 
	 

	 	- Schedule 23.2 — Transformation Plans & Milestones by Service Tower
	 
	 	 
	 

	 	- Schedule 23.2.1 — IT
	 
	 	 
	 

	 	- Schedule 23.2.2 — F&A
	 
	 	 
	 

	 	- Schedule 23.2.3 — HR
	 
	 	 
	 

	 	- Schedule 23.2.4 — Supply Chain
	 
	 	 
	 

	 	- Schedule 23.2.5 — Meter to Cash
	 
	 	 
	 

	 	- Schedule 23.2.6 — Call Centers
	 
	 	 
	 

	 	- Schedule 23.2.7 — Sales Centers
	 
	 	 
	24

	 	Service Provider Approved Subcontractors
	 
	 	 
	25

	 	Service Provider and Service Provider Third Party Software and Tools
	 
	 	 
	 

	 	- Schedule 25.1 Restricted Software and Tools
	 
	 	 
	26

	 	Technology Refresh
	 
	 	 
	27

	 	Service Provider Technical Architecture
	 
	 	 
	28

	 	Other Matters

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          This AGREEMENT FOR BUSINESS PROCESS AND SUPPORT SERVICES (this “Agreement”), dated as of June
20, 2005 (the “Effective Date”), is entered into between NiSource Corporate Services Company, a
Delaware corporation (the “Customer”), and International Business Machines Corporation, a New York
corporation (the “Service Provider”).

RECITALS

     WHEREAS, the Service Provider is a provider of a broad range of business process and
operations support services for customers including, without limitation, information
technology, information management, call/contact center support services, supply chain
management, finance and accounting support services and human resources support and related
services;

     WHEREAS, the Service Provider is experienced and skilled in the administration,
management, provision, performance and delivery of such services and the business functions,
responsibilities and tasks attendant with such services;

     WHEREAS, the Service Provider desires to provide certain of these services to the
Customer Group (as defined herein) for the Customer Business (as defined herein), and to
perform and assume the functions, responsibilities and tasks attendant with such services as
currently performed by the Customer for the Customer Business and the Customer Group and as
envisioned to be required for the Customer Business and the Customer Group in the future;

     WHEREAS, the Customer desires that such services for the Customer Business and the
Customer Group and the attendant functions, responsibilities and tasks, be performed and
assumed by the Service Provider;

     WHEREAS, the Parties have identified specific goals for the Service Provider’s business
process and operations support services that they intend that the Service Provider’s
performance pursuant to this Agreement will achieve. These goals include: (i) delivering
performance that matches or exceeds current Customer Group service levels and functionality
at reduced cost in 2005 and continuing to deliver service improvements and cost reductions
in the functions encompassed by the Services (as defined herein) in future years; (ii)
transforming and then continuing to evolve and integrate certain business functions and
process solutions encompassed by the Services to deliver to the Customer Group a set of
solutions that are and remain market competitive throughout the Term (as defined herein);
(iii) enhancing the current functionality of the in-scope processes and systems and
supporting the Customer in its efforts to improve the internal controls of the Customer
Group and the Customer Business with respect to the scope of the Services and operations
covered by this Agreement; (iv) securing favorable rates for current and additional resource
consumption and for reductions in resource consumption and increasing flexibility regarding
resources chargeable and available to the Customer Group and committed by the Service
Provider to the Customer Group; (v) creating variable, unit based pricing to provide the
Services and provide the Customer Group with more predictable costs; and (vi) achieving a
risk mitigated transition of the Customer Group infrastructure and processes to the Service
Provider with a level of business interruption acceptable to the Customer.

     NOW, THEREFORE, for and in consideration of the agreements of the Parties set forth
below and intending to be legally bound, the Customer and the Service Provider hereby agree
as follows:

1. RECITALS/STRUCTURE OF AGREEMENT/TERM

     1.1 Recitals

The Recitals are intended to be a statement of the purposes of and basis for this Agreement
and are not intended to alter the plain meaning of the terms and conditions of this
Agreement or to require any Party to undertake performance obligations not required by this
Agreement. To the extent that the terms and conditions of this Agreement are unclear or
ambiguous, such terms and conditions are to be interpreted and construed consistent with the
purposes set forth in the Recitals.

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     1.2 Structure of Agreement

	 	(a)	 	The initial Services will be grouped around the following eight
(8) platforms or clusters of services: (i) Customer Contact Center, (ii) Sales
Center, (iii) Work Management Systems — GIS Mapping, (iv) Finance and
Accounting, (v) Meter-to-Cash, (vi) Human Resources and Communications, (vii)
Information Technology and (viii) Supply Chain. Each such platform/cluster of
services is herein referred to individually as a “Service Tower” and
collectively as the “Service Towers.” The Exhibits and
Schedules (including the Annexes, Appendices and Attachments thereto)
will collectively define the Services to be provided by the Service Provider
under the Service Towers and such Exhibits and Schedules
(including the Annexes, Appendices and Attachments thereto)and the main body of
this Agreement set forth the terms and conditions upon which the Services will
be provided.
	 
	 	(b)	 	This Agreement is comprised of the provisions set forth in this
Agreement, and in the various Exhibits and Schedules (including
the Annexes, Appendices and Attachments thereto)referenced herein. All
references to this Agreement shall include the Exhibits and
Schedules (including the Annexes, Appendices and Attachments thereto)to
this Agreement. All references to Exhibits to this Agreement shall
include the Schedules (including the Annexes, Appendices and
Attachments thereto), if any, to such Exhibits.
	 
	 	(c)	 	In the event of a conflict between (i) the terms and conditions
in the main body of this Agreement and the terms of any Exhibit or
Schedule (including the Annexes, Appendices and Attachments thereto),
the terms and conditions in the main body of this Agreement shall prevail or
(ii) the terms of the Exhibits to this Agreement and the terms of the
various Schedules (including the Annexes, Appendices and Attachments
thereto) referenced in the Exhibits, the terms in the Exhibit
shall prevail.

     1.3 Term of Agreement

The initial term of this Agreement will begin as of the Effective Date and will terminate
upon the later to occur of (a) the date that is ten (10) full Contract Years after the
Effective Date or (b) the date of completion by the Service Provider of the
Termination/Expiration Assistance required to be provided by the Service Provider upon the
conclusion of such ten (10) year period (the “Term”), unless earlier terminated in
accordance with the provisions of this Agreement (in which case the “Term” will end upon the
conclusion of the provision by the Service Provider of the Termination/Expiration
Assistance). The Customer will remain responsible for the performance of the operations
encompassed by the Services (but not the Transition Services) from the Effective Date to the
applicable Commencement Date(s) under each Service Tower.

     1.4 Extension of Services

The Customer shall have three (3) additional twelve (12) full calendar month optional
extension periods (each an “Extension Period”), exercisable by the Customer upon not less
than sixty (60) days prior written notice given before the scheduled expiration of this
Agreement. For the avoidance of doubt, the Parties acknowledge that the Customer has the
right to receive Termination/Expiration Services for up to twenty-four (24) months after the
expiration of the initial term or any Extension Period pursuant to Section 12.3
hereof, and such twenty-four (24) month period shall be considered a separate extension of
the Term. The Fees set forth in Exhibit 4, the “Pricing, Invoicing &
Payment” Exhibit and its Schedules, subject to adjustment and change as provided
herein and in Exhibit 4, the “Pricing, Invoicing & Payment” Exhibit,
shall apply during any Extension Period or during any Termination/Expiration Assistance
period.

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2. DEFINITIONS

     2.1 Definitions Exhibit

In this Agreement, all capitalized terms in the body of this Agreement shall have the
meanings set forth in the “Definitions” Exhibit attached hereto as
Exhibit 1.

     2.2 Other Terms

Other capitalized terms used elsewhere in this Agreement are defined where they are used and
have the meanings there indicated.

3. THE SERVICES

     3.1 Obligation to Provide Services

	 	(a)	 	Starting on the Effective Date and continuing during the Term,
the Service Provider shall provide the Services to, and perform the Services
for, the Customer Group, for use by the Customer Group and other Authorized
Users.
	 
	 	(b)	 	For purposes of this Agreement, “Services” shall mean the
services, functions and responsibilities, as they may evolve during the Term
by, among other things, the engagement of the Service Provider to perform New
Services, and as they may be otherwise supplemented, enhanced, modified or
replaced, as set forth below:

	 	(i)	 	the services, functions, and responsibilities
described in this Agreement, including the Termination/Expiration
Assistance;
	 
	 	(ii)	 	even if not specifically described in this
Agreement, the services, functions, and responsibilities routinely
performed by Customer personnel and contractors who are transitioned to
the Service Provider or displaced or whose functions were displaced by
the assumption of the Services by the Service Provider and which were
routinely performed during the twelve (12) month period prior to the
Effective Date to the extent such services, functions or
responsibilities continue to be needed by the Customer Group;
	 
	 	(iii)	 	even if not specifically described in this
Agreement, the services, functions, and responsibilities reflected in
those categories of the Customer’s Financial Base Case set forth in
Schedule 4.6 to Exhibit 4, the “Pricing, Invoicing
& Payment” Exhibit, that are assumed by the Service
Provider; and
	 
	 	(iv)	 	any services, functions, and responsibilities
not specifically described in this Agreement but that are required for
the proper performance and provision of the services, functions, and
responsibilities described above or are an inherent part of, or
necessary subpart included within, the services, functions and
responsibilities described above.

	 	(c)	 	The Parties agree that the services, functions and
responsibilities described in Section 3.1(b)(ii), (iii) and
(iv) above are intended to cover those services, functions and
responsibilities that (i) reasonably relate to the specific services, functions
and responsibilities described in this Agreement, and (ii) may have been
omitted in the drafting of this Agreement. For the avoidance of doubt, the
provisions in Section 3.1(b)(ii), (iii) and (iv) are not
intended to expand the scope of Section 3.1(b)(i) beyond the purposes
identified in this Section 3.1(c).

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	 	(d)	 	Changes during the Term in the services, functions and
responsibilities described above shall not be deemed to be New Services, if
such services, functions and responsibilities evolved or were supplemented and
enhanced during the Term (a) by the Service Provider in its sole discretion, or
(b) are required to be made by the Service Provider as part of the services,
functions or responsibilities described above pursuant to the terms of this
Agreement.
	 
	 	(e)	 	Except as otherwise expressly provided in this Agreement, the
Service Provider shall be responsible for providing the facilities, personnel,
software, equipment and other resources as necessary to provide the Services.
	 
	 	(f)	 	As part of the Services, throughout the Term, the Service
Provider shall provide the interfaces between the Service Provider Systems and
the Customer Systems as necessary to provide the Services. Upon the Service
Provider’s request, the Customer shall provide reasonable information, access
and cooperation as may be necessary for the Service Provider to develop and
implement any interfaces. Any interfaces not listed in the transition plans
shall be subject to the applicable Change Control Process; provided that there
shall not be any additional cost to the Customer for interfaces necessary to
provide the Services, except for reasonable one-time interface implementation
charges for work actually performed by the Service Provider (or its
subcontractors) that are associated with (i) adding new members to the Customer
Group, (ii) providing or performing New Services or changes to interfaces
required by changes by the Customer to its technical architectural standards
pursuant to Section 3.8 or (iii) introducing new Customer Software at
the Customer’s request and direction.
	 
	 	(g)	 	The Service Provider shall promptly make available and provide
to the Customer Group, at no additional charge, all maintenance for and
enhancements to the Services, and each of the components of the Services,
developed, prepared, licensed or otherwise acquired by or for the Service
Provider that the Customer is required to incorporate and use to receive the
Services pursuant to Section 3.1(i).
	 
	 	(h)	 	The Service Provider shall not, without the prior written
agreement of the Customer, make any modification or change to the Services, or
any component of the Services, (A) that does not successfully satisfy the
applicable test criteria, if any, specified in this Agreement for integration
into the Services, or (B) that could (i) cause the Services to fail to deliver
the full features, functionality, scalability and performance as described in
this Agreement, (ii) cause the Services to fail to satisfy any Service Level,
(iii) breach this Agreement, or (iv) require an alteration of any of the
systems, network and infrastructure of the members of the Customer Group in
order for the Customer Group to use the full features, functionality,
scalability or performance of the Services.
	 
	 	(i)	 	The Customer shall timely incorporate and use all modifications
or changes to the Services made by the Service Provider in accordance with this
Agreement. Notwithstanding the above, the Customer shall not be required to
incorporate or use any modification if it does not satisfy or could have any of
the effects described in item (A) or (B) of Section 3.1(h), or the
Service Provider has not complied with its notice obligations pursuant to
Section 3.1(h).

     3.2 Service Levels/Service Credits

	 	(a)	 	Effective on each Commencement Date, the Service Provider
agrees to perform and provide the Services that are the subject of each Service
Tower in a manner that shall meet or exceed its performance obligations and
other requirements set forth in Exhibit 3, the “Service Levels”
Exhibit, subject to the limitations and in accordance with the
provisions set forth in this Agreement. The management methodology applicable
to the Service Levels is set forth in Schedule 3.1, the “Service
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Methodology” Schedule, to Exhibit 3, the
“Service Levels” Exhibit. The Service Provider further
agrees that it shall perform the Services that are not subject to expressly
defined Service Levels at a level of service that satisfies or exceeds the
greater of (i) standards employed by other service providers performing
services of similar scope and scale or (ii) the level of service and degree
of accuracy, quality, completeness, timeliness, responsiveness and
efficiency as was provided prior to the Commencement Date by or for the
Customer Group.

	 	(b)	 	If the Service Provider fails to perform the Services in
accordance with the terms set forth on Exhibit 3, the “Service
Levels” Exhibit, and such performance is not excused pursuant to
the applicable terms of this Agreement, the Service Provider shall, if
applicable, credit or pay the amounts (including Service Credits) set forth in
Exhibit 3, the “Service Levels” Exhibit, to the
Customer.

     3.3 Business Continuity Planning Services and Disaster Recovery Services

As part of the Services, the Service Provider shall provide Disaster Recovery Services and
Business Continuity Planning Services in accordance with Exhibit 18, the
“Disaster Recovery” Exhibit, and Exhibit 17, the “Business
Continuity Planning” Exhibit. If (i) the Service Provider fails to timely and
properly perform or provide the Business Continuity Planning Services or Disaster Recovery
Services to the extent and in accordance with the time table set forth in those
Exhibits for a period(s) as set forth in those Exhibits and (ii) such
failure to timely and properly perform or provide the Business Continuity Planning Services
or Disaster Recovery Services is not itself caused by a Force Majeure Event, then the
Customer will be entitled, at its election, to terminate the portion of this Agreement
(including Exhibit 17 and Exhibit 18, the “Business Continuity Planning” and
“Disaster Recovery” Exhibits) relevant to the affected Service Category or
Service Tower pursuant to Section 12.1(a) (without giving the notices and observing
the cure periods set forth in Section 12.1(a)) upon written notice to the Service
Provider and payment of the Applicable Termination Fees. If the Customer elects to
terminate as described in this Section 3.3, the Customer shall give notice to the
Service Provider of such election within sixty (60) days after the occurrence of the event
on which such termination is based. Such termination shall not constitute the sole and
exclusive remedy of the Customer for such failure of performance by the Service Provider,
nor shall the failure of the Customer to take action to pursue other remedies at the time of
termination constitute a waiver of the Customer’s right to pursue such additional remedies
as may be available at law or in equity, subject to the terms of this Agreement, at a later
date.

     3.4 Audits

	 	(a)	 	The Service Provider shall maintain, and cause its
subcontractors at all levels to maintain, records and a complete audit trail,
including all original transaction records, of all financial and non-financial
transactions, actions or activities resulting from or arising in connection
with this Agreement. The Service Provider shall provide to the Customer, its
auditors (including internal audit staff and external auditors), regulators and
such other representatives as the Customer may from time to time designate in
writing (excluding from the foregoing any persons or entities who are listed in
Schedule 20.1, the “Service Provider Competitors”
Schedule, to Exhibit 20, the “Competitors”
Exhibit), access at all reasonable times (i) to any facility or part of
a facility at which either the Service Provider or any of its subcontractors at
any level is performing or providing the Services, (ii) to the Service Provider
and its subcontractors’ personnel, (iii) to the Service Provider and its
subcontractors’ systems, policies and procedures relevant to the Services, and
(iv) to the data, records and books of the Service Provider and its
subcontractors relating to the Services (but excluding data and records of any
other customers of the Service Provider and data related to the Service
Provider’s or its subcontractors costs except for cost data that constitutes
Managed Third Party Expenses) for the purpose of performing audits and
examinations of the Service Provider and any of its subcontractors for the
following reasons:

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	 	(i)	 	to examine, review and verify the accuracy of
Fees, any other charges by the Service Provider and the invoices for
all such amounts;
	 
	 	(ii)	 	to examine, review and verify the integrity of
the Customer Data and examine the systems that process, store, support
and transmit that data and verify the integrity of such systems,
including intrusion vulnerability and penetration assessments and
reports; and
	 
	 	(iii)	 	to examine, review, test and verify Service
Provider compliance with this Agreement and the performance of the
Services including: (A) the internal controls of the Service Provider
and its subcontractors at any level relating to the Services and the
Service Provider Service Delivery Locations, (B) compliance by the
Service Provider and its subcontractors with Customer policies listed
in Exhibit 19, the “Standards, Policies & Procedures”
Exhibit, (C) business continuity and disaster recovery and
back-up procedures for the Services, (D) with regard to the portions of
the Services priced on a cost-plus or Managed Third Party Expense
basis, the costs of the Service Provider in performing the Services
(but only to the extent affecting Fees for, or timing of, the Services
hereunder), and (E) as appropriate to enable the Customer Group to meet
regulatory requirements applicable to the Customer Group. However,
neither the Customer nor its auditors or examiners will be allowed
access to the records of any other customer of the Service Provider or
its subcontractors. Nothing in this Agreement shall limit or restrict
the Customer Group’s or the Service Provider’s rights in discovery
proceedings pursuant to any civil litigation.

Such access shall be as requested by the Customer from time to time, shall
require reasonable written notice (in a writing by e-mail and by U.S. mail)
to the Service Provider and shall be provided at reasonable hours (or upon
such lesser notice and at such times, as may be required or permitted by
law, rule or regulation applicable to any member of the Customer Group);
provided, however, that the Service Provider shall provide the Customer with
immediate access upon the occurrence of any of the following events: (i)
any act or allegation of fraud committed or alleged to have been committed
by the Service Provider, its Affiliates or their subcontractors or other
malfeasance committed or alleged to have been committed by any of such
entities in the performance of the Services or (ii) any audit initiated by
applicable regulatory authorities or otherwise required to enable compliance
by the members of the Customer Group with the Customer Laws to the extent
that the audits described in this item (ii) require immediate access. In
addition, if the Service Provider becomes insolvent 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, then the Customer shall have immediate access
rights to the extent necessary to obtain, protect or recover the Customer
Data. As part of its obligations under this paragraph, the Service Provider
shall promptly provide the Customer with a contact from the Service
Provider’s internal audit department for the purpose of timely investigating
and resolving the acts or allegations referred to in item (i) of the
immediately preceding sentence. Any discrepancies in the Service Provider’s
invoices revealed by such an audit shall be adjusted as set forth in
Section 3.4(c) or resolved in accordance with the Dispute Resolution
Process.

	 	(b)	 	The Service Provider shall provide to the Customer Group and
their respective auditors, regulators and other representatives such assistance
as they reasonably require. The Service Provider shall cooperate with the
Customer Group and its designees in connection with audit functions and with
regard to examinations by regulatory authorities. The Customer Group’s
auditors and other representatives shall comply with the Service Provider’s
reasonable confidentiality and security requirements in a manner

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equivalent to the requirements of Article 11 of this Agreement,
except as otherwise required by law.

	 	(c)	 	If any audit or examination reveals that the Service Provider’s
invoices for the audited period are not correct (other than amounts in dispute
pursuant to Section 9.8) and either the Service Provider or the
Customer, as the case may be, does not successfully dispute the amount
questioned by such audit in accordance with Section 16.1 hereof, then
the Service Provider shall promptly reimburse the Customer for the amount of
any overcharges or the Customer shall promptly pay the Service Provider for the
amount of any undercharges. Any amounts unpaid by the Service Provider that
are owed pursuant to this Section 3.4(c) may be set-off by the Customer
against any other amounts that may be due to the Service Provider under this
Agreement.
	 
	 	(d)	 	The Parties shall meet following each audit at a time
reasonably designated by the Customer to review the results of the audit. The
Service Provider agrees to make promptly any changes and take any other actions
necessary as a result of any audit examination or otherwise found to be
necessary to remediate or maintain compliance with this Agreement including the
matters referred to in Section 3.19. If any audit reveals a
discrepancy of more than five percent (5%) of the invoiced amount charged to
the Customer during any period audited and the Service Provider does not
successfully dispute the discrepancy identified by such audit in accordance
with Section 16.1 hereof, then the Service Provider shall bear the cost
of such audit; provided, however, that the Service Provider shall not be
obligated to reimburse the Customer for the cost of such audit if the auditor
is engaged by the Customer on a contingent fee basis.
	 
	 	(e)	 	The Service Provider shall retain all records, documents and
data required to be maintained by it under this Agreement for such period as
may be specified on Schedule 19.3, the “Record Retention
Policies” Schedule, to Exhibit 19, the “Standards,
Policies & Procedures” Exhibit.
	 
	 	(f)	 	The Service Provider shall conduct audits of or pertaining to
the Services and the Service Provider Delivery Locations in such manner and at
such times as is consistent with the audit practices of well managed operations
performing services similar to the Services. At least once in every Contract
Year, and at a time that is appropriate to the Customer’s fiscal year (provided
such fiscal year ends on December 31), the Service Provider shall, and shall
cause its subcontractors to, deliver to the Customer, at its or their expense,
a report from the Service Provider’s or such subcontractor’s independent
auditors of examinations in accordance with Statement of Accounting Standards
(“SAS”) No. 70, Type II, as amended or superseded from time to time, of the
controls, procedures, and systems used by the Service Provider and its
subcontractors to deliver the Services from the Service Provider Service
Delivery Locations that support multiple Service Provider customers. All such
reports shall have an effective date that is no earlier than three (3) months
prior to the Customer’s fiscal year end so long as such year end is a calendar
year end and shall be delivered to the Customer by the date that is no later
than thirty(30) days after such fiscal year end. The Service Provider shall,
and shall cause each of its subcontractors to, correct the circumstances
resulting in any exception or qualification to any such report related to the
Service Provider Service Delivery Locations that support multiple Service
Provider customers and provide to the Customer prior to the end of each such
fiscal year a letter confirming that there have been no changes in the control
processes since the date of the audit report.
	 
	 	(g)	 	In addition to the SAS No. 70, Type II report described in
Section 3.4(f), the Service Provider shall promptly report to the
Customer regarding any exposure to the Service Provider’s or its Affiliates’ or
subcontractors’ internal control environments raised or identified in any
review or audit conducted by the Service Provider, its Affiliates or their

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subcontractors or by inspectors or regulators to the extent any such audit
is relevant to the Services and indicates an impact on the Customer.

	 	(h)	 	The Service Provider will comply with the Customer Internal
Controls Requirements Policy of the Customer listed in Schedule 19.4,
the “Compliance Requirements, Customer Internal Control Requirements and
Other Policies, Standards and Procedures” Schedule to Exhibit
19, the “Standards, Policies & Procedures” Exhibit, with
respect to the internal controls to be complied with by the Service Provider
and its subcontractors applicable to the Services. Except as otherwise
directed by the Customer, during the Term, the Service Provider shall, at a
minimum, continue to employ the self-testing and other testing measures and
methods employed by the Customer as of the Effective Date and, at no additional
charge, will develop and maintain at least equivalent self-testing and other
testing measures as the Services evolve during the Term. Further, the Service
Provider shall promptly provide to the Customer a statement of compliance with
such policy by the Service Provider and its subcontractors performing any part
of the Service as requested by the Customer from time to time.
	 
	 	(i)	 	Until the later of (i) all pending matters relating to this
Agreement (e.g., disputes) are closed; or (ii) the information is no longer
required to meet the Customer’s records retention policy as described in
Schedule 19.3, the “Record Retention Policy” Schedule,
to Exhibit 19, the “Standards, Policies & Procedures”
Exhibit, the Service Provider shall maintain and provide access upon
request to the records, documents and other information required to meet the
Customer’s audit rights under this Agreement.

     3.5 Service Provider Cooperation with Authorized User Examinations

The Service Provider acknowledges that Authorized Users frequently require the right to
conduct security, disaster recovery and regulatory compliance examinations of the Customer
information processing facilities and resources used to provide Services to them or for
their benefit. The Service Provider agrees to cooperate with the Customer on behalf of the
Customer’s Authorized Users in the conduct of such examinations and to provide them access
to the Service Provider facilities, personnel and systems used to provide and perform the
Services as reasonably necessary for such Authorized Users (or their designated
representatives) to conduct such examinations. All such access to such Service Provider
facilities and resources used by the Service Provider to provide and perform the Services
shall be subject to: (i) reasonable data and records protection and physical security
measures, and (ii) such Authorized Users’ employees, agents and representatives undertaking
reasonable confidentiality requirements relating to such examinations which are the
equivalent of those set forth in Article 11 of this Agreement.

     3.6 Equipment and Facilities

	 	(a)	 	To enable the Service Provider to provide the Services, the
Customer will provide the use of (i) the Customer Provided Hardware, the
Customer Provided Office Furnishings, and other Customer facilities that are
specified in Exhibit 21, the “Service Provider Use of Customer
Facilities” Exhibit, (ii) any office services such as reasonable
telephone services already subscribed to by the Customer and (iii) any of the
Customer Locations specified in Schedule 9.2, the “Customer Service
Recipient Locations” Schedule, to Exhibit 9, the
“Service Locations” Exhibit, for the sole purpose of providing
and performing the Services for the Customer Group. The Customer Provided
Hardware, the Customer Provided Office Furnishings, the Customer Service
Recipient Locations and other facilities will be provided “AS IS,” except that
the Customer warrants that the Customer has the right to make the Customer
Provided Hardware, the Customer Provided Office Furnishings and the Customer
Service Recipient Locations available to the Service Provider and its
subcontractors to the extent required by the terms of this Agreement. The
Service Provider shall have inspected such equipment and facilities and
determined that the provided items meet the Service Provider’s need. Except as
specifically set forth in Exhibit 21, the “Service Provider Use of
Customer Facilities” Exhibit, the Customer

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shall not be responsible to the Service Provider for ensuring that the
Customer Provided Hardware, the Customer Provided Office Furnishings, the
other facilities identified in Exhibit 21, the “Service Provider
Use of Customer Facilities and Equipment” Exhibit, provide for a
safe working environment, including compliance with applicable laws and
regulations. The Service Provider shall maintain the Customer Provided
Hardware and the Customer Provided Office Furnishings. The Service Provider
shall take no action that will compromise the safety of the working
environment that includes the Customer Provided Hardware, the Customer
Provided Office Furnishings, the Customer Service Recipient Locations and
other facilities provided by the Customer to the Service Provider, or
violate the laws and regulations applicable thereto. When the Customer
Provided Hardware, the Customer Provided Office Furnishings and other
Customer facilities and office services are no longer deemed necessary to
perform the Services, the Customer’s obligations set forth in this
Section 3.6 with respect to each such item of resources shall
terminate.

	 	(b)	 	The use by the Service Provider of the Customer Provided
Hardware, the Customer Provided Office Furnishings, the Customer Service
Recipient Locations and other Customer facilities described in this Agreement
will not constitute or create any lease, leasehold interest, estate for any
period or other similar interest in the Service Provider, but instead will
constitute a license to use such items for the periods and subject to the terms
of this Agreement. Improvements to the Customer Service Recipient Locations
shall become the property of the Customer.
	 
	 	(c)	 	The Service Provider Equipment used by the Service Provider or
its subcontractors (including Equipment owned by the Service Provider or its
subcontractors and Equipment leased by the Service Provider or its
subcontractors from Third Parties) to perform and provide the Services will be
set forth on Exhibit 12, the “Equipment Assets”
Exhibit.
	 
	 	(d)	 	Schedule 9.1, the “Service Provider Service
Delivery Locations” Schedule, to Exhibit 9, the
“Service Locations” Exhibit, sets forth a list of all Service
Provider Service Delivery Locations, together with the general scope of the
Services to be provided at each Service Provider Service Delivery Location.
The Service Provider must obtain the Customer’s prior consent (which consent
shall not be unreasonably withheld) for any change, relocation or addition to
the Service Provider Service Delivery Locations or the types or allocation of
Services provided at a Service Provider Service Delivery Location. All such
changes, relocations or additions to the Service Provider Service Delivery
Locations or the types or allocations of Services provided at a Service
Provider Service Delivery Location shall be at the Service Provider’s sole cost
and expense when made at the Service Provider’s discretion (and not pursuant to
Section 3.6(f) or Section 3.6(g)). The factors that the Customer shall
consider in granting or refusing to grant its consent are that the proposed
change, relocation or addition to the Service Provider Service Delivery
Locations or the types or allocation of Services provided at a Service Provider
Service Delivery Location would: (i) impact the Customer’s customer facing
processes; (ii) harm or adversely impact the relationship of any member of the
Customer Group with any regulatory or other governmental authorities in the
utility industry; (iii) allocate or move portions of the Services to a Service
Provider Service Delivery Location or other location outside of the United
States; (iv) negatively impact the perception of the members of the Customer
Group in their marketplaces or (v) impair, diminish or compromise the
effectiveness of the internal controls, procedures and systems relating to the
Services and the Service Provider Service Delivery Locations.
	 
	 	(e)	 	To the extent the Service Provider provides the Services from
Service Provider Service Delivery Locations outside the United States, the
Service Provider may only perform the Services from those specific locations
set forth (by address) in Schedule 9.1, the “Service Provider
Service Delivery Locations” Schedule, to Exhibit 9, the
“Service Locations”

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Exhibit (collectively, the “Specified Offshore Service Locations”;
each, a “Specified Offshore Service Location”). The Service Provider shall
remain fully liable and responsible for the performance of all Services
performed by non-U.S. operations hereunder to the same extent as if such
Services were performed by the Service Provider in the United States.

Notwithstanding the provisions of Section 3.6(d) above, the Service
Provider may request the Customer to approve, on an expedited basis, the
relocation of a Specified Offshore Service Location to another existing or
newly built facility in the same or another country for economic, security
or other risk mitigation reasons. The Customer shall promptly review the
Service Provider request in light of the circumstances giving rise to such
request and shall approve each such request, which approval shall not be
unreasonably withheld.

	 	(f)	 	If in the Customer’s reasonable determination at any time
during the Term: (i) the risks presented by the performance of the Services,
or any portion of the Services, at the Specified Offshore Service Location are,
in the opinion of the Customer, significantly increased, or (ii) the perception
of the members of the Customer Group in their marketplaces is negatively
impacted, including as a result of the political or social climate or business
environment or the enactment or enforcement of any law, rule or regulation
affecting any of the Specified Offshore Service Locations or (iii) a country in
which a Service Provider Service Location is located is placed on the
Department of State’s “Warning List”, ((i) through (iii) collectively, the
“Relocation Events”; each, a “Relocation Event”), the Customer shall have the
right, exercisable by delivering written notice to the Service Provider, to
require the Service Provider to relocate the applicable Services from the
applicable Specified Offshore Service Location to an existing Service Provider
site providing services similar to the applicable Services within another
country that is reasonably acceptable to the Customer (provided that the
provision of the Services from such site shall remediate the risk or exposure
that was the basis of the Relocation Event and that the new site has the
capacity required to be able to assume the Services to be relocated). The
Customer’s right to require the Service Provider to relocate Services in the
manner described in the immediately preceding sentence shall not relieve the
Service Provider of its obligation to exercise good judgment in determining
whether to relocate the Services itself to avoid the risks to the Customer and
to the Services described in this Section 3.6(f). The Customer shall
not bear financial responsibility for, and shall not be required to pay any
charges in connection with, a relocation of the Services from a Specified
Offshore Service Location if (i) the Specified Offshore Service Location is
used by the Service Provider solely to provide the Services to the Customer,
the members of the Customer Group or any Authorized User (and not also for the
benefit of other customers of the Service Provider) and (ii) a reasonable and
prudent provider of services similar to the Services would itself relocate the
affected Services under the circumstances, but the Customer will be responsible
for any increase in Fees that results from moving the Services to a location
where the Service Provider’s Fees are more expensive than those charged at the
previous location. In all other cases, the Customer will be responsible for
additional expenses of the Service Provider in relocating the Services, but the
Service Provider shall use commercially reasonable efforts to avoid any
significant incremental charges to the Customer in connection with any proposed
relocation of the Services at the Customer’s request and shall notify the
Customer of the additional Fees and other expenses for compliance with the
Customer’s direction to relocate such Services, including those for the
relocation itself, and Fees and additional expenses, if any, for the continued
performance of the Services by the Service Provider at or from the new
location, and increased Fees if the Service Provider reasonably charges more
for Services from the new location. Subject to the Customer’s prior written
agreement to pay such Fees and expenses, the Service Provider shall perform and
complete such relocation as soon as possible under the circumstances with a
view to

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avoiding any non-compliance with applicable laws, rules or regulations or
significant incremental Fees and expenses.

	 	(g)	 	If any Governmental Authority or change in the Customer Laws
requires that the Customer relocate all or any portion of the Services from any
Specified Offshore Service Location, the Parties shall share equally the costs
associated with such relocation but the Customer will be responsible for
increases in Fees if the Service Provider reasonably charges more for Services
from the new location subject, however, to the right of the Customer to
terminate the affected Services pursuant to Section 3.19(g) and payment of the
Applicable Termination Fees thereunder. If the provision of the Services from
another Service Provider site would not remediate the risk of exposure that was
the basis of the Relocation Event or another Service Provider site does not
have the capacity required to be able to assume the Services to be relocated,
then the Customer may discuss an alternate course of action with the Service
Provider or terminate all or part of the affected Services. The Customer shall
be responsible for the Applicable Termination Fees related to any such
termination pursuant to this Section.
	 
	 	(h)	 	The Service Provider will provide reasonable access to the
Service Provider Service Delivery Locations and other facilities used by the
Service Provider to provide and perform the Services (including, without
limitation, the attendant Equipment and Software) (i) to the Customer Group’s
authorized employees, agents and representatives as necessary or appropriate
for the performance, delivery and use of the Services by the Customer Group and
for the operation, maintenance, upgrade, support and use of any other Customer
hardware, software and other resources located in the Service Provider Delivery
Locations or other facilities used by the Service Provider to provide the
Services, and (ii) to Third Party Providers and other third party vendors and
service providers of installation, maintenance, support and upgrade services,
technology and hardware for the systems and any other Customer hardware,
software and other resources located in the Service Provider Service Delivery
Locations and other facilities used by the Service Provider to provide the
Services. To the extent practical in light of such installation, maintenance,
support and upgrade requirements, the Customer will provide twenty-four (24)
hours notice to the Service Provider prior to any visits by such Third Party
Providers and third party vendors and service providers.
	 
	 	(i)	 	All access to the portion of the Service Provider Service
Delivery Locations and other facilities used by the Service Provider to provide
and perform the Services shall be subject to (i) reasonable data and records
protection and physical security measures (including the Customer’s physical
security requirements) and (ii) such Customer Group employees, agents and
representatives and Third Party Providers and third party vendors and service
providers undertaking reasonable confidentiality requirements relating to such
visits that satisfy the requirements of Article 11.
	 
	 	(j)	 	Schedule 9.2, the “Customer Service Recipient
Locations” Schedule, to Exhibit 9, the “Service
Locations” Exhibit, sets forth a list of all Customer Service
Recipient Locations, together with the general scope of the Services to be
received or provided at each Customer Service Recipient Location. The Service
Provider shall permit the members of the Customer Group to enter into those
portions of the Customer Service Recipient Locations occupied by the Service
Provider at any time and the Service Provider acknowledges that the Customer
may relocate the Customer Service Recipient Locations at will at any time
during the Term. The Service Provider shall use commercially reasonable
efforts to avoid any significant incremental Fees or expenses to the Customer
in connection with a relocation by the Customer of any of the Customer Service
Recipient Locations. The Service Provider shall notify the Customer of any
additional Fees or expenses associated with the continued provision of the
Services to such new Customer Service Recipient Location and, upon agreement by
the Customer to pay such additional Fees, the Service Provider will migrate the
applicable Services to such new

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Customer Service Recipient Location. The Service Provider shall not make
any improvements or changes involving structural, mechanical or electrical
alterations to such space without the Customer’s prior written consent.

     3.7 Security

The Service Provider shall comply with the Customer’s standard policies and procedures
regarding access to and use of the Customer Data and the Customer Service Recipient
Locations, including procedures for logical and physical security set forth in Schedule
19.2, the “Safety and Security Procedures” Schedule, to Exhibit
19, the “Standards, Policies & Procedures” Exhibit. The Customer
authorizes all access to all Software operated by, and Company Information and other records
of the Customer Group in the possession of, the Service Provider in support of the Services
solely through the data and records security procedures as described in Exhibit 19,
the “Standards, Policies & Procedures” Exhibit. The Service Provider shall
notify the Customer, upon request, the identity of each of the entities and personnel
working with the Service Provider to provide and perform the Services that are authorized
access to the Customer Data or the Customer Software utilized in support of the Services and
the level of security access granted to each. The Parties shall cooperate in administering
security procedures regarding such access, in accordance with such Exhibit. The
Service Provider will enable such access by persons as designated by the Customer and deny
such access to all other persons, in accordance with such Exhibit.

     3.8 Technical Architecture/Technology Refresh/Technology and Business Process Evolution

	 	(a)	 	The Customer acknowledges that the Services have been designed
and priced based upon the architectural standards specified in “Service
Provider Technical Architecture”, Exhibit 27. The Customer further
acknowledges its acceptance of those standards in accordance with the terms of
this Agreement. The Customer shall have final authority to implement
information technology architectures, standards and plans and to modify or
grant waivers from such architectures, standards or plans. The Service
Provider shall (i) comply with and enforce the technology architectures,
standards and plans established by the Customer from time to time, (ii) change
the Services or the Service Provider Systems as and to the extent necessary to
conform to such architectures, standards and plans, and (iii) obtain the
Customer’s prior approval for any deviations from such architectures, standards
or plans. All such Changes are subject to the applicable Change Control
Process.
	 
	 	(b)	 	The Service Provider will continually introduce and implement
technology and business process evolutions to improve the provision of the
Services and to ensure that it keeps pace with both the technological and
business process advancements or improvements over the Term and the Service
Provider technology refresh and upgrade commitments set forth in this
Agreement.
	 
	 	(c)	 	The Service Provider shall be responsible for refresh of
technology under its control as necessary to meet its performance obligations
under this Agreement. Further, the Service Provider shall refresh and
supplement the infrastructure, tools, and other resources used by the Service
Provider in providing its services to keep pace with technological advances and
advances in the methods of delivering services, where such advances are at the
time pertinent and in proven use elsewhere to enable the Customer to take
advantage of technological advancements in its industry and support the
Customer’s efforts to maintain competitiveness in the markets in which it
competes. The refresh and supplement obligations set forth in this Section
3.8(c) and in Exhibit 26, the “Technology Refresh”
Exhibit, shall not be deemed New Services.
	 
	 	(d)	 	Technology and business process evolution activities described
in this Section 3.8 and elsewhere in this Agreement (including, without
limitation, in Exhibit 26, the “Technology Refresh”
Exhibit) as of the Effective Date are included in the Fees. The
Customer will pay additional sums for implementing technology and business
process

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evolution only if and to the extent (i) the technology and business process
evolution would be considered a New Service, or (ii) the Customer requests
that a refresh be implemented more quickly than the established schedule set
forth in Exhibit 26, the “Technology Refresh”
Exhibit, including, but not limited to, the circumstances set forth
in Section 3.8(a), above, and in each case, only if and to the
extent that additional Service Provider personnel and resources are required
to implement the technology and business process evolution in the Customer’s
desired timeframe.

	 	(e)	 	The Service Provider must monitor, analyze, and regularly (at
least annually) report to the Customer on new business and technology
strategies and emerging trends and, where requested by the Customer, develop
proposals for implementing such new strategies or emerging trends or changing
the direction of the Customer’s then current strategy.
	 
	 	(f)	 	If the Service Provider develops advances in the technologies,
business processes or systems used to provide the same or substantially similar
services to other Service Provider customers or the Service Provider develops
new or enhanced services, relationships, software, tools, products or
methodologies to be offered to such customers (collectively, “New Advances”),
the Service Provider will (i) offer the Customer the opportunity to serve as a
pilot customer in connection with the implementation of each such New Advance;
and (ii) even if the Customer declines this opportunity, offer the Customer
preferred access to such New Advance and the opportunity to be among the first
of the Service Provider customer base to implement and receive the benefits of
any New Advance. In the event of a significant and unanticipated change in
technology or business processes that materially reduces the Service Provider’s
cost of providing the Services, the Parties will negotiate in good faith a
corresponding equitable adjustment to the Fees under the affected Service Tower
and in this event the Customer will agree not to benchmark the affected
Services for twenty-four (24) months from the applicable adjustment date.
	 
	 	(g)	 	The Customer’s approval will be required for technology refresh
and business evolution changes. Such approvals shall be subject to the
applicable Change Control Process described in Section 6.4.
Notwithstanding the foregoing, the Customer approves and consents to (i) the
scheduled technology refresh changes identified in Exhibit 26, the
“Technology Refresh” Exhibit, in the manner and on the time
table set forth in such Exhibit and (ii) the business evolution changes
identified in Exhibit 23, the “Transformation by Service Tower”
Exhibit, in the manner and on the time table set forth in such
Exhibit and acknowledges that the Fees set forth in Exhibit 4,
the “Pricing, Invoicing & Payment” Exhibit, are based, in part,
on such Service Provider technology refresh obligations and business process
evolution transformations in the manner and on the time table set forth in such
Exhibit.

     3.9 Customer Owned Software – Existing

The Customer grants to the Service Provider, and to the Service Provider’s Approved
Subcontractors as required for the Service Provider to provide the Services, a worldwide,
fully paid-up, nonexclusive license (and to the extent required, the right of the Service
Provider to grant sublicenses to Approved Subcontractors) during the Term to Use (i) the
Customer Owned Software listed on Exhibit 13, the “Software Assets”
Exhibit, to this Agreement and (ii) subject to Section 4.18 hereof, the “IP
Rights” license, in each case solely for the purpose of and to the extent necessary for
performing the Services. The Customer Owned Software will be made available to the Service
Provider in such form and on such media as exists on the Commencement Date(s) or as is later
obtained by the Customer, together with available documentation and any other related
materials. Neither the Service Provider nor its Approved Subcontractors shall be permitted
to Use the Customer Owned Software or the IP Rights for the benefit of any entities other
than members of the Customer Group and the other Authorized Users without the prior written
consent of the Customer, which may be withheld at the Customer’s discretion. The Service
Provider shall install, operate and support (and otherwise treat in the same manner as the
Customer Owned

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Software existing as of the Commencement Date(s)) additional Customer Owned Software that
the Customer may make available to the Service Provider from time to time during the Term.
Except as otherwise requested or approved by the Customer, the Service Provider shall cease
all Use of the Customer Owned Software and the IP Rights upon expiration or termination of
this Agreement. The Customer Owned Software is made available to the Service Provider on an
“as is, where is” basis, with no warranties whatsoever except that the Customer warrants
that it has the right to make the Customer Owned Software available to the Service Provider
and its subcontractors solely to the extent necessary to provide the Services and that its
rights to the Customer Owned Software are, or prior to the applicable Commencement Date,
shall be sufficient to enable the Customer Group and the Authorized Users to receive the
Services.

     3.10 Third Party Provider Software – Existing

	 	(a)	 	With respect to the Third Party Provider Software licensed by
the Customer listed on Exhibit 13, the “Software Assets”
Exhibit or on Exhibit 14, the “Third Party Contracts”
Exhibit, subject to the Parties having obtained any Required Consents
for Third Party Provider Software in the manner provided in Section
8.2, the Customer grants, or shall cause to be granted, to the Service
Provider, and to the Service Provider’s Approved Subcontractors as required for
the Service Provider to provide the Services, solely for the purposes of and to
the extent necessary for performing the Services, and on a royalty-free basis,
the rights of Use of such Software that the Customer has as of the Commencement
Date or later obtains with respect to such Software. Except as otherwise
requested or approved by the Customer, the Service Provider and its Approved
Subcontractors shall cease all Use of such Software upon (i) the expiration or
termination of this Agreement or (ii) the expiration of or termination of the
Customer license for such Software. At the Customer’s election, the Service
Provider shall promptly return to the Customer or destroy any such Software and
related documentation. The Third Party Provider Software is made available to
the Service Provider on an “as is, where is” basis, with no warranties
whatsoever except that the Customer warrants that its rights to the Third Party
Provider Software are, or prior to the applicable Commencement Date, shall be
sufficient to enable the Customer Group and the Authorized Users to receive the
Services, (including, without limitation, having paid all applicable license
fees) and, subject to obtaining any Required Consents, that it has the right to
make Third Party Provider Software available to the Service Provider and its
subcontractors solely to the extent necessary to provide the Services.
	 
	 	(b)	 	The Service Provider shall, and shall cause its Approved
Subcontractors to, comply with all obligations under all licenses and
maintenance agreements for such Third Party Provider Software, including
without limitation, the obligations of nondisclosure and scope of use, as such
obligations may be modified pursuant to the Required Consents; provided,
however, that the Service Provider will only be obligated under this
Section 3.10(b) with regard to the licenses and maintenance agreements
for such Third Party Provider Software to the extent the obligations thereunder
are disclosed by the Customer to the Service Provider. The Service Provider
shall be deemed to have reviewed and accepted the obligations under the
licenses and maintenance agreements for the Third Party Provider Software
listed on Exhibit 13, the “Software Assets” Exhibit or
Exhibit 14, “Third Party Contracts” Exhibit, as of the
Commencement Date(s).

     3.11 Service Provider Software/New Service Provider Software Added During the Term

	 	(a)	 	The Service Provider Software used by the Service Provider or
its subcontractors (including software owned by the Service Provider or its
subcontractors and software licensed by the Service Provider or subcontractors
from third parties) to perform and provide the Services is set forth in
Exhibit 25, the “Service Provider and Service Provider Third Party
Software and Tools” Exhibit, to this Agreement. The Service
Provider grants to the members of the Customer Group and the other Authorized
Users a non-exclusive license to Use such Software solely to the extent
necessary to enable the Customer Group

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and the other Authorized Users to receive and use the Services during the
Term. The grant of license in this Section 3.11(a) will not relieve the
members of the Customer Group from any amounts owed or obligations incurred
before the Effective Date with respect to the items listed in Exhibit 13.

	 	(b)	 	The Service Provider shall not introduce any additional
Software into the information technology environments primarily dedicated to
the Customer and used by the Service Provider or its subcontractors to provide
the Services without the Customer’s prior written approval. The Service
Provider grants to the Customer and the other Authorized Users, a non-exclusive
license to Use such Software solely to the extent necessary to enable the
Customer Group and the other Authorized Users to receive and use the Services
during the Term.
	 
	 	(c)	 	This Section 3.11(c) shall apply to the Service
Provider Software provided by the Service Provider in connection with the
Services and any Customer Software licensed under a Third Party Contract, in
each case, for which the license agreement for such Software is entered into
after the Effective Date and such Software is of a type that would be used by
the Customer to perform services within the scope of the Services for the
Customer Group and the Authorized Users following termination or expiration of
this Agreement, with the exception of the Software described in the last
sentence of this Section 3.11(c). The Software to which this
Section 3.11(c) applies shall be licensed (and the attendant
maintenance arrangements contracted) in the name of the Customer Group member
designated by the Customer as the licensee with the Service Provider having the
right to access and use such Software in performing the Services.
Notwithstanding the foregoing, if the Service Provider can procure such
Software (or attendant maintenance arrangement) on a more cost effective basis
licensed in its own name on terms permitting the Service Provider to assign the
license and maintenance agreements for such Software to the Customer without
charge to the Customer at the expiration or termination of this Agreement or on
terms otherwise accepted by the Customer in writing, the Service Provider may
procure such Software (or attendant maintenance arrangement) in the Service
Provider’s name. For avoidance of doubt, the Service Provider Software that is
used by the Service Provider for multiple customers (e.g. is a shared services
environment) and the Service Provider Software that is identified in
Section 12.4(c) will not be subject to this Section 3.11(c).
	 
	 	(d)	 	During the Term, for Software utilized by the Service Provider
to deliver the Services, the Service Provider shall maintain all procedures
necessary to operate such Software to the extent necessary for the Customer to
receive the Services, and, upon request of the Customer, shall deliver to the
Customer an electronic copy of all such procedures. For Software utilized by
the Service Provider to provide the Services after the Effective Date that was
previously utilized by the Customer prior to the Effective Date, the Service
Provider shall maintain the same type of documentation at the same level of
completeness as was maintained by the Customer prior to the Effective Date and,
upon request, shall make such documentation available to the Customer. To the
extent, however, that the Service Provider performs any maintenance on such
Software, the Service Provider shall document its changes in accordance with
CMM level 3 standards. For software that is newly developed pursuant to this
Agreement, the Service Provider shall deliver to the Customer such
documentation as is set forth in the Statement of Work or project plan agreed
for such project.

     3.12 Software Licenses/Changes to the Software-Substitutions and Additions

	 	(a)	 	The Service Provider shall not, and shall not have the right
to, direct the Customer Group to, terminate, extend, replace, amend or add
licenses for the Software or the maintenance arrangements attendant therewith,
contracted in the name of a member of the Customer Group. The Service Provider
may request that the Customer Group take such action by

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giving the Customer written notice of the proposed action and obtaining the
Customer’s written agreement subject to the applicable Change Control
Process. Concurrently with the delivery of each such proposal by the
Service Provider to the Customer, the Service Provider shall deliver to the
Customer a written report of the reasons for, and the impact and
ramifications on the Services of, the Service Provider’s proposed action.
If any such cancellation, substitution, termination, change or addition of a
Third Party Contract will have an impact on the operations of users that are
outside the scope of the Services and the Customer has notified the Service
Provider prior to the expiration of the Customer response period described
above of such impact and the Service Provider elects to proceed, the Service
Provider will provide or cause to be provided the products or services that
are the subject of such Third Party Contract to the users that are outside
the scope of the Services on terms no less favorable than the terms of the
applicable Third Party Contract. The approval of, consent by or agreement
by the Customer to any of the actions described in this Section
3.12(a) shall not relieve the Service Provider of any obligation to
perform and provide the Services as required by this Agreement. If the
Customer Group in connection with or resulting from any such termination,
replacement, amendment or addition of any license for Software or
maintenance arrangement incurs additional expenses or other costs, including
but not limited to personnel costs, and the Service Provider has been
notified in writing by the Customer of its estimate of such financial impact
prior to the Service Provider’s implementation of such action and the
Service Provider elects to proceed, the Service Provider shall promptly
reimburse the Customer for such amounts actually incurred by the Customer;
provided, however, that in each instance in this Section 3.12(a))
that the Customer provides the Service Provider an estimate of the financial
impact of an action by the Service Provider on the Customer, the amounts
recoverable from the Service Provider by the Customer in each such instance
shall not exceed the amount of the written estimate provided to the Service
Provider for each such instance.

	 	(b)	 	The Service Provider will provide to the Customer, and update
as changes occur, a listing of all Software by name, Maintenance Release and
Version promoted into production on each Equipment at each location of the
Equipment.
	 
	 	(c)	 	The Customer may direct the Service Provider to substitute or
add Software to or delete Software from Exhibit 13, the “Software
Assets” Exhibit. The Service Provider shall promote into or remove
from production, use and operate any Software selected by the Customer. If the
Customer requests a substitution of any Software for which the Service Provider
has financial responsibility, according to Exhibit 4, the “Pricing,
Invoicing & Payment” Exhibit, the Customer shall pay or receive a
credit in the amount by which the periodic license or maintenance fees
attributable to the substituted Software exceeds or is less than the
then-current periodic license or maintenance fees being paid by the Service
Provider attributable to the Software being replaced. With respect to Software
which can be replaced with minimal effort or disruption, if the Customer
requests deletion of any Software for which the Service Provider has financial
responsibility and the Service Provider does not expeditiously substitute any
other new Software therefor, the Customer may utilize an amount equal to the
then-current applicable periodic license or maintenance fees attributable to
such deleted Software to offset the fees attributable to any new Software or
receive a credit in such amount. If the Customer requests deletion of any
Software for which the Service Provider has financial responsibility and the
deletion of such Software or installation or implementation of replacement
software (including associated activities such as data conversion and
cleansing) requires more than minimal effort or resources to replace, the
Parties will address such replacement and changes to the license and
maintenance fees through the applicable Change Control Process. The Service
Provider will provide the Customer with the license or maintenance fees support
documentation necessary to permit the Customer to evaluate the decision to
replace such Software.

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	 	(d)	 	The Customer shall be permitted by the Service Provider to
audit the Service Provider’s testing procedures and approve all new
Applications Software for use in performing and providing the Services prior to
its promotion into production, and Service Provider shall provide the
cooperation, information and access necessary or appropriate to permit the
Customer to perform such functions.
	 
	 	(e)	 	If the Service Provider timely notifies the Customer that any
software requested by the Customer be substituted for, deleted from, or added
to, the Software will have an adverse impact on the operation of the Systems
before such action is effected and the Customer directs the Service Provider to
effect such action even in view of such notice, the Service Provider shall be
excused from of any failure to satisfy the Service Levels for the affected
portion of the Services to the extent, and only to the extent, such action
directly causes such failure to satisfy such Service Levels.

     3.13 Software Currency

	 	(a)	 	Subject to the last sentence of this Section 3.13(a) and to
Section 3.13(b), the Parties shall maintain reasonable currency for Maintenance
Releases and Versions of Software, unless the Customer requests otherwise. For
purposes of this Section 3.13(a), “reasonable currency” in the case of Versions
shall mean no more than one Version behind the most current Version made
available by the licensor and in the case of Releases, within two months of the
licensor making such Release available or in the case of a Release that
includes elements designed to mitigate known security risks as soon as
practically possible after the licensor makes such release available, unless
such Release or Version contains defects, Viruses, Disabling Code or similar
infirmities identified by the Parties, or either of them, that will adversely
affect the Customer’s operations, in which case, the previous Release or
Version will be deemed “reasonably current” until such time as such defects,
Viruses, Disabling Code or similar infirmities have been cured, at which time
such Release or Version shall be implemented as soon as practically possible.
Notwithstanding the other provisions of this Section, (i) the obligation to
maintain reasonable currency of Releases and Versions only applies to Software
for which Customer has a current maintenance agreement as of the Effective Date
which makes new Releases or Versions available at no additional charge beyond
the charges included in such maintenance agreement, and to Software introduced
by the Service Provider, unless the Version or Release is made available by the
licensor free of additional charge, and (ii) for Software that is used by the
Customer Group and is subject to the reasonable currency requirements of this
Section 3.13(a) (including meeting the maintenance requirements of clause (i)
of this sentence) which is more than one Version behind the most current
Version as of the Effective Date, the Service Provider shall have up to twelve
(12) months from the end of Transition Services to bring the Software to within
one Version of most current Version, except in the case of desktop personal
computer operating systems for which such upgrades are scheduled for December,
2006.
	 
	 	(b)	 	If the Customer requests the Service Provider to expedite
installation of a Maintenance Release or Version or to delay the installation
of a Maintenance Release or Version of specific Software beyond the period
described in Section 3.13(a) or requires operation and maintenance of
multiple Versions of Software, the Service Provider shall do so, provided that
if the Service Provider reasonably determines that it will incur any costs as a
result of such requests (e.g., Software support costs due to withdrawal of
maintenance by the licensor, multiple version charges, etc.) for resources not
otherwise required to perform the Services or covered under a current Resource
Baseline, then the Service Provider will notify the Customer of the Fees and
expenses in writing and the Customer, at its option, will either delay
installation of such Maintenance Release or Version or update the Software to
the current level (as applicable) or pay the Service Provider such Fees and
expenses. The installation and promotion into production of each Maintenance

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Release and Version shall be performed in accordance with the applicable
Change Control process.

	 	(c)	 	In addition, the Customer shall relieve the Service Provider
from any failure to meet a Service Level to the extent directly impacted by the
delay or acceleration of the next Maintenance Release or Version until such
time as the affected Software is brought to “reasonable currency” as defined in
this Section 3.13.

     3.14 Terms of Acquisition by Service Provider of Third Party Provider Software

If the Service Provider acquires Third Party Provider Software in the Service Provider’s
name during the Term to provide the Services, the Service Provider shall use commercially
reasonable efforts to acquire such software on commercially reasonable terms and conditions,
including customary forms of protection of the licensee concerning actual or alleged claims
of infringement of intellectual property rights.

     3.15 Third Party Contracts — Compliance, Substitutions and Additions

	 	(a)	 	To the extent that the Customer provides the Service Provider
with access to or use of leased Equipment, licensed Software or services or
resources subject to other Third Party Contracts for which the Customer retains
legal responsibility, the Service Provider shall, and shall cause its
subcontractors, to comply with all the obligations under the leases, licenses
and other Third Party Contracts applicable to such leased Equipment, licensed
Software and services or resources subject to other Third Party Contracts. The
Service Provider shall cease use of such items upon expiration or termination
of this Agreement or as required by the Customer consistent with the terms of
this Agreement.
	 
	 	(b)	 	The Customer may substitute or add Third Party Contracts to, or
delete Third Party Contracts from, Exhibit 14, the “Third Party
Contracts” Exhibit, if the Customer has financial responsibility
for such Third Party Contracts. Any changes to expenses or any effect on the
Services or Fees (excluding those elements of the Fees relating to the
management of such Third Party Contracts) resulting from the addition or
substitution of any such Third Party Contracts will be addressed through the
applicable Change Control Process, but those contracts listed on such Exhibit
as Category “3” may be terminated by Customer at its sole discretion.
	 
	 	(c)	 	If the Service Provider timely notifies the Customer that any
Third Party Provider services requested by the Customer to be substituted for,
deleted from, or added to, Exhibit 14, the “Third Party
Contracts” Exhibit and identified on such Exhibit as being either
in Category “1” or “2”, will have an adverse impact on the operation of the
Systems or Services before such action is effected and the Customer directs the
Service Provider to effect such action even in view of such notice, the Service
Provider shall be relieved of any failure to satisfy the Service Levels to the
extent, and only to the extent, such action affects the Service Provider’s
ability to satisfy such Services Levels.

     3.16 New Services

	 	(a)	 	The Customer may direct the Service Provider to perform
additional quantities of the Services during the Term. The Service Provider
shall provide such additional quantities of the Services as part of the
Services. The charges for such additional Services shall be calculated
according to the pricing set forth in Exhibit 4, the “Pricing,
Invoicing & Payment” Exhibit, including the Resource Unit and
Baseline methodology.
	 
	 	(b)	 	During the Term, the Customer may request the Service Provider
to perform one or more New Services. Further, the Customer’s request for a New
Service may include a request for the Service Provider to correspondingly
reduce or eliminate one or more existing elements of the Services then being
provided that are being replaced by the New

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Services. In such event, the Service Provider shall determine the resources
and expenses related to the element or elements of the Services being
reduced or eliminated and those required for the New Services being added.

	 	(c)	 	Promptly after receiving each request for New Services from the
Customer, the Service Provider shall provide a written proposal for such New
Services to the Customer setting forth the net increase or decrease in the Fees
or other charging methodologies, and as applicable, increases and decreases in
existing Baselines and additional Baselines (if any) that will be attributable
to such New Services and shall concurrently deliver to the Customer as part of
such proposal a detailed description of the New Services together with a report
regarding the ramifications and impacts of such New Services on the Services
affected by the New Services request. All changes in the Fees and other
charging methodologies shall be based upon the required proportional increase
in personnel, systems and other resources applicable to the New Services
relative to the Fees and other existing charging methodologies and equitably
account for any efficiencies, economies or reduced or increased resource
requirements resulting from any changes in the Services resulting from the New
Services. Upon receipt of such proposal and other documentation, the Customer
may then elect to have the Service Provider perform the New Services, and the
Fees and other charging methodologies and Baselines (if applicable) will be
established or adjusted to reflect such New Services in a written amendment to
this Agreement in accordance with Section 17.2. Notwithstanding the
foregoing, nothing herein shall be deemed to obligate the Customer to obtain
New Services from the Service Provider.
	 
	 	(d)	 	The Parties agree that changes during the Term in functions,
responsibilities and tasks that are within the scope of the Services will not
be deemed to be New Services, if such functions, responsibilities and tasks
evolved or were supplemented or enhanced during the Term by the Service
Provider in its sole discretion or pursuant to the provisions of this
Agreement.

     3.17 Affiliates, Acquisitions and Divestitures

	 	(a)	 	If any operation or entity becomes a member of the Customer
Group during the Term or any member of the Customer Group desires to use the
Services during the Term and the Customer desires that the Service Provider
provide some or all of the Services for such member, the Service Provider will
provide such member with the Services in accordance with the terms of this
Agreement. As part of its obligation under this Section 3.17, the
Service Provider shall propose a transition plan and schedule for
implementation of the Services to be provided to such member of the Customer
Group. The Service Provider may charge the Customer for the initial set-up,
transition and implementation charges allocable to such new member (determined
on a commercially reasonable basis consistent with the other Fees, unless such
charges are specifically identified in Exhibit 4, the “Pricing,
Invoicing & Payment” Exhibit), and shall charge the Customer for
the performance and delivery of the Services allocable to such member, based on
the existing charging methodologies for increases or decreases in the Fees due
to increases or reductions in the quantity of the Services used by the Customer
Group.
	 
	 	(b)	 	If the Customer divests any member of the Customer Group or
other operation or entity during the Term and the Customer desires that the
Service Provider continue to provide some or all of the Services for such
former Customer Group member or other operation or entity, the Service Provider
will continue to provide the Customer or such divested Customer Group member or
other operation or entity with such Services pursuant to this Agreement if such
divested Customer Group member or other operation or entity (i) used the
Services prior to being divested, (ii) after being divested uses either
essentially the same Services as before being divested, or otherwise does not
require the Service Provider to modify its systems or processes used to perform
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more than an immaterial amount, and (iii) agrees to be subject to the
provisions of this Agreement that protect the Service Provider’s
intellectual property rights. The Service Provider shall charge the
Customer for the continuing performance and delivery of such Services based
on the existing charging methodologies for the Fees unless the Service
Provider determines, in its sole discretion, that such divested Customer
Group member is itself a reasonable credit risk in which case the Customer
shall be relieved of all financial responsibility for the performance of the
Services to or for such divested Customer Group member; provided that such
divested Customer Group member agrees to be bound by the terms of this
Agreement. The Service Provider shall not be required to provide the
Services to any such divested Customer Group member, operation or entity for
more than eighteen (18) months following the effective date of such
divestiture.

     3.18 Viruses

The Service Provider shall use commercially reasonable efforts consistent with industry
practices employed by other service providers providing services of similar scale or scope
to prevent the introduction of Viruses into either Party’s systems or the other operating
environments and systems used to provide or receive the Services. If a Virus is found to
have been introduced into any such systems or environments, the Service Provider shall
promptly notify the Customer in writing of the event, and at no additional charge to the
Customer, the Service Provider shall use commercially reasonable efforts consistent with
industry practices employed by other service providers providing services similar in scope
and scale, and diligently work, to eliminate the effects of the Virus. If the Virus causes
an interruption of the Services, a loss of operational efficiency or loss of data, the
Service Provider shall assist the Customer Group to the same extent to mitigate and restore
such interruption or losses. The Customer shall bear financial responsibility for any work
required to be performed by the Service Provider to remediate the effects of a Virus if (i)
the Service Provider exercised commercially reasonable efforts to prevent the introduction
of the Viruses into the systems or operating environments, (ii) notwithstanding the exercise
by the Service Provider of commercially reasonable efforts, a Virus was introduced into
either Party’s systems or environments through no fault of the Service Provider, its
Affiliates or their subcontractors and (iii) there are no Service Provider resources already
dedicated, committed or assigned to the performance of the Services hereunder that are
available or capable of remediating and otherwise eliminating the effects of the Virus
without additional charge to the Customer.

     3.19 Compliance with Laws, Regulations and Policies

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

	 	(i)	 	this Agreement, including the Procedures
Manual(s);
	 
	 	(ii)	 	all Service Provider Laws;
	 
	 	(iii)	 	all laws, rules, regulations and regulatory
settlements or stipulations applicable to the portion of the operations
of the Customer Group performed by the Service Provider as part of the
Services pursuant to this Agreement just as if the members of the
Customer Group performed the Services themselves as identified or
communicated in writing to the Service Provider and interpreted,
augmented or modified by the Customer Compliance Directives (the
“Customer Compliance Requirements”); and
	 
	 	(iv)	 	all Customer Compliance Directives.

If the Service Provider determines that the performance of the Services
requires an interpretation of any aspect of the Customer Compliance
Requirements or Procedures Manual(s) (an “Interpretive Issue”), the
Service Provider shall present to the Customer compliance officer or his/her
designee for such purpose, in writing the factual scenario in issue for
resolution. The Customer compliance officer or his/her designee, shall as
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as practical instruct the Service Provider in writing with respect to each
such Interpretive Issue so presented to him/her, and the Service Provider is
authorized to act and rely on, and shall promptly implement such Customer
instruction(s) in the performance and delivery of the Services. All
Customer interpretative responses regarding Interpretive Issues shall be
deemed Customer Compliance Directives.

	 	(b)	 	The Service Provider will not be responsible for a failure to
comply with the provisions of Section 3.19(a)(iii) or (iv) above to the
extent that it relies on the Customer Compliance Directives (and where there
are multiple Customer Compliance Directives relating to an aspect of the
Services, on the most recent Customer Compliance Directive applicable to such
aspect of the Services) or other written instructions authorized by the
Customer regarding the manner of such compliance (including, without
limitation, reliance on the “Standards, Policies & Procedures”
Exhibit).
	 
	 	(c)	 	In addition, except as provided in the second sentence of this
Section 3.19(c), the Service Provider will not be responsible for a
failure to comply with the provisions of Section 3.19(a)(iii) or (iv)
above if such failure to comply occurs at any time prior to the first
(1st) anniversary of the Effective Date and results from the
performance by the Service Provider, its Affiliates or their subcontractors of
the Services in the same manner as such services were performed by the
applicable member of the Customer Group before being taken over by the Service
Provider; provided, however, that in such a case, the Service Provider will
expeditiously notify the Customer of such non-compliance and the Parties will
remedy such non-compliance on an expedited basis. The Service Provider shall
not be entitled to the relief granted in the preceding sentence if a failure to
comply occurs because (A) the Customer through a Customer Compliance Directive
has previously instructed the Service Provider to alter or change the
pre-existing methods and processes employed by the members of the Customer
Group and the Service Provider fails timely to comply with such Customer
Compliance Directive or (B) the terms of this Agreement including, without
limitation, Exhibit 23, the “Transformation by Service Tower”
Exhibit, require the Service Provider to change the manner in which the
services were previously performed by the Customer and the Service Provider
fails timely to execute or implement such change. At all times after the first
(1st) anniversary of the Effective Date, the relief granted to the
Service Provider in the first sentence of this Section 3.19(c) will not
apply.
	 
	 	(d)	 	From time to time the Customer may instruct the Service
Provider in writing as to compliance with any of the Customer Compliance
Requirements and changes in the Service Provider’s policies, procedures and
processes relating to such compliance (a “Customer Compliance Directive”). The
Customer Compliance Directives shall be listed in Exhibit 19, the
“Standards, Policies & Procedures” Exhibit. The 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 provisions of this Section. To the extent that the Customer
directs the Service Provider to comply with additional corporate compliance
policies or modifies or amends the policies listed on Exhibit 19, the
“Standards, Policies & Procedures” Exhibit, and provides the
Service Provider a written copy of such corporate compliance policies, such
additional policies, modifications or amendments will for purposes of this
Section 3.19 be deemed Customer Compliance Directives and the Service
Provider shall, and shall cause each of its subcontractors to, comply with such
corporate compliance policies as and to the extent applicable to functions of
the Customer Group for which the Service Provider is responsible.
	 
	 	(e)	 	The Service Provider shall promptly notify the Customer of any
change in the Service Provider Laws relating to (i) the performance, delivery
or use of the Services by the Customer Group, or (ii) the performance of the
Service Provider’s other obligations under this Agreement. Subject to
Section 6.4, the Service Provider agrees, at its expense,

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to make any changes to the Services and take other actions which are
necessary to maintain compliance with Service Provider Laws applicable to
its performance and to the provision of the Services or to its performance
of the Service Provider’s other obligations under this Agreement. Subject
to Section 6.4, the Customer may submit to the Service Provider
findings and recommendations regarding changes to the Services necessary for
the compliance by the Service Provider or its subcontractors with Service
Provider Laws which the Service Provider will analyze and consider in good
faith. The Service Provider shall promptly respond to the Customer
regarding the Service Provider’s evaluation and activity plan for such
findings and recommendations.

	 	(f)	 	The Customer shall notify the Service Provider of any new
Customer Laws or changes in the Customer Laws that are applicable to the
Services and the Service Provider shall work with the Customer to the extent
necessary to identify the impact of such new Customer Laws and changes in the
Customer Laws on the Service Provider’s performance and the Customer Group’s
and Authorized Users’ receipt and use of the Services.
	 
	 	(g)	 	The Service Provider shall, with the Customer’s approval and at
the Service Provider’s expense, conform the Services in a timely manner to any
changes in the Service Provider Laws and to changes in laws that require
changes to the Services only because the Services were outsourced (including,
without limitation, outsourcing such Services to countries outside the United
States). For new or changed Customer Compliance Requirements (including the
Customer Compliance Directives) or other changes to laws (other than those that
are the Service Provider’s responsibility pursuant to the immediately preceding
sentence) that require increases or result in decreases in the resources
required to perform the Services, the Fees will be adjusted by the Service
Provider to reflect such increases or decreases through the applicable Change
Control Process. However, to the extent that the expense of such changes can
be allocated to multiple customers of the Service Provider, additional Fees
will be equitably allocated to reflect the allocation of such expense. The
Service Provider shall identify changes to the Services resulting from the
circumstances described in the preceding sentence in a written proposal that
shall propose a method of integrating such changes in a cost-effective manner
and without disruption of the Services (as modified by such changes), and shall
identify the Service Provider’s increased or decreased Fees that will result
therefrom and the Service Provider’s proposed adjustment of the Fees to reflect
such changes. Such changes and adjustments shall:

	 	(i)	 	equitably account for any efficiencies,
economies or reduced or increased resource requirements resulting from
any changes in the Services or to the Service Levels resulting from
such changes; and
	 
	 	(ii)	 	provide modified Fees and expenses that have
been determined on a commercially reasonable basis consistent with the
other Fees and expenses.

If a change in the laws (other than the laws described in the first sentence
of this Section 3.19(g)) requires a change in the Services, and the
Service Provider charges to implement such change represents an increase of
greater than ten percent (10%) in the Fees for such Services or a material
reduction in the quality or scope of the Services, then the Customer shall
have the right to terminate the affected Service Tower or Service Category
by payment of the Applicable Termination Fees for termination pursuant to
this Section. Upon the Customer’s agreement to the proposed changes and
adjustments, the Service Provider will execute the Change subject to and in
accordance with the terms of Section 6.4 hereof.

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4. WARRANTIES/REPRESENTATIONS/COVENANTS

     4.1 Work Standards

The Service Provider warrants and represents and covenants that (a) it has, and during the
Term will have, and each of its Affiliates and subcontractors that it will use to provide
and perform the Services has and during the Term will have, the necessary knowledge, skills,
experience, qualifications and resources to provide and perform the Services in accordance
with this Agreement; and (b) the Services shall be performed for the Customer Group in a
diligent, workmanlike manner in accordance with standards adopted by other service providers
providing services of similar scope or scale applicable to the performance of such services;
provided, however, that to the extent a Service Level defines the required level of
performance for a Service, this Section 4.1 shall not impose performance obligations
at a level higher than such Service Level.

     4.2 Non-Infringement

Each of the Parties covenants that it shall perform its responsibilities under this
Agreement in a manner that (a) to its knowledge does not infringe any patent right of any
third party and (b) does not infringe, or constitute an infringement or misappropriation of,
any trade secret, copyright or other proprietary right (exclusive of patent rights) of any
third party; provided however that the Service Provider shall not be in breach of this
covenant to the extent any infringement or misappropriation by the Service Provider in the
course of performing the Services is caused by the Customer’s failure to have obtained any
Required Consents that the Customer is responsible for obtaining. Notwithstanding this
provision or any other provision in this Agreement, the Customer makes no warranty or
representation with respect to any claims for such infringement or misappropriation by
virtue of its compliance with obligations herein to provide the Service Provider access to,
use of or benefits of any Third Party Contracts prior to receiving the necessary Required
Consents and the Service Provider makes no warranty or representation with respect to
business processes that the Customer requires the Service Provider to use or follow.

     4.3 Disabling Code

Each of the Customer and the Service Provider warrant and represent and covenant that
without the prior written consent of the other Party, it shall not, and shall not permit its
Affiliates or subcontractors to, insert any Disabling Code into the Software or knowingly
invoke any Disabling Code that may be part of the Software at any time, including upon
expiration or termination of this Agreement for any reason, without the written consent of
the other Party.

     4.4 Authorization and Enforceability

Each Party hereby represents and warrants that:

	 	(a)	 	it has all requisite corporate power and authority to enter
into, and fully perform pursuant to, this Agreement;
	 
	 	(b)	 	the execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby have been duly and
properly authorized by all requisite corporate action on its part;
	 
	 	(c)	 	this Agreement has been duly executed and delivered by such
Party; and
	 
	 	(d)	 	no consent or approval of any state or federal authority not
otherwise obtained is required for it to enter into this Agreement and to carry
out its obligations hereunder.

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     4.5 Maintenance/Deliverables Conformance to Specifications

The Service Provider covenants that it shall maintain the Equipment and Software for which
the Service Provider is responsible so that they operate in accordance with their
specifications. The Service Provider further covenants that with respect to Deliverables
having acceptance criteria and related specifications, such Deliverables shall conform with
the applicable specifications for twelve (12) months following final acceptance of such
Deliverables in accordance with the terms of this Agreement. The foregoing will not extend
to any nonconformity attributable to (i) any change or modification to a Deliverable
performed by a party other than the Service Provider, its Affiliates or their subcontractors
without the Service Provider’s approval or (ii) the use of such Deliverable other than in
accordance with the applicable documentation.

     4.6 Efficiency and Cost Effectiveness

The Service Provider covenants that it shall use commercially reasonable efforts (a) to
efficiently administer, manage, operate and use the resources employed by the Service
Provider to provide and perform the Services that are chargeable to the Customer under this
Agreement; (b) to diligently improve the performance and delivery of the Services by the
Service Provider and the elements of the policies, processes, procedures and Systems that
are used by the Service Provider to perform and deliver the Services, including, without
limitation, re-engineering, tuning, enhancing, balancing or reconfiguring the processes,
procedures and systems used to perform, deliver and track the Services; and (c) to perform
the Services in a cost-effective manner consistent with the required level of quality and
performance.

     4.7 Software Ownership or Use

The Service Provider warrants and represents and covenants that it is either the owner of,
or authorized to Use, in the manner proposed to be used by the Service Provider hereunder,
the Service Provider Software and other materials provided and used by the Service Provider,
directly or indirectly, to perform and deliver the Services.

     4.8 Inducements

The Service Provider represents and warrants and covenants that it has not violated, and
shall not violate, any applicable laws or regulations or any of the Customer policies in
existence as of the Effective Date of which the Service Provider has been given notice
regarding the offering of unlawful inducements in connection with this Agreement and,
following notification of any changes to such Customer policies during the Term, will not
violate such revised Customer policies.

     4.9 Disclaimer

	 	(a)	 	The Service Provider will not be responsible for any inaccuracy
of any advice, report, data or other product delivered to the Customer to the
extent any inaccuracies are caused by data or software provided by the
Customer. The Service Provider will promptly notify the Customer of any such
inaccuracies of which the Service Provider becomes aware and the cause therefor
if known by the Service Provider. The Service Provider will use commercially
reasonable efforts to assist the Customer Group to remedy such problems.
	 
	 	(b)	 	The Service Provider does not, unless expressly specified for a
specific Service, warrant or assure uninterrupted or error-free operations of
Software or Equipment; provided, that the foregoing will not relieve the
Service Provider of its obligations to satisfy the Service Levels and provide
the Services as set forth in this Agreement without material degradation or
interruption.
	 
	 	(c)	 	EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, THERE ARE NO
OTHER EXPRESS WARRANTIES OR REPRESENTATIONS, AND THERE ARE NO IMPLIED
WARRANTIES OR REPRESENTATIONS, INCLUDING,

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BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OR REPRESENTATIONS OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.

     4.10 Regulatory Approvals and Licenses

	 	(a)	 	To the extent required by applicable Service Provider Laws, the
Service Provider, at its cost and expense, shall, and shall cause each of its
subcontractors to, obtain and keep current all necessary regulatory approvals
applicable to its or their business and the provision of the Services and
obtain and keep current all necessary licenses and permits applicable to its or
their business and to the provision of the Services.
	 
	 	(b)	 	To the extent required by applicable Customer Laws, the
Customer, at its cost and expense, shall, and shall cause the members of the
Customer Group to, obtain and keep current all necessary regulatory approvals
applicable to its or their business and the receipt of the Services and obtain
and keep current all necessary licenses and permits applicable to its or their
business and to the receipt of the Services.

     4.11 Date Warranty

The Service Provider warrants and represents and covenants that the Services will not be
adversely affected in any way by any date data, date setting, date value, date input or
other date related data and any combination thereof (including leap year), whether falling
on, after or before January 1, 1999, September 9, 1999, December 31, 1999, or January 1,
2000, as a result of any failure of the Service Provider Software to properly process,
receive or provide such date related data within and between the twentieth and twenty-first
centuries (including leap year) excluding Services failures and other problems caused by
such date related failures that arise as a consequence of defects in the Customer Owned
Software or other Software not provided by or through the Service Provider, its Affiliates
or their subcontractors.

     4.12 Covenant of Cooperation and Good Faith

The Parties shall timely, diligently, in good faith and on a commercially reasonable efforts
basis, cooperate with each other, with due consideration of the goals, objectives and
purposes of this Agreement, to facilitate the performance of their respective duties and
obligations set forth in this Agreement and to reach agreement with respect to matters left
for further review, consideration or negotiation and agreement by the Parties as
specifically set forth in this Agreement.

     4.13 Absence of Litigation

Each Party represents and warrants that as of the Effective Date no claim, litigation,
proceeding, arbitration, investigation or material controversy is pending, or to its
knowledge, has been threatened or is contemplated, which would have a material adverse
effect on its ability to enter into this Agreement, to perform, provide or receive the
Services, as the case may be, or to perform its other obligations in accordance with this
Agreement.

     4.14 No Solicitation

	 	(a)	 	Subject to Section 4.14(b) and Section 12.4(g)
hereof, neither the Service Provider, its Affiliates or its or their
subcontractors, on the one hand, or the Customer or the other members of the
Customer Group, on the other hand, shall directly or indirectly, solicit or
hire (i) in the case of the Service Provider, its Affiliates, and its or their
subcontractors, the employees of the members of the Customer Group involved in
the performance or execution of any Customer obligations hereunder (other than
the Affected Employees as contemplated by this Agreement or as otherwise
approved in writing in advance by the Customer), for two (2) years following
the date that any of the foregoing employees

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ceases to be involved in the performance of the Customer’s responsibilities
hereunder (unless approved in writing in advance by the Customer) or (ii) in
the case of the Customer and the members of the Customer Group, the
employees of the Service Provider and its Affiliates and Approved
Subcontractors involved in the performance or execution of any Service
Provider responsibilities hereunder, for two (2) years following the date
that any of the foregoing employees ceases to be involved in the performance
of the Service Provider’s responsibilities hereunder (unless approved in
writing in advance by the Service Provider).

	 	(b)	 	The Parties and their Affiliates (and in the case of the
Service Provider, its subcontractors), may make general solicitations to the
public (including solicitations by way of job-posting web sites) or
solicitations by a retained third party so long as the third party is not
specifically directed by a Party or its Affiliates or subcontractors to make
such solicitation to the employees to which the limitations of paragraph (a)
above applies, and hire any such person that responds to such a general
solicitation.

     4.15 Service Provider to Provide and Manage Necessary Resources

Except as otherwise expressly provided in this Agreement, the Service Provider shall have
the responsibility and obligation to provide and administer, manage, support, maintain and
pay for all resources (including, without limitation, personnel, hardware, software,
facilities, services and other items, however described) necessary or appropriate for the
Service Provider to provide, perform and deliver the Services as described in this
Agreement.

     4.16 Functionality, Performance, Capabilities, etc.

The Service Provider shall cause the Services, and each of the components of the Services,
to at all times, (i) possess the features, functionality, compatibility, configuration,
scalability, performance and integration capabilities expressly set forth in this Agreement;
and (ii) be integrated, compatible and interoperable in a manner that will conform to the
specifications relating to the functionality, performance and scalability of the Services
and that will satisfy the Services Levels, provided that the Customer Group properly and
timely comply with the Service Provider’s directions to the Customer in accordance with this
Agreement regarding the Customer’s responsibilities in connection with the Services and the
configuration, operation and use of the Services and the components of the Services.

     4.17 Export; Immigration

	 	(a)	 	The Parties acknowledge that any products, software, data, and
technical information (including, but not limited to services and training)
provided by the Customer Group to the Service Provider and its subcontractors
or by the Service Provider to the Customer Group under this Agreement may be
subject to U.S. 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, data, or technical information (even if
incorporated into other products) provided to it by the other Party pursuant to
this Agreement in violation of U.S. export laws and regulations. Neither Party
will directly or indirectly “export” or “reexport” software or “technical data”
or other data disclosed to it by the other Party or the direct product of such
software or “technical data” or other data to any country, or citizen of any
country, prohibited by U.S. export laws (as the identity of such countries and
citizens of such countries may be updated from time to time by the applicable
United States governmental agencies). The Party providing the products,
software, data or technical information that will be imported/exported into and
from any countries pursuant to this Agreement shall make the determination of
the applicable and requisite import/export restrictions and requirements and
the other Party shall comply with such restrictions and requirements; provided,
however, that in the event of products, software, data or technical information
provided by the Customer, the Customer shall only make

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such determination as to any U.S. import/export restrictions and
requirements and the Service Provider shall make such determination as to
any non-U.S. import/export restrictions and requirements. Any change in the
manner or method by which the Services are performed or provided as a result
of such restrictions and requirements shall be addressed in accordance with
the applicable Change Control Process.

	 	(b)	 	The Service Provider agrees at its cost and expense to obtain
all necessary passports, visas and other immigration documents and perform all
related actions necessary for its employees and agents to enter and perform the
Services in the United States and any other jurisdiction required pursuant to
this Agreement, and to otherwise comply with all applicable laws and
regulations relating to immigration in such jurisdictions that are applicable
to it or its personnel or agents.

	 	(c)	 	The Service Provider shall be responsible for all tariffs,
duties and import/export fees and costs and the costs of compliance with all
import/export laws and regulations with respect to the performance or delivery
of the Services or any part thereof, outside of the United States to any
location of the members of the Customer Group or any Authorized User that is
located within the United States.

     4.18 IP Rights License

The Customer represents and warrants that it has a license to the IP Rights sufficient to
enable the Service Provider and its Affiliates and the Key Approved Subcontractors (and the
subcontracting entity identified in Part 4 of Exhibit 28) to perform the Services in the
manner contemplated by this Agreement, provided that use of such IP Rights license by the
Service Provider and its Affiliates and the Key Approved Subcontractors and the entity
identified in Part 4 of Exhibit 28 pursuant to such license is solely for the purpose of
providing the Services to the members of the Customer Group and the Authorized Users (the
“Permitted Use”).

     4.19 Services Not to be Withheld

The Service Provider shall not Abandon the Services under this Agreement. In the event of
Abandonment, the provisions of Part I of Exhibit 28 will apply.

     4.20 Service Provider Disqualification

Neither the Service Provider nor any subcontractor or Affiliate of the Service Provider who
will be engaged in the provision of the Services (i) is, as of the Effective Date, debarred
by a Governmental Authority or (ii) shall use, in any capacity, in connection with the
performance of the Services, any person or entity who or that has been debarred by any
Governmental Authority. If the Service Provider learns that a person or entity performing
on its behalf under this Agreement has been debarred by any Governmental Authority, the
Service Provider shall promptly notify Customer and shall prohibit such person or entity
from performing on its behalf under this Agreement.

     4.21 ISO 9001

The Service Provider warrants and covenants that, with the exception of the Customer
facilities or facilities previously occupied by a member of the Customer Group that the
Service Provider or one of its subcontractors shall use to provide the Services, the quality
certifications for the Service Provider owned or leased facilities at which the Services are
performed and provided, and, to the extent applicable, the personnel who will perform the
Services (excluding the Affected Employees), are, and during the Term shall be, ISO 9001
qualified and certified.

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5. TRANSFER, TRANSITION AND TRANSFORMATION

     5.1 Transition Plans

	 	(a)	 	A high level transition plan (with appropriate contingency
plans) describing the tasks, methods, procedures and timing of the steps the
Service Provider shall take to transition responsibility and operations for a
Service Category or Service Tower to the Service Provider and avoid
interruptions and degradations of the Services during the transition, is set
forth in Exhibit 22, the “Transition by Service Tower”
Exhibit. The transition management methodology and the transition plan
applicable to each Service Tower describes the overall transition and
implementation process, including: (i) the Service Provider’s overall approach;
(ii) major activities and schedules for the transition, including critical
milestones; (iii) the Service Provider’s description of the transition of each
in-scope function to the Service Provider; and (iv) the specific activities
which are Customer’s responsibility as part of the applicable transition plan.
Unless otherwise specified in a transition plan, within sixty (60) days after
the Effective Date, the Service Provider shall deliver to Customer for its
review, comment, and approval a written detailed work plan(s) based on and
consistent with the applicable transition plan. Such detailed work plan(s),
once approved by Customer, shall become a part of the applicable transition
plan and be incorporated therein. Except as set forth in Exhibit 22,
the “Transition by Service Tower” Exhibit, no member of the
Customer Group shall incur any charges, fees or expenses payable to the Service
Provider or third parties in connection with the Service Tower transitions.
The Service Provider shall perform the tasks described in each Service Tower
transition plan in a manner that shall not disrupt or adversely impact the
business or operations of any member of the Customer Group or (ii) degrade the
Services then being received by any member of the Customer Group, except (1) as
may otherwise be provided in the applicable Service Tower transition plan and
(2) to the extent such disruption, adverse impact or degradation is caused by
Customer’s failure to perform its designated obligations in the Service Tower
transition plan.

	 	(b)	 	The Service Provider shall provide cooperation and assistance
required or requested by Customer in connection with Customer’s evaluation or
testing of the Deliverables as set forth in each Service Tower transition plan.
The Service Provider shall identify and resolve any problems that may impede
or delay the timely completion of each task in each Service Tower transition
plan that are the Service Provider’s responsibility and shall use reasonable
efforts to assist Customer with the resolution of any problems that may impede
or delay the timely completion of each task in each Service Tower transition
plan that are Customer’s responsibility.

	 	(c)	 	No functionality of the services or operations being
transitioned shall be disabled or cut over to a new service or replacement
functionality until the new service or functionality is demonstrated to the
Customer’s satisfaction to have at least equivalent capabilities for such
functionality and the Customer has provided written notice of acceptance of
such capability; provided, however, that the Service Provider shall not be
required to keep such dual services or operations enabled for more than thirty
(30) days (or, in specific circumstances, if any, to be mutually agreed by the
Parties in which it is not reasonably possible to test and verify the proper
functioning of the new service or functionality within thirty (30) days, such
longer period as is reasonable under the circumstances) at the Service
Provider’s expense unless the Customer has identified and notified the Service
Provider within such period of reasonable concerns, in which case the Parties
will agree to a reasonable timeframe for continuation of the identified
services or operations at the Service Provider’s expense.

	 	(d)	 	The Customer shall have the right to monitor, test and
otherwise participate in the transition. The Service Provider shall
immediately notify the Customer if such monitoring, testing or participation
has caused (or in the Service Provider’s reasonable

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opinion may cause) a problem or delay in the transition and work with the
Customer to prevent or circumvent such problem or delay.

	 	(e)	 	Customer shall have the right to temporarily suspend the
transition by providing notice to the Service Provider if the Service Provider
is responsible for the transition failing to fulfill the requirements set out
in the approved transition plan or otherwise causing a material disruption in
Customer’s business environment occasioned by the carrying out of the
transition, until such time as the Service Provider can demonstrate to the
Customer’s satisfaction that it is capable of and will satisfy such
requirements or end such disruptions.

	 	(f)	 	During the transition period, the Customer will cooperate with
the Service Provider in implementing the transition plan by providing the
personnel (or portions of the time of the personnel) set forth in the
transition plan (“Transition Personnel”) and performing the tasks described for
the Customer in the transition plan; provided, however, the Parties have agreed
that the Customer Group will have a limited role and not be responsible for
incurring more than immaterial costs, other than the Customer resources
specifically identified in the “Transition by Service Tower”
Exhibit. During the transition period, the Service Provider will be
responsible for the provision of the Services set forth in this Agreement
(including within those Services the implementation of the transition plan) in
accordance with the transition plan.

	 	(g)	 	Any delays caused by either party in the execution of the
Transition Plans will be addressed as set forth in Exhibit 28.

     5.2 Transformation Plan

	 	(a)	 	A plan (with appropriate contingency plans) describing the
tasks, activities, responsibilities and timing of the steps the Service
Provider shall take to transform and continue to evolve and integrate the
operations covered by the Service Towers and encompassed by the Services is set
forth in Exhibit 23, the “Transformation by Service Tower”
Exhibit. The transformation management methodology is also set forth
in Exhibit 23, the “Transformation by Service Tower”
Exhibit. The transformation plans describe the overall transformation
process, including: (i) the Service Provider’s overall approach; (ii) major
activities and schedules for the transformation, including critical milestones
and (iii) the specific activities which are Customer’s responsibility as part
of the applicable transformation effort.

	 	(b)	 	The Service Provider shall provide cooperation and assistance
required or requested by Customer in connection with Customer’s evaluation or
testing of the Deliverables as set forth in each Service Tower transformation
plan. The Service Provider shall identify and resolve any problems that may
impede or delay the timely completion of each task in each Service Tower
transformation plan that are the Service Provider’s responsibility and shall
use reasonable efforts to assist Customer with the resolution of any problems
that may impede or delay the timely completion of each task in each Service
Tower transformation plan that are Customer’s responsibility.

     5.3 Affected Employees

In order to facilitate the orderly assumption by the Service Provider of it
obligations under this Agreement, the Service Provider shall employ or offer
employment to (or cause its Affiliate or Approved Subcontractor to do so, as
applicable), the Customer Group personnel identified in the Exhibit 7,
“Human Resources” Exhibit (the “Affected Employees”) in accordance
with the terms and conditions of Exhibit 7, the “Human Resources”
Exhibit, and applicable local law. The terms and conditions applicable to
the interviewing and hiring of the Affected Employees are set forth in Exhibit
7, the “Human Resources” Exhibit. All costs and expenses
incurred by the Service

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Provider in connection with the offer to employ and the employment of the Affected
Employees shall be the responsibility of the Service Provider. Except as
Exhibit 7, the “Human Resources” Exhibit, expressly provides
otherwise, the Service Provider will promptly reimburse the Customer for the amount
of salary and benefit costs incurred by the Customer, if any, with respect to each
Affected Employee on and after the relevant Commencement Date(s) for the period
until they become employees of the Service Provider, the period for acceptance of an
offer of employment by Service Provider expires without acceptance of such offer by
the applicable Affected Employee, or the Service Provider determines not to offer
employment to an Affected Employee and notifies the Customer in writing of such
determination.

6. GOVERNANCE

     6.1 Relationship Management and Contract Governance Model

	 	(a)	 	The Service Provider acknowledges that it is a key business
requirement of the Customer that the Service Provider provide the Services in a
consistent, integrated manner across all Service Towers. To meet that
requirement, the Service Provider will adhere to the relationship management
and contract governance model and processes as described in Exhibit 8,
the “Governance” Exhibit.

	 	(b)	 	The Service Provider organization responsible for the Service
Provider’s relationship with the Customer and delivery of the Services will be
led by a Service Provider Account Executive (“Service Provider AE”), whose
counterpart will be the Customer Program Manager (“the Customer PM”). The
Service Provider AE will serve as the primary point of contact with the
Customer PM and the Customer PM will serve as the primary point of contact with
the Service Provider AE.

	 	(c)	 	The Service Provider AE will be supported by additional Service
Provider personnel, whose roles and responsibilities are set forth in
Exhibit 8, the “Governance” Exhibit.

     6.2 Meetings

The Parties shall determine an appropriate set of meetings to be held between their
representatives, which shall include at least a monthly meeting of the Service Provider AE
with the Customer PM. The Service Provider shall prepare and circulate an agenda
sufficiently in advance of each such meeting to give participants an opportunity to prepare
for the meeting. The Service Provider will make such changes to the agenda as the Customer
may request. The Customer will chair all such meetings. At the Customer’s request, the
Service Provider shall prepare and circulate minutes promptly after each meeting. Such
minutes shall not be binding on either Party.

     6.3 Procedures Manual(s)/Training Materials

	 	(a)	 	The “Procedures Manual(s)” shall describe how the Service
Provider shall perform and deliver the Services under this Agreement, the
Equipment and Software being used, and the documentation (e.g., operations
manuals, user guides, specifications) which will provide further details of
such activities. The Procedures Manual(s) shall describe the activities the
Service Provider proposes to undertake to provide the Services, including those
direction, supervision, monitoring, staffing, reporting, planning and oversight
activities normally undertaken by other service providers who provide services
similar in scope and scale to the Services. The Procedures Manual(s) also
shall include detailed descriptions of the acceptance testing and quality
assurance procedures approved by the Customer, the Service Provider’s problem
management and escalation procedures, and the other standards and procedures of
the Service Provider pertinent to the Customer’s interaction with the Service
Provider in obtaining the Services. The Procedures Manual(s) shall be suitable
for use by the Customer to understand the Services and the Service Provider’s
organization, resources, methods, procedures and processes for

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performing, providing and managing the Services and its obligations under
this Agreement.

	 	(b)	 	By the applicable dates set forth in Exhibit 28, the Service
Provider shall deliver drafts of the Procedures Manual(s) listed in Exhibit 28
to the Customer, for the Customer’s comments and review. The Service Provider
shall incorporate reasonable comments or suggestions of the Customer and shall
finalize the Procedures Manual(s) within the periods specified in Exhibit 28.
The final Procedures Manual(s) shall be subject to the approval of the
Customer. The Service Provider shall periodically (but not less frequently
than on a calendar quarterly basis) update the Procedures Manual(s) to reflect
changes in the operations or procedures described therein. Updates of the
Procedures Manual(s) shall be provided to the Customer for review, comment and
approval. The Service Provider shall perform the Services in accordance with
the most recent Customer-approved version of the Procedures Manual(s). In the
event of a conflict between the provisions of this Agreement and the Procedures
Manual(s), the provisions of this Agreement shall control. The Procedures
Manual(s) shall be considered operational document(s), which the Service
Provider AE and the Customer PM may revise by mutual written agreement without
the need to amend this Agreement.

	 	(c)	 	The Service Provider shall, with the Customer’s review and
approval, establish, maintain and keep current training materials and other
documentation required by the Service Provider to perform the Services. The
Service Provider shall be responsible for training its personnel to perform the
Services in accordance with the terms of this Agreement.

	 	(d)	 	If the Customer does not believe such training methods are
adequate or are not in compliance with the Customer’s Compliance Requirements,
the Customer shall notify the Service Provider of such non-compliance and the
Service Provider shall immediately rectify such non-compliance at the Service
Provider’s cost and provide the Customer with evidence thereof.

     6.4 Change Control Process

	 	(a)	 	The Customer shall have the right to approve in advance any
change, action or decision of the Service Provider with respect to the
provision of Services to the Customer that (i) may reasonably be expected to
have an adverse effect on the Services, including a deterioration in the
quality or interruption of the Services or the Customer Group’s ability to
access the Services; (ii) may reasonably be expected to have an adverse effect
on the manner in which the Services are performed; (iii) requires that any
member of the Customer Group change the way it conducts its operations; (iv)
increases Fees by the Service Provider to or the costs (including taxes)
incurred by the Customer Group to receive and use the Services or otherwise;
(v) involves any change in the locations at or from which any of the Services
are performed or provided as set forth in Section 3.6(d), (e),
(f) and (g); (vi) may reasonably be expected to result in any decrease
in the security or integrity of the operations or the Company Information of
the Customer Group; (vii) may result in any change in the internal controls of
the Service Provider or its subcontractors applicable to the Services described
in Section 3.4, or (viii) the Service Provider performs and or provides
services to or for any person or entity other than members of the Customer
Group from the Customer Service Recipient Locations (collectively, “Strategic
Changes”). The Customer will have the right to set priorities in scheduling
such changes.

	 	(b)	 	Parties will follow an agreed Change Control Process to manage
Strategic Changes (“Strategic Change Control Process”) to the environment and
infrastructure used to provide the Services in a controlled manner with minimum
disruption. The purposes and objectives of the Strategic Change Control
process are (i) to determine whether a Strategic Change to the environment and
infrastructure used to provide the Services is

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within the scope of the Services or constitutes a New Service, (ii) to
prioritize all requests for Strategic Changes, (iii) to minimize the risk of
exceeding time or cost estimates associated with the Strategic Change by
identifying, documenting, quantifying, controlling, managing and
communicating Strategic Change requests, their disposition and, as
applicable, implementation, and (iv) to identify the different roles,
responsibilities and actions that shall be assumed and taken by the Parties
to define and implement the Strategic Changes. The Strategic Change Control
process covers all activities from receipt of a request for a Strategic
Change to the post-implementation review. The Strategic Change Control
process will produce approval or other action with respect to any proposed
Strategic Change. The Service Provider shall not carry out any Strategic
Change that is not approved by the Customer as required by Section
6.4(a). The Strategic Change Control process will be included as part of
Exhibit 8,  the “Governance” Exhibit.

	 	(c)	 	“Operational Changes” shall mean those changes that are not
reasonably expected to (i) have an adverse effect on the Services, such as a
deterioration in the quality or interruption of the Services or the Customer
Group’s ability to receive the Services; (ii) have an adverse effect on the
manner in which the Services are performed; (iii) require any member of the
Customer Group to change the way it conducts its operations; (iv) increase Fees
by the Service Provider to or the costs (including taxes) incurred by the
Customer Group to receive and use the Services (v) involve any change in the
locations at or from which any of the Services are performed or provided as set
forth in Section 3.6(d), (e) and (f); (vi) result in
any decrease in the security or integrity of the operations or the Company
Information of the Customer Group; or (vii) result in any change in the
internal controls of the Service Provider or its subcontractors applicable to
the Services described in Section 3.4, or (viii) involve provision of
services to or for any person or entity other than members of the Customer
Group from the Customer Service Recipient Locations.

	 	(d)	 	The Service Provider will follow a Change Control Process to
manage Operational Changes (“Operational Change Control Process”). The purpose
and objectives of the Operational Change Control Process are (i) to prioritize
all requests for Operational Changes, (iii) to minimize the risk of Operational
Changes by identifying, documenting, quantifying, controlling, managing and
communicating Operational Change requests, their disposition and, as
applicable, implementation (iii) allow the Service Provider to manage
Operational Changes as required without approval from the Customer. The
Operational Change Control Process will be documented in the Procedures
Manual(s).

	 	(e)	 	Notwithstanding the foregoing, the Service Provider may make an
emergency change to the Services without the Customer’s prior approval if
required to ensure the uninterrupted delivery of the Services or any portion
thereof, or to minimize damage to the systems or Customer Data. In each such
event, the Service Provider shall promptly (but in no event longer than
twenty-four (24) hours after the decision to make such change), notify the
Customer, orally and in writing, of such change, the time and date on which
such change was implemented and the reason(s) for such change. If such change
would have required Customer’s prior approval under this Agreement, except for
this emergency exception, then Customer shall have the option to direct the
Service Provider to remove such change and the Service Provider shall promptly
remove such change and restore the Services as performed or delivered prior to
such change.

     6.5 Reports

The Service Provider shall prepare and deliver to the Customer the reports and
compilations of information set forth in Exhibit 15, the “Reports”
Exhibit, according to the schedule or with the frequency set forth in that
Exhibit.

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7. SERVICE PROVIDER PERSONNEL

     7.1 Account Executive

Unless otherwise provided in this Agreement, the Service Provider shall cause the person
assigned as the Service Provider AE to devote substantially all of his or her working time
and effort in the employ of the Service Provider to his or her responsibilities for the
provision of the Services, subject to the Service Provider’s reasonable holiday, vacation
and medical leave policies and subject to occasional, short-term, non-recurring work on
other assignments by the Service Provider related to the Service Provider AE’s areas of
expertise. The Service Provider AE shall serve as the single point of accountability for
the Service Provider for the Services and shall have the additional responsibilities
described in Exhibit 8, the “Governance” Exhibit. The Service
Provider AE’s compensation shall include meaningful financial incentives based on the
Customer’s satisfaction with the Services.

     7.2 Replacement of Personnel

	 	(a)	 	The Service Provider shall assign an adequate number of the
Service Provider personnel to perform the Services. The Service Provider
personnel shall be properly educated, trained and fully qualified for the
Services they are to perform.

	 	(b)	 	If the Customer determines that it is not in the Customer’s
best interests for any Service Provider or subcontractor employee to be
appointed to perform or to continue performing any of the Services, the
Customer may give the Service Provider written notice to that effect and the
Service Provider will take prompt action, at no expense to the Customer, to
remedy the situation to the satisfaction of the Customer including, without
limitation, removing such Service Provider or subcontractor employee from the
Customer account if requested by Customer. If, following discussions with the
Customer, the Service Provider must replace the individual on the Customer’s
account, the Service Provider will do so with an individual of suitable ability
and qualifications, with the Customer’s approval.

     7.3 Key Service Provider Personnel and Positions

	 	(a)	 	The Customer will designate members of, or positions on, the
Service Provider’s staff for the Services as Key Service Provider Personnel.
The Key Service Provider Personnel shall be listed or identified in
Schedule 7.4, the “Key Service Provider Personnel and
Positions” Schedule, to Exhibit 7, the “Human
Resources” Exhibit.
	 
	 	(b)	 	The Service Provider shall cause the Service Provider Personnel
who are Key Service Provider Personnel or who occupy each of the Key Service
Provider Personnel Positions to devote substantially all of their working time
and effort in the employ of the Service Provider to his or her responsibilities
for the provision of the Services, subject to the Service Provider’s reasonable
holiday, vacation and medical leave policies and subject to occasional,
short-term, non-recurring work on other assignments by the Service Provider
related to the Key Service Provider Personnel’s areas of expertise.
	 
	 	(c)	 	The Customer may from time to time change the designated Key
Service Provider Personnel and Positions under this Agreement, provided that
without the Service Provider’s consent, the percentage of all full-time
equivalent Service Provider personnel represented by the Key Service Provider
Personnel and Positions shall not exceed the percentage as of the Commencement
Date on which the largest number of personnel and positions were so designated.
	 
	 	(d)	 	Before the initial and each subsequent assignment of an
individual to a Key Service Provider Personnel Position, the Service Provider
shall notify the Customer of the proposed assignment, introduce the individual
to appropriate representatives of the

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Customer and, consistent with the Service Provider’s personnel practices,
provide the Customer with a resume and any other information about a
prospective individual reasonably requested by the Customer. If the
Customer objects to the proposed assignment, the Parties shall attempt to
resolve the Customer’s concerns on a mutually agreeable basis. If the
Parties have not been able to resolve the Customer’s concerns within five
(5) working days, the Service Provider shall not assign the individual to
that position and shall propose to the Customer the assignment of another
individual of suitable ability and qualifications.

	 	(e)	 	The Service Provider will give the Customer, where reasonably
possible, at least ninety (90) days advance notice of a change of the person
appointed to a Key Service Provider Personnel Position, and will discuss with
the Customer any objections the Customer may have to such change. Where
reasonably possible, the Service Provider will arrange for the proposed
replacement for an individual appointed to a Key Service Provider Personnel
Position to work side-by-side with the individual being replaced during the
notice period to achieve an effective transfer of knowledge prior to the
incumbent leaving his or her position. The Service Provider shall not reassign
or replace any person assigned to a Key Service Provider Personnel Position
during the first year of his or her assignment to the Customer service team,
nor shall the Service Provider assign more than five (5) different individuals
to a single Key Service Provider Personnel Position during the Term, unless the
Customer consents to such reassignment or replacement, or the Service Provider
employee voluntarily resigns from the Service Provider, requests a transfer, is
terminated by the Service Provider or is unable to work due to his or her death
or disability. Individuals designated as Key Service Provider Personnel or
filling Key Service Provider Personnel Positions may not be transferred or
re-assigned until a suitable replacement has been approved by the Customer, and
no such re-assignment or transfer shall occur at a time or in a manner that
would have an adverse impact on delivery of the Services. The Service Provider
shall establish and maintain an up-to-date succession plan for the individuals
serving in Key Service Provider Personnel Positions.

	 	(f)	 	The Service Provider shall not assign any of its Key Service
Provider Personnel or personnel assigned to Key Service Provider Positions who
have been provided access to the Customer Group Data to the account of any of
the Customer Group Competitors identified in Exhibit 20, the
“Competitors” Exhibit, for a period of one year after such
personnel have ceased being a member of the Service Provider’s account team for
the Customer.

     7.4 Service Provider Personnel Requirements

	 	(a)	 	After the Effective Date, the Service Provider shall fill, from
its own staff, any vacancies that occurred during the contract negotiation
process for this Agreement. As of the Effective Date and throughout the Term,
the Service Provider shall be responsible for all recruiting and hiring of
staff necessary to meet its Service Level, Schedule and other
commitments and to provide continuous improvement to the Service Levels.

	 	(b)	 	The Service Provider personnel and the personnel of the Service
Provider’s subcontractors must successfully complete a background screening
(including credit and criminal record reviews) and drug testing, as specified
by the Customer, prior to assignment to the Customer service team. The
applicable background screening and drug testing procedures and standards are
set forth in Exhibit 19, the “Standards, Policies & Procedures”
Exhibit, to this Agreement.

     7.5 Retention of Experienced Personnel

	 	(a)	 	The Customer has identified certain of the Affected Employees
as “Knowledge Retention Personnel” due to their possession of knowledge that
the Customer believes will be

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critical to the Service Provider in providing the Services. A list of the
Affected Employees who are designated as Knowledge Retention Personnel is
set forth in Exhibit 7, the “Human Resources”
Exhibit. The Service Provider will not transfer or reassign any
Knowledge Retention Personnel from his or her current function prior to the
successful completion of the transition and transformation projects set
forth in Exhibit 22, the “Transition by Service Tower”
Exhibit, and in Exhibit 23, the “Transformation by
Service Tower” Exhibit, that relate to his or her current
function, and thereafter, the Service Provider will use commercially
reasonable efforts to keep all Knowledge Retention Personnel as members of
the Customer service team through the retention period specified for each
Knowledge Retention Personnel in Exhibit 7, the “Human
Resources” Exhibit, subject to the Service Provider’s ability to
make reasonable opportunities for promotion available to them within the
Customer service team. The provisions of Section 7.3(e) shall also
apply to changes in the assignment or employment status of Knowledge
Retention Personnel, except that the provision of Section 7.3(c)
that limits the number of individuals who may occupy a Key Personnel
Position during the Term shall not apply to Knowledge Retention Personnel.

	 	(b)	 	The Customer and the Service Provider agree that it is in their
best interests to keep the turnover rate of the Service Provider personnel to a
reasonably low level. Accordingly, if the Service Provider fails to meet the
Service Levels persistently or continuously and if the Customer reasonably
believes such failure is attributable in whole or in part to the Service
Provider’s reassignment, movement, or other changes in the human resources
allocated by the Service Provider to the performance and delivery of the
Services or to the Service Provider subcontractors assigned to the Customer
service team, the Customer will notify the Service Provider of such belief and
the basis for such belief. Upon receipt of such notice from the Customer, the
Service Provider (a) will promptly provide to the Customer a report setting
forth the Service Provider’s position regarding the matters raised by the
Customer in its notice; (b) will meet with the Customer to discuss the matters
raised by the Customer in its notice and the Service Provider’s positions with
regard to such matters; and (c) will promptly and diligently take commercially
reasonable efforts to modify or eliminate any Service Provider practices or
processes identified as adversely impacting the performance and delivery of the
Services.

8. RELATIONSHIP PROTOCOLS

     8.1 Annual Updating of Exhibits and Schedules

The Parties agree to review and update the Exhibits and Schedules to this
Agreement at least once a year during the Term to accurately reflect the implementation of
Changes agreed by the Parties and Changes permitted or required by this Agreement. The
preceding sentence is not intended, nor is it authorization, to expand the scope of the
Services except as provided pursuant to Section 3.16 (New Services). If the
Exhibits and Schedules to this Agreement are not otherwise updated during
any Contract Year, the Parties will review and update them during the first month after the
end of such Contract Year.

     8.2 Required Consents

	 	(a)	 	The Customer shall have the financial and legal responsibility
for timely obtaining all Required Consents under the Third Party Contracts for
use by the Service Provider of the services, products or licenses that are the
subject thereof and for any transfer of assets or rights from the Customer as
required by this Agreement. Unless this Agreement expressly provides
otherwise, the applicable Customer Group member will remain the contracting
party of record on each such Third Party Contract.

	 	(b)	 	With regard to the Customer obtaining any Required Consents,
the Service Provider will bear administrative and management responsibility and
will prepare all necessary Required Consent letters to the Third Party
Providers under the Third Party Contracts and

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manage the process for timely obtaining all such Required Consents. The
Service Provider shall provide to Customer the benefit of any relationship
of the Service Provider with each such Third Party Provider in obtaining
Required Consents to the extent permitted under the Service Provider’s
agreements with such Third Party Provider. The Customer will cooperate, and
cause the other members of the Customer Group to cooperate, with the Service
Provider in obtaining such Required Consents.

	 	(c)	 	The Service Provider will have management, administrative,
financial and legal responsibility for obtaining all Required Consents to
secure any rights of use of or access to any assets owned, leased or licensed
to the Service Provider or any of its subcontractors required for the Service
Provider or such subcontractors to perform and provide the Services to the
Customer Group and for the Customer Group and other Authorized Users to use the
Services as contemplated by this Agreement. The Customer will cooperate, and
cause the other members of the Customer Group to cooperate, with the Service
Provider in obtaining such Required Consents.

	 	(d)	 	For all Third Party Contracts 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 Contract
relates shall bear the costs, if any, of obtaining any associated Required
Consents. The provisions of this paragraph shall be applicable to New Services
unless otherwise provided by the Parties in the applicable Change Control
documentation governing New Services.

	 	(e)	 	If a Required Consent is not obtained, the Service Provider
shall implement, subject to Customer’s prior approval, alternative approaches
as necessary to provide the Services without such Required Consents. The Party
financially responsible for obtaining the Required Consent will be responsible
for the financial costs of such alternative approaches required by the failure
to timely obtain such Required Consent.

     8.3 Appointment as Attorney In Fact

	 	(a)	 	The Customer appoints the Service Provider as the attorney in
fact of the members of the Customer Group, and the Service Provider accepts
such appointment as a part of the Services, for the limited purposes of
administering, managing, supporting, operating under and paying under the Third
Party Contracts and for making any governmental filings and reports that are
the Service Provider’s responsibility in connection with the Services as
contemplated by this Agreement. The Customer does not appoint the Service
Provider as the attorney in fact of the members of the Customer Group for the
purposes of entering into oral or written Agreements with any individual or
business entity for or in the name of the Customer Group or their Affiliates,
without the prior express written approval of the Customer. The Customer
agrees to promptly notify all Third Party Providers under the Third Party
Contracts of the Service Provider’s appointment hereunder as attorney in fact.

	 	(b)	 	The Service Provider will perform its obligations and
responsibilities as an attorney in fact pursuant to Section 8.3(a)
under all Third Party Contracts to which a member of the Customer Group is a
party and for filings and reports identified as Service Provider
responsibilities in the applicable Statements of Work, subject to the
provisions of this Agreement, including, without limitation, Article 3,
Section 8.2, this Section 8.3 and Article 11. Upon the
Customer’s request, the Service Provider will provide to the Customer all
information and documentation related to its activities as the Customer Group’s
attorney in fact with regard to such Third Party Contracts. The Customer may
terminate or provide additional restrictions on the Service Provider’s attorney
in fact appointment with respect to any Third Party Contract if the Service
Provider (i) fails to pay any amount due in a timely manner; (ii) permits a
default to occur (whether or not such default may be cured within a specified
period which has not expired); or (iii) does

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not diligently pursue the service and financial benefits available to the
Customer Group under such Third Party Contract.

     8.4 Conflicts of Interests

Each Party recognizes that the Service Provider personnel providing Services to the Customer
Group under this Agreement may perform similar services for others and this Agreement shall
not prevent the Service Provider from performing similar services for others subject to the
restrictions set forth in Article 11; provided, however, the Service Provider shall
not use any of the Customer Provided Hardware or the Customer Software or the Customer
Provided Office Furnishings or the Customer facilities to perform services for others
(including the Service Provider), without the prior written consent of the Customer.

     8.5 Alternate Providers/Non-Exclusive

	 	(a)	 	The Service Provider will be engaged by Customer on a
non-exclusive basis to provide the Services under this Agreement and,
accordingly, Customer and each of its Affiliates who receive or use the
Services may engage the third parties to perform, or itself perform, the
Services or any element of the Services at any time, subject to Section
3.5(c) of Schedule 4.1, the “Pricing Methodology,”
Schedule, to Exhibit 4). The Service Provider shall cooperate
with any such third party supplier and the Customer as requested from time to
time. Such cooperation shall be for purposes of enabling an orderly transition
of responsibilities to the Customer or any third party supplier and shall
include, without limitation, to the extent reasonably necessary for transition
of the applicable Services to such third party or back to the Customer, (i)
providing reasonable physical and electronic access to the Service Provider
Service Delivery Locations and other facilities of the Service Provider
relating to the provision of the Services; (ii) use of any Equipment used by
the Service Provider to perform Services for the Customer Group for the
Customer Business; (iii) use of any of the Software (other than any Software
where the underlying license agreement does not authorize such access and
consent permitting such access and use has not been obtained); (iv) providing
such information regarding the operating environment, systems constraints, and
other operating parameters as is reasonably necessary for the work product of
the third party supplier of the Customer Group to be compatible with the
Services or New Services; and (v) such other reasonable cooperation as may be
requested by the Customer. In addition, the Service Provider will provide
reasonable cooperation to other parties performing services that were
transitioned from the Service Provider and to third parties providing new or
additional services to the Customer Group. Nothing in this Section
8.5(a) will be construed as providing the Customer or any third party
providing services within the scope of the Services with the right to use the
facilities of the Service Provider or the Equipment or Software described in
item (ii) of the preceding sentence to provide the Services, but rather the
access granted pursuant to this Section 8.5(a) will be limited only to
such access to facilities and such use of Equipment and Software as may be
reasonably necessary to effect an orderly transition of any of the Services to
facilities, equipment or software of the Customer or such third party.

	 	(b)	 	The Service Provider’s obligations hereunder shall be subject
to the Customer-engaged third party suppliers’ compliance with reasonable data
and physical security and other applicable standards and procedures, execution
of appropriate confidentiality agreements satisfying the requirements of
Article 11, and reasonable scheduling of access to other resources to
be furnished by the Service Provider pursuant to this Agreement.

	 	(c)	 	If, in the Service Provider’s reasonable, good faith
determination, the activities of any third party supplier engaged by the
Customer other than at the suggestion of the Service Provider impair the
Service Provider’s ability to meet the Service Levels or otherwise provide the
Services in accordance with this Agreement, the Service Provider will provide
written notice to the Customer of such determination. The Parties will
cooperate

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to determine and verify whether such effect is caused by a third party
supplier, the extent of such effect, and how to ameliorate any such effect.
The Service Provider shall be excused for any inability to meet the Service
Levels or otherwise provide any of the Services to the extent, and only for
the period, any such third party supplier’s activities directly impair the
Service Provider’s ability to meet any Service Level or otherwise provide
any of the Services in accordance with this Agreement.

     8.6 Use of Subcontractors

	 	(a)	 	The Parties will develop and prepare a list of agreed
subcontractors that the Parties agree may be engaged by the Service Provider to
perform and deliver the part or portion of the Services indicated on such list
as a subcontractor to the Service Provider (the “Approved Subcontractors”),
which will be set forth in Exhibit 24, the “Service Provider
Approved Subcontractors” Exhibit. The Service Provider shall not
terminate any subcontracting arrangement with those Approved Subcontractors
identified in Exhibit 24, the “Service Provider Approved
Subcontractors” Exhibit, as “Key Approved Subcontractors” without
the prior written consent of the Customer. The Service Provider shall,
however, be relieved of its obligation to meet any Service Level adversely
affected by the continued use of a “Key” Approved Subcontractor if the Service
Provider has previously informed the Customer of the possibility of degradation
in the Services resulting from the continued use of such Approved Subcontractor
and, notwithstanding such notice, the Customer refuses to grant its consent to
the proposed termination of the subcontracting arrangement with such Approved
Subcontractor and instead requires the Service Provider to continue to use the
“Key” Approved Subcontractor in the performance of the Services. Affiliates of
the Service Provider shall be deemed to be Approved Subcontractors for all
purposes under this Agreement. With respect to proposed subcontractors which
are not Approved Subcontractors, the Service Provider shall notify the Customer
in writing of any proposal by the 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 a
material effect on the quality, timing, cost, consistency or performance of the
Services or on the operations of any member of the Customer Group or on the
security or integrity of the Customer Company Information or Customer Service
Recipient Locations, or on the Customer Business as conducted by any member of
the Customer Group, or (ii) where the subcontractor will interface directly
with the members of the Customer Group or (iii) where the subcontractor will
perform any Services outside the United States. The Service Provider shall not
delegate or subcontract any function, responsibility, activity or task to any
such subcontractor or change any subcontractor without the prior written
approval of the Customer. Upon the Customer’s request, the Service Provider
shall promptly provide to the Customer information regarding the proposed new
or replacement subcontractors to permit the 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, and the
experience, financial status, resources, and reason for selection of the
proposed subcontractors. Subject to the Service Provider’s timely provision of
the foregoing information to the Customer, the Customer shall be deemed to have
accepted such delegation or subcontract or change that is the subject of the
notification by the Service Provider to the Customer, if the Customer has not
notified the Service Provider in writing of its objection to such delegation or
subcontract on or before the twentieth (20th) business day after receipt of
such notice from the Service Provider. The 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
the Service Provider by Article 11.

	 	(b)	 	The Customer shall have the right to require that the Service
Provider replace any subcontractor other than a Key Approved Subcontractor
(with respect to which Section

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8.6(c) will apply) if the Customer determines that it is no longer desirable
for such subcontractor to continue to perform any part of the Services. The
Customer will provide the Service Provider with reasonable advance written
notice of its intent to remove any subcontractor from the provision of the
Services pursuant to this Section 8.6(b). Except as otherwise
specifically provided herein, the Customer will be responsible for the
reasonable, additional Fees and expenses, if any, associated with the
replacement of any subcontractor pursuant to this Section 8.6(b), including,
without limitation, charges associated with acquiring and training a new
subcontractor and to the extent the Customer’s directive to the Service
Provider to replace a subcontractor is not accompanied by a reasonable
notice period, the Service Provider shall be relieved of its obligation to
meet any Service Level adversely affected by the removal of such
subcontractor for a period of time equal to a reasonable notice period under
the circumstances. Except as specifically provided in this Section
8.6(b), the Customer shall have no financial responsibility including,
without limitation, responsibility for any termination charges incurred by
the Service Provider upon a removal by the Customer of any Service Provider
subcontractor pursuant to this Section 8.6(b).

	 	(c)	 	The Customer shall have the right to require that the Service
Provider replace any Key Approved Subcontractor if the Customer determines that
it is no longer desirable for such Key Approved Subcontractor to continue to
perform any part of the Services. The Customer will provide the Service
Provider with reasonable advance written notice of its intent to remove any Key
Approved Subcontractor from the provision of the Services pursuant to this
Section 8.6(c). Except as otherwise specifically provided herein, the
Customer will be responsible for the reasonable, additional Fees and expenses,
if any, associated with the replacement of any Key Approved Subcontractor
pursuant to this Section 8.6(c), including, without limitation, charges
associated with acquiring and training a new subcontractor and to the extent
the Customer’s directive to the Service Provider to replace a Key Approved
Subcontractor is not accompanied by a reasonable notice period, the Service
Provider shall be relieved of its obligation to meet any Service Level
adversely affected by the removal of such Key Approved Subcontractor for a
period of time equal to a reasonable notice period under the circumstances. In
addition, in the event of the removal of a Key Approved Subcontractor pursuant
to this Section 8.6(c), the Customer will reimburse the Service Provider for
any amounts that the Service Provider is required to pay under its agreement
with the Key Approved Subcontractor for any termination-related fees or charges
and any amounts analogous to Wind-Down Expenses under this Agreement.

	 	(d)	 	The Service Provider shall remain primarily liable for and
obligated to the Customer (i) for the timely and proper performance of all of
its obligations hereunder even if such obligations are delegated to its
Affiliates or third party subcontractors for performance, and (ii) for the
proper and timely performance and actions of any person or entity (and their
employees) to which it delegates or subcontracts any such obligations. The
Service Provider shall include in its subcontracting arrangements provisions
substantially similar to the following provisions of this Agreement unless
otherwise agreed by the Customer in a specific instance: Sections 3.4,
4.14, 4.21, 7.4(b), 10, 11,
13.6 and 15.

9. CHARGES; INVOICES; PAYMENT; BENCHMARKING; ETC.

     9.1 Fees/Credits/Inflation Adjustment

	 	(a)	 	The Customer shall pay to the Service Provider the Fees as set
forth in Exhibit 4, the “Pricing, Invoicing & Payment”
Exhibit, together with the other amounts described in this Article
9. There are no Fees or other charges or expenses payable with respect to
the Services or adjustments to the Fees, except those set forth in this
Agreement. The Service Provider shall promptly pay to the Customer or apply to
the Fees all credits and

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other amounts payable by the Service Provider to the Customer in accordance
with this Agreement.

	 	(b)	 	The Service Provider may implement an inflation adjustment to
the Fees for the Services in accordance with the procedures set forth in
Exhibit 4, the “Pricing, Invoicing & Payment” Exhibit,
to this Agreement.

     9.2 Invoicing and Payment

	 	(a)	 	The Customer shall pay Fees and other amounts due under this
Agreement when those payments are due, subject to the Customer’s right to
withhold disputed amounts up to the Disputed Charges Cap. The Customer shall
have the right to set off, without limitation, against amounts owed by the
Customer under this Agreement any amount the Service Provider is obligated to
pay or credit to the Customer under this Agreement; provided such amounts are
not in dispute and subject to the process set forth in Section 9.8.
The Customer may also withhold payment of particular Fees that the Customer
disputes in good faith; provided, however, that at no time during the Term
shall the total amount of Fees withheld by Customer pursuant to this
Section 9.2(a) exceed, in the aggregate, the Disputed Charges Cap. The
payment by the Customer of Fees due under any invoice shall not, in any way,
indicate the Customer’s agreement with the legitimacy of such Fees or waive the
Customer’s right to subsequently dispute such Fees in good faith and to
withhold disputed amounts from a subsequent invoice up to the Disputed Charges
Cap.

	 	(b)	 	The Service Provider shall render a single consolidated invoice
for the Fees incurred in each month. Each invoice shall be in the form set
forth in Schedule 4.4, the “Form of Invoice & Supporting Data”
Schedule, to Exhibit 4, the “Pricing, Invoicing &
Payment” Exhibit, and shall show such details as reasonably
specified by the Customer, including:

	 	(i)	 	The calculations utilized to establish the
Fees.
	 
	 	(ii)	 	Identification of all Managed Third Party
Expenses for the month to which the invoice corresponds.
	 
	 	(iii)	 	Identification of the amounts of any taxes the
Service Provider is collecting from the Customer.
	 
	 	(iv)	 	Such other details and billing information as
is necessary and produced by the Customer as of the Effective Date to
satisfy the Customer’s internal accounting, charge back requirements
billing, including as necessary to allow the Customer to accurately
allocate the Fees by legal entity, business unit, department, Service
Tower, employee, project and Resource Unit.

	 	(c)	 	The Service Provider shall invoice the Customer for the monthly
portion of the Annual Services Charge by the tenth (10th) of the
month in which the Services are received and the Customer shall pay such
charges by the end of such month. The Service Provider shall also separately
invoice the Customer for any variable charges incurred by the tenth
(10th) of the month following the month in which the Services are
performed and received and the Customer shall pay such charges by the end of
such month.

	 	(d)	 	The Service Provider shall not invoice the Customer, and the
Customer shall not be obligated to pay, any Fees that are not properly invoiced
within six (6) months after the end of the month to which such Fees correspond.

	 	(e)	 	For any Fees, charges, credits (including Service Credits) or
other amounts payable by one Party to the other pursuant to this Agreement that
are not in dispute and that remain

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unpaid for more than thirty (30) days after their due date, the Party owing
the applicable amount agrees to pay interest on the amount due at a rate of
1% per month. For any Fees, charges, credits (including Service Credits) or
other amounts payable by one Party to the other pursuant to this Agreement
that are in dispute, the party that ultimately is determined to owe such
disputed amount, will pay interest from the date such amount was originally
due until the disputed amount is paid at a rate equal to the “Prime Rate” in
the Money Rates section of the Wall Street Journal, as such rate may change
during the dispute period.

     9.3 Taxes

	 	(a)	 	The Fees described in Section 9.1 to be paid by the
Customer are inclusive of all applicable income, sales, use, gross-receipts or
value-added, excise, personal property, real property, intangibles or other
similar taxes based upon or measured by (i) the Service Provider’s cost in
acquiring or providing Equipment, materials, supplies or services furnished to
or used by the Service Provider in providing and performing the Services, (ii)
the value or cost or use of all Service Provider Equipment, Service Provider
Software and other Service Provider resources however described; and (iii) the
Service Provider’s revenues, income or profit. Each Party shall bear sole
responsibility for all taxes, assessments and other real or personal
property-related levies on its owned or leased real or personal property, for
franchise or similar taxes on its business, for employment taxes on its
employees, and for intangible taxes on property it owns, licenses, leases or
subleases.

	 	(b)	 	Notwithstanding Section 9.3(a), if a value added tax or
tax on services is assessed solely and directly with respect to Fees to the
Customer for the provision of the Services by the Service Provider to the
Customer Group under this Agreement, the Customer shall be responsible for and
pay the amount of any such tax to the Service Provider, or as the law otherwise
requires, in addition to the Fees.

	 	(c)	 	The Parties agree to reasonably cooperate with each other in
good faith to more accurately determine and reflect each Party’s tax liability
and to minimize such liability to the extent legally permissible. Each Party
shall provide and make available to the other any resale certificates and other
exemption certificates or information reasonably requested by either Party.
The Parties will also work together to segregate the Fees, reimbursements,
expenses and other amounts payable hereunder, into separate payment accounts
charged under separate invoices, as appropriate, for Services and the
components of the Services (i.e., components that are taxable and nontaxable,
including those for which a sales, use or similar tax has already been paid by
the Service Provider and for which the Service Provider functions merely as a
paying agent for the Customer in receiving goods, supplies or services
including licensing arrangements that otherwise are nontaxable or have
previously been subjected to tax, components that are capitalized, and
components that are expensed).

	 	(d)	 	To the extent not otherwise expressly required by this
Agreement, any software (including any enhancements, upgrades or updates) and
related documentation shall be delivered by the Service Provider to the
Customer Group, at the election of the Customer, either (i) with the Service
Provider’s advice and assistance, through electronic transmission or downloaded
from the internet or other telecommunications network connection, or (ii) by
installation by the Service Provider on the relevant equipment with retention
by the Service Provider of all tangible media on which such software and
documentation reside. The Service Provider shall not transfer any tangible
medium containing such software (including any enhancements, upgrades or
updates) and documentation to the Customer Group at any time, for any reason
under the terms of this Agreement, and the Service Provider shall, at all
times, retain possession and control of any such tangible medium used or
consumed by the Service Provider.

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     9.4 Customer Satisfaction

The Service Provider shall conduct an initial customer satisfaction survey as required by
Schedule 16.1 of Exhibit 16, the “Customer Satisfaction” Exhibit, to establish a baseline
regarding the Customer’s overall satisfaction with the in-scope Services. Thereafter, from
time to time during the Term, the Service Provider shall perform ongoing customer
satisfaction surveys at the frequencies specified in and pursuant to the terms of
Schedule 16.2 of Exhibit 16, the “Continuous Customer Satisfaction”
Exhibit.

     9.5 Benchmarking

	 	(a)	 	The Customer may engage a Benchmarker to benchmark all of the
Services provided hereunder or solely the portions of the Services covered by
an individual Service Tower or Service Category, which Service Categories are
identified in Exhibit 6, the “Service Categories”
Exhibit, attached hereto. The purpose and results of the Benchmark
Process are to determine if the Fees and Services are competitive given the
nature, volume and type of Services provided by the Service Provider hereunder.

	 	(b)	 	The Benchmark Process may be initiated by the Customer in the
manner specified in Exhibit 5, the “Benchmarking”
Exhibit. The Customer and the Service Provider shall engage any one of
the Benchmarkers identified in the relevant “Approved Benchmarkers”
Schedule to Exhibit 5, the “Benchmarking”
Exhibit, or other mutually agreed benchmarker, provided, that the
Benchmarker shall not be any of the competitors of the Service Provider listed
in Schedule 20.1, the “Service Provider Competitors”
“Schedule”, to Exhibit 20, the “Competitors”
Exhibit.

	 	(c)	 	The Customer, the Service Provider and the Benchmarker shall
conduct the Benchmark Process according to the methodology set forth in
Exhibit 5, the “Benchmarking” Exhibit.

	 	(d)	 	Any Benchmarker engaged by the Customer shall agree in writing
to be bound by the applicable confidentiality and security provisions specified
in this Agreement. Each Party shall co-operate fully with the Benchmarker and
shall provide reasonable access to the Benchmarker during such effort to permit
Benchmarker to perform the Benchmarking.

	 	(e)	 	Each Party shall provide, and ensure that its subcontractors
(excluding in the case of the Customer, the Service Provider and its
subcontractors) provide, all necessary cooperation, information, documents and
assistance reasonably required to perform the Benchmarking.

	 	(f)	 	Benchmarking shall not result in any increase in any Fees to
the Customer.

     9.6 Data Transport — Market Watch

	 	(a)	 	For data transport services provided by the Service Provider,
this Section 9.6 supplants the Customer’s right to benchmark that
portion of the Services under Section 9.5 of this Agreement. For the
portion of the data transport services that the Service Provider is providing
under its own arrangements rather than through Third Party Contracts in
existence as of the Effective Date, the Service Provider will, at the
Customer’s request, on or after the first anniversary of the Effective Date,
but no more than once in any 12-month period, determine the prevailing market
costs and performance (e.g. industry service levels) of data transport
services.

	 	(b)	 	The Customer shall have the option to participate in any such
market watch activities.

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	 	(c)	 	To the extent that the market watch reveals that the data
transport Fees under this Agreement are higher than those prevailing in the
market, after considering the Service Provider’s reasonable recovery for
management services, then the Fees for data transport services under this
Agreement shall be reduced to eliminate such variance effective with the next
invoice after the completion of the market watch activity..

	 	(d)	 	There shall be no upward adjustment to any Fees as a result of
any market watch activity.

     9.7 New Services

	 	(a)	 	The Fees for New Services will be integrated into Exhibit
4, the “Pricing, Invoicing & Payment” Exhibit, in
accordance with Sections 3.16 and 17.2.

	 	(b)	 	If the Parties cannot agree whether a function, responsibility
or task falls within the definition of a New Service, the Service Provider
shall nevertheless perform the disputed function, responsibility or task if
requested by the Customer. The determination of whether any function,
responsibility or task is a New Service to be paid by the Customer will be made
pursuant to the expedited dispute resolution process described in Section
16.3. The Customer shall pay one hundred percent (100%) of the Fees for
the disputed function, responsibility or task under this Section 9.7 at
the then existing rates set forth in Exhibit 4, the “Pricing,
Invoicing & Payment” Exhibit, until such dispute is resolved
through the expedited dispute resolution process. The Customer shall promptly
pay to the Service Provider any additional amounts determined to be owed to the
Service Provider after resort to the expedited dispute resolution process
described in Section 16.3.

     9.8 Disputed Fees/Credits

In the event the Customer or the Service Provider disputes the accuracy or applicability of
a charge or credit or other financial arrangement described in this Agreement, the disputing
Party shall notify the other Party of such dispute as soon as practicable after the
discrepancy has been discovered. The Parties will investigate and resolve the dispute using
the expedited dispute resolution processes provided under Article 16 of this
Agreement. Any undisputed amounts contained in or applicable to an invoice will be paid by
the Party owing it and, in the case of the Customer, disputed amounts in excess of the
Disputed Charges Cap, and any undisputed credit amounts owed by the Service Provider shall
be promptly paid to Customer or credited by the Service Provider against the Fees.

10. INTELLECTUAL PROPERTY RIGHTS

Pursuant to this Agreement, the Service Provider (which for purposes of Development
activities and ownership rights under this Article 10 shall include the Service
Provider’s Affiliates and subcontractors) and the Customer (which for purposes of
Development activities and ownership rights under this Article 10 shall include the
Customer’s Affiliates and the Authorized Users and their subcontractors) may Develop,
currently possess, acquire or license certain Materials (including object code and, where
applicable, source code) and documentation, in connection with the Service Provider’s
performance of the Services. Unless otherwise agreed to by the Parties on an exception
basis, the respective rights in such Materials as between the Parties shall be as follows:

     10.1 Reserved

     10.2 Service Provider Materials; Materials Developed by Service Provider or Jointly
Developed

All Intellectual Property in the Service Provider Software and other preexisting Materials
of the Service Provider shall, as between the Service Provider and the Customer, be the
property of the Service Provider. For the purposes of this Article 10, neither the
Service Provider nor its Affiliates nor subcontractors shall be considered contractors or
subcontractors of the Customer or the Customer Group.

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With respect to any Materials Developed solely by the Service Provider or jointly by
personnel of the Customer and the Service Provider under this Agreement or in the
performance of Services, except as otherwise expressly set forth in this Agreement,
ownership of all such Materials and the Intellectual Property therein shall be as follows:

	 	(a)	 	Materials that constitute a Derivative Work of preexisting
Materials owned by the Customer (and all Intellectual Property therein), shall,
as between the Service Provider and the Customer, be owned by the Customer and
the Service Provider shall have a nonexclusive, irrevocable, worldwide, paid-up
license from the Customer (i) to access, use, execute, reproduce and prepare
Derivative Works of such Materials (including all Intellectual Property
therein) only in connection with the performance and delivery of the Services
during the Term, including any period during which the Service Provider is
providing the Termination/Expiration Assistance, and (ii) to sublicense third
parties to do any of the foregoing. Such license shall include the Materials
(including all Intellectual Property therein) owned by the Customer and upon
which such Derivative Work is based, but only to the extent such Materials are
embodied in, or necessary for the exercise of the license to, such Derivative
Work.

	 	(b)	 	Materials Developed in the course of performing the Services
that constitute a Derivative Work of preexisting Materials owned by the Service
Provider (and all Intellectual Property therein), shall, as between the Service
Provider and the Customer, be owned by the Service Provider and the Customer
shall have a nonexclusive, irrevocable, worldwide, paid-up license from the
Service Provider (a) to access, use, execute, reproduce and prepare Derivative
Works of such Materials (including all Intellectual Property therein) for the
Customer Business during the Term, limited to such use as is necessary for the
Customer to receive the benefit of the Services during the Term including any
period during which the Service Provider is providing the
Termination/Expiration Assistance, unless a separate license agreement between
the Parties provides for a shorter term for the underlying Materials, and (b)
to sublicense third parties to do any of the foregoing limited to such use as
is necessary for the Customer to receive the benefit of the Services. Such
license shall include the Materials (including all Intellectual Property
therein) Developed by the Service Provider upon which such Derivative Work is
based, but only to the extent such Materials are embodied in, or necessary for
the exercise of the foregoing license to, such Derivative Work.

	 	(c)	 	Materials Developed in connection with the Services or the
performance of this Agreement that do not constitute a Derivative Work of any
preexisting Materials owned by the Customer or the Service Provider (and all
Intellectual Property therein), shall, as between the Service Provider and
Customer, be owned:

	 	(i)	 	by Customer, if such Materials are (i)
AD Materials, (ii) usable only in conjunction with the Customer Owned
Software or (iii) are newly Developed interfaces usable only between
any Customer Owned Software and Service Provider Software or between
Customer Owned Software and Software of any Third Party Provider
licensed in the name of any member of the Customer Group, and the
Service Provider shall have a nonexclusive, irrevocable, worldwide,
paid-up license from Customer (1) to access, use, execute, reproduce,
and prepare Derivative Works of such Materials (and all Intellectual
Property therein) internally within the Service Provider solely in
connection with the performance and delivery of the Services during the
Term, including any period during which the Service Provider is
providing the Termination/Expiration Assistance, and (2) to sublicense
third parties to do any of the foregoing; or
	 
	 	(ii)	 	by the Service Provider, in all other
cases, and Customer shall have a nonexclusive, irrevocable, worldwide,
paid-up license from the Service Provider

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(1) to access, use, execute, reproduce and prepare Derivative Works
of such Materials (including all Intellectual Property therein) for
the Customer Business during the Term, limited to such use as is
necessary for the Customer to receive the benefit of the Services,
including any period during which the Service Provider is providing
the Termination/Expiration Assistance, and (2) to sublicense third
parties to do any of the foregoing.

     10.3 Customer Materials

With respect to any Materials to which the Service Provider is granted access under this
Agreement that are owned by the Customer (including, without limitation, the Customer Owned
Software and other preexisting Materials) or have been Developed (a) solely by the Customer
Group, whether or not Developed under this Agreement or (b) for the Customer Group by third
parties other than the Service Provider in connection with this Agreement, such Materials
(including all Intellectual Property therein) shall, as between the Service Provider and
Customer, be owned by the Customer, and the Service Provider shall have a nonexclusive,
irrevocable, worldwide, paid-up license from the Customer (y) to access, use, execute,
reproduce and prepare Derivative Works of such Materials (and all Intellectual Property
therein) internally within the Service Provider solely in connection with the performance
and delivery of the Services during the Term including any period during which the Service
Provider is providing the Termination/Expiration Assistance, and (z) to sublicense third
parties to do any of the foregoing.

     10.4 Derivative Works of Service Provider Materials Developed Solely by Customer

With respect to any Materials that are Developed solely by the Customer and that constitute
a Derivative Work of any Materials owned by the Service Provider, such Materials (including
all Intellectual Property therein) shall, as between the Service Provider and the Customer,
be owned by the Service Provider, and the Customer shall have a nonexclusive, irrevocable,
worldwide, paid-up license from the Service Provider (a) to access, use, execute, reproduce
and prepare Derivative Works of such Materials (including all Intellectual Property therein)
for the Customer Business during the Term, including any period during which the Service
Provider is providing the Termination/Expiration Assistance, unless a separate license
agreement between the Parties provides for a shorter term for the underlying Materials and
limited to such use as is necessary for the Customer to receive the benefit of the Services,
and (b) to sublicense third parties to do any of the foregoing. Such license shall include
the Materials (including all Intellectual Property therein) owned by the Service Provider
upon which such Derivative Work is based, but only to the extent such Materials are embodied
in, or necessary for the exercise of the license to, such Derivative Work.

     10.5 Limitation

Any ownership or license rights herein granted to either Party in this Agreement are limited
by and subject to any Intellectual Property owned by, and terms and conditions of any
license agreements with, applicable Third Party Providers and with the Service Provider if
the Service Provider licenses the applicable Materials, products or services to the Customer
under a separate license agreement.

     10.6 Assignment

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

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     10.7 Licenses to Third Parties

To the extent that either the Service Provider or Customer licenses any Materials of the
other Party to a third party, each such license shall be in writing and shall be subject to
this Agreement including, without limitation, provisions that protect the owning or
licensing Party’s Intellectual Property in such Materials and that appropriately limit the
use and number of copies of the Materials and restrict their use to the use permitted to
each Party in this Article 10.

     10.8 Sale of an Affiliate

Customer may extend to (i) a Customer Group member or (ii) any operation of Customer or any
Customer Group member that is sold, divested, distributed via a stock dividend or other
distribution or otherwise transferred to a third party, a sublicense in each case for such
transferred or divested entities use for its business only (but including, without
limitation, to sublicense to an outsourcing services provider for use solely in providing
services to the transferred or divested entity), of the rights in Materials granted to
Customer pursuant to this Article 10.

     10.9 Licenses to Customer

Notwithstanding any other provision in this Agreement to the contrary, the Service Provider
hereby grants to the Customer Group an irrevocable, perpetual, nonexclusive, worldwide,
paid-up license to access, use, execute, reproduce and prepare Derivative Works of the
Procedures Manual(s).

     10.10 Obligations Regarding Materials

The Service Provider and the Customer shall each reproduce copyright, patent and other
legends which appear on any portion of the Materials which may be owned by the other Party
and any and all third parties. Neither this Agreement nor any disclosure made hereunder
grants any license to either Party under any patent or copyright of the other Party, except
for the licenses expressly granted under this Agreement.

     10.11 Moral Rights

With respect to the “moral rights” of any author in any of the Materials delivered to the
Customer Group under this Agreement, and subject to the other provisions of this Article
10, the Service Provider and the Customer acknowledge that each is responsible for
assuring that the other Party is entitled to (i) the undisturbed use of such items in
accordance with the rights granted under this Agreement, and (ii) in particular and without
limitation hereto, to exercise for the relevant author the right of dissemination, the right
of recognition of authorship, the right to prevent distortions of the work, the right to
decide whether the work should bear the author’s designation, the right of access to copies
of the work and the revocation rights for such items, to the extent necessary for a Party to
exercise the rights granted by the other Party to any Materials pursuant to this Agreement.

11. CONFIDENTIALITY AND DATA

     11.1 Company Information

The Service Provider and the Customer each acknowledge that the other Party may possess and
may continue to possess information, which has commercial value in such other Party’s
business and is not in the public domain. Such 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. For the
purposes of this Article 11, neither the Service Provider nor its Affiliates nor
subcontractors shall be considered contractors or subcontractors of the Customer or the
Customer Group.

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     11.2 Obligations

	 	(a)	 	the Customer and the Service Provider will each refrain from
unauthorized use, storage and disclosure, will hold as confidential and will
use the same level of care (including both facility physical security and
electronic security) to prevent unauthorized access by, storage, disclosure,
publication, dissemination to 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.
Notwithstanding the foregoing confidentiality and similar obligations in this
Article 11 (but subject to compliance with law), the Parties may
disclose to and permit use of the Company Information of the other Party by,
(A) in the case of the Customer, other members of the Customer Group; (B) in
the case of the Service Provider, to Affiliates and subcontractors of the
Service Provider that are performing the Services, and (C) in the case of both
Parties and the members of the Customer Group, their respective legal counsel,
auditors, investment and financial advisors, contractors and subcontractors
where: (i) 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 the Service Provider and members of the Customer Group to
perform their obligations or exercise their rights hereunder or for their
respective legal counsel, auditors, investment and financial advisors,
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;
(ii) such investment and financial advisors, contractors and subcontractors are
bound in writing by obligations of confidentiality, non-disclosure and the
other restrictive covenants set forth in this Article 11, at least as
restrictive and extensive in scope as those set forth in this Article
11 and such auditors or legal counsel are equally bound, whether or not in
writing, and (iii) the Service Provider, in the case of the Customer Group
Company Information, and the Customer, in the case of the Service Provider
Company Information, assumes full responsibility for the acts or omissions with
respect to the 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 the Service Provider and the Customer,
respectively.

	 	(b)	 	The Service Provider shall be responsible to ensure that its
legal counsel, auditors, investment and other financial advisors, contractors
and subcontractors comply with this Section 11.2 and the Customer shall
be responsible to ensure that the other members of the Customer Group and its
and their legal counsel, auditors, investment and financial advisors,
contractors and subcontractors comply with this Section 11.2.

	 	(c)	 	Without limiting the generality of the foregoing, neither Party
will disclose the substantive or material commercial terms of this Agreement or
the substantive positions of the Parties in the negotiation of this Agreement,
except to the extent permitted by this Article 11 or to enforce the
terms of this Agreement, without the prior written consent of the other Party.
Furthermore, except as set forth in this Agreement, neither the Service
Provider nor the Customer will acquire any right in or assert any lien against
the other Party’s Company Information, or refuse to promptly return, provide a
copy in the format requested of, or destroy such Company Information upon the
request of the disclosing Party.

	 	(d)	 	Notwithstanding any other provision of this 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 in connection with its business operations any
knowledge, ideas, concepts, know-how, techniques or 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 this Agreement and the performance and use
of the

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Services, which are retained in the unaided memories of employees who have
had access to the other Party’s Company Information (without reference to
any physical or electronic embodiment of such information and without
deliberate memorization for the purposes of reuse under this Section),
unless such disclosure or use (i) shall infringe any of the patent rights,
copyrights, or mask works rights (or, in the case of the Service Provider,
the “Customer-Specific Trade Secrets” identified in Exhibit 1 which
are a part of or embodied in the other Party’s Company Information, (ii)
shall constitute a violation by the Service Provider, a member of the
Customer Group, or their respective contractors or subcontractors or their
respective employees, of any applicable law (exclusive of the laws of Trade
Secrets, other than as they relate to the aforementioned
“Customer-Specific Trade Secrets”), or (iii) shall involve the use,
disclosure or reproduction of any Personally Identifiable Information.

     11.3 Exclusions

Notwithstanding the foregoing and excluding the Personally Identifiable Information, this
Article 11 shall not apply to any information which the Service Provider or the
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
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; (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; (f) a graphical user interface or other screen display that appears on monitors and
provides user/operator interfaces to the Services; or (g) user/operator instructions for the
use of the Services. Further, either Party may disclose the other Party’s Company
Information to the extent required by law or order of a court or governmental agency or the
rules of the New York Stock Exchange, the Nasdaq Stock Market or similar national stock
exchange. However, in the event of disclosure pursuant to an order of Court or governmental
agency, and subject to compliance with law or such order of Court or governmental agency,
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, and to the extent required by the rules of the New York Stock Exchange,
the Nasdaq Stock Market or similar national stock exchange, the recipient shall give the
disclosing Party such notice as is available under those rules to permit the disclosing
Party to protect the confidentiality of such information in accordance with such rules. The
receipt of Company Information under this Agreement will not limit or restrict assignment or
reassignment of employees of the Service Provider and the Customer Group within or between
the respective Parties and their Affiliates.

     11.4 Data Ownership

All Customer Company Information (including, without limitation, the Customer Data, records
and reports related to the Customer Group and the Customer Business) whether in existence at
any Commencement Date or compiled thereafter in the course of performing the Services, shall
be treated by the Service Provider and its subcontractors as the exclusive property of the
Customer or other member of the Customer Group and the furnishing of such the Customer
Company Information, or access to such items by, the Service Provider or its subcontractors,
shall not grant any express or implied interest in the Service Provider or its
subcontractors relating to such Customer Company Information, and the Service Provider’s and
its subcontractors’ use of such Customer Company Information shall be limited to such use as
is necessary to perform and provide the Services to the Customer Group. Upon request by the
Customer at any time and from time to time and without regard to the default status of the
Parties under this Agreement, the Service Provider or its subcontractors shall promptly
deliver to the Customer Company Information (including without limitation all data, records
and related reports regarding the Customer Group and the Customer Business) in electronic
format and in such hard copy as exists on the date of the request by the Customer.

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     11.5 Loss of or Unauthorized Access to Company Information; Intrusions

	 	(a)	 	The receiving Party will immediately notify the disclosing
Party, in writing in the event of any storage, disclosure, loss, unauthorized
access to or use in violation of this Agreement of a disclosing Party’s Company
Information (and with respect to the Customer Group, the Customer Data) known
to the receiving Party. With respect to the Customer Data, the Service
Provider shall also immediately notify the Customer of any known security
breach that may result in the unauthorized use, access, disclosure, alteration
or destruction of Personally Identifiable Information contained in the Customer
Data or of any accidental loss, destruction, or damage to the Customer Data.

	 	(b)	 	The Service Provider will provide the Customer and its
representatives with access to the Service Provider’s policies, processes and
procedures and descriptions of its systems relating to intrusion detection and
interception with respect to the systems used by the Service Provider to
provide the Services for the purpose of assessing those systems, processes,
policies and procedures. The Service Provider will promptly notify the
Customer of any such intrusion or attack or any significant escalation in the
number of attempted intrusions or attacks that would reasonably be expected to:
(i) require a significant change in the security safeguards employed to
protect against such intrusions or attacks or (ii) have a material adverse
effect on the Services or (iii) adversely impact the Service Provider’s ability
to comply with the terms of this Agreement.

     11.6 Data Privacy

	 	(a)	 	The Customer shall be and remain the controller of the
Personally Identifiable Information and other Customer Company Information for
purposes of all applicable laws relating to data privacy, personal data,
transborder data flow and data protection (collectively, the “Privacy Laws”),
with rights to determine the means by which and the purposes for which the
Customer Data, the Customer Company Information and other information are
processed, and nothing in this Agreement will restrict or limit in any way the
Customer’s rights or obligations as owner or controller of its data and
information for such purposes. As the controller of such data and other
information of the Customer Group, the Customer will direct the Service
Provider’s use of and access to the Personally Identifiable Information and
Customer Company Information. The Parties also acknowledge and agree that the
Service Provider may have certain responsibilities prescribed as of the
Effective Date by applicable Privacy Laws or by the Customer’s policies related
to the Privacy Laws and the operations and procedures of the Customer Group (as
such policies are in effect and provided to the Service Provider prior to
Effective Date and updated by the Customer from time to time and provided to
the Service Provider) as an entity with use of, access to and possibly custody
of the Customer Data and other Customer Company Information and the Service
Provider hereby acknowledges such responsibilities and agrees that such
responsibilities shall be included as a part of the Services to be provided by
the Service Provider under this Agreement. The Customer policies related to
the Privacy Laws and the operations and procedures of the Customer Group, shall
be the policies published generally by the Customer from time to time and
delivered to the Service Provider. Such policies as of the Effective Date are
set forth in Exhibit 19, the “Standards, Policies & Procedures”
Exhibit. Nothing in this Agreement prevents the Service Provider or
the Customer from taking the steps and actions necessary to comply with
applicable Privacy Laws or such policies.

	 	(b)	 	If Privacy Laws or the Customer’s policies related to the
Privacy Laws and the operations and procedures of the Customer Group applicable
to the activities contemplated by this Agreement are modified or new or amended
or re-interpreted Privacy Laws or Customer policies related to the Privacy Laws
and the operations and procedures of the Customer Group applicable to such
activities come into effect, the Service Provider shall as part of the Services
cooperate with the Customer to continue to comply with such Privacy Laws

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and policies, as so amended, modified or interpreted, but to the extent that
such amendments, modifications or interpretations expand the scope or
increase the cost of the activities previously undertaken by the Service
Provider, the Service Provider will, at the Customer’s request, provide such
additional activities as New Services; provided, however, that the Customer
shall not be obligated for any additional Fees with respect to any
additional responsibilities imposed on the Service Provider as a processor
of data in the ordinary course of its business and the Service Provider
shall not be obligated for any amounts with respect to any additional
responsibilities imposed on the Customer as a controller of data in the
ordinary course of its business.

     11.7 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 seven (7)
years after termination of the Parties’ relationship under this Agreement, or as long as
required by applicable law; and (iii) with respect to Personally Identifiable Information,
in perpetuity. Neither Party will be responsible for the security of the Company
Information of the other party during transmission via public communications facilities,
except to the extent that such breach of security is caused by the failure of such Party to
perform its obligations under this Agreement, or acts or omissions in breach of this
Agreement, in the case of the Service Provider, by the Service Provider or its Affiliates or
subcontractors or their respective employees, and in the case of the Customer, by members of
the Customer Group or their respective contractors or subcontractors.

12. TERMINATION

     12.1 Termination by the Customer

The Customer may terminate this Agreement or any Service Tower in whole or, in the case of
termination pursuant to paragraphs (a), (b), (c) or (g) in part with respect to the affected
Service Category, for any of the following reasons:

	 	(a)	 	If there exists a material breach by the Service Provider of
this Agreement that remains uncured for thirty (30) calendar days after receipt
of written notice. The Customer shall not be obligated to pay any Breakage
Fee, Termination Charge, Wind-Down Expense or other fee, however described, for
a termination pursuant to this subsection other than payment for the Services
(including the Termination/Expiration Assistance) provided through the
effective date of the completion of the Termination/Expiration Assistance; or

	 	(b)	 	If there exists a series of material breaches that are cured
within the permissible periods, or non-material persistent breaches, of this
Agreement by the Service Provider that in the aggregate constitute a material
breach of this Agreement; provided that all breaches upon which the Service
Provider is basing its termination pursuant to this Section shall have occurred
within the nine (9) month period immediately preceding the notice of
termination. The Customer shall not be obligated to pay any Breakage Fee,
Termination Charge, Wind-Down Expense or other fee, however described, for a
termination pursuant to this subsection other than payment for the Services
(including the Termination/Expiration Assistance) provided through the
effective date of the completion of the Termination/Expiration Assistance; or

	 	(c)	 	For convenience effective upon six (6) months prior written
notice of the effective date of such termination by the Customer to the Service
Provider given at any time. The Customer shall only be obligated to pay (i)
the Applicable Termination Fees for a termination of this Agreement or any
Service Tower pursuant to this subsection and

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(ii) amounts owed for Services (including the Termination/Expiration
Assistance) provided through the effective date of the completion of the
Termination/Expiration Assistance; or

	 	(d)	 	Upon written notice to the Service Provider if the Service
Provider becomes insolvent or is unable to pay its debts or enters into or
files (or has filed or commenced against it) a petition, arrangement,
application, action or 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 or transfers all or substantially all of its
assets to another person or entity. The Customer shall only be obligated to
pay (i) the Applicable Termination Fees for a termination pursuant to this
Section and (ii) amounts owed for Services (including the
Termination/Expiration Assistance) provided through the effective date of the
completion of the Termination/Expiration Assistance; or

	 	(e)	 	In the event of a Change of Control of the Service Provider,
the Customer may, within six (6) months after such Change of Control, elect to
terminate this Agreement upon one hundred eighty (180) days prior written
notice to the Service Provider, which notice shall designate the date upon
which such termination will be effective. The Customer shall only be obligated
to pay (i) the Applicable Termination Fees for a termination pursuant to this
Section and (ii) amounts owed for Services (including the
Termination/Expiration Assistance) provided through the effective date of the
completion of the Termination/Expiration Assistance; or

	 	(f)	 	In the event that (i) the Customer recovers from the Service
Provider Direct Damages in excess of eighty percent (80%) of the Cap or (ii)
the Service Provider pays Losses under Section 14.1(h) equal to one hundred
percent (100%) of the Fines Cap and the Service Provider does not agree to
reset to zero either the Direct Damages under item (i) counted toward the Cap
or the Losses under item (ii) counted toward the Fines Cap, then the Customer
may terminate this Agreement upon thirty (30) days prior written notice from
the Customer. Upon any termination pursuant to this Section 12.1(f),
the Customer shall only be obligated to pay (i) the Applicable Termination Fees
for a termination pursuant to this Section and (ii) amounts owed for
Services (including the Termination/Expiration Assistance) provided through the
effective date of the completion of the Termination/Expiration Assistance; or

	 	(g)	 	Under the circumstances set forth in Sections 3.3,
3.6, 3.19, 9.5 or 17.3. Upon any termination
pursuant to this Section 12.1(g), the Customer shall only be obligated
to pay (i) the Applicable Termination Fees for a termination pursuant to this
Section and (ii) amounts owed for Services (including the
Termination/Expiration Assistance) provided through the effective date of the
completion of the Termination/Expiration Assistance; or

	 	(h)	 	In the event of a Change of Control of the Customer, the
Customer may, within six (6) months after such Change of Control, elect to
terminate this Agreement in its sole discretion upon one hundred eighty (180)
days prior written notice to the Service Provider, which notice shall designate
the date upon which such termination will be effective if the Customer deems
that this Agreement would inhibit the planned Change of Control of the
Customer. Upon any termination pursuant to this Section 12.1(h), the
Customer shall only be obligated to pay (i) the Applicable Termination Fees for
a termination pursuant to this Section and (ii) amounts owed for
Services (including the Termination/Expiration Assistance) provided through the
effective date of the completion of the Termination/Expiration Assistance; or

	 	(i)	 	the Service Provider is debarred by a Governmental Authority.
Upon any termination pursuant to this Section 12.1(i), the Customer
shall only be obligated to pay (i) the Applicable Termination Fees for a
termination pursuant to this Section and (ii) amounts

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owed for Services (including the Termination/Expiration Assistance) provided
through the effective date of the completion of the Termination/Expiration
Assistance.

	 	12.2	 	Termination by Service Provider

In the event, but only in the event, that the Customer fails to pay the Service Provider
when due undisputed Fees or other charges in excess of the Undisputed Charges Cap under this
Agreement or withholds any disputed amounts in excess of the Disputed Charges Cap and fails
to make such payment within thirty (30) days after receiving notice from the Service
Provider of the failure to make such payment, the Service Provider may, by giving written
notice to the Customer, terminate this Agreement as of a date specified in the notice of
termination.

	 	12.3	 	Termination/Expiration Assistance

	 	(a)	 	The Parties agree that the Service Provider will cooperate with
the Customer Group to assist in the orderly transfer and migration without
interruption of Services to one or more members of the Customer Group itself or
another services provider in connection with the expiration or earlier
termination of this Agreement for any reason, however described
(“Termination/Expiration Assistance”). The quality of the Services provided by
the Service Provider, and the Service Provider’s performance of the Services
and its obligations under this Agreement, shall not be degraded during the
Termination/Expiration Assistance period. The Term shall not be deemed to have
expired or terminated until the Termination/Expiration Assistance thereunder is
completed. Upon the Customer’s request the Service Provider shall provide, and
shall cause its subcontractors to provide, Termination/Expiration Assistance
commencing up to twelve (12) months prior to expiration or upon any notice of
termination or of non-renewal of this Agreement and continue to provide, and
cause to be provided, the Termination/Expiration Assistance for up to
twenty-four (24) months after the effective date of termination. The Service
Provider shall provide the Termination/Expiration Assistance regardless of the
reason for termination or expiration; provided, however, that if termination is
due to Customer’s non-payment, the Customer will be required to pay for
Termination/Expiration Assistance services in advance on a month-to-month
basis. Termination/Expiration Assistance shall be provided through the
effective date of the expiration or termination of the Services or any portion
thereof. Upon request by the Customer, the effective date of any such
expiration or termination shall be extended for the periods and in the manner
described in Section 1.4 (Extension of Services), pursuant to the terms
and conditions of this Agreement and such period shall be considered an
extension of the Term. If such extensions should occur, the Applicable
Termination Fees shall be calculated for such extensions.
	 
	 	(b)	 	As part of Termination/Expiration Assistance, the Service
Provider shall (i) provide such information as the Customer may reasonably
request relating to the number and function of each of the Service Provider’s
personnel who are employed or contracted by the Service Provider to perform the
Services under this Agreement, and the Service Provider shall make such
information available to potential successors as designated by the Customer;
(ii) not make any material change in the level of Service or number of
employees assigned to perform functions for the Customer under this Agreement
without the prior consent of the Customer; (iii) not change the level of
Service or reassign the Service Provider’s employees or subcontractors away
from performance of functions under this Agreement in a manner other than
permitted under this Agreement; and (iv) provide the Customer with access to
the Software (including related documentation) items described in Section
12.4 and commence the performance of all transfer/transition activities
described in Section 12.4 as necessary to effectuate an orderly
transition.
	 
	 	(c)	 	In the process of evaluating whether to undertake or allow
termination, expiration or renewal of this Agreement, the Customer may consider
obtaining, or determine to obtain,

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	 	 	 	offers for performance of services similar to the Services following
termination, expiration or renewal of this Agreement. As and when
reasonably requested by the Customer for use in such a process and subject
to Schedule 4.1, the “Pricing Methodology” Schedule
to Exhibit 4 and Section 6.4, the Service Provider shall
provide to the Customer such information and other cooperation regarding
performance of the Services as would be reasonably necessary for a third
party to prepare an informed, non-qualified offer for such services. The
types of information and level of cooperation to be provided by the Service
Provider pursuant to this Section 12.3(c) shall be no less than
those initially provided by the Customer to the Service Provider prior to
commencement of this Agreement.
	 
	 	(d)	 	Reserved.
	 
	 	(e)	 	In performing any Termination/Expiration Assistance hereunder,
the Service Provider shall first utilize any resources already dedicated to the
performance of the Services hereunder or otherwise committed, assigned or used
by the Service Provider to provide the Services to the Customer to the extent
such resources can be used by the Service Provider to perform
Termination/Expiration Assistance without compromising or degrading the
performance of the Services. If the Service Provider is unable to properly
perform the Services including the Termination/Expiration Assistance utilizing
only the resources described in the immediately preceding sentence without
degradation to the Services, the Service Provider shall inform the Customer of
the nature and extent of the possible degradation in the Services that will
result from the use of such resources in the manner described herein and the
Service Provider shall, after obtaining the Customer’s prior written consent,
perform the Termination/Expiration Assistance and the Services solely utilizing
such resources and will not be responsible for the attendant degradation of any
Services. If the Customer does not consent to the use of such resources in the
manner described in this Section 12.3(e) and the attendant degradation
in the Services, the Service Provider shall provide to the Customer a proposal
documenting the additional resources to be used or expended by the Service
Provider to perform the Services including without limitation the
Termination/Expiration Assistance in accordance with the terms of this
Agreement and the Customer shall pay for such additional resources at the rates
specified in Exhibit 4, the “Pricing, Invoicing & Payment”
Exhibit, if applicable.

	 	12.4	 	Other Rights Upon Termination

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

	 	(a)	 	Upon the Customer’s request, the Service Provider agrees to
sell to the Customer or its designee the Service Provider Equipment owned by
the Service Provider then currently being used by the Service Provider
primarily to perform the Services or a portion of the Services, as applicable,
at the fair market value of such Service Provider Equipment. In the case of
Service Provider Equipment that the Service Provider is leasing and using
primarily to perform the Services, the Service Provider agrees to use
commercially reasonable efforts to permit the 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 assume the lease(s) and secure
the release of the Service Provider thereon, subject to the terms of the
applicable lease. The 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)	 	To the extent that the Service Provider is using commercially
available Service Provider proprietary software to perform the Services on the
termination or expiration of this Agreement, (i) if such software was provided
pursuant to a license agreement existing before the Effective Date, the license
will continue in force after the Term in accordance

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	 	 	 	with its terms and (ii) for other such Service Provider software so used,
Service Provider will grant to the members of the Customer Group and their
Affiliates a license (which license shall permit a third party designee to
use such software solely for the Customer Group’s benefit) to such software
(and any related documentation) on the Service Provider’s then standard
terms and conditions and in the cases of both (i) and (ii) of this sentence,
at the release and Version level in use at the end of the Term. To the
extent Customer has paid a one-time license fee for the use of such
software, no additional one-time license fee shall be required, but the
Customer will continue to be responsible for fees and charges applicable to
new Releases, Versions or updates, or periodic or usage-based or similar
fees or charges applicable to periods after the Term.
	 
	 	(c)	 	For Service Provider Software proprietary to the Service
Provider (which for purposes of this paragraph includes its Affiliates and
subcontractors) and not generally commercially available which are used by the
Service Provider to provide the Services as of the end of the Term (excluding
(1) the Software listed on Schedule 25.1, the “Restricted Software
and Tools” Exhibit, and (2) Software used in a shared services environment,
neither of which will continue to be made available by the Service Provider
after the end of the Term), (i) to the extent that at the end of the Term the
Customer decides to bring the Services performance back in house, the Service
Provider shall grant and hereby grants to Customer a worldwide, perpetual,
irrevocable, non-exclusive, non-transferable license to use, execute, reproduce
(as necessary to receive the benefit of the Services being provided in-house),
display, perform, distribute (internally within the Customer Group) such
non-commercially available Service Provider Software at the release or Version
level in use at the end of the Term solely for the use of the Customer Group in
the Customer Business in connection with Customer’s continued performance for
the Customer Group of the Services, and (ii) to the extent that Customer
engages a third-party designee to perform the Services at the end of the Term,
the Service Provider hereby grants to Customer a worldwide, fully paid-up,
internal-use license for up to twelve (12) months as needed for such designee
to migrate to the use of its own software, to use, execute, reproduce (as
necessary to support Customer’s authorized use of such Service Provider
Software), display and perform, such non-commercially available Software from
the end of the Term solely for the continued receipt by the Customer Group of
the Services, and for any interfaces that may be owned by the Service Provider
that are used between any Customer Owned Software and Service Provider Software
or between Customer Owned Software and any Third Party Provider Software
licensed in the name of any member of the Customer Group, such 12-month license
will instead be perpetual; provided in each case that such designee has first
executed agreements, in accordance with this Agreement, to protect the Service
Provider’s intellectual property rights in such Service Provider Software
including, without limitation, appropriate confidentiality provisions. These
licenses shall be at no cost to the Customer beyond regularly and generally
applicable reasonable on-going maintenance charges if such maintenance is
available and Customer elects to receive it, and in the case of any such
Service Provider Software regularly licensed on a monthly, variable or periodic
charge basis, ongoing license charges for such Software, provided that such
ongoing license charges shall not exceed such charges charged to similarly
situated customers.
	 
	 	(d)	 	Subject to Section 12.4(e), if the Service Provider has
licensed or purchased and is using any generally commercially available
Software to provide the Services to the Customer Group at the end of the Term,
the Customer may elect to take a transfer or an assignment of the license for
such Software (and any attendant maintenance agreement), subject to the terms
of such license and reimburse the Service Provider for the initial license or
purchase charges for such Software in an amount equal to the remaining
unamortized cost of such Software, if any, depreciated over a five (5) year
life. The Customer shall also pay any transfer fee or charge imposed by the
applicable vendor and any such fee shall not be the obligation of the Service
Provider hereunder, and, subject to the

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	 	 	 	Customer’s acceptance of any applicable vendor terms and conditions, such
licensed Software shall be transferred or assigned to the Customer.
	 
	 	(e)	 	If the Service Provider has licensed or purchased and is using
any generally commercially available Software to provide the Services to the
Customer Group and other Service Provider customers in a shared environment at
the end of the Term, the Service Provider, upon request by the Customer, will
assist the Customer in obtaining licenses for such Software at the release or
Version level in use at the end of the Term (and any attendant maintenance
agreement) subject to the Customer’s payment of any license fee and other
charge imposed by the applicable vendor.
	 
	 	(f)	 	The Service Provider will use commercially reasonable efforts
to negotiate license arrangements with third parties containing license and
maintenance fees consistent with those for entities similar to the Customer and
which minimize assignment fees to be paid by the Customer. If the Service
Provider is unsuccessful in any such negotiations, it will so notify the
Customer prior to executing the affected agreement, in which event the Customer
may elect to participate in the negotiation of such license and maintenance
agreement arrangements. The Service Provider shall provide reasonable advance
written notice to the Customer of such anticipated negotiations.
	 
	 	(g)	 	In the case of the impending expiration or termination of this
Agreement for any reason, subject to local law, the Customer Group shall have
the right (or, as required by applicable local law, the duty) to make offers of
employment to any or all Service Provider employees primarily assigned to the
performance of the Services for the Customer Group hereunder, as applicable
(“Service Employees”). Promptly after either Party provides the other Party
written notice of termination or expiration, with the prior consent of each
Service Employee (each of whom the Service Provider will notify of the
Customer’s interest), the Service Provider shall, subject to the agreement of
the Service Employees, supply the Customer with the names and resumes requested
by the Customer for the purpose of exercising its rights under this Section
12.4(g), at no charge. The Customer’s rights under this Section
12.4 will take precedence over any Service Employee’s employment contract
or covenant that may otherwise limit an employee’s right to accept employment
with the Customer Group.
	 
	 	(h)	 	Upon the Customer’s request, the Service Provider will transfer
or assign to the Customer or its designee, subject to the Customer’s acceptance
of any applicable vendor terms and conditions any contracts not otherwise
treated in this Section 12.4, applicable solely to Services being
provided to the Customer Group, including, without limitation, third party
contracts for maintenance, Disaster Recovery Services and other necessary third
party services then being used by the Service Provider to perform the Services
subject to the payment by the Customer of any transfer fee or charge imposed by
the applicable vendors.
	 
	 	(i)	 	To the extent that the Service Provider has incorporated the
Customer Group’s network into a Service Provider proprietary network, the
Service Provider shall provide up to eighteen (18) months of continued network
services at the then current contract rates for such service, in order to
permit the Customer to establish its own network or transfer to another network
in an orderly manner.
	 
	 	(j)	 	Upon Customer’s request, the Service Provider will transfer or
assign to Customer or its designee, on mutually acceptable terms, the title to
or leasehold interest in any facility primarily dedicated to the performance of
the Services, subject to the payment by Customer of the fair market value of
the Service Provider’s interest in such facilities and any transfer fee or
charge imposed by any lessor.

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	 	(k)	 	For purposes of calculating Wind-Down Expenses, the Parties
agree to the following guidelines:

	 	(i)	 	If the Service Provider enters into any lease
agreements or Software license agreements in connection with the
Services that extend beyond the initial 10-year term Specified in
Section 1.3, without the prior consent of Customer, Wind Down Expenses
shall not include any amounts attributable to the period after such
10-year term.
	 
	 	(ii)	 	If the Service Provider purchases any equipment
dedicated to the Customer in connection with the Services where the
amortization schedule for such equipment extends beyond the initial
10-year term specified in Section 1.3, without the prior consent of the
Customer, Wind Down Expenses shall not include any amounts attributable
to the period after such 10-year term.
	 
	 	(iii)	 	the Service Provider will, as soon as
practically possible after any termination event that will give rise to
termination fees or similar charges, except as otherwise requested by
the Customer, give notice of termination, as appropriate, with respect
to all applicable Software license and maintenance agreements and
equipment leases and subcontractor agreements.
	 
	 	(iv)	 	the Service Provider shall (A) plan the orderly
relocation or redeployment of the Service Provider’s affected
employees, and make all reasonable efforts to secure such relocation or
redeployment; and (B) use commercially reasonable efforts to cooperate
with the Customer to minimize all Wind Down Expenses.

The amount of the Wind Down Expenses shall be reduced, dollar for dollar, if
the Customer or its designee agrees to assume any of the Service Provider’s
obligations that would otherwise result in costs or expenses to the Service
Provider that comprise such Wind Down Expense (including hardware/Software
acquisition and assumption of third party contracts, if any).

	 	12.5	 	Effect of Partial Termination

If the Customer elects to terminate any Service Tower or Service Category, the Fees payable
under this Agreement shall be equitably adjusted to reflect those Services that are not
terminated.

	 	12.6	 	Effect of Termination/Survival of Selected Provisions

	 	(a)	 	In the event of the bankruptcy of the Service Provider pursuant
to the Bankruptcy Code and an attendant rejection of this Agreement or any
license granted hereunder pursuant to Section 365 thereof, the Parties intend
that the provisions of the Bankruptcy Code shall apply and the Customer shall
be entitled to retain all license rights granted in this Agreement and
possession of all embodiments of intellectual property licensed under this
Agreement, and to exercise all rights to obtain possession of all embodiments
of intellectual property licensed hereunder in accordance with this Agreement
and any escrow or other Agreement supplementary hereto, and the Customer shall
have no obligation to pay any additional fees or payments in connection with
the exercise of the license rights granted under this Agreement and use of any
embodiments of such licensed intellectual property.
	 
	 	(b)	 	Notwithstanding the expiration or earlier termination of the
Services or this Agreement for any reason however described, the following
Sections of this Agreement shall survive any such expiration or termination:
Section 3.4(e), Section 4.14, Section 8.3(b),
Article 10, Article 11, Section 12.5, Section
12.6, Section 12.7, Article 13, Article 14,
Article 15, Section 16.1 and Article 17.

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	13.	 	LIABILITY

	 	13.1	 	Liability Caps

Except as provided in Section 13.2 below, the liability of the Service Provider
(which shall, for purposes of this Article, include the Service Provider’s
Affiliates and its and their subcontractors) to the Customer (which shall, for purposes of
this Article, include the members of the Customer Group and the Authorized Users)
and the liability of the Customer to the Service Provider 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, relating
to, or resulting from the performance or non-performance of their respective obligations
pursuant to this Agreement shall be limited in the aggregate for all claims:

	 	(a)	 	to, in the case of the Service Provider and the Customer,
Direct Damages in an amount not to exceed the amounts paid by the Customer to
the Service Provider under this Agreement during the twelve (12) months
immediately preceding the occurrence of the first event giving rise to
liability (the “Cap”) and, in the case of the Service Provider, to an
additional, separate amount solely for any Losses required to be paid by the
Service Provider pursuant to Section 14.1(h), not to exceed the amounts
paid by the Customer to the Service Provider under this Agreement during the
four (4) months immediately preceding the occurrence of the first event giving
rise to liability under Section 14.1(h) (the “Fines Cap”); provided, however,
that for the first twelve (12) months immediately following the Effective Date,
the Cap shall be the Initial Year Cap and the Fines Cap shall be the Initial
Year Fines Cap. The Fines Cap is a single separate cap covering all Losses
required to be paid by the Service Provider pursuant to Section 14.1(h)
hereof. The Service Provider and the Customer agree that any Losses paid or
required to be paid by the Service Provider pursuant to Section 14.1(h)
hereof shall not be subject to the Cap or included in calculating the Cap and
shall instead be subject only to the single Fines Cap, and that amounts that
are subject to the Cap are not subject to or included in calculating the Fines
Cap.
	 
	 	(b)	 	Neither Party shall have any liability to the other Party or
its Affiliates or any third party beneficiary claiming under this Agreement
regardless of the form of action, whether based on warranty, contract, tort
(including negligence), statute or otherwise for special, indirect, incidental,
consequential or exemplary damages, including lost profits, loss of interest or
other damages.

	 	13.2	 	Exclusions and Exceptions

	 	(a)	 	Except as provided in subsection (vii) below, the following
damages, recoveries and payments shall not be subject to the Cap or the Fines
Cap set forth in Section 13.1(a) or to the limitations on types of
damages recoverable by the Service Provider and the Customer in Section
13.1(b):

	 	(i)	 	Accrued but unpaid Fees for the Services
(including Termination/Expiration Assistance) through the last date on
which the Services are provided by the Service Provider and any
Termination Fees;
	 
	 	(ii)	 	Accrued but unpaid Service Credits due and
payable to the Customer by the Service Provider under this Agreement;
	 
	 	(iii)	 	Amounts payable by the Service Provider for an
alternate source under the force majeure provisions of Section
17.3(c)(i) of this Agreement;
	 
	 	(iv)	 	Damages for a breach by a Party under Sections
11.1 through 11.5 and Section 11.7;

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	 	(v)	 	Damages for fraud or theft by the employees of
the Service Provider, its Affiliates and their subcontractors, to the
extent of the Service Provider’s liability under Section 13.6
hereof;
	 
	 	(vi)	 	Amounts payable under Section 3.4(c) in
connection with overcharges and undercharges; and
	 
	 	(vii)	 	With the exception of Losses payable pursuant
to Sections 14.1(d), 14.1(h), 14.1(i), 14.1(q), 14.2(c) and 14.2(d),
(none of which are subject to the provisions of this Section 13.2(a)),
all other Losses payable pursuant to either Party’s indemnification
obligations under Section 14 (Indemnities) of this Agreement.

	 	(b)	 	Notwithstanding Section 13.1 above, with respect to any
Direct Damages incurred by the Customer that are occasioned by the tort of
willful misconduct of the Service Provider, its Affiliates or their
subcontractors, or as a result of the Service Provider’s Abandonment, or as a
result of Losses for the torts of fraud or theft pursuant to Section 14.1(h)
(each, an “Increased Cap Factor” and collectively, the “Increased Cap
Factors”), the Cap (and not the Fines Cap) shall be increased by an amount
equal to an additional three (3) months of Fees, such that the total Cap shall
not, for all claims and actions, including claims and actions resulting from
the Increased Cap Factors, exceed an amount equal to the aggregate amounts paid
by the Customer under this Agreement during the fifteen (15) months immediately
preceding the occurrence of the first such Increased Cap Factor giving rise to
liability, provided that if fifteen (15) months have not elapsed since the
Effective Date, the total Cap for all claims and actions, including claims and
actions resulting from the Increased Cap Factors, shall be the Initial Year
Increased Cap. The Parties agree that the preceding sentence does not create a
separate cap that would apply in such instance and that the Cap, when three (3)
additional months of liability for claims and actions resulting from the
Increased Cap Factors are added, will in no event exceed the amounts described
in the preceding sentence. This Section 13.2(b) shall in no way
diminish, increase or alter the amount of the Fines Cap or the amount of the
Cap for purposes of calculating the Customer’s maximum liability to the Service
Provider hereunder.
	 
	 	(c)	 	Notwithstanding Section 13.1 above, with respect to any Losses
incurred by the Customer that are occasioned by a breach by the Service
Provider of its obligations under Section 11.6 (a “Section 11.6 Loss”), the
Fines Cap (and not the Cap) shall be increased by an amount equal to an
additional two (2) months of Fees, such that the total Fines Cap shall not, for
all Losses for which Service Provider is responsible under Section 14.1(h),
including any Section 11.6 Losses, exceed an amount equal to the aggregate
amounts paid by the Customer under this Agreement during the six (6) months
immediately preceding the occurrence of the first event giving rise to a
Section 11.6 Loss, provided, however, that for the first six (6) months
immediately following the Effective Date, the total Fines Cap for all Losses
for which Service Provider is responsible under Section 14.1(h), when it
includes Section 11.6 Losses, shall be the Initial Year Increased Fines Cap.
The Parties agree that the preceding sentence does not create a separate cap
that would apply in such instance and that the Fines Cap, when two (2)
additional months of liability claims and actions resulting from the Section
11.6 Loss are added, will in no event exceed the amounts described in the
preceding sentence. This Section 13.2(c) shall in no way diminish, increase or
alter the amount of the Cap for purposes of calculating the Customer’s maximum
liability to the Service Provider hereunder.
	 
	 	(d)	 	Notwithstanding Section 13.1, none of the amounts or
payments made to satisfy damages, Losses and other amounts described in
Section 13.2(a)(i) through (vi) and in 13.2(a) (vii) (other
than the exceptions identified at the beginning of Section 13.2(a)(vii)
regarding Losses that are subject to the Cap, the Fines Cap, or in the case of
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	 	 	 	14.1(d), limited to one-third of the Cap) shall be included in
calculating the Cap for either Party or the Fines Cap for the Service
Provider.

	 	13.3	 	Direct Damages and Cover Fees

“Direct Damages” means actual, direct damages incurred by the claiming entity. For the
purposes of this Agreement, “Direct Damages” include, but are not limited to, (i) costs of
implementing and performing work-arounds regarding failure by the Service Provider to
provide the Services in accordance with this Agreement; (ii) costs of replacing lost, stolen
or damaged goods or tangible materials; (iii) “cover damages”, consisting of costs to
procure, or transition to, replacement services that are the same as or substantially
similar to the Services from an alternate source (or to perform such Services in-house) as a
result of a failure by the Service Provider its Affiliates or their subcontractors to
perform its or their obligations under this Agreement, to the extent in excess of amounts
that would have been payable to the Service Provider; (iv) overtime, straight time and
related expenses and allocated overhead (including travel, lodging and wages) incurred by
the Customer Group as a result of a failure by the Service Provider to timely or properly
perform the Services; (v) Losses payable pursuant to Section 14.1(h) (which are subject to
the Fines Cap) and Losses payable pursuant to Sections 14.1 (d), 14.1(i), 14.1(r), 14.2(c)
and 14.2(d) (which are subject to the Cap and, in the case of 14.1(d), limited to one third
of the Cap); and (vi) the costs incurred by the Customer Group to correct any deficiencies
in the Services rendered by the Service Provider.

	 	13.4	 	Savings Clause/Dependencies

Neither the members of the Customer Group nor their contractors shall be liable for any
damages if and to the extent caused by (a) any failure to perform or improper performance by
the Service Provider, its Affiliates or its or their subcontractors, (b) any tortious act of
the Service Provider, its Affiliates or their subcontractors or (c) the improper functioning
of Software or Equipment for which the Service Provider has operational or maintenance
responsibility.

	 	13.5	 	Service Credits

If the Service Provider fails to provide the Services in accordance with the Service Levels,
the Service Provider shall apply the resulting Service Credits against the Fees owed to the
Service Provider for the month following the month in which the Service Credits were
incurred. The Parties agree that the Service Credits represent credits for the reduced
value of the Services, are not liquidated damages, shall not limit or diminish any of the
remedies granted to the Customer hereunder including the termination rights granted to the
Customer in Section 12 hereof and the Customer shall be entitled to pursue all
remedies that it may have against the Service Provider for the event or events giving rise
to such Service Credits provided, that if the Customer recovers monies for the events giving
rise to any Service Credits, the Service Provider will be entitled to set-off against such
damages for any Service Credits paid to the Customer for the events giving rise to such
recovery.

	 	13.6	 	Fraud and Theft

The Service Provider will be liable for damages to the Customer Group for theft and the tort
of fraud committed by the employees of the Service Provider, its Affiliates or their
subcontractors occurring outside the scope of their employment, but only if and to the
extent such damages are recoverable within the terms and policy limits of the insurance
coverages for which the Service Provider has responsibility to maintain and/or cause to be
maintained as identified in Section 15.1(h).

	 	13.7	 	Excused Performance

In no event will the Service Provider be liable for any failure or delay in performing any
obligations hereunder (including, without limitation, Service Levels), or any resulting
damages or Losses, to the extent caused by (a) failure of a Customer Group member or their
contractors to perform their respective obligations or provide resources under this
Agreement when required, (b) tortious acts of a Customer

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Group member or their contractors, (c) the Service Provider’s compliance with the Customer’s
written directions or required procedures or (d) the improper functioning of Software or
Equipment for which the Customer has operational responsibility. For purposes of this
paragraph, neither the Service Provider nor its Affiliates or their subcontractors will be
considered contractors of the Customer.

	14.	 	INDEMNITIES

	 	14.1	 	Service Provider Indemnity Obligations

The Service Provider will indemnify, defend and hold harmless the Customer and the other
members of the Customer Group, its and their Affiliates, and their respective current,
future and former officers, directors, employees, 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:

	 	(a)	 	all Claims that the Services or resources used by the Service
Provider or any work performed by the Service Provider, or the resources used
or work performed by the Service Provider’s Affiliates or subcontractors
infringe, violate or misappropriate any patent, trade secret, trademark,
copyright or other proprietary or intellectual property right of any third
party, but excluding any such infringement, violation or misappropriation
caused by (i) resources provided by the Customer Group for use by the Service
Provider, its Affiliates or its or their subcontractors, (ii) modifications by
the Customer Group or other third parties to resources provided by the Service
Provider, its Affiliates or its or their subcontractors (excluding
modifications made pursuant to the Service Provider’s written direction or with
its written consent or approval), or (iii) any combination or use of resources
provided by the Service Provider, its Affiliates or its or their subcontractors
with resources not provided by the Service Provider or its subcontractors
unless such combination or use was authorized by the Service Provider or its
subcontractors; (iv) business processes that the Customer requires Service
Provider to use or follow, or (v) a breach by the Customer of the terms of
Section 4.18 hereof;
	 
	 	(b)	 	all Claims by employees of the Service Provider, its Affiliates
or its or their subcontractors or vendors arising out of or relating to this
Agreement, except (i) to the extent caused by the negligence or intentional
misconduct of any member of the Customer Group or any of their contractors (but
excluding the Service Provider and its Affiliates and subcontractors from such
exception) or (ii) a Claim for which any Service Provider Indemnitee is
entitled to indemnification by the Customer under Section 14.2;
	 
	 	(c)	 	all Claims for bodily injuries, death or damage to tangible
personal or real property to the extent caused by the negligence or intentional
misconduct of the Service Provider, its Affiliates or its or their
subcontractors, except to the extent caused by the negligence or intentional
misconduct of a member of the Customer Group or any of their contractors (but
excluding the Service Provider and its Affiliates and subcontractors from such
exception);
	 
	 	(d)	 	subject to a limit equal to one-third of the Cap, all Claims
arising out of a violation of any Service Provider Laws, by the Service
Provider, its Affiliates or its or their subcontractors, excluding any such
violation to the extent caused by a breach of this Agreement by a member of the
Customer Group;
	 
	 	(e)	 	all Claims arising out of the Service Provider’s provision of
any services to any third party (other than the Customer Group or Authorized
Users) from the same facilities from which the Services are provided to the
Customer, except to the extent caused by the negligence or intentional
misconduct of any member of the Customer Group or any of their contractors (but
excluding the Service Provider and its Affiliates and subcontractors from such
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	 	(f)	 	all Claims by the applicable Third Party Providers arising out
of the Service Provider’s use in performing or providing the Services to the
Customer Group after the Effective Date of products, services or license rights
under the Third Party Contracts (including any Customer Software licensed by
the Customer or any other member of the Customer Group or their Affiliates from
a third party), assigned to the Service Provider or for which the Service
Provider has assumed financial, administrative or operational responsibility to
the extent due to the Service Provider’s or any of its subcontractors’ breach
of the Third Party Contract for such products, services or license rights
(including a third party’s license agreement for the Customer Software),
excluding, however, any Claim arising from the failure of the Customer to
obtain, or cause to be obtained, the appropriate consents or approvals for such
use;
	 
	 	(g)	 	all Claims for increases in the fees payable to the Third Party
Providers under the Third Party Contracts caused by or arising out of any
breach of any term of the applicable Third Party Contract by the Service
Provider, its Affiliates or its or their subcontractors, or any failure to
properly and timely perform any duty or responsibility that the Service
Provider, its Affiliates or any of its subcontractors has under this Agreement
that causes a breach of such Third Party Contract, except to the extent caused
by any breach of this Agreement by the Customer Group or its contractors (but
excluding the Service Provider and its Affiliates and subcontractors from such
exception);
	 
	 	(h)	 	subject to the Fines Cap and except as otherwise provided in
Section 3.19(a), all Claims for fees, fines, penalties, sanctions, late
charges or other monetary remedies imposed by any governmental agency or
authority to the extent arising out of or resulting from the Service Provider’s
failure to comply with the provisions of Section 3.19(a)(iii) or
(iv) (subject to the Floor) or Section 11.6, excluding any such
Claim to the extent caused by a breach of this Agreement by the Customer or any
member of the Customer Group;
	 
	 	(i)	 	subject to the Cap, all Claims arising out of the tort of fraud
or theft committed by the Service Provider, its Affiliates or its or their
subcontractors or the employees of the foregoing to the extent such employees
are acting within the scope of their employment;
	 
	 	(j)	 	all Claims relating to the Service Provider’s tax liabilities
arising from the Service Provider’s provision of Services, as set forth in
Section 9.3;
	 
	 	(k)	 	all Claims by Affiliates of the Service Provider and vendors to
any of the foregoing and to the Service Provider, arising out of or relating to
this Agreement or the Services and all Claims by subcontractors of the Service
Provider or its Affiliates asserting rights under this Agreement;
	 
	 	(l)	 	all Claims resulting from the failure of the Service Provider
to obtain, or cause to be obtained, any consent or approval required to be
obtained by the Service Provider and necessary for the Customer Group and the
other Authorized Users to receive and use the Services, or any component
thereof, to the full extent provided in this Agreement;
	 
	 	(m)	 	all Claims arising out of the Service Provider’s breach of its
obligations under Sections 11.1 through 11.5 and 11.7of this Agreement;
	 
	 	(n)	 	all Claims by any Affected Employees arising out of or
resulting from their employment, or the termination of their employment, with
the Service Provider, its Affiliates and its or their subcontractors, including
Claims arising out of the Service Provider’s interview, hiring or personnel
transfer processes related to the Affected Employees, except to the extent any
such Claim arises from (i) a wrongful act of the Customer Group or (ii) any
errors or inaccuracies in information provided by the Customer Group and
communicated in good faith by the Service Provider to Affected Employees in
connection with their employment by the Service Provider, its Affiliates or
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	 	(o)	 	all Claims to the extent that such Claims would have been
covered by insurance required to be maintained by the Service Provider, its
Affiliates or its or their subcontractors had the Service Provider, its
Affiliates or its or their subcontractors obtained, maintained in effect and,
where applicable, provided to the Customer Indemnitees the insurance coverages
and other rights and benefits required to be provided by the Service Provider
or its subcontractors under Article 15 of this Agreement (subject, in
all cases, to the limitations and other terms, conditions and qualifications of
such insurance policies);
	 
	 	(p)	 	all Claims resulting from the Service Provider’s breach of the
representations and warranties set forth in Section 4.4 (Authorization
and Enforceability), 4.8 (Inducements) and 4.13 (Absence of
Litigation); and
	 
	 	(q)	 	subject to the Cap, all Special Category Claims.

In the event and to the extent that a Claim is made against a Customer Indemnitee by an
employee of the Service Provider or its subcontractors providing services, products or
software hereunder, the Parties agree that the Service Provider shall indemnify and hold
harmless the Customer Indemnitee to the same extent as if the Claim was made by a
non-employee of the Service Provider or its subcontractors. The Service Provider’s
indemnification obligations hereunder shall be primary and immediate. Accordingly, in
addition to other provisions herein, and in order to render the Parties’ intent and this
indemnification agreement fully enforceable, the Service Provider, in an indemnification
claim hereunder, expressly and without reservation waives any defense or immunity it may
have under any applicable workers’ compensation law(s) or any other statute or judicial
decision disallowing or limiting such indemnification and consents to a cause of action for
indemnity. This waiver and consent to indemnification is made irrespective of and
specifically waiving any defense or immunity under any statute or judicial decision.

	 	14.2	 	Indemnity by the Customer

The Customer will indemnify and hold harmless the Service Provider and its Affiliates, (and
solely with respect to the IP Rights, the Key Approved Subcontractors of the Service
Provider and the subcontracting entity identified in Part 4 of Exhibit 28), and the
respective current, future and former officers, directors, employees, 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 the Customer Owned Software, Customer Provided
Hardware, IP Rights or other resources provided to the Service Provider or its
Affiliates by the Customer Group in connection with the performance of the
Services infringe, violate or misappropriate any patent, trade secret,
trademark, copyright or other proprietary or intellectual property right of any
third party, but excluding any such infringement, violation or misappropriation
caused by (i) resources provided by the Service Provider, its Affiliates or
subcontractors for use by the Customer Group or the Authorized Users, (ii)
modifications by a Service Provider Indemnitee of the resources provided by the
Customer Group (excluding modifications made pursuant to the Customer’s written
direction or with its consent or approval), (iii) a Service Provider
Indemnitee’s combination, operation or use of the resources provided by the
Customer Group with devices, data, programs or other resources furnished by the
Customer Group, unless such combination or use was authorized by the Customer
Group, (iv) the use by a Service Provider Indemnitee of resources provided by
the Customer Group to such Service Provider Indemnitee in a country other than
the United States or (v) any use by the Service Provider, its Affiliates, the
Key Approved Subcontractor (and the subcontracting entity identified in Part 4
of Exhibit 28) of the IP Rights other than Permitted Uses;
	 
	 	(b)	 	all Claims for bodily injuries, death or damage to tangible
personal or real property to the extent caused by the negligence or intentional
misconduct of the Customer or any

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	 	 	 	member of the Customer Group, except to the extent caused by the negligence
or intentional misconduct of the Service Provider, its Affiliates or their
subcontractors;
	 
	 	(c)	 	subject to the Cap, all Claims arising from a violation of any
Customer Laws, excluding (i) any violation of Customer Laws as a result of the
Service Provider’s failure to comply with its obligations under Section
3.19 or (ii) any such violation to the extent caused by a breach of this
Agreement by the Service Provider, its Affiliates or any of their contractors);
	 
	 	(d)	 	subject to the Cap, all Claims arising from the tort of fraud
or theft committed by the Customer or any member of the Customer Group or the
employees of the foregoing to the extent such employees are acting within the
scope of their employment;
	 
	 	(e)	 	all Claims for Customer’s tax liabilities specified in this
Agreement;
	 
	 	(f)	 	all Claims arising out of Customer’s breach of its obligations
under Sections 11.1 through 11.5 and 11.7 of this Agreement;
	 
	 	(g)	 	all Claims arising out of the failure of Customer to obtain, or
cause to be obtained, any consent or approval required for the Service Provider
to provide the Services, or any component thereof, to the full extent provided
in this Agreement;
	 
	 	(h)	 	all Claims by any Affected Employees arising out of or
resulting from their employment, or the termination of their employment, with
the members of the Customer Group, except to the extent any such Claim arises
from (i) a wrongful act of the Service Provider, its Affiliates or their
subcontractors or (ii) any errors or inaccuracies in information provided by
the Service Provider and communicated in good faith by the Customer to Affected
Employees in connection with the hiring of such Affected Employees by the
Service Provider;
	 
	 	(i)	 	all Claims by employees of the Customer Group or their
subcontractors or vendors (excluding Claims made by Affected Employees relating
to their employment with the Service Provider, its Affiliates or their
contractors) arising out of or relating to this Agreement, except (i) to the
extent caused by the negligence or intentional misconduct of the Service
Provider or its Affiliates or any of their contractors or (ii) a Claim for
which any Customer Indemnitee is entitled to indemnification by the Service
Provider under Section 14.1; and
	 
	 	(j)	 	all Claims by Affiliates of the Customer arising out of or
relating to this Agreement or the Services (except to the extent any Claims of
the members of the Customer Group are specifically authorized by the first
sentence of Section 17.10(b) hereof) and all Claims by subcontractors
of the Customer (but excluding the Service Provider and its Affiliates) or any
Customer Affiliates asserting rights under this Agreement (except to the extent
any Claims of Customer’s Affiliates are specifically authorized by the first
sentence of Section 17.10(b) hereof).

In the event and to the extent that a Claim is made against a Service Provider Indemnitee by
an employee of the Customer Group or its subcontractors providing services, products or
software hereunder, the Parties agree that the Customer shall indemnify and hold harmless
the Service Provider Indemnitee to the same extent as if the Claim was made by a
non-employee of the Customer Group or its subcontractors. The Customer’s indemnification
obligations hereunder shall be primary and immediate. Accordingly, in addition to other
provisions herein, and in order to render the Parties’ intent and this indemnification
agreement fully enforceable, the Customer, in an indemnification claim hereunder, expressly
and without reservation waives any defense or immunity it may have under any applicable
workers’ compensation law(s) or any other statute or judicial decision disallowing or
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a cause of action for indemnity. This waiver and consent to indemnification is made
irrespective of and specifically waiving any defense or immunity under any statute or
judicial decision.

	 	14.3	 	Employment Actions

Personnel supplied by the Service Provider (including, after the initial Commencement Date,
Affected Employees who have become employees of the Service Provider), and its Approved
Subcontractors under this Agreement shall be deemed employees of the Service Provider or
such Approved Subcontractor and shall not for any purposes be considered employees,
Affiliates or agents of the Customer. Personnel of the Customer Group who perform any
obligations of the Customer hereunder shall be deemed employees of the Customer Group and
shall not for any purposes be considered employees, Affiliates or agents of the Service
Provider or its Approved Subcontractors (excluding, from and after their date of employment
by the Service Provider or its Approved Subcontractor, any Affected Employees who became
employees of the Service Provider or any Approved Subcontractor. Each Party assumes full
responsibility for the actions and supervision of its personnel while performing services
under this Agreement. Neither Party assumes liability for the personnel of the other Party
(excluding, in the case of the Service Provider, any Affected Employees who become employees
of the Service Provider or any Approved Subcontractor for periods allocable to their
employment by Service Provider or its Approved Subcontractor). The Service Provider shall
be solely and exclusively responsible for personnel decisions affecting the Service
Provider’s employees and employees of its subcontractors and agents (including, without
limitation, hiring, promotions, training, compensation, evaluation, discipline, and
discharge). The Customer shall be solely and exclusively responsible for personnel
decisions affecting employees, contractors and agents of the members of the Customer Group
(including, without limitation, hiring, promotion, training, compensation, evaluation,
discipline and discharge).

	 	14.4	 	Exclusive Remedy

The indemnification rights of each Customer Indemnitee or Service Provider Indemnitee for
Claims pursuant to Sections 14.1 and 14.2 and any attendant rights to
injunctive relief, shall be the sole and exclusive remedies of such Customer Indemnitee or
Service Provider Indemnitee with respect to each such Claim to which such indemnification
relates.

	 	14.5	 	Indemnification Procedures

An Indemnitee under this Article 14 shall promptly notify the indemnifying Party of
any Claim with respect to which it seeks indemnity under this Article 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
Indemnitee to represent the Indemnitee and any others the indemnifying Party may designate
in such proceeding and shall pay the fees and disbursements of such counsel related to such
proceeding. In any such proceeding, any Indemnitee shall have the right to retain its own
counsel, but the fees and expense of such counsel shall be at the expense of such Indemnitee
unless (i) the indemnifying Party and the Indemnitee shall have mutually agreed to the
retention of such counsel or (ii) the named parties to any such proceeding (including any
impleaded parties) include both the indemnifying Party and the Indemnitee and representation
of both parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is agreed that the indemnifying Party shall not, in
respect of the legal expense of any Indemnitee 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 Indemnitees 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, but
if settled with such consent or if there is a final judgment for the plaintiff, the
indemnifying Party agrees to indemnify the Indemnitee from and against any Loss by reason of
such settlement or judgment. No indemnifying Party shall, without the prior written consent
of the Indemnitee, effect any settlement of any pending or threatened proceeding in respect
of which any Indemnitee is or could have been a party and indemnity could have been sought
hereunder by such Indemnitee (i) if such

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settlement involves any form of relief other than the payment of money or any finding or
admission of any violation of any law, regulation or order or any of the rights of any
person or has any adverse effect on any other Claims that have been or may be made against
the Indemnitee, or (ii) if such settlement involves only the payment of money, unless it
includes an unconditional release of such Indemnitee of all liability on claims that are the
subject of such proceeding. An Indemnitee may assume control of the defense of any Claim if
(i) it irrevocably waives its right to indemnity under this Article 14, or (ii)
without prejudice to its full right to indemnity under this Article 14: (A) the
indemnifying Party fails to provide reasonable assurance to the Indemnitee of its financial
capacity to defend or provide indemnification with respect to such Claim, (B) the
indemnifying Party refuses or fails to timely assume the defense of such Claim or (C) under
the circumstances described in Section 14.6 below.

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

	 	(i)	 	the Indemnitee fails to 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;
	 
	 	(ii)	 	the Indemnitee fails to tender control of the
defense of such Claim to the indemnifying Party as provided in this
Section 14.5; or
	 
	 	(iii)	 	the Indemnitee fails to provide the
indemnifying Party with all reasonable cooperation in the defense of
such Claim (the cost thereof to be borne by the indemnifying Party).

	 	14.6	 	Governmental Claims

With respect to Claims covered by Sections 14.1(h) the following procedures shall
apply:

	 	(a)	 	Notice. Promptly after receipt by the Customer of notice of
the commencement or threatened commencement of any action or proceeding
involving a Claim in respect of which it will seek indemnification pursuant to
Section 14.1(h), the Customer shall notify the Service Provider of
such Claim. No delay or failure to so notify the Service Provider shall
relieve the Service Provider of its obligations under this Agreement except to
the extent that the Service Provider has suffered actual prejudice by such
delay or failure.
	 
	 	(b)	 	Procedure for Defense. In the case of a Claim that is subject
to Section 14.1(d), the Customer shall be entitled, at its option, to have the
Claim handled pursuant to Section 14.5 or to retain sole control over
the defense and settlement of such Claim; provided that, in the latter case,
the Customer shall (i) consult with the Service Provider on a regular basis
regarding Claim processing (including actual and anticipated costs and
expenses) and litigation strategy, (ii) reasonably consider any settlement
proposals or suggestions by the Service Provider, (iii) use commercially
reasonable efforts to minimize any amounts payable or reimbursable by the
Service Provider, and (iv) obtain the reasonable prior written approval of the
Service Provider before entering into any settlement of such Claim (x)
involving the payment of money for which the indemnitor will ultimately be
financially responsible under Section 14.1(h) or (y) that imposes any
obligations or restrictions binding upon the indemnitor other than with respect
to this Agreement or the Services.

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	15.	 	INSURANCE AND RISK OF LOSS

	 	15.1	 	Service Provider Insurance

During the Term, the Service Provider and each Service Provider contractor and subcontractor
shall maintain and keep in force, at its own expense, the following minimum insurance
coverages and minimum limits::

	 	(a)	 	workers’ compensation insurance, with statutory limits as
required by the various laws and regulations applicable to the employees of the
Service Provider;
	 
	 	(b)	 	employer’s liability insurance, for employee bodily injuries
and deaths, with a limit of $5,000,000 per employee by accident and $5,000,000
per employee by disease. If coverage is obtained from a state fund (such as
Ohio or West Virginia), the Service Provider will purchase “Stop Gap” coverage,
with minimum limits of $5,000,000 per occurrence.
	 
	 	(c)	 	comprehensive or 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: (1) occurrence/aggregate limit of $2,000,000 bodily injury, death and
property damage per occurrence of $2,000,000 combined aggregate;
	 
	 	(d)	 	comprehensive automobile liability insurance, covering owned,
non-owned and hired vehicles, with combined single limits for bodily injury and
property damage of $5,000,000 per occurrence;
	 
	 	(e)	 	excess or umbrella liability insurance with a combined single
limit of not less than $25,000,000 per occurrence and in the aggregate.
	 
	 	(f)	 	all-risk property insurance, on a replacement cost basis,
covering the real and personal property of the Service Provider which the
Service Provider is obligated to insure by this Agreement. Such real and
personal property may include buildings, equipment, furniture, fixtures and
supply inventory;
	 
	 	(g)	 	professional liability/errors and omissions insurance, with a
limit of $20,000,000 per occurrence; and
	 
	 	(h)	 	comprehensive crime insurance, covering dishonest acts of
employees, such insurance shall also include third party liability coverage and
be written for limits not less than $25,000,000 per occurrence.

The Customer shall be named as an additional insured on the policies described in (c) and
(d) above and shall be named as loss payee on the policy described in (h) above. All
liability insurance policies shall be written on an “occurrence” policy form except for the
policies described in (h) above which shall be on a “claims made” basis. The members of the
Customer Group shall be named as loss payee as its interest may appear on the property
insurance policies of the Service Provider. The Service Provider shall be responsible for
payment of any and all deductibles from insured claims under its policies of insurance. The
coverage afforded under any insurance policy obtained by the Service Provider pursuant to
this Agreement shall be primary coverage without contribution from any other member of the
Customer Group insurance regardless of whether or not the Customer Group has similar
coverage except that such coverage will not be primary for premises liability on premises of
the Customer Group that are not under the Service Provider’s control. Insurance maintained
by the Customer Group is for the exclusive benefit of the Customer Group and will not inure
to the benefit of the Service Provider or its subcontractors. The Service Provider and its

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subcontractors shall not perform under this Agreement without the prerequisite insurance.
Within ten (10) days after the Effective Date and thereafter annually and upon the
Customer’s request, the Service Provider shall provide the Customer with certificates of
such insurance including renewals thereof. If any of the insurance is provided by an
insurance company that is an Affiliate of the Service Provider, the Service Provider shall,
on an annual basis and in lieu of providing the Customer with certificates of insurance
provide the Customer with a copy of the insurance policy accompanied by the audited
financial statement of the Affiliate insurer. The minimum limits of coverage required by
this Agreement may be satisfied by a combination of primary and excess or umbrella insurance
policies. If the Service Provider or its subcontractors fail to comply with any of the
insurance requirements herein, upon written notice to the Service Provider by the Customer
and a ten (10) day cure period, the Customer may, without any obligation to do so, procure
such insurance and the Service Provider shall pay the Customer the cost thereof plus a
reasonable administrative fee as designated by the Customer. The maintenance of the
insurance coverages required under this Agreement shall in no way operate to limit the
liability of the Service Provider to the Customer under the provisions of this Agreement.
The policies that Service Provider is required to maintain pursuant to this Article 15 will
be with insurance companies having a rating at least “A-” as defined in Best’s Key
Rating Guide.

Notwithstanding the other provisions of this Article 15, the Service Provider will not be in
breach of this Agreement for failure by any Service Provider subcontractor or contractor to
comply with the insurance requirements above as long as the Service Provider provides
indemnification relating to such failure in accordance with Section 14.1(o) of this
Agreement.

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

	 	15.2	 	Risk of Property Loss

The Service Provider and the Customer each shall be responsible for damages to their
respective tangible personal or real property (whether owned or leased) while in such
Party’s own possession or control, and each Party agrees to look only to their own insuring
arrangements (if any) with respect to such damages.

	 	15.3	 	Mutual Waiver of Subrogation

The Service Provider and the Customer waive all rights to recover against each other for any
loss or damage to their respective tangible personal property (whether owned or leased) from
any cause covered by insurance maintained by each of them, including their respective
deductibles or self-insured retentions. The Service Provider and the Customer shall cause
their respective insurers to issue appropriate waivers of subrogation rights endorsements to
all property insurance policies maintained by each Party; provided, however, the Customer
shall give the Service Provider written notice (in a writing by e-mail and by U.S. mail) if
a waiver of subrogation is unobtainable, or obtainable only at additional expense. If the
Service Provider upon receipt of such notice agrees to reimburse the Customer for such
additional expense, the Customer shall obtain such waiver of subrogation. If a waiver is
unobtainable or the Service Provider elects not to pay the additional expense of a waiver,
then neither the Customer nor its insurers shall waive such subrogation rights.

	16.	 	DISPUTE RESOLUTION

	 	16.1	 	Dispute Resolution Procedures

	 	(a)	 	Subject to the provisions set forth in Exhibit 8, the
“Governance” Exhibit, any dispute between the Parties either
with respect to the interpretation of any provision of this Agreement or with
respect to the performance hereunder by the Service Provider or by

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	 	 	 	the Customer or their respective Affiliates shall be resolved as specified
in this Section 16.1.

	 	(i)	 	Initially, the Customer PM and the Service
Provider AE shall attempt to resolve all disputes. If they are unable
to resolve a dispute in an amount of time that either Party deems
reasonable under the circumstances, such Party may refer the dispute
for resolution in accordance with the procedures set forth in Exhibit
8, “Governance” to the governance.
	 
	 	(ii)	 	Upon the written request of either Party after
the Customer PM and Service Provider AE have sought to resolve a
problem pursuant to Section 16.1(a)(i) above, a dispute shall
be submitted to governance for resolution.
	 
	 	(iii)	 	A meeting shall be convened in accordance with
the procedures set forth in Exhibit 8, “Governance”, within ten (10)
business days of submission of such matter to governance and thereafter
as often as necessary to gather and furnish to each Party all
non-privileged information with respect to the matter in issue which is
appropriate and germane in connection with its resolution.
	 
	 	(iv)	 	In accordance with the procedures set forth in
Exhibit 8 “Governance”, the Parties shall discuss the problem and
negotiate in good faith in an effort to resolve the dispute without the
necessity of any formal proceeding relating thereto.
	 
	 	(v)	 	During the course of such negotiation or
additional negotiations pursuant to Section 16.1(c) below, all
reasonable requests made by one Party to the other for non-privileged
information reasonably related to this Agreement, will be honored in
order that each Party may be fully advised of the other Party’s
position.
	 
	 	(vi)	 	The representatives of the Parties meeting
pursuant to the procedures set forth in the Governance Exhibit will
determine the format for such negotiations, which may include the
preparation of agreed upon statements of fact or written statements of
position furnished by each Party to the other Party.

	 	(b)	 	If the dispute is not resolved within ten (10) business days
after it was first referred for resolution in accordance with procedures set
forth in the Exhibit 8, “Governance”, then the dispute shall be escalated to
the Customer’s Senior Vice President, Administrative Services and the Service
Provider’s General Manager, BTO Americas for their review and attempted
resolution. Notwithstanding anything to the contrary in Section
16.1(e), the time periods set forth in this Section 16.1 may be
stayed upon unanimous vote of its members to take such action.
	 
	 	(c)	 	The representatives of each Party designated pursuant to
Section 16.1(b) will confer as often as they deem reasonably necessary
to gather and furnish to the other all information with respect to the matter
in issue which the Parties believe to be appropriate and germane in connection
with its resolution. The designated representatives shall discuss the problem
and negotiate in good faith in an effort to resolve the dispute without the
necessity of any formal proceeding. The specific format for the discussions
will be left to the discretion of the designated senior corporate executives,
but may include the preparation of agreed-upon statements of fact or written
statements of position..
	 
	 	(d)	 	Any written or oral statement or offers of settlement made in
the course of the dispute resolution process set forth in this Article
will (i) be Confidential Information, (ii) not be offered into evidence,
disclosed, or used for any purpose other than the dispute resolution process,
and (iii) not constitute an admission or waiver of rights. Each Party shall

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	 	 	 	promptly return to the other, upon request, any written statements or offers
of settlement, including all copies thereof.
	 
	 	(e)	 	Formal proceedings for the resolution of a dispute may not be
commenced until the earlier of: (i) one of the two representatives designated
pursuant to Section 16.1(b) concluding in good faith that amicable
resolution through continued negotiation of the matter does not appear likely;
or (ii) forty (40) business days after the initial referral under Section
16.1(b) above referring the dispute to the designated senior corporate
executives. Notwithstanding any other provision of this Section 16.1,
either Party may resort to court action for injunctive relief at any time if
the dispute resolution processes set forth in this Section may 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 process.

	 	16.2	 	Continued Performance

The Parties agree to continue performing their respective obligations under this Agreement
while the dispute is being resolved unless and until (i) authority to do so is granted by
the Customer or conferred by a court of competent jurisdiction; (ii) the Term has properly
and permissibly terminated or has expired and all Termination/Expiration Assistance required
to be provided has been performed and completed by the Service Provider in accordance with
this Agreement; provided that the Customer withholding payment of disputed Fees and other
charges as permitted under Section 9.8 (Disputed Fees/Credits) will not considered
to be preventing the Service Provider from performing its obligations; or (iii) the Service
Provider has terminated this Agreement pursuant to Section 12.2 and the Customer
fails to pay for the Termination/Expiration Assistance pursuant to the terms of this
Agreement. Without limiting the generality of the foregoing, the Service Provider agrees
that it shall not, for any reason, interrupt the provision of Services (including
Termination/Expiration Assistance) to Customer or disable any hardware or software used to
provide the Services or perform any other action that prevents, impedes or reduces in any
way the provision of the Services or the Customer’s ability to conduct its activities,
unless authorized to do so by the terms of this Section 16.2.

	 	16.3	 	Expedited Dispute Resolution

The Parties agree that the following expedited timeframes shall apply to the dispute
resolution process set forth in this Article 16 with respect to disputes arising
under Section 3.2, Section 9.5, payment disputes or disputes arising under Section
9.8 hereof: (i) five (5) business days instead of ten (10) business days for resolution
of matters pursuant to Section 16.1(a)(iii), and (ii) fifteen (15) business days
instead of forty (40) business days for resolution of matters pursuant to Section
16.1(e).

	17.	 	GENERAL

	 	17.1	 	Relationship of Parties; Publicity

This Agreement shall not be construed as constituting either Party or its Affiliates as
partner, joint venturer or fiduciary of the other Party and its Affiliates or to create any
other form of legal association that would impose liability upon one Party or its Affiliates
for the act or failure to act of the other Party and its Affiliates or as providing either
Party or its Affiliates with the right, power or authority (express or implied) to create
any duty or obligation of the other Party and its Affiliates, except as provided in
Section 8.3.

No public disclosures by either Party relating to this Agreement, except for (i) internal
announcements, or (ii) disclosures required to meet legal or regulatory requirements beyond
the reasonable control of the disclosing Party, shall be made without the prior written
approval of authorized representatives of the other Party, except that either Party may
include the other Party’s or its Affiliates’ name and a factual summary of the work
performed under this Agreement on employee bulletin boards, in internal business planning
documents and in its annual report to stockholders, and unless and until the Customer
notifies the Service Provider in writing to the contrary, the Service Provider may include
the Customer’s name and a factual

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description of the work performed under this Agreement in a list of references and in the
experience Section of proposals to third parties.

	 	17.2	 	Entire Agreement, Updates, Amendments and Modifications

This Agreement (including the Exhibits and the Schedules to the
Exhibits) constitutes the entire Agreement of the Parties with regard to the
Services and matters addressed herein. All letters, proposals, discussions and other
documents regarding the Services and the matters addressed in this Agreement are superseded
by and merged into this Agreement and therefore are of no further force or effect. Updates,
amendments and modifications to this Agreement may not be made orally, but shall only be
made by a written document signed in the case of this Agreement by duly authorized
representatives of both Parties. In the case of the Customer, only the Senior Vice
President, Administrative Services or that person’s designee shall have contract signature
authority with respect to this Agreement. Any terms and conditions varying from this
Agreement on any order or written notification from either Party or its Affiliates shall not
be effective or binding on the other Party or its Affiliates except as specifically
permitted by Section 17.10 hereof.

	 	17.3	 	Force Majeure

	 	(a)	 	Except as set forth in Section 17.3(d), neither Party
shall be liable for any default or delay in the performance of its obligations
hereunder if and to the extent and while such default or delay is caused,
directly or indirectly, by a Force Majeure Event. The failures of independent
third party providers of services used by the Service Provider shall not be
considered Force Majeure Events to the extent the Service Provider has
committed that its delivery of the Services is designed to accommodate such
failures.
	 
	 	(b)	 	If a Force Majeure Event occurs, the non-performing Party will
be excused from any further performance or observance of the obligation(s) so
affected for as long as such circumstances prevail and such Party continues to
use commercially reasonable efforts to recommence performance or observance
whenever and to whatever extent possible without delay. Any Party so delayed
in its performance will immediately notify the other by telephone and describe
at a reasonable level of detail the circumstances causing such delay (to be
confirmed in writing within twenty-four (24) hours after the inception of such
delay).
	 
	 	(c)	 	If any Force Majeure Event substantially prevents, hinders, or
delays performance of the Services necessary for the performance of the
critical functions of the Customer users, as identified by the Customer, of
such Services for more than twenty-four (24) hours, then at the Customer’s
option:

	 	(i)	 	the Customer may, at is sole discretion,
procure such Services from an alternate source. If (i) Customer has
not terminated this Agreement or the affected Services pursuant to
Section 17.3(c)(iii), (ii) the Customer continues to make
payment to the Service Provider under this Agreement and (iii) the
Customer exerts reasonable efforts to mitigate amounts payable to the
alternate source, the Service Provider will directly and timely pay the
alternate source the full amount charged by such alternate source for
the provision of such Services to the Customer for a period not to
exceed six (6) months; or
	 
	 	(ii)	 	If after the six (6) month period, the Service
Provider has not fully restored the Services (including satisfying the
Service Levels), the Customer may terminate any portion of this
Agreement so affected including, without limitation, any Service Tower
or Service Category and the Fees payable hereunder shall be equitably
adjusted to reflect those terminated Services; provided, the Customer
shall pay all Fees due and payable through the termination date and the
Applicable Termination Fees; or

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	 	(iii)	 	At any time after the six (6) month period
described in item (ii) above and until such time as the Service
Provider has fully restored the Services (including satisfying the
Service Levels), the Customer may terminate this Agreement or the
affected Service Tower or Service Category as of a date specified by
the Customer in a written notice of termination to the Service
Provider, and in such event the Customer will pay all Fees due and
payable through the termination date and the Applicable Termination
Fees. If the Customer elects such termination, the Customer shall not
be obligated to pay any other termination fees, however described.

	 	(d)	 	Notwithstanding the foregoing, the Service Provider shall be
obligated to perform the Business Continuity Planning Services and Disaster
Recovery Services in accordance with Section 3.3 upon the occurrence of
a Force Majeure Event; provided, however, that the Service Provider will be
relieved of its obligation to provide such services to the extent that the
Force Majeure Event substantially impairs or damages (i) the facilities
(including equipment, software and other resources) the Service Provider uses
to perform and provide the ongoing operational aspects of the Services and (ii)
the facilities (including equipment, software and other resources) that the
Service Provider uses to perform and provide the Disaster Recovery Services and
the use by the Service Provider of reasonable precautions would not have
avoided the simultaneous impairment of its operational and back-up facilities
by the Force Majeure Event(s). In the event of a Force Majeure Event affecting
the Customer, this Section 17.3 will not limit or otherwise relieve the
Customer’s obligation to pay any monies due the Service Provider under the
terms of this Agreement, except as provided in Section 17.3(c)(iii) and
Section 3.3.

	 	17.4	 	Waiver

No waiver of any breach of any provision of this 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 this 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

This Agreement shall be executed in counterparts. Each such counterpart shall be an
original and together shall constitute one and the same document.

	 	17.7	 	Governing Law

This Agreement and any and all claims and disputes arising out of or in connection with or
related to the relationships and arrangements between the Customer Group and the Service
Provider and its Affiliates described in this Agreement will be governed by and construed in
accordance with the laws of the State of Ohio and the United States of America except where
local mandatory law applies. The Parties hereby (a) agree that the U.S. District Court in
Columbus, Ohio, or if such court does not have subject matter jurisdiction, the appropriate
state or superior court sitting in Columbus, Ohio, shall have non-exclusive jurisdiction
over the actions arising out of or related to or in connection with this Agreement and the
subject matter of this Agreement, whether in contract, tort, or any other form of action
(“Action”); (b) agree to initiate any such Action against the other Party only in such
courts; (c) agree that they shall not raise any defense to the lawful jurisdiction of such
courts; and (d) agree that they shall not attempt the removal of any Action to any other
court, whether local, state or federal courts of the United States or the courts of any
other country.

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	 	17.8	 	Binding Nature and Assignment

This Agreement will be binding on the Parties and their respective successors and permitted
assigns. Except as provided in this Section 17.8, neither Party may, or will have
the power to, assign this Agreement or any rights hereunder without the prior written
consent of the other, which consent shall not be unreasonably withheld, except that (a) the
Customer may assign its rights and obligations under this Agreement, without the approval of
the Service Provider (i) to an entity that acquires all or substantially all of the assets
of Customer or which is the successors in a merger or acquisition involving Customer or (ii)
in whole or in part, and in the cases of items (i) and (ii) of this Section to an Affiliate
which expressly assumes the obligations and responsibilities of the Customer hereunder and
(b) the Service Provider may assign its rights to payment under this Agreement. The
assigning Party shall remain fully liable for and shall not be relieved from the full
performance of all obligations under this Agreement. Any attempted assignment that does not
comply with the terms of this Section 17.8 shall be null and void.

	 	17.9	 	Notices

	 	(a)	 	Whenever one Party is required or permitted to give legal
notice to the other Party under this Agreement, such legal notice will be in
writing unless otherwise specifically provided herein and will be deemed given
when delivered in 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 U.S. mail, registered or certified mail, return receipt
requested, postage prepaid. Operational notices may be sent via e-mail.
	 
	 	(b)	 	Legal notifications will be addressed as follows:

	 	 	 	 	 
	 	 	In the case of the Service Provider:	 	In the case of the Customer:
	 

	 	International Business Machines
	 	NiSource Corporate Services Company
	 

	 	Corporation
	 	801 East 86th Avenue
	 

	 	Account Executive Office
	 	Merrillville, IN 46410
	 

	 	NiSource Corporate Services Company
	 	Attn: Chief Financial Officer
	 

	 	801 East 86th Avenue	 	 
	 

	 	Merrillville, IN 46410	 	 
	 

	 	Attn: IBM Account Executive	 	 
	 
	 	 	 	 
	 

	 	with a copy to:
	 	with a copy to:
	 
	 	 	 	 
	 

	 	IBM Business Consulting Services
	 	NiSource Inc.
	 

	 	Building 2
	 	801 East 86th Avenue
	 

	 	Route 100
	 	Merrillville, IN 46410
	 

	 	Somers, NY 10589
	 	Attn: General Counsel
	 

	 	Attn: Vice President and Assistant	 	 
	 

	 	General Counsel	 	 
	 

	 	(914) 766-9217 (Fax)	 	 

	 	(c)	 	Operational notifications will be addressed to the Service
Provider AE and the Customer PM.

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.

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	 	17.10	 	No Third Party Beneficiaries

	 	(a)	 	The Parties do not intend to create for any third party
beneficiary rights for any Person other than (i) each member of the Customer
Group and, to the extent the Service Provider is required to provide Services
to them under this Agreement, the divested entities and operations as permitted
in this Agreement in accordance with Section 17.10(b) below, each of
which shall be a third party beneficiary under this Agreement for all purposes
including enforcement, and subject to the provisions of Section
17.10(b) below, and (ii) the third parties identified in Section 14
(Indemnities) who shall have the rights and benefits described in that
Section.
	 
	 	(b)	 	Customer will ensure that the members of the Customer Group and
the divested entities and operations as permitted in this Agreement shall
communicate and operate with the Service Provider, and bring all actions,
claims, demands and other disputes with respect to the Service Provider, this
Agreement and the Services, through the Customer acting in its individual
capacity or as agent of the aggrieved members of the Customer Group or such
divested entities and operations; provided, however, any such third party
beneficiary may take any action to enforce its rights under this Agreement in
any instance in which the action, claim or demand may only be brought, filed or
otherwise made under applicable law by such third party beneficiary. 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
Article 14 shall be subject to any and all limitations and defenses
available to the Service Provider under this Agreement or otherwise, as well as
the dispute resolution process set forth in Article 16. All rights of
the Customer Group members and each divested entity or operation, or any
beneficiary under Article 14, are, and shall remain throughout the Term
and thereafter, subject to any waiver, amendment, change, or other modification
to this Agreement agreed between the Service Provider and Customer,
irrespective of any reliance or change in position of the Customer Group
members or any approval of any such Customer Group member, divested entity or
operation, or indemnified party pursuant to Article 14, and no consent,
agreement or approval of such Customer Group member, divested entity or
operation, or indemnified party pursuant to Article 14 shall be
required for such waiver, amendment, change or other modification.

	 	17.11	 	Other Documents

Upon request of the other Party on or after the Effective Date or any amendments or
modifications thereto, each Party shall furnish to the other such certificate of its
Secretary, certified copy of resolutions of its Board of Directors, or other documentation,
as shall evidence that this Agreement or any amendment or modification thereto has been duly
executed and delivered on behalf of such Party or its Affiliates.

	 	17.12	 	Liens

The Service Provider will not file and will not by action or inaction file or permit any
Affiliate or subcontractor to file, any materialmen’s or mechanic’s liens or similar liens
against the real and personal property of the members of the Customer Group, and the
Services. Should any such lien or lien claim be asserted for any reason, the Service
Provider will satisfy the lien or otherwise remove it or cause it to be removed at its sole
cost.

	 	17.13	 	Headings

All headings herein and the table of contents are not to be considered in the construction
or interpretation of any provision of this Agreement. This 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 thereof.

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	 	17.14	 	Remarketing

The Customer may not remarket all or any portion of the Services provided under this Agreement.

	 	17.15	 	Commencement of Actions

Neither Party may bring an action, regardless of form, arising out of this Agreement more
than four (4) years after the later to occur of the date on which the cause of action has
arisen or the date such cause of action was or should have been discovered.

	 	17.16	 	Currency

All references to payments or credits in this Agreement shall refer to payments or credits
in United States dollars and all payments and credits between the Parties pursuant to this
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.

	 	17.17	 	Consents and Approvals

The Parties agree that, except as otherwise specified herein, 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 this 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.

	 	17.18	 	Professional Advice

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

	 	17.19	 	Duty to Mitigate

Neither Party will have an obligation to pay damages or to provide indemnification for
Losses for which the other Party (or in the case of indemnification, the Indemnitee) had an
opportunity but failed to take reasonable measures to mitigate, to the extent that failure
to so mitigate would result in a reduction of damages or Losses recoverable under applicable
principles of contract law.

	 	17.20	 	Remedies

Except for any remedy that is expressly indicated as the sole and exclusive remedy for the
event or circumstance to which it applies, all remedies provided for in this Agreement shall
be cumulative and in addition to and not in lieu of any other remedies available to either
Party at law, in equity or otherwise, subject to the provisions of this Agreement.

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     IN WITNESS WHEREOF, each of the Parties hereto, by duly authorized representatives, has hereby
executed this Agreement.

	 	 	 
	NISOURCE CORPORATE SERVICES COMPANY

	 	INTERNATIONAL BUSINESS MACHINES

CORPORATION
	 
	 	 
	By: /s/ Robert C. Skaggs, Jr.

	 	By: /s/ Maureen A. Sweeny
	 
	 	 
	Name: Robert C. Skaggs, Jr.

	 	Name: Maureen A. Sweeny
	 
	 	 
	Title: President

	 	Title: Vice President
	 
	 	 
	Date: 6/20/05

	 	Date: 6/20/05

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