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Res 1089 - Computer Hardwre Agm COUNCIL BILL NO. 1345 RESOLUTION NO. 1089 A RESOLUTION ENTERING INTO A COMPUTER HARDWARE AGREEMENT WITH INTERNATIONAL BUSINESS MACHINES CORPORATION AND AUTHORIZING THE MAYOR TO SIGN SAID AGREEMENT. WHEREAS, the North Marion 9-1-1 Communications Center requested proposals from computer hardware vendors to allow for enhances 9-1-1 computer-aided dispatch, and WHEREAS, the 9-1-1 User Board has recommended that a contract with International Business Machines Corporation by executed, NOW, THEREFORE, THE CITY OF WOODBURN RESOLVES AS FOLLOWS: Section 1. That the City of Woodburn enter into a contract with International Business Machines Corporation, which is attached as Exhibit "A" and by this reference incorporated herein, Section 2. That the Mayor is authorized to sign said agreement on behalf of the ::~roved as to form77.?U1 ~/J / b- / ~ - 7/ City Attorney Date APPROVED: 1;1g{ ~s~A1~ Passed by the Council October 28, 1991 Submitted to the Mayor October 29, 1991 Approved by the Mayor October 29, 1991 Filed in the Office of the Recorder October 29, 1991 ATTEST: fYI~ /~ ~--.l Mary Ten , City Recorder City of Woodburn, Oregon Page 1 - COUNCIL BILL NO. 1345 RESOLUTION NO. 1089 ..--- ,.-----'t' _.~.~-_."-~'~-+'~~-_._---~ ,~ = - -~~~ Customer Agreement Statement of Work for Project Support Services Custom Services Scope of Services. Completion Criteria. cJlarges. and other applicable terms: We will provide Project Support Services as described below in the Scope of Services. The..se" seryices will be designated Fixed Price or Custom Price as indicated by a check in the appropriate box. ,. Scope of Services: Tier II - Express Enabling Statement of Work attached o Fixed Price Not to exceed $20,000.00 $ 3. ?RO o Custom Price $ estimated charges for Not to exceed 160 hours. You will be billed only tor actual hours worked. estimated hours Completion Criteria: Services will end when 1) we provide the Fixed Price Services, or 2) under the Custom Price option we provide the specified hours or Services whichever occurs first, or 3) under the Custom Price option the project estimated cnd dale expires. We will invoice you upon completion of Fixed Price Services and monthly for Custom Price Services rendered. This offer will expire after JanUary 18, 1992 NW42691 80th of us agree that the complete agreement between us about these Services will consist of 1) this Statement of Work and 2) the IBM Customer Agreement (or any equivalent agreement signed by both of us). Agreed to: International Business Machines Corporation Armonk, New Vorl< 10504 By By AuttwJriled5Ig~l,/~ Name (type or print) Fred W. ... Mayor Date: 10/~/91 Customer number: 6599507 Customer address: 270 Montgomery St. Woodburn, OR 97071 Name (type or print) Date: IBM Customer Agreement number: Statement of Work number: IBM Office number: Project name or identifier: IBM Office address: Estimated start date: December I, 1991 Estimated end date: IBM Services group address: Z125-4195-01 1/91 Page 1 of - AS/400 (9402 OR 9404) EXPRESS ENABLING 1.0 STATEMENT OF WORK This Statement of Work (SOW) is subject to the terms and conditions of the IBM Customer Agreement (Agreement). The Statement of Work defines the project scope, tasks to be performed by IBM, the responsibilities to be met by you, the deliverable materials, the project completion criteria, and the charges. Changes to this Statement of Work may result in changes to the price, schedule, or other terms of the Agreement and will be subject to the section 1.7, "Change Control Procedurestl. 1 .1 SCOPE IBM will provide a trained technical resource at your site to tailor the IBM software listed in section 1. 2.3, IBM Licensed Program Product Support. IBM takes the responsibility of performing the following tasks for you. By working directly with your staff, IBM also accomplishes a skills transfer with the intention that your staff be able to perform the same tasks the next time they are required in your operation. 1.2 IBM RESPONSIBILITIES Under this Statement Of Work IBM will provide the following tasks: 1.2.1 PROJECT MANAGEMENT The IBM technical resource will work with your designated representative with regards to the following subtasks: . Review Statement Of Work and project schedule. . Provide task status, . Administer the Change Control Procedure. 1.2.2 PRE-INSTALLATION EDUCATION IBM will provide for up to 3 of your staff 2 half day seminars covering the following topics: . ASj400 System Planning ASj400 (9402 or 9404) EXPRESS ENABLING 1 '.- "'1'''~~_'-'.'''--'''--' . AS/400 Basic System Operations . AS/400 Security and System Management 1.2.3 IBM LICENSED PROGRAM PRODUCT SUPPORT IBM will install and verify the fol10wing IBM system software products supplied by you: . OS/400. . AS/400 supported languages. . System Utilities. . PC Support. . Dictionary, 1.2.4 CUSTOMIZE INITIAL SYSTEM CONFIGURATION IBM will configure your IBM AS/400 Operating System (OS/400) in 1.2.3. Subtasks to be performed are: . Selection of Operational Assistant Options . Select Appropriate Controlling Subsystem . Select System Values Options . Tailor Subsystems . Tailoring of Memory Pools . Print your System Configuration Report . Print your 10cal Device Addresses Report 1.2.5 INSTAll/CONNECT IBM FIXED FUNCTION TERMINALS IBM personnel will: . Connect up to 10 fixed function terminals. . Verify that they are connected properly to the customer-supplied cabling. . Verify that the AS/400 system recognizes and communicates with each terminal. 1.2.6 DEFINE USER IDS IBM will define and enter up to 20 customer supplied user ids with appropriate parameters. AS/400 (9402 or 9404) EXPRESS ENABLING 2 ~. ...-r-ro 1.2.7 SETUP IBM PRINTERS IBM will establish system parameters for up to two attached IBM printers in the machine room of the ASj400. 1.2.8 OPERATOR PROCEDURES IBM will recommend Operational Assistant options to provide system maintenance of messages, 10gs, journals, and output spool files. These options will be recorded in the customer's System Management Control Book. Documentation of Support Contact information, Security procedures, backup and recovery procedures) change management procedures, and problem management procedures will also be noted in the customer's System Management Control Book. 1.2.9 ELECTRONIC CUSTOMER SUPPORT IBM will conduct an on-site demonstration of the Electronic Customer Support service offering provided with your system, by enrolling the customer for the ASj400 Quarterly Newsletter. Other features will be discussed relating to managing Program Temporary Fixes (PTFs), 1.2.10 INSTALL IBM LICENSED PROGRAM PRODUCTS IBM will verify that the customer supplied IBM Licensed Program Products are installed with the latest level of fixes. The customer's staff will be instructed in the following tasks: . System Backup/Recovery procedures . Creation of Sample Backup Procedures . Documentation of procedures in the System Management Control Book . Adding additional user IDs. . Definingjimplementing security for additional users. . Making changes to the system configuration. . Setting up IBM printers. . Installingjconnecting IBM terminals. 1.2.11 FIRST CORRECTIVE SERVICE TAPE INSTALLATION PTFs are generated by IBM to provide support for newly announced hardware and to remedy IBM software problems in the Operating Systemj400. Periodically these PTFs are grouped together as a package that is orderable, via ECS, by you. If within 90 days of your system installation, IBM releases a PTF package for the version installed in 1. 2.3, IBM will install the first ASj400 Cumulative j Preventive PTF package on your system. ASj400 (9402 or 9404) EXPRESS ENABLING 3 ~. .-,.-r-.--...'.... ..-.----....---...-... 1.3 YOUR RESPONSIBILITIES The following responsibilities are in addition to those specified in the IBM Customer Agreement and are to be provided at no charge to IBM. . You will designate a representative who will administer the Change Control Procedures specified in 1.7, "Change Control Procedures". This representative will be the focal point for all IBM communication relative to this project and will have the authority to act on your behalf in matters regarding this project. . You will provide the IBM system software listed in 1.2.3 by the Estimated Start Date. . You will provide user ids, device names, and passwords. . You will provide all cabling. . You will designate up to three operators and make them available for both the pre-installation and on-site instruction. . You wil1 provide suitable workspace, furniture, telephone and other facilities for IBM personnel while they are working on your premises. . You will provide all necessary clerical, typing, and reproduction services to support IBM personnel while they are working on yourcpremises. . You will provide access to the ASj400 during norma 1 business hours, . If you desire to have IBM perform 1.2.11, you will advise IBM and provide the required PTF package. 1.4 DELIVERABLE MATERIALS None 1.5 COMPLETION CRITERIA IBM will have fulfilled its obligation under this Statement Of Work when any one of the following first oc~urs: . IBM completes the tasks listed in section 1.2. . You terminate the project in accordance with the terms of the IBM Customer Agreement. 1.6 CHARGES IBM charge for the performance of this SOW is $3,280. You will be invoiced upon the completion of task 1. 2 .10. payable on receipt. This invoice is 1.7 CHANGE CONTROL PROCEDURES The following provides a detailed process to follow if a change to this Statement of Work (SOW) is required. . A Project Change Request (PCR) will be the vehicle for communicating change. The PCR must describe the change, the rationale for the change and the effect the change will have on the project. ASj400 (9402 or 9404) EXPRESS ENABLING 4 .__. . , .___. '.~_~..,..4 .....__._..., .,."...~,_..._, ._.....~." .._.~_~_".__"___._ ____.__,___.~_._.__.__.__._ . The designated Representative of the requesting party will review the proposed change and determine whether to submit the request to the other party. . Both Representatives will review the proposed change and approve it for further investigation or reject it. IBM will specify any charges for such investigation. If the investigation is authorized, the Representatives will sign the PCR which will constitute approval for the investigation charges. IBM will invoice you for any such charges. The investigation will determine the effect that the implementation of the PCR will have on price, schedule and other terms and conditions of the Agreement. . A written Change Authorization must be signed by both parties to authorize implementation of the investigated changes. AS/400 (9402 or 9404) EXPRESS ENABLING 5 ~ '-'-T--T-'" h_..___. ..-----.-- ...----.-- --- - ---- - - --- :: - -~"'E: Customer Agreement a Thank you for doing business with us. We are committed to providing you with the highest quality Products and Services. If, at any time, you have any questions or problems, or are not completeiy satisfied, please let us know. Our goal is to do our best for you. This IBM Customer Agreement (called the "Agreement") covers the major business transactions we may do with you, including: (a) sale of Machines; (b) license of Programs; and (e) provision of Services. We also make several Options available to you concerning the Products and Services we provide under this Agreement, such as volume discounts. " This Agreement and its applicable Attachments and Transaction Documents are the complete agreement regarding these transactions, and replace any prior oral or written communications between us. By signing below for our respective Enterprises, each of us agrees to the terms of this Agreement. Once signed, 1) any reproduction of this Agreement, an Attachment, or Transaction Document made by reliable means (for example, photocopy or facsimile) is considered an original and 2) all Products and Services you order under this Agreement are subject to it. Agreed to: Enterprise name: City of Woodburn North Marion 911 By 1;Zd!1hL~ Agreed to: International Business Machines Corporation Armonk, New York 10504 By Authorized signature Name (type or print): Date: October 29, Fred W. Mayor 1991 Kyser Name (type or print): V. J. Bjarnson Dale: Enterprise number: Enterprise address: 270 ~1ontgomery Street Woodburn, OR 97071 Agreement number: SP9176 KB6 IBM Office number: IBM Office address: 4263 Commercial St, SE Salem, OR 97302 Z 125-4575-00 1/91 Page 1 of 23 -- .. - r -"T". --- - ---- - - --- ;: - -~'f~ Customer Agreement Table of Contents Seclion Tille Page Part 1 - General..........................................3 1.1 Definitions..........................................3 1.2 Agreement Structure ........................4 1.3 Delivery..............................................4 1.4 Electronic Communications .............5 1.5 Prices and Price Changes................5 1.6 Invoicing, Payment, and Taxes........6 1.7 Additional Charges ...........................6 1.8 Types of Service for Machines ........6 1.9 Patents and Copyrights ....................7 1.10 Limitation of Liability ........................7 1.11 Mutual Responsibilities ....................8 1.12 Your Other Responsibilities.............8 1.13 Your Additional Rights......................9 1.14 IBM Business Partners.....................9 1.15 Changes to the Agreement Terms..9 1.16 Agreement Termination....................9 1.17 Geographic Scope ............................9 1.18 Governing Law..................................9 Part 2 - Warranties ...................................10 2.1 The IBM Warranties ........................10 2.2 Extent of Warranty...........................11 2.3 Items Not Covered by Warranty.....11 Part 3 - Machines .....................................12 3.1 Title ..................................................12 3.2 Risk of Loss .....................................12 3.3 Production Status ............................12 3.4 Installation .......................................12 3.5 Licensed Internal Code ..................13 Z125.4575.00 1191 ~_. ".--r...,..- Seclion Tille Page Part 4 - Programs .....................................14 4.1 Grant of License..............................14 4.2 License Detalls................................14 4.3 Distributed Features .......................15 4.4 Additional License Copies .............15 4.5 Program Testing..............................15 4.6 Program Packages ..........................15 4.7 Program Protection .........................16 4.8 Program Services ...........................16 4.9 Variable-Charge Programs.............16 4.10 License Termination .......................16 Part 5 - Services .......................................17 5.1 Maintenance Services ....................17 5.2 Continuing Support Services .........18 5.3 Project Support Services................18 5.4 IBM Information Network and Other Services....... ...... ... ... ...... ....... .20 Part 6 - Options.........................................21 6.1 Volume Discounts ...........................21 6.2 Maintenance Service Options ........22. 6.3 Payment Options.............................22 6.4 Special Options ...............................23 Page 2 ot 23 --- - ---- - - --- ;: - -~'f~ Customer Agreement Part 1 - General 1.1 Definitions Customer-set-up Machine is an IBM Machine that you set up according to our instructions. Date of Installation is the following: 1. for a Machine- a. the business day after the day we install it or, if you defer installalion, make it available to you for installation; b. the second business day after the end of a Customer-set-up Machine's standard transit allowance period. We will allocate a reasonable transit allowance period; or c. the second business day after the arrival of a non-IBM Machine. 2. for a Program, the latest of - a. the day after its testing period ends (this does not apply to Program Packages); b. 10 days after we ship it; or c. the day, specified in a Transaction Document, on which we authorize you to make an Additional License Copy or a copy of a Distributed Feature. Designated Machine is the Machine, that you identify to us by type/model and serial (or plant order) number, on which you intend to use a Program for processing. When we specify that you do not have to provide this identification to us, the term "Designated Machine" means the single Machine on which you may use the Program at anyone time. Enterprise is any legal entity (such as a corporation) and the subsidiaries it owns by more than 50 percent. The term "Enterprise" applies only to the portion of the enterprise located in the United States or Puerto Rico. Machine is a machine, its features, conversions, upgrades, elements, or accessories, or any combination of them. The term "Machine" includes an IBM Machine and any non-IBM Machine (including other equipment) that we may provide to you. Product is a Machine or a Program. Program is the following, including features and any whole or partial copies: 1. machine-readable instructions; 2. a collection of machine.readable data, such as a data base; and 3. related materials, including documentation and listings, in any form. The term "Program" includes an IBM Program and any non-IBM Program that we may provide to you. The term does not include Licensed Internal Code or Materials. Service is assistance or use of a resource (such as a network) we make available to you. Specifications is a document that provides information specific to a Product. For a Machine, we call the document "Official Published Specifications." For a Program, we call it "Licensed Program Specifications" or "License Information." Specified Operating Environment is the Machines and Programs with which a Program is designed to operate, as described in the Program's Specifications. Z125-4575.00 1191 Page 3 of 23 ""'~~. . .-...r--T..--.-----..- 1.2 Agreement Structure Attachments Some Products and Services have terms in addition to those we specify in this Agreement. We provide the additional terms in documents called "Attachments" which are also part of this Agreement. For example, we describe the additional terms for IBM Information Network Services in an Attachment. We make the Attachments available to you for signature. Transaction Documents For each order you place, we will provide to you the appropriate "Transaction Documents" that confirm the specific details of your order. The following are examples of Transaction Documents, with examples of the information they may contain: 1. supplements (Machine quantity and type ordered, price, estimated shipment date, and warranty period); 2. exhibits (eligible Producls by category, discount schedules, and available contract periods); 3. addenda (selected contract-period duration, start date, and total quantity or revenue committed); 4. statements of work (project schedule, responsibilities, and charges); and 5. invoices (item, quantity, price, amount due, and other typical invoice information). Conflicting Terms If there is a conflict among the terms in the various documents, those of an Attachment prevail over those of this Agreement. The terms of a Transaction Document prevail over those of both of these documents. Our Acceptance of Your Order A Product or Service becomes subject to this Agreement when we accept your order. We accept your order by doing any of the following: 1. sending you a Transaction Document; 2. shipping the Product; or 3. providing the Service. Your Acceptance of Additional Terms You accept the additional terms in an Attachment or Transaction Document by doing any of the following: 1. signing the Attachment or Transaction Document; 2. using the Product or Service, or allowing others to do so; or 3. making any payment for the Product or Service. 1.3 Delivery We will use our best efforts to meet your delivery requirements for Products and Services you order, and will inform you of their status. We pay normal transportation charges for Products we ship to you. Z125-4575-00 1/91 Page 4 of 23 .--- .-.--"r'-""---.'-- 1.4 Electronic Communications Each of us may communicate with the other by electronic means. Both of us agree to the following for all electronic communications: 1. an identification code (called a "USERID") contained in an electronic document is legally sufficient to verify the sender's identity and the document's authenticity; 2. an electronic document that contains a USERID is a signed writing; and 3. an electronic document, or any computer printout of it, is an original when maintained in the normal course of business. Electronic Data Interchange We may provide Electronic Data Interchange (called "EDI") Options to you. Electronic invoicing and electronic payment are examples of these Options. When using EDI Options, each of us agrees: 1. when a bank is involved, to pay our respective bank charges and to promptly notify the other of any changes to the bank payment process; and 2. to promptly notify the other of any changes to the technology, process, or information upon which the EDI transactions are based. We will specify respective responsibilities for the EDI Option you choose. 1.5 Prices and Price Changes The following are the bases on Wllich we may require the amount payable for a Product or Service to be paid, with an example of each: 1. one-time (the price of a Machine); 2. recurring (a monthly charge for Maintenance Services); or 3. a combination of both (an initial charge and a monthly license charge for a Program). We will specify the amount and basis for the particular Product or Service. Price Increases We may increase recurring charges by giving you three months' written notice. An increase applies on the first day of the applicable invoice period on or after the effective date we specify in the notice. We may increase one-time charges and hourly rates without notice. However, an increase to one-time charges does not apply to you if 1) we receive your order before the announcement date of the increase and 2) one of the following occurs within three months after the announcement: 1. we ship you the Product; 2. with our authorization, you make an Additional License Copy of a Program or a copy of a Distributed Feature; or 3. a Program's group-upgrade charge becomes due. Price Decreases You receive the benefit of a decrease in charges for amounts which become due on or after the effective date of the decrease. Z125-4575-00 1191 Page 5 of 23 ~- .< .<T--T--.----.+----- 1.6 Invoicing, Payment, and Taxes We invoice: 1. recurring charges (other than usage charges) for a Program and for Maintenance Services in advance for the applicable invoice period; 2. usage charges following the period in which you incur them; and 3. all other charges when or after you incur them. For a Product with a one-time charge, payment is due on its Date of Installation. Recurring charges for a Product begin on its Date of Installation. You agree to pay as we specify in the invoice. You also agree to pay amounts equal to any applicable taxes resulting from any transaction under this Agreement. This does not include taxes based on our net income. You are responsible for personal property taxes for each Product from the date we ship it to you. 1.7 Additional Charges Depending on the particular Product, Service, or circumstances, additional charges may apply. For example, if we are required to use other than private automobile or scheduled public transportation to provide Maintenance Services to you, we - charge an additional amount. We will notify you in advance if these charges apply. 1.8 Types of Service for Machines We provide ce,iain types of service for a Machine to keep it in, or restore it to, good working order during its warranty period or while it is under Maintenance Services. The following terms apply to both warranty service and Maintenance Services. Depending on the Machine, the service may be 1) a "Repair" service at your location (called "On-site") or at one of our service locations (called "Carry-in") or 2) an "Exchange" service, either On-site or Carry-in. We will inform you of the available types of service for a Machine. Under Maintenance Services, you may select the type of service from those available for the Machine. We require that a Machine and its features have the same type of service. We offer On-site types of service 24 hours a day, seven days a week. Carry-in types of service are available during the normal business hours of our service locations. When a type of service involves the exchange of a Machine or part, the item we replace becomes our property and the replacement becomes yours. The replacement may not be new, but will be in good working order. Under Carry-in service, instead of delivering the failing Machine to us, if you prefer, you may ship it (prepaid and suitably packaged) to a location we designate. After we have repaired or exchanged the Machine, we will return it to you at our expense. Under On-site Exchange service, depending on the nature of the failure, we may repair the failing Machine at your site instead of exchanging it. We are responsible for loss of, or damage to, your Machine while it is 1) in our possession or 2) in transit in those cases where we are responsible for the transportation charges. ZI25-4575-00 1f9t Page 6 of 23 - .".,_..._."'...._..__."-~""'-~"r'.-~- You ag ree to: 1. obtain authorization from the owner to have us service a Machine that you do not own; 2. where applicable, before we provide service - a. follow the problem determination, problem analysis, and service request procedures that we provide, b. secure all programs, data, and funds contained in a Machine, c. inform us of changes in a Machine's location, and d. for a Machine witll Exchange service, remove all features, parts, options, alterations, and attachments not under our service. You also agree to ensure that the Machine is free of any legal obligations or restrictions that prevent its exchange; 3. be responsible for loss of, or damage to, a Machine in transit in those cases where you are responsible for the transportation charges; and 4. on completion of Carry-in Repair service, connect a repaired Machine and verify its operation. 1.9 Patents and Copyrights If a third party claims that a Product we provide infringes a patent or copyright, we will defend you against that claim at our expense and pay all costs, damages, ani:! attorney's fees that a court finally awards, provided that you: 1. promptly notify us in writing of the claim; and 2. allow us to control, and cooperate with us in, the defense and any related settlement negotiations. If such a claim is made or appears likely to be made, you agree to permit us to enable you to continue to use tile Product, or to modify or replace it. If we determine that none of these alternatives is reasonably available, you agree to return the Product to us on our written request. We will then give you a credit equai to your net book value for the Product, provided you have followed generally-accepted accounting principles. This is our entire obligation 10 you regarding any claim of infringement. Claims for Which We are Not Responsible We have no obligation regarding any claim based on any of the following: 1. your modification of a Product, or a Program's use in other than its Specified Operating Environment; 2. the combination, operation, or use of a Product with any product, data, or apparatus that we did not provide; or 3. infringement by a non-IBM Product alone, as opposed to its combination, operation, or use as part of a system of Products that we provide to you. 1.10 Limitation of Liability Circumstances may arise where, because of a default on our part or other liability, you are entitled to recover damages from us. In each such instance, regardless of the basis on which you are entitled to claim damages from us, we are liable only for: 1. payments referred to in our patent and copyright terms described above; 2. bodily injury (including death), and damage to real property and tangible personal property; and Z125-4575-00 1191 Page 7 of 23 '.....-- ..->--t.--....T... 3. the amount of any other actual loss or damage, up to the greater of $100,000 or the charges (if recurring, 12 months' charges apply) for the Product or Service that Is the subject of the claim. This limit also applies to any of our subcontractors and Program developers. It is the maximum for which we are collectively responsible. Items for Which We are Not Liable Under no circumstances are we liable for any of the following: 1. third-party claims against you for losses or damages (other than those under the first two items listed above); 2. loss of, or damage to, your records or data; or 3. economic consequential damages (including lost profits or savings) or incidental damages, even if we are informed of their possibility. 1.11 Mutual Responsibilities Both of us agree that under this Agreement: 1. neither of us will use the other's trademark, trade name, or other designation in any promotion or publication without prior written consent: 2. all information exchanged is non confidential. If either of us requires the exchange of confidential information, it will be made under a signed confidentiality agreement; 3. each is free to enter into similar agreements with others; 4. each grants the other only the licenses specified. No other licenses (including licenses under patents) are granted; 5. each will allow the other reasonable opportunity to comply before it claims that the other has not met its obligations; and 6. neither of us will bring a legal action more than two years after the cause of action arose. 1.12 Your Other Responsibilities You agree: 1. not to assign this Agreement or your rights under it, delegate your obligations, or resell any Service without prior written consent. Any attempt to do so is void; 2. to acquire Machines with the intent to use them within your Enterprise and not for reselling, leasing, or transferring to a third party, unless either of the following applies - a. you are arranging lease-back financing for the Machines, or b. you purchase them without any discount or allowance, and do not remarket them in competition with our authorized remarketers; 3. to allow us to install mandatory engineering changes (such as those required for safety) on a Machine. Any parts we remove become our property; 4. that you are responsible for the results obtained from the Products and Services; 5. to comply with all applicable government export laws and regulations; and 6. to provide us with full, free, and safe access to your facilities for us to fulfill our obligations. If you become aware of any unsafe conditions or hazardous materials to which our personnel would be exposed at any of your facilities, you agree to promptly notify us. ZI25-4575-00 1191 Page 8 of 23 ...- --~r--, 1.13 Your Additional Rights You may have additional rights under certain laws (such as consumer laws) which do not allow the exclusion of implied warranties, or the exclusion or limitation of certain damages. If these laws apply, our exclusions or limitations may not apply to you. 1.14 IBM Business Partners We have signed agreements with certain organizations (called "IBM Business Partners") to promote, market, and support some of our Products and Services. We have chosen these organizations because of their skills and experience In a particular field. When you order our Products or Services (marketed to you by these organizations) under this Agreement, we confirm that we are responsible for providing them to you under the warranties and other terms of this Agreement. We are not responsible for 1) the actions of these organizations, 2) any additional obligations they may have to you, or 3) any products or services that they (and not us) may supply to you. 1.15 Changes to the Agreement Terms In order to maintain flexibility in our Products, Services, and Options, we may change the terms of this Agreement by giving you three months' written notice. However, these changes are not retroactive. They apply, as of the effective date we specify in the notice, only to new orders (those we receive on or after the date of the notice) and to on-:-going transactions, such as licenses and Services. Otherwise, for a change to be valid, both of us must sign it. Additional or different terms in any order or written communication from you are void. 1.16 Agreement Termination You may terminate this Agreement on written notice to us following the expiration or termination of all your obligations. Either of us may terminate this Agreement if the other does not comply with any of its terms, provided the one who is not complying is given written notice and reasonable time to comply. Any terms of this Agreement which by their nature extend beyond its termination remain in effect until fulfilled, and apply to respective successors and assignees. 1.17 Geographic Scope All your rights, all our obligations, and all licenses (except for Licensed Internal Code and as specifically granted) are valid only in the United States and Puerto Rico. 1.18 Governing Law The laws of the State of New York govern this Agreement. Z125.4575.00 1/91 Page 9 of 23 ~ . . ----M"l-- -'T'"-' --",-_.~, .~---,... - .-..---...--. ,-..~---_.-.,-__~~__,_ --- - ---- - - --- ;: - -~~~ Customer Agreement Part 2 - Warranties 2.1 The IBM Warranties Warranty for IBM Machines For each IBM Machine, we warrant that it: 1. is free from defects in materials and workmanship; and 2. conforms to its Specifications. The warranty period for a Machine is a specified, fixed period. We calculate its expiration from the Machine's Date of Installation. During the warranty period, we provide warranty service under the type of service we designate for the Machine or under the alternative service you select under Maintenance Services. For us to provide warranty service for a feature, conversion, or upgrade, we require that the Machine on which it is installed be 1) the designated, serial-numbered Machine and 2) at an engineering-change level compatible with the feature, conversion, or upgrade. During the warranty period, we manage and install engineering changes that apply to the Machine. If a Machine does not function as warranted during the warranty period, we will repair or replace it without charge. If we are unable to do so, you may return it to us and we will refund your money. Warranty for IBM Programs For each warranted IBM Program, we warrant that: 1. we have the right to license it; and 2. it conforms to its Specifications. The warranty period for a Program expires when its Program Services are no longer available. During the warranty period, we provide warranty service, without charge, for a Program lhrough Program Services. Program Services are available for a warranted Program for at least one year following its general availability. Therefore, the duration of warranty service depends on when you obtain your license. If, during the first year after you obtain your license, we are unable to make the Program function as warranted, you may return it to us and we will refund your money. Warranty for IBM Services For each IBM Service, we warrant that we perform it: 1. in a workmanlike manner; and 2. according to its current description contained in this Agreement, an Attachment, or a Transaction Document. Z125-4575-00 1/91 Page 10 of 23 .~ . -.-r-T-'---.,-...----~-....,-'---,.. Warranty for Systems Where we provide Products to you as a system, we warrant that they are compatible and can operate with one another. Warranty for Integrated Systems For each integrated system we deliver to you under a Statement of Work for Systems Integration Services, we warrant that it meets its Completion Criteria as specified in the Statement of Work. The warranty period for an integrated system is a fixed period as specified in the Statement of Work. It begins on the date we deliver the system to you. If an integrated system does not function as warranted during the warranty period, we will correct the deficiency without charge. If we are unable to do so, you may return the system to us and we will refund your money. 2.2 Extent of Warranty If a Machine is subject to federal or state consumer warranty laws, our statement of limited warranty included with the Machine applies in place of these Machine warranties. Misuse, accident, modification, unsuitable physical or operating environment, operation in other than the Specified Operating Environment, improper maintenance by you, or failure caused by a product for which we are not responsible may void the warranties. THESE WARRANTIES REPLACE ALL OTHER WARRANTiES, EXPRESS OR IMPLIED, INCLUDING THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. ,2.3 Items Not Covered by Warranty We do not warrant uninterrupted or error-free operation of a Product or Service. We will identify IBM Products and Services that we do not warrant. We provide non-iBM Products and Services on an "AS IS" basis. However, non-IBM manufacturers, suppliers, or publishers may provide their own warranties to you. ZI25.4575.00 1191 Page 11 of 23 ~ ".-'~'r"'-"'-"""~-""...'-~'." --- - ---- - - --- ;: - -~'f~ Customer Agreement Part 3 - Machines 3.1 Title When we accept your order, we agree to sell you the Machine described in a Transaction Document. We transfer title to you or, if you choose, your lessor when we ship the Machine. However, we reserve a purchase money security interest in the Machine until we receive the amounts due. For a feature, conversion, or upgrade involving the removal of parts which become our property, we reserve the security interest until we receive the amounts due and the removed parts. You agree to sign an appropriate document to permit us to perfect our purchase money security interest. 3.2 Risk of Loss We bear the risk of loss for the Machine through its Date of Installation. Thereafter, you assume the risk. 3.3 Production Status Each Machine is manufactured from new parts, or new and serviceable used parts (which perform like new parts). In some cases, the Machine may not be new and may have been previously installed. Regardless of the Machine's production status, our warranty terms apply. 3.4 Installation For the Machine to function properly, it must be installed in a suitable physical environment. You agree to provide an environment meeting our specified requirements for the Machine. We design our standard installation procedures to ensure that each Machine we install is in good working order and meets its Specifications. We will successfully complete these procedures before we consider the Machine installed. You are responsible for setting up a Customer-set-up Machine (we provide instructions to enable you to do so) and for the installation of a non-IBM Machine. Machine Features, Conversions, and Upgrades We sell features, conversions, and upgrades for installation only on designated, serial-numbered Machines. You represent that you have the permission of the owner (if you are not the owner of the Machine) and any lien holders to 1) install features, conversions, and upgrades and 2) transfer removed parts to us. Some of these transactions (called "Net-Priced" transactions) include associated replacement parts. We provide these parts on an exchange basis. All removed parts in a Net-Priced transaction become our property. For a Net-Priced transaction, you agree to allow us to install it within 30 days of its delivery and to recover the removed parts. Otherwise, we may terminate the transaction and you must return the feature, conversion, or upgrade to us at your expense. ZI25-4575-00 1191 Page 12 of 23 _.~ . '--r-T'- 3.5 Licensed Internal Code Certain Machines we specify (called "Specific Machines") use Licensed Internal Code (called "Code"). We own copyrights in Code. We own all copies of Code, including all copies made from them. We will identify each Specific Machine in a Transaction Document. If you are the rightful possessor of a Specific Machine, we grant you a license to use the Code (or any replacement we provide) on, or in conjunction with, only the Specific Machine, designated by serial number, for which the Code is provided. We license the Code to only one rightful possessor at a time. Under each license, we authorize you to do only the following: 1. execute the Code to enable the Specific Machine to function according to its Specifications; 2. make a backup or archival copy of the Code (unless we make one available for your use), provided you reproduce the copyright notice and any other legend of ownership on the copy. You may use the copy only to replace the original, when necessary; and 3. execute and display the Code as necessary to maintain the Specific Machine. You agree to acquire any replacement for, or additional copy of, Code directly from us in accordance with our standard policies and practices. You also agree to use that Code under these terms. You may transfer possession of the Code to another party only with the transfer of the Specific Machine. If you do so, you must 1) either give the other party all your copies of the Code or destroy them, and 2) give the other party a copy of this page with the Specific Machine's identification information filled in below. We license the other party when it accepts these terms by initial use of lhe Code. These terms apply to all Code you acquire from any source. Your license terminates when you no longer rightfully possess the Specific Machine. Actions You May Not Take You agree to use the Code only as authorized above. You may not do, for example, any of the following: 1. otherwise copy, display, transfer, adapt, modify, or distribute the Code (electronically or otherwise), except as we may authorize in the Specific Machine's Specifications or in writing to you; 2. reverse assemble, reverse compile, or otherwise translate the Code; 3. sublicense or assign the license for the Code; or 4. lease the Code or any copy of it. INFORMATION FOR SUBSEQUENT LICENSEE OF LICENSED INTERNAL CODE This page is copied from the IBM Customer Agreement and is provided to the subsequent licensee when Code is transferred. The Specific Machine being transferred is identified as: Type/Model___ Serial Number The following definitions are provided for the subsequent licensee of the Code: 1. "We" means International Business Machines Corporation (IBM); 2. "Transaction Document" does not apply to you. The above Type/Model and Serial Number identify the Specific Machine to you; . 3. "You" means the subsequent licensee of the Code; and 4. "Specifications" means IBM's Official Published Specifications. ZI25-4575.QO 1/91 Page t3 of 23 ~' +'+"-'~'T'~- --To.' --- - ---- - - --- - --- = - -~'f~ Customer Agreement Part 4 - Programs 4.1 Grant of License When we accept your order, we grant you a license for the Program. Programs are copyrighted and licensed (not sold). We do not transfer title to Programs to you. 4.2 License Details Under each license, we authorize you to: 1. use the Program's machine-readable portion on only the Designated Machine, unless- a. the Designated Machine is inoperable. You may then use the Program on a backup Machine, b. the Designated Machine cannot assemble or compile the Program. You may then assemble or compile it on another Machine, c. we grant an "Installation License." You may then use the Program on any other Machine in the same or adjoining rooms as the Designated Machine, or d. we grant a "Location License." You may then use the Program on any other Machine in the same building with the same mailing address as the Designated Machine. If you change the Designated Machine, you agree to notify us of the change and its date; 2. store the Program's machine-readable portion in, transmit it through, and display it on, Machines associated with the Designated Machine; 3. do the following to support your aulhorized use as described above - a. modify the Program's machine-readable instructions or data, or merge them into another Program, and b. make copies of the Program, provided you reproduce the copyright notice and any other legend of ownership on each copy or partial copy; and 4. use any portion of the Program we mark restricted (for example, "Restricted Materiats of IBM") only to- a. resolve problems related to the use of the Program, and b. modify the Program so that it will work together with other products. You agree to comply with any additional terms (for example, a usage restriction) that a Program's Specifications may contain. We provide the Specifications to you with the Program. For an "AS IS" Program, any additional terms are contained in a document called "Notice of Availability." Actions You May Not Take You agree not to do any of the following: 1. sublicense, assign, or transfer the license for any Program; 2. distribute any Program to any third paliy; or 3. reverse assemble, reverse compile, or otherwise translate any Program. ZI25-4575-00 1191 Page 14 of 23 ~. !-r .". .---., ~._.,.....- .--..--.......---..- .,~-_.~~-...- 4.3 Distributed Features Some Programs have features (called "Distributed Features") that are designed to work with those Programs (called "Associated Programs"). After we accept your order for a Distributed Feature, we authorize you to: 1. make a copy of the Distributed Feature and its documentation; and 2. distribute the copy to, and use it on, a Machine other than the Designated Machine of the Associated Program. You may use the copy on only one Machine at a time. Persons using a Machine outside of your Enterprise may use the copy only to access the Associated Program. 4.4 Additional License Copies You may order additional licenses for Programs. If you prefer, for each license we grant, rather than shipping you another copy of the Program, we will authorize you to make an additional copy (called an "Additional License Copy"). For some Programs, you may make a copy under a Distributed System License Option (called a "DSLO" license). We charge less for a DSLO license than we do for the original license (called the "Basic" license). In return for the lesser charge, you agree to do the following while licensed under a DSLO: 1. have a Basic license for the Program; 2. provide problem documentation and receive Program Services (if any) only through the location of the Basic license; and 3. distribute to, and install on, the DSLO's Designated Machine, any release, correction, or bypass that we provide for the Basic license. 4.5 Program Testing We provide a testing period for certain Programs to help you evaluate if they meet your needs. The testing period for a Program starts 1) 10 days after we ship it or 2) on the day we authorize you to make an Additional License Copy. We will inform you of the duration of the Program's testing period. For the first order for each Distributed Feature, the testing period is the same as its Associated Program. We do not provide a testing period for a Program under a DSLO license. 4.6 Program Packages We provide certain Programs together with their own license agreements. These Programs (called "Program Packages") are licensed under the terms of the agreements provided with them. This Agreement's patent and copyright terms apply to IBM Program Packages. For a Program Package, we may specify that: 1. Additional License Copies apply. If so, these copies are subject to the terms of the Program Package's agreement, except that you may not transfer them; and 2. a testing period applies. If so, and you return the Program Package to us before the end of the testing period, we will refund your money. If a Program Package has Distributed Features, this Agreement's terms regarding Distributed Features apply Z125.4575.00 1191 Page 15 of 23 ..-. "1- -T....... __,_-0_.._____ 4.7 Program Protection For each Program, you agree to: 1. if it is a data base, allow access to it only to your employees; 2. ensure that anyone who uses it (accessed either locally or remotely) does so only for your authorized use and complies with our terms regarding Programs; and 3. maintain records of all copies. 4.8 Program Services We provide Program Services for warranted Programs and for selected other Programs. If we can reproduce your reported problem in the Specified Operating Environment, we will issue defect correction information, a restriction, or a bypass. We provide Program Services for only the unmodified portion of a current release of a Program. We provide Program Services 1) on an on-going basis (with at least six months' written notice before we terminate services for a Program), 2) until the date we specify, or 3) for a period we specify. 4.9 Variable-Charge Programs We may place a Machine in a Machine group. The charges for some Program licenses depend on the group of the Designated Machine. We call these Programs "Variable-Charge" Programs. Variable charges include graduated charges and processor-based charges. We will specify the group for a Machine and will inform you of any changes. For these licenses, the following apply: 1. if you change (including upgrade or downgrade) a Designated Machine to a Machine in another group, you may incur a group-upgrade charge or a changed recurring charge. You agree to promptly notify us of the date of such a change; 2. if we reassign a Designated Machine to a Machine group with different charges, Program licenses with one-time charges due or paid before the reassignment are not affected. Otherwise, our price change terms apply; and 3. if a change or reassignment results in a lower charge, we do not give credits or refunds for one-time charges already due or paid. 4.10 license Termination You may terminate the license for a Program on one month's written notice or at any time during the Program's testing period. For some Programs, if you terminate the license and replace that Program with another we specify, we only require you to pay an upgrade charge. We may terminate any license we grant in this Part if you do not meet your obligations regarding Programs. You agree to destroy all copies of the Program within three months after license termination. However, you may keep a copy in your archives. Z 125-4575-00 1191 Page 16 of 23 ~.- -. . .'-.-l"-'--"-"-~-_.'~..'-~'.-'~.'.. --- - ---- - - --- - --- - - --- - - - --- ---.- ---.- Customer Agreement Part 5 - Services 5.1 Maintenance Services You may select the type of service from those available for the Machine. When we accept your order, we agree to service the Machine described in a Transaction Document. Based on the type of service, we will restore the Machine to good working order or exchange it. We may also perform preventive maintenance, including lubrication, adjustments, and replacement of parts. We manage and install engineering changes that apply to the Machine. We will inform you of the date on which Maintenance Services begin. We may inspect the Machine within one month following that date. If the Machine is not in an acceptable condition for service, you may 1) have us restore it for a charge or 2) withdraw your request for Maintenance Services and we will refund any amounts you have paid to us for its service. For a Machine under a usage plan, you agree to provide us with the meter reading as of the last working day of the period that the minimum maintenance charge covers. We provide Maintenance Services for selected non-IBM Machines only when they are connected to certain IBM Machines. When a type of service involves the exchange of a non-IBM Machine, the replacement may not be identical. Maintenance Services do not cover accessories and certain parts, such as frames and covers. In addition, Maintenance Services do not cover service of a Machine damaged by misuse, accident, modification, unsuitable physical or operating environment, improper maintenance by you, or failure caused by a product for which we are not responsible. Alternative Service During Warranty For certain Machines, at any time during the warranty period, you may select a different type of service from that which we designate for the Machine. For example, if you prefer On-site service to Carry-in, it may be availabie. We will inform you of the available types of service for the Machine and the available alternative service periods. We provide the alternative type of service for an additional charge. When the alternative service ends, we will continue Maintenance Services for the Machine under the same type of service you selected. Maintenance Services Termination You may terminate Maintenance Services for a Machine on one month's written notice to us under any of the following circumstances: 1. after it has been under Maintenance Services for at least six months; 2. if you remove it from productive use within your Enterprise; 3. as of the effective date of an increase in Maintenance Services charges; or 4. if you terminate coverage for a Maintenance Service Option under our terms for 1) removal of a Machine type from eligibility or 2) increased total adjusted charges for Maintenance Services. We may terminate Maintenance Services for a Machine on three months' written notice, provided it has been under Maintenance Services for at least one year. Either of us may terminate service for any Machine if the other does not meet its obligations concerning Maintenance Services. On termination of service for a Machine, we will give you any applicable credit. Z125-4575-00 119t Page 17 of 23 5.2 Continuing Support Services We provide Continuing Support Services on a contract-period basis to assist you in such areas as improving the availability of your systems and improving your productivity. We provide the terms specific to a Service in an Attachment. If we make a change to the terms of an Attachment that 1) affects your current contract period and 2) you consider unfavorable, on your request, we will defer it until the end of that contract period. We will specify the eligible Products, applicable prerequisites and minimum commitments, exit-option percents, and available contract periods for a Service. We will also inform you periodically of any changes. These changes apply only to orders that we confirm on or after the effective date of the change. When we accept your order, we will confirm the specific details of the Service in a Transaction Document. You may select a start date for the Service that is within three months following the effective date we specify in the Transaction Document. During a contract period, we may increase charges. An increase becomes effective on the next anniversary of the start of a contract period, following the effective date we specify in the notice. When an increase results in a change to your total monthly charge for a Service of more than the exit-option percent we specify, you may terminate that Service on the effective date of the increase. Adjustment or termination charges do not apply in this case. You may request a change to the Services you have selected on one. month's notice. If we agree, we will confirm the change to you with applicable adjustments in charges. Each of us agrees to notify the other (before your current contract period expires) if they do not intend to renew. Continuing Support Services Termination You may terminate a Continuing Support Service by providing us one month's written notice upon fulfillment of any minimum commitments. The termination of Services with contract periods longer than one year results in adjustment charges. In this case, you agree to pay the lesser of: 1. the difference between the total charges you paid through the termination date and those you would have paid for the shorter contract period; 2. the monthly charge multiplied by the applicable adjustment charge factor; or 3. the total charges remaining to complete the contract period. 5.3 Project Support Services The Project Support Services we make available to you include providing general assistance on a technical task (such as writing programs), providing consulting services, acting as a prime contractor to deliver an information handling function, and providing Systems Integration Services. When we accept your order, we agree to provide the Services described in the Statement of Work. We require a separate Statement of Work, signed by both of us, for each project. We manage the project unless the Statement of Work specifies that you manage it. If you are responsible, then we only provide Services to assist you. Z 125-4575-00 1191 Page 18 of 23 ~- . ----l-.T"""-.~- The Statement of Work includes: 1. our respective responsibilities; 2. an estimated schedule which we provide for planning purposes; 3. the specific conditions, if any, (called the "Completion Criteria") that we are required to meet to fulfill our obligations; and 4. applicable charges and any other terms. Each of us agrees to make reasonable efforts to carry out our respective responsibilities according to the estimated schedule. However, if Completion Criteria are applicable, then the project is complete when we meet those criteria. Changes to the Statement of Work When both of us agree to change a Statement of Work, we will prepare a written description of the change (called a "Change Authorization"). The Change Authorization becomes effective when we provide it to you. It need not be signed, unless either of us requests signature. Any change in the Statement of Work may affect the charges, estimated schedule, or other terms. Depending on the scope of the requested change, we may charge you for our effort to analyze it. We will then give you a written estimate of the charges for the analysis. We will perform the analysis only on your written authorization. Personnel Each of us will authorize a person to represent us during the project. Each will 1) address all notices to the other's representative and 2) promptiy notify the other in writing if this person is replaced. Each of us is responsible for supervising and controlling only our own personnel. We will try to honor your requests regarding the assignment of our personnel to your project. However, we reserve the right to determine the assignment of our personnel. Ownership and License During a project, we may deliver to you work product (called "Materials"), such as programs, program listings, programming tools, documentation, reports, and drawings. The Statement of Work will specify if Materials are applicable to the project. It will identify them as being "Type I Materials," "Type II Materials," or otherwise as we both agree. Type I Materials are those, created during the project, in which you will have all right, titie, and interest (including ownership of copyright). We will retain one copy of the Materials. You grant us 1) an irrevocable, nonexclusive, worldwide, paid-up license to use, execute, reproduce, display, perform, distribute (internally and externally) copies of, and prepare derivative works based on Type I Materials and 2) the right to authorize others to do any of the former. Type II Materials are those in which we or third parties have all right, tille, and interest (including ownership of copyright). We will deliver one copy of the Materials to you. We grant you an irrevocable, nonexclusive, worldwide, paid-up license to use, execute, reproduce, display, perform, and distribute (internally only) copies of Type II Materials. Each of us agrees to reproduce the copyright notice and any other legend of ownership on any copies made under the licenses granted in this Part. Z125.4575.00 1191 Page 19 of 23 ...,..-. .'- --'-'l--'~~-- ~ '"- Project Support Services Termination You may terminate a project on written notice to us. We may terminate a project if you do not meet your obligations concerning it. Upon termination, we will stop our work in an orderly manner as soon as practical. You agree to pay us for all Services we provide and any Materials we deliver through the project's termination. Payment includes any charges we incur in terminating subcontracts. Additional Terms for Systems Integration Services When the Statement of Work specifies Systems Integration Services, we provide you with an integrated system that may consist of a combination of Products, Services, Materials, and other items. We design, develop, deliver, install, and support the system as described in the Statement of Work. The Statement of Work contains the Completion Criteria. We will inform you when we meet each of them. You then have 10 days to inform us if you believe that we have not met the Completion Criteria. 5.4 IBM Information Network and Other Services IBM Information Network Services The IBM Information Network (called "IBM IN") Services we make available to you include access to, and use of, IBM IN machines, programs, networking facilities, and associated communications and support services. We provide the terms specific to IBM IN Services in an Attachment. On-line Services We make on-line Services available to you, including access to certain of our information data bases. We provide these Services to you through a connection to IBM IN. We provide the terms specific to an on-line Service in an Attachment. We may specify that you accept the terms of IBM IN Services as a prerequisite to an on-line Service. other Services We make other Services available to you that are not associated with the Services described in this Part. For these Services, we provide all the additional terms in Attachments. Z125-4575-00 1191 Page 20 of 23 --- - ---- - - --- ;: - -~"'~ Customer Agreement Part 6 - Options 6.1 Volume Discounts We provide discounts for certain Products based on the volume of business you agree to do with us (called your "Commitment") during a contract period. You may make a Commitment based on either Product quantity or revenue. Revenue for a Product is its single-unit charge, less any discounts or allowances. We will specify the eligible Products, their categories, available discount percents and contract periods, upper-limit percents, and adjustment charge factors. We will inform you periodically of any changes. An unfavorable change (and all changes related to it) applies to an existing Commitment only if you accept it in writing. Related changes become effective at the same time. We will also inform you if we withdraw eligible Products from marketing. We then accept orders you place for these Products subject to their availability. Unless we specify otherwise, we do not discount Program upgrades, Program features ordered separately from Programs, accessories, or field-installed Machine features, conversions, or upgrades. End User Certification You agree to acquire the Products for use only within your Enterprise and not for remarketing. We call this representation "End User Certification." We provide the discounts to you based on End User Certification. How You May Obtain the Discounts If you wish to obtain the discounts, you agree to sign an Addendum specifying your Commitment, and selected contract-period start date and duration. During the contract period, you may increase your Commitment or extend the contract period (subject to our approval) by signing a revised Addendum. If you extend, you agree to increase your Commitment so that the new discount percent is at least equal to your current discount percent. Any increased discount percent applies to all eligible Products for which Date of Installation is on or after the date we receive your signed Addendum. How We Apply the Discounts We apply the discount to the single-unit charges of eligible Products that you acquire from us during the contract period. The charges are the lesser of 1) those generally available at the time of acquisition or 2) tile announced charges in effect on the date we receive the initial Addendum, subject to our price change terms described below. We count specified Products that you acquire from our authorized remarketers when we receive the required certification. Adjustment charges do not apply to these Products. We may place some Products in a dependent category with an associated controlling category. To determine the discount percent applicable to either category, we count quantities or revenue for only those Products in the controlling category. Price Changes During a contract period, we may increase or decrease charges. We apply your discount to the new charges as follows: 1. we establish a maximum charge (called an "Upper Limit") for each Product in a committed category for each year of a contract period. We determine the Upper Limit by increasing the announced charge in effect, as of the date we receive the initial Addendum, Z125-4575-00 1191 Page 21 of 23 .- .. '1-' -.,....-.' .--.. by a certain amount. We calculate this amount by multiplying that charge by the upper-limit percent we specify at the time of your Commitment; 2. for an increase, we apply the discount to either the increased charge or the Upper Limit, whichever is less; and 3. for a decrease, we apply the discount to the decreased charge, provided you accept any related changes in terms we may have made after your Commitment. Otherwise, you may select 1) the decreased charge without discount or 2) the discounted charge available to you before the decrease. Adjustment Charges If you have not met your Commitment by the end of the contract period, you agree to pay adjustment charges. The adjustment charge for each Product is either: 1. the difference between the discounted amount we charged you and the discounted amount which you were entitled to receive; or 2. the result of multiplying the adjustment charge factor by the number of discount percentage points between what we gave you and what you were entitled to receive. We will inform you which method we use for a particular Product. For a revenue-based Commitment, the total of the adjustment charges will not be more than the difference between your Commitment and the actual revenue you attained. International Discounts For our international customers, we provide volume discounts based on worldwide Commitments. To allow you to participate in such a Commitment, this Agreement may be modified by a signed international agreement. You, your international enterprise coordinator, and we will sign the relevant Transaction Document, unless the coordinator exempts you from signing. That Transaction Document becomes part of this Agreement. 6.2 Maintenance Service Options We provide Maintenance Service Options for certain Machines. If you wish to obtain the benefit of lower charges available under an Option. you agree to assume additional, specified responsibilities. We provide the terms specific to an Option in an Attachment. We will specify the eligible Machine types, eligible types of service, available discount percents and contract periods, exit-option percents, and notice requirements for termination of each contract period, as applicable to each Option. We will also inform you periodically of any changes. We will defer an unfavorable change (and all changes related to it) until the end of your contract period, if you request it in writing before the effective date of the change. Related changes become effective at the same time. 6.3 Payment Options Extended Maintenance Option You may select the Extended Maintenance Option (called the "EMO") for certain Machines. Under this Option, we adjust your Maintenance Services charges based on your prepayment of those charges during an available contract period. We will specify the eligible Machine types and available contract periods. We will also inform you periodically of any changes. A change applies only to Machines you add under this Option on or after the effective date of the change. Z125-4575-00 1191 Page 22 of 23 .....~'" l'M" ",..~<,.. ..__... The Transaction Document will list the Machines covered and the dates of coverage for the contract period you have selected for each Machine. You may select EMO in addition to other Maintenance Service Options. We then adjust the Machine's EMO charge based on the applicable discounts which you are entitled to receive under those Options. Whiie under this Option, you agree to maintain coverage under all the Services and other Options on which we base the Machine's EMO charge. For a Machine not yet installed or set up, coverage starts on its Date of Installation. For an installed Machine, coverage starts on a mutually-agreed-to date. If applicable, the contract period includes the Machine's warranty period. We calculate the EMO charge for a Machine using the announced Maintenance Services charges and any applicable discounts in effect for the Machine when coverage begins. EMO charges are not refundable after coverage has started for the Machine. Both of us agree that if a feature, conversion, or upgrade is installed on a Machine while it is under this Option, 1) an additional charge may apply and 2) the feature, conversion, or upgrade is subject to the remaining portion of the contract period. If we increase the EMO charge, the increase does not apply to a Machine not yet installed or set up, unless we give you at least three months' notice before its scheduled date of shipment. If we decrease the EMO charge before coverage has begun for a Machine, you receive the benefit of the decrease. We will give you at least three months' notice of a Machine's eligibility for renewal. At the end of your contract period, we will continue Maintenance Services for the Machine (if available), unless you request us not to do so. If you transfer coverage for a Machine to a third party, you agree to inform that party 1) of the applicable terms of this Agreement and 2) that it must notify us in writing of the transfer, the location of the Machine, and acceptance of coverage. If that party does not wish to maintain coverage under all the Services and other Options on which we base the Machine's EMO charge, you agree to pay the transfer charge that we specify. Invoicing Options We make Invoicing Options available to you for certain Products and Services to provide fiexibility in payment terms. We provide the terms specific to an Option in an Attachment. We will specify the eligible Products, Services, and charges, and the available contract periods, invoicing schedules, and environments which may be covered by an Option. We will also inform you periodically of any changes. Together, we will estimate your requirements for the applicable Products and Services. We use this estimate to determine the total charges that we will invoice, distributed according to the schedule you select. These invoiced amounts replace the applicable charges otherwise due. Depending on the Option, the total charges may be subject to adjustments. The Transaction Document, signed by both of us, will list the date from which we provide the selected Option to you and its other details. 6.4 Special Options In order to meet your specific requirements, we may provide Special Options to you. Under these Options, we are willing to provide special terms and tailor our processes for you. We will describe our mutual commitments under a Special Option in a Transaction Document. Zt25-4575-00 .1191 Page 23 of 23 -~' . . ,._,..-~_.~ t' -".,.~.__., ,..-.-........--... -".._,~ ._'''._-'---''.'~''''-_.-'''''*'._~''.~-'.''-'-'~