Supplementary Conditions IBM Enterprise Services with Term Value Commitment

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1 Supplementary Conditions IBM Enterprise Services with Term Value Commitment Edition November Subject Matter This Supplementary Conditions for IBM Enterprise Services is part of the IBM Enterprise Services (ES) Contract and defines the agreed Services under this Contract. The Services will be provided for the Products listed in the Order Form. Except where required by law, IBM has no obligation to provide any services for Machines located outside Switzerland and the Principality of Liechtenstein. 2.0 General Definitions Charging Period means successive twelve-month periods commencing on the Effective Date. Customer-Critical Problem means a problem that will lead to a critical disruption of the Customer's business operations (Severity Code 1). Eligible Machine means a machine identified by its serial number listed in the Machine List of the Order Form or subsequently included in the Machine List (see chapter Automatic Inventory Management ). Eligible Program means a program licensed by the Customer listed in the Service List of the Order Form. IBM Hardware Maintenance Operational Guide is a document including additional information about the IBM procedures relating to Warranty and maintenance, which may be obtained from IBM. This document is not legally binding and subject to changes. IBM's normal business hours means IBM's local customary business hours during which the Services will be available (from 08:00 to 17:00, Monday to Friday, except on Statutory Holidays). Machine List is a list included in the Order Form in which the Eligible Machines and the related service levels are specified. Minimum Term always refers to the contract term and not to the point in time of the integration of new machines into the existing contract. Order Form means the Order Form itself or any associated change document added later. Operability means the usability of a Product in relation to the test measures prescribed by the manufacturer and described in the related documentation. The machine will be ready for operation once the test measures have been completed with a positive result. Outside normal business hours are all times outside IBM's normal business hours. Place of Installation is the site of an Eligible Machine specified under 'installation address' in the Order Form of this IBM Enterprise Services Contract for which the Services will be provided. Primary Contact for Technical Questions is a Customer employee to whom IBM will pass on general technical information about the services. The Primary Contact for Technical Questions will have sufficient technical expertise regarding the Customer's IT environment and the Eligible Machines and Programs installed at the Customer's location, in order to enable effective communication with the IBM Support Center. Products are machines, programs or parts thereof. Round-the-clock means twenty-four (24) hours a day, seven days a week, including statutory holidays. Services are services for machines, machine extensions, machine parts, additional components and/or programs. Service List is a list included in the Order Form, in which Eligible Software Products are listed. Service Times are the times for the provision of the Services, as agreed between IBM and the Customer in the Contract. System means a combination of installed Eligible Machines specified in the Machine Lists and the programs installed on such Eligible Machines. Page 1 of 8

2 Start Date means the date on which IBM starts to perform the applicable Service on an Eligible Machine and/or Eligible Program as specified on the Order Form. Statutory Holidays are New Year, Good Friday, Easter Monday, Ascension, Whit-Monday, 1st August, 25th and 26th December. Term Commitment means the minimum period during which the Eligible Machines and services must remain subject to this Agreement. Term means the period for which this Agreement is effective as specified on the Order Form starting from the Effective Date. The Term will be extended by subsequent twelve-month periods unless this Agreement is otherwise terminated in accordance with its terms. Total Service Charge means the total charge, specified on the Order Form, to be paid by the customer for the services planned to be performed by IBM during a Charging Period. Usage right is the right acquired on the purchase or licensing of a Product to use the Product according to the manufacturer s specification. Warranty is a contractually specified obligation of IBM with respect to the Customer. Additional, specific definitions may be specified in the individual service descriptions. 3.0 Conditions of Validity The customer must satisfy the following criteria during the entire Term of this contract: At least one Eligible Machine on the Machine List is a System z or System p (High-end or Mid-range)* or System i (High-end or Mid-range)* server or equivalent non-ibm server. All machines of the same machine type at a specified Place of Installation are subject to this contract, unless otherwise agreed upon by the customer and IBM. Enhanced Technical Support (ETS) is provided for at least one of the following IBM system platforms: System z, System p (all High-end and Mid-range servers in the Machine List) or System i (all High-end and Mid-range servers in the Machine List)*. The assumptions as defined in the Enhanced Technical Support (ETS) section of this Agreement remain valid. (*) as categorised in the applicable IBM product announcement letter 4.0 Service Times The on-call service periods for hardware maintenance will be specified in the Machine List and/or Service List, unless specified otherwise elsewhere in the Contract. In addition to the standard Service Times Monday to Friday from 7:00 to 18:00 (5x11), except on statutory holidays, the following service times may be agreed on against payment of a supplement: Monday to Sunday from 0:00 to 24:00 (7x24), including statutory holidays The customer may modify the Periods of System Service chosen by the customer by giving one month's written notice (period of notice) to IBM. Any change will take effect on the first day of the month that follows expiry of the period of notice. 5.0 General Customer Obligations The Customer agrees to provide IBM with a list of all eligible Machines and Programs per location; return to IBM the defective CRU (Customer Replaceable Unit) within 30 days of receipt of the replacement CRU. A "CRU" is a machine part which is to be replaced by the customer, e.g. keyboards, memory, or hard disk drives. IBM provides CRUs to the customer for carrying out the replacement. give IBM written notice within one (1) month of all changes relating to the machine and/or software program inventory, their address of installation and/or the number of processors. Such changes may result in an adjustment to the service charges; ensure that all access codes that IBM has provided will only be used by duly authorized Customer employees; provide IBM with all requested information, provided that such information relates to the provision of the relevant Services; directly contact IBM or any third party authorized by IBM in case of any concerns relating to this Contract or the Services subject to this Contract; provide IBM with all the required information available (including product or system and diagnostic information) in relation to problems concerning the Eligible machines or Programs for which support services have been requested; exclusively use the programs provided by IBM for diagnostic and service provision for the support of the Eligible Machines and Eligible Programs; provide IBM as required and upon request with remote access to the Eligible Machines and Eligible Programs via a modem or the Internet for error analysis and error correction * Page 2 of 8

3 * IBM will not access the Customer's Eligible Machines by means of remote access without the Customer's explicit authorization. All remote activities will be carried out under the control of the Customer. If remote access to the Eligible Machines is not provided to IBM, this may result in a significant delay in problem resolution. In such a case, IBM will not be obliged to comply with any applicable service level agreements and/or the agreed service provision. provide IBM with the necessary modem and telephone lines at the place of installation and with temporary user access to the Eligible Machines and Eligible Programs; pay all communication charges incurred by the Customer in relation to the use of the respective Service(s), unless agreed otherwise; be responsible for adequately protecting the customer's Eligible Machines, and all data contained therein, whenever IBM carries out a customer authorised remote access to them; not assign, transfer or pass on otherwise this Contract or the Customer's rights or obligations under this Contract without prior written agreement by IBM. Any attempt to do so is void; name the Primary Contact for Technical Questions to whom general technical information on the Eligible Machines and Eligible Programs can be sent, to IBM, within three (3) business days after the commencement of the service provision. This Primary Contact for Technical Questions and every other person authorized to be contacted must have sufficient technical knowledge of the Customer's Eligible Machines and Eligible Programs to ensure efficient communication with the IBM Support Center; provide the IBM Service Specialist with a suitable and reasonably equipped workplace, including telephone, and access to the defective Eligible Machines and Eligible Programs, for the duration of the work at the place of installation. Protection against electro-static discharge must be ensured for hardware Services; agree that the customer's responsibilities in relation to distributed licenses will continue to apply regardless of other software services; agree that any additional features, model conversions and or machine elements applied to any Eligible Machines will be automatically included in the scope of this Agreement; an exclusion from this Agreement is not possible; use the information received during the respective service provision exclusively for the purpose of supporting the IT requirements within the Customer's enterprise; ensure that usage rights have been obtained for all Eligible Programs for which support has been requested; update the Eligible Machines and Eligible Programs at each selected place of installation to the current software level or software version, provided this is requested by IBM to correct a reported problem; agree that electronic access to IBM support centres and certain databases may require a separate agreement, against an additional charge where appropriate; remove all removable data media, non-ibm parts, modifications and attachments in the case of a machine element to be replaced. Services on IBM machines will be performed only on the unmodified parts of such machines. ensure the security of the data, files and databases as well as the control and provision/maintenance of procedures for the recovery of lost or modified data or programs. This will also include the necessary procedures for the protection of the integrity and security of the software and data used during the service provision against any unauthorized access. Whenever IBM and the customer agree to store repair parts at the customer's Specified Location/Installation Site, the customer will: provide secure storage space for all parts stored at the customer's Specified Location/Installation Site; provide IBM service technicians with easy access to the secure storage space so that they may promptly store, inspect, and remove the parts whenever they deem necessary; and agree that, while the parts are in storage: o the customer is responsible for all loss or damage to the parts; o the customer will be separately charged for any parts that IBM finds to be missing; this also applies to used or damaged parts; o the parts remain the property of IBM, are subject to IBM parts control procedures and must be returned to IBM upon request. Additional, specific Customer obligations may be specified in the respective services descriptions. 6.0 Joint Tasks If at any time either of the parties requests a review of the inventory count, the parties will cooperate at the end of a Charging Period to update the last formal inventory. The machine list will also be updated as a result of this inventory count. 7.0 Data Privacy IBM hereby explicitly informs the Customer that it might be necessary for IBM to access the Customer's systems from countries outside the EU, in particular from the U. S. A. for the purpose of providing the Services. The Customer confirms that it has fulfilled the requirements for permitting such processing and use of data by IBM, even across national borders. The Customer herewith explicitly agrees remote diagnostics can be performed from outside the EU, in particular from the U. S. A. Page 3 of 8

4 8.0 License for Service Programs The following terms will apply to all programs provided by IBM in a particular situation together with a service for which no separate license agreement has been concluded, for example, analysis programs or the Electronic Service Agent. IBM will grant the Customer a non-exclusive right to use the program on the machine for which the use of the program is intended, in order to support the Customer with regard to problem diagnostics or system support. If IBM has not provided a backup copy of the program, the Customer will be entitled to create a copy of the respective program, provided that the Customer will reproduce copyright notices or other copyright legends on the copy in question. The backup copy of a program will be subject to the same terms as the original program. The Customer will not be entitled to do any of the following: change the machine-readable instructions of the program or integrate data into a different program; disassemble, decompile or otherwise convert the programs; grant sublicenses, assign or otherwise transfer the license, or distribute the programs to third parties. IBM will not assume any warranty for these programs. The right to use the programs will lapse if the Service has been terminated, or if IBM has withdrawn the Service or the contract term has expired; the programs are no longer required for providing the Services or if the Customer has ceased productive use of the machine for which the program is intended. IBM may terminate the license if the Customer has failed to meet its contractual obligations. The Customer agrees to destroy the programs, including all copies received or created, once the licenses have been terminated. 9.0 Service Charges and Payment Conditions 9.1 Total Service Charge for a Charging Period The Customer's Service charges are calculated taking into account the quantity of Eligible Machines, service selections, payment options and the customer's commitments. These commitments are described in further detail below (section entitled Commitments Having an Influence on the Charge). During the first twelve months of the Term, the Total Service Charge will include the maintenance charge for usage-plan machines agreed mutually between the customer and IBM. At the end of each Charging Period, the customer will report to IBM the actual usage measured, and this will be used to adjust the customer's Total Service Charge for that Charging Period. The estimate for each subsequent Charging Period will be based on the actual usage in the previous Charging Period. The customer agrees to pay the Total Service Charge plus VAT. Unless otherwise specified on the Order Form, IBM will invoice the Total Service Charge to the customer in quarterly amounts in advance. At the end of each Charging Period, IBM will adjust the customer's charges as specified under Reconciliation and Adjustments. The invoice amount is due and payable upon receipt of the invoice. If payment is not received by IBM within 30 days from the date of the invoice, IBM will be entitled to charge late payment charges at a rate of 7.5% per annum of the invoice amount as from the date of the invoice, without a reminder. 9.2 Commitments having an influence on the Charge In calculating the customer's Total Service Charge, IBM takes into account the customer's commitments. The terms of these commitments are as described below. If the customer does not fulfil these commitments, then IBM is entitled to revise the Total Service Charge accordingly during the charging adjustment at the end of the Charging Period Term Value Commitment Module The customer commits itself for each year of the Term Commitment (three/four or five years), to procure services from IBM for a minimum amount (the Committed Total Service Charge). The Committed Total Service Charge specified on the Order Form is the Total Service Charge agreed for the first Charging Period. Eligible Machines listed in the Order Form which are still under IBM warranty, will be taken into account when calculating whether or not the Committed Total Service Charge has been achieved, by an amount equal to the base maintenance charge that would apply if they were outside of warranty. Additional Eligible Machines may be included during a Charging Period. Page 4 of 8

5 If there is a substantial change to the machine inventory which leads to an increase in the Total Service Charge by more than 20%, IBM reserves the right to terminate the existing Agreement by the end of the relevant Charging Period and simultaneously offer a new Agreement with an adjusted Term Value Commitment. 9.3 Reconciliation and Adjustments At the end of each Charging Period, IBM will reconcile the actual charges of all services provided to the customer with the Total Service Charge paid for that Charging Period. The actual charges will include those for the basic services, software services and other services. The customer will receive an invoice or credit note for any additional charges or credits due as a result of this reconciliation Recalculation If, during the Charging Period, the customer's inventory of Eligible Machines and Programs changes, the Order Form will be updated accordingly. However, the Total Service Charge paid for the Charging Period will only be adjusted if such inventory changes result in a deviation of 3% or more (plus or minus) from the Total Service Charge. If the actual charges for the Charging Period exceed the Total Service Charge by 3% or more, the customer will be charged with the difference between the actual and 103% of the Total Service Charge. If the actual charges for the Charging Period are 3% or more below the Total Service Charge, then the difference between the actual and 97% of the Total Service Charge will be credited to the customer. Other services added to the scope of services during the Charging Period are not eligible for inclusion within the above adjustment allowance, unless otherwise specified on the Order Form Committed Total Service Charge Reconciliation If the customer committed to a Committed Total Service Charge, then IBM will determine the actual charges incurred at the end of the Charging Period. If the actual charges fall below 90% of the Committed Total Service Charge for the Charging Period, then the customer will be liable to pay IBM an adjustment charge plus VAT. The basis for determination of the adjustment charge will be the difference between the Committed Total Service Charge for the contractual year and the actual charge for the same contractual year. If the actual charges fall below the 90% limit, the percentages listed below will apply for the adjustment charges: 36 months term 48 month term 60 month term In the first and last charging 8,5 % 12,5 % 17,5 % periods In the middle charging period(s) 12,5 % 19,0 % 25,0 % If the result of recalculation at the end of a Charging Period is that the actual charges have fallen below the 90% limit, the actual charge will be the new Committed Total Service Charge for the remaining Term of this Agreement. The adjustment charges mentioned above will not apply if the reason for the actual charges falling below 90% of the Committed Total Service Charge is caused by the replacement of Eligible Machines by equivalent IBM machines of the newest technology. In this case, the Committed Total Service Charge will be decreased by the difference between the charge that would have been due for the replaced machine and the corresponding charge for the replacement machine. This reduced Committed Total Service Charge will then be used for the remaining Charging Periods. In the event of substantial non-achievement of the Committed Total Service Charge, IBM will initiate a review of this Agreement with the customer to agree upon any necessary contract changes. 9.4 Total Service Charge for the next Charging Period One month before the end of each Charging Period, IBM will notify the customer of the new Total Service Charge for the following Charging Period, which will become effective on the date specified in the notice. If the Total Service Charge for the new Charging Period has not been agreed in good time, the amount invoiced by IBM for the first quarter of the new Charging Period will be the same as the amount invoiced for the last quarter of the pervious Charging Period. This amount will be offset against the Total Service Charge for the new Charging Period. 9.5 Modification of Charges Charges may only be increased upon three months' written notice. No such increase will apply to any Charging Period which commences prior to the effective date of the increase. Any decreased price announced by IBM will be applied to the first Charging Period following the effective date of the decrease specified in IBM's notice. Page 5 of 8

6 10.0 Term and Termination without general termination options This Agreement will commence on the Start Date specified on the Order Form and will end when the Term specified on the Order Form has expired. It will be continued thereafter for additional twelve month periods. Either party may terminate this Agreement by giving the other three months' written notice in advance to the end of the agreed to or continued Term. The customer may terminate this Agreement upon three months' written notice to the end of a calendar month if IBM increases its charges such that, the Total Service Charge for the next Charging Period for the same inventory of Eligible Machines and services is increased by more than 8% Termination of Individual Machines or Services The customer may terminate any Eligible Machine or service by giving IBM three month's prior written notice to the end of the agreed to or continued Term. Further, the Customer may terminate the service for Eligible Machines by written notice in case a new machine will be included in this contract which replaces the terminated one by manner and as far as function and duty goes at the same time; by one month's prior written notice to the end of a calendar month in case of a fundamental reason. In the event of termination for fundamental reasons by the customer, the service charge will be invoiced up to the time the termination enters into force. In the event of termination for fundamental reasons by IBM, the customer will pay the service charge agreed to in this contract. Fundamental reasons for the termination by a customer during the contract period could be: inclusion of the machines / products in another IBM contract; the customer definitively ends the use in his company of the product for which the service is rendered; the authorized business premises for which the service is rendered no longer lies under the customer's control (e.g. the business premises are sold or closed); the machine can no longer be maintained. Fundamental reasons for the termination by IBM during the contract period could be: the customer does not fulfil his basic contractual obligations within a reasonable time period even after a reminder; the customer does not fulfil his basic obligations as per the "Client Relationship Agreement IBM Switzerland Ltd (e.g. license violation, patent violation). Deliveries from replacement part suppliers may be necessary for the provision of the Service for Eligible Machines. If these replacement parts are discontinued or no longer available, IBM must withdraw the Service for specific machines. In this case, IBM can terminate the Service for such machines in writing with a notice period of 3 months. Other, supplementary termination terms and conditions can be defined in the individual services descriptions Term and Termination with general termination options on payment of a termination fee This Agreement will commence upon the Start Date specified on the Order Form and will end when the Term specified on the Order Form has expired. It will be continued thereafter for additional twelve month periods unless terminated as follows. Either party may terminate this Agreement to the end of a contract year by giving the other three months written notice to the end of a calendar month. The early termination will be subject to the payment to IBM of applicable adjustment charges. Adjustment charges do not apply if this Agreement is terminated by IBM without cause. IBM will calculate the actual charges incurred up to the date upon which the termination is effective, apply applicable adjustment charges, and invoice or credit the customer the resultant adjustment due. The customer may terminate this Agreement upon three months written notice to the end of a calendar month without incurring adjustment charges in case IBM has increased its charges such a way, that the Total Service Charge for the next Charging Period for the same inventory of Eligible Machines and Services is increased by more than 8% Termination of Individual Machines or Services The customer may terminate any Eligible Machine or Service which is under contract for one year by giving IBM three months prior written notice subject to payment by the customer of applicable adjustment charges. Such adjustment charges recover unearned discounts originally applied to the Total Service Charge as a result of the customer s commitments. Page 6 of 8

7 Deliveries from replacement part suppliers may be necessary for the provision of the Service for Eligible Machines. If these replacement parts are discontinued or no longer available, IBM must withdraw the Service for specific machines. In this case, IBM can terminate the Service for such machines in writing with a notice period of 3 months Adjustment Charges Adjustment charges for the termination of Eligible Machines and Services, and for termination of the Agreement, are determined in accordance with the following Agreement with Term Value Commitment The customer may terminate Eligible Machines and Services without adjustment charges subject to the achievement of the customer s Term Value Commitment. If the customer terminates the Agreement before the completion of the Term or customer does not achieve the Committed Total Service Charge, customer will pay adjustment charges to IBM. Adjustment charges shall be equal to the percentage, listed in the table below for the respective Term, of the valid Total Service Charge: Term of contract in month 36 month term 48 month term 60 month term 37 % 44 % 50 % Further, the customer may terminate the service for Eligible Machines, without paying adjustment charges by written notice in case a new machine will be included in this agreement which replaces the terminated one by manner and as far as function and duty goes at the same time; by one month's prior written notice to the end of a calendar month in case of a fundamental reason. No adjustment charge will be invoiced in the event of termination for fundamental reasons cause by the customer. The customer will pay adjustment charges as detailed in the above paragraph in the event of termination for fundamental reasons by IBM. Fundamental reasons for the termination by a customer during the contract period could be: inclusion of the machines / products in another IBM contract; the customer definitively ends the use in his company of the product for which the service is rendered; the authorized business premises for which the service is rendered no longer lies under the customer's control (e.g. the business premises are sold or closed); the machine can no longer be maintained. Fundamental reasons for the termination by IBM during the contract period could be: the customer does not fulfil his basic contractual obligations within a reasonable time period even after a reminder; the customer does not fulfil his obligations according to the "Client Relationship Agreement IBM Switzerland Ltd (e.g. license violation, patent violation). Other, supplementary termination terms and conditions can be defined in the individual services descriptions Other Terms and Conditions 12.1 Required Consents The customer is responsible for promptly obtaining and providing IBM with all Required Consents necessary for IBM to provide the services described in this Agreement. A Required Consent means any consents or approvals required to give IBM and its subcontractors the right or license to access, use and/or modify (including creating derivative works) the hardware, software, firmware and other products the customer uses, without infringing the ownership or license rights (including patent and copyright) of the providers or owners of such products. The customer will indemnify and defend IBM, its affiliates and subcontractors, against any and all claims, losses, liabilities and damages (including reasonable attorneys' fees and costs) arising from, or in connection with, any claims (including patent and copyright infringement) made against IBM, alleged to have occurred as a result of the customer's failure to provide the Required Consents. IBM will be relieved of the performance of any obligations that may be affected by the customer's failure to promptly provide any Required Consents to IBM Data File Content and Security The customer is responsible for the actual content of any data file, selection and implementation of controls on its access and use, and security (data backup) of the stored data. Page 7 of 8

8 13.0 Service Request IBM will provide telephone support services, in order to find out whether system errors that have arisen at the Customer location are attributable to hardware or software problems. Service requests may be sent as follows: Internet: support.ibm.com Phone (nat.): Phone (int l): Service Level Service levels describe the services regarding the Service Delivery Method and Hours of Coverage. A sample of possible service levels: IBM On-site Repair This service will be provided at the machine s place of installation, provided the machine can not be repaired via IBM remote support. Replacement parts for Eligible Machines are included. IBM On-site Repair Limited This Service will be provided at the machine s place of installation, provided the machine can not be repaired via IBM remote support or it concerns Tier 1 CRUs (Customer Replaceable Units). Tier 1 CRUs, as stated in the relevant announcement letter, must be exchanged by the Customer himself. Replacement parts for Eligible Machines are included. Further information about Service Delivery Method, Hours of Coverage and CRUs can be found in the IBM Hardware Maintenance Operational Guide. For software maintenance, the service provision is defined in the corresponding service description IBM Electronic Services IBM provides the Customer with a range of electronic tools to support the Customer with the handling of the maintenance processes. The Customer will provide the necessary facilities for accessing the Electronic Services, such as e.g. Internet, PC. The fees of other providers whose Services are required for access to the IBM Electronic Services will be assumed by the Customer. IBM will identify to the Customer the possible uses of all available tools Electronic Service Agent IBM uses a monitoring and analysis program for specific IBM machines and services. This program significantly improves and speeds up the support operations and is a pre-requisite for most of the IBM Electronic Tools. The Customer will be granted usage rights to this program as per the chapter License for Service Programs in this Statement of Work. The Customer will provide sufficient disk storage space for the program, if not already contained in the Operating System Electronic Tools The Customer can be appointed the Administrator for the tools, and will ensure that only Customer employees or persons authorized by IBM are defined as users. As Administrator, the Customer declares he will comply with IBM procedures necessary for the setup and startup of the tools. The Customer ensures that the information received via IBM Electronic Services is not passed on to third parties, nor used for either sales or marketing activities Automatic Inventory Management Unless the customer notifies IBM in writing otherwise: Machines purchased directly by the customer from IBM will automatically be added to this Agreement on the day following their installation at a Specified Location/Installation Site; On the day following the end date of the IBM warranty for a machine (provided it is known by IBM), IBM will automatically add the machine to the appropriate machine list for basic services. The customer may object to automatic maintenance coverage, but IBM must have received the written objection at the latest 30 days prior to the end of the warranty period. Page 8 of 8

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