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§ 10.25 Form: Outsourcing Agreement *
This Outsourcing Agreement ("Agreement") is made this ____ day
of _______, by and between ABC Bank, Inc., ("ABC") a Delaware
corporation and XYZ Corporation ("XYZ"), a Maryland corporation.
For purposes of this Agreement, "Customer" shall include ABC and
those of its Affiliates designated by ABC.
In consideration of the payments to be made and services to be
performed hereunder, the parties agree as follows:
1. Definitions
1.1 Background
This Agreement is being made and entered into with reference to
the following facts:
(a) XYZ, through its divisions, subsidiaries and Affiliates, is a
provider of data processing, systems development and operations,
corporate support and item processing, home banking, internet
banking, retail delivery services, trust data processing, and other
services. XYZ desires to perform for Customer the outsourcing
services described in this Agreement.
(b) Customer has selected XYZ to provide certain outsourcing
services to Customer. This Agreement documents the terms and
conditions under which Customer agrees to obtain and XYZ agrees to
provide the Services.
1.2 Definitions
The following terms shall have the meaning ascribed to them in this
Section 1.2:
1.2.1 Affiliate
"Affiliate" shall mean, with respect to a party, any entity at any
time Controlling, Controlled by or under common Control with, such
party.
1.2.2 Change in Control
"Change in Control" shall mean any event or series of events by
which (i) any person or entity or group of persons or entities shall
acquire Control of another person or entity or (ii) in the case of a
corporation, during any period of 12 consecutive months commencing
* Schedules and Exhibits referenced in this agreement are not attached.
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before or after the date hereof, individuals who at the beginning of
such 12-month period were directors of such corporation shall cease
for any reason to constitute a majority of the board of directors of such
corporation.1.2.3 Commencement Date
"Commencement Date" shall mean the date on which XYZ has
completed the Conversion for the processing of the Services.
1.2.4 Confidential Information
"Confidential Information" shall have the meaning set forth in
Section 17.4 of this Agreement.
1.2.5 Contract Year
"Contract Year" shall mean a period commencing on the first day
of the month in which the Commencement Date occurs (and each
anniversary thereof) and terminating on the last date of the month
occurring one (1) year thereafter.
1.2.6 Control
"Control" shall mean the direct or indirect ownership of over 50%
of the capital stock (or other ownership interest, if not a corporation)
of any entity or the possession, directly or indirectly, of the power to
direct the management and policies of such entity by ownership of
voting securities, by contract or otherwise. "Controlling" shall mean
having Control of any entity and "Controlled" shall mean being the
subject of Control by another entity.
1.2.7 Conversion
"Conversion" shall mean (i) the migration of Customer's data
processing and other information technology services to the XYZ
Service System; (ii) completion of upgrades, software modifications
and enhancements as set forth in this Agreement; and (iii) completion
of all interfaces set forth in this Agreement and full integration thereof
such that Customer is able to receive the Services in accordance with
the Conversion Plan in a live operating environment.
1.2.8 Conversion Period
"Conversion Period" shall mean that portion of the Term beginning
on the Effective Date and ending on the Commencement Date.
1.2.9 Core Services
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"Core Services" shall mean services provided by XYZ's Deposit
System, Loan System and Customer Information System.
1.2.10 Customer Data
"Customer Data" shall have the meaning set forth in Section 17.1 of
this Agreement.
1.2.11 Damages
"Damages" shall mean all direct, actual and verifiable losses,
liabilities, damages and claims and related costs and expenses
(including reasonable attorneys' fees and court costs, costs of
investigation, litigation, settlement, judgment, interest and penalties)
but excluding any and all consequential, incidental, punitive and
exemplary damages.
1.2.12 Effective Date
"Effective Date" shall mean the date first set forth above.
1.2.13 Effective Date of Termination
"Effective Date of Termination" shall mean the last day on which
XYZ provides the Services to Customer (excluding any Termination
Assistance Services) following delivery of a notice of termination.
1.2.14 Entity
"Entity" means a corporation, partnership, sole proprietorship,
limited liability company, joint venture or other form of organization,
and includes the parties hereto.
1.2.15 Estimated Remaining Value
"Estimated Remaining Value" shall mean the number of calendar
months remaining between the Effective Date of Termination and the
last day of the Term, multiplied by the greater of: (a) the Monthly
Base Fee; or (b) the average monthly Fees payable by Customer
during the three-month period prior to the event giving rise to
termination rights under this Agreement.
1.2.16 Expenses
"Expenses" shall mean all travel and lodging expenses incurred by
XYZ for Services provided to or on behalf of Customer under this
Agreement.
1.2.17 Initial Services
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"Initial Services" shall mean those Services to be provided by XYZ
at Customer's request under this Agreement as of the Effective Date as
set forth in the Services Schedule.
1.2.18 XYZ Service Bureau System
"XYZ Service Bureau System" shall mean the systems utilized by
XYZ at the Operations Center to perform the Services set forth in this
Agreement.
1.2.19 Millennium Compliant
"Millennium Compliant" shall mean the compliance of the Services
with the guidelines established by the Federal Financial Institutions
Examination Council (FFIEC) issued in May, 1997 and any
subsequent guidelines issued by the FFIEC or the Federal Regulators
(as defined in Section 20.8.1) in connection with the identification and
renovation of issues relating to the data processing of the year 2000.
1.2.20 Monthly Base Fee
"Monthly Base Fee" shall mean the fees payable monthly by
Customer to XYZ for those Services identified in the Services
Schedule, or the Fee Schedule, as being included in the Monthly Base
Fee.
1.2.21 New Services
"New Services" shall mean any services which are identified in
XYZ's standard price list as of the Effective Date, and which are not
included in the Initial Services, as well as any future services
developed by XYZ. Upon Customer's election to receive the same,
New Services shall be included in the term "Services."
1.2.22 Operations Center
"Operations Center" shall mean the datacenter used by XYZ to
provide the Services under this Agreement.
1.2.23 Performance Standards
"Performance Standards" shall mean those service levels set forth
in Schedule 9.2.
1.2.24 Proper Instructions
"Proper Instructions" shall mean those instructions sent to XYZ in
accordance with Section 3.3 below.
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1.2.25 RFP Response
"RFP Response" shall mean that portion of XYZ's response to
Customer's Request for Proposal, dated June 27, 1997, which portion
is set forth in attached Schedule 1.2.
1.2.26 Services
"Services" shall mean the services, functions and responsibilities
described in this Agreement to be performed by XYZ during the
Term.
1.2.27 Taxes
"Taxes" shall mean any manufacturers, sales, use, gross receipts,
excise, personal property or similar tax or duty assessed by any
governmental or quasi-governmental authority upon or as a result of
the execution or performance of any service pursuant to this
Agreement or materials furnished with respect to this Agreement,
except any income, franchise, privilege or like tax on or measured by
XYZ's net income, capital stock or net worth.
1.2.28 Term
"Term" shall mean the Initial Term and any extensions thereof,
unless this Agreement is earlier terminated in accordance with its
provisions.
1.2.29 Third Party
"Third Party" shall mean any Entity other than the Parties or any
Affiliates of the Parties and shall include any subcontractors of the
Parties.
1.2.30 User Manuals
"User Manuals" shall mean the documentation previously provided
by XYZ to Customer which describes the features and functionalities
of each of the Services, as modified and updated by the customer
bulletins distributed by XYZ from time to time, which describe the
features and functionalities of each of the Services.
1.3 References
In this Agreement, including the schedules and exhibits attached
hereto and incorporated herein, "include" and "including" shall mean
respectively, "includes, without limitation" and "including, without
limitation".
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1.4 Interpretation
In the event of a conflict between this Agreement and the terms of
any exhibits and schedules attached hereto, the terms of the schedules
and exhibits shall prevail and control the interpretation of the
Agreement and the exhibits and schedules as a single document.
2. Term
2.1 Initial Term
This Agreement shall commence on the Effective Date and end on
the ___ anniversary of the Commencement Date ("Initial Term").
2.2 Extensions
Unless this Agreement has been earlier terminated, Customer may
extend the Initial Term for one additional one-year period, by giving
XYZ written notice at least six (6) months prior to the expiration of
the Initial Term. At least eight (8) months prior to expiration of the
Initial Term, XYZ shall notify Customer of the expiration date and
deliver a proposal to renew the Initial Term.
3. Appointment
3.1 Performance by XYZ Affiliates
Customer understands and agrees that XYZ Corporation is a bank
holding company and that the actual performance of the Services may
be made by the divisions, subsidiaries and/or Affiliates of XYZ
Corporation. For purposes of this Agreement, performance of the
Services by any division, subsidiary and/or Affiliate of XYZ
Corporation shall be deemed performance by XYZ Corporation itself.
3.2 Third Party Services
The parties acknowledge that certain services and products
necessary for the performance of the Services may be provided by
Third Parties. XYZ shall have no liability to Customer for Third Party
products or services not selected by XYZ. XYZ agrees that the
representations, warranties and covenants made by XYZ under this
Agreement shall extend to any Third Party products or services
selected by XYZ, provided the same were not used by Customer prior
to the Effective Date, and to all interfaces to Third Party products
which are to be developed by XYZ for Customer under this
Agreement.
3.3 Proper Instructions
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"Proper Instructions" shall mean those instructions sent to XYZ by
letter, memorandum, telegram, cable, telex, telecopy facsimile,
computer terminal, e-mail or other "on-line" system or similar means
of communications or given orally over the telephone or given in
person by one or more of the person(s) whose name(s) and
signature(s) are listed on the most recent certificate delivered by
Customer to XYZ which lists those persons authorized to give orders,
corrections and instructions in the name of and on behalf of Customer.
Proper Instructions shall specify the action requested to be taken or
omitted.
4. Conversion
4.1 Development of Conversion Plan
XYZ has, in consultation with Customer, developed a detailed,
customized plan for the Conversion (the "Conversion Plan"). The
Conversion Plan includes (i) a description of the tasks to be performed
for the Conversion; (ii) allocation of responsibility for each of such
tasks; and (iii) the schedule on which each task is to be performed.
The Conversion project leaders for each party shall regularly
communicate on the progress of the Conversion, the feasibility of the
Conversion Dates specified in the Conversion Plan, and such other
matters which may affect the smooth transition of the Services.
Customer agrees to make available to XYZ individuals who are
knowledgeable about the banking, data processing and information
technology systems currently used by Customer. Customer further
agrees to provide such services and to perform its obligations
specified as Customer's responsibility in the Conversion Plan to meet
the scheduled dates set forth therein. Each party shall cooperate with
all reasonable requests of the other party made necessary to effectuate
Conversion in a timely and efficient manner. The Conversion Plan
shall set forth the criteria (including test scripts and acceptance
criteria) mutually agreed to by the parties for Customer to be deemed
ready to convert to the XYZ Service Bureau System. The Conversion
Plan (as it exists on the date of this Agreement and as it may be
amended from time to time by the mutual agreement of the parties) is
attached hereto as Schedule 4.2.
4.2 Conversion Resources
XYZ and Customer will provide a team of qualified individuals to
assist in the Conversion effort. The anticipated team members and
description of their responsibilities is set forth in the Conversion Plan.
4.3 Conversion Milestones
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During the Conversion process, XYZ will analyze Customer's
products, the setup of bank control, analyze and verify Customer's test
data, analyze Customer's training needs and perform workflow
analysis. During the next phase, Customer shall verify the converted
test data and identify any changes to the Conversion programs. A
review ("Readiness Review") will then be performed as a dress
rehearsal to ensure that XYZ and Customer are prepared to Convert.
XYZ and Customer shall mutually agree to and sign off on the
Readiness Review assuring Customer is prepared to Convert to the
Services. All items identified as open following Readiness Review
shall be resolved to Customer's reasonable satisfaction. Either party
may request to reschedule the Conversion Weekend (as defined in the
Conversion Plan) following Readiness Review to a mutually
acceptable date if it has reasonable concerns about the other party's
ability to perform its obligations under the Conversion Plan. The
stabilization phase takes place approximately three (3) to four (4)
weeks prior to Conversion, during which time software programs,
bank control and interface tables are completed and stabilized.
Changes, if any, are managed and require approval of both XYZ and
Customer. Finally, the Conversion phase includes the Conversion
weekend and Conversion week support. The XYZ Project Team
manages the Conversion weekend, working with Customer's existing
processors to meet targeted deadlines. During the Conversion week,
XYZ will provide support on site for Customer. On a daily basis, XYZ
and Customer will have status update meetings to understand levels of
self sufficiency and areas requiring attention.
4.4 Enhancements
The issues list attached hereto as Schedule 4.5 reflects the parties'
understandings, as of the Effective Date, as to the enhancements and
interfaces to be provided by XYZ to Customer. Schedule 4.5 may be
modified by mutual agreement of the parties to reflect matters
identified during the Conversion Period.
5. Services5.1 Applications
XYZ agrees to provide Customer with the banking application
Services set forth on attached Schedule 5.1 (the "Services Schedule").
The banking application Services shall be performed in accordance
with the User Manuals, and shall meet the functionality described in
the RFP Response following implementation of the enhancements and
interfaces set forth in Schedule 4.5.
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5.2 New Services
If Customer wishes to receive any New Service which is identified
on XYZ's then-current standard price list, Customer shall notify XYZ
and the parties shall implement the same in accordance with a
mutually acceptable schedule. If the New Service is not identified on
XYZ's then-current standard price list, Customer shall submit a
written request to XYZ in accordance with the terms of this
Agreement.
6. Support Services
6.1 Help Desk and Support
XYZ shall provide Customer with the support services set forth in
the attached Schedule 6.1.
7. Fees
7.1 Fee Structure
Customer shall pay XYZ the fees specified in attached Schedule 7.1
(the "Fee Schedule") in accordance with the payment terms set forth in
the Fee Schedule.
7.2 Conversion
Customer agrees to pay XYZ the fees relating to the Conversion on
the terms and conditions set forth on the Fee Schedule ("Conversion
Fees"). In addition to the Conversion Fees, Customer agrees to
reimburse XYZ (i) for all Expenses reasonably incurred in connection
with the Conversion; (ii) for all Conversion charges of accounts as
they are incurred or for the Conversion or products not identified in
the Conversion Plan or this Agreement as of the Effective Date; (iii)
for XYZ personnel or any independent contractors who perform
Conversion or related services which are identified as the
responsibility of the Customer in the Conversion Plan; and (iv) for
Conversion charges which may arise after the Conversion.
7.3 Excluded Costs
The fees set forth in the Fee Schedule do not include
communication costs, telecommunication charges, and other output
costs, Expenses, third party pass-thru charges, post-conversion
workshop fees and training fees, and late fees or charges and Taxes.
7.4 Disputed Amounts
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If Customer disputes any charge or amount on any invoice and such
dispute cannot be resolved promptly through good faith discussions
between the parties, Customer shall pay the amounts due under this
Agreement less the disputed amount, and the parties shall diligently
proceed to resolve such disputed amount. An amount will be
considered disputed in good faith if (i) Customer delivers a written
statement to XYZ on or before the due date of the invoice, describing
in detail the basis of the dispute and the amount being withheld by
Customer, (ii) Customer represents that the amount in dispute has
been determined after due investigation of the facts and that such
disputed amount has been determined in good faith, and (iii) all other
amounts due from Customer that are not in dispute have been paid in
accordance with the terms of this Agreement.
7.5 Terms of Payment
All "one-time" fees shall be paid to XYZ as set forth in the Fee
Schedule. Customer shall pay the Monthly Base Fee in advance on the
first day of the calendar month in which the Services are to be
performed. To effect payment, Customer hereby authorizes XYZ to
initiate debit entries from and, if necessary, initiate credit entries and
adjustments to Customer's account at the depository institution
designated in the Authorization Agreement attached hereto as Exhibit
A , which shall be executed by Customer contemporaneously with the
execution of this Agreement. All other amounts due hereunder shall be
paid within thirty (30) days of invoice, unless otherwise provided in
the Fee Schedule. Customer shall also pay any collection fees and
Damages incurred by XYZ in collecting payment of the charges and
any other amounts for which Customer is liable under the terms and
conditions of this Agreement.
7.6 Modification of Terms and Pricing
The fees and charges payable by Customer under this Agreement
shall be subject to the increases set forth in the Fee Schedule.
8. Training And Education8.1 Training
XYZ shall provide training in accordance with the training schedule
to be developed pursuant to the Conversion Plan. The sessions shall be
held at an XYZ Datacenter location to be determined by XYZ which
is currently in Baltimore, Maryland. Customer shall be responsible for
all Expenses incurred by the participants and XYZ's trainers in
connection with such education and training.
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8.2 User Manuals
XYZ will provide two (2) copies each of the User Manuals to
Customer. When said manuals are updated XYZ will provide two (2)
copies each of the replacement or additional pages. Additional copies
of the User Manuals may be purchased by Customer at XYZ's then
current published price list.
9. Performance Standards9.1 General
Except as otherwise specified in this Agreement, XYZ agrees to
perform the Services in accordance with the Performance Standards
and, where there are no Performance Standards, in a commercially
reasonable manner and with no other or higher degree of care. The
parties shall meet annually to determine and adjust in good faith if
additional Performance Standards, or modifications to existing
Performance Standards, are appropriate.
9.2 Performance Standards
Subject to the nonoccurrence of an event of force majeure as
provided in Section 20.1 of this Agreement and the performance of
Customer's obligations set forth in this Agreement, the User Manuals
and Schedule 4.5 , XYZ agrees that the applicable Services will be
provided in accordance with the standards set forth in attached
Schedule 9.2 (the "Performance Standards").
9.3 Performance Credits
In the event XYZ fails to meet any of the Performance Standards
for any of the Services, for the specified measurement period in the
applicable Performance Standards (other than a failure caused by
Customer, its employees, agents or contractors), XYZ shall issue to
Customer applicable Performance Credits as set forth below. The
Performance Credits represent negotiated amounts on the basis of
reduced levels of performance and shall not be deemed or construed as
a penalty. If XYZ fails to meet any of the Performance Standards set
forth above for any calendar month, XYZ shall provide Customer a
credit equal to _______percent (____%) of the Monthly Base Fee for
the second consecutive calendar month in which the same
Performance Standard is not met; provided however, that if the same
Performance Standard is not met for a third consecutive month, the
credit shall be _______percent (____%) and for the fourth consecutive
month and each consecutive month thereafter the credit shall be
_______percent (____%). The credits available to Customer under
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this Section 9.3 shall not exceed ten percent (10%) of the Monthly
Base Fee in any given month, under any circumstances. This provision
shall not be deemed to limit any other damages or remedies to which
Customer may be entitled under this Agreement. Notwithstanding the
foregoing, XYZ agrees that if the service level objectives set forth in
the table below are not met on a consistent basis, Customer may
request, and XYZ shall grant, a meeting (via conference call or in
person) with XYZ's then-current President, Outsourcing Business
Group, to address Customer's concerns and dissatisfaction with the
service levels actually provided by XYZ. XYZ shall promptly present
Customer with a root cause analysis and remediation plan reasonably
satisfactory to Customer to meet the service level objectives.
Performance Standard Objective
On-line availability ____%
Processing Time
Teller ____ seconds average
9.4 Advisory Panel
XYZ is advised by committees comprised of customers of the XYZ
Service Bureau System. XYZ agrees to appoint Customer to the User
Planning Committee and, in addition, shall recommend Customer for
membership to the Strategic Planning Advisory Council, for the
purpose of determining strategic and technology direction and product
development.
10. Modification Or Termination Of Services10.1 Modifications to Services
XYZ may modify, amend, enhance, update, or provide an
appropriate replacement for the software used to provide the Services,
or any element of its systems at any time to: (i) improve the Services
or (ii) facilitate the continued economic provision of the Services to
Customer or XYZ, provided that the functionality of the Services is
not materially adversely affected. XYZ agrees to provide Customer at
least thirty (30) days' prior notice of any modification, amendment,
enhancement, update, or replacement which XYZ knows shall result
in a material modification of any Customer practice or procedure.
10.2 Partial Termination by XYZ
XYZ may, at any time, withdraw any of the Services (other than the
Core Services) upon providing six (6) months' prior written notice to
Customer. XYZ may also terminate any of the Services immediately
upon any final regulatory, legislative, or judicial determination that
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providing such Services is inconsistent with applicable law or
regulation or upon imposition by any such authority of restrictions or
conditions which would detract from the economic or other benefits to
XYZ or Customer to any element of the Services. In the event a
Service provided as part of the Monthly Base Fee is terminated by
XYZ, the parties agree to negotiate in good faith an appropriate
reduction in the Monthly Base Fee. If XYZ terminates any Service
which is part of the Initial Services, XYZ agrees to assist Customer in
identifying an alternate provider of such terminated Service and to
provide reasonable assistance to Customer in the smooth transition to
an alternate provider during such six (6) month period or such other
reasonable amount of time, at no additional charge to Customer.10.3 Partial Termination by Customer
(a) Customer agrees that during the Term, if Customer requires any
Services included in the Monthly Base Fee, Customer shall obtain
such Services solely from XYZ.
(b) Customer may terminate one or more of the Initial Services
(other than those included in the Monthly Base Fee) upon twelve (12)
months' prior written notice of termination to XYZ without payment
of the Termination Fee (as defined Section 11.1). In the event
Customer wishes to terminate on less than twelve (12) months' prior
written notice, Customer shall provide XYZ with at least six (6)
months' prior written notice, such notice being accompanied by
payment of an amount equal to the Estimated Remaining Value,
adjusted equitably to reflect the value of the terminated Service for the
balance of the twelve (12) month notice period.
(c) For all New Services, Customer may terminate the same upon
ninety (90) days prior written notice to XYZ, without payment of any
buyout fees or charges, except that in the event of termination of all
Services under the Agreement prior to expiration of such ninety (90)
day period, the provisions of Article 11 shall apply.
10.4 Development of Custom Software
XYZ reserves the right to determine the programming (whether
hardware or software) utilized by XYZ with the equipment used in
fulfilling its duties under this Agreement. All programs (including
ideas and know-how and concepts) developed by XYZ are and shall
remain XYZ's sole property. Any writing or work of authorship
created by XYZ in the course of performing the Services under this
Agreement, even if paid for by Customer, shall be the property of
XYZ ("Developed Software"). XYZ may make such Developed
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Software available to any of its other customers; provided, however, if
Customer has paid for such Developed Software and XYZ offers, as
part of XYZ's standard price list, a separate service resulting
exclusively from such Developed Software, XYZ will refund, or
credit, to Customer any amounts paid for such Developed Software as
follows: 25% of the amount paid to XYZ shall be refunded after one
(1) XYZ customer is using the Developed Software; 25% after five (5)
XYZ customers are using the Developed Software; and remaining
50% refunded after ten (10) XYZ customers are using the Developed
Software. ABC and its Affiliates shall not be deemed "XYZ
customers" for the purposes of this Section 10.4.10.5 Technology Refresh
XYZ shall provide to Customer, for evaluation, any new banking
core application processing technologies offered by XYZ to its
customers during the Term ("Improved Technology") that could
reasonably be expected to have an impact on Customer's processing
needs in connection with its business. If Customer elects to transfer its
processing from the XYZ Service Bureau System to the Improved
Technology, Customer shall have the option to (a) continue paying the
fees set forth in the Fee Schedule (adjusted as necessary for then-
current account volumes) and pay XYZ any Conversion-related
charges for transfer to the Improved Technology; or (b) if the fees
charged by XYZ for the Improved Technology are lower than those in
the Fee Schedule, terminate this Agreement for convenience pursuant
to Section 11.1 below and enter into a new agreement with XYZ for
the Improved Technology.
11. Termination
11.1 For Convenience or Default By Customer
(a) XYZ may terminate this Agreement pursuant to Section 11.2, or
(b) Customer may terminate this Agreement for convenience upon at
least six (6) months' prior written notice to XYZ; provided that
Customer pays XYZ an early termination fee ("Termination Fee") in
an amount equal to ______ percent (____%) of the Estimated
Remaining Value. Customer shall not deliver notice of termination for
convenience to XYZ prior to expiration of the first Contract Year. The
Termination Fee shall apply to any early termination of this
Agreement other than pursuant to termination of this Agreement by
Customer pursuant to Sections 11.2 or 11.3 below.
11.2 For Cause
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If either party fails to perform any of its material obligations under
this Agreement and does not cure such failure within thirty (30) days
after being given notice specifying the nature of the failure, then the
non-defaulting party may, by giving notice to the other party,
terminate this Agreement as of the date specified in such notice of
termination.
11.3 For Insolvency
In addition to the termination rights set forth in Sections 11.1 and
11.2, subject to the provisions of Title 11, United States Code, if either
party becomes or is declared insolvent or bankrupt, is the subject to
any proceedings relating to its liquidation, insolvency or for the
appointment of a receiver or similar officer for it, makes an
assignment for the benefit of all or substantially all of its creditors, or
enters into an agreement for the composition, extension, or
readjustment of all or substantially all of its obligations, then the other
party, by giving written notice to such party, may terminate this
Agreement as of a date specified in such notice of termination.
12. Termination Assistance Services12.1 Termination Assistance
Commencing six (6) months prior to the expiration of the Term of
this Agreement, or upon any termination of this Agreement for any
reason, XYZ shall provide Customer, at Customer's expense, all
necessary assistance (except as would ordinarily be provided as
processing Services under this Agreement) to allow the Services to
continue without interruption or adverse affect to Customer and to
facilitate the orderly transition of Services to Customer or its designee
("Termination Assistance"). At the written request of Customer, given
at least ____ days prior to expiration of the Term of the Agreement,
XYZ shall continue to provide Customer all Services at the rates set
forth in this Agreement, for a maximum period of six (6) months. As
part of the Termination Assistance, XYZ shall assist Customer to
develop a plan for the transition of all data processing services from
XYZ to Customer or its designee on a reasonable schedule developed
by Customer. Prior to providing any Termination Assistance, XYZ
shall deliver to Customer a good faith estimate of all such Expenses
and charges including, without limitation, charges for custom
programming services. Customer understands and agrees that all
Expenses and charges for Termination Assistance shall be computed
in accordance with XYZ's then-current rates for such products,
materials and services. Nothing contained herein shall obligate
Customer to receive Termination Assistance from XYZ.
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13. Damages
13.1 Damages
Each party shall be liable to the other party solely for Damages
arising out of or relating to their respective performance or failure to
perform under this Agreement.
13.2 No Consequential Damages
Neither party shall be liable for, nor will the measure of any
damages in any event include, any indirect, incidental, punitive,
special or consequential damages or amounts for loss of income,
profits or savings arising out of or relating to performance or failure to
perform under this Agreement, even if such party has been advised of
the possibility of such losses or damages.
13.3 Equitable Relief
Either party may seek equitable remedies, including specific
performance and injunctive relief, for a breach of the other party's
obligations under this Agreement.
13.4 Limitation of Liability
Notwithstanding any provision in this Agreement, XYZ's total
liability under this Agreement shall not exceed payments made to
XYZ by Customer under this Agreement during the nine (9) months
prior to the event. If Customer terminates this Agreement less than
nine (9) months following the Effective Date, XYZ's total liability
shall be the average monthly payments made to XYZ by Customer
following the Effective Date, multiplied by nine (9).
13.5 Liquidated Damages
Customer acknowledges that XYZ shall suffer a material adverse
impact on its business if this Agreement is terminated pursuant to
Sections 11.1 or XYZ's termination under Section 11.2 and that the
resulting damages may not be susceptible of precise determination.
Customer acknowledges that the Termination Fee is a reasonable
approximation of such damages and shall be deemed to be liquidated
damages and not a penalty.
14. Indemnity
14.1 Indemnity
The following obligations shall apply to claims made by third
parties arising out of the events described in this Section 14:
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14.1.1 By Customer
Customer shall indemnify XYZ from, defend XYZ against, and pay
any final judgments awarded against XYZ, in connection with any
liability or expenses arising out of or relating to: (i) the inaccuracy or
untruthfulness of any representation or warranty made by Customer to
XYZ; (ii) a violation of Federal, state, or other laws or regulations for
the protection of persons or members of a protected class or category
of persons by Customer or its employees or agents; (iii) sexual
discrimination or harassment by Customer or its employees or agents;
(iv) work-related injury or death caused by Customer or its employees
or agents; (v) tangible personal or real property damage or financial or
monetary loss incurred by XYZ resulting from Customer's acts or
omissions, or those of its employees or agents; and (vi) the data,
information and/or instructions furnished by Customer pursuant to
Section 20.4 and any inaccuracy or inadequacy therein. Customer
shall be responsible for any costs and Expenses incurred by XYZ in
connection with the enforcement of this Paragraph.
14.1.2 By XYZ
XYZ shall indemnify Customer from, defend Customer against, and
pay any final judgment awarded against Customer, in connection with
any liability or expenses arising out of or relating to: (i) any claim by a
third party that the Services or XYZ's software used to provide the
Services infringe upon any United States patent, copyright, trademark
or other proprietary right of a third party; (ii) any claim by a third
party with respect to services or systems provided by XYZ to a third
party, (iii) the inaccuracy or untruthfulness of any representation or
warranty made by XYZ to Customer, (iv) a violation of Federal, state,
or other laws or regulations for the protection of persons or members
of a protected class or category of persons by XYZ or its employees or
agents (v) sexual discrimination or harassment by XYZ, its
employees, or agents, (vi) work-related injury or death caused by
XYZ, its employees, or agents, and (vii) tangible personal or real
property damage resulting from XYZ's acts or omissions. XYZ shall
be responsible for any costs and Expenses incurred by Customer in
connection with the enforcement of this Paragraph.
15. Dispute Resolution
15.1 Representatives of Parties
All disputes arising under or in connection with this Agreement
shall initially be referred to the account representatives. If the account
representatives are unable to resolve the dispute within ten (10)
business days after referral of the matter to them, the managers of the
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account representatives shall attempt to resolve the dispute. If, after
five (5) days they are unable to resolve the dispute, senior executives
of the parties shall attempt to resolve the dispute. If, after give (5) days
they are unable to resolve the dispute, the parties shall submit the
dispute to the chief executive officers of the parties for resolution.15.2 Continuity of Performance
XYZ acknowledges that the provision of the Services is critical to
the business and operations of Customer. Accordingly, in the event of
a dispute between Customer and XYZ, during the pendency of the
dispute resolution proceedings described in this Article 15, XYZ shall
continue to provide the Services and Customer shall continue to pay
any undisputed amounts to XYZ.
16. Representations And Warranties16.1 By XYZ
XYZ represents and warrants that: (I) it is a corporation validly
existing and in good standing under the laws of Maryland; (ii) it has
all requisite corporate power and authority to execute, deliver and
perform its obligations under this Agreement; (iii) no approval,
authorization or consent of any governmental or regulatory authority
is required to be obtained or made by it in order for it to enter into and
perform its obligations under this Agreement; (iv) in connection with
performing its obligations under this Agreement, it shall comply with
all applicable Federal, state and local laws and regulations and has
obtained all necessary applicable permits, rights and licenses; (v) it is
the owner, or otherwise has the right (or shall acquire the right, as
appropriate) to the Developed Software and that the Developed
Software and the provision of the Services hereunder will not infringe
upon the United States proprietary rights of any Third Party; (vi) each
of its employees providing Services hereunder shall have the proper
training, skill and background, and that all Services shall be performed
in a workmanlike manner consistent with good practice in the
industry; (vii) the Services and the XYZ Service Bureau Systems shall
be Millennium Compliant on or before December 31, 1998 and any
modification to make the Services and/or the XYZ Service Bureau
System Millennium Compliant shall be made by XYZ at no additional
charge; and (viii) the Services shall be performed in accordance with
the provisions of this Agreement.
16.2 By Customer
Customer represents and warrants that: (I) ABC is a corporation
validly existing and in good standing under the laws of Delaware; (ii)
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ABC has all requisite corporate power and authority to execute,
deliver and perform its obligations under this Agreement; and (iii) no
approval, authorization or consent of any governmental or regulatory
authority is required to be obtained or made by it in order for it to
enter into and perform its obligations under this Agreement.16.3 Disclaimer of Warranties
EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES
OF XYZ AND CUSTOMER, RESPECTIVELY SET FORTH IN
SECTIONS 16.1 AND 16.2, XYZ AND CUSTOMER DISCLAIM
ALL OTHER WARRANTIES, WHETHER WRITTEN, ORAL,
EXPRESSED OR IMPLIED INCLUDING, WITHOUT LIMITING
THE GENERALITY OF THE FOREGOING, ANY WARRANTY
OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE.
17. Confidentiality And Ownership17.1 Customer Data
Customer shall remain the sole and exclusive owner of all
Customer Data and other Confidential Information (as hereinafter
defined), regardless of whether such data is maintained on magnetic
tape, magnetic disk, or any other storage or processing device. All
such Customer Data and other Confidential Information shall,
however, be subject to regulation and examination by the appropriate
auditors and regulatory agencies to the same extent as if such
information were on Customer's premises. "Customer Data" means
any and all data and information of any kind or nature submitted to
XYZ by Customer, or received by XYZ on behalf of Customer, in
connection with the Services. Upon Customer's request and at
Customer's expense, XYZ shall promptly provide to Customer copies
of any and all Customer Data on media designated by Customer, in the
format on which it resides on the XYZ Service Bureau System.
17.2 XYZ Systems
Customer acknowledges that it has no rights in any software,
systems, documentation, guidelines, procedures and similar related
materials or any modifications thereof provided by XYZ, except with
respect to Customer's use of the same during the Term in XYZ's
provision of the Services.
17.3 Use of Customer Data
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Customer Data shall not be: (1) used by XYZ other than in
connection with providing the Services; (2) disclosed, sold, assigned,
leased or otherwise provided to Third Parties by XYZ or XYZ's
subcontractors; or (3) commercially exploited by or on behalf of XYZ
or XYZ's subcontractors. XYZ shall adequately identify the Customer
Data as Customer's property.
17.4 Confidential Information
"Confidential Information" of a party shall mean all confidential or
proprietary information and documentation of such party, whether or
not marked as such, including without limitation with respect to
Customer, all Customer Data. Confidential Information shall not
include: (i) information which is or becomes publicly available (other
than by the person or entity having the obligation of confidentiality)
without breach of this Agreement; (ii) information independently
developed by the receiving party; (iii) information received from a
third party not under a confidentiality obligation to the disclosing
party; or (iv) information already in the possession of the receiving
party without obligation of confidence at the time first disclosed by
the disclosing party. The parties acknowledge and agree that the
substance of the negotiations of this Agreement, and the terms of this
Agreement are considered Confidential Information subject to the
restrictions contained herein. Neither party shall use, copy, sell,
transfer, publish, disclose, display, or otherwise make any of the other
party's Confidential Information available to any third party without
the prior written consent of the other.
17.5 Obligations of the Parties
XYZ and Customer shall hold the Confidential Information of the
other party in confidence and shall not disclose or use such
Confidential Information other than for the purposes contemplated by
this Agreement, and shall instruct their employees, agents, and
contractors to use the same care and discretion with respect to the
Confidential Information of the other party or of any third party
utilized hereunder that XYZ and Customer each require with respect
to their own most confidential information, but in no event less than a
reasonable standard of care, including but not limited to, the
utilization of security devices or procedures designed to prevent
unauthorized access to such materials. Each party shall instruct its
employees, agents, and contractors of its confidentiality obligations
hereunder and not to attempt to circumvent any such security
procedures and devices. Each party's obligation under the preceding
sentence may be satisfied by the use of its standard form of
confidentiality agreement, if the same reasonably accomplishes the
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purposes here intended. All such Confidential Information shall be
distributed only to persons having a need to know such information to
perform their duties in conjunction with this Agreement.17.6 Security
XYZ shall establish and maintain safeguards against the
destruction, loss or alteration of the Customer Data in the possession
of XYZ that shall be no less rigorous than those data security policies
in effect to protect XYZ's similar confidential information. In the
event XYZ discovers or is notified of a breach or potential breach
relating to the Customer Data, XYZ shall immediately (1) notify
Customer's Account Representative of such breach or such potential
breach and shall (2) investigate such breach or such potential breach,
and inform Customer of the results of such investigation.
18. Regulatory Compliance
(a) During the Term of this Agreement, XYZ shall perform its
obligations herein in such a manner as to be in full compliance with all
applicable Federal and state laws and regulations. XYZ shall provide
Customer with all data and reports necessary for Customer to comply
with all Federal and state laws and regulations applicable to the
transactions and/or accounts processed by XYZ. Customer shall notify
XYZ of any requirements or changes in state law which affect XYZ's
performance of its obligations herein upon which XYZ shall
implement the necessary changes prior to the deadline imposed by the
regulatory or other governmental agency mandating such change.
XYZ's obligation to meet the compliance deadline shall be contingent
upon XYZ receiving timely notice from Customer or any other
customer of XYZ so as to enable XYZ to schedule and implement
such change prior to the regulatory deadline. XYZ shall implement
such change at Customer's sole cost and expense (shared among all of
XYZ's other customers who are affected by such change).
(b) Provided that such enactments or regulations do not prohibit
XYZ from performing the Services for Customer, XYZ shall use
commercially reasonable efforts to perform the Services regardless of
changes in legislative enactments or regulatory requirements. If such
changes prevent XYZ from performing its obligations under this
Agreement, XYZ shall, when appropriate, make commercially
reasonable efforts to develop and implement a suitable temporary
work around until such time as XYZ can perform its obligations under
this Agreement without such temporary work around.
19. Disaster Recovery
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19.1 Disaster Recovery Plan
XYZ shall maintain throughout the Term of the Agreement a
disaster recovery plan ("Disaster Recovery Plan") in compliance with
all regulatory requirements, which Disaster Recovery Plan shall cover
all the Services. For the purposes of this Agreement, "Disaster" means
any unplanned interruption of operations which materially affects the
ability of XYZ to provide Services, or as otherwise provided in the
Disaster Recovery Plan. Review and acceptance of any Disaster
Recovery Plan as may be required by any such regulatory
organizations shall be the responsibility of Customer, provided that
XYZ provides Customer and any such regulatory organizations such
cooperation and assistance in conducting such reviews as Customer or
such regulatory organizations may from time to time reasonably
request. Any Disaster Recovery Plan shall provide, at a minimum, for
XYZ to provide alternate electrical power supplies for uninterrupted
service. The Disaster Recovery Plan shall also designate one or more
facilities (each a "Disaster Recovery Site") or separate computer
resources to which XYZ shall move the affected portion of any
Services upon the declaration of a Disaster (as provided in the Disaster
Recovery Plan) requiring such a relocation. Any Disaster Recovery
Site must be appropriately equipped with data processing resources
sufficient to provide all Services in compliance with regulatory
requirements. Any Disaster Recovery Plan must also specify all
procedures for the determination or declaration of a Disaster, which
determination or declaration may not be unreasonably withheld or
delayed by either party. A detailed Executive Summary of the Disaster
Recovery Plan, as amended from time to time, shall be provided to
Customer without charge.
19.2 Relocation
XYZ shall relocate all affected Services (or any portion thereof) to
the Disaster Recovery Site as expeditiously as possible after
declaration of a Disaster (as provided in the Disaster Recovery Plan),
and shall coordinate with Customer all requisite telecommunications
modifications necessary to achieve full connectivity to the Disaster
Recovery Site in material compliance with all regulatory
requirements.
19.3 Resumption of Services
The Disaster Recovery Plan shall provide that, following the
declaration of a Disaster, XYZ is able to resume all Services in
accordance therewith utilizing the Disaster Recovery Site, within the
time periods specified in the Disaster Recovery Plan. In the event
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XYZ is unable to resume the Services to Customer following the
declaration of any Disaster, within the time periods specified in the
Disaster Recovery Plan, Customer shall have the right to terminate
this Agreement without payment of any termination fees or charges if
XYZ fails to cure such breach and comply with the Disaster Recovery
Plan within seven (7) days after receipt of written notice from
Customer. Such termination shall occur on the date specified in
Customer's notice to XYZ, but no later than six (6) months after the
date of the notice. XYZ shall cooperate with Customer in ensuring
that Customer's own disaster recovery plan for its branches is
coordinated with XYZ's Disaster Recovery Plan.19.4 Annual Test
XYZ shall test its Disaster Recovery Plan by conducting one (1)
test annually and shall provide Customer with a description of the test
results in accordance with applicable laws and regulations.
20. General Terms And Conditions20.1 Force Majeure
Notwithstanding any provision contained in this Agreement, neither
party shall be liable to the other to the extent fulfillment or
performance of any terms or provisions of this Agreement is delayed
or prevented by revolution or other civil disorders; wars; acts of
enemies; strikes; labor disputes; electrical equipment or availability
failure; fires; floods; acts of God; federal, state or municipal action;
statute; ordinance or regulation; or, without limiting the foregoing, any
other causes not within its control, and which by the exercise of
reasonable diligence it is unable to prevent, whether of the class of
causes hereinbefore enumerated or not. This clause shall not apply to
the payment of any sums due under this Agreement by either party to
the other, nor shall it extend the time periods under XYZ's Disaster
Recovery Plan in the event the Services are affected as a result of the
foregoing events.
20.2 Transmission of Data
The expense and risk of loss associated with transportation and
transmission of data and media between XYZ and Customer shall be
borne by Customer. Customer shall be responsible for submitting its
data to XYZ and XYZ shall be responsible for transmitting the
processed data to Customer. Data lost by XYZ following processing,
including loss of data already transmitted, shall either be restored by
XYZ from its back up media or shall be reprocessed at no charge to
Customer.
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20.3 Equipment and Network
Customer shall obtain and maintain at its own expense its own data
processing and communications equipment, including the equipment
and network set forth in the Systems Integration Agreement. Customer
shall pay all installation, monthly, and other charges relating to the
installation and use of communications lines in connection with the
Services. Following completion of the Implementation Services set
forth in the Systems Integration Agreement, XYZ shall be responsible
for the continued availability or reliability of the communications lines
to the Operations Center which are used by Customer in accessing the
Services. XYZ agrees to perform reasonable diagnostic services and
communicate to vendors any deficiencies of which XYZ is, or
becomes, aware. XYZ has reviewed Customer's existing network
design with Customer and proposed a network design under the
Systems Integration Agreement to ensure the adequacy of the network
to achieve the Performance Standards.
20.4 Reliance on Data
XYZ will perform the Services set forth in this Agreement on the
basis of data, information and/or instructions furnished by Customer.
XYZ shall be entitled to rely upon any such data, information, and/or
instructions provided by Customer. If any error results from incorrect
input supplied by Customer, Customer shall be responsible for
discovering and reporting such error and supplying the data necessary
to correct such error to XYZ for processing at the earliest possible
time.
20.5 Data Backup
Customer shall maintain adequate records for at least ten (10)
business days including (i) microfilm images of items being
transported to XYZ or (ii) backup on magnetic tape or other electronic
media where transactions are being transmitted to XYZ, from which
reconstruction of lost or damaged items or data can be made.
Customer assumes all responsibility and liability for any loss or
damage resulting from failure to maintain such records.
20.6 Balancing and Controls
Customer shall (a) on a daily basis, review all input and output,
controls, reports, and documentation, to ensure the integrity of data
processed by XYZ; and (b) on a daily basis, check exception reports to
verify that all file maintenance entries and nondollar transactions were
correctly entered. Customer shall be responsible for initiating timely
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remedial action to correct any improperly processed data which these
reviews disclose.20.7 Use of Services
Customer assumes exclusive responsibility for the consequences of
any Proper Instructions Customer may give XYZ, if followed by
XYZ, for Customer's failure to properly access the Services in the
manner prescribed by XYZ, and for Customer's failure to supply
accurate input information. Customer agrees that, except as otherwise
permitted in this Agreement or in writing by XYZ, Customer will use
the Services only for its own business purposes and to service its
banking customers and clients and will not sell or otherwise provide,
directly or indirectly, any of the Services or any portion thereof to any
Third Party. Customer shall not use any of the Services as a service
bureau or shared resource arrangement with any Third Party.
20.8 Regulatory Assurances
XYZ and Customer acknowledge and agree that the performance of
these Services will be subject to regulation and examination by
Customer's regulatory agencies to the same extent as if such Services
were being performed by Customer. Upon request, XYZ agrees to
provide any appropriate assurances to such agency and agrees to
subject itself to any required examination or regulation. Customer
agrees to reimburse XYZ for reasonable costs actually incurred due to
any such examination or regulation that is performed solely for the
purpose of examining Services used by Customer.
20.8.1 Notice Requirements
The Customer shall be responsible for complying with all
regulatory notice provisions to any applicable governmental agency,
which shall include providing timely and adequate notice to the Chief
Examiner of the Federal Home Loan Bank Board, the Office of Thrift
Supervision, the Office of the Comptroller of the Currency, The
Federal Deposit Insurance Corporation, the Federal Reserve Board, or
their successors, as applicable (collectively, the "Federal Regulators"),
as of the effective date of Services under this Agreement, identifying
those records to which this Agreement shall apply and the location at
which such Services are to be performed.
20.8.2 Examination of Records
The parties agree that the records maintained and produced under
this Agreement shall, at all times, be available for examination and
audit by governmental agencies having jurisdiction over the
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Customer's business, including any Federal Regulator. The Director of
Examinations of any Federal Regulator or his or her designated
representative shall have the right to ask for and to receive directly
from XYZ any reports, summaries, or information contained in or
derived from data in the possession of XYZ related to the Customer.
XYZ shall notify Customer as soon as reasonably possible of any
formal request by an authorized governmental agency to examine
Customer's records maintained by XYZ, if XYZ is permitted to make
such a disclosure to Customer under applicable law or regulations.
Customer agrees that XYZ is authorized to provide all such described
records when formally required to do so by a Federal Regulator.20.8.3 Audits
XYZ shall cause a third party review of the XYZ Service Bureau
System, the Operations Center, and related internal controls to be
conducted annually by its independent auditors. XYZ shall provide to
Customer, upon written request, one copy of the audit report resulting
from such review. XYZ agrees to promptly implement any changes
recommended as a result of such audit.
20.8.4 Access
For a period of two (2) years and during such time that a dispute is
pending, XYZ agrees to retain all records and supporting
documentation sufficient to verify the fees charged under this
Agreement and to provide in a timely manner the same to Customer
following reasonable written request from Customer.
20.9 IRS Filing
Customer represents it has complied with all laws, regulations,
procedures, and requirements in attempting to secure correct tax
identification numbers (TINs) for Customer's payees and customers
and agrees to attest to this compliance by an affidavit provided
annually. Customer authorizes XYZ to act as Customer's agent and
sign on Customer's behalf the Affidavit required by the Internal
Revenue Service on Form 4804, or any successor form. Exhibit B
(Attorney-in-Fact Appointment) and Exhibit C (Affidavit) shall be
executed by Customer contemporaneously with the execution of this
Agreement. Customer acknowledges that XYZ's execution of the
Form 4804 Affidavit on Customer's behalf does not relieve Customer
of responsibility to provide accurate TINs or liability for any penalties
which may be assessed for failure to comply with TIN requirements.
Customer agrees to hold XYZ harmless from any liabilities, claims,
expenses, penalties, or damages (including attorneys' fees) which may
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be assessed or incurred as a result of the failure to comply with TIN
requirements.20.10 Affiliates
All processing for Customer and Customer's subsidiaries and
Affiliates which XYZ does shall be included as part of the Services
provided under this Agreement and shall be done in accordance with
the terms and conditions of this Agreement. Customer agrees that it is
responsible for assuring compliance with the Agreement by its
Affiliates and subsidiaries. Customer agrees to be responsible for the
submission of its Affiliates' data to XYZ for processing and for the
transmission to Customer's Affiliates of such data processed by and
received from XYZ. Subject to the terms and conditions of this
Agreement, Customer agrees to pay any and all fees owed under this
Agreement for Services rendered to it and its subsidiaries and other
Affiliates.
20.11 Future Acquisitions
Customer acknowledges that XYZ has established the Fee Schedule
and enters into this Agreement on the basis of XYZ's understanding of
the Customer's current need for Services and Customer's anticipated
future need for Servi
