EXHIBIT 10.3
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Rochester Gas & Electric Corp. CONTRACT
CONTRACT NO. CP-70134-J-RD SEPTEMBER 23, 1997
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Contractor's Name and Address
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IBM CORPORATION
100 CLINTON SQUARE
ROCHESTER, NY 14649
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SECTION A
CONTRACT
THIS CONTRACT is entered into as of September 23, 1997 by and between Rochester
Gas and Electric Corporation a corporation organized and existing under the laws
of the State of New York (hereinafter called RG&E) and International Business
Machines Corporation (IBM), a corporation organized and existing under the laws
of the State of New York , hereinafter called the CONTRACTOR,
WITNESSETH:
This Contract is comprised of the following Sections:
Section A - Contract and Signature Page
Section B - Time and Material Prices
Section C - Statement of Work
Section D - Packaging and Marking
Section E - Quality Requirements (Not Applicable)
Section F - Deliveries and Performance (Not Applicable)
Section G - Contract Administration
Section H - General Contract Provisions
Section I - Special Contract Provisions
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All documents in this Contract shall be read so as to be consistent. In the
event of an inconsistency in this Contract, and unless otherwise provided
herein, the inconsistency shall be resolved by giving precedence in the follow
order:
1. Section C - Statement of Work;
2. Section I - Special Contract Provisions;
3. Section H - General Contract Provisions;
4. Section A - Contract and Signature Page, Section B - Time and Material
Prices,
Section D - Packaging and Marking, and Section G- Contract
Administration
The foregoing documents referenced herein are hereby incorporated as part of
this Contract.
This agreement supersedes all prior offers, negotiations, and agreements,
express or implied, pertaining to the subject matter herein and constitutes the
final, entire and complete agreement between the parties.
Now therefore, both parties, do hereby bind their respective companies to the
duties and responsibilities of performance required hereunder.
This proposed contract shall constitute an offer until acceptance by the
CONTRACTOR. Except as may be otherwise provided herein, RG&E specifically
reserves the right to revoke this offer at any time prior to acceptance
hereof in writing by the CONTRACTOR. Upon acceptance by the CONTRACTOR,
the rights and obligations of the parties hereto shall be subject to and
governed by the Terms and Conditions contained herein. When accepted by
the CONTRACTOR, this contract, as described, shall constitute the entire
agreement between the parties hereto and any terms or conditions offered by
the CONTRACTOR in addition thereto or in any way different from those set
forth herein are objected to by RG&E.
In WITNESS WHEREOF, the parties hereto have executed this Contract as of the day
and year first above written.
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International Business Machines Rochester Gas and Electric
Corporation Corporation
By /s/ H. C. Wolff By /s/ J. B. Stokes
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Title Managing Principal Title Senior Vice President & CFO
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Date 10/3/97 Date September 29, 1997
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SECTION B.
PRICES
As consideration for performance of the work required under this Contract, RG&E
hereby agrees to pay the CONTRACTOR in U.S. Dollars in accordance with the
requirements of this Contract on a Time and Material basis as follows:
B.1 PRICE
CLIN DESCRIPTION QTY ESTIMATED
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PRICE
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001 Assessment Evaluation 1 Lot $200,000
B.2. RATES (Overtime rates equal to straight time rates)
B.2.1 Labor Rate for CLIN 001 is established at $200.00 per hour, blended
rate.
B.2.2 Labor rates for all future Statements of Work shall be established
by mutual agreement prior to signing of the applicable Statement of
Work and shall be itemized substantially as follows, provided that
such rates shall be consistent with the hourly rates at which IBM
provides Year 2000 assessment, remediation and testing services for
other similarly situated commercial customers:
Labor Category Position Description Rate per Hour
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B.3. TERMS OF PAYMENT
The CONTRACTOR shall submit properly certified invoices, in triplicate to
Rochester Gas & Electric Corporation, 89 West Avenue, Rochester, NY 14649,
Attn: Accounts Payable. A copy of the invoice shall be provided to the
authorized Procurement Representative identified in Section G. All
invoices shall reference this contract number and applicable CLIN.
B.3.1 Terms of payment for invoices under this contract are Net 30 days
after receipt of invoice. A late fee of 2% per month from the due date
will be applied to all outstanding invoices which are not paid when due
except to the extent that such payment is disputed in good faith by RG&E.
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B.4 PAYMENT PROVISIONS
B.4.1 Progress Payments
Monthly payments will invoiced by IBM for labor hours and Travel and
Living expenses incurred. Provided RG&E executes IBM SOWs for Year
2000 services, and provided further that the aggregate value of such
SOWs is, at a minimum, of $10 million dollars, then IBM agrees that
for each partition, it will bill RG&E 95% of the billable charges
for each such partition and that the remaining 5% will not be due
until the expiration of the applicable Support Time Period, for such
partition. RG&E and IBM agree to discuss whether alternate retained
billing provisions are appropriate in the event the estimated
aggregate value of the Year 2000 services is less than $10 million.
Travel & Living Expenses shall be invoiced with actual direct cost
only, without overhead burden or profit.
Reasonable expenses in accordance with the following expense
reimbursement policies shall be allowed:
EXPENSE REIMBURSEMENT POLICIES
1. Ground transportation will be reimbursed for tolls, parking fees, taxi, bus
or auto rental. In the case of auto rentals, prior instructions must be
obtained from RG&E regarding the rental company and rates to be used and a
copy of the auto rental agreement will be required for reimbursement.
2. Air transportation will be reimbursed at the tourist or coach class fare
for the most direct route of scheduled airlines.
3. RG&E will reimburse lodging upon presentation of hotel bill which is
commensurate with the average rates charged for the immediate area.
4. RG&E will reimburse reasonable and actual expenses for meals. The
guidelines for meal(s) is a maximum amount of $30.00 per day.
5. RG&E will not reimburse personal expenses. If expenses of a personal
nature (i.e., hotel shop purchases, alcoholic beverages, sundry items,
movies, etc.) are charged against a hotel room, the amount will be deducted
from the invoice presented to RG&E.
6. For trips which extend beyond four (4) days, reasonable valet and laundry
charges will be reimbursed.
7. Necessary business calls made on behalf of RG&E will be reimbursed.
Business use of a personal automobile (excluding travel time) will be
reimbursed at the rate of $.275 per mile.
8. RG&E will reimburse reasonable tipping.
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9. You shall submit to RG&E invoices and applicable receipts for expenses
incurred in excess of $25.00 per item. RG&E shall make payments to you
within thirty (30) days after receipt of acceptable invoices and receipts.
SECTION C
STATEMENT OF WORK
C.1 SUPPLIES/SERVICES TO BE FURNISHED
The CONTRACTOR, in the capacity as an Independent CONTRACTOR, and not as an
agent of RG&E shall, in accordance with the terms and conditions of this
Contract, furnish the necessary management, personnel, labor, services,
documentation, materials, equipment, tools, facilities and support services,
except as specified herein to be furnished by RG&E, and do all actions/necessary
and/or incidental to performing the requirements of this Contract. The tasks
include, but are not limited to, planning, design, supporting analyses,
documentation, fabrication, demonstration and delivery. During the performance
of all tasks, RG&E shall have the opportunity to review the designs, witness
critical in-process operations, tests, configuration audits, and in-process
analytical effort.
C.1.1 Statement of Work (SOW)
The CONTRACTOR shall perform all effort required by and in conformance with
the requirements of any Statement of Work as may be signed by the CONTRACTOR and
RG&E from time to time, with respect to the year 2000 project, which are
incorporated by reference herein. As used herein, "Statement of Work" shall mean
any Statement of Work attached and any such additional Statement of Work.
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SECTION D
PACKAGING AND MARKING
(TO BE PROVIDED BY IBM UPON COMPLETION OF SOW. PACKAGING, MARKING AND
METHOD OF SHIPMENT FOR DELIVERY AND RECEIPT OF CODE FROM IBM'S CONVERSION
CENTER SHALL BE INCORPORATED INTO A SOW.)
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SECTION G
CONTRACT ADMINISTRATION
G.1. CONTRACT DIRECTION
Direction given to the CONTRACTOR shall be binding on the CONTRACTOR only
when issued in writing by a RG&E authorized Procurement Representative.
All direction received shall be acknowledged by the CONTRACTOR within five
(5) working days of receipt of the communication. All communication shall
be sent to the address shown below:
G.1.1 RG&E CONTRACTOR
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For Correspondence: For Correspondence:
RG&E Corp. IBM Corp.
89 East Avenue, One Commercial Plaza
Rochester, NY 14649 Hartford, Connecticut 06103
Attn: Robert J. DiBaudo Attn: Richard Partyka
Mail Point: 2nd Floor
Telephone:716-77--724-8033 Telephone: 860-727-6145
FAX: 716-771-2820 FAX: 860-727-6265
G.1.2 For all Quotes/Proposals including updates and revisions:
RG&E CORP.
89 East Avenue,
Rochester, NY 14649
Attn: Robert J. DiBaudo
Mail Point: 2nd Floor
Telephone: 716-77--724-8033
FAX: 716-771-2820
G.2 LIAISON RESPONSIBILITIES
Unless otherwise stated herein, RG&E shall be solely responsible for all
liaison and coordination between RG&E the CONTRACTOR, or any associated
CONTRACTORS, and any designated RG&E Contractors
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G.3. ROUTING OF CONTRACT DATA REQUIREMENTS
Unless otherwise directed in writing by an authorized RG&E Procurement
Representative, all data requiring submittal to, or action by RG&E, or any
employee or organizational unit of RG&E, shall be routed to, or through the
RG&E Procurement Representative by transmittal letter listing the documents
and the applicable provision requiring submission.
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SECTION H
IBM AGREEMENT FOR SERVICES
(ATTACHED)
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[IBM LOGO] Agreement for Services
________________________________________________________________________________
Thank you for doing business with us. We strive to provide you with the highest
quality Services. If, at any time, you have any questions or problems, or are
not completely satisfied, please let us know. Our goal is to do our best for
you.
This IBM Agreement for Services (called the Agreement") covers the Services you
acquire from us, including Services we provide on a contract period basis and
Services we provide on a project basis.
This Agreement and its applicable Attachments and Transaction Documents are the
complete agreement regarding these Services, and replace any prior oral or
written communications between us. No machines or licensed program products are
to be acquired under this Agreement. Such items are available only under the
terms of 1) the IBM Customer Agreement (or any equivalent agreement between us)
or 2) the applicable third-party agreement.
By signing below for our respective Enterprises, each of us agrees to the terms
of this Agreement. Once signed, 1) any reproduction of this Agreement, an
Attachment, or Transaction Document made by reliable means (for example,
photocopy or facsimile) Is considered an original and 2) all Services you order
under this Agreement are subject to it.
Agreed to: (Enterprise name) Agreed to:
International Business Machines
Corporation
By /S/ J B Stokes By /s/ H C Wolff
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Authorized signature Authorized signature
Name (type or print): Name (type or print): H.C. Wolff
J. Burt Stokes
Date: Date: 10/3/97
September 29, 1997
Enterprise number Agreement number
Enterprise address: IBM Office address:
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After signing, please return a copy of this Agreement to the local "IBM Office
address" shown above.
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[IBM LOGO] Agreement for Services
Table of Contents
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Section Title
PART 1 - GENERAL
1.1 Definitions
1.2 Agreement Structure
1.3 Prices and Payment
1.4 Patents and Copyrights
1.5 Limitation of Liability
1.6 Mutual Responsibilities
1.7 Your Other Responsibilities
1.8 IBM Business Partners
1.9 Changes to the Agreement Terms
1.10 Agreement Termination
1.11 Geographic Scope
1.12 Governing Law
PART 2 - WARRANTY TERMS
2.1 Warranty for IBM Services
2.2 Extent of Warranty
2.3 Items Not Covered by Warranty
PART 3 - SERVICES
3.1 Maintenance Services
3.2 Continuing Support Services
3.3 Project Support Services
3.4 The Statement of Work
3.5 Materials Ownership and License
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IBM [LOGO] AGREEMENT FOR SERVICES
Part 1 - General
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1.1 DEFINITIONS
ENTERPRISE is any legal entity (such as a corporation) and the
subsidiaries it owns by more than 50 percent. The term
"Enterprise"applies only to the portion of the enterprise located in
the United States or Puerto Rico.
MACHINE is a machine, its features, conversions, upgrades, elements,
or accessories, or a combination of them. The term "Machine" includes
an IBM Machine and any non-IBM Machine (including other equipment)
that we may provide Maintenance Services for.
MATERIALS are literary works or other works of authorship (such as
programs, program listings programming tools, documentation, reports,
drawings, and similar works) that we may deliver to you. The term
"Materials" does not include licensed program products available under
their own license agreement.
Service is performance of a task, provision of advice and counsel,
assistance, or use of resource (such as access to an information data
base) we make available to you.
1.2 AGREEMENT STRUCTURE
ATTACHMENT
Some Services have terms in addition to those we specify in this
Agreement. We provide the additional terms in documents called
"Attachments," which are also part of this Agreement. We make the
Attachments available to you for signature.
TRANSACTION DOCUMENTS
For each business transaction, we will provide you with the
appropriate "Transaction Documents" that confirm the specific details
of the transaction. Some Transaction Documents require signature, and
others do not. Statements of Work and their Change Authorizations are
examples of Transaction Documents that must be signed by both of us.
Supplements and invoices are examples of administrative, unsigned
Transaction Documents.
CONFLICTING TERMS
If there is a conflict among the terms in the various documents, those
of an Attachment prevail over those of this Agreement. The terms of a
Transaction Document prevail over those of both of these documents.
OUR ACCEPTANCE OF YOUR ORDER
A Service becomes subject to this Agreement when we accept your order.
We accept your order by doing any of the following:
1. signing a Transaction Document signed by you;
2. sending you a supplement or invoice; or
3. providing the Service.
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YOUR ACCEPTANCE OF ADDITIONAL TERMS
You accept the additional terms in an Attachment or Transaction
Document by doing any of the following:
1. signing the Attachment or Transaction document;
2. allowing us to perform the Service; or
3. making any payment for the Service.
1.3 PRICES AND PAYMENT
The amount payable for a Service will be based on one or
more of the following types of charges:
1. recurring, including usage (for example, a periodic
charge for Continuing Support Maintenance Services);
2. time and materials (for example, charges for Hourly
Services); or
3. fixed price (for example, a specific amount agreed to
between us for Project Support Services).
Depending on the particular Service or circumstance,
additional charges may apply. We will inform you in advance
whenever additional charges apply.
Payment for Services is due as we specify, either in
advance, as the work progresses, or after the work is
completed. You agree to pay amounts due, including any late
payment fees, we specify in the invoice.
If any authority imposes a duty, tax, levy, or fee,
excluding those based on our net income upon any transaction
under this Agreement, then you agree to pay that amount as
specified the invoice or supply exemption documentation.
We may increase recurring charges for Services (including
hourly rates and minimums) by giving you three months'
written notice. An increase applies on the first day of the
applicable invoice period on or after the effective date we
specify in the notice.
You receive the benefit of a decrease in charges for amounts
which become due on or after the effective date of the
decrease.
1.4 PATENTS AND COPYRIGHTS
If a third party claims that Materials we provide to you
infringe that party's patent copyright, we will defend you
against that claim at our expense and pay all costs, damage
and attorney's fees that a court finally awards, provided
that you:
1. promptly notify us in writing of the claim; and
2 allow us to control, and cooperate~-with us in, the
defense and any related settlement negotiations.
If such a claim is made or appears likely to be made, you
agree to permit us to enable you continue to use the
Materials, or to modify them, or replace them with Materials
that are at least functionally equivalent. If we determine
that none of these
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alternatives is reasonably available, you agree to return
the Materials to us on our written request. We will then
give you a credit equal to the amount you paid us for the
Materials.
This is our entire obligation to you regarding any claim of
infringement.
CLAIMS FOR WHICH WE ARE NOT RESPONSIBLE
We have no obligation regarding any claim. based on any of
the following:
1. anything you provide which is incorporated into the
Materials:
2. your modification of the Materials; or
3. the combination, operation, or use of the Materials with
any product, data, or apparatus that we did not provide.
1.5 LIMITATION OF LIABILITY
Circumstances may arise where, because of a default on our
part or other liability, you are entitled to recover damages
from us. In each such instance, regardless of the basis on
which you are entitled to claim damages from us (including
fundamental breach, negligence, misrepresentation, or other
contract or tort claim), we are liable only for:
1. payments referred to in our patents and copyrights terms
described above;
2. damages for bodily injury (including death) and damage to
real property and tangible personal property; and
3. the amount of any other actual direct damages or loss, up
to the greater of $100,000 or the charges (if recurring,
12 months' charges apply) for the Service that is the
subject of the claim.
This limit also applies to any of our subcontractors. It is
the maximum for which we and our subcontractors are
collectively responsible.
ITEMS FOR WHICH WE ARE NOT LIABLE
Under no circumstances are we or our subcontractors liable
for any of the following:
1. third-party claims against you for losses or damages
(other than those under the first two items listed
above);
2. loss of, or damage to, your records or data; or
3. special, incidental, or indirect damages or for any
economic consequential damages (including lost profits or
savings), even if we-are informed of their possibility,
1.6 MUTUAL RESPONSIBILITIES
Both of us agree that under this Agreement;
1. neither of us grants the other the right to use its
trademarks, trade names, or other designations in any
promotion or publication;
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2. all information exchanged is nonconfidential. If either
of us requires the exchange of confidential information,
it will be made under a signed confidentiality agreement;
3. each is free to enter into similar agreements with
others;
4. each grants the other only the licenses and rights
specified. No other licenses or rights (including
licenses or rights under patents) are granted;
5. each may communicate with the other by electronic means
and such communication is acceptable as a signed writing.
An identification code (called a USERID) contained in an
electronic document is legally sufficient to verify the
sender's identity and the document's authenticity;
6. each will allow the other reasonable opportunity to
comply before it claims that the other has not met its
obligations;
7. neither of us will bring a legal action more than two
years after the cause of action arose; and
8. neither of us is responsible for failure to fulfill any
obligations due to causes beyond its control.
1.7 YOUR OTHER RESPONSIBILITIES
You agree:
1. not to assign, or otherwise transfer, this Agreement or
your rights under it, delegate your obligations, or
resell any Service, without prior written consent. Any
attempt to do so is void;
2. that you are responsible for the results obtained from
the Services; and
3. to provide us with sufficient, free, and safe access to
your facilities for us to fulfill our obligations.
1.8 IBM BUSINESS PARTNERS
We have signed agreements with certain organizations (called
"IBM Business Partners") to promote, market, and support
certain Services. When you order our Services (marketed to
you by IBM Business Partners) under this Agreement, we
confirm that we are responsible for providing the Services
to you under the warranties and other terms of this
Agreement. We are not responsible for 1) the actions of IBM
Business Partners, 2) any additional obligations they have
to you, or 3) any products or services that they supply to
you under their agreements.
1.9 CHANGES TO THE AGREEMENT TERMS
In order to maintain flexibility in our Services, we may
change the terms of this Agreement by giving you three
months' written notice However, these changes are not
retroactive. They apply, as of the effective date we specify
in the notice, only to new orders (those we receive on or
after the date of the notice) and to on-going transactions.
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Otherwise, for a change to be valid, both of us must sign
it. Additional or different terms in any order or written
communication from you are void.
1.10 AGREEMENT TERMINATION
You may terminate this Agreement on written notice to us
following the expiration or termination of your obligations,
Either of us may terminate this Agreement if the other does
not comply with any of its terms, provided the one who is
not complying is given written notice and reasonable time to
comply.
Any terms of this Agreement which by their nature extend
beyond its termination remain in effect until fulfilled, and
apply to respective successors and assignees.
1.11 GEOGRAPHIC SCOPE
All your rights and all our obligations are valid only in
the United States and Puerto Rico except that all licenses
to Materials are valid as specifically granted.
1.12 GOVERNING LAW
The laws of the State of New York govern this Agreement.
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IBM [LOGO] Agreement for Services
Part 2 - Warranty Terms
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2.1 WARRANTY FOR IBM SERVICES
For each IBM Service, we warrant that we perform it:
1. in a workmanlike manner: and
2. according to its current description (including any
Completion Criteria) contained in this Agreement, an
Attachment, or a Transaction Document.
2.2 EXTENT OF WARRANTY
THESE WARRANTIES REPLACE ALL OTHER WARRANTIES, EXPRESS OR
IMPLIED, INCLUDING THE IMPLIED WARRANTIES OF MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE.
2.3 ITEMS NOT COVERED BY WARRANTY
We do not warrant uninterrupted or error-free operation of
any deliverable or Service. Unless we specify otherwise, we
provide Materials and non-lBM Services on an "AS IS" basis.
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[IBM LOGO] Agreement for Services
PART 3 - SERVICES
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3.1 MAINTENANCE SERVICES
We will restore the Machine to good working order or
exchange it based on the type of service you select from
those available for the Machine. We may also perform
preventive maintenance. We manage and install engineering
changes that apply to IBM Machines.
We will inform you of the date on which Maintenance Services
begin. We may inspect the Machine within one month following
that date. If the Machine is not in an acceptable condition
for service, you may have us restore it for a charge.
Alternatively, you may withdraw your request for Maintenance
Services. However, you will be charged for any Maintenance
Services which we have performed at your request.
For a Machine under a usage plan, you-agree to provide us
with the meter reading as of the last working day of the
period that the minimum maintenance charge covers.
Maintenance Services do not cover accessories, supply items.
and certain parts, such as batteries, frames and covers. In
addition, Maintenance Services do not cover service of a
Machine damaged by misuse, accident, modification,
unsuitable physical or operating environment, improper
maintenance by you, removal or alteration of Machine or
parts identification labels, or failure caused by a product
for which we are not responsible. Unless otherwise agreed,
Maintenance Services do not cover service of Machine
alterations.
TYPES OF SERVICE FOR MACHINES
We provide certain types of repair and exchange service
either at your location or at our service center to keep
Machines in, or restore them to, good working order.
Under carry-in service, you may deliver the failing Machine
or ship it suitably packaged (prepaid, unless we specify
otherwise) to a location we designate. After we have
repaired or exchanged the Machine, we will return it, to you
at our expense unless we specify otherwise.
Under on-site service, we may repair the failing Machine at
your site or exchange it, at our discretion, depending on
the nature of the failure.
When a type of service involves the exchange of a Machine or
part, the item we replace becomes our property and the
replacement becomes yours. You represent that all removed
items are genuine and unaltered. The replacement may not be
new, but will be in good working order and at least
functionally equivalent to the item replaced. The
replacement assumes the warranty and Maintenance Service
status of the replaced item. Before we exchange a Machine or
part, you agree to remove all features, parts, options,
alterations, and attachments not under our service. You also
agree to ensure that the item is free of any legal
obligations or restrictions that prevent its exchange.
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You agree to:
1. obtain authorization from the owner to have us service a
Machine that you do not own; and
2. where applicable, before we provide service
a. follow the problem determination, problem analysis,
and service-request procedures that we provide,
b. secure all programs, data, and funds contained in a
Machine, and
c. inform us of changes in a Machine's location.
ALTERNATIVE SERVICE DURING WARRANTY
For certain Machines, you may choose alternative warranty
service. We provide the alternative type of service for an
additional charge. When the alternative warranty service
ends, we will continue Maintenance Services for the Machine
under the same type of service you selected.
MAINTENANCE SERVICES TERMINATION
You may terminate Maintenance Services for a Machine on one
month's written notice to us under any of the following
circumstances:
1. after it has been under Maintenance Services for at least
six months;
2. if you permanently remove it from productive use within
your Enterprise;
3. as of the effective date of an increase in Maintenance
Services charges; or
4. if you terminate coverage for a Machine also covered by a
Maintenance Service Option because we 1) removed a
Machine type from eligibility or 2) increase total
adjusted charges for Maintenance Services
We may terminate Maintenance Services for a Machine on three
months' written notice, provided it has been under
Maintenance Services for at least one year.
Either of us may terminate service for any Machine if the
other does not meet its obligations concerning Maintenance
Services. On termination of service for a Machine, we will
give you any applicable credit
MAINTENANCE SERVICE OPTIONS
We provide Maintenance Service Options for certain Machines.
We provide the terms specific to an Option in an Attachment
or Statement of Work We will inform you periodically of any
changes. We will defer an unfavorable change (and all
changes related to it) until the next anniversary of the
start of your contract period, If you request it in writing
before the effective date of the change.
3.2 CONTINUING SUPPORT SERVICES
We provide Continuing Support Services on a contract-period
basis to assist you in improving the availability of your
systems. We provide the terms specific to a Service in an
Attachment or Statement of Work. If we make a change to the
terms that 1) affects your current contract period and 2)
you consider unfavorable, on your request, we will defer it
until the next anniversary of the start of the contract
period.
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Each of us agrees to notify the other (before your current
contract period expires) if they do not intend to renew.
CONTINUING SUPPORT SERVICES TERMINATION
You may terminate a Continuing Support Service by providing
us one month's written notice upon fulfillment of any
minimum commitments.
The termination of Services with contract periods longer
than one year results in adjustment charges. In this case,
you agree to pay the lesser of:
1. the difference between the total charges you paid through
the termination date and those you would have paid for
the same period of time at the charge level of the next
shorter contract period;
2. the monthly charge multiplied by the applicable
adjustment charge factor; or
3. the total charges remaining to complete the contract
period.
When an increase results in a change to your total monthly
charge for a Service of more than the adjustment charge we
specify, you may terminate that Service on the effective
date of the increase. Adjustment or termination charges do
not apply in this case.
3.3 PROJECT SUPPORT SERVICES
Following are examples of Project Support Services we make
available to you:
1. Consulting Services, such as reengineering business
processes, linking business and technology strategies,
improving manufacturing processes, and enhancing
application development and information processing
capabilities. We are responsible for managing the
engagement;
2. Custom Services, such as managing and performing project
tasks to deliver Materials. We are responsible for
managing the project, unless specified otherwise in the
Statement of Work; and
3. Hourly Services, such as assisting on a technical task.
You are responsible for managing the project and for any
results achieved. The Statement of Work will specify the
hourly rate and estimated number of hours. The estimate
is not a fixed-price commitment. Charges = (actual hours
x rate) + expenses.
Hourly Services end when the first of the following
occurs: 1) you advise us, in writing, that further
Services are not required, 2) we provide the specified
number of hours, or 3) the estimated end date expires.
You may authorize, in writing, additional hours or
extension of the end date.
PROJECT SUPPORT SERVICES TERMINATION
Either of us may terminate a project on written notice to
the other if the other does not meet its obligations
concerning the Statement of Work. Upon termination, we will
stop our work in an orderly manner as soon as practical.
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You agree to pay us for all Services we provide and any
Materials we deliver through the project's termination and
any charges we incur in terminating subcontracts.
3.4 THE STATEMENT OF WORK
A separate Statement of Work will be signed by both of us
for each Services transaction not covered by another
Transaction Document. When we accept your order, we agree to
provide the Services described in the Statement of Work.
The statement of Work includes, for example:
1. our respective responsibilities;
2. the specific conditions (called the "Completion
Criteria"), if any, that we ar required to meet to
fulfill our obligations;
3. a contract period for Maintenance and Continuing Support
Services and an estimated schedule for Project Support
Services that we provide for planning purposes; and
4. applicable charges (not including taxes) and any other
terms.
If a Statement of Work contains an estimated schedule, each
of us agrees to make reasonable efforts to carry out our
respective responsibilities according to that schedule. If
the Statement of Work contains Completion Criteria, we will
inform you when we meet each of them. You then have 10 days
to inform us if you believe that we have not met those
criteria. The project is complete when we meet the
Completion Criteria.
CHANGES TO THE STATEMENT AT WORK
When both of us agree to change a Statement of Work, other
than as permitted in the Maintenance Service Options and
Continuing Support Services Sections of this Agreement, we
will prepare a written description of the agreed change
(called a "Change Authorization'') which both of us must
sign. The terms of a Change Authorization prevail over those
of the Statement of Work and any of its previous Change
Authorizations.
Any change in the Statement of Work may affect the charges,
estimated schedule, or other terms. Depending on the extent
and complexity of the requested changes, we may charge you
for our effort required to analyze it. When charges are
necessary, we will give you a written estimate and begin the
analysis only on your written authorization.
PERSONNEL
Each of us will;
1. designate a coordinator who will represent each of us,
respectively, in all matters concerning Project Support
Services and other Services where applicable; and
2. be responsible for the supervision, direction, and
control of our respective personnel.
We will try to honor your requests regarding the assignment
of our personnel to your project.
21
However, we reserve the right to determine the assignment of
our personnel.
We may subcontract a Service, or any part of it, we provide
to you, to subcontractors selected by us.
3.5 MATERIAL OWNERSHIP AND LICENSE
We will specify Materials to be delivered to you. We will
identify them as being "Type I Materials." "Type II
Materials," or otherwise as we both agree. If not specified,
Materials will be considered Type II Materials.
Type I Materials are those, created during the Service
performance periods in which you will have all right, title,
and interest (including ownership of copyright). We will
retain one copy of the Materials. You grant us 1) an
irrevocable, nonexclusive, worldwide, paid-up license to
use, execute, reproduce, display, perform, distribute
(internally and externally) copies of, and prepare
derivative works based on Type I Materials and 2) the right
to authorize others to do any of the former.
Type II Materials are those, created during the Service
performance period or otherwise (such as those that preexist
the Service), in which we or third parties have all right,
title, and interest (including ownership of copyright). We
will deliver one copy of the specified Materials to you. We
grant you an irrevocable, nonexclusive, worldwide, paid-up
license to use, execute, reproduce, display, perform, and
distribute, within your Enterprise only, copies of Type II
Materials.
Each of us agrees to reproduce the copyright notice and any
other legend of ownership on any copies made under the
licenses granted in this Section.
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SECTION I
SPECIAL CONTRACT PROVISIONS
(ATTACHED)
23
SECTION I
SPECIAL CONTRACT PROVISIONS
Set forth below are certain modifications, deletions and additions to the
IBM Agreement for Services (the "General Contract Provisions") included under
Section H of the attached Contract. To the extent of any inconsistency between
the General Contract Provisions and these Special Terms and Conditions, the
Special Terms and Conditions shall control. All references below to sections
are to sections of the General Contract Provisions.
1. Section 1.2 (Agreement Structure) is deleted, with the understanding
that the Contract relates solely to a specific project and that all relevant
Transaction Documents have been included in the Contract or are incorporated by
reference therein. The parties agree to negotiate in good faith the terms of
separate Statements of Work for estimated completion on or before December 31,
1998 of the Detail Analysis and Planning and Code Conversion phases of the Year
2000 project described in the Request for Proposal (RG&E Year 2000 Conversion
Unit Specification, dated April 3, 1997) (the "Additional SOWs"), provided that
IBM has performed the services to the satisfaction of RG&E. The Additional SOWs
shall be governed by the same terms and conditions (Sections A, B and D through
I of the Contract) as any attached Statement of Work and the format of any
Additional SOWs shall be similar to any attached Statement of Work. Each
Additional SOW shall be signed by RG&E and IBM.
2. Section 1.3 (Prices and Payment) is modified to provide that IBM will
not increase its hourly charges to RG&E except in accordance with general price
increases for other substantially similarly situated commercial customers for
whom IBM is providing Year 2000
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assessment, remediation, and testing services. In addition, Contractor agrees
to notify RG&E in writing at least 10 working days in advance of incurring any
"additional charges" pursuant to this provision.
3. Section 1.5(3) (Limitation of Liability) is modified to provide that
Contractor's liability for "other actual direct damages or loss" shall not
exceed the greater of the amounts specified therein or the total amount paid or
payable to Contractor for services actually rendered pursuant to the Statement
of Work.
4. Section 1.6(2) (Mutual Responsibilities) is modified to delete the
first sentence thereof and replace it with the following: All information
exchanged is nonconfidential unless it is exchanged under the terms of the IBM
Agreement for Exchange of Confidential Information between RG&E and IBM dated
November 30, 1990, which is incorporated by reference herein.
5. Section 1.6(7) (Mutual Responsibilities) is modified to change the
period within which a legal action may be brought from two years to four years
after the cause of action arose.
6. Section 1.7(2) (Your Other Responsibilities) is modified to add the
word "business" before the word results.
7. Section 1.8 (IBM Business Partners) is deleted, with the understanding
that no IBM Business Partners will be involved with the project.
8. Section 1.9 (Changes to the Agreement Terms) is modified to delete
"and to on-going transactions" from the end of the first paragraph thereof. The
parties understand and
25
agree that (i) the project contemplated by the Statement of Work is the subject
of an existing order, and (ii) this Agreement (including any applicable
Statement of Work and all related documents) may be terminated by RG&E for
convenience at any time. Within fifteen (15) working days following termination
of this Agreement, Contractor agrees to deliver to RG&E all reports, analyses
and Materials prepared pursuant to this Agreement.
9. Section 1.10 (Agreement Termination) is modified to delete the second
paragraph and replace it with the following:
"Either of us may terminate this Agreement if the other does not comply
with any of its terms, provided that the one who is not complying is given
at least thirty (30) days written notice of the default and an opportunity
to cure the default within such period."
10. Section 2.1 (Warranty for IBM Services) is modified to add the
following provisions:
1. We warrant that our personnel and agents are and shall
be fully experienced and properly licensed and qualified to perform the
work contemplated by the Statement of Work and that such work will comply
with any and all applicable laws, rules, regulations and orders.
2. Conversion Center Process Error Support
---------------------------------------
IBM will correct, at no additional charge to RG&E, "Process Errors" that
were caused directly due to actions of IBM during the conversion process at the
IBM Conversion Center, provided, RG&E notifies IBM, in writing, of such errors
within thirty calendar days from the date of delivery of each code partition to
RG&E (the "Support Time Period"), and provided
26
further the parties mutually agree, in the exercise of standard judgment, that
each such error is a "Process Error". Process Errors shall include: (1)
modifications to source code that introduce new compilation errors using the
same compiler and compiler options in which the original source code was
compiled; (2) failure to include source code provided by RG&E at the start of
the conversion at the IBM Conversion Center; (3) failure to return, at the
conclusion of the conversion at the IBM Conversion Center, source code provided
by RG&E; (4) version management errors introduced into the conversion process at
the IBM Conversion Center; and (5) errors in IBM's pre-existing windowing
routines.
In the event partial deliveries of a code partition are desired, the
Support Time Period will commence on the date each partial delivery is returned
to RG&E.
Process Errors do not include: (1) support for post-remediation testing
and the effort required to identify any errors and (2) "Conversion Errors" and
any other errors other than the five (5) Process Errors defined above.
Conversion Errors include, but are not limited to, the following: (1)
Missing Date Errors (errors associated with not locating all date sensitive
variables); (2) Infrastructure Errors (errors resulting from problems associated
with the operation of RG&E's hardware, system software, or utilities); (3)
Third-Party Errors (errors resulting from problems associated with the operation
of third-party software); (4) Secondary Errors (errors related to the impact to
other program sections, paragraphs, and programs that are not directly impacted
by the remediation services); (5) Interface Errors (errors related to the impact
to external interfaces (such as files, external systems, and/or external
interfaces) that are not directly impacted by the remediation
27
services); (6) Date Errors (problems within the existing data which impact the
operation of the converted code); (7) Customer Input Errors (errors resulting
from customer supplied components, such as incorrect versions of source code
and/or compiler options and errors resulting from incorrect or untimely
information and feedback from RG&E); or (8) any other errors introduced during
the conversion process.
This support will be deemed completed upon the earlier to occur of:
a) IBM's correction of Process Errors identified during the Support Time
Period; or
b) The expiration of the Support Time Period in the event no errors are
identified.
3. Post-Conversion Hourly Support
------------------------------
Each Statement of Work shall include an estimated number of hours to be
used for billable hourly post-conversion support. Post-conversion hourly
support will be provided to RG&E for the purpose of reviewing code changes with
RG&E and assisting RG&E with the correction of "Conversion Errors". For each
returned partition, IBM will provide such support until the earlier to occur of:
a) the expiration of the agreed-upon number of billable hours; or b) the
expiration of the Support Time Period with respect to each code partition
delivered to RG&E. In the event partial deliveries of a code partition are
desired, the Support Time Period will commence upon the date each partial
delivery is returned to RG&E.
11. Section 2.3 (Items Not Covered by Warranty) is modified to provide
that "non-IBM Services" do not include work performed by IBM's agents or
subcontractors.
28
12. Sections 3.1 (Maintenance Services) and 3.2 (Continuing Support
Services) are deleted with the understanding that such provisions are not
applicable to the project.
13. Section 3.3(3) (Project Support Services) is modified so that the
second paragraph thereof is deleted and replaced with the following:
Hourly Services end when the first of the following occurs: 1)
you advise us, in writing, that further Services are not
required, 2) we provide the specified number of hours unless you
authorize us in writing for additional hours, or 3) the estimated
end date expires unless you authorize us in writing for
additional hours and/or an extension of the estimated end date.
14. Section 3.3 (Project Support Services -- Project Support Services
Termination) is modified so that the first sentence thereof is deleted and
replaced with the following:
"Either of us may terminate this Agreement if the other does not
comply with any of its obligations concerning the Statement of
Work, provided that the one who is not complying is given at
least thirty (30) days written notice of the default and an
opportunity to cure the default within such period."
In addition, the second paragraph of Section 3.3 is deleted and replaced
with the following:
Upon a termination for convenience by you, you agree to pay us
for all Services we provide and any Materials we deliver through
the project's termination plus reasonable termination charges
(including charges IBM incurs in terminating subcontractors
involved in the project up to a maximum of 15 working days of
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subcontractor performance), but no amount will be allowed for
anticipated profit or unperformed services.
15. Section 3.4 (The Statement of Work -- Personnel) is modified to
provide that Contractor may not subcontract a Service (excluding work performed
by a majority-owned subsidiary of Contractor) without obtaining the prior
written consent of RG&E, which shall not be unreasonably withheld. In addition,
Section 3.4 is modified to add the following:
1. Contractor shall submit a "Key Contractor Personnel" list
for RG&E's approval prior to execution of the Contract.
2. Contractor shall use reasonable efforts to cause at least
one of the Key Contractor Personnel to devote substantial
time and effort to the performance of the requirements under
the Statement of Work until completion of the project.
Contractor shall not assign an individual to a position
designated thereunder unless the replacement individual is
at least as competent to perform the required services.
Contractor shall notify RG&E of any proposed assignment,
shall introduce the individual to appropriate RG&E
representatives, and shall provide RG&E with a resume and
other information about the individual reasonably requested
by RG&E. If RG&E in good faith objects to the proposed
assignment, the parties shall attempt to resolve RG&E's
concerns on a mutually agreeable basis. If the parties have
not been able to resolve RG&E's concerns within five (5)
working days, Contractor shall not assign the individual to
that position and shall propose to RG&E the assignment of
another individual of suitable ability and qualifications.
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16. Section 3.4 (The Statement of Work) is modified to add the following:
Work Breakdown Structure (WBS):
------------------------------
RG&E has requested that IBM develop and deliver a Work
Breakdown Structure (WBS) that correlates to each measurable
task and product delivery as described in the applicable
SOW. This WBS would be used as a basis when reporting
original estimated Man Hours, Cost, Schedule vs. Actuals,
etc. Where possible, IBM will support the level of detail
reporting that RG&E has requested. There may be activities
that arise that make such detail reporting impractical. For
example, IBM and RG&E have not, as a team, come to agree or
understand the specific role(s) of the Conversion Centers,
during and after remediation activities. Therefore, it is
impractical to agree at this time on WBS reporting until IBM
and RG&E agree on the specific SOWs. It is IBM's intent, to
satisfy the level of detail RG&E is requesting; IBM may need
RG&E's support in completing this requirement.
17. Section 3.5 (Materials Ownership and License) is modified to add the
following:
All reports and analyses prepared by Contractor in connection with the
project shall be treated as Type II Materials, with the understanding that
neither party shall have any right, title or interest in the other party's
confidential information and such information shall remain subject to the terms
of the Agreement for Exchange of Confidential Information.
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TYPE III MATERIALS
------------------
"Converted Code is source or application programs that RG&E or third
parties have all right, title and interest, including ownership of copyright,
that RG&E provides to Contractor for Contractor to perform conversion services
as described in the Statement of Work. Contractor will provide RG&E the
Converted Code which contains modifications, programs, or programming language
that result from these services.
Contractor retains no ownership rights to the Converted Code, however,
Contractor is free to use all ideas, concepts, know-how, or techniques that are
used, developed, or provided by either of us, or jointly by the both of us, in
the performance of these services. Moreover, Contractor is free to use all
modules, components, designs, utilities, interfaces, subroutines, methods,
report formats, modules and other pre-existing materials used or developed by
Contractor in the course of this engagement. Contractor is free to provide same
or similar services to others, including the provision of the same or similar
modifications, programs, or programming language without accounting to RG&E.
18. The Agreement is also amended to add the following provisions:
(i) Audit. Contractor shall keep accurate records and accounts
-----
showing all hours worked, disbursements, or expenses
incurred by Contractor in the performance of the work.
Upon 90 days prior written notice, RG&E shall have the
right to audit such records and accounts up to one year
after payment of the final invoice for the work to verify
that the hours worked and expenses reported were actually
incurred.
32
(ii) Insurance. See Exhibit A attached hereto whose terms are
---------
incorporated herein by reference.
(iii) Independent Contractor. Contractor shall have complete
----------------------
charge of and responsibility for all its personnel and
agents engaged in the work and shall perform the work in
accordance with its own methods, subject to compliance
with this Agreement. Contractor shall comply with all
reasonable safety and other rules of RG&E for work
performed upon its premises provided such rules are
provided to Contractor.
(iv) Export. Contractor and RG&E acknowledge that certain
------
software and technical data to be provided hereunder and
certain transactions hereunder may be subject to export
controls under the laws and regulations of the United
States and other countries. Neither the Contractor nor
RG&E shall export or re-export any such items or any
direct product thereof or undertake any transaction in
violation of any such laws or regulations. To the extent
within either party's control, such party shall be
responsible for, and shall coordinate and oversee,
compliance with such export laws in respect of such items
exported or imported hereunder.
(v) No Waiver. The failure of either party to enforce the
---------
provisions of this Agreement shall not constitute a waiver
thereof nor of the right to seek such remedies as it may
have for any breach thereof. No waiver shall be valid
unless in a writing signed by the waiving party.
(vi) Security, No Conflicts. Contractor agrees that
----------------------
Contractor's employees, representatives, and
33
agents, upon entering RG&E's premises shall, if required,
sign in at the facility "Sign-In Log" and, if applicable,
shall wear visible identification specifying Contractor's
name. Contractor's employees, representatives and agents
shall be subject at all times to RG&E's security policies
and procedures.
Each party agrees to inform the other of any information
made available to the other that is classified or
restricted data, agrees to comply with the security
requirements imposed by any state or local government, or
by the United States Government, and shall return all such
material upon request. Each party warrants that its
participation in this Agreement does not create any
conflict of interest prohibited by the United States
Government or any other domestic or foreign government and
shall promptly notify the other party if any such conflict
arises during the engagement.
(vii) Miscellaneous. Any reference to Contractor shall be deemed
-------------
a reference to Contractor, its employees and
subcontractors and those under their direction and
control. This Agreement may be amended only by a writing
signed by the parties. Any notice in connection with this
Agreement shall be in writing and may be delivered either
personally or by prepaid first class mail, recognized
courier, or facsimile machine; provided that in the latter
event a copy is then mailed to the intended recipient
within 24 hours. Addresses for notice shall be as set
forth in the preamble or as changed by notice. Any dispute
shall be resolved in courts located in Monroe County, New
York, and Contractor consents to their personal
jurisdiction.
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EXHIBIT A
INSURANCE REQUIREMENTS FOR
CONTRACTORS AND LABOR SUPPLIERS
Before commencing work, the Contractor shall procure and maintain at its
own expense for a period of two years beyond completion of the work, the
insurance types, limits, terms, and conditions listed in Section 1 below. The
amounts as specified are minimums only. The actual amounts above the minimums
shall be determined by the Contractor. In addition, for any work that is
authorized to be subcontracted, the Contractor shall require each subcontractor
to procure and maintain all insurance as outlined in Section 1.
IF YOU DO NOT HAVE A CURRENT CERTIFICATE ON FILE WITH RG&E, prior to
commencement of work, Certificates of Insurance evidencing Contractor's and/or
subcontractor's possession of insurance as outlined in Section 1 shall be filed
with Rochester Gas and Electric Corporation for its review. Certificates of
Insurance should be mailed to the Purchasing Department at the following
address:
Rochester Gas and Electric Corporation
Attn: Strategic Supply Management
89 East Avenue
Rochester, New York 14649-0001
1. Required Insurance Coverages and Minimum Amounts
------------------------------------------------
Each insurance policy shall be placed with an insurance company
licensed to write insurance in the State of New York and shall have an
A.M. Best's Rating of not less than "B+" and a policyholder surplus of
at least $25,000,000.
RG&E should be notified of any reduction in the aggregate policy
limits.
Each policy shall be endorsed to provide a minimum of thirty (30) days
prior written notice of cancellation, intent not to renew, or material
change in coverage.
Each policy shall be endorsed to provide a breach of warranty clause.
In the event Contractor and/or subcontractor has a policy(ies) written
on a "claims-made" basis, such insurance shall provide for a
retroactive date
35
not later than the commencement of work under this agreement. In
addition, the Contractor and/or subcontractor will guarantee future
coverage for claims arising out of events occurring during the course
of this agreement.
All of the insurance required hereunder will be primary to any or all
other insurance coverage in effect for Rochester Gas and Electric Corporation.
1.1 Workers' Compensation and Employers' Liability Insurance in accordance
with the statutory requirements of the State of New York. For work
that is conducted outside of New York State, the minimum limit for
Employers' Liability Insurance should be $500,000 each accident,
$500,000 disease-policy limit, $500,000 disease-each employee.
1.2 Automobile Liability insuring any auto, all owned autos, hired autos,
and non-owned autos with a bodily injury and property damage combined
single limit of $1,000,000 per occurrence.
1.3 General Liability (Comprehensive or Commercial Form), including
coverage for Premises/Operations, Products/Completed Operations,
Contractual Liability, Independent Contractors, Broad Form Property
Damage, and Personal Injury, in the amount of $1,000,000 per
occurrence and $3,000,000 aggregate.
In the event of claims being made by reason of damage to property
belonging to any insured hereunder for which another insured is or may
be liable, then this policy shall cover such insured against whom a
claim is made or may be made in the same manner as if separate
policies had been issued to each insured hereunder, except with
respect to the limits of insurance.
None of the requirements contained herein as to types, limits and approval
of insurance coverage to be maintained by Contractors or subcontractors are
intended to, nor shall they in any manner limit or qualify the liabilities and
obligations assumed by Contractor or subcontractor under this agreement.
36