<PAGE> 1
EXHIBIT 10C
CUSTOMER AGREEMENT
STATEMENT OF WORK SERVICES
Scope of Services, Completion Criteria, Charges, and other applicable terms:
Refer to the IBM Statement of Work for the DynCom "Market Maker", dated Feb. 11,
2000.
This proposal is valid for 30 days from the date above
The estimated funding requirements are $5,864,985.
--------------------------------------------------------------------------------
Both of us agree that the complete agreement between us about these Services
will consist of 1) this Statement of Work and 2) the IBM Customer Agreement
(Agreement) (or any equivalent agreement signed by both of us).
Agreed to: Agreed to:
DYNCOM, INC. INTERNATIONAL BUSINESS MACHINES CORPORATION
ARMONK, NEW YORK 10504
By: -- Signed -- By: -- Signed --
-------------------------------- ---------------------------------
Authorized signature Authorized signature
Name (type or print): Name (type or print):
Date: Date:
Customer number: 2639896 Reference Agreement number:
Statement of Work
number:
Customer address: IBM Office Number: '74E'
424 West 49th Street Suite 6A IBM Office Address:
New York, NY 10019-7258 590 Madison Avenue
New York, New York 10022
Project Name: DynCom "Market Maker"
<PAGE> 2
CUSTOMER AGREEMENT
Thank you for doing business with us. We strive to provide you with high quality
Products and 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 Customer Agreement (called the "Agreement") covers business
transactions you may do with us to purchase Machines, license Programs, and
acquire Services.
This Agreement and its applicable Attachments and Transaction Documents are the
complete agreement regarding these transactions, and replace any prior oral or
written communications between us.
By signing below for our respective Enterprises, both of us agree to the terms
of this Agreement. Once signed, 1) any reproduction of this Agreement, an
Attachment, or Transaction Document made by reliable means (for example,
photocopy or facsimile) is considered an original and 2) all Products and
Services you order under this Agreement are subject to it.
Agreed to: Agreed to:
Dyncom Inc. International Business Machines
Corporation
By /s/ CURT D. JANSEN By -- Signed --
------------------------------------ -----------------------------------
Authorized signature Authorized signature
Name (type or print): Curt D. Jansen Name (type or print):
Date: October 6, 1999 Date:
Enterprise number: 2639896 Agreement number: 0000000
Enterprise address: IBM address:
Dyncom Inc. 27 Commerce Drive
424 W. 49th St Cranford, NJ
NEW YORK, NY 10019
After signing, please return a copy of this Agreement to the "IBM address" shown
above.
Page 1 of 18
<PAGE> 3
IBM CUSTOMER AGREEMENT
TABLE OF CONTENTS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Section Title Page Section Title Page
<S> <C> <C> <C>
PART 1 - GENERAL 3 PART 4 - PROGRAMS 13
1.1 Definitions 3 4.1 License 13
1.2 Agreement Structure 4 4.2 License Details 13
1.3 Delivery 4 4.3 Program Components Not Used
1.4 Charges and Payment 5 On the Designated Machine 13
1.5 Changes to the Agreement Terms 5 4.4 Distributed System License Option 13
1.6 IBM Business Partners 6 4.5 Program Testing 14
1.7 Mutual Responsibilities 6 4.6 Packaged Programs 14
1.8 Your Other Responsibilities 6 4.7 Program Protection 14
1.9 Patents and Copyrights 7 4.8 Program Services 14
1.10 Limitation of Liability 7 4.9 License Termination 14
1.11 Agreement Termination 8
1.12 Geographic Scope 8 PART 5 - SERVICES 15
1.13 Governing Law 8
5.1 IBM Services 15
PART 2 - WARRANTIES 5.2 Personnel 15
5.3 Materials Ownership and License 15
2.1 The IBM Warranties 9 5.4 Changes to Service Terms 15
2.2 Extent of Warranty 9 5.5 Renewal 16
2.3 Items Not Covered by Warranty 10 5.6 Termination and Withdrawal 16
5.7 Service for Machines
PART 3 - MACHINES 11 (During and after warranty) 16
5.8 Maintenance Coverage 17
3.1 Title and Risk of Loss 11
3.2 Production Status 11
3.3 Installation 11
3.4 Licensed Internal Code 11
3.5 Machine Code 12
</TABLE>
Page 2 of 18
<PAGE> 4
CUSTOMER AGREEMENT
PART I - GENERAL
--------------------------------------------------------------------------------
1.1 DEFINITIONS
CUSTOMER-SET-UP MACHINE is an IBM Machine that you install according to our
instructions.
DATE OF INSTALLATION is the following:
1. for an IBM Machine we are responsible for installing, the business day after
the day we install it or, if you defer installation, make it available to you
for subsequent installation by us;
2. for a Customer-set-up Machine and a non-IBM Machine, the second business day
after the Machine's standard transit allowance period; and
3. for a Program, the latest of -
a. the day after its testing period ends,
b. the second business day after the Program's standard transit allowance
period,
c. the date, specified in a Transaction Document, on which we authorize
you to make a copy of the Program, or
d. the date you distribute a copy of a chargeable component in support of
your authorized use of the Program.
DESIGNATED MACHINE is either 1) the machine on which you will use a Program for
processing and which we require you to identify to us by type/model and serial
number, or 2) any machine on which you use the Program if we do not require you
to provide this identification to u s.
ENTERPRISE is any legal entity (such as a corporation) and the subsidiaries it
owns by more than 50 percent. The term "Enterprise" applies only to the portion
of the enterprise located in the United States or Puerto Rico.
MACHINE is a machine, its features, conversions, upgrades, elements, or
accessories, or any combination of them. The term "Machine" includes an IBM
Machine and any non-IBM Machine (including other equipment) that we may provide
to you.
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 as part of a Service. The term
"Materials" does not include Programs or Licensed Internal Code.
PRODUCT is a Machine or a Program.
PROGRAM is the following, including the original and all whole or partial
copies:
1. machine-readable instructions and data;
2. components;
3. audio-visual content (such as images, text, recordings, or pictures); and
4. related licensed materials.
The term "Program" includes an IBM Program and any non-IBM Program that we may
provide to you. The term does not include Licensed Internal Code or Materials.
SERVICE is performance of a task, provision of advice and counsel, assistance,
or access to a resource (such as access to an information database) we make
available to you.
Page 3 of 18
<PAGE> 5
SPECIFICATIONS is a document that provides information specific to a Product.
For an 113M Machine, we call the document "Official Published Specifications."
For an IBM Program, we call it "Licensed Program Specifications," or "License
Information."
SPECIFIED OPERATING ENVIRONMENT is the Machines and Programs with which a
Program is designed to operate, as described in the Program's Specifications.
1.2 AGREEMENT STRUCTURE
ATTACHMENTS
Some Products and Services have terms in addition to those we specify in this
Agreement. We provide the additional terms in documents called "Attachments,"
which are also part of this Agreement. Attachments will be signed by both of us
if requested by either of us.
TRANSACTION DOCUMENTS
For each business transaction, we will provide you with the appropriate
"Transaction Documents" that confirm the specific details of the transaction.
Transaction Documents will be signed by both of us if requested by either of us.
The following are examples of Transaction Documents with examples of the
information they may contain:
1. addenda (contract-period duration, start date, and total quantity);
2. exhibits (eligible Products by category);
3. invoices (item, quantity, and amount due);
4. statements of work (scope of Services, responsibilities, deliverables,
completion criteria, estimated schedule or contract period, and charges); and
5. supplements (Machine quantity and type ordered, price, estimated shipment
date, and warranty period).
CONFLICTING TERMS
If there is a conflict among the terms in the various documents, those of an
Attachment prevail over those of this Agreement. The terms of a Transaction
Document prevail over those of both of these documents,
OUR ACCEPTANCE OF YOUR ORDER
A Product or Service becomes subject to this Agreement when we accept your order
by doing any of the following:
1. sending you a Transaction Document;
2. shipping the Machine or making the Program available to you; or
3. providing the Service,
YOUR ACCEPTANCE OF ADDITIONAL TERMS
You accept the additional terms in an Attachment or Transaction Document by
doing any of the following:
1. signing the Attachment or Transaction Document;
2. using the Product or Service, or allowing others to do so; or
3. making any payment for the Product or Service.
Page 4 of 18
<PAGE> 6
1.3 DELIVERY
We will try to meet your delivery requirements for Products and Services you
order, and will inform you of their status. Transportation charges, if
applicable, will be specified in a Transaction Document.
1.4 CHARGES AND PAYMENT
The amount payable for a Product or Service will be based on one or more of the
following types of charges:
1. one-time (for example, the price of a Machine);
2. recurring (for example, a periodic charge for Programs or measured use of
Services);
3. time and materials (for example, charges for hourly Services); or
4. fixed price (for example, a specific amount agreed to between us for a custom
Service),
Depending on the particular Product, Service, or circumstance, additional
charges may apply (such as special handling or travel related expenses). We will
inform you in advance whenever additional charges apply.
Recurring charges for a Product begin on its Date of Installation. Charges for
Services are billed as we specify which may be in advance, periodically during
the performance of the Service, or after the Service is completed.
Amounts are due upon receipt of invoice and payable as we specify in a
Transaction Document. You agree to pay accordingly, including any late payment
fee.
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 in the invoice or supply exemption documentation. You
are responsible for personal property taxes for each Product from the date we
ship it to you.
One-time and recurring charges may be based on measurements of actual or
authorized use (for example, number of users or processor size for Programs,
meter readings for maintenance Services, or connect time for network Services).
You agree to provide actual usage data if we specify. If you make changes to
your environment that impact use charges (for example, change processor size or
configuration for Programs), you agree to promptly notify us and pay any
applicable charges. Recurring charges will be adjusted accordingly. Unless we
agree otherwise, we do not give credits or refunds for charges already due or
paid. In the event that we change the basis of measurement, our terms for
changing charges will apply.
We may increase recurring charges for Products and Services, as well as labor
rates and minimums for Services provided under this Agreement, by giving you
three months' written notice. An increase applies on the first day of the
invoice or charging period on or after the effective date we specify in the
notice.
We may increase one-time charges without notice. However, an increase to
one-time charges does not apply to you if 1) we receive your order before the
announcement date of the increase and 2) one of the following occurs within
three months after our receipt of your order:
1. we ship you the Machine or make the Program available to you;
2. you make an authorized copy of a Program or distribute a chargeable component
of a Program to another Machine; or
3. a Program's increased use charge becomes due.
You receive the benefit of a decrease in charges for amounts which become due on
or after the effective date of the decrease.
Page 5 of 18
<PAGE> 7
Services for which you prepay must be used within the applicable contract
period. Unless we specify otherwise, we do not give credits or refunds for
unused prepaid Services.
1.5 CHANGES TO THE AGREEMENT TERMS
In order to maintain flexibility in our business relationship, 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 and on-going transactions (such as
licenses, except that changes to license termination terms are effective only
for new orders). Part 5 of this Agreement contains additional provisions for
changes to the terms of individual Service transactions.
Otherwise, for a change to be valid, both of us must sign it. Additional or
different terms in any written communication from you (such as an order) are
void.
1.6 IBM BUSINESS PARTNERS
We have signed agreements with certain organizations (called "IBM Business
Partners") to promote, market, and support certain Products and Services. When
you order our Products or Services (marketed to you by IBM Business Partners)
under this Agreement, we confirm that we are responsible for providing the
Products or 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.
1.7 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 without prior written
consent;
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 "user ID") contained in an electronic document is 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.
1.8 YOUR OTHER RESPONSIBILITIES
You agree:
1. not to assign, or otherwise transfer, this Agreement or your rights under
this Agreement, delegate your obligations, or resell any Service, without our
prior written consent. Any attempt to do so is void;
2. to acquire Machines with the intent to use them within your Enterprise and
not for reselling, leasing, or transferring to a third party, unless either of
the following applies
Page 6 of 18
<PAGE> 8
a. you are arranging lease-back financing for the Machines, or
b. you purchase them without any discount or allowance, and do not remarket them
in competition with our authorized remarketers;
3. to allow us to install mandatory engineering changes (such as those required
for safety) on a Machine. Any parts we remove become our property. You represent
that you have the permission from the owner and any lien holders to transfer
ownership and possession of removed parts to us;
4. that you are responsible for the results obtained from the use of the
Products and Services;
5. to provide us with sufficient, free, and safe access to your facilities for
us to fulfill our obligations; and
6. to comply with all applicable export and import laws and regulations.
1.9 PATENTS AND COPYRIGHTS
For purposes of this Section, the term "Product" includes Materials (alone or in
combination with Products we provide to you as a system) and Licensed Internal
Code.
If a third party claims that a Product we provide to you infringes that party's
patent or copyright, we will defend you against that claim at our expense and
pay all costs, damages, 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 to continue to use the Product, or to modify it, or replace it with
one that is at least functionally equivalent. If we determine that none of these
alternatives is reasonably available, you agree to return the Product to us on
our written request. We will then give you a credit equal to:
1. for a Machine, your net book value provided you have followed
generally-accepted accounting principles;
2. for a Program, the amount paid by you or 12 months' charges (whichever is
less); and
3. for Materials, 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 a Product;
2. your modification of a Product, or a Program's use in other than its
Specified Operating Environment;
3. the combination, operation, or use of a Product with other Products not
provided by us as a system, or the combination, operation, or use of a Product
with any product, data, or apparatus that we did not provide; or
4. infringement by a non-IBM Product alone, as opposed to its combination with
Products we provide to you as a system.
Page 7 of 18
<PAGE> 9
1.10 LIMITATION OF LIABILITY
Circumstances may arise where, because of a default on our part or other
liability, you are entitled to recover damages from us. In each such instance,
regardless of the basis on which you are entitled to claim damages from us
(including fundamental breach, negligence, misrepresentation, or other contract
or tort claim), we are liable for no more than:
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 up to the greater of $100,000
or the charges (if recurring, 12 months' charges apply) for the Product or
Service that is the subject of the claim. For purposes of this item, the term
"Product" includes Materials and Licensed Internal Code.
This limit also applies to any of our subcontractors and Program developers. 11
Is the maximum for which we and our subcontractors and Program developers are
collectively responsible.
ITEMS FOR WHICH WE ARE NOT LIABLE
Under no circumstances are we, our subcontractors, or Program developers liable
for any of the following:
1. third-party claims against you for 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.
1.11 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 the Agreement
termination remain in effect until fulfilled, and apply to both of our
respective successors and assignees.
1.12 GEOGRAPHIC SCOPE
All your rights, all our obligations, and all licenses (except for Licensed
Internal Code and as specifically granted) are valid only in the United States
and Puerto Rico.
1.13 GOVERNING LAW
The laws of the State of New York govern this Agreement.
Nothing in this Agreement affects any statutory rights of consumers that cannot
be waived or limited by contract.
Page 8 of 18
<PAGE> 10
IBM CUSTOMER AGREEMENT
PART 2 - WARRANTIES
--------------------------------------------------------------------------------
2.1 THE IBM WARRANTIES
WARRANTY FOR IBM MACHINES
For each IBM Machine, we warrant that it:
1. is free from defects in materials and workmanship; and
2. conforms to its Specifications.
The warranty period for a Machine is a specified, fixed period commencing on its
Date of Installation. During the warranty period, we provide repair and exchange
Service for the Machine, without charge, under the type of Service we designate
for the Machine.
If a Machine does not function as warranted during the warranty period and we
are unable to either 1) make it do so, or 2) replace it with one that is at
least functionally equivalent, you may return it to us and we will refund your
money.
Additional terms regarding Service for Machines during and after the warranty
period are contained in Part 5.
WARRANTY FOR IBM PROGRAMS
For each warranted IBM Program, we warrant that when it is used in the Specified
Operating Environment, it will conform to its Specifications.
The warranty period for a Program expires when its Program Services are no
longer available. During the warranty period, we provide defect-related Program
Services without charge. Program Services are available for a warranted Program
for at least one year following its general availability.
If a Program does not function as warranted during the first year after you
obtain your license and we are unable to make it do so, you may return the
Program to us and we will refund your money. To be eligible, you must have
obtained your license while Program Services (regardless of the remaining
duration) were available for it. Additional terms regarding Program Services are
contained in Part 4.
WARRANTY FOR IBM SERVICES
For each IBM Service, we warrant that we perform it:
1. using reasonable care and skill; and
2. according to its current description (including any completion criteria)
contained in this Agreement, an Attachment, or a Transaction Document.
WARRANTY FOR SYSTEMS
Where we provide Products to you as a system, we warrant that they are
compatible and will operate with one another. This warranty is in addition to
our other applicable warranties.
2.2 EXTENT OF WARRANTY
If P Machine is subject to federal or state consumer warranty laws, our
statement of limited warranty included with the Machine applies in place of
these Machine warranties.
Page 9 of 18
<PAGE> 11
The warranties will be voided by misuse, accident, modification, unsuitable
physical or operating environment, operation in other than the Specified
Operating Environment, improper maintenance by you, removal or alteration of
Product or parts identification labels, or failure caused by a product for which
we are not responsible.
THESE WARRANTIES ARE YOUR EXCLUSIVE WARRANTIES AND REPLACE ALL OTHER WARRANTIES
OR CONDITIONS, EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, THE IMPLIED
WARRANTIES OR CONDITIONS OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR
PURPOSE.
ITEMS NOT COVERED BY WARRANTY
We do not warrant uninterrupted or error-free operation of a Product or Service
or that we will correct all defects.
We will identify IBM Products that we do not warrant.
Unless we specify otherwise, we provide Materials, non-IBM Products, and non-IBM
Services WITHOUT WARRANTIES OF ANY KIND. However, non-IBM manufacturers,
suppliers, or publishers may provide their own warranties to you.
Page 10 of 18
<PAGE> 12
IBM CUSTOMER AGREEMENT
PART 3 - MACHINES
--------------------------------------------------------------------------------
3.1 TITLE AND RISK OF LOSS
When we accept your order, we agree to sell you the Machine described in a
Transaction Document. We transfer title to you or, if you choose, your lessor
when we ship the Machine. However, we reserve a purchase money security interest
in the Machine until we receive the amounts due. For a feature, conversion, or
upgrade involving the removal of parts which become our property, we reserve the
security interest until we receive the amounts due and the removed parts. You
agree to sign an appropriate document to permit us to perfect our purchase money
security interest.
We bear the risk of loss for the Machine up to and including its Date of
Installation. Thereafter, you assume the risk,
3.2 PRODUCTION STATUS
Each IBM Machine is manufactured from new parts, or new and used parts. In some
cases, a Machine may not be new and may have been previously installed.
Regardless of a Machine's production status, our appropriate warranty terms
apply.
3.3 INSTALLATION
For the Machine to function properly, it must be installed in a suitable
physical environment. You agree to provide an environment meeting the specified
requirements for the Machine.
We have standard installation procedures. We will successfully complete these
procedures before we consider an IBM Machine (other than a Machine for which you
defer installation or a Customer-set-up Machine) installed.
You are responsible for installing a Customer-set-up Machine (we provide
instructions to enable you to do so) and a non- IBM Machine.
MACHINE FEATURES, CONVERSIONS, AND UPGRADES
We sell features, conversions, and upgrades for installation on Machines, and,
in certain instances, only for installation on a designated, serial-numbered
Machine. Many of these transactions involve the removal of parts and their
return to us. As applicable, you represent that you have the permission from the
owner and any lien holders to 1) install features, conversions, and upgrades and
2) transfer ownership and possession of removed parts (which become our
property) to us. You further represent that all removed parts are genuine,
unaltered, and in good working order. A part that replaces a removed part will
assume the warranty or maintenance Service status of the replaced part. You
agree to allow us to install the feature, conversion, or upgrade within 30 days
of its delivery. Otherwise, we may terminate the transaction and you must return
the feature, conversion, or upgrade to us at your expense.
3.4 LICENSED INTERNAL CODE
Certain Machines we specify (called "Specific Machines") use Licensed Internal
Code (called "Code"). We own copyrights in Code or have the right to license
Code. We or a third party own all copies of Code, including all copies made from
them.
We will identify each Specific Machine in a Transaction Document. If you are the
rightful possessor of a Specific Machine, we grant you a license to use the Code
(or any replacement WE PROVIDE) ON, OR IN CONJUNCTION WITH, ONLY THE SPECIFIC
MACHINE, DESIGNATED by serial number, for which the Code is provided. We license
the Code to only one rightful possessor at a time.
Under each license, we authorize you to do only the following;
1. execute the Code to enable the Specific Machine to function according to its
Specifications;
Page 11 of 18
<PAGE> 13
2. make a backup or archival copy of the Code (unless we make one available for
your use), provided you reproduce the copyright notice and any other legend of
ownership on the copy. You may use the copy only to replace the original, when
necessary; and
3. execute and display the Code as necessary to maintain the Specific Machine.
You agree to acquire any replacement for, or additional copy of, Code directly
from us in accordance with our standard policies and practices. You also agree
to use that Code under these terms.
You may transfer possession of the Code to another party only with the transfer
of the Specific Machine. If you do so, you must 1) destroy all your copies of
the Code that were not provided by us, 2) either give the other party all your
IBM- provided copies of the Code or destroy them, and 3) notify the other party
of these terms. We license the other party when it accepts these terms by
initial use of the Code. These terms apply to all Code you acquire from any
source.
Your license terminates when you no longer rightfully possess the Specific
Machine.
ACTIONS YOU MAY NOT TAKE
You agree to use the Code only as authorized above. You may not do, for example,
any of the following:
1. otherwise copy, display, transfer, adapt, modify, or distribute the Code
(electronically or otherwise), except as we may authorize in the Specific
Machine's Specifications or in writing to you;
2. reverse assemble, reverse compile, or otherwise translate the Code unless
expressly permitted by applicable law without the possibility of contractual
waiver;
3. sublicense or assign the license for the Code; or
4. lease the Code or any copy of it,
3.5 MACHINE CODE
For certain Machines we may provide basic input/output system code, utilities,
diagnostics, device drivers, or microcode (collectively called "Machine Code").
This Machine Code is licensed under the terms of the agreement provided with it.
Page 12 of 18
<PAGE> 14
CUSTOMER AGREEMENT
PART 4 - PROGRAMS
--------------------------------------------------------------------------------
4.1 LICENSE
When we accept your order, we grant you a nonexclusive, nontransferable license
to use the Program, Programs are owned by International Business Machines
Corporation or one of its subsidiaries ("IBM") or an IBM supplier and are
copyrighted and licensed (not sold).
4.2 LICENSE DETAILS
Under each license, we authorize you to:
1. use the Program's machine-readable portion on only the Designated Machine. If
the Designated Machine is inoperable, you may use another Machine temporarily.
If the Designated Machine cannot assemble or compile the Program, you may
assemble or compile the Program on another Machine.
If you change a Designated Machine previously identified to us, you agree to
notify us of the change and its effective date;
2. use the Program to the extent of authorizations you have acquired;
3. make and install copies of the Program, to support the level of use
authorized, provided you reproduce the copyright notices and any other legends
of ownership on each copy or partial copy; and
4. use any portion of the Program we 1) provide in source form, or 2) mark
restricted (for example, "Restricted Materials of IBM") only to
a. resolve problems related to the use of the Program, and
b. modify the Program so that it will work together with other products.
You agree to comply with any additional terms we may place on a Program. We
identify these in the Program's Specifications or in a Transaction Document.
ACTIONS YOU MAY NOT TAKE
You agree not to:
1. reverse assemble, reverse compile, or otherwise translate the Program; or
2. sublicense, rent, or lease the Program.
4.3 PROGRAM COMPONENTS NOT USED ON THE DESIGNATED MACHINE
Some Programs have components that are designed for use on machines other than
the Designated Machine on which the Program is used. You may make copies of a
component and its documentation in support of your authorized use of the Program
provided you notify us of the component's actual date of distribution.
4.4 DISTRIBUTED SYSTEM LICENSE OPTION
For some Programs, you may make a copy under a Distributed System License Option
(called a "DSLO" copy). We charge less for a DSLO copy than we do for the
original license (called the "Basic" license). In return for the lesser charge,
you agree to do the following while licensed under a DSLO:
1. have a Basic license for the Program;
Page 13 of 18
<PAGE> 15
2. PROVIDE PROBLEM DOCUMENTATION AND RECEIVE PROGRAM SERVICES (if any) only
through the location of the Basic license; and 3. distribute to, and install on,
the DSLO's Designated Machine, any release, correction, or bypass that we
provide for the Basic license.
4.5 PROGRAM TESTING
We provide a testing period for certain Programs to help you evaluate if they
meet your needs. If we offer a testing period, it will start 1) the second
business day after the Program's standard transit allowance period, or 2) on
another date specified in a Transaction Document. We will inform you of the
duration of the Program's testing period.
We do not provide testing periods for DSLO copies.
4.6 PACKAGED PROGRAMS
We provide certain Programs together with their own license agreements. These
Programs are licensed under the terms of the agreements provided with them.
4.7 PROGRAM PROTECTION
For each Program, you agree to:
1. ensure that anyone who uses it (accessed either locally or remotely) does so
only for your authorized use and complies with our terms regarding Programs; and
2. maintain a record of all copies and provide it to us at our request.
4.8 PROGRAM SERVICES
We provide Program Services for warranted Programs and for selected other
Programs. If we can reproduce your reported problem in the Specified Operating
Environment, we will issue defect correction information, a restriction, or a
bypass, We provide Program Services for only the UNMODIFIED PORTION OF a current
release of a Program.
We provide Program Services 1) on an on-going basis (with at least six months'
written notice before we terminate Program Services), 2) until the date we
specify, or 3) for a period we specify.
4.9 LICENSE TERMINATION
You may terminate the license for a Program on one month's written notice, or at
any time during the Program's testing period.
Licenses for certain replacement Programs may be acquired for an upgrade charge.
When you acquire these replacement Programs, you agree to terminate the license
of the replaced Programs when charges become due, unless we specify otherwise.
We may terminate your license if you fail to comply with its terms. I If we do
so, your authorization to use the Program is also terminated.
Page 14 of 18
<PAGE> 16
CUSTOMER AGREEMENT
PART 5 - SERVICES
--------------------------------------------------------------------------------
5.1 IBM SERVICES
Services may be either standard offerings or customized to your specific
requirements. Each Service transaction may include one or more Services that:
1. expire at task completion or an agreed upon date;
2. automatically renew as another transaction with a specified contract period.
Renewals will continue until either of us terminates the Service; or
3. do not expire and are available for your use until either of us terminates
the Service.
5.2 PERSONNEL
Each of us is responsible for the supervision, direction, and control of our
respective personnel.
We reserve the right to determine the assignment of our personnel.
We may subcontract a Service, or any part of it, to subcontractors selected by
us.
5.3 MATERIALS OWNERSHIP AND LICENSE
We will specify Materials to be delivered to you. We will identify them as being
"Type I Materials," "Type 11 Materials," or otherwise as we both agree. If not
specified, Materials will be considered Type 11 Materials.
Type I Materials are those, created during the Service performance period, 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 11 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 11 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.
Any idea, concept, know-how, or technique which relates to the subject matter of
a Service and is developed or provided by either of us, or jointly by both of
us, in the performance of a Service may (subject to applicable patents and
copyrights) be freely used by either of us.
5.4 CHANGES TO SERVICE TERMS
We may change the terms of Services that are renewable or non-expiring by giving
you three months' written notice. However, these changes are not retroactive.
They apply immediately to renewal transactions and as of the effective date we
specify in the notice to all existing transactions. If we make a change to the
terms of a renewable Service that 1) affects your current contract period and 2)
you consider unfavorable. on your request, we will defer it until the end of
that contract period.
Page 15 of 18
<PAGE> 17
When both of us agree to change any Services statement of work other than as
described above, 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.
5.5 RENEWAL
Renewable Services renew automatically for a same length contract period unless
either of us provides written notification (at least one month prior to the end
of the current contract period) to the other of its decision not to renew.
5.6 TERMINATION AND WITHDRAWAL
Either of us may terminate a Service if the other does not meet its obligations
concerning the Service,
You may terminate a non-expiring Service, without adjustment charge, on one
month's written notice to us provided you have met all minimum requirements
specified in the applicable Attachments and Transaction Documents.
You may terminate a renewable Service or a non-expiring maintenance Service,
without adjustment charge, on notice to us provided you have met all minimum
requirements specified in the applicable Attachments and Transaction Documents
and any of the following circumstances occur:
1. you permanently remove the eligible Product, for which the Service is
provided, from productive use within your Enterprise;
2. the eligible location, for which the Service is provided, is no longer
controlled by you (for example, because of sale or closing of the facility);
3. an increase in the Service charges, either alone or in combination with prior
increases over the previous twelve months, is more than the maximum specified in
the applicable Service Transaction Document. If no maximum is specified, then
this circumstance does not apply; or
4. the Machine has been under maintenance Services for at least six months and
you give us one month's written notice prior to terminating the maintenance
Service.
For all other circumstances, you may terminate an expiring or renewable Service
on one month's written notice to us but such termination will result in
adjustment charges equal to the lesser of.
1. the charges remaining to complete the contract period; or
2. one of the following if specified in the Transaction Document -
a. the charges remaining to complete the contract period multiplied by the
adjustment factor specified, or
b. the amount specified.
You agree to pay us for all Services we provide and any Products and Materials
we deliver through Service termination and any charges we incur in terminating
subcontracts.
We may withdraw a renewable or non-expiring Service or support for an eligible
Product on three months' written notice to you. If we withdraw a Service for
which you have prepaid and we have not yet fully provided it to you, we will
give you a prorated refund.
Any terms which by their nature extend beyond termination or withdrawal remain
in effect until fulfilled and apply to respective successors and assignees.
Page 16 of 18
<PAGE> 18
5.7 SERVICE FOR MACHINES (DURING AND AFTER WARRANTY)
We provide certain types of repair and exchange Service either at your location
or at a service center to keep Machines in, or restore them to, conformance with
their Specifications. We will inform you of the available types of Service for a
Machine. We may repair the failing Machine or exchange it at our discretion.
When the type of Service requires that you deliver the failing Machine to us,
you agree to 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. We are
responsible for loss of, or damage to, your Machine while it is 1) in our
possession or 2) in transit in those cases where we are responsible for the
transportation charges.
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.
When 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 or 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.
Any feature, conversion, or upgrade we service must be installed on a Machine
which is 1) for certain Machines, the designated, serial-numbered Machine and 2)
at an engineering-change level compatible with the feature, conversion, or
upgrade.
Repair and exchange Services do not cover:
1. accessories, supply items, and certain parts, such as batteries, frames, and
covers;
2. Machines damaged by misuse, accident, modification, unsuitable physical or
operating environment, or improper maintenance by you;
3. Machines with removed or altered Machine or parts identification labels;
4. failures caused by a product for which we are not responsible; or
5. service of Machine alterations.
We manage and install engineering changes that apply to IBM Machines and may
also perform preventive maintenance.
We provide maintenance Services for selected non-IBM Machines.
5.8 MAINTENANCE COVERAGE
When you order Machine maintenance Services under this Agreement, we will inform
you of the date on which the maintenance Services will 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
Page 17 of 18
<PAGE> 19
maintenance Services. However, you will be charged for any maintenance Services
which we have performed at your request.
Page 18 of 18
