EXHIBIT 10.97
AMENDMENT NUMBER 1 TO
SETTLEMENT AGREEMENT
This Amendment Number 1 (the "Amendment") to the Settlement Agreement between
the Parties dated March 21, 2005 (the "Settlement Agreement") is entered into as
of November 29, 2005 (the "Amendment Effective Date") by and between
International Business Machines Corporation ("IBM") and Compuware Corporation
("CPWR") (collectively, the "Parties").
WHEREAS, the Parties have entered into the Settlement Agreement;
WHEREAS, the Parties wish to amend the Settlement Agreement;
NOW THEREFORE, in consideration of the mutual promises and undertakings
set forth herein, the receipt and sufficiency of which are hereby mutually
acknowledged, and intending to be legally bound hereby, the Parties hereby agree
to amend the Settlement Agreement as follows:
1. Amended Definitions. Remove Section 1(H) of the Settlement Agreement in
its entirety and replace with the following:
(H) "Installed Base" shall mean licenses to CPWR software
products for which IBM (or any of its subsidiaries) has made payments
(whether for its Internal Account, a Customer Account, or an Agency
Account) at or prior to the date of this Agreement (March 21, 2005).
Installed Base does not include Capacity Increases on the Installed
Base after the date of this Agreement or any licenses to CPWR software
products for which IBM (or any of its subsidiaries) has not made
payments (whether for its Internal Account, a Customer Account, or an
Agency Account) at or prior to the date of this Agreement (March 21,
2005).
2. New Definitions. Insert the following new Sections 1(M) through 1(S):
(M) "Capacity Increase" shall mean an extended parameter
around the licensed use for an existing CPWR software product license,
such as any additional permitted machine or server use or increased
machine size, MIPS, CPU's, agents, or users.
(N) "Internal Account" shall mean licenses for CPWR
software products, in IBM's (or its subsidiary's) name, that are used
for IBM's (or its subsidiary's) internal productive use.
(O) "Customer Account" shall mean licenses for CPWR
software products, in IBM's (or its subsidiary's) name, that are used
by or on behalf of an IBM customer.
(P) "Agency Account" shall mean licenses for CPWR
software products, in the customer's name, that are used by or on
behalf of an IBM customer.
(Q) "Excluded Agency Payments" shall mean the following
types of payments made by IBM (or its subsidiaries) for an Agency
Account:
(x) payments to fulfill a preexisting
non-cancellable customer payment obligation to CPWR; or
(y) payments made pursuant to a new or amended
customer agreement by which IBM has assumed responsibility for
customer payment obligations to CPWR after the date of this
Agreement ("New Agreement") and either (i) the services
provided by IBM to the customer under the New Agreement are
not materially related to the use of the licensed CPWR
software or (ii) the sole or principal purpose of the New
Agreement is for IBM to make payments on the Agency Account to
CPWR.
(1)
For the purpose of this definition, a customer license or maintenance
obligation is preexisting only if it was in effect between the customer
and CPWR as of the date IBM first entered into a New Agreement with the
customer.
(R) "TSFP/MS-RFPs" shall mean requests for proposal
issued by the IBM Integrated Supply Chain Sourcing organization for
technical services fixed price or managed services (the "TSFP/MS
Services"), either for IBM internal use or as subcontractors for IBM
Global Services outsourcing accounts where the service provider is
requested to bid on a services statement of work to be executed at a
fixed price for the entire statement of work. TSFP/MS-RFPs do not
include requests for proposal for General Contract Rate Services or
Value Add Rate Services or any other services which are procured on an
hourly or other periodic rate basis or on a time and materials basis.
(S) "Services Territory" shall mean the United States of
America, Belgium, France, Germany, Ireland, the Netherlands, Spain,
Switzerland, and the United Kingdom.
3. Amended Software Terms. Remove Section 3(B) of the Settlement Agreement
in its entirety and replace with the following:
(B) (i) Subject to the remainder of this Section 3(B),
IBM agrees that it (or its subsidiaries) will make payments to CPWR for
licenses for CPWR software products ("License Payments"), for Capacity
Increases to CPWR software products licenses ("Capacity Payments"), and
for maintenance of CPWR software products ("Maintenance Payments") in
the amounts (each, a "Minimum Annual Software Commitment") and for the
periods (each, a "Software Purchase Commitment Period") set forth
below:
Period Payments
------ --------
Date of this Agreement through March 31, 2006 $20,000,000
April 1, 2006 through March 31, 2007 $30,000,000
April 1, 2007 through March 31, 2008 $30,000,000
April 1, 2008 through March 31, 2009 $30,000,000
April 1, 2009 through March 31, 2010 $30,000,000
(ii) The Parties agree that (a) payments for the Installed
Base and the Excluded Agency Payments will not be taken into account
for purposes of determining whether IBM's Minimum Annual Software
Commitments have been satisfied, and (b) all License Payments, Capacity
Payments and Maintenance Payments (other than those payments referenced
in clause 3(B)(ii)(a) above) by IBM (or any of its subsidiaries) will
be taken into account for purposes of determining whether IBM's Minimum
Annual Software Commitments have been satisfied. For the avoidance of
doubt and consistent with the definition of Installed Base set forth in
subsection 1(H), payments by IBM (or any of its subsidiaries) for
Capacity Increases to the Installed Base purchased after the date of
this Agreement are not included in clause 3(B)(ii)(a) above and will be
taken into account for purposes of determining whether IBM's Minimum
Annual Software Commitments have been satisfied. The Installed Base is
out of the scope of this Agreement, and IBM shall have no obligations
under this Agreement with respect to the Installed Base.
(2)
(iii) Unless otherwise specifically agreed by the Parties
or their subsidiaries in writing, all purchases by IBM (or any of its
subsidiaries) of CPWR software products and maintenance for IBM's (or
any of its subsidiaries') Internal Account and for Customer Accounts of
IBM or its subsidiaries, shall be made pursuant to an agreement in the
form set forth in Exhibit F (it being understood that the current
License Agreement No. 117172 by and between IBM and CPWR shall not be
amended or otherwise revised pursuant to this Agreement); the customer
pricing and terms of such agreement are subject to the provisions set
forth in Schedule 2 to this Agreement.
(iv) If during any Software Purchase Commitment Period the
aggregate amount of License Payments, Capacity Payments, and
Maintenance Payments that IBM and its subsidiaries have made (together
with any License Payments, Capacity Payments, or Maintenance Payments
IBM is deemed to have made pursuant to Section 3(B)(v)) is less than
the Minimum Annual Software Commitment for such Software Purchase
Commitment Period, IBM will pay CPWR an amount in cash equal to such
shortfall within 30 days after receipt of a proper invoice, which shall
not be delivered prior to the end of such Software Purchase Commitment
Period.
(v) If during any Software Purchase Commitment Period the
aggregate amount of License Payments, Capacity Payments, and
Maintenance Payments that IBM and its subsidiaries have made (together
with any License Payments, Capacity Payments, or Maintenance Payments
IBM is deemed to have made pursuant to this clause (v)) exceeds the
Minimum Annual Software Commitment for such Software Purchase
Commitment Period, IBM will be deemed to have made License Payments,
Capacity Payments, and Maintenance Payments in the amount of such
excess in the immediately following Software Purchase Commitment
Period.
(vi) Notwithstanding anything in Section 3(B)(i) to the
contrary, on or before March 31, 2005, IBM shall make a payment in the
amount of $20,000,000 in respect of the Minimum Annual Software
Commitment for the Software Purchase Commitment Period commencing on
the date of this Agreement, which payment shall count as License
Payments and Maintenance Payments made in such Software Purchase
Commitment Period for purposes of this Agreement; provided, that IBM's
obligation to make such payment is subject to its prior receipt of a
proper invoice from CPWR in respect of such payment. (For the sake of
clarity, CPWR acknowledges that IBM has made the $20,000,000 payment
described in this Section 3(B)(vi).)
4. Amended Services Terms. Remove Section 3(C) of the Settlement Agreement
in its entirety and replace with the following:
(C) (i) IBM agrees that it (or its subsidiaries) will
provide CPWR the opportunity to bid on all of IBM's (or its
subsidiaries') TSFP/MS-RFPs in the Services Territory in the manner
provided for in Section 3(C) (ii) below until the aggregate value of
the TSFP/MS-RFPs provided to CPWR equals or exceeds the amounts set
forth in this Section 3(C)(i), below.
For planning purposes only, the parties intend that the aggregate value
of the TSFP/MS-RFPs for each period below will meet or exceed the
following:
Period Amounts
------ -------
Date of this Agreement through September 30, 2006 $ 40,000,000
October 1, 2006 through September 30, 2007 $ 60,000,000
October 1, 2007 through September 30, 2008 $ 80,000,000
October 1, 2008 through September 30, 2009 $ 80,000,000
------------------------------------------------- ------------
Cumulative value $260,000,000
(3)
(ii) IBM (or its subsidiaries) will provide TSFP/MS-RFPs
in the Services Territory to CPWR using IBM's (or its subsidiaries')
then standard process (including standard schedules) for providing
requests for proposal to potential service providers unless IBM and
CPWR agree on an alternate process. CPWR may submit a bid on any of the
TSFP/MS-RFPs, but will have no obligation to do so. In most cases, IBM
(or its subsidiary) will also solicit bids from other suppliers. IBM
(or its subsidiary) will select the best overall proposal, using
evaluation criteria established by IBM and consistent with IBM's (or
its subsidiary's) procurement policies and practices. CPWR may or may
not be awarded the contract for any bid. The value of each TSFP/MS-RFP
provided to CPWR in the Services Territory will count towards the
amounts set forth in clause (i) above irrespective of whether CPWR bids
or whether CPWR is selected by IBM (or its subsidiary) to do the work.
Any work awarded to CPWR shall be pursuant to the terms and subject to
the conditions of the Core Supplier Agreements applicable to the
TSFP/MS Service (e.g., the rates matrix contained in the Core Supplier
Agreements shall not apply to the TSFP/MS Services) or as may be
amended by the relevant Work Authorization. Each TSFP/MS-RFP will be
valued by IBM for the purpose of tracking aggregate TSFP/MS-RFP's
submitted to CPWR in furtherance of this Agreement at the contract
value for the awarded TSFP/MS Services. IBM will periodically report
aggregate values to CPWR for tracking purposes, but will not report the
value of individual TSFP/MS-RFPs.
(iii) IBM and CPWR will meet upon CPWR's request quarterly
to review the bids that CPWR has submitted and discuss the
competitiveness of the CPWR bids that did not result in a contract for
services. IBM will share with CPWR the same level of information that
it shares with its preferred suppliers with respect to their bids. Such
information shall not include the details of any winning bidder's
submission, including prices. The Parties will also discuss the
performance of the CPWR services team for bids that were awarded. The
goal of these reviews will be to help CPWR understand how they are
performing and to enable the Parties to better serve one another's
interests. In addition, on a monthly basis, IBM will provide CPWR with
a list of the TSFP/MS-RFPs provided to CPWR, as well as activities
described in clauses (iv) and (v) below, during the prior month.
(iv) IBM will work cooperatively with CPWR to understand
the specialized or highly differentiated expertise of the CPWR services
organization. In appropriate situations where IBM believes that those
services would be of value to IBM customers, IBM (or its subsidiary)
and CPWR will work together to sell those services to IBM customers. In
those cases, IBM (or its subsidiary) will negotiate pricing with CPWR
using a 'fair value' methodology. Any proposals that IBM makes to IBM
customers to sell CPWR services will count towards satisfying IBM's
obligations under clause (i) above regardless of whether the customers
accept the proposals.
(v) CPWR and IBM may agree that CPWR will provide
services (either related to CPWR software or otherwise) in support of
IBM or an IBM customer. In such case, payments made by IBM to CPWR
during the term of this Settlement Agreement for such services will
count towards satisfying IBM's obligations under clause (i) above.
(vi) If IBM (and its subsidiaries) has not provided the
opportunity to bid on TSFP/MS-RFPs (under clause (i) above); made
proposals to IBM customers (under clause (iv) above); or purchased
services from CPWR (under clause (v) above) with a total value equal to
the cumulative value identified in clause (i) above ($260,000,000) by
September 30, 2009, this time frame will be extended for such time as
is needed by IBM to provide TSFP/MS-RFPs; provide proposals; and/or
purchase services with such cumulative value. In the event the
cumulative value is attained prior to September 30, 2009, IBM will
continue to work with CPWR pursuant to clause (iv) until September 30,
2009.
(4)
(vii) Notwithstanding anything in this Agreement to the
contrary, IBM's obligation to provide the opportunity to bid on
TSFP/MS-RFPs to CPWR pursuant to this Section 3(C) is subject to CPWR's
compliance with the terms and conditions of the Core Supplier
Agreements, as may be amended as provided herein. CPWR understands and
agrees that IBM's obligation to provide the opportunity to bid on
TSFP/MS-RFPs does not guarantee CPWR any specific volume of business.
Any CPWR bids on TSFP/MS-RFPs are subject to IBM's evaluation pursuant
to the criteria established by IBM as described in clause (ii) above
and there is no guarantee that CPWR will be awarded those bids.
5. Remove Exhibit F of the Settlement Agreement in its entirety and
replace with the new Exhibit F attached to this Amendment.
6. Remove Schedule 2 of the Settlement Agreement in its entirety and
replace with the new Schedule 2 attached to this Amendment.
7. Any commitments by IBM in the text deleted by this Amendment are void
ab initio. IBM shall have no obligation to offer to CPWR any General
Contract Rate Services or Value Add Rate Services. Any disputes with
respect to the interpretation of the Settlement as amended by this
Amendment shall be subject to the provisions of Section 8 of the
Settlement.
Except as modified by this Amendment, all of the provisions of the Settlement
Agreement remain in full force and effect.
ACCEPTED AND AGREED TO:
COMPUWARE CORPORATION INTERNATIONAL BUSINESS MACHINES CORPORATION
By: /S/ By: /S/
-------------------- ----------- ------------------- -------------------
Print Name Xxxxx Xxxxxxxx, Jr. Print Name Xxxxxx Xxxxxxx
----------- ------ ------ --------------
Title Chairman & Chief Executive Officer Title Director, Software Sourcing
------ ----- ------ -----
Date November 29, 2005 Date November 29, 2005
--------- --------------------- ----------- -----------
(5)
