System Maintenance Agreement

DATE	AGREEMENT made this	day of

BETWEEN	The Customer (called “the Customer”)

AND	The Supplier (called “the Supplier”)

Preamble

The Customer requires the supply of services for the maintenance and support of an information technology system.

The Supplier has agreed to make available maintenance and support services for the Customer’s information technology system.

The parties have agreed that the Supplier shall supply such services on the terms and conditions set out in this Agreement.

1.	Definitions and Interpretations

1.1	In this Agreement, the following expressions shall have the following meanings:

“Change Request” means a request in writing from the Customer to the Supplier, requesting an alteration to the Maintenance Services or Service Levels in accordance with clauses 5.1 and 5.2.

“Charges” means the Supplier's charges set out in Schedule D for provision of Maintenance Services under this Agreement as amended from time to time in accordance with this Agreement;

“Commencement Date” means the date of this Agreement;

“Data” means that information which is input to, or stored on the System or any part of it and includes Customer's computer records, tables, indices and parameters;

“Designated Premises” means the premises where the Equipment is located and where the Maintenance Services will be provided under this Agreement;

“Equipment” means computer hardware and telecommunications hardware as identified in Schedule A which is included under the Maintenance Services;

“Licensor” means the party who has licensed and granted the Customer rights to use the Software;

“Maintenance Services” means the maintenance services to be supplied under this Agreement as specified in Schedule B;

“Service Levels” means those service levels for Maintenance Services specified in Schedule C;

“Service Plan” is the plan and timetable set out in Schedule E for the delivery of the Maintenance Services by the Supplier;

“Software” means the programming component which in combination with the Equipment is necessary to deliver the function of the Equipment and which is in Schedule A and is included under the Maintenance Services;

“System” means the combination of the Equipment and Software operating together;

“Warranty Period” means the period during which any item of Equipment or Software that has been incorporated in the System will be maintained by its supplier at no additional charge to Customer.

For the purposes of interpretation and construction of this Agreement:

1.2.1	words importing one gender include the other;

1.2.2	words importing the singular or plural number include the plural and singular number respectively;

1.2.3	references to Sections, Clauses, and Schedules are references to sections, clauses and schedules in this Agreement;

1.2.4	any Schedules, and the provisions and conditions contained in such Schedules, will have the same effect as if set out in the body of the Agreement. In the event of any conflict between the Schedules and the body of this Agreement, the provisions and conditions of the body of this Agreement will prevail;

1.2.5	headings and marginal notes are inserted for the sake of convenience of reference only and do not affect the interpretation of this Agreement.

2.	Term

This Agreement commences on the Commencement Date and shall remain in force until terminated in accordance with clause 10.

3.	Scope of Services

3.1	The Supplier agrees to provide Maintenance Services at the Designated Premises to keep the System in, or restore it to, good working order.

3.2	Maintenance Services will be provided by the Supplier during the hours specified in the Service Levels Schedule. Services requested or required by the Customer outside these hours will be charged at Supplier's then current schedule of rates and will be in addition to the Charges.

3.3	Where the Customer requests additional services which are outside the scope of the Maintenance Services, the Supplier may provide those services at standard time and material rates and conditions then in effect.

3.4	The Maintenance Services will be delivered in accordance with the Service Levels specified in the Service Levels Schedule.

3.5	Where any service involves replacement of a machine or part, the item replaced becomes the Supplier's property and the replacement becomes the Customer's property.

Maintenance Services do not include service where a defect is caused by:

3.6.1	improper use;

3.6.2	failure by the Customer to provide a suitable physical environment;

3.6.3	alterations, amendments or attachments to the System which have not been approved in writing by the Supplier;

3.6.4	fire, flood, lightning, earthquake and any other events over which the Supplier has no control;

3.6.5	service work not performed by the Supplier.

3.7	Where Equipment or Software is under warranty, the Supplier shall support such Equipment or Software in accordance with the Service Levels, notwithstanding the terms of the warranty. Where the warranty is provided by a third party, the Supplier shall liase with the third party to ensure that the benefit of the warranty is available to the Customer.

3.8	The Customer may request the Supplier to supply maintenance or support services with respect to any Equipment or Software acquired by the Customer after the commencement of this Agreement (“New Items”), by using the Change Request procedure set out in clause 5. The acquisition of New Items may result in an increase to the Charges and/or changes to the Service Levels if services additional to those provided for in this Agreement are required for the maintenance and support of the New Items.

3.9	The Software will be supported upon the terms of the software maintenance agreement already in place between the Customer and the Licensor. The Supplier agrees to liaise with Licensor when reasonably requested to do so by the Customer in order to assist the Customer to resolve defects in the Software but the Licensor shall remain solely responsible for the resolution of such defects in accordance with the terms of the maintenance agreement between the Customer and the Licensor. The Customer may, at its option, either notify defects in Software to the Supplier for referral to the Licensor or notify such defects directly to the Licensor in accordance with the procedures agreed between the parties.

4.	Charges and Payments

The Charges for Maintenance Services shall be as set out in Schedule D. Additional services that fall outside the scope of Maintenance Services identified in Schedule D shall be charged to the Customer in accordance with the Supplier's standard rates applicable at that time. GST will be payable by the Customer, at the rate applicable at the time of supply. Any new tax or duty, other than income tax, shall be paid by the Customer.

4.2	The Charges shall be invoiced [an agreed period, eg monthly, quarterly, etc] in advance. Where the Supplier performs additional services, such services shall be invoiced monthly in arrears.

4.3	The address for invoices will be as specified in Schedule D. The Supplier shall include sufficient details in each invoice to enable the Customer to identify the particular service that is the subject of the invoice.

4.4	The Customer shall pay the Supplier's invoice within 14 days from the date of receipt.

4.5	The Supplier may seek a review of Charges applicable under this Agreement to be effective from the next anniversary of the Commencement Date. Any such review will be in accordance with the procedures and conditions as set out in Schedule D.

5.	Change Control

5.1	The Customer may ask for changes in the Maintenance Services or Service Levels during the term of this Agreement. Any such changes will be advised by the Customer submitting a written request to the Supplier (“Change Request”).

5.2	The Customer may from time to time wish to amend the configuration of the System and the Customer acknowledges that amendments to the configuration of the System may impact Service Levels. The Customer shall advise the Supplier in writing of this fact in which event the parties shall negotiate, in good faith, amendments (if any) to the Service Levels applicable.

5.3	The Supplier will consider the Change Request and, within 10 business days of receiving it, the Supplier will either:

5.3.1	submit a written proposal to the Customer confirming the Supplier's agreement to the change (“Proposal”); or

5.3.2	give written notice to the Customer advising that the change is not agreed and detailing the reasons. The Supplier may not unreasonably withhold agreement to any change request.

5.4	The Proposal under clause 5.3.1 will include:

5.4.1	a detailed description of any additional costs or Charges to be paid by the Customer in return for the performance of the Customer's request and provide any revised schedules to this Agreement as required;

5.4.2	a description of any impact that performance of the Customer's request would have on the Supplier's ability to fulfil its other obligations under this Agreement. In particular, if performance of the Customer’s request would affect the terms of any warranty or costs contained in this Agreement, the Supplier will fully explain reasons for this in the proposal and will ensure that the impact of any such proposal is reasonable and justifiable;

5.4.3	an explanation of any changes to the terms and conditions of this Agreement or to the Schedules that may be necessary for the performance of Customer's request;

5.4.4	a timetable containing the dates by which Supplier would achieve key milestones in the performance of the Customer's request.

5.5	The Customer will consider the Proposal and will give the Supplier written notice either accepting or rejecting the Proposal within 10 business days of receipt, failing which the Customer shall be deemed to have rejected the Proposal. If the Customer rejects the Proposal, the Supplier may charge the Customer a reasonable amount for the professional services used by the Supplier in preparing its Proposal.

5.6	Each Change Request and Proposal that is accepted by the Customer in the manner prescribed in clause 5.5 shall, upon acceptance, form part of this Agreement.

6.	Service Levels

6.1	The Supplier is expected to meet the Service Levels for Maintenance Services as specified in Schedule C to this Agreement.

6.2	The parties will jointly establish procedures to monitor, log performance, and formally report on the Maintenance Services and will on a regular basis review and agree performance.

6.3	In the event that performance does not meet the Service Levels the Customer will be entitled to a credit for a portion of the Charges paid for that [period] in accordance with the formula set out in Schedule D.

7.	Responsibilities of the Parties

The Customer

7.1	The Customer shall give the Supplier reasonable access to and the use of the general facilities and services of the Designated Premises in order to enable the Supplier to perform its obligations under this Agreement.

7.2	If agreed and as set out in the Service Plan in Schedule E, the Customer shall make available remote telecommunications access to the System as required by the Supplier to enable services to be performed by it under this Agreement.

7.3	The Customer will be responsible for ensuring that it holds the appropriate licences for all Software included under Maintenance Services.

7.4	The Customer will appoint the appropriate and authorised persons from its staff to liaise with the Supplier as set out and agreed in the Service Plan. The Customer will ensure that such staff are reasonably available to the Supplier as required for consultation and guidance with regard to all information, facilities and services reasonably required by the Supplier for the performance of its obligations under this Agreement.

7.5	The Customer will be responsible for:

7.5.1	the procurement and/or provision of, all supplies and consumables not specifically identified in the Service Plan, as being the responsibility of the Supplier; and

7.5.2	any regular maintenance that is normally undertaken by the user or operator as described in the operating manual for the equipment; and

7.5.3	the correct use of the Equipment and Software and in accordance with the manufacturer’s operating instructions; and

7.5.4	the security and integrity of the back-up and recovery of the Software and Data; and

7.5.5	in consultation with the Suppliers, update as required, all Software to current supported versions.

7.6	Before any service is provided, the Customer will follow the problem determination, problem analysis and service request procedures set out in the Service Plan.

The Supplier

7.7	The Supplier will satisfy itself that the System is in reasonable working order and condition at the Commencement Date.

7.8	The Supplier will take reasonable steps to identify and confirm the nature of the problem reported by the Customer prior to attending the Designated Premises.

8.	Staffing

8.1	Prior to the commencement of any duties, the Supplier upon request will make available to the Customer details of its personnel who will undertake the Maintenance Services. Further details may be sought from the Supplier of any person proposed to the Customer.

8.2	The Customer will advise if any personnel of the Supplier are not acceptable and the reasons shall be discussed with the Supplier. Acceptance by the Customer of any personnel shall not be unreasonably withheld.

8.3	The Customer, acting reasonably, may at any time advise the Supplier that acceptance of any of the Supplier’s personnel is withdrawn. The reasons shall be discussed and agreed with the Supplier. In the event that this includes any breach of security or confidentiality, the person must be immediately withdrawn from all duties relating to the maintenance of the Customer’s System.

8.4	The Supplier’s staff shall:

8.4.1	comply with all reasonable requests and instructions of the Customer’s staff; and

8.4.2	comply with the Customer’s health, safety and security procedures at all times when on the Customer’s premises.

8.5	While this Agreement is in force, and for a period of six months after the termination of this Agreement for any reason, neither party will employ or offer employment to any person employed by or acting on behalf of the other party, without with the prior written permission of the other party.

9.	Warranties

9.1	Supplier warrants that where it is providing services to the Customer under this Agreement:

9.1.1	all work will be carried out with due care and attention;

9.1.2	the Supplier will use suitably qualified personnel; and

9.1.3	all service parts supplied as part of Maintenance Services will be new or as new, in good working order and at least functionally equivalent to the item replaced.

10.	Termination

Immediate Termination

10.1	Either party may terminate this Agreement forthwith if the other party:

10.1.1	assigns its rights or obligations under the Agreement otherwise than in accordance with Clause 19; or

10.1.2	enters into a composition with its creditors, is declared bankrupt, goes into liquidation, or a receiver, or a receiver and manager, or statutory receiver is appointed in respect of it.

Termination by Either Party on Notice

10.2	If one party defaults in the performance of any of its obligations under this Agreement and:

10.2.1	the default is capable of being remedied, and, within ten (10) working days of notice by the non-defaulting party specifying the default, is not remedied; or

10.2.2	the default is not capable of being remedied

the non-defaulting party may immediately terminate, or temporarily suspend the operation of, this Agreement, at its sole discretion.

10.3	Either party may terminate this Agreement on the next anniversary of the Commencement Date by giving not less than 90 days prior written notice.

On Termination

10.4	Upon termination, each party shall be regarded as discharged from any further obligations under this Agreement. If the Customer terminates this Agreement pursuant to clause 10.2.2 the Customer may recover any sums paid to the Supplier on any account under this Agreement for Services which have not been performed or completed.

11.	Disputes and Remedies

11.1	The parties agree to use their best efforts to resolve any dispute that may arise under the Agreement through good faith negotiations. Except as provided in subclause 11.5, no party shall commence any arbitration or litigation in relation to this Agreement unless it has first invited the chief executive of the other party to meet with its own chief executive for the purpose of endeavouring to resolve the dispute on mutually acceptable terms.

11.2	Any dispute arising under this Agreement which cannot be settled by negotiation between the parties or their respective representatives shall be submitted to mediation before commencing any litigation. Either party may initiate mediation by giving written notice to the other party.

11.3	If the parties can not agree a mediator within 2 working days of the notice, then the mediator will be selected by the President for the time being of LEADR (Lawyers Engaged in Alternative Dispute Resolution) or its successor.

11.4	The parties shall continue to perform their obligations under the Agreement as far as possible as if no dispute had arisen pending the final settlement of any matter referred to mediation.

11.5	Nothing in this clause shall preclude either party from taking immediate steps to seek urgent equitable relief before a New Zealand Court.

12.	Confidentiality

Both parties agree that, unless they have the prior written consent of the other, they will not use or disclose to any third party (other than for the purpose of performing this Agreement) the terms and conditions of this Agreement or any information confidential to the other party. The obligations of this clause 12 shall survive termination or cancellation of this Agreement.

13.	Intellectual Property Rights Indemnity

13.1	The Supplier will indemnify the Customer against and will at its cost defend or settle any claim, suit, action or proceeding (collectively called “Action”) brought against the Customer to the extent that the Action is based on a claim that the Customer’s use of Maintenance Services supplied by the Supplier constitutes a breach of any patent, copyright, trade secret or other proprietary right of a third party, provided that:

13.1.1	The Customer fully co-operates with the Supplier in defending or settling the Action and makes its employees available to give statements, advice and evidence as the Supplier may reasonably request;

13.1.2	The Supplier is notified promptly in writing of any Action and is given complete authority and information required for the conduct of the defence or settlement of the Action; and

13.1.3	The Supplier shall have the sole control of the conduct of any Action and all negotiations for its settlement or compromise.

14.	Limitation of Liability

14.1	The warranties in clause 9 replace all other representations or warranties (statutory, express or implied) and all such representations and warranties (save any which may not lawfully be excluded) are expressly excluded, including, without limitation, the implied warranties of merchantability and fitness for any particular purpose. The foregoing exclusions do not apply to rights granted to the Customer under the Consumer Guarantees Act 1993 unless the Customer is acquiring the Services for the purposes of a business in which case the parties agree the provisions of the Consumer Guarantees Act 1993 shall not apply.

14.2	Neither party will under any circumstances be liable under the law of tort, contract or otherwise for any loss of profits or savings or for any indirect or consequential loss or damage, however caused, arising out of or in connection with the performance or non-performance of this Agreement.

14.3	The Supplier’s liability to the Customer arising out of any claim for damages for any cause whatsoever will under no circumstances exceed in aggregate the greater of:

14.3.1	the sum of $[amount]; or

14.3.2	the total amount of the sums actually paid to the Supplier for Services for the 12-month period prior to the date of the claim.

14.4	No action arising out of this Agreement, regardless of form, may be brought by either party more than two years after the party bringing the action became aware, or reasonably ought to be aware, of the circumstances giving rise to the action.

15.	Force Majeure

15.1	Neither party will be liable for any act, omission, or failure to fulfil its obligations under this Agreement if such act, omission or failure arises from any cause reasonably beyond its control including acts of God, strikes, lockouts, riots, acts of war, epidemics, governmental action after the date of this Agreement, fire, communication line failures, power failures, earthquakes or other disasters (called “Force Majeure”).

15.2	The party unable to fulfil its obligations due to Force Majeure will immediately:

15.2.1	notify the other in writing of the reasons for its failure to fulfil its obligations and the effect of such failure; and

15.2.2	use all responsible endeavours to avoid or remove the cause and perform its obligations.

16.	Waiver

No delay, neglect or forbearance by either party in enforcing against the other any provision of this Agreement will be a waiver, or in any way prejudice any right, of that party.

17.	Severability

If any provision of this Agreement is held to be invalid, illegal or unenforceable, such provision will be severed and the remainder of the Agreement will remain in full force and effect.

18.	Notices

Any notice given pursuant to this Agreement will be sufficiently given if it is in writing and delivered, or sent by prepaid post or facsimile to the other party at the address as shown below:

The Customer’s contact, address and fax ......

The Supplier’s contact, address and fax ......

19.	Assignment

Neither party may assign, contract, or transfer its rights or obligations under this Agreement without the prior written consent of the other parties, which shall not be unreasonably withheld.

20.	Amendments

Any modification to or variation of this Agreement must be in writing and signed by authorized representatives of the Supplier and the Customer.

21.	Entire Agreement

The parties acknowledge that this Agreement contains the whole of the contract and understanding between them. There are no conditions, warranties or other understandings affecting the arrangements between the parties other than those set out herein and this Agreement replaces all prior Agreements and understandings (if any) with respect to the subject matter of this Agreement.

EXECUTED as an Agreement on the date first above written.

SIGNED on behalf of the Supplier	}
by a duly authorised representative in the presence of:	}
}

SIGNED on behalf of the Customer	}
by a duly authorised officer in the presence of:	}
}

SCHEDULE A - Equipment and Software

This schedule will set out in detail each of the items of Equipment and Software that form part of the System and which will be included under the Maintenance Services. The schedule should set out the equipment and software that is grouped together at a particular location with the location(s) identified and specified (the “Designated Premises”)

It may be appropriate to set out the individual prices for each item and any uplift(s) for extended travel.

SCHEDULE B - Maintenance Services

This schedule will detail the services that make up the “Maintenance Services”. This is likely to include those maintenance services that are “preventative” and those that are “remedial”. It is important that any exclusions (other than what is stated in the body of the Agreement) are identified as well.

The services relating to extended coverage and/or “time and materials” should be set out.

SCHEDULE C - Service Levels

This schedule will set out the Service Levels that will apply to all services to be supplied under this Agreement. It is likely to include:

the hours of coverage (including weekends, public holidays, etc.)

any provision for support outside the coverage period

any provision of different levels of call and response (eg “critical” and “non critical”)

“work to completion” or work only during hours of coverage

provision for preventative maintenance outside the normal coverage period

the target time for initial response to a call logged by the Customer for service (also “same day” or “next day” if call logged late in the coverage period?)

the target time for the Supplier to arrive at the Designated Premises in the event this is required

the target time for the Equipment, Software and/or System to be available again for the Customer’s use

any targets for “system availability” and the formulae for calculating this

definition of “system down” or any other performance measures for the purposes of any availability calculations

the provision for any replacement or loan equipment

any special provisions for spare part inventories

response to out of hours coverage

response to “time and material” calls

the service level issues regarding the Supplier’s roles/responsibilities with respect to any third party suppliers

any limitations on the eligibility of any software or equipment (eg age or version).

SCHEDULE D - Prices and Payments

This schedule will set out the charges applicable for all services and the payments and payment milestones that will apply. Depending on the approach, it may be appropriate to merge this schedule with Schedule A to simplify updates and amendments. The relevant clause references will then need to be adjusted.

This schedule will also set out the milestones and procedures for reviewing charges and the rules (if any) that will apply, including limitations on any increases.

The schedule will include the address for the Supplier’s invoices.

SCHEDULE E - Service Plan

This schedule should set out the plan for the delivery of services. It might include:

a plan and timetable for the preventative maintenance work

the procedures for logging calls for service (including outside the coverage period if applicable)

any definitions of “critical” and “non critical” faults and reference to the service levels that will apply

the procedures that the parties follow in the event of a call for service (arrival on site, access, closing down the system, documenting the call, restoring the system, declaring the problem resolved, reporting the problem, etc)

the account management plan (regular meetings, reports required, etc)

the problem escalation plan and procedures

plan and procedures for the Supplier with respect to other parties who have responsibilities for maintenance of any Equipment or Software on the System

any special requirements of the service that relate to travel, access, reporting, etc

any additional roles/responsibilities of the parties that should be documented

the procedures for requesting additional work (equipment relocation, addition or removal)

how equipment or software that is not under maintenance is dealt with

the policy/plan with respect to remote engineering login

policy procedures for the Supplier in accepting equipment or software under maintenance (including any immediate or longer term refurbishment work required)

the quality assurance plan

any consumables or supplies that it is agreed that the Supplier will provide

procedures and responsibilities for restoring from backup media the Software or Data in the event it is lost for any reason.

G. Roderick Singleton

2004-07-13T17:46:43