<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 23, 1999
REGISTRATION NO. 333-86755
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 6
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
FREEMARKETS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 7389 04-3265483
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>
------------------------
22ND FLOOR, ONE OLIVER PLAZA
210 SIXTH AVENUE
PITTSBURGH, PA 15222
(412) 434-0500
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
GLEN T. MEAKEM
CHIEF EXECUTIVE OFFICER
22ND FLOOR, ONE OLIVER PLAZA
210 SIXTH AVENUE
PITTSBURGH, PA 15222
(412) 434-0500
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
------------------------
COPIES TO:
<TABLE>
<S> <C>
MARLEE S. MYERS, ESQ.
DAVID A. GERSON, ESQ. KEITH F. HIGGINS, ESQ.
ERIC D. KLINE, ESQ. ROPES & GRAY
MORGAN, LEWIS & BOCKIUS LLP ONE INTERNATIONAL PLACE
THIRTY-SECOND FLOOR, ONE OXFORD CENTRE BOSTON, MA 02110
PITTSBURGH, PA 15219-1417 (617) 951-7000
(412) 560-3300 FAX: (617) 951-7050
FAX: (412) 560-3399
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [ ]
------------------------
CALCULATION OF REGISTRATION FEE
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- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE PROPOSED MAXIMUM AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED(1) PER SHARE(2) AGGREGATE OFFERING PRICE REGISTRATION FEE
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
Common Stock, $0.01 par value.......... 4,140,000 $16.00 $66,240,000 $17,488(3)
</TABLE>
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- --------------------------------------------------------------------------------
(1) Includes 540,000 shares issuable pursuant to an over-allotment option
granted to the underwriters.
(2) Estimated solely for the purpose of computing the amount of the registration
fee; based on a bona fide estimate of the maximum offering price per share
of the securities being registered in accordance with Rule 457(a) under the
Securities Act.
(3) Previously paid.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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<PAGE> 2
EXPLANATORY NOTE
This Amendment No. 6 to the Form S-1 Registration Statement is being filed
for the sole purpose of filing exhibits.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, payable by the registrant in connection
with the sale of the securities being registered. All amounts are estimates
except the SEC registration fee, the NASD fee and the Nasdaq National Market
listing fee.
<TABLE>
<CAPTION>
AMOUNT
TO BE PAID
----------
<S> <C>
SEC registration fee........................................ $ 17,488
NASD fee.................................................... 7,124
Nasdaq National Market listing fee.......................... 94,000
Printing expenses........................................... 500,000
Legal fees and expenses..................................... 750,000
Accounting fees and expenses................................ 500,000
Transfer agent and registrar fees........................... 3,500
Miscellaneous............................................... 347,888
----------
Total.............................................. $2,220,000
==========
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 102(b)(7) of the Delaware General Corporation Law (the "DGCL")
permits a corporation, in its certificate of incorporation, to limit or
eliminate, subject to certain statutory limitations, the liability of directors
to the corporation or its stockholders for monetary damages for breaches of
fiduciary duty, except for liability (a) for any breach of the director's duty
of loyalty to the corporation or its stockholders, (b) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, (c) under Section 174 of the DGCL, or (d) for any transaction from which
the director derived an improper personal benefit. Article VII of the
registrant's Amended and Restated Certificate of Incorporation, to be in effect
upon consummation of the offering of the securities to which this registration
statement relates, provides that the personal liability of directors of the
registrant is eliminated to the fullest extent permitted by Section 102(b)(7) of
the DGCL.
Under Section 145 of the DGCL, a corporation has the power to indemnify
directors and officers under certain prescribed circumstances and subject to
certain limitations against certain costs and expenses, including attorneys'
fees actually and reasonably incurred in connection with any action, suit or
proceeding, whether civil, criminal, administrative or investigative, to which
any of them is a party by reason of being a director or officer of the
corporation if it is determined that the director or officer acted in accordance
with the applicable standard of conduct set forth in such statutory provision.
Article VII of the registrant's Amended and Restated Bylaws, to be in effect
upon consummation of the offering of the securities to which this registration
statement relates, provides that the registrant will indemnify any person who
was or is a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding by reason of the fact that he is or was
(or to the extent permitted under Delaware law, has agreed to be) a director,
officer, employee or agent of the registrant, or is or was serving (or, to the
extent permitted under Delaware law, has agreed to serve) at the request of the
registrant as a director, officer, employee or agent of another entity, against
certain liabilities, costs and expenses. Article VII further permits the
registrant to maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of the registrant, or is or was serving at
the
II-1
<PAGE> 3
request of the registrant as a director, officer, employee or agent of another
entity, against any liability asserted against such person and incurred by such
person in any such capacity or arising out of his status as such, whether or not
the registrant would have the power to indemnify such person against such
liability under the DGCL. The registrant expects to maintain directors' and
officers' liability insurance.
The registrant has entered into indemnification agreements with its
directors and officers and intends to enter into indemnification agreements with
any new directors or officers in the future.
Under Section 8(b) of the Underwriting Agreement, the Underwriters will be
obligated, under certain circumstances, to indemnify directors and officers of
the registrant against certain liabilities, including liabilities under the
Securities Act of 1933, as amended (the "Securities Act"). Reference is made to
the form of Underwriting Agreement filed as Exhibit 1.1 hereto.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
Since November 1996, the registrant has sold and issued the following
securities:
1. In December 1996, the registrant issued 1,057,800 shares of Series B
preferred stock to 13 investors for an aggregate consideration of $572,553.
2. From January through July 1997, the registrant issued 1,289,400 shares
of Series B preferred stock and warrants to purchase 571,800 shares of Series B
preferred stock to 18 investors for an aggregate consideration of $697,514.
3. In October 1997, the registrant issued 531,000 shares of common stock to
24 employees for an aggregate consideration of $287,625.
4. In December 1997, the registrant issued 5,017,200 shares of Series A-2
preferred stock and warrants to purchase 1,222,800 shares of Series A-2
preferred stock to 60 investors for an aggregate consideration of $2,717,650.
5. In October 1998, the registrant issued 780,000 shares of common stock to
78 employees for an aggregate consideration of $1,300,000.
6. In March 1999, the registrant issued 2,409,000 shares of common stock
upon the exercise of warrants previously issued to an investor and placement
agent, for an aggregate consideration of $1,304,875.
7. In April 1999, the registrant issued 2,305,434 shares of Series C
preferred stock to 78 investors for an aggregate consideration of $10,996,926.
8. In September 1999, the registrant issued 2,057,773 shares of Series D
preferred stock and warrants to purchase 304,431 shares of Series D preferred
stock to 44 investors for an aggregate consideration of $30,445,040.
9. In September 1999, the registrant issued 304,431 shares of Series D
preferred stock upon the exercise of warrants previously issued to an investor,
for an aggregate consideration of $3,044.
10. Since inception, the registrant has granted options to purchase an
aggregate of 12,820,250 shares of common stock to a number of its employees,
directors, officers and individuals who served as consultants. No consideration
was received by the registrant upon grant of any such options. As of this date,
569,520 options have been exercised for an aggregate consideration of
$5,310,580.
The issuances of the above securities were intended to be exempt from
registration under the Securities Act in reliance on Section 4(2) thereof as
transactions by an issuer not involving any public offering. In addition,
certain issuances described in Items 3, 5 and 10 were intended to be exempt from
registration under the Securities Act in reliance upon Rule 701 and/or Rule 4(2)
promulgated under the Securities Act. The recipients of securities in each such
transaction represented their intentions to
II-2
<PAGE> 4
acquire the securities for investment only and not with a view to, or for sale
in connection with, any distribution thereof and appropriate legends were
affixed to the share certificates, warrants and options issued in such
transactions. The registrant believes that all recipients had adequate access,
through their relationships with the registrant, to information about the
registrant.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) EXHIBITS. The following exhibits are filed as part of this registration
statement:
<TABLE>
<CAPTION>
NUMBER DESCRIPTION
- -------- ------------------------------------------------------------
<S> <C>
1.1* Form of Underwriting Agreement.
3.1(a)* Registrant's Amended and Restated Certificate of
Incorporation (to be replaced by Exhibit 3.1(b) upon the
closing of this offering).
3.1(b)* Form of registrant's Amended and Restated Certificate of
Incorporation (to be effective upon the closing of this
offering).
3.2(a)* Registrant's Amended and Restated Bylaws (to be replaced by
Exhibit 3.2(b) upon the closing of this offering).
3.2(b)* Form of registrant's Amended and Restated Bylaws (to be
effective upon the closing of this offering).
4.1* Amended and Restated Registration Rights Agreement dated
August 3, 1999.
5.1* Opinion of Morgan, Lewis & Bockius LLP as to the legality of
the securities being registered.
10.1(a)++ Transaction Agreement between General Motors Corporation and
the registrant dated July 17, 1998 and effective as of June
8, 1998.
10.1(b)++* Amendment to Transaction Agreement between General Motors
Corporation and the registrant dated and effective as of
October 1, 1999.
10.1(c) Framework Agreement for Information Technology between
General Motors Corporation and the registrant dated and
effective as of June 8, 1998.
10.1(d) Software Licensing Category Agreement between General Motors
Corporation and the registrant dated and effective as of
June 8, 1998.
10.1(e) Consulting Services Category Agreement between General
Motors Corporation and the registrant dated and effective as
of June 8, 1998.
10.2(a)++ Systems and Services Agreement between United Technologies
Corporation and the registrant dated January 14, 1999 and
effective as of January 1, 1999.
10.2(b)* Side Letter Agreement between United Technologies
Corporation and the registrant dated July 30, 1999.
10.3(a)* Lease Agreement between the registrant and One Oliver
Associates Limited Partnership dated October 21, 1998.
10.3(b)* First Amendment to Lease between the registrant and One
Oliver Associates Limited Partnership dated March 30, 1999.
10.3(c)* Second Amendment to Lease between the registrant and One
Oliver Associates Limited Partnership dated June 1999.
10.4(a)* Loan and Security Agreement between the registrant and
Silicon Valley Bank dated February 5, 1999.
10.4(b)* First Amendment to Loan and Security Agreement between the
registrant and Silicon Valley Bank dated September 3, 1999.
10.5* Registrant's 1996 Stock Incentive Plan.
10.6* Registrant's Amended and Restated Stock Incentive Plan.
</TABLE>
II-3
<PAGE> 5
<TABLE>
<CAPTION>
NUMBER DESCRIPTION
- -------- ------------------------------------------------------------
<S> <C>
10.7* Registrant's Employee Stock Purchase Plan.
10.8(a)+* 1998 Stock Option Plan Grant Certificate (Glen T. Meakem).
10.8(b)+* 1998 Stock Option Plan Grant Certificate (Sam E. Kinney,
Jr.).
10.8(c)+* 1998 Stock Option Plan Grant Certificate (Sam E. Kinney,
Jr.).
10.8(d)+* 1998 Stock Option Plan Grant Certificate (David J. Becker).
10.8(e)+* 1998 Stock Option Plan Grant Certificate (David J. Becker).
10.8(f)+* 1998 Stock Option Plan Grant Certificate (John P. Levis,
III).
10.8(g)+* 1998 Stock Option Plan Grant Certificate (Thomas L. McLeod).
10.8(h)+* 1998 Stock Option Plan Grant Certificate (Thomas L. McLeod).
10.9+* Letter Agreement between the registrant and Eric C. Cooper
dated October 28, 1999.
10.10+* Letter Agreement between the registrant and L. John Doerr
dated October 28, 1999.
10.11+* Letter Agreement between the registrant and David A. Noble
dated October 28, 1999.
10.12* Form of Indemnification Agreement between the registrant and
each of its directors and officers.
10.13+ Restricted Stock Purchase Agreement between Thomas J.
Meredith and the registrant dated as of November 23, 1999.
21.1* Subsidiaries of the registrant.
23.1* Consent of PricewaterhouseCoopers LLP.
23.2* Consent of Morgan, Lewis & Bockius LLP (included in opinion
filed as Exhibit 5.1).
24.1* Power of Attorney granted by Glen T. Meakem, Joan S. Hooper,
Sam E. Kinney, Jr., Eric C. Cooper and David A. Noble
(included on signature page of this registration statement
and Amendment No. 1 hereto).
24.2* Power of Attorney granted by L. John Doerr.
24.3* Power of Attorney granted by Thomas J. Meredith.
27.1* Financial Data Schedule for the year ended December 31,
1996.
27.2* Financial Data Schedule for the year ended December 31,
1997.
27.3* Financial Data Schedule for the year ended December 31,
1998.
27.4* Financial Data Schedule for the nine months ended September
30, 1998.
27.5* Financial Data Schedule for the nine months ended September
30, 1999.
</TABLE>
- ---------------
* Previously filed.
++ Portions of this Exhibit have been omitted pursuant to a request for
confidential treatment.
+ Management or compensatory contract.
II-4
<PAGE> 6
(b) FINANCIAL STATEMENT SCHEDULES. The following financial statement schedule
is included as part of this registration statement:
Schedule II -- Valuation and Qualifying Accounts.
Other financial statement schedules have been omitted because they are
inapplicable or are not required under applicable provisions of Regulation S-X,
or because the information that would otherwise be included in such schedules is
contained in the registrant's financial statements or notes thereto.
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes to provide to the underwriters
at the closing specified in the underwriting agreement, certificates in such
denominations and registered in such names as required by the underwriters to
permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
The undersigned registrant hereby undertakes that:
(1) For the purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the registrant pursuant to Rules 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
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<PAGE> 7
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this amendment to the registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Pittsburgh,
Commonwealth of Pennsylvania, on November 23, 1999.
FREEMARKETS, INC.
By: /s/ GLEN T. MEAKEM
------------------------------------
Glen T. Meakem
President, Chief Executive
Officer and Chairman of the Board
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
--------- -------- ----
<S> <C> <C>
* President, Chief Executive Officer November 23, 1999
- --------------------------------------- and Chairman of the Board
Glen T. Meakem (Principal Executive Officer) and
Director
* Vice President and Chief Financial November 23, 1999
- --------------------------------------- Officer (Principal Financial and
Joan S. Hooper Accounting Officer)
* Director November 23, 1999
- ---------------------------------------
Sam E. Kinney, Jr.
* Director November 23, 1999
- ---------------------------------------
Eric C. Cooper
* Director November 23, 1999
- ---------------------------------------
David A. Noble
* Director November 23, 1999
- ---------------------------------------
L. John Doerr
* Director November 23, 1999
- ---------------------------------------
Thomas J. Meredith
*By /s/ GLEN T. MEAKEM
- -------------------------------------
Glen T. Meakem, attorney-in-fact,
pursuant to powers of attorney
previously filed as part of this
registration statement
</TABLE>
II-6
<PAGE> 8
EXHIBIT INDEX
<TABLE>
<CAPTION>
NUMBER DESCRIPTION
- -------- ------------------------------------------------------------
<S> <C>
1.1* Form of Underwriting Agreement.
3.1(a)* Registrant's Amended and Restated Certificate of
Incorporation (to be replaced by Exhibit 3.1(b) upon the
closing of this offering).
3.1(b)* Form of registrant's Amended and Restated Certificate of
Incorporation (to be effective upon the closing of this
offering).
3.2(a)* Registrant's Amended and Restated Bylaws (to be replaced by
Exhibit 3.2(b) upon the closing of this offering).
3.2(b)* Form of registrant's Amended and Restated Bylaws (to be
effective upon the closing of this offering).
4.1* Amended and Restated Registration Rights Agreement dated
August 3, 1999.
5.1* Opinion of Morgan, Lewis & Bockius LLP as to the legality of
the securities being registered.
10.1(a)++ Transaction Agreement between General Motors Corporation and
the registrant dated July 17, 1998 and effective as of June
8, 1998.
10.1(b)++* Amendment to Transaction Agreement between General Motors
Corporation and the registrant dated, and effective as of
October 1, 1999.
10.1(c) Framework Agreement for Information Technology between
General Motors Corporation and the registrant dated and
effective as of June 8, 1998.
10.1(d) Software Licensing Category Agreement between General Motors
Corporation and the registrant dated and effective as of
June 8, 1998.
10.1(e) Consulting Services Category Agreement between General
Motors Corporation and the registrant dated and effective as
of June 8, 1998.
10.2(a)++ Systems and Services Agreement between United Technologies
Corporation and the registrant dated January 14, 1999 and
effective as of January 1, 1999.
10.2(b)* Side Letter Agreement between United Technologies
Corporation and the registrant dated July 30, 1999.
10.3(a)* Lease Agreement between the registrant and One Oliver
Associates Limited Partnership dated October 21, 1998.
10.3(b)* First Amendment to Lease between the registrant and One
Oliver Associates Limited Partnership dated March 30, 1999.
10.3(c)* Second Amendment to Lease between the registrant and One
Oliver Associates Limited Partnership dated June 1999.
10.4(a)* Loan and Security Agreement between the registrant and
Silicon Valley Bank dated February 5, 1999.
10.4(b)* First Amendment to Loan and Security Agreement between the
registrant and Silicon Valley Bank dated September 3, 1999.
10.5* Registrant's 1996 Stock Incentive Plan.
10.6* Registrant's Amended and Restated Stock Incentive Plan.
10.7* Registrant's Employee Stock Purchase Plan.
10.8(a)+* 1998 Stock Option Plan Grant Certificate (Glen T. Meakem).
10.8(b)+* 1998 Stock Option Plan Grant Certificate (Sam E. Kinney,
Jr.).
10.8(c)+* 1998 Stock Option Plan Grant Certificate (Sam E. Kinney,
Jr.).
10.8(d)+* 1998 Stock Option Plan Grant Certificate (David J. Becker).
10.8(e)+* 1998 Stock Option Plan Grant Certificate (David J. Becker).
10.8(f)+* 1998 Stock Option Plan Grant Certificate (John P. Levis,
III).
10.8(g)+* 1998 Stock Option Plan Grant Certificate (Thomas L. McLeod).
</TABLE>
<PAGE> 9
<TABLE>
<CAPTION>
NUMBER DESCRIPTION
- -------- ------------------------------------------------------------
<S> <C>
10.8(h)+* 1998 Stock Option Plan Grant Certificate (Thomas L. McLeod).
10.9+* Letter Agreement between the registrant and Eric C. Cooper
dated October 28, 1999.
10.10+* Letter Agreement between the registrant and L. John Doerr
dated October 28, 1999.
10.11+* Letter Agreement between the registrant and David A. Noble
dated October 28, 1999.
10.12* Form of Indemnification Agreement between the registrant and
each of its directors and officers.
10.13+ Restricted Stock Purchase Agreement between Thomas J.
Meredith and the registrant dated as of November 23, 1999.
21.1* Subsidiaries of the registrant.
23.1* Consent of PricewaterhouseCoopers LLP.
23.2* Consent of Morgan, Lewis & Bockius LLP (included in opinion
filed as Exhibit 5.1).
24.1* Power of Attorney granted by Glen T. Meakem, Joan S. Hooper,
Sam E. Kinney, Jr., Eric C. Cooper and David A. Noble
(included on signature page of this registration statement
and Amendment No. 1 hereto).
24.2* Power of Attorney granted by L. John Doerr.
24.3* Power of Attorney granted by Thomas J. Meredith.
27.1* Financial Data Schedule for the year ended December 31,
1996.
27.2* Financial Data Schedule for the year ended December 31,
1997.
27.3* Financial Data Schedule for the year ended December 31,
1998.
27.4* Financial Data Schedule for the nine months ended September
30, 1998.
27.5* Financial Data Schedule for the nine months ended September
30, 1999.
</TABLE>
- ---------------
* Previously filed.
++ Portions of this Exhibit have been omitted pursuant to a request for
confidential treatment.
+ Management or compensatory contract.
<PAGE> 1
Exhibit 10.1(a)
INFORMATION DENOTED BY [*] HEREIN HAS BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT. THIS INFORMATION HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
GENERAL MOTORS CORPORATION
TRANSACTION AGREEMENT
THIS TRANSACTION AGREEMENT (Transaction Agreement) is made to be
effective as of the 8th day of June, 1998 (Effective Date) by and between
General Motors Corporation, with offices at 100 Renaissance Center, Detroit,
Michigan 48243 and FreeMarkets OnLine, Inc., with offices at 130 Seventh Street,
Suite 500, Pittsburgh, Pennsylvania 15222. General Motors Corporation and
FreeMarkets OnLine, Inc. are referred herein individually as a "Party" and
collectively as the "Parties."
Terms used in this Transaction Agreement with initial capital letters
are defined in Exhibit A of this Transaction Agreement or herein or in the other
Agreements, as more fully set forth in Section 17.3 herein.
BACKGROUND
The Parties have entered into the Framework Agreement governing their
overall relationship regarding the provision to Customer by Supplier of Products
and Services. The Parties have also entered into a Software Licensing Agreement
and a Consulting Services Agreement, the terms of which are incorporated into
and made a part of the Framework Agreement. Customer wishes to be provided with,
and Supplier wishes to provide, access to a global online bidding system to be
used by Customer and associated consulting services including training, CBE
management services, technical operations services, call center services and
OnLine Market Making(TM) consulting services. This Transaction Agreement is
intended to address the specific understanding of the parties related to the
Project. The Parties intend that upon full execution of this Transaction
Agreement, the terms hereof shall be incorporated into and made a part of the
Agreements. The terms of this Transaction Agreement are intended to supplement
the Framework Agreement, the Software Licensing Agreement and the Consulting
Services Agreement by defining and clarifying the Parties' rights and
obligations with respect to the licensing by Supplier of Licensed Software to
Customer and the provision by Supplier to Customer of the Services described
therein.
THE AGREEMENT
1. SCOPE OF PROJECT
1.1 GENERAL. Subject to the terms and conditions of this Transaction
Agreement, Supplier agrees to supply, and Customer agrees to license, access to
Supplier's online bidding system and use of Supplier's BidWare(R) Software, and
purchase associated services to be used by Customer's purchasing department in
North America to enable Supplier and Certified Buyers to conduct CBEs
<PAGE> 2
among selected Qualified Bidders for procurement of goods and services for
Customer. The services to be provided by Supplier shall include training of
Certified Buyers and Qualified Bidders, CBE Management services, Technical
Operations services, Call Center services and OnLine Market Making(TM)
consulting services. All CBEs will be conducted at a time mutually agreeable to
Customer and Supplier.
2. SERVICES
2.1 SERVICES. Beginning on the Effective Date, Supplier will provide
the integrated set of services set forth in this Article 2 to assist Customer in
effectively utilizing the System. These services will provide Buyers with tools
to work with Supplier to conduct CBEs among Qualified Bidders for specific
pieces of business. Fees for the services described in this Article 2 are set
forth in Exhibit D.
2.2 TRAINING OF BUYERS. At times mutually agreed to by Supplier and
Customer, Supplier will provide training to Buyers designated by Customer
relating to Supplier's proprietary procedures for structuring online bids and
operating the BidWare(R) Software. All Buyer training will be held at Customer's
Sites and will be conducted by [*] Supplier personnel assigned by Supplier. Each
class will last for [*] hours during normal business hours and shall have the
agenda set forth in Exhibit B. Each class will run up to twice a day during
specific periods as mutually agreed to by Customer and Supplier. A maximum total
of [*] Buyers may attend each training class. Buyers who, as determined by
Supplier, are successfully trained will be certified by Supplier as being a
Certified Buyer. Each Certified Buyer will be given a unique user identification
number and password for the use of the BidWare(R) Software and access to the
System. The Parties agree that only Certified Buyers will be permitted to use
the BidWare(R) Software and access the System. The certification by Supplier of
a Buyer in no way shall be interpreted as a guarantee that the Certified Buyer
is able to operate and understand the CBE process without error. Supplier shall
have no liability for any act or omission of a Buyer.
2.3 SUPPORT IN VIEWING CBES. Subject to the terms of the license grant
set forth herein, Supplier will provide copies of BidWare(R) Software for
installation on Customer's personal computers for Certified Buyers in North
America, as requested in writing by Customer, at the price set forth in Exhibit
D. Neither Supplier nor Customer will integrate the BidWare(R) Software with
existing Customer computer systems or any other computer system, nor will the
BidWare(R) Software be used on any Customer networks or any other networks under
this Transaction Agreement, except for the network designated by Supplier.
Certified Buyers will be invited to use this software to view the market
activity of the CBEs as well as print out market results and audit reports. Each
Site which is provided with the BidWare(R) Software shall be outfitted by
Customer as set forth in Section 3.2. Customer shall have the option to purchase
a BidWare(R) PC (including CPU, monitor, modem and printer) through Supplier for
each copy of BidWare(R) Software supplied to Customer as set forth on Exhibit D
of this Transaction Agreement, or to purchase its own personal computers to run
the BidWare(R) Software.
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2.4 SERVICES FOR CBES. Upon the request of a Certified Buyer to use the
System to set up a CBE and Supplier's consent to the same, Supplier will provide
the following services related to such CBE:
(A) ASSISTANCE IN STRUCTURING EVENTS. Supplier will provide CBE
Management Services to Certified Buyers to assist the Certified Buyer in
structuring the CBE. "Structuring" shall include lot setting, establishing
bidding parameters and other factors relevant to the CBE. Additionally, if
requested by Customer, Supplier will provide OnLine Market Making(TM) Consulting
to Certified Buyers at a time which is mutually agreeable to the Parties. The
CBE Management Services and the OnLine Market Making(TM) consulting services
outlined in this Section 2.4 will be billed on a variable basis and are not
included in the fixed cost of this Transaction Agreement. A description of the
OnLine Market Making(TM) consulting services and associated costs is attached
hereto as Exhibit D.
(B) INTERACTION WITH BIDDERS. Supplier will contact each Bidder
properly identified by Customer which Customer desires to participate in a
particular CBE. Supplier shall attempt to identify the appropriate Bidder
contact, and explain the bidding process to such person. Supplier will provide
the relevant Certified Buyer with reasonable feedback on the status of each
Bidder.
(C) DISTRIBUTION OF SOFTWARE TO QUALIFIED BIDDERS. Upon written
notification of the CBE, the names of the Bidders and agreement on the time line
for the CBE, as set forth in Section 3.1, Supplier will attempt to have Bidder
execute the Bidder Agreement and to license Supplier's BidWare(R) Software to
the Bidders. All licenses for the BidWare(R) Software to Bidders shall be
pursuant to the terms and conditions of Supplier's then standard license
provided with each copy of the BidWare(R) Software supplied to Bidders. A copy
of Supplier's current license is attached hereto as Exhibit G. A Bidder shall be
considered a Qualified Bidder upon execution of the Bidder Agreement and
acceptance of the terms of the license agreement. In the event that a Bidder
does not agree to the terms of the Bidder Agreement and/or the terms of the
license agreement, the Bidder shall not be permitted to participate in the CBE.
Upon Bidder's execution of the Bidder Agreement, Supplier shall ship the
BidWare(R) Software and the BidWare Manual to the Bidder, and issue the Bidder a
unique user identification number and password to be used for the CBE, subject
to Bidder's acceptance of the license agreement. Customer shall pay the license
fee for each copy of the BidWare(R) Software licensed to Bidders. Bidders shall
be responsible for providing their own personal computers to run the BidWare(R)
Software and for the installation of such software onto such personal computers.
Bidders shall also be responsible for the connection of such personal computers
to the telecommunication service used for the CBE.
(D) TRAINING OF QUALIFIED BIDDERS. Supplier shall use commercially
reasonable efforts to identify the correct contact for each Qualified Bidder to
be trained in the use of the BidWare(R) Software. Customer agrees to provide
reasonable assistance in identifying such person if requested by Supplier.
Supplier will train that contact over the phone using real time "mock" bidding
sessions to ensure that the Qualified Bidder is reasonably comfortable with the
BidWare(R) Software and the System. Supplier does not guarantee that the
Qualified Bidder personnel will be
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properly trained and reserves the right to request that a different person be
provided by the Qualified Bidder.
(E) CONDUCT OF THE CBE. The Supplier will load all relevant CBE and
technical parameters provided by Customer into the System. During the term of
this Transaction Agreement, Supplier will staff an operations center located at
Supplier's facility in Pittsburgh to handle all CBE related activities as
follows:
(a) Maintain a call center for Qualified Bidders to call with
questions before the CBE or with technical problems during the CBE;
(b) Conduct procedures for ensuring that Qualified Bidders are
prepared and present on bid-day;
(c) Respond in a timely fashion to Qualified Bidder issues with
software or connectivity;
(d) Respond to Qualified Bidder problems that might prevent bidding
with a secure "surrogate bidding" system;
(e) Close bidding only after a reasonable determination that no
Qualified Bidders experienced difficulties material to the bidding process;
(f) Communicate any changes or adjustments to all Qualified
Bidders;
(g) Provide reasonable assistance to facilitate resolution of any
issues between Certified Buyers and Qualified Bidders;
(h) Establish and maintain a secure virtual private network;
(i) Authenticate the identities of all Qualified Bidders and
Certified Buyers involved in each CBE; and
(j) Ensure that only authorized Qualified Bidders and Certified
Buyers have access to appropriate CBE information.
3. CUSTOMER RESPONSIBILITY
3.1 GENERAL. At least [*] days prior to a CBE, a Certified Buyer shall
inform Supplier of its desire to hold a CBE. Supplier and the Certified Buyers
shall agree on mutually acceptable time and date for the CBE and a time line for
conducting the CBE. The Certified Buyer shall provide Supplier, in writing, all
of the necessary information regarding the parts, materials or services to be
bid on in the CBE and identify the Bidders who will be invited to participate in
the CBE. The Certified Buyer shall also provide the applicable completed RFQ to
each Bidder and Supplier. The Certified Buyer will coordinate with the Supplier
CBE Management Staff to structure
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the online bid. Customer and all Certified Buyers who use Supplier must agree to
abide by the Rules and Procedures set forth in the Bidder Agreement. Supplier
and/or Supplier senior staff have the right to de-certify any Certified Buyer
who fails to abide by these rules.
3.2 SITE RESOURCES. Customer will designate a room at each major
location (i.e., North American Operations Headquarters) as the Supplier Room.
This room will contain an external analog phone line and a separate external
phone line for normal telephone usage. In addition, Customer will be responsible
for providing all audiovisual equipment for projecting electronic bids for a
larger audience if Customer desires (i.e., computer projector). During a CBE and
in preparation thereof, Customer shall ensure that appropriate facilities and
personnel are available to facilitate Certified Buyers' use of the System.
3.3 PERSONNEL. Customer will designate a prime contact responsible for
all Supplier matters. This contact will have the authority to ensure that all
Customer commitments are met and will commit significant time to understanding
the Supplier process and system. Customer will also designate a "Buyer Feedback"
sponsor who will periodically attend Buyer training sessions, gather feedback on
these sessions, and assist the Supplier team in improving the training.
4. LICENSES
4.1 LICENSE. In consideration of the fees paid pursuant to this
Transaction Agreement, Supplier hereby grants, and Customer hereby accepts, a
non-exclusive, non-transferable: (i) limited license to have Certified Buyers in
North America access the System solely to conduct CBEs as set forth in this
Transaction Agreement, and (ii) limited license to have Certified Buyers in
North America use the BidWare(R) Software to work with Supplier to conduct CBEs
as set forth in this Transaction Agreement. Customer is not granted any right or
access to the Source Code and shall not, attempt to decompile, disassemble,
reverse engineer or use any other process to gain access to the Source Code.
4.2 SYSTEM. The functionality provided to Customer by the System is
described in the Documentation provided by Supplier to Customer for the System
and the BidWare(R) Software. In addition, future versions of the System will
include the functionality as set forth in Exhibit E.
4.3 AUTHORIZED USERS. Except for Certified Buyers, no other employees,
consultants, agents or other individuals of Customer or any other individuals or
entities are permitted to use the BidWare(R) Software or access the System.
4.4 NUMBER OF USERS. Customer may only use and/or install the
BidWare(R) Software on one personal computer per copy of BidWare(R) Software
distributed by Supplier under this Transaction Agreement. Customer may, however,
make one copy of the BidWare(R) Software for back-up purposes. As the System
will be resident at Supplier's facility in Pittsburgh, Pennsylvania and
maintained and operated by Supplier, Customer may not make any copies of the
System, in whole or in part, for any purpose. During the term of this
Transaction Agreement, Customer agrees that it shall only use the BidWare(R)
Software in accordance with Supplier's specifications and instructions.
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5. DELIVERY AND INSTALLATION
5.1 BIDWARE(R) PCS. If Customer purchases BidWare(R) PCs from Supplier,
Supplier shall pre-load each BidWare(R) PC ordered from Supplier with one copy
of the BidWare(R) Software. Supplier will pre-test and ship each pre-loaded
BidWare(R) PC to Customer complete with modem, monitor and printer. If requested
by Customer in writing, Supplier will install the BidWare(R) PCs at Customer's
Site. Installation will be provided by Supplier's CBE Management personnel. In
the event that Customer installs the BidWare(R) PCs itself, Supplier will
provide telephone support by Technical Operations personnel. Customer shall be
deemed to have accepted a BidWare(R) PC if Customer does not report a failure of
such BidWare(R) PC during any thirty day period after its delivery. For purposes
of this Section 5.1, a "failure" means a failure caused solely by the BidWare(R)
PC which results in System unavailability.
5.2 BIDWARE(R) SOFTWARE TO QUALIFIED BUYERs. In the event that Customer
supplies its own personal computers to run the BidWare(R) Software, Customer
shall be responsible for the installation of such software onto such personal
computers. Supplier shall provide telephone support to assist Customer with the
installation of the BidWare(R) Software. All personal computers provided by
Customer to run the BidWare(R) Software must, at a minimum, conform to the
specifications set forth on Exhibit H of this Transaction Agreement. All
personal computers used during a CBE shall be located in a Supplier Room.
Customer shall also be responsible for the connection of such personal computers
to the telecommunication service used for the CBE.
5.3 BIDWARE(R) SOFTWARE TO BIDDERs. Supplier shall ship one copy of the
BidWare(R) Software to each Qualified Bidder for which Customer purchases a
BidWare(R) Software license pursuant to this Transaction Agreement. Each
Qualified Bidder shall be responsible for supplying their own personal computer
on which to load the BidWare(R) Software. Qualified Bidders shall be responsible
for loading the BidWare(R) Software on such personal computers. Supplier will
provide telephone support by Technical Operations personnel to assist Qualified
Bidders with the installation of the BidWare(R) Software.
6. FEES AND COSTS
6.1 FEES. In consideration of the Services and the licenses provided
pursuant to this Transaction Agreement, Customer agrees to pay a fixed fee as
well as certain variable charges, depending on need, as set forth in Exhibit D.
Invoices for the fees of whatever nature, including without limitation, license
fees, BidWare(R) PC fees, training fees, CBE Management fees, OnLine Market
Making consulting fees, Technical Operations fees, Call Center fees and/or
out-of-pocket expenses incurred during a month will be invoiced at the end of
such month. The first invoice will be sent by Supplier to Customer by the last
day of the first month after the Effective Date of this Transaction Agreement.
Monthly charges that have been in effect for less than a full calendar month
shall be prorated on the basis of a thirty (30) day month.
6.2 CURRENCY. All fees and costs set forth in this Transaction
Agreement are stated in, and shall be paid in, the currency of the United
States.
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7. MODIFICATIONS
7.1 GENERAL. During the term of this Transaction Agreement, from time
to time, Supplier will modify the BidWare(R) Software and System, including
without limitation, correcting errors in the BidWare(R) Software or System. Such
error corrections or modifications may result in the creation of a new
version(s) of the BidWare(R) Software or System, under the same or one or more
different names (collectively, the Supplier Modifications). Supplier
Modifications shall in all cases be considered new versions of existing
BidWare(R) Software and/or System and not new Products. All rights to the
Supplier Modifications shall belong to Supplier. Exhibit E to this Transaction
Agreement contains a list of modifications currently scheduled by Supplier.
7.2 AVAILABILITY. During the term of this Transaction Agreement,
Supplier shall [*] supply Customer, and Customer shall accept, Supplier's then
current [*] over [*] not later than [*].
7.3 WARRANTY. Supplier Modifications to the BidWare(R) Software shall
be considereD BidWare(R) Software for purposes of this Transaction Agreement;
provided, however, that all warranty provisions herein shall apply to each
Supplier Modification from the time such modifications are first delivered to
Customer. Supplier shall promptly deliver any Documentation, if any, relating to
the Supplier Modifications.
8. TERM AND TERMINATION
8.1 TERM. This Transaction Agreement and the Agreements shall continue
in force for an initial term of twelve (12) months from the Effective Date, and
shall be automatically renewed for one twelve (12) month term thereafter, and,
if still in effect, shall again automatically renew thereafter for a term that
begins on June 8, 2000 and ends on December 31, 2000. The foregoing automatic
renewals shall occur unless Customer provides written notice of its intent not
to renew this Transaction Agreement at least [*] days prior to the renewal date.
In the event that the term automatically renews from June 8, 2000 until December
31, 2000, as set forth above, the [*] fee set forth on Exhibit D shall be
prorated accordingly. This Transaction Agreement and the Agreements may be
extended for additional terms past December 31, 2000 if agreed to in writing by
both Parties, upon terms and conditions mutually agreed to in writing by the
Parties. [*].
8.2 TERMINATION. This Transaction Agreement and the Agreements may only
be terminated or canceled prior to the expiration of the term upon the terms and
conditions set forth in Sections 19.1(E), 19.3, 19.4 (except for a change in
stock ownership of less than fifty percent (50%) or pursuant to an initial
public offering under the Securities Act of 1933, as amended), 19.5 or 19.6 of
the Framework Agreement.
8.3 EFFECT OF TERMINATION. Upon the termination or expiration of this
Transaction Agreement, whether under this Article 8 or otherwise, Customer will
discontinue use of the BidWare(R) Software and access to the System, and both
parties shall return or destroy the other Party's Confidential Information as
set forth in Sections 12.9 and 12.10 of the Framework Agreement, as modified by
Sections 11.1, 11.2 and 17.3 of this Transaction Agreement.
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9. OWNERSHIP
9.1 SUPPLIER INTELLECTUAL PROPERTY. Customer shall have no rights or
interests in Supplier Intellectual Property except as described in this
Transaction Agreement. All right, title and interest in and to Supplier
Intellectual Property shall be and shall remain the sole property of the
Supplier or its third party subcontractors/licensors. Supplier hereby grants to
Customer a non-exclusive, non-transferable, royalty-free license to use the
Supplier Intellectual Property as required to effectuate the purposes of this
Transaction Agreement. Customer is not granted any other right to Supplier
Intellectual Property and shall not copy, modify, create derivative works,
sublicense, transfer, sell or otherwise use or dispose of the Supplier
Intellectual Property. Notwithstanding the above, Customer may make copies of
training materials provided by Supplier solely for the internal use of Customer.
9.2 DERIVATIVE WORKS. With respect to any Derivative Works developed
under the Agreements or in the provision of the Products or Services, the
allocation of rights in such works will be as follows:
(A) All Intellectual Property rights in a Derivative Work developed
by Customer for which the preexisting work is Customer Intellectual Property,
shall be owned by Customer and shall be deemed to be Customer Intellectual
Property.
(B) All Intellectual Property rights in a Derivative Work developed
by Supplier, by Supplier in conjunction with Customer when the preexisting work
is Supplier Intellectual Property shall be owned by Supplier and shall be deemed
to be Supplier Intellectual Property.
9.3 WORK PRODUCT. All Work Product shall be owned by Supplier. Customer
shall retain no rights in any Work Product.
10. SUPPLIERS WARRANTIES
10.1 WARRANTIES. Set forth below are certain exceptions to the
covenants, representations and warranties (collectively "Warranties") set forth
in the Framework Agreement and applicable Category Agreements.
A. All Warranties shall terminate upon the termination of the
Transaction Agreement.
B. No Warranties are made with respect to Third Party Equipment,
Software and Services.
C. Section 10.11 of the Framework Agreement is modified by
deleting "necessary conversions."
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D. Section 12.15 of the Software Licensing Agreement is modified
by deleting: "within the same time periods and under the terms set
forth in Article 11 of this Software Licensing Agreement."
E. Section 10.5 of the Framework Agreement and Section 12.16 of the
Software Licensing Agreement are modified by making the illicit
code/virus warranties only apply to the presence of illicit
code/viruses on the BidWare(R) Software at the time of delivery by
Supplier.
10.2 DISCLAIMER OF WARRANTIES. EXCEPT FOR THE EXPRESS WARRANTIES MADE
IN THE AGREEMENTS, AS MODIFIED BY THIS TRANSACTION AGREEMENT, NEITHER PARTY
MAKES ANY OTHER WARRANTIES, EXPRESS OR IMPLIED, CONCERNING THE SUBJECT MATTER OF
THIS TRANSACTION AGREEMENT, INCLUDING WITHOUT LIMITATION ANY IMPLIED WARRANTIES
OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
10.3 REMEDY. If during the term of this Transaction Agreement, the
BidWare(R) Software fails to meet the Warranties, Supplier shall promptly repair
or replace the non-conforming BidWare(R) Software at no cost to Customer.
Supplier will not provide the foregoing warranty service if the nonconformity is
caused by malfunctions of hardware, non-Supplier software, modification of the
BidWare(R) Software not made by Supplier, by operator error, or by use of the
BidWare(R) Software that is not in accordance with the operating instructions
for the BidWare(R) Software.
11. CONFIDENTIALITY
11.1 CONFIDENTIAL INFORMATION OF SUPPLIER. Section 12.2 of the
Framework Agreement shall apply to this Transaction Agreement. However, Customer
agrees that: (i) the BidWare(R) Software, (ii) all training materials and
Documentation which are marked as "Confidential" and provided by Supplier to
Customer, and (iii) all pricing, cost information, business affairs information
and other information related to Supplier's business learned during [*]; shall
be considered Supplier Confidential Information without the approval of the
Customer Project Manager and that Supplier will not generate a written report
describing such material.
11.2 USE AND RETURN OF SUPPLIER CONFIDENTIAL INFORMATION. Section 12.10
of the Framework Agreement shall apply to this Transaction Agreement. However,
Section 12.10 is modified by deleting: ", to the extent Customer no longer needs
the Supplier Confidential Information to exercise its rights under the
Agreements" from Section 12.10(i), and deleting all of Section 12.10(iii) and
the sentence which follows 12.10(iii).
11.3 AGREEMENT. Both parties shall have the right to disclose the
existence of this Transaction Agreement but not the terms of this Agreement
unless such disclosure is approved in writing by both parties prior to such
disclosure or such terms are required to be disclosed by governmental
authorities.
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12. LIMITATION OF LIABILITY.
IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR CONSEQUENTIAL, INCIDENTAL OR
PUNITIVE LOSSES, DAMAGES OR EXPENSES (INCLUDING LOSS OF PROFITS, SAVINGS,
PENALTIES, FINES, LATE-PAYMENT CHARGES, INTEREST, COMPETITIVE ADVANTAGE,
GOODWILL, BUSINESS ADVANTAGE, GOODWILL, BUSINESS INTERRUPTION OR INDEMNITY
HEREUNDER), EVEN IF IT HAS BEEN ADVISED OF THE POSSIBLE EXISTENCE THEREOF.
EITHER PARTY'S LIABILITY FOR DAMAGES OF ANY KIND ARISING OUT OF THIS TRANSACTION
AGREEMENT AND THE AGREEMENTS, INCLUDING WITHOUT LIMITATION ANY AMOUNTS DUE
PURSUANT TO ARTICLE 15 OF THE FRAMEWORK AGREEMENT, SHALL BE LIMITED TO $[*].
NOTWITHSTANDING THE LIMITATION OF LIABILITY SET FORTH IN THE PRECEDING SENTENCE,
SUPPLIER'S LIABILITY FOR DAMAGES OF ANY KIND ARISING OUT OF SECTIONS 15.2(A),
AND 15.2(B) OF THE FRAMEWORK AGREEMENT (INFRINGEMENT), AND CUSTOMER'S LIABILITY
FOR DAMAGES OF ANY KIND ARISING OUT OF SECTIONS 15.1(A) AND 15.1(B) OF THE
FRAMEWORK AGREEMENT (INFRINGEMENT), SHALL BE LIMITED TO $[*]. THE FOREGOING
LIMITATIONS ON LIABILITY SHALL NOT APPLY TO FEES WHICH ARE OUTSTANDING UNDER
THIS TRANSACTION AGREEMENT.
13. CONTRACT ADMINISTRATION
13.1 DESIGNATION OF CONTRACT AND PROJECT MANAGERS. For purposes of
Article 3 of the Framework Agreement, a Party may assign the same individual to
be the Corporate Contract Manager and Project Manager. The Corporate Contract
Manager/Project Manager for the Parties shall be as follows:
Corporate Contract Manager:
Customer: James Scotti
Supplier: Glen Meakem
Project Manager:
Customer: Duane Bolinger
Supplier: Robert Stevens
A Party may change its Corporate Contract Manager and/or Project
Manager at any time in their sole discretion and shall provide notice of such
change to the other Party within ten (10) business days of such change.
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14. PERSONNEL
14.1 GENERAL. Each party shall choose personnel in their sole
discretion to perform their respective services and obligations under this
Transaction Agreement. In the event that a Party is not satisfied with the
performance, actions or inactions of an employee of the other Party, the Party
shall inform the other Party of such dissatisfaction. The other Party shall then
take commercially reasonable action to investigate the performance, inaction or
action of such employee and shall take appropriate measures, if any, as
determined by such other Party.
14.2 [*]. Supplier agrees that in the event that Customer [*] that
includes [*] required for Customer's performance under this Transaction
Agreement, such [*] may [*] provided that: (i) all [*] by the [*] shall be
provided by [*], (ii) the [*] has [*], and (iii) the [*] is not a competitor of
Supplier in [*].
15. SUPPLIER SERVICES
Supplier agrees that for a period lasting from the Effective Date to
the earlier of: (i) June 30, 2000, or (ii) the date this Transaction Agreement
terminates; as long as Customer is not in default under the terms of this
Transaction Agreement, Supplier shall not provide the services provided to
Customer hereunder to the automobile operations of the following
manufacturers:[*].
16. INSURANCE
16.1 LIMITS. The minimum limits of liability of insurance which
Supplier must maintain, as set forth in Section 17.1 of the Framework Agreement,
are modified as follows:
(i) The limits of liability for the insurance set forth in Section
17.1(B) (General Commercial) shall be [*] per occurrence.
(ii) The limits of liability for the insurance set forth in Section
17.1(C) (Automobile) shall be [*] per occurrence.
(iii) The limit for the insurance set forth in Section 17.1(D)
(Errors and Omissions) shall be [*] per occurrence.
16.2 LOSS PAYEES. Supplier is not required to name any other entity,
including without limitation, Customer, as a loss payee under any of Supplier's
insurance policies.
17. GENERAL
17.1 INTERNATIONAL USE. As set forth in Exhibit F, Supplier and
Customer may agree to begin a pilot international program upon the execution by
both Parties of a separate mutually agreeable Transaction Agreement relating to
such project.
17.2 FORCE MAJEURE. The Force Majeure provision set forth in Section
25.3 of the Framework Agreement shall apply to this Transaction Agreement,
provided that the second and third sentences of such section shall not apply to
this Transaction Agreement.
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17.3 ORDER OF PRECEDENCE. This Transaction Agreement incorporates the
terms of the Framework Agreement, the Software Licensing Agreement and the
Consulting Agreement. The Parties agree that any inconsistency, ambiguity or
conflict between or among the terms and conditions of this Transaction Agreement
and the Agreements be resolved according to the order of precedence set forth in
Section 1.3 of the Framework Agreement. In furtherance of, and not in limitation
to the generality of the preceding, the following provisions shall not apply to
this Transaction Agreement:
(A) Framework Agreement: Sections 1.2, 1.4, 1.5, 1.6, 1.7, 2.6, 4.1,
4.2, 4.3, 5.2, 5.6(C), 5.8(A)(3), 8.1(A), 8.3, 9.4, 9.8, 10.7 and 10.13, Article
11, Sections 12.13, 12.17, 13.2, 13.3(B) (iii), 13.3(C), 13.4, 13.5, 13.6, 13.7
and 13.9, Article 14, Sections 15.7, 19.1(A) - (D), 19.7, 19.9, 20.3, and
22.6(A) (source code), Article 23, and Section 25.17.
(B) Software Licensing Agreement: Sections 3.3, 3.4, 3.5, 4.1, 4.3,
5.1, that portion of Section 6.1(A) which states ", from which Customer may make
copies for its use consistent with all limitations of this Software Licensing
Agreement and the applicable Transaction Agreement," Sections 6.2, 7.3, Articles
8 and 9, Sections 10.1(B) (CD-ROMs), 12.4, 12.9, 12.10 and 12.14, and Articles
11, 13 and 14.
(C) Consulting Services Agreement: Section 3.4.
In addition, the Parties agree that any inconsistency, ambiguity or
conflict between the definitions attached to this Transaction Agreement in
Exhibit A and any other definitions contained in the Agreements or elsewhere
will be resolved in favor of the definitions attached to this Transaction
Agreement in Exhibit A.
17.4 ASSIGNMENT. Neither party may assign any of its rights or
obligations hereunder or the Agreements without the prior written consent of the
other party, which consent shall be in the other Party's sole discretion.
17.5 [*]. Subsections 5.6(A) and (B) of the Framework Agreement shall
apply to this Transaction Agreement. Notwithstanding anything to the contrary in
the foregoing: (i) Customer shall conduct, or have conducted on its behalf, no
more than [*] per year period after the initial one-year period, (ii) Supplier
shall only be required to provide such information in such [*] which is
reasonably required by Customer, and (iii) the [*] shall execute a
non-disclosure agreement substantially in the form set forth in Exhibit I prior
to its conduct of such assessment. Changes to the non-disclosure agreement may
only be made with the written consent of Supplier.
17.6 ENTIRE AGREEMENT. Section 25.14 of the Framework Agreement shall
apply to this Transaction Agreement. Additionally, the Parties agree that
Section 14(c) of the purchase order TCS26983, dated October 31, 1997, and
Section 4 of Attachment 1 thereto, shall be superseded in their entirety by
Sections 4 and 9 of this Transaction Agreement, and that Section 12 of this
Transaction Agreement shall apply to such purchase order, except that the
references therein to Sections 15.2 (A) and (B) of the Framework Agreement shall
be deemed to refer to Sections 14(a) and (b) of such purchase order. The Parties
also agree that such purchase order shall not apply to
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any goods or services provided under this Transaction Agreement or any future
Transaction Agreement between the Parties.
17.7 PUBLICITY. Section 25.15 of the Framework Agreement shall apply to
this Transaction Agreement. Notwithstanding anything to the contrary in the
foregoing, Supplier may use Customer's name as part of a general customer list
used by Supplier in promotional material and business presentations.
17.8 GOVERNING LAW; VENUE; SERVICE OF PROCESS. This Transaction
Agreement and the Agreements are to be construed according to the laws of
Michigan, without giving effect to the principals of conflicts of laws. Any
action or proceedings by Customer against Supplier shall be brought in the
federal or state courts located in Pittsburgh, Pennsylvania, and any action
brought by Supplier against Customer shall be brought in federal or state courts
in Detroit, Michigan.
IN WITNESS WHEREOF, this Transaction Agreement has been executed by the
Parties as of the Effective Date.
SUPPLIER CUSTOMER
By: /s/ Glen T. Meakem By: /s/ James Scotti
------------------------ ------------------------
Title: Chief Executive Officer Title: Commodity Manager
------------------------- ---------------------
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EXHIBIT A
DEFINITIONS
1. "Bidder" shall mean a supplier of goods and/or services who will
participate in a CBE to supply such goods and/or services to Customer.
2. "Bidder Agreement" shall mean the OnLine Bidder Agreement for General
Motors/FreeMarkets CBE attached hereto as Exhibit C. Such agreement may be
revised from time-to-time in Supplier's discretion.
3. "BidServer(R) Software" shall mean the server software used in conjunction
with online bidding auctions which is proprietary to Supplier.
4. "BidWare(R) Software" shall mean the software used in conjunction with
online bidding auctions which is proprietary to Supplier. The version of
BidWare(R), v 2.2 in general use as of the Effective Date supports multiple
Qualified Bidders bidding in real time, allowing each Qualified Bidder to
view the anonymous bids of all other Qualified Bidders.
5. "BidWare Manual" shall mean the user manual for the BidWare(R) Software.
6. "BidWare(R) PCs" shall mean the personal computers configured to operate
the BidWare(R) Software which may be purchased by Customer to be placed at
various Customer Sites in North America to allow viewing of CBEs, printing
of results, reports, and printing of audit reports.
7. "Buyer" shall mean an employee of Customer located in North America whose
primary function entails the procurement of materials from suppliers.
8. "CBE" shall mean a Competitive Bidding Event using the System as set forth
in this Transaction Agreement.
9. "Certified Buyer" shall mean a Buyer who, as determined by Supplier, has
successfully completed the Buyer training as set forth in Section 2.2 of
this Transaction Agreement.
10. [*]
11. "Customer" shall mean General Motors Corporation, Delphi Automotive Systems
and all 100% owned subsidiaries of General Motors Corporation.
12. "Documentation" shall mean the published documentation for the System and
BidWare(R) Software provided by Supplier to Customer.
13. "Project" shall mean the implementation of the global online bidding System
provided by Supplier to be used by Buyers in North America.
<PAGE> 15
14. "Qualified Bidder" shall mean a Bidder chosen by Customer to participate in
a CBE which has executed Supplier's then standard Bidder Agreement.
15. "RFQ" shall mean a written request for quote which shall contain all
relevant information required for the CBE including, without limitation,
detailed specifications of the parts, material(s) or services, the quantity
requirements and the term of the commitment.
16. "Site" shall mean, when referring to Customer's facilities, a Customer
facility located in North America, and when referring to Supplier's
facilities, shall mean Supplier's facility located in Pittsburgh,
Pennsylvania.
17. "Source Code" shall mean the BidWare(R) Software and System (and components
thereof), expressed in a form suitable for modification by humans.
18. "Supplier" shall mean FreeMarkets OnLine, Inc.
19. [*]
20. "Supplier Room" shall mean a room designated by Customer which will contain
an external analog telephone line and a separate external telephone line
for normal telephone usage. The Supplier Rooms shall be used by Customer
for the viewing of CBEs using the BidWare(R) Software.
21. "Supplier Technical Operations Staff" shall mean personnel who run and
maintain the System, as well as provide technical support to BidWare(R)
licensees, Customer and Bidders.
22. "System" shall mean the Supplier global online bidding system provided by
Supplier. The System includes BidServer(R) Software installed on Supplier's
secure hardware in its Pittsburgh offices, and hardware located at
Supplier's Pittsburgh offices, including T1 lines, routers and servers.
<PAGE> 16
EXHIBIT B
TRAINING AGENDA
ACTIVITY TIME
-------- ----
1. Principles of OnLine Market Making(TM) [*]
[*]
2. Communicating with Suppliers [*]
[*]
3. Structuring OnLine Competitive [*]
Bidding Events (CBEs)
[*]
4. Using BidWare(R) for Buyers and the [*]
FreeMarkets(TM) System
5. Structuring and executing a mock CBE [*]
TOTAL TIME [*]
<PAGE> 17
EXHIBIT C
[*]
<PAGE> 18
EXHIBIT D
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
FEE ELEMENT DESCRIPTION RATE NOTES
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
System Access Unlimited North American [*] o To be used by any Certified
License use of the then current Buyers in North America
System. using Qualified Bidders from
anywhere in the world
o Will be billed at [*]
- -----------------------------------------------------------------------------------------------------------------------
BidWare PCs PC, modem, monitor, [*] [*]
printer at select Customer
buying sites, fully
configured to run
BidWare(R) Software,
exclusive of license fee
for BidWare(R) Software.
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 19
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
FEE ELEMENT Description Rate Notes
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
BidWare(R) License for each copy of [*] for each Cost covers the following:
Software BidWare(R) Software for BidWare(R)
License Buyers or Suppliers. Software license o Software license
shall begin when
shipped, and shall o Packaging
last for the earlier
of [*] from date of o Shipping
shipment or the
termination of this o Documentation
Transaction
Agreement, o Establishment and
regardless of maintenance of secure user
whether such I.D.s
software is being
used by a Buyer or
Qualified Bidder.
[*] for BidWare(R)
Software,
Customer shall
notify Supplier in
writing whether or
not Customer
wishes such
BidWare(R)
Software license
to be renewed [*].
All license fees for
BidWare(R)
Software are
invoiced to
Customer upon
initial shipment or
renewal.
- -----------------------------------------------------------------------------------------------------------------------
Network & Global network connection Network access o Network fees [*]
Telecom fees and fee - [*]
charges telecommunications fees o Telecom will be [*] and may
charged by providers Network connect adjust over time
time - [*]
o Providers to be chosen by
Telecom - Supplier
estimated [*]
</TABLE>
<PAGE> 20
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
FEE ELEMENT Description Rate Notes
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Direct Labor OnLine Market Making [*] o In-depth consulting to
Consulting formulate [*]
CONSULTING TOPICS:
o Structuring RFQs for [*]
o [*] competition and ease of
award
o Application of online markets
to [*]
- -----------------------------------------------------------------------------------------------------------------------
EXAMPLES OF CONSULTING:
o Presentation to Creativity
Teams: Supplier/ Supplier
personnel present the goals
and process of online market
making, answer questions and
help team identify projects that
would benefit from OnLine
Market Making(TM).
o Assist Certified Buyers in
structuring events: Help
Certified Buyers answer
strategic questions regarding
specific events: elements of
total cost, bidding scenarios,
etc.
o Communications: Assist
Certified Buyers in
communicating with Qualified
Bidders in difficult or unusual
situations.
- -----------------------------------------------------------------------------------------------------------------------
o Structuring complex or
innovative CBEs: Help
Certified buyers determine [*].
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 21
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
FEE ELEMENT DESCRIPTION RATE NOTES
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Training [*] o Structured training programs
for groups of Buyers
o Time spent preparing training
materials
- -----------------------------------------------------------------------------------------------------------------------
CBE Management [*] o Work with buyers [*]
o Manage the CBE scheduling
with Qualified Buyers
- -----------------------------------------------------------------------------------------------------------------------
Technical Operations [*] o Manage and maintain the
System
o Troubleshoot Qualified Bidder
connection problems
o On-site and telephone
installation services and
support for Customer and
Qualified Bidders
- -----------------------------------------------------------------------------------------------------------------------
Call Center [*] o Train Qualified Bidders and
explain CBE and bidding
process
o Provide first line support to
Certified buyers for basic
BidWare(R) Software and CBE
questions
All costs set forth above As incurred o Direct billing for travel to and
for Direct Labor are from Customer locations
exclusive of out-of-pocket
expenses, which will be billed
separately as incurred pursuant
to the terms of this Transaction
Agreement.
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
All fees incurred related to Products, licenses or Services provided by Supplier
under this Transaction Agreement shall be billed to, and paid by, Customer
pursuant to the standard payment terms set forth in the Agreements as modified
by this Transaction Agreement.
<PAGE> 22
All costs set forth above for Direct Labor, whether to Customer or any other
party will be billed in full day increments for, in each case, an eight hour or
greater day of service dedicated to Customer. During the term of this
Transaction Agreement, Customer agrees [*] for each of the following: (i) a CBE
Management person, (ii) a Technical Operations person, and (iii) a Call Center
person. CBE Management, Technical Operations and Call Center personnel shall be
provided on a 1:1:1 ratio for any given CBE.
<PAGE> 23
EXHIBIT E
FUTURE VERSIONS OF SYSTEM
Supplier's plan for future versions of the System includes the following
additional functionality:
ENHANCEMENT RELEASE DATE DESCRIPTION
[*] July 1998 [*]
[*] July 1998 [*]
[*] August 1998 [*]
[*] August 1998 [*]
[*] November 1998 [*]
Customer understands and agrees that such enhancements are not being
specifically developed for Customer, but will be released as general
enhancements to Supplier's System and may be implemented by Supplier in the
services offered to the general public or any other customer. Customer is not
paying for the enhancements set forth above and will have no ownership interest
in them or their Intellectual Property. Access to such enhancements shall be
licensed to Customer as part of the System pursuant to the license set forth in
Article 4 of this Transaction Agreement at no additional charge.
<PAGE> 24
EXHIBIT F
INTERNATIONAL IMPLEMENTATION
What follows are preliminary terms for possible expansion of the relationship of
the Parties for conducting international CBEs. The terms set forth herein are
preliminary and are subject to change. If the Parties agree to expand the scope
of their relationship to include international CBEs, the actual terms and
conditions for such relationship shall be set forth in mutually agreeable
additional Transaction Agreement(s).
<TABLE>
<CAPTION>
POSSIBLE POSSIBLE POSSIBLE
TIMING: EXPANSION: ACTIVITIES:
- ------- ---------- -----------
<C> <C> <C> <C>
1998 Begin pilot program in Europe [*]
[*]
1999 Begin roll-out for European o Agree on a European program
implementation
o Develop a Supplier European
operations center
Begin pilot program in o Identify further opportunities
other region(s)
2000 Roll out into o Complete agreements for other regions
other regions
[*]
</TABLE>
DESCRIPTION OF PILOT PROGRAMS IN THE REGIONS
Supplier pilot programs in other regions will be structured similarly to North
American Operations pilot program:
o [*]
o [*]
o [*]
<PAGE> 25
ESTIMATED INCREMENTAL COSTS FOR INTERNATIONAL IMPLEMENTATION:
<TABLE>
Item Fee Structure
- ---- -------------
<S> <C>
System Access [*]. For example, if the potential bid volume in Europe is U.S. $2 BB,
License Fees the Access Fee will be [*]
Direct Labor Because the cost of labor [*], Customer and Supplier agree that the
direct labor costs [*]. The percentage overhead that Supplier allocates
to each position will [*].
Supplier travel During the pilot program, Customer will [*]. Once a longer-term agreement
to other regions is reached, Supplier and Customer will [*]. Customer will [*].
</TABLE>
<PAGE> 26
EXHIBIT G
BIDWARE(R) SOFTWARE LICENSE AGREEMENT
READ THE TERMS AND CONDITIONS OF THIS LICENSE AGREEMENT CAREFULLY BEFORE
SELECTING THE "YES" BUTTON BELOW TO ACCEPT THE TERMS OF THE AGREEMENT. THIS
SOFTWARE IS COPYRIGHTED AND LICENSED (NOT SOLD). BY SELECTING THE "YES" BUTTON,
YOU ARE ACCEPTING AND AGREEING TO THE TERMS OF THIS AGREEMENT. IF YOU ARE NOT
WILLING TO BE BOUND BY THE TERMS OF THIS AGREEMENT, YOU SHOULD SELECT THE "NO"
BUTTON DECLINING THE TERMS, UNINSTALL THE SOFTWARE FROM YOUR PC, PROMPTLY RETURN
THE PACKAGE AND YOU WILL RECEIVE A REFUND OF ANY MONEY IF YOU PAID FOR THE
SOFTWARE. THIS AGREEMENT REPRESENTS THE ENTIRE AGREEMENT CONCERNING THE SOFTWARE
BETWEEN YOU AND FREEMARKETS ONLINE, INC. ("LICENSOR" OR "THE COMPANY"), AND IT
SUPERSEDES ANY PRIOR PROPOSAL, REPRESENTATION, OR UNDERSTANDING BETWEEN THE
PARTIES.
1. GRANT OF LICENSE. Subject to the terms and conditions set forth in this
BidWare(R) Software License Agreement ("License Agreement"), we hereby grant to
you a non-transferrable and non-exclusive license (the "License") to use this
BidWare(R) Software or any of its components (collectively "the Software"). The
License granted herein authorizes use of the Software only by your authorized
users and only in connection with the services to be provided to you by
Licensor, for purposes of this License, your "use" of the Software, means to
load the Software into RAM or to store the Software in a memory storage device
such as a hard drive, CD-ROM other storage device. Under no circumstances shall
you make the Software available, or allow the Software to be made available, on
a network or file server other than the Licensor's BidWare(R) and the Licensor's
Network. Under no circumstances shall you copy the Software, or allow the
Software to be copied, for any purpose other than to produce the single archival
(backup) copy permitted under this License, nor shall you decompile or reverse
engineer the Software, or allow others to decompile, disassemble, or reverse
engineer the Software.
2. USE AND LOCATION.
2.1 The Software shall not be used to connect with any server, on-line
service, or any other system except as specifically provided by Licensor.
2.2 BidWare(R) users who have complied with the terms of this License
will be assigned a user ID and password to govern access to the Licensor's
Network and BidWare(R) databases. We reserve the right to change or cancel or
render inoperable any user ID and/or password at any time without prior
notification. You are required at all times to maintain security for your
assigned user IDs and password(s). Discloser of user IDs and passwords to anyone
else is strictly prohibited, and will be grounds for termination of our services
under this License.
2.3 You understand that we may, from time-to-time, make available
upgrades to modify the performance of the Software. You understand that in order
to utilize the Software in conjunction with the BidWare(R) and the Licensor's
Network, we may require you to perform the necessary tasks, and supply the
necessary computer equipment, to install software upgrades. Your failure to
install upgrades or provide appropriate computer equipment may render the
Software inoperable for its intended purpose.
3. WARRANTY DISCLAIMER/LIMITATION OF LIABILITY
THE COMPANY MAKES NO WARRANTIES TO THE LICENSEE, EXPRESS OR IMPLIED,
INCLUDING BUT NOT LIMITED TO, ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE, RESPECTING THE SOFTWARE, NETWORK, ANY COMPETITIVE
BIDDING EVENT, ANY SUPPLIER, OR THE LICENSEE'S PARTICIPATION IN ANY COMPETITIVE
BIDDING EVENT. THE LICENSEE HEREBY ACKNOWLEDGES AND AGREES THAT THE SOFTWARE AND
THE NETWORK ARE NEW CREATIONS, AND THAT THERE MAY SURFACE FROM TIME-TO-TIME
"BUGS" OR "GLITCHES" THAT MAY AFFECT THE COMPANY'S PERFORMANCE OF ITS
OBLIGATIONS, AND/OR THE RIGHTS AND BENEFITS OF THE LICENSEE, UNDER THIS
AGREEMENT. THE LICENSEE AGREES THAT IT ASSUMES THE RISKS OF SUCH "BUGS" OR
"GLITCHES".
<PAGE> 27
THE COMPANY'S SOLE OBLIGATION AND LIABILITY UNDER THIS LICENSE SHALL BE
TO REMEDY ANY NON-CONFORMANCE TO THE SOFTWARE OR REPLACE THE SOFTWARE. THE
REMEDY OF THE LICENSEE SET FORTH ABOVE IS EXCLUSIVE AND IN LIEU OF ALL OTHERS.
THE COMPANY'S PARTICIPATION IN THE PREPARATION, EXECUTION, AND FOLLOW-UP OF A
COMPETITIVE BIDDING EVENT NOTWITHSTANDING, THE COMPANY SHALL NOT BE LIABLE FOR
DAMAGES THAT MAY ARISE OUT OF THE LICENSEES'S USE OF OR INABILITY TO USE
SOFTWARE, PARTICIPATION OR INABILITY TO PARTICIPATE IN A COMPETITIVE BIDDING
EVENT OR DAMAGES THAT ARISE FROM BREACH OF PERFORMANCE ON THE PART OF A SUPPLIER
OR THE LICENSEE IN FULFILLING TERMS OF A CONTRACT. THE COMPANY SHALL NOT BE
LIABLE FOR LOSS OF USE, INCOME OR PROFIT, INCIDENTAL, SPECIAL, CONSEQUENTIAL OR
OTHER SIMILAR DAMAGES ARISING, DIRECTLY OR INDIRECTLY, OUT OF OR OCCASIONED BY
THE OPERATION, USE, INSTALLATION, REPAIR OR REPLACEMENT OF THE SOFTWARE, ANY
DELAY IN OR NON-OCCURRENCE OF ANY COMPETITIVE BIDDING EVENT AS PLANNED, OR THE
LICENSEE'S OR ANY SUPPLIER'S INABILITY TO PARTICIPATE IN A COMPETITIVE BIDDING
EVENT, WHETHER SUCH DAMAGES ARE BASED ON A CLAIM OF BREACH OF CONTRACT OR
TORTIOUS CONDUCT (INCLUDING NEGLIGENCE AND STRICT LIABILITY) OR ANY OTHER CAUSE
OF ACTION.
4. PROPRIETARY RIGHTS. This License does not convey to you any exclusive
proprietary or other rights in any Software, including, but not limited to, any
patent, copyright, trademark, service mark, trade secret, trade name or other
intellectual property rights, except that you will have the limited rights
expressly set forth in this License. Accordingly, you acknowledge that, except
as expressly provided for in this License, you possess no title or ownership of
any Software or any portion thereof.
5. NON-ASSIGNMENT OF USE OR LICENSE. You may not assign or otherwise transfer,
voluntarily, by operation of law or otherwise, any of your rights under this
License, without, in each instance, our prior written consent, which consent may
be withheld, delayed or conditioned in our sole discretion. Any attempted
assignment or transfer in violation of the terms of this Section 5 shall be null
and void. Any assignment will not relieve you of any of your obligations under
this License.
6. TERMINATION OF LICENSE. The License is effective upon selecting the "YES"
button, which indicates your acceptance of the terms of this License Agreement,
and shall continue until terminated. The License shall terminate immediately
upon completion of or termination of services to be provided by Licensor.
Licensor may terminate this License upon the breach by you of any of the terms
hereof and you may terminate this License by returning the Software and all
copies thereof and extracts therefrom to Licensor. Upon any termination of the
License, for whatever reason, you shall, within ten (10) days after such
termination, return to us the Software, any and all copies thereof, materials
related thereto and derivations therefrom then in your possession or under your
control.
7. U.S. GOVERNMENT RESTRICTED RIGHTS.
The Software is provided with RESTRICTED RIGHTS. Use, duplication, or
disclosure by the U.S. Government is subject to restrictions as set forth in
subparagraph (c)(1)(ii) of the Rights in Technical Data and Computer Software
clause at DFARS 242.227-7013 or subparagraphs (c)(1) and (2) of the Commercial
Computer Software - Restrict Rights clause at 48 CFR 52.227-19, as applicable.
Contractor/Manufacturer is FreeMarkets OnLine, Inc., 130 Seventh Street, Century
Building, Suite 500, Pittsburgh, Pennsylvania 15222, USA.
8. GENERAL PROVISIONS. This License will be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania, without giving
effect to its conflicts of laws provisions. In the event that any provision of
this License Agreement is held to be illegal, invalid or unenforceable under
present or future laws by any court of competent jurisdiction, then such
provision will be fully severable and this License Agreement will be construed
and enforced as if such illegal, invalid or unenforceable provision were not a
part hereof. BidWare(R) and BidServer(R) are registered trademarks of Licensor.
No right, license or interest to such trademarks are granted hereunder and you
agree that no right, license or interest shall be asserted by you with respect
to such trademarks.
<PAGE> 28
EXHIBIT H
PERSONAL COMPUTER SPECIFICATIONS
The personal computers on which the BidWare(R) Software and associated equipment
will be installed shall meet the following minimum specifications:
1. Pentium 100 personal computer.
2. Microsoft Windows 95 or Windows NT version 4.0
3. 16 MB RAM
4. 28.8 kbs modem
5. 10 Megabytes of unused hard drive space
6. HP LaserJet compatible printer.
Personal computers used during a CBE must be connected to the Supplier provided
network outside of Customer's firewall and not connected to any other network.
<PAGE> 29
EXHIBIT I
This Non-Disclosure Agreement ("Agreement") is entered into between
FREEMARKETS ONLINE, INC. ("Discloser") and
---------------------------------------------
---------------------------------------------
---------------------------------------------
("Recipient")
WITNESSETH:
In consideration of the covenants and agreements herein contained, and
intending to be legally bound hereby, Discloser and Recipient agree as follows:
1. DEFINITION
"CONFIDENTIAL INFORMATION" shall mean confidential or other proprietary
information that is disclosed by Discloser to Recipient regarding
Discloser' products and other information, including without
limitation, consulting or handbook materials, product specifications
and documentation, pricing and other financial information and other
confidential business information. Confidential Information shall not
include information which: (i) is or becomes public knowledge without
any action by, or involvement of, Recipient; (ii) is disclosed by
Recipient with the prior written approval of Discloser. Recipient may
is disclose Confidential Information pursuant to any judicial or
governmental order to the extent required by such order, provided that
Recipient gives Discloser sufficient prior notice to contest such
order.
2. RESTRICTIONS ON USE
Recipient agrees that, as a condition to the receipt of Confidential
Information from Discloser, Recipient shall: (i) not disclose, directly
or indirectly, to any third party any portion of the Confidential
Information without the prior written consent of Discloser; (ii) not
use or exploit the Confidential Information in any way except for
purpose of conducting benchmarking and/or competitive assessments for
General Motors Corporation ("GM") pursuant to the agreements entered
into by Discloser and GM (the "Purpose"); (iii) promptly return or
destroy, at Discloser's option, all materials and documentation
regarding the Confidential Information received from Discloser upon
completion of Recipient's internal review or upon request of Discloser;
(iv) take all necessary precautions to protect the confidentiality of
the Confidential Information received hereunder and exercise at least
the same degree of care in safeguarding the Confidential Information as
Recipient would with its own confidential information; and, (v)
promptly advise Discloser in writing upon learning of any unauthorized
use or disclosure of the Confidential Information.
3. OWNERSHIP
3.1 OWNERSHIP. All Confidential Information furnished to Recipient
by Discloser shall, unless otherwise specified in writing by
Discloser, remain the property of Discloser.
<PAGE> 30
3.2 NO LICENSE. Except for the Purpose, Discloser does not grant
Recipient any license, by implication or otherwise, to use the
Confidential Information or any license rights in any
copyright or other intellectual property rights owned by
Discloser regarding the Confidential Information.
4. DISCLAIMER
The Confidential Information is disclosed by Discloser to Recipient
"AS-IS." Nothing contained in this Agreement or in any Confidential
Information shall constitute any express or implied warranty of any
kind, including without limitation any warranty of merchantability,
fitness for a particular purpose or noninfringement of any patent,
copyright or other third party intellectual property right.
5. MISCELLANEOUS
This Agreement shall survive for the longer of (i) five (5) years from
the Effective Date of this Agreement, or (ii) five (5) years following
the termination of all agreements between Discloser and GM. Recipient
recognizes that breach of this Agreement will cause irrevocable harm to
Discloser that is inadequately compensable in damages and that
Discloser is entitled to injunctive relief for such breach. The
invalidity or unenforceability of any provision of this Agreement shall
not affect the validity or enforceability of any other provision
hereof. No provision of this Agreement may be amended or waived without
a written agreement signed by Discloser and Recipient.
IN WITNESS WHEREOF Discloser and Recipient have entered into this
Confidentiality Agreement as of the Effective Date set forth below.
- ---------------------------- -----------------------------
(Discloser) (Recipient)
By:
----------------------------------
Name:
--------------------------------
Title:
--------------------------------
Effective Date:
----------------------
<PAGE> 31
EXHIBIT J
[*]
<PAGE> 1
Exhibit 10.1(c)
GENERAL MOTORS CORPORATION
GM Logo
FRAMEWORK AGREEMENT
FOR
INFORMATION TECHNOLOGY
This document contains confidential and proprietary information furnished for
evaluation purposes only; except with the express prior written permission of
General Motors Corporation, such information may not be published, disclosed or
used for any other purpose.
<PAGE> 2
General Motors Corporation
Framework Agreement
for
Information Technology
Table of Contents
<TABLE>
<CAPTION>
<S> <C>
1. SCOPE OF AGREEMENT ....................................................... 1
1.1 APPLICABILITY ........................................................ 1
1.2 RELATIONSHIP OF THE PARTIES .......................................... 1
1.3 ORDER OF PRECEDENCE .................................................. 2
1.4 SUPPLY ITEMS ......................................................... 2
1.5 ACCEPTANCE OF PHASES AND STAGES ...................................... 3
1.6 ACCEPTANCE ........................................................... 3
1.7 THIRD PARTY PRODUCTS AND SERVICES .................................... 3
1.8 THIRD PARTY COMPLIANCE ............................................... 4
1.9 ADDITIONAL SERVICES .................................................. 4
1.10 FUNDAMENTAL PRINCIPLE OF GOOD FAITH AND FAIR DEALING ................ 4
1.11 INFORMATION GATHERING PRACTICES ..................................... 4
2. CHANGES .................................................................. 5
2.1 CHANGE ORDER PROCEDURES .............................................. 5
2.2 CHANGE ORDER RESPONSE ................................................ 5
2.3 CHANGE IMPLEMENTATION ................................................ 6
2.4 PRICE INCREASE PURSUANT TO CHANGE ORDERS ............................. 6
2.5 NORMAL AND ROUTINE TASKS ............................................. 6
2.6 ADDITIONAL BUSINESS UNITS ............................................ 6
3. CONTRACT ADMINISTRATION .................................................. 7
3.1 DESIGNATION OF CONTRACT AND PROJECT MANAGERS ......................... 7
3.2 DELEGATION OF AUTHORITY .............................................. 8
3.3 REVIEW MEETINGS AND PROGRESS REPORTS ................................. 8
3.5 STATUS REPORTS ....................................................... 8
3.5 EFFECT OF SUPPLIER'S FAILURE TO IDENTIFY CERTAIN PROBLEMS ............ 8
3.6 EFFECT OF SUPPLIER'S SUBMISSION OF STATUS REPORTS .................... 9
3.7 EFFECT OF CUSTOMER'S FAILURE TO PERFORM CUSTOMER OBLIGATIONS ......... 9
4. SUPPLIER PERSONNEL AND SUBCONTRACTORS .................................... 9
4.1 KEY SUPPLIER PERSONNEL ............................................... 9
4.2 OTHER SUPPLIER PERSONNEL ............................................. 10
4.3 NO EFFECT ON WARRANTIES .............................................. 10
4.4 CUSTOMER ACCESS TO SUPPLIER PERSONNEL ................................ 11
4.5 SUBCONTRACTORS/SUPPLIER'S AGENTS ..................................... 11
4.6 SITE RULES AND REGULATIONS ........................................... 11
5. RELATIONSHIP BETWEEN CUSTOMER AND SUPPLIER ............................... 11
5.1 RELATIONSHIP DEVELOPMENT ............................................. 11
5.2 PREFERENTIAL SCHEDULING .............................................. 11
5.3 NEW TECHNOLOGY REPLACEMENT ........................................... 11
5.4 CONTINUOUS IMPROVEMENT AND BEST PRACTICES ............................ 12
5.5 SATISFACTION AND PERFORMANCE REVIEWS ................................. 12
5.6 COMPETITIVE ASSESSMENT ............................................... 13
5.7 SHARED ENVIRONMENT ................................................... 13
5.8 CONSENTS ............................................................. 14
</TABLE>
i
<PAGE> 3
General Motors Corporation
Framework Agreement
for
Information Technology
Table of Contents
<TABLE>
<CAPTION>
<S> <C>
6. CUSTOMER OBLIGATIONS AND ASSETS .......................................... 14
6.1 CUSTOMER OBLIGATIONS ................................................. 14
6.2 CUSTOMER ASSETS ...................................................... 15
7. TRANSACTION AGREEMENTS ................................................... 16
7.1 TERMS ................................................................ 16
8. CHARGES .................................................................. 18
8.1 PAYMENT REQUIREMENTS ................................................. 18
8.2 NO PRICE INCREASES ................................................... 18
8.3 NO RESTRICTIONS ON USE ............................................... 18
8.4 RIGHT OF SET-OFF ..................................................... 18
8.5 OUT-OF-POCKET ........................................................ 18
9. PRICING .................................................................. 19
9.1 INVOICING STANDARDS .................................................. 19
9.2 ISSUANCE AND DELIVERY OF INVOICES .................................... 19
9.3 CREDITS .............................................................. 19
9.4 DISCOUNTS ............................................................ 20
9.5 PAYMENT TERMS ........................................................ 20
9.6 SUPPLIER'S EFFORTS TO MINIMIZE CHARGES ............................... 20
9.7 FEE DISPUTES ......................................................... 20
9.8 CURRENCY ............................................................. 21
10. COVENANTS, REPRESENTATIONS AND WARRANTIES .............................. 21
10.1 CAPABILITIES ........................................................ 21
10.2 DELEGATION OF AUTHORITY ............................................. 21
10.3 RIGHT AND TITLE ..................................................... 21
10.4 MANUFACTURER'S WARRANTIES ........................................... 21
10.5 SOFTWARE ............................................................ 21
10.6 STANDARDS ........................................................... 22
10.7 TERMINATION BY ELECTRONIC MEANS ..................................... 22
10.8 SUPPLIER THIRD PARTY AGREEMENTS ..................................... 22
10.9 CUSTOMER THIRD PARTY AGREEMENTS ..................................... 22
10.10 YEAR 2000 .......................................................... 22
10.12 EMU CONVERSION ..................................................... 23
10.14 ESCROW SUFFICIENCY ................................................. 23
11. MUTUAL DISCLAIMER ....................................................... 23
12. CONFIDENTIAL INFORMATION ................................................ 23
12.1 CONFIDENTIAL INFORMATION OF CUSTOMER ................................ 23
12.2 CONFIDENTIAL INFORMATION OF SUPPLIER ................................ 24
12.3 SAFEGUARDING DATA ................................................... 25
12.4 FILE SECURITY ....................................................... 25
12.6 RESTRAINTS ON COPYING ............................................... 25
12.6 NOTIFICATION TO CUSTOMER ............................................ 25
12.7 SUPPLIER SOFTWARE ASSIGNMENT OF CODES ............................... 26
12.8 CODE SECURITY ....................................................... 26
12.9 USE AND RETURN OF CUSTOMER CONFIDENTIAL INFORMATION ................. 26
12.11 USE AND RETURN OF SUPPLIER CONFIDENTIAL INFORMATION ................ 26
12.11 SECURITY PROCEDURES ................................................ 27
12.12 PERSONNEL .......................................................... 27
12.13 INTERNET ADDRESSES ................................................. 27
12.15 ATTORNEY-CLIENT PRIVILEGE .......................................... 27
12.15 UNAUTHORIZED ACCESS ................................................ 28
12.16 COSTS .............................................................. 28
12.17 EXCLUSION .......................................................... 28
</TABLE>
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General Motors Corporation
Framework Agreement
for
Information Technology
Table of Contents
<TABLE>
<CAPTION>
<S> <C>
13. PROPRIETARY RIGHTS ...................................................... 29
13.1 CUSTOMER INTELLECTUAL PROPERTY ...................................... 29
13.2 SUPPLIER INTELLECTUAL PROPERTY ...................................... 29
13.3 THIRD-PARTY INTELLECTUAL PROPERTY ................................... 30
13.4 DERIVATIVE WORKS .................................................... 31
13.5 WORK PRODUCT ........................................................ 32
13.6 DEVELOPED SOFTWARE .................................................. 32
13.7 REPRODUCTION OF SOFTWARE ............................................ 32
13.8 DOCUMENTATION ....................................................... 33
13.9 RIGHTS IN DATA ...................................................... 33
14. ESCROW OF SOURCE CODE ................................................... 33
14.1 RELEASE OF ESCROW ................................................... 33
14.2 CUSTOMER'S RIGHTS AND OBLIGATIONS AFTER RELEASE OF SOURCE CODE ...... 34
14.3 ESCROW VERIFICATION ................................................. 34
14.4 SOURCE CODE INSTALLATION ............................................ 34
16. INDEMNIFICATION ......................................................... 35
15.1 INDEMNIFICATION BY CUSTOMER ......................................... 35
15.2 INDEMNIFICATION BY SUPPLIER ......................................... 35
15.3 NOTICE .............................................................. 36
15.4 INDEMNIFICATION PROCEDURES .......................................... 36
15.5 USE OF INFRINGING PRODUCTS OR SERVICES .............................. 37
15.6 DISCONTINUATION OF PAYMENTS ......................................... 37
15.7 EXCLUSION ........................................................... 37
16. THIRD PARTY AGREEMENTS .................................................. 37
16.1 THIRD-PARTY AGREEMENTS ............................................. 38
16.2 PERFORMANCE UNDER THIRD-PARTY AGREEMENTS ........................... 38
16.3 PERFORMANCE UNDER SUPPLIER-ADMINISTERED AGREEMENTS ................. 38
16.4 THIRD-PARTY INVOICES ................................................ 38
17. INSURANCE ............................................................... 39
17.1 TYPES AND AMOUNT .................................................... 39
17.2 REPUTABLE INSURERS .................................................. 39
17.3 INSURANCE CERTIFICATES .............................................. 39
17.4 NO SATISFACTION OF OTHER OBLIGATIONS ................................ 40
17.5 SUBCONTRACTORS ...................................................... 40
18. TERM .................................................................... 40
18.1 INITIAL TERM ........................................................ 40
18.2 RENEWAL ............................................................. 40
18.3 MAXIMUM TERM ........................................................ 40
18.4 EFFECT OF EXPIRATION OR TERMINATION ................................. 40
19. TERMINATION AND CANCELLATION ............................................ 41
19.1 CANCELLATION ........................................................ 41
19.2 EFFECT OF CANCELLATION .............................................. 41
19.3 TERMINATION FOR CONVENIENCE ......................................... 41
19.4 TERMINATION FOR CHANGE IN CONTROL OF SUPPLIER ....................... 41
19.5 TERMINATION FOR CAUSE ............................................... 42
19.6 TERMINATION FOR INSOLVENCY .......................................... 42
19.7 EFFECT OF PARTIAL TERMINATION ....................................... 42
19.8 TERMINATION FEE ..................................................... 42
19.9 ABSOLUTE OBLIGATION ................................................. 43
19.10 RIGHTS UPON TERMINATION ............................................ 44
20. REMEDIES ................................................................ 45
20.1 REMEDIES OF EITHER PARTY ............................................ 45
20.2 NO WAIVER ........................................................... 45
20.3 CONSEQUENTIAL DAMAGES ............................................... 45
20.4 DIRECT DAMAGES ...................................................... 45
20.5 EXCLUSIONS .......................................................... 46
</TABLE>
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General Motors Corporation
Framework Agreement
for
Information Technology
Table of Contents
<TABLE>
<CAPTION>
<S> <C>
21. RESOLUTION OF DISPUTES .................................................. 46
21.1 RESOLUTION OF DISPUTES OF INVOICES .................................. 46
21.2 RESOLUTION OF ALL DISPUTES .......................................... 47
22. AUDIT RIGHTS; RECORDS RETENTION ......................................... 47
22.1 AUDITS (PROCESSING) ................................................. 47
22.2 CUSTOMER EXPENSES ................................................... 47
22.3 SUPPLIER EXPENSES ................................................... 47
22.4 AUDITS (PERFORMANCE AND FEES) ....................................... 47
22.5 RECORDS RETENTION ................................................... 48
22.6 ACCESS .............................................................. 48
22.7 STATUS REPORTS ...................................................... 48
22.8 AUDIT SOFTWARE ...................................................... 48
22.9 FACILITIES .......................................................... 48
23. ASSIGNMENT .............................................................. 49
23.1 ASSIGNMENT BY SUPPLIER .............................................. 49
23.2 ASSIGNMENT BY CUSTOMER .............................................. 49
23.3 PARTIAL ASSIGNMENT TO RELATED ENTITY OR PURCHASER ................... 49
23.4 DIVESTED ENTITIES ................................................... 50
24. TAXES ................................................................... 50
24.1 INFORMATION ......................................................... 50
24.2 STRUCTURE ........................................................... 50
24.3 TAX CREDIT .......................................................... 50
24.4 COOPERATION ......................................................... 50
25. MISCELLANEOUS ........................................................... 51
25.1 COMPLIANCE WITH LAWS AND REGULATIONS ................................ 51
25.2 INDEPENDENT CONTRACTOR STATUS AND GENERAL LIABILITY PROVISION ....... 51
25.3 FORCE MAJEURE ....................................................... 51
25.4 RELEASES AND WAIVERS ................................................ 52
25.5 NOTICES ............................................................. 52
25.6 CUMULATIVE REMEDIES ................................................. 52
25.7 AMENDMENT ........................................................... 52
25.8 BUSINESS CONTINUITY ................................................. 52
25.9 NO BROKERS OR INTERMEDIARIES ........................................ 53
25.10 NO WAIVER .......................................................... 53
25.11 PARTIAL INVALIDITY ................................................. 53
25.12 HEADINGS ........................................................... 53
25.13 COUNTERPARTS ....................................................... 53
25.14 ENTIRE AGREEMENT ................................................... 53
25.15 PUBLICITY .......................................................... 53
25.16 SURVIVAL ........................................................... 53
25.17 GOVERNING LAW; VENUE; SERVICE OF PROCESS ........................... 54
25.18 THIRD PARTY BENEFICIARIES .......................................... 54
25.19 COVENANT OF FURTHER ASSURANCES ..................................... 54
</TABLE>
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<TABLE>
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APPENDIX A - ............................................................. GLOSSARY
EXHIBITS
1.2 - EXISTING AGREEMENTS
3.3A - CUSTOMER DELEGATION OF AUTHORITY
5.1 - CUSTOMER INFORMATION SYSTEMS AND SERVICES ORGANIZATION CHART
5.4D - CUSTOMER CORPORATE INFORMATION TECHNOLOGY ARCHITECTURE AND TECHNICAL STANDARDS
8.5 - CUSTOMER TRAVEL GUIDELINES
10- SOFTWARE WITH ILLICIT CODE, KEY, NODE LOCK, TIME-OUT AND OTHER PRODUCT- OR SERVICE-LIMITING
FUNCTIONS
10.10- CUSTOMER YEAR 2000 COMPLIANCE TEST PROCEDURE
</TABLE>
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<PAGE> 7
GENERAL MOTORS CORPORATION
FRAMEWORK AGREEMENT
FOR
INFORMATION TECHNOLOGY
THIS FRAMEWORK AGREEMENT FOR INFORMATION TECHNOLOGY is made to
be effective as of the 8th day of June, 1998 (Effective Date) by and between
General Motors Corporation with offices at 100 Renaissance Center, Detroit,
Michigan and FreeMarkets OnLine, Inc., with offices at 130 Seventh Street,
Century Building, Suite 500, Pittsburgh, Pennsylvania 15222.
Terms used with initial capital letters in this Framework
Agreement or in other Agreements are defined in Appendix A or herein or therein.
BACKGROUND AND OBJECTIVES
Customer and its Related Entities desire to procure certain information
technology products and services, and Supplier desires to be considered as a
potential supplier of such products and services to Customer. Customer desires
to solicit these products and services from Supplier from time to time,
generally through the issuance of Requests For Proposal to the Supplier and to
other suppliers of these products and services. The Parties' objectives in
entering into this Framework Agreement are: (i) to establish the Parties' desire
to create a mutually beneficial relationship in a globally competitive
marketplace; (ii) to ensure that Supplier understands Customer's requirements
for information technology products and services including Customer's
information technology strategy as set forth in Customer's Corporate Information
Technology Architecture and Technical Standards; (iii) to set forth the terms
that shall govern the provision of Products and Services by Supplier to
Customer; and (iv) to establish a structure by which all transactions between
the Parties may be completed in a time-efficient and cost-effective manner.
Supplier will share Customer's dedication to customer enthusiasm, integrity,
teamwork, innovation and continuous and measurable improvement. Both Parties
will strive to eliminate ambiguities and omissions from the spoken and written
terms of the relationship by communicating with clarity of purpose and
expectations.
THE AGREEMENT
1. SCOPE OF AGREEMENT
1.1 APPLICABILITY. This Framework Agreement is applicable to the
procurement by Customer or its Related Entities, for any Site, of any Products
or Services that are available during the Term of the applicable Agreements.
1.2 RELATIONSHIP OF THE PARTIES. Supplier and Customer will execute
this Framework Agreement and each Category Agreement, while Supplier, on the one
hand, and Customer or a Related Entity of Customer, on the other hand, will
execute
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each Transaction Agreement. Each Related Entity of Customer that is a party to
one or more of the Transaction Agreements shall be considered to be the
"Customer" as such term is used in this Framework Agreement and in all
applicable Category Agreements. Notwithstanding the foregoing, Supplier
acknowledges and agrees that only the Related Entity of Customer that is a party
to the applicable Agreement shall be held responsible for and liable to any
other party with respect to activities under that Agreement. In the event the
Supplier is a partnership, the partnership alone will be held responsible for,
and liable to, the Customer with respect to activities under any of the
applicable Agreements, and not the individual partners comprising the
partnership. General Motors Corporation shall be an intended third party
beneficiary of the rights of any of its Related Entities under all Transaction
Agreements to which any of such Related Entities is a party.
1.3 ORDER OF PRECEDENCE. This Framework Agreement is a general
procurement agreement that contemplates the execution by Supplier and Customer
of one or more Category Agreements and one or more Transaction Agreements. A
Transaction Agreement may be applicable to (and therefore incorporate the terms
of) more than one Category Agreement, and each Category Agreement may have more
than one applicable Transaction Agreement. The Parties intend that the terms of
this Framework Agreement be incorporated into all Category Agreements and
Transaction Agreements, and that the terms of the Agreements are consistent with
each other. Any inconsistency, ambiguity or conflict between or among the terms
and conditions of the operative documents will be resolved in the following
order of precedence:
(A) any applicable Change Order(s), with a later Change Order
taking precedence over any earlier, applicable Change Order(s);
(B) the applicable Transaction Agreement, with the Transaction
Agreement regarding an undertaking covered therein taking precedence over
Category Agreements and the Framework Agreement regarding the same undertaking;
(C) the applicable Category Agreement with the Category
Agreement regarding an undertaking covered therein taking precedence over
Framework Agreement regarding the same undertaking; and
(D) the Framework Agreement.
Notwithstanding the foregoing, the order of precedence applies only to the
extent an inconsistency, ambiguity or conflict exists. Any inconsistent,
ambiguous or conflicting terms shall not be deemed to be amended, modified,
canceled or waived with respect to any other Category Agreement or Transaction
Agreement or for any other purpose whatsoever. No amendment, modification,
cancellation or waiver shall be effective until Change Order Procedures are
completed.
1.4 SUPPLY ITEMS. Prior to the execution of the applicable Transaction
Agreements by Customer, Supplier shall provide Customer with specifications for
all Supply Items required to provide the Products or perform the Services
contemplated by such Transaction Agreements. Customer reserves the right to
obtain and use Supply Items from sources other than Supplier without affecting
Supplier obligations, including maintenance and performance warranties under the
related Category Agreement and Transaction Agreement, provided such
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Supply Items conform to the applicable specifications. If Customer obtains any
Supply Items from an authorized reseller of Supplier, such Supply Items will be
covered by the same warranty terms as if the Supply Items had been obtained
directly from Supplier.
1.5 ACCEPTANCE OF PHASES AND STAGES. Depending upon the nature of the
Products or Services, the applicable Category Agreements and Transaction
Agreements may provide that Supplier shall perform its obligations in two or
more phases or stages. In such event, each such phase or stage of performance
shall constitute a separate obligation of Supplier, the performance of which
shall be subject to all remedies available to Customer under the applicable
Agreements in the event the applicable Acceptance Criteria specified therein are
not fully satisfied.
1.6 ACCEPTANCE.
Customer may include in the terms and conditions of each
Transaction Agreement certain Acceptance Criteria for Supplier's delivery and
performance of the Products and Services and any related Deliverables. Customer
shall have the period of time, if any, as set forth in the applicable
Transaction Agreement in which to ascertain whether the Products and Services
meet or exceed all applicable Specifications, Deliverables, Service Levels and
all other representations, warranties, covenants and conditions of the
applicable Agreements, and that the Supplier has provided and performed the
Products and Services to successfully complete the Acceptance Criteria. Except
as otherwise expressly set forth in the Transaction Agreement, Customer's
obligation to compensate Supplier with respect to any Products or Services and
any related Deliverables shall arise only after Customer has reviewed such
items, performed such Acceptance Testing as set forth in the applicable
Transaction Agreement, and otherwise established that Supplier has fully
performed its obligations under the applicable Agreements, and that Supplier is
not otherwise in default under such Agreements. In no event shall use of the
Products or Services or any related Deliverables by Customer for business,
profit, revenue or any other purpose during Acceptance Testing constitute
acceptance by Customer. Supplier's failure to meet the Acceptance Criteria
within the time established in the applicable Transaction Agreement shall
constitute breach, and it shall be deemed that Customer has received no value
from the Products and Services.
1.7 THIRD PARTY PRODUCTS AND SERVICES.
(A) Except as otherwise expressly set forth in the Transaction
Agreement, Customer may at any time obtain any products and services, from any
third party in replacement of, or in addition to, the Products and Services from
the Supplier. If such products and services are procured as a result of
termination of Customer's obligation to procure the Products and Services, the
terms of Article 19 will apply based on the reasons for such termination. In the
event Customer contracts with a third party for products or services, Supplier
shall cooperate with Customer and such third party to the extent reasonably
required by Customer and such third party, which cooperation shall include, but
not be limited to, the following:
(1) providing such third party with the written
requirements, standards and procedures applicable to Customer's information
technology environment as requested by Customer;
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(2) providing assistance and support Services to such
third party on behalf of Customer at the rates set forth in the applicable
Transaction Agreement; and
(3) providing access to the Products and Services
being used by Supplier as may be reasonably required by such third party and
approved by Customer.
(B) Alternatively, upon Customer's request, Customer and
Supplier may jointly negotiate with a third party the terms and conditions
relating to the Products and Services Supplier will be providing to Customer
through such third party.
1.8 THIRD PARTY COMPLIANCE. Customer shall require all third party
suppliers to comply with Supplier's reasonable requirements regarding
operations, data center standards, confidentiality and security to the extent
applicable and necessary. Supplier will provide to such third parties, or to
Customer upon request, copies of any such reasonable requirements regarding
Supplier's operations, data center standards, confidentiality and security.
1.9 ADDITIONAL SERVICES. During the Term, Customer may desire to obtain
Additional Services. As soon as reasonably practicable and in no event later
than thirty (30) days after Supplier's receipt of Customer's request for
Additional Services, Supplier may submit to Customer, Supplier's Proposal for
provision of Additional Services, including Supplier's proposed charges for the
Additional Services; provided, however, if Supplier cannot provide its Proposal
within thirty (30) days, Supplier shall notify the Customer and may request an
extension for a reasonable period of time, which Customer, in its reasonable
discretion, may grant. Customer, in Customer's sole discretion, may obtain
additional services from suppliers other than Supplier.
1.10 FUNDAMENTAL PRINCIPLE OF GOOD FAITH AND FAIR DEALING. In entering
into this Framework Agreement, the Category Agreements and the Transaction
Agreements, each of Customer and Supplier acknowledges and agrees that all
aspects of the worldwide business relationship and dealings between Customer and
Supplier contemplated by the Agreements, including the performance of all
obligations and the exercise of all rights under the Agreements, will be
governed by the fundamental principle of good faith and fair dealing. Customer
and Supplier will assure that each of their respective Related Entities complies
with this principle of good faith and fair dealing.
1.11 INFORMATION GATHERING PRACTICES. Supplier agrees that its
acquisition of information on behalf of Customer shall be in compliance with all
applicable laws and regulations and shall be in compliance with the ethical
principles set forth by Customer as follows:
There are important limitations on how and what competitive
information may be obtained. No improper means may be used to
acquire confidential or proprietary information from any
competitor, supplier or customer. Improper means would include
any form of industrial espionage, the payment of money or
giving of any favor or consideration, or the hiring of a
competitor's employees to obtain confidential information.
Information which may not be sought would include data on a
competitor's unannounced new products or confidential data
relating to costs, prices or profits.
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2. CHANGES
2.1 CHANGE ORDER PROCEDURES.
(A) In the event that Customer desires to propose a Change, it
shall deliver a Change Order Request to the applicable Supplier Project Manager.
Supplier shall use reasonable efforts to promptly prepare and deliver to
Customer, at no charge to Customer, a Change Order Response in accordance with
the time period, if any, set forth in the Change Order Request. If Supplier
cannot provide a Change Order Response within the time period, if any, set forth
in the Change Order Request, Supplier shall notify the Customer and request an
extension for a reasonable period of time, which Customer, in its reasonable
discretion, may grant.
(B) In the event that Supplier desires to propose a Change, it
shall deliver a Change Order Response to the applicable Customer Project Manager
or to the Customer Corporate Contract Manager.
(C) A Change Order Response, whether in response to a Change
Order Request or not, shall constitute an irrevocable offer by Supplier for a
time period of sixty (60) days to implement the proposed Change described
therein on the terms set forth herein and therein.
(D) If Customer accepts Supplier's offer as set forth in the
Change Order Response, such Change Order Response shall be deemed to be a Change
Order.
2.2 CHANGE ORDER RESPONSE. Supplier shall include the following
information in all Change Order Responses:
(i) the effect, and manner of establishment thereof, of the
proposed Change, if any, on the amounts payable by Customer under the Agreements
(as determined by the procedure set forth in Section 2.4
(ii) the effect, and manner of establishment thereof, of the
proposed Change, if any, on Supplier's performance of its obligations under the
Agreements, including the effect on required Schedules and Service Levels as set
forth in the applicable Transaction Agreements;
(iii) a good faith estimate of the effect, and manner of
establishment thereof, of the proposed Change, if any, on Customer's costs and
expenses relating to Customer's obligations under the Agreements;
(iv) the anticipated time schedule for implementing the
proposed Change; and
(v) any other information requested by Customer or reasonably
necessary for Customer to make an informed decision.
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2.3 CHANGE IMPLEMENTATION. No Change Order shall become effective
without the written approval of the applicable Customer Project Manager. In
addition, certain Changes may only be approved by the Customer Corporate
Contract Manager or his or her designee as set forth in Customer's Delegation of
Authority. Under no circumstances shall Supplier be entitled to payment for any
Product or Service provided pursuant to a Change Order that has not been so
approved by the Customer Project Manager or the Customer Corporate Contract
Manager or his or her designee.
2.4 PRICE INCREASE PURSUANT TO CHANGE ORDERS. If either Party proposes
a Change in the Products or Services to be provided hereunder pursuant to the
Change Order Procedures, the price for such Change shall be determined in the
manner set forth below.
(A) To the extent the proposed Change can be reasonably
accommodated within the specified existing level of resources, not including
overtime work, then being used by Supplier in performing its obligations
hereunder or under the other applicable Agreements, and without degradation of
Supplier's compliance with all applicable performance requirements, the charges
payable by Customer under the Agreements shall not be increased. To the extent a
Change proposed by either Party will lower Supplier's cost to fully perform its
obligations hereunder, the charges payable by Customer under the Agreements
shall be equitably adjusted to reflect such projected cost savings.
(B) To the extent the proposed Change in Products or Services
is not subject to Section 2.4 (A) above or except as otherwise expressly set
forth in the Transaction Agreement, Supplier shall quote Customer a charge for
such Change equal to Supplier's incremental cost of providing such changed or
additional Products or Services plus a reasonable profit margin on such
incremental cost not exceeding the profit margin then charged by the Supplier.
Supplier shall include with its quote the information used by Supplier to
determine its incremental costs and the appropriate profit margin.
2.5 NORMAL AND ROUTINE TASKS. Notwithstanding anything to the contrary
in the Agreements, Supplier acknowledges that Supplier is expected to undertake
and accomplish normal and routine tasks necessary to perform its obligations
under the Agreements for the charges set forth in the applicable Agreements. No
Change Order Response will be approved by Customer for tasks that Customer
reasonably determines to be normal and routine tasks.
2.6 ADDITIONAL BUSINESS UNITS. Customer shall have the right to add
Related Entities or other additional Sites, entities and units under the
Agreements. The Parties shall follow the Change Order Procedures in the event
that Customer adds a Related Entity or other additional Site, entity or unit.
Customer's Change Order Request shall contain sufficient information for
Supplier to prepare an accurate and complete Change Order Response. The Change
Order Response shall contain a plan to accommodate Customer's needs in a
cost-effective manner without a disruption in service to Customer. Such Change
Order Response shall also include any adjustments to the compensation due
Supplier under the applicable
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Agreements (subject to such adjustments being limited to the rates or other
pricing in effect under the applicable Agreements for similar Products or
Services unless Supplier can demonstrate that the cost of delivery of the
Products and Services is significantly higher due to different circumstances).
Customer shall not be obligated to accept such Change Order Response with
respect to any Related Entities or other additional Sites, entities or units.
3. CONTRACT ADMINISTRATION
3.1 DESIGNATION OF CONTRACT AND PROJECT MANAGERS. The Parties will
designate Managers for all Agreements in accordance with the following:
(A) Customer and Supplier will each designate a Corporate
Contract Manager who shall be responsible for, among other things:
(1) Implementing, managing and enforcing Agreements
on behalf of that Party, including overall management of the Agreements;
(2) Supporting the implementation of the Transaction
Agreements by the Project Managers for the Parties thereto, including, through
the formulation of guidelines for use by the Project Managers to implement the
Transaction Agreements;
(3) Exercising day-to-day responsibility for
achieving resolution of corporate-wide issues relating to the Agreements;
(4) Working with the Project Managers to establish
uniform policies applicable to the Products and Services provided by Supplier to
Customer; and
(5) Monitoring the activities of the Project Managers
as applicable, of that Party.
(B) Each Party to a Transaction Agreement will appoint a
Project Manager who will be identified in the Transaction Agreement, and who
will be responsible for the following:
(1) implementing, managing and enforcing the
Agreement on behalf of the Party;
(2) supervising performance of that Party's
obligations under the Agreement;
(3) having principal responsibility to resolve
disputes between the Parties; and
(4) ensuring that the policies and procedures
established with respect to the Agreement are consistent with the policies and
procedures of general applicability established by the applicable Corporate
Contract Manager.
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3.2 DELEGATION OF AUTHORITY.
(A) The Customer Delegation of Authority limits the authority
of Customer Project Managers and other Customer personnel to undertake certain
obligations. Obligations undertaken by any Customer Project Manager or other
Customer personnel who are not authorized to enter into such obligations under
the Customer Delegation of Authority are voidable, in Customer's sole
discretion.
(B) Each Corporate Contract Manager or Project Manager may
delegate any of his or her authority to a designated representative by notifying
the other Party's Corporate Contract Manager or Project Manager of the
designated representative to whom such authority is delegated and the extent of
the authority delegated, which notice shall be confirmed in writing. Subject to
Section 3.2(A), each Party shall be entitled to rely upon instructions received:
(1) from the Corporate Contract Manager or Project
Manager for the other Party with respect to all matters relating to the
Agreements; and
(2) any designated representative of the Corporate
Contract Manager or Project Manager for the other Party so authorized with
respect to the areas for which such designated representative is responsible.
3.3 REVIEW MEETINGS AND PROGRESS REPORTS. During the Term, and as
requested by Customer Project Manager, the Customer Project Manager and Supplier
Project Manager, as well as additional personnel involved in the performance of
the applicable Transaction Agreements, shall meet at a location designated by
Customer or, at Customer's option, shall conduct a telephone conference call, to
discuss the progress made by Supplier and Customer in the performance of their
respective obligations during the period since the most recent meeting for such
purpose.
3.4 STATUS REPORTS. In order to facilitate proper management of the
Agreements, Supplier shall, at each such meeting, provide Customer with a
written status report in which Supplier identifies any material problem or
circumstance encountered by Supplier, or which Supplier gained knowledge of
during the period since the last such status report (including without
limitation the failure of Customer to perform, any delay of Customer in
performing, or the inadequacy in the performance of Customer of any Customer
obligation set forth in the Agreements), or any problem or circumstance that may
cause material harm to Customer, that: (i) may prevent or tend to prevent
Supplier from completing any of its obligations hereunder; (ii) may cause or
tend to cause Supplier to generate charges in excess of those previously agreed
to by the Parties; or (iii) result in increased costs or obligations for
Customer in complying with the terms of the Agreements. Supplier shall identify
such costs, the amount of excess charges, if any, and the cause of any
identified problem or circumstance and steps taken or proposed to be taken by
Supplier to remedy same.
3.5 EFFECT OF SUPPLIER'S FAILURE TO IDENTIFY CERTAIN PROBLEMS. In the
event Supplier fails to specify in writing
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any material problem or circumstance, or any problem or circumstance that may
cause material harm to Customer, that the Supplier knew or should have known,
with respect to the time covered by Supplier's status report, it shall be
conclusively presumed for purposes of the Agreements that no such problem or
circumstance arose during such time, and Supplier shall not be entitled to rely
upon such problem or circumstance as a purported justification for either:
(A) claiming Supplier is entitled to receive any amount
(including without limitation damages or additional charges arising out of a
breach by Customer of a Customer obligation as set forth in the Agreements) with
respect to any of Supplier's obligations hereunder in excess of those previously
agreed to; or
(B) failing to complete any of Supplier's obligations
hereunder.
3.6 EFFECT OF SUPPLIER'S SUBMISSION OF STATUS. Submission by Supplier
of the status reports pursuant to Section 3.4 shall not alter, amend or modify
Supplier's or Customer's rights or obligations pursuant to any provision of the
Agreements.
3.7 EFFECT OF CUSTOMER'S FAILURE TO PERFORM CUSTOMER OBLIGATIONS. For
any problem or circumstance included in any Supplier status report and which
Supplier claims was the result of Customer's or Customer's subcontractors' or
agents' failure or delay in discharging a Customer obligation as set forth in
the Agreements, Customer shall review the same and determine if such problem or
circumstance was in fact the result of such failure or delay. If Customer agrees
as to the cause of such problem or circumstance, then the Parties shall follow
the Change Order Procedures. If Customer does not agree as to the cause of such
problem or circumstance, the Parties shall each attempt to resolve the problem
or circumstance in a manner satisfactory to both Parties.
4. SUPPLIER PERSONNEL AND SUBCONTRACTORS
4.1 KEY SUPPLIER PERSONNEL.
(A) Supplier shall propose names and provide resumes for
Supplier's recommendation for the position of the Supplier Corporate Contract
Manager to Customer for Customer's approval, such approval not to be
unreasonably withheld. The Customer Corporate Contract Manager and Supplier
Corporate Contract Manager may designate as Key Supplier Personnel, a reasonable
number of key Supplier positions that are critical to the Customer/Supplier
relationship and the successful performance under the Agreements including, but
not limited to, the Supplier Project Managers. In addition, Customer shall have
the right to designate up to ten percent (10%) of Supplier personnel assigned
under any Transaction Agreement as Key Supplier Personnel.
(B) Before any Supplier employee is assigned as a Key Supplier
Personnel, Supplier will propose to Customer that such employee be assigned as a
Key Supplier Personnel. Supplier will introduce the employee to Customer
representatives and will provide Customer with a resume and any other
information about the Supplier employee requested by the Customer. If
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Customer reasonably objects to the proposed assignment within ten (10) working
days following actual receipt of the aforementioned notification, then Supplier
will not assign that Supplier employee to that position. However, Supplier may
appoint another Supplier employee to serve in that position on an interim basis
until a Supplier employee who is reasonably acceptable to Customer can be
assigned to that position.
(C) Key Supplier Personnel shall not be replaced or reassigned
by Supplier without Customer's prior written consent, which consent shall not be
unreasonably withheld. Notwithstanding the foregoing, Key Supplier Personnel may
be temporarily replaced by Supplier for absences due to vacation, illness,
accident or other events outside of Supplier's reasonable control. The terms of
this Section 4.1 (C) shall not apply in the event that Key Supplier Personnel
becomes disabled, dies or voluntarily resigns from his or her position with
Supplier. In such an event, Supplier shall be responsible: (i) for replacing
such Key Supplier Personnel within thirty (30) days of the last day of such Key
Supplier Personnel's employment with Supplier; and (ii) for training such Key
Supplier Personnel's replacement at Supplier's sole expense.
(D) Customer may require Supplier to replace any individual
Key Supplier Personnel immediately for any reason including but not limited to:
(i) violation of the terms of any Agreement; (ii) violation of Customer's
policies, rules or regulations; (iii) violation of local, state, federal or
municipal laws, statutes or regulations; (iv) such individual's engagement in
activities that could be detrimental to Customer or Customer's personnel, or
because Customer believes such individual is not compatible with Customer's
personnel. Should Customer so request, Supplier shall replace any Key Supplier
Personnel within thirty (30) days from the date of Customer's notification.
(E) Key Supplier Personnel shall not be assigned to a
competitor of the Related Entity under the applicable Transaction Agreement for
one (1) year from the date such Key Supplier Personnel last worked for Customer
without Customer's prior written consent, which consent shall not be
unreasonably withheld.
4.2 OTHER SUPPLIER PERSONNEL. Customer reserves the right to review the
qualifications of Supplier's personnel providing Products or Services under the
Agreements, and to make recommendations regarding placement of such personnel
for the benefit of Customer. Supplier shall make a commercially reasonable
effort to honor Customer's requests to replace any Supplier personnel.
Notwithstanding the foregoing, Customer may require Supplier to replace any
Supplier personnel immediately for reasons including but not limited to: (i)
violation of the terms of any Agreement; (ii) violation of Customer's policies,
rules or regulations; (iii) violation of local, state, federal or municipal
laws, statutes or regulations; or (iv) such individual's engagement in
activities that could be detrimental to Customer or Customer's personnel.
4.3 NO EFFECT ON WARRANTIES. Customer's selection, use or election not
to use any of its rights and remedies regarding Supplier Key Personnel and other
Supplier personnel shall not affect in any way Supplier's responsibilities,
liabilities or warranties under the Agreements.
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4.4 CUSTOMER ACCESS TO SUPPLIER PERSONNEL. Without limitation on any
other obligation of Supplier or right of Customer hereunder, Supplier agrees
that it shall, upon Customer's reasonable request, provide Customer with
reasonable access to Supplier's specialized technical personnel and resources to
an extent no less than that provided to any other of Supplier's customers.
4.5 SUBCONTRACTORS/SUPPLIER'S AGENTS.
(A) Supplier shall not subcontract all or any material portion
of its obligations hereunder without Customer's prior written consent.
Customer's consent with respect to any subcontractor shall not relieve Supplier
of its responsibility for the performance of any of its obligations hereunder or
constitute Customer's consent to further subcontracting.
(B) Supplier shall retain responsibility for the acts or
omissions of all of its employees, subcontractors, consultants, representatives
and agents in connection with the performance of its obligations hereunder.
Supplier shall be responsible for all payments to, and claims by, such
employees, subcontractors, consultants, representatives and agents relating to
performance or nonperformance under the Agreements. Customer, in its sole
discretion, shall approve all Supplier employees, subcontractors, consultants,
representatives and agents requiring access to any Customer Site or facility.
4.6 SITE RULES AND REGULATIONS. Supplier employees, subcontractors,
consultants, representatives and agents shall comply with Customer's reasonable
safety and access policies and holiday schedule, provided Customer gives
Supplier employees, subcontractors, consultants, representatives and agents
notice of such policies. Supplier agrees that it will comply with all Customer
policies and procedures applicable to the security and safety of Customer
Confidential Information in the possession of Supplier, and shall establish and
maintain safeguards for the protection thereof in accordance with the applicable
Agreements.
5. RELATIONSHIP BETWEEN CUSTOMER AND SUPPLIER
5.1 RELATIONSHIP DEVELOPMENT. At Customer's request, in order to
further develop the Customer/Supplier relationship, Supplier will appoint a
senior executive to act as an interface with the appropriate Information Officer
or Department Head from Customer's IS&S Organization identified on the chart
attached as Exhibit 5.1 as modified by Customer from time to time.
5.2 PREFERENTIAL SCHEDULING. In determining the availability of a
Product or replacement Product, if necessary to meet Customer's requirements or
to replace damaged Products, Supplier shall use commercially reasonable efforts
to allocate to Customer the next available Product at Supplier's warehouse or
factory, waiving to the extent permitted by law, other contracts, or all other
delivery commitments and schedules.
5.3 NEW TECHNOLOGY REPLACEMENT. Customer and Supplier recognize that
Supplier will develop and market New Technology. To
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accommodate each Party's requirements, Supplier agrees to include the New
Technology as part of its Product or Services offered to Customer within the
terms provided for in the Agreements. Customer's acquisition of New Technology
will be included in any pricing discounts for Product or Services or counted
toward purchase volumes stated within the Agreements.
5.4 CONTINUOUS IMPROVEMENT AND BEST PRACTICES.
(A) On a continuous basis and at Supplier's expense, as part
of its total quality management process, Supplier shall identify ways to improve
the quality of the Products, Services, pricing and technology provided and
available to Customer and its Related Entities under the Agreements, including
through participation in PICOS methodology and other initiatives of Customer's
Worldwide Purchasing Organization.
(B) Supplier shall identify and apply proven processes,
techniques, tools and other methods and instruments from other installations
within its operations that would benefit Customer either operationally or
financially.
(C) Supplier shall use commercially reasonable efforts to
advise Customer of any new developments relating to its obligations to Customer
under the Agreements, including but not limited to, obligations under all
Category Agreements and Transaction Agreements in effect from time to time, and
shall, upon Customer's request, assist in the evaluation and testing of such
developments in connection with the performance of such obligations. Without
limiting the foregoing, Supplier shall use commercially reasonable efforts to
inform Customer of any new Services, Products, processes, techniques, tools and
other methods and instruments Supplier is developing or information technology
trends and directions of which Supplier is aware, which may be applicable to
Customer's business. Except as otherwise expressly set forth in the Transaction
Agreement, such activities will be performed within the specified existing level
of resources, not including overtime work, then being used by Supplier in
performing its obligations hereunder or under the other applicable Agreements,
and without degradation of Supplier's compliance with all applicable performance
requirements. Advice on all new Services or Products will be subject to
then-existing nondisclosure or confidentiality restrictions between Supplier and
its other customers and third parties in accordance with Article 12.
(D) Supplier shall perform its duties and obligations under
the Agreements in accordance with standards set forth in the applicable
Transaction Agreement which standards shall be consistent with the then-current
Customer Corporate Information Technology Architecture and Technical Standards.
5.5 SATISFACTION AND PERFORMANCE REVIEWS. Customer shall have the right
to develop, adopt and implement on at least an annual basis, customer
satisfaction surveys, Supplier performance reviews, and any other surveys or
reviews as deemed appropriate by Customer. The content, scope, method and timing
of such surveys and reviews shall be developed by Customer in coordination with
Supplier. Supplier shall: (i) support such surveys and reviews to the extent
reasonably requested by Customer; and (ii) work with Customer to increase
customer satisfaction and customer performance on an ongoing
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basis. At Customer's request, Supplier shall meet and discuss with Customer the
results of such surveys and reviews, and shall prepare a plan for improvement of
performance and customer satisfaction. Such surveys and reviews, and Supplier's
assistance to Customer in improving performance and customer satisfaction, shall
be factors to be considered by Customer in evaluating Supplier's performance
under the Agreements.
5.6 COMPETITIVE ASSESSMENT.
(A) Customer shall have the right, at any time during the
Term, but after a one-year period from the Effective Date of this Framework
Agreement and/or at regular intervals as set forth in the Transaction Agreement,
to benchmark or competitively assess any of the Products or Services being
performed by Supplier, to ensure that such Products or Services are competitive
with respect to price, quality, service and technology. Customer may consult
with Supplier in advance regarding the definition and specifications of each
such Product or Service to be benchmarked or competitively assessed, provided
that Customer shall finally determine such definitions and specifications.
(B) Supplier shall, at Customer's reasonable request, prepare
and provide, or cooperate with Customer or its consultants in the preparation or
provision of, comparative competitive information and data verifying the
competitive nature of the Products or Services being performed or that are
available from Supplier, in such frequency, methodology and detail as required
by Customer, including but not limited to the provision of access to Customer
and its consultants. Customer agrees to select one or more experienced
benchmarking companies which are not generally considered to be direct
competitors of Supplier and such benchmarking companies shall be subject to the
same confidentiality requirements the Customer is subject to under the
Agreements.
(C) If the written benchmarking report indicates, in
Customer's reasonable judgment, that all or part of the Products or Services
provided by Supplier are not competitive with respect to price, quality, service
or technology, then Customer shall provide Supplier with a copy of the benchmark
results and the Parties shall negotiate in good faith to adjust the related
price, quality, service or technology of the Products or Services to meet the
benchmark results or such other standards as the Parties may have agreed to
during the review period. If the Parties are unable to reach an agreement on
price adjustments to meet the benchmark results or such other standards as the
Parties may have agreed to during the review period, Customer shall have the
right to procure such benchmarked Products and Services under the terms of
Section 1.7 and such procurement shall be deemed a termination without any
penalties.
5.7 SHARED ENVIRONMENT.
(A) Supplier will notify Customer if Supplier is to provide
Customer with Products or Services from a Shared Environment.
(B) Supplier will not provide any Services to Customer from a
site or facility of any person or entity that is now or in the future
competitive with Customer's business, without Customer's prior written consent.
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(C) Supplier will develop a process, subject to Customer's
approval, to restrict access in any Shared Environment so that Customer
Confidential Information cannot be accessed by any other customer of Supplier.
(D) Supplier will not provide or market Products or Services
to a third party from a Customer Site without Customer's prior written consent.
5.8 CONSENTS.
(A) Except as otherwise expressly set forth in the Transaction
Agreement, Supplier shall be responsible for, and shall pay any costs associated
with, obtaining consents, approvals, authorizations, notices, requests and
acknowledgments that are necessary to allow:
(1) Supplier to use the Customer Software, Customer
Equipment and the services under Third-Party Agreements, to provide the Products
and Services;
(2) Supplier to use the Supplier Software and
Supplier Equipment to provide the Products and Services;
(3) Supplier to assign to Customer all right, title
and interest to the Developed Software and Work Product; and
(4) Customer to use the Developed Software and
Supplier Intellectual Property during the period Supplier is to provide the
Products or Services requiring such use, and upon the expiration or termination
thereof including but not limited to signing any applicable confidentiality,
license or noncompetition agreements required by licensor to allow Customer's
use thereof by Supplier at all applicable Sites.
(B) Customer shall cooperate with Supplier in obtaining such
consents.
6. CUSTOMER OBLIGATIONS AND ASSETS
6.1 CUSTOMER OBLIGATIONS.
(A) Customer shall be responsible for assigning the Customer
Corporate Contract Manager and Customer Project Managers.
(B) Except as otherwise expressly set forth in the applicable
Agreements, Customer shall provide Supplier personnel with access to Customer
Sites as is appropriate to Supplier's responsibilities under the Agreements. If
Supplier personnel require access to a Customer Site outside of normal working
hours, Supplier shall request the necessary security clearance from Customer and
Customer shall not unreasonably withhold such clearance.
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(C) Except as otherwise expressly set forth in the applicable
Agreements, Customer shall be responsible for providing to Supplier personnel
located on Customer's premises, in connection with the Supplier's performance
under the Agreements, office space and office furnishings, janitorial services
and utilities in connection with such office space (all such space, furnishings
and utilities shall be consistent with those that Customer provides to its own
similarly situated personnel). Supplier may not provide Products or Services to
other customers from Customer's space or using items or utilities provided by
Customer without Customer's consent, which consent may be withheld in Customer's
sole discretion. Customer shall have the option to relocate Supplier personnel
located on Customer's premises to another comparable location or facility, at
Customer's expense.
(D) Customer shall provide Supplier with access to all
Customer Software, the use of which is necessary or appropriate in connection
with the provision of Products and Services, and will cooperate with Supplier to
help Supplier secure the necessary approvals and consents from third parties for
the use of Customer Third-Party Software or Supplier Third-Party Software, the
use of which is necessary or appropriate in connection with Supplier's provision
of Products or Services.
(E) Customer shall have no obligations under the Agreements,
except as otherwise expressly set forth in the applicable Agreements, that
Customer must perform as a condition to the full and timely performance by
Supplier of Supplier's obligations under the Agreements. Except for the
execution and delivery of Category Agreements and Transaction Agreements
pursuant to this Framework Agreement, no language or provision of any document
or correspondence delivered by Supplier to Customer prior to or during the Term
(including Supplier's Proposal) shall be deemed or construed as expanding,
adding to or altering Customer's obligations as set forth in the Agreements.
(F) Without limiting the foregoing, Customer's agreement to
the terms of this Framework Agreement or a Category Agreement shall in no way
give rise to any presumption that Customer has or shall agree to acquire any
Products or Services from Supplier, except and only to the extent agreed to in
an executed Transaction Agreement.
6.2 CUSTOMER ASSETS.
(A) Prior to the execution of any Transaction Agreement,
Supplier shall provide to Customer a list of all Customer Assets required by
Supplier in order to perform its obligations under the Transaction Agreement.
Customer will review Supplier's list and will advise Supplier of any Customer
Assets that will not be available for Supplier's requested use. Supplier shall
then revise the list accordingly. The revised list of Customer Assets shall be
set forth in detail in the applicable Transaction Agreements.
(B) Except as otherwise expressly set forth in the applicable
Transaction Agreement, Customer Assets shall at all times remain the property of
Customer. Supplier shall have access to and use of the Customer Assets as set
forth in the applicable Transaction Agreements and such ability to manage the
Customer Assets as may be necessary or appropriate to enable Supplier to
properly perform its obligations hereunder.
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(C) As and when any Customer Assets are no longer required for
the performance of Supplier's obligations hereunder, Supplier, upon Customer's
request, shall arrange for the sale or disposal of such Customer Assets on such
terms as Supplier determines to be advantageous to Customer using the same
efforts as Supplier uses with respect to its own similar assets and shall advise
Customer of those terms. Upon Customer's approval, Supplier shall sell or
dispose of such Customer Assets on the terms approved by Customer, and shall
forward to Customer the proceeds of such sale or disposal that shall be net of
Supplier's reasonable and direct third-party costs and expenses. In the event
Customer does not approve of the proposed terms of sale or does not wish
Supplier to dispose of a Customer Asset, Supplier shall return such Customer
Asset to Customer or Customer's designee.
7. TRANSACTION AGREEMENTS
7.1 TERMS. Each Transaction Agreement executed pursuant to this
Framework Agreement shall contain, at a minimum, the following terms to the
extent applicable (all such terms must be addressed, at least with a "not
applicable" notation):
(A) the scope of work to be performed thereunder;
(B) a list of Customer Assets as described in Section 6.2;
(C) the applicable term, termination and cancellation
provisions, and a matrix of the rights and duties of the Parties upon
termination or cancellation;
(D) a complete list of the Products or Services covered by the
Transaction Agreement (specifying the quantity, type and model number, and
description of each Product, and specifying scope and other information
regarding performance for each Service);
(E) the price to the Customer for the Products or Services,
any additional charges and costs, including, without limitation, costs for any
non-standard Services and special features or applicable default price lists.
(F) the total, timing and currencies of amounts payable to
Supplier or, if applicable, other payment bases;
(G) the location at which the Products shall be delivered and,
if different, the location at which the Products shall be initially installed or
used;
(H) any non-standard Site specifications for the Product;
(I) the dates by which Customer shall complete preparation of
the installation Site or perform other specified obligations and the dates, if
any, by which Supplier shall inspect Customer's installation Site to determine
its compliance with Supplier's Site requirements;
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(J) the delivery date for the Products and, if applicable, any
interim delivery schedule;
(K) the installation date for the Products, or the cut-over or
implementation date for the Services;
(L) the maintenance schedule for the Products and Services, if
applicable;
(M) the identification of any critical Products and Services;
(N) the transportation method to be used to ship Products to
Customer;
(O) the Acceptance Criteria, Service Levels, performance
specifications and response times specific to the Products or Services;
(P) a detailed list of Deliverables and related due dates and
prerequisites, performance milestones, and related project timetables and
compensation schedules for Services;
(Q) an itemized estimate of all Supplier's anticipated travel
and other reimbursable expenses, unless specified otherwise as being included as
part of the fixed price;
(R) the terms of any supplemental agreements or licenses,
including, without limitation, any Supplier Third-Party Software licenses that
may be applicable;
(S) a list of Key Supplier Personnel including name, location,
title and responsibilities;
(T) a list of any provisions of this Framework Agreement or
any Category Document that the Parties desire to Change, together with
appropriate documentation containing any required approval for such change
pursuant to Customer's Delegation of Authority;
(U) the then-current Customer Related Entities to which the
Products and Services are to be provided;
(V) all applicable Category Agreements and the order of
precedence therein;
(W) the amounts payable by Customer upon termination by
Customer for its convenience;
(X) the then-current Sites;
(Y) the choice of law and forum; and
(Z) any special or additional terms agreed upon by Supplier
and Customer as set forth in the applicable Category Agreement or Transaction
Agreement.
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8. CHARGES
8.1 PAYMENT REQUIREMENTS.
(A) Except as otherwise expressly set forth in the applicable
Agreements, Customer shall commence payments to Supplier on the Acceptance Date.
(B) Customer shall not be billed or liable for any charges or
expenses other than those charges or expenses stated and expressly authorized in
the applicable Agreements.
(C) Monthly charges under any Transaction Agreement that have
been in effect for less than a full calendar month shall be prorated on the
basis of a thirty (30) day month.
8.2 NO PRICE INCREASES. Unless otherwise agreed in writing by Customer
in a Change Order, Supplier shall not, during the effective term of an
applicable Transaction Agreement, increase the prices for any Product or Service
above the prices for such Product or Service as specified in the Transaction
Agreement.
8.3 NO RESTRICTIONS ON USE. Except as otherwise expressly set forth in
the applicable Transaction Agreement, applicable charges as set forth in the
applicable Transaction Agreement: (i) shall entitle Customer and, its Related
Entities and other assignees or third party suppliers with whom they have
contracted to perform functions requiring the use of Products or Services
provided by Supplier, to unlimited use of such Products or Services, and to
operate any such Products or Services at any time and for any period of time at
the convenience of Customer, within the scope of the Customer's rights to such
Products or Services; and (ii) Customer may use the Products or Services
acquired hereunder for such purposes and functions as may be necessary or
convenient, and Customer's use of the Products or Services shall not be
restricted to any particular purpose or function.
8.4 RIGHT OF SET-OFF. With respect to any amount that is due a Party
pursuant to an Agreement, such Party may, upon notice to the other Party, deduct
the entire amount owed to such Party against the charges otherwise payable, or
expenses owed to the other Party, pursuant to the Agreements. The exercise of
this right of set-off shall not affect a Party's right to other remedies
provided for in the Agreements.
8.5 OUT-OF-POCKET EXPENSES. Except as otherwise expressly set forth in
the Transaction Agreement, Customer will reimburse Supplier for all reasonable
and necessary out-of-pocket costs (including travel costs in accordance with
Customer's Travel Guidelines) and subcontracted costs associated with the
Products or Services, provided such costs have been previously approved by
Customer in writing and are not included as part of any fixed pricing
arrangement. All out-of-pocket and subcontracted costs will be billed net,
without mark-up; provided, however, if such subcontracted costs are material,
Supplier may submit a Change Order Response to Customer pursuant to Article 2 of
this Framework Agreement.
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9. PRICING
9.1 INVOICING STANDARDS. Supplier shall render one (1) copy of an
invoice not later than the month following the month for which the charges in
the invoice accrue. Provided that the amounts covered by the invoice are
accurate and not in dispute, each invoice shall be paid in accordance with the
terms of this Section 9.1. Invoices shall include, at a minimum, the following
information as applicable:
(A) a description of the Products and Services;
(B) the base charges for each Product and Service;
(C) other charges, as applicable and any credits applied;
(D) total charges;
(E) other detail required by the applicable Category Agreement
or Transaction Agreement;
(F) any reimbursable expenses;
(G) serial numbers for all Equipment that carries a serial
number;
(H) third party charges for Products and Services procured by
Supplier that are passed-through to Customer, detailed by category of resource
consumption by each Customer entity or unit in such frequency, methodology and
detail as may be required by Customer; and
(I) With respect to any Taxes, Supplier shall segregate the
charges on each invoice into aggregate categories for each of the following
categories: (a) Services provided to the Customer for which Taxes are collected;
(b) Services provided to the Customer for which Taxes are not collected; (c)
Products for which Taxes are collected; and (d) Products for which Taxes are not
collected.
(J) Without limiting the foregoing, Supplier agrees to provide
Customer with additional supporting documentation and other information as
requested by Customer to verify the accuracy of the invoice.
9.2 ISSUANCE AND DELIVERY OF INVOICES. Invoices shall be issued and
delivered to the Related Entities specified by the Customer Project Manager in a
format and on the media agreed upon by Customer and Supplier. Customer may
require a change the invoice format, as well as the detail and summary billing
formats, and Supplier shall implement such changes as soon as reasonably
practicable.
9.3 CREDITS. Any credits due Customer may be applied by Customer
against Supplier's invoices with appropriate information attached. Any credits
due
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Customer that are not so applied against Supplier's invoices for any reason
shall be paid to Customer by Supplier within thirty (30) days after Supplier's
receipt of Customer's written request for such payment.
9.4 DISCOUNTS. The price Supplier will charge Customer for Products and
Services pursuant to the Agreements shall be the least of: (i) the list price
for the Product or Service minus the discount percentage specified in the
Transaction Agreement; (ii) the lowest price charged by Supplier to any Customer
Related Entity; (iii) a price negotiated by the Parties specifically pursuant to
a given Transaction Agreement; and (iv) the price determined by benchmarking
conducted in accordance with and subject to Section 5.6.
9.5 PAYMENT TERMS. Payment will be made by Supplier net 25th PROX. (on
the 25th day of the month following the month of Customer's receipt of an
invoice prepared in accordance with Section 9.1).
9.6 SUPPLIER'S EFFORTS TO MINIMIZE CHARGES. To the extent any Products
or Services are rendered on a time and materials basis under any of the Category
Agreements or Transaction Agreement, Supplier shall use commercially reasonable
efforts to complete each assigned task in as economical a manner as possible and
to minimize the T&M Charges and other charges or fees and expenses incurred in
connection therewith, to the maximum extent possible, consistent with Supplier's
other obligations under the Agreements.
9.7 FEE DISPUTES.
(A) In the event Customer disputes all or any portion of an
invoice submitted by Supplier, Customer may withhold payment of the amount
subject to the dispute; provided, however, that: (i) Customer shall continue to
be obligated to pay the undisputed amount when it becomes due and payable in
accordance with the terms of the Agreements; and (ii) Supplier shall continue to
perform its obligations hereunder. The Parties shall resolve the dispute in
accordance with the procedures set forth in Section 21.1. No failure by Customer
to identify a contested fee or charge prior to payment of the invoiced amount
shall limit or waive any of Customer's rights or remedies with respect to such
fee or charges, including Customer's right to withhold such disputed amounts
from subsequent fees or charges due to Supplier.
(B) In the event that it is determined that one Party should
pay all or part of a disputed amount to the other, such Party shall pay such
amount plus interest at a rate per annum equal to the base rate established by
CitiBank N.A. or a comparable financial institution mutually agreed to by
Customer and Supplier. Unpaid fees or charges that are in dispute shall not be
considered a basis for termination under the Agreements. Each of Customer and
Supplier acknowledge that the performance of the Agreements is critical to the
business and operations of Customer and Supplier. Accordingly, in the event of a
good-faith fee dispute between Customer and Supplier, Supplier shall continue to
perform its obligations hereunder and Customer shall continue to pay Supplier as
set forth in this Article 9.
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9.8 CURRENCY. Except as otherwise expressly set forth in a Transaction
Agreement, the invoicing and payment for Products and Services shall be in the
currency of the country(ies) in which the Related Entity receiving the Products
are delivered or Services are performed.
10. COVENANTS, REPRESENTATIONS AND WARRANTIES
10.1 CAPABILITIES. The Products and Services, and all Software and
Equipment utilized by Supplier in the performance thereof, shall include all
items, components and services necessary to provide Customer with all services
and processing capabilities required by Customer to meet the Service Levels for
as long as the Supplier performs the applicable Services.
10.2 DELEGATION OF AUTHORITY.
(A) Customer represents and warrants that those individuals
specified in a written Customer Delegation of Authority provided to the Supplier
shall be duly authorized to enter into the Agreements on behalf of the Related
Entity, and that each Related Entity is duly authorized by all corporate action
to enter into and perform each of the Agreements to which it is a party.
(B) Supplier represents and warrants that those individuals
specified in a written delegation of authority provided to the Customer shall be
duly authorized to enter into the Agreements on behalf of the Supplier.
10.3 RIGHT AND TITLE. Supplier shall have, throughout the applicable
period of delivery of the Products and performance of the Services, free and
clear title to, or the right to possess, use, sell, transfer, assign, license or
sublicense, any and all Products that are sold, licensed or otherwise provided
to Customer in connection with Supplier's performance under the Agreements.
10.4 MANUFACTURER'S WARRANTIES. All manufacturer's warranties relating
to Equipment to be utilized by Supplier in performing the Agreements shall, to
the extent assignable, be passed through and assigned to Customer.
10.5 SOFTWARE. Except as set forth in Exhibit 10.5 or as authorized in
writing by Customer, or as necessary for Supplier to perform it's obligations
under the Agreements, Supplier Software:
(A) shall not contain Illicit Code, and for any viruses in the
Supplier Software or Equipment of which Supplier had no knowledge of, Supplier
shall immediately undertake to remove such virus, and to correct and repair any
damage to data or Software caused by such virus; and
(B) shall not alter, damage and erase any data or computer
programs without control of a person operating the computing equipment on which
it resides.
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10.6 STANDARDS. Supplier will provide all Products and Services under
the Agreements in accordance with the highest professional standards in the
applicable area or areas of expertise required to provide the applicable
Products and Services. The Services, and all Equipment and Software utilized by
Supplier in the performance of the Services, shall conform to the Service Levels
and other requirements of the applicable Transaction Agreement in all material
respects, and shall be fit and sufficient for the purposes expressed in the
applicable Transaction Agreement. Without limitation on any other rights of
Customer hereunder, Supplier further warrants that in the event of its failure
to fulfill all or part of the warranty in this item at any time during the
period Supplier is providing the Products or Services to Customer, Supplier
shall take all necessary or appropriate actions to correct such failure, at no
cost to Customer.
10.7 TERMINATION BY ELECTRONIC MEANS. Supplier shall not use any
electronic means to enforce termination under any Agreement.
10.8 SUPPLIER THIRD PARTY AGREEMENTS. Supplier is not a party to any
agreement with a third party the performance of which is reasonably likely to
adversely affect the ability of Customer or Supplier to fully perform their
respective obligations under the Agreements.
10.9 CUSTOMER THIRD PARTY AGREEMENTS. Customer is not a party to any
agreement with a third party, the performance of which is reasonably likely to
adversely affect the ability of Customer or Supplier to fully perform their
respective obligations under the Agreements.
10.10 YEAR 2000.
(A) All Products and Services developed, provided or used (not
including Customer Software) by Supplier under the Agreements must be fully Year
2000 Compliant except as specified herein and in the applicable Transaction
Agreement. With respect to Supplier Third-Party Software and Equipment, Supplier
shall use all reasonable efforts: (i) to obtain the warranty set forth in this
Section 10.10; and (ii) to ensure that such Supplier Third-Party Software or
Equipment, as applicable, is Year 2000 Compliant before using such Software and
Equipment for the provision of the Products and Services. If Supplier is unable
to obtain such warranty for Supplier Third-Party Software or Equipment, Supplier
shall promptly notify Customer and shall promptly undertake to test such
Supplier Third-Party Software or Equipment using, at a minimum, Customer's Year
2000 Compliance Test Procedure, or any comparable procedure approved by
Customer. If such Supplier Third-Party Software or Equipment fails the Year 2000
Compliance Test Procedure, Customer shall have the option to do one of the
following: (i) reject such Supplier Third-Party Software or Equipment and pursue
other alternatives; or (ii) require Supplier to upgrade the such Supplier
Third-Party Software or Equipment to render it Year 2000 Compliant.
(B) To be "Year 2000 Compliant" a Product or Service must at
all times before, during, and after January 1, 2000, accurately process and
handle date and time data (including, but not limited to, calculating, comparing
and sequencing) from, into, and between the twentieth and twenty-first
centuries, and the years 1999 and 2000, including leap year calculations, to the
extent
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that other information technology used in combination with such Products and
Services properly exchange date/time data with it. To the extent any Products
and Services provided by Supplier under the Agreements must perform as a System
as set forth in the applicable Transaction Agreement, such Products and Services
(e.g., Equipment or Software) used in combination with the Products and Services
as set forth therein, must properly exchange date/time data with it in
accordance with the foregoing warranty.
10.11 EMU CONVERSION. Except as otherwise expressly set forth in the
Transaction Agreement, all Products and Services developed, provided or used
(not including Customer Software) by Supplier under the Agreements, must be able
to accurately process and handle all applicable currencies of any of the Sites
or countries, including the European Monetary Unit (EMU) where applicable, and
conduct the necessary conversions from the local or national currency to the EMU
("EMU Compliance"). With respect to Supplier Third-Party Software and Equipment,
Supplier shall use all reasonable efforts: (i) to obtain the warranty set forth
in this Section 10.11; and (ii) to ensure that such Supplier Third-Party
Software or Equipment, as applicable, is EMU Compliant before using such
Software and Equipment for the provision of the Products and Services. If
Supplier is unable to obtain such warranty for Supplier Third-Party Software and
Equipment, Supplier shall promptly notify Customer and shall promptly undertake
to test such Supplier Third-Party Software and Equipment using any procedure
approved by Customer. If such Supplier Third-Party Software or Equipment fails
the EMU Compliance test, Customer shall have the option to do one of the
following: (i) reject such Supplier Third-Party Software or Equipment and pursue
other alternatives; or (ii) require Supplier to upgrade the such Supplier
Third-Party Software or Equipment to render it EMU Compliant.
10.13 ESCROW SUFFICIENCY. Supplier represents and warrants that the
escrow maintained on behalf of Customer, pursuant to the Escrow Agreement, shall
contain Source Code that operates in accordance with the applicable
Specifications in the event that the Source Code is released to Customer, and
Customer or Customer's agent is required to maintain the Source Code.
11. MUTUAL DISCLAIMER
EXCEPT FOR THE EXPRESS WARRANTIES MADE OR REFERENCED IN THE AGREEMENTS,
NEITHER PARTY MAKES ANY OTHER WARRANTIES, EXPRESS OR IMPLIED, CONCERNING THE
SUBJECT MATTER OF THE AGREEMENTS, INCLUDING WITHOUT LIMITATION ANY IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
12. CONFIDENTIAL INFORMATION
12.1 CONFIDENTIAL INFORMATION OF CUSTOMER. Supplier agrees to treat
Customer Confidential Information with the same degree of care as Supplier uses
to avoid disclosure, publication or dissemination of its own information of a
similar nature, but not less than a reasonable degree of care, except that
Supplier may disclose such information if:
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(A) required to do so pursuant to applicable law (and then
only on the entry of a protective order, if available, acceptable to Customer);
(B) it was rightfully in the possession of Supplier from a
source other than Customer prior to the Time of Receipt;
(C) it became public knowledge prior to the Time of Receipt;
(D) it became public knowledge after the Time of Receipt by
any means other than an unauthorized act or omission on the part of Supplier;
(E) it is supplied to Supplier after the Time of Receipt
without restriction by a third party who is under no obligation to Customer to
maintain such information in confidence; or
(F) it was independently developed by Supplier prior to the
Time of Receipt.
12.2 CONFIDENTIAL INFORMATION OF SUPPLIER. Prior to any disclosures of
Supplier Confidential Information to Customer, Supplier must receive the
approval of the applicable Customer Project Manager. Supplier will follow the
following process to obtain such approval:
(A) Supplier will prepare a written description of the
Supplier Confidential Information, without actually disclosing the Supplier
Confidential Information, and send it to the Customer Project Manager.
(B) At the time of such transmission, the Customer Project
Manager will decide, on the basis of Supplier's written description of the
Supplier Confidential Information and not upon receipt of the Confidential
Information itself, the following: (i) if Customer agrees that the information
is confidential; (ii) if Customer needs the information; and (iii) if the
answers to (1) and (2) are "yes" and Customer agrees to accept the Supplier
Confidential Information, Customer agrees to treat Supplier Confidential
Information with the same degree of care as Customer uses to avoid disclosure,
publication or dissemination of its own information of a similar nature, but not
less than a reasonable degree of care, except that Customer may disclose such
information if :
(1) required to do so pursuant to applicable law (and
then only on the entry of a protective order, if available, acceptable to
Supplier);
(2) it was rightfully in the possession of Customer
from a source other than Supplier prior to the Time of Receipt;
(3) it became public knowledge prior to the Time of
Receipt;
(4) it became public knowledge after the Time of
Receipt by any means other than an unauthorized act or omission on the part of
Customer;
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(5) it is supplied to Customer after the Time of
Receipt without restriction by a third party who is under no obligation to
Supplier to maintain such information in confidence;
(6) it was independently developed by Customer prior
to the Time of Receipt; or
(7) it was developed by Supplier at Customer's
expense.
To the extent a decision not to approve or use Supplier
Confidential Information jeopardizes Supplier's ability to perform it
obligations under the Agreements, Supplier shall be relieved of adverse
consequences, solely and to the extent its performance is materially and
adversely affected thereby; provided, however, that Supplier shall promptly
notify Customer of the possibility of such adverse consequences and both Parties
shall attempt to reach a mutually satisfactory solution to alleviate or prevent
such adverse consequences.
12.3 SAFEGUARDING DATA. Supplier shall establish and maintain
reasonable precautions against the destruction, loss or erroneous alteration of
Customer's data in the possession of Supplier. At a minimum, such precautions
shall conform to those maintained by Customer as of the Effective Date of the
applicable Transaction Agreement and in Customer's Corporate Information
Security Practices and Procedures.
12.4 FILE SECURITY. Supplier will provide reasonable protection for
Customer's computer-stored files and programs from unauthorized access by third
parties. Supplier shall be responsible for no less than the security procedures
set forth in Supplier's security manuals or comparable documents in existence at
the time of the applicable Category Agreements and their Transaction Agreements,
and which are incorporated by reference herein. Customer shall have the
unconditional right to make security inspections of Supplier's organization at
any time without notice to Supplier. If Customer requests additional security
provisions, Supplier shall not unreasonably delay or refuse to institute same.
12.5 RESTRAINTS ON COPYING. Except as required by law, at the request
or direction of Customer, or as required in the normal course of providing the
Products and Services to Customer hereunder, Supplier will not: (i) copy or
endeavor to copy Customer's computer-stored files and programs except as backup
media for data protection purposes in accordance with Supplier's standard
security procedures; and (ii) make any attempt to translate or convert
Customer's computer-stored files and programs or any copies thereof from
machine-readable form to human-readable form.
12.6 NOTIFICATION TO CUSTOMER. In the event Supplier receives a
subpoena or any other order or request from a governmental body or any other
entity or person for any of Customer's computer-stored or backup files and
programs, Supplier shall, as soon as reasonably practicable, notify Customer of
such subpoena, order or request and shall not, without Customer's prior written
consent, accede to such subpoena, order or request unless required to do so
under applicable laws and regulations or when otherwise necessary to
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avoid legal penalties, notwithstanding Customer's efforts, if any, to contest
such subpoena, order or request.
12.7 SUPPLIER SOFTWARE ASSIGNMENT OF CODES. At Customer's request,
Supplier will assign Customer any necessary user codes, identification numbers
or codes, user numbers or other special identifying or system features as may be
necessary to ensure that access to Supplier's Equipment configuration and other
data processing facilities chargeable to Customer is confined to Customer and
its authorized representatives or agents.
12.8 CODE SECURITY. Customer shall take appropriate steps to protect
the use of the identifying or system features set forth in Section 12.7 and
Supplier will provide all assistance reasonably required, including but not
limited to, changing such identifying or system features, at the request of
Customer.
12.9 USE AND RETURN OF CUSTOMER CONFIDENTIAL INFORMATION. Without
limitation on other obligations of Supplier relative to the use and care of
Customer Confidential Information, Supplier agrees that, upon Customer's request
at any time and upon the cessation of the Services and Termination Assistance
Services, Supplier shall, as directed by Customer: (i) promptly return to
Customer, in the format and on the media in use as of the date of the request,
all or the portion requested of the Customer Confidential Information; (ii)
erase or destroy all other of the Customer Confidential Information in
Supplier's possession prior to the cessation of the Services or Termination
Assistance Services and promptly confirm to Customer in writing that such
erasure or destruction has occurred; provided, however, that if Customer directs
Supplier to erase or destroy any Customer Confidential Information prior to the
cessation of the Termination Assistance Services, Customer will waive any
obligations of Supplier to the extent that they cannot reasonably be performed
without such Customer Confidential Information; and (iii) use the Customer
Confidential Information only for the purpose of fulfilling Supplier's
obligations under the Agreement.
12.10 USE AND RETURN OF SUPPLIER CONFIDENTIAL INFORMATION. Without
limitation on other obligations of Customer relative to the use and care of
Supplier Confidential Information or on the rights of Customer to continue to
use Supplier Confidential Information after termination of the applicable
Agreements pursuant to Article 13 and Article 19 of this Framework Agreement,
Customer agrees that, upon the cessation of the Services and Termination
Assistance Services, Customer shall, as directed by Supplier: (i) promptly
return to Supplier, in the format and on the media in use as of the date of
return, all or the portion requested of the Supplier Confidential Information,
to the extent Customer no longer needs the Supplier Confidential Information to
exercise its rights under the Agreements; (ii) erase or destroy all other of the
Supplier Confidential Information in Customer's possession prior to the date of
return and promptly confirm to Supplier in writing that such erasure or
destruction has occurred.; and (iii) use the Supplier Confidential Information
only for the purpose of fulfilling Customer's obligations under the Agreements
and exercising its rights under the Agreements including, but not limited to,
Article 13 and Article 19 of this Framework Agreement. Notwithstanding the
foregoing, Customer shall be entitled to use
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Supplier Confidential Information during the Term, the Termination Assistance
Period and any additional periods in order to exercise its rights under the
Agreements.
12.11 SECURITY PROCEDURES. Supplier shall maintain and enforce data and
physical security standards and procedures at each Site to which Supplier has
access in connection with the provision of the Products and Services. At a
minimum, such standards and procedures shall conform to those maintained by
Customer as of the Effective Date of the applicable Transaction Agreement and in
Customer's Corporate Information Security Practices and Procedures.
12.12 PERSONNEL. Each of Supplier and Customer shall communicate its
obligations pursuant to this Article 12 to its employees, subcontractors,
consultants, representatives and agents. Each Party shall also be liable to the
other for any violations of Article 12 by its employees, subcontractors,
consultants, representatives and agents.
12.13 INTERNET ADDRESSES.
(A) Upon Customer's request and expense, Supplier shall
register, or re-register as the case may be, all Internet addresses used by
Customer or Supplier in connection with the provision of Products and Services
by Supplier hereunder and receipt of same in Customer's name.
(B) All network identification and access codes issued to
Customer users by Supplier or its employees, subcontractors, consultants,
representatives and agents, shall be owned by Customer. Supplier hereby assigns
to Customer all rights in and to such codes, and agrees to execute such
documents as may be reasonably necessary to effect this assignment.
12.14 ATTORNEY-CLIENT PRIVILEGE.
(A) Supplier acknowledges that it may have access to Customer
Privileged Work Product over the course of Supplier's performance under the
Agreements. Supplier further acknowledges that Privileged Work Product has been
or will be prepared in anticipation of litigation, and that Supplier is
performing hereunder in respect of Privileged Work Product as an agent of
Customer.
(B) Customer shall notify Supplier of any Privileged Work
Product to which Supplier has or may have access. After the Supplier Project
Manager is notified or otherwise becomes aware that such documents, data,
database, or communications are Privileged Work Product, only Supplier personnel
for whom such access is necessary for the purpose of Supplier's performance
hereunder may have access to Privileged Work Product.
(C) Should Supplier ever be notified of any judicial or other
proceeding seeking to obtain access to Privileged Work Product, Supplier: (i)
shall immediately notify Customer; and (ii) shall take such reasonable actions
as may be specified by Customer to resist providing such access. Customer may
have the right to represent Supplier in such resistance or to select and
compensate counsel to so represent Supplier. If Supplier is ultimately required,
pursuant to an order of a court of competent jurisdiction, to produce documents,
disclose data or otherwise act in
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contravention of the confidentiality obligations imposed hereunder or otherwise
with respect to maintaining the confidentiality, proprietary nature and secrecy
of Privileged Work Product, Supplier shall not be liable for breach of such
obligation.
12.15 UNAUTHORIZED ACCESS. Each Party shall:
(A) as soon as reasonably practicable, notify the other Party
of any unauthorized possession, use or knowledge, or attempt thereof, of the
other Party's Confidential Information, of which it becomes aware, including any
material breach or potential material breach of security on a system, LAN or
telecommunications network which contains, processes or transmits Customer
Confidential Information;
(B) as soon as reasonably practicable, furnish to the other
Party, full details of the unauthorized possession, use or knowledge, or attempt
thereof, and use reasonable efforts to assist the other Party in investigating
or preventing the recurrence of any unauthorized possession, use or knowledge,
or attempt thereof, of Confidential Information; provided, however, that if
additional security measures are required and such cannot reasonably be provided
by the specified existing level of resources (not including overtime work)
without jeopardizing the performance of their other duties under the Agreements,
such measures shall be taken pursuant to Article 2;
(C) use reasonable efforts to cooperate with the other Party
in any litigation and investigation against third parties deemed necessary by
the other Party to protect its proprietary rights. Either Party shall have the
right to conduct and control any investigation relating to such breach or
potential breach of its Confidential Information that it determines is
appropriate; and
(D) use all reasonable efforts to prevent a recurrence of any
such unauthorized possession, use or knowledge of Confidential Information.
12.16 COSTS. Except as set forth in 12.15(B), when applicable, each
Party shall bear the costs it incurs as a result of compliance with this Article
12.
12.17 EXCLUSION. The limitations or exculpations of liability set forth
in Sections 20.3 and 20.4 of the Framework Agreement are not applicable to
liability under this Article 12.
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13. PROPRIETARY RIGHTS
13.1 CUSTOMER INTELLECTUAL PROPERTY.
(A) Supplier shall have no rights or interests in the Customer
Intellectual Property except as described in this Section. All right, title and
interest in and to Customer Intellectual Property shall be and shall remain the
sole property of the Customer, its Related Entities, or its and their suppliers,
contractors and third parties. Prior to using any Customer Intellectual Property
pursuant to the license granted under Section 13.1(B) to provide any of the
Products and Services, Supplier shall notify Customer that it intends to use
Customer Intellectual Property and shall obtain Customer's consent to such use.
If Customer does not consent to such use, Supplier shall recommend a
functionally equivalent alternative that Supplier shall use upon Customer's
consent.
(B) Except as otherwise expressly set forth in a Transaction
Agreement, Customer hereby grants to Supplier, to the extent permitted by any
third-party licenses to Customer, a worldwide, nonexclusive, royalty-free,
personal, nontransferable and limited right and license: (i) to use; (ii) to
operate; (iii) to maintain; (iv) to copy solely for backup and archival
purposes; (v) to modify; and (vi) to create derivative works of, with the right
to grant sublicenses to as provided below, to only that portion of Customer
Intellectual Property that is necessary to provide Products and Services and
solely for such purpose to Customer during the Term of an applicable Transaction
Agreement.
Supplier may not decompile, disassemble or otherwise
reverse-engineer the Customer Intellectual Property in any manner. As of the
Effective Date of an applicable Transaction Agreement, Customer shall be
obligated to provide Supplier, at no cost to Supplier, with access to the
Customer Software only in the form in use by Customer as of such Effective Date.
To the extent provided for in the applicable Transaction Agreement or otherwise
approved by Customer, and to the extent permitted by third party licenses to
Customer, Supplier may grant a sublicense to Supplier's subcontractors under the
same terms as this Section and the terms and conditions set forth in Section 4.5
of the Framework Agreement, as may be necessary in connection with the provision
of the Products and Services.
(C) Upon the expiration or termination of a Transaction
Agreement for any reason, Supplier's rights and license to the Customer
Intellectual Property for the performance by Supplier of its obligations under
such Transaction Agreement shall terminate, and Supplier shall return the same
to Customer, except to the extent the Customer Intellectual Property is
necessary or appropriate in connection with Supplier's provision of Termination
Assistance Services under the applicable Transaction Agreement.
13.2 SUPPLIER INTELLECTUAL PROPERTY.
(A) Customer shall have no rights or interests in Supplier
Intellectual Property except as described in this Section. All right, title and
interest in and to Supplier Intellectual Property shall be and shall remain the
sole property of the Supplier or its third party
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subcontractors/licensors. Prior to using any Supplier Intellectual Property to
provide any of the Products and Services, Supplier shall notify Customer that it
intends to use Supplier Intellectual Property and shall obtain Customer's
consent to such use. If Customer does not consent to such use, Supplier shall
recommend a functionally equivalent alternative which Supplier shall use upon
Customer's consent.
(B) In providing the Products and Services, Supplier shall:
(i) use the Supplier Intellectual Property as set forth in the applicable
Transaction Agreement and as may be required to provide the Products and
Services; (ii) make available to Customer such Supplier Intellectual Property
for use by Customer in connection with the use of the Products and Services; and
(iii) deliver to Customer, at its request, no more than once during every
quarter during the provision of the Products and Services, a copy of the
Supplier Software (including related Source Code) that is owned by Supplier
(i.e., excluding Supplier Third Party Software) for backup and archival purposes
only.
(C) Except as otherwise expressly set forth in a Transaction
Agreement, Supplier hereby grants to Customer a perpetual, worldwide,
nonexclusive, nontransferable, royalty-free license to all rights now known or
later devised to Supplier Intellectual Property as necessary to effectuate the
purposes of the applicable Agreements including, but not limited to, the right
and license under Supplier Intellectual Property: (i) to use; (ii) to operate;
(iii) to maintain; (iv) to copy; (v) to modify; (vi) to create derivative works
of, with the right to grant sublicenses to third parties engaged by Customer.
(D) Except as otherwise expressly set forth in the applicable
Transaction Agreement, Supplier hereby grants Customer a perpetual,
nonexclusive, nontransferable license, with the right to sublicense (solely for
the performance by a third-party service provider of services on behalf of
Customer and its Related Entities) effective upon the expiration or termination
of the applicable Transaction Agreement hereunder for any reason, to Supplier
Intellectual Property under the same terms as Section 13.2(C); provided,
however, such third-party service provider shall be subject to Supplier's
safety, security and confidentiality requirements that are consistent with such
requirements of the Agreements.
13.3 THIRD-PARTY INTELLECTUAL PROPERTY.
(A) Supplier may utilize Supplier Third-Party Intellectual
Property in the provision of Products and Services. The Supplier Third-Party
Intellectual Property shall be and shall remain the exclusive property of
Supplier's third-party licensors and Customer shall have no rights or interests
in the Supplier Third-Party Intellectual Property except as described in this
Section.
(B) In providing the Products and Services, Supplier shall:
(i) use the Supplier Third-Party Intellectual Property solely as set forth in
the applicable Transaction Agreement, and as may be required to provide the
Products and Services; (ii) make available to Customer such Supplier Third-Party
Intellectual Property for use by Customer in connection with the use of the
Products and Services; and (iii) to the extent possible deliver to Customer, at
its request, no more
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than once during every quarter during the provision of the Products and
Services, a copy of the Supplier Third-Party Software (including related Source
Code) for archival purposes only.
(C) Upon the expiration or termination of the applicable
Transaction Agreement hereunder for any reason, Supplier shall use all
reasonable efforts to obtain from the applicable third-party a perpetual,
nonexclusive, nontransferable license, with the right to sublicense (solely for
the performance by a third-party service provider on behalf of Customer and its
Related Entities), Third-Party Intellectual Property under the same terms as
Section 13.2 (C); provided, however, that such third-party service provider
shall be subject to Supplier's and the other third party's safety, security and
confidentiality requirements that are consistent with such requirements of the
Agreements. Customer shall be responsible for any third-party charges associated
with such sublicense. Supplier agrees that any new agreement it enters into with
any third party for any Supplier Third-Party Intellectual Property shall include
terms permitting a sublicense for Customer as described in this Section.
13.4 DERIVATIVE WORKS. With respect to any Derivative Works developed
under the Agreements or in the provision of the Products and Services, the
allocation of rights in such works will be as follows.
(A) All Intellectual Property rights in a Derivative Work
(whether developed solely by Customer, its Related Entities, Supplier, or
jointly by Customer and Supplier), for which the preexisting work is Customer
Intellectual Property ("Customer Derivative Work"), shall be owned by Customer,
and shall be deemed to be Customer Intellectual Property.
(B) All Intellectual Property rights in a Derivative Work
developed by Supplier or third party for Customer in support of the performance
of Supplier's obligations under the Agreements, developed by Customer, or any
combination of the foregoing, for which the preexisting work is Supplier
Intellectual Property, shall be owned by Customer, provided however, Customer's
right to use the preexisting work (i.e., Supplier Intellectual Property) shall
be limited to the terms set forth in the Agreements. Customer shall be free to
exploit any portions of the Derivative Work that are developed for Customer
under this Section to the extent such portions can be segregated from the
preexisting work, and such portions of the Derivative Work shall be deemed Work
Product subject to Section 13.5.
(C) All Intellectual Property rights in a Derivative Work
developed by Supplier or a third party for customers other than Customer and not
pursuant to the Supplier's performance obligations under the Agreements, for
which the preexisting work is Supplier Intellectual Property ("Supplier
Derivative Work"), shall be owned by Supplier, and shall be deemed to be
Supplier Intellectual Property.
(D) All Intellectual Property rights in a Derivative Work
(whether developed solely by Customer, its Related Entities, Supplier, a third
party, or any combination of the foregoing), for which the preexisting work is
owned by a third party, shall be deemed to be a Customer Intellectual Property
to the extent permitted by the applicable third-party license agreement;
provided, however, if such Derivative Work is developed in support of the
performance
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of Supplier's obligations under the Agreements, it shall be deemed Work Product
subject to Section 13.5.
13.5 WORK PRODUCT.
(A) All Work Product shall be owned by Customer as a "work
made for hire," if such Work Product fits within the specified categories of the
definitions of such term under the United States Copyright Act. Customer shall
own all right, title and interest, including ownership of copyright, in and to
the Work Product and all copies of the Work Product. Supplier or any applicable
third party shall retain no rights in any Work Product.
(B) To the extent any of the Work Product may not be deemed,
by operation of law, a "work made for hire," Supplier hereby irrevocably
assigns, transfers and conveys, and shall cause Supplier's employees,
subcontractors, consultants, representatives and agents and any applicable third
parties to irrevocably assign, transfer and convey, to Customer without further
consideration, all right, title and interest in and to such Work Product,
including all rights of copyright, patent, trademark or other proprietary rights
in such materials. Supplier acknowledges that Customer and the assigns of
Customer shall have the right to obtain and hold in their own name any
intellectual property rights in and to such Work Product. Supplier agrees to and
shall cause any applicable third parties to agree to, execute any documents or
take any other actions as may reasonably be necessary, or as Customer may
reasonably request, to perfect Customer's ownership of any such Work Product.
Supplier shall, and shall cause any applicable third parties to, at no cost to
Customer:
(1) deliver to Customer, upon Customer's request
during the Term and upon the expiration or termination of all or part of
Supplier's performance hereunder, a current copy of all Work Product in the form
and on the media in use as of the date of Customer's request or as of such
expiration or termination, as the case may be; and
(2) upon the expiration or termination of the
applicable Agreements, destroy or erase all other copies of Work Product in
Supplier's possession.
13.6 DEVELOPED SOFTWARE. Developed Software shall be deemed to be Work
Product.
13.7 REPRODUCTION OF SOFTWARE. Subject to the following sentence and
notwithstanding the limitations of Section 12.10, Customer shall have the right,
at no additional cost, to reproduce any and all Supplier Software regardless of
whether the same be copyrighted or otherwise restricted as proprietary
information and Customer shall be granted such rights in the reproduction as are
conferred upon an "owner" under Section 117 of the Copyright Act; provided,
however, that such reproductions shall be subject to the same restrictions on
use and disclosure as are set forth in this Framework Agreement. Prior to using
any Supplier Third Party Software for which such rights of reproduction are not
available, Supplier shall notify Customer that Supplier intends to use such
Supplier Third Party Software and shall obtain Customer's prior consent to such
use. Any and all copies of Supplier Software made by Customer
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shall include a valid copyright notice indicating Supplier's or a third party's
proprietary interest therein, as applicable.
13.8 DOCUMENTATION. Supplier shall supply Customer with all applicable
Documentation. Whenever such Documentation is revised, modified or altered in
any material way, Supplier shall promptly supply copies of the revised, modified
or altered Documentation to Customer. Supplier agrees that all Documentation
shall provide Customer with sufficient information to properly operate, diagnose
and maintain Equipment or Software safely and efficiently.
13.9 RIGHTS IN DATA. Supplier does not convey, and Customer does not
obtain any right, in the programs, systems, data or materials utilized or
provided by Supplier in the ordinary course of business in the performance of
any of the Agreements, except that all files, software, programs, packages or
systems (together with, but not limited to, their Source Codes), input materials
and output materials, and the media upon which they are located (including,
without limitation, cards, tapes, discs and other storage facilities) which are
utilized or developed for, and paid for by, Customer in connection with the
provision of Products and Services, and which may or may not be either
confidential or proprietary, shall be the property of Customer, and Supplier
shall place an appropriate plaque, emblem and decal or other appropriate label
or marking thereon evidencing Customer's ownership of such property while it is
in the possession of Supplier. Upon the termination of the Transaction Agreement
for any reason, all such properties, together with, but not limited to, their
Source Codes, which are in the possession of Supplier, shall be immediately
delivered to Customer.
14. ESCROW OF SOURCE CODE
With respect to the Licensed Software and Supplier-owned Software that
Supplier utilizes in providing the Products or Services, and to the extent
Third-Party Supplier Software is not subject to an escrow agreement that is
satisfactory to Customer, Customer and Supplier hereby agree to enter into the
Escrow Agreement with an escrow agent selected by Customer, concurrently with
the Transaction Agreement. A copy of the Escrow Agreement shall be attached to
the applicable Transaction Agreement and approved as part of the Parties'
agreement to execute the Transaction Agreement.
14.1 RELEASE OF ESCROW. Customer and Supplier agree that the occurrence
of any of the following conditions that Customer determines, in the exercise of
good faith and reasonable commercial judgment, will permit Customer to require a
release of Source Code pursuant to the Escrow Agreement. Customer and Supplier
agree that the following conditions will be incorporated into the Escrow
Agreement.
(A) Supplier has materially defaulted in performance or
otherwise has failed to perform its obligations under: (i) the applicable
Transaction Agreement or any of the Category Agreements; (ii) the license
whereby Supplier acquired its rights to such Source Code; or (iii) any agreement
between Supplier and Customer for the maintenance or correction of such
Software, and such material default or failure to perform has continued for a
period of thirty (30) days following written notice thereof to Supplier from
Customer.
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(B) Supplier has made an assignment for the benefit of
creditors, has admitted in writing its inability to pay debts as they mature, or
has ceased operating in the normal course of business.
(C) A trustee or receiver of Supplier or of any substantial
part of Supplier's assets has been appointed by any court.
(D) An involuntary proceeding has been commenced by any party
against Supplier under any one of the chapters of Title 11 of the United States
Code and: (i) the proceeding has been pending for at least sixty (60) days; (ii)
Supplier has consented, either expressly or by operation of law, to the entry of
an order for relief; or (iii) Supplier has been decreed or adjudged a debtor.
(E) A voluntary petition has been filed by Supplier under any
of the chapters of Title 11 of the United States Code.
(F) Supplier has or announces it will discontinue support,
upgrades or enhancements of the Products or Services or of the Licensed
Software.
(G) Supplier assigns or attempts to assign or transfer all or
a substantial part of its assets related to the Products and Services or to the
Licensed Software without Customer's prior written consent.
14.2 CUSTOMER'S RIGHTS AND OBLIGATIONS AFTER RELEASE OF SOURCE CODE.
Customer shall not have any rights of ownership to the Source Code, or any
rights other than the rights to the Software as conveyed in any of the
applicable Category Agreements and except such license rights to the Source Code
as are provided in the Escrow Agreement.
14.3 ESCROW VERIFICATION. Customer shall have the right for the term of
this Framework Agreement, to verify the accuracy and completeness of the deposit
made pursuant to the Escrow Agreement at any time during normal business hours,
with reasonable notification to Supplier by having a representative of the
escrow agent and Customer present at Supplier's site to verify, audit and
inspect the escrow deposit, or optionally to pay escrow agent to perform the
verification on behalf of Customer. Customer shall pay all fees for the escrow
and any related services resulting from any of the Agreements.
14.4 SOURCE CODE INSTALLATION. If requested by Customer, Supplier shall
install the Source Code on the Equipment designated by Customer within three (3)
business days after delivery by the Escrow Agent or within such other time that
is mutually agreed between the Parties. Such installation shall include a
successful compilation of the Source Code on such Equipment and performance of
Supplier's installation tests using Supplier's test data. Supplier shall
promptly provide Customer with documentation demonstrating the successful
installation of the Software. Customer may elect to install the Source Code by
itself or through Customer's appointed agent. Any such installation shall be for
the purpose of validating
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that the escrowed Source Code will compile properly and that once validation has
occurred, all copies of the Source Code and compiled codes shall be deleted from
Customer's Equipment.
15. INDEMNIFICATION.
15.1 INDEMNIFICATION BY CUSTOMERS. Customer shall, at its sole expense,
defend (as provided in this Article 15), indemnify and hold harmless Supplier,
its Related Entities, and its and their successors and assigns and its and their
officers, directors, employees, subcontractors, consultants, representatives and
agents, from and against any and all losses, damages, injuries (including
death), causes of action, claims, penalties, interest, additional taxes, demands
and expenses, including reasonable legal fees and expenses, of any kind or
nature arising out or on account of, or resulting from any claim or allegation
of a third party for an action based on:
(A) infringement of patent, copyright or trademark with
respect to Customer Assets and Customer Intellectual Property;
(B) misappropriation of trade secret or other proprietary
rights with respect to Customer Assets and Customer Intellectual Property;
(C) failure of Customer, Related Entities and its and their
officers, directors, employees, subcontractors, consultants, representatives and
agents, to comply with applicable laws, ordinances, regulations or codes;
(D) any tort (including any wrongful, negligent or intentional
act or omission), or breach or default in the performance of its obligations
pursuant to the Agreements by Customer, its Related Entities, its and their
successors and assigns, or its or their officers, directors, employees,
subcontractors, consultants, representatives and agents, including but not
limited to the breach of any representation or warranty of Customer;
(E) failure or delay to file any return or information
required by law, rule or regulation; and
(F) any other basis expressly set forth in any Agreement that
provides for indemnity by Customer to Supplier.
15.2 INDEMNIFICATION BY SUPPLIER. Supplier shall, at its sole expense,
defend (as provided in this Article 15), indemnify and hold harmless Customer,
its Related Entities, and its and their successors and assigns and its and their
officers, directors, employees, subcontractors, consultants, representatives and
agents, and any third parties with which Customer contracts to perform any
aspect of Customer's information technology business functions, from and against
any and all losses, damages, injuries (including death), causes of action,
claims, penalties, interest, additional taxes, demands and expenses, including
reasonable legal fees and expenses, of any kind or nature arising out or on
account of, or resulting from any claim or allegation of a third party for an
action based on):
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(A) infringement of patent, copyright or trademark by the
provision of Products or Services (including Supplier Intellectual Property) or
anything that Supplier uses in the provision of the Products and Services;
(B) misappropriation of trade secret or other proprietary
rights with respect to Supplier Intellectual Property;
(C) failure or delay to file any return or information
required by law, rule or regulation;
(D) failure of Supplier or its officers, directors, employees,
subcontractors, consultants, representatives and agents, to comply with laws,
ordinances, regulations or codes;
(E) the breach of any representation or warranty of Supplier;
(F) the claim of any Supplier personnel removed or replaced by
Supplier where such personnel are Transferred Employees after the date of
hiring;
(G) any tort (including any wrongful, negligent or intentional
act or omission) or breach or default in the performance of its obligations
pursuant to the Agreements by Supplier, its Related Entities, its and their
successors and assigns, or its subcontractors, officers, directors, employees,
subcontractors, consultants, representatives and agents; and
(H) any other basis expressly set forth in any Agreement that
provides for indemnity by Supplier to Customer.
15.3 NOTICE. Each Party shall give the other Party prompt written
notice of any claim or liability hereby indemnified against by such other Party
and thereupon such other Party shall be entitled to control, and shall assume
full responsibility for, the defense of such matter. If the indemnifying Party
elects to assume such responsibility, it shall so notify the indemnified Party.
The indemnities contained herein shall not be deemed to be a waiver of or in
limitation of any other rights either Party may have, including but not limited
to rights of indemnity or contribution.
15.4 INDEMNIFICATION PROCEDURES.
(A) Supplier Responsible. The indemnified Party shall
cooperate in all reasonable respects with the indemnifying Party and its
attorneys in the investigation, trial and defense of such claim or liability and
any appeal arising therefrom; provided, however, that the indemnified Party may,
at its own cost and expense, participate, through its attorneys or otherwise, in
such investigation, trial and defense of such claim or liability and any appeal
arising therefrom. No settlement of a claim that involves a remedy other than
the payment of money by the indemnifying Party shall be entered into without the
consent of the indemnified Party. After notice by the indemnifying Party to the
indemnified Party of its election to assume full control of the defense of any
such claim, the indemnifying Party shall not be liable to the indemnified Party
for
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any legal expenses incurred thereafter by such indemnified Party in connection
with the defense of such claim.
(B) If the indemnifying Party does not assume full control
over the defense of a claim subject to defense as provided in this Section
15.4(B), the indemnifying Party may participate in such defense, at its sole
cost and expense, and the indemnified Party shall have the right to defend such
claim in the manner it deems appropriate, at the cost and expense of the
indemnifying Party.
15.5 USE OF INFRINGING PRODUCTS OR SERVICES. If an injunction or order
shall be obtained against the indemnified Party's use of any Products or
Services by reason of the allegations, or if in the indemnifying Party's opinion
any such Products or Services are likely to become a subject of a claim of
infringement or violation of a copyright, trade secret or other proprietary
right of a third party, the indemnifying Party will, at the indemnified Party's
option and the indemnifying Party's its expense:
(A) procure for the indemnified Party the right to continue
using the Products or Services;
(B) replace or modify the same so that it becomes
non-infringing (which modification or replacement shall not adversely affect the
applicable specifications for, or the use or operation by the indemnified Party
of, the Products or Services);
(C) if the Products or Services are purchased, and the other
options stated are not practicable, repurchase the Products or Services; or
(D) if the Products or Services are licensed, and the other
options stated are not practicable, remove such Products or Services from the
indemnified Party's Sites and refund to the indemnified Party any charges paid
by the indemnified Party, other than charges for license payments for any actual
period of use by the indemnified Party in excess of twenty-four (24) months
amortized over a useful life of sixty (60) months, and release the indemnified
Party from any further liability hereunder.
15.6 DISCONTINUATION OF PAYMENTS. In no event shall Customer be liable
to Supplier for any license or maintenance payments for those Products and
Services that Customer no longer uses after the date, if any, that Customer no
longer uses such Products or Services because of such actual or claimed
infringement or misappropriation. If removal or replacement of the Products or
Services is required or undertaken pursuant to the Agreements, Supplier shall
use reasonable care in the removal or modification thereof and shall, at its own
expense, restore the premises as nearly to their original condition as is
reasonably possible.
15.7 EXCLUSION. Except as set forth in Section 20.5, the limitations or
exculpations of liability set forth in Sections 20.3 and 20.4 of the Framework
Agreement are not applicable to liability under this Article 15.
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16. THIRD PARTY AGREEMENTS
16.1 THIRD-PARTY AGREEMENTS. Supplier shall abide by, and comply with,
the terms of the Third-Party Agreements.
16.2 PERFORMANCE UNDER THIRD-PARTY AGREEMENTS. Supplier shall promptly
inform the Customer of any breach of, misuse or fraud in connection with, any
Third-Party Agreements and shall cooperate with Customer to prevent or stay any
such breach, misuse or fraud. Supplier shall pay all amounts due for any
penalties or charges (including amounts due to a third-party as a result of
Supplier's failure to promptly notify Customer pursuant to the preceding
sentence), associated taxes, legal expenses and other incidental expenses
incurred by Customer as a result of Supplier's nonperformance of its obligations
under the applicable Transaction Agreement with respect to the Third-Party
Agreements.
16.3 PERFORMANCE UNDER SUPPLIER-ADMINISTERED AGREEMENTS. Supplier shall
be responsible for:
(A) notifying Customer of any performance obligations and
maintaining any warranties, under the Supplier-Administered Agreements;
(B) cooperating with the third-party supplier, including
problem resolution in respect of the services provided under the
Supplier-Administered Agreements; and
(C) providing Customer reasonable notice of any renewal,
termination or cancellation dates and fees in respect of the
Supplier-Administered Agreements. At Supplier's request and upon Customer's
consent, Supplier shall, to the extent permitted by the Supplier-Administered
Agreements, modify, terminate or cancel any such Supplier- Administered
Agreements. Any modification, termination or cancellation fees or charges
imposed upon Customer in connection with any such modification, termination or
cancellation shall be paid by Supplier. The late fees and incremental charges
described in this Section shall be paid by Supplier to the appropriate
third-party.
16.4 THIRD-PARTY INVOICES.
(D) Supplier Responsible. If Supplier is financially
responsible for any of the Supplier-Administered Agreements, Supplier shall: (i)
receive all Third-Party Invoices; (ii) review and make reasonable commercial
efforts to correct any errors in any such Third-Party Invoices in a timely
manner; and (iii) pay such Third-Party Invoice prior to the due date or, if a
discount for such payment is given, the date on which Supplier may pay such
Third-Party Invoice with a discount. Customer shall reimburse Supplier for the
amount of the Third-Party Invoice (with the applicable discount). Supplier shall
be responsible for discounts not received or any late fees in respect of the
Third-Party Invoices.
(E) Customer Responsible. If Customer is financially
responsible for any Supplier-Administered Agreements pursuant to the applicable
Transaction Agreement, Supplier shall: (i) receive all Third-Party Invoices;
(ii) review and use reasonable commercial efforts to
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correct any errors in any such Third-Party Invoices in a timely manner; and
(iii) promptly submit such Third-Party Invoices to Customer for payment.
(1) Customer shall pay the Third-Party Invoices
received and approved by Supplier. Customer shall only be responsible for
payment of the Third-Party Invoices, and shall not be responsible for late fees
thereon unless due solely to Customer's failure to pay same after having
received the Third-Party Invoice as provided for in this paragraph. Except as
otherwise expressly set forth in the Transaction Agreement specifically agreed
to by Customer, all Third-Party Invoices will be paid in accordance with
Customer's standard invoicing requirements.
(2) If Supplier fails to submit a Third-Party Invoice
to Customer for payment in a timely manner as provided in this Section, Supplier
shall be responsible for any discount not received or any late fees in respect
of such Third-Party Invoice.
17. INSURANCE
17.1 TYPES AND AMOUNT. During the Term, Supplier will maintain policies
of insurance in the following types and amounts:
(A) Workers compensation in an amount not less than the
statutory limits for the state(s) in which Services are to be performed,
including employer's liability insurance in an amount not less than $1,000,000.
If Supplier is self-insured, a certificate of the state in which the Services
are to be performed must be furnished by such state agency directly to Customer.
(B) Commercial general liability insurance, including
contractual liability coverage, with minimum limits of liability of not less
than $10,000,000 per occurrence.
(C) Automobile liability insurance (including owned,
non-owned, and hired vehicles), with minimum limits of not less than $10,000,000
per occurrence.
(D) Professional/Errors and Omissions Liability insurance in
an amount not less than $10,000,000 per occurrence.
17.2 REPUTABLE INSURERS. All insurance policies will be issued by
reputable insurance companies rated "A" or better by A.M. Best. If such policies
do not contain a separation of insureds provision, they will be endorsed to
provide cross-liability coverage. Supplier will maintain all such required
insurance in force except as otherwise expressly set forth in the Transaction
Agreement.
17.3 INSURANCE CERTIFICATES. Before Services are started, Supplier will
furnish to Customer certificates(s) of insurance evidencing compliance with the
insurance requirements. Each certificate will: (i) set forth the amount of
coverage, policy number and date of expiration, (ii) name Customer as an loss
payee under all of the above policies, except those listed in Sections 17.1(A)
and (D), but only with respect to operations performed by Supplier for Customer
under the Agreements, (iii) provide that such insurance carrier will not
terminate, cancel, or materially modify such insurance coverage without thirty
(30) days prior
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written notice to Customer, and (iv) state that such insurance is primary in
coverage to any other insurance or self-insurance programs which may be
available to Customer or is Related Entities.
17.4 NO SATISFACTION OF OTHER OBLIGATIONS. The purchase of insurance
coverage and furnishing of certificate(s) will neither modify Supplier's
obligation to indemnify Customer under Section 15.2 of this Agreement nor be in
satisfaction of Supplier's liability under the Agreements.
17.5 SUBCONTRACTORS. Supplier will include all subcontractors employed
by it as loss payees under its policies or will cause each subcontractor to
purchase and maintain insurance of the type specified above and listing Customer
as a loss payee. When requested by Customer, Supplier will furnish copies of
certificates of insurance evidencing coverage for each subcontractor.
18. TERM
18.1 INITIAL TERM.
(A) This Framework Agreement and the Category Agreements shall
have an initial term commencing with the Effective Date and unless otherwise
terminated as provided herein, shall continue for a period of three (3)
consecutive years thereafter.
(B) The initial term of a Transaction Agreement will be the
term set forth therein.
18.2 RENEWAL.
(A) Upon expiration of the initial term, the Parties may agree
in writing to additional renewal period(s). Each of the Parties shall provide
the other with written notice of its desire to renew at least three (3) months
prior to the expiration of the initial term or the then-current renewal term, as
applicable and any renewal shall occur only upon mutual agreement between the
Parties. If such notices are not given, this Framework Agreement shall continue
only until the end of the Initial Term, unless terminated sooner, or the end of
then-current renewal term, as applicable.
(B) Category Agreements may not be renewed beyond the term of
the Framework Agreement. However, if the Framework Agreement is renewed the
Parties may agree to renew all, some or none of the Category Agreements.
18.3 MAXIMUM TERM. In no event shall the Term of any Agreement extend
beyond the earlier of June 6, 2006 or the expiration or termination of the MSA.
18.4 EFFECT OF EXPIRATION OR TERMINATION. Upon expiration or
termination of this Framework Agreement or any Category Agreement, the Parties
shall not execute any new Transaction Agreements to be incorporated into this
Framework or any Category Agreement. Except as otherwise expressly set forth in
the
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Transaction Agreement, expiration or termination of this Framework Agreement or
any Category Agreement shall not affect the obligations of the Parties under any
Category Agreement or Transaction Agreement that is still in effect as of the
date of expiration or termination of this Framework Agreement, and the terms of
this Framework Agreement or Category Agreement will continue to apply to the
Parties' relationship pursuant to any such Category Agreements and Transaction
Agreements until termination or expiration of such Category Agreements and
Transaction Agreements.
19. TERMINATION AND CANCELLATION
19.1 CANCELLATION. Except as otherwise expressly set forth in the
Transaction Agreement specified otherwise in a Transaction Agreement, a
Transaction Agreement may be canceled under the following circumstances:
(A) a Transaction Agreement involving Products manufactured by
Supplier may be canceled up to fifteen (15) days prior to the delivery date for
the Products;
(B) a Transaction Agreement involving Products manufactured by
a third party may be canceled by Customer prior to the date on which Supplier's
order with such third party becomes non-cancelable without penalty;
(C) a Transaction Agreement involving Products manufactured by
a third party may be canceled by Customer at any time if Customer reimburses
Supplier for any resulting penalty imposed by such third party;
(D) Customer may cancel any Transaction Agreement involving
Supplier Third-Party Software prior to the acceptance date provided therein; and
(E) Customer may cancel any Transaction Agreement for Services
at any time upon thirty (30) days prior written notice to Supplier provided
Services have begun, or immediately if Services have not yet begun.
19.2 EFFECT OF CANCELLATION. Upon cancellation of a Transaction
Agreement by Customer, Customer shall have no liability for any payments
accruing after the cancellation date; provided, however, that Customer shall
comply with its obligations, if any, relating to the return or redelivery of any
Products to Supplier that are covered by the canceled Transaction Agreement.
19.3 TERMINATION FOR CONVENIENCE. Customer may, in its sole discretion,
terminate the Agreements, in whole or in part, upon not less than ninety (90)
calendar days' notice to Supplier.
19.4 TERMINATION FOR CHANGE IN CONTROL OF SUPPLIER. In the event of a
sale of: (i) all or substantially all of the assets of Supplier; (ii) sufficient
stock of Supplier to effect a change in control of Supplier; (iii) more than
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twenty percent (20%) of issued voting rights stock of Supplier to a competitor
of Customer; or (iv) more than twenty percent (20%) of issued voting rights
stock of Supplier to other person or entity, which in Customer's reasonable
opinion, creates a substantial uncertainty as to Supplier's continued ability to
perform under the Agreements, Customer may terminate the Agreements in whole or
in part upon at least sixty (60) calendar days' notice to Supplier and require
Supplier to reimburse Customer for all reasonable costs and expenses
attributable to Supplier's change of control and Customer's need to procure the
products and services from other suppliers.
19.5 TERMINATION FOR CAUSE. If either Customer or Supplier materially
fails to perform any of its obligations or materially breaches any
representations or warranties hereunder and such failure is not cured within
thirty (30) calendar days after notice is given to the breaching Party, then the
non-breaching Party may, upon further notice to the breaching Party, terminate
any and all Agreements as to all or part of the Products and Services being or
to be provided by Supplier hereunder, as of the date specified in the notice of
termination; provided, however, that if, after the breaching Party's best
efforts, such breach cannot be cured within such thirty (30) day period, the
time to cure such breach shall be extended for up to fifteen (15) calendar days
from the date on which such notice of termination is received by the breaching
Party, if the breaching Party has promptly commenced to cure the breach and
continues to use its best efforts to cure such breach during the fifteen (15)
day period.
19.6 TERMINATION FOR INSOLVENCY. In the event either Party is unable to
pay its debts generally as they come due, or is declared insolvent or bankrupt,
is the subject of any proceedings relating to its liquidation, insolvency or for
the appointment of a receiver or similar officer for it, makes an assignment for
the benefit of all or substantially all of its creditors, or enters into an
agreement for the composition, extension or adjustment of all or substantially
all of its obligations, then the other Party hereto may, by giving written
notice thereof to such Party, terminate the Agreements as of the date specified
in the notice of termination.
19.7 EFFECT OF PARTIAL TERMINATION. In the event of a termination of
the Agreements pursuant to this Article 19 as to part of the Products and
Services provided or to be provided by Supplier hereunder and thereunder, the
Agreements shall remain in effect with respect to those Products and Services
still to be provided by Supplier.
19.8 TERMINATION FEE.
(A) Except as expressly set forth in the Transaction
Agreement, in the event of a termination of any of the Agreements by Supplier
pursuant to Section 19.5, or by Customer pursuant to Section 19.3, Customer
shall reimburse Supplier for the following amounts:
(1) an amount equal to the net book value of any
Supplier Equipment or Supplier Software purchased, leased or licensed by
Supplier in connection with the provision of the Products and Services affected
by the termination, but only to the extent such cost has not then been amortized
in accordance with generally accepted accounting principles, and cannot be used
by Supplier for other business; and
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(2) the actual and reasonable third party costs
(without mark-up) and redundancy payments as required by local law for a maximum
period of six (6) months incurred by Supplier to re-deploy or terminate any of
its employees dedicated to the performance of Supplier's obligations relative to
the Products and Services affected by the termination for more than six (6)
months, and whose employment cannot reasonably be continued by Supplier for
other business; provided, however, that Customer shall only be liable to
reimburse termination benefits for the lesser of actual relocation expenses or
four (4) weeks severance pay.
(B) With respect to any termination fee payable by Customer
pursuant to this Section 19.8, Supplier shall use commercially reasonable
efforts to minimize such fees. Customer shall not pay to Supplier any fees or
charges relating to a termination pursuant to this Article 19 other than the
applicable termination fees as set forth herein.
19.9 ABSOLUTE OBLIGATION. Supplier acknowledges and agrees that it
shall have an absolute and unconditional obligation to provide Customer with
Termination Assistance Services. Termination Assistance Services shall be set
forth in the Transaction Agreements and shall be provided by Supplier at the
same rates it charged Customer for comparable services under the applicable
Agreements.
(A) In the event of the expiration or termination of any
Transaction Agreement hereunder, Supplier shall, upon Customer's request,
continue to provide the applicable Products and Services that were provided by
Supplier prior thereto, as well as the Termination Assistance Services, as
follows.
(B) At no additional cost, Supplier shall provide to Customer
and any designated third-party provider: (i) in writing, to the extent available
and in the form then maintained by Supplier, applicable requirements, standards,
policies, operating procedures and other documentation relating to the affected
Products and Services; and (ii) necessary access to the systems and sites from
which the affected Products and Services were provided, provided such access by
Customer's third-party providers shall be subject to such providers' compliance
with Supplier's safety, security and confidentiality requirements..
(C) If and to the extent requested by Customer, Supplier shall
assist Customer in developing a plan which shall specify the tasks to be
performed by the Parties in connection with the Termination Assistance Services
and the schedule for the performance of such tasks.
(D) Supplier will provide the Termination Assistance Services
for the Termination Assistance Period at no additional cost except to the extent
that resources included in the fees otherwise being paid by Customer to Supplier
cannot be used to provide the Termination Assistance Services.
(E) Following the Termination Assistance Period, Supplier
shall: (i) answer questions from Customer or Customer's designee regarding the
Products and Services on an "as needed" basis as agreed upon by Customer and
Supplier; and (ii) deliver to Customer any remaining Customer-owned reports and
documentation still in Supplier's possession.
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(F) Upon request from Customer, Supplier shall, to the extent
permitted by third-party contracts:
(1) make available any Supplier Equipment or Systems
dedicated to the performance of the affected Products or Services, by allowing
Customer or its designee to: (a) purchase, at the lesser of fair market value
and book value, any such Supplier Equipment or System owned by Supplier; and (b)
assume the lease of any such Supplier Equipment or System leased by Supplier;
(2) transfer or assign, upon Customer's request, any
third-party contracts applicable to the affected Products and Services for
maintenance, business continuity services or other necessary third-party
services being used by Supplier and dedicated to the delivery and performance of
the affected Products and Services, to Customer or its designee, on terms
acceptable to all parties;
(3) continue to provide the Products and Services and
any Termination Assistance Services requested by Customer that may be required
to facilitate the transfer of the Products and Services requested by Customer to
Customer or Customer's designee;
(4) upon request from Customer, allow Customer or its
designee to offer employment to, and to hire, Supplier employees performing
full-time as of the date the termination notice is given, or who have performed
full-time 3 of the last 6 months prior to the date termination notice is given,
the affected Products and Services; and
(5) provide to Customer, in the form and of the
content requested by Customer, inventories of the Equipment and Software used in
connection with the provision of the Products and Services as needed.
(G) Supplier shall not degrade the quality or level of its
performance during the Termination Assistance Period.
19.10 RIGHTS UPON TERMINATION. Upon termination or expiration of this
Framework Agreement, any Category Agreement or Transaction Agreement, each Party
shall forthwith return to the other all papers, materials and properties of the
other held by such Party in accordance with the terms of Section 12.9 and 10 and
subject to the terms of Article 13. In addition, each Party will assist the
other Party in the orderly termination of the applicable Agreements and the
transfer of all items, tangible and intangible, as may be necessary for the
orderly, non-disrupted business continuation of each Party. Other rights and
duties of each of the Parties upon termination or expiration of any Category
Agreement or Transaction Agreement shall be set forth in the applicable Category
Agreement or Transaction Agreement.
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20. REMEDIES
20.1 REMEDIES OF EITHER PARTY. If a material breach by either Party
shall occur and be continuing, the other Party shall have the following remedies
(except as specified otherwise in any other applicable Agreement):
(A) terminate all or part of the applicable Agreement to the
extent of the terms contained therein and return any and all Products covered
thereunder to the Party furnishing same, in the manner required therein for
redelivery at the end of the applicable Agreement's term, except that such
return shall be at the sole expense of the defaulting Party;
(B) by written notice to the defaulting Party, declare the
applicable Agreement to be terminated, without prejudice to either Party's
rights in respect to the obligations then accrued and remaining unsatisfied;
(C) pursue the recovery of actual damages arising out of such
breach, subject to the limitations set forth in Sections 20.3 and 20.4;
(D) seek specific performance by the defaulting Party of its
obligations hereunder; and
(E) exercise any other right or remedy that may be available
under the applicable Category Agreement and Transaction Agreement, at law or in
equity.
20.2 NO WAIVER. In no event shall the acceptance by Customer, or the
application by Supplier, of any license, maintenance or other credit pursuant to
the Agreements be deemed to be a waiver by Customer of any of its rights under
the Agreements or at law or in equity. Notwithstanding the foregoing, either
Party's failure or delay in performing any minor or technical aspect of its
performance obligations hereunder shall not be considered a material breach
under the Agreements unless and until such failure or delay remains uncured for
a period of thirty (30) days following the first occurrence thereof, or recurs
repeatedly to the extent that the successful performance of the Agreements may
be adversely affected.
20.3 CONSEQUENTIAL DAMAGES. Except with respect to claims or actions
resulting from a Party's gross negligence, willful, wanton or reckless
misconduct or intentional misconduct, in no event shall either Party be liable
for consequential, incidental or punitive losses, damages or expenses (including
loss of profits, savings, penalties, fines, late-payment charges, interest,
competitive advantage, goodwill, business interruption or indemnity hereunder),
even if it has been advised of the possible existence thereof.
20.4 DIRECT DAMAGES. Neither Customer nor Supplier shall be liable to
the other Party for any direct damages arising out of or relating to its
performance hereunder, whether based on an action or claim in contract, equity,
negligence, tort or otherwise, for all events, acts or omissions, in the
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aggregate, in an amount exceeding the Direct Damages Cap. In the event a Party
is liable hereunder for damages in excess of the Direct Damages Cap, in the
aggregate, the other Party may terminate the applicable Agreement in whole or in
part. The following shall be considered direct damages and a Party shall not
assert that they are consequential damages pursuant to Section 20.3 to the
extent they result from a Party's failure to perform its obligations in
accordance with the terms of the Agreements:
(A) costs and expenses of recreating or reloading any of
Customer's lost, stolen or damaged information;
(B) costs and expenses of implementing a work-around or
temporary fix in respect of a failure by Supplier to perform all or any part of
its obligations hereunder;
(C) costs and expenses of replacing lost, stolen or damaged
Products or Services;
(D) costs and expenses incurred by Customer to cover and
correct errors in Software maintenance and enhancements provided as part of
Supplier's performance hereunder;
(E) costs and expenses incurred by Customer to procure from an
alternate supplier, or to perform itself, all or any part of Services the
performance of which is the obligation of Supplier hereunder, to the extent in
excess of Supplier's charges hereunder;
(F) straight time, overtime or related expenses incurred by
Customer, including overhead allocations of Customer for Customer's employees,
wages and salaries of additional employees, travel expenses, overtime expenses,
telecommunications charges and similar charges, due to failure of Supplier to
provide all or any part of the Services incurred in connection with any of the
above; and
(G) fines, penalties, assessments or other charges incurred in
connection with any of the above.
20.5 EXCLUSIONS. The limitations or exculpations of liability set forth
in Sections 20.3 and 20.4 are not applicable: (i) to indemnification claims as
set forth in Article 15 except for those indemnification claims based on a
breach of Sections 10.1, 10.2, 10.4, 10.6, 10.8, 10.9, 10.10 and 10.11; (ii) to
liability resulting from the gross negligence or willful or wanton misconduct or
intentional misconduct of a Party; (iii) to any other liability expressly
excluded from limitation by the applicable Agreement.
21. RESOLUTION OF DISPUTES
21.1 RESOLUTION OF DISPUTES OF INVOICES. If Customer disputes
any amount on any Supplier invoice, Customer and Supplier agree to use all
reasonable efforts to resolve such dispute within sixty (60) days after Customer
provides written notification of the dispute to Supplier. Both Parties agree to
provide full supporting documentation concerning any disputed amount or invoice
within thirty (30) days after written notification of the dispute. Provided that
one Party furnishes written notification of the dispute to the other Party
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within thirty (30) days, neither Party shall have any obligation, during the
sixty (60) day period specified above, to pay any amount that remains in
dispute.
21.2 RESOLUTION OF ALL DISPUTES. Except as otherwise expressly set
forth in a Category Agreement or Transaction Agreement, disputes arising out of
or relating to the Agreements shall first be discussed by the Customer Project
Manager and Supplier Project Manager. Any dispute that cannot be resolved within
twenty (20) business days at the Project Manager level shall be referred to the
Corporate Contract Managers. Upon notification to the Corporate Contract
Managers, the Parties may pursue available legal and equitable remedies.
22. AUDIT RIGHTS; RECORDS RETENTION
22.1 AUDITS (PROCESSING). Upon notice from Customer, Supplier shall
grant to such auditors and inspectors as Customer may designate in writing, with
access to any of Supplier's sites or facilities used in the provision of the
Products or Services (including, but not limited to, any Supplier Equipment) for
the purposes of performing audits or inspections of the Customer's financial
statements. Supplier shall provide such auditors and inspectors any assistance
that they may reasonably require. If any audit by an auditor designated by
Customer or a regulatory authority results in Supplier being notified that it is
not in compliance with any law, regulation, audit requirement or generally
accepted accounting principle relating to Supplier's performance hereunder,
Supplier shall take actions to comply with such audit.
22.2 CUSTOMER EXPENSES. Customer shall bear the expense of any such
compliance that is:
(A) required by a law, regulation or other audit requirement
that relates to Customer's business irrespective of Supplier's obligations
hereunder; or
(B) necessary due to Customer's noncompliance with any law,
regulation or audit requirement imposed on Customer.
22.3 SUPPLIER EXPENSES. Supplier shall bear the expense of any such
response that is: (i) required by a law, regulation or other audit requirement
relating to Supplier's business; (ii) the performance of Supplier of its
obligations hereunder; or (iii) necessary due to Supplier's noncompliance with
any law, regulation or audit requirement imposed on Supplier.
22.4 AUDITS (PERFORMANCE AND FEES). Upon reasonable notice from
Customer, Supplier shall provide Customer and its employees, subcontractors,
consultants, representatives and agents with access to any of Supplier's sites
or facilities used in the provision of the Products or Services (including, but
not limited to, any Supplier Equipment) and to such financial records and
supporting documentation as may be reasonably requested by Customer for the
purposes of performing audits and inspections of Supplier's performance and of
the fees charged by Supplier to Customer to determine that Supplier has fully
performed its obligations and that such fees are accurate and in accordance with
the
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Agreements, and that work charged was actually performed. If, as a result of
such audit, Customer determines that Supplier has not performed, Supplier shall
promptly remedy the non-performance and/or issue a credit for the fees related
to the Products or Services that were not provided in accordance with the
applicable Agreements. If, as a result of such audit, Customer determines that
Supplier has overcharged or undercharged Customer, Customer shall notify
Supplier of the amount of such overcharge or undercharge as the case may be, and
Supplier shall promptly pay to Customer the amount of the overcharge, or shall
add the amount of the undercharge to the next invoice. In the event any such
audit reveals an overcharge to Customer during any twelve (12) month period
exceeding five percent (5%) of the aggregate fees paid by Customer to Supplier
during such period with respect to any separate Transaction Agreement, Supplier
shall reimburse Customer for the cost of such audit.
22.5 RECORDS RETENTION. Supplier shall retain records and supporting
documentation sufficient to document the performance of its obligations
hereunder and the related fees charged to Customer, for a minimum of three (3)
years, or such longer period required by law, following the completion of the
transaction to which such performance and fees relate.
22.6 ACCESS. Supplier shall provide to Customer and its employees,
subcontractors, consultants, representatives and agents access to:
(A) records and supporting documentation (including, where
applicable, program Source Code to the extent permitted by law or under the
applicable third party agreements) relating to Supplier's performance hereunder
and the related fees charged by Supplier;
(B) Supplier sites or facilities, as may be necessary for
Customer or its employees, subcontractors, consultants, representatives and
agents to perform the audits described in this Article 22.
22.7 STATUS REPORTS. Supplier shall provide to Customer periodic status
reports in accordance with Customer's audit procedures regarding Supplier's
resolution of any audit-related compliance activity for which Supplier is
responsible.
22.8 AUDIT SOFTWARE. Supplier shall, to the extent permitted under
applicable third party agreements and to the extent such audit software will not
materially degrade Supplier's performance under any of the Agreements or for any
of its other customers, operate and maintain such audit software as Customer or
its employees, subcontractors, consultants, representatives and agents may
provide to Supplier during the Term.
22.9 FACILITIES. Supplier shall provide to Customer and such auditors
and inspectors as Customer may designate in writing, on Supplier's sites and
facilities (or if the audit is being performed on a subcontractor, the
subcontractor's premises if necessary) space, office furnishings (including
lockable cabinets), telephone and facsimile services, utilities and
office-related equipment and duplicating services as Customer or such auditors
and inspectors may reasonably require to perform the audits described in this
Article 22.
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23. ASSIGNMENT
23.1 ASSIGNMENT BY SUPPLIER. Supplier shall not assign any of its
rights or obligations hereunder without Customer's prior written consent to such
assignment. Except where otherwise agreed in writing by Customer, no such
assignment shall release Supplier from its obligations pursuant to the
Agreements.
23.2 ASSIGNMENT BY CUSTOMER. Customer may assign the Agreements in
their entirety to: (i) any majority owned or controlled subsidiary of Customer;
or (ii) a purchaser of the business of Customer applicable to the Products and
Services, upon written notice to, but without the consent of, Supplier. Upon
such assignment and an assumption of liability hereunder by the assignee
Customer shall not be discharged of any further liability pursuant to the
Agreements without Supplier's consent, such consent not to be unreasonably
withheld. Any other assignment of the Agreements in its entirety by Customer may
occur only with the prior written consent of Supplier, which consent shall not
be unreasonably withheld or delayed.
23.3 PARTIAL ASSIGNMENT TO RELATED ENTITY OR PURCHASER.
(A) Customer's rights and obligations with respect to one or
more Transaction Agreements executed pursuant to the Agreements may be assigned
in whole or in part by Customer, and, to the extent permitted by applicable
third-party agreements, any Product owned or licensed hereunder may be leased,
rented or sublicensed to: (i) any majority owned or controlled subsidiary of
Customer; or (ii) to a purchaser of the business of Customer applicable to the
Products and Services upon written notice to, but without the consent of,
Supplier. Such assignment may be to a Related Entity or business unit that is
sold by Customer, to the extent that such assignment relates to the business of
such Related Entity or business unit. Upon such assignment and an assumption of
liability hereunder by the assignee Customer shall not be discharged of any
further liability pursuant to the Agreements insofar as it relates to the rights
and obligations so assigned and the Products that are so leased, rented or
sublicensed, without Supplier's consent, such consent not to be unreasonably
withheld.
(B) Any Related Entity, at its election, shall be deemed to be
Customer under the Agreements for the purposes of purchasing, licensing or
otherwise acquiring Products or Services covered by the Agreements with
Supplier. In such event, the Related Entity shall be deemed Customer for the
purposes of purchasing, licensing or otherwise acquiring any such Products
covered by the Agreements, with all of the rights and privileges hereunder;
provided, however, that the obligations and liabilities of Customer's Related
Entity shall be limited to those set forth in the terms of the Agreements that
are applicable to the specific Transaction Agreements that relate to the rights
and obligations so assigned with respect to the acquisition, purchase, license
or lease between Supplier and the Related Entity.
(C) No partial assignment to any Related Entity of Customer's
rights and obligations relative to any one or more Transaction Agreements shall
preclude any other
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assignment of Customer's rights and obligations under any other Transaction
Agreements to that or any other Related Entity.
23.4 DIVESTED ENTITIES. Supplier shall, upon Customer's request and
subject to the Divested Entity providing Supplier with reasonable assurances
that it will pay all amounts due, provide all or part of the applicable Services
to any Divested Entity for a period of three (3) years after the effective date
of the sale or divestiture, on the same terms as the terms under which such
Services are then being provided to Customer under the applicable Agreements.
24. TAXES
24.1 INFORMATION. Each Party shall provide and make available to the
other Party any applicable resale certificates, information regarding
out-of-state sales or use of Products or Services, and other exemption
certificates or information reasonably requested by the other Party.
24.2 STRUCTURE. The Parties agree to utilize reasonable efforts to
structure the provision and receipt of Products or Services, as the case may be,
in such a fashion as to minimize, to the extent legally permissible, any sales,
use, value-added, withholding, and similar taxes payable by the Customer.
24.3 TAX CREDIT. In the event that the Supplier is entitled to claim a
foreign tax credit benefit with regard to withholding taxes associated with
cross border payments under any Agreement, the parties agree that the Customer
shall not be charged or otherwise billed for such taxes.
24.4 COOPERATION. The Parties shall reasonably cooperate with each
other in connection with the other Party's efforts to minimize its liability for
Taxes, to the extent legally permissible, and to support the other Party upon
audit by applicable taxing authorities in the following manner:
(A) The parties will work together to ensure that the
taxability positions are jointly discussed. Further, Supplier agrees to allow
the Customer Tax Staff, at least annually, and more frequently if reasonably
requested by Customer, and at Customer's expense, to review Supplier's billing
and collection systems relating to Taxes collected by Supplier from Customer
under an Agreement.
(B) In the event Supplier has previously collected Taxes from
Customer and remitted such Taxes to the applicable taxing authority, and such
Taxes pertain to the items described in Section 9.1 (I) (a) or (c), Supplier
shall disclose to Customer, if reasonably requested by Customer, the type of
Taxes, the applicable taxing authority, and the amount of such Taxes.
(C) In the event that a taxing authority does not agree to
audit the charges payable in connection with the Agreement for sales and use tax
purposes, as part of Supplier's sales and use tax audits, and proposes to assess
sales and use taxes directly against Customer on the
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aggregate charges described in sub-Section 9.1 (I) (b) or (d), Supplier shall
work directly with the taxing authority to address audit concerns as they
pertain to the charges or sales and use taxes payable in connection with the
Agreement. In the event that the taxing authority requires any documentation to
be submitted directly by Customer, Supplier agrees to cooperate with Customer in
providing the necessary documentation.
(D) Supplier agrees to pay, and to hold Customer harmless
against, any penalty, interest, or additional tax that may be assessed or levied
as a result of the failure or delay of Supplier or its agents to file any return
or information required by law, rule or regulation. Supplier agrees to provide
reasonable assistance to Customer should Customer contest any taxes imposed on
it which result from the Agreements.
25. MISCELLANEOUS
25.1 COMPLIANCE WITH LAWS AND REGULATIONS. Each of the Parties agrees
that it will comply with all applicable laws, rules, regulations, orders,
conventions, ordinances or standards of the country(ies) of destination or which
relate to the manufacture, labeling, transportation, importation, exportation,
licensing, approval or certification of the goods or services, including, but
not limited to, those relating to environmental matters, wages, hours and
conditions of employment, forced labor, subcontractor selection, government
contracts, discrimination, occupational health/safety and motor vehicle safety.
25.2 INDEPENDENT CONTRACTOR STATUS AND GENERAL LIABILITY PROVISION.
Both Parties shall be deemed to be independent contractors hereunder and, except
as otherwise expressly provided herein or in any other Agreement, shall not be
considered or permitted to be an employee, subcontractor, consultants,
representative, agent, servant, joint venturer or partner of the other. Both
Parties agree to take such steps as may be necessary to ensure that each
subcontractor of the other will be deemed to be an independent contractor and
will not be considered or permitted to be an employee, subcontractor,
consultants, representative, agent, servant, joint venturer or partner of the
other Party. All persons furnished, used, retained or hired by or on behalf of
each Party or any of its subcontractors shall be considered to be solely the
employees or agents of that Party of such subcontractor, and each Party shall be
responsible for insuring there is payment of any and all unemployment, workers
compensation, social security, and other payroll taxes for such persons,
including any related assessments or contributions required by law.
25.3 FORCE MAJEURE. Any delay or failure of either party to perform its
obligations hereunder shall be excused if, and to the extent that, it is caused
by an event or occurrence beyond the reasonable control of the party and without
its fault or negligence, such as, by way of example and not by way of
limitation, acts of God, actions by any governmental authority (whether valid or
invalid), fires, floods, windstorms, explosions, riots, natural disasters, wars,
sabotage, labor problems (including lockouts, strikes and slowdowns), inability
to obtain power, material, labor equipment or transportation, or court
injunction or order; provided, however, that, except as provided in Section
10.10, any Year 2000 compliance problem shall not be deemed to be an event of
force majeure subject to this Section 25.3 and provided that written notice of
such delay (including the anticipated duration of the delay) shall be given by
the affected party to the
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other party as soon as possible after the event or occurrence (but in no event
more than ten (10) days). During the period of such delay or failure to perform
by Supplier, Customer, at its option, may procure Products or Services from
other sources, without liability to Supplier, or have Supplier provide the
Products and Services from other sources in quantities and at times requested by
Customer, and at the price set forth in the applicable Agreement. In addition,
Supplier, at its expense, shall take such actions as are necessary to ensure the
supply of Products and Services to Customer for a period of at least thirty (30)
days during any anticipated labor disruption or resulting from the expiration of
Supplier's labor contract(s). If requested by Customer, Supplier shall, within
ten (10) days provide adequate assurances that the delay shall not exceed thirty
(30) days. If the delay lasts more than thirty (30) days or Supplier does not
provide adequate assurance that the delay will cease within thirty (30) days,
Customer may immediately terminate the affected Services under the Agreements
without liability.
25.4 RELEASES AND WAIVERS. Neither Party shall require waivers or
releases of any personal rights from representatives of the other in connection
with visits to its premises and both Parties agree that no such releases or
waivers shall be pleaded by them or third parties in any action or proceeding.
25.5 NOTICES. Any and all notices permitted or required to be given
under the Agreements shall be deemed duly given: (i) upon actual delivery, if
delivery is by hand; or (ii) upon receipt by the transmitting Party of a
separate confirmation that the facsimile was received; or (iii) upon delivery
into the U.S. mail or any other reputable courier or delivery service, if
delivery is by postage paid registered, certified, or any other traceable method
and that such mail or delivery has been received within five (5) days following
delivery into the U.S. mail or such courier or delivery service. Each such
notice shall be sent to the respective Party at the address indicated below or
to any other address as the respective Party may designate by notice delivered
pursuant to this Section or as set forth in the applicable Transaction
Agreement.
25.6 CUMULATIVE REMEDIES. Except as specifically provided herein, no
remedy made available to Customer or Supplier hereunder is intended to be
exclusive of any other remedy, and each and every remedy shall be cumulative and
shall be in addition to every other remedy provided hereunder or available at
law or in equity.
25.7 AMENDMENT. The Agreements shall not be modified, amended or in any
way altered except by a Change Order or by another instrument in writing signed
by authorized personnel of the Parties for that express purpose. All Change
Orders and amendments executed by authorized personnel pursuant to the terms of
the applicable Agreement shall be binding upon the Parties despite any lack of
consideration.
25.8 BUSINESS CONTINUITY. Terms regarding business continuity may be
set forth in either the applicable Category Agreement or Transaction Agreements.
Supplier acknowledges and agrees that Customer may not have a business
continuity plan in place with respect to a particular Transaction Agreement, and
that Customer's failure to have a business continuity plan in place with respect
to a particular Transaction Agreement shall not be the basis for a claim of a
failure to mitigate damages with respect to that or any other Agreement.
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25.9 NO BROKERS OR INTERMEDIARIES. The Parties agree that the
Agreements and any amendment or modification hereof shall be entered into by and
between Customer and Supplier without representation or involvement of any
broker, intermediary or other third party, and shall be binding upon Customer
and Supplier according to the terms hereof.
25.10 NO WAIVER. No term or condition of the Agreements or of any
document incorporated herein by reference shall be deemed waived and no breach
shall be deemed excused unless such waiver or consent shall be in writing and
signed by the Party claimed to have waived or consented. No consent by any Party
to, or waiver of, a breach by the other, whether express or implied, shall
constitute a consent to, waiver of, or excuse for any different or subsequent
breach.
25.11 PARTIAL INVALIDITY. If any term or provision of the Agreements,
or of any document incorporated herein by reference, shall be found to be
illegal or unenforceable then, notwithstanding such illegality or
unenforceability, the Agreements, and each incorporated document, shall remain
in full force and effect and such term or provision shall be deemed to be
deleted.
25.12 HEADINGS. The headings used in the Agreements are for reference
purposes only and shall not be deemed a part of the Agreements.
25.13 COUNTERPARTS. The Agreements may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
25.14 ENTIRE AGREEMENT. The Agreements are the entire agreement between
the Parties with respect to the subject matter herein or therein, and there are
no other representations, understandings or agreements between the Parties
relative to such subject matter.
25.15 PUBLICITY. Neither Party shall use the other Party's name or
refer to the other Party directly or indirectly in any media release, public
announcement or public disclosure relating to the Agreements or any acquisition
pursuant hereto, including in any promotional or marketing materials, customer
lists, referral lists or business presentations, without consent from the other
Party for each such use or release or if required by law. Neither Party may use
any trademark or service mark of the other Party without that Party's consent,
which consent shall be given in the Party's sole discretion.
25.16 SURVIVAL. All terms of this Framework Agreement shall survive its
expiration or termination for any reason with respect to any Category Agreements
and Transaction Agreements still in effect as of the date of such expiration or
termination. The terms of this Framework Agreement that by their sense and
context are intended to survive shall survive termination or expiration of this
Framework Agreement for any reason whatsoever.
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25.17 GOVERNING LAW; VENUE; SERVICE OF PROCESS. Except as otherwise
expressly set forth in a Transaction Agreement, the Agreements are to be
construed according to the laws of the country (and state/province, if
applicable) from which the applicable Agreement issues as shown by the address
of Customer (including any Related Entity), excluding the provisions of the
United Nations Convention on Contracts for the International Sale of Goods and
any conflict of law provisions which would require application of another choice
of law. Any action or proceedings by Customer against Seller may be brought by
Customer in any court(s) having jurisdiction over Supplier or, at Customer's
option, in the court(s) having jurisdiction over Customer's location, in which
event Supplier consents to jurisdiction and service of process in accordance
with applicable procedures. Any actions or proceedings by Supplier against
Customer may be brought by Supplier only in the court(s) having jurisdiction
over Customer's location.
25.18 THIRD PARTY BENEFICIARIES. Except as set forth otherwise in
Section 1.2, the Parties intend that the Agreements, including any amendments or
modifications hereto, shall not benefit any person or entity other than Customer
or Supplier, or create any right or cause of action in or on behalf of, any
person or entity other than Customer or Supplier.
25.19 COVENANT OF FURTHER ASSURANCES. The Parties covenant and agree
that, during the Term and thereafter and without any additional consideration,
each of Customer and Supplier shall execute and deliver any further legal
instruments and perform any acts which are or may become necessary to effectuate
the purposes of the Agreements and any amendment or modification hereto.
* * *
IN WITNESS WHEREOF, each of the Parties, by its duly
authorized representative, has executed this Framework Agreement as of the
Effective Date.
SUPPLIER CUSTOMER
By: /s/ Glen T. Meakem By: /s/ James Scotti
--------------------------------- ------------------------------
(Print) Glen T. Meakem (Print) James Scotti
----------------------------- ---------------------------
Title: Chief Executive Officer Title: Commodity Manager
------------------------------ ----------------------------
Date: Date:
------------------------------- -----------------------------
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APPENDIX A
GENERAL MOTORS CORPORATION
GLOSSARY
FOR
INFORMATION TECHNOLOGY AGREEMENTS
DEFINITIONS
The following terms when used with initial capital letters (in both singular and
plural forms) in any of the Agreements shall have the respective meanings set
forth in this Appendix.
ACCEPTANCE CRITERIA shall mean the criteria set forth in the applicable
Transaction Agreement regarding Customer's acceptance of the applicable Products
or Services including but not limited to, Year 2000 Compliance and EMU
Compliance as set forth in Section 10.10 and 10.11, respectively, of the
Framework Agreement.
ACCEPTANCE DATE shall mean the date on which Customer notifies Supplier in
writing that Acceptance Testing has been successfully completed based on
satisfactory performance of the Acceptance Criteria.
ACCEPTANCE TEST shall mean one or more procedures, as specified in Category
Agreement or Transaction Agreement for verifying that the Acceptance Criteria
for the applicable Product or System have been satisfied.
ACCEPTANCE TESTING shall mean the process, as specified in a Category Agreement
or Transaction Agreement, through which a Product or System is subjected to the
applicable Acceptance Test.
ADDITIONAL SERVICES shall mean services from Supplier that are within the scope
of Supplier's obligations under existing Category Agreements and Transaction
Agreements.
AGREEMENTS shall mean the Framework Agreement and all Category Agreements and
Transaction Agreements currently in effect.
AUTHORIZED USER shall mean Customer, its Related entities, and Outsourcing
Companies, and its and their employees, agents, consultants or contractors who
need to use a Product or System in the performance of their duties on behalf of
Customer and who are authorized and enabled by Customer to access and utilize
the Product or System.
CATEGORY AGREEMENT shall mean an agreement governing a specific type or category
of transaction (e.g., outsourcing, consulting services, equipment purchase,
software development and software license).
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CHANGE shall mean an addition, deletion or modification to any term, obligation
or other aspect of an Agreement.
CHANGE ORDER shall mean a Change Order Response that has been proposed by
Supplier and accepted by Customer pursuant to the Change Order Procedures.
CHANGE ORDER PROCEDURES shall mean those procedures set forth in Article 2 of
the Framework Agreement as the same may be modified in an Agreement.
CHANGE ORDER REQUEST shall mean a written document prepared by Customer
describing a proposed Change and establishing a reasonably prompt period for
Supplier to respond with a Change Order Response.
CHANGE ORDER RESPONSE shall mean a written document prepared by Supplier that
either: (i) describes a Change desired by Supplier and includes the information
set forth in the Change Order Procedures; or (ii) responds to a Change Order
Request and includes the information set forth in the Change Order Procedures.
COMPENSATION PACKAGE shall mean that compensation package offered to Transferred
Employees, the net effect of which shall be to provide overall compensation that
is no less favorable to such Transferred Employees taken as a whole to that
received by them from Customer or from Customer's existing Outsourcing Company,
as applicable, but that is, to the extent possible in light of the foregoing,
consistent with Supplier's standard policies in existence at that time.
COMPONENT shall mean any constituent part of a Product, whether provided by
Supplier or any other source.
CONFIDENTIAL INFORMATION shall mean Customer Confidential Information or
Supplier Confidential Information, as applicable.
CONSULTING SERVICES shall mean Services generally described as consulting to be
provided by Supplier to Customer that are related to Customer's information
technology environment, as such Consulting Services are further defined in the
applicable Transaction Agreements.
CONVERSION PERIOD shall mean a reasonable period of time, not to exceed six
(6)months, during which Customer converts to a new Operating System Software.
CORPORATE CONTRACT MANAGER shall mean the individual designated by Customer and
Supplier, respectively, pursuant to Section 3.1 of the Framework Agreement.
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CORPORATE SOFTWARE LICENSE shall mean the Software license as defined in Section
4.1 of the Software Licensing Agreement.
CPU shall mean any computer or computer system that is used in the Customer's
business to store, process, or retrieve data or perform other functions using
Operating Systems and application program Software.
CPU SOFTWARE LICENSE shall mean the Software license as defined in Section 4.1
of the Software Licensing Agreement.
CRITICAL PROGRAM ERROR shall me an any Program Error, whether or not known to
Customer, that prohibits or significantly impairs use of a Product as
contemplated in the Documentation, Specifications or any of the applicable
Agreements.
CRITICAL SYSTEMS shall mean the systems identified as critical in the applicable
Transaction Agreement.
CUSTOMER shall mean General Motors Corporation with respect to this Framework
Agreement and the Category Agreements and, as applicable with respect to
Transaction Agreements, those Related Entities of General Motors Corporation as
specified in the applicable Transaction Agreement.
CUSTOMER ASSETS shall mean those assets owned, leased or otherwise held by
Customer and to be used by Supplier in connection with the performance of
Supplier's obligations under the Agreements.
CUSTOMER CONFIDENTIAL INFORMATION shall mean any confidential information
received by Supplier directly or indirectly from Customer or its Related
Entities, or acquired or developed in the course of performance of the
Agreements, including, by way of example only, business affairs, data, designs,
discounts, manuals, training materials and documentation, formulas, ideas,
inventions, know-how, manufacturing processes, mask works, methods (including
but not limited to, PICOS), prices, processes, financial and accounting data,
products and product specifications, systems and technical information and the
terms of the Agreements.
CUSTOMER CORPORATE CONTRACT MANAGER shall mean the individual designated by
Customer from time to time, pursuant to Section 3.1(A) of the Framework
Agreement, that will act as the primary point of contact with respect to
communications to, and from, Supplier regarding the overall relationship of the
Parties. The Customer Corporate Contract Manager will have overall authority to
issue, execute, grand and provide on behalf of Customer any approvals, requests,
notices and other communications required by and Agreement.
CUSTOMER CORPORATE INFORMATION SECURITY PRACTICES AND PROCEDURES OR ISP&P shall
mean Customer's Corporate policy and practices related to information security
prepared by Customer's
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Corporate Chief Technology Officer as the same may be revised from time to time
by Customer's Corporate Chief Technology Officer and will be attached to the
Framework Agreement as Exhibit __.
CUSTOMER CORPORATE INFORMATION TECHNOLOGY ARCHITECTURE AND TECHNICAL STANDARDS
shall mean the document published by Customer's Corporate Chief Technology
Officer containing Customer's information technology strategy, architecture and
standards as the same may be amended from time to time by the Corporate Chief
Technology Officer. When published, such document will be attached to the
Framework Agreement as Exhibit 5.4(D) thereto.
CUSTOMER DELEGATION OF AUTHORITY shall mean the authority delegated by (i) the
Customer Corporate Contract Manager, to Customer Project Managers, or other
Customer personnel, and (ii) the Customer Project Managers to other Customer
personnel, thereby permitting the designee to undertake and obligation on behalf
of Customer or any of its Related Entities. When completed, the Customer
Delegation of Authority will be attached as Exhibit 3.2(A) to the Framework
Agreement and may be modified by Customer at any time, and from time to time, as
set forth on said Exhibit 3.2(A).
CUSTOMER DERIVATIVE WORKS shall have the meaning as set forth in Section 13.4(A)
of the Framework Agreement.
CUSTOMER EQUIPMENT shall mean the computers, hardware and related equipment used
by Customer for its information technology requirements an owned by, or leased
or otherwise provided to, Customer by a third party.
CUSTOMER INFORMATION SYSTEMS AND SERVICES ORGANIZATION OR IS&S shall mean the
organization responsible for the acquisition, implementation and deployment of
Customer's information technology.
CUSTOMER INTELLECTUAL PROPERTY shall mean all Intellectual Property and Customer
Confidential Information (as those terms are understood under United States
law), including any Derivative Works thereof, created, developed or prepared by
or on behalf of Customer or one of its Related Entities, or that are proprietary
to, or otherwise owned by, Customer, one of its Related Entities or one of its
or their third party licensors.
CUSTOMER MODIFICATIONS shall have the meaning set forth in Section 12.2 of the
Software Licensing Category Agreement.
CUSTOMER PROJECT MANAGER shall mean the individual designated by Customer,
pursuant to Section 3.1(B) of the Framework Agreement, and set forth in a
Transaction Agreement that will act as the primary point of contact with respect
to communications to and from Supplier regarding the project contemplated by the
Transaction Agreement. Customer Project Manager will have the authority to
issue, execute, grant and provide on behalf of Customer any approvals,
4
<PAGE> 65
requests, notices and other communications required by the project contemplated
by the Transaction Agreement, except as such authority is otherwise reserved to
Customer Corporate Contract Manager.
CUSTOMER SOFTWARE shall mean Software used, owned by or licensed to Customer,
including Customer Third-Party Software.
CUSTOMER THIRD-PARTY SOFTWARE shall mean Software that is used or owned by a
party other than Customer or Supplier and that is licensed to Customer.
CUSTOMER TRAVEL GUIDELINES shall mean the Customer's guidelines for business
travel by its employees, attached as Exhibit 8.5 to the Framework Agreement, as
the same may be modified by Customer from time to time.
CUSTOMER YEAR 2000 COMPLIANCE TEST PROCEDURE shall mean such document containing
Customer's test procedure to test Year 2000 Compliance of any Equipment or
Software, as such may be amended from time to time by the Customer's Corporate
Chief Technology Officer, and which shall be attached to the Framework Agreement
as Exhibit 10.10.
DELIVERABLES shall mean those items to be delivered by Supplier to Customer for
Customer's approval in accordance with the terms set forth in the applicable
Category Agreement or Transaction Agreement.
DELIVERY DATE shall mean that date as defined in Section 5.1 of the Equipment
Agreement.
DERIVATIVE WORKS shall mean a work based on one or more preexisting works,
including, without limitation, a condensation, transformation, expansion or
adaption, that if prepared without authorization of the owner of the copyright
of the preexisting work, would constitute copyright infringement.
DESIGNATED CPU shall mean any CPU or multiple CPU complex forming a part of the
Equipment, including is associated peripheral units, as set forth in the
applicable Transaction Agreement, or the CPU or multiple CPU complex on which
the Licensed Software was first used. The Transaction Agreement may designate
more than one CPU.
DEVELOPED SOFTWARE shall mean Software developed by Supplier by original
authorship or through contracts with third parties as part of or in order to
perform Services.
DIAGNOSTIC TESTING shall mean one of the Acceptance Tests, as specified in a
Category Agreement or Transaction Agreement.
DIRECT DAMAGES CAP shall mean the amount of direct damages equal to the total
amount paid or payable to Supplier under the applicable Transaction Agreement.
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DIVESTED ENTITY shall mean an entity or unit of Customer that is sold or
otherwise divested.
DIVESTED RELATED ENTITY shall mean such Related Entity as defined in Article 8
of the Software Licensing Agreement.
DOCUMENTATION shall mean the user manuals and any other materials in any form or
medium customarily provided by Supplier to the Customer of the related Product
or Service.
EFFECTIVE DATE shall mean, with respect to an Agreement, the date set forth in
the applicable Agreement, or, if no such date is identified, the later date upon
which such Agreement is executed by both Supplier and Customer.
EFFECTIVENESS LEVEL shall mean the result of dividing the Operational Use Time
of the System or Module by the sum of that time plus System or Module Failure
Downtime for the System or Component.
EMPLOYEE TRANSITION DATE shall mean the date identified as the Employee
Transition Date in the applicable Transaction Agreement.
EQUIPMENT shall mean, without limitation, the computers, hardware and related
equipment used in connection with the delivery or receipt of Services, including
central processing units and other processors, controllers, modems,
communications and telecommunications equipment (voice, data and video), cables,
storage devices, printers, terminals, other peripherals and input and output
devices, and other tangible mechanical and electronic equipment intended for the
processing, input, output, storage, manipulation, communication, transmission
and retrieval of information and data.
EMU COMPLIANCE shall have the meaning as set forth in Section 10.11 of the
Framework Agreement.
EQUIPMENT MAINTENANCE shall mean both Preventive and Remedial Maintenance such
that any Custom Equipment in the custody of Supplier will be maintained in a
manner to ensure its continued usability and value, including cosmetic
condition.
EQUIPMENT TESTING shall mean one of the Acceptance Tests as specified in Section
7.5(B) of the Equipment Agreement, or in any Category Agreement or Transaction
Agreement.
ESCROW AGREEMENT shall mean a source code escrow agreement among Customer,
Supplier and an escrow company selected by Customer, a copy of which shall be
attached to the applicable Transaction Agreement and which shall be approved as
part of the Parties' agreement to execute such Transaction Agreement.
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FRAMEWORK AGREEMENT shall mean the Framework Agreement for Information
Technology executed by the Parties as of the Effective Date.
ILLICIT CODE shall mean any (i) illicit code, (ii) hidden files, (iii)
automatically replicating, transmitting or activating code, (iv) virus about
which Supplier knows or should have known, or (v) key, node lock, time-out or
other Product-limiting or Service-limiting function, whether implemented by
electronic or other means.
INSTALLATION DATE shall mean the date, as specified in a Category Agreement or
Transaction Agreement, by which all Components of the applicable Product shall
be installed at the applicable designated Site.
INTELLECTUAL PROPERTY shall mean: all patents and patent applications;
copyrights and copyrightable works; trade secrets, confidential information and
know-how (including but not limited to ideas, formulae, compositions,
manufacturing and production processes and techniques, research and development
information, drawings, specifications, designs, plans, proposals, technical
data, business and marketing plans, customer lists, dealer lists, supplier lists
and related information); and computer software (including but not limited to
data, data bases and documentation), but not including any trademarks, service
marks or trade names.
KEY SUPPLIER PERSONNEL shall mean those employees or contractors of Supplier who
have been or will be assigned substantially full-time to Customer to be
designated Key Supplier Personnel as agreed to by the Parties in a Transaction
Agreement.
LICENSED SITE shall mean, from along all of Customer's Sites, a collection of
geographically contiguous (i.e., adjacent tracts or parcels of real property
separated, if at all, only by publicly dedicated rights of way or private
easements) buildings, each of which, in whole or in part, is occupied or
accessed by Customer and each of which is a permitted locale where the
applicable Licensed Software may be used in accordance with the applicable Site
Software License.
LICENSED SOFTWARE shall mean Software provided or to be provided by Supplier to
Customer under the Software Licensing Agreement and any applicable Transaction
Agreement.
MALFUNCTION INCIDENT REPORT shall mean a report, as specified in a Category
Agreement or Transaction Agreement, by which information about the failure of
the applicable Product or System to meet the performance warranties set forth in
the Agreements is memorialized.
MAINTENANCE SERVICES shall mean Preventive Maintenance and Remedial Maintenance
Services.
MANAGERS shall mean the Corporate Contract Managers and Project Managers.
MINIMUM ACCEPTABLE LEVEL OF PERFORMANCE shall mean the threshold performance
standard, as specified in a Category Agreement or Transaction Agreement, below
which the applicable Product or System is not performing satisfactorily.
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MODULE shall mean a collection of routines and data structures that perform a
specific function within Software.
MSA shall mean that Master Service Agreement between Customer and Electronic
Data Systems Corporation dated June 7, 1996.
NEW TECHNOLOGY shall mean new products, processes, methods or other means
designed to enhance or replace the Products or Services provided pursuant to the
Agreements.
OPERATING SYSTEM SOFTWARE shall mean the Software control program in a CPU that
provides the interface to the CPU and its associated Equipment, and the usage
and allocation of memory resources, processor resources, input/output resources,
and security resources.
OPERATIONAL USE TIME shall mean the accumulated time during which the applicable
Product or System is in actual operation.
OUTSOURCING shall mean obtaining computing or related services from a source
outside of Customer or Customer's Related Entities, possibly as Outsourcing
Services. Such computing or related services may include programming or
executing the Customer's Licensed Software on Customer's CPUs, programming
executing Customer's programs and Licensed Software on Outsourcing Company's
CPUs, or any combination thereof.
OUTSOURCING COMPANY shall mean an entity that provides Outsourcing services or
similar services in the nature of Outsourcing under contract to Customer.
OUTSTANDING SERVICES shall mean Services that are related to Customer's
information technology that have been provided by Customer, Supplier or a third
party outsourcing service provider, to be further defined in the applicable
Transaction Agreements.
PARTY(IES) shall mean the party or parties executing the applicable Agreement.
PERFORMANCE PERIOD shall mean the period of time during which System Acceptance
Testing is measured, as specified in a Category Agreement or Transaction
Agreement.
PICOS shall mean Customer's Purchasing Input Cost Optimization of Suppliers
methodology, as set forth in the booklet entitled "Selling to General Motors",
as modified by Customer from time to time.
PLATFORM shall mean a specific Equipment and Operating System Software
combination that is different from other Equipment and Operating System Software
combinations to the extent that a different version of the Licensed Software is
required to execute properly in the environment established by such Equipment
and Operating System combination.
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PREVENTIVE MAINTENANCE shall mean maintenance performed, or required to be
performed, by Supplier on a scheduled basis to keep a Product or System in good
operating condition in accordance with Supplier's published specifications
therefor and in accordance with any additional specifications contained or
referenced in this Equipment Agreement or any applicable maintenance agreement.
Preventive Maintenance shall include: (i) calibration, testing and any necessary
adjustments, cleaning, lubrication, replacement of worn, defective, or
questionable parts, and minor circuit updating and modifications; (ii)
maintenance and engineering services necessary to retrofit or otherwise install
engineering changes, modifications, and improvements (including the latest
Supplier engineering revision and any and all reliability improvements) made to
any Product or Supplier at any time during the maintenance term for the Product;
and (iii) automatic update services for any and all manuals and documentation
furnished with any Product that is subject to maintenance under this Equipment
Agreement.
PRICING AND PAYMENT EXHIBIT shall mean the exhibit setting forth the pricing
that applies in connection with the applicable Transaction Agreement.
PRIVILEGED WORK PRODUCT shall mean documents, data and databases and all
associated communications that may be subject to the attorney-client privilege.
PRODUCT shall mean any Supplier Equipment, Supplier Software or Supply Item
provided by Supplier pursuant to an Agreement.
PROGRAM ERROR shall mean code in the Licensed Software that produces unintended
results or actions, or that produces results or actions other than those
described in the applicable Specifications. A Program Error includes, without
limitations, any "Critical Program Error."
PROGRAM SET shall mean the group of Products including the Licensed Software
specified in the applicable Transaction Agreement plus any additional Products
licensed by Customer under the Software Licensing Agreement and any applicable
Transaction Agreement.
PROJECT shall mean the total of all Software and related Documentation,
Equipment and Services to be provided by Supplier under a Category Agreement or
any applicable Transaction Agreement.
PROJECT MANAGER shall mean the individuals designated by Customer and Supplier,
respectively, pursuant to Section 3.1(B) of the Framework Agreement.
PROPOSAL shall mean the Supplier's written proposal submitted in response to
Customer's solicitation of [ ] in whatever from such request is made (including
and RFP), and on which Customer's decision to applicable Products or Services
from Supplier through one or more specific transactions as set forth in the
applicable Category Agreements and Transaction Agreements will be based.
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RECOMMENDED EQUIPMENT CONFIGURATION shall mean the Equipment to the extent
utilized by Customer recommended by the Supplier in Supplier's Proposal relating
to a specific proposed transaction that [ ] in the execution of a Transaction
Agreement.
RELATED ENTITIES shall mean any functional entity, division, department, group
affiliates, subsidiaries parents of a Party. For purposes of this definition,
"affiliate" shall mean any company, partnership or joint venture more than ten
percent (10%) of the interest in which is owned by or under the control of a
Party, parent or subsidiary, at any tier, and any customer, dealer, distributor,
supplier or agent to which Customer wishes to extend Products and Services;
"subsidiary" shall mean any company, partnership or joint venture more than ten
percent (10%) of the voting shares of which, or interest in which, are owned or
controlled by a Party or any parent, other subsidiary or affiliate at any tier;
and "parent' shall mean any company partnership, or joint venture that owns or
controls more than fifty percent (50%) interest of a Party.
REMEDIAL MAINTENANCE shall mean maintenance performed, or required to be
performed, by Supplier upon the written or oral request of Customer to place the
applicable Product or System back into good operating condition, in accordance
with the standards specified in the definition of "Preventive Maintenance"
hereafter it has become inoperative or subject to malfunction.
REQUEST FOR PROPOSAL OR RFP shall mean formal requests by Customer to Supplier
that solicit a Proposal by Supplier to provide certain Products and Services to
Customer.
SERVICES shall mean any Outsourcing Services, programming service, Preventive
Maintenance service, Remedial Maintenance service, Software maintenance service,
conversion service, consulting service, support service or other service
provided by Supplier to Customer as further in the applicable Agreements.
SERVICE LEVELS shall mean the required availability, response times or other
performance standards [ ] Customer's information technology business operations,
including but not limited to such performance standards relating to Critical
Systems, Products and Services, as such performance standards are set forth in
the applicable Transaction Agreement.
SHARED ENVIRONMENT shall mean a site or facility from which Supplier provides
Products or Services to more than one customer.
SITE shall mean all Customer designated locations worldwide, including all
present and future Customer-controlled locations, Customer's customers,
suppliers, dealers and other third parties. Supplier Corporate Contract Manager
will have the authority to issue, execute, grant and provide on behalf of
Supplier any approvals, requests, notices and other communications required by
an Agreement.
SUPPLIER DERIVATIVE WORKS shall have the meaning as set forth in Section 13.4(C)
of the Framework Agreement.
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SUPPLIER EQUIPMENT shall mean Equipment owned by, leased by, or otherwise under
the control of, Supplier.
SUPPLIER INTELLECTUAL PROPERTY shall mean all Intellectual Property including
without limitation, Supplier Confidential Information and any improvements or
modifications thereto and Derivative Works thereof, created, developed or
prepared by or on behalf of Supplier or that are proprietary to, or otherwise
owned by, Supplier or its third party licensors, but not including anything
developed under or in support of the performance of Supplier's obligations under
the Agreements or in accordance with the terms of Section 13.4(B) of the
Framework Agreement.
SUPPLIER MODIFICATIONS shall have the meaning set forth in Section 13.1 of the
Software Licensing Category Agreement.
SUPPLIER PROJECT MANAGER shall mean the individual designated by Supplier,
pursuant to Section 3.1(B) of the Framework Agreement, and set forth in a
Transaction Agreement that will act as the primary point of contact with respect
to communications to and from Customer regarding the project contemplated by the
Transaction Agreement. Supplier Project Manager will have the authority to
issue, execute, grant and provide on behalf of Supplier any approvals, requests,
notices and other communications required by the project contemplated by the
Transaction Agreement, except as such authority is otherwise reserved by
Supplier Corporate Contract Manager.
SUPPLIER SOFTWARE shall mean Software owned by, or licensed to, or otherwise
under the control of, Supplier, including Supplier Third-Party Software.
SUPPLIER THIRD-PARTY SOFTWARE shall mean Software owned by a party other than
Customer or Supplier and which is licensed to Supplier.
SUPPLY ITEM shall mean any cards, paper, ribbons, magnetic tape, other magnetic
storage media and similar items used in connection with the Products and
Services.
SYSTEM shall mean any collection or aggregation of two (2) or more Products that
are designed to perform, or are represented by Supplier as performing or being
capable of performing, as a functional entity. A System may be provided to
Customer by Supplier or by any other supplier and may include Component s or
Products offered by Supplier and those offered by one (1) or more other
suppliers. The Products comprising each System, along with designations of
whether the Supplier is responsible for providing them, are to be specified in
the applicable Transaction Agreement.
SYSTEM ACCEPTANCE TESTING shall mean one of the Acceptance Tests, as specified
in a Category Agreement or Transaction Agreement.
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SYSTEM OR MODULE FAILURE DOWNTIME shall have the meaning as set forth in Section
9.3(C) of the Software Licensing Agreement.
T&M CHARGES shall mean time and material charges.
TAXES shall mean any value-added, country or local sales, use or similar taxes
imposed by and collected on behalf of any taxing authority and any
telecommunications excise taxes, except taxes on the net income [ ] a Party.
TERM shall mean, collectively, the initial term and renewal term, if applicable.
TERMINATION ASSISTANCE PERIOD shall mean a period of up to three (3) years as
may be reasonably required by Customer for the orderly transition of the
affected Services.
TERMINATION ASSISTANCE SERVICES shall mean any services requested by Customer
that may be required during the Termination Assistance Period to facilitate the
transfer of the affected Services to Customer or to a third-party service
provider, as applicable, including providing to Customer or third-party
personnel training in the performance of the affected services.
THIRD-PARTY AGREEMENTS shall mean those third-party agreement identified in the
applicable Transaction Agreement to which Customer is a party and which will
affect, or be affected by, the provision of the Outsourcing Services by
Supplier.
THIRD-PARTY INVOICES shall mean invoices received in connection with the
Supplier-Administered Agreements.
TIME OF RECEIPT shall mean the time of disclosure of the applicable information
to the receiving Party.
TOTAL PURCHASE PRICE shall mean the total amount payable by Customer as set
forth nit eh applicable Transaction Agreement.
TRANSACTION AGREEMENT shall mean an agreement invoking and supplementing this
Framework Agreement and one or more Category Agreements that sets forth terms
specific to that category or categories (e.g., Service Levels).
TRANSFERRED EMPLOYEE shall mean those employees and individual independent
subcontractor personnel of Customer or of its existing outsourcing service
provider previously agreed upon between the Parties and identified in the
applicable Transaction Agreement that will be offered employment or
subcontractor contracts, as applicable, by Supplier.
TRANSITION PERIOD shall mean the period from the Effective Date of the
applicable Transaction Agreement until the Acceptance Date.
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UPGRADE shall mean the exchange, modification or conversion of a Product for or
into a Product that has greater or improved capability, performance or
specifications.
WARRANTY PERIOD shall mean the period of time set forth in a Category Agreement
or Transaction Agreement during which Supplier, at its expense, has specific
responsibilities with respect to Products set forth in a Category Agreement or a
Transaction Agreement.
WORK PRODUCT shall mean all Intellectual Property and Deliverables including any
improvements or modifications thereto, created, developed or prepared by
Supplier or a third party under or in support of the performance of its
obligations under the Agreements, or in accordance with the terms of Section
13.4(B) of the Framework Agreement, but shall not include Supplier Derivative
Works.
YEAR 200 COMPLIANT shall have the meaning as set forth in Section 10.10(B) of
the Framework Agreement.
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<PAGE> 1
Exhibit 10.1(d)
GENERAL MOTORS CORPORATION
GM Logo
SOFTWARE LICENSING
CATEGORY AGREEMENT
<PAGE> 2
GENERAL MOTORS CORPORATION
SOFTWARE LICENSING
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
BACKGROUND ..................................................... -1-
THE AGREEMENT .................................................. -1-
1 SCOPE OF SERVICES .......................................... -1-
1.1 Existing Agreements ............................... -1-
1.2 Software Available from Supplier .................. -1-
2. TERM ....................................................... -1-
2.1 Initial Term ...................................... -1-
2.2 Renewal ........................................... -1-
3. PAYMENT .................................................... -2-
3.1 Payment Terms ..................................... -2-
3.2 Invoices .......................................... -2-
3.3 License Fee ....................................... -2-
3.4 Maintenance Invoices .............................. -2-
3.5 Trade-In Credit ................................... -2-
3.6 Conversion ........................................ -3-
4. LICENSE .................................................... -3-
4.1 Grant of License .................................. -3-
4.2 License Fee ....................................... -4-
4.3 Source Code ....................................... -4-
4.4 Restriction on Use ................................ -4-
5. AUTHORIZED USERS ........................................... -4-
5.1 Authorized Users .................................. -4-
5.2 Number of Users ................................... -4-
6. PLATFORM SPECIFICATIONS .................................... -4-
6.1 Program Sets ...................................... -4-
6.2 Multiple Platforms ................................ -5-
7. DELIVERY AND INSTALLATION .................................. -5-
7.1 Delivery and Risk of Loss ......................... -5-
7.2 Shipments ......................................... -5-
7.3 Installation by Supplier .......................... -5-
7.4 Installation by Customer .......................... -6-
</TABLE>
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<PAGE> 3
GENERAL MOTORS CORPORATION
SOFTWARE LICENSING
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
8. DIVESTITURE OF A RELATED ENTITY ............................ -6-
8.1 ................................................... -6-
8.2 ................................................... -6-
9. ACCEPTANCE TESTING ......................................... -7-
9.1 Live Environment Testing .......................... -7-
9.2 Correction of Specification Non-Conformities ...... -7-
9.3 Acceptance Testing ................................ -7-
9.4 Maintenance During Acceptance Testing ............. -9-
9.5 Failure to Successfully Complete Acceptance Testing -9-
9.6 Use Shall Not Constitute Acceptance .............. -10-
10 DOCUMENTATION AND TRAINING .................................. -10-
10.1 Documentation ..................................... -10-
10.2 User Group, Bulletin Boards and Internet Sites .... -11-
10.3 Training .......................................... -11-
11 MAINTENANCE SERVICES ........................................ -11-
11.1 Availability of Maintenance ....................... -11-
11.2 Maintenance Services .............................. -12-
11.3 Response Times .................................... -12-
11.4 Service Tracking and Reporting .................... -13-
11.5 Maintenance Fee (Customer Error) .................. -13-
11.6 Maintenance Fees/Cap .............................. -13-
11.7 Revision Levels ................................... -14-
11.8 Inoperability ..................................... -14-
11.9 Reinstatement ..................................... -14-
12 SUPPLIER'S WARRANTIES ....................................... -15-
12.1 Title ............................................. -15-
12.2 Platform .......................................... -15-
12.3 Environmental Specifications ...................... -15-
12.4 Completeness and Requisite Rights ................. -15-
12.5 Media Defects ..................................... -15-
12.6 Function and Features ............................. -16-
12.7 Performance ....................................... -16-
12.8 Compatibility ..................................... -16-
12.9 Ninety-Day Warranty ............................... -16-
12.10 Conformance to Specifications ..................... -16-
12.11 Equipment Configuration ........................... -17-
12.12 Pass-Through of Warranties ........................ -17-
12.13 Free and Clear Title .............................. -17-
12.14 Future Support .................................... -17-
12.15 Defect-Free ....................................... -17-
12.16 Illicit Code ...................................... -17-
13 MODIFICATIONS AND PROPRIETARY RIGHTS ........................ -18-
13.1 Supplier Modifications ............................ -18-
13.2 Customer Modifications ............................ -18-
14 ASSIGNMENT AND TRANSFER ..................................... -19-
14.1 Assignment ........................................ -19-
14.2 Transfer of Software .............................. -19-
14.3 Transfer of Maintenance ........................... -19-
Exhibit 1.1 .................................................... -22-
</TABLE>
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<PAGE> 4
GENERAL MOTORS CORPORATION
SOFTWARE LICENSING
CATEGORY AGREEMENT
THIS SOFTWARE LICENSING CATEGORY AGREEMENT (Software Licensing
Agreement) is made to be effective as of the 8th day of June, 1998 (Effective
Date) by and between General Motors Corporation, with offices at 100 Renaissance
Center, Detroit, Michigan, and FreeMarkets OnLine, Inc., Supplier with offices
at 130 Seventh Street, Century Building, Suite 500, Pittsburgh, PA 15222.
Terms used with initial capital letters in this Software
Licensing Agreement are defined in Appendix A or herein or in the other
Agreements.
BACKGROUND
The Parties have entered into the Framework Agreement
governing their overall relationship regarding the provision to Customer and its
Related Entities by Supplier of Products and Services. The Parties intend that
upon full execution of this Software Licensing Agreement, the terms hereof shall
be incorporated into and made a part of the Framework Agreement. The terms of
this Software Licensing Agreement are intended to supplement the Framework
Agreement by further defining the Parties' rights and obligations with respect
to the licensing by Supplier of Software to Customer. The Parties further intend
to enter into specific Transaction Agreements further defining their agreement
with respect to the licensing of such Software.
THE AGREEMENT
1. SCOPE OF SERVICE
1.1 EXISTING AGREEMENTS. If Software is currently being provided by
Supplier, the agreement(s) pursuant to which Supplier has licensed such Software
to Customer shall remain in effect, except for those agreement(s) set forth in
Exhibit 1.1
1.2 SOFTWARE AVAILABLE FROM SUPPLIER. Upon request by Customer, through
an RFP or otherwise, Supplier may submit to Customer one or more Proposals to
furnish Products in a manner that meets Customer's objectives as stated in its
RFP and during the Term, Supplier will furnish Products to Customer pursuant to
this Equipment Agreement.
2. TERM
2.1 INITIAL TERM. The initial term of this Software Licensing Agreement
is three (3) years from the Effective Date.
2.2 RENEWAL. This Software Licensing Agreement may be renewed as set
forth in Section 18.2 (B) of the Framework Agreement.
<PAGE> 5
3. PAYMENT
3.1 PAYMENT TERMS. The payment terms will be as set forth in Section
9.5 of the Framework Agreement.
3.2 INVOICES. Supplier shall prepare the invoices as set forth in
Section 9.1 of the Framework Agreement.
3.3 LICENSE FEE.
(A) In consideration of the license granted to Customer under
this Software Licensing Agreement upon the execution of an appropriate
Transaction Agreement and in consideration of the Services to be performed by
Supplier hereunder, and except as otherwise expressly set forth in the
applicable Transaction Agreement, Customer shall pay Supplier for each purchase
made under this Software Licensing Agreement amounts determined as follows,
which amounts shall be paid in accordance with the terms of this Software
Licensing Agreement:
<TABLE>
<CAPTION>
Payment Event Percentage of Total License Fee Payable
------------- ---------------------------------------
<S> <C>
Delivery 25.0
Installation 25.0
Preliminary Testing 25.0
Acceptance Date 25.0
</TABLE>
(B) The license fee for each Product is calculated by
multiplying the number of Product(s) licenses purchased by the purchase price
for each Product as set forth in the applicable Transaction Agreement. The total
license fee for each purchase is calculated by adding the individual Product
license fees.
3.4 MAINTENANCE INVOICES. Invoices for maintenance will be delivered to
Customer by Supplier no later than sixty (60) days prior to the expiration of
the Warranty Period and each subsequent maintenance period that is offered on an
annual basis pursuant to Article 11 of this Software Licensing Agreement.
Failure to deliver said invoice at least sixty (60) days prior to the expiration
date will have the effect of extending the current warranty or maintenance
period to sixty (60) days after receipt of Supplier's invoice by Customer and
all notification periods for renewal of maintenance will be extended for thirty
(30) days after receipt of Supplier's invoice.
3.5 TRADE-IN CREDIT. Except as otherwise expressly set forth in the
applicable Transaction Agreement, at any time during the three (3) year period
commencing with the Acceptance Date, Customer may elect to return the Licensed
Software and any Equipment or other Products to Supplier for a credit that may
be applied against future acquisitions of Software or other Products or Services
from Supplier. This credit will be calculated by reducing the original license
fee by one-thirty-sixth (1/36) for each month or partial month elapsing between
the Acceptance Date and Customer's return of the Licensed Software to Supplier.
3.6 CONVERSION. For the purpose of changing the Licensed Software from
one (1) Operating System environment to a different Operating System
environment, Supplier will extend the rights of the applicable license to the
new Operating System environment, on a month-by-month
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<PAGE> 6
basis, during the Conversion Period by having Customer pay a per-month fee not
to exceed two percent (2%) of the per-annum (or equivalent) license fee for the
new Licensed Software. After the Conversion Period, Customer may use the
Licensed Software on the new Operating System without further charge, except as
otherwise expressly set forth in the applicable Transaction Agreement.
4. LICENSE
4.1 GRANT OF LICENSE. Except as otherwise expressly set forth in the
applicable Transaction Agreement, and in addition to the grant set forth in
Section 13.2 (C) of the Framework Agreement, Supplier hereby grants to Customer,
and Customer hereby accepts from Supplier, a worldwide, nonexclusive,
irrevocable, perpetual license to use, copy, execute and display the object code
version of the Licensed Software at one or more specified Licensed Sites (a
"Site Software License"), on a Designated CPU (a "CPU Software License") or for
Customer-wide use ("Corporate Software License") and such other use or license
as agreed to by the Parties in the Transaction Agreement and to the extent that
the license includes Customer access to the Source Code of the Licensed
Software, a license to produce derivative works therefrom, all in accordance
with the terms and conditions of this Software Licensing Agreement and any
applicable Transaction Agreement. The applicable Transaction Agreement shall
designate whether the Licensed Software is to be provided pursuant to a Site
Software License, a CPU Software License, or a Corporate Software License, each
as defined later in this Section 4.1. If the applicable Transaction Agreement
fails to designate the type of software license desired, then such software
license shall be deemed to be a Corporate Software License.
(A) With respect to each Site Software License, the Licensed
Software may be used at the Licensed Sites designated in the applicable
Transaction Agreement and Customer may only copy the Licensed Software as
necessary for use and dissemination at the Licensed Site and for archival,
maintenance or back-up purposes. Notwithstanding the foregoing, the Licensed
Software may be used at other than the designated Licensed Site, if: (i) the
designated Licensed Site cannot be used; (ii) the designated Licensed Site is
replaced or changed by Customer; or (iii) Customer provides Supplier with prior
written notice. If Customer desires to run parallel operations in the process of
transferring operations from one (1) Licensed Site to another Site, Customer may
operate the Licensed Software at two (2) Sites for the period of time reasonably
necessary to complete the transfer. The Customer shall notify the Supplier if
the Licensed Software is being used at a Site other than the designated Licensed
Site.
(B) With respect to each CPU Software License, the Licensed
Software may be used on any Designated CPU, and Customer may only copy the
Licensed Software as necessary for archival, maintenance or back-up purposes. If
Customer desires to run parallel operations in the process of transferring
operations from one (1) Designated CPU to another Designated CPU, Customer may
operate the Licensed Software on two (2) Designated CPU's for the period of time
reasonably necessary to complete the transfer. The Customer shall notify the
Supplier if the Licensed Software is being transferred from one Designated CPU
to another Designated CPU.
(C) With respect to each Corporate Software License, the
Licensed Software may be used at any Site and on any items of Equipment and
Customer may make and use unlimited copies of the Licensed Software.
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4.2 LICENSE FEE. In consideration of the license granted to Customer
hereunder, Customer shall agree to pay to Supplier a license fee as provided in
the applicable Transaction Agreement.
4.3 SOURCE CODE. If access (other than pursuant to the escrow in
Article 14 of the Framework Agreement) to the Source Code of the Licensed
Software is specified in the applicable Transaction Agreement, Customer's rights
to utilize the Licensed Software shall include a worldwide, nonexclusive,
irrevocable, perpetual license to use, copy, display and produce derivative
works of the Source Code of the Licensed Software.
4.4 RESTRICTION ON USE. Customer is authorized to use the Licensed
Software on a Designated CPU, Site or Customer-wide basis as specified in the
applicable Transaction Agreement.
5. AUTHORIZED USERS
5.1 AUTHORIZED USERS. Except as otherwise expressly set forth in an
applicable Transaction Agreement, Customer shall not permit any Licensed
Software to be used by any other person, except for it and its Related Entities'
employees, agents, consultants, Outsourcing Companies or contractors who need to
use the Licensed Software in the performance of their duties on behalf of
Customer and who are authorized and enabled by Customer to access and utilize
the Licensed Software (Authorized User).
5.2 NUMBER OF USERS. Except as otherwise expressly set forth in the
applicable Transaction Agreement, there shall be no limit on the number of units
of Equipment or CPUs, number of users, number of locations, the Platform or size
of CPU on which Customer can operate the Licensed Software. As specified in the
Transaction Agreement and for the charges set forth therein, Customer shall have
the right to receive additional copies of the Licensed Software and
Documentation as required by it for use on additional or alternate units of
Equipment or CPUs.
6. PLATFORM SPECIFICATIONS
6.1 PROGRAM SETS.
(A) Supplier shall deliver to Customer copies of the Licensed
Software and Documentation for each Platform as set forth in the applicable
Transaction Agreement. At the request of Customer, Supplier shall deliver to
Customer copies, as set forth in the applicable Transaction Agreements, of the
Licensed Software in CD-ROM or other media format as set forth in the
Transaction Agreement, from which Customer may make copies for its use
consistent with all limitations of this Software Licensing Agreement and the
applicable Transaction Agreement.
(B) In connection with any Licensed Software provided under
this Software Licensing Agreement, Supplier agrees and acknowledges that, by
executing the Transaction Agreement, it has been advised of Customer's current
Platform.
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6.2 MULTIPLE PLATFORMS. Except as otherwise expressly set forth in the
applicable Transaction Agreement, Customer shall have the right pursuant to
Section 4.1 (A) and (B) of this Software Licensing Agreement, with no additional
fee payable to Supplier, to operate simultaneously for a reasonable temporary
period and to move the Software to other Platforms on which the Licensed
Software may operate. Customer shall notify the Supplier of such parallel
operations and moves to other platforms.
7. DELIVERY AND INSTALLATION
7.1 DELIVERY AND RISK OF LOSS. All deliveries pursuant to this Software
Licensing Agreement shall be F.O.B. destination. Risk of loss of all Licensed
Software and media on which Licensed Software is delivered shall remain at all
times with Supplier until the Acceptance Date.
7.2 SHIPMENTS. Within twenty (20) days following execution of the
applicable Transaction Agreement by Customer, Supplier shall ship the Licensed
Software to the designated place of business set forth therein. Customer, in its
sole discretion, may delay delivery for up to ninety (90) days after execution
of the applicable Transaction Agreement. Shipments shall be prepared and packed
at Supplier's expense and shall be delivered via air or other express
transportation to minimize delay. Customer shall pay all reasonable shipping
charges for shipments requested by Customer.
7.3 INSTALLATION BY SUPPLIER. If the Transaction Agreement specifies
installation by Supplier, then the following terms shall apply.
(A) Within thirty (30) days following execution of the
applicable Transaction Agreement by Customer, Supplier shall install the
Licensed Software on Customer's Platform at the Customer's designated place of
business and make it ready for productive use pursuant to the terms set forth in
Section 7.3(C) hereof. If delivery is delayed pursuant to Section 7.2 of this
Software Licensing Agreement, installation shall occur not less than ten (10)
days after delivery of the Licensed Software to Customer.
(B) Customer, in its sole discretion, may delay installation
for up to ninety (90) days after delivery of the Licensed Software but shall
make reasonable efforts to provide as much notice as possible to Supplier about
such delay.
(C) Supplier shall conduct its standard diagnostic evaluation
at the designated Customer Site to determine that the Licensed Software is
properly installed and fully ready for productive use subject to Acceptance
Testing as provided in Article 9 of this Software Licensing Agreement, and shall
provide Customer with a copy of the results of the diagnostic evaluation
promptly after completion thereof.
(D) The Licensed Software shall be deemed to be installed upon
successful completion of the diagnostic test and Customer's approval of the
results thereof. The installation procedures of this Section 7.3 are in addition
to all Acceptance Tests required by Article 9 of this Software Licensing
Agreement and by any applicable Transaction Agreement.
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7.4 INSTALLATION BY CUSTOMER. If installation is to be performed by
Customer, the Licensed Software shall be deemed to be installed when all
programs, program libraries (supplied as components of the Licensed Software)
and user interfaces are copied to, and initialized on, the appropriate CPU and
demonstrated as executable by having Customer invoke the primary functions of
each major component on the Platform. The installation procedures of this
Section 7.4 are in addition to all Acceptance Tests required by Article 9 of
this Software Licensing Agreement and by any applicable Transaction Agreement.
8. DIVESTITURE OF A RELATED ENTITY
8.1 USE OF LICENSED SOFTWARE BY DIVESTED RELATED ENTITY WITHOUT CHARGE.
In the event Customer reduces its interest in a Related Entity below the level
set forth in the definition thereof, or otherwise loses the ability to control
the day-to-day operations of the Related Entity (Divested Related Entity),
Customer may, upon prompt notice to Supplier, in Customer's sole discretion,
with no additional charge to Customer or Divested Related Entity, allow the
Divested Related Entity to temporarily (up to one hundred eighty (180) days)
continue to use the Licensed Software on Divested Related Entity's Equipment, or
utilize the Licensed Software on Customer's Equipment to provide benefit to the
Divested Related Entity for the purpose of facilitating an orderly transition of
such Divested Related Entity to either become part of another organization or to
achieve an independent status, provided that: (i) such use does not exceed the
use allowed under this Software Licensing Agreement and any applicable
Transaction Agreement for the Related Entity; and (ii) such Related Entity, in
its sole discretion, either executes appropriate Transaction Agreement(s) with
Supplier with terms and conditions similar to those contained in the applicable
extant Transaction Agreement or agrees in writing to be bound by applicable
Transaction Agreement(s) in force at such time.
8.2 USE OF LICENSED SOFTWARE BY DIVESTED RELATED ENTITY WITH CHARGE.
Supplier agrees that the Divested Related Entity may continue to use the
Licensed Software on its own Equipment for up to one (1) year following the
transition period by paying the then-current standard maintenance fee and such
other license fees as otherwise payable by Customer to Supplier for the one (1)
year period. After such period, such Divested Related Entity shall either
acquire its own license on terms substantially similar to the terms of this
Software Licensing Agreement, or discontinue use of the Licensed Software.
9. ACCEPTANCE TESTING
9.1 LIVE ENVIRONMENT TESTING. As soon as practicable after
installation, Customer may, in its sole discretion, begin utilizing the Licensed
Software in a live environment on the Platform. Upon completion of Phase Three
below, the Licensed Software shall be deemed finally accepted (Acceptance Date).
Nothing contained in this Section 9.1 or any other provision of this Software
Licensing Agreement shall be deemed to prevent Customer from using any portion
of the Licensed Software in a live environment for productive processing prior
to the Acceptance Date of the Licensed Software and any such use shall not
alter, amend or modify any of Supplier's obligations pursuant to this Software
Licensing Agreement.
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9.2 CORRECTION OF SPECIFICATION NON-CONFORMITIES. Any Specification
Non-Conformities revealed during any phase of the Acceptance Testing, as set
forth below (or in connection with any preliminary productive use of the
Licensed Software by Customer) shall be promptly corrected by Supplier (and
appropriate documentation for such correction produced and delivered to Customer
within thirty (30) days of such correction).
9.3 ACCEPTANCE TESTING. Except as otherwise expressly set forth in the
Transaction Agreement, upon completion of installation, Supplier and Customer
shall perform Acceptance Testing of all Licensed Software in the following three
(3) phases. The Acceptance Testing requirements of this Section 9.3 also apply
to substitute, replacement and conversion Products that are acquired by Customer
after the Licensed Software has passed earlier Acceptance Testing.
(A) Supplier shall initially perform its standard test
procedures for Customer's personnel and shall certify to Customer in writing all
components and each applicable Module are operating in accordance with the
applicable Specifications. In the event the Supplier is unable to, or does not,
so certify to Customer within thirty (30) calendar days from the Installation
Date, the System and any applicable Module will be deemed not to have
successfully completed this phase of the Acceptance Testing.
(B) With the advice and assistance of Supplier's
representatives, Customer will operate the System for five (5) business days,
using all Software furnished by the Supplier necessary for the Licensed Software
to function as specified in this Software Licensing Agreement, to perform:
(i) the Licensed Software's routine business
transactions in accordance with the Specifications;
(ii) transactions performed during pre-acceptance
testing, benchmark or other demonstration included, referenced, or incorporated
into the Acceptance Tests;
(iii) such other transactions as may be specified in
the Acceptance Tests (this Phase Two will be the Preliminary Acceptance
Testing); and
(iv) in the event the System fails to perform all
such transactions, or fails to run the Licensed Software, in accordance with
applicable Specifications and within two percent (2%) of applicable benchmark or
other demonstration results stated in the Acceptance Test, for a period of five
(5) consecutive business days, Customer shall operate the System for additional
consecutive business days until the System so performs such transactions and
runs the Licensed Software for a period of five (5) consecutive business days.
In the event such failure continues in whole or in part for a period of more
than thirty (30) calendar days from the Installation Date, the System and any
applicable Module will be deemed not to have successfully completed this phase
of the Acceptance Testing.
(C) With the advice and assistance of Supplier's
representatives, Customer will operate the System, using all Licensed Software
furnished by Supplier or otherwise specified in this Software Licensing
Agreement, to determine whether the System and each Module of the Licensed
Software meet the Effectiveness Level.
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(1) Performance Period.
The Performance Period shall begin on the date the
System successfully completes Phase Two of the Acceptance Testing (Preliminary
Acceptance) and shall end when the System and each Module have met the standard
of performance for a period of sixty (60) consecutive days by operating in
conformity with the applicable Specifications, at an Effectiveness Level of
ninety-nine percent (99%) or more.
In the event the System or any Module thereof fails
to meet an Effectiveness Level of ninety-nine percent (99%) after ninety (90)
days from the Installation Date, the System, and any applicable Module, will be
deemed not to have successfully completed this phase of the Acceptance Testing.
(2) Effectiveness Level.
The Effectiveness Level for the System or Component
shall be computed by dividing the Operational Use Time (as defined below) of the
System or Module by the sum of that time plus System or Module Failure Downtime.
Operational Use Time for Acceptance Testing of the
System or Module is defined as the accumulated time during which the applicable
System or Module is in actual operation. During Phase Three of Acceptance
Testing, a minimum of one hundred (100) hours of Operational Use Time with
productive or simulated work will be required as a basis for computation of the
Effectiveness Level. In the event the actual Operational Use Time is less than
one hundred (100) hours, the initial thirty (30) consecutive day period will be
extended until such minimum period of use is reached. In the event the actual
Operational Use Time is in excess of one hundred (100) hours, such actual time
will be used for the computation of the Effectiveness Level.
System Failure Downtime is defined as the accumulated
time during which the applicable System or Module is inoperable due to Product
failure. Downtime for each incident during the Performance Period (as set forth
above) shall be measured from the time Supplier is notified of failure until the
failure is corrected by Supplier, such correction is verified by Customer, and
the System or Module returns to its prior Effectiveness Level, exclusive of
actual initial response time required by Supplier's maintenance personnel, not
in excess of one (1) hour per day on the day such maintenance service is
requested.
System Failure Downtime shall not include any down or
inoperable time that Supplier can demonstrate is a result of: (i) Equipment
malfunctions; (ii) failure to comply with recommended Equipment Specifications
set forth in the applicable Transaction Agreement; and (iii) failure to comply
with environmental Specifications.
Operational Use Time and System Failure Downtime
shall be measured in hours and whole minutes or the decimal equivalents thereof.
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Customer shall maintain appropriate daily records to
satisfy the requirements of this Section 9.3 (C), and shall notify Supplier in
writing of the date of the first day of a successful Performance Period (as set
forth above).
9.4 MAINTENANCE DURING ACCEPTANCE TESTING. Supplier agrees to provide
Services for maintenance of the Licensed Software as set forth in this Software
Licensing Agreement during all Acceptance Testing. Such Services shall be
provided at no additional charge to Customer.
9.5 FAILURE TO SUCCESSFULLY COMPLETE ACCEPTANCE TESTING. In the event
the System or any Module fails to satisfactorily complete any applicable
Acceptance Testing, including any re-instituted Acceptance Testing conducted
under Section 9.5 (A)(2) hereof and such failure is the result of Supplier's
non-performance under the Transaction Agreement, then Customer, in its
reasonable discretion may do the following:
(i) Customer may require Supplier:
(1) to cure such failure at Supplier's cost and
expense or, at Customer's election, to install, at Supplier's sole cost and
expense, within such time period as may be mutually agreed in writing by
Customer and Supplier prior to Customer's election hereunder (or, if such mutual
agreement cannot be so reached, within thirty (30) days from failure of
Acceptance Testing), a direct replacement of the Modules or System (or
designated Components thereof) failing to meet the applicable Acceptance Test,
in which event Supplier shall use due care in any such removal and replacement,
and any such replacements, and any System of which they comprise a part, shall
be subjected to any applicable Acceptance Tests; or
(2) to re-institute and complete the applicable
Acceptance Tests, in which event: (i) the Acceptance Tests shall be performed
again pursuant to the requirements of Section 9.3 of this Software Licensing
Agreement; and (ii) if provided for in the applicable Transaction Agreement,
Supplier shall pay to Customer as liquidated damages for the delay (and not as a
penalty and not as a sole or exclusive remedy for any breach of this Software
Licensing Agreement) the amount as specified in the applicable Transaction
Agreement for each and every day from the date five (5) days following the date
on which Customer delivers written notice of its election hereunder to Supplier
to the date on which the re-instituted Acceptance Tests are satisfactorily
completed; or
(ii) Customer may, if the remedy set forth in Section 9.5(i)
hereof fails, or if Customer, in its reasonable discretion determines that the
remedies set forth in Section 9.5(i) will fail, in addition to whatever other
rights or remedies Customer may have:
(1) terminate the applicable Transaction Agreement in
full, in which event Supplier shall, at its expense, promptly remove from the
applicable Site all of the Products provided by Supplier to Customer under such
Transaction Agreement and promptly refund to Customer any deposit or prepayment
paid by Customer thereunder;
(2) terminate the applicable Transaction Agreement in
part, with respect to one or more Products provided by Supplier to Customer
pursuant to such Transaction Agreement
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and designated by Customer, without regard to whether such Product(s) failed to
complete such Acceptance Testing satisfactorily, in which event the Product(s)
so designated by Customer shall be deleted from the applicable Transaction
Agreement (and the Total Purchase Price shall be correspondingly reduced and any
deposit or prepayment allocable (on a pro rata basis) to such Product(s) shall
be promptly refunded to Customer by Supplier) and removed from the applicable
Site by Supplier at Supplier's expense, and the applicable Transaction Agreement
shall otherwise remain in full force and effect; or
(3) terminate this Software Licensing Agreement and
request the removal of the Products and Components failing to meet the
applicable phase of Acceptance Testing, and any related Product, in which event
Customer may pursue any remedy hereunder or available at law or in equity, or
seek to enforce any damages, including any liquidated damages that may be
specifically set forth in this Software Licensing Agreement.
9.6 USE SHALL NOT CONSTITUTE ACCEPTANCE. In no event shall use of any
Product by Customer, for business, profit, revenue or any other purpose during
any phase of the Acceptance Testing, constitute acceptance of any Product by
Customer.
10. DOCUMENTATION AND TRAINING
10.1 DOCUMENTATION.
(A) Supplier shall provide to Customer Documentation
sufficient to allow Customer to utilize fully the Licensed Software in
accordance with the Specifications. Such Documentation includes overview
descriptions of all major functions and detailed step-by-step operating
procedures for each screen and activity. The Documentation to be provided by
Supplier is in addition to any on-line help that is part of the Licensed
Software user interface.
(B) Supplier shall deliver to Customer upon execution of the
applicable Transaction Agreement a number of copies of the Documentation as set
forth in the applicable Transaction Agreement, as well as a copy of the
Documentation in CD-ROM or other media format as requested by Customer. Supplier
shall revise such Documentation as necessary to reflect any modifications made
by Supplier to the Licensed Software. Customer may copy and incorporate the
Documentation in works prepared for Customer's needs in using the Licensed
Software so long as Customer includes all copyright, trademark and other notices
of Supplier in the same form as they appear on or in the Documentation.
10.2 USER GROUP, BULLETIN BOARDS AND INTERNET SITES. In addition to any
other maintenance obligation or obligation to provide Documentation, Supplier
shall notify Customer of any user group, bulletin board or Internet site that
Supplier maintains or endorses relating to the Licensed Software or Services
provided by Supplier under this Software Licensing Agreement and any applicable
Transaction Agreement, and to the extent necessary, provide access thereto.
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10.3 TRAINING.
(A) Supplier shall be responsible for providing Authorized
Users with such training in the operation and maintenance of the Licensed
Software as Customer may reasonably request from time to time prior to execution
of this Software Licensing Agreement and for a period of one hundred and eighty
(180) days thereafter. The nature and purpose of the training, number of
trainees, frequency of training and location shall be as specified in the
Transaction Agreement.
(B) Such training shall be provided at Customer's designated
place of business or other site selected by Customer, through instructors
satisfactory to Customer, in the reasonable exercise of its discretion. Training
will be performed, in part, "hands on" using the actual, applicable Software,
Equipment and Documentation. The courses will train Customer-designated
Authorized Users, who can then train the Licensed Software operators, such that
Customer will have an ongoing in-house Licensed Software training capability.
Without limitation of the foregoing right, Supplier and Customer shall prepare
and agree upon a proposed training schedule for submission to Customer not later
than thirty (30) days following the date on which the applicable Transaction
Agreement becomes effective.
(C) Customer shall be entitled to have any number of
Authorized Users attend any training session held pursuant to this Section 10.3.
11. MAINTENANCE SERVICES
11.1 AVAILABILITY OF MAINTENANCE.
(A) Services for Preventive Maintenance and Remedial
Maintenance of the Licensed Software shall never be structured in a way that
links usage or license rights to them. Such Preventive Maintenance and Remedial
Maintenance Services are an option, to be acquired in the sole discretion of
Customer. Cancellation of Services for maintenance of the Licensed Software by
Customer or a third party will not in any way affect this Software Licensing
Agreement and the grant of license herein. Preventive Maintenance and Remedial
Maintenance Services shall commence upon expiration of the Warranty Period under
Article 12 of this Software Licensing Agreement and shall be renewable on an
annual basis. Renewal of Preventive Maintenance and Remedial Maintenance
Services shall be by invoice and payment as provided under this Software
Licensing Agreement and any applicable Transaction Agreement. Furthermore,
Supplier acknowledges and agrees that Customer may require that such Preventive
Maintenance and Remedial Maintenance Services be provided, on Customer's behalf,
to an Outsourcing Company.
(B) Supplier agrees that, for a period of at least thirty-six
(36) months or the period of time set forth in the applicable Transaction
Agreement, following the Acceptance Date for the Licensed Software, Supplier
shall furnish to Customer the Remedial Maintenance and Preventive Maintenance
Services specified in the applicable Transaction Agreement. Customer shall have
the right to cause the assignment or transfer of such Services pursuant to
Article 14 of this Software Licensing Agreement.
(C) Customer shall pay any charges due for any Preventive
Maintenance and Remedial Maintenance Services pursuant to the terms and
conditions specified in the applicable Transaction Agreement.
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11.2 MAINTENANCE SERVICES.
(A) So long as Customer pays the maintenance fees as specified
in the applicable Transaction Agreement, Supplier shall provide to Customer all
generally publicly available improvements and additions to the functionality, as
well as new functions, of the Licensed Software, and shall provide the Services
for Preventive Maintenance and Remedial Maintenance of the Licensed Software as
specified herein.
(B) Supplier shall maintain the Licensed Software so that it
operates in conformity with all applicable Specifications, including
Specifications for any improved or modified versions of the Licensed Software to
which the Customer is granted a license hereunder. Services for Preventive
Maintenance and Remedial Maintenance of the Licensed Software shall include, at
a minimum, the detection and correction of any Software errors discovered by the
Customer or otherwise made known to Supplier, the implementation of all program
changes, updates and upgrades, and the installation of any additional programs
that are required in accordance with this Software Licensing Agreement and any
applicable Transaction Agreements. Supplier agrees to respond promptly to
Customer inquiries regarding the use and functionality of the Software as issues
are encountered by Authorized Users.
11.3 RESPONSE TIMES.
(A) Except as otherwise expressly set forth in the applicable
Transaction Agreement, Supplier agrees to provide twenty-four (24) hours per
day, seven (7) days per week, every day in each year, on-call support for the
Licensed Software. This will include qualified support personnel with expertise
in the Licensed Software. Response to system problems shall be within fifteen
(15) minutes of notification by telephone or other means that shall be mutually
agreed.
(B) Supplier shall provide Customer with a temporary
program-fix or work-around within four (4) hours of notification for all
problems designated as a defect or deficiency that Customer designates as having
a material impact on Customer's use of the Licensed Software (Critical Program
Error). Supplier shall provide a permanent program-fix or work-around for a
Critical Program Error within twenty-four (24) hours of the temporary-fix unless
a longer time is agreed to in writing by Customer. Supplier will respond within
the time as specified herein. Supplier shall provide Customer with a fix for any
other problem within five (5) days.
(C) Software Preventive Maintenance and Remedial Maintenance
services include repair of any defects or deficiencies in coding and
implementation of the mutually agreed upon system functionality. Initial
response will normally be by telephone modem access to Customer's CPU on which
the Licensed Software resides. Supplier will commit the resources necessary to
solve the Program Error as specified herein and in the applicable Transaction
Agreement. Customer shall furnish reasonable assistance to Supplier in
correcting the Critical Program Error. If modem service does not prove
effective, Supplier will visit the applicable Site to determine the appropriate
actions and resolve the problem. Supplier will pay for travel, hotel and per
diem expenses unless other arrangements have been agreed to.
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11.4 SERVICE TRACKING AND REPORTING. Supplier shall maintain records of
all service calls made by Customer's personnel, including the identity of the
caller, the nature of the reported problem, and Supplier's response time and
disposition of the service call. Supplier shall provide reports to Customer on a
quarterly basis summarizing the support activity and detailing the responses
made to Critical Program Errors. The failure of Supplier to resolve or timely
respond to Critical Program Errors as required in Section 11.3 of this Software
Licensing Agreement on more than three (3) occasions in a given calendar quarter
shall be deemed a material default under the applicable Transaction Agreement
and, in Customer's sole discretion, under this Software Licensing Agreement.
11.5 MAINTENANCE FEE (CUSTOMER ERROR). In the event it is determined by
Supplier that the problem was due to Customer error in the use of the Licensed
Software, as opposed to an error, defect or nonconformity in the Licensed
Software itself, Customer shall pay Supplier, Supplier's standard discounted
rates for Customer.
11.6 MAINTENANCE FEES/CAP.
(A) The fee for the initial year of Preventive Maintenance and
Remedial Maintenance Services shall be as agreed to by the Parties and set forth
in the applicable Transaction Agreement. Subsequent maintenance fees for each of
the next three (3) years shall be the lesser of the then-current maintenance fee
schedule or seven percent (7%) of the then-current applicable license fee to
Customer discounted by the percent discount Customer received at the inception
of the Software License.
(B) Supplier agrees not to increase the annual maintenance
renewal fee for any Licensed Software in any renewal period by more than seven
percent (7%) over the immediately preceding year's maintenance renewal fee.
11.7 REVISION LEVELS.
(A) Supplier shall provide Preventive Maintenance and Remedial
Maintenance Services with respect to the current release of the Licensed
Software and two whole numbered prior releases of the Licensed Software.
(B) Customer is not obligated to implement Updates, changes,
modifications or enhancements if they interfere with Customer's level of
intended usage or operating environment; however, Supplier and Customer shall
work together with mutual best efforts in order to implement and install all
such updates, changes, modifications or enhancements so that they function
properly at the level of the Customer's intended usage and within the Customer's
operating environment.
11.8 INOPERABILITY. In the event that the Licensed Software, or a
material function of the Licensed Software, becomes inoperable for a period of
five (5) days, the maintenance period may, at Customer's option, be suspended
for the period of the inoperability, and the amount of time that such period is
suspended shall be added to the end of the then-current maintenance period. Such
temporary suspension shall not relieve Supplier of its duties or obligations set
forth in this Software Licensing Agreement. In the event inoperability extends
for a period of ten (10) days, then in
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addition to suspension, the condition will be deemed a material default by
Supplier of its obligations under any applicable Transaction Agreement and, in
Customer's sole discretion, under this Software Licensing Agreement.
11.9 REINSTATEMENT.
(A) If Customer elects to discontinue maintenance at any time
during the Term of this Software Licensing Agreement or the applicable
Transaction Agreement, and subsequently elects to reinstate maintenance within
five (5) years from that time, the maintenance renewal fee shall not exceed ten
percent (10%) of the then-current applicable license fee, with no additional fee
payable to Supplier, except to reimburse Supplier for its direct distribution
costs necessary to provide Customer with one copy of the current version of all
Program Sets and Documentation for each licensed Platform, plus any intermediate
versions required by virtue of Supplier's maintenance strategy that may be
required to migrate Customer's programs and data from the versions under which
Customer is running to the then-current versions.
(B) Any subsequent maintenance renewal fees occurring within
the Term of this Software Licensing Agreement or the applicable Transaction
Agreement shall be subject to the original seven percent (7%) annual renewal cap
as provided in Section 11.6 of this Software Licensing Agreement.
12. SUPPLIER'S WARRANTIES
Supplier represents and warrants as follows.
12.1 TITLE. With respect to Software and Documentation that are the
subject of a Transaction Agreement executed pursuant to this Software Licensing
Agreement, Supplier is either the sole owner of all right, title and interest in
and to, or is authorized to license to Customer the Licensed Software and that
it is authorized to enter into this Software Licensing Agreement and the
applicable Transaction Agreements relating to same. Upon request of Customer,
Supplier shall demonstrate that all aspects of the Licensed Software are its
original work or that Supplier is authorized to sublicense on the terms stated
herein or as may be stated in the applicable Transaction Agreement.
12.2 PLATFORM. By executing the applicable Transaction Agreement in
accordance with Section 6.1 of this Software Licensing Agreement, the Licensed
Software will operate in accordance with the Specifications for the specified
Customer Platform.
12.3 ENVIRONMENTAL SPECIFICATIONS. The Equipment and Software
requirements that are set forth in the applicable Transaction Agreement include
all physical and environmental Specifications necessary (including Operating
System version and feature requirements and limitations, DASD storage
requirements, CPU memory requirements, CPU processor type requirements, CPU
feature requirements and limitations, Internet and remote access capabilities,
and Equipment configuration and connection) for the Licensed Software to be
utilized on the Recommended Equipment Configuration in accordance with the
applicable Specifications.
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12.4 COMPLETENESS AND REQUISITE RIGHTS. To the extent that the license
granted hereunder includes Customer access to the Source Code of the Licensed
Software, the Documentation and all modifications or amendments thereto and any
other Documentation that Supplier is required to provide pursuant to this
Software Licensing Agreement shall be sufficient in detail and content to allow
an appropriately skilled programmer to understand fully, modify, enhance and
correct errors in the Licensed Software without reference to any other materials
or information. Supplier further hereby represents and warrants that the
Documentation and all modifications or amendments thereto and any other
documentation that Supplier is required to provide pursuant to this Software
Licensing Agreement shall be in accordance with the documentation standards in
the present Documentation. If any Documentation or portion thereof is the
proprietary material or intellectual property of another party, Supplier
represents and warrants that it has such party's permission to convey to
Customer the right to make copies and to use the material in connection with
Customer's use of the Licensed Software.
12.5 MEDIA DEFECTS. The media on which the Licensed Software is
provided shall be free of defects in material and workmanship.
12.6 FUNCTION AND FEATURES. The Licensed Software shall possess all
material functions and features contemplated by the Specifications.
12.7 PERFORMANCE. The Licensed Software shall perform in accordance
with the applicable Specifications and the Documentation.
12.8 COMPATIBILITY. The Licensed Software shall be compatible with the
Operating System, application program Software, CPUs, and networks contemplated
by the Documentation, the Recommended Equipment Configuration and the
environmental Specifications.
12.9 NINETY-DAY WARRANTY. Customer shall have the right for ninety (90)
days after the applicable Transaction Agreement becomes effective to return the
Licensed Software and to receive a refund of all license and maintenance fees
paid to Supplier minus any unusual costs and expenses of Supplier in installing
the Licensed Software pursuant to this Software Licensing Agreement in the event
the Products do not meet the requirements of Customer, as Customer, in its sole
discretion, shall determine.
12.10 CONFORMANCE TO SPECIFICATIONS.
(A) The Licensed Software shall operate without Specification
Non-Conformities for a period of six (6) months from the Acceptance Date (the
Warranty Period) for each Site that implements the Licensed Software.
(B) If, within the Warranty Period, Customer shall give
Supplier oral or written notice of a Specification Non-Conformity contained in
the Licensed Software, Supplier shall investigate such Specification
Non-Conformity as soon as possible but not later than two (2) hours after
receipt of such notice and will classify the problem with concurrence by
Customer, as either a problem preventing normal operations (Category A), or
other problem (Category B). Supplier will provide a temporary-fix or work-around
for all Category A problems within four (4) hours of
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<PAGE> 19
receipt of such notice and provide a permanent-fix or work-around within
twenty-four hours unless Customer agrees to a longer time in writing. Category B
problems will be corrected within five (5) days.
(C) No maintenance charges will be assessed during the
Warranty Period. Supplier will provide Customer with twenty-four (24) hours per
day, seven (7) days per week, every day in each year, maintenance Services as
set forth in Section 11.2 (Maintenance) of this Software Licensing Agreement. In
addition, the provisions of Sections 11.3 (Response Times), 11.4 (Service
Tracking and Reporting), 11.7 (Revision Levels) and 11.8 (Inoperability) of this
Software Licensing Agreement, shall also apply to the warranty Services provided
by Supplier during the Warranty Period.
(D) At any time during the first one hundred eighty (180) days
of the Warranty Period, if Supplier has failed to correct any Specification
Non-Conformity within thirty (30) days of notification thereof, Customer may
elect to terminate the applicable Transaction Agreement and request a refund of
all fees paid to Supplier pursuant to this Software Licensing Agreement provided
Customer returns to Supplier all Software licensed hereunder after Customer has
had a reasonable time to procure substituted Software from a third party.
12.11 EQUIPMENT CONFIGURATION. The Recommended Equipment Configuration
shall be adequate in all aspects for the Licensed Software to function in
accordance with the Specifications and to fulfill the current and reasonably
anticipated future information processing needs of Customer with respect to the
Licensed Software.
12.12 PASS-THROUGH OF WARRANTIES. Supplier shall identify in writing
all third party warranties that Supplier receives in connection with any Product
provided to Customer. Supplier hereby passes through the benefits of all such
warranties to the extent they are assignable, provided that nothing in this
Section 12.12 shall reduce or limit Supplier's obligations under this Software
Licensing Agreement or under any applicable Transaction Agreement.
12.13 FREE AND CLEAR TITLE. Supplier has and will continue to have free
and clear title (including all intellectual property rights) to any Supplier
with Products delivered to Customer or the right to license, transfer or assign
any and all Software items that are licensed, transferred or otherwise provided
to Customer by Supplier pursuant to this Software Licensing Agreement. Supplier
shall not create or permit the creation of any lien, encumbrance or security
interest in any Product sold, rented, leased or licensed to Customer.
12.14 FUTURE SUPPORT. Supplier will support the Software for a period
of not less than three (3) years from the date of installation of any Software
provided by Supplier.
12.15 DEFECT-FREE. For ninety (90) days from the date of a Supplier
Modification installed during and subsequent to the Warranty Period, the
Licensed Software as modified will operate in the manner set forth in the
Supplier's Documentation free from defect but if any defects are detected
Supplier shall correct them promptly without charge, within the same time
periods and under the terms set forth in Article 11 of this Software Licensing
Agreement.
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<PAGE> 20
12.16 ILLICIT CODE.
(A) Unless authorized in writing by Customer, or necessary to
perform valid duties under this Software Licensing Agreement and any applicable
Transaction Agreement, any Software developed by Supplier under this Software
Licensing Agreement or otherwise provided to Customer by Supplier for use by
Supplier or Customer shall contain no Illicit Code.
(B) Provided and to the extent any Software has any of the
foregoing attributes, and notwithstanding any other provision of this Software
Licensing Agreement to the contrary, Supplier shall be in material default of
this Software Licensing Agreement and no cure period shall apply. At the request
of Customer, Supplier must remove any such Illicit Code from the Licensed
Software.
(C) In addition to any other remedies available to it under
this Software Licensing Agreement or under any applicable Transaction Agreement,
Customer reserves the right to pursue any civil or criminal penalties available
to it against the Supplier. Supplier agrees, in order to protect Customer from
damages that may be intentionally or unintentionally caused by the introduction
of Illicit Code to Customer's computer network, no Software will be installed,
executed or copied on Customer Equipment without the express approval of the
Customer Corporate Contract Manager.
13. MODIFICATIONS AND PROPRIETARY RIGHTS
13.1 SUPPLIER MODIFICATIONS.
(A) Supplier will correct errors in the Licensed Software
pursuant to this Software Licensing Agreement and may modify from time to time
the Licensed Software. Such error corrections or modifications may result in the
creation of a new version(s) of the Licensed Software, under the same or one or
more different names (collectively, the Supplier Modifications). Supplier
Modifications shall in all cases be new versions of existing Licensed Software
and not new Products. Supplier Modifications shall belong to Supplier and shall
be Licensed Software.
(B) As long as the Licensed Software is under maintenance
provided by Supplier, Supplier shall make available to Customer, at no extra
charge, a copy of the modified object code for any Supplier Modification not
later than thirty (30) days following general availability of such Supplier
Modification. Customer shall not be obligated to use any Supplier Modification.
(C) In the event that Customer determines to utilize any
Supplier Modification, it shall be deemed part of the Licensed Software for
purposes of this Software Licensing Agreement; provided, however, that all
warranty provisions herein shall apply to each Supplier Modification from the
time such modifications are first delivered to Customer. Further, the
Specifications shall be promptly amended by Supplier to reflect the addition of
each modification, and Supplier shall promptly deliver to Customer revisions to
the Documentation to allow Customer to fully utilize any Supplier Modification
in accordance with the Specifications.
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<PAGE> 21
(D) If any defects are discovered during the Warranty Period,
Supplier will correct them promptly without charge within the same time periods
and under the terms set forth in Article 11 of this Software Licensing Agreement
but not later than five (5) business days from notice from Customer.
13.2 CUSTOMER MODIFICATIONS. If Customer receives Source Code to the
Licensed Software pursuant to Article 15 of this Software Licensing Agreement it
shall do so under the following terms.
(A) Customer may modify, correct or enhance the Licensed
Software in any manner, and subject to terms of Section 13.4 of the Framework
Agreement any such modifications, corrections, or enhancements, and any related
materials and documentation (and all intellectual property rights therein,
including copyrights) shall belong exclusively to Customer (collectively, the
Customer Modifications). Supplier agrees that any Customer Modifications to
which Supplier gains access in the performance of its obligations hereunder or
otherwise shall be deemed Customer Confidential Information under this Software
Licensing Agreement.
(B) Supplier shall provide assistance to Customer for Customer
Modifications on a time and materials basis, except as otherwise expressly set
forth in an applicable Transaction Agreement. Supplier assigns all rights to and
modifications resulting from such assistance to Customer. Supplier will not bill
Customer for work related to Customer Modifications without the express, prior
written consent of Customer.
14. ASSIGNMENT AND TRANSFER
14.1 ASSIGNMENT. In addition to and without limitation on Customer's
rights under this Software Licensing Agreement, the Framework Agreement and any
applicable Transaction Agreement to assign some or all of its rights and
obligations hereunder, Customer shall also have the right to assign or transfer
this Software Licensing Agreement or any of its interests herein (including
rights and duties of performance) to any entity that Customer may engage (for
example, as an Outsourcing Company) to operate Customer's data processing
facilities, Software, its business or any portion thereof. There shall be no
charge to Customer or the assignee for any assignment hereunder. Upon such
assignment and an assumption of liability hereunder by the assignee, Customer
shall not be discharged of any liability pursuant to the Agreements, without
Supplier's consent, such consent not to be unreasonably withheld.
14.2 TRANSFER OF SOFTWARE. In the event Customer proposes to, or does,
sell, rent, lease, sublicense or otherwise transfer or assign all or any part of
any Product or System, or the right to use or operate all or any part of any
such Product or System, to any other person or entity, including any Divested
Entity or any Related Entity of Customer, Supplier agrees that it shall, upon
written request from Customer, agree to transfer to such other person or entity
the Software licensed to Customer for use by Customer on, or in connection with,
such Product or System, including any license thereto, any future releases,
fixes and enhancements, and any related manuals and Documentation therefor;
provided, however, that upon written request the transferee thereof shall enter
into an agreement with Supplier providing for the confidential treatment by such
transferee of such Software which agreement shall be on terms and conditions
comparable to those then binding Customer and Supplier with respect to such
matters.
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<PAGE> 22
14.3 TRANSFER OF MAINTENANCE. In the event Customer proposes to, or
does, sell, rent, lease, sublicense, or otherwise transfer or assign all or any
part of the Licensed Software, or the right to use all or any part of the
Licensed Software, to any other person or entity, including without limitation
any Divested Entity or any Related Entity of Customer, Supplier agrees that it
shall, upon written request from Customer, agree to maintain the Licensed
Software, and to assist in its removal and transfer to such other person or
entity; provided, however, that:
(i) the transfer, movement or use is not prohibited by the
terms of this Software Licensing Agreement;
(ii) the transferee or other user shall enter into an
agreement with Supplier agreeing to be bound by the terms and provisions of, and
to make all payments required by, the then-current maintenance agreement between
Suppler and Customer covering such Licensed Software; and
(iii) notwithstanding any other term of the then-current
maintenance agreement, no price or penalty shall be charged or imposed by
Supplier for such transfer, or for the privilege of such transfer, and the
transferee shall not be required to pay to Supplier for such maintenance any
amount greater than the amount that Customer would have paid to Supplier
therefor if the Licensed Software had not been transferred.
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<PAGE> 23
IN WITNESS WHEREOF, each of the Parties, by its duly
authorized representative, has executed this Software Licensing Agreement as of
the Effective Date.
SUPPLIER CUSTOMER
By: /s/ Glen T. Meakem By: /s/ James Scotti
---------------------------- --------------------------------
(Print) Glen T. Meakem (Print) James Scotti
------------------------ ----------------------------
Title: Chief Executive Officer Title: Commodity Manager
------------------------- -----------------------------
Date: Date:
-------------------------- ------------------------------
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<PAGE> 24
EXHIBIT 1.11.1
Existing Agreements superseded by the Software License Category Agreement.
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<PAGE> 1
Exhibit 10.1(e)
GENERAL MOTORS CORPORATION
GM Logo
CONSULTING SERVICES
CATEGORY AGREEMENT
- --------------------------------------------------------------------------------
This document contains confidential and proprietary information furnished for
evaluation purposes only; except with the express prior written permission of
General Motors Corporation, such information may not be published, disclosed or
used for any other purpose.
- --------------------------------------------------------------------------------
<PAGE> 2
GENERAL MOTORS CORPORATION
CONSULTING SERVICES
CATEGORY AGREEMENT
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
1. SCOPE OF SERVICES...........................................................1
1.1 Existing Agreements. ..............................................1
1.2 Consulting Services Available from Supplier.................................1
1.3 Scope of Work; Supplier Personnel and Rates........................1
2. TERM........................................................................2
2.1 Initial Term.......................................................2
2.2 Renewal. ..........................................................2
3. PAYMENT ....................................................................2
3.1 Payment Terms......................................................2
3.2 Invoices...........................................................2
4. GRANT.......................................................................2
4.1 Grant of License...................................................2
4.2 Changes and Upgrades to Software and Systems.......................3
4.3 Documentation......................................................3
</TABLE>
<PAGE> 3
GENERAL MOTORS CORPORATION
CONSULTING SERVICES
CATEGORY AGREEMENT
THIS CONSULTING SERVICES CATEGORY AGREEMENT (Consulting
Services Agreement) is made to be effective as of the 8th day of June, 1998
(Effective Date) by and between General Motors Corporation, with offices at 100
Renaissance Center, Detroit, Michigan, and FreeMarkets OnLine, Inc., with
offices at 130 Seventh Street, Century Building, Suite 500, Pittsburgh, PA
15222. General Motors Corporation and FreeMarkets OnLine, Inc. are referred
herein individually as a "Party" and collectively as the "Parties."
Terms used in this Consulting Services Agreement with initial
capital letters are defined in Appendix A or herein or in other Agreements.
BACKGROUND
The Parties have entered into the Framework Agreement
governing their overall relationship regarding the provision to Customer and its
Related Entities by Supplier of Products and Services. The Parties intend that
upon full execution of this Consulting Services Agreement, the terms hereof
shall be incorporated into and made a part of the Framework Agreement. The terms
of this Consulting Services Agreement are intended to supplement the Framework
Agreement by defining the Parties' rights and obligations with respect to the
provision by Supplier to Customer of Consulting Services. The Parties further
intend to enter into specific Transaction Agreements further defining their
agreement with respect to Consulting Services.
THE AGREEMENT
1. SCOPE OF SERVICES
1.1 EXISTING AGREEMENTS. If Consulting Services are currently being
provided by Supplier, the agreement(s) pursuant to which Supplier has provided
such Consulting Services shall remain in effect, except for those agreements set
forth in Exhibit 1.1.
1.2 CONSULTING SERVICES AVAILABLE FROM SUPPLIER. Upon request by
Customer, Supplier shall submit to Customer one or more Proposals to perform
specific Consulting Services for Customer in a manner that meets Customer's
objectives as stated in its request. Generally, Customer has a preference for
Consulting Services to be performed on a fixed price basis. However, if the
nature of the Consulting Services to be performed does not lend itself to such
pricing because of the scope of the work or Deliverables are not sufficiently
defined, then Customer may agree to price the Consulting Services on a time and
materials basis.
1.3 SCOPE OF WORK; SUPPLIER PERSONNEL AND RATES. Each Transaction
Agreement shall include, without limitation:
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<PAGE> 4
(i) a specific description of the work to be performed in
providing Consulting Services to Customer;
(ii) the location(s) where work is to be performed;
(iii) the number of people, names and titles of Supplier
personnel who will perform and supervise the work;
(iv) Supplier personnel schedules showing assignments, begin
and end dates, T&M Charges, other applicable charges, fees and estimated
expenses;
(v) a listing of specific Deliverables to be completed by
Supplier, and the charges related to each Deliverable; and
(vi) Supplier personnel who will be assigned by Supplier as
Key Supplier Personnel in the specific capacities indicated next to their
respective names.
2. TERM.
2.1 INITIAL TERM. The initial term of this Consulting Services
Agreement is three (3) years from the Effective Date.
2.2 RENEWAL. This Consulting Services Agreement may be renewed as set
forth in Section 18.2 (B) of the Framework Agreement
3. PAYMENT
3.1 PAYMENT TERMS. The payment terms will be as set forth in Section
9.5 of the Framework Agreement.
3.2 INVOICES. Supplier will prepare the invoices as set forth in
Section 9.1 of the Framework Agreement.
3.3 OUT-OF-POCKET EXPENSES. Reimbursement for out-of-pocket expenses
will be as set forth in Section 8.5 of the Framework Agreement.
3.4 ACCEPTANCE. Customer may include in the terms and conditions of
each Transaction Agreement certain Acceptance Criteria for Supplier's delivery
and performance of the Products and Services and any related Deliverables.
Customer shall have the period of time, if any, as set forth in the applicable
Transaction Agreement in which to ascertain whether the Products and Services
meet or exceed all applicable Specifications, Deliverables, Service Levels and
all other representations, warranties, covenants and conditions of the
applicable Agreements, and that the Supplier has provided and performed the
Products and Services to successfully complete the Acceptance Criteria. Except
as otherwise expressly set forth in the Transaction Agreement,
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<PAGE> 5
Customer's obligation to compensate Supplier with respect to any Products or
Services and any related Deliverables shall arise only after Customer has
reviewed such items, performed such Acceptance Testing as set forth in the
applicable Transaction Agreement, and otherwise established that Supplier has
fully performed its obligations under the applicable Agreements, and that
Supplier is not otherwise in default under such Agreements. In no event shall
use of the Products or Services or any related Deliverables by Customer for
business, profit, revenue or any other purpose during Acceptance Testing
constitute acceptance by Customer. Supplier's failure to meet the Acceptance
Criteria within the time established in the applicable Transaction Agreement
shall constitute breach, and it shall be deemed that Customer has received no
value from the Products and Services.
3.5 SUPPLIER'S EFFORTS TO MINIMIZE CHARGES. To the extent any Products
or Services are rendered on a time and materials basis under any of the Category
Agreements or Transaction Agreement, Supplier shall use commercially reasonable
efforts to complete each assigned task in as economical a manner as possible and
to minimize the T&M Charges and other charges or fees and expenses incurred in
connection therewith, to the maximum extent possible, consistent with Supplier's
other obligations under the Agreements.
IN WITNESS WHEREOF, this Consulting Services Agreement has
been executed by the Parties as of the Effective Date.
SUPPLIER CUSTOMER
By: /s/ Glen T. Meakem By: /s/ James Scotti
---------------------------- --------------------------------
(Print) Glen T. Meakem (Print) James Scotti
------------------------ ----------------------------
Title: Chief Executive Officer Title: Commodity Manager
------------------------- -----------------------------
Date: Date:
-------------------------- ------------------------------
<PAGE> 1
Exhibit 10.2(a)
INFORMATION DENOTED BY [*] HEREIN HAS BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT. THIS INFORMATION HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
SERVICE AND SYSTEM ACCESS AGREEMENT BETWEEN UNITED TECHNOLOGIES CORPORATION
AND FREEMARKETS ONLINE, INC.
This Service and System Access Agreement ("Agreement") is made this
14th day of January, 1999, effective as of January 1, 1999 ("Effective Date"),
by and between United Technologies Corporation, a corporation organized and
existing under the laws of the state of Delaware with an office and place of
business at Hartford, Connecticut (hereinafter referred to as "United") and
FreeMarkets OnLine, Inc., a corporation organized and existing under the laws of
the state of Delaware with an office and place of business at 130 Seventh
Street, Suite 500, Pittsburgh, PA 15222 (hereinafter referred to as
"FreeMarkets" or "Seller"). For purposes of this Agreement, the rights granted
to United under this Agreement shall also be deemed granted to any United
"Affiliate," which shall mean any entity in which United owns more than 50% of
the outstanding voting ownership interests, and shall also mean International
Aero Engines, Inc.
United wishes to be provided with, and FreeMarkets wishes to provide,
the following: (i) a series of online and offline industrial market making
project(s), including overall project management for these projects, and (ii)
access to FreeMarkets' proprietary global online bidding system for the conduct
of Competitive Bidding Events ("CBEs"), consisting of proprietary
Bidware(R)/BidServer(R) software, computer and networking hardware and operating
software used to conduct CBEs (the "System"). A CBE, the result of substantial
preparation work with buyers and suppliers, is an online session where suppliers
submit bids in an interactive fashion to establish market prices for the various
materials or components desired to be purchased by United. The parties intend
that FreeMarkets will assist United to achieve savings and supplier
consolidation for purchased components and materials used in United's products.
This Agreement is intended to address the specific understanding of the parties
related to such projects and the provision of access to the System, including
without limitation, provisions regarding confidentiality and exclusivity.
In consideration of the premises and of the mutual promises of each
party to the other herein contained, it is hereby mutually agreed as follows:
ARTICLE I - STATEMENT OF BUSINESS SERVICES, SYSTEM ACCESS, SCOPE OF WORK AND
RESOURCE COMMITMENTS
a) TERM OF SERVICES. FreeMarkets agrees that during the period commencing on
the 1st day of January, 1999 and ending on December 31, 2000 (the "Initial
Term"), and during all renewal term(s) of this Agreement (if any) (any such
renewal term(s) together with the Initial Term shall be collectively
referred to herein as the "Term"), FreeMarkets will make available to
United, to the extent, and in the manner hereinafter provided, its business
services with respect to industrial market making and purchasing and access
to the System.
b) PROJECT MANAGEMENT SERVICES. FreeMarkets will conduct a series of online
and offline industrial market making project(s) (also known as sourcing
project(s)) for the purposes of assisting United to achieve savings and
supplier consolidation for purchased components and materials used in
United's products, as identified by United from time to time. FreeMarkets
will provide overall project management for these projects utilizing either
the following FreeMarkets' market making process, organized into five
phases, or the United sourcing process set forth in
<PAGE> 2
Exhibit J attached hereto which is similar to the FreeMarkets process
except that the United process does not include CBEs and related online
industrial sourcing services:
1. Phase 1: Identify Savings Opportunities - FreeMarkets will conduct
detailed reviews of information on current and historic spending, as
well as interviews of United staff to identify savings opportunities
appropriate for utilizing the System or other sourcing processes.
2. Phase 2: Prepare Total Cost Request For Quotation ("RFQ") -
FreeMarkets will gather detailed information at the part level on
quality, logistics, engineering, manufacturing, tooling, and commercial
requirements. It will create bidding strategies designed to achieve
United's desired results, including lot setting and reserve prices,
then write and obtain buyer approval of RFQ(s), which RFQs shall
include terms and conditions satisfactory to United, including, without
limitation, government contract provisions when appropriate, insurance
specifications, and confidentiality requirements.
3. Phase 3: Identify, Screen, and Prepare Suppliers - FreeMarkets will
obtain supplier selection criteria from United buyers for manufacturing
capability, quality, delivery requirements, location, financial
strength, etc. FreeMarkets will research and identify potential new
suppliers, then screen all suppliers, including those that may be
identified by United, against the selection criteria. FreeMarkets will
gain buyer approval for final lists of suppliers, answer supplier
questions on RFQs and, if applicable, train suppliers in the use of the
System.
4. Phase 4: Online Competitive Bidding Event(s) - FreeMarkets will
provide access to the System for the conduct of CBEs. FreeMarkets will
provide all necessary infrastructure (except local buyer and supplier
site personal computers and other equipment) so that United can employ
the System. FreeMarkets will also provide all technical support and
necessary operations personnel, including training of United buyers in
the use of the System (where United does not use the System,
FreeMarkets will assist United with any offline supplier negotiations).
5. Phase 5: Provide Savings Implementation Support - FreeMarkets will
provide post-bid supplier cost breakdowns, analysis of award options,
support for supplier qualification trips and other general
implementation support as reasonably requested by United.
c) FREEMARKETS SOURCING PROJECTS. For purposes of this Agreement, a
"FreeMarkets Sourcing Project" shall include any United sourcing project
commenced before or during the Term where FreeMarkets provides one or more
of the following services described above:
(i) Prepare the RFQ for the project;
(ii) Identify, screen and prepare suppliers for the project; and/or
(iii) Provide access to the System for the conduct of CBEs.
Unless otherwise agreed by the parties, FreeMarkets Sourcing Projects shall
not include sourcing projects related to products and services not
purchased for use in United's products such as office supplies, travel and
outside services. Within thirty (30) days of the Effective Date,
FreeMarkets will provide to United
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<PAGE> 3
a schedule identifying each FreeMarkets Sourcing Project commenced prior to
the Effective Date. Thereafter, FreeMarkets will provide to United a
monthly schedule identifying each FreeMarkets Sourcing Project that was
commenced during the prior month. Within thirty (30) days of receipt of any
such schedule, United will notify FreeMarkets of any objection to such
schedule and the parties will work to mutually resolve any such objections.
No project will be designated as a FreeMarkets Sourcing Project unless the
parties mutually agree to such designation, provided that if United fails
to object to a designation within thirty (30) day of receipt of the
schedule containing such designation, United will be deemed to have
accepted such designation.
d) OVERALL PROJECT MANAGEMENT SERVICES. In addition to providing services
related to FreeMarkets Sourcing Projects as described above, during the
Term, FreeMarkets will provide the following services ("Overall Project
Management Services") to United in connection with the United Sourcing
Initiative as defined from time to time by the United personnel leading
such initiative (the "Sourcing Initiative"): overall Sourcing Initiative
planning and scheduling; assistance with tracking and reporting of savings
achieved pursuant to the Sourcing Initiative [*] as defined in Article I k)
below; assistance in high level purchasing problem solving; and, consulting
with senior United managers engaged in the Sourcing Initiative. The Overall
Project Management Services will be provided as reasonably requested by
United, subject to the resource limitations in [*] FTE's set forth in
Exhibit B attached hereto.
e) TRAINING. It is the intention of FreeMarkets to assist United in developing
internal world class sourcing capability across its many businesses. In
addition to Overall Project Management Services described above,
FreeMarkets will provide training in online and offline sourcing processes
to the United personnel working on FreeMarkets Sourcing Projects with
FreeMarkets. FreeMarkets will also provide training classes to United
personnel to assist United in the development of internal sourcing
capabilities, including the ability to effectively utilize the System.
FreeMarkets will provide up to [*] full day classes (maximum of [*]
students in each class) during each calendar year of the Term. FreeMarkets
will be prepared to provide such training classes beginning on January 31,
1999. Such training will include instruction regarding identification of
savings opportunities (Phase 1), preparation of RFQs (Phase 2),
identification, screening and preparation of suppliers (Phase 3),
conducting CBEs using the System (Phase 4), and implementing savings (Phase
5).
f) SOURCING STRATEGY DEVELOPMENT SERVICES. To further assist United in
developing internal world class sourcing capability across its many
businesses, as specifically requested by United, FreeMarkets will analyze
and create sourcing strategies for the categories of spend which
FreeMarkets helps United to source. Sourcing strategy development services
set forth in this Article I f) will be provided as reasonably requested by
United, subject to the resource limitations in [*] FTEs set forth in
Exhibit B attached hereto.
g) PRODUCT SPEND SAVINGS GOAL. Throughout the Term, FreeMarkets will provide a
complete market making team (the "FreeMarkets Market Making Team") which
will provide services with respect to FreeMarkets Sourcing Projects,
Overall Project Management Services and other services as described above.
The FreeMarkets Market Making Team shall consist on average of the number
of full time equivalent staff members set forth on Exhibit B attached
hereto. The goal of FreeMarkets and United is to meet or exceed the savings
goals set forth in Exhibit A. Specifically, FreeMarkets' goal will be
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<PAGE> 4
to help United generate [*] (the "Product Spend Savings Goal") in
Implementable Savings (as defined below) for United in each calendar year
of the Term. FreeMarkets does not guarantee that United can reach the
Product Spend Savings Goal [*]. The results of the FreeMarkets Sourcing
Projects and Overall Project Management Services for United will be highly
dependent upon the support the FreeMarkets Market Making Team receives from
United staff. FreeMarkets and United staff will cooperate to identify and
execute Sourcing Projects, Training, Sourcing Strategy Development and
Overall Project Management Services sufficient to deliver savings to
United.
h) REPORTING. Throughout the Term, the FreeMarkets Market Making Team will
schedule periodic review sessions with the United day-to-day teams and
senior project sponsors as necessary to conduct the projects and maintain
communication. On a monthly basis, FreeMarkets will provide the Vice
President of Purchasing for United with a summary of FreeMarkets activities
in support of the various United divisions and cross division purchasing
product teams. The FreeMarkets Market Making Team will split its time
between work at United site(s) and FreeMarkets' offices.
i) BIDWARE(R)/BIDSERVER(R)SOFTWARE. Subject to the terms of Article III e),
throughout the Term, in consideration of the business service and System
access fees set forth in Article II a), FreeMarkets will provide United and
its Affiliates with any necessary license to use its proprietary
BidWare(R)/BidServer(R)software pursuant to the terms of this Agreement and
the Software License Agreement effective as of January 1, 1998 between
United and FreeMarkets attached hereto as Exhibit E ("Software License
Agreement") and will provide suppliers with any necessary license to use
its proprietary BidWare(R)/BidServer(R) software pursuant to the terms of
the standard FreeMarkets' supplier license agreement. These licenses are
for any usage necessary to conduct CBEs under this Agreement, but do not
extend beyond these projects or the Term.
j) SERVICE STANDARDS. FreeMarkets represents and warrants that during the
Term, the System will perform in a manner necessary to carry out its
obligations under this Agreement, including without limitation accurately
processing date/time data from, into, and between the twentieth and twenty-
first centuries (1999-2000), provided that all hardware and software with
which the System exchanges data is year 2000 compliant. FreeMarkets' sole
obligation under this performance warranty for the System shall be to
remedy any nonconformance of the System. EXCEPT AS EXPRESSLY SET FORTH
HEREIN OR THE SOFTWARE LICENSE AGREEMENT, FREEMARKETS MAKES NO OTHER
WARRANTIES REGARDING THE SYSTEM, ANY COMPETITIVE BIDDING EVENT, ANY
SUPPLIER, OR UNITED'S PARTICIPATION IN ANY COMPETITIVE BIDDING EVENT,
EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO, ANY IMPLIED WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
k) [*]. Subject to the terms of the Software License Agreement and the terms
of the Service Agreement effective as of January 1, 1998 between United and
FreeMarkets, FreeMarkets hereby continues to grant to United and its
Affiliates [*] for any internal purpose, including any right possessed by
FreeMarkets to use [*] for any internal purpose.
l) RENEWAL. At the request of United, FreeMarkets will extend this Agreement
beyond the Initial Term for a period of one year subject to the same terms
and
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<PAGE> 5
conditions for services, System access and compensation.
m) SUPPLIER SELECTION. In no event shall United be obligated hereunder to
accept the lowest bid in a CBE or any other project hereunder.
ARTICLE II - COMPENSATION
In consideration for the business services and System access provided by
FreeMarkets hereunder, United agrees to pay FreeMarkets as follows:
a) BUSINESS SERVICE AND SYSTEM ACCESS FEES. An annual total of [*] million
(including [*] in business service fees) and [*] in System access fees
during each of 1999 and 2000, payable in equal monthly installments, as set
forth in Article II f) and Exhibit B. Exhibit B is a complete schedule of
business service and System access fees payable by United under this
Agreement.
b) EXPENSE REIMBURSEMENT. Reimbursement for the cost of all reasonable and
necessary traveling expenses, clerical expenses, telecommunications
expenses, mailing, courier, blueprinting, printing, copying or stenographic
services, in connection with the performance of the services hereunder. The
estimated monthly expenses set forth on Exhibit B will be payable as set
forth in Article II f).
c) ADDITIONAL COMPENSATION. In addition to the business service and System
access fees and the expense reimbursement set forth above, FreeMarkets will
earn additional bonus compensation provided the conditions set forth in
this Agreement are met. Subject to the terms of Article II e) (Bonus
Determinations), United will pay to FreeMarkets, the following additional
bonus compensation earned by FreeMarkets:
(i) United will pay to FreeMarkets an "Implementable Savings Bonus" equal
to [*] of Implementable Savings (as defined below) for FreeMarkets
Sourcing Projects; and
(ii) United will pay to FreeMarkets an "Implemented Savings Bonus" equal
to [*] of Implemented Savings (as defined below) for FreeMarkets
Sourcing Projects; and
(iii) Provided that the Implementable Savings for FreeMarkets Sourcing
Projects for any calendar year during the Term equals or exceeds the
Product Spend Savings Goal as defined in Article I g) for FreeMarkets
Sourcing Projects, United will pay to FreeMarkets a Major Business
Objective or "MBO Bonus" equal to [*] with respect to such year.
d) DEFINITIONS. For the purposes hereof:
(i) "Implementable Savings" means a good faith estimate of the gross
annualized savings stated in U.S. dollars expected to be implemented
as a result of FreeMarkets Sourcing Projects as reported [*] or an
alternative tracking and reporting system agreed upon by the parties.
Implementable Savings shall include savings from all FreeMarkets
Sourcing Projects commenced during or before the Term. Implementable
Savings shall be determined [*] upon finalization of agreement(s)
with selected supplier(s) based on volume estimates, non-price
savings and elimination of any potential savings which are [*] at a
site level to be too costly or too difficult to implement. Savings
shall not be classified as "Implementable Savings" until [*] that any
potential savings are implementable. Implementable
-5-
<PAGE> 6
Savings (as reported [*] or an alternative tracking and reporting
system agreed upon by the parties) shall not include any deduction
for costs of implementation.
(ii) "Implemented Savings" means a good faith estimate of [*] stated in
U.S. dollars implemented as a result of FreeMarkets Sourcing Projects
as reported using [*] or an alternative tracking and reporting system
agreed upon by the parties. Implemented Savings shall be determined
[*] upon acceptance of purchase orders by selected supplier(s) as a
result of FreeMarkets Sourcing Projects and shall be based on [*] and
[*]. Implemented Savings shall include savings from all FreeMarkets
Sourcing Projects commenced [*]. Implemented Savings (as reported [*]
or an alternative tracking and reporting system agreed upon by the
parties) shall not include any deduction for non-incremental costs of
implementation.
e) BONUS DETERMINATIONS.
(i) BILLING FOR IMPLEMENTABLE SAVINGS BONUS. No later than 15 days
following the end of each calendar quarter (including the calendar
quarter ending on December 31, 1998), FreeMarkets will submit to
United a schedule and invoice (the "Implementable Savings Schedule")
identifying the Implementable Savings with respect to all FreeMarkets
Sourcing Projects conducted during or before such calendar quarter
([*] or an alternative tracking and reporting system agreed upon by
the parties). The Implementable Savings Bonus with respect to
FreeMarkets Sourcing Projects shall be determined based on excess of
the cumulative Implementable Savings as of the end of such calendar
quarter over the cumulative Implementable Savings as of the end of
the immediately prior quarter. In the event that the cumulative
Implementable Savings as of the end of such calendar quarter are less
than the cumulative Implementable Savings as of the end of the
immediately prior quarter, such shortfall shall be credited against
any excess cumulative Implementable Savings in the following calendar
quarters.
(ii) BILLING FOR IMPLEMENTED SAVINGS BONUS. No later than 15 days
following the end of each calendar quarter (including the calendar
quarter ending on December 31, 1998), FreeMarkets will submit to
United a schedule and invoice (the "Implemented Savings Schedule")
identifying Implemented Savings with respect to all FreeMarkets
Sourcing Projects conducted during or before such calendar quarter
[*] or an alternative tracking and reporting system agreed upon by
the parties). The Implemented Savings Bonus with respect to
FreeMarkets Sourcing Projects shall be determined based on excess of
the cumulative Implemented Savings as of the end of such calendar
quarter over the cumulative Implemented Savings as of the end of the
immediately prior calendar quarter. In the event that the cumulative
Implemented Savings as of the end of the immediately subsequent
quarter is less than the Implemented Savings as of the end of the
immediately prior quarter, such shortfall shall be credited against
any excess cumulative Implemented Savings in the following calendar
quarters.
(iii) BILLING FOR MBO BONUS. No later than 15 days following the end of
each calendar year (including the calendar
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<PAGE> 7
year ending on December 31, 1998), FreeMarkets will submit to United
a schedule and invoice (the "MBO Bonus Schedule") identifying
cumulative Implementable Savings with respect to all FreeMarkets
Sourcing Projects as of the end of such calendar year ([*] or an
alternative tracking and reporting system agreed upon by the
parties). Payment of the MBO Bonus with respect to FreeMarkets
Sourcing Projects for each calendar year during the Term shall be
determined based on the excess of the cumulative Implementable
Savings as of December 31 of such calendar year over the cumulative
Implementable Savings as of December 31 of the prior year. In the
event that the cumulative Implementable Savings of such calendar year
are less than the cumulative Implementable Savings as of December 31
of the prior year, such shortfall shall be credited against any
excess cumulative Implementable Savings in the following calendar
years.
Based on such determinations, if the excess cumulative Implementable
Savings for a calendar year during the Term meets or exceeds the
Product Spend Savings Goal, then United will pay the applicable MBO
Bonus to FreeMarkets in accordance with Article II c) (iii).
(iv) SETTLEMENT PROCESS. Upon receipt of the Implementable Savings
Schedule, Implemented Savings Schedule or MBO Bonus Schedule, United
shall have [*] to confirm the amounts billed and due under this
Agreement using [*] or an alternative tracking and reporting system
agreed upon by the parties. All undisputed amounts shall be paid
within thirty days of United's receipt of the Implementable Savings
Schedule, Implemented Savings Schedule or MBO Bonus Schedule. United
shall notify FreeMarkets of any disputed Implementable Savings or
Implemented Savings amounts within the initial [*] period. The
parties will use their best efforts to resolve any such disputes, and
United will pay the mutually agreed settlement of all disputed
amounts within thirty (30) days of such settlement.
f) PAYMENT. Amounts that are due under Article II a) and b) will be invoiced
to United by FreeMarkets at the end of each calendar month; provided that
the estimated amounts due under Article II b) will be invoiced to United
for each month during the Term and within thirty (30) days after each
calendar year, FreeMarkets will provide a schedule that reconciles actual
expenses under Article II b) for such calendar year with the estimated
payments and will provide United with an invoice for any amount by which
actual expenses exceeded estimated expenses. If actual expenses were less
than estimated expenses, FreeMarkets will either credit United with the
difference or, if no further invoices are to be sent to United hereunder,
will pay such difference to United. United acknowledges that it shall be
responsible for all amounts invoiced and due under this Agreement.
FreeMarkets will submit invoices for the services and related expenses as
described herein directly to Shelley Stewart or another designated member
of the Vice President of Purchasing's staff. Upon presentation of such
invoices in form and detail satisfactory to United, United will use its
best efforts to make payments within 10 days, and in all events shall make
payment within 30 days. Each invoice shall fairly and accurately describe
in sufficient detail the actual services performed, the period of
performance and the fees and expenses that are payable to FreeMarkets under
the provisions of this Agreement.
-7-
<PAGE> 8
ARTICLE III - TERMS AND CONDITIONS OF SOURCING PROJECTS
United acknowledges and agrees as follows:
a) CBE RULES. With respect to any CBE conducted hereunder, to abide by the
attached Rules and Procedures Governing Competitive Bidding Events (Exhibit
C), which contain marketplace ground rules for United, suppliers, and
FreeMarkets. These Rules and Procedures are designed to ensure ethical
participation. In the event that FreeMarkets postpones, cancels or
otherwise modifies any CBE in accordance with Exhibit C, to the extent
possible, FreeMarkets agrees to provide advance notice to United of such
modification.
b) NDA. United and FreeMarkets have entered into the attached Non-Disclosure
Agreement as of October 1, 1997 (Exhibit D), under which each party
mutually agrees to keep confidential information which either party shall
designate to the other as confidential, including but not limited to
engineering data and prints. The parties hereby agree that the terms of
such Non- Disclosure Agreement apply to this Agreement and that the terms
and conditions of this Agreement shall be designated confidential
information under such Non-Disclosure Agreement; provided, however, that
notwithstanding Section 2 thereof, Confidential Information shall be
maintained in confidence perpetually, except as otherwise agreed by the
parties and unless such information is information described in Sections
1(a)-(f) thereof.
c) RFQ COPIES. United acknowledges that FreeMarkets has the right to include
in RFQs all information it receives from United for purposes of inclusion
in the RFQs and to copy RFQs for distribution to suppliers selected by
United for procurement by United only. United or its Affiliates also has
the right to copy RFQs. United will provide FreeMarkets for inclusion in
such RFQs any non-disclosure agreement forms required by United or its
Affiliates to be executed by such suppliers.
d) USE OF DATA. FreeMarkets shall have the right to use all data generated in
connection with FreeMarkets Sourcing Projects, including data that United
provides to FreeMarkets, to do the following: (i) perform such general
analyses to track the performance of the BidWare(R)/BidServer(R)aND [*] (or
any alternative) software; (ii) determine general price trends in various
supply industries; and (iii) create predictive analyses useful for
estimating the price for a Component before such Component has been the
subject of a FreeMarkets Sourcing Project. For purposes of this subsection,
"Component" shall mean a distinct part or material described by a United
technical drawing or part number. FreeMarkets will use such data and
perform such analyses and publish the same in such a way [*]. FreeMarkets
shall have the right to publish general results of FreeMarkets Sourcing
Projects to suppliers through FreeMarkets provided [*]. These results may
include: specific results for supplier participants in each FreeMarkets
Sourcing Project; and general results for all supplier members of the
service.
e) SOFTWARE OWNERSHIP AND LICENSE. United acknowledges that FreeMarkets
retains full ownership rights to the BidWare(R)/BidServer(R)suite of
software applications and [*], and that United is not acquiring any
ownership interest in such technology. The terms under which FreeMarkets
will supply the BidWare(R)/BidServer(R)aND [*] technology (collectively
"Software") under this Agreement are further described in the Software
License Agreement. Unless otherwise agreed in writing by the parties,
United also acknowledges that FreeMarkets will retain full ownership rights
to any software, including [*], developed by FreeMarkets during the Term.
-8-
<PAGE> 9
f) [*]. In the event that [*] during the term of this Agreement in addition to
[*], if any, [*] to United no later than the time [*] its other industrial
customers. In addition, subject to any applicable confidentiality
requirements and other restrictions, FreeMarkets shall provide United with
[*].
ARTICLE IV - INDEMNITIES
a) FREEMARKETS. FreeMarkets agrees to protect, defend, indemnify, and hold
harmless United from and against all claims, demands, causes of action of
every type or character, arising out of or related to negligent or willful
acts or omissions of FreeMarkets or its subcontractors, officers,
directors, assigns or employees in connection with the performance of the
work under this Agreement.
b) UNITED. United agrees to protect, defend, indemnify and hold harmless
FreeMarkets from and against all claims, demands, causes of every type and
character arising out of or related to any negligent or willful act or
omission of United or its subcontractors, officers, directors, assigns, or
employees in connection with the performance of its obligations under this
Agreement.
c) COSTS. In the event that a claim is made hereunder, at law or otherwise,
alleging damage as a result of any error, omission or other act arising out
of or relating to this Agreement, the prevailing party shall be entitled to
reimbursement for all costs, including reasonable attorney's fees, incurred
in defending itself against such claim.
ARTICLE V - INTELLECTUAL PROPERTY INDEMNIFICATION
a) GENERAL. FreeMarkets shall protect, defend, indemnify and hold harmless
United from any suit or proceeding brought against United based on a claim
that (1) the Software furnished by FreeMarkets hereunder, (2) the use of
the Software by United consistent with FreeMarkets' specifications and
instructions or (3) the copying by United of any Software or documentation
as permitted herein constitutes an infringement of any United States
patent, United States copyright or other intellectual property rights
asserted under the laws of the United States.
b) LIMITATIONS. FreeMarkets shall have no liability for any claim based upon:
(i) the combination, operation or use of the Software with equipment,
devices or software not supplied or specified by FreeMarkets; (ii) the
alteration or modification of the Software which alteration or modification
was not made by FreeMarkets; or (iii) the failure by United to use the most
current version of the Software [*].
ARTICLE VI -COMPETITIVE ACTIVITIES
During the term of this Agreement, FreeMarkets shall not provide technology
or services similar to those defined in this Agreement for the competitive
companies listed in Exhibit F.
ARTICLE VII - NOTICES
Whenever any notice is required or authorized to be given hereunder, such
notice shall be given in writing and sent by certified mail, return receipt
requested, or overnight delivery by a national reputable service. Any such
notice, if sent by United to the Seller, shall be addressed as follows:
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<PAGE> 10
Glen T. Meakem
Chief Executive Officer
FreeMarkets OnLine, Inc.
130 Seventh Street
Century Building, Suite 500
Pittsburgh, PA 15222
and if sent by FreeMarkets to United, shall be addressed as follows:
United Technologies Corporation
One Financial Plaza
Hartford, CT 06101
Attention: Vice President - Purchasing
ARTICLE VIII - ADDITIONAL PROVISIONS
a) UNITED GENERAL TERMS. This Agreement is subject to and governed by the
following additional provisions: (i) "United Technologies Corporation
Service Agreement Provisions, dated February 1998" (attached hereto as
Exhibit G) except provisions 3, 4, 9(a), 13 and 14 which shall not apply;
(ii) United's "Code of Ethics"; and (iii) United's Policy Statement on
Business Ethics and Contracting With the United States Government, as they
may be amended from time to time.
b) REGULATORY COMPLIANCE. FreeMarkets represents and warrants to United that
FreeMarkets shall comply strictly with all of the covenants, agreements,
and undertakings made by FreeMarkets in, or furnished under or as part of
this Agreement, including without limitation, compliance with all
applicable laws or regulations, whether or not specifically referenced in
this Agreement.
c) INSURANCE COVERAGE. The coverage amounts set forth in Provision 18 (2)-(6)
of United's Service Agreement Provisions set forth in Exhibit G attached
hereto shall be increased [*] to [*], and in addition to such coverages,
FreeMarkets shall obtain [*]. Notwithstanding anything to the contrary in
Provision 18, such insurance shall contain a provision prohibiting
cancellation or reduction in coverage except upon at least 30 days' prior
notice to United. FreeMarkets represents that, as of the date of execution
of this Agreement, it has obtained all such insurance coverage.
d) [*] WILL BE LIABLE [*] FOR ANY DIRECT DAMAGES, ARISING FROM THIS AGREEMENT
OR THE SOFTWARE LICENSING AGREEMENT, UNDER ANY THEORY OF LIABILITY IN
EXCESS OF)[*]. IN NO EVENT WILL [*] BE LIABLE TO THE OTHER FOR
CONSEQUENTIAL, INCIDENTAL OR SPECIAL DAMAGES OR LOST PROFITS OF ANY NATURE
WHATSOEVER UNDER ANY THEORY OF LIABILITY, ARISING FROM THIS AGREEMENT OR
THE SOFTWARE LICENSING AGREEMENT, [*].
e) TERMINATION. This Agreement will remain in full force and effect during the
Term, and may be terminated prior to the end of the Term only as follows:
(i) By either party if the other party has materially breached this
Agreement and has failed to correct such breach within 90 days after
receiving written notice from the other party specifying the nature of
such breach;
(ii) By either party if the other party (i) becomes the subject of a
voluntary or involuntary petition in bankruptcy or any proceeding
relating to insolvency, receivership, liquidation, or composition for
the benefit of creditors, if that petition or proceeding is not
dismissed within thirty (30) days after filing, (ii) suspends the
operation of its present business or liquidates its business assets,
or (iii) generally fails to pay its debts as such debts become due or
admits in writing its inability to pay its debts.
-10-
<PAGE> 11
(iii) By United, provided it gives FreeMarkets 30 days prior written notice
of termination, and pays to FreeMarkets the following:
(A) all business service and System access fees and reimbursement that
have accrued under Article II a) and b) through the date of
termination;
(B) any Implementable Savings Bonus and Implemented Savings Bonus with
respect to all FreeMarkets Sourcing Projects based on the cumulative
Implementable Savings and Implemented Savings from such FreeMarkets
Sourcing Projects, which Savings Bonuses shall be paid in accordance
with Article II (e) (the final payment of such Savings Bonuses shall
be based on the cumulative Implementable Savings and Implemented
Savings, respectively, as of the last day of the calendar month which
includes the one-year anniversary of the date of termination, taking
into account any existing credits under Article II e));
(C) provided that the excess cumulative Implementable Savings from
January 1 through the date of termination is equal to or greater than
the amount obtained by multiplying the Product Spend Savings Goal by a
fraction, the numerator of which is the number of days that have
elapsed in such calendar year through the date of termination and the
denominator of which is 365 ("Proration Fraction"), a portion of the
MBO Bonus will be paid for the calendar year in which termination
occurs equal to [*] multiplied by the Proration Fraction (examples of
the determination of the MBO Bonus upon termination are set forth in
Exhibit I); and
(D) a fee (the "Termination Fee") equal to [*]. The parties agree that
the Termination Fee will compensate FreeMarkets for the resources it
is committing to United hereunder, and is not in the nature of
liquidated damages or a penalty.
(iv) In the event that this Agreement expires under Article I (a) in
accordance with the terms thereof or is terminated by United under
Article VIII (e) (i) or (ii), United shall not be obligated to pay
FreeMarkets the Termination Fee; provided that such expiration or
termination shall not affect United's obligations to pay compensation
that has accrued under the terms of this Agreement prior to the date
of expiration or termination (as determined under Article VIII e)
(iii).
(v) In the event that this Agreement is terminated for any reason,
FreeMarkets will provide United with a schedule of all FreeMarkets
Sourcing Projects commenced prior to the date of termination and the
parties will reasonably cooperate to transition the FreeMarkets
Sourcing Projects to United provided that termination of this
Agreement shall not relieve either party of any obligation incurred
prior to the termination.
ARTICLE IX - MISCELLANEOUS
MODIFICATION. This Agreement can only be modified by a written agreement duly
signed by the persons authorized to sign agreements on behalf of the parties and
any other variance from the terms and conditions of this Agreement will be of no
effect.
SEVERABILITY OF PROVISIONS. If any provision or provisions of this Agreement
shall be held to be invalid, illegal or unenforceable, the validity, legality
and enforceability of the remaining provisions shall not in any way be affected
or be impaired thereby.
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<PAGE> 12
GOVERNING LAW. This Agreement shall be governed by and construed in accordance
with the laws of the State of Connecticut (other than the laws on the conflict
of laws). Unless the parties otherwise agree, any action or proceedings by
United against FreeMarkets shall be brought in the federal or state courts
located in Pittsburgh, Pennsylvania, and any action brought by FreeMarkets
against United shall be brought in federal or state courts in Hartford,
Connecticut.
ENTIRE AGREEMENT. This Agreement, including all exhibits and schedules hereto,
the Non- Disclosure Agreement and the Software License Agreement referenced
herein and attached hereto, are the complete and exclusive statement of the
agreement between the parties as to the subject matter herein, and they
supersede all prior and contemporaneous proposals or agreements, oral or
written, and all other communications between the parties related to the subject
matter of this Agreement.
WAIVERS. A waiver of a breach or default under this Agreement shall not be a
waiver of any other or subsequent breach or default. The failure or delay by
either party in enforcing compliance with any term or condition of this
Agreement shall not constitute a waiver of such term or condition unless such
term or condition is expressly waived in writing.
AGREEMENT BINDING. This Agreement shall be binding upon and inure to the benefit
of the parties hereto, their successors and permitted assigns.
ASSIGNMENT. Neither party may assign this Agreement without the prior written
consent of the other party, which consent shall not be unreasonably withheld or
delayed.
AUTHORITY. Each party represents that it has full power and authority to enter
into and perform this Agreement, and the person signing this Agreement on behalf
of it has been properly authorized and empowered to enter into this Agreement.
COUNTERPARTS. This Agreement may be executed in several counterparts, all of
which taken together shall constitute one agreement between the parties.
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<PAGE> 13
IN WITNESS WHEREOF, the parties hereto have executed or caused these
presents to be executed in duplicate (each of which shall be deemed to be an
original) effective as of the date first written above.
- -------------------------------------------------------------------------------
UNITED TECHNOLOGIES FREEMARKETS ONLINE, INC.
CORPORATION
By: /s/ Kent Brittan By: /s/ Glen T. Meakem
------------------------------------ ------------------------------
Name: Kent Brittan Name: Glen T. Meakem
Title: Vice President - Purchasing Title: Chief Executive Officer
Federal ID # 043265483
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<PAGE> 14
Exhibit A
SAVINGS GOALS
- -------------------------------------------------------------------------------
TOTAL PRODUCT IMPLEMENTABLE IMPLEMENTED
SPEND* SAVINGS SAVINGS
YEAR ($000,000s) ($000,000s) ($000,000s)
---- ------------- -------------- ------------
1999 [*] [*] [*]
2000 [*] [*] [*]
- -------------------------------------------------------------------------------
* Dollar amount of total potential annual spending under FreeMarkets Sourcing
Projects
<PAGE> 15
Exhibit B
United Technologies Corporation Schedule of Payments
To FreeMarkets OnLine for Business Services and System Access
<TABLE>
<CAPTION>
Business System
Service Access Estimated Total Estimated
Calendar FTEs Fees Fees Expenses** Cost**
Month Year [*] ($000s) ($000s) ($000s) ($000s)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Jan 1999 [*] [*] [*] [*] [*]
Feb [*] [*] [*] [*] [*]
Mar [*] [*] [*] [*] [*]
Apr [*] [*] [*] [*] [*]
May [*] [*] [*] [*] [*]
Jun [*] [*] [*] [*] [*]
Jul [*] [*] [*] [*] [*]
Aug [*] [*] [*] [*] [*]
Sep [*] [*] [*] [*] [*]
Oct [*] [*] [*] [*] [*]
Nov [*] [*] [*] [*] [*]
Dec [*] [*] [*] [*] [*]
- ------------------------------------------------------------------------------------------------------------------------
Subtotal 1999 [*] [*] [*] [*]
========================================================================================================================
Jan 2000 [*] [*] [*] [*] [*]
Feb [*] [*] [*] [*] [*]
Mar [*] [*] [*] [*] [*]
Apr [*] [*] [*] [*] [*]
May [*] [*] [*] [*] [*]
Jun [*] [*] [*] [*] [*]
Jul [*] [*] [*] [*] [*]
Aug [*] [*] [*] [*] [*]
Sep [*] [*] [*] [*] [*]
Oct [*] [*] [*] [*] [*]
Nov [*] [*] [*] [*] [*]
Dec [*] [*] [*] [*] [*]
- ------------------------------------------------------------------------------------------------------------------------
Subtotal 2000 [*] [*] [*] [*]
========================================================================================================================
- ------------------------------------------------------------------------------------------------------------------------
Overall Contract [*] [*] [*] [*]
Total
========================================================================================================================
</TABLE>
* [*] United by FreeMarkets.
** Estimated payments only. Exact amounts will depend upon actual expenses
incurred and year-end reconciliation.
<PAGE> 16
Exhibit C
RULES AND PROCEDURES
GOVERNING COMPETITIVE BIDDING EVENTS
[*]
<PAGE> 17
Exhibit D
NON-DISCLOSURE AGREEMENT
This NON-DISCLOSURE AGREEMENT (this "Agreement") dated this 1st day of
October, 1997 is by and between United Technologies Corporation ("United"), and
FreeMarkets OnLine, Inc. ( "FreeMarkets"), a Delaware corporation.
================================================================================
Preamble:
In the course of the online industrial market making projects described in
the accompanying "Service Agreement" (Service Agreement Between United
Technologies Corporation and FreeMarkets OnLine, Inc. dated October 1, 1997),
United and FreeMarkets may acquire and communicate information between one
another which either party may consider to be proprietary or confidential in
nature. Such "Confidential Information" shall mean any information owned by the
owning party or any of its subsidiaries or affiliates, or entrusted to the
owning party that provides economic value, actual or potential, to the owning
party by reason of it not being generally known to other persons or entities who
can obtain economic value from its disclosure or use. Such information may
include, by way of example: computer programs and documentation; technical
design, manufacturing and application information; customer information;
training information; financial information; personnel information; new product
developments; advertising, business, and marketing plans. Therefore, based on
our mutual desire to protect our respective Confidential Information, we each
have agreed to execute this Agreement. Therefore, with the intent to be legally
bound, the parties agree as follows:
(1) All Confidential Information acquired by or disclosed to either party or its
employees or agents (a "Party") during the course of our engagement, or
disclosed in any manner incidental to the engagement by any party in whatever
form, whether written, graphic or machine-readable form, orally disclosed or
visually observed by the discovering Party, shall not be published or disclosed
internally (except to those who have a need to know in connection with the
Parties' performance of the engagement), or to any other person, firm, or
corporation or used by the discovering Party, except for any such information:
(a) which is already known to the discovering Party at the time it acquires
such information; or
(b) which is or becomes publicly known through no wrongful act of the
discovering Party; or
(c) which is rightfully received from a third person without restriction; or
(d) which is furnished to a third person by the owning Party without a similar
restriction on the third person's right; or
(e) which is approved for release by written authorization of the owning Party
including without limitation pursuant to tem-is of the Service Agreement;
or
(f) which is required by law or the judicial process to be disclosed.
In addition and notwithstanding the foregoing, and consistent with Article
III d) of the Service Agreement between United and FreeMarkets, FreeMarkets
shall have the right to publish general results of CBEs to Suppliers.
The parties will make their best effort to mark or verbally identify as
"CONFIDENTIAL" all Confidential Information. The failure to so mark or identify
any Confidential Information shall not constitute a waiver of confidentiality
with respect to the Confidential Information. Each Party shall be responsible
for violations of this Agreement by its employees, representatives, and agents.
<PAGE> 18
(2) Each Party agrees that the obligations hereunder shall continue for a period
of five (5) years from the date on which the Confidential Information was first
acquired.
(3) The discovering Party shall use the same reasonable degree of care to
protect Confidential Information from disclosure as it exercises in protecting
like information of its own.
(4) Nothing in this Agreement shall be deemed, either expressly or by
implication, to convey any right or license to the discovering Party.
(5) Confidential Information is and shall remain the property of the owning
Party. All such information which is in writing shall be returned to the
appropriate owning Party upon written request to the discovering Party.
(6) Each Party agrees to notify the owning Party immediately upon becoming aware
of or reasonably suspecting the possession, use or knowledge of all or part of
any Confidential Information of such Party by any person or entity not
authorized to have such possession, use or knowledge. Each Party will promptly
furnish the owning Party with details of such possession, use or knowledge, will
assist in preventing a recurrence thereof and will cooperate with the owning
Party in protecting their rights in the Confidential Information. Compliance
with the terms of this section will not be construed in any way as a waiver of
the owning Party's right to recover damages or obtain other relief for the
breach of this Agreement.
(7) The Parties agree that in the event of a breach or threatened breach of the
terms of this Agreement, the non-breaching party may be entitled to an
injunction prohibiting any such breach. Any such relief shall be in addition to
and not in lieu of any other relief. The Parties acknowledge that the
Confidential Information is unique and that disclosure in breach of this
Agreement may result in irreparable injury to the Party owning such information.
(8) This Agreement shall continue in effect for the Initial Term of the Service
Agreement, and during any renewal terms. Notwithstanding any termination of this
Agreement or of the Service Agreement, all obligations of each Party with
respect to Confidential Information obtained during the term of this Agreement
shall survive such termination.
(9) This Agreement:
(a) may not be amended or modified in any manner except in writing signed by
all Parties, and
(b) shall be governed and construed in accordance with the laws of the
Commonwealth of Pennsylvania without regard to choice of law provisions.
(10) Nothing in this Agreement shall limit or otherwise restrict either party's
obligations under terms of the Service Agreement.
(11) If any provision of this Agreement is found to be unenforceable, the
remainder shall be enforced as fully as possible and the unenforceable provision
shall be deemed modified to the limited extent required to permit its
enforcement in a manner most closely representing the intention of the Parties
expressed herein.
2
<PAGE> 19
Exhibit E
SOFTWARE LICENSE AGREEMENT
This Software License Agreement ("License Agreement") is made this ____ day
of January, 1999, effective as of January 1, 1998 ("Effective Date"), by and
between United Technologies Corporation, a corporation organized and existing
under the laws of the state of Delaware with an office and place of business at
Hartford, Connecticut (hereinafter referred to as "United") and FreeMarkets
OnLine, Inc., a corporation organized and existing under the laws of the state
of Delaware with an office and place of business at 130 Seventh Street, Suite
500, Pittsburgh, PA 15222 (hereinafter referred to as "FreeMarkets").
In consideration of the premises and of the mutual promises of each party
to the other herein contained, it is hereby mutually agreed as follows:
1. CAPITALIZED TERMS. Unless otherwise defined herein, all capitalized terms
shall have the meanings set forth in the Service and System Access Agreement
(the "Service Agreement") entered into between United and FreeMarkets effective
as of January 1, 1998. For purposes of this License Agreement, the rights
granted to United under this License Agreement shall also be deemed granted to
any United "Affiliate," which shall mean any entity in which United owns more
than 50% of the outstanding voting ownership interests, and shall also mean
International Aero Engines, Inc; provided, however that any such rights are
subject to the terms and conditions of this License Agreement.
2. GRANT OF LICENSE.
2.1 BIDWARE(R). Subject to the terms and conditions set forth in this License
Agreement, in consideration of the business services and System access fees set
forth in the Service Agreement, FreeMarkets hereby grants to United a
non-transferable and non-exclusive license to use BidWare(R), and any of its
respective components and any other software, exclusive of [*], provided under
the Service Agreement. The license granted herein authorizes use of BidWare(R)
only by United authorized users and only in connection with the services to be
provided to United by FreeMarkets. For purposes of this License, United's "use"
of the BidWare(R), means to load BidWare(R) into RAM or to store BidWare(R) in a
memory storage device such as a hard drive, CD- ROM or other storage device.
Under no circumstances shall United make BidWare(R) or its components
("BidWare(R)") available, or allow BidWare(R) to be made available, on a network
or file server other than the FreeMarkets BidServer(R) and the FreeMarkets
Network. Under no circumstances shall United copy BidWare(R), or allow
BidWare(R) to be copied, for any purpose other than to produce the single
archival (backup) copy permitted under this license.
[*]. Subject to the terms and conditions set forth in this License Agreement,
FreeMarkets hereby grants United and its Affiliates a perpetual, non-exclusive,
world-wide, non-transferrable, royalty-free license tot use, copy, modify and
make derivative works of the [*] delivered to United defined in Article I of the
Service Agreement [*] for any internal purpose, including the right to use the
name [*] for any internal purpose. No license is granted for United to sell,
license, sub-license or otherwise distribute [*]. [*]. FreeMarkets disclaims any
warranties and any liability of any kind in relation to such enhancements,
modifications, improvements or derivative works and nothing herein shall provide
[*]. Nothing in this Agreement provides United with any license rights to any
enhancement, improvement, modification, derivative work and/or commercial
version of [*].
For purposes of this License Agreement, BidWare(R) anD [*] shall collectively be
referred to as the "Software".
<PAGE> 20
3. USE AND LOCATION
3.1 BidWare(R) shall not be used to connect with any server, on-line service, or
any other system except as specifically provided or specified by FreeMarkets.
3.2 BidWare(R) users who have complied with the terms of this License Agreement
will be assigned a user ID and password to govern access to the FreeMarkets
Network and BidWare(R) databases. FreeMarkets reserves the right to change or
cancel or render inoperable any user ID and/or password at any time without
prior notification. United is required at all times to maintain security for its
assigned user ID(s) and password(s). Disclosure of user IDs and passwords to
anyone else is strictly prohibited, and will be grounds for termination of
FreeMarkets' services under this license.
3.3 United understands that FreeMarkets may from time-to-time make available
upgrades to modify the performance of BidWare(R). United understands that in
order to utilize BidWare(R) in conjunction with the BidServer(R) and the
FreeMarkets Network, FreeMarkets may require United to perform the necessary
tasks, and supply the necessary computer equipment, to install software
upgrades. United's failure to install upgrades or provide appropriate computer
equipment may render the BidWare(R) inoperable for its intended purpose.
4. LIMITED WARRANTY/WARRANTY DISCLAIMER/LIMITATION OF LIABILITY
4.1 FreeMarkets represents and warrants that:
a) during the term of this Agreement and any renewal term, BidWare(R) will
conform to, and perform in the manner described in, the user documentation;
b) FreeMarkets owns or otherwise has the right to grant a license for the use of
the Software;
c) any diskettes, tapes or other media provided to United by FreeMarkets
pursuant to this Agreement shall be free from physical defects under normal use,
and, at the time of delivery, shall be free from viruses;
d) any enhancements of BidWare(R) generally made available to the public or
other customers will be made available for United's use pursuant to the terms
and conditions of this Agreement.
e) BidWare(R) is designed to and will be year 2000 compliant, which means that
the product, by itself or in exchanging data with other software and/or
hardware, accurately processes date/time data (including, but not limited to,
calculating, comparing and sequencing) from, into, and between the twentieth and
twenty-first centuries (1999-2000), and the years 1999 and 2000 and leap year
calculations, provided that all hardware and software with which the Software
exchanges data (excluding hardware and software in the System used by
FreeMarkets to conduct FreeMarkets Sourcing Projects ) is year 2000 compliant.
4.2 FreeMarkets shall deliver [*] 1.1 to United with any [*] and [*] shall
perform at United in substantially the same manner it operates at FreeMarkets as
of September 18, 1998 as long as the operating environment at United for [*]
meets the requirements set forth in Exhibit H of the Services Agreement. United
acknowledges that [*], that it has not been developed or tested for commercial
use, that it may contain bugs and errors that effect its performance, that
United takes [*] an AS-IS condition and that FreeMarkets has no obligation to
repair, replace or otherwise maintain [*].
4.3 EXCEPT AS EXPRESSLY SET FORTH HEREIN OR IN THE SERVICES AGREEMENT,
FREEMARKETS MAKES NO OTHER WARRANTIES TO UNITED, EXPRESS OR IMPLIED, INCLUDING
BUT NOT LIMITED TO, ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE,
2
<PAGE> 21
RESPECTING THE SOFTWARE, NETWORK, ANY COMPETITIVE BIDDING EVENT, ANY SUPPLIER,
OR UNITED'S PARTICIPATION IN ANY COMPETITIVE BIDDING EVENT. SUBJECT TO
FREEMARKETS OBLIGATIONS REGARDING REPAIR OR REPLACEMENT, UNITED HEREBY
ACKNOWLEDGES AND AGREES THAT THE SOFTWARE AND THE NETWORK ARE NEW CREATIONS, AND
THAT THERE MAY SURFACE FROM TIME- TO-TIME "BUGS" OR "GLITCHES" THAT MAY AFFECT
FREEMARKETS' PERFORMANCE OF ITS OBLIGATIONS, AND/OR THE RIGHTS AND BENEFITS OF
UNITED, UNDER THIS AGREEMENT. SUBJECT TO FREEMARKETS OBLIGATIONS REGARDING
REPAIR OR REPLACEMENT, UNITED AGREES THAT IT ASSUMES THE RISKS OF SUCH "BUGS" OR
"GLITCHES".
FREEMARKETS' SOLE OBLIGATION UNDER THE PERFORMANCE WARRANTY FOR THE BIDWARE(R)
SOFTWARE SHALL BE TO USE REASONABLE EFFORTS TO REMEDY ANY NONCONFORMANCE OF THE
BIDWARE(R) SOFTWARE OR REPLACE THE BIDWARE(R) SOFTWARE.
5. PROPRIETARY RIGHTS. This License does not convey to United any patent,
copyright, trademark, service mark, trade secret, trade name or other
intellectual property rights, except that United will have the limited rights
for BidWare(R) and [*] expressly set forth in this License. Accordingly, United
acknowledges that, except as expressly provided for in this License, United
possesses no title or ownership of any Software or any portion thereof.
6. NON-ASSIGNMENT OF USE OR LICENSE. United may not assign or otherwise
transfer, voluntarily, by operation of law or otherwise, any of its rights under
this License, without, in each instance, FreeMarkets' prior written consent,
which consent may be withheld, delayed or conditioned in FreeMarkets' sole
discretion. Any attempted assignment or transfer in violation of the terms of
this Section 6 shall, at FreeMarkets' option, be null and void. Any assignment
consented to by FreeMarkets will not act to relieve United of any of its
obligations under this License.
7. TERMINATION OF LICENSE. The License is effective as set forth in the Services
Agreement. The license for BidWare(R) shall terminate immediately upon
completion of or termination of services to be provided by FreeMarkets to
United. United may terminate this Agreement by notifying FreeMarkets and
returning to FreeMarkets any BidWare(R) software and copies thereof and extracts
therefrom held by United.
FreeMarkets may terminate this License Agreement if United has materially
breached this License Agreement and has failed to correct such breach within [*]
after receiving written notice from FreeMarkets specifying the nature of such
breach [*].
Upon any termination of the License, for whatever reason, United shall, within
ten (10) days after such termination, return to FreeMarkets the BidWare(R)
software, any and all copies thereof, materials related thereto and derivations
therefrom then in United's possession or under its control.
8. U.S. GOVERNMENT RESTRICTED RIGHTS. The Software is provided with RESTRICTED
RIGHTS. Use, duplication, or disclosure by the U.S. Government is subject to
restrictions as set forth in subparagraph (c)(1)(ii) of the Rights in Technical
Data and Computer Software clause at DFARS 242.227-7013 or subparagraphs (c)(1)
and (2) of the Commercial Computer Software - Restrict Rights clause at 48 CFR
52.227-19, as applicable. Contractor/Manufacturer is FreeMarkets OnLine, Inc.,
130 Seventh Street, Century Building, Suite 500, Pittsburgh, PA 15222, USA.
3
<PAGE> 22
9. GENERAL PROVISIONS.
9.1 General. This License will be governed by and construed in accordance with
the laws of the State of Connecticut, without giving effect to its conflicts of
laws provisions. In the event that any provision of this Agreement is held to be
illegal, invalid or unenforceable under present or future laws by any court of
competent jurisdiction, then such provision will be fully severable and this
Agreement will be construed and enforced as if such illegal, invalid or
unenforceable provision were not a part hereof. BidWare(R) and BidServer(R) are
registered trademarks of FreeMarkets. No right, license or interest to such
trademarks are granted hereunder and United agrees that no such right, license
or interest shall be asserted by United with respect to such trademarks.
9.2 Modification. This Agreement can only be modified by a written agreement
duly signed by the persons authorized to sign agreements on behalf of the
parties and any other variance from the terms and conditions of this Agreement
will be of no effect.
9.3 Entire Agreement. This Agreement, including all exhibits and schedules
hereto, the Service Agreement referenced herein and the Non-Disclosure Agreement
referenced in the Service Agreement, are the complete and exclusive statement of
the agreement between the parties as to the subject matter herein, and they
supersede all proposals or agreements, oral or written, and all other
communications between the parties related to the subject matter of this
Agreement.
9.4 Waivers. A waiver of a breach or default under this Agreement shall not be a
waiver of any other or subsequent breach or default. The failure or delay by
either party in enforcing compliance with any term or condition of this
Agreement shall not constitute a waiver of such term or condition unless such
term or condition is expressly waived in writing.
9.5 Agreement Binding. This Agreement shall be binding upon and inure to the
benefit of the parties hereto, their successors and permitted assigns.
9.6 Assignment. Neither party may assign this Agreement without the prior
written consent of the other party.
9.7 Authority. Each party represents that it has full power and authority to
enter into and perform this Agreement, and the person signing this Agreement on
behalf of it has been properly authorized and empowered to enter into this
Agreement.
9.8 Counterparts. This Agreement may be executed in several counterparts, all of
which taken together shall constitute one agreement between the parties.
4
<PAGE> 23
IN WITNESS WHEREOF, the parties hereto have executed or caused these
presents to be executed in duplicate (each of which shall be deemed to be an
original) effective as of the date first written above.
- -------------------------------------------------------------------------------
UNITED TECHNOLOGIES FREEMARKETS ONLINE, INC.
CORPORATION
By: /s/ Kent Brittan By: /s/ Glen T. Meakem
---------------------------------- ------------------------------
Name: Kent Brittan Name: Glen T. Meakem
Title: Vice President - Purchasing Title: Chief Executive Officer
Federal ID # 043265483
5
<PAGE> 24
Exhibit F
United Competitors
United is providing FreeMarkets with competitively sensitive information and
spending significant resources to use FreeMarkets' cost-saving processes and
services. United's competitors have access to entities other than FreeMarkets
for alternative cost-saving services and therefore the parties have agreed that
during the term (including all renewals) of this Agreement, FreeMarkets shall
abide by the terms of Article VI with regard to the following United
Competitors:
- ---------------------------------------------------------------------------
UNITED DIVISION/SUBSIDIARY COMPETITORS
- ---------------------------------------------------------------------------
CARRIER [*]
- ---------------------------------------------------------------------------
HAMILTON STANDARD [*]
- ---------------------------------------------------------------------------
OTIS [*]
- ---------------------------------------------------------------------------
PRATT & WHITNEY [*]
- ---------------------------------------------------------------------------
SIKORSKY [*]
- ---------------------------------------------------------------------------
UNITED TECHNOLOGIES [*]
AUTOMOTIVE(1)
- ---------------------------------------------------------------------------
* Directly competitive divisions/categories only.
(1) In addition to the companies listed as competitors of United Technologies
Automotive ("UTA"), UTA competes with [*]. FreeMarkets has an existing
business relationship with [*] and may continue to perform services for
them. FreeMarkets agrees (i) FreeMarkets will not disclose to [*] or any
other third party any Confidential Information received from United under
this Agreement except as provided in Exhibit D, and (ii) if [*] requests
that FreeMarkets perform specialized market-making services (i.e. RFQ
preparation and supplier qualification) for a project where FreeMarkets
possesses Confidential Information received from United known to
FreeMarkets to be applicable to the project, FreeMarkets will decline the
engagement for such specialized services. Nothing herein shall prevent
FreeMarkets from conducting any Online Competitive Bidding Event for [*].
<PAGE> 25
Exhibit G
UNITED TECHNOLOGIES CORPORATION
SERVICE AGREEMENT PROVISIONS
(Government related)
February, 1998
PROVISION 1 - INTERPRETATION AND CONSTRUCTION
a. This Agreement shall be interpreted as a unified contractual document with
these Provisions and the Articles set forth in the Service Agreement attached
hereto having equal effect, except that in the event of any inconsistency
between an Article and a Provision, the Article shall control. The construction
of this Agreement shall be governed by the laws of the State of Connecticut,
excluding its conflict of law rules. The title designations of the Articles or
Provisions in this Agreement are for convenience only and shall not affect the
interpretation or construction hereof.
b. The terms and provisions set forth in this Agreement constitute the entire
agreement between the parties and shall supersede all previous communications,
representations, and agreements, either oral or written, between the parties
hereto with respect to the subject matter hereof and no agreement or
understanding varying or extending this Agreement shall be binding upon either
party hereto unless made in a writing referencing this Agreement and signed by a
duly authorized officer or representative of the party to be bound.
c. Ambiguities, inconsistencies, or conflicts arising out of or related to this
Agreement will not be strictly construed against United; rather, they shall be
resolved by applying the most reasonable interpretation under the circumstances,
giving full consideration to the intentions of the parties at the time of
contracting.
d. If in any instance any provision of this Agreement shall be determined to be
invalid or unenforceable under any law or regulation, such provision shall not
apply in such instance, but the remaining provisions hereof shall be given
effect in accordance with their terms.
e. United's failure to insist on performance of any of the terms or conditions
herein, or to exercise any right or privilege, or United's waiver of any breach
hereunder, shall not thereafter waive any such terms, conditions, or privileges
or any other terms, conditions, or privileges, whether of the same or similar
type.
PROVISION 2 - INDEPENDENT SELLER RELATIONSHIP
a. The relationship of the Seller to United is that of an independent contractor
and nothing herein shall be construed as creating any other relationship. The
Seller may adopt such arrangements as the Seller may desire with regard to the
details of the services performed hereunder, the hours during which said
services are to be provided, and the place or places where said services are to
be furnished, provided that such details, hours and services shall be consistent
with the proper accomplishment of said services and provided further that said
services shall be performed in a manner calculated to attain the most
satisfactory results for United.
b. Seller accepts, in connection with the work called for hereby, exclusive
liability for the payment of any taxes or contributions measured by Seller's
income or levied on Sellers property (real or personal). Seller also assumes all
liability for Social Security, unemployment insurance, old age payments,
annuities or retirement benefits which are measured by wages, salaries or other
remuneration's paid by Seller to any and all persons employed by it in
connection with the performance of the work, and to comply with all valid
Federal and State administrative regulations respecting the assumption of
liability for any of the aforesaid
<PAGE> 26
taxes or contributions. Seller represents that the Agreement prices incorporated
herein include all such taxes or contributions and agrees to indemnify and hold
United and United's directors, officers and employees harmless from and against
any and all liability for the delay or failure of Seller and its subcontractors
to pay any such taxes or contributions.
PROVISION 3 - CONFIDENTIAL INFORMATION AND COMPETITIVE ACTIVITIES
a. "Confidential Information" shall mean any information owned by United or any
of its subsidiaries or affiliates (in Provisions 3 and 4 all referred to as
"United"), or acquired herein by United, or entrusted to United, that provides
economic value, actual or potential, to United by reason of it not being
generally known to other persons or entities who can obtain economic value from
its disclosure or use. Such information may include, by way of example: computer
programs and documentation; technical design, manufacturing and application
information; customer information; training information; financial information;
personnel information; new product developments; advertising and business and
marketing plans.
b. Seller shall have no obligation of confidentiality with respect to any
Confidential Information which:
i) was not developed by Seller hereunder and was already known to Seller
prior to acquisition from, or disclosure by United; or
ii) is received without restriction as to disclosure by Seller from a
third party having the right to disclose it; or
iii) is approved for release by written authorization of United; or
iv) is or becomes publicly known without fault of Seller.
c. During the term (including all renewals) of this Agreement, and for five (5)
years thereafter, Seller shall safeguard and shall neither disclose to any third
person nor use for Seller's own benefit nor for the benefit of others,
Confidential Information however or whenever acquired by Seller.
d. Seller hereby represents and warrants that Seller is under no obligation to
any other person or company whereby conflicts of interest are or may be created
by Seller entering into or performing this Agreement with United.
e. During the term (including all renewals) of this Agreement and for a period
of two (2) years thereafter, Seller shall not knowingly engage, directly or
indirectly, in any development or consulting activity which is competitive to
United.
f. The Seller shall contractually bind its employees and such other persons or
parties as may be used by the Seller in the performance of services hereunder to
the obligations established under this Provision, and, in the event of a breach
of these obligations by such employees, other persons or parties, Seller shall
enforce such contractual provisions and, upon the written request of United,
permit United to enforce such contractual provisions in Seller's name
2
<PAGE> 27
PROVISION 4 - INTELLECTUAL PROPERTY
a. "Intellectual Property" shall mean all patents, copyrights, mask works,
trademarks, Confidential Information and other rights and information of a
similar nature worldwide to the extent that such rights or information are
created or made possible by Seller alone (or acting with United or others) and
result from any service(s) herein provided to United.
b. Seller will promptly disclose in writing to United all Intellectual Property.
To the extent permissible by law, all deliverables shall be deemed works made
for hire for United. In addition, Seller, on behalf of itself, its employees and
any others used by Seller, hereby irrevocably assigns to United all right, title
and interest to all Intellectual Property, and agrees to do all things
reasonably necessary to enable United to secure United States and non-United
States patents, copyrights and any other rights relating to Intellectual
Property, including the execution of a specific assignment of title of any
Intellectual Property to United. Seller, on behalf of itself, its employees and
any others used by Seller, hereby irrevocably waives all "moral rights", all
rights under the Visual Artists Rights Act, all rights of privacy and publicity,
and the like, in all materials provided to United.
c. To any extent United does not otherwise have the right(s) to do so, Seller,
on behalf of itself, its employees and any others used by Seller, hereby grants
to United worldwide, non-exclusive, perpetual, fully-paid, irrevocable,
transferable licenses (with rights to grant sublicenses) to make, copy,
distribute, display, perform, adapt and use, in any and all media, now known or
later developed, all materials and other information which Seller provides or
has provided to United either during the term of or prior to the effective date
of this Agreement.
d. Seller hereby represents and warrants to United that all materials, devices,
services and other information that Seller uses, copies or adapts hereunder are
created originally by Seller and/or are licensed lawfully to Seller.
e. Seller shall hold United harmless from and against all damages, liabilities
and costs in connection with any claim that the exercise of any right(s)
assigned/granted hereunder, infringes or violates any patent, copyright, trade
secret or other intellectual property right or other right worldwide, provided
that United: (i) gives Seller notice of such claim, (ii) permits Seller to
defend or reasonably settle same, and (iii) gives Seller all reasonable
assistance to enable Seller to do so.
f. The Seller shall contractually bind its employees and such other persons or
parties as may be used by the Seller in the performance of services hereunder to
the obligations established under this Provision, and, in the event of A breach
of these obligations by Such employees, other persons or parties, Seller shall
enforce such contractual provisions and, upon the written request of United,
permit United to enforce such contractual provisions in Seller's name.
PROVISION 5 - TITLE TO MATERIALS AND EQUIPMENT
a. All materials and equipment furnished by United and all materials and
equipment the cost of which shall be reimbursed to the Seller by United
hereunder are to be and remain the sole property of United and are to be
returned to United within ninety (90) days after the expiration or earlier
termination of this Agreement
3
<PAGE> 28
PROVISION 6 - REPRESENTATIONS, WARRANTIES, AGREEMENTS AND COVENANTS
Seller represents, warrants, covenants and agrees that:
a. The Seller and any others used by the Seller in the performance of services
hereunder will comply with United's "Code of Ethics" and shall not, directly or
indirectly, wrongfully solicit, obtain or use on behalf of the United, or
wrongfully disclose to United, any information of any other person, association,
firm, corporation, government or other entity, including information which is a
trade secret, confidential, proprietary, government security classified, or
government procurement sensitive (including documents identified prior to the
award of a government contract as source selection information and any other
information which offers or may offer United an illegal or unfair competitive
advantage); and, unless otherwise specifically identified in writing at the time
of disclosure, all information disclosed to United by the Seller and any others
used by the Seller in the performance of services hereunder may be used or
disclosed by United without restriction;
b. None of the provisions of this Agreement, nor the services performed
hereunder by the Seller and any others used by the Seller, contravenes or is in
conflict with any law, judgment, decree, order or regulation of any governmental
authority, or with any contract or agreement with, or any obligations owed to,
any other person, association, firm, corporation, government or other entity to
which the Seller or any such others used by the Seller are subject, including
without limiting the generality of the foregoing, employment agreements,
consulting agreements, disclosure agreements or agreements for the assignment of
inventions;
c. No entertainment, gift, gratuity, money, or anything of value shall be paid,
offered, given or promised by the Seller or by any others used by the Seller in
the performance of services hereunder to, or be obtained or solicited by the
Seller or by any such others from, directly or indirectly, any person,
association, firm, corporation, government or other entity that is prohibited by
United's Code of Ethics, by applicable law or regulation, by the policies of
that association, firm, corporation, government or other entity, or by the
"Policy Statement";
d. Prior to the effective date hereof and throughout the term of this Agreement,
the Seller shall promptly notify United in writing of any action, change or
development which would make any representation, warranty, covenant or agreement
in or furnished under or as a part of this Agreement untrue, inaccurate or
incomplete in any respect;
e. If the Seller (or any others used by the Seller in the performance of
services hereunder) is expected to or may engage in services considered to be
within the definitions of a "Government Marketing Consultant", "Lobbyist", or
"current or former employee of, or consultant to, the U.S. Government," as such
terms are defined in pertinent laws and regulations, the Seller agrees to notify
United immediately in writing.
In addition to the representation, warranties, covenants, and agreements
provided above, the Seller additionally warrants, represents, agrees and
covenants, that:
(1) The Seller (and all others used by the Seller in performing services
hereunder) will comply with all applicable laws and regulations, including, but
not limited to:
(A) the "Byrd Amendment", 31 U.S.C. 1352, as implemented by Federal
Acquisition Regulation ("FAR") 3.8; and
(B) the Office of Federal Procurement Policy Act, 41 U.S.C. 423, as
implemented by FAR 3.104; and
4
<PAGE> 29
(C) section 8141 of the 1989 Department of Defense Appropriation Act
and section 6 of the OFPP Act, 41 U.S.C. 404, as implemented by FAR 9.5 and OFPP
Policy Letter 89-1.
(2) The Seller shall avoid and refrain from all activities on behalf of
United which could be interpreted as creating conflicts of interest or the
appearance of a conflict for United or the Seller, including, but not limited
to:
(A) any activities that are contrary to the responsibilities and
standards of conduct set forth in the regulations of the Office of
Personnel Management, 5 CFR Parts 2635-2637, or would create conflicts of
interest as such conflicts are described in 18 U.S.C. 201-218;
(B) any activities that are prohibited by the Office of Federal
Procurement Policy Act Amendments of 1988 (herein the "OFPP Amendments")
or implementing regulations thereunder, including the prohibitions
applicable to Sellers and their Sellers during the conduct of any federal
agency procurement from knowingly:
(i) making, directly or indirectly, any offer or promise of
future employment or business opportunity to, or engage, directly
or indirectly, in any discussion of future employment or business
opportunity with, any procurement official of such agency;
(ii) offering, giving, or promising to offer or give, directly or
indirectly, any money, gratuity, or other thing of value to any
procurement official of such agency; or
(iii) soliciting or obtaining, directly or indirectly, from any
officer or employee of such agency, prior to award of a contract,
any proprietary or source selection information regarding such
procurement or disclosing such information, directly or
indirectly, to a person other than a person authorized by the
government to receive such information;
(3) The Seller is familiar with and shall continue to be familiar with
all such conflicts of interest laws and regulations and shall provide such
written certifications under such laws and regulations as United may reasonably
request. Written certifications may be required as provided for under the OFPP
Amendments and other regulations governing the conduct of Government Marketing
Consultants and/or Lobbyists. United shall make available to the Seller, upon
written request, copies or synopses of such laws and regulations. Failure to
promptly and accurately complete certifications shall be grounds for United's
immediate termination of this Agreement, without liability to United;
(4) The Seller agrees to promptly notify United if the Seller at any time
has information or reason to believe that the performance of services hereunder
would violate any such laws or regulation or would create such a conflict of
interest, or the appearance of such a conflict;
(5) Payment by United and acceptance of compensation by the Seller under
this Agreement does not constitute a violation of 10 U.S.C. 2397b, and Seller
shall not use or provide compensation to any other persons in connection with
the performance of services hereunder in violation of such statute;
(6) The Seller and any other persons used by the Seller in the
performance of services hereunder shall not contact, directly or indirectly, (i)
any officer, employee, principal or agent of the
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<PAGE> 30
Government (including any elected member of the legislative branch of the
Government or their staff) or, (ii) any customer, competitor, prime Seller,
subcontractor, vendor or supplier of United, if such contact relates to a
current or prospective government procurement; unless the Seller is specifically
authorized to make such a contact under the terms of this Agreement or the
Seller receives the prior written approval of United to make such a contact; in
any and all such instances the Seller and any such others used by the Seller
shall comply with all applicable laws and regulations; and
(7) Neither the Seller nor, where applicable, any others used by the
Seller in the performance of services hereunder, has been convicted of a felony
or has been debarred or suspended from doing business with the government or
declared ineligible by the government to perform services for or on behalf of
United, or is presently the subject of any such action.
PROVISION 7 -ASSIGNMENT
a. Neither this Agreement nor any interest hereunder shall be assignable by
either party unless such assignment is mutually agreed to in writing by the
parties hereto; provided, however, that United may assign this Agreement to any
corporation with which United may merge or consolidate or to which United may
assign substantially all of its assets or that portion of its business to which
this Agreement pertains without obtaining the agreement of the Seller.
PROVISION 8 - MODIFICATION
a. No modification of this Agreement shall be valid unless in writing and signed
by each of the parties hereto.
PROVISION 9 - EXPIRATION OR TERMINATION
a. Either party may terminate this Agreement or any renewal thereof by giving
the other party written notice of that party's intention to so terminate. The
termination will become effective on the thirtieth (30th) day immediately
following the date of the sending of said notice. This Agreement or any renewal
thereof shall automatically expire as of the end of the term if the parties do
not renew the Agreement
b. Notwithstanding any other provisions of this Agreement, if Seller or others
used by the Seller in the performance of services hereunder violate any of the
provisions of this Agreement, including but not limited to any applicable laws
or regulations or United's "Code of Ethics" or the "Policy Statement", United
may, in its sole discretion and in addition to any other remedies available at
law or in equity, terminate this Agreement by written notice to the Seller
effective immediately upon the sending of said notice.
c. The expiration or termination of this Agreement or of any renewal thereof
shall discharge any further obligations of either party hereto with respect to
this Agreement or any renewal thereof; provided, however, that the Seller's
obligations under Provisions 3, 4, 5, 20, 21 and 22 hereof with respect to such
of said services as may have been furnished prior to the effective date of
expiration or termination shall not be discharged by such expiration or
termination but shall remain in full force and effect; and, provided further,
that United's obligation hereunder to make payment to the Seller with respect to
the period prior to the effective date of said expiration or termination shall,
except in the event of termination for cause under b. above, remain in full
force and effect.
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<PAGE> 31
d. At any time prior to final payment for work under this Agreement and within
three (3) years thereafter, United shall have the right to audit all direct and
indirect charges, to the extent United may deem necessary, for the purpose of
verifying all charges claimed under any invoice. Seller agrees to maintain and
make available all records and books of account detailing any costs and expenses
charged against this Agreement or any invoice hereunder.
PROVISION 10 -WARRANTIES
a. Seller warrants that all work will be performed in accordance with current,
sound and generally accepted industry practices by appropriately licensed
personnel who are experienced in the appropriate fields. These services are to
be performed by Seller for United in consideration of the payments specified
herein and with the obligation that should any of the work not prove
satisfactory at any time, in United's sole judgment, Seller shall re-perform all
work originally undertaken by Seller and/or necessary to correct such defective
work, at no additional cost to United.
b. Seller agrees to provide A high standard of professional service and will
exert its best efforts to achieve satisfactory results within the time and funds
available.
c. All work submitted by Seller shall comply with federal, state, or local
guidelines and directions, as appropriate, regarding the format of documents,
protocols, testing procedures, and/or contents of designs, plans,
specifications, etc., to the extent such guidelines and directions are available
to Seller prior to performance of work.
d. Seller shall assign to United all warranties for materials and equipment
furnished by Seller during the performance of work. Seller shall notify United
prior to furnishing any materials or equipment that are not fully warranted for
at least the six month period immediately following conclusion of work
hereunder.
e. Seller further agrees to execute any certificate reasonably required by
United and within the scope of work hereunder if such certificate is required
pursuant to federal, state, or local laws or regulations.
f. Seller agrees to comply with all applicable federal, state, and local laws
pertinent to performance of work under this Agreement, and further agrees to
include the substance of this paragraph in all subcontracts entered into by
Seller.
g. Any payment(s) otherwise due Seller for any item o f work in dispute may be
withheld by United (in whole or part) upon evidence of default by Seller in the
performance of any such work. In no event shall payment be made for any work
performed by the Seller if such work is not stated in or is not otherwise within
the scope of work.
h. Seller warrants that the prices/charges/rates set forth or incorporated via
reference in this Agreement are not less favorable than those currently extended
to any other customer for the same or similar services, in similar quantities,
during the term hereof. No additional charges or rates of any type shall be
added without United's prior written consent
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<PAGE> 32
PROVISION 11 - EXCUSABLE DELAYS
a. Should the progress or completion of the work required be delayed due to
causes such as (but not limited to) strikes, accidents, or other unforeseeable
causes beyond the Seller's reasonable control and without its fault or
negligence, the time for completion of said work shall be extended for an
equivalent period of such delay as may be approved in writing by United (such
approval not to be unreasonably withheld). Delays caused by acts of
subcontractors or parties engaged by Seller shall not be excusable unless such
subcontractor's or party's delay was excusable within the meaning of this clause
and Seller was unable to secure alternate sources of supply or services within a
commercially reasonable time . Prompt notice in writing shall be given to United
whenever it appears said work shall be delayed or is likely to be delayed for
any cause, and Seller shall use its best efforts to minimize any delay and
continue its performance.
b. United shall be excused for any delays due to causes beyond its reasonable
control.
PROVISION 12 - CHANGES
a. At any time during the performance of services hereunder, United shall have
the right to make changes in, deletions from, or additions to the work,
hereinafter collectively referred to as "Changes". In the event that such
Changes require different and/or additional work by Seller, then prior to
commencement of work under such Change, Seller shall present to United, and
United shall consider, a claim for an equitable increase in its compensation for
services rendered because of such Change. Such claim shall be supported by such
data and information as United reasonably may require. Any such claim by Seller
for an equitable increase in compensation shall be mutually agreed to prior to
the commencement of work under the proposed Change.
b. The parties anticipate that Changes hereunder may be required under
circumstances not permitting sufficient time in which to meet the formalities
described in paragraph a. above. In such event, both parties agree to use their
best efforts to prosecute the work required as well as to fully define any
equitable increase in compensation within a reasonable time after the Change is
ordered by United.
c. Any Changes ordered hereunder shall be issued only by United's duly
authorized representative or other designee appointed in writing in advance of
ordering the Change.
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<PAGE> 33
PROVISION 13 - INDEMNIFICATION
a. Seller agrees to protect, defend, indemnify, and hold harmless United from
and against all claims, demands, and causes of action of every type and
character, without limitation, arising out of or related to performance of work
under this Agreement
b. The indemnification provided in a. above shall apply to any action arising
out of or related to the negligent or willful acts or omissions of Seller or its
subcontractors, officers, directors, heirs, assigns, or employees. This
indemnity shall not apply to claims - other than those described in c. below -
proximately resulting from the sole negligence or willful misconduct of United,
its directors, officers, agents or employees.
c. The obligation undertaken in b. above shall expressly include, without
limitation, indemnification against injuries, sickness, disease (including
occupational disease whenever occurring), or death of Sellers employees in any
way connected with or resulting from the sole, joint, or comparative negligence
of United, or of its directors, officers, agents, or employees, whether acting
jointly or severally.
d. In the event Seller makes a claim against United, at law or otherwise,
alleging damage to Seller as a result of any error, omission or other act
arising out of or relating to this Agreement, and Seller fails to prove such
claim or to prevail in any action at law or in equity, then Seller shall pay all
costs, including reasonable attorney's fees, incurred by United in defending
itself against such claim.
PROVISION 14 - TERMINATIONS AND SUSPENSION OF WORK
a. The performance of work under this Agreement may be terminated or suspended
by United in accordance with this Article in whole or from time to time in part
whenever United shall determine that such termination or suspension is in the
best interest of United. Any such termination or suspension shall be effected by
delivery to the Seller by United of a written notice specifying the extent to
which performance of work under this Contract is terminated and/or suspended and
the date upon which such action shall become effective. In the event of such
action, United shall pay Seller for all services rendered up to the effective
date of termination or suspension (subject to Article 11(d) of the Service
Agreement), and Seller may submit a proposal for equitable increase in the
prices hereof to account for any costs of demobilization and direct termination
expenses, to the extent such costs are solely attributable to the
termination/suspension and are actually incurred and paid by Seller.
PROVISION 15 - PERMITS AND LICENSES
a. Except for permits and/or licenses required by statute or regulation to be
obtained by United, Seller agrees to obtain and maintain - at its own expense -
all permits, licenses and other forms of documentation required by Seller in
order to comply with all existing laws, ordinances, and regulations of the
United States and of any state, county, township, or municipal subdivision
thereof, or other governmental agency, which may be applicable to Seller's
performance of work hereunder. United reserves the right to review and approve
all applications, permits, and licenses prior to the commencement of any work
hereunder.
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<PAGE> 34
PROVISION 16 - REPRESENTATIVES
a. Both United and Seller shall designate a representative or representatives
who shall be available during progress of work and who shall have authority to
act in all matters concerning such services, excepting, however, such
representative(s) shall not be empowered to amend or waive any term or condition
of this Contract.
PROVISION 17 - EQUAL OPPORTUNITY
a. Seller will not discriminate against any employee or applicant for employment
because of age, race, color, handicap, religion, sex, or national origin. Seller
will take affirmative action to ensure that applicants are employed, and that
employees are treated during employment without regard to their age, race,
color, religion, sex, handicap, or national origin. Such action shall include
but not be limited to the following: Employment, upgrading, demotion, or
transfer, recruitment or recruitment advertising, layoff or termination, rates
of pay or other forms of compensation, selection for training, including
apprenticeship. Seller agrees to post in conspicuous places, available to
employees and applicants for employment, notices setting forth the provisions of
this nondiscrimination clause.
b. Seller will, in all solicitations or advertisements for employees placed by
or on behalf of Seller, state that all qualified applicants will receive
consideration for employment without regard to age, race, color, religion, sex,
handicap, or national origin.
c. Seller will send to each labor union or representative of workers with which
he has a collective bargaining agreement or other contract or understanding, a
notice advising the labor union or workers' representative of the Seller's
commitments under this Equal Opportunity clause and shall post copies of the
notice in conspicuous places available to employees and applicants for
employment.
d. Seller will comply with all provisions of the rules, regulations, and
relevant orders of the Secretary of Labor.
e. Seller will include the substance of this Article in every subcontract or
purchase order unless exempted by rules, regulations, or orders of the Secretary
of Labor issued pursuant to section 204 of Executive Order 11246 of September
24, 1965, as amended by Executive Order 11375 of October 13, 1967, so that such
provisions will be binding upon each subcontractor or vendor.
PROVISION 18 - INSURANCE
a. Seller agrees to secure and carry as a minimum the following insurance
covering all work to be performed under this Agreement
(1) Workers' Compensation and Employer's Liability Insurance in an amount
sufficient by virtue of the laws of the U.S., foreign country, state, or other
governmental subdivision in which the work or any portion of the work is
performed;
(2) General Liability Insurance in which the limit of liability for injuries,
including accidental death, shall be [*] for any one occurrence;
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<PAGE> 35
(3) General Liability Insurance in which the limit of liability for property
damage shall be [*] for any one occurrence;
(4) Automobile Liability Insurance in which the limit of liability for
injuries, including accidental death, shall be [*] for any one occurrence;
(5) Automobile Liability Insurance in which the limit of liability for
property damage shall be [*] for any one occurrence; and
(6) Professional Liability Insurance subject to a limit of [*].
(7) Contractual Liability Insurance sufficient in scope of coverage and
amount [*] to cover the liabilities herein assumed by Seller.
b. All such insurance shall be issued by companies authorized to do business
under the laws of the State in which all or part of the services are to be
performed, shall be in form satisfactory to United, and shall contain a
provision prohibiting cancellation except upon at least ten (10) days' prior
notice to United. All such insurance policies will be primary in the event of a
loss arising out of the Seller's performance of work. Certified copies of said
policies or certificates evidencing such insurance and naming United as an
additional insured shall be filed with United within 30 days after the date of
this Agreement and within a reasonable time after any renewals or changes to
such policies are issued.
c. To the extent permitted by law, Seller and its insurer(s) agree that
subrogation rights against United are hereby waived. Seller hereby undertakes to
reflect such waiver in any policy(ies) required under this Agreement.
d. Seller agrees to insert the substance of paragraphs a. through c. above in
all subcontracts entered into by Seller to support work performed under this
Agreement.
PROVISION 19 - CONTINUATION OF WORK DURING THE PENDENCY OF A DISPUTE
a. No failure of Seller and United to settle any dispute or to reach any
agreement provided for by the terms of this Agreement shall excuse Seller from
diligently proceeding with the performance of this Agreement, except as
otherwise expressly provided in this Agreement.
PROVISION 20 - GOVERNMENT CONTRACTING PROVISIONS
a. This Agreement is subject to and governed by United's "Policy Statement on
Business Ethics and Conduct in Contracting with the United States Government,"
dated February 1, 1989, made a part hereof, as such may be amended from time to
time. The Seller covenants and agrees that the Seller and any others used by the
Seller in the performance of services hereunder will comply with the laws and
regulations applicable to contracting with the United States Government and with
the "Policy Statement."
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<PAGE> 36
PROVISION 21 - NATIONAL DEFENSE INFORMATION
a. The Seller recognizes that United is engaged in the performance of contracts
with the United States Government and that under such contracts United is
required to meet various requirements as to the safeguarding and nondisclosure
of information relating to the national defense. The Seller agrees, therefore,
that the Seller and others used by the Seller in the furnishing of services
hereunder shall comply strictly with all applicable laws, rules, regulations and
requirements of the Government and of United with regard to such matters. The
Seller further understands that failure to safeguard, or improper disclosure of,
information relating to the national defense may subject Seller or any such
others used by Seller to criminal liability under the laws of the United States,
including Title 18 U.S.C., Sections 793 through 799, and Executive Orders No.
10865 dated February 20, 1960, as amended by Executive Orders No. 10909 and No.
11382, and modified by No. 12030; and No. 12065 dated June 28, 1978.
PROVISION 22 - KICKBACKS
a. Seller represents and warrants to United that neither Seller (including any
of its officers, partners, employees or agents) nor any subcontractor or
subcontractor employee has:
(1) provided, attempted to provide, or offered to provide any kickback;
(2) solicited, accepted or attempted to accept any kickback; or
(3) included, directly or indirectly, the amount of any kickback in the
price applicable to this Agreement or in the subcontract price charged by any
subcontractor to a higher tier subcontractor.
b. In addition to any other remedies that United may have, Seller shall
indemnify and hold harmless United from and against any loss or damage,
including, without limitation, United's costs, attorney's fees, or any fines or
penalties assessed against United, resulting from a violation of (i) the
Anti-Kickback Act of 1986 or (ii) other pertinent federal, state, or local laws
regarding kickbacks or commercial bribery, by Seller (including any of its
officers, partners, employees, or agents) or by any subcontractor or
subcontractor employee.
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<PAGE> 37
Exhibit H
TECHNICAL ENVIRONMENT REQUIREMENTS FOR RUNNING [*]
Server Requirements:
- --------------------
The server environment for the [*] Server Database for use on a network must
have:
1. Network environment with shared file storage
2. 10-20 Mb Free files space on network accessible shared drive
Client Requirements
- -------------------
The computer to run the [*] Client Software must have:
1. Pentium Processor (or equivalent)
2. 32 Mb or more RAM
3. At least 20 Mb free space on hard drive
4. Microsoft Windows 95 Release 4.00.950 or greater or Microsoft
Windows NT 4.0 or greater
5. Network connection and authority to access and write to network
drive where shared database file is stored (UTCMeasures.mdb)
6. Microsoft Access 97
<PAGE> 38
Exhibit I
Determination of MBO Bonus Upon Termination
-------------------------------------------
Assumptions:
- ------------
Product Spend Savings Goal: [*]
Date of Termination: May 26
146 Days
Prorated Savings Goal: [*] x ------------ = [*] Million
365 Days
******************************************************************************
Scenario 1:
MBO Savings
January 1 - May 26: [*]
146 Days
MBO Bonus: [*] x ------------ = [*]
365 Days
******************************************************************************
Scenario 2:
MBO Savings
January 1 - May 26: [*] Million
MBO Bonus: No MBO Bonus
<PAGE> 39
Exhibit J
United Sourcing Process
-----------------------
The goal of the United Technologies Corporation Supply Management Process is to
select and manage the best possible suppliers. The detailed steps are outlined
below:
# Perform Procurement Analysis and Profile Sourcing Group (SG)
# Develop Sourcing Strategy
# Generate Supplier Portfolio
# Develop Solicitation and Visit Suppliers
# Evaluate Supplier Proposals
# Select Competitive Supplier
# Negotiate with Selected Supplier
# Manage Transition Plan for Products and Services
<PAGE> 1
Exhibit 10.13
FREEMARKETS, INC.
AMENDED AND RESTATED
STOCK INCENTIVE PLAN
RESTRICTED STOCK PURCHASE AGREEMENT
This Restricted Stock Purchase Agreement (the "Agreement") is made
between Thomas J. Meredith (the "Optionee") and FreeMarkets, Inc.
(the "Company") on and as of November 23, 1999.
RECITALS
A. In accordance with the Company's Amended and Restated Stock
Incentive Plan (the "Plan") and the Grant Certificate (the "Grant Certificate")
dated November 17, 1999 by and between the Company and Optionee, the
Compensation Committee of the Board of Directors of the Company (the
"Compensation Committee") has determined, pursuant to Section 7(b) and Section 8
of the Plan, to permit Optionee to exercise a stock option (the "Option") with
respect to 50,000 shares of the Common Stock of the Company as to which vesting
has not yet occurred under the vesting schedule set forth in the Grant
Certificate ("Unvested Shares"). The Unvested Shares and the shares subject to
the Grant Certificate which become vested after the date hereof are sometimes
collectively referred to herein as the "Shares."
B. As a condition to the Compensation Committee permitting Optionee to
exercise the Option with respect to Unvested Shares, Optionee must execute this
Restricted Stock Purchase Agreement, which sets forth the rights and obligations
of the parties with respect to Shares acquired upon exercise of the Option.
C. Defined terms which are used but not defined herein shall have the
definitions set forth in the Plan. For the purposes hereof, all references to
"Optionee" shall be deemed to mean or to include where applicable the Optionee's
heirs, estate, personal representative or any person claiming rights or
interests by, through or on behalf of Optionee.
1. Incorporation by Reference; Right to Repurchase
(a) The Plan and the Grant Certificate are incorporated herein by
reference, provided, however, that Section 6 of the Grant Certificate is
expressly superseded by this Restricted Stock Purchase Agreement.
(b) If Optionee's service as a member of the Board of Directors of the
Company (the "Board") is terminated for any reason, whether due to Optionee's
failure to be nominated or to stand for reelection to the Board, or his failure
to be reelected to the Board, with or without cause, or for resignation or any
other reason except as set forth in the proviso to this Section 1(b) (a
"Termination"), the Company shall have the right and option (the "Repurchase
Right") to
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<PAGE> 2
purchase from Optionee all of the Optionee's Shares which have not vested under
the vesting schedule set forth in the Grant Certificate as of the date of such
Termination at the price of $14.80 per share (the "Repurchase Price"), provided,
however, that the Company shall have no Repurchase Right upon a termination of
Optionee's service on the Board by reason of Optionee's death or permanent
disability (as defined in the Plan).
(c) Upon the occurrence of a Termination, the Company may exercise the
Repurchase Right by giving written notice to Optionee within ninety (90) days
following the effective date of the Termination, indicating the Company's
intention to exercise the Repurchase Right and setting forth (i) the number of
Shares as to which the Repurchase Right is being exercised (the "Repurchased
Shares") and (ii) a date for closing not later than thirty (30) days from the
mailing of such notice. The closing shall take place at the Company's office or
such other place designated by the Company. At the closing, the Company shall
pay to Optionee the Repurchase Price for the Repurchased Shares in immediately
available funds against delivery to the Company of certificates representing the
Repurchased Shares, and Optionee shall have no further legal or beneficial
right, title or interest in the Repurchased Shares.
2. Escrow; Transferability of the Shares.
(a) To ensure the performance of Optionee's obligations hereunder,
Optionee hereby appoints the Secretary of the Company (or such Secretary's
designee) (the "Secretary") as escrow agent for the Unvested Shares and as
Optionee's attorney-in-fact to sell, assign and transfer to the Company, all of
the Shares which the Company may repurchase pursuant to its exercise of the
Repurchase Right. Upon execution of this Agreement, Optionee shall duly endorse
and deliver to the Secretary in blank the stock power attached hereto, medallion
signature guaranteed. Promptly following execution of this Agreement, the
Secretary shall cause the share certificates representing the Unvested Shares to
be delivered to the Secretary. The Unvested Shares and the stock power shall be
held by the Secretary in escrow, until the earlier of (i) the closing of the
exercise by the Company of the Repurchase Right with respect thereto, or (ii)
subject to the proviso set forth in the following sentence, the vesting of
Unvested Shares in accordance with the vesting schedule and other provisions set
forth in the Plan and the Grant Certificate. The Secretary shall release or
cause the release of Shares from the escrow established hereunder as such Shares
vest pursuant to the vesting schedule and other provisions set forth in the Plan
and the Grant Certificate; provided, however, that the Secretary shall have the
discretion to effect such release in the manner he deems appropriate, and shall
have no obligation to deliver certificates for Shares which have vested at any
particular time or more frequently than once every year. Upon any such release,
and as a condition thereto, Optionee shall deliver to the Secretary in
accordance with this Section 2(a), any replacement certificates representing
Unvested Shares, with a stock power duly endorsed in blank, medallion signature
guaranteed, to represent the continuing escrow of such Unvested Shares in
accordance herewith.
(b) Neither the Company nor any of its officers, directors, employees
or agents, shall be liable for any act it or any of them may do or omit to do
with respect to holding or releasing the Shares which are subject to the escrow
provisions hereof.
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<PAGE> 3
(c) The sale, transfer, assignment, pledge, hypothecatation, gift or
other disposition by any means ("Transfer") (other than upon Optionee's death
pursuant to the Optionee's will or the laws of descent and distribution) of any
Unvested Shares is prohibited, and any such purported Transfer shall be void and
shall be given no force or effect. Following the lapse of the Company's
Repurchase Right with respect to Shares, such Shares shall continue to remain
subject to any restrictions set forth in the Plan, the Grant Certificate and any
other agreements to which Optionee is a party with the Company.
3. Ownership. This Agreement shall not affect in any way the ownership,
voting rights or other rights or duties of Optionee relating to the Shares,
except as specifically provided in this Agreement. This Agreement shall not be
construed in any manner to confer upon Optionee any right to remain on the
Board.
4. Legends. The share certificate evidencing the Unvested Shares issued
hereunder shall be endorsed with the following legend (in addition to any legend
required under applicable securities laws):
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
CERTAIN RESTRICTIONS UPON TRANSFER AND RIGHTS OF REPURCHASE AS
SET FORTH IN AN AGREEMENT BETWEEN THE COMPANY AND THE
STOCKHOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF
THE COMPANY.
5. Adjustment for Stock Split. All references to the number of Shares
and the purchase or repurchase price of the Shares in this Agreement shall be
appropriately adjusted to reflect any stock split, stock dividend or other
change in the Shares which may be made by the Company after the date of this
Agreement.
6. Notices. Notices from one party to the other under this Agreement
shall be deemed to have been duly given if (a) delivered personally, (b) mailed
by United States Postal Service via certified or registered mail, return receipt
requested, or (c) sent by a reputable courier service which requires a signature
upon delivery, to the party at its address set forth beneath its signature
below. Such notice will be deemed to have been given as of the date so
delivered, if delivered personally or, in the case of notice by mail or courier,
on the date so mailed or deposited with the courier.
7. Survival of Terms. This Agreement shall apply to and bind Optionee
and the Company and their respective permitted assignees and transferees, heirs,
legatees, executors, administrators and legal successors.
8. Section 83(b) Election. Optionee hereby acknowledges that Optionee
has been informed that, with respect to the exercise of an Option for Unvested
Shares, an election may be filed by Optionee with the Internal Revenue Service,
within thirty days of the purchase of such Shares, electing pursuant to Section
83(b) of the Internal Revenue Code of 1986, as amended
3
<PAGE> 4
(the "Code"), to be taxed currently on any difference between the purchase price
of the Shares and their Fair Market Value on the date of purchase. Optionee
acknowledges that Optionee has sought the advice of Optionee's own tax advisors
in connection with the purchase of the Shares and the advisability of filing of
such Election under Section 83(b) of the Code. Optionee ACKNOWLEDGES THAT IT IS
OPTIONEE'S SOLE RESPONSIBILITY TO FILE TIMELY THE ELECTION UNDER SECTION 83(b)
AND THAT THE COMPANY HAS NO OBLIGATIONS WITH RESPECT THERETO.
9. Representations. Optionee has reviewed with Optionee's own tax
advisors the federal, state, local and foreign tax consequences of this
Agreement and the transactions contemplated hereby. Optionee is relying solely
on such advisors and not on any statements or representations of the Company or
any of its agents. Optionee understands that Optionee (and not the Company)
shall be responsible for Optionee's own tax liability that may arise as a result
of this Agreement and the transactions contemplated hereby. Optionee further
acknowledges that the Shares have been purchased by Optionee solely for
investment purposes and not with a view to distribution, and that Optionee
understands that there is no liquid or other market for the Shares, that the
Shares are subject to restrictions on transferability and that the Optionee may
lose Optionee's entire investment therein.
10. Severability. The invalidity, illegality or limitation on
enforceability of any provision of this Agreement shall not affect any other
provision, each of which shall remain unaffected and unimpaired.
11. Governing Law. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of Delaware, without giving
effect to any choice of law or conflict of law provision or rule that would
cause the application of the laws of any jurisdiction other than the State of
Delaware.
12. Acknowledgment. Optionee acknowledges and represents that Optionee
has read this Agreement and is familiar with its terms and provisions. Optionee
hereby agrees to accept as binding, conclusive and final all decisions or
interpretations of the Compensation Committee upon any questions arising under
this Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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<PAGE> 5
IN WITNESS WHEREOF, this Agreement is deemed made as of the date first
set forth above.
FREEMARKETS, INC.
By: /s/ Glen T. Meakem
---------------------------------
Name: Glen T. Meakem
-------------------------------
Title: President and Chief Executive
Officer
------------------------------
OPTIONEE
/s/ Thomas J. Meredith
-------------------------------------
Signature
Thomas J. Meredith
-------------------------------------
Printed Name
5
<PAGE> 6
STOCK POWER
KNOW ALL MEN BY THESE PRESENTS,
For value received the undersigned, Thomas J. Meredith, hereby sells, assigns
and transfers unto __________________________________________________________
_____________________________________________________________________________
Fifty Thousand (50,000) Shares of Common Stock, $.01 par value per share, of
FreeMarkets, Inc. (the "Company") standing in his name on the books of the
Company represented by Certificate No. __ herewith and does hereby irrevocably
constitute and appoint the Secretary of the Company as his attorney to transfer
said stock on the books of the Company with full power of substitution in the
premises.
Dated: /s/ Thomas J. Meredith
--------------------- --------------------------------
Thomas J. Meredith
[Medallion Signature Guaranteed]
NOTICE: The signature to this assignment must correspond with the name as
written upon the face of the Certificate, in every particular, without
alteration or enlargement, or any change whatever.
