171-180000002112 - Attachment 4 - Standard Contract Terms.docx

STATE OF MICHIGAN

Request For Proposal No. 171-180000002112

STANDARD CONTRACT TERMS

This STANDARD CONTRACT (“Contract”) is agreed to between the State of Michigan (the “State”) and [Insert Company Name] (“Contractor”), a [Insert State & Entity Status, e.g., a Michigan corporation or a limited liability company]. This Contract is effective on September 1, 2018 (“Effective Date”), and unless terminated, expires on August 30, 2023 (the “Term”).

This Contract may be renewed for up to 5 additional 2-year period(s). Renewal is at the sole discretion of the State and will automatically extend the Term of this Contract. The State will document its exercise of renewal options via Contract Change Notice.

The parties agree as follows:

1. Definitions. For the purposes of this Contract, the following terms have the following meanings:

“Acceptance” has the meaning set forth in Section 7.

“Audit Period” has the meaning set forth in Section 28.

“Business Day” means a day other than a Saturday, Sunday or other day on which the State is authorized or required by law to be closed for business.

“Change” has the meaning set forth in Section 3.

“Change Notice” has the meaning set forth in Section 3.b.

“Change Proposal” has the meaning set forth in Section 3.a.

“Change Request” has the meaning set forth in Section 3.

“Confidential Information” has the meaning set forth in Section 10.a.

“Configuration” means State-specific changes made to the Software without Source Code or structural data model changes occurring.

“Contract” has the meaning set forth in the preamble.

“Contract Administrator” is the individual appointed by each party to (a) administer the terms of this Contract, and (b) approve any Change Notices under this Contract. Each party’s Contract Administrator will be identified in the Contract SOW.

“Contract SOW” means the statement of work entered into by the parties and attached as Schedule A to this Contract.

“Contractor” has the meaning set forth in the preamble.

“Contractor Personnel” all employees of Contractor and any Permitted Subcontractors involved in the performance of Services hereunder.

“Deliverable” means the Equipment, Software, Documentation, Work Products, and all other materials that Contractor is required to or otherwise does provide to the State under this Contract and otherwise in connection with any Services, including all items specifically identified as Deliverables in the applicable Statement of Work.

“Dispute Resolution Procedure” has the meaning set forth in Section 37.

“Documentation” means all user manuals, operating manuals, technical manuals and any other instructions, specifications, documents or materials, in any form or media, that describe the functionality, installation, testing, operation, use, maintenance, support, technical or other components, features or requirements of any Deliverable.

“Effective Date” has the meaning set forth in the preamble.

“Engagement SOW” means a statement of work entered into by the State and Contractor for the provision of additional specified Services and Deliverables

“Equipment” means the equipment that Contractor is required to or otherwise does provide to the State under this Contract and otherwise in connection with any Services, including but not limited to the power, environmental monitoring, HVAC equipment, and all related components including all items specifically identified as Equipment in the applicable Statement of Work.

“Fees” means the prices for Services and Deliverables set forth in an attachment to the applicable Statement of Work.

“Harmful Code” means any: (a) virus, trojan horse, worm, backdoor or other software or hardware devices the effect of which is to permit unauthorized access to, or to disable, erase, or otherwise harm, any computer, systems or software; or (b) time bomb, drop dead device, or other software or hardware device designed to disable a computer program automatically with the passage of time or under the positive control of any Person, or otherwise prevent, restrict or impede the State's use of such software.

“Intellectual Property Rights” means any and all intellectual property rights in any part of the world, whether registered or unregistered, and all applications for and renewals or extensions of such rights, including rights comprising or relating to: (a) patents, patent disclosures and inventions (whether patentable or not); (b) trademarks, service marks, trade dress, trade names, logos, corporate names and domain names, together with all of the goodwill associated therewith; (c) works of authorship, designs, copyrights and copyrightable works (including computer programs), mask works and rights in data and databases; (d) trade secrets, know-how and other confidential information; and (e) all similar or equivalent rights or forms of protection.

“Key Personnel” means any Contractor Personnel identified as key personnel in the applicable Statement of Work.

“Maintenance Release” means any update, upgrade, release or other adaptation or modification of the Software, including any updated Documentation, that Contractor may generally provide to its licensees from time to time during the Term, which may contain, among other things, error corrections, enhancements, improvements or other changes to the user interface, functionality, compatibility, capabilities, performance, efficiency or quality of the Software.

“Modification” means State-specific changes made to the Source Code of the Software to enhance, improve or otherwise create derivative works of the Software.

“New Version” means any new version of the Software that the Contractor may from time to time introduce and market generally as a distinct licensed product, as may be indicated by Contractor's designation of a new version number.

“Operating Environment” means, collectively, the platform, environment and conditions on, in or under which the Software is intended to be installed and operate, as set forth in the applicable Statement of Work, including such structural, functional and other features, conditions and components as hardware, operating software and system architecture and configuration.

“Permitted Subcontractor” has the meaning set forth in Section 9.e.

“Person” means an individual, corporation, partnership, joint venture, limited liability company, governmental authority, unincorporated organization, trust, association or other entity.

“Program Manager” is the individual appointed by each party to (a) monitor and coordinate the day-to-day activities of this Contract, and (b) for the State, to sign off on its notice of Acceptance for Services and Deliverables. Each party’s Program Manager will be identified in the Contract SOW.

“Reports” means any and all reports that Contractor is obligated to or otherwise does provide under the applicable Statement of Work.

“Representatives” means a party's employees, officers, directors, partners, shareholders, agents, attorneys, third-party advisors, successors and permitted assigns.

“Services” means any of the services Contractor is required to or otherwise does provide under this Contract or an applicable Statement of Work (including any exhibits or attachments) as more fully described in the body of this Contract and the applicable Statement of Work.

“Software” means software Contractor is required to or otherwise does provide to the State under this Contract as set forth in the applicable Statement of Work, and any Maintenance Releases or New Versions provided to the State and any Configurations or Modifications made by or for the State pursuant to this Contract, and all copies of the foregoing permitted under this Contract and any applicable license agreement.

“Source Code” means the human readable source code of the Software to which it relates, in the programming language in which the Software was written, together with all related flow charts and technical documentation, including a description of the procedure for generating object code, all of a level sufficient to enable a programmer reasonably fluent in such programming language to understand, build, operate, support, maintain and develop modifications, upgrades, updates, adaptations, enhancements, new versions and other derivative works and improvements of, and to develop computer programs compatible with, the Software.

“State” means the State of Michigan.

“State Data” has the meaning set forth in Section 25.

“State Materials” means all materials and information, including documents, data, know-how, ideas, logos, methodologies, specifications, software, content and technology, in any form or media, directly or indirectly provided or made available to Contractor by or on behalf of the State in connection with this Contract.

“Statement of Work” means the Contract SOW or an Engagement SOW entered into by the parties. All references to “applicable Statement of Work” shall mean either the Contract SOW or an applicable Engagement SOW.

“Term” has the meaning set forth in the preamble.

“Third Party” means any Person other than the State or Contractor.

“Transition Period” has the meaning set forth in Section 20.

“Transition Responsibilities” has the meaning set forth in Section 20.

“Unauthorized Removal” has the meaning set forth in Section 9.d.ii.

“User Data” means all data, information and other content of any type and in any format, medium or form, whether audio, visual, digital, screen, GUI or other, that is input, uploaded to, placed into or collected, stored, processed, generated or output by any device, system or network by or on behalf of the State, including any and all works, inventions, data, analyses and other information and materials resulting from any use of the Software by or on behalf of the State under this Contract, except that User Data does not include the Software or data, information or content, including any GUI, audio, visual or digital or other display or output, that is generated automatically upon executing the Software without additional user input.

“Warranty Period” means the period of time commencing on the date of the State's Acceptance of the Deliverables and continuing for the period of time specified in the Contract SOW or an applicable Engagement SOW.

“Work Product” means all State-specific materials that Contractor is required to, or otherwise does, provide to the State under this Contract including but not limited to computer scripts, macros, user interfaces, Reports, project management documents, forms, templates, and other State-specific documents and related materials together with all ideas, concepts, processes, and methodologies developed in connection with this Contract whether or not embodied in this Contract.

2. Services. Contractor shall provide the Services and Deliverables pursuant to the executed Contract SOW, which is attached as Schedule A to this Contract. Contractor may provide additional Services and Deliverables pursuant to an Engagement SOW. The terms and conditions of this Contract will apply at all times to the Contract SOW and any Engagement SOW. Contractor agrees that prompt and timely performance of its obligations in accordance with this Contract, the Contract SOW, and any Engagement SOW is strictly required.

3. Change Control Process. The State may at any time request in writing (each, a “Change Request”) changes to the Contract SOW or an Engagement SOW, including changes to the Services and Deliverables (each, a “Change”). Upon the State’s submission of a Change Request, the parties will evaluate and implement all Changes in accordance with this Section

a. As soon as reasonably practicable, and in any case within twenty (20) Business Days following receipt of a Change Request, Contractor will provide the State with a written proposal for implementing the requested Change (“Change Proposal”), setting forth:

i. a written description of the proposed Changes to any Services or Deliverables;

ii. a schedule for commencing and completing any additional or modified Services or Deliverables, and the effect of such Changes, if any, on completing any other Services or Deliverables under the applicable Statement of Work;

iii. any additional resources Contractor deems necessary to carry out such Changes; and

iv. any increase or decrease in Fees resulting from the proposed Changes, which increase or decrease will reflect only the increase or decrease in time and expenses Contractor requires to carry out the Change.

b. Within thirty (30) Business Days following the State’s receipt of a Change Proposal, the State will by written notice to Contractor, approve, reject, or propose modifications to such Change Proposal. If the State proposes modifications, Contractor must modify and re-deliver the Change Proposal reflecting such modifications, or notify the State of any disagreement, in which event the parties will negotiate in good faith to resolve their disagreement. Upon the State’s approval of the Change Proposal or the parties’ agreement on all proposed modifications, as the case may be, the parties will execute a written agreement to the Change Proposal (“Change Notice”), which Change Notice will be signed by the State’s Contract Administrator and will constitute an amendment to the applicable Statement of Work.

c. If the parties fail to enter into a Change Notice within fifteen (15) Business Days following the State’s response to a Change Proposal, the State may, in its discretion:

i. require Contractor to provide the Services and Deliverables under the applicable Statement of Work without the Change;

ii. require Contractor to continue to negotiate a Change Notice;

iii. initiate a Dispute Resolution Procedure; or

iv. if the Change Request is initiated due to changes in any applicable laws or policy, then, notwithstanding any provision to the contrary in the applicable Statement of Work, terminate this Contract for cause under Section 18, or otherwise, terminate this Contract for convenience under Section 19.

d. No Change will be effective until the parties have executed a Change Notice. Except as the State may request in its Change Request or otherwise in writing, Contractor must continue to perform its obligations in accordance with the applicable Statement of Work pending negotiation and execution of a Change Notice. Contractor will use its best efforts to limit any delays or Fee increases from any Change to those necessary to perform the Change in accordance with the applicable Change Notice. Each party is responsible for its own costs and expenses of preparing, evaluating, negotiating, and otherwise processing any Change Request, Change Proposal, and Change Notice.

e. The performance of any functions, activities, tasks, obligations, roles and responsibilities comprising the Services or Deliverables as described in this Contract are considered part of the Services and Deliverables and, thus, will not be considered a Change. This includes the delivery of all Deliverables in accordance with their respective specifications, and the diagnosis and correction of non-conformities discovered in Deliverables prior to their Acceptance by the State or, subsequent to their Acceptance by the State, as necessary for Contractor to fulfill its associated service and maintenance obligations under this Contract.

f. Contractor may, on its own initiative and at its own expense, prepare and submit its own Change Request to the State. However, the State will be under no obligation to approve or otherwise respond to a Change Request initiated by Contractor.

4. Intellectual Property Rights.

a. Work Products. As to any Work Products, Contractor hereby acknowledges that the State is and will be the sole and exclusive owner of all right, title, and interest in such Work Products, and all associated Intellectual Property Rights, if any. Such Work Products are works made for hire as defined in Section 101 of the Copyright Act of 1976. To the extent any Work Products, or related Intellectual Property Rights do not qualify as works made for hire under the Copyright Act, Contractor will, and hereby does, immediately on its creation, assign, transfer and otherwise convey to the State, irrevocably and in perpetuity, throughout the universe, all right, title and interest in and to the Work Products, including all Intellectual Property Rights therein.

b. Rights to Software and Documentation. Contractor hereby grants to the State a license to use the Software and related Documentation in accordance with the terms and conditions of this Contract and the License Agreement set forth in Schedule B (the “License Agreement”).

c. State License Grant. The State will remain the sole and exclusive owners of all right, title, and interest in and to State Materials, including all Intellectual Property Rights therein. Contractor will have no right or license to, and will not, use any State Materials except solely during the Term of this Contract for which they are provided and to the extent necessary to perform the Services and provide the Deliverables to the State. All other rights in and to the State Materials are expressly reserved by the State

5. Support and Maintenance. Contractor shall provide support and maintenance for the Equipment and Software in accordance with the Contract SOW.

6. Purchase, Delivery, and Installation.

a. Purchase Orders. The State will order the Services, Equipment, Software, or Deliverables pursuant to a signed Purchase Order issued by the State. The State reserves the right to cancel any Purchase Order at any time prior to shipment of the Deliverables or delivery of the Services and shall not be subject to any charges or other fees whatsoever as a result of such cancellation. The State may by written communication cancel or make changes to any Purchase Order subject to an equitable adjustment in the price, delivery schedule, or both, where appropriate. THE TERMS AND CONDITIONS OF THIS CONTRACT WILL APPLY AT ALL TIMES TO ANY PURCHASE ORDERS ISSUED BY THE STATE.

b. Engagement Statements of Work. The State may order additional Services and Deliverables pursuant to an Engagement SOW. For billing purposes, all Engagement SOWs must have an associated Purchase Order issued by the State. THE TERMS AND CONDITIONS OF THIS CONTRACT WILL APPLY AT ALL TIMES TO ANY ENGAGEMENT SOW ENTERED INTO BETWEEN THE PARTIES.

Engagement SOWs entered into under this Contract shall be developed and agreed to by the parties as set forth below:

i. The State shall deliver its proposed Engagement SOW to the Contractor, whereupon the Contractor shall review and approve, or raise any exceptions or clarifications to the State’s proposed Engagement SOW. If Contractor raises any such exceptions, the parties shall negotiate in good faith to amend the proposal, provided that:

1. to the extent that the Contractor’s response does not comply with the requirements of this Contract and the business requirements set forth in the State’s proposed Engagement SOW, it shall be amended to so comply; and

2. either party may terminate negotiations if the parties fail to agree on a final Engagement SOW.

ii. Upon the parties' agreement to an Engagement SOW, each party shall cause the same to be signed by its duly authorized representative. Upon its mutual execution, the Engagement SOW shall be attached to its associated Purchase Order.

c. Delivery Procedure for Deliverables. Contractor shall deliver all Deliverables within the timeframe set forth in the applicable Purchase Order, FOB destination, with such destination being the "ship to" address as specified in the applicable Purchase Order. Contractor shall bear all risk of loss of or damage to the Deliverable until Acceptance by the State and shall arrange and pay for all transportation and insurance sufficient to fully protect the Deliverable while in transit. Each shipment shall include a packing slip indicating the State’s order number, a description of the Deliverable shipped and the quantity shipped. If any loss to, or damage of, the Deliverable occurs prior to Acceptance by the State, Contractor shall immediately provide a replacement Deliverable. Contractor is responsible for filing, processing, and collecting all damage claims. The State will record and report to Contractor any evidence of visible damage. Title shall pass upon such Acceptance. Contractor shall make available all appropriate or related user Documentation at the time of delivery of the first unit of each different Deliverable type. Deliverables delivered without the appropriate and required Documentation shall be considered "shipped short" until the applicable Documentation has been received.

d. Software Installation.

i. Unless otherwise set forth in the applicable Statement of Work or the applicable Purchase Order, Contractor will deliver, install, configure, integrate, customize, modify and otherwise provide and make fully operational the Software in accordance with the criteria set forth in the applicable Statement of Work.

ii. Unless otherwise set forth in the applicable Statement of Work or applicable Purchase Order, Contractor is responsible for ensuring the relevant Operating Environment is set up and in working order to allow Contractor to deliver and install the Software. Contractor will provide the State with such notice as is specified in the applicable Statement of Work, prior to delivery of the Software to give the State sufficient time to prepare for Contractor’s delivery, and if applicable, installation of the Software. If the State is responsible for site preparation or installation, Contractor will provide such assistance as State requests to complete such preparation and installation on a timely basis.

iii. During the Term, Contractor shall provide the State with all Maintenance Releases and New Versions, each of which will constitute Software and be subject to the terms and conditions of this Contract, at no additional charge.

iv. The State has no obligation to install or use any Maintenance Release or New Version. If the State wishes to install any Maintenance Release or New Version, the State shall have the right to have such Maintenance Release or New Version installed, in the State's discretion, by Contractor or other authorized party as set forth in the applicable Statement of Work.

e. Equipment Installation. Unless otherwise specified in the applicable Statement of Work or applicable Purchase Order, Contractor shall provide the initial installation of all Equipment at no additional charge. Installation shall include: unpacking, removal of all shipping and packing materials from the premises, positioning, connecting to internal utility services, and related necessary services to allow for testing and Acceptance by the State. All Equipment installations shall comply with building and facilities standards established by the State. If the State installs the Equipment, Contractor shall provide all reasonably necessary assistance at no additional cost.

7. Acceptance.

a. All Services and Deliverables are subject to inspection and testing by the State in accordance with the applicable Statement of Work and any applicable Purchase Order Requirements.

b. Unless otherwise specified in the applicable Statement of Work, all Services and Deliverables are subject to the acceptance procedures set forth below:

i. All Services and Deliverables are subject to inspection and testing by the State within 30 calendar days of the State’s receipt of them, or such other period as may be agreed upon in writing. The Services and Deliverables must be accepted in writing by the State’s Program Manager (“Acceptance”). If the State finds deficiencies in the Services and Deliverables, it may: (1) demand performance at no additional cost, in the form a written notice to cure; or (2) reject the deficient Services and Deliverables without performing any further inspections, and terminate the Contract, in whole or in part, in accordance with Section 18, Termination for Cause.

ii. Within 10 Business Days from the date of Contractor’s receipt of a notice to cure, or such other period as may be agreed upon in writing, Contractor must cure, at no additional cost, the noted deficiencies and deliver acceptable Services and Deliverables to the State.

iii. If Contractor is unable or refuses to correct the noted deficiencies within the time response standards set forth in subsection (ii) above, the State may terminate the Contract, in whole or in part, in accordance with Section 18, Termination for Cause. The State, or a third party identified by the State, may perform the Services and Deliverables and the State may recover the difference between the cost to cure and the Contract price plus an additional 10% administrative fee.

iv. If the State rejects the Deliverables, Contractor must remove them from the premises within 10 Business Days, or such other period as may be agreed upon in writing, after notification of rejection. The risk of loss of rejected or non-conforming Deliverables remains with Contractor. Rejected Deliverables not removed by Contractor within the agreed to timeframe will be deemed abandoned by Contractor, and the State will have the right to dispose of it as its own property. Contractor must reimburse the State for costs and expenses incurred in storing or effecting removal or disposition of rejected Deliverables.

8. Invoicing and Payment.

a. Invoicing. Contractor will invoice the State for Fees in accordance with the requirements set forth in the applicable Statement of Work. Contractor must submit each invoice in electronic format, via such delivery means and to such address as are specified by the State. Each separate invoice must:

i. clearly identify this Contract;

ii. list each Fee item separately;

iii. include sufficient detail for each line item to enable the State to satisfy its accounting and charge-back requirements;

iv. for Fees determined on a time and materials basis, report details regarding the number of hours performed during the billing period, the skill or labor category for such Contractor Personnel and the applicable hourly billing rates;

v. include such other information as may be required by the State; and

vi. any other requirements set forth in the applicable Statement of Work.

b. Responsibility for Costs. Contractor is responsible for all costs and expenses incurred in or incidental to the delivery of Services and Deliverables, including all costs of any materials supplied by Contractor, all fees, fines, licenses, bonds, or taxes required of or imposed against Contractor, and all other of Contractor’s costs of doing business.

c. Payment. Invoices are due and payable by the State, in accordance with the State’s standard payment procedures as specified in 1984 Public Act no. 279, MCL 17.51, et seq., within forty-five (45) calendar days after receipt, provided the State determines that the invoice was properly rendered. The State will only disburse payments under this Contract through Electronic Funds Transfer (EFT). Contractor must register with the State at http://www.michigan.gov/cpexpress to receive electronic fund transfer payments. If Contractor does not register, the State is not liable for failure to provide payment.

d. Payment Disputes. The State may withhold from payment any and all payments and amounts it disputes in good faith, pending resolution of such dispute, provided that the State:

i. timely renders all payments and amounts that are not in dispute;

ii. notifies Contractor of the dispute prior to the due date for payment, specifying in such notice (A) the amount in dispute; and, (B) the reason for the dispute set out in sufficient detail to facilitate investigation by Contractor and resolution by the parties;

iii. works with Contractor in good faith to resolve the dispute promptly; and

iv. promptly pays any amount determined to be payable by resolution of the dispute.

e. Not to Withhold Services. Contractor shall not withhold any Services or Deliverables or fail to perform any obligation hereunder by reason of the State's good faith withholding of any payment or amount or any dispute arising therefrom.

f. Firm Pricing. Unless otherwise set forth in the applicable Statement of Work, all Fees set forth in this Contract are firm and will not be increased during the Term, or any renewal thereof.

g. Taxes. The State is exempt from State sales tax for direct purchases and may be exempt from federal excise tax, if Services or Deliverables purchased under this Contract are for the State’s exclusive use. Notwithstanding the foregoing, all Fees are inclusive of taxes, and Contractor is responsible for all sales, use and excise taxes, and any other similar taxes, duties and charges of any kind imposed by any federal, state, or local governmental entity on any amounts payable by the State under this Contract.

h. Right of Setoff. Without prejudice to any other right or remedy it may have, the State reserves the right to set off at any time any amount owing to it by Contractor against any amount payable by the State to Contractor under this Contract.

i. Service Credits. Contractor acknowledges and agrees that any credits assessed pursuant to the applicable Statement of Work: (a) is a reasonable estimate of and compensation for the anticipated or actual harm to the State that may arise from the corresponding service level failure, which would be impossible or very difficult to accurately estimate; and (b) may, at the State’s option, be credited or set off against any Fees or other charges payable to Contractor under this Contract or be payable to the State upon demand. No service credits for any service period may exceed the total amount of Fees that would be payable for that service period if the Services were fully provided in accordance with this Contract and the applicable Statement of Work. Credits assessed pursuant to the applicable Statement of Work will not constitute a waiver or release of any other remedy the State may have under this Contract for Contractor’s breach of this Contract, including without limitation, the State’s right to terminate this Contract for cause under Section 18, and the State will be entitled in its discretion to recover actual damages caused by Contractor’s failure to perform its obligations under this Contract.

9. Performance of Services. Contractor will provide all Services and Deliverables in a timely, professional and workmanlike manner and in accordance with the terms, conditions, and specifications set forth in this Contract and the applicable Statement of Work.

a. State Standards

i. Contractor must adhere to all applicable standards as described within the comprehensive listing of the State’s existing technology standards at http://www.michigan.gov/dmb/0,4568,7-150-56355-108233--,00.html

ii. To the extent that Contractor has access to the State’s computer system, Contractor must comply with the State’s Acceptable Use Policy, see http://michigan.gov/cybersecurity/0,1607,7-217-34395_34476---,00.html. All Contractor personnel will be required, in writing, to agree to the State’s Acceptable Use Policy before accessing the State’s system. The State reserves the right to terminate Contractor’s access to the State’s system if a violation occurs.

iii. Contractor is not authorized to make changes to any State systems without prior written authorization from the State Project Manager. Any changes Contractor makes to any State systems with the State’s approval must be done according to applicable State procedures, including security, access, and configuration standards.

b. Contractor Personnel

i. Contractor is solely responsible for all Contractor personnel and for the payment of their compensation, including, if applicable, withholding of income taxes, and the payment and withholding of social security and other payroll taxes, unemployment insurance, workers’ compensation insurance payments and disability benefits.

ii. Prior to any Contractor personnel performing any Services, Contractor will:

1. ensure that such Contractor personnel have the legal right to work in the United States; and

2. require such Contractor personnel to execute written agreements, in form and substance acceptable to the State that bind such Contractor personnel to confidentiality provisions that are at least as protective of the State’s information (including all Confidential Information) as those contained in this Contract.

iii. Contractor and all Contractor Personnel will comply with all rules, regulations, and policies of the State that are communicated to Contractor in writing, including security procedures concerning systems and data and remote access, building security procedures, including the restriction of access by the State to certain areas of its premises or systems, and general health and safety practices and procedures.

iv. The State reserves the right to require the removal of any Contractor Personnel found, in the judgment of the State, to be unacceptable. The request must be written with reasonable detail outlining the reasons for the removal request. Replacement personnel for the removed person must be fully qualified for the position. If the State exercises this right, and Contractor cannot immediately replace the removed personnel, the parties agree to negotiate an equitable adjustment in schedule or other terms that may be affected by the required removal.

c. Background Checks. Upon request, Contractor must perform background checks on all employees and subcontractors and its employees prior to their assignment. The scope is at the discretion of the State and documentation must be provided as requested. Contractor is responsible for all costs associated with the requested background checks. The State, in its sole discretion, may also perform background checks.

d. Contractor’s Key Personnel

i. The State has the right to recommend and approve in writing the initial assignment, as well as any proposed reassignment or replacement, of any Key Personnel. Before assigning an individual to any Key Personnel position, Contractor will notify the State of the proposed assignment, introduce the individual to the State Project Manager, and provide the State with a resume and any other information about the individual reasonably requested by the State. The State reserves the right to interview the individual before granting written approval. In the event the State finds a proposed individual unacceptable, the State will provide a written explanation including reasonable detail outlining the reasons for the rejection.

ii. Contractor will not remove any Key Personnel from their assigned roles on this Contract without the prior written consent of the State. The Contractor’s removal of Key Personnel without the prior written consent of the State is an unauthorized removal (“Unauthorized Removal”). An Unauthorized Removal does not include replacing Key Personnel for reasons beyond the reasonable control of Contractor, including illness, disability, leave of absence, personal emergency circumstances, resignation, or for cause termination of the Key Personnel’s employment. Any Unauthorized Removal may be considered by the State to be a material breach of this Contract, in respect of which the State may elect to terminate this Contract for cause under Section 18.

e. Subcontractors. Contractor will not, without the prior written approval of the State, which consent may be given or withheld in the State’s sole discretion, engage any Third Party to perform Services. The State’s approval of any such Third Party (each approved Third Party, a “Permitted Subcontractor”) does not relieve Contractor of its representations, warranties or obligations under this Contract. Without limiting the foregoing, Contractor will:

i. be responsible and liable for the acts and omissions of each such Permitted Subcontractor (including such Permitted Subcontractor's employees who, to the extent providing Services or Deliverables, shall be deemed Contractor Personnel) to the same extent as if such acts or omissions were by Contractor or its employees;

ii. name the State a third party beneficiary under Contractor’s Contract with each Permitted Subcontractor with respect to the Services;

iii. be responsible for all fees and expenses payable to, by or on behalf of each Permitted Subcontractor in connection with this Contract, including, if applicable, withholding of income taxes, and the payment and withholding of social security and other payroll taxes, unemployment insurance, workers' compensation insurance payments and disability benefits

10. Notices. All notices and other communications required or permitted under this Contract must be in writing. Notices sent in accordance with this Section 10 will be deemed effectively given: (a) when received, if delivered by hand (with written confirmation of receipt); (b) when received, if sent by a nationally recognized overnight courier (receipt requested); (c) on the date sent by e-mail (with confirmation of transmission), if sent during normal business hours of the recipient, and on the next Business Day, if sent after normal business hours of the recipient; or (d) on the fifth (5th) day after the date mailed, by certified or registered mail, return receipt requested, postage prepaid.

[Name] [Street Address] [City, State, Zip] [Email] [Phone] [Name] [Street Address] [City, State, Zip] [Email] [Phone]

11. Insurance Requirements. Contractor must maintain the insurances identified below and is responsible for all deductibles. All required insurance must: (a) protect the State from claims that may arise out of, are alleged to arise out of, or result from Contractor's or a subcontractor's performance; (b) be primary and non-contributing to any comparable liability insurance (including self-insurance) carried by the State; and (c) be provided by a company with an A.M. Best rating of "A" or better and a financial size of VII or better.

Commercial General Liability Insurance

Minimal Limits:

$1,000,000 Each Occurrence Limit $1,000,000 Personal & Advertising Injury Limit $2,000,000 General Aggregate Limit $2,000,000 Products/Completed Operations

Deductible Maximum:

$50,000 Each Occurrence Contractor must have their policy endorsed to add “the State of Michigan, its departments, divisions, agencies, offices, commissions, officers, employees, and agents” as additional insureds using endorsement CG 20 10 11 85, or both CG 2010 07 04 and CG 2037 07 0.

Automobile Liability Insurance

Minimal Limits:

$1,000,000 Per Occurrence

Workers' Compensation Insurance

Minimal Limits:

Coverage according to applicable laws governing work activities.

Waiver of subrogation, except where waiver is prohibited by law.

Employers Liability Insurance

Crime Insurance

Minimal Limits:

$1,000,000 Employee Theft Per Loss Contractor must have their policy: (1) cover forgery and alteration, theft of money and securities, robbery and safe burglary, computer fraud, funds transfer fraud, money order and counterfeit currency, and (2) endorsed to add “the State of Michigan, its departments, divisions, agencies, offices, commissions, officers, employees, and agents” as Loss Payees.

Professional Liability (Errors and Omissions) Insurance

Minimal Limits:

$5,000,000 Each Occurrence $5,000,000 Annual Aggregate

Deductible Maximum:

$50,000 Per Loss

If any of the required policies provide claim-made coverage, the Contractor must: (a) provide coverage with a retroactive date before the effective date of the Contract or the beginning of Services; (b) maintain coverage and provide evidence of coverage for at least three (3) years after completion of the Services; and (c) if coverage is canceled or not renewed, and not replaced with another claims-made policy form with a retroactive date prior to the contract effective date, Contractor must purchase extended reporting coverage for a minimum of three (3) years after completion of work.

Contractor must: (a) provide insurance certificates to the State’s Contract Administrator, containing the agreement or purchase order number, at Contract formation and within 20 calendar days of the expiration date of the applicable policies; (b) require that subcontractors maintain the required insurances contained in this Section; (c) notify the State’s Contract Administrator within 5 business days if any insurance is cancelled; and (d) waive all rights against the State for damages covered by insurance. Failure to maintain the required insurance does not limit this waiver.

This Section is not intended to and is not be construed in any manner as waiving, restricting or limiting the liability of either party for any obligations under this Contract (including any provisions hereof requiring Contractor to indemnify, defend and hold harmless the State).

12. Extended Purchasing Program. This Contract is extended to MiDEAL members. MiDEAL members include local units of government, school districts, universities, community colleges, and nonprofit hospitals. A current list of MiDEAL members is available at www.michigan.gov/mideal. Upon written agreement between the State and Contractor, this Contract may also be extended to: (a) State of Michigan employees and (b) other states (including governmental subdivisions and authorized entities).

If extended, Contractor must supply all Services and Deliverables at the established Contract prices and terms. The State reserves the right to negotiate additional discounts based on any increased volume generated by such extensions.

Contractor must submit invoices to, and receive payment from, extended purchasing program members on a direct and individual basis. ALL CONTRACTUAL OBLIGATIONS UNDER THIS CONTRACT IN CONNECTION WITH A PURCHASE ORDER PLACED BY A MIDEAL MEMBER ARE THE SOLE OBLIGATION OF THE MIDEAL MEMBER PLACING THE ORDER AND NOT THE RESPONSIBILITY OF THE STATE

13. Independent Contractor. Contractor is an independent contractor and assumes all rights, obligations and liabilities set forth in this Contract. Contractor, its employees, and agents will not be considered employees of the State. No partnership or joint venture relationship is created by virtue of this Contract. Contractor, and not the State, is responsible for the payment of wages, benefits and taxes of Contractor’s employees and any subcontractors. Prior performance does not modify Contractor’s status as an independent contractor.

14. Assignment. Contractor may not assign this Contract to any other party without the prior written approval of the State. Upon notice to Contractor, the State, in its sole discretion, may assign in whole or in part, its rights or responsibilities under this Contract to any other party.

15. Change of Control. Contractor will notify the State, at least 90 calendar days before the effective date, of a change in Contractor’s organizational structure or ownership. For purposes of this Contract, a change in control means any of the following: (a) a sale of more than 50% of Contractor’s stock; (b) a sale of substantially all of Contractor’s assets; (c) a change in a majority of Contractor’s board members; (d) consummation of a merger or consolidation of Contractor with any other entity; (e) a change in ownership through a transaction or series of transactions; (f) or the board (or the stockholders) approves a plan of complete liquidation. A change of control does not include any consolidation or merger effected exclusively to change the domicile of Contractor, or any transaction or series of transactions principally for bona fide equity financing purposes.

In the event of a change of control, Contractor must require the successor to assume this Contract and all of its obligations under this Contract.

16. Liquidated Damages. Liquidated damages, if applicable, will be assessed as described in the applicable Statement of Work.

17. Stop Work Order. The State may suspend any or all activities under the Contract at any time. The State will provide Contractor a written stop work order detailing the suspension. Contractor must comply with the stop work order upon receipt. Within 90 calendar days, or any longer period agreed to by Contractor, the State will either: (a) issue a notice authorizing Contractor to resume work, or (b) terminate the Contract. The State will not pay for Services or Deliverables, Contractor’s lost profits, or any additional compensation during a stop work period.

18. Termination for Cause. The State may terminate this Contract for cause, in whole or in part, if Contractor, as determined by the State: (a) endangers the value, integrity, or security of any State location, data, or personnel; (b) becomes insolvent, petitions for bankruptcy court proceedings, or has an involuntary bankruptcy proceeding filed against it by any creditor; (c) engages in any conduct that may expose the State to liability; (d) breaches any of its material duties or obligations under this Contract, including but not limited to obtaining and maintaining, throughout the Term of the Contract, relevant certifications; or (e) fails to cure a breach within the time stated in a notice of breach. Any reference to specific breaches being material breaches within this Contract will not be construed to mean that other breaches are not material.

If the State terminates this Contract under this Section, the State will issue a termination notice specifying whether Contractor must: (a) cease performance immediately, or (b) continue to perform for a specified period. If it is later determined that Contractor was not in breach of the Contract, the termination will be deemed to have been a termination for convenience, effective as of the same date, and the rights and obligations of the parties will be limited to those provided in Section 19.

The State will only pay for amounts due to Contractor for Services and Deliverables accepted by the State on or before the date of termination, subject to the State’s right to set off any amounts owed by the Contractor for the State’s reasonable costs in terminating this Contract. Contractor must promptly reimburse to the State any Fees prepaid by the State prorated to the date of such termination, including any prepaid Fees for support and maintenance services. Further, Contractor must pay all reasonable costs incurred by the State in terminating this Contract for cause, including administrative costs, attorneys’ fees, court costs, transition costs, and any costs the State incurs to procure the Services or Deliverables from other sources.

19. Termination for Convenience. The State may immediately terminate this Contract in whole or in part without penalty and for any reason, including but not limited to, appropriation or budget shortfalls. The termination notice will specify whether Contractor must: (a) cease performance of the Services immediately, or (b) continue to perform the Services in accordance with Section 20. If the State terminates this Contract for convenience, the State will pay all reasonable costs, as determined by the State, for State approved Transition Responsibilities.

20. Transition Responsibilities. Upon termination or expiration of this Contract for any reason, Contractor must, for a period of time specified by the State (not to exceed 90 calendar days) (the “Transition Period”), provide all reasonable transition assistance requested by the State, to allow for the expired or terminated portion of the Services and Deliverables to continue without interruption or adverse effect, and to facilitate the orderly transfer of such Services and Deliverables to the State or its designees. Such transition assistance may include, but is not limited to: (a) continuing to perform the Services at the established Contract rates; (b) taking all reasonable and necessary measures to transition performance of the work, including all applicable Services and Deliverables, training, reports and other documentation, to the State or the State’s designee; (c) taking all necessary and appropriate steps, or such other action as the State may direct, to preserve, maintain, protect, or return to the State all materials, data, property, and confidential information provided directly or indirectly to Contractor by any entity, agent, vendor, or employee of the State; (d) transferring title in and delivering to the State, at the State’s discretion, all completed or partially completed Deliverables prepared under this Contract as of the Contract termination date; and (e) preparing an accurate accounting from which the State and Contractor may reconcile all outstanding accounts (collectively, “Transition Responsibilities”). This Contract will automatically be extended through the end of the transition period.

21. General Indemnification. Contractor must defend, indemnify and hold the State, its departments, divisions, agencies, offices, commissions, officers, and employees harmless, without limitation, from and against any and all actions, claims, losses, liabilities, damages, costs, attorney fees, and expenses (including those required to establish the right to indemnification), arising out of or relating to: (a) any breach by Contractor (or any of Contractor’s employees, agents, subcontractors, or by anyone else for whose acts any of them may be liable) of any of the promises, agreements, representations, warranties, or insurance requirements contained in this Contract; (b) any infringement, misappropriation, or other violation of any Intellectual Property Right or other right of any third party; (c) any bodily injury, death, or damage to real or tangible personal property occurring wholly or in part due to action or inaction by Contractor (or any of Contractor’s employees, agents, subcontractors, or by anyone else for whose acts any of them may be liable); and (d) any acts or omissions of Contractor (or any of Contractor’s employees, agents, subcontractors, or by anyone else for whose acts any of them may be liable).

The State will notify Contractor in…