2 - 190000001956 - Contract Terms - FINAL.docx

DRAFT

STATE OF MICHIGAN

CONTRACT TERMS

This Contract (this “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 TEXAS LIMITED LIABILITY COMPANY]. This Contract is effective on October 1, 2019 (“Effective Date”), and unless earlier terminated, will expire on September 30, 2024.

This Contract may be renewed for up to three additional one-year periods. 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.

Definitions.

“Accept” has the meaning set forth in Section 20.2(b).

“Acceptance” has the meaning set forth in Section 20.2(b).

“Action” has the meaning set forth in Section 29.1.

“Allegedly Infringing Features” has the meaning set forth in Section 29.3(b)(ii).

“Authorized Users” means all Persons authorized by the State to access and use the Services through the State’s account under this Contract.

“Availability Requirement” has the meaning set forth in Section 21.

“Business Day” means a day other than a Saturday, Sunday or State Holiday.

“Change Notice” has the meaning set forth in Section 18.2.

“Code” has the meaning set forth in Section 35.

“Confidential Information” has the meaning set forth in Section 26.1.

“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 and execute any Change Notices under this Contract. Each party’s Contract Administrator will be identified in the Statement of Work.

Steve Rigg 525 W. Allegan St. 1st Floor P.O. Box 30026 Lansing, MI 48909-7526 RiggS@michigan.gov 517-249-0454 [Name] [Street Address] [City, State, Zip] [Email] [Phone]

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

“Contractor Personnel” means all employees and agents of Contractor, all Subcontractors and all employees and agents of any Subcontractor, involved in the performance of Services.

“Contractor Security Officer” has the meaning set forth in Section 18.5(a).

“Contractor Service Manager” has the meaning set forth in Section 18.5(a).

“Documentation” means all generally available documentation relating to the Services, including all user manuals, operating manuals and other instructions, specifications, documents and materials, in any form or media, that describe any component, feature, requirement or other aspect of the Services, including any functionality, testing, operation or use thereof.

“DR Plan” has the meaning set forth in Section 28(a).

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

“Fees” has the meaning set forth in Section 24.1.

“Force Majeure Event” has the meaning set forth in Section 33.1.

“Harmful Code” means any software, hardware or other technologies, devices or means, the purpose or effect of which is to: (a) permit unauthorized access to, or to destroy, disrupt, disable, distort, or otherwise harm or impede in any manner, any (i) computer, software, firmware, hardware, system or network, or (ii) any application or function of any of the foregoing or the integrity, use or operation of any data Processed thereby; or (b) prevent the State or any Authorized User from accessing or using the Services or Contractor Systems as intended by this Contract, and includes any virus, bug, trojan horse, worm, backdoor or other malicious computer code and any time bomb or drop dead device.

“HIPAA” has the meaning set forth in Section 25.1.

“Hosted Services” has the meaning set forth in Section 2.1(a).

“Incumbent Vendor” is the Vendor providing similar Services to the State prior to the date of this Contract.

“Intellectual Property Rights” means any and all 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) authorship rights, copyrights and copyrightable works (including computer programs) and rights in data and databases; (d) trade secrets, know-how and other confidential information; and (e) all other intellectual property rights, in each case whether registered or unregistered and including all applications for, and renewals or extensions of, such rights, and all similar or equivalent rights or forms of protection provided by applicable Law in any jurisdiction throughout the world.

“Key Personnel” means any Contractor Personnel identified as key personnel in this Contract or any Statement of Work.

“Law” means any statute, law, ordinance, regulation, rule, code, order, constitution, treaty, common law, judgment, decree or other requirement or rule of any federal, state, local or foreign government or political subdivision thereof, or any arbitrator, court or tribunal of competent jurisdiction.

“Loss” means all losses, damages, liabilities, deficiencies, claims, actions, judgments, settlements, interest, awards, penalties, fines, costs or expenses of whatever kind, including reasonable attorneys’ fees and the costs of enforcing any right to indemnification hereunder and the cost of pursuing any insurance providers. “Losses” has a correlative meaning.

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

“Personal Health Information (PHI)” has the meaning set forth in Section 25.1.

“Personally Identifiable Information (PII)” has the meaning set forth in Section 25.1.

“Process” means to perform any operation or set of operations on any data, information, material, work, expression or other content, including to (a) collect, receive, input, upload, download, record, reproduce, store, organize, combine, log, catalog, cross-reference, manage, maintain, copy, adapt, alter, translate or make other improvements or derivative works, (b) process, retrieve, output, consult, use, disseminate, transmit, submit, post, transfer, disclose or otherwise provide or make available, or (c) block, erase or destroy. “Processing” and “Processed” have correlative meanings.

"RPO" or "Recovery Point Objective" means the maximum amount of potential data loss in the event of a disaster.

"RTO" or "Recovery Time Objective" means the period of time to fully restore the Hosted Services in the case of a disaster.

“Reject” has the meaning set forth in Section 20.2(b).

“Rejection” has the meaning set forth in Section 20.2(b).

“Reports” includes any written test results or other scientific reports related to the Services provided.

“Representatives” means a party’s employees, officers, directors, consultants, legal advisors and, with respect to Contractor, Contractor’s Subcontractors.

“RFP” means the State’s request for proposal designed to solicit responses for Services under this Contract.

“Service Level Agreement” means the service level agreement attached as Schedule B to this Contract, setting forth Contractor’s obligations with respect to the hosting, management and operation of the Service Software.

“Service Software” means any and all software applications and any third-party or other software, and all new versions, updates, revisions, improvements and modifications of the foregoing, that Contractor provides remote access to and use of as part of the Services.

“Services” has the meaning set forth in Section 2.1.

“Testing Services Data” includes all test results, number of tests performed, number of requests for court records, number of requests for testimony, and any other data requested by the State related to the Services outlined by in Schedule A, the Statement of Work.

“Source Code” means the human readable source code of the Service Software to which it relates, in the programming language in which the Service 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 Service Software.

“Specifications” means the specifications for the Services set forth in the applicable Statement of Work and, to the extent consistent with and not limiting of the foregoing, the Documentation.

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

“State Data” has the meaning set forth in Section 25.1.

“State Modification” has the meaning set forth in Section 29.2(a).

“State Program Manager” has the meaning set forth in Section 18.8.

“State Systems” means the information technology infrastructure, including the computers, software, databases, electronic systems (including database management systems) and networks, of the State or any of its designees.

“Statement of Work” has the meaning set forth in Section 2.1(a). The Initial Statement of Work is attached as Schedule A, and subsequent Statements of Work shall be sequentially identified and attached as Schedule A-1, A-2, A-3, etc.

“Subcontractor” means any entity that performs any Services under this Contract and otherwise has the meaning set forth in Section 18.4(a).

“Support Services” has the meaning set forth in Section 6.

“Support Service Level Requirement” has the meaning set forth in Section 6.

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

“Testing Services” includes all Services and Documentation related to the provision of drug testing pursuant to this Contract, as outlined in Schedule A, Statement of Work.

“Transition Period” has the meaning set forth in Section 23.4.

“Transition Responsibilities” has the meaning set forth in Section 23.4.

“User Data” means any and all information reflecting the access or use of the Hosted Services by or on behalf of the State or any Authorized User, including any end user profile, visit, session, impression, click-through or click-stream data and any statistical or other analysis, information or data based on or derived from any of the foregoing.

“Work Product” means all State-specific deliverables that Contractor is required to, or otherwise does, provide to the State under this Contract including reports, project management documents, forms, templates, documents created for evidentiary purposes to demonstrate chain of custody, documents created in anticipation of or preparation for litigation, testimony, or otherwise created with the intent to provide or which has been provided to any court of competent jurisdiction, and other State-specific documents and related materials. Work Product does not include the Service Software.

Duties of Contractor. Contractor must perform the services and provide the deliverables described in Schedule A – Statement of Work (the “Contract Activities”). An obligation to provide delivery of any commodity is considered a service and is a Contract Activity.

Contractor must furnish all labor, equipment, materials, and supplies necessary for the performance of the Contract Activities, and meet operational standards, unless otherwise specified in Schedule A.

Contractor must: (a) perform the Contract Activities in a timely, professional, safe, and workmanlike manner consistent with standards in the trade, profession, or industry; (b) meet or exceed the performance and operational standards, and specifications of the Contract; (c) provide all Contract Activities in good quality, with no material defects; (d) not interfere with the State’s operations; (e) obtain and maintain all necessary licenses, permits or other authorizations necessary for the performance of the Contract; (f) cooperate with the State, including the State’s quality assurance personnel, and any third party to achieve the objectives of the Contract; (g) return to the State any State-furnished equipment or other resources in the same condition as when provided when no longer required for the Contract; (h) not make any media releases without prior written authorization from the State; (i) assign to the State any claims resulting from state or federal antitrust violations to the extent that those violations concern materials or services supplied by third parties toward fulfillment of the Contract; (j) comply with all State physical and IT security policies and standards which will be made available upon request; and (k) provide the State priority in performance of the Contract except as mandated by federal disaster response requirements. Any breach under this paragraph is considered a material breach.

Contractor must also be clearly identifiable while on State property by wearing identification issued by the State, and clearly identify themselves whenever contacting the State.

Performance Guarantee. Contractor must always have financial resources sufficient, in the opinion of the State, to ensure performance of the Contract and must provide proof upon request. The State may require a performance bond (as specified in Schedule A) if, in the opinion of the State, it will ensure performance of the Contract.

Administrative Fee and Reporting. Contractor must pay an administrative fee of 1% on all payments made to Contractor under the Contract including transactions with the State (including its departments, divisions, agencies, offices, and commissions), MiDEAL members, and other states (including governmental subdivisions and authorized entities). Administrative fee payments must be made by check payable to the State of Michigan and mailed to:

Department of Technology, Management and Budget Cashiering P.O. Box 30681 Lansing, MI 48909

Contractor must submit an itemized purchasing activity report, which includes at a minimum, the name of the purchasing entity and the total dollar volume in sales. Reports should be mailed to MiDeal@michigan.gov.

The administrative fee and purchasing activity report are due within 30 calendar days from the last day of each calendar quarter.

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) other states (including governmental subdivisions and authorized entities) and (b) State of Michigan employees.

If extended, Contractor must supply all Contract Activities at the established Contract prices and terms. The State reserves the right to impose an administrative fee and 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.

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.

Staffing. The State’s Contract Administrator may require Contractor to remove or reassign personnel by providing a notice to Contractor.

Change of Control. Contractor will notify within 30 days of any public announcement or otherwise once legally permitted to do so, the State 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.

Ordering. Contractor is not authorized to begin performance until receipt of authorization as identified in Schedule A.

Terms of Payment. Invoices must conform to the requirements communicated from time-to-time by the State. All undisputed amounts are payable within 45 days of the State’s receipt. Contractor may only charge for Contract Activities performed as specified in Schedule A. Invoices must include an itemized statement of all charges. The State is exempt from State sales tax for direct purchases and may be exempt from federal excise tax, if Services purchased under this Agreement are for the State’s exclusive use. All prices are exclusive 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.

The State has the right to withhold payment of any disputed amounts until the parties agree as to the validity of the disputed amount. The State will notify Contractor of any dispute within a reasonable time. Payment by the State will not constitute a waiver of any rights as to Contractor’s continuing obligations, including claims for deficiencies or substandard Contract Activities. Contractor’s acceptance of final payment by the State constitutes a waiver of all claims by Contractor against the State for payment under this Contract, other than those claims previously filed in writing on a timely basis and still disputed.

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/SIGMAVSS to receive electronic fund transfer payments. If Contractor does not register, the State is not liable for failure to provide payment. Without prejudice to any other right or remedy it may have, the State reserves the right to set off at any time any amount then due and owing to it by Contractor against any amount payable by the State to Contractor under this Contract.

Disclosure of Litigation, or Other Proceeding. Contractor must notify the State within 14 calendar days of receiving notice of any litigation, investigation, arbitration, or other proceeding (collectively, “Proceeding”) involving Contractor, a subcontractor, or an officer or director of Contractor or subcontractor, that arises during the term of the Contract, including: (a) a criminal Proceeding; (b) a parole or probation Proceeding; (c) a Proceeding under the Sarbanes-Oxley Act; (d) a civil Proceeding involving: (1) a claim that might reasonably be expected to adversely affect Contractor’s viability or financial stability; or (2) a governmental or public entity’s claim or written allegation of fraud; or (e) a Proceeding involving any license that Contractor is required to possess in order to perform under this Contract.

Records Maintenance, Inspection, Examination, and Audit. The State or its designee may audit Contractor to verify compliance with this Contract. Contractor must retain and provide to the State or its designee and the auditor general upon request, all financial and accounting records related to the Contract through the term of the Contract and for 4 years after the latter of termination, expiration, or final payment under this Contract or any extension (“Audit Period”). If an audit, litigation, or other action involving the records is initiated before the end of the Audit Period, Contractor must retain the records until all issues are resolved.

Within 10 calendar days of providing notice, the State and its authorized representatives or designees have the right to enter and inspect Contractor's premises or any other places where Contract Activities are being performed, and examine, copy, and audit all records related to this Contract. Contractor must cooperate and provide reasonable assistance. If any financial errors are revealed, the amount in error must be reflected as a credit or debit on subsequent invoices until the amount is paid or refunded. Any remaining balance at the end of the Contract must be paid or refunded within 45 calendar days.

Warranties and Representations. Contractor represents and warrants: (a) Contractor is the owner or licensee of any Contract Activities that it licenses, sells, or develops and Contractor has the rights necessary to convey title, ownership rights, or licensed use; (b) all Contract Activities are delivered free from any security interest, lien, or encumbrance and will continue in that respect; (c) the Contract Activities will not infringe the patent, trademark, copyright, trade secret, or other proprietary rights of any third party; (d) Contractor must assign or otherwise transfer to the State or its designee any manufacturer's warranty for the Contract Activities; (e) the Contract Activities are merchantable and fit for the specific purposes identified in the Contract; (f) the Contract signatory has the authority to enter into this Contract; (g) all information furnished by Contractor in connection with the Contract fairly and accurately represents Contractor's business, properties, finances, and operations as of the dates covered by the information, and Contractor will inform the State of any material adverse changes;(h) all information furnished and representations made in connection with the award of this Contract is true, accurate, and complete, and contains no false statements or omits any fact that would make the information misleading; and that (i) Contractor is neither currently engaged in nor will engage in the boycott of a person based in or doing business with a strategic partner as described in 22 USC 8601 to 8606. A breach of this Section is considered a material breach of this Contract, which entitles the State to terminate this Contract under Section 23.1, Termination for Cause.

This Section applies to Contractor, any parent, affiliate, or subsidiary organization of Contractor, and any subcontractor that performs Contract Activities in connection with this Contract.

Conflicts and Ethics. Contractor will uphold high ethical standards and is prohibited from: (a) holding or acquiring an interest that would conflict with this Contract; (b) doing anything that creates an appearance of impropriety with respect to the award or performance of the Contract; (c) attempting to influence or appearing to influence any State employee by the direct or indirect offer of anything of value; or (d) paying or agreeing to pay any person, other than employees and consultants working for Contractor, any consideration contingent upon the award of the Contract. Contractor must immediately notify the State of any violation or potential violation of these standards. This Section applies to Contractor, any parent, affiliate, or subsidiary organization of Contractor, and any subcontractor that performs Contract Activities in connection with this Contract.

Non-Exclusivity. Nothing contained in this Contract is intended nor will be construed as creating any requirements contract with Contractor. This Contract does not restrict the State or its agencies from acquiring similar, equal, or like Contract Activities from other sources.

Website Incorporation. The State is not bound by any content on Contractor’s website unless expressly incorporated directly into this Contract.

Contract Modification. This Contract may not be amended except by signed agreement between the parties (a “Contract Change Notice”). Notwithstanding the foregoing, no subsequent Statement of Work or Contract Change Notice executed after the Effective Date will be construed to amend this Contract unless it specifically states its intent to do so and cites the section or sections amended.

Services.

Services. Throughout the Term and at all times in connection with its actual or required performance under this Contract, Contractor will, in accordance with all terms and conditions set forth in this Contract and each applicable Statement of Work, provide to the State and its Authorized Users the following services (“Services”):

the hosting, management and operation of the Service Software and other services for remote electronic access and use by the State and its Authorized Users (“Hosted Services”) as described in one or more written, sequentially numbered, statements of work referencing this Contract, including all Specifications set forth in such statements of work, which, upon their execution will be attached as Schedule A to this Contract and by this reference are incorporated in and made a part of this Contract (each, a “Statement of Work”);

maintain the Availability Requirement set forth in the Service Level Agreement attached as Schedule B to this Contract;

provide maintenance and Support Services as set forth in the Service Level Agreement, attached as Schedule B;

implement and maintain the security requirements set forth in Schedule C to this Contract;

maintain a DR plan, which is attached as Schedule D to this Contract; and such other services as may be specified in the applicable Statement of Work, including Testing Services.

Change Notices.

Any modifications or changes to the Services under any executed Statement of Work will be effective only if and when memorialized in a mutually agreed written change notice (“Change Notice”) signed by both Parties, provided, however, that for any Services provided on a limited basis (for example, on a per user, server, CPU or named-user basis, or specifically requested non-routine screening and testing), the State may, at any time, increase or decrease the number of its licenses required for use of the Services or tests ordered hereunder subject to the pricing set forth in the applicable Statement of Work.

In the event the Services are customizable, a more detailed change control process may be specified in the applicable Statement of Work. In such event, the change control process set forth in such Statement of Work shall control.

Compliance with Laws. Contractor must comply with all applicable Laws as they concern this Contract, including by securing and maintaining all required and appropriate visas, work permits, business licenses and other documentation and clearances necessary for performance of the Services.

Subcontracting. Contractor will not itself, and will not permit any Person to, subcontract any Services, in whole or in part, without the State’s prior written consent, which consent may be given or withheld in the State’s sole discretion. Without limiting the foregoing:

Contractor must ensure each Contractor subcontractor (including any subcontractor of a Contractor subcontractor, each, a “Subcontractor”) complies with all relevant terms of this Contract, including all provisions relating to State Data or other Confidential Information of the State;

the State’s consent to any such Subcontractor does not relieve Contractor of its representations, warranties or obligations under this Contract;

Contractor will remain responsible and liable for any and all: (i) performance required hereunder, including the proper supervision, coordination and performance of the Services; and (ii) acts and omissions of each Subcontractor (including, such Subcontractor’s employees and agents, who, to the extent they are involved in providing any Services, are deemed Contractor Personnel) to the same extent as if such acts or omissions were by Contractor;

any noncompliance by any Subcontractor or its employees or agents with the provisions of this Contract or any Statement of Work will constitute a breach by Contractor;

prior to the provision of Services by any Subcontractor, Contractor must obtain from each such proposed Subcontractor:

the identity of such Subcontractor and the location of all its data centers, if any, that will be used in Processing any State Data, which information Contractor shall promptly disclose to the State in writing; and a written confidentiality and restricted use agreement, giving the State rights at least equal to those set forth in Section 25 (State Data), Section 26 (Confidentiality), Section 27 (Security) and Section 28 (Disaster Recovery) and containing the Subcontractor’s acknowledgment of, and agreement to, the provisions of Section 18.5 (Contractor Personnel), a fully-executed copy of which agreement Contractor will promptly provide to the State upon the State’s request.

In accordance with 45 CFR 164.502(e)(1)(ii) and 164.308(b)(2), if applicable, Contractor will ensure that any subcontractors that create, receive, maintain, or transmit protected health information on behalf of the business associate agree to the same restrictions, conditions, and requirements that apply to the business associate with respect to such information.

Contractor Personnel. Contractor will subject to the prior written approval of the State, appoint: (i) a Contractor employee to serve as a primary contact with respect to the Services who will have the authority to act on behalf of Contractor in matters pertaining to the receipt and processing of support requests and the Support Services (the “Contractor Service Manager”); and (ii) a Contractor employee to respond to the State’s inquiries regarding the security of the Contractor Systems who has sufficient knowledge of the security of the Contractor Systems and the authority to act on behalf of Contractor in matters pertaining thereto (“Contractor Security Officer”); and (iii) other Key Personnel, who will be suitably skilled, experienced and qualified to perform the Services;

provide names and contact information for Contractor’s Key Personnel in the Statement of Work;

maintain the same Contractor Service Manager, Contractor Security Officer and other Key Personnel throughout the Term and such additional period, if any, as Contractor is required to perform the Services, except for changes in such personnel due to: (i) the State’s request pursuant to Section 18.5(d); or (ii) the death, disability, resignation or termination of such personnel or other circumstances outside Contractor’s reasonable control;

upon the reasonable written request of the State, promptly replace any Key Personnel of Contractor;

reassignment of Key Personnel in violation of this Section 18.5 may result in the assessment of damages as set for in Schedule A, the Statement of Work.

Management and Payment of Contractor Personnel.

Contractor is solely responsible for the payment of Contractor Personnel, including all fees, expenses and compensation to, by or on behalf of any Contractor Personnel and, if applicable, the withholding of income taxes and payment and withholding of social security and other payroll taxes, unemployment insurance, workers’ compensation insurance payments and disability benefits.

Contractor will ensure that no Person who has been convicted of a felony or any misdemeanor involving, in any way, theft, fraud, or bribery provides any Services or has access to any State Data, State Systems or State facilities. On a case-by-case basis, the State may request that Contractor initiate a background check on any Contractor Personnel before they may have access to State Data, State Systems or State facilities. Any request for a background check shall be initiated by the State and must be reasonably related to the type of work requested. The scope of the background check is at the discretion of the State and the results shall be used solely to determine the eligibility of Contractor Personnel to work with State Data, State Systems or in State facilities. If provided to the State, results of background checks will be promptly returned to Contractor, and will be treated as Confidential Information. All investigations will include a Michigan State Police Background check (ICHAT) and may include a National Crime Information Center (NCIC) Finger Print check. Contractor will present attestation of satisfactory completion of such tests. Contractor is responsible for all costs and expenses associated with such background checks.

Time is of the Essence. Contractor acknowledges and agrees that time is of the essence with respect to its obligations under this Contract and that prompt and timely performance of all such obligations, including all timetables and other requirements of this Contract and each Statement of Work, is strictly required. Late or improper completion of Testing Services pursuant to this Contract is subject to the Liquidated Damages provision of this Contract, as outlined in Schedule A, the Statement of Work.

State Program Manager. The State will appoint and, in its reasonable discretion, replace, a State employee to serve as the primary contact with respect to implementation of the Services (the “State Program Manager”).

State:

Debbie Martinson MartinsonD@michigan.gov 517-241-2005

Contractor’s Program Manager. The Program Manager will monitor and coordinate the day-to-day activities of the Contract.

Contractor:

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

License Grant and Restrictions.

Contractor License Grant. Contractor hereby grants to the State, exercisable by and through its Authorized Users a nonexclusive, royalty-free, irrevocable (except as provided herein) right and license during the Term and such additional periods, if any, as Contractor is required to perform Services under this Contract or any Statement of Work, to:

access and use the Hosted Services, including in operation with other software, hardware, systems, networks and services, for the State’s business purposes, including for Processing State Data;

generate, print, copy, upload, download, store and otherwise Process all GUI, audio, visual, digital and other output, displays and other content as may result from any access to or use of the Services;

prepare, reproduce, print, download and use a reasonable number of copies of the Reports, Specifications and Documentation related to the Services under this Contract; and access and use the Services for all such non-production uses and applications as may be necessary or useful for the effective use of the Hosted Services hereunder, including for purposes of analysis, development, configuration, integration, testing, training, maintenance, support and repair, which access and use will be without charge and not included for any purpose in any calculation of the State’s or its Authorized Users’ use of the Services, including for purposes of assessing any Fees or other consideration payable to Contractor or determining any excess use of the Hosted Services as described in Section 19.5.

State Ownership of Work Product. Upon full and final payment thereof, the State is and will be the sole and exclusive owner of all right, title, and interest in and to all Work Product, including all Intellectual Property Rights. In furtherance of the foregoing:

Contractor will create all Work Product as work made for hire as defined in Section 101 of the Copyright Act of 1976; and to the extent any Work Product or Intellectual Property Rights do not qualify as, or otherwise fails to be, work made for hire, upon full and final payment thereof, Contractor hereby:

assigns, transfers, and otherwise conveys to the State, irrevocably and in perpetuity, throughout the universe, all right, title, and interest in and to such Work Product, including all Intellectual Property Rights; and irrevocably waives any and all claims Contractor may now or hereafter have in any jurisdiction to so-called “moral rights” or rights of droit moral with respect to the Work Product.

Further Actions. Contractor will, and will cause the Contractor Personnel to, take all appropriate action and execute and deliver all documents, necessary or reasonably requested by the State to effectuate any of the provisions or purposes of Section 19.2, or otherwise as may be necessary or useful for the State to prosecute, register, perfect, record, or enforce its rights in or to any Work Product or any Intellectual Property Right therein.

License Restrictions. The State will not: (a) rent, lease, lend, sell, sublicense, assign, distribute, publish, transfer or otherwise make the Hosted Services available to any third party, except as expressly permitted by this Contract or in any Statement of Work; or (b) use or authorize the use of the Services or Documentation in any manner or for any purpose that is unlawful under applicable Law.

Use. The State will pay Contractor the corresponding Fees set forth in the Statement of Work for all Authorized Users access and use of the Service Software. Such Fees will be Contractor’s sole and exclusive remedy for use of the Service Software, including any excess use.

State License Grant. The State hereby grants to Contractor a limited, non-exclusive, non-transferable license (i) to use the State's (or individual agency’s, department’s or division’s) name, trademarks, service marks or logos, solely in accordance with the State’s specifications, and (ii) to display, reproduce, distribute and transmit in digital form the State’s (or individual agency’s, department’s or division’s) name, trademarks, service marks or logos in connection with promotion of the Services as communicated to Contractor by the State. Use of the State’s (or individual agency’s, department’s or division’s) name, trademarks, service marks or logos will be specified in the applicable Statement of Work.

Service Preparation, Testing and Acceptance.

Service Preparation. Promptly upon the parties’ execution of a Statement of Work, Contractor will take all steps necessary to make the Services procured thereunder ready and available for the State’s use in accordance with the Statement of Work and this Contract, including any applicable milestone date or dates set forth in such Statement of Work, and any Transition Plan milestone date or dates as agreed to with the Incumbent Vendor, as applicable.

Hosted Services Testing and Acceptance.

When Contractor notifies the State in writing that the Hosted Services are ready for use in a production environment, the State will have thirty (30) days (or such other period as may be agreed upon by the Parties in writing) from receipt of the notice to test the Hosted Services to determine whether they comply in all material respects with the requirements of this Contract and the Specifications.

Upon completion of the State’s testing, the State will notify Contractor of its acceptance (“Accept” or “Acceptance”) or, if it has identified any noncompliance with the Specifications, rejection (“Reject” or “Rejection”) of the Hosted Services. If the State Rejects the Hosted Services, the State will provide a written list of items that must be corrected. On receipt of the State’s notice, Contractor will promptly commence, at no additional cost or charge to the State, all reasonable efforts to complete, as quickly as possible and in any event within twenty (20) days (or such other period as may be agreed upon by the Parties in writing) from receipt of the State’s notice, such necessary corrections, repairs and modifications to the Hosted Services to bring them into full compliance with the Specifications.

If any corrective measures are required under Section 20.2(b), upon completion of all such measures, Contractor will notify the State in writing and the process set forth in Section 20.2(a) and Section 20.2(b) will be repeated; provided that if the State determines that the Hosted Services, as revised, still do not comply in all material respects with the Specifications, the State may, in its sole discretion:

require the Contractor to repeat the correction, repair and modification process set forth in Section 20.2(b) at no additional cost or charge to the State; or terminate any and all of the relevant Statement of Work, this Contract and any other Statements of Work hereunder.

The parties will repeat the foregoing procedure until the State Accepts the Hosted Services or elects to terminate the relevant Statement of Work as provided in Section 20.2(c)(ii) above. If the State so terminates the relevant Statement of Work, Contractor must refund to the State all sums previously paid to Contractor under such Statement of Work within ten (10) Business Days of the State’s written notice of termination, and the State will be relieved of all obligations thereunder.

Testing Services Acceptance.

Testing Services may be subject to inspection, review, audit, and testing by the State within 30 calendar days of the State’s notification of test results (“State Review Period”), unless otherwise provided in Schedule A. If the Testing Services are not fully accepted by the State, the State will notify Contractor by the end of the State Review Period that either: (a) the Testing Services are accepted, but noted deficiencies must be corrected; or (b) the Testing Services are rejected. If the State finds material deficiencies, it may: (i) reject the Testing Services without performing any further inspections; (ii) demand reperformance at no additional cost; or (iii) terminate this Contract in accordance with Section 23.1, Termination for Cause.

Within 10 business days from the date of Contractor’s receipt of notification of acceptance with deficiencies or rejection of any Testing Services, Contractor must cure, at no additional cost, the deficiency and deliver unequivocally acceptable Testing Services to the State. If acceptance with deficiencies or rejection of the Testing Services impacts the content or delivery of other non-completed Testing Services, the parties’ respective Program Managers must determine an agreed to number of days for re-submission that minimizes the overall impact to the Contract. However, nothing herein affects, alters, or relieves Contractor of its obligations to correct deficiencies in accordance with the time response standards set forth in this Contract.

If Contractor is unable or refuses to correct the deficiency within the time response standards set forth in this Contract, the State may cancel the order in whole or in part. The State, or a third party identified by the State, may perform the Testing Services and recover the difference between the cost to cure and the Contract price plus an additional 10% administrative fee.

Service Availability. Contractor will make the Hosted Services available, as measured over the course of each calendar month during the Term, in accordance with the provisions set forth in the Service Level Agreement, attached as Schedule B to this Contract (the “Availability Requirement”).

Support and Maintenance Services. Contractor will provide Hosted Service maintenance and support services (collectively, “Support Services”) in accordance with the provisions set forth in the Service Level Agreement, attached as Schedule B to this Contract (the “Support Service Level Requirement”). Contractor will provide Testing Services support in accordance with the provisions set forth in Schedule A, the Statement of Work.

Termination, Expiration and Transition.

Termination for Cause. In addition to any right of termination set forth elsewhere in this Contract:

The State may terminate this Contract for cause, in whole or in part, if Contractor, as determined by the State: (i) endangers the value, integrity, or security of State Systems, State Data, or the State’s facilities or personnel; (ii) becomes insolvent, petitions for bankruptcy court proceedings, or has an involuntary bankruptcy proceeding filed against it by any creditor; (iii) engages in any conduct that may expose the State to liability; (iv) breaches any of its material duties or obligations; or (v) 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 23.1, 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 this 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 23.2.

The State will only pay for amounts due to Contractor for Services 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. 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 from other sources.

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 immediately, or (b) continue to perform in accordance with Section 23.4. 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 to the extent the funds are available.

Stop Work Order. The State may, at any time, order the Services of Contractor fully or partially stopped for its own convenience for up to ninety (90) calendar days at no additional cost to the State. The State will provide Contractor a written notice detailing such suspension (a “Stop Work Order”). Contractor must comply with the Stop Work Order upon receipt. Within 90 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 this Contract. The State will not pay for any Services, Contractor’s lost profits, or any additional compensation during a stop work period.

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 120 calendar days; the “Transition Period”), provide all reasonable transition assistance requested by the State, to allow for the expired or terminated portion of the Contract to continue without interruption or adverse effect, and to facilitate the orderly transfer of the Services 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 Statement of Work rates; (b) taking all reasonable and necessary measures to transition performance of the work, including all applicable Services 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 State Data, Documentation, and Work Product; and (d) preparing an accurate accounting from which the State and Contractor may reconcile all outstanding accounts (collectively, the “Transition Responsibilities”). The Term of this Contract is automatically extended through the end of the Transition Period.

Effect of Termination. Upon and after the termination or expiration of this Contract or one or more Statements of Work for any or no reason:

Contractor will be obligated to perform all Transition Responsibilities specified in Section 23.4.

All licenses granted to Contractor in State Data will immediately and automatically also terminate. Contractor must promptly return to the State all State Data not required by Contractor for its Transition Responsibilities, if any.

Contractor will (i) return to the State all documents and tangible materials (and any copies) containing, reflecting, incorporating, or based on the State’s Confidential Information; (ii) provide the State all Documentation and Work Product as requested by the State and in the form requested by the State; (iii) permanently erase the State’s Confidential Information from its computer systems; and (iv) certify in writing to the State that it has complied with the requirements of this Section 23.5(c), in each case to the extent such materials are not required by Contractor for Transition Responsibilities, if any.

Notwithstanding any provisions of this Contract or any Statement of Work to the contrary, upon the State’s termination of this Contract or any Statement of Work for cause pursuant to Section 23.1, the State will have the right and option to continue to access and use the Hosted Services under each applicable Statement of Work, in whole and in part, for a period not to exceed one hundred and eighty (180) days from the effective date of such termination pursuant to the terms and conditions of this Contract and each applicable Statement of Work and at a reduced rate of fifty (50%) off the applicable Fees set forth in each such Statement of Work.

Survival. The rights, obligations and conditions set forth in this…