Saas Contract Terms.docx

STATE OF MICHIGAN

This Hosted Software Contract (this “Contract”) is agreed to between the State of Michigan (the “State”) and (“Contractor”), a [insert State] limited liability company. This Contract is effective on [ ], (“Effective Date”), and unless earlier terminated, will expire on [ ], 20XX (the “Term”).

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

“Affiliate” of a Person means any other Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such Person. For purposes of this definition, the term “control” (including the terms “controlled by” and “under common control with”) means the direct or indirect ownership of more than fifty percent (50%) of the voting securities of a Person.

“Allegedly Infringing Materials” has the meaning set forth in Section 21.3(b)(ii).

“API” means all Application Programming Interfaces and associated API Documentation provided by Contractor, and as updated from time to time, to allow the Software to integrate with various Third-Party Software.

“Authorized Users” means all Persons authorized by the State to access and use the Software (including any Third-Party Software) and Equipment under this Contract.

“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.

“Business Owner” is the individual appointed by the State to (a) act as the State’s representative in all matters relating to the Contract, and (b) co-sign off on notice of Acceptance for the Software. The Business Owner will be identified in the Statement of Work.

“Business Requirements Specification” means the initial specification setting forth the State’s business requirements regarding the features and functionality of the Software and Equipment, as set forth in the Statement of Work.

“Change” has the meaning set forth in Section 2.2.

“Change Notice” has the meaning set forth in Section 2.2(b).

“Change Proposal” has the meaning set forth in Section 2.2(a).

“Change Request” has the meaning set forth in Section 2.2.

“Confidential Information” has the meaning set forth in Section 16.1.

“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 Statement of Work.

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

“Contractor’s Bid Response” means the Contractor’s proposal submitted in response to the RFP.

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

“Deliverables” as further described herein means the Software offered as Hosted Services, the Hosted Environment, Equipment, and all other documents and 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 Statement of Work.

“Dispute Resolution Procedure” has the meaning set forth in Section 25.1.

“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 the Software.

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

“Equipment” means the servers, routers, computers, computer mice, monitors, wiring/cable/fiber, connectors, and any other materials, equipment or hardware that Contractor or any Subcontractor is required to, or otherwise does provide, under this Contract.

“Fees” means collectively, the License Fees, Implementation Fees, and Support Services Fees.

“Financial Audit Period” has the meaning set forth in Section 23.1.

“Force Majeure” has the meaning set forth in Section 31.1.

“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 or any Authorized User's use of such software.

“Hosted Services” means the hosting, management and operation of the Software, including the computing hardware, ancillary equipment, firmware, data, other services (including support services), and related resources for remote electronic access and use by the State and its Authorized Users “Implementation Fees” has the meaning set forth in Section 12.2.

“Implementation Plan” means the schedule included in the Statement of Work setting forth the sequence of events for the performance of Services under the Statement of Work, including the Milestones and Milestone Dates.

“Intellectual Property Rights” means all or any of the following: (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 associated goodwill; (c) 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 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 the 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.

“License Agreement” has the meaning set forth in Section 3.

“License Fee” has the meaning set forth in Section 12.1.

“Loss or Losses” 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.

“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, security patches, or other changes to the user interface, functionality, compatibility, capabilities, performance, efficiency or quality of the Software.

“Milestone” means an event or task described in the Implementation Plan under the Statement of Work that must be completed by the corresponding Milestone Date.

“Milestone Date” means the date by which a particular Milestone must be completed as set forth in the Implementation Plan under the Statement of Work.

“Permitted Subcontractor” has the meaning set forth in Section 7.4.

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

“Pricing” means any and all fees, rates and prices payable under this Contract, including pursuant to any Schedule or Exhibit hereto.

“Pricing Schedule” means the schedule attached as Schedule D, setting forth the License Fees, Implementation Fees, Support Services Fees, and any other fees, rates and prices payable under this Contract.

“Project 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 co-sign off on its notice of acceptance for the Software and Equipment. Each party’s Project Manager will be identified in the Statement of Work.

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

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

“Services” means any of the services Contractor is required to or otherwise does provide under this Contract, the Statement of Work, and the Service Level Agreement.

“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 Software and Equipment.

“Software” means Contractor’s software set forth in the Statement of Work, and any Maintenance Releases provided to the State and any Configurations made by or for the State pursuant to this Contract, and all copies of the foregoing permitted under this Contract and the License Agreement.

“Specifications” means, for the Software, Equipment, and Hosted Environment, the specifications collectively set forth in the Business Requirements Specification, Technical Specification, and Documentation for such Software, Equipment, and Hosted Environment, or elsewhere in the Statement of Work.

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

“State Data” has the meaning set forth in Section 15.1.

“State Materials” means all materials and information, including documents, data, know-how, ideas, 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.

“State Resources” has the meaning set forth in Section 8.1(a).

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

“Stop Work Order” has the meaning set forth in Section 19.

“Support Services” means the maintenance and support services Contractor is required to or otherwise does provide to the State under the Service Level Agreement.

“Support Services Fees” has the meaning set forth in Section 12.3.

“Technical Specification” means, with respect to any Software, Equipment, and Hosted Environment, the document setting forth the technical specifications for such Software, Equipment, and Hosted Environment and included in the Statement of Work.

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

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

“Third-Party Software” means software, content, and technology, in any form or media, in which any Person other than the State or Contractor owns any Intellectual Property Rights.

“Transition Period” has the meaning set forth in Section 18.3 “Transition Responsibilities” has the meaning set forth in Section 18.3.

“Unauthorized Removal” has the meaning set forth in Section 7.3(b).

“Unauthorized Removal Credit” has the meaning set forth in Section 7.3(c).

“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, Documentation, Services, Deliverables, 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.

Statement of Work. Contractor shall provide Services and Deliverables pursuant to the executed Statement of Work entered into under this Contract. The Statement of Work shall not be effective unless signed by each party’s Contract Administrator. The term of the Statement of Work shall commence on the parties' full execution of the Statement of Work and terminate when the parties have fully performed their obligations. The terms and conditions of this Contract will apply at all times to the Statement of Work. The State shall have the right to terminate such Statement of Work as set forth in Section 18. Contractor acknowledges that time is of the essence with respect to Contractor’s obligations under the Statement of Work and agrees that prompt and timely performance of all such obligations in accordance with this Contract and the Statement of Work (including the Implementation Plan and all Milestone Dates) is strictly required.

Statement of Work Requirements. The Statement of Work will include the following:

names and contact information for Contractor’s Contract Administrator, Project Manager and Key Personnel;

names and contact information for the State’s Contract Administrator, Project Manager and Business Owner;

a detailed description of the Services to be provided under this Contract, including any training obligations of Contractor;

a detailed description of the Software to be provided under this Contract, including the:

version and release number of the Software;

Business Requirements Specification;

Technical Specification; and a description of the Documentation to be provided;

the Project Management Methodology (PMM) that will be utilized;

an Implementation Plan that follows the PMM, including all Milestones, the corresponding Milestone Dates and the parties’ respective responsibilities under the Implementation Plan;

the due dates for payment of Fees and any invoicing requirements, including any Milestones on which any such Fees are conditioned, and such other information as the parties deem necessary;

disclosure of all Third-Party Software (each identified on a separate exhibit to the Statement of Work), in each case accompanied by such related documents as may be required by this Contract;

a detailed description of all State Resources required to complete the Implementation Plan.

Change Control Process. The State may at any time request in writing (each, a “Change Request”) changes to the Statement of Work, including changes to the Services and Implementation Plan (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 2.2.

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:

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

an amended Implementation Plan reflecting: (A) the schedule for commencing and completing any additional or modified Services or Deliverables; and (B) the effect of such Changes, if any, on completing any other Services under the Statement of Work;

any additional State Resources Contractor deems necessary to carry out such Changes; and 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.

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 Statement of Work to which it relates; and 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:

require Contractor to perform the Services under the Statement of Work without the Change;

require Contractor to continue to negotiate a Change Notice;

initiate a Dispute Resolution Procedure; or notwithstanding any provision to the contrary in the Statement of Work, terminate this Contract under Section 18.

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 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.

The performance of any functions, activities, tasks, obligations, roles and responsibilities comprising the Services as described in this Contract are considered part of the Services and, thus, will not be considered a Change. This includes the delivery of all Deliverables in accordance with their respective Specifications, and all related Support Services required under this Contract.

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.

Contractor Software License. Contractor hereby grants to the State and its Authorized Users the right and license to use the Software and Documentation in accordance with the terms and conditions of this Contract and the License Agreement set forth in Schedule C (the “License Agreement”). Contractor is responsible for securing necessary licensing for any Third-Party Software that will be used by the State’s Authorized Users as part of the Services.

Software Implementation.

Implementation. Contractor will deliver, install, configure, integrate, and otherwise provide and make fully operational the Software on or prior to the applicable Milestone Date in accordance with the criteria set forth in the Statement of Work.

Set-up. Contractor is responsible for ensuring the Hosting Services and Equipment are set up and in working order to allow Contractor to deliver and install the Software on or prior to the applicable Milestone Date. Contractor will provide the State with such notice as is specified in the Statement of Work, prior to installation of the Software and Equipment, to give the State sufficient time to prepare for purposes of user acceptance testing.

Hosting and Support.

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

Support Services. Contractor shall provide the State with the Support Services and maintain the Support Service Level Requirement set forth in the Service Level Agreement attached as Schedule B to this Contract.

Data Privacy and Information Security.

Undertaking by Contractor. Contractor shall comply with all security requirements set forth in the Data Security Requirements attached as Schedule F to this Contract. In addition, and without limiting Contractor’s obligation of confidentiality as further described, Contractor is responsible for establishing and maintaining a data privacy and information security program, including physical, technical, administrative, and organizational safeguards, that is designed to: (a) ensure the security and confidentiality of the State Data; (b) protect against any anticipated threats or hazards to the security or integrity of the State Data; (c) protect against unauthorized disclosure, access to, or use of the State Data; (d) ensure the proper disposal of State Data; and (e) ensure that all Contractor Representatives comply with all of the foregoing.

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://www.michigan.gov/dtmb/0,5552,7-150-56355_56579_56755---,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.

Right of Audit by the State. Without limiting any other audit rights of the State, the State has the right to review Contractor’s data privacy and information security program prior to the commencement of Services and from time to time during the term of this Contract. During the providing of Services, on an ongoing basis from time to time and without notice, the State, at its own expense, is entitled to perform, or to have performed, an on-site audit of Contractor’s data privacy and information security program. In lieu of an on-site audit, upon request by the State, Contractor agrees to complete, within forty-five (45) calendar days of receipt, an audit questionnaire provided by the State regarding Contractor’s data privacy and information security program.

Audit Findings. With respect to State Data, Contractor must implement any required safeguards as identified by the State or by any audit of Contractor’s data privacy and information security program.

State’s Right to Termination for Deficiencies. The State reserves the right, at its sole election, to immediately terminate this Contract or the Statement of Work without limitation and without liability if the State determines that Contractor fails or has failed to meet its obligations under this Section 6.

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 Statement of Work.

Contractor Personnel.

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.

Prior to any Contractor Personnel performing any Services, Contractor will:

ensure that such Contractor Personnel have the legal right to work in the United States;

upon request, 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; and upon request, perform background checks on all Contractor Personnel 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 on Contractor Personnel.

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.

The State reserves the right to require the removal of any Contractor Personnel found, in the judgment of the State, to be unacceptable. The State’s 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 State agrees to negotiate an equitable adjustment in schedule or other terms that may be affected by the State’s required removal.

Contractor’s Project Manager. Throughout the Term of this Contract, Contractor must maintain a Contractor employee acceptable to the State to serve as Contractor’s Project Manager, who will be considered Key Personnel of Contractor. Contractor’s Project Manager will be identified in the Statement of Work.

Contractor’s Project Manager must:

have the requisite authority, and necessary skill, experience, and qualifications, to perform in such capacity;

be responsible for overall management and supervision of Contractor’s performance under this Contract; and be the State’s primary point of contact for communications with respect to this Contract, including with respect to giving and receiving all day-to-day approvals and consents.

Contractor’s Project Manager must attend all regularly scheduled meetings as set forth in the Implementation Plan, and will otherwise be available as set forth in the Statement of Work.

Contractor will maintain the same Project Manager throughout the Term of this Contract, unless:

the State requests in writing the removal of Contractor’s Project Manager;

the State consents in writing to any removal requested by Contractor in writing;

Contractor’s Project Manager ceases to be employed by Contractor, whether by resignation, involuntary termination or otherwise.

Contractor will promptly replace its Project Manager on the occurrence of any event set forth in Section 7.2(c). Such replacement will be subject to the State's prior written approval.

Contractor’s Key Personnel.

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’s 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.

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 18.1.

It is further acknowledged that an Unauthorized Removal will interfere with the timely and proper completion of this Contract, to the loss and damage of the State, and that it would be impracticable and extremely difficult to fix the actual damage sustained by the State as a result of any Unauthorized Removal. Therefore, Contractor and the State agree that in the case of any Unauthorized Removal in respect of which the State does not elect to exercise its rights under Section 18.1, Contractor will issue to the State an amount equal to $75,000 per individual (each, an “Unauthorized Removal Credit”).

Contractor acknowledges and agrees that each of the Unauthorized Removal Credits assessed under Subsection (c) above: (i) is a reasonable estimate of and compensation for the anticipated or actual harm to the State that may arise from the Unauthorized Removal, which would be impossible or very difficult to accurately estimate; and (ii) may, at the State’s option, be credited or set off against any Fees or other charges payable to Contractor under this Contract.

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:

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;

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

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; and notify the State of the location of the Permitted Subcontractor and indicate if it is located within the continental United States.

State Obligations.

State Resources and Access. The State is responsible for:

providing the State Materials and such other resources as may be specified in the Statement of Work (collectively, “State Resources”); and providing Contractor Personnel with such access to State facilities as is necessary for Contractor to perform its obligations on a timely basis as set forth in the Statement of Work.

State Project Manager. Throughout the Term of this Contract, the State will maintain a State employee to serve as the State’s Project Manager under this Contract. The State’s Project Manager will be identified in the Statement of Work. The State’s Project Manager will be available as set forth in the Statement of Work.

Acceptance Testing; Acceptance.

Acceptance of the System. Requirements for User Acceptance Testing (UAT) of the Software, Equipment, and Hosting Services as an integrated system are set forth in Schedule G.

Delivery, Acceptance and Warranty of Equipment. Requirements for delivery, acceptance and warranty of Equipment are set forth in Schedule H.

Training. Contractor shall provide training on all uses of the Software permitted hereunder in accordance with the times, locations and other terms set forth in the Statement of Work. Upon the State's request, Contractor shall timely provide training for additional Authorized Users or other additional training on all uses of the Software for which the State requests such training, at such reasonable times and locations and pursuant to such rates and other terms as are set forth in the Pricing Schedule.

Maintenance Releases Maintenance Releases. Contractor shall provide the State with all Maintenance Releases, each of which will constitute Software and be subject to the terms and conditions of this Contract.

Fees License Fee. In consideration of, and as payment in full for, the rights and license to use the Software, Third-Party Software, and any associated Documentation as provided in this Contract and the license agreements, the State shall pay to Contractor the license fees (the “License Fee”) set forth on the Pricing Schedule, subject to and in accordance with the timetable and other provisions of the Statement of Work and this Section 12.

Implementation Fees. In consideration of, and as payment in full for, Contractor’s provision of implementation services as provided in this Contract and the Statement of Work, the State shall pay to Contractor the implementation fees (the “Implementation Fees”) set forth on the Pricing Schedule, subject to and in accordance with the terms and conditions of this Contract, including the applicable timetable and other provisions of the Statement of Work and this Section 12.

Support Service Fees. In consideration of Contractor providing the Support Services as required under the Service Level Agreement, the State shall pay to Contractor the Support Services fees (the “Support Service Fees”) set forth in the Pricing Schedule, subject to and in accordance with the terms and conditions of this Contract, including the applicable provisions of the Service Level Agreement and this Section 12.

Firm Pricing/Fee Changes. All Pricing set forth in this Contract is firm and will not be increased during the Term.

Invoices and Payment.

Invoices. Contractor will invoice the State for Fees in accordance with the requirements set forth in the Statement of Work, including any requirements that condition the rendering of invoices and the payment of Fees upon the successful completion of Milestones. Contractor must submit each invoice in both hard copy and electronic format, via such delivery means and to such address as are specified by the State in the Statement of Work. Each separate invoice must:

clearly identify the Contract to which it relates, in such manner as is required by the State;

list each Fee item separately;

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

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; and include such other information as may be required by the State as set forth in the Statement of Work.

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/SIGMAVSS to receive electronic fund transfer payments. If Contractor does not register, the State is not liable for failure to provide payment.

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.

Service Availability Credits. Contractor acknowledges and agrees that any credits assessed under the Service Level Agreement: (a) are a reasonable estimate of and compensation for the anticipated or actual harm to the State that may arise from not meeting the Availability Requirement or the Support Service Level Requirements, 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. Credits may not exceed the total amount of Fees that would be payable for the relevant service period in which the credits are assessed.

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

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

notifies Contractor of the dispute prior to the due date for payment, specifying in such notice:

the amount in dispute; and the reason for the dispute set out in sufficient detail to facilitate investigation by Contractor and resolution by the parties;

works with Contractor in good faith to resolve the dispute promptly; and promptly pays any amount determined to be payable by resolution of the dispute.

Contractor shall not withhold any Services or fail to perform any obligation hereunder by reason of the State's good faith withholding of any payment or amount in accordance with this Section 13.5 or any dispute arising therefrom.

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.

Intellectual Property Rights Ownership Rights in Software Subject to the rights and licenses granted by Contractor in this Contract and the License Agreement, and the provisions of Section 14.1(b):

Contractor reserves and retains its entire right, title and interest in and to all Intellectual Property Rights in and to the Software, including but not limited to all modifications, improvements, and derivative works based thereon, as well as all new inventions, innovations, discoveries, works of authorship, and other things developed, made and created arising out of and relating to Contractor’s activities in furtherance of this Contract; and none of the State or Authorized Users acquire any ownership of Intellectual Property Rights in or to the Software, Documentation or any of the other items in 18.1(a)(i) above as a result of this Contract.

As between the State, on the one hand, and Contractor, on the other hand, the State has, reserves and retains, sole and exclusive ownership of all right, title and interest in and to State Data and User Data, including all Intellectual Property Rights arising therefrom or relating thereto.

Rights in Third-Party Software. Ownership of all Third-Party Software, and all Intellectual Property Rights therein, is and will remain with its respective owners, subject to any express licenses or sublicenses granted to the State under this Contract and the Third-Party Licenses.

Ownership Rights in API. The State is and will be the sole and exclusive owner of all right, title, and interest in and to all API custom-developed by the Contractor for the State, including all Intellectual Property Rights in and to the API. In furtherance of the foregoing:

Contractor will create all API as work made for hire as defined in Section 101 of the Copyright Act of 1976; and to the extent any API or Intellectual Property Rights do not qualify as, or otherwise fails to be, work made for hire, 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 API, including all Intellectual Property Rights in and to the API; 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 API.

State Data.

Ownership. The State’s data (“State Data”), which will be treated by Contractor as Confidential Information, includes: (a) User Data; and (b) any other data collected, used, processed, stored, or generated by the State in connection with the Services, including but not limited to (i) personally identifiable information (“PII”) collected, used, processed, stored, or generated as the result of the Services, including, without limitation, any information that identifies an individual, such as an individual’s social security number or other government-issued identification number, date of birth, address, telephone number, biometric data, mother’s maiden name, email address, credit card information, or an individual’s name in combination with any other of the elements here listed. State Data is and will remain the sole and exclusive property of the State and all right, title, and interest in the same is reserved by the State. This Section 15.1 survives termination or expiration of this Contract.

Contractor Use of State Data. Contractor is provided a limited license to State Data for the sole and exclusive purpose of providing the Services, including a license to collect, process, store, generate, and display State Data only to the extent necessary in the provision of the Services. Contractor must: (a) keep and maintain State Data in strict confidence, using such degree of care as is appropriate and consistent with its obligations as further described in this Contract and applicable law to avoid unauthorized access, use, disclosure, or loss; (b) use and disclose State Data solely and exclusively for the purpose of providing the Services, such use and disclosure being in accordance with this Contract, the Statement of Work, and applicable law; and (c) not use, sell, rent, transfer, distribute, or otherwise disclose or make available State Data for Contractor’s own purposes or for the benefit of anyone other than the State without the State’s prior written consent. This Section 15.2 survives termination or expiration of this Contract.

Data Retention. Specific data retention requirements for the State will be set forth in the Statement of Work.

Discovery. Contractor shall immediately notify the State upon receipt of any requests which in any way might reasonably require access to State Data or the State’s use of the Software. Contractor shall notify the State by the fastest means available and also in writing. In no event shall Contractor provide such notification more than twenty-four (24) hours after Contractor receives the request. Contractor shall not respond to subpoenas, service of process, FOIA requests, and other legal requests related to State Data without first notifying the State and obtaining the State’s prior approval of Contractor’s proposed responses. Contractor agrees to provide its completed responses to the State with adequate time for review, revision and approval Loss or Compromise of Data. In the event of any act, error or omission, negligence, misconduct, or breach on the part of Contractor that compromises or is suspected to compromise the security, confidentiality, or integrity of State Data or the physical, technical, administrative, or organizational safeguards put in place by Contractor that relate to the protection of the security, confidentiality, or integrity of State Data, Contractor must, as applicable: (a) notify the State as soon as practicable but no later than twenty-four (24) hours of becoming aware of such occurrence; (b) cooperate with the State in investigating the occurrence, including making available all relevant records, logs, files, data reporting, and other materials required to comply with applicable law or as otherwise required by the State; (c) in the case of PII, at the State’s sole election, (i) with approval and assistance from the State, notify the affected individuals who comprise the PII as soon as practicable but no later than is required to comply with applicable law, or, in the absence of any legally required notification period, within five (5) calendar days of the occurrence; or (ii) reimburse the State for any costs in notifying the affected individuals; (d) in the case of PII, provide third-party credit and identity monitoring services to each of the affected individuals who comprise the PII for the period required to comply with applicable law, or, in the absence of any legally required monitoring services, for no less than twelve (12) months following the date of notification to such individuals; (e) perform or take any other actions required to comply with applicable law as a result of the occurrence; (f) pay for any costs associated with the occurrence, including but not limited to any costs incurred by the State in investigating and resolving the occurrence, including reasonable attorney’s fees associated with such investigation and resolution; (g) without limiting Contractor’s obligations of indemnification as further described in this Contract, indemnify, defend, and hold harmless the State for any and all claims, including reasonable attorneys’ fees, costs, and incidental expenses, which may be suffered by, accrued against, charged to, or recoverable from the State in connection with the occurrence; (h) be responsible for recreating lost State Data in the manner and on the schedule set by the State without charge to the State; and (i) provide to the State a detailed plan within ten (10) calendar days of the occurrence describing the measures Contractor will undertake to prevent a future occurrence. Notification to affected individuals, as described above, must comply with applicable law, be written in plain language, not be tangentially used for any solicitation purposes, and contain, at a minimum: name and contact information of Contractor’s representative; a description of the nature of the loss; a list of the types of data involved; the known or approximate date of the loss; how such loss may affect the affected individual; what steps Contractor has taken to protect the affected individual; what steps the affected individual can take to protect himself or herself; contact information for major credit card reporting agencies; and, information regarding the credit and identity monitoring services to be provided by Contractor. The State will have the option to review and approve any notification sent to affected individuals prior to its delivery. Notification to any other party, including but not limited to public media outlets, must be reviewed and approved by the State in writing prior to its dissemination. This Section 15.5 survives termination or expiration of this Contract.

Confidential Information. Each party acknowledges that it may be exposed to or acquire communication or data of the other party that is confidential in nature and is not intended to be disclosed to third parties. This Section 16 survives termination or expiration of this Contract.

Meaning of Confidential Information. The term “Confidential Information” means all information and documentation of a party that: (a) has been marked “confidential” or with words of similar meaning, at the time of disclosure by such party; (b) if disclosed orally or not marked “confidential” or with words of similar meaning, was subsequently summarized in writing by the disclosing party and marked “confidential” or with words of similar meaning; or, (c) should reasonably be recognized as confidential information of the disclosing party. The term “Confidential Information” does not include any information or documentation that was or is: (a) in the possession of the State and subject to disclosure under the Michigan Freedom of Information Act (FOIA); (b) already in the possession of the receiving party without an obligation of confidentiality; (c) developed independently by the receiving party, as demonstrated by the receiving party, without violating the disclosing party’s proprietary rights; (d) obtained from a source other than the disclosing party without an obligation of confidentiality; or, (e) publicly available when received, or thereafter became publicly available (other than through any unauthorized disclosure by, through, or on behalf of, the receiving party). Notwithstanding the above, in all cases and for all matters, State Data is deemed to be Confidential Information.

Obligation of Confidentiality. The parties agree to hold all Confidential Information in strict confidence and not to copy, reproduce, sell, transfer, or otherwise dispose of, give or disclose such Confidential Information to third parties other than employees, agents, or subcontractors of a party who have a need to know in connection with this Contract or to use such Confidential Information for any purposes whatsoever other than the performance of this Contract. The parties agree to advise and require their respective employees, agents, and subcontractors of their obligations to keep all Confidential Information confidential. Disclosure to the Contractor’s subcontractor is permissible where: (a) the subcontractor is a Permitted Subcontractor; (b) the disclosure is necessary or otherwise naturally occurs in connection with work that is within the Permitted Subcontractor's responsibilities; and (c) Contractor obligates the Permitted Subcontractor in a written contract to maintain the State’s Confidential Information in confidence. At the State’s request, any of the Contractor’s Representatives may be required to execute a separate agreement to be bound by the provisions of this Section 16.2.

Cooperation to Prevent Disclosure of Confidential Information. Each party must use its best efforts to assist the other party in identifying and preventing any unauthorized use or disclosure of any Confidential Information.