Service and Market Access Agreement - United Technologies Corp. and FreeMarkets Inc.
SERVICE AND MARKET ACCESS AGREEMENT BETWEEN UNITED TECHNOLOGIES CORPORATION
AND FREEMARKETS, INC.
This Service and Market Access Agreement ("Agreement") is made this
19th day of October, 2000, effective as of January 1, 2001 ("Effective Date"),
by and between United Technologies Corporation, a corporation organized and
existing under the laws of the State of Delaware with an office and place of
business at Hartford, Connecticut (hereinafter referred to as "United") and
FreeMarkets Inc., a corporation organized and existing under the laws of the
State of Delaware with an office and place of business at FreeMarkets Center,
210 Sixth Avenue, Pittsburgh, Pennsylvania 15222 (hereinafter referred to as
"FreeMarkets" or "Seller"), and shall govern the relationship of the parties for
services to be provided by FreeMarkets beginning as of January 1, 2001. For
purposes of this Agreement, the rights granted to United under this Agreement
shall also be deemed granted to any United "Affiliate," which shall mean any
entity in which United owns more than 50% of the outstanding voting ownership
interests (except as otherwise agreed to by the parties in writing), and shall
also mean International Aero Engines, Inc.
United wishes to be provided with, and FreeMarkets wishes to provide,
use of the FreeMarkets business-to-business eMarketplace and eSourcing
capabilities which shall include access to the following services and
technologies: (i) access to FreeMarkets' proprietary BidWare(R), BidServer(R),
FreeMarkets(R) Desktop(TM) software, QuickSource(TM) software, and computer and
networking hardware (the "System"), (ii) technical hosting of the foregoing
Web-deployed software applications, (iii) market operations support to United's
buyers as well as current and potential United suppliers, (iv) access to
FreeMarkets' Web-deployed supplier information, (v) Market Making Services, and
(vi) eSourcing program management. The parties intend that FreeMarkets will
provide the services and technologies described herein to assist United to
achieve savings and supplier consolidation for purchased components and
materials used in United's products as well as other purchased goods and
services. This Agreement is intended to address the specific understanding of
the parties related to such projects and the provision of access to the System,
including without limitation, provisions regarding confidentiality.
In consideration of the premises and of the mutual promises of each
party to the other herein contained, it is hereby mutually agreed as follows:
ARTICLE I - STATEMENT OF BUSINESS SERVICES, SYSTEM ACCESS, SCOPE OF WORK AND
RESOURCE COMMITMENTS
a) TERM OF SERVICES. FreeMarkets agrees that during the period commencing on
the 1st day of January, 2001 and ending on December 31, 2003 (the "Term"),
FreeMarkets will make available to United, to the extent, and in the manner
hereinafter provided, its business services with respect to industrial
market making and purchasing and access to the System.
b) FREEMARKETS ESOURCING SOLUTIONS. FreeMarkets will conduct a series of
online and offline project(s) (also known as sourcing project(s)), or
provide technology and information for United to conduct such project(s),
for the purposes of assisting United to achieve savings and supplier
consolidation for purchased components and materials used in United's
products as well as other purchased goods and services, as identified by
United from time to time. Each sourcing project shall be conducted
utilizing, FreeMarkets "DirectSource(TM) eSourcing Solution",
"FullSource(TM) eSourcing Solution" or "QuickSource(TM) eSourcing Solution"
as each is generally described in Exhibit A, and as more fully described in
Exhibits B, C and D respectively, each attached hereto.
The DirectSource(TM) eSourcing Solution is designed to give United's buyers
access to FreeMarkets' System (exclusive of
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QuickSource(TM) software) in situations requiring less Market Making
Service and less complex bid situations. The DirectSource(TM) eSourcing
Solution may apply where:
(i) The buyer has experience with online markets;
(ii) The desired suppliers to compete in the market is known;
(iii) An Opportunity Assessment (as set forth in Exhibit C) is not
required; or
(iv) The RFQ already exists or can be created by United without
assistance from FreeMarkets.
The FullSource(TM) eSourcing Solution gives buyers access to FreeMarkets'
entire suite of eSourcing solutions described in this Agreement, exclusive
of QuickSource(TM) software. The FullSource(TM) eSourcing Solution may be
used over the DirectSource(TM) eSourcing Solution in more complex market
making situations where:
(i) United desires that FreeMarkets provide assistance in writing
the Request For Quotation ("RFQ");
(ii) United desires that FreeMarkets researches and recruits new
suppliers;
(iii) The buyer is less experienced in online market making; or
(iv) Several United buying locations participate in the sourcing
project requiring significant communication and process
management.
In addition to receiving the DirectSource(TM) eSourcing Solution and the
FullSource(TM) eSourcing Solution, United may elect to procure products
without the assistance of FreeMarkets pursuant to the QuickSource(TM)
eSourcing Solution as set forth on Exhibit A and more fully set forth on
Exhibit D. Throughout the Term, in consideration of the fees set forth in
Article II a) (ii), FreeMarkets will provide United and its Affiliates with
a license to access FreeMarkets(R) QuickSource(TM) software pursuant to the
terms of this Agreement and the Amended and Restated Software License
Agreement effective as of January 1, 2001 between United and FreeMarkets
attached hereto as Exhibit H ("Software License Agreement"), solely for the
purpose of allowing United buyers to conduct self-service online bidding
events as set forth in Exhibit A and as more fully set forth in Exhibit E.
The parties acknowledge and agree that before any services are provided by
FreeMarkets for a particular sourcing project, United shall inform
FreeMarkets whether United desires FreeMarkets to provide its
FullSource(TM) eSourcing Solution or the DirectSource(TM) eSourcing
Solution for such sourcing project. The parties further agree that any
sourcing project(s) begun prior to January 1, 2001 which have not been
completed by January 31, 2001 shall be deemed to be FullSource Project(s)
(as defined below), unless otherwise agreed to by the parties.
c) FREEMARKETS SOURCING PROJECTS. For purposes of this Agreement, a
"FreeMarkets Sourcing Project" shall include any United sourcing project
commenced during the Term where FreeMarkets provides one or more of the
services or technologies described in the FullSource eSourcing Solution or
the DirectSource eSourcing Solution or QuickSource eSourcing Solution.
A Sourcing Project where FreeMarkets provides its DirectSource(TM)
eSourcing Solution shall be referred to herein as a "DirectSource Project."
A Sourcing Project where FreeMarkets provides its FullSource(TM) eSourcing
Solution shall be referred to as a "FullSource Project." A Sourcing Project
where FreeMarkets provides its QuickSource(TM) eSourcing Solution shall be
referred to as a "QuickSource Project." Within [*] of receipt of the
schedule identifying the type of Sourcing Project begun during a prior
month
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as set forth in Section 6.4 of Exhibits A, B and C, United will notify
FreeMarkets of any objection to such schedule and the parties will
work to mutually resolve any such objections. No project will be designated
as a FreeMarkets Sourcing Project and a FullSource Project, DirectSource
Project or QuickSource Project, unless the parties mutually agree to such
designation, provided that if United fails to object to a designation
within thirty (30) days of receipt of the schedule containing such
designation, United will be deemed to have accepted such designation. In
addition, if a Sourcing Project is initially designated as a DirectSource
Project but FreeMarkets is asked by United to perform services or provide
technology within the FullSource(TM) eSourcing Solution which are not
offered as part of the DirectSource(TM) eSourcing Solution under this
Agreement, such DirectSource Project shall automatically be deemed to be a
FullSource Project. FreeMarkets shall provide written notice to United of
any such upgrade in service level prior to FreeMarkets commencement of
upgraded work on such project. Similarly, upgrade in project designation
will also apply to QuickSource Projects where United requests that
FreeMarkets provide service or technology offerings from the
DirectSource(TM) and/or FullSource(TM) eSourcing Solutions. In the event
that United downgrades the sourcing level of a Sourcing Project (e.g. from
FullSource to DirectSource or QuickSource, or Direct Source to
QuickSource), the Sourcing Project will be deemed to be provided at the
higher sourcing level for purposes of calculating the fees due thereon,
provided that FreeMarkets has provided any services or technology provided
in the higher service level that are not a part of the lower service level.
d) FTES. The FullSource(TM) eSourcing Solution and DirectSource(TM) eSourcing
Solution services shall be provided as reasonably requested by United.
FreeMarkets shall provide the dedicated full time equivalent resources
("FTEs") set forth in Exhibit E, attached hereto to provide such services.
e) COOPERATION REQUIRED BY UNITED. The results of the FreeMarkets Sourcing
Projects and Overall Project Management Services (as described in Exhibits
A, B and C) for United will be highly dependent upon the support
FreeMarkets receives from United staff. FreeMarkets and United staff will
cooperate in the performance under this Agreement to deliver savings to
United.
f) ADDITIONAL SERVICES. If requested by United, FreeMarkets shall provide to
United the following additional services (not related to specific
FreeMarkets Sourcing Projects conducted by FreeMarkets under this
Agreement) at a cost to be mutually agreed to by FreeMarkets and United:
(1) supply chain and/or logistics consulting services; (2) broad based
sourcing opportunity and spend assessment services; (3) advanced sourcing
analysis regarding shared cost models and/or make versus buy decisions; (4)
sourcing process design and re-engineering; (5) general e-commerce strategy
consulting; (6) outsourcing analysis, strategy and execution; (7) commodity
strategies and market studies and (8) sourcing organization structure and
change management services. The parties will execute a statement of work
regarding any additional services to be provided under this Agreement.
g) BIDWARE(R)/BIDSERVER(R) SOFTWARE. Subject to the terms of Article III e),
throughout the Term, in consideration of the fees set forth in Article II
a) (i), FreeMarkets will provide United and its Affiliates with any
necessary license to use its proprietary BidWare(R)/BidServer(R) software
pursuant to the terms of this Agreement and the Software License Agreement
and will provide suppliers with any necessary license to use its
proprietary BidWare(R)/BidServer(R) software pursuant to the terms of the
standard FreeMarkets' supplier license agreement. These licenses are for
any usage necessary to conduct FullSource(TM) and DirectSource(TM) CBEs(R)
under this Agreement, but do not extend beyond these projects or the Term.
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h) FREEMARKETS(R)DESKTOP(TM)SOFTWARE. Throughout the Term, in consideration of
the fees set forth in Article II a) i), FreeMarkets will provide United and
its Affiliates with a license to access FreeMarkets(R)Desktop(TM)software
pursuant to the terms of this Agreement and the Software License Agreement,
solely for the following purposes: writing, approving and publishing online
RFQs (requests for quotation), reviewing supplier and business capability
profiles, inviting qualified bidders to participate in a CBE(R), tracking
supplier progress and lot interest, viewing real-time bidding and printing
post-bid reports, matching bidding opportunities to supplier profiles and
managing multiple projects. This access is only for usage necessary to
conduct FullSource(TM)and DirectSource(TM)CBEs(R)under this Agreement, but
does not extend beyond the Sourcing Projects conducted under this Agreement
or the Term.
i) QUICKSOURCE(TM) SOFTWARE. Access to QuickSource Projects and the
QuickSource(TM) software will be provided to United on a [*] day
initial trial basis when QuickSource is made available by FreeMarkets
("Trial Period"). If during such Trial Period United determines that it
does not desire to use QuickSource, it shall so notify FreeMarkets in
writing prior to the expiration of the Trial Period and shall not be
charged for QuickSource. Upon such notification, United's right to conduct
QuickSource Projects and access the QuickSource(TM) software shall
terminate. In the event that United does not provide such notice to
FreeMarkets prior to the expiration of the Trial Period, United shall pay
to FreeMarkets the fees set forth in Article II a) (ii), provided that the
fees for QuickSource for the first Contract Year shall be pro-rated for
that portion of the Contract Year from the beginning of the Trial Period to
the end of the Contract Year. Thereafter, United's right to conduct
QuickSource Projects and access the QuickSource software shall
automatically renew at the conclusion of the then present Contract Year
unless United provides notice of its intention not to renew its rights to
QuickSource by providing notice thereof at least [*] days prior to the end
of the then current Contract Year or fails to pay the yearly fee for
QuickSource(TM) as set forth in this Agreement. United and its Affiliates
access to the QuickSource(TM) software shall be pursuant to the terms of
this Agreement and the Software License Agreement and shall be solely for
the purposes of conducting self-service reverse and upward auctions,
including access to generic RFQ Builder(TM). The access to the
QuickSource(TM) software is only for usage necessary to conduct
QuickSource(TM) auctions under this Agreement.
j) SERVICE STANDARDS. FreeMarkets represents and warrants that during the
Term, the System will perform in a manner necessary to carry out its
obligations under this Agreement. FreeMarkets' sole obligation under this
performance warranty for the System shall be to remedy any nonconformance
of the System. EXCEPT AS EXPRESSLY SET FORTH HEREIN OR THE SOFTWARE LICENSE
AGREEMENT, FREEMARKETS MAKES NO OTHER WARRANTIES REGARDING THE SYSTEM, ANY
COMPETITIVE BIDDING EVENT, ANY SUPPLIER, OR UNITED'S PARTICIPATION IN ANY
COMPETITIVE BIDDING EVENT, EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED
TO, ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE.
k) SUPPLIER SELECTION. In no event shall United be obligated hereunder to
accept the lowest bid in a CBE(R)or any other project hereunder.
l) By [*], FreeMarkets and United will establish mutually agreed to
performance metrics to be used by each party to evaluate FreeMarkets' and
United's performance under this Agreement. The metrics will be applied to
each DirectSource and FullSource Sourcing Project and each party's general
performance in accordance with the metrics will be reviewed [*]. Issues
discovered by use of the metrics may be raised with the
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management of each party to identify actions to improve the performance of
the parties under this Agreement.
ARTICLE II - COMPENSATION
a) FEES.
(i) In consideration of the business services, supplier market information
and System access (exclusive of access to the QuickSource(TM)
software), technical hosting, market operations, access to supplier
information, Market Making Services, and eSourcing program management
provided by FreeMarkets hereunder, United agrees to pay FreeMarkets
the fees set forth in Section 1 (a) of Exhibit E attached hereto.
(ii) In consideration of the access to FreeMarkets(R) QuickSource(TM)
eSourcing Solution, United agrees to pay FreeMarkets the fees for
QuickSource(TM) eSourcing Solution set forth in Section 1(b) of
Exhibit E attached hereto.
b) EXPENSE REIMBURSEMENT. In addition to the fees set forth in Exhibit E
attached hereto and the fees for additional services described in Article I
f), United shall reimburse FreeMarkets for the cost of all reasonable and
necessary traveling expenses, clerical expenses, telecommunications
expenses, mailing, courier, blueprinting, printing, copying or stenographic
services, in connection with the performance of the services hereunder
including without limitation, the services provided under Article I f). The
monthly expenses set forth on Exhibit E will be payable as set forth in
Article II c).
c) PAYMENT. Amounts that are due under Article II a) and b) and Article I f)
will be invoiced to United by FreeMarkets at the end of each calendar month
(except for the fees for QuickSource under Article II a) ii) which shall be
invoiced at the end of the first month of each Contract Year (as defined in
Exhibit E), but at the end of the Trial Period for the first Contract
Year); provided that the estimated amounts due under Article II b) will be
invoiced to United for each month during the Term and within [*] days after
each calendar quarter, FreeMarkets will provide a schedule that reconciles
actual expenses under Article II b) for such calendar quarter with the
estimated payments and will provide United with an invoice for any amount
by which actual expenses exceeded estimated expenses. If actual expenses
were less than estimated expenses, FreeMarkets will either credit United
with the difference or, if no further invoices are to be sent to United
hereunder, will pay such difference to United. United acknowledges that it
shall be responsible for all amounts invoiced and due under this Agreement.
FreeMarkets will submit invoices for the services and related expenses as
described herein directly to Vice President Worldwide Sourcing or another
designated member of the Vice President of Supply Management's staff. Upon
presentation of such invoices in form and detail satisfactory to United,
United will [*]. Each invoice shall fairly and accurately describe in
sufficient detail the actual services performed, the period of performance
and the fees and expenses that are payable to FreeMarkets under the
provisions of this Agreement.
ARTICLE III - TERMS AND CONDITIONS OF SOURCING PROJECTS
United acknowledges and agrees as follows:
a) CBE(R) RULES. With respect to any CBE(R) conducted hereunder, to abide by
the attached Rules and Procedures Governing Competitive Bidding Events
(Exhibit G), which contain marketplace ground rules for United, suppliers,
and FreeMarkets. These Rules and Procedures are designed to ensure ethical
participation. In the event that FreeMarkets and/or United postpones,
cancels or otherwise modifies any CBE(R) in accordance with Exhibit G, to
the extent possible, each party agrees to provide advance notice to the
other party of such modification.
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b) NDA. United and FreeMarkets have entered into the attached Non-Disclosure
Agreement ("NDA") as of October 1, 1997 (Exhibit H), under which each party
mutually agrees to keep confidential information which either party shall
designate to the other as confidential, including but not limited to
engineering data and prints. The parties hereby agree that the terms of
such Non-Disclosure Agreement apply to this Agreement and that the terms
and conditions of this Agreement shall be designated confidential
information under such Non-Disclosure Agreement.
c) RFQ COPIES. United retains all copyright ownership rights in any RFQ
completed for United hereunder provided that United acknowledges that
FreeMarkets has the right to include in RFQs all information it receives
from United for purposes of inclusion in the RFQs and to copy RFQs for
distribution to suppliers selected by United for procurement by United
only. United will provide FreeMarkets for inclusion in such RFQs any
non-disclosure agreement forms required by United or its Affiliates to be
executed by such suppliers.
d) USE OF DATA. FreeMarkets shall have the right to use all data generated in
connection with FreeMarkets Sourcing Projects, including data that United
provides to FreeMarkets, to do the following: (i) perform such general
analyses to track the performance of the BidWare(R)/BidServer(R),
FreeMarkets(R) Desktop(TM) and QuickSource(TM) software; (ii) determine
general price trends in various supply industries; and (iii) create
predictive analyses useful for estimating the price of a Component before
such Component has been the subject of a FreeMarkets Sourcing Project. For
purposes of this subsection, "Component" shall mean a distinct part or
material described by a United technical drawing or part number; provided,
however, that such drawings or part numbers shall be considered the
Confidential Information of United as described in the NDA but may be
distributed by FreeMarkets as part of an RFQ as set forth in the preceding
paragraph. FreeMarkets will use such data and perform such analyses and
publish the same in such a way as to be reasonably untraceable to United.
FreeMarkets shall have the right to publish general results of FreeMarkets
Sourcing Projects to suppliers through FreeMarkets provided United is
anonymous and reasonably untraceable. These results may include: specific
results for supplier participants in each FreeMarkets Sourcing Project; and
general results for all supplier members of the service.
e) SOFTWARE OWNERSHIP AND LICENSE. United acknowledges that FreeMarkets
retains full ownership rights to the BidWare(R)/BidServer(R) software,
FreeMarkets(R) Desktop(TM) software, and the QuickSource(TM) software, and
that United is not acquiring any ownership interest in such technology. The
terms under which FreeMarkets will supply the BidWare(R)/BidServer(R),
FreeMarkets(R) Desktop(TM) software, the QuickSource(TM) software and STARS
technology (collectively "Software") under this Agreement are further
described in the Software License Agreement (Exhibit I). Unless otherwise
agreed in writing by the parties, United also acknowledges that FreeMarkets
will retain full ownership rights to any software, including STARS,
developed by FreeMarkets during the Term.
f) NEW TECHNOLOGY. In the event that FreeMarkets develops any new software or
other technology related to sourcing during the term of this Agreement,
except for software or other technology, if any, specifically developed by
FreeMarkets for United, FreeMarkets will offer such software and other
technology to United no later than the time it offers such software and
other technology to its other customers. In addition, [*].
ARTICLE IV - INDEMNITIES
a) FREEMARKETS. FreeMarkets agrees to protect, defend, indemnify, and hold
harmless United from and against all claims, demands, causes of action of
every type and character, arising out of or related to negligent or willful
acts or omissions of
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FreeMarkets or its subcontractors, officers, directors, assigns or
employees in connection with the performance of the work under this
Agreement.
b) UNITED. United agrees to protect, defend, indemnify and hold harmless
FreeMarkets from and against all claims, demands, causes of action of every
type and character arising out of or related to any negligent or willful
act or omission of United or its subcontractors, officers, directors,
assigns, or employees in connection with the performance of its obligations
under this Agreement.
c) [*]. In the event that a claim is made hereunder, at law or otherwise,
alleging damage as a result of any error, omission or other act arising out
of or relating to this Agreement, [*].
ARTICLE V - INTELLECTUAL PROPERTY INDEMNIFICATION
a) GENERAL. FreeMarkets shall protect, defend, indemnify and hold harmless
United from any suit or proceeding brought against United based on a claim
that (1) the Software furnished by FreeMarkets hereunder, (2) the use of
the Software by United consistent with FreeMarkets' specifications and
instructions, or (3) the copying by United of any Software or documentation
as permitted herein constitutes an infringement of any United States or
foreign patent, United States or foreign copyright or other intellectual
property rights asserted under the laws of the United States or other
countries.
b) LIMITATIONS. FreeMarkets shall have no liability for any claim based upon:
(i) the combination, operation or use of the Software with equipment,
devices or software not supplied or specified by FreeMarkets; (ii) the
alteration or modification of the Software which alteration or modification
was not made by FreeMarkets, or (iii) the failure by United to use the most
current version of the Software (other than STARS).
ARTICLE VI - NOTICES
Whenever any notice is required or authorized to be given hereunder, such
notice shall be given in writing and sent by certified mail, return receipt
requested, or overnight delivery by a national reputable service. Any such
notice, if sent by United to the Seller, shall be addressed as follows:
Glen T. Meakem
Chairman and CEO
FreeMarkets, Inc.
FreeMarkets Center
210 Sixth Avenue
Pittsburgh, PA 15222
and if sent by FreeMarkets to United, shall be addressed as follows:
United Technologies Corporation
One Financial Plaza
Hartford, CT 06101
Attention: Vice President Worldwide Sourcing
ARTICLE VII - ADDITIONAL PROVISIONS
a) UNITED GENERAL TERMS. This Agreement is subject to and governed by the
following additional provisions: (1) "United Technologies Corporation
Service Agreement Provisions, dated February 1998" (attached hereto as
Exhibit J) except provisions 3, 4, 9(a), 13 and 14 which shall not apply;
(ii) United's "Code of Ethics"; and (iii) United's Policy Statement on
Business Ethics and Contracting With the United States Government, as they
may be amended from time to time.
b) REGULATORY COMPLIANCE. FreeMarkets represents and warrants to United that
FreeMarkets shall comply strictly with all of the covenants, agreements,
and undertakings made by FreeMarkets in, or furnished under or as part of
this Agreement, including without limitation, compliance with all
applicable laws or regulations, whether or not specifically referenced in
this Agreement.
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c) INSURANCE COVERAGE. The coverage amounts set forth in Provision 18 (2)-(6)
of United's Service Agreement Provisions set forth in Exhibit J attached
hereto shall [*], and in addition to such coverages, FreeMarkets shall
obtain Employer's Liability Insurance for [*]. Notwithstanding anything to
the contrary in Provision 18, such insurance shall contain a provision
prohibiting cancellation or reduction in coverage [*]. FreeMarkets
represents that, as of the date of execution of this Agreement, it has
obtained all such insurance coverage.
d) NEITHER PARTY WILL BE LIABLE TO THE OTHER FOR ANY DIRECT DAMAGES, ARISING
FROM THIS AGREEMENT OR THE SOFTWARE LICENSING AGREEMENT, UNDER ANY THEORY
OF LIABILITY IN EXCESS OF [*]. IN NO EVENT WILL EITHER PARTY BE LIABLE TO
THE OTHER FOR CONSEQUENTIAL, INCIDENTAL OR SPECIAL DAMAGES OR LOST PROFITS
OF ANY NATURE WHATSOEVER UNDER ANY THEORY OF LIABILITY, ARISING FROM THIS
AGREEMENT OR THE SOFTWARE LICENSING AGREEMENT, EVEN IF THE PARTY HAS BEEN
ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
e) TERMINATION. This Agreement will remain in full force and effect during the
Term, and may be terminated prior to the end of the Term only as follows:
(i) By either party if the other party has materially breached this
Agreement and has failed to correct such breach within [*] days
after receiving written notice from the other party specifying the
nature of such breach;
(ii) By either party if the other party (1) becomes the subject of a
voluntary or involuntary petition in bankruptcy or any proceeding
relating to insolvency, receivership, liquidation, or composition
for the benefit of creditors, if that petition or proceeding is not
dismissed within thirty (30) days after filing, (ii) suspends the
operation of its present business or liquidates its business
assets, or (iii) generally fails to pay its debts as such debts
become due or admits in writing its inability to pay its debts.
(iii) By United, provided it gives FreeMarkets 30 days prior written
notice of termination, and pays to FreeMarkets the following:
(A) all fees and reimbursements that have accrued under Article I
f), II a) and II b) through the date of termination; and
(B) a fee (the "Termination Fee") equal to [*]. The parties agree
that the Termination Fee will compensate FreeMarkets for the
resources it is committing to United hereunder, and is not in the
nature of liquidated damages or a penalty.
(iv) In the event that this Agreement expires under Article I (a) in
accordance with the terms thereof or is terminated by United under
Article VII (e) (i) or (ii), United shall not be obligated to pay
FreeMarkets the Termination Fee; provided that such expiration or
termination shall not affect United's obligations to pay
compensation that has accrued under the terms of this Agreement
prior to the date of expiration or termination.
(v) In the event that this Agreement is terminated for any reason,
FreeMarkets will provide United with a schedule of all FreeMarkets
Sourcing Projects commenced prior to the date of termination and
the parties will reasonably cooperate to transition the FreeMarkets
Sourcing Projects to United provided that termination of this
Agreement shall not relieve either party of any obligation incurred
prior to the termination.
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ARTICLE VIII - MISCELLANEOUS
a) MODIFICATION. This Agreement can only be modified by a written agreement
duly signed by the persons authorized to sign agreements on behalf of the
parties and any other variance from the terms and conditions of this
Agreement will be of no effect.
b) SEVERABILITY OF PROVISIONS. If any provision or provisions of this
Agreement shall be held to be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not
in any way be affected or be impaired thereby.
c) GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Connecticut (other than the laws
on the conflict of laws). Unless the parties otherwise agree, any action or
proceedings by United against FreeMarkets shall be brought in the federal
or state courts located in Pittsburgh, Pennsylvania, and any action brought
by FreeMarkets against United shall be brought in federal or state courts
in Hartford, Connecticut.
d) ENTIRE AGREEMENT. This Agreement, including all exhibits and schedules
hereto, the Non-Disclosure Agreement and the Software License Agreement
referenced herein and attached hereto, are the complete and exclusive
statement of the agreement between the parties as to the subject matter
herein, and they supersede all prior and contemporaneous proposals or
agreements, oral or written, and all other communications between the
parties related to the subject matter of this Agreement, provided, however,
that the provisions of the certain Service and System Access Agreement
between the parties effective as of January 1, 1999 shall remain in effect
until and through December 31, 2000 and shall apply to all Sourcing
Projects completed as of such date.
e) WAIVERS. A waiver of a breach or default under this Agreement shall not be
a waiver of any other or subsequent breach or default. The failure or delay
by either party in enforcing compliance with any term or condition of this
Agreement shall not constitute a waiver of such term or condition unless
such term or condition is expressly waived in writing.
f) AGREEMENT BINDING. This Agreement shall be binding upon and inure to the
benefit of the parties hereto, their successors and permitted assigns.
g) ASSIGNMENT. Neither party may assign this Agreement without the prior
written consent of the other party, which consent shall not be unreasonably
withheld or delayed.
h) AUTHORITY. Each party represents that it has full power and authority to
enter into and perform this Agreement, and the person signing this
Agreement on behalf of it has been properly authorized and empowered to
enter into this Agreement.
i) COUNTERPARTS. This Agreement may be executed in several counterparts, all
of which taken together shall constitute one agreement between the parties.
j) MINORITY-AND WOMEN-OWNED BUSINESS ENTERPRISES CLAUSE. During each year of
the term of this Agreement, FreeMarkets shall purchase goods or services
in the amount of 10% of the annual payments made by United under this
Agreement from Minority and/or Women-Owned Business Enterprises. To assist
in satisfying this requirement, FreeMarkets shall endeavor to purchase
goods or services from such enterprises where such goods or services are
utilized to supply United with the goods or services specified under this
Agreement. FreeMarkets shall submit an implementation plan to UTC no later
than sixty (60) days after entering into this Agreement. The plan shall be
in accordance with UTC's Implementation Plan for Minority and Women-Owned
Business Enterprises, attached hereto as Exhibit K.
"Minority Owned Business Enterprise", or "MBE", is a business that is owned
and controlled by racial and/or ethnic
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minorities including, but not limited to, African Americans, Hispanic
Americans, Native Americans, Asian Pacific Americans, Asian Indian
Americans, or any other group classified as a minority group by the United
States Small Business Administration. A "Women Owned Business Enterprise"
or "WBE" is a business that is owned and controlled by a woman or women.
k) SUPPLIER DATA BASE. In the event that FreeMarkets (i) becomes the subject
of a voluntary or involuntary petition in bankruptcy, if that petition is
not dismissed within thirty (30) days after filing (each of the above a
"Bankruptcy Event"), and (ii) fails in a material respect to provide its
services hereunder, United shall continue to have the right to access
FreeMarkets database through the earlier of December 31, 2003 or the
termination of this Agreement (other than by a rejection of FreeMarkets as
the debtor in possession or the Bankruptcy trustee). Such access to
FreeMarkets database shall be subject to the terms and conditions generally
applicable to such access hereunder. FreeMarkets acknowledges that if
FreeMarkets as a debtor in possession or a trustee in Bankruptcy in a case
under the Bankruptcy Code rejects this Agreement, United may elect to
retain its rights under this Section k) as provided in Section 365 (n) of
the Bankruptcy Code. Upon written request of United to FreeMarkets or the
Bankruptcy Trustee, FreeMarkets or such Bankruptcy Trustee shall not
interfere with the rights of United as provided in this Section l).
l) SOURCE CODE ESCROW. Upon the execution of this Agreement by the parties,
FreeMarkets and United shall execute the Software Escrow Agreement set
forth on Exhibit L, attached hereto, which provides for the placement of
the Software (as defined in Article III e)) and its source code in escrow
according to the terms and conditions set forth therein.
10
<PAGE> 11
IN WITNESS WHEREOF, the parties hereto have executed or caused these
presents to be executed in duplicate (each of which shall be deemed to be an
original) effective as of the date first written above.
--------------------------------------------------------------------------------
UNITED TECHNOLOGIES FREEMARKETS, INC.
CORPORATION
By: /s/ KENT L. BRITTAN By: /s/ GLEN T. MEAKEM
---------------------- ----------------------
Name: Kent L. Brittan Name: Glen T. Meakem
Title: Vice President - Title: Chairman and CEO
Supply Management
Federal ID # 04326548
1
<PAGE> 12
Exhibit E
UNITED'S SCHEDULE OF PAYMENTS
TO FREEMARKETS DURING THE TERM
1. FEES.
(a) FEES (EXCLUSIVE OF FEES FOR QUICKSOURCE(TM)eSOURCING SOLUTIONS):
(i) FIXED MONTHLY ACCESS FEE. Pursuant to Article II a) i) of the
Agreement, in consideration of the business services (including the
FreeMarkets FTEs provided in the Agreement), supplier market information
and System access (exclusive of access to the QuickSource(TM) eSourcing
solution) provided by FreeMarkets under the Agreement, , United shall pay
FreeMarkets each calendar month of each Contract Year a "Fixed Monthly
Access Fee" as set forth in Table 1 below. Fixed Monthly Access Fees for a
month shall be paid according to Article II c).
(ii) VOLUME BASED MONTHLY FEE. Pursuant to Article II a) i) of the
Agreement, in consideration of additional business services, supplier
market information and System access (exclusive of access to the
QuickSource(TM) eSourcing Solution) provided by FreeMarkets to support
higher volumes run through FreeMarkets(R) DirectSource(TM) and
FullSource(TM) eSourcing Solutions than are paid for by the Fixed Monthly
Access Fee, during each Contract Year, United shall pay FreeMarkets, with
respect to each month during such Contract Year, a "Volume Based Monthly
Fee" that is based upon the type of Sourcing Project and the amount by
which the sum of the Cumulative FullSource Adjusted Fee and the Cumulative
DirectSource Adjusted Fee for such Contract Year has exceeded the Yearly
Committed Access Fee for such Contract Year by the end of the applicable
month. The Volume Based Monthly Fees are in addition to the Fixed Monthly
Access Fees set forth above. The Volume Based Monthly fee with respect to
each month during a Contract Year shall equal (i) the amount by which the
sum of the Cumulative FullSource Adjusted Fee and the Cumulative
DirectSource Adjusted Fee, for the portion of the Contract Year ending on
the last day of the applicable month, exceeds the Yearly Committed Fee for
such Contract Year, minus (ii) the sum of the Volume Based Monthly Fees
paid or payable by with respect to each month of the applicable Contract
Year which ended prior to the applicable month. Volume Based Monthly Fees
for a month shall be paid according to Article II c). Volume of Sourcing
Projects begun prior to January 1, 2001 which are completed prior to
January 31, 2001 shall not be included in the calculation of the Volume
Based Monthly Fee.
Volume run as a QuickSource Project will not be included for purposes of
the preceding paragraph, provided however, that if a FullSource Project or
DirectSource Project is converted into a QuickSource Project, in whole or
in part, then the QuickSource Project will be deemed to be a completed
CBE(R) of the type of project from which it was converted and shall be
included in the calculation of fees set forth in the proceeding paragraph.
TABLE 1
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------------
2001 CONTRACT YEAR 2002 CONTRACT YEAR 2003 CONTRACT YEAR
-------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
FIXED MONTHLY ACCESS FEE [*] [*] [*]
-------------------------------------------------------------------------------------------------------------------------------
FULLSOURCE VOLUME RATE [*] [*] [*]
-------------------------------------------------------------------------------------------------------------------------------
DIRECTSOURCE VOLUME RATE [*] [*] [*]
-------------------------------------------------------------------------------------------------------------------------------
YEARLY COMMITTED ACCESS FEE [*] [*] [*]
-------------------------------------------------------------------------------------------------------------------------------
MONTHLY ESTIMATED EXPENSES [*] [*] [*]
-------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 13
(b) FEES FOR QUICKSOURCE(TM) eSOURCING SOLUTION:
Pursuant to Article II a) ii) and Article I i) of the Agreement,
United shall pay FreeMarkets [*] per Contract Year for the
QuickSource(TM) eSourcing Solution which shall include a license to
access the QuickSource(TM) software, hosting of the QuickSource(TM)
software, and access to the Technical Help Line services provided as
part of the QuickSource(TM) eSourcing Solution as set forth in
Exhibits A and D.
2. EXPENSES.
MONTHLY ESTIMATED EXPENSES. The Monthly Estimated Expenses set forth in
Table 1 represent a monthly estimated expense amount. Exact expense amounts
will depend upon actual expenses incurred by FreeMarkets when performing
services under this Agreement as reconciled quarterly in accordance with
Article II c) of the Agreement.
3. DEFINITIONS.
(a) "BID VOLUME" means (i) for each completed CBE(R), the product of the
Historic Price for each good or service included in a completed CBE(R)
multiplied by the volume of such good or service included in the
completed CBE(R) and (ii) for all goods or services that are the
subject of an Off-Line Sourcing Project, the product of the Historic
Price for each good or service that is the subject of an Off-Line
Sourcing Project multiplied by the volume of such good or service so
awarded by United.
(b) "CONTRACT YEAR" means each twelve (12) month period commencing on
January 1, 2001 or any anniversary thereof during the Term.
(c) "CUMULATIVE DIRECTSOURCE ADJUSTED FEE" means the DirectSource Volume
Rate set forth in Table 1 above for the applicable Contract Year
multiplied by the sum of (a) the Bid Volume for all CBEs(R) completed
utilizing FreeMarkets DirectSource(TM) eSourcing Solution during the
Contract Year, plus (b) the Bid Volume for all Off-Line Sourcing
Projects utilizing FreeMarkets DirectSource(TM) eSourcing Solution
conducted during the Contract Year. The Cumulative DirectSource
Adjusted Fee shall be reset to zero at the commencement of each
Contract Year.
(d) "CUMULATIVE FULLSOURCE ADJUSTED FEE" means the FullSource Volume Rate
set forth in Table 1 above for the applicable Contract Year multiplied
by the sum of (a) the Bid Volume for all CBEs(R) completed utilizing
FreeMarkets FullSource(TM) eSourcing Solution during a Contract Year,
plus (b) the Bid Volume for all Off-Line Sourcing Projects utilizing
FreeMarkets FullSource(TM) eSourcing Solution conducted during the
Contract Year. The Cumulative FullSource Adjusted Fee shall be reset
to zero at the commencement of each Contract Year.
(e) "HISTORIC PRICE" means the price of a good or service that is: [*]. If
the Historic Price is difficult to determine and/or the parties are
unable to agree on a Historic Price, the Historic Price shall be, in
the case of a CBE [*] and, in the case of an Off-Line Sourcing
Project, [*].
(f) "OFF-LINE SOURCING PROJECT" means a Sourcing Project where the good or
service comprising a FullSource or DirectSource Sourcing Project is
procured by United without the use of a CBE(R). In the event that a
CBE(R) is completed for only a portion of the goods or services in a
Sourcing Project, that portion so completed will be deemed to be part
of a completed CBE(R) and the remainder of the goods and services will
be deemed to be included in an Off-Line Sourcing Project.
<PAGE> 14
Exhibit F
DEDICATED FTES
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------------
2001 CONTRACT YEAR DEDICATED 2002 CONTRACT YEAR 2003 CONTRACT YEAR
FTES* DEDICATED FTES* DEDICATED FTES*
-------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PROGRAM MANAGEMENT**,*** [*] [*] [*]
-------------------------------------------------------------------------------------------------------------------------------
MARKET MAKING COMMODITY TEAMS*** [*] [*] [*]
-------------------------------------------------------------------------------------------------------------------------------
MARKET OPERATIONS [*] [*] [*]
-------------------------------------------------------------------------------------------------------------------------------
TOTAL [*] [*] [*]
-------------------------------------------------------------------------------------------------------------------------------
</TABLE>
1. Full Time Equivalent Resources dedicated to United by FreeMarkets.
** Program Management FTEs are named individuals who are approved by the VP of
Global Supply Management at United, which approval will not be unreasonably
withheld. FreeMarkets will not remove a named individual without providing
at least [*] business days prior notice, which notice will contain the name
of the individual's replacement. United will be deemed to accept such
replacement individual if United does not object to the replacement within
such [*] business day period.
*** The FreeMarkets Market Making Commodity Team and Program Management
personnel will perform their work at [*].