Strategic Relationship Agreement - I-many Inc. and Procter & Gamble Co.
STRATEGIC RELATIONSHIP AGREEMENT
This Strategic Relationship Agreement ("Agreement") is entered into on
this 1st day of May, 2000 ("Effective Date") by and between I-many, Inc., a
Delaware corporation, having a place of business at 537 Congress Street, 5th
Floor, Portland, ME 04101 ("I-many"), and The Procter & Gamble Company, an Ohio
corporation, having a place of business at One Procter & Gamble Plaza,
Cincinnati, OH 45202 ("P&G").
WHEREAS, I-many has developed and is continuing to develop I-many
Solutions (defined below);
WHEREAS, I-many wishes to market the I-many Solutions to the food
service, office coffee service, vending, janitorial/sanitation, and other
markets currently served by P&G's Commercial Products Group (collectively,
"Commercial Products Markets");
WHEREAS, P&G has entered, and/or plans to enter, into strategic
relationships with entities that maintain and promote internet portals directed
at participants in the Commercial Products Markets;
WHEREAS, P&G is in a position to recommend to entities that control the
portals that they enter into contractual relationships with I-many to license
the I-many Solutions;
WHEREAS, in consideration of P&G's agreements set forth herein, I-many
has agreed to issue to P&G a common stock purchase warrant on the terms set
forth below;
NOW, THEREFORE, in consideration of the mutual covenants set forth
herein, the sufficiency of which is hereby acknowledged, the parties agree as
follows:
1. DEFINITIONS.
"I-MANY SOLUTIONS" means software and internet applications which allow
manufacturers, distributors, and purchasers of services and products to make,
manage and maximize contracts between and/or among such parties related to the
purchase and sale of goods, including the evaluation of data related to
payments, shipments, invoices, discounts, chargebacks, and the overall
effectiveness of purchase contracts.
"CPG" means P&G's Commercial Products Group.
"LICENSE AGREEMENT" means an enterprise license agreement entered into by
I-many and P&G for I-many contract management software.
"MODIFICATIONS" means changes to be made to the available I-many
Solutions for use in the Commercial Products Markets.
"REVENUES" means accrued and recognized product and transactional
revenues received by I-many during the term of this Agreement from business
within the Commercial Product Market. For the purposes of Section 7 only,
"Revenues" expressly does not include professional
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services or any other services performed on a fixed time or time and materials
basis. Also for the purposes of Section 7 only, if I-many acquires from a third
party a product line and existing customers in the Commercial Products Markets,
Revenues shall not include revenues derived from (i) those existing customers,
or (ii) that product line, including without limitation modifications, such as
additional users or new modules, and recurring revenue, such as support fees or
subscription fees; provided, however, that if an existing customer of such third
party acquisition is already a customer of I-many, Revenues shall include all
revenues received from that customer for products and services other than those
derived from the acquired product line. In the instance I-many bundles the
acquired product line with a product already marketed by I-many (the "Product
Bundling"), revenue received from the entire Product Bundling shall be accounted
for as Revenues, unless the acquired product and related services are separately
and fairly defined, allocated and priced.
"JOINT BUSINESS PLAN" means a "Commercial Products Markets" business plan
to be prepared jointly by I-many and P&G.
"TERMINATION DATE" means ten years after the signing of this agreement.
2. WARRANT.
2.1 WARRANT ON EXECUTION. Upon execution of this Agreement, I-many
shall issue to P&G a warrant, substantially in the form of EXHIBIT A, which
shall permit P&G to purchase up to 350,000 shares of I-many common stock,
subject to the terms and conditions set forth in the warrant. All share numbers
in this Agreement are stated prior to the anticipated split of I-many's common
stock expected to take place after April 30, 2000, and shall be adjusted
proportionately to reflect such split when and if it occurs.
2.2 WARRANT FOR REVENUE GOAL. If by two years from the Effective
Date, I-many shall have received more than $40 million in Revenues, I-many shall
issue to P&G a warrant, substantially in the form of EXHIBIT A, which shall
permit P&G to purchase up to an additional 50,000 shares of I-many common stock
at an exercise price equal to the then current fair market value thereof, as
determined by the Board of Directors of I-many in its reasonable judgment. Such
warrant will be exercisable within two years of the date of issuance and
according to the terms thereof. This Section 2.3 shall apply only if P&G has
used good faith efforts in fulfilling the requirements of Sections 4 and 5 up to
the time when I-many has received $40 million in Revenues.
2.3 STAND-OFF AGREEMENT. If requested by I-many and the managing
underwriter of an underwritten public offering by I-many of Common Stock, P&G
agrees that it shall not sell or otherwise transfer or dispose of any shares of
Common Stock acquired upon the exercise of any warrants issued to it or other
securities of the Company held by P&G from time to time for a period of 180 days
following the date of the prospectus relating to such offering. I-many may
impose stop-transfer instructions with respect to the securities subject to the
foregoing restriction until the end of such 180-day period.
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3. ENTERPRISE LICENSE AGREEMENT. Upon execution of this Agreement, the
parties shall enter into an Enterprise License Agreement as agreed to by the
parties.
4. DEVELOPMENT OF COMMERCIAL PRODUCTS MARKET SOLUTIONS.
4.1 I-MANY PROJECT TEAM. I-many shall designate a project manager and
other I-many personnel (collectively, the "I-many Project Team) working with P&G
to perform I-many's obligations hereunder. The composition of the I-many Project
Team may be changed in I-many's reasonable discretion, provided that I-many
gives P&G notice of such changes. The I-many Project Team will be documented
within the Joint Business Plan.
4.2 P&G PROJECT TEAM. P&G shall designate a project manager and
additional employees (collectively, the "P&G Project Team") to work with the
I-many Project Team to assist I-many's development and marketing efforts
hereunder. The composition of the P&G Project Team may be changed in P&G's
reasonable discretion, provided that P&G gives I-many notice of such changes.
The P&G Project Team will be documented within the Joint Business Plan.
4.3 DESIGN AND DEFINITION. Upon execution of this Agreement, the P&G
Project Team shall work to propose modifications based on P&G's experience and
knowledge in the Commercial Products Markets to adapt the I-many Solutions for
use in the Commercial Products Markets ("Modifications"). The P&G Project Team
shall work to define contract management software requirements from a
manufacturer's perspective, and define distributor and operator contract
management functionality in the Commercial Products Markets. The I-many Project
Team shall work with the P&G Project Team to develop and install such
Modifications as agreed to by P&G and I-many based on the proposed Modifications
through consultation between the respective Project Teams. P&G and I-many shall
use reasonable efforts to implement Modifications for a food service version of
the I-many Solutions, and shall continue to work on Modifications for other
segments of the Commercial Products Markets. Notwithstanding the foregoing, the
parties acknowledge that the commitment of each project team is to provide a
good faith effort to develop and install the Modifications, and that I-many
shall have no liability to P&G or any other party for a failure to develop or
install such Modifications.
4.4 TESTING. The I-many Project Team shall determine the timing and
approach to testing, while the P&G Project Team shall provide input and
consultation. During the Testing Phase, P&G shall beta test the I-many Solutions
with Modifications, and shall use diligent efforts to obtain product evaluations
from as many industry participants in the Commercial Products Market as
reasonably practicable.
4.5 IMPLEMENTATION. The respective Project Teams shall, at the
conclusion of testing and when P&G's Commercial Products Group certifies that
the I-many Solutions are operating to the satisfaction of P&G's Commercial
Products Group, diligently work together to implement the I-many Solution for
P&G Commercial Products Group contract management. P&G will supply business and
information technology personnel to the project team to perform tasks that rely
heavily on P&G domain expertise, as defined by the I-many project manager.
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4.6 MEETINGS. The respective Project Teams shall be in active
communication at least until the Modifications are implemented for the
Commercial Products Markets.
5. JOINT BUSINESS PLAN; ASSISTANCE; EXCLUSIVITY.
5.1 JOINT BUSINESS PLAN. Within 30 days of the signing of this
agreement, P&G and I-many will jointly prepare a Commercial Products Markets
business plan detailing I-many's plans and objectives in the Commercial Products
Market and how P&G will assist I-many in achieving the plan. The Joint Business
Plan will be updated at least as often as every six months by I-many and P&G.
The Joint Business Plan will include, but will not be limited to, the following:
(a) targeted portals within the Commercial Products Markets
that P&G will assist I-many in creating relationships with
and target dates for approaching and reaching agreements
with each portal;
(b) targeted non-competing Commercial Products Markets
manufacturers that P&G will assist I-many in creating
relationships with and target dates for approaching each
manufacturer;
(c) the P&G resources that will be assigned to work on each of
the P&G and joint activities within this agreement;
(d) target beta test partners (non-competing manufacturers,
distributors, chain operators) that P&G will assist in
obtaining for beta test activities;
5.2 ASSISTANCE. P&G shall use commercially reasonable efforts to
provide references with respect to I-many's contract management solutions, and
shall use commercially reasonable efforts to assist I-many in the following
ways:
(a) introduce I-many to the target portals and other internet
portals in the Commercial Products Markets and serve as a
reference to such portals;
(b) serve as a reference for third parties considering purchase
of I-many Solutions or for third parties providing
financial assistance to I-many, on reasonable request from
I-many, including allowing visits from such third parties;
(c) introduce I-many to relevant trade organizations, such as
Efficient Foodservice Response (EFR), National Restaurant
Association (NRA), International Foodservice Manufacturers
Association (IFMA), and International Foodservice
Distributors Association (IFDA);
(d) assist I-many in developing press releases and promotional
materials including consenting to be named in press
releases, promotional materials, and on I-many's client
lists, provided however Imany may only use P&G's name in
such materials upon P&G's written consent; and
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(e) refer to I-many potential licensees of the I-many
Solutions, including other manufacturers and distributors,
where a referral includes actively working to introduce
such potential licensees to I-many (as opposed, for
example, to simply providing a list of potential
licensees).
5.3 EXCLUSIVITY. For a period of three (3) years from the Effective
Date hereof ("Exclusivity Period"), I-many shall be the exclusive provider of
P&G's purchase contract management software and related internet applications
for P&G's Commercial Products Group, such purchase contract management software
and related internet applications to be defined solely and explicitly by the
following functionalities and/or capabilities: (i) tracking and paying rebates
between P&G CPG and operators (end use customers); (ii) tracking and paying
rebates between P&G CPG and distributors; (iii) tracking balances of a
contractual relationship with either operators and/or distributors; and (iv)
viewing, offering and accepting simple, price and rebate contracts with
operators and/or distributors via use of the internet (collectively, the "CPG
Contract Management Functionalities"). The Exclusivity Period shall be extended
for so long as P&G licenses the I-many Solutions under the License Agreement, up
to the Termination Date hereof. P&G shall agree to be identified in I-many
marketing materials as the exclusive provider of such specifically-defined CPG
Contract Management Functionalities software, provided that such marketing
materials shall be subject to P&G's prior written approval. During the
Exclusivity Period, P&G shall not purchase, license, develop, or use any
software or internet applications internally or from third parties which perform
any one or more of the specified CPG Contract Management Functionalities
detailed in subsections 5.3(i)-(iv) above; provided, however, that P&G shall be
free to purchase and/or use any one or more of the CPG Contract Management
Functionalities of a customer/distributor's own system, software, network and/or
internet application in the instance any CPG customer or distributor requires
P&G's CPG group to utilize such functionalities/capabilities as a key term and
condition of doing business with such distributor/customer. Notwithstanding the
previous sentence, this Section 5.3 shall not apply to those aspects of the
I-many Solutions delivered to P&G to satisfy its CPG Contract Management
Functionalities needs which fail to satisfy a compatibility determination
pursuant to Section 5(a) of the Enterprise License Agreement referred to in
Section 3 herein. In addition, in the event P&G requests additional and/or
incremental capabilities, P&G shall propose such capabilities to I-many and
negotiate exclusively with I-many for sixty (60) days (or such shorter time if
the 60 day period is waived by I-many), and if such changes are not deemed
appropriate by I-many to develop for P&G, P&G shall have the right to develop,
have developed, or acquire the capability in question from third parties.
6. AGREEMENTS WITH TARGET PORTALS. Notwithstanding anything else herein,
I-many shall have sole discretion to enter (or not to enter) into any agreement
with any third party, including any portal, target portal, third party referred
by P&G, or any other entity contemplated hereunder, and shall have sole
discretion over the terms and conditions under which I-many enters into any such
agreements with those third parties.
7. REVENUE SHARING.
7.1 ROYALTIES. I-many shall pay P&G a royalty based on Revenues as
follows:
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(a) If I-many receives, between the Effective Date and the Termination
Date, cumulative Revenues of between $50 million and $150 million,
I-many shall pay to P&G 10% of such revenues up to a cumulative
total of $10 million.
(b) If I-many receives, between the Effective Date and the Termination
Date, cumulative Revenues of between $150 million and $250
million, I-many shall pay to P&G 7.5% of those revenues up to a
total of $7.5 million (and therefore up to a cumulative total of
$17.5 million).
(c) If I-many receives, between the Effective Date and the Termination
Date, cumulative revenues of between $250 million and $500
million, I-many shall pay to P&G 5% of those revenues up to a
total of $12.5 million (and therefore up to a cumulative total of
$30 million).
(d) I-many shall not be required to pay any royalties for the first
$50 million in Revenues, and shall not be required to pay
royalties on Revenues to the extent they exceed $500 million.
7.2 REPORTS. Within thirty days after the end of each calendar year,
I-many shall provide a report identifying Revenues and any amounts owed to P&G
hereunder. I-many shall pay any royalties owed with the report.
7.3 AUDIT. I-many shall keep sufficient books and records from which
Revenues may be determined. P&G shall have the right to have an independent
certified public accountant audit such books and records at P&G's expense, at
the location where such records are ordinarily kept, on at least thirty (30)
days prior written notice. Such an audit shall not be unreasonably disruptive
of I-many's business, shall take place no more than once per year, and shall
cover no more than the two most recent full calendar years.
8. TERM; TERMINATION.
8.1 INITIAL TERM. Unless earlier terminated under Section 8.2, this
Agreement shall expire on the Termination Date.
8.2 EARLY TERMINATION.
(a) I-many may terminate this Agreement prior to expiration if
P&G fails to provide reasonable assistance and cooperation
under Sections 4, 5, 6, and 10 of this Agreement and does
not take steps to remedy such failure within thirty (30)
days of receipt of written notice from I-many. Whether P&G
has provided reasonable assistance and cooperation shall be
resolved by arbitration.
(b) P&G may terminate this Agreement prior to expiration if
I-many fails to provide reasonable assistance and
cooperation under Sections 4 and 5 of
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this Agreement and does not take steps to remedy such
failure within thirty (30) days of receipt of written
notice from I-many. Whether I-many has provided reasonable
assistance and cooperation shall be resolved by
arbitration.
(c) P&G may terminate this Agreement prior to expiration if
I-many fails to provide a report and payment of undisputed
amounts under Section 7 of this Agreement and does not take
steps to remedy such failure within thirty (30) days of
receipt of written notice from P&G. Amounts subject to a
good faith dispute shall be resolved by arbitration, and
non-payment of such amounts shall not be grounds for
termination unless and until completely adjudicated or
agreed to by the parties in writing.
8.3 EFFECT OF TERMINATION.
(a) If I-many terminates under Section 8.2(a), I-many shall be
responsible for payments under Section 7 that accrued prior
to the date of termination, but shall have no further
liability on and following such termination.
(b) If P&G properly terminates this Agreement under Section
8.2(b) or Section 8.2(c), I-many shall remain liable for
payments under Section 7.
8.4 RELATION TO LICENSE AGREEMENT. The termination of this Agreement
shall not affect the term of the License Agreement, and vice versa.
9. OWNERSHIP OF INTELLECTUAL PROPERTY. Ownership and licenses of any
intellectual property created hereunder shall be governed by the terms of the
Enterprise License Agreement.
10. PRESS RELEASES.
10.1 EXECUTION. Upon the execution of this Agreement, I-many shall
issue a press release announcing the terms of this Agreement in the form of
EXHIBIT B attached hereto.
10.2 LAUNCH. I-many may issue a press release with reference to and
quote from P&G announcing I-many's launch into vertical markets outside of
healthcare. The press release shall be subject to P&G's written consent, such
consent not to be unreasonably withheld or delayed.
11. NOTICES. All notices, requests, consents and other communications
hereunder shall be in writing, shall be mailed by first class, registered or
certified air mail or nationally recognized overnight express courier, postage
prepaid and shall be deemed given when such notice is mailed and addressed as
follows:
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If to I-many:
I-many, Inc.
537 Congress Street
5th Floor
Portland, ME 04101-3353
Attention: A. Leigh Powell
President and Chief Executive Officer
with a copy to:
Jeffrey A. Stein, Esq.
Hale and Dorr, LLP
60 State Street
Boston, MA 02109
or to such other person at such other place as
I-many shall designate to P&G in writing; and
If to P&G:
Procter & Gamble Company
One Procter & Gamble Plaza
Cincinnati, OH 45202
Attention: General Counsel
or to such other person at such other place as P&G
shall designate to I-many in writing.
12. AMENDMENTS. This Agreement may not be modified or amended except
pursuant to an instrument in writing signed by I-many and P&G.
13. SEVERABILITY. In case any provision contained in this Agreement should
be invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein, shall not in any
way be effected or impaired thereby.
14. EXECUTED IN COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall constitute, an original, but all of which,
were taken to the other, shall constitute but one instrument and shall become
effective when one or more counterparts have been signed by each party hereto
and delivered to the other parties.
15. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the Ohio without regard to the conflict of laws and
the federal law of the United States of America. The application to this
Agreement of the United Nations Convention on Contracts for the International
Sale of Goods is hereby expressly excluded.
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16. ARBITRATION. Any controversy or claim arising out of or relating to this
agreement, or the breach thereof (other than rights relating to the ownership of
intellectual property rights), shall be settled by arbitration in accordance
with the Commercial Arbitration Rules of the American Arbitration Association,
and judgment on the award rendered by the arbitrator(s) may be entered in any
court having jurisdiction thereof. Either party may seek an injunction if
required to preserve its rights in any court of competent jurisdiction.
17. INTEGRATION. This Agreement (including the Exhibits hereto) constitutes
the entire agreement between the parties with respect to its subject matter;
except as provided herein, all other representations, statements, negotiations,
undertakings and prior agreements (not including the License Agreement) are
terminated and superseded hereby.
18. DISCLOSURE. I-Many and P&G agree that I-many may file this Agreement as
an exhibit to any filings it makes with the Securities and Exchange Commission.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives as of the date and year first
above written.
I-MANY, INC.
/s/ A. Leigh Powell
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By: A. Leigh Powell
Its President and Chief
Executive Officer
The PROCTER & GAMBLE COMPANY.
/s/ Charles A. Pierce
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By:
Its Vice President - Global and
North American Commercial
Products Group
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