Software Development Agreement [Amendment] - PeopleSoft Inc., Solutions for Education Administrators Inc. and SIS Development LLC
<PAGE> 1
AMENDED SOFTWARE DEVELOPMENT AGREEMENT
THIS AMENDED SOFTWARE DEVELOPMENT AGREEMENT ("Agreement") is entered into as of
the Amended Effective Date by and between PEOPLESOFT, INC., ("PeopleSoft") a
Delaware corporation having its principal place of business at 1331 North
California Boulevard, Walnut Creek, California 94596, SOLUTIONS FOR EDUCATION
ADMINISTRATORS, INC. ("SEA") a California corporation having its principal place
of business at 15515 San Fernando Mission Boulevard, Suite 6, Mission Hills,
California 91345, and SIS DEVELOPMENT, LLC ("LLC") a California limited
liability company having its principal place of business at 4440 Rosewood Drive,
Pleasanton, California 94588 hereafter collectively referred to as the parties
("Parties").
R E C I T A L S
Whereas, SEA is engaged in computer systems design, software development and the
provision of professional consulting services to the higher education market;
and
Whereas, PeopleSoft, LLC and SEA each desire to enter into an agreement for
development of the Derivative Software upon the terms and conditions set forth
herein; and
Whereas, PeopleSoft and SEA entered into a Software Development Agreement
effective 16 January 1995 ("Original Development Agreement") upon which this
Agreement is principally based and which is intended to terminate and be
superseded by this Agreement upon the Parties' execution of this Agreement; and
Whereas, PeopleSoft and David A. Duffield entered into a Software Development
Funding Agreement effective December 7, 1994 under which Mr. Duffield would fund
the development of the Derivative Software and which agreement has subsequently
been terminated effective December 22, 1995 with Mr. Duffield contributing all
of his rights and interests in the Derivative Software to LLC; and
Whereas, PeopleSoft and LLC have entered into an Exclusive Marketing and
Distribution Agreement ("Marketing Agreement") for PeopleSoft's distribution of
the proposed Derivative Software as specified in the Marketing Agreement;
NOW, THEREFORE, in consideration of the mutual covenants, representations and
warranties of the Parties contained in this Agreement, PeopleSoft, LLC and SEA
hereby agree as follows:
1. DEFINITIONS. For purposes of this Agreement, the following terms shall have
the respective meanings indicated below:
"ACCEPTANCE" means PeopleSoft's and LLC's written statement of acceptance of the
Derivative Software developed by SEA pursuant to this Agreement based on
PeopleSoft's and LLC's determination, in its reasonable judgment, that the
Derivative Software conforms to the Test Plans. Acceptance shall also mean
PeopleSoft's and LLC's written statement of acceptance of each Vested Milestone.
"ACCEPTANCE TESTING" shall have the meaning set forth in Section 15 of this
Agreement.
"AMENDED EFFECTIVE DATE" means 22 December 1995.
"BETA SITES" shall have the meaning set forth in Section 4 of this Agreement.
"CONFIDENTIAL INFORMATION" shall have the meaning set forth in Section 38 of
this Agreement.
"DERIVATIVE SOFTWARE" means all and any portion of the Documentation and Modules
developed by SEA using the PeopleSoft application development environment, and
all other information systems technologies developed or acquired in accordance
with the Test Plans and Project Plans. Without limitation of any other
exclusions, the
Page 1 of 40
<PAGE> 2
following are expressly excluded from the scope of this definition: (i) the
Student Loan Marketing Association's ("Sallie Mae") LineSS software, except as
such product may be adapted for and included in the Financial Aid Module of the
Derivative Software; and (ii) any enhanced free-standing LineSS product
developed by Sallie Mae using PeopleTools; and (iii) any loan management system
incorporating all or part of LineSS that is developed by Sallie Mae.
"DEVELOPMENT ENVIRONMENT" shall have the meaning set forth in Section 5 of this
Agreement.
"DEVELOPMENT TERM" shall have the meaning set forth in Section 3 of this
Agreement.
"DOCUMENTATION" means written materials, and a machine readable copy in Word for
Windows format, developed for use in the training, operation, and maintenance of
the Derivative Software, including instruction manuals and program listings.
"EFFECTIVE DATE" means 16 January 1995.
"FUTURE MODULES" means the functions set forth in Exhibit "B".
"IMPLIED FUNDING LEVEL FORMULA" means the Implied Project Funding set forth in
Section 17.1.
"INTEGRATION" means the process of design and development of the Derivative
Software in a manner that produces a "look and feel characteristic set" that is
consistent with the Software. The Integration shall also mean the incorporation
of (where reasonably practicable) table compositions and field definitions that
are consistent with the Software where the Derivative Software and the Software
can share common information such as department tables or account tables.
"INTERFACE" means the additional programming to the Software and third party
software reasonably necessary for establishing an interface between the
Derivative Software and the Software not otherwise obtainable through
Integration.
"KEY PERSONNEL" means [ * ] who are designated as key personnel for the
performance of the Project during the Development Term.
"MAINTENANCE CONTRACT" means a proposed maintenance and support agreement as
further described in Section 27 and Exhibit "F", respectively.
"MODULES" means five student information system program modules, one each
regarding (i) [ * ], (ii) [ * ], (iii) [ * ], (iv) [ * ] , and (v) [ * ] , in
each case meeting the requirements of the Test Plans and with the expectation
that such Modules shall achieve reasonable marketplace acceptance in the higher
education market. Exhibit "A" lists the functions which will be considered for
inclusion (but not necessarily included) in each of the Modules as of the
Effective Date. The definition of Modules excludes Future Modules, Interfaces,
and Portings.
"MORAL RIGHTS" shall: (i) include any personal, non-proprietary, non-assignable
or inalienable rights with respect to works of authorship, including any alleged
right to prevent others from making changes in a work, or to withdraw a work
from publication if it no longer represents the then-current position of the
author, under the laws of the United States (including the Visual Artists Rights
Act of 1990 or similar state laws) or of any other jurisdiction; and (ii)
expressly exclude the limited right of SEA, and its programmers, solely for
marketing, promotion, publicity and financing purposes, to publicize SEA, and
its programmers, as the designers, developers, consultants and programmers of
the Derivative Software, provided that during the Term such marketing, promotion
and publication rights and activities are consistent with the spirit of this
Agreement.
"NET LICENSE FEES" shall mean the gross revenues earned on an accrual basis in
accordance with generally accepted accounting principles and invoiced by
PeopleSoft, or
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.
Page 2 of 40
<PAGE> 3
LLC, or any distributor appointed by PeopleSoft or LLC, from the sale, license,
lease or other transfer of any Module or Derivative Software less any bundled
maintenance, sales taxes, and third-party product royalty payments. Gross
revenues include all fees received from initial licenses, upgrades (excluding
upgrades provided pursuant to Support Services), expanded or enhanced rights to
use the Derivative Software or any Module, and PeopleTools run-time licenses.
However, for the purposes of payment calculations, bundled maintenance fees may
be no more than [ * ] % of the Net License Fees, and third-party product royalty
payments may be no more than [ * ]% of the Net License Fees. Any other fees for
training, professional services, or any other items that are standardly bundled
with the initial license fee will not be deducted from gross revenues when
calculating Net License Fees.
"PAYMENT RATE SCHEDULE" means the payment rates ascribed to a particular Project
Funding Level as set forth in Exhibit D for years one (1) through ten (10)
starting from the Effective Date.
"PEOPLESOFT AFFILIATE" means any entity which at the time of assignment of this
Agreement to such entity meets each of the following three requirements: (a) the
entity is an entity in which PeopleSoft has a material ownership interest (ten
percent or more) or which owns a majority interest in PeopleSoft, (b) the entity
is an entity to which PeopleSoft may assign this Agreement pursuant to Section 2
hereof, and (c) the entity is an entity that PeopleSoft reasonably believes as
of the assignment date has sufficient resources to fund the Project and to pay
payments to SEA as set forth herein, in each case without a significant risk of
bankruptcy or insolvency.
"PEOPLESOFT FINANCIALS" means the PeopleSoft Financials programs, including
applicable source code, as delivered to SEA, including to the extent of
development: PeopleSoft General Ledger, PeopleSoft Accounts Payable, PeopleSoft
Accounts Receivable, PeopleSoft Asset Management, PeopleSoft Budget
Administration, PeopleSoft Purchasing, PeopleSoft Inventory, PeopleSoft Order
Management, PeopleSoft Project Costing and PeopleSoft Billing.
"PEOPLESOFT HRMS" means the standard PeopleSoft HRMS programs, including
applicable source code, as delivered to SEA, including to the extent of
development: PeopleSoft Human Resources, PeopleSoft Payroll, PeopleSoft Benefits
Administration, PeopleSoft Payroll Interface, PeopleSoft FSA Administration,
PeopleSoft Pension Administration, and PeopleSoft Time and Labor.
"PEOPLETOOLS" means all or any portion of the underlying technology, tools and
documentation delivered by PeopleSoft to SEA under this Agreement which serves
as the foundation for PeopleSoft Financials and PeopleSoft HRMS. No portion of
the source code to PeopleTools is included in this definition, except such
limited portions of the source code as may be provided by PeopleSoft in its sole
discretion to SEA as a result of PeopleSoft's Interface or Porting obligations.
"PHASE 1" means the Project Initiation/General Architecture phase, as further
described in Section 3.1.
"PHASE 2" means the Detailed Design and Prototyping phase, as further described
in Section 3.2.
"PHASE 3" means the Development phase, as further described in Section 3.3.
"PORT" or "PORTING" shall mean the additional programming and third party
licenses reasonably necessary to make the Software and the Derivative Software
function on any Targeted Database Platform.
"PROJECT" means the various phases of development of the Derivative Software as
set forth in Section 3, commencing on the Effective Date, and shall include the
respective obligations and duties of SEA, LLC and PeopleSoft with respect to the
funding, design, development, engineering and programming of the Derivative
Software pursuant to this Agreement.
"PROJECT FUNDING" shall have the meaning set forth in Section 7.
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.
Page 3 of 40
<PAGE> 4
"PROJECT PLANS" means the written project plans developed by SEA, LLC and
PeopleSoft during Phase 1, as refined during Phase 2 and with very limited
refinement during Phase 3, respectively, and covering specific deliverables,
schedules and Vesting Milestones.
"SOFTWARE" means all or any portion of the computer software and standard
documentation for PeopleTools, PeopleSoft HRMS, and PeopleSoft Financials as of
the Effective Date and as provided by PeopleSoft to SEA. The term "Software"
shall also include such corrections and updates to the Software as they are
provided by PeopleSoft to SEA.
"TARGETED DATABASE PLATFORMS" means only those relational database products
selected by PeopleSoft for operation with the Derivative Software after
undertaking a good faith assessment of, and considering technological
feasibility and market demand criteria. The Targeted Database Platforms may
include one or more platforms other than that used in the Development
Environment. The Targeted Database Platforms may not include any database
platforms which are not then-commercially supported by PeopleSoft or any desktop
environment other than Microsoft Windows current or future versions.
"TERM" means the period commencing on the Effective Date and continuing until
January 15, 2005 or as may be extended or earlier terminated under this
Agreement.
"TEST PLANS" means the written requirements to be mutually agreed to by SEA, LLC
and PeopleSoft during Phase 1 and Phase 2 which shall form the basis for the
issuance of Acceptance with each party acting reasonably and in good faith.
"VESTING MILESTONES" shall have the meaning set forth in Section 17.
2. ASSIGNMENT.
All Parties hereby agree to the complete and unconditional assumption by LLC of
certain PeopleSoft rights, responsibilities and obligations as documented
herein, including, but not limited to, the obligation to provide all Project
Funding to SEA. PeopleSoft will continue to retain all rights, responsibilities
and obligations under the Development Agreement which have not been assumed by
LLC. Neither PeopleSoft nor LLC may sell or transfer title to any Module or the
Derivative Software to any customer or entity without paying SEA the applicable
payments set forth in Section 10 of the Development Agreement or negotiating a
lump-sum payment pursuant to Section 11 of the Development Agreement. Any other
amendment, assignment or transfer of the Development Agreement, as amended, by
PeopleSoft, LLC or SEA will require the written consent of all Parties which
will not be unreasonably withheld by any party
3. SCOPE OF AGREEMENT. The Derivative Software is to be developed in accordance
with the Project Plans in three phases, referred to herein as Phase 1, Phase 2,
and Phase 3, as further set forth below. Phase 1 shall commence on the Effective
Date. The combined duration of these three phases, commencing on the Effective
Date, shall hereinafter be referred to as the "Development Term." The Test Plans
will be developed and agreed upon at the end of Phase 1 and the detailed
deliverables will be revisited and refined in Phase 2 with each party acting
reasonably and in good faith.
GENERAL:
SEA shall only use PeopleTools and the third party development software
typically used by other PeopleSoft software as the primary technical foundation
for the development of the Derivative Software. PeopleSoft and LLC shall have
the right to approve or not approve all other software component technologies
which may be utilized by SEA to develop the Derivative Software. The impact, if
any, that such third party technologies will have on the Term, Development Term,
milestones, Vesting Milestones, and payment schedule, and the payment
obligations, Beta Sites obligations, and Development Environment obligations of
PeopleSoft, shall be discussed
Page 4 of 40
<PAGE> 5
between the Parties and adjusted as mutually agreed upon in writing at such
times. Any costs and expenses incurred for such other software component
technologies shall be negotiated in good faith between the Parties and may be
deemed Project Funding and recoverable by PeopleSoft under Section 12 or
otherwise under this Agreement only as mutually agreed upon in writing by the
Parties at such time, and if no written amendment is reached, then the
incorporation of these software component technologies will not be part of SEA's
responsibilities under this Agreement.
It is not expected that Future Modules will be included in the Project Plans,
although this possibility is not excluded. PeopleSoft may choose to use some of
the time associated with a Maintenance Contract to develop certain Future
Modules relating to [ * ] capabilities or other functions.
PeopleSoft believes that (a) the [ * ] may provide much of the functionality
needed for the [ * ], and (b) that the [ * ] may provide much of the
functionality required for the identification and personal data components of
the [ * ].
Notwithstanding any other clause in Section 3:
The Parties expect that the Integration and Interface scoping will occur in
Phase 1. If there is a need for additional Interface development beyond Phase 1,
the Parties will meet and discuss in good faith a project plan at such time; if
no written amendment is reached, then the incorporation of these technology
changes will not be part of SEA's responsibilities under this Agreement.
With respect to Integration, SEA understands that it should develop the
Derivative Software with the goal of achieving as much Integration as possible
between the Derivative Software and the then current Software.
PeopleSoft may be required to modify the Software to provide the proper hooks to
the Interface. All additional programming and third party licenses as reasonably
determined by PeopleSoft in connection with the Interface shall be performed or
obtained by PeopleSoft at its expense and cost. Any expenses and costs incurred
by PeopleSoft in order to develop the Interfaces shall not be deemed Project
Funding and shall not be recoverable by PeopleSoft under Section 12 or otherwise
under this Agreement.
3.1 PHASE 1. PROJECT INITIATION/GENERAL ARCHITECTURE.
(a) DURATION. The approximate duration of Phase 1 shall be the first [ * ]
commencing on the Effective Date.
(b) RESPONSIBILITIES OF PEOPLESOFT DURING PHASE 1 AT PEOPLESOFT'S COST AND
EXPENSE:
PeopleSoft will:
(i) Be responsible for defining the requirements necessary to support
the Interfaces and Portings.
(ii) Use all reasonable commercial efforts to provide standard and
customary PeopleSoft training in PeopleTools and SQL/SQR on a timely basis to
all existing and new SEA employees assigned by SEA to work on the Project.
(iii) Commence to use all reasonable commercial judgment and efforts to
market the Derivative Software to potential clients.
(iv) Establish and maintain the Development Environment as further set
forth in Section 5 below.
(v) Establish and maintain Beta Sites, only as described in Section 4.
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.
Page 5 of 40
<PAGE> 6
(vi) Provide technical support in accordance with Section 6.
(vii) Determine the specific requirements for the Documentation.
(c) RESPONSIBILITIES OF LLC DURING PHASE 1
LLC will:
Provide Project Funding in accordance with Section 7 and reimbursement
of the Development Environment as provided in Section 5.
(d) RESPONSIBILITIES OF SEA DURING PHASE 1 TO BE PAID BY SEA WITH PROJECT
FUNDING:
SEA will:
(i) Utilize the services of up to [ * ] SEA employees or subcontractors
(subcontractors must be approved in writing by PeopleSoft) to do the following:
(1) Create a high level data model/database design.
(2) Develop a complete prototype of one or two simple student
information systems functions and data segments to act as a model for systems
development, and as the basis for productivity estimates.
(3) Train a minimum of one of its staff members to perform the
duties of onsite network LAN administration, excluding the cost of class
enrollment and travel.
(4) Define general functions of all system components.
(5) Participate in ongoing Beta Sites review and feedback.
(e) JOINT RESPONSIBILITIES OF PEOPLESOFT, LLC AND SEA DURING PHASE 1.
(i) Preparation of the Project Plans, on or before [ * ] from
the Effective Date, which shall include detailed deliverables, milestones, and
Vesting Milestones.
(ii) Preparation of the Test Plans.
(iii) Determination of an appropriate database to be used as a starting
point for the Derivative Software. The database may be all or a subset of [ * ]
or an empty database.
3.2 PHASE 2. DETAILED DESIGN AND PROTOTYPING.
(a) DURATION. The Parties anticipate that Phase 2 may overlap with Phase 1 and
shall commence during the [ * ] of the Project and end in the [ * ] of the
Project.
(b) RESPONSIBILITIES OF PEOPLESOFT DURING PHASE 2 AT PEOPLESOFT'S COST AND
EXPENSE:
PeopleSoft will:
(i) Use all reasonable commercial efforts to provide all new SEA
personnel involved in the development of Derivative Software who have not
previously been trained by PeopleSoft with standard and customary technical
training in PeopleTools and SQL/SQR on a timely basis.
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.
Page 6 of 40
<PAGE> 7
(ii) Use all reasonable commercial judgment and efforts to market the
Derivative Software to potential clients.
(iii) Maintain and support Development Environment, as further set
forth in Section 5.
(iv) Maintain and support Beta Sites, only as set forth in Section 4.
(v) Provide technical support in accordance with Section 6.
(c) RESPONSIBILITIES OF LLC DURING PHASE 2
LLC will:
Provide Project Funding in accordance with Section 7 and reimbursement
of the Development Environment as provided in Section 5.
(d) RESPONSIBILITIES OF SEA DURING PHASE 2 TO BE PAID BY SEA WITH PROJECT
FUNDING:
SEA will:
(i) Utilize the services of up to [ * ] SEA employees or subcontractors
to perform the following:
(1) Create all databases.
(2) Develop or create functional prototypes of all modules and
listed functions.
(3) Participate in ongoing Beta Sites review and feedback.
(e) JOINT RESPONSIBILITIES OF PEOPLESOFT, LLC AND SEA DURING PHASE 2:
(i) Refinement of Project Plans, including definition of detailed
requirements for all functions.
(ii) Refinement of Test Plans.
3.3 PHASE 3. DEVELOPMENT.
(a) DURATION. The Parties anticipate that Phase 3 shall commence in the [ * ] of
the Project and end upon Acceptance of the Derivative Software.
(b) RESPONSIBILITIES OF PEOPLESOFT DURING PHASE 3 AT PEOPLESOFT'S COST AND
EXPENSE:
PeopleSoft will:
(i) Complete, as set forth in the Project Plans, the Interfaces between
the Derivative Software and Software.
(ii) Provide all new SEA personnel involved in the development of
Derivative Software who have not previously been trained by PeopleSoft with
standard and customary technical training in PeopleTools and SQL/SQR on a timely
basis.
(iii) Use all reasonable commercial judgment and efforts to market the
Derivative Software to potential clients as provided in the Marketing Agreement.
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.
Page 7 of 40
<PAGE> 8
(iv) Maintain and support Development Environment as further set forth
in Section 5.
(v) Maintain and support Beta Sites, only as further set forth in
Section 4.
(vi) Provide technical support in accordance with Section 6.
(vii) Provide the publication expertise reasonably necessary as
determined by PeopleSoft, to turn the Documentation and training guide drafts
into final documents ready for delivery to licensees. This effort contemplates
limited textual editing, document formatting and other minor preparations which
are typically expected prior to publication, and which will otherwise conform
the Documentation to PeopleSoft's then current style guides.
(viii) Provide reasonable assistance to SEA in testing the Interfaces
and Derivative Software as may be reasonably requested by SEA from time to time.
(ix) Undertake Acceptance Testing as set forth in Section 15.
(x) Commence Porting activities. In connection with the Porting,
PeopleSoft shall determine the reasonable and necessary additional programming
required to be performed and third party licenses to be obtained by PeopleSoft
at its expense and cost. Porting expenses and costs shall not be deemed Project
Funding and shall not be recoverable by PeopleSoft under Section 12 or otherwise
under this Agreement.
(c) RESPONSIBILITIES OF LLC DURING PHASE 3
LLC WILL:
(i) Provide Project Funding in accordance with Section 7 and
reimbursement of the Development Environment as provided in Section 5.
(ii) To the extent LLC wishes to do so, undertake Acceptance Testing as
set forth in Section 15.
(d) RESPONSIBILITIES OF SEA DURING PHASE 3 TO BE PAID BY SEA WITH PROJECT
FUNDING:
(i) Utilize the services of up to [ * ] SEA employees to perform the
following:
(1) Ongoing prototyping and detail design.
(2) Participate in ongoing Beta Sites review and feedback.
(3) Complete development of the Modules.
(4) Participate in Beta Sites installation and testing.
(5) Complete preparation of Documentation and training guides.
The deliverables contemplated herein shall be a complete draft suitable for
final editing, formatting and publishing.
(6) Complete Derivative Software testing and signoff.
(7) Deliver the Derivative Software to PeopleSoft and LLC.
(8) Provide support for the development of a marketing
strategy and marketing materials. SEA will support marketing activity, but
direct involvement in marketing is outside the scope of the Project. However,
SEA will allocate [ * ] person/days and [ * ] person/days in [ * ] respectively
during the
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.
Page 8 of 40
<PAGE> 9
Development Term to assist PeopleSoft (at PeopleSoft's direction) in marketing
activities associated with the licensing of the Derivative Software.
(e) JOINT RESPONSIBILITIES OF PEOPLESOFT, LLC AND SEA DURING PHASE 3:
(i) Finalize Test Plans.
(ii) Derivative Software Acceptance Testing and signoff to occur after
delivery of Software.
4. BETA SITES. PeopleSoft has agreed at its sole expense and cost, which
expenses and costs shall not be deemed Project Funding and shall not be
recoverable under Section 12 or otherwise under this Agreement, to manage
testing sites ("Beta Sites") for the Derivative Software in a manner which is
consistent with beta sites for PeopleSoft Software. The Parties acknowledge that
the quality and involvement of the Beta Sites in the Project is an important
factor in the success of the Project, but it is also a possibility that other
beta-type arrangements will be appropriate, such as a technology council or
consortium. PeopleSoft shall work with SEA's president to identify and qualify
the Beta Sites or other arrangements. All such Beta Site or other arrangement
project management responsibilities typically associated with vendor-packaged
software transactions, and associated fees, costs and expenses shall be the
responsibility of PeopleSoft.
5. DEVELOPMENT ENVIRONMENT. Within the first month following the Effective Date,
PeopleSoft shall, at its sole expense and cost, which expense and costs shall
not be deemed Project Funding and shall not be recoverable under Section 12 or
otherwise under this Agreement, establish a development environment (the
"Development Environment") at SEA's Los Angeles area office, and will support
the Development Environment for the duration of the Development Term and for the
term of any Maintenance Contract. The LLC will reimburse PeopleSoft for all
direct and allocable costs associated with providing and supporting SEA's
Development Environment during the development term. Pursuant to the Marketing
Agreement, all right, title and interest in SEA's Development Environment will
transfer to PeopleSoft upon the earlier of i) the payment of [ * ] in cumulative
payments to LLC or ii) the end of the payment term. SEA shall not (or permit )
transfer, pledge or encumber the Development Environment in any manner.
This Development Environment shall include:
(i) A LAN based network including an RDBMS license (as of the Effective
Date, this shall be Gupta SQLBase), a fully configured server, and [ * ] fully
configured workstations for the developers.
(ii) A complete set of PeopleTools for all developers working on the
Project.
(iii) Any required networking between SEA, PeopleSoft and Beta Sites as
reasonably determined by PeopleSoft.
(iv) Fully installed PeopleSoft Human Resource, PeopleSoft Payroll and
PeopleSoft Financial systems.
(v) Ongoing upgrades to the Development Environment and PeopleSoft's
application systems as reasonably determined by PeopleSoft.
(vi) Any appropriate PeopleSoft technical and applications
documentation as reasonably determined by PeopleSoft.
The Development Environment shall be maintained by PeopleSoft to continue to
incorporate, at PeopleSoft's sole expense and cost, which expense and cost shall
not be deemed Project Funding and shall not be recoverable by PeopleSoft under
Section 12 or otherwise under this Agreement, updated technology, third party
licenses and software relating to all of the foregoing only as determined by
PeopleSoft in its sole judgment and the same may be modified, enhanced or
improved throughout the Term as reasonably determined by PeopleSoft.
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.
Page 9 of 40
<PAGE> 10
SEA shall be responsible, at its expense and cost, for primary support of the
LAN and shall designate a local SEA LAN administrator who will be the primary
contact between SEA and the PeopleSoft network services group. The cost and
expense of the LAN administrator will be borne by SEA out of the Project
Funding. PeopleSoft shall also: (i) provide local diagnostic support for the
LAN, and (ii) provide backup onsite LAN diagnostic assistance in the event the
network experiences any problems that cannot be corrected remotely or by the
local SEA LAN administrator. During the Development Term and thereafter for as
long as the Maintenance Contract is in force, PeopleSoft will continue to
provide SEA with technical support as specified in Section 6.
6. TECHNICAL SUPPORT. PeopleSoft, with respect to items (ii), (iii), (iv) and
(v), and LLC, with respect to item (i), at their own expense and cost, which
expense and cost shall not be deemed Project Funding and shall not be
recoverable under Section 12 or otherwise under this Agreement, shall provide
SEA with the following technical support:
(i) Involvement on a timely basis, as may be from time to time
reasonably requested by SEA, of senior, knowledgeable personnel for
participation in technical and design reviews, and design consultation.
(ii) Involvement in testing of the Derivative Software pursuant to the
Test Plans.
(iii) Involvement of application specialists only to review the design
of the Derivative Software and to assist only in the review of integrating
existing applications [ * ] with the Derivative Software as may be from time to
time reasonably requested by SEA in writing.
(iv) Mutually agreed upon PeopleTools consulting, including the
enhancement of PeopleTools or other components of the Software if PeopleSoft and
SEA agree such enhancement is required; provided that PeopleSoft shall be solely
responsible for any additional costs and expenses incurred for PeopleSoft's
enhancement of PeopleTools or other components of the Software pursuant to SEA's
reasonable written request, and such additional costs and expenses in any case
shall not be deemed to be Project Funding. The intent behind this subsection is
not to permit a delay in the development of the Derivative Software due to SEA's
request for a PeopleTools enhancement. Rather, the emphasis is only on mutually
agreed upon PeopleTools enhancements that will not delay development of the
Derivative Software.
(v) Porting the Derivative Software to other Targeted Database
Platforms and environments as determined by PeopleSoft.
7. PROJECT FUNDING AND OTHER PEOPLESOFT FUNDING.
7.1 PROJECT FUNDING. The LLC will provide funding (the "Project
Funding") to SEA to finance the Project as set forth in the Funding Schedule
attached hereto as Exhibit "C" and incorporated herein by this reference. SEA
can unilaterally reduce the funding it requires at any time, and if SEA elects
to reduce the funding owed for a particular period, SEA can require that LLC add
the amount of such reduction to any subsequent funding period(s). In no event
shall LLC have an obligation to fund in excess of [ * ] . If the Project Funding
at [ * ] is insufficient to complete the Project, PeopleSoft's and the LLC's
rights shall include termination of this Agreement for convenience under Section
19.1, or obtaining or providing additional funding to keep this Agreement in
effect. The Parties shall negotiate in good faith a commensurate decrease in the
payment rates set forth in Exhibit "D."
Commencing on the Effective Date, the Project Funding payable shall be paid by
LLC (or by PeopleSoft on LLC's behalf) to SEA pursuant to Exhibit "C" to the
following bank account:
[ * ]
All Project Funding is recoverable by PeopleSoft subject to the terms and
conditions of Section 12 hereof.
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.
Page 10 of 40
<PAGE> 11
7.2 OTHER FUNDING. In addition to the Project Funding, LLC shall be responsible
for items (i) and (ii) and PeopleSoft shall be responsible for items (iii), (iv)
and (v) as follows:
(i) The reasonable costs and expenses of network/phone lines between
SEA, PeopleSoft and the Beta Sites determined to be reasonably required by
PeopleSoft and only as approved in advance by PeopleSoft or LLC in writing.
(ii) All reasonable travel and lodging costs and expenses directly
incurred by SEA during the Development Term in furtherance of this Agreement,
including travel to Northern California (including, without limitation, travel
to Pleasanton and Walnut Creek), to Beta Sites, and to meetings and conferences
as determined by PeopleSoft. All such travel and lodging costs and expenses must
be pre-approved in writing by PeopleSoft or LLC.
(iii) The costs and expenses of programming or obtaining any Interface
to the Software.
(iv) The costs and expenses attributable to any change requested by
PeopleSoft under Section 14.
(v) The costs and expenses attributable to Porting the Derivative
Software to the Targeted Database Platforms.
Nothing contained in this Section 7.2 shall be deemed to be Project Funding, and
nothing contained in this Section 7.2 shall be recoverable by PeopleSoft or LLC
from SEA under Section 12 or otherwise under this Agreement.
8. SEA FUNDING. SEA is responsible for all expenses related to recruiting the
SEA team. In addition, SEA is responsible for all overhead expenses related to
the operation of the development team and the development site, excluding the
costs and expenses borne by PeopleSoft or LLC under Section 7 and the costs and
expenses of the Development Environment borne by PeopleSoft or LLC under Section
5 of this Agreement.
9. KEY PERSONNEL. SEA recognizes that PeopleSoft and LLC have entered into this
Agreement primarily to obtain the services of the Key Personnel. SEA agrees to
use all reasonable efforts to ensure that the Key Personnel will devote
substantially all of their efforts to the Project during the Development Term.
The Parties agree that should any Key Personnel for any reason become
unavailable for more than twenty (20) consecutive days to devote substantially
all of his/her efforts to the Project during the Development Term, SEA shall use
its best efforts (at SEA's sole expense) to expeditiously replace the former
employee with someone else to be approved by PeopleSoft and LLC, which approval
cannot be unreasonably withheld. Should more than two Key Personnel become
concurrently unavailable for more than twenty (20) consecutive days to devote
substantially all of his/her efforts to the Project during the Development Term,
irrespective of whether SEA replaces such Key Personnel, this will constitute a
material breach of this Agreement by SEA. During the thirty day period after
notice of such material breach issued by PeopleSoft or LLC to SEA, SEA shall
have the opportunity to convince PeopleSoft and LLC that this will not
materially affect the Project during the Development Term, which explanation by
SEA can be accepted or rejected by PeopleSoft and LLC in their sole discretion.
10. PAYMENTS/DISTRIBUTORS.
10.1 PAYMENTS. PeopleSoft shall pay SEA during the Term for each sale, license
or other conveyance or transfer of the Derivative Software or any subset thereof
by PeopleSoft based on the appropriate payment percentage set forth in Exhibit
"D." Exhibit "D" states the payment percentages during the Term at nine
different levels of Project Funding. The payment percentage is determined based
on the date that the license contract is signed by a client, not the date that
the fees are invoiced. Except in the event of early termination as set forth in
Section 19, the appropriate payment percentages will be determined at the end of
the Development Term, and will
Page 11 of 40
<PAGE> 12
be based solely on the Payment Rate Schedule associated with the aggregate
actual funding paid to SEA as of the end of the Development Term. If the actual
Project Funding falls in between two Project Funding Levels, the higher Project
Funding Level amount will be used to determine the applicable Payment Rate
Schedule. Should PeopleSoft's exclusive distribution rights under the Marketing
Agreement terminate, PeopleSoft may continue to distribute the Derivative
Software on a non-exclusive basis (in which case all payment obligations to SEA
will continue) and the LLC may distribute and/or appoint additional distributors
of the Derivative Software subject to SEA's written approval which will not be
unreasonably withheld. In considering such request, SEA is entitled to give full
consideration to the impact that approval of the distributor will have on SEA's
status as the Preferred Implementation Partner per Section 30 hereof and
interest in future payments per this Section 10. Should LLC distribute or
appoint distributors for the Derivative Software during the Term, LLC shall pay
SEA for each sale, license or other conveyance or transfer of the Derivative
Software or any subset thereof by LLC or additional distributors based on the
appropriate payment percentage set forth in Exhibit "D".
The payment rate shall be determined in accordance with Exhibit D based upon the
actual Project Funding received by SEA. Amounts reported and/or paid during the
Development Term will be based on the lowest applicable payment percentage for
that year. When the final actual amount of Project Funding is determined, a lump
sum adjustment will be made if the payment percentage used should have been
higher.
As an example only, if the Project Funding actually paid by LLC to SEA under
Section 7 hereof is [ * ], then the amount to be paid by PeopleSoft to SEA, for
a sale made in the fourth year of the Term, is [ * ] of the Net License Fee
attributable to such sale. Except as expressly set forth elsewhere herein, after
the Term, PeopleSoft and LLC shall have no further payment obligation to SEA.
10.2 DISTRIBUTORS. In the event PeopleSoft or LLC (upon termination of
PeopleSoft's exclusive distribution rights under the Marketing Agreement) wishes
to appoint additional distributors of the Derivative Software, the Parties will
meet and confer regarding such appointment. Any appointment of additional
distributors of the Derivative Software is subject to SEA's written approval
which will not be unreasonably withheld. In considering such a request, SEA is
entitled to give full consideration to the impact that approval of the
distributor will have on SEA's status as the Preferred Implementation Partner
per Section 30 hereof and interest in future payments per this section 10.
Regardless of whether the Derivative Software is distributed by PeopleSoft, LLC
or their distributors, PeopleSoft and LLC will be obligated to pay SEA their
respective payments due on any Net License Fees attributable to the Derivative
Software. In addition, any agreements between PeopleSoft or LLC and their
distributors shall obligate the distributor to pay SEA any amounts due SEA which
PeopleSoft or LLC have failed to pay on the distributors behalf.
11. LUMP SUM PAYMENT. If SEA, LLC and PeopleSoft mutually agree, the Parties may
elect to terminate this Agreement in exchange for the payment by PeopleSoft to
SEA of a lump sum payment, in an amount mutually agreed upon between the Parties
in writing. Payment of the lump sum payment shall terminate all of SEA's and
PeopleSoft's obligations hereunder, except for the obligations of SEA set forth
in Sections 11, 23, 24, and 38 hereof, and except for the obligations of
PeopleSoft set forth in Sections 11, 25 and 30 hereof. If SEA and PeopleSoft are
unable to amicably agree as to the amount of the lump sum payment, or if
PeopleSoft fails to pay such lump sum payment in full to SEA, then this Section
11 shall be of no force or effect and the Agreement shall remain in effect.
12. RECOVERY OF PROJECT FUNDING. All Project Funding will be recoverable
(subject to the terms and conditions set forth below), by PeopleSoft or, upon
termination of PeopleSoft's exclusive distribution rights, LLC from payments
earned by SEA under Section 10 hereof. If PeopleSoft and LLC both distribute the
Derivative Software and prepare a quarterly report pursuant to Section 13.2
which would result in a cumulative recovery of Project Funding which exceeds
total Project Funding, then each party's recovery for that quarter will be
subject to a pro-rata adjustment which would result in cumulative payments equal
to total Project Funding and a recovery of Project Funding for that quarter for
each party equal that party's proportionate share of payments reported for that
quarter. Except as set forth below, PeopleSoft and LLC will retain [ * ] of
payments otherwise payable to SEA under Section 10 hereof, up to the total
amount of Project Funding:
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.
Page 12 of 40
<PAGE> 13
(i) During the [ * ] year of the Term, the first [ * ] in payments
payable under Section 10 hereof shall not be subject to recovery by PeopleSoft
and LLC.
(ii) During the [ * ] year of the Term, the first [ * ] in payments
payable under Section 10 hereof shall not be subject to recovery by PeopleSoft
and LLC.
Except as expressly provided in this Agreement, the foregoing represents the
only means under this Agreement by which PeopleSoft and LLC may recover any of
the Project Funding from SEA, its shareholders, directors, officers, employees,
representatives, subcontractors, agents, or any other Project participant (other
than PeopleSoft, LLC or their assigns). If this payback structure does not
recover all Project Funding, SEA, its shareholders, directors, officers,
employees, representatives, subcontractors, agents and all Project participants
(other than PeopleSoft, LLC or their assigns) will bear no liability for
repayment of the Project Funding under this Agreement. PeopleSoft and LLC shall
have no right to recoup any other funds expended by PeopleSoft and LLC under
this Agreement or provided by PeopleSoft and LLC to SEA under this Agreement
other than as set forth above with respect to the Project Funding.
13. RECORDS AND REPORTS/PAYMENTS.
13.1 PEOPLESOFT RECORDS. PeopleSoft and LLC shall keep full, true and accurate
records and accounts in accordance with generally accepted accounting principles
to show the amounts payable to SEA. These records and accounts shall include for
each copy of Derivative Software or any Module licensed, sold, or otherwise
conveyed or distributed:
(i) The name and address of each recipient/purchaser/licensee.
(ii) The date of shipment and date of invoice from each
recipient/purchaser/licensee; and
(iii) A copy of each signed end user license agreement and other
applicable documents of transfer or conveyance.
PeopleSoft and LLC shall keep these records at their principal place of
business. At SEA's direction and expense, an independent certified public
accountant or public accounting firm shall have the right to conduct an audit of
such records once per calendar year to determine PeopleSoft's and LLC's
compliance with this Agreement. In the event any such audit reveals that
PeopleSoft or LLC has understated the amount of fees that PeopleSoft or LLC is
obligated to pay SEA under this Agreement by more than five percent (5%),
PeopleSoft or LLC shall pay, in addition to any fees contractually due all
reasonable costs, expenses and fees associated with the audit.
13.2 PAYMENTS. Except as otherwise provided in Section 10, thirty (30) days
after the end of each calendar quarter during the Term, PeopleSoft and LLC shall
(a) provide SEA with a quarterly report in accordance with its standard
reporting practices that is structured as a summary report and which also
provides the information set forth above in 13.1 (i), (ii) and (iii) above, with
accessibility to detailed backup information, and (b) pay SEA the amounts
associated with all applicable Net License Fees which are invoiced in such
quarter to end user licensees. The quarterly report provided by PeopleSoft and
LLC to SEA hereunder shall in each case set forth information concerning the
Module(s) licensed, customer name, ship date, quantity, standard list price,
actual fee received, reductions for bundled services, Net License Fee applicable
payment rate and the actual amount. All payments and calculations made hereunder
shall be in United States dollars.
The Parties shall proportionately share the risk of Derivative Software end user
licensee bad debts. Therefore, PeopleSoft and LLC shall be entitled to offset
against any future payment due under Section 10 to SEA the amount of any amount
previously paid to SEA for a Derivative Software end user licensee which is
subsequently and reasonably deemed uncollectable by PeopleSoft or LLC with all
collection efforts ceasing.
13.3 SEA RECORDS. SEA shall keep full, true and accurate records and accounts in
accordance with generally accepted accounting principles to show the expenditure
of the Project Funding. SEA shall keep these records at
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.
Page 13 of 40
<PAGE> 14
SEA's principal place of business. PeopleSoft or LLC shall have the right to
conduct an audit, at PeopleSoft's or LLC's expense, of such records once per
calendar year.
14. CHANGES. After the completion in Phase 1 of the initial draft of the Test
Plans, PeopleSoft and LLC may from time to time request reasonable changes in
the Project by giving SEA written notice of such requested change. Within a
reasonable number of days, not to exceed five (5) business days following
receipt of such written notice of change, the following procedures shall govern:
(i) SEA will assess the impact of the desired change(s) on the
milestones to be reached, the timeframe for completion, the costs of the
Project, and any further areas which, in the opinion of SEA, are likely to be
affected by the desired change(s).
(ii) SEA will notify PeopleSoft and LLC, in writing, of its estimates
(which estimates shall not be binding on SEA if so labeled) regarding the items
set forth in paragraph (i) above and shall await written instructions from
PeopleSoft and LLC upon whether or not to proceed with the change(s). PeopleSoft
and LLC shall respond in writing within ten (10) days of receipt of such notice,
advising SEA whether or not to proceed with the change(s).
(iii) In the event PeopleSoft or LLC wishes to incorporate PeopleSoft's
or LLC's requested change(s), such change(s) hereunder will be incorporated into
the Project on such terms and conditions as the Parties may agree by a written
amendment to this Agreement duly executed by the Parties hereto. If the Parties
cannot mutually agree in writing on the terms and conditions, then the requested
change(s) will not be incorporated into the Project.
15. ACCEPTANCE TESTING. PeopleSoft's and LLC's Acceptance of the Derivative
Software shall occur after PeopleSoft and LLC review the results of the testing
of the Derivative Software based on the mutually agreed upon Test Plans.
PeopleSoft and LLC will review and approve test results within the time frame to
be reasonably determined in the Test Plans. Within a reasonable time frame not
to exceed ninety (90) days, SEA will fix errors identified during development
and Acceptance Testing. PeopleSoft and LLC grant the following individuals full
authority to agree to test plans, and to review and approve test results: LLC's
General Manager (currently Paul Salsgiver), PeopleSoft's General Manager of
Higher Education (currently Paul Salsgiver), PeopleSoft's Public Sector
Development Manager [ * ] , and PeopleSoft's Student Administration Product Line
Manager [ * ] . Acceptance of the Derivative Software will occur upon the
approval of both the LLC's General Manager and PeopleSoft's General Manager of
Higher Education,
Nothing contained herein shall render SEA liable or responsible for the
correction or cost to correct any errors to the extent directly attributable to
the Software, Interface or Porting. Within a reasonable time period, PeopleSoft
agrees to, at PeopleSoft's expense and cost, which expense and cost shall not be
deemed Project Funding and shall not be recoverable under Section 12 or
otherwise under this Agreement, fix errors identified and agreed upon in writing
between the Parties during development and Acceptance Testing to the extent
directly attributable to the Software, any Interface, or Porting. Nothing in
Section 15 shall limit PeopleSoft's and LLC's right to terminate this Agreement
for convenience as set forth in Section 19.1.
16. MONTHLY PROGRESS REPORTS AND BACKUP. Within thirty (30) days after the end
of each calendar month, SEA shall furnish PeopleSoft and LLC with written
progress reports, reflecting its activity under this Agreement during the prior
month. The monthly progress reports shall contain such information and be in the
format that PeopleSoft and LLC shall reasonably request. SEA will backup the
development databases on the LAN provided by PeopleSoft under Section 5 hereof
daily and every week during the Development Term will provide PeopleSoft and LLC
with a copy of the entire backup.
17. PROJECT MILESTONES/DELAYS.
17.1 During Phase 1 and as refined during Phase 2, both SEA, LLC and PeopleSoft
will define and mutually agree upon development milestones to be set forth in
the Project Plans.
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.
Page 14 of 40
<PAGE> 15
SEA, LLC and PeopleSoft will also define and mutually agree in writing upon the
milestones to be set forth in the Project Plans that must be met in order for
SEA to vest in a payment stream ("Vesting Milestones"). The Vesting Milestone
for a particular time in the Project will be based only on the deliverables
actually delivered by SEA to PeopleSoft and LLC.
In the Project Plans, SEA, LLC and PeopleSoft shall set forth the percentage of
the total Project represented by each Vesting Milestone, and SEA will be vested
in that percentage of the payment stream as each Vesting Milestone achieves
Acceptance, with the payment schedule percentage to be determined using the
following implied funding level formula ("Implied Funding Level Formula):
Actual funding to date x [ * ] = Implied Project Funding
Scheduled payments to date
Exhibit "G" provides a hypothetical example for illustrative purposes only.
One of the Vesting Milestones may include PeopleSoft's and LLC's Acceptance of a
functional prototype of all the Module functions.
All Parties agree to work in good faith to ensure that all milestones are
achieved in the jointly agreed upon time frames.
17.2 In the event that SEA or PeopleSoft misses any milestone assigned to them
in the Project Plans, then at the time of missing such milestone, the Parties
will meet and confer to determine the reasonable necessity, if any, for any
extension of the applicable deadlines for any of the other's milestones which
the Parties reasonably believe are dependent on the milestone which was missed.
Any and all such Project Plan modifications and associated agreements must be
agreed upon in a formal written amendment to this Agreement to be effective.
17.3 Notwithstanding Sections 17.1 and 17.2, in the event that SEA or PeopleSoft
misses any milestone assigned to them in the Project Plans and fails to complete
the milestone within thirty (30) days from the milestone's original target date
or subsequently modified target date as set forth in an agreed upon writing,
then unless the Parties otherwise agree in writing within such thirty (30) day
cure period, such missed milestone(s) may be considered to be a material breach
subject to termination as set forth in Section 19.2 or 19.1 and such termination
in accordance with Section 19.2 or 19.1 shall be the sole remedy.
18. PROJECT COMPLETION DATE. SEA and PeopleSoft shall commence the Project on
the Effective Date, and SEA shall use all commercially reasonable efforts to
deliver the Derivative Software to PeopleSoft and LLC for Acceptance Testing in
accordance with the Test Plans on or before [ * ]. Time is of the essence
regarding this Agreement.
19. TERMINATION.
19.1 TERMINATION FOR CONVENIENCE BY LLC.
(i) If LLC, in its sole discretion, terminates this Agreement, for any
reason other than for a material breach on the part of SEA, at any point prior
to thirty (30) days following LLC's receipt of the Project Plans specified in
Phase 1, LLC's sole obligation, other than with respect to the payment of any
vested payments associated with the applicable Vested Milestones as set forth in
Section 17 and payment of any pro-rated Project Funding due but not yet paid
prior to the date of termination, shall be to pay SEA a [ * ] cancellation fee
plus the actual lease cancellation costs paid by SEA for termination of its
office lease up to a maximum of [ * ].
Payments will be calculated using Exhibit "D", the Vesting Milestone
percentage(s) of the Project and the Implied Funding Level Formula. In the event
of a termination for convenience, the [ * ] cancellation fee paid by LLC shall
be recoverable and shall constitute Project Funding. The scheduled Project
Funding payments made by
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.
Page 15 of 40
<PAGE> 16
LLC to SEA incurred prior to cancellation are recoverable by PeopleSoft and LLC
against PeopleSoft's and LLC's Section 10 payment obligations.
If LLC terminates this Agreement for convenience due to the failure to agree on
a Project Plan or if LLC terminates this Agreement for convenience with a belief
that an unfavorable market exists for the Derivative Software, PeopleSoft and
LLC will nevertheless negotiate in good faith to offer SEA the ability to act as
a non-exclusive VAR for the Derivative Software in accordance with PeopleSoft's
then current value-added-remarketer program for the higher education market.
(ii) After the thirty (30) day period set forth in paragraph (i) above
has elapsed, if LLC terminates this Agreement for convenience, and not due to a
material breach on the part of SEA, LLC's sole obligation to SEA, other than
with respect to payment of any vested payments set forth in Section 17, and
payment of any pro-rated Project Funding due but not yet paid prior to the date
of termination, will be to pay SEA [ * ] months expense and cost for the Key
Personnel, [ * ] months expense and cost for other developers, and [ * ] month
expense for administrative personnel at the point of termination plus the actual
lease cancellation costs paid by SEA for termination of its office lease up to a
maximum of [ * ]. This expense and cost shall be calculated at [ * ] per month
for each Key Personnel, [ * ] per month for other developers, and [ * ] per
month for administrative personnel. In no event shall such termination amount
exceed [ * ] . All termination payments made by LLC shall be Project Funding and
subject to recovery against future Section 10 payments payable to SEA, but shall
be excluded from the Implied Funding Level Formula.
(iii) LLC shall not be entitled to terminate this Agreement for
convenience after [ * ], which is [ * ] months before the end of the Development
Term. The end of the Development Term is [ * ].
19.2 TERMINATION FOR CAUSE.
(i) Any party may terminate this Agreement and seek any available
remedies at law or equity, in the event one of the other Parties has committed
fraud under this Agreement or intentionally violates any other's intellectual
property rights.
(ii) If any party materially breaches this Agreement and does not
remedy such breach within thirty (30) days after receipt of written notice from
one of the other Parties, the other Parties shall have the right, at its option,
to:
(1) Suspend performance or payment until such breach is remedied, without
excusing the breaching party from any obligation arising prior to the date of
such election;
(2) Cancel this Agreement, if the material breach is not a performance
breach by SEA for failure to achieve any Vesting Milestone, with no further
obligation except for SEA's return to LLC of any unexpended Project Funding and
the Development Environment, without excusing the breaching party from any
obligation arising prior to the date of such cancellation; or
(3) Seek a combination of (1) and (2) and seek those remedies available at
law or equity, except to the extent limited by the terms of this Agreement.
(iii) In the event SEA terminates this Agreement due to a material
breach by PeopleSoft or LLC, and provided SEA is not in material breach, SEA
only retains its rights to any vested payments under this Agreement and SEA's
sole remedy shall only be to retain all Project Funding received by SEA and
LLC's sole obligation to SEA, other than with respect to payment of any vested
payments set forth in Section 17, and payment of any pro-rated Project Funding
due but not yet paid prior to the date of termination, will be only to pay SEA
[ * ] months expense and cost for the Key Personnel, [ * ] months expense and
cost for other developers, and [ * ]
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.
Page 16 of 40
<PAGE> 17
[ * ] month expense for administrative personnel at the point of termination of
the Agreement, plus the actual lease cancellation costs paid by SEA for
termination of its office lease up to a maximum of [ * ] . This expense shall be
calculated at [ * ] per month for each Key Personnel, [ * ] per month for other
developers, and [ * ] per month for administrative personnel. In no event shall
such termination payment amount exceed [ * ] . All termination payments made by
LLC shall be Project Funding and subject to recovery against future Section 10
Payments to SEA, but shall be excluded from the Implied Funding Level Formula.
In any event, SEA shall not be entitled to terminate this Agreement for
convenience and SEA may only terminate this Agreement for cause as set forth in
this Section 19.2.
(iv) During the Development Term, in the event PeopleSoft or LLC
terminates this Agreement due to SEA's decision to work for another person or
entity to develop software competitive to the Derivative Software, PeopleSoft's
and LLC's damages shall be limited to the amount of Project Funding paid and
SEA's rights to continue to receive future payments shall immediately cease.
(v) During the Development Term, in the event PeopleSoft or LLC terminates
this Agreement due to SEA's failure to achieve any Vesting Milestone within
sixty (60) days of the agreed upon date in the Project Plans, SEA's rights to
continue to receive future payments under this Agreement shall continue, subject
to offset in the amount of the Project Funding paid by LLC to SEA and SEA shall
be entitled to receive payment of any pro-rated Project Funding due under the
Project Plans but not yet paid prior to the date of written notice of default
due to failure to achieve the Vesting Milestone. LLC's obligation to provide
Project Funding is suspended at the time of issuance of a notice of default due
to a failure of SEA to achieve a Vesting Milestone and is revived only upon cure
of the material breach.
20. REPRESENTATION AND WARRANTIES.
20.1 SERVICES. SEA represents and warrants to PeopleSoft and LLC that during the
Development Term and the term of any Maintenance Contract, the services to be
performed by SEA hereunder shall be performed in a timely, good, professional,
workmanlike and competent manner. PeopleSoft represents and warrants to SEA that
during the Development Term and the term of any Maintenance Contract, the
services to be performed by PeopleSoft hereunder shall be performed in a timely,
good, professional, workmanlike and competent manner.
20.2 ORIGINAL DEVELOPMENT. SEA represents and warrants to PeopleSoft and LLC
that the Modules will be of original development by SEA, will be specifically
developed for this Agreement and will not infringe upon or violate any United
States or Canadian patent, copyright, trade secret or other United States or
Canadian proprietary right of any third party. PeopleSoft represents and
warrants to SEA and LLC that the Software, Interfaces and Porting will be of
original development by PeopleSoft and will not infringe upon or violate any
United States or Canadian patent, copyright, trade secret or other United States
or Canadian proprietary right of any third party.
20.3 COMPLIANCE WITH APPLICABLE LAWS. SEA warrants to PeopleSoft and LLC that to
the best knowledge of SEA, the Modules delivered to PeopleSoft and LLC hereunder
and performance by SEA of its obligations hereunder, shall be in compliance with
all applicable laws, rules and regulations as of the date of delivery thereof.
PeopleSoft warrants to SEA and LLC that to the best knowledge of PeopleSoft, the
Software, the Porting, and the Interfaces delivered to SEA hereunder and
performance by PeopleSoft of its obligations hereunder, shall be in compliance
with all applicable laws, rules and regulations as of the date of delivery
thereof.
20.4 NO THREATENED LITIGATION. All Parties represent to the others that to the
best knowledge of such party or its key developers, such party and its key
developers are not involved as a plaintiff or defendant in any litigation and is
not aware of any threatened litigation in which it could become involved that is
likely to materially or adversely affect either party's rights or obligations
under this Agreement.
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.
Page 17 of 40
<PAGE> 18
20.5 AUTHORITY. All Parties represent and warrant to the others that it has the
full power and authority to enter into this Agreement and that any
representative of such party who signs this Agreement has full power and
authority to enter into this Agreement.
20.6 LLC and PeopleSoft represent and warrant that LLC shall have an initial
capitalization of at least [ * ] and that the LLC will not extend loans to any
member(s), make cash distributions to any member(s) during the Development Term
or engage in any other transactions in which the initial capital of LLC is paid
to its members during the Development Term without the prior written consent of
SEA, such consent not to be unreasonably withheld.
21. MODULES AND DERIVATIVE SOFTWARE PROVIDED BY SEA TO PEOPLESOFT AND LLC ON "AS
IS" BASIS: NO MAINTENANCE, SUPPORT OR WARRANTY OBLIGATIONS OF SEA.
21.1 EXCEPT AS MAY BE EXPRESSLY SET FORTH IN A MAINTENANCE CONTRACT EXECUTED BY
SEA AND PEOPLESOFT OR LLC, AFTER THE EXPIRATION OF THE DEVELOPMENT TERM, THE
MODULES AND DERIVATIVE SOFTWARE ARE PROVIDED TO PEOPLESOFT AND LLC "AS IS"
WITHOUT WARRANTY OF ANY KIND, WHETHER EXPRESS OR IMPLIED, INCLUDING BUT NOT
LIMITED TO THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, SEA SHALL
HAVE NO OBLIGATION TO PROVIDE ANY MAINTENANCE, SUPPORT OR WARRANTY SERVICE TO
PEOPLESOFT, LLC, ANY THIRD PARTY OR ANY END USER OF THE MODULES AND DERIVATIVE
SOFTWARE OR TO ANY OTHER THIRD PARTY MAKING A CLAIM IN WHOLE OR IN PART BASED
UPON THE MODULES AND DERIVATIVE SOFTWARE.
22. LIMITED LIABILITY.
22.1 EXCEPT FOR THE RESPECTIVE OBLIGATIONS UNDER SECTIONS 24 AND 25, VIOLATIONS
OF ANY PARTY'S INTELLECTUAL PROPERTY RIGHTS FOR WHICH NO LIMITATION ON DAMAGES
SHALL APPLY, AND PEOPLESOFT'S OR LLC'S LIABILITY TO SEA FOR VESTED PAYMENTS
UNDER SECTION 17 AND PROJECT FUNDING THAT IS PAYABLE UNDER SECTION 7 PRIOR TO
ANY TERMINATION OF THIS AGREEMENT, THE LIABILITY OF ANY PARTY FOR DAMAGES UNDER
THIS AGREEMENT SHALL BE LIMITED TO ACTUAL AMOUNTS PAID BY PEOPLESOFT OR LLC TO
SEA UNDER THIS AGREEMENT.
IN NO EVENT SHALL ANY PARTY BE LIABLE TO THE OTHER PARTIES FOR INCIDENTAL,
CONSEQUENTIAL OR SPECIAL DAMAGES OF ANY KIND, INCLUDING BUT NOT LIMITED TO LOST
PROFITS (OTHER THAN VESTED PAYMENTS UNDER SECTION 17 EARNED BY SEA), EVEN IF THE
OTHER PARTY HAS BEEN INFORMED OF THE LIKELIHOOD OF SUCH DAMAGES OCCURRING, AND
EVEN IF THE LIMITED REMEDIES STATED HEREIN FAIL IN THEIR ESSENTIAL PURPOSE.
22.2 NO PASS THROUGH OF WARRANTY OBLIGATIONS. SEA AND LLC DO NOT MAKE BY VIRTUE
OF THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREIN, AND SEA AND LLC
HEREBY EXPRESSLY DISCLAIM, ANY REPRESENTATION OR WARRANTY TO ANY END USER,
DEALER, DISTRIBUTOR OR THIRD PARTY (INCLUDING, WITHOUT LIMITATION, CUSTOMERS OF
PEOPLESOFT), WITH RESPECT TO ANY MODULE OR ANY DERIVATIVE SOFTWARE ACQUIRED BY
PEOPLESOFT PURSUANT TO THIS AGREEMENT, INCLUDING, WITHOUT LIMITATION, THE
IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
PEOPLESOFT SHALL TAKE ALL MEASURES REASONABLY NECESSARY TO ENSURE THAT NEITHER
IT NOR ANY OF ITS EMPLOYEES OR AGENTS MAKES OR PASSES ON, ANY SUCH
REPRESENTATION OR WARRANTY ON BEHALF OF SEA OR LLC TO ANY END USER, DEALER,
DISTRIBUTOR OR THIRD PARTY (INCLUDING, WITHOUT LIMITATION, CUSTOMERS OF
PEOPLESOFT).
23. OWNERSHIP OF DERIVATIVE SOFTWARE.
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.
Page 18 of 40
<PAGE> 19
23.1 SEA and PeopleSoft agree that all or any portion of the Modules, Derivative
Software and design documents, flow charts and all other related development
documents, and all patents and copyrights to each of the items therein, shall be
the exclusive property of LLC. PeopleSoft, SEA or any of its agents,
subcontractors or consultants shall have no ownership interest in the Modules,
Derivative Software or development documents. SEA and PeopleSoft agree that the
Derivative Software, Modules and development documents shall be considered a
"work for hire" for the benefit of LLC and any of its assigns pursuant to this
Agreement. Upon LLC's reasonable request, SEA and PeopleSoft agree to execute
documents, including, but not limited to, copyright assignment documents, and to
perform such acts as may be deemed necessary or advisable to confirm in LLC all
right, title and interest of SEA and PeopleSoft in and to the Modules,
Derivative Software and development documents, including all patent
applications, patents and copyrights thereon, and to enable and assist LLC in
procuring, maintaining, enforcing and defending patents, copyrights and other
applicable statutory protection on the Modules, development documents and the
Derivative Software. Except as set forth elsewhere in this Agreement, SEA and
PeopleSoft hereby irrevocably assign to LLC in perpetuity all right, title and
interest in the Derivative Software, Modules and development documents that SEA
and PeopleSoft may now have or later acquire directly through SEA's development
of the Derivative Software and Modules in accordance with the Project Plans,
including any Moral Rights. SEA and PeopleSoft further agree to enter into any
and all necessary agreements with its employees, subcontractors and agents who
perform services under this Agreement and to take any and all other reasonable
and necessary measures to effect such complete ownership in LLC. SEA and
PeopleSoft irrevocably waives and relinquishes, for itself and its employees and
agents, any claims of Moral Rights with respect to any and all uses of the
Derivative Software, Modules and development documents and SEA and PeopleSoft
will take all reasonable actions, including taking legal action against such
employees or agents to ensure that neither it nor its employees/agents shall
assert any such claims with respect to such Moral Rights. Nothing set forth
herein shall prevent PeopleSoft, SEA or their employees from using or exploiting
information which (i) is not Confidential Information, or (ii) is not part of
the Derivative Software, Modules or development documents.
23.2 Pursuant to the Maintenance and Support Services Terms and Conditions
(Exhibit F), all Parties acknowledge that, after the development term, the
Derivative Software will be subject to maintenance, updates and enhancements as
further described in Exhibit F. The Parties anticipate that such maintenance,
updates and enhancements will be so significant that after [ * ] years the
Derivative Software will have evolved to substantially new software as compared
to the Derivative Software released at the end of the Development Term. If the
Maintenance and Support Services and all enhancements are funded principally by
PeopleSoft and PeopleSoft has retained its exclusive distribution rights under
the Marketing Agreement, then, pursuant to the Marketing Agreement, PeopleSoft
will receive all right, title and ownership as described in Section 23.1 to the
Derivative Software upon the earlier of i) the payment of [ * ] in cumulative
payments to LLC (but such title transfer shall not alter PeopleSoft's payment
obligations to LLC under the Marketing Agreement), or ii) the end of the payment
term. If the Maintenance and Support Services and all enhancements are funded by
PeopleSoft and LLC, and/or PeopleSoft is no longer the exclusive distributor of
the Derivative Software, the LLC will continue to have all right, title and
ownership in the Derivative Software as of the end of the Development Term and
PeopleSoft and the LLC will [ * ] ownership interest in any modifications,
enhancements or other changes made to the Derivative Software subsequent to the
Development Term until PeopleSoft has paid [ * ] in cumulative payments to LLC
at which time PeopleSoft will receive all right, title and ownership as
described in Section 23.1 to the Derivative Software
24. INDEMNIFICATION BY SEA. Notwithstanding Section 22.1, SEA shall indemnify
and defend PeopleSoft and LLC against any claims (i) that all or any portion of
the Derivative Software and Modules developed by SEA infringe any United States
or Canadian patent, copyright or trade secret; (ii) attributable to any act of
SEA in its creation of the Derivative Software or Modules; or (iii) relating to
third party licenses or other agreements between SEA and any third party, in
each case provided that SEA is given prompt notice of such claim and is given
information, reasonable assistance, and authority to defend or settle the claim.
In the defense or settlement of the claim, SEA may obtain for PeopleSoft and LLC
the right to continue using and marketing the Derivative Software and Modules or
replace or modify Derivative Software and Modules so that it becomes
noninfringing while giving substantially equivalent performance. SEA shall have
no liability to the extent the alleged infringement is based on: (i) a
modification of Derivative Software or Modules by anyone other than SEA or its
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.
Page 19 of 40
<PAGE> 20
agents, consultants or subcontractors under SEA's direction; (ii) the use of the
Derivative Software or Modules other than in accordance with the Documentation;
(iii) the Software; (iv) any Interface; (v) any Porting. SEA shall have no
liability to the extent the alleged infringement is based on claims covered by
Section 25 hereof. However, each party shall be liable to the others in the
percentage amount of their determined liability.
25. INDEMNIFICATION BY PEOPLESOFT. Notwithstanding Section 22.1, PeopleSoft
shall indemnify and defend SEA and LLC against any claims (i) that all or any
portion of the Software, the Interfaces or the Porting developed by PeopleSoft
infringe any United States or Canadian patent, copyright or trade secret; (ii)
attributable to any act of PeopleSoft in its creation, distribution or
maintenance of any of the Software, Derivative Software, Documentation, Modules,
Development Environment and Beta Sites; or (iii) relating to third party
licenses or other agreements between PeopleSoft and any third party, in each
case provided that PeopleSoft is given prompt notice of such claim and is given
information, reasonable assistance, and authority to defend or settle the claim.
PeopleSoft shall have no liability to the extent the alleged infringement is
based on claims covered by Section 24 hereof. However, each party shall be
liable to the others in the percentage amount of their determined liability.
26. LICENSE. During the Term only, PeopleSoft and LLC grant SEA a non-exclusive,
nontransferable license to use a reasonable number of copies of the Software
solely for promotion, demonstration or internal use purposes connected with this
Agreement or in conjunction with SEA's development, support, demonstration,
testing (and all other similar supporting tasks) of the Derivative Software.
SEA's use of the Software shall be in accordance with the terms and conditions
of PeopleSoft's standard license agreement, a copy of which is attached hereto
as Exhibit "E" and in the event of conflict between the license in this
Agreement and Exhibit "E", the Agreement shall control.
27. MAINTENANCE CONTRACT. SEA and PeopleSoft and, upon termination of
PeopleSoft's exclusive distribution rights under the Marketing Agreement, LLC
agree to negotiate in good faith the terms and conditions of a Maintenance
Contract for the Derivative Software. The Parties shall use reasonable efforts
to finalize the Maintenance Contract at least six (6) months prior to the
initial shipment of the beta versions of the Derivative Software and may include
terms and conditions similar to those identified in Exhibit F attached hereto.
28. NONCOMPETITION.
This Section 28 shall survive termination of the Agreement only for a period of
one (1) year from termination.
28.1 RESTRICTIONS ON SEA. During the Term, SEA shall not directly or indirectly
(other than with LLC, PeopleSoft or a PeopleSoft Affiliate) develop or
participate in the development or marketing to the higher education market of
any software product being developed for commercial distribution which is
competitive with the Derivative Software. After the Development Term, SEA and
its personnel are not precluded from participating in the custom development of
software or the customization of software packages for internal use only by
individual clients and SEA will undertake all reasonable efforts to ensure that
there is no plan to transfer or convey external use rights in any way to the
custom software and/or the customizations.
28.2 RESTRICTIONS ON PEOPLESOFT AND LLC. During the Term, PeopleSoft and LLC
shall not directly or indirectly (other than with SEA) participate in the
distribution or marketing to the higher education marketplace of any software
product which is directly competitive with the Derivative Software. This Section
28.2 shall immediately cease (with no one year waiting period) in the event SEA
elects to work with another entity or person to develop or market software which
is competitive with the Derivative Software.
29. SALE OF INTEREST IN SEA. PeopleSoft, Inc. shall have a first right of
refusal in connection with each and any sale of a [ * ] interest in the
outstanding or newly issued capital stock of SEA during the Development Term or
any interest once SEA has cumulatively conveyed (via multiple transactions) more
than [ * ] percent. The intent is not to permit SEA to circumvent PeopleSoft's
first right of refusal rights or PeopleSoft's right to terminate Section 30
after the Development Term by SEA selling multiple [ * ] interests which have
the cumulative effect of transferring a cumulative interest of more than [ * ]
percent to a third party or Parties. A [ * ] interest is defined as [ * ] or
more. As used herein, a sale of a [ * ] interest in the
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.
Page 20 of 40
<PAGE> 21
outstanding or newly issued capital stock of SEA shall expressly exclude any
interest offered or transferred pursuant to an employee benefit plan or to or
between any person(s) who are both employees, directors, shareholders or
controlling persons of SEA. After the expiration of the Development Term and
first year of the Maintenance Contract (or earlier termination of this
Agreement) this Section 29 shall terminate and be of no further force or effect,
except that a sale of a [ * ] interest will act to terminate Section 30
in the event PeopleSoft reasonably determines that (i) SEA's ability to act as a
preferred implementation partner will have a negative impact on PeopleSoft's
Derivative Software marketing activities, (ii) is likely to result in disclosure
of PeopleSoft Confidential Information, (iii) it is likely to adversely impact
PeopleSoft's ability to manage other Derivative Software implementation
partnerships; or (iv) a PeopleSoft competitor has acquired the [ * ] interest in
SEA. Should PeopleSoft not exercise its first right of refusal, LLC shall have
the same first right of refusal as described herein.
30. PREFERRED IMPLEMENTATION PARTNER STATUS. Effective as of the Effective Date,
SEA will be given a preferred implementation partner status associated with the
Derivative Software. PeopleSoft, LLC and SEA will work together during and at
the end of the Development Period to develop a preferred role for SEA within any
PeopleSoft or LLC implementation partners program for the Derivative Software.
In any event, SEA will have the right to acquire and use Derivative Software
licenses for internal use only at no license fee in conjunction with SEA's role
as an implementation partner. As of the Effective Date, PeopleSoft and SEA have
discussed the possibility of a key role for SEA within the Derivative Software
installation process. Such good faith discussions shall continue during and at
the conclusion of the Development Term to define SEA's role. The intent behind
this paragraph is not necessarily to provide SEA with exclusive status as an
implementation partner, but to offer SEA preferential treatment to the extent
reasonably practicable within PeopleSoft's or LLC's (or any distributor
appointed by LLC) then current implementation partners program.
During the Term, neither PeopleSoft nor LLC will enter into any transactions
that contractually limit in a material fashion PeopleSoft's or LLC's continuing
relationship with SEA as a preferred implementor. If PeopleSoft, LLC or any
other distributor appointed by the LLC begins to offer implementation services
themselves, SEA's preferred status will still be in force. SEA will not then be
obligated to pay PeopleSoft or LLC any finder's fees for any implementation
business that SEA may obtain, nor shall PeopleSoft, LLC or any other distributor
appointed by the LLC accept any finder's fees from any other implementation
services providers for assisting PeopleSoft, LLC or any other distributor
appointed by the LLC in obtaining customers. In the event that SEA has proven to
be ineffective as a preferred implementation provider as reasonably indicated by
PeopleSoft's or LLC's client feedback, or does not have sufficient resources
available to provide timely implementation services to new licensee's,
PeopleSoft and LLC shall have the right to terminate the restrictions in this
paragraph.
Both PeopleSoft and LLC recognize SEA's status as the Preferred Implementation
Partner associated with the Derivative Software as defined herein and agree
hereby to meet before the end of the Development and agree upon a regular
schedule of meetings in which the Parties will discuss planned and ongoing
software development efforts, joint marketing plans and any reasonable request
for information regarding End Users.
31. PARTICIPATION ON BOARD OF DIRECTORS. As of the Effective Date and throughout
the Term, SEA shall provide PeopleSoft or LLC with one (1) seat on SEA's board
of directors
32. ASSIGNMENT AND SUBCONTRACTING BY SEA / SUBCONTRACTING BY PEOPLESOFT
32.1 During the Development Term, SEA shall not assign or otherwise transfer any
of its rights or obligations under this Agreement without the prior written
consent of LLC, which consent can be withheld in LLC's sole discretion.
With LLC's prior written consent, SEA will be entitled to subcontract work to be
performed under the Project Plans, provided that such assignment shall not work
a novation and SEA shall remain responsible for all of its duties and
obligations hereunder. SEA is responsible for all costs and expenses associated
with the subcontract and such costs shall be considered Project Funding.
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.
Page 21 of 40
<PAGE> 22
32.2 PeopleSoft will be entitled to subcontract work to be performed under the
Project Plans or otherwise in its discretion, provided that such assignment
shall not work a novation as to PeopleSoft and PeopleSoft shall remain
responsible for all of its duties and obligations hereunder.
32.3 SEA shall not hire or utilize [ * ] without the prior written consent of
PeopleSoft and LLC, which consent may be withheld in PeopleSoft's or LLC's sole
discretion. Once PeopleSoft and LLC provide such written consent, such person
shall be permitted to work for SEA without further consent required, provided
adequate written assurances are received by SEA from such person that they are
not contractually or otherwise prohibited from developing the Derivative
Software. In the event such person is reasonably viewed thereafter by
PeopleSoft, LLC or SEA to have breached their representations to SEA, SEA shall
not be in material breach of this Agreement provided SEA has taken all
reasonable actions to remedy or cure such employee breach which may include
termination of such employee's employment with SEA.
Any assignment or transfer by either party in violation of this Section 32.
shall be deemed to be null and void.
33. PERFORMANCE AUDITS. In order to ensure the proper performance hereunder,
PeopleSoft and LLC shall have the right at anytime upon reasonable notice to
inspect and receive copies of all completed and partially completed portions of
the Derivative Software, programming, printed program source code listings,
narratives, record layouts, file descriptions, computer output, working papers
and other material relating to the Project.
34. ACCESS TO FINANCIAL STATEMENTS. Once every twelve months, SEA, LLC and
PeopleSoft shall provide the Parties with updated and audited financial
statements for its company.
35. INDEPENDENT CONTRACTOR.
SEA shall be deemed to be an independent contractor in the performance of this
Agreement and shall not be considered or permitted to be an agent, servant,
joint venturer or partner of PeopleSoft or LLC. All persons furnished, used,
retained or hired by or on behalf of SEA shall be considered to be solely the
employees or independent contractors of SEA, and SEA at all times shall maintain
such supervision and control over its employees as is necessary to preserve its
independent contractor status. SEA shall be responsible for payment of any and
all unemployment, social security, withholding, and other payroll taxes for its
employees, as applicable, including any related assessments or contributions
required by law.
PeopleSoft shall be deemed to be an independent contractor in the performance of
this Agreement and shall not be considered or permitted to be an agent, servant,
joint venturer or partner of SEA or LLC. All persons furnished, used, retained
or hired by or on behalf of PeopleSoft shall be considered to be solely the
employees of PeopleSoft, and PeopleSoft at all times shall maintain such
supervision and control over its employees as is necessary to preserve its
independent contractor status. PeopleSoft shall be responsible for payment of
any and all unemployment, social security, withholding, and other payroll taxes
for its employees, as applicable, including any related assessments or
contributions required by law.
36. FORCE MAJEURE. No party shall be deemed to be in default of any provision of
this Agreement or liable for failures in performance resulting from acts or
events beyond the reasonable control of such party. Such acts and events shall
include but not be limited to acts of God, civil or military authority, civil
disturbance, war, strikes, fires, earthquakes, other catastrophes, or other
"force majeure" events beyond a party's reasonable control, and shall NOT
include the death or disability of Key Personnel.
37. ARBITRATION; CHOICE OF LAW; FORUM.
37.1 ARBITRATION AUTHORITY. PeopleSoft, LLC and SEA expressly agree that any
dispute, controversy, or claim arising out of or relating to this Agreement or
the formation, breach, interpretation, or enforcement of this Agreement shall be
submitted to and settled by binding arbitration conducted by the American
Arbitration Association ("A.A.A."). The A.A.A. rules notwithstanding, in no
event shall the arbitrator in any arbitration
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.
Page 22 of 40
<PAGE> 23
under this Agreement have power or authority to add to or detract from the
express agreement of PeopleSoft, LLC and SEA or to award punitive or
consequential damages.
37.2 CHOICE OF LAW. This Agreement was entered into in the State of California,
and its validity, construction, interpretation, and legal effect shall be
determined and governed by the substantive laws and judicial decisions of the
State of California applicable to contracts entered into and performed entirely
within the State of California.
37.3 PLACE OF ARBITRATION; FORUM. PeopleSoft, LLC and SEA expressly agree that
any arbitration pursuant to this Agreement shall be conducted in the county of
the principal place of business where the party NOT requesting arbitration is
located. Any and all functions or proceedings which must or may be performed or
conducted by a court prior to, in conjunction with, or after any arbitration
under this Agreement shall be performed or conducted by the Superior Court of
the State of California located in the same county. Notwithstanding the
foregoing, any award rendered in the arbitration and any order issued by the
Superior Court of the State of California for the same county may be enforced in
any court of competent jurisdiction.
37.4 ARBITRATION HEARING. PeopleSoft, LLC and SEA expressly agree that an oral
hearing will be held in the arbitration. The oral hearing will commence within
sixty (60) days after appointment of the arbitrator and will conclude within
thirty (30) days after it commences. The arbitrator will make every effort to
enforce this requirement strictly, and may extend the time for commencing and/or
concluding the hearing only upon a showing that exceptional circumstances
require extension to prevent manifest injustice.
37.5 COSTS AND FEES. PeopleSoft, LLC and SEA shall bear the expense of
conducting the arbitration in equal proportions, but either PeopleSoft, LLC or
SEA may advance such amounts, subject to recovery as an addition or offset to
any award. PeopleSoft, LLC and SEA expressly agree that each will bear its own
costs and fees incurred in any arbitration hereunder, and that the arbitrator
shall not have the power or authority to award costs or fees to a prevailing
party.
37.6 RELATED ACTIONS. PeopleSoft, LLC and SEA expressly agree that any legal
action relating to the arbitration and any action to stay the arbitration or to
modify or correct any award or otherwise, will be heard in the Superior Court of
the State of California located in the county of arbitration.
Any action for injunctive or interim relief will be heard in either San
Francisco or Los Angeles County as determined by the party bringing the action.
37.7 CONFIDENTIALITY. PeopleSoft, LLC and SEA acknowledge that the progress, and
results of any arbitration, any testimony rendered in any arbitration
proceeding, and any arbitral award (collectively, "Arbitration Information") are
to remain strictly confidential. PeopleSoft, LLC and SEA agree not to publish or
advertise any Arbitration Information by any means and further agree to take
reasonable care, but in no event less care than it takes to protect their own
confidential business information generally, to prevent disclosure and
dissemination of any Arbitration Information.
37.8 ARBITRATION BINDING. The award rendered in any arbitration will be final
and binding, and may be enforced in any court of competent jurisdiction.
PeopleSoft, LLC and SEA expressly waive any right they might have to appeal or
petition for review of any arbitral award.
38. CONFIDENTIAL INFORMATION.
Page 23 of 40
<PAGE> 24
38.1 SEA and LLC understand and agree that the Software and the Derivative
Software and materials provided by PeopleSoft to SEA under this Agreement
contain trade secrets, confidential and proprietary information of PeopleSoft
(hereinafter referred to as the "Confidential Information"). SEA and LLC shall
exercise all reasonable care to avoid unauthorized disclosure, publication, or
dissemination of the Confidential Information, and will not copy or permit
others to copy the Confidential Information, except for a reasonable number of
copies necessary to perform the services hereunder, all of which shall be
treated in accordance with the foregoing standard. SEA and LLC shall not
disclose, provide, or otherwise make available the Confidential Information, in
whole or in part, except in confidence to SEA's employees in the scope of their
employment for purposes solely related to the performance of services hereunder
by SEA. SEA and LLC shall return such Confidential Information to PeopleSoft at
its request. If LLC, SEA or its employees use, disclose, or attempt to use or
disclose any such Confidential Information in a manner contrary to this
provision, then PeopleSoft shall have the right to seek injunctive relief
against such breach or threatened breach pending arbitration as provided in
Section 37.
38.2 Under no circumstances shall Confidential Information include any
information which:
(i) Was in the public domain at the time it was disclosed.
(ii) Was lawfully known to SEA or LLC prior to the time of
disclosure by PeopleSoft to SEA.
(iii) Is disclosed with the prior written approval of
PeopleSoft.
(iv) Is or becomes publicly known through no wrongful act of
SEA or LLC.
(v) Becomes lawfully known to SEA or LLC from a source other
than PeopleSoft without breach of this Agreement by SEA
or LLC.
(vi) Is disclosed pursuant to the order or requirement of a
court, administrative agency or other governmental body, provided that if SEA or
LLC is required to disclose any Confidential Information pursuant to any
governmental or legal proceedings, SEA or LLC will give PeopleSoft reasonable
advance written notice of such proceeding.
39. RIGHTS UPON TERMINATION. Except as provided otherwise in this Agreement,
upon the termination or expiration of this Agreement, SEA shall return to
PeopleSoft or LLC, as appropriate, (and keep no copies of) any and all papers,
materials and property of PeopleSoft, the Development Environment, all copies of
the PeopleSoft Software, the Derivative Software, Modules, design or development
documents and any portion thereof, held by SEA, its agents, employees or
subcontractors in connection with the performance of this Agreement.
40. NOTICES. All notices given hereunder shall be in writing and deemed duly
given upon personal delivery or on the third business day following the date on
which each such notice is deposited postage prepaid in the U.S. Mail, registered
or certified, return receipt requested. All notices shall be delivered or sent
to the other party at the address shown below or at any other address as the
party may designate by ten (10) calendar days prior written notice given in
accordance with this provision.
IF TO PEOPLESOFT:
PeopleSoft, Inc.
1331 North California Boulevard
Walnut Creek, California 94596
Attention: Legal Department
IF TO SEA:
Page 24 of 40
<PAGE> 25
Solutions For Education Administrators, Inc.
15515 San Fernando Mission Boulevard, Suite 6
Mission Hills, California 91345
Attention: Geoff Collier
If to LLC:
SIS Development, LLC
4440 Rosewood Drive
Pleasanton, CA 94588
Attention: Paul Salsgiver
41. SURVIVAL. The following provisions shall survive any termination of this
Agreement: Sections 1, 2, 13.1, 19, 21, 22, 23, 24, 25, 27, 28, 35, 37, 38, 39,
40, 41, 43 and 44.
42. SUBSEQUENT CHANGES IN AGREEMENT. This Agreement may be modified only by an
amendment executed in writing by a duly authorized representative for
PeopleSoft, LLC and SEA.
43. DUPLICATE ORIGINALS. This Agreement may be executed in counterparts, each of
which shall be deemed an original but both of which together shall constitute
one and the same instrument. In proving this Agreement it shall not be necessary
to produce more than one (l) such original.
44. ENTIRE AGREEMENT. This Agreement contains the entire understanding and
agreement between the Parties with respect to the subject matter hereof, and
supersedes any and all prior or contemporaneous oral or written communications
with respect to the subject matter hereof, and there are no oral or written
representations, understandings or agreements between the Parties respecting the
subject matter hereof which are not fully expressed herein. All amendments must
be in writing and signed by the Parties' authorized signatories to be effective.
THE TERMS, CONDITIONS, AND PRICING IN THIS AGREEMENT ARE CONFIDENTIAL AND SHALL
NOT BE DISCLOSED BY SEA, LLC OR PEOPLESOFT TO ANY THIRD PARTY WITHOUT THE PRIOR
WRITTEN CONSENT OF ALL OF THE OTHER PARTIES, SUCH CONSENT NOT TO BE UNREASONABLY
WITHHELD.
Page 25 of 40
<PAGE> 26
IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be executed
in duplicate originals by its respective duly authorized representative on the
Amended Effective Date entered below.
<TABLE>
<CAPTION>
<S> <C> <C>
AMENDED EFFECTIVE DATE: 22 DECEMBER 1995.
SOLUTIONS FOR EDUCATION
ADMINISTRATORS, INC. PEOPLESOFT, INC. SIS DEVELOPMENT, LLC
/S/ GEOFFREY R. COLLIER /S/ RONALD E.F. CODD /S/ PAUL H. SALSGIVER JR.
-------------------------------------------------------------------------------------------------
AUTHORIZED SIGNATURE AUTHORIZED SIGNATURE AUTHORIZED SIGNATURE
GEOFFREY R. COLLIER, PRESIDENT RONALD E.F. CODD - SR. VP CFO PAUL H. SALSGIVER JR., MANAGER
------------------------------------------------------------------------------------------------------
PRINTED NAME AND TITLE PRINTED NAME AND TITLE PRINTED NAME AND TITLE
</TABLE>
Page 26 of 40
<PAGE> 27
EXHIBIT A
FUNCTIONS FOR CONSIDERATION AS OF THE EFFECTIVE DATE
[ * ]
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.
Page 27 of 40
<PAGE> 28
[ * ]
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.
Page 28 of 40
<PAGE> 29
[ * ]
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.
Page 29 of 40
<PAGE> 30
EXHIBIT B
FUTURE MODULES
[ * ]
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.
Page 30 of 40
<PAGE> 31
[ * ]
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.
Page 31 of 40
<PAGE> 32
EXHIBIT C
FUNDING SCHEDULE
The following spreadsheet provides the schedule for the Project Funding that LLC
will provide to SEA under the terms of the Agreement. SEA can unilaterally
reduce the Project Funding to be received at any time, and if SEA elects to
reduce the Project Funding SEA receives in a particular funding period, SEA can
require that LLC add the amount of such reduction to any subsequent funding
period(s).
<TABLE>
<CAPTION>
Payment Date (on following
Month During Period Cumulative business day if falls on weekend
Development Term Funding Funding or holiday)
<S> <C> <C> <C>
[ * ]
</TABLE>
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.
Page 32 of 40
<PAGE> 33
EXHIBIT D
PAYMENT RATE SCHEDULE
<TABLE>
<CAPTION>
Project TARGET
Funding % % % % % % % % % % NET
Level YR YR YR YR YR YR YR YR YR YR PAYMENT
1 2 3 4 5 6 7 8 9 10
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
[ * ]
</TABLE>
For the avoidance of doubt, the Target Net Payment is not a guaranteed payment
amount or guaranteed payment stream, rather the Target Net Payment is only a
rough estimation of the possible payment amount.
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.
Page 33 of 40
<PAGE> 34
EXHIBIT E
LICENSE AGREEMENT
(Term of use shall be Term of Software Development Agreement)
SOFTWARE END USER LICENSE AND SERVICES AGREEMENT
This agreement ("Agreement") is made as of ,1994
("Effective Date") by and between PeopleSoft, Inc. ("PeopleSoft"), a Delaware
corporation having its principal place of business at 1331 North California
Boulevard, Walnut Creek, California 94596 and
Name: ("LICENSEE")
------------------------------
Address:
---------------------------
---------------------------
---------------------------
This Agreement and the Schedules constitute the entire agreement between the
Parties concerning Licensee's use of the Software. No purchase order, other
ordering document, or any handwritten or typewritten text which purports to
modify or supplement the printed text of this Agreement or any Schedule shall
add to or vary the terms of this Agreement. All such proposed variations or
additions (whether submitted by PeopleSoft or Licensee) are objected to and
deemed material. This Agreement replaces and supersedes any prior verbal
understandings, written communications, and representations, including any
unsigned license agreement included in any package for PeopleSoft furnished
software, except terms contained in such unsigned license agreement that limit
usage of the Software.
THE TERMS AND CONDITIONS HEREIN ARE ACCEPTED AS PART OF THIS
AGREEMENT.
LICENSEE PEOPLESOFT, INC.
----------------------------------- -----------------------------------
Authorized Signature Authorized Signature
----------------------------------- -----------------------------------
Printed Name and Title Printed Name and Title
TERMS AND CONDITIONS
1. LICENSE
1.1 During the Term, PeopleSoft grants Licensee a non-exclusive,
nontransferable license to use the licensed number of copies of the
Software, solely for internal data processing operations, on Server(s)
at the Site up to any maximum number of applicable designated Users
specified in the applicable Schedule. Any third party software products
or modules provided by PeopleSoft to Licensee shall be used solely with
PeopleSoft Software. Licensee may use the Software temporarily on a
machine other than the Server in the event that the Server is
inoperable. Licensee may make one (1) copy of the Software solely for
archive or emergency back-up purposes. Licensee may modify or merge the
Software with other software with the understanding that any
modifications, however extensive, shall not diminish PeopleSoft's title
or interest in the Software.
1.2 PeopleSoft shall provide Licensee with one (1) copy of the Software and
two (2) printed sets of Documentation. Licensee may make a reasonable
number of copies of Documentation solely for Licensee's internal use
with the Software provided all copyright notices are reproduced.
Page 34 of 40
<PAGE> 35
2. LICENSE EXCLUSIONS
2.1 Except as expressly authorized herein, Licensee shall not:
a. copy or modify the Software;
b. cause or permit reverse compilation or reverse assembly of all
or any portion of the Software;
c. distribute, disclose, market, rent, lease or transfer to any
third party any portion of the Software (including
PeopleTools) or the Documentation, or use the Software or
Documentation in any service bureau arrangement or third party
training;
d. disclose the results of Software performance benchmarks to any
third party without PeopleSoft's prior written notice;
e. transfer the Software to a different computer, location or
Site without the prior written consent of PeopleSoft (such
consent not unreasonably withheld) and payment of any
additional fees which may be due;
f. export the Software in violation of U.S. Department of
Commerce export administration regulations;
g. invoke support libraries other than through documented API
calls; and
h. use PeopleTools in a non-PeopleSoft application development
environment.
2.2 No license, right, or interest in any PeopleSoft trademark, trade name,
or service mark is granted hereunder.
3. FEES AND PAYMENT TERMS
3.1 Licensee shall pay PeopleSoft the fees as specified in each
applicable Schedule and all associated shipping costs.
3.2 Unless Licensee provides PeopleSoft with a valid tax exemption or
direct pay certificate, Licensee is responsible for all taxes, duties
and customs fees concerning the Software and/or services, excluding
taxes based on PeopleSoft's income. Overdue payments shall bear
interest at the lesser of twelve percent (12%) per annum or the maximum
rate allowed under applicable law.
4. TITLE AND PROTECTION
4.1 PeopleSoft (or its third-party providers) retains title to all portions
of the Software, any modifications to the Software developed with
PeopleTools, and any copies thereof. Title to the physical media for
the Software vests in Licensee upon delivery. The Software contains
valuable proprietary information, and Licensee shall not disclose the
Software to anyone other than those of its employees or consultants
under nondisclosure obligations who have a need to know for purposes
consistent with this Agreement. Licensee shall affix, to each full or
partial copy of the Software made by Licensee, all copyright and
proprietary information notices as affixed to the original. The
obligations set forth in this paragraph shall survive termination of
this Agreement.
4.2 The Software may be transferred to the U.S. government only with the
separate prior written consent of PeopleSoft and solely with
"Restricted Rights" as that term is defined in FAR 52.227-19(c)(2) (or
DFAR 252.227-7013(c)(1) if the transfer is to a defense-related agency)
or subsequent citation.
5. PATENT AND COPYRIGHT INDEMNITY
PeopleSoft shall indemnify and defend Licensee against any claims that
the Software infringes any United States or Canadian patent or
copyright; provided that PeopleSoft is given prompt notice of such
claim and is given information, reasonable assistance, and sole
authority to defend or settle the claim. In the defense or settlement
of the claim, PeopleSoft may obtain for Licensee the right to continue
using the
Page 35 of 40
<PAGE> 36
Software, replace or modify the Software so that it becomes
noninfringing while giving equivalent performance. PeopleSoft shall
have no liability if the alleged infringement is based on: (i) a
modification of the Software by anyone other than PeopleSoft; (ii) use
of the Software with equipment not listed in a Schedule; or (iii) the
use of the Software other than in accordance with the Documentation.
6. DEFAULT AND TERMINATION
6.1 Any of the following shall constitute an event of default:
a. Licensee fails to perform any of its obligations under the
sections entitled "License Exclusions" or "Title and
Protection" ; or
b. Either party fails to perform any other material obligation
under this Agreement and such failure remains uncured for more
than thirty (30) days after receipt of written notice thereof.
6.2 If an event of default occurs, the nondefaulting party, in addition to
any other rights available to it under law or equity, may terminate
this Agreement and all licenses granted hereunder by written notice to
the defaulting party. Remedies shall be cumulative and there shall be
no obligation to exercise a particular remedy.
6.3 Within fifteen (15) days after termination of this Agreement, Licensee
shall certify in writing to PeopleSoft that all copies of the Software
in any form, including partial copies within modified versions, have
been destroyed or returned to PeopleSoft.
7. LIMITED WARRANTY
PeopleSoft warrants that it has title to the Software and the authority
to grant licenses to use the Software. PeopleSoft warrants that the
Software will perform substantially in accordance with the
Documentation for a period of one (1) year from the date of
installation. PeopleSoft's sole obligation is limited to repair or
replacement of the defective Software, provided Licensee notifies
PeopleSoft of the deficiency within the one-year period and provided
Licensee has installed all Software updates provided by PeopleSoft's
Software Support Services. PEOPLESOFT DISCLAIMS ALL OTHER WARRANTIES,
EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO THE WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
8. LIMITATION OF LIABILITY
PEOPLESOFT WILL NOT BE LIABLE FOR INDIRECT, INCIDENTAL, SPECIAL, OR
CONSEQUENTIAL DAMAGES, INCLUDING BUT NOT LIMITED TO LOST DATA OR LOST
PROFITS, HOWEVER ARISING, EVEN IF IT HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES. EXCLUDING DAMAGES INCURRED UNDER THE
ARTICLE ENTITLED "PATENT AND COPYRIGHT INDEMNITY", PEOPLESOFT'S
LIABILITY FOR DAMAGES UNDER THIS AGREEMENT SHALL IN NO EVENT EXCEED THE
AMOUNT PAID BY LICENSEE TO PEOPLESOFT FOR THE SOFTWARE OR THE SERVICES
FROM WHICH THE CLAIM AROSE. THE PARTIES AGREE TO THE ALLOCATION OF
LIABILITY RISK WHICH IS SET FORTH IN THIS SECTION.
9. SOFTWARE SUPPORT SERVICES TERMS AND CONDITIONS
On the Schedule Effective Date, PeopleSoft shall provide Licensee with
one (1) year of software support services as described in PeopleSoft's
standard Software Support Services Terms and Conditions (receipt of
which is hereby acknowledged). After the first year, Licensee may elect
to acquire Software Support Services by paying PeopleSoft the then
current applicable fees.
Page 36 of 40
<PAGE> 37
10. ON-SITE SUPPORT
PeopleSoft shall provide Licensee with support at the Site for the
Software as set forth in the Schedule. For a period of six (6) months
from the Schedule Effective Date, support days not used during the
installation phase may be used for other implementation support.
Licensee shall reimburse PeopleSoft for all reasonable travel and
living expenses associated with any installation and support.
11. TRAINING
PeopleSoft shall provide Licensee with the number of training units set
forth in the Schedule for use at a PeopleSoft Training Facility.
Licensee may use training units for Site training as the Parties
mutually agree in writing. Licensee must use these training units
within one (1) year from the Schedule Effective Date.
12. NOTICES
All notices shall be in writing and sent by first class mail, overnight
mail, courier, or transmitted by facsimile (if confirmed by such
mailing), to the addresses indicated on the first page of this
Agreement, or such other address as either party may indicate by at
least ten (10) days prior written notice to the other party. Notices to
PeopleSoft shall be sent to the Legal Department.
13. ASSIGNMENT
Licensee may not assign this Agreement (by operation of law or
otherwise) or sublicense the Software without the prior written consent
of PeopleSoft, and any prohibited assignment or sublicense shall be
null and void.
14. NONDISCLOSURE OBLIGATION
14.1 The terms, conditions, pricing and any other information clearly marked
"confidential" under this Agreement are confidential and shall not be
disclosed, orally or in writing by Licensee to any third party without
the prior written consent of PeopleSoft.
14.2 Licensee shall protect the Software with at least the same degree of
care and confidentiality which Licensee utilizes for similar Licensee
information which it does not wish disclosed to the public. Licensee
may provide access to and use of the Software only to those third
Parties, (undertaking similar nondisclosure obligations), providing
services concerning Licensee's use of the Software.
15. GENERAL
This Agreement is made in and shall be governed by the laws of the
State of California, excluding choice of law principles. Venue shall be
in San Francisco, California. The section headings herein are provided
for convenience only and have no substantive effect on the construction
of this Agreement. Except for Licensee's obligation to pay PeopleSoft,
neither party shall be liable for any failure to perform due to causes
beyond its reasonable control. If any provision of this Agreement is
held to be unenforceable, this Agreement shall be construed without
such provision. The failure by a party to exercise any right hereunder
shall not operate as a waiver of such party's right to exercise such
right or any other right in the future. Except for actions for
nonpayment or breach of PeopleSoft's proprietary rights in the
Software, no action regardless of form, arising out of this Agreement
may be brought by either party more than one year after the cause of
action has accrued. This Agreement may be amended only by a written
document executed by a duly authorized representative of each of the
Parties. This Agreement may be executed in counterparts. To expedite
order processing, Transmitted Copies are considered documents
equivalent to original documents.
Page 37 of 40
<PAGE> 38
16. DEFINITIONS
"Documentation" means only technical publications relating to the use
of the Software, such as reference, user, installation, systems
administrator and technical guides, delivered by PeopleSoft to
Licensee.
"PeopleTools" means the underlying architecture from which the Software
is designed, and includes software application programming tools and
code.
"Schedules" means the product schedules which specifically reference
this Agreement and which have been executed by the Parties.
"Server" means a single database or file server which may be accessed
by a network of personal computers.
"Site" means a specific, physical location of Licensee's Server as set
forth in the applicable Schedule.
"Software" means all or any portion of the binary computer software
programs (including corresponding source code) provided by PeopleSoft
or made by Licensee with PeopleSoft's prior written consent, in
machine-readable form and including all listed in the applicable
Schedule and all corrections or updates thereto. Software includes the
third-party software as identified in the Schedule. Software does not
include source code to PeopleTools.
"Transmitted Copies" means this Agreement, Schedules and other ordering
documents which (i) contain no modifications or amendments to this
Agreement; (ii) are copied or reproduced and transmitted via photocopy,
facsimile or process that accurately transmits the original documents;
and (iii) are accepted by PeopleSoft.
"User" means an individual authorized by Licensee to use Software on
the Server.
Page 38 of 40
<PAGE> 39
EXHIBIT F
MAINTENANCE AND SUPPORT SERVICES TERMS AND CONDITIONS
Prior to the conclusion of Phase 3, SEA and PeopleSoft agree to negotiate in
good faith the terms and conditions of a Maintenance Contract for the Derivative
Software. Such agreement may include terms and conditions similar to those
outlined herein. Upon termination of PeopleSoft's exclusive distribution rights
under the Marketing Agreement, SEA and the LLC agree to negotiate in good faith
the terms and conditions of a Maintenance Contract for the Derivative Software
and all references in this Exhibit F to "PeopleSoft" will change to "PeopleSoft
or the LLC".
In performing its duties under the Maintenance Contract, if any, SEA shall
utilize the equivalent of [ * ] time technical personnel and application
specialists working no more than [ * ] hours each annually, with such hours to
be allocated evenly throughout the term of the Maintenance Contract, to provide
the following services to PeopleSoft and its licensees of the Derivative
Software, in order of their priority:
Ongoing fixes of bugs in Derivative Software. A "bug" is an error in the
Derivative Software that prevents it from performing in accordance with the
Test Plans.
Second level support direct to PeopleSoft for Derivative Software licensees.
Revisions and limited enhancements to existing Derivative Software modules,
limited by the amount of time available from the [ * ] staff members
assigned to the Maintenance Contract, with such efforts to be allocated
evenly throughout the term of the Maintenance Contract. It is assumed that
this would include, as the first priority, the revision of the Financial Aid
system to meet new regulatory requirements, which is estimated to require
from [ * ] man-months of work annually.
Participation in Derivative Software user group conferences and activities.
Participation in appropriate professional groups and conferences in order to
anticipate changing requirements and to identify new opportunities.
Sales support assistance for Derivative Software sales opportunities,
estimated not to exceed [ * ] man days per year.
All response time and fix periods to be negotiated in good faith.
The Maintenance Contract will be for a one year term, and will be renewed
annually if mutually agreed upon by SEA and PeopleSoft. The Maintenance Contract
would commence at the start of the third year after the Effective Date. The cost
of the Maintenance Contract would be negotiated annually based on the number and
seniority of the personnel assigned to the contract by SEA and agreed to by
PeopleSoft.
As a part of the Maintenance Contract, PeopleSoft would continue to provide
complete support for SEA's Development Environment, as described in Section 5 of
this Agreement and the technical support as described in Section 6 of the
Agreement.
Notwithstanding the foregoing, after the Development Term is completed, it is
anticipated that there will be significant ongoing development of new Software
and enhancement of the Derivative Software functions and modules. Ongoing
enhancement is crucial to the continuing expansion of sales. Such ongoing
development activity is expected to be outside the scope of the Maintenance
Contract, except as described above. Separate contracts would be negotiated
between SEA and PeopleSoft for this work.
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.
Page 39 of 40
<PAGE> 40
EXHIBIT G
VESTED PAYMENT EXAMPLE
The following exhibit is only provided for the purpose of illustrating a
hypothetical payment computation in the event that termination of this Agreement
occurs prior to the end of the Development Term.
Example assumptions:
Contract effective date is January 16, 1995.
Early termination occurs at the end of month 7 (August 15, 1995).
Actual funding paid to SEA as of the date of early termination is [ * ]
Vesting Milestone one is deemed to be [ * ] of the project.
Vesting Milestone two is deemed to be [ * ] of the project.
No other Vesting Milestones have been reached, and therefore are not
relevant to this example.
SEA has completed Vesting Milestones one and two at or prior to the
early termination date, and consequently is [ * ] vested in their
payments.
Subject sale of the Derivative Software is earned in year 4 of the
original term.
Subject sale results in a Net License Fee of [ * ]
To determine the applicable payment percentage to be used, the following steps
must be taken:
1) Determine the applicable funding (and consequent Payment Rate
Schedule). Since the project stopped in month 7, the scheduled project
funding through month 7 paid to SEA would be [ * ] in accordance with
schedule C. Using the Implied Funding Payment Formula and the example
values, the implied total project funding is determined to be [ * ] as
follows:
[ * ]
Note: Since the implied total project funding falls in between the
[ * ] level and the [ * ] level, in accordance with this Agreement, the
higher funding schedule is applicable. Therefore, the applicable
Project Funding Level (Payment Rate Schedule) is [ * ]
2) Select the appropriate annual rate from schedule D using the [ * ]
funding schedule, which is [ * ]
3) Multiply the vesting percentage [ * ] by the payment rate [ * ] by
the Net License Fees to determine the appropriate payment to SEA, as
follows:
[ * ] (payment due SEA subject to Project Funding recovery)
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.
Page 40 of 40