-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PHdOW1TI2VOqdjdOYm2ZQjbhSGr3x8rKa8Rg0V0FlEt3I9vapYeKimJEFi6kRyFD bps6xfVr/xQtc0MikrX31g== 0000891618-96-002324.txt : 19961023 0000891618-96-002324.hdr.sgml : 19961022 ACCESSION NUMBER: 0000891618-96-002324 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19961021 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: PEOPLESOFT INC CENTRAL INDEX KEY: 0000875570 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 680137069 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-20710 FILM NUMBER: 96645890 BUSINESS ADDRESS: STREET 1: 4440 ROSEWOOD DR CITY: PLEASANTON STATE: CA ZIP: 94588-3031 BUSINESS PHONE: 5102253000 MAIL ADDRESS: STREET 1: 4440 ROSEWOOD DRIVE CITY: PLEASANTON STATE: CA ZIP: 94588-3031 10-K/A 1 AMENDMENT NO. 1 TO FORM 10-K 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K/A AMENDMENT NO. 1 X Annual Report Pursuant to Section 13 or 15(d) of the Securities - ----- Exchange Act of 1934 for the fiscal year ended December 31, 1995 - ----- Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Commission File Number: 0-20710 PEOPLESOFT, INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) Delaware 68-0137069 (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.) INCORPORATION OR ORGANIZATION) 4440 Rosewood Drive, Pleasanton, CA 94588 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) Registrant's telephone number, including area code: 510/225-3000 SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: Name of each exchange Title of each class on which registered None None SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: COMMON STOCK, $.01 PAR VALUE (Title of Class) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ----- ----- Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. / / The aggregate market value of the voting stock held by non-affiliates of the Registrant, based upon the closing sale price of Common Stock on March 14, 1996 as reported on the Nasdaq National Market, was approximately $1,000 million. Shares of Common Stock held by each officer and director and by each person who owns 5% or more of the outstanding Common Stock have been excluded in that such persons may be deemed to be affiliates. This determination of affiliate status is not necessarily a conclusive determination for other purposes. As of March 14, 1996, Registrant had 49,884,994 outstanding shares of Common Stock. DOCUMENTS INCORPORATED BY REFERENCE Portions of the Proxy Statement for Registrant's 1996 Annual Meeting of Stockholders to be held May 21, 1996 are incorporated by reference in Part III of this Form 10-K Report. 2 PART IV ITEM 14. EXHIBITS, CONSOLIDATED FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (a) The following exhibits are filed as part of this Report: 3. Exhibits. 3.1(1) Restated Certificate of Incorporation of Registrant. 3.2(2) Certificate of Amendment to Certificate of Incorporation of Registrant. 3.3 Bylaws of Registrant, as amended to date. 10.1(3) Amended and Restated 1989 Stock Plan and forms of option agreements thereunder. 10.2(3) 1992 Employee Stock Purchase Plan as amended to date, and form of subscription agreement thereunder. 10.3(3) 1992 Directors' Stock Option Plan and forms of option agreements thereunder. 10.4(4,7) Executive Bonus Plan. 10.5* Amendment and Restatement of PeopleSoft, Inc. 401(k) Plan, dated December 13, 1995, Amendment No. 1 dated December 30, 1994, and Amendment No. 2, dated August 25, 1995. 10.6(3) Form of Indemnification Agreement entered into between the Registrant and each of its directors and officers. 10.7* Loan Agreement between the Registrant and West America Bank, N.A. dated October 31, 1995. 10.8(3) Office Lease for 1331 North California Boulevard dated July 23, 1990 between the Registrant and 1333 North California Boulevard, a California limited partnership, as amended by the First Amendment to Lease dated April 24, 1991 and the Second Amendment to Lease dated June 17, 1992 and related Lease Guarantees dated July 26, 1990 and June 14, 1991 between 1333 North California Boulevard and David A. Duffield. 10.9(3) Lease dated July 24, 1992 between the Registrant and Glen Pointe Associates. 10.10(3,8) Perpetual License Agreement dated July 1, 1991 between the Registrant and Norwest Corporation. 10.11(3,8) Software License Agreement dated August 26, 1991 between the Registrant and Goldman, Sachs & Co. and Addendum One thereto dated March 6, 1992, and related Software Maintenance Agreement dated August 26, 1991. 10.12(3,8) Software License and Support Agreement dated June 23, 1992 between the Registrant and ADP, Inc., as amended by Amendment No. 1 dated September 30, 1992. 10.14(3) Rights Agreement dated April 26, 1991 among the Registrant, Norwest Equity Partners IV, L.P. and certain of the Registrant's officers. 10.15(3,4,8) OEM Software License Agreement between the Registrant and Gupta Technologies, Inc. 10.17(3,8) Perpetual License Agreement effective March 6, 1992 between the Registrant and the Equitable Life Assurance Society of the United States and Addendum One thereto effective March 6, 1992. 10.18(4) Lease dated June 23, 1993 between the Registrant and Westbrook Corporate Center. 10.19(4) Lease dated January 17, 1994 between the Registrant and R-H Associates Bldg. III Corp. 10.20(4) Lease dated March 10, 1994 between the Registrant and Rosewood Associates. 10.21(5) Contract of Sale and Escrow Instructions between the Company and Rosewood Owner of California (B) LLC, a California limited liability company, dated October 4, 1995. 10.22(6) Warrant Agreement between the Registrant and The First National Bank of Boston, as Warrant Agent, dated October 30, 1995. 10.23(6) Warrant Purchase Agreement between the Registrant and Goldman, Sachs & Co. dated October 30, 1995.
3 10.24(6) Registration Rights Agreement between the Registrant and Goldman, Sachs & Co. dated October 30, 1995. 10.25 Amendment No. 2 dated September 28, 1994, Amendment No. 3 dated September 21, 1995 and Amendment No. 4 dated December 28, 1995 to the Software License and Support Agreement dated June 23, 1992 between the Registrant and ADP, Inc. (only Amendments No. 2 and No. 4 are being refiled as the request for Confidential treatment has been withdrawn for Amendment No. 2 and No. 4). 10.26(9) Amended Software Development Agreement dated December 22, 1995 between the Registrant and Solutions for Education Administrators, Inc. 10.27(9)* Exclusive Marketing and Distribution Agreement dated December 22, 1995 between the Registrant and SIS Development LLC ("SIS"). 10.28* Amendment No. 1 dated September 19, 1994, Amendment No. 2 dated May 15, 1995 and Amendment No. 3 dated June 19, 1995 to the Lease dated March 10, 1994 between the Registrant and Rosewood Associates. 10.29(9) Systems Integrator Agreement dated August 25, 1995 between the Registrant and Shared Medical Systems Corporation. 10.30* Software Development and End User License and Support Services Agreement dated September 30, 1994 between the Registrant and PeopleMan, L.P. 10.31* Exclusive Marketing and Distribution Agreement dated September 30, 1994 between the Registrant and PeopleMan, L.P. 11.1* Computation of per share earnings. 21.1* Subsidiaries. 23.1* Consent of Independent Auditors. 24.1* Power of Attorney (see page 32).
- --------------------------- 1 Incorporated by reference to Exhibit No. 4.1 filed with the Registrant's Registration Statement on Form S-8 (No. 333-08575 filed on July 22, 1996). 2 Incorporated by reference to Exhibit No. 4.2 filed with the Registrant's Registration Statement on Form S-8 (No. 333-08575 filed on July 22, 1996). 3 Incorporated by reference to the exhibit having the same number filed with the Registrant's Registration Statement on Form S-1 (No. 33-53000) filed October 7, 1992, Amendment No. 1 thereto filed October 26, 1992, Amendment No. 2 thereto filed November 10, 1992 and Amendment No. 3 thereto filed November 18, 1992, which Registration Statement became effective November 18, 1992 and the Registrant's Registration Statement on Form S-1 (No. 33-62356) filed on May 7, 1993, which Registration Statement became effective May 24, 1993. 4 Incorporated by reference to the exhibit having the same filed number with the Company's Annual Report on Form 10-K for the year ended December 31, 1994. 5 Incorporated by reference to Exhibit 2.1 filed with the Company's Form 8-K filed with the Securities and Exchange Commission on December 15,1995. 6 Exhibits 10.22, 10.23, and 10.24 are incorporated by reference to Exhibits 10.1, 10.2, and 10.3, respectively, filed with the Company's Registration Statement on Form S-3 (No. 33-80755) filed with the Securities and Exchange Commission on December 22, 1995. 7 This agreement is a compensatory plan or arrangement required to be filed as an exhibit to this Annual Report on Form 10-K pursuant to Item 14(c). 8 Confidential treatment previously granted. 9 Confidential treatment has been requested in connection with the filing of this Annual Report on Form 10-K. * Previously filed with the Company's Annual Report on Form 10-K for the year ended December 31, 1995. 4 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Amendment No. 1 to this Report to be signed on its behalf by the undersigned, thereunto duly authorized in the city of Pleasanton, California, on October 8, 1996. PEOPLESOFT, INC. By: /s/ Ronald E. F. Codd ------------------------------------------------------- Ronald E. F. Codd, Senior Vice President of Finance and Administration and Chief Financial Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
SIGNATURE TITLE DATE * President, Chief Executive Officer and October 8, 1996 __________________________________ Director (Principal Executive Officer) David A. Duffield /s/ Ronald E. F. Codd Senior Vice President of Finance and October 8, 1996 ___________________________________ Administration and Chief Financial Officer Ronald E. F. Codd (Principal Financial and Accounting Officer) * ___________________________________ Director October 8, 1996 Dr. Edgar F. Codd * ___________________________________ Director October 8, 1996 Albert W. Duffield * ___________________________________ Director October 8, 1996 A. George Battle * ___________________________________ Director October 8, 1996 George J. Still, Jr. * ___________________________________ Director October 8, 1996 Cyril J. Yansouni
*BY: /s/ RONALD E.F. CODD _______________________________ RONALD E.F. CODD ATTORNEY-IN-FACT EX-3.3 2 BYLAWS OF REGISTRANT, AS AMENDED TO DATE. 1 EXHIBIT 3.3 BY-LAWS OF PEOPLESOFT, INC. (As Amended through February 1995) 2 TABLE OF CONTENTS
PAGE ---- ARTICLE I - CORPORATE OFFICES ........................................ 1 1.1 REGISTERED OFFICE ............................................. 1 1.2 OTHER OFFICES ................................................. 1 ARTICLE II - MEETINGS OF STOCKHOLDERS ................................ 1 2.1 PLACE OF MEETINGS ............................................. 1 2.2 ANNUAL MEETING ................................................ 1 2.3 SPECIAL MEETING ............................................... 2 2.4 NOTICE OF STOCKHOLDERS' MEETINGS .............................. 2 2.5 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE .................. 2 2.6 QUORUM ........................................................ 2 2.7 ADJOURNED MEETING; NOTICE ..................................... 2 2.8 CONDUCT OF BUSINESS ........................................... 3 2.9 VOTING ........................................................ 3 2.10 WAIVER OF NOTICE .............................................. 3 2.11 STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING ....................................................... 3 2.12 RECORD DATE FOR STOCKHOLDER NOTICE; VOTING; GIVING CONSENTS ...................................................... 4 2.13 PROXIES ....................................................... 5 2.14 LIST OF STOCKHOLDERS ENTITLED TO VOTE ......................... 5 2.15 ADVANCE NOTICE OF STOCKHOLDER NOMINEES ........................ 5 2.16 ADVANCE NOTICE OF STOCKHOLDER BUSINESS ........................ 6 ARTICLE III - DIRECTORS ............................................... 7 3.1 POWERS ........................................................ 7 3.2 NUMBER OF DIRECTORS ........................................... 7 3.3 ELECTION, QUALIFICATION AND TERM OF OFFICE OF DIRECTORS ..................................................... 7 3.4 RESIGNATION AND VACANCIES ..................................... 7 3.5 PLACE OF MEETINGS; MEETINGS BY TELEPHONE ...................... 8 3.6 REGULAR MEETINGS .............................................. 9 3.7 SPECIAL MEETINGS; NOTICE ...................................... 9 3.8 QUORUM ........................................................ 9 3.9 WAIVER OF NOTICE .............................................. 10 3.10 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING ............. 10 3.11 FEES AND COMPENSATION OF DIRECTORS ............................ 10 3.12 APPROVAL OF LOANS TO OFFICERS ................................. 10 3.13 REMOVAL OF DIRECTORS .......................................... 10
3 TABLE OF CONTENTS (CONTINUED)
PAGE ---- ARTICLE IV - COMMITTEES .............................................. 11 4.1 COMMITTEES OF DIRECTORS ...................................... 11 4.2 COMMITTEE MINUTES ............................................ 12 4.3 MEETINGS AND ACTION OF COMMITTEES ............................ 12 ARTICLE V - OFFICERS ................................................. 12 5.1 OFFICERS ..................................................... 12 5.2 APPOINTMENT OF OFFICERS ...................................... 12 5.3 SUBORDINATE OFFICERS ......................................... 13 5.4 REMOVAL AND RESIGNATION OF OFFICERS .......................... 13 5.5 VACANCIES IN OFFICES ......................................... 13 5.6 CHAIRMAN OF THE BOARD ........................................ 13 5.7 PRESIDENT .................................................... 13 5.8 VICE PRESIDENTS .............................................. 14 5.9 SECRETARY .................................................... 14 5.10 CHIEF FINANCIAL OFFICER ...................................... 14 5.11 ASSISTANT SECRETARY .......................................... 15 5.12 ASSISTANT TREASURER .......................................... 15 5.13 REPRESENTATION OF SHARES OF OTHER CORPORATIONS ............... 15 5.14 AUTHORITY AND DUTIES OF OFFICERS ............................. 16 ARTICLE VI - INDEMNITY ............................................... 16 6.1 THIRD PARTY ACTIONS .......................................... 16 6.2 ACTIONS BY OR IN THE RIGHT OF THE CORPORATION ................ 16 6.3 SUCCESSFUL DEFENSE ........................................... 17 6.4 DETERMINATION OF CONDUCT ..................................... 17 6.5 PAYMENT OF EXPENSES IN ADVANCE ............................... 17 6.6 INDEMNITY NOT EXCLUSIVE ...................................... 18 6.7 INSURANCE INDEMNIFICATION .................................... 18 6.8 THE CORPORATION .............................................. 18 6.9 EMPLOYEE BENEFIT PLANS ....................................... 18 6.10 CONTINUATION OF INDEMNIFICATION AND ADVANCEMENT OF EXPENSES ..................................................... 19
-ii- 4 TABLE OF CONTENTS (CONTINUED)
PAGE ---- ARTICLE VII - RECORDS AND REPORTS .................................... 19 7.1 MAINTENANCE AND INSPECTION OF RECORDS ........................ 19 7.2 INSPECTION BY DIRECTORS ...................................... 20 7.3 ANNUAL STATEMENT TO STOCKHOLDERS ............................. 20 ARTICLE VIII - GENERAL MATTERS ....................................... 20 8.1 CHECKS ....................................................... 20 8.2 EXECUTION OF CORPORATE CONTRACTS AND INSTRUMENTS ............. 20 8.3 STOCK CERTIFICATES; PARTLY PAID SHARES ....................... 21 8.4 SPECIAL DESIGNATION ON CERTIFICATES .......................... 21 8.5 LOST CERTIFICATES ............................................ 22 8.6 CONSTRUCTION; DEFINITIONS .................................... 22 8.7 DIVIDENDS .................................................... 22 8.8 FISCAL YEAR .................................................. 22 8.9 SEAL ......................................................... 22 8.10 TRANSFER OF STOCK ............................................ 23 8.11 STOCK TRANSFER AGREEMENTS .................................... 23 8.12 REGISTERED STOCKHOLDERS ...................................... 23 ARTICLE IX - AMENDMENTS .............................................. 23
-iii- 5 BY-LAWS OF PEOPLESOFT, INC. (As Amended through February 1995) ARTICLE I CORPORATE OFFICES 1.1 REGISTERED OFFICE The registered office of the corporation shall be in the City of Wilmington, County of New Castle, State of Delaware. The name of the registered agent of the corporation at such location is The Corporation Trust Company. 1.2 OTHER OFFICES The board of directors may at any time establish other offices at any place or places where the corporation is qualified to do business. ARTICLE II MEETINGS OF STOCKHOLDERS 2.1 PLACE OF MEETINGS Meetings of stockholders shall be held at any place, within or outside the State of Delaware, designated by the board of directors. In the absence of any such designation, stockholders' meetings shall be held at the registered office of the corporation. 2.2 ANNUAL MEETING The annual meeting of stockholders shall be held each year on a date and at a time designated by the board of directors. At the meeting, directors shall be elected and any other proper business may be transacted. -1- 6 2.3 SPECIAL MEETING A special meeting of the stockholders may be called at any time by the board of directors, or by the chairman of the board, or by the president. No other person or persons are permitted to call a special meeting. No business may be conducted at a special meeting other than the business brought before the meeting by the board of directors or the chairman of the board or the president. 2.4 NOTICE OF STOCKHOLDERS' MEETINGS All notices of meetings with stockholders shall be in writing and shall be sent or otherwise given in accordance with Section 2.5 of these by-laws not less than ten (10) nor more than sixty (60) days before the date of the meeting to each stockholder entitled to vote at such meeting. The notice shall specify the place, date, and hour of the meeting, and, in the case of a special meeting, the purpose or purposes for which the meeting is called. 2.5 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE Written notice of any meeting of stockholders, if mailed, is given when deposited in the United States mail, postage prepaid, directed to the stockholder at such stockholder's address as it appears on the records of the corporation. An affidavit of the Secretary or an Assistant Secretary or of the transfer agent of the corporation that the notice has been given shall, in the absence of fraud, be prima facie evidence of the facts stated therein. 2.6 QUORUM The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise provided by statute or by the certificate of incorporation. If, however, such quorum is not present or represented at any meeting of the stockholders, then either (i) the Chairman of the meeting or (ii) the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum is present or represented. At such adjourned meeting at which a quorum is present or represented, any business may be transacted that might have been transacted at the meeting as originally noticed. 2.7 ADJOURNED MEETING; NOTICE When a meeting is adjourned to another time or place, unless these by-laws otherwise require, notice need not be given of the adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken. At the adjourned meeting the corporation may transact any business that might have been transacted at the original meeting. If the adjournment is for more than thirty (30) days, or if after the adjournment a new record date is fixed for the adjourned meeting, -2- 7 a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. 2.8 CONDUCT OF BUSINESS The chairman of any meeting of stockholders shall determine the order of business and the procedure at the meeting, including such regulation of the manner of voting and the conduct of business. 2.9 VOTING The stockholders entitled to vote at any meeting of stockholders shall be determined in accordance with the provisions of Section 2.12 of these by-laws, subject to the provisions of Sections 217 and 218 of the General Corporation Law of Delaware (relating to voting rights of fiduciaries, pledgors and joint owners of stock and to voting trusts and other voting agreements). Except as may be otherwise provided in the certificate of incorporation, each stockholder shall be entitled to one vote for each share of capital stock held by such stockholder. 2.10 WAIVER OF NOTICE Whenever notice is required to be given under any provision of the General Corporation Law of Delaware or of the certificate of incorporation or these by-laws, a written waiver thereof, signed by the person entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders need be specified in any written waiver of notice unless so required by the certificate of incorporation or these by-laws. 2.11 STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING Unless otherwise provided in the certificate of incorporation, any action required by this chapter to be taken at any annual or special meeting of stockholders of a corporation, or any action that may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice, and without a vote if a consent in writing, setting forth the action so taken, is signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. If the action -3- 8 which is consented to is such as would have required the filing of a certificate under any section of the General Corporation Law of Delaware if such action had been voted on by stockholders at a meeting thereof, then the certificate filed under such section shall state, in lieu of any statement required by such section concerning any vote of stockholders, that written notice and written consent have been given as provided in Section 228 of the General Corporation Law of Delaware. 2.12 RECORD DATE FOR STOCKHOLDER NOTICE; VOTING; GIVING CONSENTS In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or entitled to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the board of directors may fix, in advance, a record date, which shall not be more than sixty (60) nor less than ten (10) days before the date of such meeting, nor more than sixty (60) days prior to any other action. If the board of directors does not so fix a record date: (i) The record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. (ii) The record date for determining stockholders entitled to express consent to corporate action in writing without a meeting, when no prior action by the board of directors is necessary, shall be the day on which the first written consent is expressed. (iii) The record date for determining stockholders for any other purpose shall be at the close of business on the day on which the board of directors adopts the resolution relating thereto. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the board of directors may fix a new record date for the adjourned meeting. 2.13 PROXIES Each stockholder entitled to vote at a meeting of stockholders or to express consent or dissent to corporate action in writing without a meeting may authorize another person or persons to act for such stockholder by a written proxy, signed by the stockholder and filed with the secretary of the corporation, but no such proxy shall be voted or acted upon after three (3) years from its date, unless the proxy provides for a longer period. A proxy shall be deemed signed if the stockholder's name is placed on the proxy (whether by manual signature, typewriting, telegraphic transmission or -4- 9 otherwise) by the stockholder or the stockholder's attorney-in-fact. The revocability of a proxy that states on its face that it is irrevocable shall be governed by the provisions of Section 212(c) of the General Corporation Law of Delaware. 2.14 LIST OF STOCKHOLDERS ENTITLED TO VOTE The officer who has charge of the stock ledger of a corporation shall prepare and make, at least ten (10) days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten (10) days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. Such list shall presumptively determine the identity of the stockholders entitled to vote at the meeting and the number of shares held by each of them. 2.15 ADVANCE NOTICE OF STOCKHOLDER NOMINEES Nominations of persons for election to the Board of directors of the corporation may be made at a meeting of stockholders by or at the discretion of the board of directors or by any stockholder of the corporation entitled to vote in the election of directors at the meeting who complies with the notice procedures set forth in this Section . Such nominations, other than those made by or at the direction of the board of directors, shall be made pursuant to timely notice in writing to the Secretary of the corporation. To be timely, a stockholder's notice shall be delivered to or mailed and received at the principal executive offices of the corporation not less than twenty (20) days nor more than sixty (60) days prior to the meeting; provided, however, that in the event less than thirty (30) days notice or prior public disclosure of the date of the meeting is given or made to stockholders, notice by the stockholder to be timely must be so received not later than the close of business on the tenth day following the day on which such notice of the date of the meeting was mailed or such public disclosure was made. Such stockholder's notice shall set forth (a) as to each person, if any, whom the stockholder proposes to nominate for election or re-election as a director: (i) the name, age, business address and residence address of such person, (ii) the principal occupation or employment of such person, (iii) the class and number of shares of the corporation which are beneficially owned by such person, (iv) any other information relating to such person that is required by law to be disclosed in solicitations of proxies that is required by law to be disclosed in solicitations of proxies for election of directors, and (v) such person's written consent to being named as a nominee and to serving as a director if elected; and (b) as to the stockholder giving the notice: (i) the name and address, as they appear on the corporation's books, of such stockholder, and (ii) the class and number of shares of the corporation which are beneficially owned by such stockholder, and (iii) a description of all arrangements or understandings between such stockholder and each nominee and any other person or persons (naming such person or persons) relating to the nomination. At the request of the board of -5- 10 directors any person nominated by the Board for election as a director shall furnish to the secretary of the corporation that information required to be set forth in the stockholder's notice of nomination which pertains to the nominee. No person shall be eligible for election as a director of the corporation unless nominated in accordance with the procedures set forth in this Section . The chairman of the meeting shall, if the facts warrant, determine and declare at the meeting that a nomination was not made in accordance with the procedures prescribed by these bylaws, and if he should so determine, he shall so declare at the meeting and the defective nomination shall be disregarded. 2.16 ADVANCE NOTICE OF STOCKHOLDER BUSINESS At the annual meeting of the stockholders, only such business shall be conducted as shall have been properly brought before the meeting. To be properly brought before an annual meeting, business must be: (a) as specified in the notice of meeting (or any supplement thereto) given by or at the direction of the board of directors, (b) otherwise properly brought before the meeting by or at the direction of the board of directors, or (c) otherwise properly brought before the meeting by a stockholder. Business to be brought before an annual meeting by a stockholder shall not be considered properly brought if the stockholder has not given timely notice thereof in writing to the secretary of the corporation. To be timely, a stockholder's notice must be delivered to or mailed and received at the principal executive offices of the corporation not less than twenty (20) nor more than sixty (60) days prior to the meeting; provided, however, that in the event that less than thirty (30) days notice or prior public disclosure of the date of the meeting is given or made to stockholders, notice by the stockholder to be timely must be so received not later than the close of business on the tenth day following the day on which such notice of the date of the annual meeting was mailed or such public disclosure was made. A stockholder's notice to the secretary shall set forth as to each matter the stockholder proposes to bring before the annual meeting: (i) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (ii) the name and address of the stockholder proposing such business, (iii) the class and number of shares of the corporation, which are beneficially owned by the stockholder, (iv) any material interest of the stockholder in such business, and (v) any other information that is required by law to be provided by the stockholder in his capacity as a proponent of a stockholder proposal. Notwithstanding anything in these bylaws to the contrary, no business shall be conducted at any annual meeting except in accordance with the procedures set forth in this Section . The chairman of the annual meeting shall, if the facts warrant, determine and declare at the meeting that business was not properly brought before the meeting and in accordance with the provisions of this Section , and, if he should so determine, he shall so declare at the meeting that any such business not properly brought before the meeting shall not be transacted. -6- 11 ARTICLE III DIRECTORS 3.1 POWERS Subject to the provisions of the General Corporation Law of Delaware and any limitations in the certificate of incorporation or these by-laws relating to action required to be approved by the stockholders or by the outstanding shares, the business and affairs of the corporation shall be managed and all corporate powers shall be exercised by or under the direction of the board of directors. 3.2 NUMBER OF DIRECTORS The Board of Directors shall consist of five (5) persons until changed by a proper amendment of this Section 3.2. No reduction of the authorized number of directors shall have the effect of removing any director before that director's term of office expires. 3.3 ELECTION, QUALIFICATION AND TERM OF OFFICE OF DIRECTORS Except as provided in Section 3.4 of these by-laws, directors shall be elected at each annual meeting of stockholders to hold office until the next annual meeting unless specified otherwise in the certificate of incorporation. Directors need not be stockholders unless so required by the certificate of incorporation or these by-laws, wherein other qualifications for directors may be prescribed. Each director, including a director elected to fill a vacancy, shall hold office until his or her successor is elected and qualified or until his or her earlier resignation or removal. Elections of directors need not be by written ballot. 3.4 RESIGNATION AND VACANCIES Any director may resign at any time upon written notice to the attention of the Secretary of the corporation. When one or more directors so resigns and the resignation is effective at a future date, a majority of the directors then in office, including those who have so resigned, shall have power to fill such vacancy or vacancies, the vote thereon to take effect when such resignation or resignations shall become effective, and each director so chosen shall hold office as provided in this section in the filling of other vacancies. Unless otherwise provided in the certificate of incorporation or these by-laws: -7- 12 (i) Vacancies and newly created directorships resulting from any increase in the authorized number of directors elected by all of the stockholders having the right to vote as a single class may be filled by a majority of the directors then in office, although less than a quorum, or by a sole remaining director. (ii) Whenever the holders of any class or classes of stock or series thereof are entitled to elect one or more directors by the provisions of the certificate of incorporation, vacancies and newly created directorships of such class or classes or series may be filled by a majority of the directors elected by such class or classes or series thereof then in office, or by a sole remaining director so elected. If at any time, by reason of death or resignation or other cause, the corporation should have no directors in office, then any officer or any stockholder or an executor, administrator, trustee or guardian of a stockholder, or other fiduciary entrusted with like responsibility for the person or estate of a stockholder, may call a special meeting of stockholders in accordance with the provisions of the certificate of incorporation or these by-laws, or may apply to the Court of Chancery for a decree summarily ordering an election as provided in Section 211 of the General Corporation Law of Delaware. If, at the time of filling any vacancy or any newly created directorship, the directors then in office constitute less than a majority of the whole board (as constituted immediately prior to any such increase), then the Court of Chancery may, upon application of any stockholder or stockholders holding at least ten (10) percent of the total number of the shares at the time outstanding having the right to vote for such directors, summarily order an election to be held to fill any such vacancies or newly created directorships, or to replace the directors chosen by the directors then in office as aforesaid, which election shall be governed by the provisions of Section 211 of the General Corporation Law of Delaware as far as applicable. 3.5 PLACE OF MEETINGS; MEETINGS BY TELEPHONE The board of directors of the corporation may hold meetings, both regular and special, either within or outside the State of Delaware. Unless otherwise restricted by the certificate of incorporation or these by-laws, members of the board of directors, or any committee designated by the board of directors, may participate in a meeting of the board of directors, or any committee, by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at the meeting. -8- 13 3.6 REGULAR MEETINGS Regular meetings of the board of directors may be held without notice at such time and at such place as shall from time to time be determined by the board. 3.7 SPECIAL MEETINGS; NOTICE Special meetings of the board of directors for any purpose or purposes may be called at any time by the chairman of the board, the president, any vice president, the secretary or any two (2) directors. Notice of the time and place of special meetings shall be delivered personally or by telephone to each director or sent by first-class mail or telegram, charges prepaid, addressed to each director at that director's address as it is shown on the records of the corporation. If the notice is mailed, it shall be deposited in the United States mail at least four (4) days before the time of the holding of the meeting. If the notice is delivered personally or by telephone or by telegram, it shall be delivered personally or by telephone or to the telegraph company at least forty-eight (48) hours before the time of the holding of the meeting. Any oral notice given personally or by telephone may be communicated either to the director or to a person at the office of the director who the person giving the notice has reason to believe will promptly communicate it to the director. The notice need not specify the purpose or the place of the meeting, if the meeting is to be held at the principal executive office of the corporation. 3.8 QUORUM At all meetings of the board of directors, a majority of the authorized number of directors shall constitute a quorum for the transaction of business and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the board of directors, except as may be otherwise specifically provided by statute or by the certificate of incorporation. If a quorum is not present at any meeting of the board of directors, then the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum is present. A meeting at which a quorum is initially present may continue to transact business notwithstanding the withdrawal of directors, if any action taken is approved by at least a majority of the required quorum for that meeting. 3.9 WAIVER OF NOTICE Whenever notice is required to be given under any provision of the General Corporation Law of Delaware or of the certificate of incorporation or these by-laws, a written waiver thereof, signed by the person entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such -9- 14 meeting, except when the person attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the directors, or members of a committee of directors, need be specified in any written waiver of notice unless so required by the certificate of incorporation or these by-laws. 3.10 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING Unless otherwise restricted by the certificate of incorporation or these by-laws, any action required or permitted to be taken at any meeting of the board of directors, or of any committee thereof, may be taken without a meeting if all members of the board or committee, as the case may be, consent thereto in writing and the writing or writings are filed with the minutes of proceedings of the board or committee. 3.11 FEES AND COMPENSATION OF DIRECTORS Unless otherwise restricted by the certificate of incorporation or these by-laws, the board of directors shall have the authority to fix the compensation of directors. 3.12 APPROVAL OF LOANS TO OFFICERS The corporation may lend money to, or guarantee any obligation of, or otherwise assist any officer or other employee of the corporation or of its subsidiary, including any officer or employee who is a director of the corporation or its subsidiary, whenever, in the judgment of the directors, such loan, guaranty or assistance may reasonably be expected to benefit the corporation. The loan, guaranty or other assistance may be with or without interest and may be unsecured, or secured in such manner as the board of directors shall approve, including, without limitation, a pledge of shares of stock of the corporation. Nothing in this section contained shall be deemed to deny, limit or restrict the powers of guaranty or warranty of the corporation at common law or under any statute. 3.13 REMOVAL OF DIRECTORS Unless otherwise restricted by statute, by the certificate of incorporation or by these by-laws, any director or the entire board of directors may be removed, with or without cause, by the holders of a majority of the shares then entitled to vote at an election of directors; provided, however, that, so long as stockholders of the corporation are entitled to cumulative voting, if less than the entire board is to be removed, no director may be removed without cause if the votes cast against his or her removal would be sufficient to elect such director if then cumulatively voted at an election of the entire board of directors. No reduction of the authorized number of directors shall have the effect of removing any director prior to the expiration of such director's term of office. -10- 15 ARTICLE IV COMMITTEES 4.1 COMMITTEES OF DIRECTORS The board of directors may, by resolution passed by a majority of the whole board, designate one or more committees, with each committee to consist of one or more of the directors of the corporation. The board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another member of the board of directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the board of directors or in the by-laws of the corporation, shall have and may exercise all the powers and authority of the board of directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers that may require it; but no such committee shall have the power or authority to (i) amend the certificate of incorporation (except that a committee may, to the extent authorized in the resolution or resolutions providing for the issuance of shares of stock adopted by the board of directors as provided in Section 151(a) of the General Corporation Law of Delaware, fix the designations and any of the preferences or rights of such shares relating to dividends, redemption, dissolution, any distribution of assets of the corporation or the conversion into, or the exchange of such shares for, shares of any other class or classes or any other series of the same or any other class or classes of stock of the corporation or fix the number of shares of any series of stock or authorize the increase or decrease of the shares of any series), (ii) adopt an agreement of merger or consolidation under Sections 251 or 252 of the General Corporation Law of Delaware, (iii) recommend to the stockholders the sale, lease or exchange of all or substantially all of the corporation's property and assets, (iv) recommend to the stockholders a dissolution of the corporation or a revocation of a dissolution, or (v) amend the bylaws of the corporation; and, unless the board resolution establishing the committee, the by-laws or the certificate of incorporation expressly so provide, no such committee shall have the power or authority to declare a dividend, to authorize the issuance of stock, or to adopt a certificate of ownership and merger pursuant to Section 253 of the General Corporation Law of Delaware. 4.2 COMMITTEE MINUTES Each committee shall keep regular minutes of its meetings and report the same to the board of directors when required. 4.3 MEETINGS AND ACTION OF COMMITTEES -11- 16 Meetings and actions of committees shall be governed by, and held and taken in accordance with, the provisions of Article III of these by-laws, Section 3.5 (place of meetings and meetings by telephone), Section 3.6 (regular meetings), Section 3.7 (special meetings and notice), Section 3.8 (quorum), Section 3.9 (waiver of notice), and Section 3.10 (action without a meeting), with such changes in the context of those by-laws as are necessary to substitute the committee and its members for the board of directors and its members; provided, however, that the time of regular meetings of committees may be determined either by resolution of the board of directors or by resolution of the committee, that special meetings of committees may also be called by resolution of the board of directors and that notice of special meetings of committees shall also be given to all alternate members, who shall have the right to attend all meetings of the committee. The board of directors may adopt rules for the government of any committee not inconsistent with the provisions of these by-laws. ARTICLE V OFFICERS 5.1 OFFICERS The officers of the corporation shall be a president, a secretary, and a chief financial officer. The corporation may also have, at the discretion of the board of directors, a chairman of the board, one or more vice presidents, one or more assistant vice presidents, one or more assistant secretaries, one or more assistant treasurers, and any such other officers as may be appointed in accordance with the provisions of Section 5.3 of these by-laws. Any number of offices may be held by the same person. 5.2 APPOINTMENT OF OFFICERS The officers of the corporation, except such officers as may be appointed in accordance with the provisions of Sections 5.3 or 5.5 of these by-laws, shall be appointed by the board of directors, subject to the rights, if any, of an officer under any contract of employment. 5.3 SUBORDINATE OFFICERS The board of directors may appoint, or empower the president to appoint, such other officers and agents as the business of the corporation may require, each of whom shall hold office for such period, have such authority, and perform such duties as are provided in these by-laws or as the board of directors may from time to time determine. 5.4 REMOVAL AND RESIGNATION OF OFFICERS -12- 17 Subject to the rights, if any, of an officer under any contract of employment, any officer may be removed, either with or without cause, by an affirmative vote of the majority of the board of directors at any regular or special meeting of the board or, except in the case of an officer chosen by the board of directors, by any officer upon whom such power of removal may be conferred by the board of directors. Any officer may resign at any time by giving written notice to the corporation. Any resignation shall take effect at the date of the receipt of that notice or at any later time specified in that notice; and, unless otherwise specified in that notice, the acceptance of the resignation shall not be necessary to make it effective. Any resignation is without prejudice to the rights, if any, of the corporation under any contract to which the officer is a party. 5.5 VACANCIES IN OFFICES Any vacancy occurring in any office of the corporation shall be filled by the board of directors. 5.6 CHAIRMAN OF THE BOARD The chairman of the board, if such an officer be elected, shall, if present, preside at meetings of the board of directors and exercise and perform such other powers and duties as may from time to time be assigned to him by the board of directors or as may be prescribed by these by-laws. If there is no president, then the chairman of the board shall also be the chief executive officer of the corporation and shall have the powers and duties prescribed in Section 5.7 of these by-laws. 5.7 PRESIDENT Subject to such supervisory powers, if any, as may be given by the board of directors to the chairman of the board, if there be such an officer, the president shall be the chief executive officer of the corporation and shall, subject to the control of the board of directors, have general supervision, direction, and control of the business and the officers of the corporation. The president shall preside at all meetings of the stockholders and, in the absence or nonexistence of a chairman of the board, at all meetings of the board of directors. The president shall have the general powers and duties of management usually vested in the office of president of a corporation and shall have such other powers and duties as may be prescribed by the board of directors or these by-laws. 5.8 VICE PRESIDENTS In the absence or disability of the president, the vice presidents, if any, in order of their rank as fixed by the board of directors or, if not ranked, a vice president designated by the board of directors, shall perform all the duties of the president and when so acting shall have all the powers of, and be subject to all the restrictions upon, the president. The vice presidents shall have such other powers and perform such other duties as from time to time may be prescribed for them respectively by the board of directors, these by-laws, the president or the chairman of the board. -13- 18 5.9 SECRETARY The secretary shall keep or cause to be kept, at the principal executive office of the corporation or such other place as the board of directors may direct, a book of minutes of all meetings and actions of directors, committees of directors, and stockholders. The minutes shall show the time and place of each meeting, whether regular or special (and, if special, how authorized and the notice given), the names of those present at directors' meetings or committee meetings, the number of shares present or represented at stockholders' meetings, and the proceedings thereof. The secretary shall keep, or cause to be kept, at the principal executive office of the corporation or at the office of the corporation's transfer agent or registrar, as determined by resolution of the board of directors, a share register, or a duplicate share register, showing the names of all stockholders and their addresses, the number and classes of shares held by each, the number and date of certificates evidencing such shares, and the number and date of cancellation of every certificate surrendered for cancellation. The secretary shall give, or cause to be given, notice of all meetings of the stockholders and of the board of directors required to be given by law or by these by-laws. The secretary shall keep the seal of the corporation, if one be adopted, in safe custody and shall have such other powers and perform such other duties as may be prescribed by the board of directors or by these by-laws. 5.10 CHIEF FINANCIAL OFFICER The chief financial officer shall keep and maintain, or cause to be kept and maintained, adequate and correct books and records of accounts of the properties and business transactions of the corporation, including accounts of its assets, liabilities, receipts, disbursements, gains, losses, capital retained earnings, and shares. The books of account shall at all reasonable times be open to inspection by any director. The chief financial officer shall deposit all moneys and other valuables in the name and to the credit of the corporation with such depositories as may be designated by the board of directors. The chief financial officer shall disburse the funds of the corporation as may be ordered by the board of directors, shall render to the president and directors, whenever they request it, an account of all his or her transactions as chief financial officer and of the financial condition of the corporation, and shall have other powers and perform such other duties as may be prescribed by the board of directors or these by-laws. The chief financial officer shall be the treasurer of the corporation. 5.11 ASSISTANT SECRETARY -14- 19 The assistant secretary, or, if there is more than one, the assistant secretaries in the order determined by the stockholders or board of directors (or if there be no such determination, then in the order of their election) shall, in the absence of the secretary or in the event of his or her inability or refusal to act, perform the duties and exercise the powers of the secretary and shall perform such other duties and have such other powers as may be prescribed by the board of directors or these by-laws. 5.12 ASSISTANT TREASURER The assistant treasurer, or, if there is more than one, the assistant treasurers, in the order determined by the stockholders or board of directors (or if there be no such determination, then in the order of their election), shall, in the absence of the chief financial officer or in the event of his or her inability or refusal to act, perform the duties and exercise the powers of the chief financial officer and shall perform such other duties and have such other powers as may be prescribed by the board of directors or these by-Laws. 5.13 REPRESENTATION OF SHARES OF OTHER CORPORATIONS The chairman of the board, the president, any vice president, the chief financial officer, the secretary or assistant secretary of this corporation, or any other person authorized by the board of directors or the president or a vice president, is authorized to vote, represent, and exercise on behalf of this corporation all rights incident to any and all shares of any other corporation or corporations standing in the name of this corporation. The authority granted herein may be exercised either by such person directly or by any other person authorized to do so by proxy or power of attorney duly executed by such person having the authority. 5.14 AUTHORITY AND DUTIES OF OFFICERS In addition to the foregoing authority and duties, all officers of the corporation shall respectively have such authority and perform such duties in the management of the business of the corporation as may be designated from time to time by the board of directors or the stockholders. ARTICLE VI INDEMNITY 6.1 THIRD PARTY ACTIONS The corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending, or completed action, suit or proceeding, whether civil, criminal, -15- 20 administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement (if such settlement is approved in advance by the corporation, which approval shall not be unreasonably withheld) actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which such person reasonably believed to be in or not opposed to the best interest of the corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful. 6.2 ACTIONS BY OR IN THE RIGHT OF THE CORPORATION The corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that such person is or was a director, officer, employee or agent of corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys' fees) and amounts paid in settlement (if such settlement is approved in advance by the corporation, which approval shall not be unreasonably withheld) actually and reasonably incurred by such person in connection with the defense or settlement of such action or suit if the person acted in good faith and in manner the person reasonably believed to be in or not opposed to the best interests of the corporation, except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the Delaware Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Delaware Court of Chancery or such other court shall deem proper. Notwithstanding any other provision of this Article VI, no person shall be indemnified hereunder for any expenses or amounts paid in settlement with respect to any action to recover short-swing profits under Section 16(b) of the Securities Exchange Act of 1934, as amended. 6.3 SUCCESSFUL DEFENSE To the extent that a director, officer, employee or agent of the corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in Sections 6.1 and 6.2, or in defense of any claim, issue or matter therein, such person shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by the person in connection therewith. -16- 21 6.4 DETERMINATION OF CONDUCT Any indemnification under Sections 6.1 and 6.2 (unless ordered by a court) shall be made by the corporation only as authorized in the specific case upon a determination that the indemnification of the director, officer, employee or agent is proper in the circumstances because the person has met the applicable standard of conduct set forth in Sections 6.1 and 6.2. Such determination shall be made (1) by the Board of Directors or the Executive Committee by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceeding or (2) or if such quorum is not obtainable or, even if obtainable, a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, or (3) by the stockholders. Notwithstanding the foregoing, a director, officer, employee or agent of the Corporation shall be entitled to contest any determination that the director, officer, employee or agent has not met the applicable standard of conduct set forth in Sections 6.1 and 6.2 by petitioning a court of competent jurisdiction. 6.5 PAYMENT OF EXPENSES IN ADVANCE Expenses incurred in defending a civil or criminal action, suit or proceeding, by an individual who may be entitled to indemnification pursuant to Section 6.1 or 6.2, shall be paid by the corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of the director, officer, employee or agent to repay such amount if it shall ultimately be determined that the individual is not entitled to be indemnified by the corporation as authorized in this Article VI. 6.6 INDEMNITY NOT EXCLUSIVE The indemnification and advancement of expenses provided by or granted pursuant to the other sections of this Article VI shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any by-law, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in their official capacity and as to action in another capacity while holding such office. 6.7 INSURANCE INDEMNIFICATION The corporation shall have the power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against any liability asserted against the person and incurred by the person in any such capacity or arising out of the person's status as such, whether or not the corporation would have the power to indemnify such person against such liability under the provisions of this Article VI. 6.8 THE CORPORATION -17- 22 For purposes of this Article VI, references to "the corporation" shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, and employees or agents, so that any person who is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under and subject to the provisions of this Article VI (including, without limitation the provisions of Section 6.4) with respect to the resulting or surviving corporation as the person would have with respect to such constituent corporation if its separate existence had continued. 6.9 EMPLOYEE BENEFIT PLANS For purposes of this Article VI, references to "other enterprises" shall include employee benefit plans; references to "fines" shall include any excise taxes assessed on a person with respect to an employee benefit plan; and references to "serving at the request of the corporation" shall include any service as a director, officer, employee or agent of the corporation which imposes duties on, or involves services by, such director, officer, employee, or agent with respect to an employee benefit plan, its participants, or beneficiaries; and a person who acted in good faith and in a manner he reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner "not opposed to the best interests of the corporation" as referred to in this Article VI. 6.10 CONTINUATION OF INDEMNIFICATION AND ADVANCEMENT OF EXPENSES The indemnification and advancement of expenses provided by, or granted pursuant to, this Article VI shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person. ARTICLE VII RECORDS AND REPORTS 7.1 MAINTENANCE AND INSPECTION OF RECORDS The corporation shall, either at its principal executive officer or at such place or places as designated by the board of directors, keep a record of its stockholders listing their names and addresses and the number and class of shares held by each stockholder, a copy of these by-laws as amended to date, accounting books, and other records. -18- 23 Any stockholder of record, in person or by attorney or other agent, shall, upon written demand under oath stating the purpose thereof, have the right during the usual hours for business to inspect for any proper purpose the corporation's stock ledger, a list of its stockholders, and its other books and records and to make copies or extracts therefrom. A proper purpose shall mean a purpose reasonably related to such person's interest as a stockholder. In every instance where an attorney or other agent is the person who seeks the right to inspection, the demand under oath shall be accompanied by a power of attorney or such other writing that authorizes the attorney or other agent so to act on behalf of the stockholder. The demand under oath shall be directed to the corporation at its registered office in Delaware or at its principal place of business. The officer who has charge of the stock ledger of the corporation shall prepare and make, at least ten (10) days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten (10) days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. 7.2 INSPECTION BY DIRECTORS Any director shall have the right to examine the corporation's stock ledger, a list of its stockholders, and its other books and records for a purpose reasonably related to his position as a director. The Court of Chancery is hereby vested with the exclusive jurisdiction to determine whether a director is entitled to the inspection sought. The Court may summarily order the corporation to permit the director to inspect any and all books and records, the stock ledger, and the stock list and to make copies or extracts therefrom. The Court may, in its discretion, prescribe any limitations or conditions with reference to the inspection, or award such other and further relief as the Court may deem just and proper. 7.3 ANNUAL STATEMENT TO STOCKHOLDERS The board of directors shall present at each annual meeting, and at any special meeting of the stockholders when called for by vote of the stockholders, a full and clear statement of the business and condition of the corporation. -19- 24 ARTICLE VIII GENERAL MATTERS 8.1 CHECKS From time to time, the board of directors shall determine by resolution which person or persons may sign or endorse all checks, drafts, other orders for payment of money, notes or other evidences of indebtedness that are issued in the name of or payable to the corporation, and only the persons so authorized shall sign or endorse those instruments. 8.2 EXECUTION OF CORPORATE CONTRACTS AND INSTRUMENTS The board of directors, except as otherwise provided in these by-laws, may authorize any officer or officers, or agent or agents, to enter into any contract or execute any instrument in the name of and on behalf of the corporation; such authority may be general or confined to specific instances. Unless so authorized or ratified by the board of directors or within the agency power of an officer, no officer, agent or employee shall have any power or authority to bind the corporation by any contract or engagement or to pledge its credit or to render it liable for any purpose or for any amount. 8.3 STOCK CERTIFICATES; PARTLY PAID SHARES The shares of the corporation shall be represented by certificates, provided that the board of directors of the corporation may provide by resolution or resolutions that some or all of any or all classes or series of its stock shall be uncertificated shares. Any such resolution shall not apply to shares represented by a certificate until such certificate is surrendered to the corporation. Notwithstanding the adoption of such a resolution by the board of directors, every holder of stock represented by certificates and upon request every holder of uncertificated shares shall be entitled to have a certificate signed by, or in the name of the corporation by the chairman or vice-chairman of the board of directors, or the president or vice-president, and by the chief financial officer or an assistant treasurer, or the secretary or an assistant secretary of such corporation representing the number of shares registered in certificate form. Any or all of the signatures on the certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate has ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if the person were such officer, transfer agent or registrar at the date of issue. -20- 25 The corporation may issue the whole or any part of its shares as partly paid and subject to call for the remainder of the consideration to be paid therefor. Upon the face or back of each stock certificate issued to represent any such partly paid shares, upon the books and records of the corporation in the case of uncertificated partly paid shares, the total amount of the consideration to be paid therefor and the amount paid thereon shall be stated. Upon the declaration of any dividend on fully paid shares, the corporation shall declare a dividend upon partly paid shares of the same class, but only upon the basis of the percentage of the consideration actually paid thereon. 8.4 SPECIAL DESIGNATION ON CERTIFICATES If the corporation is authorized to issue more than one class of stock or more than one series of any class, then the powers, the designations, the preferences, and the relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights shall be set forth in full or summarized on the face or back of the certificate that the corporation shall issue to represent such class or series of stock; provided, however, that, except as otherwise provided in Section 202 of the General Corporation Law of Delaware, in lieu of the foregoing requirements there may be set forth on the face or back of the certificate that the corporation shall issue to represent such class or series of stock a statement that the corporation will furnish without charge to each stockholder who so requests the powers, the designations, the preferences, and the relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights. 8.5 LOST CERTIFICATES Except as provided in this Section 8.5, no new certificates for shares shall be issued to replace a previously issued certificate unless the latter is surrendered to the corporation and canceled at the same time. The corporation may issue a new certificate of stock or uncertificated shares in the place of any certificate theretofore issued by it, alleged to have been lost, stolen or destroyed, and the corporation may require the owner of the lost, stolen or destroyed certificate, or the owner's legal representative, to give the corporation a bond sufficient to indemnify it against any claim that may be made against it on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate or uncertificated shares. 8.6 CONSTRUCTION; DEFINITIONS Unless the context requires otherwise, the general provisions, rules of construction, and definitions in the Delaware General Corporation Law shall govern the construction of these by-laws. Without limiting the generality of this provision, the singular number includes the plural, the plural number includes the singular, and the term "person" includes both a corporation and a natural person. 8.7 DIVIDENDS -21- 26 The directors of the corporation, subject to any restrictions contained in (i) the General Corporation Law of Delaware or (ii) the certificate of incorporation, may declare and pay dividends upon the shares of its capital stock. Dividends may be paid in cash, in property, or in shares of the corporation's capital stock. The directors of the corporation may set apart out of any of the funds of the corporation available for dividends a reserve or reserves for any proper purpose and may abolish any such reserve. Such purposes shall include but not be limited to equalizing dividends, repairing or maintaining any property of the corporation, and meeting contingencies. 8.8 FISCAL YEAR The fiscal year of the corporation shall be fixed by resolution of the board of directors and may be changed by the board of directors. 8.9 SEAL The corporation may adopt a corporate seal, which shall be adopted and which may be altered by the board of directors, and may use the same by causing it or a facsimile thereof to be impressed or affixed or in any other manner reproduced. 8.10 TRANSFER OF STOCK Upon surrender to the corporation or the transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignation or authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate, and record the transaction in its books. 8.11 STOCK TRANSFER AGREEMENTS The corporation shall have power to enter into and perform any agreement with any number of stockholders of any one or more classes of stock of the corporation to restrict the transfer of shares of stock of the corporation of any one or more classes owned by such stockholders in any manner not prohibited by the General Corporation Law of Delaware. 8.12 REGISTERED STOCKHOLDERS The corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends and to vote as such owner, shall be entitled to hold liable for calls and assessments the person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of another person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware. -22- 27 ARTICLE IX AMENDMENTS The by-laws of the corporation may be adopted, amended or repealed by the stockholders entitled to vote; provided, however, that the corporation may, in its certificate of incorporation, confer the power to adopt, amend or repeal by-laws upon the directors. The fact that such power has been so conferred upon the directors shall not divest the stockholders of the power, nor limit their power to adopt, amend or repeal by-laws. -23- 28 CERTIFICATE OF AMENDMENT OF BY-LAWS OF PEOPLESOFT, INC. Certificate by Secretary of Amendment The undersigned hereby certifies that he is the duly elected, qualified, and acting Secretary of PeopleSoft, Inc. and that the foregoing By-Laws, comprising twenty-five (25) pages, were ratified as the Amended and Restated By-Laws of the corporation by the Board of Directors on February 15, 1995. IN WITNESS WHEREOF, the undersigned has hereunto set his hand and affixed the corporate seal this ____ day of February, 1996. ------------------------- Ronald E. F. Codd, Secretary EX-10.25 3 SOFTWARE LICENSE & SUPPORT AGREEMENT AMENDMENTS 1 AMENDMENT NO. 2 EXHIBIT 10.25 via fax and post 28 September 1994 Mr. Dan Zaccardo Senior Corporate Counsel ADP, Inc. One ADP Boulevard Roseland, New Jersey 07068-1728 Dear Dan: It is my understanding that Al Duffield and Tim Lamb have had discussions concerning a proposed distribution transaction that PeopleSoft is undertaking with Shared Medical Systems ("SMS"). This letter will formalize those discussions and shall act as written amendment number 2 to our existing agreement ("Agreement"). The parties have agreed, without waiving any rights under the Agreement with respect to future transactions, to work together as agreed herein to expedite and increase the possibility of closure of a proposed PeopleSoft/SMS transaction for the mutual benefit of both PeopleSoft and ADP and a proposed transaction between ADP and GSI (Canada) for the remarketing of GSI's product by ADP in Canada. The parties agree as follows: 1. PeopleSoft shall have the right to enter into a remarketing relationship with SMS to enable SMS to remarket PeopleSoft HRMS software products with SMS' products to SMS' customers and future customers for implementation in the healthcare industry; 2. Only upon execution of the remarketing agreement between PeopleSoft and SMS, PeopleSoft will, at ADP's written request, either: (a) reduce the aggregate maximum amount of License and Support Fees referenced in Paragraph 6(b)(II)(C) by $400,000 and therefore the $22,500,000 will be changed to $22,100,000; or (b) reduce the Sublicense Fee referenced in Paragraph 6(b)(II)(A) to be paid by ADP for calendar year 1995 by $100,000 and reduce the Sublicense Fee referenced in Paragraph 6(b)II)(B) to be paid by ADP for calendar year 1996 by $100,000. 3. As of the date of this letter, and without further notice by notice or conference required by either party to the other, ADP commits to the minimum payments in 6(b)(II)(A) for 1995; 4. Upon execution of this letter, PeopleSoft agrees that the PeopleSoft/Application Group Implementation Partner Agreement dated 1 September 1993, as amended, and the related software license may be assigned to the ADP entity only for the marketing benefit of The Application Group entity (and not under the ADP name). Only upon execution of the remarketing agreement between PeopleSoft and SMS, the term of each of the Implementation Partner Agreement and the related license shall be extended to 31 December 1997. 2 Mr. Dan Zaccardo ADP, Inc. 31 August 1994 Page 2 The intent behind this assignment is to enable The Application Group to continue to perform work for clients of PeopleSoft and/or ADP and not to enable ADP to obtain a competitive advantage against PeopleSoft by using or reviewing PeopleSoft technology to enhance ADP's CSS technology. All payments under the Implementation Partner Agreement and the related license shall continue. The parties understand that it is expected that only Application Group personnel will have access to both the PeopleSoft source code and the ADP CSS source code in connection with the performance of their implementation services to PeopleSoft customers and ADP customers. However, Application Group personnel who have access to the PeopleSoft source code shall not use any PeopleSoft source code or information derived therefrom to enhance, modify, or further develop the ADP CSS source code. The parties further understand that Application Group personnel who have had access to the PeopleSoft source code may retain certain fragments of information in their memory and such personnel shall be permitted to use such fragments of information in connection with the CSS product only after a twelve (12) month period after last access to the PeopleSoft source code. In no event shall ADP, The Application Group or its contractors be permitted to copy all or any portion of any copyrighted portion of the PeopleSoft information without PeopleSoft's prior written consent, unless otherwise provided in the Agreement; and 5. Upon execution of this letter, PeopleSoft agrees to permit ADP (without ADP losing any of its rights or benefits under the Agreement) to: (i) contract with GSI to enable ADP to sublicense GSI products in Canada; and (ii) contract with banks in Canada to enable ADP to sublicense such banks' products in Canada to mutual clients of such banks and ADP, in each case in the same manner that ADP operates under the Agreement. 6. The parties understand and agree that the specific terms of this letter amendment are confidential, (particularly the possible or actual extension of the term of the Implementation Partner Agreement) and neither party shall disclose any of the specific terms to any third party. However, ADP shall be permitted to issue general press releases and marketing statements concerning ADP's acquisition of AG. Please procure the signature of an authorized ADP signatory and return the original document to my attention. Sincerely, PeopleSoft, Inc. ADP, Inc. /s/ Robert D. Finnell /s/ Ronald E.F. Codd /s/ James B. Benson _____________________ ____________________ ___________________ Robert D. Finnell Ronald E.F. Codd Signature Corporate Counsel Sr. Vice President and CFO James B. Benson Printed name/title President 3 AMENDMENT NO. 4 December 28, 1995 Mr. Al Duffield Vice President PeopleSoft, Inc. 1331 North California Boulevard Walnut Creek, California 94596 Dear Al: This letter agreement ("Letter Agreement") will serve as Amendment No. 4 to the Software License and Support Agreement dated as of June 23, 1992 between ADP, Inc. ("ADP") and PeopleSoft, Inc. ("PeopleSoft"), as heretofore amended (the "ADP/PeopleSoft Agreement"). ADP and PeopleSoft hereby agree as follows: 1. PeopleSoft hereby grants to ADP a perpetual and non-exclusive source code and object code license to use, modify and relicense PeopleSoft Workflow and all related workflow tools, all of which are more fully described on Exhibit A attached hereto ("Workflow"). Except as otherwise indicated herein, such license shall be governed by the terms and conditions of the ADP/PeopleSoft Agreement. 2. Promptly after the date hereof and in accordance with the terms and conditions of the ADP/PeopleSoft Agreement, PeopleSoft shall deliver to ADP the source code and object code for Workflow release No. 5.0 and all related end-user materials (including, without limitation, all materials described in Section 1.12 of the ADP/PeopleSoft Agreement). 3. In accordance with Section 4 of the ADP/PeopleSoft Agreement, PeopleSoft shall provide to ADP "Product Maintenance Services" (as defined in Section 4) for Workflow, including, without limitation, providing ADP with (i) any and all updates, improvements, additions, modifications and/or enhancements to Workflow release No. 5.xx up to, but not including, the next major release of Workflow (e.g., release No. 6.0), (ii) any and all releases which are intended to correct any "Bugs" (as defined in Section 1.6 of the ADP/PeopleSoft Agreement) in the releases to which ADP is entitled pursuant hereto and (iii) any and all information on human resource data base changes which are necessary or required to correct Bugs and to use the updates, improvements, additions, modifications and/or enhancements described herein. PeopleSoft shall provide ADP with all such interim 5.xx 4 releases of Workflow regardless of whether Workflow releases are delivered by PeopleSoft as part of Product Maintenance Services for Workflow and/or PeopleTools. 4. As full consideration for PeopleSoft's grant of the license hereunder and its provision of Product Maintenance Services for Workflow, ADP hereby notifies PeopleSoft that, in accordance with Section 6(b)(II) of the ADP/PeopleSoft Agreement, ADP hereby commits to the two minimum payments provided for in Sections 6(b)(II)(B) and 6(b)(II)(C) of the ADP/PeopleSoft Agreement; provided, however, that such minimum payments are hereby amended to be $4,900,000 each (i.e., ADP hereby agrees to pay a total of $1,000,000 as full consideration for PeopleSoft's grant of the license hereunder and its provision of Product Maintenance Services for Workflow), subject to Paragraph 6 herein. The annual notice to be given by ADP to PeopleSoft on or before December 1, 1996 pursuant to Paragraph 6(b)(II) of the ADP/PeopleSoft Agreement is hereby given. 5. In accordance with Paragraph 2(a) of Amendment No. 2 to the ADP/PeopleSoft Agreement, ADP and PeopleSoft hereby agree that the aggregate maximum amount of the "Sublicense Fees" and the "License and Support Fees" referenced in Section 6(b)(II)(C) of the ADP/PeopleSoft Agreement are hereby reduced by $400,000 and therefore, after taking into effect the $1,000,000 payment referred to in Paragraph 4 herein and the discounting process described in Paragraph 6 herein, the $22,500,000 referenced in such section is hereby changed to $22,781,500. 6. Notwithstanding anything to the contrary contained in the ADP/PeopleSoft Agreement, the payments provided for in Section 6(b)(II)(B) and 6 (b)(II)(C) of the ADP/PeopleSoft Agreement and referred to in Paragraph 4 herein shall be discounted at six percent (6%) and shall be made as follows (in lieu of one payment annually in arrears): March 31................................................. $1,157,625 June 30.................................................. $1,176,000 September 30............................................. $1,194,375 December 31.............................................. $1,212,750 ---------- Total: $4,740,750
For example, the $4,900,000 payment that would have been made in February 1997 (i.e., the payment provided for in Section 6(b)(II)(B) of the ADP/PeopleSoft Agreement, as amended in Paragraph 4 herein) shall instead be discounted to $4,740,750 and shall be made in four quarterly installments commencing March 31, 1996. 2 5 7. In connection with PeopleSoft's current efforts to build an interface between its client/server products and ADP's Autopay II payroll system, ADP hereby agrees to license and deliver to PeopleSoft a copy of (i) "PC Payroll" (release No. 6.02) and (ii) "PC Exchange" (release No. 6.02). ADP also hereby agrees to license and promptly deliver to PeopleSoft all future releases of both such products until the earlier of (A) the date that PeopleSoft completes the aforementioned interface and (B) the date that ADP is no longer entitled to receive Product Maintenance Services for Workflow. PeopleSoft acknowledges and agrees that such ADP products and any non-public information related thereto are the proprietary and confidential property of ADP. Accordingly, PeopleSoft hereby agrees that it will treat as confidential and will not use, disclose or otherwise make available any such ADP products or information to any person or entity other than to employees of PeopleSoft who have a need-to-know in connection with PeopleSoft's current efforts to build the aforementioned interface. Upon ADP's written request, PeopleSoft shall return to ADP (within ten days after ADP's request) the ADP products and information described in this Paragraph 7; provided, however, that, so long as PeopleSoft is in compliance with the terms and conditions of this Letter Agreement and the ADP/PeopleSoft Agreement, PeopleSoft shall not be required to return such copies and information to ADP until the earlier of (A) the date that PeopleSoft completes the aforementioned interface and (B) the date that ADP is no longer entitled to receive Product Maintenance Services for Workflow. At no additional fee to PeopleSoft, ADP shall also provide PeopleSoft with 120 ADP man-hours of phone/on-site advisory support for PeopleSoft's efforts to build the aforementioned interface. PeopleSoft shall be responsible for all reasonable travel expenses incurred by ADP and ADP personnel in connection with such support. If and to the extent that ADP shall agree with PeopleSoft to provide additional support, such support shall be provided at ADP's then prevailing rates. 8. ADP and PeopleSoft have agreed to this Amendment No. 4 without waiving any other rights under the ADP/PeopleSoft Agreement and this Amendment No. 4 represents the entire agreement between ADP and PeopleSoft on the subject matter herein and may only be modified by a written amendment hereto. 3 6 9. If you agree to be bound by the terms and conditions herein, please execute below both copies of this Letter Agreement and return one fully executed copy to my attention. ADP, INC. By: /s/ Richard Haviland _____________________________ Name: Richard Haviland Title: Vice President ACCEPTED AND AGREED: PEOPLESOFT, INC. By: /s/ Albert W. Duffield __________________________ Name: Al Duffield Title: Sr. Vice President 4 7 EXHIBIT A Workflow Release 5.0 consists of: * Workflow Designer: Tools to design and build the business process, rules, roles and routings. Used to define worklists, message definitions, user roles, and business processes. * Workflow Processor: Suite of on-line agents to control and run the business processes. Includes Message Agent, Application Agent, Database Agent and Worklist Processor. * Workflow Administrator: Tools to access, monitor, analyze and control the workflow in the organization. 5 EX-10.26 4 AMENDED SOFTWARE DEVELOPMENT AGREEMENT 1 EXHIBIT 10.26 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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.
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
Page 26 of 40 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 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 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 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 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 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).
Payment Date (on following Month During Period Cumulative business day if falls on weekend Development Term Funding Funding or holiday) [ * ]
* 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 33 EXHIBIT D PAYMENT RATE SCHEDULE
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 [ * ]
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 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 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 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 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 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 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 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 EX-10.29 5 SYSTEMS INTEGRATOR AGREEMENT 1 Exhibit 10.29 [*] SYSTEMS INTEGRATOR AGREEMENT (Non-Exclusive Appointment) This Agreement ("Agreement") is made as of the Effective Date by and between PeopleSoft, Inc. ("PEOPLESOFT") a Delaware corporation having a place of business at 1331 North California Boulevard, Walnut Creek, California 94596 and Shared Medical Systems Corporation ("SMS") a Delaware corporation having a place of business at 51 Valley Stream Parkway, Malvern, Pennsylvania 19355 1. APPOINTMENT / GRANT OF LICENSES a) PeopleSoft hereby appoints SMS as its (i) non-exclusive systems integrator for the sub-licensing of the PeopleSoft HRMS Software, under the SMS label, throughout the Territory to End Users solely in conjunction with SMS's simultaneous distribution of SMS's Core Applications and (ii) exclusive (except for PeopleSoft's distributor, ADP, and as otherwise stated herein, including, Sections 2.c and 2.d) systems integrator for the sub-licensing of the PeopleSoft HRMS Software, under the SMS label, throughout the Territory to SMS End Users. b) PeopleSoft hereby appoints SMS as its (i) non-exclusive systems integrator for the sub-licensing of the PeopleSoft Financial Software, under the SMS label, throughout the Territory to End Users solely in conjunction with SMS's simultaneous distribution of SMS's Core Applications and (ii) exclusive (except as otherwise stated herein, including, Sections 2.c and 2.d) systems integrator for the sub-licensing of the PeopleSoft Financial Software, under the SMS label, throughout the Territory to SMS End Users. c) PeopleSoft hereby grants to SMS (i) a non-exclusive and nontransferable license to sub-license the PeopleSoft HRMS Software, under the SMS label, throughout the Territory solely to End Users in conjunction with SMS's simultaneous distribution of SMS's Core Applications and (ii) an exclusive (except for PeopleSoft's distributor, ADP, and as otherwise stated herein, including, Sections 2.c and 2.d) and nontransferable license to sub-license the PeopleSoft HRMS Software, under the SMS label, throughout the Territory solely to SMS End Users, for installation and use on a Server located in the Territory subject to the terms and conditions of a License Agreement. d) PeopleSoft hereby grants to SMS (i) a non-exclusive and nontransferable license to sub-license the PeopleSoft Financial Software, under the SMS label, solely to End Users throughout the Territory in conjunction with SMS's simultaneous distribution of SMS's Core Applications and (ii) an exclusive (except as otherwise stated herein, including, Sections 2.c and 2.d) and nontransferable license to sub-license the PeopleSoft Financial Software, under the SMS label, throughout the Territory solely to SMS End Users, for installation and use on a Server located in the Territory subject to the terms and conditions of a License Agreement. e) PeopleSoft hereby grants to SMS a perpetual, non-exclusive and nontransferable license to use the PeopleSoft Software, including third party software specified on Exhibit C, for its own internal use subject to the terms and conditions of the PeopleSoft License Agreement attached hereto as Exhibit E. With regards to SMS's internal use license only, SMS shall have the right, at no additional PeopleSoft license fee, to distribute the PeopleSoft manufactured components of the Software (which excludes third party software identified in PeopleSoft's then-current Hardware and Software Requirements Document, a copy of such document as of the Effective Date is attached hereto as Exhibit H) to multiple other Servers located either inside or outside the Territory ("Distributed Sites") for the purpose of load balancing SMS's data volumes and for performance efficiency purposes. SMS shall support all Distributed Sites through SMS's central site. Support items such as hotline support and distribution of maintenance Releases will be conducted and distributed through SMS's central site. SMS is responsible for obtaining, at its expense, any third party software necessary to process at the Distributed Sites. * Certain information on this page has been ommitted and filed separately with the Commission. Confidential treatment has been requested with respect to the ommitted portions. Page 1 of 51 2 f) SMS's internal use license for PeopleTools for general development, as specified on Exhibit C, shall be used solely to (i) develop applications for SMS's internal systems and/or (ii) develop modifications and/or enhancements to the PeopleSoft Software. SMS shall not market or distribute the applications developed with PeopleTools for SMS's internal systems without executing a mutually acceptable amendment to this Agreement authorizing such extended use and specifying the royalty associated with such usage. SMS shall have the right to market or distribute the modifications and/or enhancements to the PeopleSoft Software developed with PeopleTools to End Users, provided such modifications and enhancements do not compete with any application offered by PeopleSoft. g) Except for the third party software, specified in Section 1.h below, that is embedded in the application programming code for the PeopleSoft Software, any third party software required by End Users to operate the PeopleSoft Software must be licensed directly from the manufacturer or an authorized dealer. As of the Effective Date, PeopleSoft represents that the third party software identified in the Hardware and Software Requirements Document is the third party software necessary to operate the PeopleSoft Software. The Hardware and Software Requirements Document as of the Effective Date is attached hereto as Exhibit H. PeopleSoft agrees to notify SMS of any changes regarding such third party software in accordance with PeopleSoft's standard notification procedures for its early release customer base which includes notification via PS/Forum. The early release customer program is described in Section 5.a. h) As of the Effective Date, PeopleSoft represents that the third party software embedded in the application programming code for the PeopleSoft Software is as follows: Halo Image Library Two MicroSoft DLL Files: XLCALL.DLL and CTL3D.DLL One 123DLL file from Lotus. PeopleSoft agrees to notify SMS of any changes regarding such embedded third party software in accordance with PeopleSoft's standard notification procedures for its early release customer base which includes notification via PS/Forum. The early release customer program is described in Section 5.a. i) PeopleSoft hereby grants to SMS a non-exclusive and nontransferable license to use the PeopleSoft Software in the Territory to provide technical support, training, and sales support, including demonstrations, to End Users subject to the terms and conditions of the PeopleSoft License Agreement attached hereto as Exhibit E. j) PeopleSoft hereby grants to SMS the right to copy or reproduce the PeopleSoft Software and Documentation or any part thereof only as is required for the sublicense and distribution purposes as outlined herein and as otherwise permitted under Section 3(c). SMS shall reproduce the PeopleSoft Software and Documentation only in the Territory. k) PeopleSoft hereby grants SMS the right to sublicense the PeopleSoft Software under a SMS trade name. However, any such "private labeling" shall in no way (i) diminish PeopleSoft's rights, title or interest in the PeopleSoft Software and PeopleTools, (ii) alter SMS's obligation under this Agreement or (iii) use any part of PeopleSoft trademark or trade name, including the word "People". l) In the event PeopleSoft develops and licenses additional PeopleSoft HRMS Software Modules and/or PeopleSoft Financials Software Modules, and SMS and PeopleSoft desire to expand the scope of this Agreement to cover such additional modules, PeopleSoft agrees that the additional fees (distribution, royalties and maintenance, including telephone support) shall be proportionate to the fees specified in Exhibit B. The calculation shall compare PeopleSoft's list price for such additional modules to the list price for the modules specified in Exhibit A. An example for illustrative purposes only: if the list price for the PeopleSoft Software Modules listed on Exhibit A is $1,000,000 and the list price for a future Page 2 of 51 3 PeopleSoft HRMS Software Module is $100,000, the royalties stated in Section 4.b of Exhibit B shall increase by ten percent (10%) which is 100,000 divided by $1,000,000. 2. LICENSE VARIATIONS a) If, after a Substantial "Selling" Effort by SMS, a Health Care Industry prospect in the Territory that is not a SMS End User decides to license only the PeopleSoft Software and not SMS's Core Applications, PeopleSoft agrees that, upon PeopleSoft's prior written approval, which approval shall not be unreasonably withheld, SMS shall have the right to license the PeopleSoft HRMS Software and PeopleSoft Financial Software, respectively, to such prospect for installation and use on a Server located in the Territory subject to the terms and conditions of a License Agreement; provided SMS pays PeopleSoft the applicable royalty specified in Exhibit B. SMS understands and agrees that notwithstanding anything to the contrary, PeopleSoft may withhold its consent if PeopleSoft is competing with SMS in order to license the PeopleSoft Software to the prospect. b) SMS may not grant any rights or licenses to distribute the PeopleSoft Software to any computer equipment manufacturers, value added resellers, sub-distributors or other third party without the separate prior written approval of PeopleSoft, which approval may be withheld by PeopleSoft for any reason or may be subject to such conditions as determined by PeopleSoft in its discretion. In the event PeopleSoft allows SMS to grant any such sub-distribution rights, SMS shall submit a copy of the proposed sub-distribution agreement to PeopleSoft for review and approval prior to appointment of the sub-distributor. c) PeopleSoft retains the right to distribute the PeopleSoft Software directly in the Territory by itself or through other then-current distributors, oems, vars and other channel partners. Except as stated in Section 2.d below, SMS shall not be entitled to any compensation or credit for such PeopleSoft related transactions. However, with respect to SMS End Users, PeopleSoft agrees that PeopleSoft and its then-current distributors, oems, vars and other channel partners (with the specific exclusion of ADP as to PeopleSoft HRMS Software) shall only market the PeopleSoft Software (i) to the SMS End Users listed on Exhibit L on which PeopleSoft has expended a Substantial "Selling" Effort and (ii) with SMS's prior written permission, which permission shall not be unreasonably withheld, to other SMS End Users upon direct solicitation by such entities. SMS understands and agrees that during the nine (9) month period following the Effective Date, PeopleSoft has the exclusive right to market, distribute and license the PeopleSoft Software to the SMS End Users listed on Exhibit L. PeopleSoft understands and agrees that after the expiration of the nine (9) month period following the Effective Date, PeopleSoft must cease to market the PeopleSoft Software to SMS End Users listed on Exhibit L unless such SMS End Users directly solicit PeopleSoft and SMS grants PeopleSoft SMS's prior written permission, which permission shall not be unreasonably withheld. SMS understands and agrees that during the twelve (12) month period following the Effective Date, PeopleSoft has the exclusive marketing, distribution and licensing rights for the prospects listed on Exhibit L and SMS shall not market or distribute the PeopleSoft Software to such prospects during such twelve month period. SMS understands and agrees that during the Term of this Agreement, including all subsequent renewals, PeopleSoft has the right to market, distribute and license the PeopleSoft Software to the entities listed on Exhibit L that are current PeopleSoft customers and SMS End Users. With regards to the SMS End Users described in this Section, PeopleSoft is not obligated to pay royalty or issue any credit to SMS in conjunction with a license of the PeopleSoft Software to such entities by PeopleSoft. d) If, after a Substantial "Selling" Effort by SMS, a SMS End User decides to license the PeopleSoft Software directly from PeopleSoft, SMS agrees that, upon SMS's prior written approval, which approval shall not be unreasonably withheld, PeopleSoft shall have the right to license the PeopleSoft HRMS Software and Page 3 of 51 4 PeopleSoft Financial Software, respectively, to such SMS End User; provided PeopleSoft credits to the royalties SMS is obligated to pay PeopleSoft the amounts specified in Exhibit B. Notwithstanding anything to the contrary, the credit obligation shall not apply to the SMS End Users listed on Exhibit L on which PeopleSoft has expended a Substantial "Selling" Effort. PeopleSoft understands and agrees that notwithstanding anything to the contrary, SMS may withhold its consent if PeopleSoft is competing with SMS in order to license the PeopleSoft Software to the SMS End User. 3. LICENSE EXCLUSIONS a) SMS shall not license or distribute the Software outside the Territory, except as expressly provided herein. SMS has no right to exploit PeopleSoft's intellectual property except as specifically set forth in this Agreement. b) Except as otherwise stated herein, SMS shall not license or distribute the PeopleSoft Software to any entity that (i) is not simultaneously licensing SMS's Core Applications in conjunction with the PeopleSoft Software or (ii) is not a SMS End User. c) SMS shall not (or permit any third party to) copy, translate or modify the PeopleSoft Software and Documentation, except for sublicense distribution purposes, normal back-up, disaster recovery testing, disaster recovery operation, archival copies or as otherwise stated in this Agreement and/or the License Agreement. Notwithstanding anything to the contrary in this Agreement, SMS shall have the right to enable End Users to cause additional facilities and affiliated entities under contract with End User to access the PeopleSoft Software provided that PeopleSoft's intellectual property rights are protected. d) SMS shall not permit any third party to license, sublicense, distribute, assign, transfer or use the PeopleSoft Software, except as specifically permitted under this Agreement. e) SMS warrants that SMS will not export or disclose directly or indirectly: (i) the PeopleSoft Software or related technical information, documents or materials; or (ii) any direct product produced from the PeopleSoft Software or related technical information, documents, or materials without the prior written consent, if required, of the Office of Export Administration of the US Department of Commerce, Washington DC. In the event SMS elects to operate internationally as specified in Section 8 of Exhibit B, SMS shall use its best endeavors to ensure its international customers abide by the terms contained in this clause. Such obligation shall be satisfied by the inclusion in SMS's License Agreement of a warranty similar to that contained herein. f) Neither party shall knowingly make any false or misleading representations concerning the other party or the other party's Software. 4. SMS'S OBLIGATIONS During the Term, SMS agrees to do each of the following : a) Use all reasonable efforts commensurate with market demand to solicit licenses of the PeopleSoft Software and provision of Maintenance, as distributor for PeopleSoft, from End Users located within the Territory. b) Enter into, in its own name and not that of PeopleSoft, licenses of the PeopleSoft Software directly with End Users, pursuant to a License Agreement. SMS warrants that all end user license agreement shall contain (i) confidentiality and scope of use provisions substantially similar to the form attached hereto as Exhibit I and (ii) a third party beneficiary rights provision that shall allow PeopleSoft the right to enforce the confidentiality and scope of use provisions. Page 4 of 51 5 c) Offer Maintenance to all End Users pursuant to a Maintenance Agreement. It is expressly agreed by SMS that all Maintenance Agreements executed by SMS pursuant to this Agreement are executed by SMS as principal and not as agent for PeopleSoft. d) Perform or cause to be performed, the following: (i) the installation of the PeopleSoft Software, if elected by End User, (ii) the training of End User personnel in the use of the PeopleSoft Software, (iii) the provision of Maintenance required under any Maintenance Agreement. Any expenses associated with such activities shall be paid by SMS and/or the End User. In no event shall PeopleSoft be responsible for such activities and the associated expenses. e) Except as otherwise provided in this subsection 4.e, not directly or indirectly market or distribute any products in the Territory which compete with the PeopleSoft Software. As of the Effective Date, products from Oracle (financials), Dun & Bradstreet Software, SAP, JD Edwards, Ross Systems (excluding licensees existing on the Effective Date and additional licenses and/or license extensions to SMS's Allegra customer base), Integral, Cyborg and Tesseract are competing products. Notwithstanding anything to the contrary, this restriction shall not apply to SMS's marketing or distribution (i) to SMS End Users that, on the Effective Date, have an existing license with SMS for a Ross Systems application, (ii) of any new license(s) and/or license extension(s) between SMS and SMS's Allegra customer base for a Ross Systems application, (iii) of any new license(s) between SMS and SMS's Allegra prospects for a Ross Systems application during the twelve (12) month period after the Effective Date, provided SMS has expended a Substantial "Selling" Effort on such prospect(s) prior to the Effective Date, and (iv) of SMS's current legacy applications for Human Resources and Financials, such as UNITY, INVISION, MS4. SMS represents that SMS does not intend to proliferate the Ross Systems application within SMS's Allegra customer base. This list may be updated during the Term to include other products reasonably understood in the marketplace to be competitors of PeopleSoft's products. This obligation shall not survive termination of this Agreement. In the event SMS has paid PeopleSoft the total amount of all the fees specified in Sections 4.a, 4.c and 4.d SMS may elect to market or distribute products in the Territory which compete with the PeopleSoft Software. f) Distribute the PeopleSoft Software to End Users properly licensed to use the PeopleSoft Software. g) Distribute Releases to End Users properly licensed to use the PeopleSoft Software and under a current Maintenance Agreement with SMS. h) Bear and be liable for all costs and expenses initiated and incurred by SMS in fulfilling its responsibilities under this Agreement. i) Bear and be liable for all reasonable travel and living expenses incurred by PeopleSoft personnel performing services pursuant to this Agreement at the request of SMS. Such expenses shall be reimbursed in accordance with SMS's then current expense reimbursement policy for its employees. At copy of such policy as of the Effective Date is attached hereto as Exhibit M. j) Be responsible for acquiring the right to distribute and sublicense, or requiring that End Users acquire, any third party software products or modules normally provided by PeopleSoft in conjunction with a license of the PeopleSoft Software. Such third party software products are described in PeopleSoft's Hardware and Software Requirements Guide, a copy of such document as of the Effective Date is attached hereto as Exhibit H. PeopleSoft shall update such guide periodically to identify the then-current third party software products or modules associated with the PeopleSoft Software. k) To oversee the parties relationship under this Agreement, create with PeopleSoft an Executive Team comprised of one senior management representative from each organization. The Executive Team will meet at least twice a year throughout the term of this Agreement and be responsible for monitoring the progress of the relationship, recommending and causing improvements to be implemented, and discussing mutual strategy as it relates to the Agreement. The meetings shall alternate between PeopleSoft's corporate Page 5 of 51 6 headquarters and SMS's corporate headquarters. In the event of a deadlock, the Executive Team will submit to dispute escalation procedures pursuant to Section 19. 5. PEOPLESOFT'S OBLIGATIONS During the Term, PeopleSoft agrees to do each of the following: a) Provide SMS with reasonable prior notice concerning PeopleSoft's release of new or updated software. PeopleSoft agrees that SMS shall be treated as an "early release" customer, provided SMS has paid the Software Support Services fee for the then-current year. Accordingly, SMS shall receive pre-release beta versions of the PeopleSoft Software to assist SMS with planning its direction. The pre-release beta PeopleSoft Software is provided "as is" without any Software Support Services. Provided SMS is a then-current participant in PeopleSoft's Software Support Services and Maintenance Program as specified in Sections 4.f and 4.g of Exhibit B and specifically excluding Sections 4.h and 4.i of Exhibit B, PeopleSoft shall deliver to SMS the generally available Release of the PeopleSoft Software if or when such Releases are available. b) Provide SMS with membership in PeopleSoft's Healthcare Advisory Group. Such group meets periodically to discuss the direction of PeopleSoft's efforts in the healthcare market. In addition, PeopleSoft agrees to provide SMS with access to PeopleSoft's strategic marketing group for the healthcare industry. Such access shall be available based upon a mutually agreeable schedule. c) Provide SMS with a copy of software marketing materials, price lists and updates thereto for SMS's use solely in connection with this Agreement. For certain software marketing materials, PeopleSoft may charge SMS PeopleSoft's cost associated with producing and delivering such marketing materials. d) Provide SMS with Secondline Support and reasonable access to PeopleSoft's standard Lotus Notes database or successor database. PeopleSoft shall have no obligation to directly support SMS's customers. In the event an End User is experiencing a Priority A Error, as defined in Exhibit D, within the twelve month period following the Effective Date (and such period shall continue for as long as SMS has paid the applicable Software Support Services fee as specified in Sections 4.f, 4.g, 4.h and 4.i of Exhibit B) and SMS is unable to correct such error after utilizing all reasonable efforts, PeopleSoft agrees that such End User may directly contact PeopleSoft for assistance with such error, provided SMS notifies the PeopleSoft support representative of the situation. e) Provide other technical support, as reasonably requested by SMS on a time and material basis. As of the Effective Date, PeopleSoft's consulting rates are as follows: Consultant $175/hour Senior Consultant $200/hour Manager $225/hour Product Specialist $225/hour
On-site consulting services are charged at a minimum increment of four (4) hours per day. f) Provide SMS with Releases in accordance with PeopleSoft's then current commercial practices. g) For the PeopleSoft Software used exclusively for SMS's internal use, provide SMS with Maintenance as described in Exhibit F. h) Provide SMS with [*] training units for use at any PeopleSoft training facility in order for SMS to become a certified instructor and for SMS's internal use. The fee for such training units are included in the fees specified in Sections 4.a, 4.c and 4.d of Exhibit B. SMS must use these training units within two years from the Effective Date. During the first year of this Agreement, SMS may only utilize * Certain information on this page has been ommitted and filed separately with the Commission. Confidential treatment has been requested with respect to the ommitted portions. Page 6 of 51 7 [*] training units which is sixty percent (60%) of the total number of training units. During the second year of this Agreement, SMS must utilize the remainder of the training units. One training unit is the equivalent of one student day of training in a PeopleSoft training class. As of the Effective Date, the fee associated with on-site training is as follows: $1,500 per day instructor fee plus the applicable number of training units per day per on-site training class plus the reasonable travel and living expenses incurred by PeopleSoft personnel in association with such training. i) Provide SMS with [*] site support days to be used during the initial installation of the PeopleSoft Software. During the first year of this Agreement, SMS may only utilize nine (9) support days which is approximately sixty percent (60%) of the total number of support days. During the second year of this Agreement, SMS must utilize the remainder of the support days. The fee for such on-site support days are included in the fees specified in Sections 4.a, 4.c and 4.d of Exhibit B. The services to be performed during the on-site days will be the services reasonably requested by SMS. j) Provide SMS with [*] hours of consulting services to assist with the installation and/or implementation of the PeopleSoft Software at SMS or End-User sites. The fee for such consulting services are included in the fees specified in Sections 4.a, 4.c and 4.d of Exhibit B. SMS must use these consulting hours within two years from the Effective Date. During the first year of this Agreement, SMS may only utilize [*] which is approximately sixty percent (60%) of the total number of consulting hours. During the second year of this Agreement, SMS must utilize the remainder of the consulting hours. k) During the term of this Agreement, not to enter into substantially similar marketing and distribution agreements for the PeopleSoft Software in the Territory and in the Healthcare Industry with any SMS Competitor that markets and/or licenses applications that compete with SMS's Core Applications. The provisions of this Section 5.k shall be construed to prevent an SMS Competitor, whether directly under contract with PeopleSoft, or indirectly through any ownership, management or contractual relationship, from marketing, distributing and licensing the PeopleSoft Software in the Territory and in the Healthcare Industry. One possible example, for illustrative purposes only, of a permitted marketing and distribution agreement: PeopleSoft may enter into a substantially similar marketing and distribution agreements for the PeopleSoft Software in the Territory outside the Healthcare Industry with an entity whose primary source of revenue is derived outside the Healthcare Industry from a decision support services application. Except as otherwise provided in this Agreement, if SMS elects to market or distribute products in the Territory which compete with the PeopleSoft Software (as specified in Section 4.e), the restriction contained in this Section 5.i shall no longer apply, provided PeopleSoft gives SMS written notice at least ten (10) days prior to PeopleSoft removing the restriction contained in this Section 5.i. l) Bear and be liable for all costs and expenses initiated and incurred by PeopleSoft in fulfilling its responsibilities under this Agreement, except for travel and living expenses incurred by PeopleSoft personnel performing services pursuant to this Agreement at the request of SMS. m) To oversee the parties relationship under this Agreement, create with SMS an Executive Team comprised of one senior management representative from each organization. The Executive Team will meet at least twice a year throughout the term of this Agreement and be responsible for monitoring the progress of the relationship, recommending and causing improvements to be implemented, and discussing mutual strategy as it relates to the Agreement. The meetings shall alternate between PeopleSoft's corporate headquarters and SMS's corporate headquarters. In the event of a deadlock, the Executive Team will submit to dispute escalation procedures pursuant to Section 19. 6. COMMERCIAL TERMS a) SMS shall pay PeopleSoft the following amounts: (i) all amounts due to PeopleSoft in accordance with Exhibit B; and (ii) all related shipping charges and customs duties. Unless SMS provides PeopleSoft with * Certain information on this page has been ommitted and filed separately with the Commission. Confidential treatment has been requested with respect to the ommitted portions. Page 7 of 51 8 a valid tax exemption or direct pay certificate, SMS is responsible for all taxes, duties and customs fees concerning this Agreement and/or services, excluding taxes based on PeopleSoft's income. b) SMS is free to set its own prices for the licensing and Maintenance of the PeopleSoft Software in the Territory. PeopleSoft shall provide SMS with thirty days prior notice concerning any revisions to the PeopleSoft price list. As of the Effective Date, PeopleSoft's intent is to revise the PeopleSoft price list on an annual basis. All outstanding SMS proposals will be valid for ninety (90) days from SMS's receipt of PeopleSoft written notice of a revision to the PeopleSoft price list. c) In the event SMS requires special technical or sales assistance, the parties shall mutually agree in writing on payment of costs and compensation on a case by case basis. 7. NOTIFYING AND SHIPMENT OF SOFTWARE a) SMS shall, no later than fifteen (15) days following the end of each quarter, inform PeopleSoft of the delivery of any PeopleSoft Software sublicensed by SMS and shall provide to PeopleSoft a SMS quarterly report, in the form attached as Exhibit K, containing sufficient information to allow PeopleSoft to invoice SMS for such licenses. Such quarterly report shall also contain an update for Exhibit G that specifies all the entities that executed a license agreement with SMS for any and all SMS's Core Application during the reporting period. b) For the purposes of this Agreement, the quarters shall end on the following dates: February 28 (or February 29, if applicable) May 31 August 31 November 30 c) The preprinted terms and conditions of any SMS order shall not supersede the terms and conditions set forth herein. d) Unless otherwise agreed, PeopleSoft Software shall be shipped to End Users by SMS. 8. LIMITED USE OF TRADEMARKS AND TRADENAMES a) All trademarks, service marks, trade names, logos or other words or symbols identifying the PeopleSoft Software or PeopleSoft's business (the "Marks") are and will remain the exclusive property of PeopleSoft, whether or not specifically recognized or perfected under the laws of the Territory. SMS will not take any action that jeopardizes PeopleSoft's proprietary rights or acquire any rights in the Marks, except the limited use rights specified in paragraph (c) below. Except as otherwise agreed in writing, SMS will not register, directly or indirectly, any trademark, service mark, trade name, copyright, company name or other proprietary or commercial right which is identical or confusingly similar to the Marks or which are translations thereof in any other language(s). Upon PeopleSoft's request, SMS will execute such instruments and take such actions that may be appropriate to register, maintain or renew the registration of the Marks in PeopleSoft's name in the Territory and/or protect PeopleSoft's interest in the Marks. b) All trademarks, service marks, trade names, logos or other words or symbols identifying SMS Products or SMS's business and specified on Exhibit N (the " SMS Marks") are and will remain the exclusive property of SMS, whether or not specifically recognized or perfected under the laws of the Territory. PeopleSoft will not take any action that jeopardizes SMS's proprietary rights or acquire any rights in the SMS Marks, except the limited use rights specified in paragraph (c) below. Except as otherwise agreed in writing, PeopleSoft will not register, directly or indirectly, any trademark, service mark, trade name, copyright, company name or other proprietary or commercial right which is identical or confusingly similar to the SMS Marks or which are translations thereof in any other language(s). Page 8 of 51 9 c) SMS may use PeopleSoft's Marks which relate to the PeopleSoft Software solely in connection with SMS's activities under this Agreement, provided SMS clearly identifies PeopleSoft's ownership of such Marks. PeopleSoft may use SMS's Marks solely in connection with PeopleSoft's activities under this Agreement, provided PeopleSoft clearly identifies SMS's ownership of such Marks. Each party shall submit to the other all advertising and marketing material using the other party's trademarks, service marks, trade names, logos or other words or symbols identifying such party to the owner of such marks for review and approval prior to release by the non-owner. Such consent shall not be unreasonably withheld. Furthermore, such consent shall be deemed to have been obtained if the party seeking approval has not received any objection to the submitted materials within thirty (30) days after the submission of the material. Both parties also reserve the right to require the other party to discontinue use of any advertising and marketing materials related to the subject matter of this transaction that such party reasonably believes will have a detrimental effect on its business. 9. PAYMENTS a) All payments shall be made in U.S. dollars by payment to PeopleSoft's bank account specified in Exhibit B or as changed by PeopleSoft from time to time upon notice to SMS. Unless otherwise specified herein, all payments are due within thirty (30) days of SMS's receipt of a correct invoice Overdue payments shall accrue interest at the lesser of twelve per cent (12%) per annum or the maximum rate permitted by applicable law. However, if SMS pays PeopleSoft an amount which SMS disputes and upon settlement of such dispute, it is determined that PeopleSoft is not entitled to such amounts, PeopleSoft shall pay the amounts to which it is found not to be entitled to SMS together with interest thereon payable at a rate of twelve percent (12%) per annum or the maximum rate permitted by applicable law from the date such amounts were paid to PeopleSoft through the date of refund of such payments to SMS. SMS shall pay all taxes and duties associated with this Agreement, other than taxes based on PeopleSoft's net income. b) All amounts payable by SMS under this Agreement are exclusive of any tax, levy or similar governmental charge that may be assessed within the Territory, whether based on gross revenue, the delivery, possession or use of the PeopleSoft Software, the execution, delivery and performance of this Agreement or otherwise. If SMS is legally required to withhold any income or remittance tax from amounts payable to PeopleSoft, then (i) SMS will promptly notify PeopleSoft, (ii) the amount payable will be automatically increased to the full extent required to offset such tax, so that the amount remitted to PeopleSoft, net of all taxes, equals the amount stated in the invoice, and (iii) SMS will promptly furnish PeopleSoft with the official receipt of payment of such tax to the appropriate taxing authority. SMS agrees to assume all responsibility for collection and payment of any value added or sales taxes applicable in the Territory. 10. TERM This Agreement shall commence on the Effective Date and, unless otherwise sooner terminated as provided herein, shall terminate and expire at the end of the Term. Upon expiration of the Term, this Agreement shall be extended automatically for a renewal term(s) of one (1) year unless SMS notifies PeopleSoft, in writing at least thirty days prior to the anniversary of the Effective Date, of its intention not to renew this Agreement. PeopleSoft may only terminate this Agreement in accordance with the terms and conditions of this Agreement, including Sections 16 and 17, Default and Termination, respectively. In the event SMS has a Paid Up License as defined in Section 4.e of Exhibit B and this Agreement is not renewed, SMS may continue to distribute the PeopleSoft Software as outlined in this Agreement; however, PeopleSoft shall have no obligation to provide any new Releases or the like. Page 9 of 51 10 11. RECORDS AND REPORTS a) SMS shall keep full, true and accurate records and accounts in accordance with generally accepted accounting practices to show all amounts payable by SMS to PeopleSoft. These records and accounts shall be retained for a period of at least two (2) years and shall include, at a minimum, for each License and Maintenance Agreement executed: (i) the name and address of the End User; (ii) the date of shipment; and (iii) a copy of each License Agreement and Maintenance Agreement. b) SMS shall keep all records at SMS's principal place of business. On an annual basis and with sixty days prior notice to SMS, PeopleSoft shall have the right to conduct audits of the records to determine SMS's compliance with this Agreement. PeopleSoft shall bear the expenses of the audit, however, in the event any such audit reveals that SMS has understated the amount that SMS is obligated to pay PeopleSoft under this Agreement by an amount of more than five percent (5%) of the amount paid to PeopleSoft during the period audited, SMS shall pay, in addition to the amounts due, all reasonable costs associated with the audit. c) PeopleSoft shall keep all records at PeopleSoft's principal place of business. On an annual basis and with sixty days prior notice to PeopleSoft, SMS shall have the right to conduct audits of the records to determine PeopleSoft 's compliance with this Agreement. SMS shall bear the expenses of the audit, however, in the event any such audit reveals that PeopleSoft has understated the amount that PeopleSoft is obligated to credit to SMS under this Agreement in accordance with Section 5 of Exhibit B by an amount of more than five percent (5%) of the amount to be credited to SMS during the period audited, PeopleSoft shall pay, in addition to the amounts due, all reasonable costs associated with the audit. 12. COMPLIANCE WITH LAWS a) Each party will, at its expense, obtain and maintain the governmental and other authorizations, registrations and filings that may be required under the laws of the Territory to execute or perform this Agreement. Each party will otherwise comply with all laws, regulations and other legal requirements that apply to this Agreement, including tax and foreign exchange legislation. b) At the expense of the requesting party, either party to this Agreement may request that the other party provide the requesting party with assurances and official documents to verify the other party's compliance with this Section. 13. TITLE AND PROTECTION OF SOFTWARE AND CONFIDENTIAL INFORMATION a) PeopleSoft retains ownership of all intellectual property rights (including copyright and trademarks) in and relating to the PeopleSoft Software. If an enhancement, improvement or other modification is created with PeopleTools, SMS shall have all right, title and interest only in such enhancement, improvement or other modification that remains after PeopleTools has been removed from such enhancement, improvement or other modification. b) Each party agrees to take the necessary precautions to maintain the confidentiality of Confidential Information pertaining to or disclosed in connection with this Agreement by using at least the same degree of care as such party employs with respect to its own Confidential Information of a like-kind or nature, but in no case less than reasonable care to maintain confidentiality. Each party shall only use such Confidential Information in connection with its performance of this Agreement. Confidential Information does not include information which is generally available to the public on an unrestricted basis; previously known or independently developed outside this Agreement; or lawfully disclosed by a third party without restriction. Page 10 of 51 11 14. REPRESENTATIONS / LIMITATION OF LIABILITY a) Each party represents that it has the right to enter into this Agreement. SMS warrants that it has the authority to bind its affiliates, subsidiaries and operating divisions to the terms and conditions of this Agreement. b) PeopleSoft warrants that it has the authority to grant to SMS all the rights contained herein, including the right to grant licenses to use and sublicense the PeopleSoft Software and the third party software specified in Section 1.h that is embedded in the application programming code for the PeopleSoft Software. In the event, PeopleSoft embeds additional third party software in the application programming code for the PeopleSoft Software, PeopleSoft shall extend this warranty to cover such additional third party software. c) PeopleSoft warrants that (i) PeopleSoft uses a reliable virus detection system, therefore, PeopleSoft represents that to the best of its knowledge that the PeopleSoft Software contains no computer viruses of any kind or form and (ii) the PeopleSoft Software does not contain any procedures or programs which can disable or destroy the PeopleSoft Software. In addition, PeopleSoft warrants that the PeopleSoft Software does not and shall not contain any lock, clock, timer, counter, copy protection feature, replication device or defect ("virus" or "worm" as such terms are commonly used in the computer industry), CPU serial number reference, or other device which: (i) might lock, disable or erase the PeopleSoft Software; (ii) prevent SMS from fully utilizing the PeopleSoft Software; or (iii) require action or intervention by PeopleSoft or any other person or entity to allow SMS to utilize the PeopleSoft Software. d) PeopleSoft represents that it has the right to enter into this Agreement. PeopleSoft represents that the PeopleSoft Software does not infringe any patent, copyright or other third party intellectual property rights under the laws of any country within the Territory when used in accordance with the published specifications. PeopleSoft represents that the PeopleSoft Software will perform substantially in accordance with PeopleSoft's published specifications for a period of one (1) year from delivery to SMS and such warranty shall continue for as long as SMS has paid the applicable Software Support Services fee. The initial one (1) year warranty is provided at not cost to SMS. PeopleSoft shall have no responsibility for any modifications or alterations carried out by the SMS or any party other than PeopleSoft PeopleSoft's sole obligation to remedy any breach of this warranty shall be to provide Secondline Support in an effort to remedy the defect. PeopleSoft does not represent that the PeopleSoft Software is error-free. SMS shall make no representation or warranty concerning the PeopleSoft Software which would expand the scope of the representations made by PeopleSoft in this Agreement. e) PEOPLESOFT DISCLAIMS ALL OTHER REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO THE WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. f) Except for the indemnification provided in the section entitled "Indemnification" below and except for claims for bodily injury or tangible property damage to extent caused by the proven fault of PeopleSoft, PeopleSoft's liability for damages under this Agreement (whether in contract or tort) shall not exceed the amounts paid by SMS to PeopleSoft. EXCEPT FOR LIABILITY RELATING TO THE BREACHES OF INTELLECTUAL OR PROPRIETARY RIGHTS, NEITHER PARTY WILL BE LIABLE FOR ANY LOST DATA, LOST PROFITS, INCIDENTAL, CONSEQUENTIAL OR INDIRECT DAMAGES OR ANY KIND, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. 15. INDEMNIFICATION a) PeopleSoft shall indemnify and defend SMS against any claim that the PeopleSoft Software infringes patent, copyright or other third party intellectual property rights under the laws of any country within the Territory when used by SMS or its End Users in accordance with the terms of this Agreement; provided Page 11 of 51 12 SMS gives PeopleSoft prompt notice of such claim and is given information, reasonable assistance and authority to defend or settle the claim. Notwithstanding anything to the contrary herein, PeopleSoft's liability under this Section 15.a is limited to the amounts award against SMS by a court or agreed to in settlement by PeopleSoft. PeopleSoft shall have the right, at its option, either to obtain for SMS the right to continue using the product, substitute other software with equivalent functional capabilities or modify the product so that it is no longer infringing while retaining equivalent functions. If such options are not reasonably available, SMS's remedy shall be to terminate this Agreement, to cease using and return to PeopleSoft all infringing copies of the PeopleSoft Software in SMS's possession and receive the amount of fees paid to PeopleSoft for such copies depreciated on a five year straight-line method. Notwithstanding the foregoing, PeopleSoft shall have no obligation or liability for any claim for infringement of the intellectual property rights of any party which is based on or arises out of (i) any act or omission on the part of the SMS, (ii) compliance with designs or specifications provided by or on behalf of the SMS or any third party, (iii) modifications or alterations carried out by the SMS or any party other than PeopleSoft, (iv) the use in connection with the PeopleSoft Software of any software not supplied by PeopleSoft, (v) the use of the PeopleSoft Software in a manner not authorized or contemplated by this Agreement, or (vi) the failure to promptly install any Release. The foregoing states the entire liability and obligation of PeopleSoft to the SMS for infringement of the intellectual property rights of any third party. b) SMS shall indemnify and defend PeopleSoft against any damage, loss, liability or expense that PeopleSoft may incur (i) with respect to the acts or omissions of any of SMS's employees or agents while at PeopleSoft's facilities or (ii) as a result of (1) any modification or amendment of the prescribed terms of the License Agreement or Maintenance Agreement that PeopleSoft did not specifically approve, (2) any warranty, condition, representation, indemnity or guarantee granted by SMS with respect to the PeopleSoft Software in addition to or in lieu of the limited warranties specified in the Section of this Agreement titled "Representations and Limitations of Liability", (3) any omission or inaccuracy in SMS's advertisements and promotional materials that relate to PeopleSoft or the PeopleSoft Software, (4) any customization or other modification of the PeopleSoft Software by SMS or its employees or agents, including, without limitation, any customization or other modification made with PeopleTools, or (5) SMS's failure to comply with the Sections of this Agreement titled "License Exclusions", "Compliance with Laws" or "Title and Protection of Software and Confidential Information"; provided PeopleSoft gives SMS prompt notice of such claim and is given information, reasonable assistance and authority to defend or settle the claim. Notwithstanding anything to the contrary herein, SMS's liability under this Section 15.b is limited to the amounts award against PeopleSoft by a court or agreed to in settlement by SMS. This Section will not be construed to limit or exclude any other claims or remedies which PeopleSoft may assert under this Agreement or by law. 16. DEFAULT a) Any of the following shall constitute an Event of Default: (i) SMS fails to pay any sum due under this Agreement within thirty (30) days after the time period specified in this Agreement; or (ii) either party fails to perform any of its other material obligations under this Agreement and such failure remains uncured for thirty (30) days after receipt of written notice thereof. b) In any Event of Default occurs, the nondefaulting party, in addition to any other rights available to it under law or equity, may withhold its performance (other than payment of sums due and owing to the other party) under and/or may immediately terminate this Agreement and any rights granted hereunder by written notice to the defaulting party. Unless otherwise provided in this Agreement, remedies shall be cumulative and there shall be no obligation to exercise a particular remedy. 17. TERMINATION a) All licenses properly granted by SMS to End Users pursuant to this Agreement shall survive termination of this Agreement. Furthermore, SMS's internal use license shall survive termination of this Agreement unless PeopleSoft has terminated the internal use license pursuant to the terms and conditions of Exhibit E Page 12 of 51 13 attached hereto. In such event, PeopleSoft, in addition to any other rights available to it under law or equity, may terminate this Agreement and the internal use licenses granted hereunder by written notice to SMS. b) In the event one party hereto merges with, or sells substantially all of its assets to, or undergoes a Change of Control involving, a competitor (as the term competitor is described in Section 4.e for PeopleSoft competitor and Section 18 for SMS Competitor) of the other party hereto, such other party may terminate this Agreement. An example for illustrative purposes only: in the event of a Change of Control of PeopleSoft to an SMS competitor, SMS (not PeopleSoft) may terminate this Agreement. c) Except if this Agreement is terminated due to an Event of Default by PeopleSoft, immediately upon termination of this Agreement, all sums that are outstanding under this Agreement shall be paid to the appropriate party, and the due dates of all payments shall be automatically accelerated to the date of termination. In the Event of Default by PeopleSoft, SMS may terminate this Agreement as specified in Section 16.b above and SMS shall immediately cease to distribute the PeopleSoft Software and shall return all copies of the PeopleSoft Software except for the copy required to provide support services to End Users as specified in the paragraph below. The preceding sentence shall not apply if SMS has a Paid-Up License and elects to continue to distribute the PeopleSoft Software as outlined in this Agreement; however, PeopleSoft shall have no obligation to provide any new Releases or the like. Except in the event of default by SMS, if this Agreement is terminated, SMS shall have the right to continue using the PeopleSoft Software to provide support services to End Users for the remaining of the then-current term of the SMS End User License Agreement and PeopleSoft will continue to provide support services to SMS in accordance with PeopleSoft's then-current rate structure. If the Agreement was terminated due to SMS's default or if SMS is unable or does not elect to provide support services to End Users, PeopleSoft agrees, except as otherwise stated herein, to offer support services to affected End Users subject to PeopleSoft's then current, generally applicable support terms and fees, including, without limitation, the requirement to be on PeopleSoft's current Release of the PeopleSoft Software. SMS understands and agrees that PeopleSoft's support service offer does not extend to SMS's Timeshare Operation and the affected End Users. Except for perpetual licenses specified herein, SMS shall return to PeopleSoft or its designee, or certify in writing to PeopleSoft that all copies or partial copies of the PeopleSoft Software in SMS's possession or control have been destroyed. d) Upon termination of this Agreement, SMS shall immediately (i) cease to use any documentation or advertising identifying it as a PeopleSoft distributor or representative of PeopleSoft, and (ii) remove promptly all signs, cancel all business listings, and take such other reasonable action as may be necessary to remove its identification as such a PeopleSoft distributor or representative. Upon termination of this Agreement, PeopleSoft shall immediately (i) cease to use any materials or advertising identifying SMS as a PeopleSoft distributor, and (ii) remove promptly all signs, cancel all business listings, and take such other reasonable action as may be necessary to remove any identification of SMS as a PeopleSoft distributor. e) In addition to this section, the sections entitled 'License Exclusions', 'Title and Protection of Software and Confidential Information,' and 'Representations / Limitation of Liability', and 'Indemnification', shall survive termination of this Agreement. Page 13 of 51 14 18. DEFINITIONS "Change of Control" means that a person, firm, company or entity acquires more than fifty percent (50%) or more of the voting shares or equity interest in one of the parties to this Agreement. "Confidential Information" means all written and/or oral information identified by a party as confidential or otherwise reasonably understood as confidential by its nature. "Current Financials ICO User" means any person, firm, company or entity identified on Exhibit G who is using SMS's General Financials Product at such entity's in-house computer operation on an IBM or IBM compatible mainframe. "Current Financials Non-ICO User" means any person, firm, company or entity identified on Exhibit G who is using SMS's General Financials Product in a non- IBM or non-IBM compatible mainframe in-house computer operation (i.e.: such product is used in a time sharing operation or at user's in-house computer operation on an non- IBM or non-IBM compatible mainframe). "Current HRMS ICO User" means any person, firm, company or entity identified on Exhibit G who is using SMS's Human Resources Product at such entity's in-house computer operation on an IBM or IBM compatible mainframe. "Current HRMS Non-ICO User" means any person, firm, company or entity identified on Exhibit G who is using SMS's Human Resources Product in a non- IBM or non-IBM compatible mainframe in-house computer operation (i.e.: such product is used in a time sharing operation or at user's in-house computer operation on an non- IBM or non-IBM compatible mainframe). "Designated European Countries" means the countries of the United Kingdom, France, Germany and the Netherlands. "Distribution Fee" means the fee paid by SMS to PeopleSoft for the right to have access to the PeopleSoft Software for purposes of distribution and sublicensing as set forth in this Agreement. Such fee does not include royalties associated with SMS's sublicensing of the PeopleSoft Software. "Documentation" means only technical publications relating to the use of the PeopleSoft Software, such as reference, user, installation, systems administrator and technical guides, delivered by PeopleSoft to SMS. "Effective Date" means the date set forth in Exhibit B as the effective date of this Agreement. "End User(s)" means any person, firm, company or entity in the Health Care Industry who is located in the Territory and who acquires a license to use the PeopleSoft Software from SMS for internal production end user purposes and not for redistribution in accordance with the terms and conditions of this Agreement. "Health Care Industry" means any person, firm, company or entity which is engaged in the business of providing health services through entities, including, but not limited to, hospital, infirmary or clinic. "License Agreement" means a form of end user license agreement containing (i) confidentiality and scope of use provisions substantially similar to the form attached hereto as Exhibit I and (ii) a third party beneficiary rights provision that shall allow PeopleSoft the right to enforce the confidentiality and scope of use provisions. Page 14 of 51 15 "Maintenance" means support services provided by SMS to End Users as described in the Maintenance Agreement. "Maintenance Agreement" means a form of end user support services agreement substantially in the form attached hereto as Exhibit J. SMS may unilaterally modify Exhibit J as deemed necessary by SMS. SMS shall provide to PeopleSoft copies of all such changes that affect the provision of Software support by SMS. "New Financials ICO User" means (a) an entity who is not a SMS End User that executes a license with SMS for PeopleSoft Financial Software or (b) an entity who is a SMS End User but is not a Current Financials ICO User and such entity executes a license with SMS for PeopleSoft Financial Software. All such licenses must be issued in accordance with the terms and conditions of this Agreement and are for use at such entity's in-house computer operation on an IBM or IBM compatible mainframe. "New Financials Non-ICO User" means (a) an entity who is not a SMS End User that executes a license with SMS for PeopleSoft Financial Software or (b) an entity who is a SMS End User but is not a Current Financials Non-ICO User executes a license with SMS for PeopleSoft Financial Software. All such licenses must be issued in accordance with the terms and conditions of this Agreement and are for use in a non- IBM or non-IBM compatible mainframe in-house computer operation (i.e.: such product is used in a time sharing operation or at user's in-house computer operation on an non- IBM or non-IBM compatible mainframe). "New HRMS ICO User" means (a) an entity who is not a SMS End User that executes a license with SMS for PeopleSoft HRMS or (b) an entity who is a SMS End User but is not a Current HRMS ICO User executes a license with SMS for PeopleSoft HRMS Software. All such licenses must be issued in accordance with the terms and conditions of this Agreement and are for use at such entity's in-house computer operation on an IBM or IBM compatible mainframe. "New HRMS Non-ICO User" means (a) an entity who is not a SMS End User that executes a license with SMS for PeopleSoft HRMS Software or (b) an entity who is a SMS End User but is not a Current HRMS Non-ICO User that executes a license with SMS for PeopleSoft HRMS Software. All such licenses must be issued in accordance with the terms and conditions of this Agreement and are for use in a non- IBM or non-IBM compatible mainframe in-house computer operation (i.e.: such product is used in a time sharing operation or at user's in-house computer operation on an non- IBM or non-IBM compatible mainframe). "PeopleSoft Financial Software" means all or any portion of the machine-readable and executable source code software programs identified in Exhibit A as Financial Software and all corrections, Releases and associated Documentation and updates thereto. "PeopleSoft HRMS Software" means all or any portion of the machine-readable and executable source code software programs identified in Exhibit A as HRMS Software and all corrections, Releases and associated Documentation and updates thereto. "PeopleSoft Software" means all or any portion of the machine-readable and executable source code PeopleSoft HRMS Software and PeopleSoft Financial Software programs identified in Exhibit A and all corrections, Releases and associated Documentation and updates thereto; excluding third party software products remarketed by PeopleSoft. Software does not include source code to PeopleTools. "Release" means one (1) copy of all published revisions to the printed Documentation and one (1) copy of new versions, Releases and other enhancements to the PeopleSoft Software which enhances the existing functionality of the PeopleSoft Software but does not create a new module with separate and distinct functionality to satisfy another business operation that are designated by PeopleSoft as new products for which it charges separately. Page 15 of 51 16 "Secondline Support" means technical support in accordance with the terms and conditions of Exhibit D provided by PeopleSoft solely to SMS's technical support organization. "Server" means a database or file server which may be accessed by a network of personal computers. "SMS Competitor" shall mean any entity in the Territory and in the Healthcare Industry whose primary source of revenue is derived from applications that compete with SMS's Core Applications in the Territory and in the Healthcare Industry. "SMS's Core Applications" are any of the following SMS application functionality: human resources, general financial services, provider billing services, patient management systems, order processing systems, master patient index repositories, clinical repositories, nursing and results reporting, electronic data interchange services and decision support services as such functionality is marketed and distributed by SMS to the Healthcare Industry. "SMS End User" means any person, firm, company or entity listed on Exhibit G (as such Exhibit is revised each quarter) who has acquired from SMS a license to use SMS's Core Applications for production end user purposes and not for redistribution. "Substantial "Selling" Effort" as used herein shall be mutually and reasonably determined by PeopleSoft and SMS, in writing as evidenced by the submittal and acceptance of a form substantially similar to Exhibit O, on a case by case basis based upon industry recognized factors involved in a software "sales" cycle. "Term" means the period defined in Exhibit B. "Territory" means the geographic area(s) listed in Exhibit B and other countries in which PeopleSoft has granted distribution rights to SMS pursuant to a mutually agreed upon written amendment to this Agreement. "Timeshare Operation" means SMS's timeshare business utilizing Human Resources and General Financial applications (i.e.: multiple clients operating from a single copy of the Software installed at SMS's Information Systems Center). "Release" means one (1) copy of all published revisions to the printed Documentation and one (1) copy of new versions of the PeopleSoft Software which enhances the existing functionality of the PeopleSoft Software but does not create a new module with separate and distinct functionality to satisfy another business operation that are designated by PeopleSoft as new products for which it charges separately. 19. DISPUTE ESCALATION PROCEDURES: During the Term, the parties shall use reasonable efforts and act in good faith to resolve disputes arising out of the Agreement in an efficient and amicable manner, as follows. At each level of escalation, five (5) business days are provided in which to resolve a dispute, and if the dispute remains unresolved after five (5) business days, the issue will be raised to the next level. First notification will be made to: PeopleSoft SMS ---------- --- Account Manager GFS Product Owner If resolution of the dispute cannot be reached at this level, further escalation will be made to: PeopleSoft SMS ---------- --- Regional Vice President of Services Solutions Manager Page 16 of 51 17 If resolution of the dispute cannot be reached at this level, further escalation will be made to: PeopleSoft SMS ---------- --- Regional General Manager Vice President - Health Solutions If resolution of the dispute cannot be reached at this level, further escalation will be made to: PeopleSoft SMS ---------- --- President President PeopleSoft and SMS may change the above stated contacts by providing written notice to the other party. In addition, legal and technical resources of each party necessary to resolve the dispute will be contacted and utilized as required. 20. MANDATORY ARBITRATION a) General: After the Dispute Escalation Procedures set forth in Section 19 have been exhausted and excluding a claim for injunctive relief, any remaining controversy or claim arising out of or relating to this Agreement or the existence, validity, breach or termination thereof, whether during or after its term shall be finally determined by compulsory arbitration. The arbitration shall be conducted in accordance with the Commercial Arbitration Rules and Supplementary Procedures of the American Arbitration Association ("AAA") as modified or supplemented under this Section, notwithstanding any choice of law provision in this Agreement. b) Proceeding: The arbitration proceeding will take place in San Francisco, California. Each party shall comply with a single request for production of documents. If disputes arise concerning these requests, the arbitrators shall have sole and complete discretion to determine the disputes. The Arbitration panel shall consist of three arbitrators, each qualified in the distribution of computer products field. Each party shall have the right to appoint a single Arbitrator, with the third Arbitrator appointed by mutual agreement between the two previously appointed arbitrators. The arbitrators shall give effect to statutes of limitation in determining any claim, and any controversy concerning whether an issue is arbitrable shall be determined by the arbitrators. The arbitration panel shall deliver a written opinion setting forth findings of fact and the rationale for the decision. The arbitrator shall reconsider the decision once upon the motion and at the expense of the party requesting reconsideration. The parties expressly agree that the arbitrators will be empowered to, at PeopleSoft' request, (i) to issue an interim order or award requiring SMS to cease distributing and using the PeopleSoft Software pending the outcome or the arbitration or (ii) grant injunctive relief. The Section of this Agreement entitled "Confidentiality" shall apply to the arbitration proceeding, all evidence taken and the opinion. The institution and maintenance of an action for judicial relief or pursuit of a provisional or ancillary remedy shall not constitute a waiver of the right of any party, including the plaintiff, to submit the controversy or claim to arbitration if any other party contests such action for judicial relief. c) Award: The arbitral award will be the exclusive remedy of the parties for all claims, counterclaims, issues or accountings presented or plead to the arbitrators. The award will (i) be granted and paid in U.S. Dollars exclusive of any tax, deduction or offset and (ii) include interest from the date of breach or other violation of the Agreement until the award is fully paid, computed at the then-prevailing LIBOR rate. Judgment upon the decision rendered by the arbitrator may be entered in any court having jurisdiction thereof. d) Fees and Expenses: The fees of the arbitrators and the expenses incident to the arbitration proceedings shall be borne equally by the parties to such arbitration. All other expenses shall be borne by Page 17 of 51 18 the party incurring such expenses. Any additional costs, fees or expenses incurred in enforcing the arbitral award will be charged against the party resisting its enforcement. e) Notification: The party which intends to initiate an arbitration proceeding shall notify the other party or parties of such intention by registered mail, return receipt requested, describing the matter in dispute, naming its arbitrator and demanding that the other party name its arbitrator within four weeks from the date of such notification. f) Failure to Name Arbitrator: If the other party fails to name its arbitrator within the above period after the giving of such notice, or if the two arbitrators do not appoint the third arbitrator within four weeks after the selection of the second arbitrator, then the American Arbitrator Association shall at the request of one of the parties, appoint the second or third arbitrator, as the case may be. 21. GENERAL a) All notices or demands shall be in writing and sent to the address set forth above by registered mail, return receipt requested or sent by fax along with a copy sent by US mail posted on the same date as the fax (SMS fax number 610/219-1931 or PeopleSoft fax number 510/274-9700, as appropriate) or express courier if delivery is confirmed by such form of transmission. Either party may change its address by giving ten days prior written notice. Notices to PeopleSoft shall be sent to the attention of Vice President and General Counsel. Notices to SMS shall be sent to the attention of Vice President, Finance. b) Neither party may assign this Agreement (by operation of law or otherwise) without the prior written consent of the other party, and any prohibited assignment shall be null and void. Notwithstanding the foregoing, either party may assign its rights to (i) its wholly owned affiliates or subsidiaries or (ii) in the event of a merger, consolidation or acquisition of all or substantially all of the assets of a party hereto, to the resulting entity, provided that such entity is not a competitor (as the term competitor is described in Section 4.e for PeopleSoft competitor and Section 18 for SMS Competitor) of the other party. In the event one party hereto assigns this Agreement or acquires another entity or merges, consolidates or is acquired by a third party or undergoes a Change of Control or the like, the scope of this Agreement, including, without limitation, the rights granted herein, is not expanded beyond the scope originally intended as of the Effective Date. An example for illustrative purposes only: if SMS acquires another entity, the definition of SMS End User shall not be expanded to include the customers of such acquired entity. If SMS desires to expand the scope of this Agreement to cover such Change of Control and the like, PeopleSoft agrees that the add-on distribution fee shall be proportionate to the initial Distribution Fee specified in Exhibit B. The calculation shall compare the market potential of the expanded customer base to the customer base specified on Exhibit G. c) Neither party shall be liable for any failure to perform due to causes beyond its reasonable control. d) The relationship of the parties is that of independent contractors. Except as set out in this Agreement nothing shall constitute the parties as partners, joint venturers or co-owners, constitute SMS as the agent, employee or representative of PeopleSoft, or empower SMS to act for, bind or otherwise create or assume any obligation on behalf of PeopleSoft or any of its parents subsidiaries or affiliates or any other companies whose business is managed or controlled by PeopleSoft. e) This Agreement constitutes the entire agreement between the parties and may only be modified by a written instrument signed by each party's authorized officers. This Agreement supersedes and replaces any prior proposals, communications or agreements between the parties concerning the subject matter hereof. Page 18 of 51 19 f) Systems Integrator and PeopleSoft agree that during the term of this Agreement, except with the prior approval of the other party, neither party will solicit for employment any employee of the other party who shall have performed activities under this Agreement. g) Except as provided in Sections 2.a, 2.b and 2.d, any other consent and/or approval that is required to be given under this Agreement shall not be unreasonably withheld by the other party. The parties have executed this Agreement by their duly authorized representatives as of the Effective Date. Shared Medical Systems Corporation PEOPLESOFT, INC. /s/ Marvin S. Cadwell /s/ Ken Horowitz - ------------------------------------ ---------------------------- Authorized Signature Authorized Signature Marvin S. Cadwell, President and CEO Ken Horowitz, Vice President - ------------------------------------ ---------------------------- Printed Name and Title Printed Name and Title Page 19 of 51 20 EXHIBIT A DISTRIBUTION USE PEOPLESOFT SOFTWARE A. PeopleSoft HRMS Software: PeopleSoft Human Resources PeopleSoft Benefits Administration PeopleSoft FSA Administration PeopleSoft Payroll PeopleSoft Payroll Interface PeopleSoft Time and Labor -- If or when such module becomes commercially available B. PeopleSoft Financial Software: PeopleSoft General Ledger PeopleSoft Accounts Receivable PeopleSoft Accounts Payable PeopleSoft Asset Management PeopleSoft Purchasing PeopleSoft Inventory -- PeopleSoft shall deliver the pre-release Beta version of the Software. Such Beta version shall be delivered "as-is". If or when the module is commercially available, PeopleSoft shall provide such version to SMS. Page 20 of 51 21 EXHIBIT B TERRITORY, PERFORMANCE AND COMPENSATION SCHEDULE This document is an Exhibit to the PeopleSoft SMS Agreement ("Agreement") between PeopleSoft, Inc. ("PeopleSoft") and SMS ("SMS"). Capitalized terms used herein shall have the same meaning as set forth in the Agreement unless otherwise defined herein. 1. EFFECTIVE DATE. The Effective Date of the Agreement is August 25, 1995 2. TERM. The Term of the Agreement is ten (10) years. Upon the fifth anniversary, PeopleSoft and SMS agree that the royalties and Software maintenance fee stated herein shall be adjusted in accordance with the adjustments to such items in PeopleSoft's Price List. An example for illustrative purposes only: On August 15, 2000, if the license fee for PeopleSoft HRMS Software has increased by twelve percent (12%), the royalties specified herein for PeopleSoft HRMS Software shall increase by twelve percent (12%). Upon the commencement of each renewal term, PeopleSoft and SMS agree that the royalties and Software maintenance fee stated herein shall be adjusted in accordance with the adjustments to such items in PeopleSoft's Price List. An example for illustrative purposes only: On August 15, 2000, if the license fee for PeopleSoft HRMS Software has increased by twelve percent (12%), the royalties specified herein for PeopleSoft HRMS Software shall increase by twelve percent (12%). 3. TERRITORY. The Territory shall consist only of the following countries as constituted as of the Effective Date: United States and Puerto Rico. 4. AMOUNTS PAYABLE TO PEOPLESOFT. a) For SMS's appointment as system integrator pursuant to this Agreement, SMS shall pay PeopleSoft a one-time Distribution Fee of one million six hundred thousand dollars ($1,600,000) as shown below. SMS understands that $1,400,000 of the total $1,600,000 is non-refundable and non-cancelable. $1,400,000 within thirty (30) days following the Effective Date; $200,000 upon commercial availability of the Inventory Software. In the event PeopleSoft does not deliver the commercial release of the Inventory Software, SMS may retain this $200,000 as liquidated damages. b) For each copy of the PeopleSoft Software licensed or copied by SMS during the Term, SMS shall also pay PeopleSoft a royalty fee per license as follows: PeopleSoft HRMS Software licensed by SMS [*] per each license to a Current HRMS Non-ICO User or a New HRMS Non-ICO User; [*] per each license to a Current HRMS ICO User; and Fifty percent (50%) of PeopleSoft's then current list license fee per each license to a New HRMS ICO User unless PeopleSoft agrees to lesser amount. * Certain information on this page has been ommitted and filed separately with the Commission. Confidential treatment has been requested with respect to the ommitted portions. Page 21 of 51 22 PeopleSoft Financial Software licensed by SMS [*] per each license to a Current Financials Non-ICO User or a New Financials Non-ICO User; [*] per each license to a Current Financials ICO User ; and Fifty percent (50%) of PeopleSoft's then current list license fee per each license to a New Financials ICO User unless PeopleSoft agrees to a lesser amount. c) In addition to any and all amounts due hereunder, SMS shall pay to PeopleSoft the non-cancelable and non-refundable guaranteed minimum royalty amounts shown below: i) On June 30, 1996, the difference, if any, between [*] and the royalties paid to PeopleSoft by SMS under Section 4.b above during the first year of the Agreement. ii) On June 30, 1997, the difference, if any, between [*] and the royalties paid to PeopleSoft by SMS under Section 4.b above during the Term of the Agreement. iii) On June 30, 1998, the difference, if any, between [*] and the royalties paid to PeopleSoft by SMS under Section 4.b above during the Term of the Agreement. iv) On June 30, 1999, the difference, if any, between [*] and the royalties paid to PeopleSoft by SMS under Section 4.b above during the Term of the Agreement. v) On June 30, 2000, the difference, if any, between [*] and the royalties paid to PeopleSoft by SMS under Section 4.b above during the Term of the Agreement. If, after the twenty-four (24) month period from the Effective Date, SMS continues to operate the PeopleSoft Software in SMS's Timeshare Operation, PeopleSoft and SMS agree that the guaranteed minimum royalties specified in Section 4(c)(iv) above shall be increased to [*] from [*] and in Section 4(c)(v) above shall be increased to [*] from [*]. Unless SMS notifies PeopleSoft in writing, within the twenty-four (24) month period from the Effective Date, that SMS has made an irrevocable decision not continue to use the PeopleSoft Software in SMS's Timeshare Operation, it shall be deemed that SMS has elected to continue to operate the PeopleSoft Software in SMS's Timeshare Operation. d) In addition to any and all amounts due hereunder, SMS shall pay to PeopleSoft the non-cancelable and non-refundable (except for the [*] specified in Section 4.d.i below) guaranteed minimum royalty amounts shown below: i) On June 30, 1996, SMS shall pay PeopleSoft the amount of [*]. In the event PeopleSoft has not delivered the commercial release of the Inventory Software on or before June 30, 1996 SMS may retain this [*] as liquidated damages until PeopleSoft's delivery of the Inventory Software; ii) On June 30, 1997, SMS shall pay PeopleSoft the amount of [*] iii) On June 30, 1998, SMS shall pay PeopleSoft the amount of [*] and iv) On June 30, 1999, SMS shall pay PeopleSoft the amount of [*]. e) After SMS has paid to PeopleSoft, pursuant to Sections 4.b and 4.c above and/or a separate lump sum royalty payment, an amount equal to or in excess of [*] for PeopleSoft HRMS Software and/or PeopleSoft Financial Software royalties which amount does not include the royalties associated with (i) New Financials ICO User, New HRMS ICO User and (ii) Current Financials and HRMS ICO End User after the first forty (40) Current Financials and HRMS ICO End User that license the PeopleSoft HRMS Software and/or PeopleSoft Financial Software ("Paid Up License"), SMS shall not be obligated to pay * Certain information on this page has been ommitted and filed separately with the Commission. Confidential treatment has been requested with respect to the ommitted portions. Page 22 of 51 23 PeopleSoft any additional royalties associated only with future licenses of the PeopleSoft HRMS Software and/or PeopleSoft Financial Software to SMS End Users with a license to use SMS's Human Resources and/or General Financial products in a Non-ICO environment (ie: such product is used in a Timeshare Operation or at user's in-house computer operation on a non- IBM or non-IBM compatible mainframe) In other words, after SMS has paid PeopleSoft the amount of the Paid Up License, SMS shall only incur royalties in association with licenses to: (i) New Financials Non-ICO User, excluding SMS End Users (ii) New HRMS Non-ICO User, excluding SMS End Users (iii) New Financials ICO User, (iv) New HRMS ICO User, (v) Current Financials ICO User, and (vi) Current HRMS ICO User SMS may continue licensing the PeopleSoft HRMS Software and/or PeopleSoft Financial Software as specified in this Agreement. Notwithstanding the above, SMS may license the PeopleSoft HRMS Software and/or PeopleSoft Financial Software to more than forty (40) Current Financials and HRMS ICO End Users; however, the additional ICO License Agreements shall not be included in the calculation referenced in this Section 4.e. SMS shall have a period of seven (7) years (the initial Term of five years plus the first two years of any applicable renewal term) to pay PeopleSoft the amounts stated in this Section 4.e. If, after the twenty-four (24) month period from the Effective Date, SMS continues to operate the PeopleSoft Software in SMS's Timeshare Operation, PeopleSoft and SMS agree that the amount stated in Line 2 in the first paragraph of this Section shall be increased to [*] from [*]. Unless SMS notifies PeopleSoft in writing, within the twenty-four (24) month period from the Effective Date, that SMS has made an irrevocable decision not continue to use the PeopleSoft Software in SMS's Timeshare Operation, it shall be deemed that SMS has elected to continue to operate the PeopleSoft Software in SMS's Timeshare Operation. f) The first year of PeopleSoft HRMS Software Maintenance (as set forth in Exhibit D, specifically excluding Section 4 of Exhibit D) is included in the Software license fees, thereafter, in the event Licensee elects to continue to receive Software Maintenance, Licensee shall pay PeopleSoft the annual Software Maintenance fee as set forth in this Agreement. Should Licensee elect not to renew Software Maintenance and subsequently request Software Maintenance, PeopleSoft shall reinstate Software Maintenance only after Licensee pays PeopleSoft the annual fee due in accordance with this Agreement plus all cumulative fees that would have been payable had Licensee not suspended Software Maintenance. For the PeopleSoft HRMS Software Maintenance provided to SMS by PeopleSoft as set forth in Exhibit D, excluding Section 4 thereof, SMS shall pay PeopleSoft, on the first through fourth anniversaries of the Effective Date, the amounts shown below based upon the number of HRMS End Users licensed by SMS.
Number of HRMS End First Anniversary - Users Fourth Anniversary 0 - 75 [*] per year 76 - 150 [*] per year 151 - 250 [*] per year Over 250 [*] per year
g) The first year of PeopleSoft Financials Software Maintenance (as set forth in Exhibit D, specifically excluding Section 4 of Exhibit D) is included in the Software license fees, thereafter, in the event Licensee elects to continue to receive Software Maintenance, Licensee shall pay PeopleSoft the annual Software Maintenance fee as set forth in this Agreement. Should Licensee elect not to renew Software Maintenance and subsequently request Software Maintenance, PeopleSoft shall reinstate Software Maintenance only * Certain information on this page has been ommitted and filed separately with the Commission. Confidential treatment has been requested with respect to the ommitted portions. Page 23 of 51 24 after Licensee pays PeopleSoft the annual fee due in accordance with this Agreement plus all cumulative fees that would have been payable had Licensee not suspended Software Maintenance. For the PeopleSoft Financial Software Maintenance provided to SMS as set forth in Exhibit D , excluding Section 4 thereof, SMS shall pay PeopleSoft, on the first through fourth anniversaries of the Effective Date, the amounts shown below based upon the number of Financial End Users licensed by SMS.
Number of Financial End First Anniversary - Users Fourth Anniversary 0 - 75 [*] per year 76 - 150 [*] per year 151 - 250 [*] per year Over 250 [*] per year
h) The first year of PeopleSoft HRMS Software Maintenance pursuant to Section 4 of Exhibit D is included in the Software license fees, thereafter, in the event Licensee elects to continue to receive such Section 4 Software Maintenance, Licensee shall pay PeopleSoft the annual Software Maintenance fee as set forth in this Agreement. For the PeopleSoft HRMS Software Maintenance provided to SMS by PeopleSoft pursuant to Section 4 as set forth in Exhibit D (telephone consultation/hotline support), SMS shall pay PeopleSoft, on the first through fourth anniversaries of the Effective Date, the amounts shown below based upon the number of HRMS End Users licensed by SMS.
Number of HRMS End Users First Anniversary - Fourth Anniversary 0 - 75 [*] per year 76 - 150 [*] per year 151 - 250 [*] per year Over 250 [*] per year
i) The first year of PeopleSoft Financials Software Maintenance pursuant to Section 4 of Exhibit D is included in the Software license fees, thereafter, in the event Licensee elects to continue to receive such Section 4 Software Maintenance, Licensee shall pay PeopleSoft the annual Software Maintenance fee as set forth in this Agreement. For the PeopleSoft Financial Software Maintenance provided to SMS by PeopleSoft pursuant to Section 4 as set forth in Exhibit D (telephone consultation/hotline support), SMS shall pay PeopleSoft, on the first through fourth anniversaries of the Effective Date, the amounts shown below based upon the number of Financial End Users licensed by SMS.
Number of Financial End First Anniversary - Users Fourth Anniversary 0 - 75 [*] per year 76 - 150 [*] per year 151 - 250 [*] per year Over 250 [*] per year
j) Consulting, training and/or other services beyond those provided pursuant to License and Maintenance Agreements shall be independently negotiated with customers. The party providing such efforts shall retain one hundred percent (100%) of the proceeds therefrom. On such occasions as SMS and PeopleSoft shall together provide such services, the allocation between SMS and PeopleSoft of the revenues therefrom shall be agreed upon in advance. * Certain information on this page has been ommitted and filed separately with the Commission. Confidential treatment has been requested with respect to the ommitted portions. Page 24 of 51 25 5. AMOUNTS CREDITED TO SMS. If, after a Substantial "Selling" Effort by SMS, a SMS End User decides to license the PeopleSoft Software directly from PeopleSoft, SMS agrees that, upon SMS's prior written approval, which approval shall not be unreasonably withheld, PeopleSoft shall have the right to license the PeopleSoft HRMS Software and PeopleSoft Financial Software, respectively, to such SMS End User; provided PeopleSoft credits to the royalties SMS is obligated to pay PeopleSoft the amounts specified in below: For each such PeopleSoft HRMS license, the credit is fifty percent (50%) of PeopleSoft's then current list license fee; and For each such PeopleSoft Financials license, the credit is fifty percent (50%) of PeopleSoft's then current list license fee . Notwithstanding anything to the contrary, this credit obligation shall not apply to the SMS End Users listed on Exhibit L on which PeopleSoft has expended a Substantial "Selling" Effort. 6. PEOPLESOFT BANK ACCOUNT FOR PAYMENT. WestAmerica Bank, Walnut Creek Branch ABA # 121-140-218 Account Number: 0704006964 Account Name PeopleSoft, Inc. 7. CURRENCY FOR PAYMENT. The currency for all payments to PeopleSoft shall be U.S. Dollars. 8. INTERNATIONAL OPTION. a) If, during the two (2) year period following the Effective Date, SMS elects to extend its non-exclusive system integration and licensing rights for the PeopleSoft Software from the United States to also include the Designated European Countries, SMS and PeopleSoft must enter into a mutually acceptable amendment to this Agreement authorizing such extended use for the Designated European Countries. PeopleSoft and SMS agree that SMS shall pay PeopleSoft a one-time entry Global Distribution Fee of [*] upon execution of the Amendment and for each copy of the PeopleSoft Software licensed by SMS in the Designated European Countries during the term of the Amendment, SMS shall pay to PeopleSoft a royalty fee per license as specified below: [*] per each PeopleSoft International HRMS Software license excluding a New HRMS ICO User; [*] per each PeopleSoft International Financial Software license excluding a New Financials ICO User; Fifty percent (50%) of PeopleSoft's then current list license fee per each license to a New HRMS ICO User unless PeopleSoft agrees to lesser amount; and Fifty percent (50%) of PeopleSoft's then current list license fee per each license to a New Financials ICO User unless PeopleSoft agrees to lesser amount. If, during the two (2) year period following the Effective Date, PeopleSoft creates a localized version of the PeopleSoft Software for countries outside of the Territory and the Designated European Countries, upon SMS's request, PeopleSoft shall have the unilateral right to expand the option stated in this Section 8.a to cover such additional localized version of the PeopleSoft Software. If this option is expanded SMS and PeopleSoft must enter into a mutually acceptable amendment to this Agreement authorizing such extended use and specifying the additional distribution fee which shall be proportional to the distribution fee for the Designated European Countries. * Certain information on this page has been ommitted and filed separately with the Commission. Confidential treatment has been requested with respect to the ommitted portions. Page 25 of 51 26 SMS understands that (i) the PeopleSoft Software for the Designated European Countries differs from, and may not contain all the features and functions as, the PeopleSoft Software for the U.S. market; and (ii) in the Designated European Countries, SMS will have to work through, and in conjunction with, PeopleSoft's distributors and channel partners, if any, in such countries. PeopleSoft agrees to facilitate the introductions between SMS and PeopleSoft's distributors and channel partners, if any, in such countries. Software Maintenance under the option specified in this Section 8.a is: (i) The first year of PeopleSoft HRMS Software Maintenance (as set forth in Exhibit D, specifically excluding Section 4 of Exhibit D) is included in the Software license fees, thereafter, in the event Licensee elects to continue to receive Software Maintenance, Licensee shall pay PeopleSoft the annual Software Maintenance fee as set forth in this Agreement. Should Licensee elect not to renew Software Maintenance and subsequently request Software Maintenance, PeopleSoft shall reinstate Software Maintenance only after Licensee pays PeopleSoft the annual fee due in accordance with this Agreement plus all cumulative fees that would have been payable had Licensee not suspended Software Maintenance. For the PeopleSoft HRMS Software Maintenance provided to SMS by PeopleSoft as set forth in Exhibit D, excluding Section 4 thereof, SMS shall pay PeopleSoft, on the first through fourth anniversaries of the Effective Date, the amounts shown below based upon the number of HRMS End Users licensed by SMS.
Number of HRMS End First Anniversary - Users Fourth Anniversary 0 - 25 [*] per year 26 - 50 [*] per year 51 - 100 [*] per year Over 100 [*] per year
(ii) The first year of PeopleSoft Financials Software Maintenance (as set forth in Exhibit D, specifically excluding Section 4 of Exhibit D) is included in the Software license fees, thereafter, in the event Licensee elects to continue to receive Software Maintenance, Licensee shall pay PeopleSoft the annual Software Maintenance fee as set forth in this Agreement. Should Licensee elect not to renew Software Maintenance and subsequently request Software Maintenance, PeopleSoft shall reinstate Software Maintenance only after Licensee pays PeopleSoft the annual fee due in accordance with this Agreement plus all cumulative fees that would have been payable had Licensee not suspended Software Maintenance. For the PeopleSoft Financial Software Maintenance provided to SMS as set forth in Exhibit D , excluding Section 4 thereof, SMS shall pay PeopleSoft, on the first through fourth anniversaries of the Effective Date, the amounts shown below based upon the number of Financial End Users licensed by SMS.
Number of Financial End First Anniversary - Users Fourth Anniversary 0 - 25 [*] per year 26 - 50 [*] per year 51 - 100 [*] per year Over 100 [*] per year
(iii) The first year of PeopleSoft HRMS Software Maintenance pursuant to Section 4 of Exhibit D is included in the Software license fees, thereafter, in the event Licensee elects to continue to receive such Section 4 Software Maintenance, Licensee shall pay PeopleSoft the annual Software Maintenance fee as set forth in this Agreement. For the PeopleSoft HRMS Software Maintenance provided to SMS by PeopleSoft pursuant to Section 4 as set forth in Exhibit D (telephone consultation/hotline support), SMS shall pay PeopleSoft, on the first * Certain information on this page has been ommitted and filed separately with the Commission. Confidential treatment has been requested with respect to the ommitted portions. Page 26 of 51 27 through fourth anniversaries of the Effective Date, the amounts shown below based upon the number of HRMS End Users licensed by SMS.
Number of HRMS End Users First Anniversary - Fourth Anniversary 0 - 25 [*] per year 26 - 50 [*] per year 51 - 100 [*] per year Over 100 [*] per year
(iv) The first year of PeopleSoft Financials Software Maintenance pursuant to Section 4 of Exhibit D is included in the Software license fees, thereafter, in the event Licensee elects to continue to receive such Section 4 Software Maintenance, Licensee shall pay PeopleSoft the annual Software Maintenance fee as set forth in this Agreement. For the PeopleSoft Financial Software Maintenance provided to SMS by PeopleSoft pursuant to Section 4 as set forth in Exhibit D (telephone consultation/hotline support), SMS shall pay PeopleSoft, on the first through fourth anniversaries of the Effective Date, the amounts shown below based upon the number of Financial End Users licensed by SMS.
Number of Financial End First Anniversary - Users Fourth Anniversary 0 - 25 [*] per year 26 - 50 [*] per year 51 - 100 [*] per year Over 100 [*] per year
b) If, during the two (2) year period following the Effective Date, SMS elects to extend its non-exclusive system integration and licensing rights for the PeopleSoft Software from the United States to the twelve countries specified below with SMS modifying the United States version of the PeopleSoft Software to create localized versions of the PeopleSoft Software for such twelve countries, SMS and PeopleSoft must enter into a mutually acceptable amendment to this Agreement authorizing such extended use. Additionally, if, during the two (2) year period following the Effective Date, SMS elects to extend its non-exclusive system integration and licensing rights for the PeopleSoft Software from the United States to the twelve countries specified below with SMS modifying the PeopleSoft Designated European Countries version(s) of the PeopleSoft Software referenced in Section 8.a of this Exhibit B to create localized versions of the PeopleSoft Software for such twelve countries, SMS must (i) enter into a mutually acceptable amendment to this Agreement authorizing such extended use and (ii) exercise the option specified in Section 8.a of this Exhibit B and pay PeopleSoft the distribution fee of [*] specified in such Section 8.a. COUNTRIES --------- Belgium United Kingdom The Czech Republic France Germany Hungary Ireland Italy Luxembourg Netherlands Poland Spain * Certain information on this page has been ommitted and filed separately with the Commission. Confidential treatment has been requested with respect to the ommitted portions. Page 27 of 51 28 PeopleSoft and SMS agree that (i) SMS shall not pay any additional distribution fee associated with this Section 8.b (the additional distribution fee is required if the option specified in Section 8.a of this Exhibit B is exercised) and (ii) SMS shall pay to PeopleSoft a royalty fee per each modified copy of the PeopleSoft Software licensed by SMS as specified below: PeopleSoft HRMS Software licensed by SMS [*] per each license to a Current HRMS Non-ICO User or a New HRMS Non-ICO User; [*] per each license to a Current HRMS ICO User; and Fifty percent (50%) of PeopleSoft's then current list license fee per each license to a New HRMS ICO User unless PeopleSoft agrees to lesser amount. PeopleSoft Financial Software licensed by SMS [*] per each license to a Current Financials Non-ICO User or a New Financials Non-ICO User; [*] per each license to a Current Financials ICO User ; and Fifty percent (50%) of PeopleSoft's then current list license fee per each license to a New Financials ICO User unless PeopleSoft agrees to a lesser amount. SMS understands that (i) PeopleSoft will not provide SMS with any maintenance for licenses granted outside the U.S. pursuant to the option specified in this Section 8.b and (ii) in the specified twelve countries, PeopleSoft recommends that SMS works through, and in conjunction with, PeopleSoft's distributors and channel partners, if any, in such countries. PeopleSoft agrees to facilitate the introductions between SMS and PeopleSoft's distributors and channel partners, if any, in such countries. Upon mutual agreement of the parties, the list of twelve countries specified herein may be expanded. However, PeopleSoft shall have the right to refuse to expand the list to any country that PeopleSoft either currently has or is intending to have an exclusive distributor relationship. * Certain information on this page has been ommitted and filed separately with the Commission. Confidential treatment has been requested with respect to the ommitted portions. Page 28 of 51 29 EXHIBIT C INTERNAL USE
PART 1 PRODUCTION TEST & DEVELOPMENT COPIES COPIES ------ ------ HRMS SOFTWARE Human Resources 1 1 - - Benefits Administration 1 1 - - FSA Administration 1 1 - - Payroll 1 1 - - Payroll Interface 1 1 - - Time and Labor 1 1 - - If or when such module becomes commercially available FINANCIALS SOFTWARE General Ledger (incl. PS/nVision) 1 1 - - Accounts Receivable 1 1 - - Accounts Payable 1 1 - - Asset Management 1 1 - - Purchasing 1 1 - - Inventory 1 1 - - If or when such module becomes commercially available
Database Version:Oracle Operating System: Hardware Model: FOR THE ORACLE DATABASE VERSION LICENSED, LICENSEE RECEIVES THE APPLICABLE ITEMS LISTED BELOW:
QTY. ORACLE ---- ------ DATABASE 1 N/A PEOPLETOOLS - RESTRICTED DEV 1 included DOCUMENTATION 2 included
ADDITIONAL SOFTWARE/SERVICES / PART TWO SOFTWARE/SERVICE MANUFACTURER QUANTITY Workstation Access (includes PeopleSoft, Inc. unlimited base application access, Sybase, Inc./MITI Workstation SQR, QueryLink, Crystal Computer Services Crystal, nVision) Server SQR Sybase, Inc./MITI 1 - PeopleTools - General Dev.(1) PeopleSoft, Inc. 10 Seats -------- - -------- (1) PeopleTools for general development for the internal use license shall be used solely to develop applications for Licensee's internal systems. Licensee shall not market or distribute such applications without executing a mutually acceptable amendment to this Agreement authorizing such extended use and specifying the royalty associated with such usage. Any third party software required by Licensee must be licensed directly from PeopleSoft or the manufacturer. Page 29 of 51 30 - ----------------------------------------- ------------------------------------- ------------------------------------ LICENSEE SITE ADDRESS BILL-TO-ADDRESS SHIP-TO-ADDRESS contact name: contact name: contact name: Phone No. Phone No. Phone No. Fax No. Fax No. Fax No. - ----------------------------------------- ------------------------------------- ------------------------------------
- --------------------------------------------------------- ---------------------------------------------------------- LICENSEE TRAINING ADMINISTRATOR CORRESPONDENT Contact Name: Contact Name: Phone No. Phone No. Fax No. - --------------------------------------------------------- ----------------------------------------------------------
Page 30 of 51 31 EXHIBIT D SECONDLINE SUPPORT TERMS AND CONDITIONS Secondline Support Services Terms and Conditions ("Support Services") are outlined herein. PeopleSoft reserves the right to modify the terms and conditions of Support Services on an annual basis to reflect current market conditions. 1. COVERAGE PeopleSoft provides SMS with Support Services for the PeopleSoft Software in consideration for SMS's payment of the applicable fees to PeopleSoft as stated in Sections 4.f, 4.g, 4.h and 4.i of Exhibit B. SMS is solely responsible for the provision of Support Services to End Users. 2. SOFTWARE MAINTENANCE The following technical and functional improvements will be issued periodically by PeopleSoft to improve PeopleSoft Software operations: a. Fixes to Errors; b. Updates; and c. Enhancements contained within new releases. 3. PRIORITY LEVEL OF ERRORS PeopleSoft shall reasonably determine the priority level of Error. PeopleSoft uses the following protocols: Priority A Errors: PeopleSoft promptly initiates the following procedures: (1) assign PeopleSoft specialists to correct the Error; (2) provide ongoing communication on the status of the corrections; and (3) immediately commence to provide a Workaround or a Fix. Priority B Errors: (1) PeopleSoft assigns a PeopleSoft specialist to commence correction of Error and (2) Provide escalation procedures as reasonably determined by PeopleSoft support staff. PeopleSoft exercises all commercially reasonable efforts to include the Fix for the Error in the next PeopleSoft Software maintenance release. Priority C Errors: PeopleSoft may include the Fix for the Error in the next major PeopleSoft Software release. 4. TELEPHONE SUPPORT PeopleSoft provides telephone technical support concerning installation and use of the PeopleSoft Software. Except for designated holidays, standard telephone support hours are Monday through Friday, 6:00 a.m. to 6:30 p.m. Pacific Time. Telephone Support is available 24-hour, 7-days a week for in-production customers who need to resolve critical production problems outside of normal support hours. 5. ACCOUNT MANAGER PeopleSoft assigns an account manager to assist the on-going support relationship. A reasonable amount of account manager on-Site time is included in the annual Support Services fee. Prior to an account manager conducting an on-Site visit, such account manager shall obtain SMS's prior approval SMS will reimburse PeopleSoft for the reasonable travel and living expenses of the account manager for on-Site activity. 6. PS/FORUM a. PS/Forum on-line bulletin board system features postings by PeopleSoft and PeopleSoft Software users regarding technical and non-technical topics of interest. SMS shall access PS/Forum solely through SMS's CompuServe services account. At SMS's own expense, SMS shall acquire the CompuServe service and a license to use Lotus Notes. Page 31 of 51 32 b. All maintenance releases and program fixes to the PeopleSoft Software may be delivered to SMS through PS/Forum. All information specified in PS/Forum by PeopleSoft is confidential and proprietary to PeopleSoft and shall only be used in connection with SMS's use of the PeopleSoft Software and informational communications with other PS/Forum participants. PeopleSoft reserves the right to modify information posted to PS/Forum. PeopleSoft shall have the right to publish and distribute only through PS/Forum in all languages and in association with SMS's name any material or software programs provided by SMS to PS/Forum. SMS shall not use PS/Forum for advertising or public relations purposes and shall only submit information to PS/Forum which is owned by SMS or which SMS has third party permission to submit to PS/Forum for use by all other PS/Forum users. c. In the interest of diminishing exposure to software viruses, PeopleSoft tests and scans for software viruses all information entered by PeopleSoft prior to submission of information to PS/Forum. SMS shall also use a reliable virus detection system on any software or information posted to PS/Forum, utilize back-up procedures, monitor access to PS/Forum, promptly notify PeopleSoft of any virus detected within SMS's systems associated with PS/Forum and generally exercise a reasonable degree of caution when utilizing information from PS/Forum. PeopleSoft does not warrant that PS/Forum will operate without interruption or without errors. PeopleSoft reserves the right to modify or suspend PS/Forum service in connection with PeopleSoft's provision for Support Services. 7. EXCLUSIONS PeopleSoft shall have no obligation to support: a. Altered, damaged or substantially modified PeopleSoft Software; b. PeopleSoft Software that is not the then-current or Previous Sequential Release; c. Errors caused by SMS's negligence, hardware malfunction or other causes beyond the reasonable control of PeopleSoft; d. PeopleSoft Software installed in a hardware or operating environment not supported by PeopleSoft; and e. Third party software not licensed through PeopleSoft. 8. GENERAL All Updates provided to SMS are subject to the terms and conditions of the Agreement. PeopleSoft shall not be liable for any failure or delay in performance of the Support Services due to causes beyond its reasonable control. Any illegal or unenforceable provision shall be severed from these Terms and Conditions. SMS agrees that any information received pursuant to these Terms and Conditions shall be deemed subject to the non-disclosure obligations set forth in the Agreement. The Support Services Terms and Conditions states the entire agreement of PeopleSoft's provision of Support Services to SMS and may only be amended by a written amendment executed by both parties. 9. DEFINITIONS Unless otherwise defined herein, capitalized terms used herein shall have the same meaning as set forth in the Agreement and applicable Schedule. "Enhancement" means technical or functional additions to the PeopleSoft Software to improve software functionality and/or operations. Enhancements are delivered with new releases of the PeopleSoft Software. "Error" means a malfunction in the PeopleSoft Software which significantly degrades the use of the PeopleSoft Software. "Fix" means the repair or replacement of source or object or executable code versions of the PeopleSoft Software to remedy an Error. "Previous Sequential Release" means the release of PeopleSoft Software for use in a particular operating Page 32 of 51 33 environment. A Previous Sequential Release will be supported by PeopleSoft for a period of fifteen (15) months after release of the subsequent release. "Priority A" means an Error that: (1) renders the PeopleSoft Software inoperative; or (2) causes the PeopleSoft Software to fail catastrophically. "Priority B" means an Error that significantly degrades performance of the PeopleSoft Software or materially restricts SMS's use of the PeopleSoft Software. "Priority C" means an Error that causes only a minor impact of the use of the PeopleSoft Software. "Update" means all published revisions to the printed documentation and one (1) copy of the new release of the PeopleSoft Software which are not designated by PeopleSoft as new products for which it charges separately. "Workaround" means a change in the procedures followed or data supplied to avoid an Error without significantly impairing performance of the PeopleSoft Software. Page 33 of 51 34 EXHIBIT E The terms and conditions of the Systems Integrator Agreement shall apply to SMS's internal use license. Unless otherwise provided in the Systems Integrator Agreement, the terms and conditions of this Exhibit E shall apply. SOFTWARE END USER LICENSE AND SERVICES AGREEMENT This agreement ("Agreement") is made as of____________ , 1995 ("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. This Agreement replaces and supersedes any prior verbal or written understandings, communications, and representations. No purchase order or other ordering document 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. 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 PeopleSoft grants Licensee a perpetual, non-exclusive, nontransferable license to use the licensed number of copies of the Software, solely for internal data processing operations, on each Server at the Site up to the licensed number of workstations 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 a reasonable number of copies of the Software solely for technical support, training and sales support, including demonstrations, and archive or emergency back-up purposes and/or disaster recovery testing 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. 34 of 51 35 1.2 PeopleSoft shall provide Licensee with the licensed number of copies of the Software and Documentation as specified in the applicable Schedule. 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. 2. LICENSE EXCLUSIONS 2.1 Except as expressly authorized herein, Licensee shall not: a. Copy 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, facility management, or third party training; d. Disclose the results of Software performance benchmarks to any third party without PeopleSoft's prior written consent; e. Transfer the Software to a different Server platform without the prior written consent of PeopleSoft (such consent not unreasonably withheld) and payment of any additional fees which may be due; f. Transfer the Software to a different Site without prior written notice to PeopleSoft; g. Export the Software in violation of U.S. Department of Commerce export administration regulations; h. Invoke support libraries other than through documented API calls; and i. Use PeopleTools except in conjunction with the licensed PeopleSoft applications. 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. PeopleSoft represents that 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. Page 35 of 51 36 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 Software, replace or modify the Software so that it becomes noninfringing while giving equivalent performance. PeopleSoft shall have no liability to indemnify or defend Licensee if the alleged infringement is based on: (i) a modification of the Software by anyone other than PeopleSoft, or (ii) 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 (WHETHER IN CONTRACT OR TORT) 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 Page 36 of 51 37 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. 10. ON-SITE SUPPORT DAYS 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 Page 37 of 51 38 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. 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 as set forth in the applicable Schedule. "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 United States version 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. Page 38 of 51 39 EXHIBIT F The terms and conditions of the Systems Integrator Agreement shall apply to support services described in this Exhibit F. Unless otherwise provided in the Systems Integrator Agreement, the terms and conditions of this Exhibit E shall apply. SUPPORT SERVICES TERMS AND CONDITIONS TERMS AND CONDITIONS Software Support Services Terms and Conditions ("Support Services") are referenced in and incorporated into the License Agreement between PeopleSoft and Licensee. PeopleSoft reserves the right to modify the terms and conditions of Support Services on an annual basis to reflect current market conditions. 1. COVERAGE PeopleSoft provides Licensee with Support Services for the Software in consideration for Licensee's payment of the applicable fees to PeopleSoft. 2. SOFTWARE MAINTENANCE The following technical and functional improvements will be issued periodically by PeopleSoft to improve Software operations: a. Fixes to Errors; b. Updates; and c. Enhancements contained within new releases. 3. PRIORITY LEVEL OF ERRORS PeopleSoft shall reasonably determine the priority level of Error. PeopleSoft uses the following protocols: Priority A Errors: PeopleSoft promptly initiates the following procedures: (1) assign senior PeopleSoft specialists to correct the Error; (2) provide ongoing communication on the status of the corrections; and (3) immediately commence to provide a Workaround or a Fix. Priority B Errors: (1) PeopleSoft assigns a PeopleSoft specialist to commence correction of Error and (2) Provide escalation procedures as reasonably determined by PeopleSoft support staff. PeopleSoft exercises all commercially reasonable efforts to include the Fix for the Error in the next Software maintenance release. Priority C Errors: PeopleSoft may include the Fix for the Error in the next major Software release. 4. TELEPHONE SUPPORT PeopleSoft provides telephone technical support concerning installation and use of the Software. Except for designated holidays, standard telephone support hours are Monday through Friday, 6:00 a.m. to 6:30 p.m. Pacific Time. Telephone Support is available 24-hour, 7-days a week for in-production customers who need to resolve critical production problems outside of normal support hours. 5. ACCOUNT MANAGER PeopleSoft assigns an account manager to assist the on-going support relationship. A reasonable amount of account manager on-Site time is included in the annual Support Services fee. Licensee will reimburse PeopleSoft for the reasonable travel and living expenses of the account manager for on-Site activity. 6. PS/FORUM Page 39 of 51 40 a. PS/Forum on-line bulletin board system features postings by PeopleSoft and PeopleSoft Software users regarding technical and non-technical topics of interest. Licensee shall access PS/Forum solely through Licensee's CompuServe services account. At Licensee's own expense, Licensee shall acquire the CompuServe service and a license to use Lotus Notes. b. All maintenance releases and program fixes to the Software may be delivered to Licensee through PS/Forum. All information specified in PS/Forum by PeopleSoft is confidential and proprietary to PeopleSoft and shall only be used in connection with Licensee's use of the Software and informational communications with other PS/Forum participants. PeopleSoft reserves the right to modify information posted to PS/Forum. PeopleSoft shall have the right to publish and distribute only through PS/Forum in all languages and in association with Licensee's name any material or software programs provided by Licensee to PS/Forum. Licensee shall not use PS/Forum for advertising or public relations purposes and shall only submit information to PS/Forum which is owned by Licensee or which Licensee has third party permission to submit to PS/Forum for use by all other PS/Forum users. c. In the interest of diminishing exposure to software viruses, PeopleSoft tests and scans for software viruses all information entered by PeopleSoft prior to submission of information to PS/Forum. Licensee shall also use a reliable virus detection system on any software or information posted to PS/Forum, utilize back-up procedures, monitor access to PS/Forum, promptly notify PeopleSoft of any virus detected within Licensee's systems associated with PS/Forum and generally exercise a reasonable degree of caution when utilizing information from PS/Forum. PeopleSoft does not warrant that PS/Forum will operate without interruption or without errors. PeopleSoft reserves the right to modify or suspend PS/Forum service in connection with PeopleSoft's provision for Support Services. 7. FEES The first year of Support Services is included in the Software license fees, thereafter, in the event Licensee elects to continue to receive Support Services, Licensee shall pay PeopleSoft the then-current annual Support Services fee. Support Services are billed on an annual basis, payable in advance. Licensee shall be responsible for all taxes associated with Support Services, other than taxes based on PeopleSoft's income. Licensee's payment shall be due within thirty (30) days of receipt of the PeopleSoft invoice. Should Licensee elect not to renew Support Services and subsequently request Support Services, PeopleSoft shall reinstate Support Services only after Licensee pays PeopleSoft the annual then current fee plus all cumulative fees that would have been payable had Licensee not suspended Support Services. 8. TERM AND TERMINATION Unless a shorter term is agreed to in writing by both parties, Support Services shall be provided for one (1) year from the Agreement Effective Date and shall be extended each additional year unless terminated by either party. Each one (1) year term shall commence on the anniversary of the Agreement Effective Date. Either party may terminate the Support Services provisions at the end of the original term or at the end of any renewal term by giving the other party written notice at least ninety (90) days prior to the end of any term. In the event Licensee fails to make payment pursuant to the section titled "Fees", or in the event Licensee breaches the Support Services provisions and such breach has not been cured within thirty (30) days of written receipt of notice of breach, PeopleSoft may suspend or cancel Support Services. 9. EXCLUSIONS PeopleSoft shall have no obligation to support: a. Altered, damaged or substantially modified Software; b. Software that is not the then-current or Previous Sequential Release; c. Errors caused by Licensee's negligence, hardware malfunction or other causes beyond the reasonable control of PeopleSoft; d. Software installed in a hardware or operating environment not supported by PeopleSoft; and Page 40 of 51 41 e. Third party software not licensed through PeopleSoft. 10. GENERAL All Updates provided to Licensee are subject to the terms and conditions of the Agreement. PeopleSoft shall not be liable for any failure or delay in performance of the Support Services due to causes beyond its reasonable control. Any illegal or unenforceable provision shall be severed from these Terms and Conditions. Licensee agrees that any information received pursuant to these Terms and Conditions shall be deemed subject to the non-disclosure obligations set forth in the Agreement. The Support Services Terms and Conditions states the entire agreement of PeopleSoft's provision of Support Services to Licensee and may only be amended by a written amendment executed by both parties. 11. DEFINITIONS Unless otherwise defined herein, capitalized terms used herein shall have the same meaning as set forth in the Agreement and applicable Schedule. "Enhancement" means technical or functional additions to the Software to improve software functionality and/or operations. Enhancements are delivered with new releases of the Software. "Error" means a malfunction in the Software which significantly degrades the use of the Software. "Fix" means the repair or replacement of source or object or executable code versions of the Software to remedy an Error. "Previous Sequential Release" means the release of Software for use in a particular operating environment which has been replaced by a subsequent release of the Software in the same operating environment. A Previous Sequential Release will be supported by PeopleSoft for a period of fifteen (15) months after release of the subsequent release. "Priority A" means an Error that: (1) renders the Software inoperative; or (2) causes the Software to fail catastrophically. "Priority B" means an Error that significantly degrades performance of the Software or materially restricts Licensee's use of the Software. "Priority C" means an Error that causes only a minor impact of the use of the Software. "Update" means all published revisions to the printed documentation and one (1) copy of the new release of the Software which are not designated by PeopleSoft as new products for which it charges separately. "Workaround" means a change in the procedures followed or data supplied to avoid an Error without significantly impairing performance of the Software. Page 41 of 51 42 SMS - CONFIDENTIAL EXHIBIT - G SMS ALLEGRA CUSTOMERS AS REPORTED FROM 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. 43 SMS - CONFIDENTIAL EXHIBIT - G SMS ALLEGRA CUSTOMERS AS REPORTED FROM THE [*] HEALTHCARE ORGANIZATION CITY ST ROSS-HR - -------------------------------------------------------------------------------- *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. 44 SMS - CONFIDENTIAL EXHIBIT - G SMS INVISION ICO CUSTOMERS AS REPORTED FROM THE [*] CORPORATION SUBSIDIARY/ENTITY CITY STATE GL HR - -------------------------------------------------------------------------------- *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. 45 SMS - CONFIDENTIAL EXHIBIT - G SMS INVISION ICO CUSTOMERS AS REPORTED FROM THE [*] CORPORATION SUBSIDIARY/ENTITY CITY STATE GL HR - -------------------------------------------------------------------------------- *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. 46 SMS - CONFIDENTIAL EXHIBIT - G SMS INVISION ICO CUSTOMERS AS REPORTED FROM THE [*] CORPORATION SUBSIDIARY/ENTITY CITY STATE GL HR - -------------------------------------------------------------------------------- *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. 47 SMS - CONFIDENTIAL EXHIBIT - G SMS INVISION ICO CUSTOMERS AS REPORTED FROM THE [*] CORPORATION SUBSIDIARY/ENTITY CITY STATE GL HR - -------------------------------------------------------------------------------- *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. 48 SMS - CONFIDENTIAL EXHIBIT - G SMS INVISION ICO CUSTOMERS AS REPORTED FROM THE [*] CORPORATION SUBSIDIARY/ENTITY CITY STATE GL HR - -------------------------------------------------------------------------------- *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. 49 SMS - CONFIDENTIAL EXHIBIT - G SMS INVISION ICO CUSTOMERS AS REPORTED FROM THE [*] CORPORATION SUBSIDIARY/ENTITY CITY STATE GL HR - -------------------------------------------------------------------------------- *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. 50 SMS - CONFIDENTIAL EXHIBIT - G SMS INVISION ICO CUSTOMERS AS REPORTED FROM THE [*] CORPORATION SUBSIDIARY/ENTITY CITY STATE GL HR - -------------------------------------------------------------------------------- *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. 51 SMS - CONFIDENTIAL EXHIBIT - G SMS MEDSERIES4 CUSTOMERS AS REPORTED FROM THE [*] HEALTHCARE ORGANIZATION CITY ST GL PP/HR - -------------------------------------------------------------------------------- *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. 52 SMS - CONFIDENTIAL EXHIBIT - G SMS MEDSERIES4 CUSTOMERS AS REPORTED FROM THE [*] HEALTHCARE ORGANIZATION CITY ST GL PP/HR - -------------------------------------------------------------------------------- *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. 53 SMS - CONFIDENTIAL EXHIBIT - G SMS MEDSERIES4 CUSTOMERS AS REPORTED FROM THE [*] HEALTHCARE ORGANIZATION CITY ST GL PP/HR - -------------------------------------------------------------------------------- *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. 54 SMS - CONFIDENTIAL EXHIBIT - G SMS MEDSERIES4 CUSTOMERS AS REPORTED FROM THE [*] HEALTHCARE ORGANIZATION CITY ST GL PP/HR - -------------------------------------------------------------------------------- *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. 55 EXHIBIT H PEOPLESOFT'S HARDWARE AND SOFTWARE REQUIREMENTS DOCUMENT Pages 43 of 51 56 EXHIBIT I LANGUAGE TO BE INCLUDED IN SMS-END USER CONTRACTS The following provisions are currently included in SMS' end user license agreements. SMS will require End User agreements to include provisions substantially as reproduced below. SMS agrees that no modification of such provisions shall cause (i) PeopleSoft Software to be treated differently than any SMS Product in such End User license agreement, or (ii) the PeopleSoft Software to have less protection than as stated herein. __. CONFIDENTIALITY. Each party shall retain in strict confidence the terms and conditions of this Agreement and all information and data relating to the other party's business, development plans, programs, documentation, techniques, trade secrets, systems, and know-how, and shall not, unless otherwise required by law, disclose such information to any third party without the other's prior written consent; provided that SMS shall have the right to compile and distribute statistical analyses and reports utilizing aggregated data derived from information and data obtained from Customer, other SMS customers, and other sources. Such reports and analyses will not identify Customer or any physician or patient of Customer. Customer shall have the right to disclose SMS information to Customer's employees, consultants, and agents on a need-to-know basis, provided that all such consultants and agents have executed a confidentiality agreement that is acceptable to SMS prior to such disclosure. Upon SMS' request, Customer shall inform SMS in writing of the number and location of the original and all copies of each of the Deliverables. The following provision applies in ICO deals: __. GRANT OF PERPETUAL LICENSE. SMS grants to Customer a perpetual license to use one (1) copy of the Applications and the Deliverables to be operated at the Facility by Customer's employees for the sole purpose of processing data of the Facility. Customer shall also have the right to make Modifications and Adaptations and to use them solely for the Facility. Customer agrees that this Agreement shall bind all users of the System. Customer may make one (1) copy of the Applications and OAS to be used solely for emergency purposes at the Facility. Customer shall not transfer its license nor sublicense the Deliverables. Customer shall not disassemble, decompile, or otherwise reverse-engineer the Applications. OAS or other software provided by SMS under this Agreement. SMS or its suppliers shall have the exclusive title to, copyright and trade secret right in, and the right to grant additional licenses to, the Applications and Deliverables. If SMS incorporates the programs of any other suppliers in the Applications, those suppliers shall be entitled to the benefit of the obligations incurred by Customer in this Section and in the Confidentiality Section. The following provision applies in non-ICO deals: __. REMOTE COMPUTING SERVICES. SMS shall process the Facility's data on the System as selected by Customer in accordance with the Documentation. Customer shall have the right to make Adaptations for use solely by the Facility. Customer shall not transfer its rights hereunder nor sublicense the Deliverables. 57 SMS or its suppliers shall have the exclusive title to, copyright and trade secret right in, and the right to grant additional licenses to, the Lan-Based Applications and related Deliverables. If SMS incorporates the programs of any other suppliers in the Applications, those suppliers shall be entitled to the benefit of the obligations incurred by Customer in this Section and in the Confidentiality Section. 58 EXHIBIT J SMS SERVICE PLUS PROGRAM The provisions of this Exhibit may be modified by SMS as any time during the Term. SMS will provide a program of support for the SMS Applications and Custom Programming listed in Exhibit A under the following terms and conditions. This Support Program shall become effective on the date of this Agreement and shall remain in force for an Initial Term of ______________ (__) months from the Delivery Date of the first Application. This Program shall continue in force thereafter until terminated by Customer or SMS upon six (6) months' written notice. 1. SMS SUPPORT RESPONSIBILITIES: (a) Correct, at no additional charge, any failure of the Applications or SMS' architectural system to perform substantially in accordance with the Documentation as specified in the warranty section of this Agreement, and to provide remote telephone warranty support. (b) Provide Customer with a Monthly Allowance of ______________ (__) hours of remote telephone non-warranty support at no additional charge. The Monthly Allowance may be used for assistance and advice on the operation and functions of the Applications, for help with diagnostics and other problem determination procedures, and for advice and assistance in problem situations. Any unused portion of this Monthly Allowance cannot be carried forward to subsequent months. (c) Initiate work on urgent issues within one hour of Customer's call for assistance to the Customer Support Center ("CSC"), 24 hours per day and 7 days per week. Generally urgent issues would be those involving substantial Application failure or those which, in Customer's reasonable judgment, are critical to Customer's overall operation. SMS will initiate work on non-urgent issues, including the correction of non-urgent software problems, during Customer's normal business hours from SMS' Corporate offices or the local SMS office, either on a remote basis or on-site, as is most effective and efficient. (d) Provide a record in SMS' Events Tracking System ("EVTS") of telephone requests received at the CSC from an employee or other representative of Customer including a description of the request, the time spent and the actions performed in satisfying the request, and the resolution of the request. Customer may, at its option, access this information to review the support effort being performed at Customer's request and the status of work in process. (e) Provide Customer, on a regular basis, Updates and Releases to the standard SMS Application functions Customer has obtained and Documentation of these items at no additional software charge. Updates are packages of software corrections as well as revisions addressing common functional and performance issues. Releases are a redistribution of licensed SMS software containing an aggregation of Updates, and functional, operational and/or performance improvements. (f) Provide Customer, when made generally available by SMS, with new Versions of previously delivered Application functions of UNITY FMS, INVISION RCO, SIGNATURE RCO Applications or Applications licensed under a SMS Term License Agreement for no additional software fee during the term of this Support Program. New Versions of previously delivered Application functions of SMS Applications licensed under a SMS Perpetual License Agreement will be charged at SMS' then-current rates. A Version is a delivery of new features packages as part of existing and/or new Applications. 59 (g) Meet annually with Customer's management staff to (i) jointly develop an annual support schedule, (ii) evaluate support performance, and (iii) review Customer's utilization of the System. The annual support schedule will state which support services will be provided at no additional charge and which will be provided for an additional fee. (h) Provide Customer with all generally applicable federally-mandated regulatory changes and state-mandated billing changes. Federally-mandated programming changes to the Payroll and Accounts Payable Applications and to the Case Mix Groupers/Schemes will be provided at no additional charge. SMS' charges, if any, for other generally applicable federally-mandated programming changes or state-mandated billing changes are contingent on the scope of such changes and are set on a multi-client/fair-share basis for programming. Changes will be provided to Customer when made generally available to customers of this System. (i) Provide Customer with an allowance of thirty-two (32) hours of SMS Education during the first twelve (12) months of the Initial Term. Thereafter, the Annual Education Allowance will be as provided in the annual support schedule developed by the parties. 2. CUSTOMER SUPPORT RESPONSIBILITIES: (a) Ensure the appropriate Customer personnel have been trained in the operation, support, and management of the SMS System. (b) Appoint an SMS System Support Coordinator, a LAN Administrator, establish a central Help Desk, and, if applicable, a Departmental Help Desk for the effective support and operation of the SMS Applications and to ensure that Customer Responsibilities are performed. (c) During the term of this Support Program, provide SMS with both on-site access to each Facility and remote access to the System through the SMS approved network services (minimum 14,400 baud) obtained by Customer to enable SMS to provide warranty assistance both on-site and remotely. Time spent in remote telephone support activities will be calculated in minimum time increments of one-half (1/2) hour. (d) Maintain up-to-date SMS Documentation at the Facility, and, for the SMS System located at the Facility, to be solely responsible for maintaining all necessary backup and recovery procedures. (e) Complete proper problem determination procedures, as specified in the Documentation, before contacting SMS and then perform problem definition activities and remedial actions, as reasonably requested by SMS. (f) Implement all Updates within sixty (60) calendar days and all Releases within six (6) months, unless a delay is mutually agreed upon by the parties. (g) Remain on the latest Release of either the then-current Version or next-to-current Version of the SMS Applications covered by Customer's current Agreement and made available by SMS. (h) Obtain all additional equipment, operating system software, third-party software, and professional services required to stay current with third party changes, and changes made by SMS in response to federal and state regulatory change. 60 (i) Obtain all additional equipment, operating system software, third-party software, and professional services (i) relating to Updates and Releases provided hereunder, (ii) relating to Custom Programming; and (iii) relating to any Versions and optional net new function. (j) Remain on the latest Release and Version of all third-party software as designated by SMS and obtain support for all third-party software from the respective vendor. 3. MISCELLANEOUS. If the parties objectively determine a problem is not an error in the Applications, OAS, or Documentation, or if Customer elects not to perform the Customer's Responsibilities, any support efforts made by SMS may result in additional charges which shall be pursuant to SMS' then-current rates and terms. Telecommunication services line charges, charges for remote telephone support in excess of Customer's Monthly Allowance, travel and other expenses associated with support provided by SMS shall be paid by Customer pursuant to SMS' then-current rates and terms. This program shall supersede any other support agreement between SMS and Customer relating to the Applications listed in Exhibit A. 61 EXHIBIT K MONTHLY REPORT FORM SMS shall, no later than fifteen (15) days following the end of each quarter, inform PeopleSoft of the delivery of any PeopleSoft Software sublicensed by SMS and shall provide to PeopleSoft a SMS quarterly report, in the form shown below, containing sufficient information to allow PeopleSoft to invoice SMS for such licenses. For the purposes of this Agreement, the quarters shall end on the following dates: February 28 (or February 29, if applicable) May 31 August 31 November 30 Information required for each End User that licensed PeopleSoft Software from SMS: Name: Address: PeopleSoft Software licensed: Royalty due to PeopleSoft: Type of SMS End User: (Current Financials ICO User, Current Financials Non-ICO User, New Financials ICO User, New Financials Non-ICO User, etc.) If new SMS End User, specify SMS's Core Application licensed simultaneous with PeopleSoft Software: Exhibit G Update: Specify all the entities that have executed a license agreement with SMS for any and all SMS's Core Applications during the reporting period. Page 46 of 51 62 EXHIBIT L 1. SMS End Users SMS understands and agrees that during the nine (9) month period following the Effective Date, PeopleSoft and its then-current distributors, oems, vars and other channel partners have the exclusive marketing, distribution and licensing rights for the PeopleSoft Software to the SMS End Users specified below: [ * ] 2. Prospects SMS understands and agrees that during the twelve (12) month period following the Effective Date, PeopleSoft and its then-current distributors, oems, vars and other channel partners have the exclusive marketing, distribution and licensing rights for the prospects specified below and SMS shall not market or distribute the PeopleSoft Software to such prospects during such twelve month period. [ * ] 3. SMS End User and Current PeopleSoft Customer SMS understands and agrees the entities specified below are current PeopleSoft customers and during Term of this Agreement, including all subsequent renewals, PeopleSoft and its then-current distributors, oems, vars and other channel partners may market, distribute and license the PeopleSoft Software to such entities. [ * ] Page 47 of 51 * 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. 63 [ * ] Page 48 of 51 * 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. 64 EXHIBIT M SUMMARY OF SMS TRAVEL AND LIVING POLICIES The following is a summary of the principal provisions of SMS' present policy for employee reimbursement for United States travel and living expenses. SMS passes these charges through to Customer. 1. Commercial Air Fare. Coach class, except business class is reimbursable on coast-to-coast flights if it is not more than twenty percent (20%) more expensive than coach class. 2. Car Rental. Compact car (unless the number of people being transported requires a larger car) from a car rental firm that provides SMS special reduced rates. 3. Use of Personal Automobile. At a rate of $.29 per mile plus tolls for the United States, except Puerto Rico which is reimbursed at the rate of $.32 per mile plus tolls. 4. Other Commercial Travel. Coach class for trains and buses. Airport vans are to be used in preference to taxi cabs for travel to and from airports where practical. 5. Parking. The maximum amount which is reimbursable for parking at any airport or train station is the standard per-day rate for remote parking. 6. Lodging. Lowest-priced, satisfactory accommodation. The use of hotels which provide SMS special reduced rates is encouraged. 7. Meals. An allowance for breakfast and dinner only Monday through Friday and additionally for lunch on weekends. The rates for these allowances are as follows:
New York City Vicinity, Puerto Rico, Alaska, All Other Meal and Hawaii Locations Breakfast $ 6.00 $ 6.00 Lunch $ 5.00 $ 5.00 Dinner $21.00 $16.00
Receipts are required for commercial travel, car rental, parking, and lodging. Where SMS employees visit more than one client on the same trip, the expenses incurred are apportioned in relation to time spent with each client. SMS' policy for employee reimbursement may be changed by SMS from time to time to reflect changes in economic and business factors. 65 EXHIBIT N SMS MARKS TO BE PROVIDED BY SMS AT A LATER DATE (WITHIN THIRTY DAYS OF THE EFFECTIVE DATE) Page 50 of 51 66 EXHIBIT O SUBSTANTIAL SELLING EFFORT Date: [On applicable party's letterhead] Send to: PeopleSoft, Inc. or SMS (as appropriate) Attn: Regional General Manager or SMS contact (as appropriate) ALL INFORMATION MUST BE COMPLETED AND SIGNATURE REQUIRED BY EACH PARTY'S AUTHORIZED REPRESENTATIVE BEFORE ELIGIBILITY FOR CREDIT OF ROYALTY List the Substantial Selling Effort provided by PeopleSoft or SMS (as appropriate) to qualify for royalty credit under the Agreement (list all significant details including end user customer name, dates and locations of sales presentations, demonstrations, submittal of RFP Responses, etc.) - ------------------------------ SMS - ------------------------------ PeopleSoft This form when executed by the parties authorized representative certifies that PeopleSoft or SMS (as appropriate) provided the above Substantial Selling Effort and this license is authorized and qualifies for royalty credit by PeopleSoft to SMS as set forth in Section 5 of Exhibit B to the Agreement. Agreed & Acknowledged: PEOPLESOFT, INC. - ------------------------------------- Licensee - ------------------------------------- ------------------------------------- Authorized signature of Sales Authorized signature of Sales Management Management - ------------------------------------- ------------------------------------- Printed name and title Printed name and title Page 51 of 51 -----END PRIVACY-ENHANCED MESSAGE-----