Exhibit 10.18
ALLIANCE AGREEMENT
This Vsource/IBM Alliance Agreement (the "Agreement") is entered into this 19th
day of September, 2000, by Vsource, Inc. ("Vsource"), and International Business
Machines Corporation ("IBM"). Vsource and IBM shall be referred to in the
singular as a "Party" and collectively as the "Parties." The geographic scope
of this Agreement is the United States; however, both Parties may wish to expand
it at a later date.
ATTACHMENTS
-----------
- Attachment A. IBM Customer Agreement
- Attachment B. IBM Customer Agreement Attachment for Subcontracting
The above attachments are part of this Agreement, and each is incorporated
herein by reference.
If there is a conflict among the terms in the various documents, those of an
Attachment shall prevail over those of this Agreement. If there is a conflict
between the Attachments themselves, those of Attachment B shall prevail of those
of the others.
1. DEFINITIONS
A. "Combined Offering" means those products and services of Vsource and IBM
that will be mutually agreed to be provided by the Parties to the Relevant
Client Set.
B. "Information Technology (IT) & Systems Integration (SI) Provider" means a
provider of hardware, software and/or services that enable electronic
business, as well as hosting services, business process outsourcing
services, and other information technology and systems integration
services. (Network communications solutions are specifically excluded from
this definition.)
C. "Program Office" means a team composed of the members representing each
Party, and with certain responsibilities, all as described in Section 4
below.
D. "Relevant Client Set" refers to buyer and suppliers of products and
services who may benefit from offerings of Vsource and IBM.
E. "VSN" (Virtual Source Network) is Vsource's e-Procurement application which
is provided to the Relevant Client Set.
1
2. INTRODUCTION
Vsource is a provider of business to business (B2B) e-procurement solutions to
both buyers and suppliers in a variety of industries. IBM is an IT & SI
provider to many major industries.
Vsource will provide e-procurement solutions, focusing on buyers and purchasing
professionals.
IBM intends to maximize sales of services, hardware and software through
engagements with clients and strategic relationships. A key principle of IBM's
strategy is to market the successes of existing engagements to facilitate the
sale of additional engagements. Another key principle of IBM's strategy is to
leverage its experience as an IT provider and systems integrator to build
relationships with clients which will lead to long-term relationships and
multiple engagements.
Vsource and IBM agree that a mutually beneficial relationship, the terms of
which are documented below, shall be implemented in such a way as to help
support each company's independent objectives.
3. RELATIONSHIP OF THE PARTIES
A. Based on the mutually agreed upon objectives, the Parties have identified
and will pursue a relationship that includes, but is not limited to, the
following three key components, and as further defined in section 5:
- Vsource will recommend IBM as a preferred IT & SI Provider to the
Relevant Client Set;
- IBM will assist Vsource to close new business, as mutually agreed upon
by the Parties; and,
- Vsource and IBM will establish a marketing agreement to focus on a
Combined Offering as further described in paragraph 5K.
Nothing herein is intended to preclude or restrict Vsource from utilizing IBM as
a provider of e-procurement solutions, to designate IBM as a Provider of choice
with respect to e-procurement solutions, or, to recommend IBM as a preferred IT
& SI Provider with respect to e-procurement solutions, should the Parties agree.
This is a non-exclusive agreement. The Parties may enter into similar
agreements with other companies.
B. When Vsource purchases services from IBM, the terms ad conditions of the
IBM Customer Agreement, as set forth in Attachment A, and/or, as
applicable, IBM Customer Agreement Attachment for Subcontracting, as set
forth in Attachment B, will apply. To the extent that Vsource wishes to
enter into an agreement for hosting services, business process outsourcing
services, or other related services, the Parties will negotiate in good
faith to establish the applicable agreement for such services.
2
C. As Vsource and IBM develop Statements of Work or other transaction
documents (hereafter, collectively referred to as "SOW") for the work to
performed under this Agreement, the Parties will include in such SOWs,
periodic checkpoints at which the Parties will meet to evaluate the overall
cost effectiveness of the work performed to date, the levels of cost
reduction achieved in the implementation of the Vsource solution, and the
appropriateness and effectiveness of each Party's staffing levels for the
applicable SOW.
D. While the relationship contemplated by this Agreement is intended to be
beneficial to both Parties, this Agreement is not a guarantee of the
marketing, financial or other success of either Party.
4. GOVERNANCE
During and/or following the provision of initial consulting services by IBM,
Vsource may establish a Program Office for work to be performed hereunder. The
governance of such Program Office will be controlled by the terms and conditions
of a Program Office Agreement entered into at a future date.
5. KEY COMPONENTS
A. Vsource clients will require IT and SI capabilities and services needed to
support both the implementation of Vsource offerings and their on-going
business operations (e.g., procurement, business processes, deployment,
etc.), including but not limited to:
(1) Project management for VSN pilot implementation
(2) Business process analysis and transformation
(3) IT infrastructure and management
(4) Application project management
(5) Systems integration
(6) Education and learning
(7) Other services
B. To help facilitate its growth in the marketplace, Vsource agrees to name
IBM as its IT and SI "Provider of Choice" for its clients. For purposes of
this Agreement, "Provider of Choice" shall mean that Vsource will recommend
IBM in the Relevant Client Set as the preferred provider of services
referenced in this section.
3
C. IBM will develop a services practice within IBM Global Services to provide
both sales and services delivery support for the pilot and implementation
of VSN. Within three weeks of signing this Agreement, IBM will assign a
core team to this practice and develop a business plan to develop this
practice to meet the needs of Vsource and its clients.
D. Beginning January, 2001, and on a periodic basis thereafter, IBM will
evaluate the financial return of this practice. If in IBM's opinion,
sufficient business returns do not appear to exist, IBM may terminate this
practice.
E. IBM will provide its project management services for VSN Pilot
Implementation to Vsource's clients under contract with Vsource. To
preserve constant market pricing, IBM will discount its Pilot services to
Vsource. All other services will be contracted directly with Vsource's
clients.
F. Vsource will make available to IBM its prospect list, including relevant
information about the nature of the specific opportunities, probability to
close the sale, and the expected close date. This information will be
provided to IBM for the sole purpose of scheduling resource deployment.
This information will only be shared within IBM with those individuals
assigned to the IBM-Vsource Alliance and who have a need to know this
information for the stated purpose.
G. IBM is free to pursue follow on work with the Vsource clients for whom IBM
has performed initial services through its alliance with Vsource. Such
follow on work will be offered pursuant to the terms and conditions of this
Agreement and its Attachments, as updated from time to time, or upon
separate agreement with the client.
H. Vsource will be responsible for providing the education necessary to enable
IBM employees to perform the integration and implementation services
required by Vsource.
I. If IBM is involved in closing new business for Vsource, IBM will receive an
ongoing revenue payment equal to 18% of the transaction fee paid to Vsource
by the client. This payment will be made if IBM is involved in one or more
of the following sales activities:
- Refer a qualified company to Vsource
- Participate in sales calls
- Assist in closing the business
The revenue payment will be made to IBM upon receipt of the client payment. IBM
and Vsource will mutually determine for which clients IBM participated in one or
more of the above sales activities.
4
J. Notwithstanding the foregoing, nothing contained in this Agreement shall
preclude Vsource from working with any Client in the Relevant Client Set if
such Client, following Vsource's recommendation of IBM as set forth herein,
chooses a service provider other than IBM to provide IT and SI services for
such Client's implementation of the Vsource solution.
K. The Parties agree that there is synergy between Vsource, IBM, and the
Relevant Client Set. The Parties agree to evaluate the opportunity to
establish a mutually agreed to marketing agreement that will focus on a
Combined Offering to the Relevant Client Set. The marketing agreement will
enable both parties to further define the go to market strategy for the
Combined Offering.
L. Within thirty days of the execution of this Agreement, IBM will work with
Vsource to develop a preferred pricing agreement for Vsource. This
Agreement will apply to IBM products and services used by Vsource for its
IT infrastructure. The preferred pricing developed will not apply to IBM
products and services acquired by Vsource for resale to its clients.
6. PUBLICITY
All public announcements by either Party related to this Agreement shall be
subject to the prior written approval of the other Party. Neither Party shall
identify, either expressly or by implication, this relationship, the other Party
or the other Party's corporate affiliates or use any of the other Party's
affiliates' names, trademarks, trade names, services marks, or other proprietary
marks in any advertising, press releases, publicity matters or other promotional
materials without the other Party's prior written approval. The foregoing shall
not restrict either Party from disclosures required by law or governmental
agency, provided the Party that receives such a request gives the other Party
prompt notice to allow the other Party a reasonable opportunity to obtain a
protective order, if required.
7. INTELLECTUAL PROPERTY RIGHTS
The ownership, license and other proprietary rights regarding any intellectual
property developed in association with performance under this Agreement will be
governed by and subject to the terms and conditions of the IBM Customer
Agreement and/or, as applicable, the IBM Customer Agreement Attachment for
Subcontracting, and any applicable SOWs.
8. TERM
Once signed by both Parties, this Agreement will remain in effect unless or
until terminated by either Party pursuant to the provisions of Section 9 below.
5
9. TERMINATION
Either Party may terminate this Agreement upon a material breach of the other
Party to perform its obligations hereunder as follows: the terminating Party
shall give the other Party written notice of the basis for termination and the
other Party shall have thirty (30) days in which to cure the default or make
substantial progress toward curing the default. If the default has not been
cured within the 30-day period but substantial progress toward a cure has been
made, the defaulting Party shall provide the terminating Party, during the
30-day period, with a detailed plan that establishes the schedule and program
for curing the default within the succeeding 30 days. If the default is not
cured within the 30-day period, or if the defaulting Party fails to make
substantial progress toward a cure or to provide a detailed plan for completion
of the effort or fails to cure the default within the succeeding 30-day period
following the delivery of such detailed plan, the Agreement will terminate
effective upon the lapse of the applicable 30-day period.
10. THIRD PARTIES
Either Party may subcontract to a third party, all or a portion of the services
that it provides under this Agreement. The Parties agree to reasonably
cooperate so as to obtain optimum subcontractor performance under this
Agreement. To the extent that said subcontracting materially impacts or
presents a reasonably certain risk of materially impacting a Party's ability to
achieve its individual objectives, approval of the other Party will be required.
Each Party agrees to ensure that each of its subcontractors executes a
non-disclosure agreement, with terms at least as restrictive as those contained
in the Agreement For Exchange of Confidential Information executed by the
Parties ("AECI") regarding any Confidential Information, as that term is defined
within the AECI, disclosed to such subcontractor under this Agreement.
11. LIMITATION OF LIABILITY
Each Party's entire liability for any and all damages resulting from any claim
in any way related to the subject matter of this Agreement shall be governed by
the terms and conditions of the IBM Customer Agreement and/or, as applicable,
the ISA, between the Parties.
12. CONFIDENTIALITY
Any disclosures of Confidential Information, as that term is defined within the
AECI, will be governed by the terms of the AECI. All information exchanged
between the Parties is non-confidential, unless it is disclosed pursuant to the
terms of the AECI.
6
13. FREEDOM OF ACTION
The Parties shall perform their obligations as independent contractors and
nothing herein shall be construed as creating any other relationship between the
Parties. Each Party shall be solely responsible for the withholding or payment
of all applicable federal, state and local income taxes, social security taxes
and other payroll taxes with respect to its employees, as well as any taxes,
contributions or other obligations imposed by applicable state unemployment or
workers' compensation acts. Each Party has sole authority and responsibility to
hire, terminate and otherwise control its employees.
This Agreement shall not prevent either Party or its subsidiaries from
marketing, acquiring or developing solutions, products or services which are
competitive to those of the other Party, except that any such solutions,
products or services may not violate a Party's obligations under the AECI.
14. NOTICES
Notices given by one Party to the other under this Agreement shall be in writing
and shall be delivered via electronic means as agreed upon by the Parties, or
personally, sent by express delivery service, certified mail in first class U.S.
Mail postage prepaid and addressed to the respective Parties as follows:
TO VSOURCE: TO IBM:
Xxxxxx XxXxxxxxx Xxxx Xxxxxx
Vsource, Inc. IBM Corporation
0000 Xxxxxxx Xxxxxx, Xxxxx 000 000 Xxxxxx Xxxxxx
Xxxxxxx, XX 00000 Xxx Xxxxxxxxx, XX 00000
WITH COPY TO:
IBM Corporation
Office of Regional Counsel
Mail Stop: SF19-F-2
000 Xxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000-0000
or to such other address as either Party shall designate by proper notice.
Notices will be deemed given as of the earlier of (a) the date of the actual
receipt, (b) the next business day when notice is sent via express mail or
personal delivery, or (c) three (3) days after the mailing in the case of first
class or certified U.S. Mail.
15. COMPLIANCE WITH LAWS AND GOVERNING LAW
Each Party shall comply with all applicable federal, state and local laws, rules
and regulations applicable to its performance under this Agreement. The laws of
7
the state of California govern this Agreement. Both Parties waive a trial by
jury. Both Parties agree that under this Agreement, neither Party will bring a
legal action more than two (2) years after the cause of action arose unless
otherwise provided by local law without the possibility of contractual waiver or
limitation.
Nothing in this Agreement affects any statutory rights of consumers that cannot
be waived or limited by contract.
16. COPIES OF AGREEMENT
Once signed, any reproduction of this Agreement made by reliable means (e.g.,
photocopy or facsimile), is considered an original.
17. NO THIRD PARTY BENEFICIARIES
This Agreement is solely for the benefit of the Parties signing below. There
are no third party beneficiaries to this Agreement.
18. DISPUTE RESOLUTION AND ATTORNEY'S FEES
In the event of an alleged breach of or other dispute regarding performance
under this Agreement, and any Attachments hereto, by either Party, and as a
prerequisite to the exercise of any other remedies available under the law, the
Parties agree to engage in a good faith effort negotiation in an attempt to
resolve the dispute or alleged breach. In the event that this initial
negotiation is not successful within fifteen business days, the Parties agree to
escalate the dispute or alleged breach to the executive level of each Party, and
the senior executives of each Party agree to negotiate in good faith in an
attempt to arrive at a mutual resolution of such dispute or alleged breach. If
within thirty (30) days following such escalation, no resolution is achieved,
the Parties may then pursue their respective remedies pursuant to applicable
law.
19. ENTIRE AGREEMENT
The terms contained in this Agreement and the Attachments hereto constitute the
entire agreement between the Parties with respect to the subject matter
addressed herein, superseding all other prior or contemporaneous understandings,
proposals and other communications, oral or written. This Agreement may only be
amended or modified by a writing referencing this Agreement and signed by both
Parties.
8
IN WITNESS WHEREOF, the Parties have executed this Agreement by their duly
authorized representatives in one or more counterparts, each of which shall
constitute an original, effective as of the date set forth above.
Agreed to: Agreed to:
VSOURCE, INC. INTERNATIONAL BUSINESS MACHINES
CORPORATION
By: /s/ By: /s/
----------------------------- ---------------------------------------
Name: Xxxxxx X. XxXxxxxxx Name: Xxxxxx X. Xxxxxx Xx.
--------------------------- --------------------------------------
Title: Chief Executive Officer Title: Vice President
-------------------------- -------------------------------------
Date: September 19, 2000 Date: September 20, 2000
--------------------------- --------------------------------------
9
