Exhibit 10.12
CONTRACT FOR NETWORK MANAGER SERVICES
THIS CONTRACT is between the Information Network of Arkansas, by and
through the Information Network of Arkansas Board, hereinafter referred to as
the "INA", a public instrumentality carrying out an essential government
function, and the Arkansas Information Consortium, Inc., a for-profit
Arkansas corporation, without seal, hereinafter referred to as AIC.
The INA issued RFP 97-0140 seeking proposals for a network manager,
dated August 5, 1996. The request is hereinafter referred to as the RFP.
AIC submitted a proposal dated May 9, 1997, in response to the RFP, and
such proposal was determined by the INA to meet the requirements of the RFP.
The proposal is hereinafter referred to as the AIC Proposal.
The INA enters into a contract with AIC for AIC to serve as network
manager to establish, develop, operate, maintain and expand the information
network, as defined in the RFP and this contract, for increased electronic
access to public and other useful and relevant information as contemplated by
the grant of authority by the Arkansas General Assembly to the Information
Network of Arkansas.
NOW THEREFORE, the parties agree as follows:
1. PURPOSE OF INFORMATION NETWORK.
The purpose of the information network and this Contract may be
summarized as follows:
a. To create and provide a significant and aggressively promoted
public service to the citizens and businesses of Arkansas by (1) increasing
accessibility to public information and other useful information and services
through electronic means, and (2) promoting economic development by
increasing ease of access to public information and other useful information,
and by promoting the sharing of that information.
b. To provide such public service without increasing the tax
burden on the citizens of Arkansas, through utilization of private capital
and management.
2. HARDWARE AND SOFTWARE AGREEMENTS.
AIC will provide hardware, and provide or develop software as enumerated
in the AIC Proposal, and such other hardware and software as may be necessary
to make the information network operational.
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All INA trademarks, tradenames, logos and other INA identifiers,
Internet uniform resource locators, Internet addresses and e-mail addresses
obtained or developed pursuant to this Contract shall be the property of INA.
3. CONNECTIONS BETWEEN INFORMATION NETWORK AND STATE AGENCIES.
Costs associated with and maintenance of communication links from state
facilities to AIC facilities for information network purposes, including but
not limited to leased circuits from telephone or cable companies, shall be
paid as expenses from the information network revenue account.
4. INFORMATION NETWORK SERVICE.
AIC on behalf of the INA shall negotiate with and obtain written
contracts for each separate data-providing entity (hereinafter, DPE) from
which electronic access is desired.
All subscribers will be required to execute a contract for services.
All contracts with subscribers and agencies shall be subject to approval
and continuing monitoring of the INA.
5. REGULATION OF RATES BY THE INA.
All rates and fees charged to information network users shall be subject
to the final approval of the INA. The INA may on its own motion review and
regulate any and all rates and fees for fairness, reasonableness and
appropriateness. The AIC may at any time recommend changes in rates and fees
to the INA.
The maximum initial annual subscription fee that mainframe bulk and
interactive subscribers and PC/modem interactive subscribers shall pay is
$50.00.
In the event that costs which AIC pays state agencies for data or data
access are reduced or increased as a result of legislation or state
regulatory administrative changes, such reductions or increases shall be
passed on directly to subscribers and users of the information network unless
otherwise approved in writing by the INA.
6. NETWORK MANAGER REMUNERATION.
General Provisions: The initial cash investment of AIC shall be $300,000.
AIC shall establish one or more accounts in Arkansas financial institutions
which are federally insured, for deposit of revenue from information network
operations and shall furnish the INA with the names of the institutions, the
account numbers and the names of those persons having signatory authority. Any
funds deemed
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by AIC to be "idle" or "excess" funds (defined as those not required to meet
immediate needs) may be deposited at AIC's discretion in money market
accounts, treasury bills, or other suitable investment vehicles until needed.
Within the framework of the rate-setting procedure addressed in section
5 above, the disbursement of all funds received by the information network as
a result of the operation of this Contract will be as follows:
a. For information network operating expenses, including
disbursement to DPEs for electronic and administrative expenses.
b. 5% of the difference between gross network revenues and the
amount payable to state agencies.
c. AIC will be entitled to retain any sums remaining after payment
of the amounts specified in paragraphs a. and b. above.
Accounts receivable and proceeds therefrom not yet disbursed by the
information network, which are generated from information network operations
conducted by AIC, are the sole property of AIC until disbursed.
7. CHANGES IN INFORMATION NETWORK.
Information network operations and development shall be in accordance
with the AIC Proposal and the RFP.
A planned material change in the information network operations cannot
be made by AIC without the prior written consent of the INA. A "material
change" includes, but is not limited to, a change which increases response
time to inquiries, adds to the complexity of information network use,
diminishes services provided to users, or results in a comparable impact on
operations noticeable by users.
AIC will provide to the INA at least thirty (30) days prior written
notice of a planned material change in information network operations.
AIC shall timely provide to the INA such management reports as the INA
may reasonably request.
8. NOTICES.
The INA contact person shall be designated by the INA in writing no
later than upon the execution of this Agreement. The AIC contact person
shall be the President of AIC. Each party may change its designation for
notice following written notice to the other party to this Contract.
Notices by the parties to one another shall be given in writing to the
persons identified above or to such other persons as may be subsequently
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identified in a written notice. Such notices shall be effective on the date
of receipt if sent by U. S. first-class or restricted delivery mail,
postpaid, or by any reputable overnight delivery service, prepaid.
9. FINANCES AND RECORDS.
All AIC documents and records pertaining to operation of the information
network will be available for inspection, auditing and copying by the INA, or
other authorized representatives designated by the INA. Monthly income
statements and balance sheets for the information network will be provided to
the INA by AIC.
AIC also agrees to comply with any recommendations made in any audit,
unless AIC and INA otherwise mutually agree. Any such audit will be
performed by a competent and reputable CPA licensed in Arkansas.
To the extent the audit report discloses any discrepancies in the AIC
charges, xxxxxxxx or financial records, and following a period for review and
verification of the amount by AIC, AIC will adjust the next monthly xxxx as
soon as reasonably possible, but not to exceed 90 days. AIC shall cooperate
to assure that verification is completed in a timely manner.
The accounting system is to include a numbered chart of accounts, books
of original entry of all transactions, appropriate subsidiary ledgers, a
general ledger which includes to-date postings and an audit trail through
financial statements. Such books may either be maintained on paper or on
computer with appropriate backup. AIC shall from the beginning of this
Contract adopt the calendar year ending December 31, for reporting purposes.
10. AIC SHAREHOLDERS.
AIC agrees to provide and continually keep updated a list of names and
addresses of stockholders of AIC for those shareholders holding five percent
(5%) or more of any class of stock and the percentage of ownership of each
stockholder.
As a basic policy all shareholders of AIC shall be natural persons;
however, exceptions to this requirement may be approved by the INA on a case
by case basis. Such approval is not to be unreasonably withheld. The intent
of this section is that the INA shall know the identity of AIC investors,
back to natural persons.
11. THE INFORMATION NETWORK OF ARKANSAS AND THE NETWORK MANAGER.
The duties of the INA and the network manager are as set forth in A.C.A.
00-00-000 et seq.
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12. FULL-TIME EQUIVALENT POSITIONS AND SALARIES, BENEFITS AND RELATED
EMPLOYER EXPENSES.
AIC agrees to attain a staffing level during the first fiscal year of at
least eight (8) full-time equivalent employee positions, based on an
eight-hour work day per position, five days per working week.
The hiring, firing, recruitment, management, and training of AIC
employees will not be the responsibility of the INA. The INA's involvement
in the personnel affairs of AIC shall be limited to disclosure of the names
and positions of officers and employees of AIC.
No officer, employee, director or shareholder of AIC shall receive a
salary, except as and for services performed by such officer, employee, or
director or shareholder for AIC on behalf of the information network.
AIC shall be responsible for all required employer costs attributable to
its officers and employees, including but not limited to, workers'
compensation premiums and deductible, unemployment compensation tax
withholding contributions, tax withholding contributions, and similar items.
13. INCORPORATION BY REFERENCE.
The provisions of the RFP and the AIC Proposal are hereby incorporated
into this Contract and made a part hereof. If there is any conflict among
the provisions of the RFP, the AIC proposal, this Contract and state law then
those conflicts will be resolved in the following order of precedence:
a. State law
b. This Contract
c. The RFP and addenda
d. The AIC proposal
This Contract may be amended only by mutual expressed written consent.
14. INSURANCE AND BONDS.
AIC shall provide the INA written proof of the following provided by a
qualified firm authorized / admitted to do business in Arkansas:
a. Proof of a general comprehensive liability insurance policy in
the amount of at least $1,000,000.
b. AIC shall maintain all workers' compensation insurance coverage
as required by law.
c. AIC shall maintain an Employers' Liability Insurance - Coverage
B, as required by law.
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d. AIC shall maintain a commercial automobile policy in the amount
of at least $1,000,000.
e. AIC shall maintain a fidelity bond in the amount of at least
$100,000 per employee.
15. TERMINATION OF CONTRACT.
The INA shall have the right to terminate this Contract for cause,
subject to cure, by providing written notice of termination to AIC. Such
notice shall specify the time, the specific provision of this Contract or
"for cause" reason that gives rise to the termination, and shall specify
reasonable appropriate action that can be taken by AIC to avoid termination
of the Contract. The INA shall provide a period of up to thirty (30) days,
unless otherwise specified in this Contract, for AIC to cure breaches and
deficiencies of its performance obligations under this Contract.
The INA may terminate this Contract at any time and without cause if
directed to do so by statute.
If the State decides to extend the Contract through June 30, 2003, or at
anytime thereafter, the INA shall be entitled to a perpetual for-use-only
license with the right to modify, along with application software
documentation and source code, for no additional compensation to AIC. Prior
to June 30, 2003, the INA reserves the right to negotiate terms for licensure
of software, which may include perpetual for-use-only license with a right to
modify software application documentation and source code, notwithstanding
the terms set forth in the section of this Contract concerning Continuation
of Operations During Transition Period.
16. TERMINATION FOR CAUSE
For purposes of this Contract, the phrase "for cause" shall mean, but
not be limited to:
a. Any material breach or evasion by AIC of the terms or
conditions of this Contract and its amendments, if any;
b. Ownership in AIC by a shareholder unacceptable to the INA.
c. Substantial cessation of information network services by AIC
shall be cause for immediate termination of this Contract.
d. Fraud, misappropriation, embezzlement, malfeasance, significant
misfeasance, or illegal conduct by AIC, its officers, directors or
shareholders.
e. Dissolution of AIC or forfeiture of its corporate existence.
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f. Repeal of the INA's enabling statutes. This is cause for
immediate termination, unless another agency is designated for oversight of
the information network within a reasonable time thereafter.
g. Amendment of the INA's enabling statue or an adverse judicial
decision by a court of competent jurisdiction, which has the effect of
rendering information network operations no longer feasible.
h. Insolvency of AIC.
I. Material breach of an agreement with any state agency.
j. Intentional disclosure of any confidential information.
17. APPROPRIATE USE MESSAGES.
The information network shall display an appropriate use message to all
subscribers upon initial log-on to the information network. Each subscriber
shall be required to verify compliance with said message terms. Upon
subsequent log-ons, such message shall be displayed, without verification,
only if prior verification is logged in the user file.
The information network shall provide DPEs the opportunity to include
additional wording if determined necessary by the DPE. The appropriate use
message shall be approved by the INA and updated to comply with any
amendments to the law, or as required by the INA.
18. ACCESS TO INFORMATION NETWORK BY DATA PROVIDING ENTITY.
a. DPEs must have terminal (read) access to the information
network's computerized log of subscribers using the DPEs' data and their
security status, without access cost to the DPEs. The DPEs will be
responsible for the cost of terminal(s) and the cost of a dial-up or lease
line, whichever is used.
b. DPEs must be able to sign on to AIC's information network to
audit the dissemination of its records. On-line audit capability must be
available for the length of time specified by the data owning agencies after
transaction processing. After the on-line retention period has expired, AIC
shall, as specified between AIC and the DPEs, retain, destroy, or provide the
record information to the data owning agencies without cost. At a minimum,
the information network shall retain the following data: name of subscriber,
transaction date and time, type of inquiry and access keys.
c. AIC shall notify affected DPEs and the INA within two (2) hours
of unauthorized attempts to gain access to classified data. The notice shall
contain detailed information to aid the affected DPE in examining the matter.
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19. LIMITATION OF PURPOSE.
AIC shall engage solely in the business or businesses expressly approved
by the INA which shall initially be only and solely the start-up, operation,
maintenance and expansion of the information network. AIC shall furnish the
INA with certified copies of Articles of Incorporation reflecting this
limitation of purpose.
20. PATENT, COPYRIGHT, TRADEMARK AND TRADE SECRET INDEMNITY.
AIC warrants that its proposed operation of the information network does
not and shall not infringe on the United States patent, copyright, trademark
or trade secret right of any person or entity. The INA shall be provided
with prompt notice of any such claim of infringement and AIC shall have the
exclusive right to defend or settle such claim at AIC's option. The INA
shall cooperate with AIC in its defense or settlement of such claim at no
expense to the INA.
21. LIABILITY.
The State of Arkansas, its agents and employees shall not be legally
responsible for errors due to information network problems.
AIC agrees for itself, its agents, employees and assigns to hold
harmless, indemnify and defend the INA and the State of Arkansas, its agents
and employees from any actions arising out of AIC's negligence or material
failure to perform under the terms of this Contract.
AIC agrees that it has no right of subrogation or contribution from the
State of Arkansas for any judgment rendered against AIC.
AIC agrees to indemnify, defend, and save harmless the State and INA
board members, its officers, agents and employees from the claims enumerated
in RFP 60.14.1 through 60.14.4.
22. APPROPRIATION AND LEGISLATION.
The INA may cancel this Contract to the extent funds or regulatory or
statutory fees are no longer legally available for expenditures under this
Contract. In the event legislation alters the authority or duties of INA,
the legislation controls the terms and conditions of this Contract.
23. ASSIGNMENT AND SUBCONTRACTING.
AIC may not assign any of its rights or delegate any of its duties
hereunder unless done pursuant to prior written consent of the INA.
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AIC may subcontract portions of work to be performed by it under this
Contract with the written consent of the INA.
24. TERM OF CONTRACT.
This Contract shall be for a term of three (3) years, commencing July 1,
1997, and expiring at 12:00 a.m., June 30, 2000, unless earlier terminated by
the INA.
a. By March 31, 2000, the INA will inform AIC of the INA's
decision on whether or not to extend the contract period through June 30,
2001.
b. By March 31, 2001, the INA will inform AIC of the INA's
decision on whether or not to extend the contract period through June 30,
2002.
c. By March 31, 2002, the INA will inform AIC of the INA's
decision on whether or not to extend the contract period through June 30,
2003.
d. By March 31, 2003, the INA will inform AIC of the INA's
decision on whether or not to extend the contract period through June 30,
2004.
Upon termination or expiration of this Contract all information network
and manager records, work papers and operations documentation shall be
delivered to the INA within thirty (30) days after termination or expiration
and shall become the property of the INA, if not already such.
AIC will be responsible during the term of this Contract for maintaining
information network hardware and software.
25. RELATIONSHIP OF PARTIES.
Notwithstanding any other provisions contained herein, it is expressly
agreed that AIC is an independent contractor in the performance of each and
every part of this Contract. As such, AIC is solely liable for all labor and
expenses in furtherance of such performance and for any and all damages which
may be occasioned on account of its performance hereunder.
AIC may become an agent of the INA only by the expressed written consent
of the INA.
AIC will not pledge any assets of the INA or State of Arkansas in its
care, custody or control, or cause any type of lien to attach to such.
It is expressly agreed that the contractor and any subcontractors and
agents, officers, and employees of the contractor or any subcontractors in
the performance of this Contract shall act in an independent capacity and not
as officers or employees of the State. It is further expressly agreed that
this
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Contract shall not be construed as a partnership or joint venture between the
contractor or any subcontractor and the State of Arkansas.
26. CLAIMS.
This Contract shall be construed according to the laws of the State of
Arkansas. Any legal proceedings against the INA regarding this request for
proposals or any resultant contract shall be brought in the State of
Arkansas' administrative, legislative or judicial forums. Venue will be in
Pulaski County.
27. CONTINUATION OF OPERATIONS DURING TRANSITION PERIOD.
If for any reason this Contract shall be terminated or upon expiration
of the Contract without extension, or at the end of any extension, AIC shall,
at the option of the INA, continue to operate under this Contract as network
manager in accordance with all terms and conditions of this Contract,
together with any amendments or modifications in existence at such time, for
a period of up to twelve (12) months from the time of expiration or
notification of termination from the INA to AIC. The intent of this
provision is to insure continuation of information network operations while a
successor network manager is chosen and installed.
28. ENTIRE AGREEMENT.
This Contract, including any documents incorporated by reference,
constitutes the entire agreement of the parties and supersedes all other
prior written or oral contracts between the parties with respect to the
subject matter hereof. This Contract may be amended only by a writing signed
by the parties thereto.
IN WITNESS to the agreement of the Information Network of Arkansas and
the Arkansas Information Consortium, Inc., to all of the above terms and
conditions, the respective governing bodies or Boards of Directors of the two
organizations have approved the same and have authorized their chief
executive officers and secretaries to affix their signatures below indicating
such upon this 2 day of JULY, 1997.
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ARKANSAS INFORMATION CONSORTIUM, INC.
/s/ Xxxxxx Xxxxxxx 7/2/97
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Xxxxxx Xxxxxxx, President/CEO Date
ATTEST:
/s/ Xxxxxx Xxxxxx 7/2/97
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Date
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INFORMATION NETWORK OF ARKANSAS
/s/ Xxxxxx Xxxxxx 7/2/97
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Date
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