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Contract <br />The City intends that the following key concepts will be included in any final agreement <br />between the parties. Below is a summary of the most important such issues. Please <br />verify your willingness and ability to comply with each of these contractual requirements <br />in an agreement with the City. <br />1. The City will require a ten -year schedule for maintenance charges wherein <br />annual maintenance pricing is fixed during this period of time. <br />Lawson Response: <br />Lawson is willing to provide for a yearly maintenance cap of 5% for a period of <br />ten years. <br />2. The warranty remedy, as discussed in Lawson and S & S response V 1E if <br />Lawson is unable to cure a warranty breach should include the implementation <br />fees paid for the appropriate software. <br />Lawson Response: <br />If Lawson breaches the Services Warranty as set forth in the Customer <br />Agreement, and fails to cure, then the implementation fees related to the breach <br />are recoverable for a period of 12 months after the date that the City notifies <br />Lawson of the breach. <br />3. The City will retain 15% of the implementation fees, with retainage to be released <br />upon Final Acceptance of the system. <br />Lawson Response: <br />Lawson is willing to comply with this requirement as it pertains to implementation <br />services. Lawson will agree to a retainage, but prefers to release portions of the <br />retainage as the City is live on the key components of the project. That means, <br />that the retainage will be divided between the final acceptance of Phase la , <br />Phase lb, Phase Ila, Phase Ilb and Phase III. We assume Final Acceptance of <br />each Phase noted above will occur within 45 days of the Go -live of each Phase. <br />4. The City will assess credits for Lawson's failure to provide critical deliverables <br />within an agreed -upon timeframe. The credits will result in penalties of $5,000 <br />per day for a maximum of thirty days until the deliverable is achieved unless a <br />mutually agreed extension of time is given. <br />Lawson Response: <br />Lawson understands the City's concern regarding meeting project deadlines, as <br />we share the same concern. The City and Lawson both bear mutual risk for this <br />project. The City has taken steps to mitigate this risk by requesting not -to- <br />exceed pricing, milestone deliverables and retainage, all of which Lawson has <br />agreed to. These terms serve to effectively transfer much of the project risk from <br />the City to Lawson. In addition, Lawson's Master Agreement addresses contract <br />breach and related remedies, cures and warranties. We believe the City's <br />request for additional penalties in addition to the terms and provisions noted <br />above is excessive and unnecessary since Lawson has effectively placed its <br />Lawson Software - Confidential 27 <br />