Strategic Alliance Agreement

STRATEGIC ALLIANCE AGREEMENT

This Strategic Alliance Agreement (“Agreement”), dated as of ______(the “Effective Date”), is made by and between Philip Morris Incorporated (“PMUSA”), a Virginia corporation, with offices at 120 Park Avenue, New York, New York 10017, and ______, a ______corporation with offices at ______(“Consultant”). If, when, and to the extent requested by PMUSA, Consultant shall perform services in accordance with the following terms and conditions:

1.Consulting Services to be Provided

1.1Description of Services. From time to time during the term of this Agreement, PMUSA and Consultant may agree that Consultant’s “Personnel” will provide “Services” in connection with a “Project.” Each such agreement shall be embodied in a written agreement between the parties in substantially the form of Exhibit A (a “Project Agreement”). The term “Services” refers to all the work performed by Consultant pursuant to this Agreement or pursuant to a Project Agreement. The term “Personnel” refers to Consultant’s employees and independent contractors (including employees of entities affiliated with Consultant) who perform Services. PM USA shall not be required to purchase its requirements for, or any minimum quantity of, Services from Consultant. A general description of the type of Services that Consultant may provide, along with a description of the objectives that PM USA expects to achieve with Consultant, are attached hereto as ExhibitG.

1.2Consultant’s Offer. At such time as PM USA may require Services from Consultant, it may request such Services either orally or in writing (a “Request for Services”). Within five (5) business days after Consultant’s receipt of a Request for Services, Consultant shall prepare and provide at no charge to PM USA a written offer to provide such Services (“Consultant’s Offer”) detailing Consultant’s:

• Understanding of the scope of the Services;
• Plan for the performance of the Services including any assumptions on which such plan is based;
• Performance schedule;
• Description of Personnel that will perform such Services and their respective daily billing rates;
• Plans, if any, to use one or more subcontractors to perform Services;
• Estimate of the number of person-days necessary for Consultant to complete the Services; and
• If applicable, the fixed fee price for the Services.

Consultant’s Offer shall be sufficiently detailed and comprehensive to permit prompt evaluation by PM USA. Unless PM USA accepts Consultant’s Offer in writing, such offer shall be deemed rejected and PM USA may retain another consultant to perform the services that were the subject of such offer.

1.3Project Agreements. In the event that PM USA accepts Consultant’s Offer in accordance with the terms of Section 1.2, the parties promptly shall enter into a Project Agreement incorporating the terms of Consultant’s Offer as agreed to by PM USA. Consultant shall provide the Services specified in the Project Agreement in accordance with directions provided by PMUSA. Time is of the essence with respect to all Services to be provided pursuant to any Project Agreement. Accordingly, Consultant shall use its best efforts to provide Services in as efficient a manner as reasonably possible. Except as provided in Section 3.10, all Services shall be performed only by Consultant’s Personnel.

1.4Work Products. Consultant shall prepare the “Work Product” identified in a Project Agreement, if any, and such other Work Products as PMUSA may from time to time direct. The term Work Product includes without limitation reports, designs, computer software, documentation, inventions, discoveries, works of authorship, and other work products created or made by or on behalf of Consultant in providing Services.

1.5Acceptance of Work Products. All Work Products delivered by Consultant to PM USA pursuant to a Project Agreement shall be subject to acceptance or rejection by PM USA based on the acceptance criteria set forth in the applicable Project Agreement. Unless otherwise specified in the applicable Project Agreement, PM USA shall have thirty (30) days after receipt of Work Products to test and accept such Work Products or to reject such Work Products as non-conforming. If PM USA rejects Work Products as nonconforming, Consultant shall, at its expense, promptly correct such non-conformity and redeliver such Work Products to PM USA, and PM USA shall again have the number of days set forth above or in the Project Agreement to test and accept or reject the re-delivered Work Products. If PM USA still finds non-conformities, then PM USA may terminate the applicable Project Agreement and in such event Consultant shall refund to PM USA all fees paid in connection with such nonconforming Work Products.

1.6Change Order Procedure. The parties must agree in writing to any change to a Project Agreement. The parties shall follow the procedure set forth below with respect to all changes:

• The Project Manager for Consultant, or, if no Project Manager has been designated, the Account Manager and the Project Manager or other appropriate representative from PM USA shall negotiate in good faith all changes to a Project Agreement in the form of a Request for Change (“RFC”). Each RFC shall contain the following information:
• Reason for the change;
• Impact, if any, on existing Services to be provided and/or description of additional Services to be provided;
• Estimated impact, if any, on Project schedule; and
• Estimated change, if any, in fees payable by PM USA in connection with such Project, including any change to any Fixed Fee relevant to such Project.
• All RFCs shall be reviewed and accepted by the Project Manager for Consultant, or, if no Project Manager has been designated, the Account Manager and the Project Manager or other appropriate representative from PM USA prior to execution by the parties.
• All approved RFCs will be incorporated into the applicable Project Agreement by written amendment to such Project Agreement. Consultant shall not perform any Services pursuant to an RFC, and PMUSA shall not pay for any Services performed by Consultant pursuant to an RFC, unless and until such RFC has been approved by the parties and the applicable Project Agreement has been amended in accordance with the terms hereof.

1.7Facilities. Unless otherwise provided in a Project Agreement, Consultant shall provide all Services at PMUSA's facility identified in the applicable Project Agreement. Consultant shall ensure that its Personnel at PMUSA's facility comply with PMUSA's safety and security rules and other rules applicable to those working in the facility, including without limitation PM USA’s Security Policy, a copy of which is attached hereto as Exhibit J. PMUSA will not assume any responsibility for the safekeeping of property of Consultant or its Personnel stored at PMUSA's facility. All of Consultant's work in progress under this Agreement is subject to continuous examination, evaluation, and inspection by PMUSA. If Consultant or any of its Personnel uses its own equipment, including without limitation, computer hardware or software, to provide Services, PMUSA shall have the right to examine and inspect such equipment, and Consultant shall cooperate fully to facilitate such examination and inspection, promptly upon PMUSA's request. Consultant shall take all necessary action to ensure that its Personnel will comply with the immediately preceding sentence.

PM USA shall provide reasonable access to its facilities for Consultant’s Personnel providing Services under this Agreement or any Project Agreement, provided that Consultant provides PM USA with advance written notice of the names of its Personnel requiring such access and the times such access is required. PM USA may provide Consultant’s Personnel with security badges enabling access to PM USA’s facilities for performance of Services. Consultant acknowledges that such badges are the property of PM USA and agrees to return any such badges issued to Consultant within twenty-four (24) hours of (i)PM USA’s request therefor or (ii)such Personnel terminating his or her employment with Consultant. Consultant shall pay to PM USA a replacement fee of $100 per badge not returned to PM USA in accordance with this Agreement.

1.8Permits and Approvals. Consultant shall comply with all laws and regulations applicable to the providing of Services and obtain and pay for all licenses, permits and approvals necessary for it to provide Services. Consultant shall provide PMUSA with copies of any such licenses, permits and approvals on request.

1.9Use of Software Licensed from Third Parties. Consultant covenants that neither it nor any of its Personnel shall use any software that PM USA licenses from a third party without first obtaining PM USA’s written consent to such use.

2.Non-Exclusivity. Consultant acknowledges and agrees that this Agreement shall not be deemed exclusive, and, accordingly, PM USA may enter into agreements similar to this Agreement with parties other than Consultant, including without limitation competitors of Consultant, for services similar to the Services that may be provided by Consultant hereunder.

3.Personnel; Benchmarking.

3.1Executive Sponsor. Subject to PM USA’s approval, Consultant shall designate one of its executive level employees to be the “Executive Sponsor” of Consultant’s activities hereunder. The Executive Sponsor shall, at PM USA’s discretion, coordinate with PM USA’s Information Services Leadership Team to ensure continuous alignment of PM USA’s vision and objectives.

3.2Account Manager. Subject to PM USA’s approval, Consultant shall provide to PM USA one strategic account manager (the “Account Manager”) to be on site full-time at PM USA’s Richmond, Virginia facility, or, on occasion as directed by PM USA, at PM USA’s New York, New York facility. The Account Manager shall oversee Consultant’s performance of Services hereunder. In particular, the Account Manager shall, among other things, ensure that Consultant’s capabilities correspond to PM USA’s requirements, provide Consultant’s Offers to PM USA, facilitate Project Agreement negotiation, participate in strategic planning, coordinate resources, oversee all development and implementation programs for Projects, ensure overall integration of Projects and Services, evaluate the progress and performance of Consultant hereunder, facilitate escalation and problem management, and resolve day to day issues arising under this Agreement and any Project Agreements.

3.3No Charges for Executive Sponsor or Account Manager. Consultant shall not invoice PM USA, and PM USA shall not pay, any fees including out-of-pocket expenses, for the Executive Sponsor or the Account Manager, regardless of whether such Executive Sponsor or Account Manager also performs Services in another capacity, such as Project Manager, hereunder. Consultant acknowledges and agrees that it shall provide the Executive Sponsor and the Account Manager to PM USA in exchange for the opportunity to discover and to pursue Projects with PM USA.

3.4Project Manager. Each party may designate a “Project Manager” who shall be the principal point of contact between the parties for all matters relating to a Project. Each Project Agreement may contain an initial designation of a Project Manager for each party. Subject to Section 3.8, a party may designate a new Project Manager by written notice to the other party.

3.5Unavailability of Executive Sponsor or Account Manager. If the Executive Sponsor or the Account Manager terminates employment with Consultant or otherwise becomes unavailable to perform Services in accordance with this Agreement or any Project Agreement for reasons beyond Consultant's reasonable control, Consultant may provide the Services through other employees with comparable training and experience, provided that (i) Consultant immediately shall notify PMUSA of the termination or unavailability of such Executive Sponsor or Account Manager, (ii) Consultant shall provide PMUSA with the resumes of any proposed replacement employees within one (1) week of the date that the employee being replaced became unavailable, and (iii) PMUSA shall have the right to approve any replacement employees proposed by Consultant for the positions of Executive Sponsor or Account Manager. Consultant shall ensure that PM USA is not without an Executive Sponsor for more than four (4) weeks or without an Account Manager for more than two (2) weeks.

3.6Project Management Resources. Consultant shall make available a pool of Personnel known as “Project Management resources” who have been trained in PM USA’s Project management and delivery methodologies (the “PM USA Methodologies”) and are familiar with PM USA’s business areas, facilities and Key Personnel. PM USA shall conduct a two-day training session on PM USA Methodologies for the Account Manager and the Project Management resources. Consultant shall not charge PM USA, and PM USA shall not pay, for the time that it or any of its Personnel spends on any such training. Initially, Consultant shall ensure that no fewer than six (6) of its Personnel (in addition to the Account Manager) are trained in PM USA Methodologies. The number of Consultant’s Personnel who must be trained in PM USA Methodologies during the term of this Agreement may be adjusted at PM USA’s discretion, and Consultant shall thereafter ensure that at all times during the term of this Agreement no fewer than that number of its Personnel are trained in PM USA Methodologies. All Services that Project Managers of Consultant perform pursuant to this Agreement and any Project Agreement shall be performed by Project Management resources trained in PM USA Methodologies, and shall be performed in accordance with PM USA Methodologies.

3.7Key Personnel. A Project Agreement may designate certain individuals as “Key Personnel” for a Project, and the parties subsequently may agree in writing that additional individuals are Key Personnel for a Project. In the event that Key Personnel are designated for a Project, Consultant shall provide Services related to such Project only through such Key Personnel.

3.8Unavailability of Key Personnel or Project Manager. If any Key Personnel or Project Manager terminates employment with Consultant or otherwise becomes unavailable to work on a Project for reasons beyond Consultant's reasonable control, Consultant may provide the Services through other employees with comparable training and experience, provided that (i)Consultant immediately shall notify PMUSA of the termination or unavailability of such Key Personnel or Project Manager, (ii) PMUSA shall have the right to terminate the relevant Project Agreement, (iii) Consultant shall provide PMUSA with the resumes of any proposed replacement employees before they are assigned to the Project, and (iv) PMUSA shall have the right to approve any replacement employees proposed by Consultant for assignment to the Project.

3.9Nonsolicitation of Employees. During the term of this Agreement and for a period of one (1)year thereafter, neither party shall solicit for employment or hire employees of the other party without obtaining the prior written consent of the other party; provided, however, that this restriction shall not prohibit either party from conducting general solicitations in newspapers in connection with its hiring.

3.10(a)Consultant’s Employees; Independent Contractors. Consultant shall provide all of the Services through bona-fide employees of Consultant to whom Consultant provides a W-2 form for federal income tax purposes, unless PMUSA agrees in writing with respect to a particular Project that certain specified Services may be performed by Consultant through independent contractors previously identified by Consultant to PMUSA and approved by PMUSA in advance. Consultant represents and warrants that any independent contractor who provides Services will be either (i) a bona fide employee of a third party with whom Consultant has arranged for such employee to provide Services to PMUSA or (ii) a bona fide independent contractor who meets the requirements of the Internal Revenue Service for independent contractor status.

(b)Taxes. Consultant, and not PMUSA, shall be responsible for payment of compensation to Consultant’s Personnel, payroll deductions required by federal, state or local law, payments for income tax, social security and Medicare contributions, unemployment or disability insurance as required by law, and workers’ compensation insurance, coverage or premiums required under state law, all as in effect from time to time.

3.11Subcontractors.

(a)Consent Required. Consultant may not use subcontractors to perform any Services under this Agreement or any Project Agreement without obtaining PM USA’s prior written consent.

(b)Fees for Subcontractors. In the event that PM USA approves of Consultant’s use of a subcontractor in accordance with Section 3.11(a), if the Services being subcontracted are of a type that Consultant is capable of performing, then the fees payable by PM USA for such Services shall be the lesser of (i)the actual amount paid or payable by Consultant to the subcontractor that performed such Services and (ii)the amount that Consultant would have charged PM USA to perform such Services in accordance with the rates set forth in ExhibitD.

(c)Agreements with Subcontractors. Consultant’s agreements with any subcontractor approved by PM USA shall expressly provide that the subcontractor assumes all obligations and responsibilities of Consultant under this Agreement. Without limiting the generality of the foregoing, the approved subcontractor must expressly agree to be bound by the provisions of this Agreement relating to confidentiality, record keeping and auditing.

3.12Performance of Personnel. If PMUSA becomes dissatisfied with the performance of any of Consultant's Personnel providing Services, PMUSA may notify Consultant of the details of the unsatisfactory performance, and the parties shall cooperate to remedy the problem as soon as reasonably possible.

3.13No Employment Relationship. At no time shall PMUSA be deemed to be the employer of Consultant's Personnel, even if PMUSA personnel may supervise Consultant's Personnel in providing Services at PMUSA's facilities.

3.14Benchmarking. On the first anniversary of the Effective Date and each anniversary thereafter, PMUSA shall be entitled at its option to select a third party (the “Benchmarker”) to compare Consultant’s Services and fees with other arrangements of Consultant or other consultants of a similar nature, size and significance (“Similar Arrangements”) to ensure that (i) Consultant is providing the Services at a level equal to or greater than the level at which Similar Arrangements are performed and (ii) Consultant’s fees are competitive with the fees for which Similar Arrangements are performed. PMUSA shall attempt in good faith to select a Benchmarker agreeable to both parties, but if the parties are not able to agree upon a Benchmarker within a reasonable amount of time then PMUSA shall have sole discretion to select the Benchmarker, provided that PMUSA shall not select a Benchmarker that is a direct competitor of Consultant without Consultant’s express written consent. Each party shall pay half of the cost for the services of the Benchmarker. In the event the Benchmarker determines PMUSA is not receiving (a) Services at a level equal to or greater than the level at which Similar Arrangements are performed or (b) fees that are competitive with the fees for which Similar Arrangements are performed, then the parties shall revise the Services or adjust the fees, as applicable, in accordance with such determination, provided that in no circumstance shall the level of Services be diminished or decreased nor shall the fees payable by PM USA be increased.