TRANSITION AGREEMENT
TRANSITION AGREEMENT, effective as of September 1, 1999 (this
"Agreement"), between Insurdata Incorporated, a Texas corporation ("Insurdata"),
and ▇▇▇▇▇▇▇▇▇▇.▇▇▇, Inc., a Pennsylvania corporation ("HealthAxis").
WHEREAS, Insurdata and HealthAxis contemplate entering into a Merger
Agreement, pursuant to which Insurdata and HealthAxis will combine to form a
single company; and
WHEREAS, Insurdata and HealthAxis intend that the terms of this
Agreement will govern the relationship between Insurdata and HealthAxis
commencing upon September 1, 1999 through the later of (x) the closing date of
the Merger or (y) thereafter in the event that the transactions contemplated by
the Merger Agreement shall fail to close on or before January 31, 2000 or at
such later date as may be agreed upon by the parties the Merger Agreement (the
"Transition Date") for any reason, including the inability of HealthAxis to
satisfy conditions to Insurdata's obligations to close.
NOW, THEREFORE, for good and adequate consideration the parties agree
as follows:
1. Terms of Agreement. The following terms govern the relationship
between Insurdata and HealthAxis created pursuant to this Agreement:
Pre-Closing Period: Period beginning on September 1, 1999 and
ending on the Transition Date.
Transition Period: Period beginning on the Transition Date and
ending on the latest date contemplated by
the succeeding paragraphs of this Agreement.
Scope and Duration of Services: Services to be provided by Insurdata will be
of four types:
o Carrier Integration Services, to consist
of Systems Integration Services performed
by Insurdata for HealthAxis in order to
get certain designated insurance carriers
up and operating on the HealthAxis
e-commerce platform. All Carrier
Integration Services that have been
initiated during the Pre-Closing Period
by Insurdata staff will be completed by
Insurdata. It is estimated that such
services can be completed within six
months following the Transition Date.
o Version 2.0 Small Group Development
Services, to consist of project
management and development services. All
Version 2.0 Small Group Development
Services that have been initiated during
the Pre-Closing Period by Insurdata staff
will be completed by Insurdata. It is
estimated that such services can be
completed within twelve months following
the Transition Date. In addition,
following completion of the development
of Version 2.0 Small Group software,
Insurdata will provide training and
support services for a period of 3-4
months if needed, or such shorter time
period as may be designated by
HealthAxis. It is agreed and understood
that Insurdata will have no
responsibility to HealthAxis to assist
HealthAxis in the development of Version
2.0 Individual solutions.
o Platform Solutions, to consist of
Insurdata's proprietary solutions
encompassing Insur-Web, Insur-Enroll and
Virtual Print. These solutions are
expected to be deployed in the HealthAxis
delivery of Version 2.0 Small Group
solutions, as well as in carrier back-end
integration solutions.
o Infrastructure Outsourcing Services, to
consist of provisioning and operation of
the hardware and software products used
in the support of the HealthAxis
development and production environments.
Insurdata will continue to provide
operations services at standard external
billing rates for up to one year from the
Transition Date at HealthAxis' sole
discretion.
Pricing of Services: Services will be priced as follows:
o For Carrier Integration Services,
Insurdata will receive a professional fee
for all work performed during the
Pre-Closing Period and the Transition
Period at Insurdata's standard external
billing rates as outlined in Schedule A,
such fee to be invoiced and paid on a
monthly basis in cash.
o For Version 2.0 Small Group Development
Services, Insurdata will receive a
professional fee for all work performed
during the Pre-Closing Period and the
Transition Period (including any
post-development training) at Insurdata's
standard external billing rates, such fee
to be invoiced and paid on a monthly
basis in cash.
o For Platform Solutions, Insurdata will
retain ownership of Version 2.0 Small
Group software and Platform Software
(including Insurdata's Insur-Web, Insur
Enroll and Virtual Print software),
including all source code. HealthAxis
will retain all rights to the
presentation layer software of the
overall Version 2.0 Small Group design,
and Insurdata will be granted a
non-exclusive, royalty free right to use
such software. In consideration of the
royalty from HealthAxis as provided
below, Insurdata will grant to HealthAxis
a perpetual, non-exclusive right to use,
solely in connection with the delivery of
services and not for re-sale, the Version
2.0 Small Group software and the Platform
Software (including Insurdata's
Insur-Web, Insur-Enroll and Virtual Print
software), including access to all
associated source code.
o For Infrastructure Outsourcing Services,
Insurdata will charge a professional fee
for all work performed during the
Pre-Closing Period and the Transition
Period at Insurdata's standard external
billing rates. Insurdata will receive a
10% margin on any hardware or third party
software acquired by HealthAxis from
Insurdata. In addition, Insurdata will
charge HealthAxis an allocable share of
space, data, telephony, transportation,
travel expense and environmental costs.
All such fees are to be invoiced and paid
on a monthly basis in cash.
o HealthAxis will pay all one-time costs
associated with the repatriation of any
and all of these services. HealthAxis
will also pay all travel and living
expenses associated with any and all of
the above services.
Rights of HealthAxis in Technology: Upon completion of Version 2.0 Small Group
Development Services and Platform
Development Services, Insurdata will grant
to HealthAxis a perpetual, non-exclusive
right to use, solely in connection with the
delivery of services and not for re-sale,
the Version 2.0 Small Group software and the
Platform Software (including the right to
use Insurdata's Insur-Web, Insur-Enroll and
Virtual Print software), including access to
all source code. In consideration of its
right to use, solely in connection with the
delivery of services and not for resale, the
Platform Software (including Insurdata's
Insur-Web, Insur-Enroll and Virtual Print
software), HealthAxis will agree that (a) it
will not charge for use of such software on
a per-transaction or other basis at a rate
less than the lowest rate currently quoted
by Insurdata for comparable transaction
volumes or other use, and (b) HealthAxis
will pay to Insurdata as a royalty 50% of
all revenues derived from any use (excluding
any revenues generated from the sale of
insurance or related products on the
HealthAxis e-commerce platform) of the
Version 2.0 Small Group software or Platform
Software, whether earned on a
per-transaction, commission or other basis.
Upon turnover of source code, Insurdata will
provide training and transition professional
services at standard billing rates for a
period of up to six months from the date of
delivery. Without limiting the generality of
the foregoing,
o The license to be granted to HealthAxis
will be non-exclusive and
non-transferable by operation of law
(including without limitation by merger
or consolidation) or otherwise and
limited to use of the licensed software
only by HealthAxis in the course of
HealthAxis' operating its e-commerce and
technology health insurance company;
provided, however, that nothing hereunder
shall prevent a successor to HealthAxis
by reason of sale, merger or other change
in control from utilizing the Platform
Software in accordance with the terms
otherwise set forth herein with respect
to HealthAxis' installed base of users at
the time of such sale, merger or other
change in control.
o The Insurdata software (including without
limitation Insur-Web, Insur-Enroll and
Virtual Print) will remain the property
of Insurdata and title in and to the
Insurdata software shall remain at all
times with Insurdata.
o Without the prior written consent of
Insurdata, and without the payment of
such additional license fee by the
proposed transferee as Insurdata may
agree, HealthAxis may not sell, transfer,
loan or otherwise dispose of any licensed
software or the license to be granted
under the Transition Agreement.
o In no event may HealthAxis subject any
licensed software to any lien, security
interest or encumbrance of any kind.
o The license to be granted to HealthAxis
will cover only the versions and releases
as delivered to HealthAxis pursuant to
the Transition Agreement, and will not
include any rights to future revisions,
modifications, enhancements and upgrades
as may thereafter be made by Insurdata.
Audit Rights: Insurdata shall have reasonable and
customary rights to audit the books and
records of HealthAxis from time to time for
purposes of (i) verifying the determination
of all royalties to be paid to Insurdata
measured in terms of revenues and/or
transactions and (ii) compliance with the
most favored nation pricing undertaking set
forth in the preceding paragraph.
Use of Information: HealthAxis shall view as Insurdata's
property any idea, data, program, technical,
business or other intangible information,
however conveyed, and any document, print,
tape, disk, tool, or other tangible
information-conveying or performance-aiding
article owned or controlled by Insurdata,
and provided to, or acquired by, HealthAxis.
HealthAxis shall keep such information
confidential and use it only as provided
under the Transition Agreement and obligate
its employees, subcontractors and others
working for it to do so, provided that the
foregoing shall not apply to information
previously known to HealthAxis free of
obligation, or made public through no fault
imputable to HealthAxis. Since unauthorized
use, transfer or disclosure of Insurdata's
confidential information will diminish the
value to Insurdata of its proprietary
interests, if HealthAxis breaches any of its
obligations under the Transition Agreement,
Insurdata shall be entitled to seek
equitable relief to protect its interests,
including, but not limited to, injunctive
relief, as well as money damages. The rights
and remedies of Insurdata are not exclusive
and are in addition to any other rights and
remedies provided by law.
Limitation of Liability: Insurdata shall not be liable under the
Transition Agreement for any indirect,
incidental or consequential damages
(including lost profits) sustained or
incurred in connection with this agreement
regardless of the form of action, whether in
contract, tort (including negligence),
strict liability or otherwise and whether or
not such damages are foreseeable or
unforeseeable. In addition, neither
Insurdata nor HealthAxis shall be liable for
exemplary or punitive damages in connection
with the Transition Agreement. Accordingly,
each party will agree to assume the risk of
insuring against or otherwise bearing the
risk of greater damages.
Warranties: The software and technology licensed and
services to be provided under the Transition
Agreement will be provided "as is" and
without warranty of any kind, and Insurdata
hereby disclaims all other warranties,
express, implied or statutory, including but
not limited to all warranties of
merchantability or fitness for a particular
use.
Personnel: Each of Insurdata and HealthAxis will retain
the employees that were part of their
respective organizations prior to the
Transition Date. Employees hired during the
Pre-Closing Period will remain with
HealthAxis if they are based in Philadelphia
and with Insurdata if they are based in
Dallas. Insurdata and HealthAxis will agree
not to solicit for employment the employees
of the other. Insurdata and HealthAxis will
remain liable for benefits of their
employees.
Dispute Resolution: Insurdata and HealthAxis will agree to
submit all disputes under the Transition
Agreement to binding arbitration. In such
arbitration, each party will submit its
position with respect to the dispute to the
arbitrator, and the arbitrator, after
considering such factors as he deems
appropriate and reasonable, shall choose the
position of one of the parties, with the
non-prevailing party to be responsible for
all costs and expenses associated with such
arbitration proceedings.
2. Miscellaneous.
(a) Governing Law. This Agreement shall be construed in
accordance with and governed by the substantive laws of the State of
Pennsylvania, without giving effect to the principles of conflicts of law
thereof.
(b) Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto with respect to the subject matter hereof
and may be amended only in a writing that is executed by Insurdata and
HealthAxis.
(c) Severability. Insofar as possible, each provision of this
Agreement shall be interpreted so as to render it valid and enforceable under
applicable law and severable from the remainder of this Agreement. A finding
that any such provision is invalid or unenforceable in any jurisdiction shall
not affect the validity or enforceability of any other provision or the validity
or enforceability of such provision under the laws of any other jurisdiction.
(d) Notice. Any notice or communication required or permitted
hereunder shall be in writing and either delivered personally, telegraphed or
telecopied or sent by certified or registered mail, postage prepaid, and shall
be deemed to be given, dated and received (a) when so delivered personally, (b)
upon receipt of an appropriate electronic answerback or confirmation when so
delivered by telegraph or telecopy (to such number specified below or another
number or numbers as such person may subsequently designate by notice given
hereunder), or (c) five business days after the date of mailing to the following
address or to such other address or addresses as such person may subsequently
designate by notice give hereunder, if so delivered by mail:
(i) if to Insurdata, to:
Insurdata Incorporated
▇▇▇▇ ▇. ▇'▇▇▇▇▇▇ ▇▇▇▇. ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ,▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(ii) if to Insurdata, to:
▇▇▇▇▇▇▇▇▇▇.▇▇▇, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Blank Rome Comisky & ▇▇▇▇▇▇▇▇ LLP
One ▇▇▇▇▇ Square
Philadelphia, Pennsylvania
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(e) Execution in Counterparts. This Agreement may be executed
in any number of counterparts, each of which when so executed and delivered
shall be deemed an original. It shall not be necessary in making proof of this
Agreement to produce or account for more than one counterpart.
(f) Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by either of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other party. Subject to the preceding sentence, this Agreement
will be binding upon, inure to the benefit of and be enforceable by the parties
and their respective successors and assigns.
(g) Interpretation. Wherever from the context it appears
appropriate, each term stated in either the singular or the plural shall include
the singular and the plural, and pronouns stated in either the masculine, the
feminine or the neuter gender shall include the masculine, feminine and neuter.
(h) Further Assurances. Insurdata and HealthAxis, by executing
this Agreement, agree that each party will take such actions and execute such
further documents as either party may reasonably request from time to time in
order to carry out the purposes of this Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
executed and delivered as of the date first set forth above.
INSURDATA INCORPORATED
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
▇▇▇▇▇▇▇▇▇▇.▇▇▇, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: President
Schedule A - Professional Services Rates
System Integration Daily Rates:
Development:
Programmer $380
Programmer Analyst $520
Sr. Programmer Analyst $640
Systems Analyst / Project Leader $740
Consultant / Project Manager $830
Sr. Consultant / Sr. Project Manager $930
Managing Consultant / Project Director $1030
Systems Development Manager $1030
Business:
Quality Assurance Analyst $380
Sr. Quality Assurance Analyst $440
Business Analyst $550
Sr. Business Analyst $620
Industry Specialist $690
Industry Consultant $890
Business Systems Manager $890
Technical:
Associate Systems Engineer $330
Systems Engineer $410
Sr. Systems Engineer $540
Technical Specialist $630
Sr. Technical Specialist $730
Technical Architect $800
Technical Services Manager $890
Director: $1070