Exhibit 10.10
▇▇▇▇▇▇▇▇▇.▇▇▇ INC. DEVELOPMENT AND SERVICES AGREEMENT
This Agreement, made as of this 27th day of October, 1999 (the
"Effective Date"), by and between ▇▇▇▇▇▇▇▇▇.▇▇▇ inc., a Delaware corporation
(the "Company") having its principal place of business in Dallas, Texas, and
McKesson HBOC, Inc., a Delaware corporation (the "Customer"), having its
principal place of business in San Francisco, California, but whose relevant
business unit has a principal place of business in Dubuque, Iowa.
W I T N E S S E T H
WHEREAS, Customer has an existing proprietary EDI system (the McKesson
EDI system or "MIE") permitting certain claims processing and other services.
WHEREAS, Company has developed an existing Internet EDI offering (its
▇▇▇▇▇▇▇▇.▇▇▇ product) with a Web interface (collectively, the "Existing Company
Product"), which Company believes Company may readily adapt to integrate with
and be adapted to become Customer's MIE system.
WHEREAS, Customer desires to provide an E-commerce solution that may be
sold directly by its general sales force, including, without limitation, through
sales to small physician offices with independent practice management systems,
and believes that integrating and customizing the Existing Company Product with
Customer's MIE offering, with a short implementation time, will allow Customer
to roll out its product offering in a timely fashion to take advantage of an
opportunity in the market.
WHEREAS, Company will therefore provide development, customization,
electronic claims processing and other services to the Customer in accordance
with this Agreement
NOW, THEREFORE, in consideration of the mutual covenants contained in
this Agreement and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, and intending to be legally bound,
the Parties hereby agree as follows:
SECTION 1
Definitions
"Acceptance" shall mean either of the following: (1) Customer's
delivery to Company of a written notice of Acceptance of the Modifications in
Final Form; (2) Customer's commencement of "Live" Processing using the
Modifications in Final Form.
"Acceptance Criteria" shall mean the following: (1) The Modifications
conform to the Design Specifications; and (2) the Modifications will
successfully provide seamlessly integrated services, and when installed on the
applicable Hardware will successfully perform in accordance with all service
levels specified in Design Specifications set forth on Exhibit A.
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"Acceptance Testing Period" shall mean the period commencing upon
Customer's receipt of the Modifications in Final Form and ending 60 days
thereafter or upon Live Processing, whichever is earlier.
"Acceptance Testing Procedures" shall mean testing procedures to be
performed by Customer for the purpose of establishing that the Modifications in
Final Form (as integrated with Customer's MIE software and installed on the
Hardware) conform to the Acceptance Criteria.
"Additional Term" shall mean any period of extension or renewal of this
Agreement after the Initial Term pursuant to Section 8.1 of this Agreement.
"Affiliate" of a Party means any entity that controls, is controlled
by, or is under common control with such Party or its Affiliates.
"Agreement" shall mean this Development and Services Agreement,
including all exhibits and Schedules hereto, as the same may be amended or
supplemented from time to time.
"Business Day" shall mean any day that is not a Saturday, Sunday, legal
holiday or other day on which national banks are authorized or obligated by law
or executive order to close.
"Confidential Information" shall mean all source code, related
documentation, support materials and any confidential instructional and training
materials, customer lists, data reports, Financial Statements, interpretations,
forecasts and audit reports, as well as information concerning Company or the
Customer, which is not available to the general public and which has been
provided by one Party to another Party in connection with the services offered
under this agreement.
"Final Form," as in "Modifications in Final Form," shall mean an entire
set of Modifications delivered or deliverable to Customer and indicated by
Company to be ready for Acceptance Testing Procedures.
"Hardware" shall mean the servers and other hardware described in the
Design Specifications and provided by Company for hosting the Web site and
providing the Services as described in this Agreement.
"Initial Term" shall mean the original term of this Agreement as set
forth in Section 8.1 of this Agreement.
"Interim Testing Period" shall mean the period commencing upon
Customer's receipt of Sub-Milestone Deliveries and ending upon delivery of the
Modifications in Final Form.
"Interim Testing Procedures" shall mean tests, trial runs, temporary
use guidelines, or other procedures agreed by Company and Customer with respect
to Sub-Milestone Deliveries of the Modifications.
"Live Processing" shall mean the first day upon which the Modifications
in Final Form are brought fully on-line and used to process transactions for
Customer and Customer's clients. Live Processing shall not be deemed to occur
prior to Acceptance, however, if such transactions
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are processed primarily for testing purposes or if Customer, upon written notice
to Company, commences operation with the Modifications while testing is still in
progress or while deficiencies that provide a basis for rejection are still
being corrected.
"Modifications" shall mean changes, additions, or corrections made by
Company to Existing Company Product pursuant to this Agreement. Where possible,
Modifications shall be divided into separately defined and deliverable
development projects, each of which is treated independently for purposes of
design and development, testing, acceptance, warranty, and payment terms under
and pursuant to this Agreement. Unless otherwise indicated, "Modifications" may
refer to any combination of Sub-Milestone Deliveries, Modifications in Test
Form, or Modifications in Final Form.
"Parties" shall mean Company and the Customer. "Party" shall mean
Company or the Customer.
"Person" shall mean any natural person, corporation (including
business, municipal, or not-for-profit corporation), trustee, executor,
administrator or other personal representative constituting a separate person as
a matter of law, business trust, limited liability company, general or limited
partnership, joint venture, unincorporated association, joint stock company, or
other entity of any kind and any government, including any agency, political
subdivision, or instrumentality of any government.
"Program Error" shall mean any deviations in the Modifications from (1)
the Design Specifications; (2) any specifications that are mutually agreed upon
by the Parties; or (3) commonly accepted standards for normal and correct
operation of computer programs, such as any cases where the Modifications in
Final Form abnormally cease functioning, produce incorrect or misleading
information, or erroneously interprets information given to it.
"Services" shall mean the electronic claims processing, hosting,
support and maintenance services to be provided in accordance with this
Agreement.
"Sub-milestone Deliveries" shall mean separately defined and
deliverable portions of the Modifications, as indicated in the Design
Specifications.
"Term" shall mean the period commencing on the Effective Date during
which this Agreement shall remain in full force and effect, and ending on the
Termination Date.
"Termination Date" shall mean the date that this Agreement expires
pursuant to its terms or is terminated pursuant to Section 8 of this Agreement.
"Test Form," as in "Modifications in Test Form," shall mean
Sub-Milestone Deliveries or Modifications delivered or deliverable to Customer
prior to Company's indication that an entire set of Modifications is complete
and ready for Acceptance Testing Procedures.
"Testing Period" shall mean the combination of the Interim Testing
Period and the Acceptance Testing Period.
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"Testing Procedures" shall mean the combination of the Interim Testing
Procedures and the Acceptance Testing Procedures.
"Transaction" shall mean the transmission of business information
between two or more parties by means, in whole or in part, of electronic data
interchange. Transactions may be transmitted singly or in groups and may be
delivered in real-time or in periodic cycles during which transactions are
aggregated and transmitted in a batch. Types of Transactions shall include,
without limitation, paper or electronic physician or dental Claims, Eligibility
Query and Responses, Electronic Remittance Advices, Encounters, Referrals, Claim
Status Messages, Patient Statements and Enrollments.
SECTION 2
Development Services By Company, Testing and Acceptance
2.1 Development Of The Modifications in Final Form. As more
specifically described in the design specifications set forth as Exhibit A (the
"Design Specifications") and incorporated herein by this reference, Company
shall convert the Existing Company Product to the MIE system with a unique look
and feel approved by Customer, including graphical changes and content provided
or approved by Customer.
As provided more specifically in the Design Specifications, the
front-end Web site shall consist of a "public" site for basic information and
registration of the service, and a "private" site for actual transaction
processing, secured through digital certification provided by Company and its
software.
2.2 Development Timetable. Company shall provide its development and
customization services in accordance with the milestone delivery schedule set
forth as attached Exhibit B (the "Milestone Schedule"). Company agrees that time
is of the essence in this Agreement and represents and warrants to Customer
that, conditioned upon receiving timely feedback and cooperation from Customer,
Company has the resources committed to this project to permit it to perform its
services and to customize and deliver the software in accordance with the
Milestone Schedule.
2.3 Cooperation During Initial Development Phase. The Parties agree
that they shall cooperate in good faith and provide timely feedback to permit
rapid development and deployment of the Modifications in Final Form as set forth
in the Milestone Schedule. To further that cooperation, each Party agrees that
within 10 business days of the execution of this agreement that party shall
designate an individual in writing to the other Party who shall be responsible
for coordinating the design, development and approval process in connection with
the development and deployment of the Modifications.
2.4 Testing and Acceptance. During the Testing Period and prior to
Acceptance, customer may install, execute, and test the Modifications subject to
any agreed guidelines provided in the Interim Testing Procedures. Until
Acceptance of the Modifications in Final Form, however, the Modifications are
subject to further testing and development, and Customer's use of such
Modifications are at Customer's risk. Company shall make good faith efforts to
test Sub-Milestone Deliveries prior to delivery, but until Acceptance, Company
gives
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no assurance that the Modifications have been tested, are error free, or will
perform in the prescribed manner in accordance with the Design Specifications.
During the Testing Period, Customer and Company shall cooperate to perform the
Testing Procedures and report the results to the other Party. Company will
provide to Customer, its representatives, and its consultants (if applicable)
such documentation and assistance as may be reasonably required by Customer to
perform any Testing Procedures. If Customer determines during the Testing Period
that the Modifications do not conform to applicable Design Specifications, or
otherwise demonstrate errors, Customer shall notify Company the nature and
specifics of the non-conformity. Company shall use all reasonable efforts to
correct or modify the Modifications so that they conform to the Design
Specifications, operate without error, and otherwise qualify for Acceptance.
2.5 Notice of Acceptance or Non-Conformity. Upon satisfactory
completion of the Acceptance Testing Procedures after delivery of the
Modifications in Final Form, Customer shall issue to Company a notice of
Acceptance pertaining to the Modifications. If Customer determines that at any
time during the Acceptance Testing Period that the Modifications in Final Form
fail to qualify for Acceptance, Customer shall notify Company of the nature and
specifics of the non-conformity. If Customer notifies Company as to any such
non-conformity and does not provide its Acceptance of the Modifications by the
end of the Acceptance Testing Period set forth in the Milestone Schedule, and
the Parties do not agree on an extension of the Acceptance Testing Period to
permit further correction or modification of the Modifications by Company, or if
Customer otherwise reasonably determines that the Modifications will not qualify
for Acceptance despite Company's efforts, Customer shall be entitled to
terminate all further efforts relating to such Modifications, shall return all
Company Confidential Information, including such Modifications and all related
documents, to Company, and shall terminate this Agreement immediately.
2.6 License. During the Term of this Agreement, Customer shall have a
license to use the Modifications in Final Form and derivative works thereof in
connection with providing the Services to end user customers. Customer may not
grant licenses of sublicenses to the Modifications of the Company Existing
Product to any party.
The Modifications performed by the Company for the customer pertaining
to (i) user interface as outlined in the Design Specifications (Exhibit A) as of
the date hereof and (ii) any Confidential Information of Customer, shall be the
sole and exclusive property of, and title thereto shall be fully vested in and
held by, the Customer. Company agrees to cooperate reasonably to implement
Modifications requested by Customer, provided that Company is not hereby
required to perform any such Modification except as otherwise provided under
this or any other written agreement between the parties. Except as set forth in
Section 8.4, all remaining portions of the Modifications, including those in the
specific processing engine, including, but not limited to, real-time editing of
claims, system interface software from the practice management systems into the
processing engine, installation services including mapping technologies, shall
be the sole and exclusive property of, and the title thereto shall be fully
vested in and held by, the Company.
2.7 Future Development Phases. In addition to the development and
delivery of the Modifications in Final Form, Company, upon receipt of a detailed
design specification from
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Customer, agrees to develop, for mutually agreed fees, the Phase II (Integration
with Physician Office Manager) and Phase III (Seamless Integration with
Physician Office Manager) tasks described generally in the Design
Specifications. For one year from the Effective Date, Company agrees not to
enter into any transaction or agreement that it reasonably believes would
interfere with or prevent it from performing the Phase II and Phase III
development tasks described.
SECTION 3
Ongoing Services by Company
3.1 Ongoing Services. During the Term of this Agreement, Company shall
provide the services more specifically described on Exhibit C attached to this
Agreement, including without limitation, claims processing services from a site
selected by Customer, together with providing all necessary hardware and
software to permit hosting of the Public Site, Private Site and processing
system as more specifically described in the Design Specification attached as
Exhibit A.
3.2 Maintenance And Support. As more specifically described in Exhibit
D ("Support and Maintenance Agreement"), which is hereby incorporated by this
reference, Company agrees to provide maintenance services to Customer consisting
of delivery on a periodic basis of all releases improving the functionality or
features of, or correcting errors in, the Existing Company Product to the extent
licensed hereunder, its successors or similar software provided as part of the
Modifications. Company agrees that it shall provide Customer with such
enhancements or improvements in a timely fashion to permit Customer's site to
incorporate any such enhancements or improvements at the same time or within 90
days after the earlier of launch by other customers of Company or of Company's
incorporation of them as part of the Existing Company Product, its successors or
similar software. As set forth in the Support and Maintenance Agreement, Company
shall provide first level and second level support for all of Customer's users
and customers. At the reasonable request of Company, Customer shall make
available in an appropriate place on the Web site reasonably selected by
Customer, information or instructions that may assist end-user customers of
Customer in extraction of claims files from various systems and format
information. If Customer designates that the Hardware shall be located at
Customer's facility, Customer shall pay the reasonable increases in support and
maintenance costs caused by Customer's designation of a location separate from
other hardware maintained by Company or its designee.
In the event that that Customer determines to locate the Hardware at
any facility other than a facility designated by Company, Customer (A) shall
indemnify, defend and hold harmless Company, and each of the respective
employees, officers and directors of Company, for and against all expenses and
costs, including, but not limited to, reasonable attorneys fees, judgments,
penalties and other payments in settlement or other disposition, in connection
with any claim or controversy brought or asserted by a third party in any type
of claim or proceeding relating to any Services rendered by means of the
Hardware located at such facility and the performance thereof and (B) waive all
warranties and covenants of Company with respect to the proper performance of
the Existing Company Product and the Modifications on such Hardware unless and
until such Hardware is approved by Company.
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3.3 Marketing Plan. On or before the Live Processing date, Company and
Customer shall agree on a Marketing Plan to be attached as Exhibit E to this
Agreement.
3.4 Source Code Escrow. On or prior to the Live Processing date,
Company and Customer shall enter into the Source Code Escrow Agreement attached
to this Agreement as Exhibit F, permitting access by Customer or its Consultants
to the source code for the Modifications in Final Form in the event Company
breaches its obligations to provide maintenance and support, or to correct
errors, or in the event the Company becomes insolvent, files for or is subject
to any insolvency or bankruptcy proceeding, makes an assignment for the benefit
of creditors, or is subject to receivership, conservatorship or liquidation.
SECTION 4
Fees
Customer shall pay to Company the following fees, in accordance with
this Agreement:
4.1 Development Fee. In return for Company's development of the
Modifications in Final Form, Customer shall pay Company a fee of $1,035,000 in
installments as provided in the Milestone Schedule attached as Exhibit B, upon
approval of the applicable milestone deliverables, including final Acceptance.
4.2 Software and Site Licensing Fee. In return for Company's licensing
of the Modifications in Final Form, hosting the Web site at a facility
designated by Customer (if applicable), and providing the Hardware (if
applicable), Customer shall pay Company $3,500,000, divided into two
installments of $1,166,666.66 each and a final installment of $1,166,666.67
payable respectively (1) within 30 days of the commencement of Live Processing;
(2) and on the first and second anniversaries thereof.
4.3 Monthly Subscription Fee. In return for Company's obligation to
provide all processing hardware and software maintenance and upgrades, including
payor edits, hosting hardware and system upgrades, and for providing the other
maintenance services set forth in the Maintenance and Support Agreement,
Customer shall pay Company a monthly subscription fee of $52,500 (a "Monthly
Fee"). This Monthly Fee shall be payable upon the commencement of Live
Processing and monthly thereafter during the term of this Agreement. Payment
shall be due within 30 days of invoice.
4.4 Transaction Fees. In addition to the other fees set forth in this
Agreement, in return for Company's providing the Services, Customer shall pay a
transaction fee of $.15 per HCFA, $.15 per paper claim, $.05 per remittance
advice, and $.15 per statement (where Company has provided mapping and
translation prior to submission to Customer) as more specifically described in
Exhibit C, "Continuing Services to be Provided."
4.5 Customer support. As described in, and in return for the customer
support services described in the Support and Maintenance Agreement attached as
Exhibit D, Customer shall pay Company a claim processing set up fee of $150, and
a statement processing set-up fee of $150 and may charge such set-up fees it
sets for the end user customers. All as more specifically described in the
Support and Maintenance Agreement, the Parties contemplate that
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Customer will provide first level phone consultation for end user customers
using its Physician Office Manager product, and Company will be responsible for
initial telephone support of other end user customers during the hours of 8:00
a.m. to 8:00 p.m. Eastern Time, for which Company may ▇▇▇▇ Customer an incident
fee/telephone of $60. Company shall provide free telephone support for 30 days
from the date an account is ready for production.
4.6 Most Favored Pricing. Notwithstanding sections 4.2, 4.3, 4.4, and
4.5 of this Agreement, if during the term of this Agreement Company provides
substantially similar services to a third party at more favorable pricing,
Company shall reduce the price of the relevant services to Customer to ensure
that Customer shall receive a price as least as favorable as any other customer
of Company's, taking into account relevant volume and service requirements.
SECTION 5
Representations and Warranties
5.1 Representations and Warranties of Customer. Customer hereby
represents and warrants to Company as follows: Customer has all requisite
corporate power and authority to enter into, adopt and perform all of its
obligations under this Agreement and all Schedules and Exhibits hereto. The
execution, adoption and delivery of this Agreement (including all Schedules and
Exhibits hereto), have been duly and validly authorized by all necessary
corporate action on the part of Customer, and upon execution and delivery by the
other parties hereto and thereto, such agreements will constitute legal, valid
and binding obligations of Customer, enforceable against it in accordance with
their respective terms, subject as to enforceability, to bankruptcy, insolvency,
conservatorship, receivership and other laws of general applicability relating
to or affecting creditors' rights and to general equity principles.
5.2 Representations and Warranties of Company. Company hereby
represents and warrants to Customer as follows: Company has all requisite
corporate power and authority to enter into, adopt and perform all of its
obligations under this Agreement and all Exhibits and Schedules hereto. The
execution, adoption and delivery of this Agreement (including all Exhibits and
Schedules hereto), have been duly and validly authorized by all necessary
corporate action on the part of Company, and upon execution and delivery by the
other parties hereto and thereto, such agreements will constitute legal, valid
and binding obligations of Company, enforceable against it in accordance with
their respective terms, subject as to enforceability, to bankruptcy, insolvency,
conservatorship, receivership and other laws of general applicability relating
to or affecting creditors' rights and to general equity principles. Company has
all necessary rights to its Existing Company Product to permit it to enter into
this Agreement and modify that software to create the Modifications in Final
Form, and has not entered into any agreement inconsistent with its grant of
rights and performance of its obligations herein. Except for the content of the
Web sites contributed by Customer, the Modifications in Final Form shall not
infringe the intellectual property, contract, or other rights of any third
party, and Company will not grant any rights to any portion of the Modifications
in Final Form that are inconsistent with the rights granted to Customer under
this Agreement. The Modifications in Final Form shall be free from Program
Errors, including without limitation date problems known commonly as "Y2K"
problems, and will operate in accordance with the Design Specifications. The
Modifications in Final Form and all interim deliverables and the media on which
they are
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delivered shall be free from viruses, undocumented features known as "Easter
eggs", or other harmful or dangerous programs. At Customer's request, Company
will promptly investigate and use best efforts to correct all significant
Program Errors reported by Customer and will deliver to Customer, at no
additional charge to Customer and as soon as practicable, an avoidance procedure
or work-around to solve or avoid any significant Program Error until a
correction is achieved. Company will continue to use its best efforts to develop
a correction for any material Program Error and when a correction is achieved,
Company will deliver to Customer all modifications necessary to implement this
correction. The Hardware and any other media delivered to Customer (or to any
entity providing hosting services at Customer's direction) by Company (or by
third party's at Company's direction) shall operate free from errors of
workmanship for 180 days from the date of its delivery. In addition to its
obligations under section 7.1 below, if any third party receives a binding
determination from a competent authority limiting Customer's right to use the
Modifications in Final Form because of any claimed intellectual property or
contract right to any portion of the Modification in Final Form, contrary to
Company's representations and warranties herein, and such determination is not
removed or stayed within thirty (30) days, Company shall be obligated, at
Company's sole expense either to modify the Modification in Final Form to
eliminate the claimed problem or to obtain a license to the necessary rights for
Customer from the third party claiming an interest.
SECTION 6
Confidential Information
6.1 Preservation of Confidential Information. During the Term of this
Agreement, both Parties may be exposed to the Confidential Information of the
other party, and each of them agrees to preserve this Confidential Information
as confidential, and agrees to use at least the same level of safeguards and
protection to preserve this Confidential Information as it uses to protect its
own Confidential Information; provided that Confidential Information may be
disclosed as required by clearly applicable law, rules, regulations or judicial,
administrative or similar process, including, without limitation, the
requirements of the Federal securities laws and the rules and regulations
thereunder, after seeking protective orders or other similar means to prevent
public disclosure and after notice to the other party with an opportunity for
the other party to seek an injunction to avoid such disclosure. Upon Customer's
request, Company shall execute any further documents reasonably necessary to
protect transactional information and other confidential information of
Customer's clients and customers.
6.2 Return or Destruction of Confidential Information on Termination.
Upon expiration or termination of this Agreement, any written Confidential
Information originally provided by one of the Parties (including all copies
thereof and extracts therefrom) still in the possession of the other Party, its
agents, employees and representatives, will be returned to the Party originally
providing such Confidential Information promptly upon written request of the
originating Party. Any written Confidential Information not so requested, any
oral Confidential Information, and any joint Confidential Information about the
Parties, obtained or created by the Parties will be either held and kept
confidential by the Parties hereto or destroyed.
6.3 Press Releases and Public Announcements. Company agrees not to make
any public announcement or press release regarding this Agreement, the product
to be developed
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under this Agreement or the products to be offered by Customer without the prior
written consent of Customer, which consent will not be unreasonably withheld.
Except as required by clearly applicable law, rules, regulations or judicial,
administrative or similar process, including, without limitation, the
requirements of the Federal securities laws and the rules and regulations
thereunder, and after seeking protective orders or other similar means to
prevent public disclosure and after notice to Customer with an opportunity for
Customer to seek an injunction to avoid such disclosure, Company shall not
disclose the terms of this Agreement.
6.4 Non-Solicitation. Each Party hereby agrees that for the term
commencing on the date hereof and terminating on the date which is one year
following the date of termination of this Agreement it shall not employ, solicit
for employment, or retain, or cause others to employ, solicit or retain, any
employee of the other Party hereto.
SECTION 7
Indemnification
7.1 Indemnification. Each of the parties hereto (the "Indemnifying
Party") shall indemnify, defend and hold harmless the other party hereto. and
each of the respective employees, officers and directors of such other party
hereto ("Indemnified Parties") for and against all reasonable expenses and
reasonable costs, including, but not limited to, reasonable attorneys fees,
judgments, penalties and other payments in settlement or other disposition, in
connection with (1) any claim or controversy brought or asserted by a third
party in any type of claim or proceeding relating to this Agreement and its
performance to the extent allowable by law, other than any claims or
controversies brought or asserted solely because of any willful acts or
omissions of the Indemnified Parties; and (2) any claim or controversy arising
out of breach or claimed breach of the Indemnifying Party's representations or
warranties under this Agreement.
7.2 Notification. Promptly after receipt by an Indemnified Party of
notice of any threatened or commenced claim or proceeding, the Indemnified
Parties shall so notify the Indemnifying Party in writing; provided, however,
that unless materially prejudicial to the defense of such action, the omission
to notify the Indemnifying Party shall not relieve the Indemnifying Party of any
liability which it may have to the Indemnified Party otherwise than under this
Section. The Indemnifying Party shall be entitled to participate in the defense
of such action, and may assume the defense thereof with counsel satisfactory to
such Indemnified Party (which consent shall not be unreasonably withheld);
provided, however, that the Indemnified Party shall be entitled to participate
in any such action with counsel of its own choice at the expense of the
Indemnifying Party if, in the good faith judgment of the Indemnified Party's
counsel, representation by Indemnifying Party's counsel may present a conflict
of interest or that there may be defenses available to the Indemnified Party
which are different from or in addition to those available to Indemnifying
Party. If Indemnifying Party assumes the defense of such action in accordance
with the preceding sentence and subject thereto, Indemnifying Party shall not be
liable to such Indemnified Party for any legal expenses subsequently incurred by
such Indemnified Party in connection with the defense of such claim or
proceeding, other than reasonable costs of investigation and review and approval
of any settlement. If Indemnifying Party shall not assume the defense of any
such action, the Indemnified Party may defend against such action in such manner
as it may deem appropriate, at the expense of Indemnifying Party-,
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provided that an Indemnified Party shall not settle any action which would give
rise to Indemnifying Party's liability under this indemnity without the prior
written consent of Indemnifying Party, which consent shall not be unreasonably
withheld. Indemnifying Party shall not, without the prior written consent of
each Indemnified Party that is not released as described in this sentence,
settle or compromise any action, or permit a default or consent to the entry of
judgment or otherwise seek to terminate any pending or threatened action, in
respect of which indemnity may be sought hereunder (whether or not any
Indemnified Party is a party thereto), unless (A) such settlement, compromise,
consent or termination includes an unconditional release of each indemnified
party from all liability in respect of such action and (B) such settlement,
compromise, consent or termination is solely for money damages.
7.3 Reimbursement. Subject to Section 7.2, Indemnifying Party shall
reimburse the Indemnified Parties for all reasonable costs and expenses incurred
with respect to any claim or threatened claim described in Section 7.1 as such
costs and expenses are incurred. All claims for reimbursement for such costs and
expenses shall be paid within 10 days of the Indemnified Party furnishing to
Indemnifying Party written evidence of any costs or expenses incurred by the
Indemnified Party, which evidence may be in the form, among other things, of a
canceled check or receipt. Any such request for reimbursement by the Indemnified
Party shall be made no more frequently than at 30-day intervals.
SECTION 8
Term and Termination
8.1 Term and Termination of Agreement. The Initial Term of this
Agreement shall commence on the Effective Date and continue until the third
anniversary of the commencement of Live Processing. In the event that this
Agreement is not sooner terminated as provided for herein, upon the expiration
of the Initial Term, Customer may renew this Agreement for up to two additional
one year periods, commencing on the third and fourth anniversaries of Live
Processing (each, an "Additional Term") provided that it continues to pay the
Monthly Fee as provided in Section 4.3.
8.2 Termination. This Agreement may be terminated by either Party for a
material breach of this Agreement, which is not cured within 30 days after
written notice of the breach. In the event of termination, Company shall return
the proportionate amount of any remaining maintenance and support fees
attributable to any time after the termination date. Either Party may terminate
this Agreement immediately in the event the other Party becomes insolvent in
that its liabilities exceed its assets, is adjudicated insolvent, files for or
is subject to any insolvency or bankruptcy proceeding, makes an assignment for
the benefit of creditors prior to bankruptcy or is subject to receivership,
conservatorship or liquidation. In the event Company proposes to (1) sell all or
substantially all of its assets, or (2) be acquired, merged into another entity
or otherwise undergo a change in ownership and control such that the holders of
the Company's voting securities prior to the transaction hold less than fifty
percent (50%) of the total voting power represented by the voting securities of
the surviving or successor corporation or entity immediately following such
transaction, the Company shall promptly deliver to Customer a notice of such
proposed transaction, which notice shall specify that it is a notice pursuant to
this Section 8.2 and shall identify the purchaser or purchasers of such assets
or other party or parties
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to such transaction. Within twenty (20) days after the delivery of such notice
to Customer, Customer shall deliver to Company a notice which shall either (i)
consent to such transaction or (ii) advise Company of Customer's intention to
terminate this Agreement in the event of the consummation of such sale of assets
or such transaction. In the event that Customer shall fail to deliver such
notice to Company within such twenty (20) day period, Customer shall be deemed
to have delivered such notice to Company to the effect of clause (i) in the
immediately preceding sentence. In the event that Customer shall deliver to
Company such notice within such period to the effect of clause (ii) of the
second preceding sentence, upon the consummation of such asset sale or
transaction, this Agreement shall terminate. Upon such termination, at
Customer's request, Company shall continue to provide services under this
Agreement for an additional period of up to twelve months in return for the fees
payable under this Agreement, prorated for such time period. Customer may
terminate its subscription pursuant to this Agreement by (A) delivering to
Company at any point after the first anniversary of the Live Processing date
notice of such termination, which notice shall become effective one hundred
twenty (120) days following such date of notice and (B) by paying to Company all
Monthly Fees through the date of such termination and all license fees then
remaining under this Agreement.
8.3 Survival. In the event a Party gives notice of termination of this
Agreement pursuant to Section 8.1 hereof, this Agreement shall become void and
have no effect, except that (i) the provisions relating to the confidentiality,
indemnification, the payment of any outstanding amounts hereof and future
competition, respectively, shall survive any such termination and (ii) any
termination shall not relieve any party from any liability that may arise from a
breach of the terms of this Agreement or otherwise.
8.4 Future Competition. Notwithstanding any other provision of this
Agreement, including without limitation, the confidentiality provisions of
Section 6, the Parties agree that nothing in this Agreement prevents Customer
from developing or deploying any other Web-based claims processing service or
other EDI service, even one which competes with the Existing Company Product and
which has similar functionality and a similar look and feel, but Customer is
prohibited from directly incorporating any of Company's Confidential Information
to create such service. Modifications which, pursuant to Section 2.6, are the
property of Customer shall be deemed to not contain any of Company's
Confidential Information.
8.5 Payment of Fees. As soon as practicable after the Termination Date
(but not later than 30 days thereafter), each Party shall pay to the other any
fees or other payments due pursuant to the Agreement or otherwise in connection
with the Program.
SECTION 9
Amendment
9.1 Complete Agreement. This Agreement (including the Exhibits and
Schedules hereto) expresses the entire agreement of the Parties with respect to
the subject matter hereof, and supersedes all prior agreements, written or oral,
with respect to such subject matter. The terms and conditions of this Agreement
shall inure to the benefit of and be binding upon the Parties hereto and their
respective successors and assigns. Nothing in this Agreement, expressed
12
or implied, is intended to confer upon any party, other than the Parties hereto
and their respective successors and assigns, any rights, remedies, obligations
or liabilities.
9.2 Amendment. This Agreement may be amended or supplemented (including
by adding or amending the Exhibits and Schedules hereto) at any time by mutual
agreement of the Parties hereto. Any such amendment or supplement must be in
writing and executed by the Parties' duly authorized officers.
SECTION 10
Miscellaneous
10.1 Notices. Any notices required or permitted to be given to any
Party in connection with this Agreement shall be in writing, shall be deemed
delivered when received and sufficient if delivered personally; deemed delivered
the next Business Day if sent by Federal Express or similar overnight courier
service for next Business Day delivery; shall be effective if delivered during
the Business Day by telecopier or similar means with written confirmation of
receipt during business hours (or, otherwise, effective the next Business Day);
or deemed delivered and effective three Business Days after deposit in first
class mail, Express Mail, or registered or certified mail, postage prepaid,
addressed as follows:
If to Company: If to Customer:
▇▇▇▇▇▇▇▇▇.▇▇▇ inc. McKesson HBOC, Inc.
12801 N. Central Expressway ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
ATTENTION:
ATTENTION: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇ Corporate Senior Vice President,
Executive Vice President Business Development
13
With a copy (which shall not constitute With a copy (which shall not
notice) to: constitute notice) to:
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, LLC McKesson HBOC, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇.
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
ATTENTION: ATTENTION:
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, Esq. General Counsel
Fax: ▇▇▇-▇▇▇-▇▇▇▇ Fax: ▇▇▇-▇▇▇-▇▇▇▇
10.2 Assignment. No Party may assign its rights or obligations under
this Agreement without the written consent of the other, except that either
Party may assign its rights and obligations hereunder to any Affiliate without
the consent of the other Party hereto, such consent not to be unreasonably
withheld.
10.3 Further Assurances. The Parties hereto agree to do such further
acts and to execute and deliver such additional assignments, agreements,
instruments and other documents as may be required to carry into effect the
purposes contemplated by this Agreement.
10.4 No Implied Waivers; Remedies. No failure or delay on the part of
either Party in exercising any right, privilege, power, or remedy under this
Agreement, and no course of dealing between the Parties shall operate as a
waiver of any such right, privilege, power, or remedy; nor shall any single or
partial exercise of any right, privilege, power, or remedy under this Agreement
preclude any other or further exercise of such right, privilege, power, or
remedy or the exercise of any other right, privilege, power or remedy. No waiver
shall be asserted against any Party unless signed in writing by such Party. The
rights, privileges, powers, and remedies available to the Parties are cumulative
and not exclusive of any other rights, privileges, powers, or remedies provided
by statute, at law, in equity, or otherwise. Except as provided in this
Agreement, no notice to or demand on either Party in any case shall entitle such
Party to any other or further notice or demand in any similar or other
circumstances or constitute a waiver of the right of the Party giving such
notice or making such demand to take any other or further action in any
circumstances without notice or demand.
10.5 Governing Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of California applicable to agreements
made and entirely to be performed within such jurisdiction, without regard to
the conflict of laws principles thereof.
10.6 Headings. The headings contained in this Agreement are for
convenience only and shall not affect the construction of any provision of this
Agreement.
10.7 Counterparts. This Agreement may be executed in any number of
counterparts, and each such counterpart shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
14
10.8 Warranty; Disclaimer and Limitation of Damages. In no event shall
any party be permitted to claim any consequential or special damages, (other
than payment of indemnification claims asserted by third parties)
notwithstanding their foreseeable disclosure by one party to the other.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
15
IN WITNESS WHEREOF, the Parties hereby have caused this Agreement to be
duly executed by their respective officers or authorized agents, and attested by
their officers duly authorized, as of the day and year first above written.
▇▇▇▇▇▇▇▇▇.▇▇▇ INC.
By: /s/ ▇▇ ▇. ▇▇▇▇▇
-------------------------------------
Name: ▇▇ ▇. ▇▇▇▇▇
Title: Chairman
Attested to:
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Corporate Controller
MCKESSON HBOC, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Senior Vice President
Attested to:
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇
-------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇
Title: Counsel
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EXHIBIT A
Design Specifications
Company shall convert its existing ▇▇▇▇▇▇▇▇▇.▇▇▇ Internet EDI offering
known as ▇▇▇▇▇▇▇▇.▇▇▇ to become the front end and an integrated part of the
Customer's Internet EDI system for HCFA 1500 claims, Electronic Remittance
Advice ("ERA") and Statements with a unique look and feel approved by the
Customer. These services shall be maintained on a server dedicated to the
Customer. Company Modifications in Final Form include:
A private public website developed to carry all Internet HCFA 1500,
Statements and Electronic Remittance Advice ("ERA") transactions for Customer's
physician office manager ("POM") product and all capabilities available in the
Company's claims processing and statement processing system.
Private and public websites will support Internet HCFA 1500 and
Statement transactions for third party practice management systems customers
with all capabilities available in the Company's claims processing and statement
processing system.
The public and private website may link from Customer's existing Web
sites, and will have an independent URL as selected by Customer.
Capabilities to house `links' to other Web sites as directed by
Customer.
"Real time" edits with errors returned to the "message center" and
accurate claims passed on to Customer's processing system in Dubuque, Iowa.
Payor specific claims edits will be created and maintained by Company
and reside within the new system created for Customer.
Initially, the following system interfaces are to be created for
Customer by Company to allow easy and quick installation of those systems for
claims: IDX, Medic, Physician Office Manager (McKessonHBOC), Physician Practice
Manager (McKessonHBOC), Medical Manager and Millbrook.
Training and demo capabilities as in the current ▇▇▇▇▇▇▇▇.▇▇▇.
Registration of users as they are in the ▇▇▇▇▇▇▇▇.▇▇▇ system with
registration information available electronically to the Customer designated
contact for update.
"Look and Feel" shall include the public site developed for Customer
(the "Public Site with the same basic inverted "L" tabs used by Company on its
▇▇▇▇▇▇▇▇.▇▇▇ product, and will provide access to a limited demonstration area,
Frequently Asked Questions, the registration process and general information.
This Public Site for basic information and registration of the service shall
retain the basic design used by the existing Company site, with changes to the
graphical interface and certain additional content provided by Customer to
maintain a consistent Customer-selected look and feel. The private site (the
"Private Site") will be a site secured for actual transaction processing through
digital certification provided through Company. The Private Site will be
17
developed to keep the same basic inverted "L" tabs and will provide access to
HCFA 1500 claims, statements and remittance processing, together with service
for Customer's customers in the initial release. Company shall include a message
center for payor reports, online tutorials and processing status, which shall
indicate completion of editing. The Public Site will be developed to enable the
addition of other services to be provided by Company and Customer in the future,
such as payor report sorting.
Hosting of the Public Site, Private Site and processing system at the
current location of the Company production servers.
Installation services for the Internet services to include mapping for
claims and statements for each PMSV that has agreed to services as sold by
Customer.
Maintaining sample statement form or forms on the server for preview as
directed by Customer
Customer Modifications in Final Form include:
Additional content, software and development resources required to add
additional services or features in the public or private site.
Output files from the POM and other third party practice management
systems, as available, to minimize customer mapping requirements and facilitate
installation and set-up provided by Company. This includes instructions on
extraction of files from named third party practice management vendors for
posting in customer care and the website, if available.
Customer will provide the required statement format that Company will
need to map all statements to prior to sending to Customer for printing.
Timely account set-up and effort to automate set-up for claim and
statement customers in the McKessonHBOC system.
18
EXHIBIT B
Milestone Delivery And Payment Schedule
The following are high points in the development and delivery of new Customer
Internet system:
Contract signing. FIRST INSTALLMENT DEVELOPMENT FEE DUE COMPANY - $250,000
Agreement of specifications, screen presentation, test plan, support plan,
escalation procedures, and workflow. SECOND INSTALLMENT DEVELOPMENT FEE DUE
COMPANY - $250,000
Programming of agreed specifications completed.
Internal testing between Company and Customer completed upon Customer signoff.
FINAL INSTALLMENT DEVELOPMENT FEE DUE COMPANY - $535,000
Beta site testing complete upon Customer signoff.
System generally available upon Customer signoff. FIRST INSTALLMENT SOFTWARE AND
SITE LICENSE FEE DUE COMPANY WITHIN 30 DAYS - $1,166,666.66 PLUS $52,500
SUBSCRIPTION FEE PAID MONTHLY
First anniversary of System generally available. SECOND INSTALLMENT SOFTWARE AND
SITE LICENSE FEE DUE COMPANY WITHIN 30 DAYS - $1,166,666.66 PLUS $52,500
SUBSCRIPTION FEE PAID MONTHLY
Second anniversary of System generally available. THIRD INSTALLMENT SOFTWARE AND
SITE LICENSE FEE DUE COMPANY WITHIN 30 DAYS - $1,166,666.67 PLUS $52,500
SUBSCRIPTION FEE PAID MONTHLY
19
EXHIBIT C
Continuing Services To Be Provided
Company agrees to provide the following on an ongoing basis at no additional
charge unless otherwise indicated:
Enhancements and new releases. Customer will be consulted on new release
content.
Corrections to programming errors at no charge with a mutually agreed escalation
and resolution plan.
Optional custom programming at $120/hour
80 hours of training time annually that can be used at the Customer's discretion
for sales, customer service (POM), etc.
Installation with a backlog not to exceed 2 months.
Addition of new links to other Customer designated sites.
Sales support questions from Customer.
20
EXHIBIT D
Support And Maintenance Agreement
The following are support and maintenance areas:
Company will provide first line support for PMSV who are not POM. Company will
provide PMSV support for the first 30 days free of charge and then may ▇▇▇▇
Customer an incident fee of $60 thereafter.
Company will provide second line support for Customer's POM support group.
Support hours to be set at 8 am EST - 8pm EST M-F
Criteria of a live customer site to be determined by Customer with mutual
agreement by the Company.
Release plans and upgrade procedures will be mutually agreed to for release for
minimum impact to end-users and operations.
The Company will strive for 80% first call resolution and will mutually
determine with the Customer escalation and resolution standards for ▇▇▇▇▇ ▇ -
▇▇▇▇▇ ▇ security levels.
EXHIBIT E
Marketing Plan
EXHIBIT F
Source Code Escrow Agreement