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EXHIBIT 2.5
INFORMATION TECHNOLOGY SERVICES AGREEMENT
BETWEEN
MEDPARTNERS, INC.
AND
THE TRIZETTO GROUP, INC.
DATED MAY 1, 1999
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TABLE OF CONTENTS
Understanding and Services........................................ Section 1
Additional Services: Exclusivity.................................. Section 2
Term.............................................................. Section 3
Transition Plan................................................... Section 4
Affected Employees................................................ ▇▇▇▇▇▇▇ ▇
▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ Purchase...................................... Section 6
Project Management................................................ Section 7
Performance....................................................... Section 8
Payments.......................................................... Section 9
Clinic Agreements................................................. Section 10
Service Locations and Security.................................... Section 11
Management and Change Control Process............................. Section 12
Data and Reports.................................................. Section 13
Software Rights................................................... Section 14
Hardware Rights................................................... Section 15
Agency............................................................ Section 16
Disaster Recovery................................................. Section 17
Force Majeure..................................................... Section 18
Audits............................................................ Section 19
Confidential Information.......................................... Section 20
Representations and Warranties.................................... Section 21
Dispute Resolution................................................ Section 22
Termination....................................................... Section 23
Limited Right to Continuation of Services......................... Section 24
Exit Plan......................................................... Section 25
Indemnification................................................... Section 26
Remedies.......................................................... Section 27
Insurance......................................................... Section 28
Miscellaneous..................................................... Section 29
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TABLE OF EXHIBITS
Exhibit A Glossary of Terms
Exhibit B Services
Exhibit C Service Matrix
Exhibit D Additional Services
Exhibit E Transition Plan
Exhibit F Bonuses
Exhibit G Key Employees
Exhibit H Service Level Agreements
Exhibit I Service Credits
Exhibit J Pricing Schedule for Services
Exhibit K Change Control Process
Exhibit L Software Rights
Exhibit M Hardware Rights
Exhibit N Services Transition Assistance
Exhibit O Reporting Template
Exhibit P Disaster Recovery Plan
Exhibit Q Insurance
Exhibit R Excluded Expenses
Exhibit S Service Resources
Exhibit T Affected Employees
Exhibit U Business Unit Asset Purchase Agreement
Exhibit V Epic License Transfer Agreement
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INFORMATION TECHNOLOGY SERVICES AGREEMENT
This INFORMATION TECHNOLOGY SERVICES AGREEMENT ("Agreement"), is dated as of May
1, 1999 (the "Effective Date"), by and between MedPartners, Inc., a Delaware
corporation ("MDM") (MDM together with its subsidiaries and affiliates are
collectively referred to herein as the "Customer") and The TriZetto Group, Inc.,
a Delaware corporation (the "Vendor"). Vendor and Customer are sometimes
hereinafter referred to individually as a "Party" and collectively as the
"Parties." All capitalized terms used but not defined herein shall have the
meanings ascribed to them in EXHIBIT A "GLOSSARY OF TERMS" attached hereto.
RECITALS
WHEREAS, Customer has contracted with certain health care clinics to provide
those clinics with certain management support and information technology
services;
WHEREAS, Customer also provides information technology services to Customer's
own business operations and the business operations of its affiliate company,
Caremark, Inc. ("Caremark");
WHEREAS, Customer is ending its relationship with the Clinics, and wishes to
outsource the services it provides to the Clinics, for the period from the
Effective Date of this Agreement to the date when each Clinic is disassociated
from Customer and for the period after such disassociation until Customer's
obligations to provide services to the Clinic end;
WHEREAS, Customer also wishes to outsource the services it provides to its own
business operations and the business operations of Caremark;
WHEREAS, Vendor desires to provide such services to the Customer Group; and
WHEREAS, Vendor recognizes that the Customer Group expects to be treated as a
valued customer and expects Vendor to exhibit a customer service attitude in
delivering the services required under this Agreement;
NOW, THEREFORE, in consideration of the recitals and for mutual promises and
covenants contained herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. UNDERSTANDINGS AND SERVICES.
(a) On and after the Effective Date and throughout the Term of this
Agreement, Vendor shall provide Customer Group the information
technology and other services described in EXHIBIT B--SERVICES
attached hereto and in this Agreement (the "Services"),
including, without
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limitation, those services described in the service matrix set
forth in EXHIBIT C--SERVICE MATRIX. The Services shall include,
without limitation, the General Services, Clinic Services, the
Corporate Services, and the Caremark Services. The Parties
intend that the Services shall include all of the functions,
responsibilities and tasks that are being performed and
delivered by the Affected Employees up to and including the
Effective Date, except as noted on EXHIBIT D.
(b) There may be functions, responsibilities, activities and tasks
not specifically described in this Agreement which are required
for the proper performance and delivery of the Services and are
a necessary, customary or inherent part of, or a necessary
sub-part included within, the Services. If such functions,
responsibilities, activities and tasks are determined to be
required for the proper performance and delivery of the Services
or are a necessary, customary or inherent part, or a necessary
sub-part included within, the Services, such functions,
responsibilities, activities and tasks shall be deemed to be
implied by and included within the scope of the Services to the
same extent and in the same manner as if specifically described
in this Agreement. Each such determination shall be made by
agreement of the Parties or resolved pursuant to the dispute
resolution provisions set forth in SECTION 22.
(c) Vendor shall not service or support additional customers or
clients from the Service Locations without Customer's prior
written approval (which shall not be unreasonably withheld),
where such service or support would place a significant demand
on Vendor's resources or would materially adversely impact
Vendor's ability to provide the Services and achieve the Service
Level Agreements. Prior to servicing or supporting additional
customers or clients from the Service Locations, Vendor shall
provide to Customer, for Customer's approval, a proposal for
providing such services to the third party, including the
material terms and anticipated scope of the obligations and
expenses, and the risks and/or expenses to Customer during the
Term and upon the termination of this Agreement.
(d) As part of the Services, Vendor shall be responsible for
obtaining at its expense any hardware, software, personnel or
other resources (whether new or replacement) required in order
to provide the Services.
(e) As part of the Services, Vendor shall be responsible for
obtaining all governmental licenses, authorizations, and permits
required by applicable laws and regulations, which Vendor is
required to have in order to perform the Services. Vendor shall
be financially responsible for all fees and taxes associated
with such licenses and permits.
(f) As part of the Services, Vendor shall identify the impact of
changes in applicable laws and regulations on its ability to
deliver the Services or on the
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Services required by Customer. Vendor shall notify Customer of
such changes and shall work with Customer to identify any
adjustment to the Services required by such changes. Vendor
shall promptly implement any such adjustment to the Services
through the Change Control Process. Where changes required under
this Section materially impact the scope of either Party's
duties and obligations under this Agreement, the Parties shall
cooperate in good faith to negotiate revisions to the terms and
conditions of this Agreement required by such changes. Proposed
revisions shall be made by agreement of the Parties, or in the
absence of agreement on such changes, pursuant to the dispute
resolution provisions set forth in SECTION 22. Vendor shall be
responsible for any fines and penalties imposed on Vendor and
Customer arising from any noncompliance with such laws and
regulations by Vendor, its agents, subcontractors, or third
party product or service providers; provided, however, that
Vendor shall not be responsible for any fines and penalties
resulting from compliance with instructions received from
Customer or from activities undertaken by Customer on its own
behalf.
(g) Vendor will perform all of the Services strictly in accordance
with (i) the requirements of all Regulations, (ii) federal,
state and community standards and (iii) other applicable
policies related to the Regulations. Without limiting the
generality of the foregoing, Vendor shall (i) comply with all
policies, procedures and protocols of Customer applicable to
activities of Vendor subject to any Regulation; (ii) direct all
requests for claims processing inquiries, decisions and rulings
either to Customer or to another party designated by Customer;
and (iii) work in cooperation with Customer, health care plans
and other parties to payor agreements to ensure that the
processes followed by Customer and Vendor in connection with the
Services, either in combination or individually, do not violate
and are not inconsistent with the Regulations. Vendor will
perform no Services requiring that Vendor be a regulated entity
(such as a preferred provider organization or third party
administrator) without first ensuring that it has satisfied all
licensure, permitting, approval and other Regulations applicable
to such activities. At no time will Vendor engage in any
activity involving a decision to reject or otherwise not pay a
claim or requiring an adjudication of any claim relating to the
Customer Group.
2. ADDITIONAL SERVICES; EXCLUSIVITY
(a) The Parties have identified on EXHIBIT D--ADDITIONAL SERVICES,
certain services which are not within the scope of the Services
as described herein, but which the Parties anticipate that the
Customer may require during the Term of this Agreement. In the
event that Customer requires, during the Clinic Services Period
for any Clinic, any Services described on EXHIBIT D for such
Clinic or any other transitional or continued services required
by any Clinic prior to the end of the applicable Clinic Services
Period, Customer shall inform Vendor of its requirements and
Vendor shall have the right to submit a proposal for such
additional services. As
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soon as reasonably practicable, but in no event more than five
(5) business days, after receiving Customer's request for
proposal on such Services, Vendor shall either submit a written
proposal for such Services or shall advise Customer that it does
not wish to perform such Services. Fees for such Additional
Services described in EXHIBIT D shall be as set forth in EXHIBIT
D, and fees for other Additional Services shall be in accordance
with the rate schedule set forth on EXHIBIT D. Customer shall
have no obligation to accept any proposal made by Vendor under
this SECTION 2(a).
(b) In the event that Customer chooses to engage a third party to
provide any Additional Service, Vendor shall cooperate with
Customer and such third party to the extent reasonably required
by Customer, including by providing (i) written requirements,
standards, and policies for systems operations so that the
enhancements or developments of such third party may be operated
by Vendor, (ii) assistance and support services to such third
party at reasonable prices, and (iii) access to the systems and
service locations as may be reasonably required by such third
party in connection with such Additional Service.
(c) Customer shall not engage any other party to provide Clinic
Services to any Clinic during the applicable Clinic Services
Period; provided, however, that the Services delivered to such
Clinic conform to the applicable Service Levels and other
requirements of this Agreement. Customer shall use commercially
reasonable efforts to support Vendor's efforts to market its
services to Clinics during the applicable Clinic Services
Period.
3. TERM
This Agreement shall commence on the Effective Date and shall continue
until December 31, 1999 (the "Initial Term") unless earlier terminated in
accordance with the terms and conditions hereof. Following the Initial Term,
this Agreement shall automatically renew for subsequent periods of thirty (30)
days (each, a "Renewal Term") unless terminated by Customer on thirty (30) days
written notice to Vendor prior to the expiration of the then-current term.
Customer's termination of this Agreement under this SECTION 3 shall not be
deemed to constitute a termination for convenience pursuant to SECTION 23 of
this Agreement.
4. TRANSITION PLAN.
(a) As part of the Services, Vendor will implement the "Transition
Plan" set forth in EXHIBIT E--TRANSITION PLAN describing (i) the
transition from the Customer to Vendor of the Affected
Employees; (ii) the transition of the administration,
management, operation under and financial responsibility for the
Third Party Agreements from the Customer to Vendor; and (iii)
the transition to Vendor of the performance of and
responsibility for the other
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functions, responsibilities and tasks currently performed by the
Customer which comprise the Services.
(b) Vendor shall execute and complete the Transition Plan without
causing a material disruption of Customer's operations. The
Customer Account Manager and the Vendor Account Manager shall
meet as required (but in any case, no less than once per week)
to ensure the appropriate execution and completion of the
Transition Plan. Vendor shall bear the reasonable costs of any
adverse impact to Customer caused by a delay in the Transition
Plan; provided, however, that Vendor shall not be responsible
for such costs to the extent caused by Customer's failure to
cooperate in the Transition Plan as required by SECTION 4(c)
(including providing appropriate resources to support the
implementation phase of the Transition Plan).
(c) Customer will cooperate with Vendor in implementing the
Transition Plan by providing the personnel (or portions of the
time of the personnel) set forth in the Transition Plan and
performing the tasks assigned to Customer in the Transition
Plan.
5. AFFECTED EMPLOYEES
(a) With Customer's consent and cooperation, Vendor shall offer
employment to each Affected Employee at salary and benefits
comparable to those provided by Customer to such Affected
Employee as of the Effective Date. [*]
(b) All costs and expenses incurred by Vendor in connection with the
offer to employ and the employment of the Affected Employees
shall be the responsibility of Vendor; provided, however, that
Customer shall pay Vendor [*] dollars ($[*]) on the Effective
Date towards the costs of personnel replacement premiums (the
"Personnel Premium"), and shall pay Vendor [*] ($[*]) on the
Effective Date to be used by Vendor towards the costs of the
Retention Bonuses to be paid by Vendor under SECTION 5(c) (the
"Retention Bonus Payment").
(c) Vendor represents and warrants that it shall pay [*]% of the
target bonuses set forth in EXHIBIT F--BONUSES to all Affected
Employees who
[*] Confidential portions omitted and filed separately with the Securities and
Exchange Commission.
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are still in Vendor's employment as of [*], and that it shall
inform the Affected Employees of its obligation under this
Agreement to make such bonus payment no later than the Effective
Date. If Vendor terminates any Affected Employee without cause
prior to or on [*], Vendor shall pay the Affected Employee [*]%
of the Affected Employee's target bonus at the time of the
Affected Employee's termination. Vendor will not be obligated to
pay any bonus to any Affected Employee who (1) voluntarily
resigns from employment with Vendor prior to [*], (2) is
dismissed by Vendor for misconduct (e.g., fraud, drug abuse,
theft) or unsatisfactory performance in respect of his or her
duties and responsibilities to Customer or Vendor, or (3) is
unable to perform his or her duties due to his or her death or
disability. Vendor may elect to pay such bonuses in the form of
[*], if agreeable to the Affected Employee in his or her sole
discretion.
6. BUSINESS UNIT ASSET PURCHASE
On the Effective Date, Customer will sell to Vendor, and Vendor will buy
from Customer, all of Customer's right, title and interest in the Business Unit
Assets, pursuant to a Business Unit Asset Purchase Agreement entered into by the
Parties, a copy of which is attached hereto as EXHIBIT U. The purchase price of
the Business Unit Assets, which shall be payable by Vendor to Customer upon the
Effective Date, shall be equal to [*] ($[*]) (the "Business Unit Asset Purchase
Price") and shall be inclusive of all taxes.
7. PROJECT MANAGEMENT
(a) Prior to the execution of this Agreement, Customer and Vendor
shall each appoint a designated representative (each, an
"Account Manager") who shall be authorized to act as the primary
point of contact for each Party in dealing with the other Party
with respect to all aspects of this Agreement.
(b) Vendor's appointment of any Vendor Account Manager shall be
subject to Customer's consent, which shall not be unreasonably
withheld. Before the initial or subsequent assignment of an
individual to such position, Vendor shall notify Customer of the
proposed assignment, introduce the individual to appropriate
Customer representatives, and consistent with Vendor's personnel
practices, provide Customer with a resume and any other
information about the individual reasonably requested by
Customer. Vendor agrees to discuss with Customer any objections
Customer may have to such assignment and the Parties will in
good faith resolve such concerns on a mutually agreed basis.
(c) When possible, Vendor will give Customer at least thirty (30)
days advance notice of a change of the person appointed as the
Vendor Account
[*] Confidential portions omitted and filed separately with the Securities and
Exchange Commission.
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Manager. Vendor will discuss with Customer any objections
Customer may have to such change and the Parties will in good
faith resolve such concerns on a mutually agreed basis. Vendor
shall not reassign or replace any Vendor Account Manager during
this Agreement unless Customer consents to such reassignment or
replacement (which consent shall not be unreasonably withheld)
or the individual (1) voluntarily resigns from employment with
Vendor, (2) is dismissed by Vendor for misconduct (e.g., fraud,
drug abuse, theft) or unsatisfactory performance in respect of
his or her duties and responsibilities to Customer or Vendor,
(3) is unable to perform his or her duties due to his or her
death or disability. Vendor may, with Customer's prior consent
(which shall not be unreasonably withheld), reassign the Vendor
Account Manager if the Vendor Account Manager voluntarily
requests a change of assignment.
(d) Vendor shall cause the person assigned as its Account Manager to
devote all reasonably necessary working time and effort in the
employ of Vendor to his or her responsibilities for the delivery
of the Services under this Agreement, subject to Vendor's
reasonable holiday, vacation and medical leave policies;
provided, however, that the Vendor Account Manager shall be
available to Customer within one (1) hour upon request during
all ordinary working hours.
(e) Each Party's Account Manager shall issue all consents or
approvals and make all requests on behalf of the Party.
References in this Agreement or any other related document to
Customer or Vendor making commitments or agreements or giving
consents or approvals on behalf of the respective Party shall
mean each Party's designated Account Manager.
(f) Customer shall appoint three members of its management staff and
Vendor shall appoint three members of its management staff,
including the Vendor Account Manager and the Customer Account
Manager, to serve on a management committee (the "Management
Committee"). Customer shall designate one of its members on the
Management Committee to act as chairperson of the Management
Committee. The Management Committee shall meet on a weekly basis
to review Vendor's performance under this Agreement during the
prior week and resolve any new or outstanding relationship
issues.
(g) Customer and Vendor have designated on EXHIBIT G--KEY EMPLOYEES
certain Affected Employees as Key Employees for the performance
of Services under this Agreement. Customer and Vendor may
mutually agree during the Term of this Agreement to modify the
list of Key Employees. Vendor shall cause the Key Employees to
each devote all reasonably necessary working time and effort in
the employ of Vendor to his or her responsibilities for the
provision of the Services under this Agreement,
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subject to Vendor's reasonable holiday, vacation and medical
leave policies.
(h) Vendor shall not reassign or replace any Key Employee without
prior notice to Customer and without Customer's prior consent
(which shall not be unreasonably withheld), if such reassignment
or replacement would materially impact Vendor's ability to
provide the Services or achieve the Service Level Agreements.
(i) If Customer reasonably and in good faith determines that it is
not in Customer's best interests for any Vendor or subcontractor
employee to be appointed to perform or to continue performing
any of the Services, Customer shall give Vendor written notice
specifying the reasons for its position and requesting that such
employee not be appointed or be removed from the Vendor employee
group servicing Customer and be replaced with another Vendor
employee or subcontractor. Promptly after its receipt of such a
notice, Vendor shall investigate the matters set forth in the
notice, discuss with Customer the results of the investigation
and resolve the matter in a manner reasonably acceptable to
Customer and Vendor.
(j) Vendor shall take commercially reasonable actions to efficiently
administer, manage, operate and use the resources employed by
Vendor to provide and perform the Services under this Agreement.
Vendor shall at all times utilize sufficient staff of suitable
training and skills to provide the Services.
(k) Vendor shall not subcontract any of the Services without
Customer's prior written consent, which shall not be
unreasonably withheld; provided, however, that Vendor shall be
permitted to utilize temporary employees (either directly or
through a third party recruiting firm) as may be reasonably
necessary, but in no event for a total period in excess of
thirty (30) days.. The consent of Customer to any subcontracting
relationship shall not relieve Vendor of its obligations and
responsibilities under this Agreement.
(l) While at Customer's service locations, Vendor's personnel and
agents shall (i) comply with reasonable requests from Customer
and standard rules and regulations of Customer communicated to
Vendor regarding personal and professional conduct (including
the wearing of a particular uniform, identification badge, or
personal protective equipment and adhering to Customer
regulations and general safety practices or procedures)
generally applicable to such Service Locations and (ii)
otherwise conduct themselves in a businesslike manner.
8. PERFORMANCE
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(a) The performance benchmarks for the Services provided to the
Customer are described in EXHIBIT H--SERVICE LEVEL AGREEMENTS,
which sets forth certain Service Levels. Vendor agrees that its
performance of the Services will meet or exceed each of the
Service Levels from the Effective Date and thereafter during the
Term, subject to the limitations set forth in this Agreement.
Vendor shall not be responsible for any failure to meet the
Service Levels resulting from any Force Majeure Event as and to
the extent set forth in SECTION 18.
(b) Customer and Vendor shall review the Service Levels monthly
during the Term, and to the extent any Service Levels are no
longer appropriate because of an increase, decrease, or change in
the Services, the Parties shall in good faith agree to adjust the
Service Levels. Both Parties must agree upon the reported Service
Levels as well as any adjustment to the Service Levels.
(c) The Parties may, at any time upon mutual agreement, adjust the
Service Levels. In addition, either Customer or Vendor may, at
any time upon notice to the other party, initiate negotiations to
review and adjust any Service Level, which such Party in good
faith believes is inappropriate at the time.
(d) As part of the Services, Vendor shall provide monthly performance
reports to Customer in the form set forth in EXHIBIT O--REPORTING
TEMPLATE or such other form as may be agreed upon by Customer and
Vendor. Reports will be made available to Customer no later than
ten (10) working days after the close of a calendar month, and
Customer and Vendor shall meet within five (5) working days after
the delivery of the report to review the report.
(e) Vendor shall pay to Customer Service Credits for any failure to
achieve the Service Levels as and to the extent set forth in
Exhibit I-Service Credits. Billing adjustments will be made on a
monthly basis to reflect Service Credits to Customer.
(f) In the event of a Critical Disruption, Customer may elect to
declare a critical service disruption, and Vendor shall, upon
notice from Customer, initiate at Vendor's expense appropriate
disaster recovery procedures in accordance with the Disaster
Recovery Plan. Without limiting the Parties' rights and
obligations under SECTION 18 of this Agreement, in the event that
there are more than [*] Critical Disruption events during any [*]
month period, Customer shall be entitled to terminate this
Agreement upon notice to Vendor in accordance with SECTION 23(c)
of this Agreement.
(g) Within [*] days after receipt of a notice from Customer alleging
Vendor's material failure to provide the Services or Vendor's
repeated failure to provide the Services in accordance with
"Priority 1" Service Levels as
[*] Confidential portions omitted and filed separately with the Securities and
Exchange Commission.
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described in the Service Levels, Vendor shall (a) perform a
root-cause analysis to identify the cause of such failure, (b)
correct such failure, (c) provide Customer with a written report
detailing the cause of, and procedure for correcting, such
failure, and (d) provide Customer with reasonable assurance that
such failure will not reoccur. Vendor's obligations under this
SECTION 8(g) shall be in addition to its other obligations under
this SECTION 8 and under this Agreement.
(h) In the performance of its obligations under this Agreement,
Vendor shall at all times provide to Customer a quality of
service and terms for service that are at least as favorable as
those provided by Vendor to any other Vendor customer. As part
of this commitment, but without limitation, Vendor shall provide
to Customer Vendor's best pricing and priority of access to
Vendor's personnel. As part of the Services, Vendor shall, upon
Customer's request, provide to Customer equal access to Vendor's
specialized technical personnel and resources consistent with
Vendor's other commercial customers receiving substantially
similar goods and services. This SECTION 8(h) shall not require
Vendor to adjust pricing previously agreed upon with Customer,
should Vendor thereafter provide more favorable pricing to any
other Vendor customer.
(i) In the event that any Dispute concerning the Vendor's
performance of any particular Service is submitted to the Senior
Executives pursuant to SECTION 22(c), the Parties shall
establish and track a Service Level applicable to the Service
that is the subject of the Dispute. The Senior Executives shall
mutually agree upon the applicable Service Level. During the
period in which the Senior Executives are attempting to resolve
the Dispute, Vendor shall report its performance against the
Service Level to the Senior Executives as required by the Senior
Executives, but in no case less than once per week.
9. PAYMENTS
(a) Customer will pay a Monthly Services Charge for Services
rendered hereunder in accordance with the schedule of fees
attached as EXHIBIT J--PRICING SCHEDULE FOR SERVICES, as
invoiced in accordance with SECTION 9(b). Customer will pay the
applicable charges for all Additional Services as invoiced in
accordance with the associated schedule of fees set forth in
EXHIBIT J or as otherwise agreed to by the Parties for such
services; provided, however, that all fees for such Additional
Services must be supported by a written service request approved
by Customer for such Additional Services.
(b) For the first calendar month of this Agreement, the Monthly
Services Charge shall be equal to $[*], and Vendor may invoice
Customer for one hundred percent (100%) of the first Monthly
Services Charge upon
[*] Confidential portions omitted and filed separately with the Securities and
Exchange Commission.
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the execution of this Agreement. Thereafter during the term of
this Agreement, Vendor shall invoice Customer for subsequent
monthly charges in accordance with Exhibit J--Pricing Schedule
for Services, on or after the first (1st) business day of each
calendar month. Vendor shall produce a final, reconciled invoice
to Customer no later than thirty (30) days following the
termination of this Agreement.
(c) Each monthly invoice also shall include any Service Credits due
to Customer from Vendor in accordance with SECTION 8 of this
Agreement, any charges due under any approved ASR's and any
other items provided for in EXHIBIT J--PRICING SCHEDULE FOR
SERVICES.
(d) Except as may be set forth in EXHIBIT R--EXCLUDED EXPENSES or as
may be mutually agreed to in connection with any Additional
Services, Vendor shall be responsible for the payment of all of
its expenses in connection with this Agreement incurred both
prior to the Effective Date and during the Term of this
Agreement. Customer shall not be required to pay any additional
fee or expense unless agreed to in advance by the Parties.
(e) Customer will cause the full amounts of the invoice for the
first Monthly Services Charge to be paid upon receipt and will
cause all undisputed amounts on all other invoices to be paid
within thirty (30) days of receipt.
(f) Vendor shall at Customer's request provide any and all
information reasonably required by Customer to permit
reconciliation of invoices as compared to the applicable pricing
schedule.
(g) Customer shall at Vendor's request and subject to any
confidentiality obligations of Customer, provide any and all
information reasonably required by Vendor to allow Vendor to
determine which resources will be required to meet Vendor's
obligations under this Agreement.
(h) During a transition period which shall last no longer than sixty
(60) days from the Effective Date, Customer shall continue to
process and pay on behalf of Vendor and in the capacity of agent
for Vendor, invoices which are Vendor's responsibility to
process and pay in accordance with SECTIONS 14 and 15 of this
Agreement. Vendor shall reimburse Customer for such payments at
the end of each calendar month. The intent of this SECTION 9(h)
is to permit Vendor sufficient time to assume the invoice
payment process from Customer.
(i) Customer shall pay Vendor the [*] and [*] in accordance with
SECTION 5(c), and Vendor shall pay Customer the Business Unit
Asset Purchase Price in accordance with SECTION 6 and $[*]
([*]), ([*]) for the transfer of certain software licenses as
[*] Confidential portions omitted and filed separately with the Securities and
Exchange Commission.
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contemplated under the [*], on the Effective Date.
(j) Customer and Vendor shall cooperate to segregate the fees and
payments made under this Agreement into the following separate
line items: (1) those for taxable Services, (2) those for
nontaxable Services, (3) those for which a sales, use, or
similar tax has already been paid by Vendor, and (4) those for
which Vendor functions merely as a paying agent for Customer in
receiving goods, supplies, or services (including leasing and
licensing arrangements) that otherwise are nontaxable or have
previously been subject to tax.
(k) In the event either Customer or Vendor disputes the accuracy or
applicability of a charge or credit or other financial
arrangement described in this Agreement, the disputing party may
withhold payment of the disputed amount without interest,
penalty or breach of this Agreement, and shall notify the other
Party of such dispute as soon as practicable after the
discrepancy has been discovered. The Parties will investigate
and resolve the dispute using the dispute resolution processes
provided herein.
10. CLINIC AGREEMENTS
(a) It is expressly understood that the Clinic Services which Vendor
shall provide under this Agreement are intended only to be
transitional services designed to provide support for each
Clinic from the Effective Date until the end of the Clinic
Services Period in which the Clinic moves from receiving such
services from Customer (under an existing contractual obligation
between Customer and the Clinic) to receiving such services from
another party (such as Vendor, under an separate, individual
agreement with the Clinic). Vendor shall be responsible for
obtaining agreements to provide the Clinics continued service
beyond the end of the Clinic Services Period. In response to
reasonable requests received from Vendor from time to time
during the Term, Customer shall provide such reasonable
cooperation to Vendor in Vendor's efforts to market services to
Clinics, as Customer may determine to be appropriate under the
circumstances. Vendor acknowledges and agrees, however, that
Customer has made no representation or commitment to Vendor
concerning the number of Clinics that may ultimately engage
Vendor to provide Services to Clinics on a long-term basis, and
that Customer shall have no responsibility or liability to
Vendor in the event that the number of Clinics which elect to
engage Vendor to provide Services is less than Vendor's
expectations or business projections.
(b) The contractual obligations between Customer and the individual
Clinics are expected to be individually terminated or to expire,
on a rolling basis, during the Term of this Agreement. As of the
end of the Clinic Services Period, Vendor shall no longer be
responsible under this Agreement to provide
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16
Clinic Services to the particular Clinic, and Customer shall not
be responsible for the payment of any fees associated with
services for that particular Clinic which are incurred after
such date of termination or expiration.
(c) Vendor shall be solely responsible for any licenses required to
provide services for which it directly contracts with a Clinic
to provide.
(d) Vendor and Customer shall meet as necessary during the Term of
this Agreement to discuss the projected roll-off of each
individual Clinic and to develop appropriate plans to support
and facilitate such roll-off.
(e) All disputes, controversies, or claims arising out of or
relating to the Clinic Services which are brought or raised by a
Clinic shall be referred directly to the Vendor Account Manager.
The Vendor Account Manager shall inform the Customer Account
Manager of the dispute and the Parties shall work together in
good faith to resolve the dispute brought by the Clinic. Such
claims shall be subject to the dispute resolution procedures
under SECTION 22 of this Agreement, with Customer acting on
behalf or in conjunction with the Clinic.
(f) Vendor and Customer acknowledge that Customer may not be
successful in terminating its obligation to each Clinic to
provide Clinic Services to that Clinic (in such case, each, a
"Management Company Clinic"), and that [*]. Vendor agrees, as
part of the Services, that it shall provide Clinic Services to
[*] on the terms and conditions (including, without limitation,
the pricing terms set forth in EXHIBITS D and J) provided for in
this Agreement, either pursuant to an amendment of this
Agreement or a separate agreement between Vendor, Customer, the
[*] or some other party, incorporating such terms and
conditions, at Customer's discretion.
11. SERVICE LOCATIONS AND SECURITY
(a) Vendor shall not [*], without Customer's prior written approval,
which shall not be unreasonably withheld.
(b) As part of the Services, Vendor shall maintain and enforce at
the Service Locations safety and security procedures that are at
least (i) equal to industry standards for such Service Locations
and (ii) as rigorous as those procedures in effect at the
Service Locations as of the effective date. Vendor shall
[*] Confidential portions omitted and filed separately with the Securities and
Exchange Commission.
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17
comply with and maintain the safety and security procedures
which are in effect at the Service Locations as of the Effective
Date.
(c) As part of the Services, Vendor shall implement and maintain
security processes, procedures and techniques in accordance with
industry standards designed to detect and prevent unauthorized
access to any and all networks and systems which process
Customer information, and shall implement and maintain virus
protection and similar software and procedures in accordance
with industry standards designed to detect and prevent software
viruses and any corruption of such networks and systems and the
data contained therein.
(d) As part of the Services, Vendor shall immediately inform
Customer of any breach in security or potential security issues,
that either (i) has a material impact on the delivery of the
Services, or (ii) may not be material in itself, but represents
a single instance in a pattern of breaches which collectively
are material. Vendor shall maintain tracking procedures
sufficient to allow it to evaluate security breaches and
determine whether they must be reported to Customer under the
preceding sentence.
(e) As part of the Services, Vendor shall provide access to and
cooperate with Customer's internal and external auditors in
respect to any audit or review of the Service Locations. Vendor
will, within a reasonable time, correct any issues raised in an
audit letter associated with items included in the scope of this
Agreement.
12. MANAGEMENT AND CHANGE CONTROL PROCESS
(a) Vendor shall, in the performance of the Services, follow any
procedures reasonably required by Customer in connection with
the following areas: (i) security; (ii) issue resolution; (iii)
change control; (iv) billing and invoicing; (v) additional
service requests; and (vi) performance tracking.
(b) Vendor shall inform Customer in advance of all proposed changes
to systems and networks used and controlled by Vendor in
performing its obligations under this Agreement, where such
change would materially alter the functionality, architecture or
technical environment of such systems or networks or would have
a material, adverse effect on the Services. Approval and
implementation of such changes shall be made pursuant to the
Change Control Process, as set forth in EXHIBIT K. No change may
be implemented without Customer's prior approval (which shall
not be unreasonably withheld) except as may be necessary on a
temporary basis to maintain the continuity of the Services.
Customer shall respond with reasonable promptness to requests
for approval from Vendor under this SECTION 12(b).
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18
(c) Vendor shall (i) schedule all projects and changes so as not to
unreasonably interrupt Customer's business operations, (ii)
monitor the status of changes, and (iii) document and provide to
Customer notification (which may be given orally provided that
such oral notice is confirmed in writing to Customer within five
business days) of all changes performed on a temporary basis to
maintain the continuity of the services, no later than the next
business day after the change is made.
13. DATA AND REPORTS
(a) All data and information submitted to Vendor by Customer or by
any Clinic in connection with the Services (the "Customer Data")
is and shall remain the property of Customer or the applicable
Clinic, [*]
(b) As part of the Services, Vendor shall promptly correct, with
Customer's reasonable cooperation, any errors or inaccuracies in
the Customer Data and the Reports that (1) are caused by Vendor,
its agents, subcontractors, or third party product or service
providers or (2) that were typically corrected by Customer in
normal course prior to the Effective Date. At Customer's
reasonable request, Vendor shall promptly correct any other
material errors or inaccuracies in the Customer Data or Reports.
(c) As part of the Services, Vendor shall promptly produce at
Customer's request a copy, in the format and on the media
available to the Vendor at the time of the request, all data
relating to a Clinic. All data relating to a Clinic which is
generated prior to this Agreement and through the end of the
Clinic Services Period, shall be maintained by Vendor throughout
the Term of this Agreement and made available to Customer at
Customer's request and in accordance with the procedures set
forth in this SECTION 13(c).
(d) As part of the Services, Vendor shall upon request by Customer
at any time and for any reason, at Customer's expense, promptly
return to Customer, in the format and on the media requested by
Customer, all Customer Data and all Clinic Data; [*]. Except as
provided herein, and unless necessary to provide the Services,
at Customer's request Vendor shall erase or destroy all Customer
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19
Data and Clinic Data in Vendor's possession. Any archival tapes
containing Customer Data or Clinic Data shall be used solely for
back-up purposes.
14. SOFTWARE RIGHTS
(a) The obligations and rights of the Parties with respect to
software required to provide the Services shall be as set forth
in this SECTION 14.
(B) EXHIBIT L--SOFTWARE RIGHTS provides a detailed schedule of all
software required to provide the Services, and categorizes such
software as follows: (i) proprietary Customer-owned software
("Customer Owned Software") which shall be licensed to Vendor in
accordance with SECTION 14(C); (ii) software which is licensed
by Customer from a third party and which Vendor shall operate
under the agency arrangement set forth in SECTION 14(D) and
SECTION 16 ("Retained Software"); (iii) third party software for
which Customer shall transfer the license to Vendor in
accordance with SECTION 14(E) ("Transferred Software"); (iv)
proprietary Vendor-owned software ("Vendor Owned Software")
which shall be used by Vendor in connection with this Agreement;
and (v) software which is licensed by Vendor from a third party
("Vendor Provided Software") which shall be used by Vendor in
connection with this Agreement. The Customer Owned Software,
Retained Software, Transferred Software, Vendor Owned Software
and Vendor Provided Software are collectively referred to herein
as the "Software".
(c) Customer hereby grants to Vendor the right and license to use,
operate, modify and copy the Customer Owned Software during the
term of this Agreement solely for the purposes of providing
Services under this Agreement; provided, however, that only for
Customer Owned Software which is identified on EXHIBIT L as
being subject to a perpetual license, Customer instead hereby
grants Vendor the right and license to use, operate, modify and
copy the such Customer Owned Software in perpetuity for all
purposes. Any enhancements or modifications to the Customer
Owned Software made during the Term of this Agreement, and any
related documentation, shall be and will remain the exclusive
property of Customer. Customer Owned Software is licensed "AS
IS" without warranty of any kind.
(d) Subject to Customer and Vendor obtaining any required
third-party consents, Customer will obtain appropriate
authorizations permitting Vendor to exercise all of Customer's
rights under the Retained Software, and Vendor will assume all
of Customer's obligations under the Retained Software. The
Parties will enter into appropriate agency agreements in
connection with the Retained Software. Unless otherwise noted on
EXHIBIT L, Vendor shall be responsible for the performance of
all obligations under the applicable licenses, including without
limitation
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payment of all maintenance fees, use charges and other related
fees and expenses, attributable to periods on or after the
Effective Date.
(e) Subject to Customer and Vendor obtaining any required
third-party consents, Customer shall transfer and assign to
Vendor all of Customer's rights under the licenses for the
Transferred Software. Vendor shall pay Customer the [*] in
consideration for transfer of the [*} as set forth in the [*].
The Parties will enter into appropriate assignment and
assumption agreements in connection with the Transferred
Software. Vendor shall be responsible for the performance of all
obligations under the applicable licenses, including without
limitation payment of all related maintenance fees, use charges
and other related fees and expenses, attributable to periods on
or after the Effective Date.
(f) Vendor shall be responsible for obtaining all licenses for
Vendor Provided Software and shall be responsible for the
performance of all obligations under the licenses therefor,
including without limitation payment of all maintenance fees,
use charges and other related fees and expenses, however
designated, for the Vendor Provided Software, and Customer shall
have no obligation to obtain such licenses or any required
third-party consents for such products.
(g) With the cooperation of the other Party, the Parties shall use
their best efforts to obtain all third party consents required
under this SECTION 14. Except as set forth in EXHIBIT L, Vendor
shall be responsible for obtaining and paying for any consents
necessary to allow Vendor to use any of the Software to perform
its obligations under this Agreement. In the event that any
required consent is not obtained, then, unless and until such
required consent is obtained, the Parties shall cooperate with
each other in achieving a reasonable alternative arrangement
under which Vendor may perform the Services without causing a
breach or violation of any agreement under which such required
consent is to be obtained.
(h) Except as may be previously approved by Customer in writing,
Vendor shall not make any changes or modifications to the
Software that would adversely alter the functionality of the
Software, degrade the performance of the Software, adversely
affect the day-to-day operations of Customer's business, or
violate the applicable license agreement for the Software.
(i) Vendor shall be responsible for managing, administering and
maintaining the agreements for the Software, including any
renewal, termination or cancellation notices or dates, the
processing of invoices and the payment of any fees in connection
therewith.
[*] Confidential portions omitted and filed separately with the Securities and
Exchange Commission.
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21
(j) Vendor shall be responsible at no charge to Customer for any
modification or enhancement to, or substitution for, the
Software necessitated by unauthorized changes to the Software by
Vendor.
(k) Except to the extent caused by Customer, any modification,
termination, or cancellation fees imposed upon Customer in
connection with any modification, termination, or cancellation
of any agreement in connection with the Software which was (i)
caused by or resulted from an action or omission by Vendor,
including Vendor's failure to notify Customer of a renewal,
termination, or cancellation date in a timely manner, or (ii)
imposed by Vendor or its affiliates, shall be paid by Vendor.
(l) Each of Customer and Vendor shall promptly inform the other
party of any breach of, or misuse or fraud in connection with,
any agreement in respect of the Software and shall cooperate
with the other party to prevent or stay any such breach, misuse,
or fraud. Each Party shall pay all amounts due for any penalties
or charges (including amounts due to a third party as a result
of a Party's failure to promptly notify the Other pursuant to
the preceding sentence), associated taxes, legal expenses, and
other incidental expenses incurred by the other Party as a
result of action or inaction by the paying Party.
14A. SERVICE RESOURCES
The Service Resources described on EXHIBIT S--SERVICE RESOURCES shall be
transferred to Vendor. Vendor shall be responsible for and shall pay all costs,
fees and other expenses associated with such relationships from and after the
Effective Date.
15. HARDWARE RIGHTS
(a) The Parties obligations and rights with respect to hardware
required to provide the Services shall be as set forth in this
SECTION 15.
(B) EXHIBIT M--HARDWARE RIGHTS provides a detailed schedule of all
hardware required to provide the Services, and categorizes such
hardware as follows: (i) Customer-owned hardware which shall be
transferred to Vendor in accordance with SECTION 15(c) ("Owned
Hardware"); (ii) hardware which is leased by Customer from a
third party and which Vendor shall operate under the agency
arrangement set forth in SECTION 15(d) and SECTION 16 ("Retained
Hardware"); (iii) leased hardware for which Customer shall
transfer the lease to Vendor in accordance with SECTION 15(e)
("Leased Hardware"); and (iv) hardware which is owned or leased
by Vendor from a third party ("Vendor Provided Hardware") which
shall be used by Vendor in connection with this Agreement. The
Owned Hardware, Retained Hardware, Leased Hardware and Vendor
Provided Hardware are collectively referred to herein as the
"Hardware".
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(c) The Owned Hardware shall be conveyed to Vendor as part of the
Business Unit Assets in accordance with SECTION 6 of this
Agreement.
(d) Subject to Customer and Vendor obtaining any required
third-party consents, Customer will obtain appropriate
authorizations permitting Vendor to exercise all of Customer's
rights under leases for the Retained Hardware, and Vendor will
assume all of Customer's obligations under the leases for the
Retained Hardware which accrue on or after the Effective Date.
The Parties will enter into appropriate agency agreements in
connection with the Retained Hardware. Unless otherwise noted on
EXHIBIT M, Vendor shall be responsible for the performance of
all obligations under the applicable leases, including without
limitation payment of all maintenance fees, use charges and
related fees and expenses, attributable to periods on or after
the Effective Date.
(e) Subject to Customer obtaining any required third-party consents,
Customer shall transfer and assign to Vendor all of Customer's
rights under the leases for the Leased Hardware. The Parties
will enter into appropriate assignment and assumption agreements
in connection with the Leased Hardware. Unless otherwise noted
on EXHIBIT M, Vendor shall be responsible for the performance of
all obligations under the applicable leases, including without
limitation payment of all maintenance fees, use charges and
related fees and expenses, attributable to periods on or after
the Effective Date.
(f) Vendor shall be responsible for obtaining all rights to Vendor
Provided Hardware and shall be responsible for the performance
of all obligations under the leases and agreements therefor,
including without limitation payment of all lease charges,
maintenance fees, use charges and related fees and expenses,
however designated, for the Vendor Provided Hardware, and
Customer shall have no obligation to obtain such leases or
agreements or any required third-party consents for such
products.
(g) With the cooperation of the other Party, the Parties shall use
best efforts to obtain all third party consents required under
this SECTION 15; provided, however, that Vendor shall be
responsible for obtaining and paying for all consents necessary
to allow Vendor to use any of the Hardware (excluding the Owned
Hardware) to perform its obligations under this Agreement. In
the event that any required consent is not obtained, then,
unless and until such required consent is obtained, the Parties
shall cooperate with each other in achieving a reasonable
alternative arrangement under which Vendor may perform the
Services without causing a breach or violation of any agreement
under which such required consent is to be obtained.
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(h) Except as may be approved by Customer, Vendor shall not make any
changes or modifications to the Hardware that would adversely
alter the functionality of the Hardware, degrade the performance
of the Hardware, adversely affect the day-to-day operations of
Customer's business, or violate the applicable lease agreements
for the Hardware.
(i) Vendor shall be responsible for managing, administering and
maintaining the agreements for the Hardware, including any
renewal, termination or cancellation notices or dates, the
processing of invoices and the payment of any fees in connection
therewith.
(j) Vendor shall be responsible at no charge to Customer for any
modification or enhancement to, or substitution for, the
Hardware necessitated by unauthorized changes to the Hardware by
Vendor.
(m) Except to the extent caused by Customer, any modification,
termination, or cancellation fees imposed upon Customer in
connection with any modification, termination, or cancellation
of any agreement in connection with the Hardware which was (i)
caused by or resulted from an action or omission by Vendor,
including Vendor's failure to notify Customer of a renewal,
termination, or cancellation date in a timely manner, or (ii)
imposed by Vendor or its affiliates, shall be paid by Vendor.
(n) Each of Customer and Vendor shall promptly inform the other
party of any breach of, or misuse or fraud in connection with,
any agreement in respect of the Hardware and shall cooperate
with the other party to prevent or stay any such breach, misuse,
or fraud. Each Party shall pay all amounts due for any penalties
or charges (including amounts due to a third party as a result
of a Party's failure to promptly notify the other pursuant to
the preceding sentence), associated taxes, reasonable legal
expenses, and other incidental expenses incurred by the other
Party as a result of the first Party's nonperformance of its
obligations under this Agreement with respect to the Hardware.
(o) In the event that Vendor or Customer identifies any equipment or
hardware in a Service Location which is not listed on EXHIBIT M,
the Parties shall reasonably cooperate with each other to
determine whether such equipment or hardware shall be retained
by Customer or shall be subject to this Agreement as Owned
Hardware (in consideration of an appropriate purchase price to
be paid by Vendor to Customer), Retained Hardware or Leased
Hardware.
16. AGENCY
(a) Customer appoints Vendor as the agent of the Customer, and
Vendor accepts such appointment as a part of the Services, for
the limited
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purposes of administering, managing, supporting, operating under
and paying under such Third Party Agreements as to which
Customer has not obtained required consents in accordance with
this Agreement. Customer does not appoint Vendor as its agent
for the purposes of entering into oral or written agreements
with any individual or business entity for or in the name of the
Customer or its Affiliates, without the prior express written
approval of Customer.
(b) Vendor will perform its obligations and responsibilities as an
agent pursuant to SECTION 16(a) under all Third Party Agreements
subject to the provisions of this Agreement. Upon Customer's
request, Vendor will provide to Customer all information and
documentation Customer may reasonably request related to its
activities as the Customer's agent with regard to such Third
Party Agreements. Customer may terminate or provide additional
restrictions on Vendor's agency appointment with respect to any
Third Party Agreement at any time in Customer's discretion
provided that such action does not affect Vendor's provision of
the Services.
17. DISASTER RECOVERY
As part of the Designated Services, Vendor shall develop, implement and
maintain a disaster recovery plan (the "Disaster Recovery Plan") that is
reasonably acceptable to Customer. Vendor shall develop and present to Customer
an initial Disaster Recovery Plan within [*] from the Effective Date of this
Agreement, and shall implement the final, approved Disaster Recovery Plan no
later than [*] from the Effective Date. The Disaster Recovery Plan shall include
at least the elements set forth in EXHIBIT P--DISASTER RECOVERY PLAN. During the
Term of this Agreement, Vendor shall (a) periodically update and test the
operability of such plan, (b) certify to Customer that the plan is fully
operational at least once during every [*] period, and, (c) implement the plan
upon notice of a disaster from Customer. All Critical Functions shall be
restored within [*] of receipt of such notice by Customer.[*]
18. FORCE MAJEURE
(a) Each Party shall be excused from performance under this
Agreement and shall have no liability to the other for any
period it is prevented from performing any of its obligations,
in whole or in part, as and to the extent set forth in this
SECTION 18, as a result of an event or delay that could not have
been prevented by reasonable precautions, was not caused by
Vendor's (or its subcontractor's) negligence, and cannot
reasonably be circumvented by the non-performing Party through
the use of alternate sources, work-around plans, or other means,
and which is caused, directly or indirectly, by fire, flood,
earthquake, elements of nature or acts of God, acts
[*] Confidential portions omitted and filed separately with the Securities and
Exchange Commission.
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of war, terrorism, riots, civil disorders, rebellions or
revolutions in the United States, strikes, lockouts, or labor
difficulties, or any other similar cause beyond the reasonable
control of such Party (each, a "Force Majeure Event").
(b) If a Force Majeure Event occurs, the nonperforming Party will be
excused from any further performance or observance of the
obligation(s) so affected for as long as such circumstances
prevail and such Party continues to use commercially reasonable
efforts to recommence performance or observance whenever and to
whatever extent possible without delay. Any Party so delayed in
its performance will promptly notify the other by telephone and
describe at a reasonable level of detail the circumstances
causing such delay (to be confirmed in writing within [*] hours
after the inception of such delay).
(c) If any Force Majeure Event substantially prevents, hinders, or
delays performance of the Services necessary for the performance
of Customer's Critical Functions for more than [*] ([*])
consecutive days, then at Customer's option:
(i) [*]
(ii) Customer may terminate this Agreement as of a date
specified by Customer in a written notice of termination
to Vendor, and Customer will pay all fees due and
payable through the termination date. If Customer elects
such termination, Customer shall not be obligated to pay
any other termination or other fees, however described,
to Vendor, except fees for Services Transfer Assistance.
(d) Whenever a Force Majeure Event or a disaster causes Vendor to
allocate limited resources between or among Vendor's customers
and affiliates at the affected service locations, Customer shall
receive at least the same priority in respect of such allocation
as Vendor's other commercial customers receiving substantially
similar goods and services.
19. AUDITS
(a) Upon notice from Customer, Vendor shall provide, and shall cause
its subcontractors to provide, such auditors and inspectors as
Customer or any regulatory authority may reasonably designate in
such notice with reasonable
[*] Confidential portions omitted and filed separately with the Securities and
Exchange Commission.
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access (i) during normal business days and hours (except as may
be necessary to perform security audits) to the premises of
Vendor and its subcontractors and (ii) at any time at the
Service Locations for the purpose of performing audits or
inspections of the business of Customer (including Vendor's
delivery of any Services being provided in support of such
business being audited).
(b) As part of the Services, Vendor shall provide, and shall cause
its subcontractors to provide, such auditors and inspectors any
assistance that they may reasonably require; provided, however,
that to the extent such assistance exceeds [*] full days over
the course of any consecutive [*] period, Vendor shall charge
Customer, and Customer shall pay Vendor, fees for such
assistance at Vendor's then-current time and materials rates.
(c) If any audit by a regulatory authority having jurisdiction over
Customer or Vendor results in Customer or Vendor being notified
that Vendor or its subcontractors are not in compliance with any
requirement relating to the Services, Vendor shall, at its own
expense and within the period of time specified by such
regulatory authority, comply with such regulatory requirements.
(d) If any audit by an auditor designated by Customer results in
Customer or Vendor being notified that Vendor or its
subcontractors are not in compliance with any generally accepted
accounting principle or other reasonable audit requirement
relating to the Services, Vendor shall, within reason, at its
own expense and within a reasonable period of time, use its best
efforts to comply with such requirement.
(e) Upon notice from Customer, Vendor shall provide, and shall cause
its subcontractors to provide, Customer with access to such
records and documentation as may be reasonably necessary for
Customer to determine the accuracy of Vendor's charges to
Customer. If, as a result of such audit, it is determined that
Vendor has overcharged Customer or Customer has underpaid
Vendor, Customer shall notify Vendor of the amount of such
overcharge or underpayment. In the case of an overcharge, Vendor
shall promptly pay to Customer the amount of the overcharge, or
in the case of an underpayment, Customer shall promptly pay to
Vendor the amount of the underpayment.
(f) In the event any such audit by Customer or its agents reveals
an overcharge to Customer by Vendor of [*] more in any fee
category, Vendor shall reimburse Customer for the reasonable
cost of such audit.
[*] Confidential portions omitted and filed separately with the Securities and
Exchange Commission.
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(g) Vendor shall, during the Term of this Agreement and until four
(4) years after termination of this Agreement, make available,
upon appropriate written request by a state or federal
governmental entity or its representatives, a copy of this
Agreement and such books, documents, records and data of Vendor
as are necessary to verify the nature and extent of the costs to
Customer for Services under this Agreement and the accuracy of
invoices for such services.
20. CONFIDENTIAL INFORMATION
(a) Vendor and Customer each acknowledge that the other Party
possesses and will continue to possess information, which has
commercial value in its business and is not in the public
domain, that has been created, discovered, developed by it or
provided to it by a third party, and in which property rights
have been assigned or otherwise conveyed to it. "Confidential
Information" means any and all proprietary business information
in the possession of the disclosing Party treated as secret by
the disclosing party (that is, it is the subject of efforts by
the disclosing Party or its Affiliates that are reasonable under
the circumstances to maintain its secrecy) that does not
constitute a Trade Secret (defined below), including, without
limitation, any and all proprietary information in the
possession of such Party of which the receiving Party becomes
aware as a result of its access to and presence at the other
Party's facilities. "Trade Secrets" means information related to
the services or business of the disclosing Party or its
Affiliates or of a third party which (i) derives economic value,
actual or potential, from not being generally known to or
readily ascertainable by other persons who can obtain economic
value from its disclosure or use; and (ii) is the subject of
efforts by the disclosing Party or its Affiliates that are
reasonable under the circumstances to maintain its secrecy,
including without limitation (A) marking any information reduced
to tangible form clearly and conspicuously with a legend
identifying its confidential or proprietary nature; (B)
identifying any oral presentation or communication as
confidential immediately before, during or after such oral
presentation or communication; or (C) otherwise, treating such
information as confidential or secret. Assuming the criteria in
sections (i) and (ii) above are met, Trade Secrets include, but
are not limited to, technical and nontechnical data, formulas,
patterns, compilations, computer programs and software, devices,
drawings, processes, methods, techniques, designs, programs,
financial plans, product plans, and lists of actual or potential
customers and suppliers. "Company Information" means
collectively the Confidential Information and Trade Secrets.
Company Information also includes information which has been
disclosed to either Party by a third party which such Party is
obligated to treat as confidential or secret.
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(b) Customer and Vendor will each refrain from disclosing, will hold
as confidential and will use the same level of care to prevent
disclosing to third parties, the Company Information of the
other Party as it employs to avoid disclosure, publication or
dissemination of its own information of a similar nature but in
no event less than a reasonable standard of care.
Notwithstanding the foregoing, the Parties may disclose Company
Information in the case of Customer, to members of the Customer
Group and in the case of both Parties, the authorized
contractors and subcontractors involved in providing and using
the Services under this Agreement where: (i) such disclosure is
necessary to permit the members of the Customer Group and the
contractor or subcontractor to perform its duties hereunder or
use the Services; (ii) members of the Customer Group and the
contractor or subcontractor agree in writing to observe the
confidentiality and restricted use and disclosure covenants and
standards of care set forth in this SECTION 20 and under which
the disclosing Party is a third party beneficiary for all
purposes; and (iii) the receiving Party making the disclosure
assumes full responsibility for the acts or omissions of its
contractor or subcontractor and in the case of Customer, the
members of the Customer Group, no less than if the acts or
omissions were those of the receiving Party.
(c) Neither Customer nor Vendor shall use the Company Information of
the other Party except in the case of Vendor and its
subcontractors, in connection with the performance of the
Services and as otherwise specifically permitted in this
Agreement, and in the case of Customer, its contractors and
other members of the Customer Group, as specifically permitted
in this Agreement and in connection with the use of the
Services. Vendor shall be responsible to ensure that its
subcontractors comply with this SECTION 20(c) and Customer shall
be responsible to ensure that the members of the Customer Group
and its subcontractors comply with this SECTION 20(c).
(d) Without limiting the generality of the foregoing, neither Party
will publicly disclose the terms of this Agreement, except to
the extent permitted by this SECTION 20 and to enforce the terms
of this Agreement, without the prior written consent of the
other. Furthermore, neither Vendor nor Customer will make any
use of the Company Information of the other Party except as
contemplated by this Agreement; acquire any right in or assert
any lien against the other Party's Company Information except as
contemplated by this Agreement; or refuse to promptly return,
provide a copy of or destroy such Company Information upon the
request of the disclosing Party.
(e) Notwithstanding any other provision of the Agreement, neither
Party will be restricted in using, in the development,
manufacturing and marketing of its products and services and in
its operations, any data processing, system
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operations, applications development or network management
ideas, concepts, know-how and techniques which are retained in
the minds of employees who have had access to the other Party's
Company Information (without reference to any physical or
electronic embodiment of such information), unless such use
shall infringe any of such Party's patent rights, copyrights or
mask works rights.
(f) Notwithstanding the foregoing, this SECTION 20 will not apply to
any information which Vendor or Customer can demonstrate was:
(i) at the time of disclosure to it, in the public domain; (ii)
after disclosure to it, published or otherwise becomes part of
the public domain through no fault of the receiving Party; (iii)
without a breach of duty owed to the disclosing Party, is in the
possession of the receiving Party at the time of disclosure to
it; (iv) received after disclosure to it from a third party who
had a lawful right to and, without a breach of duty owed to the
disclosing Party, did disclose such information to it; or (v)
independently developed by the receiving Party without reference
to Company Information of the disclosing Party. Further, either
Party may disclose the other Party's Company Information to the
extent required by law or order of a court or governmental
agency. However, the recipient of such Company Information must
give the other Party prompt notice and make a reasonable effort
to obtain a protective order or otherwise protect the
confidentiality of such information, all at the disclosing
party's cost and expense. It is understood that the receipt of
Company Information under this Agreement will not limit or
restrict assignment or reassignment of employees of Vendor and
the Customer Group within or between the respective Parties and
their Affiliates.
(g) The receiving Party will immediately notify the disclosing
Party, orally or in writing in the event of any disclosure,
loss, or use in violation of this Agreement.
(h) The covenants of confidentiality set forth herein (i) will apply
after the Effective Date to any Company Information disclosed to
the receiving Party before and after the Effective Date and (ii)
will continue and must be maintained from the Effective Date
through the termination of the relationship between the Parties
and (A) with respect to Trade Secrets, until such Trade Secrets
no longer qualify as trade secrets under applicable law; and (B)
with respect to Confidential Information for a period equal to
the shorter of two (2) years after termination of the Parties'
relationship under this Agreement or until such Confidential
Information no longer qualifies as confidential under applicable
law. Neither Party will be responsible for the security of the
Company Information of the other Party during transmission via
public communications facilities, except to the extent that such
breach of security is caused by the failure of such Party to
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perform its obligations under this Agreement or the negligent
acts or omissions of such Party, its contractors, subcontractors
or Affiliates.
(i) Vendor acknowledges and agrees that all Clinic Data is owned by
the respective Clinics, and Vendor shall act in the capacity of
the custodian of such data during the Term of this Agreement.
Clinic Data shall be considered Confidential Information for the
purposes of this Agreement, and Vendor shall observe all
obligations and duties under this Section 20 with respect to
such data. In addition, Vendor shall be responsible for
complying with all federal and state laws applicable to the
Clinic Data.
21. REPRESENTATIONS AND WARRANTIES
(a) Vendor warrants, represents and covenants that (i) it has, and
during the Term will have, and each of the subcontractors that
it will use to provide and perform the Services has and during
the Term will have, the necessary knowledge, skills, experience,
qualifications, rights and resources to provide and perform the
Services in accordance with this Agreement; and (ii) the
Services will be performed for Customer in a diligent,
workmanlike manner in accordance with industry standards
applicable to the performance of such services.
(b) Vendor warrants, represents and covenants that the Services will
be rendered by the Vendor in a manner consistent with good
commercial practices.
(c) Vendor warrants, represents and covenants that it will perform
its responsibilities under this Agreement in a manner that, to
the best of its knowledge, does not infringe, or constitute an
infringement or misappropriation of, any patent, trade secret,
copyright or other proprietary right of any third party.
(d) Each Party hereby represents and warrants that (i) it has all
requisite corporate power and authority to enter, and fully
perform pursuant to, into this Agreement; (ii) the execution,
delivery and performance of this Agreement and the consummation
of the transactions contemplated hereby have been duly and
properly authorized by all requisite corporate action on its
part; and (iii) this Agreement has been duly executed and
delivered by such Party.
(e) Each Party agrees at its cost and expense to obtain all
necessary regulatory approvals applicable to its business, to
obtain any necessary permits for its business, and to comply in
all material respects with all laws and regulatory requirements
applicable to the performance of its obligations under this
Agreement.
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(f) Vendor represents and warrants that as of the Effective Date,
Vendor has not disclosed to any unauthorized party any
Confidential Information.
(g) RESERVED
(h) Customer represents and warrants that, as of the Effective Date
and to its knowledge, the Customer Owned Software does not
infringe any copyright, patent or trade secret right of any
third party.
(i) Vendor represents and warrants that, as of the Effective Date
and to its knowledge, the Vendor Owned Software does not
infringe any copyright, patent or trade secret right of any
third party.
(j) NEITHER PARTY MAKES ANY WARRANTIES NOT SET FORTH EXPRESSLY IN
THIS AGREEMENT AND EXPLICITLY DISCLAIMS ALL OTHER WARRANTIES,
EXPRESS OR IMPLIED, INCLUDING WARRANTIES OF MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE.
22. DISPUTE RESOLUTION
(a) The Parties agree that they shall attempt to resolve issues
concerning this Agreement at the operational level using
standard business practices, cooperative approaches and
unemotional behavior. Among other resolution strategies, the
Parties may elect to use a staff facilitator to speed resolution
of the issue. All disputes, controversies, or claims arising out
of or relating to this Agreement (including the Exhibits hereto)
that are not so resolved ("Disputes") shall be referred to the
Vendor Account Manager and the Customer Account Manager prior to
escalation to the Management Committee. The Vendor Account
Manager and the Customer Account Manager shall maintain a log of
all Disputes detailing the date, circumstances, possible
solutions, assignments arising from the resolution process,
resolution schedule and ultimate disposition of such Dispute. If
the Customer Account Manager and the Vendor Account Manager are
unable to resolve, or do not anticipate resolving, the Dispute
within fifteen (15) days after referral of the matter to them,
the parties shall submit the Dispute to the Management
Committee.
(b) In the event a Dispute is submitted to the Management Committee,
the Management Committee shall meet within seven (7) days (or at
such other time as the Parties may designate) for the purpose of
resolving the Dispute. The Management Committee shall consider
Disputes in the order of the materiality of such Disputes, or if
it is unclear as to the priority of materiality, in the order
such Disputes are brought before it. In the event the Management
Committee is unable to resolve a Dispute within thirty (30)
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days, the Management Committee shall submit the dispute to the
Senior Executives pursuant to SECTION 22(c).
(c) In the event that the Management Committee is not successful in
resolving a Dispute within thirty (30) days after submission,
the Management Committee shall submit the dispute to the Chief
Executive Officer of Vendor and the Chief Information Officer or
the Chief Financial Officer of Customer (the "Senior
Executives"). The Senior Executives shall meet as necessary (but
in any case, at least once per week) for the purpose of
resolving the Dispute. No Dispute under this Agreement shall be
the subject of arbitration or other formal proceedings between
Customer and Vendor before being considered by the Management
Committee and the Senior Executives, pursuant to this SECTION
22, except for an action to seek injunctive relief to stay a
breach of this Agreement.
(d) Disputes that are not resolved by the procedures set forth above
may be submitted by either Party to binding and final
arbitration according to the rules of the American Arbitration
Association. The arbitration shall be heard before a single
arbitrator to be chosen by mutual consent of the Parties within
thirty (30) days of the initiation of the arbitration by either
Party. The schedule and rules for the arbitration hearing shall
be as set by the arbitrator and the hearing shall be held in
Birmingham, Alabama. Each party shall bear its own costs of
conducting the hearing and shall be bound by the arbitrator's
decision. The costs of the arbitration shall be paid by the
party designated by the arbitrator. The arbitrator shall have
not less than ten (10) years experience in the information
technology industry, commercial software marketing, or
large-scale information technology project management. The
decision of the arbitrator is final and binding upon all
parties. Judgment upon the final arbitration decision may be
entered with any court having jurisdiction thereof. The
obligation to arbitrate if the preceding dispute resolution
steps fail is an essential provision of this Agreement and the
Parties both agree that such obligation is legally binding upon
them. In case of a violation of the obligation to arbitrate by
either Party, the other Party may bring an action to seek
enforcement of such obligation in any state or federal court of
appropriate jurisdiction.
(e) All negotiations under this SECTION 22 shall be confidential and
treated as compromise and settlement negotiations for purposes
of the state and federal rules of evidence.
(f) In the event of a Dispute between Customer and Vendor pursuant
to which Customer in good faith believes it is entitled to
withhold payment and during the pendency of the dispute
resolution process described in this Agreement, Vendor shall,
subject to the escrow of disputed amounts pursuant to this
Agreement, continue to provide the Services and Customer shall
continue to pay any undisputed amounts to Vendor. Customer
shall, upon request by
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Vendor, deposit any disputed amount in an interest bearing
escrow account. Upon resolution of the Dispute, the parties
shall allocate the money in the escrow account, plus any
interest earned on such money, according to the resolution of
such Dispute.
23. TERMINATION
(a) Termination Upon Payment Default by Customer. At Vendor's
option, this Agreement may be terminated by Vendor in the event
that the Customer shall fail to make any payment due to Vendor
under this Agreement except as provided in SECTION 9(k) or 23(d)
and shall fail to cure such payment default within [*] days
after Vendor's written notice to Customer detailing such payment
default.
(b) Termination Upon Event of Default by Vendor. Upon the occurrence
of an Event of Default (as defined below) and at any time
thereafter during the continuance of such Event of Default,
Customer may terminate this Agreement or any Services being
provided by Vendor under this Agreement by written notice given
to the Vendor, and pursue any legal remedies available to it
under law and this Agreement. The occurrence of any of the
following events with the passing of any applicable notice and
cure periods shall constitute an "Event of Default" under this
Agreement:
(i) Vendor fails to observe or perform any other material
obligation to be observed or performed by it hereunder,
and such failure shall continue for [*] days after
written notice of default from the Customer; or
(ii) Upon a Change of Control of Vendor or an announcement or
acknowledgement of a pending Change of Control of
Vendor, with [*] days notice to Vendor of such
termination; or
(iii) Vendor fails to provide the Critical Functions and
Vendor does not, within [*] hours after notice of such
failure from Customer, cure such failure or, if such
failure cannot be cured within such [*] hour period,
provide to Customer and implement a workaround for such
Critical Functions reasonably satisfactory to Customer;
or
(iv) Vendor shall admit in writing its inability to pay its
debts as they mature, or shall make an assignment for
the benefit of its or any of its creditors; or
(v) Proceedings in bankruptcy, or for reorganization of
Vendor or for the readjustment of any of its debts,
under the United States Bankruptcy Code, or under any
other laws, whether state or
[*] Confidential portions omitted and filed separately with the Securities and
Exchange Commission.
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federal, for the relief of debtors, now or hereafter
existing, shall be commenced by Vendor, or shall be
commenced against Vendor and shall not be discharged or
terminated within sixty (60) days of their commencement;
or
(vi) A receiver or trustee shall be appointed for Vendor or
for any substantial part of its assets, or any
proceedings shall be instituted for the dissolution or
the full or partial liquidation of Vendor, and such
receiver or trustee shall not be discharged within sixty
(60) days of his appointment, or such proceedings shall
not be discharged within sixty (60) days of their
commencement, or Vendor shall discontinue its business;
or
(vii) As determined by Customer, there exists a series of
non-material or persistent breaches by Vendor that in
the aggregate have a significant adverse impact on the
Services or upon the management of the Services; or
(viii) Vendor fails to meet any particular Service Level [*] or
more times in any [*] day period, or Vendor fails to
meet the Minimum Performance Levels set forth in EXHIBIT
H at any time.
(c) Additionally, Customer may terminate this Agreement as permitted
under SECTIONS 8(f) and 18(c)(ii).
(d) Termination for Convenience. Customer may terminate this
Agreement or the Clinic Services for convenience without
penalty, termination fee or other liability to Vendor, at any
time after December 31, 1999, upon thirty (30) days prior
written notice to Vendor. In addition, Customer may terminate
this Agreement or the Clinic Services for convenience prior to
December 31, 1999, but no earlier than October 31, 1999, upon
written notification of termination at any time during the Term
giving ninety (90) days notice to Vendor and payment of the
Convenience Termination Fee. Notwithstanding the foregoing,
Customer may terminate the Corporate Services or the Caremark
Services at any time for any reason without penalty, termination
fee or other liability to Vendor upon written notice to Vendor
giving ninety (90) days notice to Vendor.
24. LIMITED RIGHT TO CONTINUATION OF SERVICES.
Upon the termination of this Agreement for any reason, Vendor shall
provide the Services Transfer Assistance set forth in EXHIBIT N--SERVICES
TRANSFER ASSISTANCE for a period up to ninety (90) days after the date of
termination, and in accordance with the fee schedule set forth on EXHIBIT N. The
quality and level of performance of the Services during the termination process
shall not be degraded unless otherwise agreed to by the Parties.
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25. EXIT PLAN.
Upon the termination by Customer of this Agreement for an Event of
Default or under SECTION 8(f) or SECTION 18(c)(ii), Customer may, at its option,
purchase any of the Hardware and Software used to provide the Corporate Services
and/or Caremark Services at a price equal to then-current fair market value, but
not to exceed $[*].
26. INDEMNIFICATION.
(a) Customer shall indemnify, defend and hold harmless Vendor from
any liability or expenses (including reasonable attorneys' fees)
arising out of or relating to any claim by a third party that
the Customer Owned Software, as delivered by Customer and
otherwise unmodified and unchanged (unless and to the extent
such modification or change would not materially impact the
third party claim), infringes upon the proprietary rights of any
third party.
(b) Customer shall indemnify, defend and hold harmless Vendor from
any liability or expenses (including reasonable attorneys' fees)
arising out of or relating to any claim concerning (i) any
allegation of improper billing practices that occurred prior to
the Effective Date brought by the Health Care Financing
Administration or any other party, (ii) Customer's performance
prior to the Effective Date of services similar to the Services,
or (iii) any breach of the Third Party Agreements or any other
agreement related to either the Services or Service Locations,
accruing before the Effective Date of this Agreement.
(c) Customer shall indemnify, defend and hold harmless Vendor from
any liability or expenses (including reasonable attorneys' fees)
arising out of or relating to any claim brought by a third party
to the extent such claim is the result of actions taken by
Vendor after Vendor's written objection at the specific
direction of Customer in connection with Vendor's performance
under this Agreement or any amendment thereto.
(d) Vendor shall indemnify, defend and hold harmless Customer from
any liability or expenses (including reasonable attorneys' fees)
arising out of or relating to Vendor's use of the Software to
provide services to a third party (other than a member of the
Customer Group).
(e) Vendor shall indemnify, defend and hold harmless each member of
the Customer Group from any liability or expenses (including
reasonable attorneys' fees) arising out of or relating to any
claim by a third party that the Services, the Vendor Proprietary
Software, or any work performed by Vendor or its agents with
respect to the Software under this Agreement infringes upon the
proprietary rights of any third party. In the event of such
[*] Confidential portions omitted and filed separately with the Securities and
Exchange Commission.
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a claim by a third party, Vendor shall use commercially
reasonable best efforts to also provide Customer a
non-infringing work-around which is functionally equivalent to
the software, services or work in question, at no additional
cost to Customer.
(f) Vendor shall indemnify, defend and hold harmless each member of
the Customer Group from any liability or expenses (including
reasonable attorneys' fees) arising out of or relating to any
claim by a third party with respect to inadequacies in the
physical and data security control systems at the Service
Locations to the extent such systems are controlled or provided
by Vendor after the Effective Date of this Agreement.
(g) Vendor shall indemnify, defend and hold harmless each member of
the Customer Group from any liability or expenses (including
reasonable attorneys' fees) arising out of or relating to any
claim concerning (i) any allegation of improper billing
practices that occurred on or after the Effective Date brought
by the Health Care Financing Administration or any other party;
(ii) the performance of services by Vendor on or after the
Effective Date (including, without limitation, Vendor's breach
of Section 1(g) of this Agreement); or (iii) any breach of the
Third Party Agreements or any other agreement related to the
Services or the Service Locations, accruing on or after the
Effective Date of this Agreement.
(h) Customer shall indemnify, defend and hold harmless Vendor from
any liability or expenses (including reasonable attorneys' fees)
arising out of any act or omission by Customer under the lease
agreements covering Customer's locations in Glastonbury,
Connecticut, or Birmingham, Alabama, accruing, in each case,
before the Effective Date of this Agreement.
(i) Vendor shall indemnify, defend and hold harmless each member of
the Customer Group from any liability or expenses (including
reasonable attorneys' fees) arising out of any act or omission
by Vendor under the lease agreement assumed by Vendor for the
Glastonbury, Connecticut Service Location, or the sub-lease
agreement for the Birmingham, Alabama, Service Location,
accruing, in each case, on or after the Effective Date of this
Agreement.
(j) Each Party shall indemnify, defend and hold harmless the other
Party from any liability or expenses (including reasonable
attorneys' fees) arising out of or relating to any amounts
including taxes, interest, and penalties assessed against a
Party which are obligations of the other Party.
(i) Each Party shall indemnify, defend and hold harmless the other Party
from any costs and expenses (including reasonable attorneys fees)
incurred in connection with the enforcement of the other Party's
indemnity rights.
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(j) Procedure. If any third party shall notify a Party hereto (the
"Indemnified Party") with respect to any matter which may give
rise to a claim for indemnification against the other Party (the
"Indemnifying Party") under this SECTION 26, then the
Indemnified Party shall notify the Indemnifying Party in writing
thereof promptly; provided, however, that no delay on the part
of the Indemnified Party in notifying any Indemnifying Party
shall relieve the Indemnifying Party from any liability or
obligation hereunder unless (and then solely to the extent) the
Indemnifying Party experiences any prejudice in the ability to
provide the indemnification required under this SECTION 26. If
the Indemnifying Party acknowledges that this Agreement applies
with respect to such claim, then the Indemnifying Party shall be
entitled to take control of the defense and investigation of the
claim. In the event any Indemnifying Party notifies the
Indemnified Party that it is assuming the defense thereof, (A)
the Indemnifying Party will defend the Indemnified Party against
the matter with counsel of the Indemnifying Party's choice
reasonably satisfactory to the Indemnified Party, (B) the
Indemnified Party may retain separate co-counsel at its sole
cost and expense (except that the Indemnifying Party will be
responsible for the fees and expenses of the separate co-counsel
to the extent the Indemnified Party concludes reasonably that
the counsel the Indemnifying Party has selected has a conflict
of interest), (C) the Indemnified Party will not consent to the
entry of any judgment or enter into any settlement with respect
to the matter without the written consent of the Indemnifying
Party which consent will not be withheld or delayed
unreasonably, and (D) the Indemnifying Party will not consent to
the entry of any judgment with respect to the matter, or enter
into any settlement which does not include a provision whereby
the plaintiff or claimant in the matter releases the Indemnified
Party from all liability with respect thereto, without the
written consent of the Indemnified Party, which consent will not
be withheld or delayed unreasonably.
27. REMEDIES.
(a) Unless specifically provided to the contrary in this Agreement,
neither party shall have any liability whether based on
contract, tort (including without limitation, negligence),
warranty, guarantee or any other legal or equitable grounds to
the other party for any damages other than Direct Damages.
(b) Neither Party shall have any liability to the other Party for
any damages arising out of or resulting from the performance and
non-performance of its obligations under this Agreement in
excess of [*] ($[*]) in the aggregate.
[*] Confidential portions omitted and filed separately with the Securities and
Exchange Commission.
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(c) The limitations set forth in SECTIONS 27(a) - (c) are not
applicable to (i) the Parties' indemnification obligations for
third party claims under SECTION 26; (ii) losses covered by
insurance policies maintained by the Party liable for such
damages; or (iii) liability resulting from the gross negligence
or willful misconduct of a Party.
28. INSURANCE. During the Term, Vendor shall maintain the insurance coverages
required under EXHIBIT Q--INSURANCE of this Agreement and otherwise comply with
the requirements set forth on EXHIBIT Q.
29. MISCELLANEOUS.
(a) Headings. The Section headings herein are for reference purposes
only and shall not affect in any way the meaning or
interpretation of this Agreement.
(b) Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective
successors and assigns; provided, however, that no party hereto
will assign its rights or delegate its obligations under this
Agreement without the express prior written consent of the other
party hereto except that Customer at its discretion may assign
this Agreement and any of its rights and obligations under this
Agreement pursuant to a merger, corporate reorganization or sale
of all or substantially all of its assets or stock.
(c) Governing Law. This Agreement shall be construed and governed by
the internal laws of the State of Alabama, without reference to
the choice of law principles thereof. Each party irrevocably
agrees that any legal action, suit, or proceeding brought by it
in any way arising out of the agreement must be brought solely
and exclusively in the federal district court (or in the absence
of federal jurisdiction, the appropriate state court) sitting in
Birmingham, Alabama and each party irrevocably accepts and
submits to the sole and exclusive jurisdiction of each of the
aforesaid courts in personam, generally and unconditionally with
respect to any action, suit, or proceeding brought by it or
against it by the other party.
(d) Notices. All communications or notices required or permitted by
this Agreement shall be sufficiently given for all purposes
hereunder if given in writing and delivered (i) personally, (ii)
by United States mail, return receipt requested, (iii) by
document overnight delivery service or (iv) by telecopy,
facsimile or other electronic transmission service, provided the
sender delivers a confirmation copy of such telecopy, facsimile
or other electronic transmission service within three (3)
business days thereafter. All notices delivered in accordance
with this Section shall be sent to the appropriate address or
number, as set forth below, or to such other address or to the
attention of such other person as the recipient party has
specified by prior written notice to the sending party, and
shall be effective upon its
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delivery to the addressee, as provided herein, either
personally, by mail or by electronic transmission, as the case
may be, or three (3) business days after it is sent or
dispatched, whichever occurs earlier.
(e) Severability. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective
and valid under applicable law, but if any provision of this
Agreement is held to be prohibited by or invalid under
applicable law, such provision will be ineffective only to the
extent of such prohibition or invalidity, without invalidating
the remainder of this Agreement.
(f) Amendments. This Agreement may not be modified or amended except
by an instrument or instruments in writing signed by the party
against whom enforcement of any such modification or amendment
is sought.
(g) Exhibits; Entire Agreement. The exhibits and other attachments
to this Agreement are hereby incorporated by reference and made
part hereof. This Agreement (including, without limitation, the
Regulated Services Agreement and each of the exhibits and
attachments to this Agreement) constitutes the entire
understanding of the parties with respect to the subject matter
hereof and there are no restrictions, promises, warranties,
covenants or undertakings other than those expressly set forth
or referred to herein. This Agreement supersedes all prior
negotiations, agreements and undertakings between the parties
with respect to such subject matter.
(h) No Third Party Beneficiaries. This Agreement is not intended to
and shall not be construed to give any person or entity, other
than the parties hereto, any interest, rights, or remedies
(including, without limitation, any third party beneficiary
rights) with respect to or in connection with this Agreement or
any agreements or provisions contemplated hereby.
(i) Relationship of Parties. Vendor, in furnishing services to
Customer under this Agreement, is acting only as an independent
contractor. Except where this Agreement expressly provides
otherwise, Vendor does not undertake by this Agreement or
otherwise to perform any obligations of Customer, whether
regulatory or contractual, or to assume any responsibility for
Customer's business or operations.
(j) Publicity; Trade Reference. Before using Customer or Customer's
name as a trade reference or for publicity, marketing,
advertising or otherwise, Vendor shall obtain Customer's prior
written consent, which shall not be unreasonably withheld.
Likewise, prior to the Customer using the Vendor or Vendor's
name as a trade reference or for publicity, marketing
advertising or otherwise, Customer shall obtain Vendor's prior
written consent, which shall not be unreasonably withheld.
However, either Party may include the other Party's name and a
factual description of the work
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performed under this Agreement on employee bulletin boards, in
its list of references and in the experience section of
proposals to third parties, in internal business planning
documents and in its annual report to stockholders, and whenever
required by reason of legal, accounting or regulatory
requirements.
(k) Construction. The language used in this Agreement will be deemed
to be the language chosen by the parties to express their mutual
intent, and no rule of strict construction shall be applied
against any party. Any reference to any federal, state, local,
or foreign statute or law shall be deemed also to refer to all
rules and regulations promulgated thereunder, unless the context
requires otherwise.
(l) Except as specifically set forth in this Agreement, all
consents, approvals, acceptances, or similar actions to be given
by either party under this Agreement shall not be unreasonably
withheld or delayed and each party shall make only reasonable
requests under this Agreement.
(m) During the Term and for a period of three (3) months after the
termination of this Agreement, except for the Affected
Employees, neither Party shall solicit any employee of the other
without the other Party's consent.
(n) Sections 5(c), 9(b), 10(a), 19(g), 20, 22, 24, 25, 26, 27 and 28
of this Agreement shall survive the termination or expiration of
this Agreement for any reason.
IN WITNESS WHEREOF, the parties have caused this Information Technology Services
Agreement to be executed in their names as of the date first above written.
MEDPARTNERS, INC. THE TRIZETTO GROUP, INC.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
By:_______________________________ By:______________________________________
(Authorized Signature) (Authorized Signature)
Name:_____________________________ Name:____________________________________
Title:____________________________ Title:___________________________________
Date:_____________________________ Date:____________________________________
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EXHIBIT A
GLOSSARY OF TERMS
ACCOUNT MANAGER Shall have the meaning set forth in SECTION
7(a).
ADDITIONAL SERVICES Shall have the meaning set forth in EXHIBIT
D.
AFFECTED EMPLOYEES Shall be those individuals listed on EXHIBIT
T.
AFFILIATES Shall mean any party controlling, controlled
by or under common control with another
party.
AGREEMENT Shall mean this Information Technology
Services Agreement.
ASR Shall have the meaning set forth in EXHIBIT
D.
BUSINESS UNIT ASSETS Shall have the meaning set forth in the
Business Unit Purchase Agreement attached as
EXHIBIT U.
BUSINESS UNIT ASSET PURCHASE PRICE Shall have the meaning set forth in SECTION
6.
CALENDAR Shall have the meaning set forth in EXHIBIT
B.
CAREMARK Shall be Caremark, Inc., a subsidiary of
MedPartners, Inc.
CAREMARK SERVICES Shall have the meaning set forth in EXHIBIT
B.
CHANGE CONTROL PROCESS Shall mean the change control process set
forth in EXHIBIT K.
CHANGE OF CONTROL Shall mean the transfer of the ownership or
control, directly or indirectly, of the
majority of the voting capital stock of
Vendor, from the persons or persons who hold
such control on the Effective Date to another
person or persons; provided, however, that a
Change of Control shall not include: (i) any
transfer of such stock by a stockholder of
Vendor to an immediate family member, (ii)
any transfer of such stock to any trust or
similar entity established for the benefit of
either (1) any stockholder of Vendor; or (2)
an immediate family member of any stockholder
of Vendor; or (iii) any initial public
offering of Vendor.
CLINIC DATA Shall be that portion of the Customer Data
which specifically relates to a Clinic or the
Clinics, including but not limited to medical
records and patient data.
CLINIC SERVICES Shall be that portion of the Services set
forth in EXHIBIT B to be provided to the
Clinics in accordance with the service matrix
set forth in EXHIBIT C.
CLINIC SERVICES PERIOD Shall be, for each Clinic, the period from
the Effective Date through such time as the
Clinic and Customer mutually agree that
Customer is no longer obligated to provide
the Clinic Services to the Clinic, including,
but not limited to, the period during the
Term before and after the date on which the
Clinic is disassociated from Customer.
CLINICS Shall be those clinics identified on EXHIBIT
C.
COMPANY INFORMATION Shall have the meaning set forth in SECTION
20(a).
CONFIDENTIAL INFORMATION Shall have the meaning set forth in SECTION
20(a).
CONVENIENCE TERMINATION FEE Shall be equal to the sum of $[*] per month
for the period
[*] Confidential portions omitted and filed separately with the Securities and
Exchange Commission.
Exhibit A
42
between the date on which termination is
effective and December 31, 1999, prorated as
necessary for any portion of a month.
CORPORATE SERVICES Shall have the meaning set forth in EXHIBIT
B.
CRITICAL DISRUPTION Shall mean the failure of Vendor to provide
the Critical Functions for any period of
thirty six (36) consecutive hours.
CRITICAL FUNCTIONS Shall mean financial process support, Clinic
process support, communications services and
help desk services.
CUSTOMER Shall have the meaning set forth in the
introductory paragraph of the Agreement.
CUSTOMER DATA Shall have the meaning set forth in SECTION
13(a).
CUSTOMER GROUP Shall be MDM, Caremark, the Clinics
(including, without limitation, the
Management Company Clinics).
CUSTOMER OWNED SOFTWARE Shall have the meaning set forth in SECTION
14(b).
DIRECT DAMAGES Shall mean actual, direct damages incurred by
the claiming Party which include, by way of
example but without limitation, (i) costs of
recreating or reloading any Customer Data or
Clinic Data (ii) costs of implementing a
workaround in connection with a failure to
provide any or all of the Services; (iii)
costs of replacing lost or damaged equipment,
software and materials, (iv) costs and
expenses incurred by Customer to correct
errors in software maintenance and
enhancements provided as part of the Services
or any part thereof; (v) costs and expenses
incurred by Customer to procure the Services
from an alternate source, to the extent in
excess of Vendor's charges under this
Agreement, where permitted under this
Agreement, (vi) straight time, overtime, or
related expenses incurred by the Other Party,
including, overhead allocations of the other
Party for the employees, wages, and salaries
of additional employees, travel expenses,
overtime expenses, telecommunication charges,
and similar charges of the other Party, due
to a Party's breach of its obligations under
this Agreement; (vii) payments or penalties
imposed by a regulatory agency for failure to
comply with deadlines; (viii) the Service
Credits; and (ix) similar damages; provided,
however, "Direct Damages" shall not include
(A) loss of interest, profit or revenue of
the claiming Party or (B) incidental,
consequential, special or indirect damages
suffered by the claiming Party (except as to
the damages described in (A) and (B) are
included as a part of the Service Credits or
as otherwise provided for in this Agreement)
and shall not include punitive or exemplary
damages suffered by the claiming Party
arising from or related to this Agreement,
even if such Party has been advised of the
possibility of such losses or damages.
DISASTER RECOVERY PLAN Shall have the meaning set forth in SECTION
17.
DISPUTES Shall have the meaning set forth in SECTION
22(a).
EFFECTIVE DATE Shall be May 1, 1999.
EFFECTIVE LICENSE PURCHASE PRICE Shall have the meaning set forth in SECTION
9(i).
Exhibit A
43
[*] [*]
EVENT OF DEFAULT Shall have the meaning set forth in SECTION
23(b).
FORCE MAJEURE EVENT Shall have the meaning set forth in SECTION
18(a).
GENERAL SERVICES Shall have the meaning set forth in EXHIBIT
B.
HARDWARE Shall have the meaning set forth in SECTION
15(b).
INITIAL TERM Shall have the meaning set forth in SECTION
3.
KEY EMPLOYEES Shall have the meaning set forth in SECTION
7(g).
LEASED HARDWARE Shall have the meaning set forth in SECTION
15(b).
MANAGEMENT COMMITTEE Shall have the meaning set forth in SECTION
7(f).
MANAGEMENT COMPANY Shall have the meaning set forth in SECTION
10(f).
MANAGEMENT COMPANY CLINICS Shall have the meaning set forth in SECTION
10(f).
MDM Shall be MedPartners, Inc.
MINIMUM PERFORMANCE LEVELS Shall have the meaning set forth in EXHIBIT
H.
MONTHLY SERVICES CHARGE Shall have the meaning set forth in EXHIBIT
J.
OWNED HARDWARE Shall have the meaning set forth in SECTION
15(b).
PARTIES Shall mean both Vendor and Customer.
PARTY Shall mean either Vendor or Customer.
PERFORMANCE RESULT Shall have the meaning set forth in EXHIBIT
I.
PERSONNEL PREMIUM Shall have the meaning set forth in SECTION
5(b).
PROBLEMS Shall have the meaning set forth in SECTION
2.1.6 of EXHIBIT B.
REGULATION Shall mean any law, rule or regulation of any
kind pertaining to delivery of healthcare
services, ancillary services or any other
matter.
RENEWAL TERM Shall have the meaning set forth in SECTION
3.
REPORTS Shall mean any report to be delivered by
Vendor under this Agreement.
RETAINED HARDWARE Shall have the meaning set forth in SECTION
15(b).
RETAINED SOFTWARE Shall have the meaning set forth in SECTION
14(b).
RETENTION BONUS Shall have the meaning set forth in SECTION
5(c).
RETENTION BONUS PAYMENT Shall have the meaning set forth in SECTION
5(b).
SENIOR EXECUTIVES Shall have the meaning set forth in SECTION
22(c).
SERVICE CREDITS Shall have the meaning set forth in EXHIBIT
I.
SERVICE LEVELS Shall be those service levels to be
maintained by Vendor as set forth in EXHIBIT
H.
SERVICE LOCATIONS Shall be the facilities in Birmingham,
Alabama and Glastonbury, Connecticut..
Exhibit A
44
SERVICES Shall have the meaning set forth in SECTION
1(a).
SERVICE RESOURCES Shall mean those service relationships
described in Exhibit S.
SERVICES TRANSFER ASSISTANCE Shall be those services set forth in EXHIBIT
N.
SOFTWARE Shall have the meaning set forth in SECTION
14(b).
TERM Shall be the Initial Term plus any Renewal
Term.
THIRD PARTY AGREEMENTS Shall mean the license, lease and service
agreements between Customer and the
applicable third party in connection with
Retained Software, Retained Hardware,
Transferred Software and Leased Hardware.
TRADE SECRET Shall have the meaning set forth in SECTION
20(a).
TRANSFERRED SOFTWARE Shall have the meaning set forth in SECTION
14(b).
TRANSITION PLAN Shall have the meaning set forth in SECTION
4.
VENDOR Shall be The TriZetto Group, Inc.
VENDOR PROVIDED HARDWARE Shall have the meaning set forth in SECTION
15(b).
VENDOR PROVIDED SOFTWARE Shall have the meaning set forth in SECTION
14(b).
Exhibit A
45
EXHIBIT B
DATA PROCESSING SERVICES
1. INTRODUCTION
This Exhibit B describes certain duties and responsibilities of Vendor
(the "Services") as well as certain duties and responsibilities of
Customer. The Services listed in this Exhibit B are in addition to
Vendor's other duties and obligations under the Agreement.
2. GENERAL SERVICES
Beginning on the Commencement Date, Vendor shall be responsible for the
operation, support and management of Customer's information technology
operations group operations in Birmingham, Alabama and Glastonbury,
Connecticut and Customer's business support groups for billing and
managed care in Glastonbury, Connecticut (collectively, the "IT
Operations Centers"), including without limitation, responsibility for
maintaining proper and adequate facilities, equipment and supplies and
establishing and maintaining an information technology operations
population and a business support group population for billing and
managed care, that in each case is properly trained and fully staffed
and that shall include necessary management and support staff. The
hours of operation shall be 24 hours per day, seven days per week.
Additionally, Vendor shall coordinate with Customer's various internal
and external service providers. Without limitation, the Services shall
include those functions, responsibilities and tasks set forth in this
Sections 2, 3, 4, 5 and 6 of this EXHIBIT B.
2.1 IT OPERATIONS CENTERS
This Section 2.1 of this Exhibit B describes the general IT Operations
support Vendor shall be responsible for providing as part of the
Services:
2.1.1 Operations
Vendor shall be responsible for daily job schedule execution,
monitoring, backup/recovery operations and facility and
equipment maintenance of all production and development
computing platforms within the IT Operations Centers. These
platforms include IBM - AIX and Windows based systems.
Vendor shall maintain and make available to Customer an
operations calendar (the "Calendar") at all times. Vendor
shall execute all backup/recovery tasks when scheduled in
accordance with the Calendar.
2.1.2 Systems Software
Vendor shall be responsible for system software implementation
and correction, patch management/change control, capacity
planning, performance tuning, and second level problem
resolution for all production systems, including, but not
limited to, IBM-AIX and Windows based systems.
Exhibit B
46
2.1.3 Desktop
Vendor shall be responsible for the support of the Corporate
Common Office Environment. This includes support of Windows as
the standard desktop operating system, Microsoft's SMS or
other equal or better software product as the LAN software
distribution tool, Microsoft Exchange to provide e-mail
capabilities, Microsoft Internet Explorer as the standard web
browser, and TCP/IP connectivity.
2.1.4 Network
Vendor's responsibilities in connection with the network
infrastructure shall include monitoring of network components,
problem isolation and resolution, optimizing data traffic
performance, capacity planning, backup configuration and
administration. The current network configurations include
dial-up facilities, frame relay with fractional T-1 service,
and frame relay with redundant SONET service. The hardware
supported includes: Bay Network hubs and routers, Cisco
routers, Adtran CSU/DSU, and Ethernet LAN interfaces. Network
maintenance shall include routine disassociation tasks.
Vendor shall be responsible for the support of all network
software components including Bay RS Version 12.x for the Bay
Network Routers, Version 10.x for Cisco routers, and Netview
as the network management tool.
2.1.5 Security
Vendor shall be responsible for the execution of
Customer-defined security policies for all Customer computing
systems. Vendor shall provide first-level support and
administration of security changes and enhancements.
2.1.6 Problem Management
Vendor shall maintain a IT Operations Centers staff with
necessary ability and skills to meet all Service Levels.
In managing Service Level failures and other problems and
incidents arising in connection with or affecting Vendor's
provision of the Services (collectively, "Problems"), Vendor
shall at a minimum take the following actions:
(a) identify, record, track and correct issues impacting the
delivery of the Services;
(b) recognize recurring Problems;
(c) address procedural issues relating to Problem
management; and
(d) contain or reduce the impact of Problems that occur.
2.2 DATA RETENTION SERVICES
This Section 2.2 of this Exhibit B describes the data retention
services Vendor shall be responsible for providing as part of the
Services:
Exhibit B
-2-
47
Vendor shall maintain all Customer Data and all Clinic Data in
appropriate storage media compliant with regulatory
requirements, during the Term and for a period of at least one
(1) year after the end of the Term. Vendor shall not remove or
destroy any Customer Data or Clinic Data during such retention
period.
2.3 REPORT GENERATION SERVICES
This Section 2.3 of this Exhibit B describes the report generation
services Vendor shall be responsible for providing as part of the
Services:
Vendor shall generate such reports as may be required under
any applicable law, rule or regulation, or a requirement of
any state or federal governmental regulator, or as may be
reasonably requested by Customer or Customer's auditors. Such
reports shall include, for example (but without limitation),
any reports required in response to requests received from any
representative of the Department of Health and Human Resources
or the Office of the Comptroller General of the United States
General Accounting Office.
2.4 DISASSOCIATION SERVICES
This Section 2.4 of this Exhibit B describes the Clinic disassociation
services Vendor shall be responsible for providing as part of the
Services:
Vendor will provide information technology support services
reasonably required by each Clinic in connection with its
disassociation from Customer, including but not limited to all
normal disassociation and transition services that were
provided by the Affected Employees prior to and as of the
Effective Date of the Agreement. These services may also
include, for example (but without limitation), support in
discontinuing ancillary services that had been provided by
Customer to the Clinic under an agreement between Customer and
the Clinic, assistance to Customer during clinic value
assessment and due diligence processes, and production of
tangible products such as data extracts in specified formats
using currently available media (i.e., tape drives, paper). An
example of such services for one such Clinic is set forth on
Schedule 3 to this EXHIBIT B.
2.5 CONVERSION SERVICES
This Section 2.5 of this Exhibit B describes the data conversion
services Vendor shall be responsible for providing as part of the
Services:
Vendor shall provide support services reasonably required by
any Clinic in converting from the information technology
platform provided at the Service Locations to a different
technology platform. These services will include, for example
(but without limitation), the removal of Clinic Data from the
Service Location platform, the discontinuation of other
Services provided under this Agreement to the Clinic, the
delivery of Clinic Data to the Clinic's new service provider
in a reasonably acceptable format and medium.
Exhibit B
-3-
48
2.6 YEAR 2000 SERVICES
This Section 2.6 of this Exhibit B describes the year 2000 services
Vendor shall be responsible for providing as part of the Services:
Vendor shall test the software and hardware used by Vendor in
performing the Services (the "Tested Assets") in accordance
with the testing schedule attached hereto as Schedule 1 to
this Exhibit B. Should such testing reveal that any Tested
Asset is not year 2000 compliant (a "Non-Compliant Asset"),
Vendor shall notify Customer of such non-compliance. Where the
Non-Compliant Asset is not part of the Data Center Assets, as
defined below, Vendor also shall provide Customer with an
estimate of the costs of remediating the Non-Compliant Asset.
Unless Customer directs otherwise in response to such report,
Vendor shall remediate each Non-Compliant Data Center Asset to
ensure that the Non-Compliant Data Center Asset is made year
2000 compliant, and shall use its best efforts to remediate
Non-Compliant Assets that are not Data Center Assets, to
achieve year 2000 compliance. It is understood by Customer
that the limited time available prior to December 31, 1999
precludes the ability of Vendor to guarantee that any of the
Tested Assets that are not Data Center Assets can be made year
2000 compliant. Where the non-compliant status of a Tested
Asset that is not a Data Center Asset is discovered prior to
December 31, 1999, Customer shall bear the costs of
remediating such Non-Compliant Asset (provided that the
remediation services are the subject of an ASR and shall be
performed at Vendor's rates for Additional Services set forth
in Exhibit D). Vendor shall bear the costs of remediating any
Tested Asset which is a Data Center Asset. Further, Vendor
shall be responsible for the remediation costs of any Tested
Asset where the non-compliant status is discovered after
December 31, 1999.
For purposes of this Section 2.6 of this Exhibit B, Data
Center Assets shall mean elements in Exhibit M--Hardware
Rights and associated operating system and communications
software.
2.7 RESERVED
2.8 TRAINING SERVICES
This Section 2.8 of this Exhibit B describes the training services
Vendor shall be responsible for providing as part of the Services:
Customer shall be provided access to routine Computer Based
Training (CBT) courses.
2.9 END-OF-PERIOD REPORTING
This Section 2.9 of this Exhibit B describes the end-of-period
reporting services that Vendor shall be responsible for providing as
part of the Services:
Vendor shall be responsible for maintaining, supporting and
executing routine end-of-period (month, quarter, annual)
processes and reports.
Exhibit B
-4-
49
2.10 APPLICATION SERVICES GROUP
This Section 2.10 of this Exhibit B describes the applications services
group services Vendor shall be responsible for providing as part of the
Services:
Vendor shall responsible for those tasks associated with
applications supported and described in the "Applications"
portion of Schedule 2 of this Exhibit B.
2.11 DESKTOP SERVICES
This Section 2.11 of this Exhibit B describes the desktop services
Vendor shall be responsible for providing as part of the Services:
Vendor shall responsible for those tasks associated with
desktop services described in the "Desktop" portion of
Schedule 2 of this Exhibit B.
2.12 HELP DESK SERVICES
This Section 2.12 of this Exhibit B describes the help desk services
Vendor shall be responsible for providing as part of the Services:
Vendor shall responsible for those tasks associated with help
desk services described in the "Help Desk Services" portion of
Schedule 2 of this Exhibit B.
2.13 SYSTEM SOFTWARE
This Section 2.13 of this Exhibit B describes the system software
services Vendor shall be responsible for providing as part of the
Services:
Vendor shall responsible for those tasks associated with the
systems support described in the "Technical Services" portion
of Schedule 2 of this Exhibit B.
2.14 INTERNET ACCESS
This Section 2.14 of this Exhibit B describes the Internet access
services Vendor shall be responsible for providing as part of the
Services:
Vendor shall responsible for those tasks associated with the
Internet services described in the "Internet Services" portion
of Schedule 2 of this Exhibit B.] In addition, Vendor shall be
responsible for providing access to the Internet at no
additional cost to Customer's California operations.
2.15 CUBS SOFTWARE
This Section 2.15 of this Exhibit B describes the CUBS application
services Vendor shall be responsible for providing as part of the
Services:
Vendor shall responsible for those tasks associated with the
CUBS application services described in the "CUBS" portion of
Schedule 2 of this Exhibit B. Vendor's obligation to perform
at no additional cost one thousand (1000) hours
Exhibit B
-5-
50
of "Cubs Support" shall be applicable to new (i.e., arising
after the Effective Date of the Agreement) interface services
only.
2.16 HUBS AND ROUTERS
This Section 2.16 of this Exhibit B describes the hubs and router
services Vendor shall be responsible for providing as part of the
Services:
Vendor shall provide all services associated with maintaining
connectivity to and through existing hubs and routers for
locations existing as of the Effective Date.
3. CLINIC SERVICES
In addition to the services described in this Exhibit B and the
Agreement which are applicable to the Clinics, Vendor shall provide as
"Clinic Services" the Services which are identified on the service
matrix set forth on SCHEDULE C. Descriptions of the Services identified
on SCHEDULE C are attached as Schedule 2 to this Exhibit B.
4. CORPORATE SERVICES
Corporate Services shall be those Services set forth in the Agreement
and in Section 2 of this Exhibit B which are applicable to Customer, as
well as the "Business Services" portion of Schedule 2 of this Exhibit
B and those additional services which are identified on the service
matrix set forth on SCHEDULE C and described on Schedule 2 to this
Exhibit B.
5. CAREMARK SERVICES
Caremark Services shall be those Services set forth in the Agreement
and in Section 2 of this Exhibit B which are applicable to Caremark, as
well as the "Business Services" portion of Schedule 2 of this Exhibit B
and those additional services which are identified on the service
matrix set forth on SCHEDULE C and described on Schedule 2 to this
Exhibit B.
Exhibit B
-6-
51
EXHIBIT B
[Schedules 1, 2 and 3 omitted pursuant to Regulation S-K, Item 601(b)(2) of the
Securities Act of 1933, as amended. Schedule 1 contains reports regarding the
TriZetto's Year 2000 testing and compliance efforts. Schedule 2 contains
descriptions of TriZetto's services. Schedule 3 contains a list of TriZetto
employees. TriZetto hereby agrees to furnish supplementally a copy of these
omitted schedules as requested by the Securities and Exchange Commission.]
52
EXHIBIT C
SERVICE MATRIX
[Schedule 1 omitted pursuant to Regulation S-K, Item 601(b)(2) of the
Securities Act of 1933, as amended. Schedule 1 contains a table listing the
services TriZetto shall perform for each clinic assumed under this Agreement.
TriZetto hereby agrees to furnish supplementally a copy of these
omitted schedules as requested by the Securities and Exchange Commission.]
53
EXHIBIT D
ADDITIONAL SERVICES
From time to time during the Term, Customer may request Vendor to
perform certain Additional Services at the rates set forth in Section II of this
EXHIBIT D (the "Additional Services"); provided, however, that Vendor and
Customer shall first execute an Additional Services Request ("ASR") applicable
to such Additional Services. ASR's will, in all cases, have a detailed
description of the work being requested, a firm estimate of cost and resource
usage, and other pertinent information required for its approval by Customer.
I. ADDITIONAL SERVICES
The Additional Services to be provided by Vendor at Customer's request
shall include the following (without limitation):
1. DISASSOCIATION SERVICES
Routine Clinic disassociation and transition services are provided as
part of the Services, as set forth in the Agreement and SECTION 2.4 of EXHIBIT
B. Additional Services will include (a) projects such as conversions and new
reports or extracts demanding a substantial amount of work (above forty (40)
hours per project); and (b) special requests from Clinics or a third party prior
to the close of any deal that requires a substantial amount of work (above forty
(40) hours per project).
2. SPECIAL REPORTING REQUESTS
Additional Services will include requests for new, non-standard
month-end reports.
3. DATA ENTRY SERVICES
Additional Services will include requests for data entry other than
routine file maintenance.
4. FINANCIAL SYSTEMS CONVERSIONS
Routine conversion services are provided as part of the Services, as
set forth in the Agreement and SECTION 2.5 of EXHIBIT B. Additional Services
will include major conversion services required to assist Clinics with the
design and implementation of an alternate support environment when the decision
to implement such new environment is made by Customer; provided, however, that
such services shall be billed to the applicable Clinic or to a third party, and
not to Customer.
5. CUSTOM INTERFACES AND EXTRACTS
Additional Services will include requests for custom interfaces and
extracts which demand a substantial amount of work (above forty (40) hours per
project) other than the CUBS interface work described in SECTION 2.15 of EXHIBIT
B.
54
6. NETWORK SERVICES
Routine network services are provided as part of the Services, as set
forth in the Agreement and SECTION 2.1.4 of EXHIBIT B. Additional Services will
include (a) network re-engineering at the local Clinic level which demand more
than twenty-four (24) hours per project, (b) requests for new network technology
or services, (c) web site or Internet development services directly requested by
the Clinics, and (d) systems build-out at the local Clinic level.
7. TRAINING
Routine training services to Customer are provided as part of the
Services, as set forth in the Agreement and SECTION 2.8 of EXHIBIT B. Additional
Services will include training requests requiring classroom training or Clinic
on-site education.
8. MONTH-END SERVICES
Routine end of period (month, quarter, annual) services are provided as
part of the Services, as set forth in the Agreement and SECTION 2.9 of EXHIBIT
B. Additional Services include requests from Clinics to process, balance and
close non-Customer books and to generate and distribute associated reports.
9. HUBS AND ROUTERS
Routine hub and router services required to ensure connectivity to and
through existing Clinic locations are provided as part of the Services, as set
forth in the Agreement and SECTION 2.16 of EXHIBIT B. Additional Services
include services to establish connectivity to new Clinic locations.
10. CLINIC HARDWARE AND SOFTWARE
Additional Services include requests for installation, maintenance and
remediation of hardware and software at the location of any Clinic.
II. RATES
Vendor shall perform the Additional Services as described in this
Exhibit at the following rates:
STAFF LEVEL HOURLY RATE ($)
----------- ---------------
Documentation Specialist [*]
Installation Manager [*]
Account Manager [*]
Programming/Work Orders [*]
Technical Architect [*]
System Programmer [*]
Group Practice Consultant [*]
Managed Care Consultant [*]
Project Manager [*]
Management Consultant - VIO [*]
Strategic Consultant [*]
[*] CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION.
55
The rates set forth above may be increased on [*] by no more than [*] if
Vendor's cost of delivering such Additional Services has increased
proportionately.
Positions not specified above will be billed to Customer at no greater than [*]
margin above fully loaded cost [*].
[*] CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION.
56
EXHIBIT E
TRANSITION PLAN
Vendor and Customer will execute the following Transition Plan to
ensure that the functions being transferred to Vendor from Customer do not
suffer performance downturns.
Transition Plan
The Transition Plan will be executed beginning on the Effective Date
and will be completed no later than July 1, 1999. The Transition Plan shall
include the following elements:
1. PREPARATION FOR TRANSITION OF AFFECTED EMPLOYEES
Vendor and Customer shall cooperate together in preparing for
the transition of Affected Employees to Vendor, including without limitation the
performance of the following tasks:
(a) Identification of Affected Employees
(b) Definition of organization going forward
(c) Development of predictable questions
(d) Pre-announcement of transition to staff; Question and
Answer sessions
(e) Resolution of key issues; and
(f) Preparation of employee transition packages.
2. COMPLETION OF CONTRACT ISSUES
Vendor and Customer shall cooperate together in resolving
open issues in connection with the Agreement, including without limitation the
performance of the following tasks:
(a) Execution of Agreement;
(b) Development of list of open items;
(c) Assignment of deadlines for open issue resolution;
(d) External announcement (if appropriate);
(e) Internal announcements; and
(f) Announcements to Clinics.
3. EXECUTION OF AFFECTED EMPLOYEE TRANSITION
Vendor shall perform the following tasks, without
limitation, in connection with transition of the Affected Employees to Vendor:
(a) Deliver employee transition packages; and
(b) Execute formal transition of Affected Employees.
4. ACTIVATION OF GOVERNING BODIES
Vendor and Customer shall cooperate together in activating
the appointment of the managers of the relationship between the Parties,
including without limitation the performance of the following tasks:
(a) Appointment of the Management Committee;
(b) Appointment of the Vendor Account Manager and Customer
Account Manager;
(c) Establishment of a meeting schedule; and
Exhibit E
57
(d) Schedule and hold first Management Committee meeting.
5. DEFINITION OF REPORTING PACKAGE
Vendor shall create the Reports required under the Agreement,
including without limitation the performance of the following tasks:
(a) Definition of performance elements;
(b) Development of data collection processes;
(c) Development of reporting formats; and
(d) Assignment of reporting accountabilities.
6. DEVELOPMENT OF BILLING PROCESS
Vendor shall develop the billing process requirements,
including without limitation the performance of the following tasks:
(a) Establishment of the billing process;
(b) Development of appropriate financial system support
structure;
(c) Development of invoice timing, elements and format
(d) Development of first and second pro-formas; and
(e) Adjustment of above elements.
7. TRANSITION PROCESS MONITORING
Vendor and Customer shall cooperate together in monitoring
issues in connection with the transition of the Affected Employees to Vendor,
including without limitation the performance of the following tasks:
(a) Establishment of weekly monitoring meeting;
(b) Develop process for identifying issues;
(c) Develop resolutions, definitions and clarifications.
8. ACHIEVE "STEADY STATE"
Vendor and Customer shall cooperate together to achieve a
"steady state" for the performance of the Services, including without limitation
the performance of the following tasks:
(a) Development of measurements and goals;
(b) Definition of processes and procedures to achieve
steady state;
(c) Successfully resolve the first two performance
reporting periods;
(d) Successfully resolve the first two invoices;
(e) Sign-off on resolution of Agreement open-issue list;
(f) Poll user base/Customer on performance;
(g) Adjust relationship as necessary;
(h) Achieve steady state;
(i) Sign-off on transition.
9. ADDITIONAL CUSTOMER RESPONSIBILITIES
Additionally, Customer shall reasonably cooperate in providing
information required to facilitate the execution of the Transition Plan by
Vendor.
Exhibit E
58
EXHIBIT F
BONUSES
Vendor shall pay Retention Bonuses to those Affected Employees eligible
to receive such bonuses under SECTION 5(c) of the Agreement in the amounts set
forth in a memorandum from Vendor to Customer.
Exhibit F
59
EXHIBIT G
KEY EMPLOYEES
The following Affected Employees shall be considered Key Employees for
the purposes of this Agreement:
1. [*]
2. [*]
3. [*]
4. [*]
5. [*]
6. [*]
7. [*]
8. [*]
9. [*]
10. [*]
11. [*]
12. [*]
13. [*]
14. [*]
15. [*]
16. [*]
17. [*]
[*] CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION.
60
EXHIBIT H
SERVICE LEVEL AGREEMENTS
I. SERVICE LEVELS
Vendor will provide the Services at the levels indicated in the
Agreement and in this Exhibit H (collectively, the "Service Levels").
A. HOST SYSTEM AVAILABILITY
1. Overall Availability. Vendor shall be responsible for ensuring the
host systems will be available not less than [*] of the time, [*]
hours a day, [*] days a week. Host system availability shall be
recorded by the Vendor through the use of an Availability Log. The
Availability Log will show the times from the recognition of a system
outage until the time the system has been restored. Host System
Availability is the primary service level and is not subordinate to
any other service categories.
2. Online Processing. Vendor shall be responsible for ensuring that the
[*] online systems will be available not less than [*] of the time,
[*]. Vendor will be permitted reasonable time (no more than [*]
elapsed from system available to system available) to effect
maintenance on equipment [*]. This activity will be planned and
communicated to Customer's Account Manager no less that [*] in advance
of projected downtime.
3. Batch Processing. Vendor shall be responsible for ensuring that all
production batch systems will be available not less than [*] of the
time during After Normal Business Hours ([*].) Vendor will be
permitted reasonable time (no more than [*] elapsed from system
available to system available) to effect maintenance on equipment one
Sunday per month. This activity will be planned and communicated to
Customer's Account Manager no less that [*] in advance of projected
downtime.
B. NETWORK AVAILABILITY.
1. Data Center Local Area Network. Vendor shall be responsible for
ensuring the Local Area Network within the Data Center is available
not less than [*] of the time, [*].
2. Wide Area Network. Vendor shall be responsible for ensuring the Wide
Area Network is available not less than [*] of the time, [*].
3. Dial-Up Connectivity. Vendor shall be responsible for ensuring dial-up
connectivity between the customer and the Data Center is available not
less than [*] of the time, [*].
4. Customer Local Area Network. Vendor shall have responsibility
supporting the customer local area network at the [*] and at clinics
normally supported through staff affected by this transaction. Vendor
shall ensure that the Local Area Networks included are available not
less than [*] of the time, [*].
C. HUMAN RESOURCE AVAILABILITY.
1. Emergency Support. Vendor shall be responsible for ensuring adequate
people resources are available to support [*] requests not less than
[*] of the time, [*].
2. Non-Emergency Support. Vendor shall be responsible for ensuring
adequate people resources are available to support non-Priority 1
request not less than [*] of the time, during Normal Business Hours
[*].
PRIORITY 1 requests are defined as those events associated with a key system
failure to a business function or location. This category is characterized by
the following:
- Issues that keep The Client from operating their business
- Have a large detrimental impact on the business
- No alternative work around exists.
All other failures are categorized as non-emergency.
D. CUSTOMER SERVICE HELP DESK.
1. SERVICE REQUESTS. Vendor shall be responsible for ensuring that all
requests will be prioritized and addressed according to the
following priorities without limitation.
a) Priority 1: Urgent/Emergency. These events are of the most critical nature
and of the highest priority. This category is characterized by the following:
- Issues that keep The Client form operating their business
- Have a large detrimental impact on the business
- No alternative work around exists.
The technical support staff will work continuously, [*], until the
issue is resolved. Follow-up calls will be made every [*] until issue
is resolved.
b) Priority 2: High. These issues have a negative impact upon a large business
function. This category is characterized by the following:
- Issues that significantly impact the normal conduct of Client
business
- Temporary workaround is a reasonable option.
Vendor will make a best effort to resolve these issues within [*]
Updates to customer will be given [*].
c) Priority 3: Medium. These issues have narrow functional limitations and
situations that do not currently impair the customer's business activities.
These issues are characterized by the following:
- Impaired function is limited in scope but used daily
- Temporary workaround is a reasonable option.
- Vendor will meet to assign work priority.
d) Priority 4: Low. These issues involve functions within the system that do
not negatively impact daily operations. These issues are characterized by
the following:
- Issues that are cosmetic in nature
- Infrequent occurrence
- Intermittent function.
2. RESPONSE AND RESOLUTION TIMES. Based on the priority of the problem,
Vendor shall be responsible for ensuring that the following response and
resolution times are adhered to:
MAXIMUM MAXIMUM RESOLUTION SERVICE LEVEL
PRIORITY RESPONSE TIME TIME TARGETS
1-Urgent/Emergency [*] [*] [*]
2-High [*] [*] [*]
3-Medium [*] [*] [*]
4-Low [*] [*] [*]
NOTE: ONE BUSINESS DAY = 7:00 A.M. CENTRAL TIME - 6:00 P.M.
CENTRAL TIME, OR 11 HOURS.
II. MINIMUM PERFORMANCE LEVEL
The Minimum Performance Level shall be [*] overall host system
availability (as described above in Section I.A.1 of this Exhibit H), measured
over the period of any [*].
[*] CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION.
EXHIBIT H
61
EXHIBIT I
SERVICE CREDITS
I. SERVICE CREDITS
Vendor shall provide to Customer certain service credits ("Service
Credits") for breach of any of the Service Levels set forth in this EXHIBIT I.
Service Credits for each of the associated Service Levels will be totaled for
the month in which they are incurred (the "Measurement Month") and will be
deducted from the invoice for the month following the Measurement Month. Vendor
shall pay to Customer any Service Credits that have accumulated as of the
termination of this Agreement within [*] days after such date.
II. CALCULATION OF SERVICE CREDITS
Service Credits shall be calculated by first compiling the performance
data for each associated Service Level and calculating a [*] Month (the
"Performance Result"). Any negative deviation from the target percentage will
be calculated and a Service Credit will be calculated in accordance with the
following table for each of [*] that the Performance Result is less than the
target percentage.
HIERARCHY SERVICE CREDIT
--------- --------------
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
III. SERVICE CREDIT GRACE PERIOD.
Vendor and Customer agree that no Service Credits shall be charged for Services
performed in [*].
[*] CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION.
62
EXHIBIT J
PRICING SCHEDULE FOR SERVICES
This Exhibit J contains three elements, as follows:
I. Monthly Invoice Process
II. Ramp-down Calculations
- Schedule 1
- Schedule 2
III. Sample Monthly Invoice
I. MONTHLY INVOICE PROCESS
The following process will be followed in order to generate a monthly ▇▇▇▇.
A FULL SERVICE PORTION
1 Identify the clinics that are anticipated to be serviced under
obligation from MedParnters and end of billing month.
2 Identify the clinics that are antiquated to be serviced under
obligation from MedParnters for a portion of the billing month.
3 Calculate the % of the month for which the clinics in #2 are
anticipated to be active.
4 Calculate the total "Ramp Down" charge for the clinics that are
anticipated to receive service during the billing month.
(see Schedule 1)
5 Pass total to step D.
B INFRASTRUCTURE PORTION
1 Identify the locations/departments that are anticipated to be serviced
under obligation from MedParnters at the end of the billing month.
2 Calculate the total "Ramp Down" charge for the clinics/departments that
are anticipated to receive service during the billing month. (see
Schedule 2)
3 IF #2 total is less than $[*], use $[*] as baseline payment until
contract termination.
4 Pass total to step D.
C SAP PORTION
1 Identify SAP active users that are anticipated to receive during the
billing month.
2 Calculate the total user cost by multiplying $[*] per user per month.
(see Schedule 2)
3 If #2 is less than $[*], use $[*] as baseline payment until contract
termination.
4 Pass total to step D.
D Sum A + B + C = Total Monthly Recurring Services Charges
E Multiply total Monthly Recurring Services Charges by [*]% to derive
monthly recurring invoice amount. Pass to step J.
F Calculate total of all approved ASR's to derive monthly ASR invoice
amount. Pass to step J.
G Calculate total Service Credits if after [*] days to derive monthly
Service Credit invoice amount. Pass to step J.
H Calculate any miscellaneous charges to credits to derive monthly
miscellaneous invoice amount. Pass to step J.
I Calculate difference between the amount actually earned for the prior
billing month and the amount invoiced for the prior billing month. If
the amount earned is higher than the amount billed, Vendor shall be due
the difference. If the amount earned is lower than the amount billed,
Customer shall be due the difference. Transfer this amount to step J.
J Sum E + F + G + H + I = Total Invoice Amount submitted for approval.
K All monthly invoices will be in the form of the "Sample Monthly
Invoice" attached to this Exhibit J.
63
MEDPARTNERS - TRIZETTO OUTSOURCING FINANCIALS
RAMP DOWN CALCULATIONS
FULL SERVICE, INFRASTRUCTURE & SAP
[Schedule Ramp Down Calculations omitted pursuant to Regulation S-K,
Item 601(b)(2) of the Securities Act of 1933, as amended. This Schedule
contains calculations for computing certain ramp down values for full
service sites and physicians. TriZetto hereby agrees to furnish
supplementally a copy of these omitted schedules as requested by the
Securities and Exchange Commission.]
CONFIDENTIAL, COVER
64
Exhibit K
EXHIBIT K
CHANGE CONTROL PROCESS
Within [*] days after the Effective Date and for the remainder of the Term, the
Parties shall define, establish, implement, document and maintain a change
control process for activities, processes, provisions and operations under this
Agreement and to evolve the Services (the "Change Control Process"). The
purposes and objectives of the Change Control Process are (i) to review each
request for a change to this Agreement and the Services to determine whether
such change is appropriate (a "Change Request"), (ii) to determine whether such
change is within the scope of the Services or constitutes an Additional Service,
(iii) to prioritize all Change Requests, (iv) to minimize the risk of exceeding
both time and cost estimates associated with the requested changes by
identifying, documenting, quantifying, controlling, managing and communicating
requested changes and their disposition and as applicable, implementation; and
(v) to identify the different roles, responsibilities and actions that shall be
assumed and taken by the Parties to define and implement the changes to the
Services and to this Agreement.
The Change Control Review Team, chaired by the Customer and Vendor Account
Managers or their respective designees, shall be the focal point for all Change
Requests and shall be responsible for promptly and diligently effecting the
activities set forth above in this Change Control Process with respect to each
Change Request.
The Change Control Process shall include, at a minimum:
(a) Changes to this Agreement and Services may be requested by
either Party. Since a change may affect the price, schedule or
other terms, both the Customer and Vendor Account Managers must
review and approve, in writing, each Change Request before any
Change Request is implemented.
(b) The Party proposing a Change Request will write a Change Request
Form ("CRF"), describing the change, the rationale for the
change and the anticipated effect that change will have, if
completed, or the anticipated impact it will have, if rejected,
on this Agreement and/or the Services.
(c) Customer's or Vendor's representative, as appropriate, will
review the proposed Change Request. If accepted, the CRF will be
submitted to the other Party for review. If rejected, the CRF
will be returned to the originator along with the reason for
rejection.
(d) Customer's and Vendor's representatives will weigh the merits of
the proposed Change Request and will decide whether further
study of the Change Request is in order. Approval of a CRF
proposed by Customer for further study constitutes authorization
by Customer for Vendor to proceed to investigate the CRF and
invoice Customer for such costs incurred by Vendor in such
activity. Approval of a CRF proposed by Vendor for further study
constitutes authorization by the Parties to further investigate
and study the Change Request without charge to Customer.
[*] CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION.
EXHIBIT K
65
(e) Vendor will present the results of the study to the Customer
Account Manager detailing the technical merits, effects on
price, schedule, and impact on other terms, conditions and
modifications that will result from implementation of the
proposed Change Request. The Customer Account Manager shall then
either approve or reject the Change Request.
(f) Each approved Change Request will be implemented through a
written change authorization and this Agreement will be updated
to reflect the changes in scope, price or terms and conditions,
as appropriate.
EXHIBIT K
66
EXHIBIT L
[Schedule 1 of Exhibit L omitted pursuant to Regulation S-K, Item 601(b)(2) of
The Securities Act of 1933, as amended. Schedule 1 identifies the software used
by TriZetto for the purposes of this Agreement. TriZetto hereby agrees to
furnish supplementally a copy of these omitted schedules as requested by the
Securities and Exchange Commission.]
67
EXHIBIT M
HARDWARE RIGHTS
I. INTRODUCTION
This Exhibit M and the Schedules hereto describe the arrangements of
the Parties in connection with the Hardware.
II. OWNED HARDWARE
The hardware and equipment that are being transferred to Customer
pursuant to the Business Unit Asset Purchase Agreement (the "Owned Hardware")
are identified on Schedule 1 which is attached to this Exhibit M.
III. RETAINED HARDWARE; LEASED HARDWARE
This Section III of this Exhibit M describes the arrangements of the
Parties in connection with Hardware which is leased by Customer.
The following equipment, leased by Customer from DVI Financial
Services, account numbers [*] respectively, shall be considered "Leased
Hardware" for which Vendor shall assume (in accordance with the procedures
provided for in Section 15 of the Agreement) the applicable leases: [*].
In addition, the following equipment, leased by Customer from [*],
account number [*], shall be considered "Leased Hardware" for which Vendor shall
assume (in accordance with the procedures provided for in Section 15 of the
Agreement) the applicable lease: [*].
The Bay Networks equipment listed on Schedule 2 to this Exhibit M is
leased by Customer under a lease from [*], account number [*], which expires
[*]. For the period from the Effective Date until [*], such equipment shall be
"Retained Hardware" for which Customer shall be responsible for the lease
payments. Upon the expiration of such lease on [*], Vendor shall
either (1) purchase, at Vendor's expense, the equipment from [*], or (2) enter
into a separate lease or purchase agreement with [*] or a third party for such
equipment or equivalent or better equipment, under which Vendor shall be
responsible for the lease or purchase payments. In either case, the equipment
shall then become "Vendor Provided Hardware".
The Bay Networks equipment listed on Schedule 3 to this Exhibit M is
leased by Customer under a lease from [*], account number [*], which expires
[*]. For the period from the Effective Date until [*], such equipment shall be
"Retained Hardware" for which Customer shall be responsible for the lease
payments; provided, however, that Vendor shall reimburse Customer [*] for such
lease payments. Upon the expiration of such lease on [*], Vendor shall either
(1) purchase, at Vendor's expense, the equipment from [*], or (2) enter into a
separate lease or purchase agreement with [*] or another third party for such
equipment or equivalent or better equipment, under which Vendor shall be
responsible for the lease or purchase payments. In either case, the equipment
shall then become "Vendor Provided Hardware".
[*] Confidential portions omitted and filed separately with the Securities and
Exchange Commission.
68
IV. VENDOR PROVIDED HARDWARE
Vendor will not provide any "Vendor Provided Hardware" as of the time
of the Effective Date.
69
EXHIBIT M
SCHEDULE 1
[Schedule 1 of Exhibit M omitted pursuant to Regulation S-K, Item 601(b)(2) of
The Securities Act of 1933, as amended. Schedule 1 is a list of fixtures and
equipment from MedPartner's Glastonbury office. TriZetto hereby agrees to
furnish supplementally a copy of these omitted schedules as requested by the
Securities and Exchange Commission.]
70
EXHIBIT N
SERVICES TRANSITION ASSISTANCE
I. OVERVIEW
Upon the termination or expiration of this Agreement, Vendor shall
provide at Customer's request the services described in this EXHIBIT N to assist
Customer in bringing the Services back in-house or transferring the Services to
another provider.
II. CONTINUED OPERATION
Vendor will continue to provide the Services in accordance with the terms and
conditions of the Agreement for a period of up to [*] days at Customer's request
after the termination or expiration of this Agreement.
III. DATA MANAGEMENT
Vendor shall return or transfer the Customer Data and the Clinic Data
at no cost in accordance with the Agreement and EXHIBIT B.
IV. TRANSITION SERVICES
Vendor shall provide any of the following additional transition
services requested by Customer at the rates set forth in EXHIBIT D:
1. Transition planning;
2. Current operation assessment;
3. Software inventory;
4. Hardware inventory;
5. Contract review;
6. Lease review;
7. Transition plan development; and
8. Coordination and implementation assistance.
[*] Confidential portions omitted
and filed separately with the
Securities and Exchange Commission.
Exhibit N
71
EXHIBIT O
REPORTING TEMPLATES
[Schedule 1 of Exhibit O omitted pursuant to Regulation S-K, Item 601(b)(2) of
The Securities Act of 1933, as amended. Schedule 1 contains forms of reporting
templates. TriZetto hereby agrees to furnish supplementally a copy of these
omitted schedules as requested by the Securities and Exchange Commission.]
72
EXHIBIT P
DISASTER RECOVERY PLAN
Vendor and Customer agree that the Disaster Recovery Plan to be
provided by Vendor to Customer under SECTION 17 of the Agreement shall include
each of the elements set forth in this EXHIBIT P, in detail reasonably
satisfactory to Customer:
I. REDUNDANT SERVICE CAPABILITY
The Disaster Recovery Plan shall include redundant service capability to
provide Services in the event of a disaster which would cause Vendor's physical
or system facilities to become inoperative. Such redundant service capability
will provide, at a minimum:
(a) Backup copies of all Customer Data delivered [*] to off-site, secured
storage area for use in the event of a disaster;
(b) The ability, in the event of a disaster that incapacitates Vendor's data
center operations, to completely recreate Services, with backed up data,
within [*] hours at a remote facility.
(c) Backup telecommunications services in place which will allow dial-in access
to the remote facility;
(d) Operation of the remote facility in conjunction with Vendor personnel to
recreate Services in conformance with the Standards set forth in this
Agreement.
(e) Customer may provide, at Customer's option and expense, qualified
individuals to assist Vendor, at Vendor's direction, in the event of a
disaster which causes Vendor's physical or system facilities to become
inoperative.
(f) Vendor will perform tests of its disaster recovery service capability at
least once during every six (6) month period, and will allow Customer to
participate, at Customer's option and expense and at Vendor's direction, in
such testing process. Vendor will provide Customer with the results of such
test.
II. EXECUTION
In the event of significant disruption to, or interruption of Services which
impairs Vendor's ability to provide the Services to Customer (including,
without limitation, Critical Disruptions), Vendor will initiate, in whole or
part, the specific sections of its disaster recovery plan associated with
restoring the interrupted capability. The plan shall provide for the
re-activation of service capability from a stand-by, hot production site [*].
Vendor currently subscribes to the [*] unit of [*], and is contracted to
utilize their [*] data center as the designated hot site for Vendor's [*]
platforms. Other data center or system platforms may be subscribed to alternate
[*] locations. Vendor's plan provides for the documentation of all current
information technology infrastructure, business unit impact analysis, disaster
activation steps, recovery activity and periodic plan testing.
A. PREPARATION/TESTING
The Disaster Recovery Plan will include the following elements:
1. SITE ASSESSMENT. For each data center, Vendor performs a disaster risk
assessment and hardware inventory to ensure that appropriate preventive
measures have been taken and that the environmental support systems at each
site appropriately minimize the potential for service outages. Vendor will
establish hardware maintenance contracts wherever they are deemed
appropriate to ensure risk exposure kept acceptable low.
2. INPUT FROM CUSTOMER. Vendor will meet with and request input from business
unit representatives to assess their tolerance and sensitivity to service
interruption. This assessment will be performed on an individual software
application basis and which may result in the initiation of application
specific recovery efforts that vary in scope or recovery timeframes. The
assessment deliverable will be an acceptance/acknowledgement of the specific
recovery timelines and any service level changes associated with the
disaster scenario.
3. PLATFORM SPECIFIC RECOVERY PLANS. Vendor will establish CPU
hardware/equipment recovery procedures for each in-scope processing
platform.
4. JOINT DISASTER RECOVERY COORDINATION TEAM. Vendor will establish a Disaster
Recovery Coordination Team (DRCT) with the Customer whose responsibility it
will be to participate in the evaluation of severe service degradations or
interruptions for scope/magnitude in order to ensure the most appropriate
service restoration plan is initiated.
5. SEMI-ANNUAL TEST. Vendor will perform [*] of its disaster recovery plan
including the verification of service capability from the hot site. Vendor
will allow Customer to participate, at Customer's option and expense and at
Vendor's direction, in such testing process. Vendor will provide Customer
with the results of such tests.
6. [*] TAPE BACKUPS. As documented elsewhere, system and data file backups are
taken daily and rotated to an offsite storage location by ARCUS data
security. Vendor will review the frequency and tape cycling activity, as
well as the pertinent regulatory archival requirements to ensure that all
potential data restoration needs can be met.
7. CONNECTIVITY CONTINGENCY PLAN. Vendor will network connectivity plans to
ensure redundant data circuits where necessary. Contracts [*] or other
carriers have been established to procure emergency network data circuits
from designated clinic sites to the pre-designated hot site(s).
B. DISASTER RECOVERY.
Vendor's disaster recovery plan includes the following steps.
1. DAMAGE ASSESSMENT. Upon notice of a major event seriously degrading or
disabling a data center, Vendor will convene the Disaster Recovery
Coordination Team to rapidly assess damage and determine whether to declare
a disaster and invoke efforts to move operations to the [*]. Key decision
criteria include:
a. [*]
b. [*]
c. [*]
d. [*]
2. INITIATION OF MOVE TO HOT SITE.
a. First alert notification, IT management
b. Notify business unit personnel
c. Activate [*] "Declared Disaster" notification
d. Notification to [*] security to release backup data tapes. [*] responds
within [*] minutes and activates [*].
3. MOVE KEY PERSONNEL TO HOT SITE. Also using [*] key personnel will move
immediately to the hot site to begin configuration of hot site.
4. ACTIVATION OF DATA CIRCUITS. Notify [*] or other affected carriers of
disaster plan initiation to temporarily re-home data circuits from clinic
sites to hot site.
5. INSTALLATION OF KEY APPLICATIONS. Using [*] re-installed hardware and
emergency vendor supplied equipment, Vendor installs appropriate processing
environmental on hosts.
6. CONFIGURATION OF SERVERS AND MAINFRAMES.
7. TESTING AT HOT SITE.
a. Data circuits, router-to-router
b. Application testing
c. Configuration testing
8. USER TESTING
a. Unit testing
b. Acceptance testing
9. GO-LIVE
a. Recover business functions
b. Recover administration functions
c. Report to Customer on service levels
10. PLAN FOR RESTORATION OF DATA CENTER
[*] Confidential portions omitted
and filed separately with the
Securities and Exchange Commission.
Exhibit P
73
EXHIBIT Q
INSURANCE
During the Term of this Agreement Vendor shall maintain and keep in
force, at its own expense, the following minimum insurance coverages and minimum
limits set forth on this Insurance Exhibit and as otherwise mutually agreed to
between Customer and Vendor:
(a) workers' compensation insurance, with statutory limits as
required by the various laws and regulations applicable to the
employees of Vendor or any Vendor contractor or subcontractor;
(b) employees liability insurance, for employee bodily injuries and
deaths, with a limit of [*] each accident;
(c) comprehensive or commercial general liability insurance,
covering claims for bodily injury, death and property damage,
including premises and operations, independent contractors,
products, services and completed operations (as applicable to
the Services), personal injury, contractual, and broad-form
property damage liability coverages, in an amount not less than
[*];
(d) comprehensive automobile liability insurance, covering owned,
non-owned and hired vehicles, with limits as follows (1)
combined single limit of [*] for bodily injury, death and
property damage per occurrence; or (2) split liability limits of
(i) [*] for bodily injury per person; (ii) [*] for bodily injury
per occurrence; and (iii) [*] for property damage; and
(e) all-risk property insurance, on a replacement cost basis,
covering the real and personal property of Vendor which Vendor
is obligated to insure by this Agreement. Such real and personal
property may include buildings, equipment, furniture, fixtures
and supply inventory.
All such policies of insurance of Vendor and its contractors and subcontractors
shall provide that the same shall not be canceled nor the coverage modified nor
the limits changed without first giving thirty (30) days prior written notice
thereof to Customer. No such cancellation, modification or change shall affect
Vendor's obligation to maintain the insurance coverages required by this
Agreement. Except for workers' compensation insurance, Customer shall be named
as an additional insured and loss payee on all such required policies. Vendor
shall be responsible for payment of any and all deductibles from insured claims
under its policies of insurance.
The coverage afforded under any insurance policy obtained by Vendor pursuant to
this Agreement shall be primary coverage regardless of whether or not Customer
has similar coverage. Vendor and its contractors and subcontractors shall not
perform under this Agreement without the prerequisite insurance. Upon Customer's
request, Vendor shall provide Customer with certificates of such insurance
including renewals thereof. Unless previously agreed to in writing by Customer,
Vendor's contractors and subcontractors shall comply with the insurance
requirements herein.
Exhibit Q
[*] Confidential portions omitted
and filed separately with the
Securities and Exchange Commission.
74
The minimum limits of coverage required by this Agreement may be satisfied by a
combination of primary and excess or umbrella insurance policies. If Vendor or
its contractors or subcontractors shall fail to comply with any of the insurance
requirements herein, upon written notice to Vendor by Customer and a ten (10)
day cure period, Customer may, without any obligation to do so, procure such
insurance and Vendor shall pay Customer the cost thereof. The maintenance of the
insurance coverages required under this Agreement shall in no way operate to
limit the liability of Vendor to Customer under the provisions of this
Agreement.
The parties do not intend to shift all risk of loss to insurance. The naming of
Customer as an additional insured or loss payee is not intended to be a
limitation of Vendor's liability and shall in no event be deemed to, or serve
to, limit Vendor's liability to Customer to available insurance coverage or to
the policy limits, nor to limit Customer's rights to exercise any and all
remedies available to Customer under contract, at law or in equity.
75
EXHIBIT R
EXCLUDED EXPENSES
This EXHIBIT R sets forth the financial responsibility for the
following expenses, which the Parties acknowledge may not represent a complete
list of all expenses for which financial responsibility must be allocated. Where
Customer is to assume responsibility for the expense, the charges are not
included in the Monthly Services Charge and shall be payable by Customer or
reimbursable to Vendor as agreed to by the Parties.
A. Hubs and Routers: Lease and maintenance charges for hubs
and routers located at the Clinics will be the
responsibility of [*]; these costs will [*].
B. Telecommunications Costs: Telecommunications costs for both
voice and data will be appropriately allocated between [*].
These costs include frame relay, local and long distance
and data circuits. Charges for the Sonet Ring shall be
allocated between [*] based upon usage.
C. EDI Claim Submission: EDI Claim submission costs which are
currently passed through to the Clinics will [*]. These
costs include, but are not limited to, transmission and
statement charges.
D. Training: Training materials and other out-of-pocket
expenses not pertaining to the CBT courses (as described in
Section 2.8 of Exhibit B) shall be [*].
The Parties will cooperate in good faith to ensure that all expenses
are paid in a timely manner so as to avoid discontinuation of services. If
penalties or interest are incurred as a result of untimely payment of invoices,
the Party responsible for the delay shall be responsible for such penalties or
interest.
Where Vendor is to assume primary responsibility for the expense, the
Parties shall execute an Additional Services Request setting forth such
responsibility.
Exhibit R
76
EXHIBIT S
SERVICE RESOURCES
[Schedule 1 omitted pursuant to Regulation S-K, Item 601(b)(2) of the Securities
Act of 1933, as amended. Schedule 1 contains a list of support service centers.
TriZetto hereby agrees to furnish supplementally a copy of these omitted
schedules as requested by the Securities and Exchange Commission.]
77
EXHIBIT T
AFFECTED EMPLOYEES
The "Affected Employees" are those individuals listed below on this Exhibit T.
[*] [Confidential portions omitted from 3 consecutive pages.]
[*] Confidential portions omitted and filed separately with the Securities and
Exchange Commission.
78
EXHIBIT U
BUSINESS UNIT ASSET PURCHASE AGREEMENT
This BUSINESS UNIT ASSET PURCHASE AGREEMENT ("Agreement") is entered into as of
May 1, 1999 (the "Effective Date"), by and between The Trizetto Group, Inc.
("Purchaser") and MedPartners, Inc. ("Seller").
RECITALS
WHEREAS, Purchaser and Seller are entering into an Information Technology
Services Agreement dated May 1, 1999 (the "Services Agreement");
WHEREAS, in connection with the Services Agreement, Seller has agreed to sell,
and Purchaser has agreed to purchase the Business Unit Assets (as set forth on
Schedule 1) on the Effective Date; and
WHEREAS, Seller desires to transfer and assign the Business Unit Assets and
Purchaser desires to accept the transfer and assignment thereof.
NOW, THEREFORE, in consideration of the mutual covenants contained herein and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
1. In consideration of Purchaser's payment to Seller of [*]
(the "Purchase Price"), due upon execution of this
Agreement, Seller hereby irrevocably sells, transfers,
conveys, and assigns to Purchaser all of Seller's right,
title, and interest to the Business Unit Assets, TO HAVE
AND TO HOLD the same unto Purchaser, its successors, and
assigns, forever.
2. Purchaser hereby agrees to pay Seller the Purchase Price
in full upon execution of this Agreement, and hereby
accepts the sale, transfer, conveyance, and assignment
of the Business Unit Assets.
3. At any time or from time to time after the date hereof,
at Purchaser's request and without further
consideration, Seller shall execute such other
instruments of transfer, conveyance, assignment, and
confirmation, provide such materials and information and
take such other actions as may be reasonably necessary
in order more effectively to transfer, convey, and
assign to Purchaser, and confirm Purchaser's title to,
all of the Business Unit Assets, and, to the full extent
permitted by law, to put Purchaser in actual possession
and operating control of the Business Unit Assets and to
assist Purchaser in exercising all rights with respect
thereto.
4. Seller hereby warrants and represents that Vendor shall
receive good and rightful title in and to the Business
Unit Assets, free and clear of any liens, claims or
encumbrances, upon consummation of transfer contemplated
by Sections 1 and 2 of this Agreement.
1
[*] Confidential portions omitted
and filed separately with the
Securities and Exchange Commission.
79
5. EXCEPT AS SPECIFICALLY SET FORTH IN SECTION 4 OF THIS
AGREEMENT, ALL OF THE BUSINESS UNIT ASSETS BEING
TRANSFERRED FROM SELLER TO PURCHASER PURSUANT TO THIS
AGREEMENT ARE BEING TRANSFERRED AS IS, WHERE IS, AND IT IS
THE EXPLICIT INTENT OF EACH PARTY HERETO THAT SELLER IS NOT
MAKING ANY ADDITIONAL REPRESENTATION OR WARRANTY
WHATSOEVER, EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED
TO ANY IMPLIED REPRESENTATION OR WARRANTY AS TO CONDITION,
MERCHANTABILITY, SUITABILITY OR FITNESS FOR ANY PARTICULAR
PURPOSE AS TO ANY OF THE BUSINESS UNIT ASSETS.
6. In addition to the Purchase Price, Purchaser shall pay
Seller [*], due upon execution of this Agreement, for
Seller's clinic client contact list.
7. This Agreement shall be construed and governed by the
internal laws of the State of Alabama, without reference to
the choice of law principles thereof. Each party
irrevocably agrees that any legal action, suit, or
proceeding brought by it in any way arising out of the
agreement must be brought solely and exclusively in the
federal district court (or in the absence of federal
jurisdiction, the appropriate state court) sitting in
Birmingham, Alabama and each party irrevocably accepts and
submits to the sole and exclusive jurisdiction of each of
the aforesaid courts in personam, generally and
unconditionally with respect to any action, suit, or
proceeding brought by it or against it by the other party.
IN WITNESS WHEREOF, the parties have caused this Business Unit Asset Purchase
Agreement to be executed in their names as of the Effective Date.
THE TRIZETTO GROUP, INC. MEDPARTNERS, INC.
▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
By: By:
------------------------------- ------------------------------------
(Authorized Signature) (Authorized Signature)
Name: Name:
----------------------------- ----------------------------------
Title: Title:
---------------------------- ---------------------------------
Date: Date:
---------------------------- ---------------------------------
[*] Confidential portions omitted
and filed separately with the
Securities and Exchange Commission.
2
80
SCHEDULE 1
The items identified on the attachment to this Schedule 1 shall be the "Business
Unit Assets" for the purposes of this Agreement.
[Schedule 1 omitted pursuant to Regulation S-K, Item 601(b)(2) of the Securities
Act of 1933, as amended. Schedule 1 is a list of assets from MedPartners'
Glastonbury office. TriZetto hereby agrees to furnish supplementally a copy of
these omitted schedules as requested by the Securities and Exchange Commission.]
3