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[EXECUTION COPY]
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SECOND AMENDED AND RESTATED OUTSOURCING AND OPERATING AGREEMENT *
dated as of January 1, 2001
among
NOVATION, LLC,
VHA INC.,
UNIVERSITY HEALTHSYSTEM CONSORTIUM,
HEALTHCARE PURCHASING PARTNERS INTERNATIONAL, LLC,
and
▇▇▇▇▇▇▇▇.▇▇▇, INC.
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* Confidential treatment requested for certain portions of this exhibit.
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TABLE OF CONTENTS
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1. DEFINITIONS......................................................................... 2
2. NOVATION OBLIGATIONS................................................................ 8
2.1 Agency Relationship.......................................................... 8
2.2 Novation Duties.............................................................. 8
2.3 Certain Contracts............................................................ 9
3. NEOFORMA OBLIGATIONS................................................................10
3.1 Service......................................................................10
3.2 Service Levels...............................................................10
3.3 Cooperation with Novation....................................................10
3.4 The First * Locations........................................................10
3.5 Quality Assurance Program....................................................10
3.6 Notice of Materially Adverse Facts...........................................10
3.7 Case Studies.................................................................11
3.8 Supplier Sign-Up and Integration.............................................11
4. THE EXCHANGE........................................................................12
4.1 Maintenance of Exchange......................................................12
4.2 Consultation.................................................................12
4.3 Provision of Non-Contract Product Information................................12
4.4 Provision of Contract Product Information....................................13
4.5 Independent Users............................................................13
4.6 Multiple Memberships.........................................................13
4.7 User Registration............................................................13
4.8 Delivery and Order Fulfillment...............................................14
4.9 Removal of Products from the Exchange........................................14
4.10 Customized Exchanges.........................................................14
4.11 Links........................................................................14
4.12 Reasonable Assistance........................................................14
5. NOVATION EXCHANGE AND HPPI EXCHANGE.................................................14
5.1 Development..................................................................14
5.2 Hosting......................................................................15
5.3 Delivery and Order Fulfillment...............................................15
5.4 Display of Material..........................................................15
5.5 Reports and Meetings.........................................................15
5.6 Retained Contracts...........................................................16
5.7 Marketing....................................................................16
5.8 Neoforma Auction.............................................................16
5.9 Neoforma Plan................................................................16
6. EXCLUSIVITY AND RIGHT OF FIRST OFFER................................................17
* Confidential treatment requested.
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6.1 Novation, VHA, UHC and HPPI Exclusivity......................................17
6.2 Neoforma Exclusivity.........................................................17
6.3 Right of First Offer for Novation and Neoforma...............................18
6.4 First Offer for Non-Exclusive Services.......................................19
7. LICENSES AND OWNERSHIP..............................................................20
7.1 Ownership of Marks...........................................................20
7.2 Novation Marks...............................................................20
7.3 Neoforma Marks...............................................................20
7.4 VHA, UHC and HPPI Marks......................................................20
7.5 Ownership of Neoforma Materials and Novation Materials.......................21
7.6 Neoforma Materials...........................................................21
7.7 Novation Materials...........................................................21
7.8 Development of Tools.........................................................21
7.9 Access License...............................................................22
8. FEES AND TAXES......................................................................22
8.1 Contract Product Transaction Fees............................................22
8.2 Revenue Sharing..............................................................23
8.3 Adjustment of Transaction Fees...............................................23
8.4 Reporting and Payment of Novation Exchange Transaction Fees and Revenue
Sharing......................................................................24
8.5 * ...........................................................................24
8.6 Taxes........................................................................26
8.7 New Markets..................................................................26
8.8 Product Returns..............................................................26
8.9 Neoforma * and Neoforma *, and * and * ......................................26
8.10 * ...........................................................................26
8.11 Other Expenses...............................................................27
9. TERM AND TERMINATION................................................................27
9.1 Initial Term.................................................................27
9.2 Renewal and Extension of Term................................................28
9.3 Termination for Cause........................................................28
9.4 Termination for Insolvency Events............................................28
9.5 Termination for Rejection in Bankruptcy......................................28
9.6 Termination Upon Neoforma Change of Control..................................29
9.7 Return of Materials..........................................................29
9.8 Survival.....................................................................29
9.9 Termination Assistance Services..............................................29
9.10 Third Party Products.........................................................31
10. USER DATA...........................................................................32
10.1 Registration.................................................................32
10.2 Transaction Database.........................................................32
10.3 Member Data..................................................................32
10.4 Aggregated Member Data.......................................................32
* Confidential treatment requested.
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10.5 Transaction Database.........................................................33
10.6 License Grant of Information to Novation.....................................33
10.7 No Other Licenses or Use.....................................................33
10.8 Other Data...................................................................33
10.9 Neoforma Information.........................................................34
11. SAFEGUARDING OF DATA; CONFIDENTIALITY...............................................34
11.1 Novation Data................................................................34
11.2 Confidentiality..............................................................34
12. REPRESENTATIONS AND WARRANTIES......................................................36
12.1 Representations by Neoforma..................................................36
12.2 Representations by Novation, VHA, UHC and HPPI...............................37
12.3 Warranty Disclaimer..........................................................39
13. USE OF SUBCONTRACTORS...............................................................39
13.1 Generally....................................................................39
13.2 Novation's Right to Revoke Approval..........................................39
13.3 Continuing Responsibility....................................................39
13.4 Confidential Information.....................................................39
14. INSURANCE...........................................................................39
14.1 Insurance....................................................................39
14.2 Proof of Insurance...........................................................40
15. INDEMNITY...........................................................................40
15.1 Neoforma Indemnity...........................................................40
15.2 Novation Indemnity...........................................................41
15.3 Infringement Claims..........................................................41
15.4 Indemnity Procedures.........................................................42
16. LIMITATION OF LIABILITY.............................................................42
16.1 Limitations..................................................................42
16.2 Exceptions...................................................................43
16.3 Liquidated Damages...........................................................43
17. AUDIT RIGHTS........................................................................44
17.1 General......................................................................44
17.2 Frequency of Audits..........................................................45
17.3 Auditors.....................................................................45
17.4 Record Retention.............................................................45
17.5 Cooperation..................................................................45
17.6 Overcharges..................................................................45
18. DISPUTE RESOLUTION..................................................................45
18.1 Resolution of Disputes.......................................................45
18.2 Negotiations and Escalation..................................................46
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18.3 Appointment of Arbitral Body.................................................46
18.4 Qualifications of Arbitrator.................................................46
18.5 Initiation of Arbitration and Procedures.....................................46
18.6 Procedures...................................................................47
18.7 Governing Law; Jurisdiction..................................................47
18.8 Arbitration Award............................................................47
18.9 Cooperation of the Parties...................................................48
18.10 Costs........................................................................48
18.11 Judgment on the Award; Enforcement...........................................48
18.12 Preservation of Equitable Relief; Third-Party Litigation.....................48
18.13 Continued Performance........................................................49
19. GUARANTY OF PERFORMANCE.............................................................49
19.1 VHA and UHC Guarantees.......................................................49
19.3 VHA and UHC Waivers..........................................................49
19.3 Scope of Liability...........................................................50
19.4 Continued Performance by Neoforma............................................50
20. GENERAL PROVISIONS..................................................................51
20.1 No Waiver....................................................................51
20.2 Entire Agreement.............................................................51
20.3 Publicity....................................................................51
20.4 Covenant of Good Faith.......................................................51
20.5 Compliance with Laws and Regulations.........................................51
20.6 Assignment; Successors and Assigns...........................................52
20.7 Governing Law................................................................52
20.8 Notices......................................................................52
20.9 No Agency....................................................................53
20.10 Force Majeure................................................................53
20.11 Interest.....................................................................54
20.12 Program Management...........................................................54
20.13 Severability.................................................................54
20.14 Counterparts.................................................................54
20.15 Headings.....................................................................55
20.16 Section 365(n) Matters.......................................................55
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EXHIBITS:
Exhibit A Marks +
Exhibit B Current Marks Usage Guidelines for Novation +
Exhibit C Current Marks Usage Guidelines for Neoforma +
Exhibit D Current Marks Usage Guidelines for VHA, UHC and HPPI +
Exhibit E Reports and Other Information Requirements
Exhibit F Program Management +
Exhibit G Minimum Fee
Exhibit H Target Fee Levels
Exhibit I Examples
Exhibit J Priority Suppliers
+ Exhibit filed previously and not included here.
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SECOND AMENDED AND RESTATED
OUTSOURCING AND OPERATING AGREEMENT
This Second Amended and Restated Outsourcing and Operating Agreement
("AGREEMENT") entered into as of January 1, 2001 (the "EFFECTIVE DATE"), by and
among ▇▇▇▇▇▇▇▇.▇▇▇, Inc., a Delaware corporation with offices at ▇▇▇▇-▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("NEOFORMA"), Novation, LLC, a Delaware
limited liability company with offices at ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ ("NOVATION"), Healthcare Purchasing Partners International,
LLC, a Delaware limited liability company with offices at ▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ ("HPPI"), VHA Inc., a Delaware
corporation with offices at ▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇ ("VHA"), and University HealthSystem Consortium, an Illinois
corporation with offices at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ("UHC").
RECITALS
WHEREAS, Neoforma is a provider of Internet (as defined in Section 1)
e-commerce services to the healthcare industry facilitating the sale, rental or
lease of new and used equipment, products, supplies, services information and
other content, and provides information regarding various healthcare facilities
and equipment through its online offerings and programs;
WHEREAS, VHA and UHC are organizations whose patrons are hospitals and
healthcare providers, who view e-commerce as an essential part of their
cooperative purchasing programs on behalf of their patrons for the future and
who desire to more fully develop the services they render to their patrons
through this Agreement;
WHEREAS, VHA and UHC together own all the ownership interests in
Novation and HPPI;
WHEREAS, Novation is a contracting agent that develops and delivers
supply chain management agreements, programs and services on behalf of VHA and
UHC and their patrons;
WHEREAS, HPPI is a GPO that serves healthcare organizations that are not
members of VHA and UHC and other GPOs and which develops and delivers
supply-chain management programs and services to such healthcare organizations;
WHEREAS, the parties wish to establish a long-term, global relationship
to enable the parties to achieve increased efficiency and cost savings through
Internet-based technology and pursuant to which (i) Neoforma will develop and
manage the Exchange (as defined in Section 1), an e-commerce web site for the
benefit of the members of VHA and UHC, the associated healthcare organizations
of HPPI and for the benefit of other users unaffiliated with VHA, UHC or HPPI,
(ii) Novation will serve as the contracting agent for Neoforma by recruiting,
contracting with and managing relationships with healthcare equipment
manufacturers and service suppliers on Neoforma's behalf and (iii) VHA and UHC
will provide marketing support for the Exchange, guarantee Novation's
obligations to the extent provided under this Agreement and enter into the
exclusivity provisions hereunder;
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WHEREAS, the parties have previously entered into an Outsourcing and
Operating Agreement (the "ORIGINAL OUTSOURCING AND OPERATING AGREEMENT"), dated
as of March 30, 2000 (the "ORIGINAL EFFECTIVE DATE"), and have also previously
entered into an amended and restated Original Outsourcing and Operating
Agreement, dated as of May 24, 2000 (the "FIRST AMENDED AND RESTATED OUTSOURCING
AND OPERATING AGREEMENT"), and each of Novation, VHA, UHC and HPPI, together
with Neoforma, desire to amend, restate, remake and reaffirm the First Amended
and Restated Outsourcing and Operating Agreement as set forth herein; and
WHEREAS, in consideration for the services initially agreed to be
provided by VHA and UHC pursuant to the Original Outsourcing and Operating
Agreement and the First Amended and Restated Outsourcing and Operating
Agreement, Neoforma issued to VHA and UHC shares of, and warrants to purchase,
common stock of Neoforma.
NOW, THEREFORE, for good and valuable consideration, the parties agree
as follows:
1. DEFINITIONS
As used in this Agreement, the following terms shall have the respective
meanings set forth below. Other capitalized terms shall have the meanings set
forth elsewhere in this Agreement.
"ADJUSTED GROSS TRANSACTION VALUE(S)" means, with regard to a confirmed
purchase, rental or lease on the Novation Exchange, * which are related to the
Product purchased, rented or leased.
"AFFILIATE(S)" means, with respect to a specified person, any other
person that, directly or indirectly, through one or more intermediaries,
controls, is controlled by or is under common control with such specified
person. Neoforma, on the one hand, and Novation, VHA and/or UHC, on the other
hand, shall not be Affiliates.
"AGGREGATED MEMBER DATA" means all or any of an aggregate of the
Information relating to any two or more Members.
"API(s)" means language and messaging formats, in human and computer
readable form, that define how programs interact with an operating system, a
database, with functions in other programs, with communication systems, or with
hardware drivers.
"CONTRACT PRODUCT(S)" means any Product that is part of the Novation
Contract Portfolio and available on the Novation Exchange or the HPPI Exchange.
"CUSTOMIZED EXCHANGE(S)" means that portion of the Exchange created
specifically for and accessible only to members of a particular purchasing
organization.
* Confidential treatment requested.
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"EXCHANGE" means the Novation Exchange, HPPI Exchange, all Customized
Exchanges and all other portions of the Neoforma web sites.
"EXPECTED TRANSACTION FEES" means all amounts of Novation Exchange
Transaction Fees expected to be paid by a Supplier during the period commencing
on the applicable * or *, as the case may be, up to and including * of such
Supplier. Such Expected Transaction Fees shall be calculated with respect to
each Supplier by multiplying (i) the * sales, rentals and leases of * (as
evidenced by the most recent *) and * (as evidenced by reasonable supporting
documentation provided to Neoforma by Novation) by * that were * prior to the
applicable * or *, as the case may be, and that processed transactions with the
applicable * through the Novation Exchange during the preceding *, by (ii) the
applicable * for sales, rentals and leases of * and * as defined in the
agreement between Neoforma and such Supplier. In order to calculate the *
Expected Transaction Fees, the resulting number is then multiplied by a
fraction, the numerator of which is * for the first * days subsequent to the * ,
* for the second * days, * for the third * days, and * thereafter, and the
denominator of which is *. By way of example, if (A) as of a certain *, * (as
described above) representing * purchases of * and * from the applicable
Supplier in the preceding * were processing transactions through the Novation
Exchange, and (B) such Supplier was obligated to pay a Novation Exchange
Transaction Fee of * with respect to such transactions through the Novation
Exchange, then in the first * days following such *, * would be multiplied by *,
and the resultant number of * would be multiplied by the quotient of * and *, or
*, to calculate a * Expected Transaction Fee of *.
"GAAP" means United States generally accepted accounting principles as
in effect at the time of the application thereof.
"GPO(s)" means any entity in the United States that meets the definition
of a "Group Purchasing Organization" as set forth in 42 CFR Section 1001.952(j),
and any entity outside the United States performing a similar function.
"GROSS REVENUE" means, with respect to Novation's responsibility for any
* in Minimum Fees, the aggregate of (i) the marketing fees and other revenue
recognized by VHA and the administrative fees and other revenue recognized by
UHC pursuant to Novation-related agreements with suppliers and distributors and
(ii) revenue recognized by Novation pursuant to Sections 8.2, 8.9 and 8.10, less
any revenues recognized from HPPI and amounts related to purchases made through
VHA's Care Continuum Program and any substantially similar program operated by
UHC.
"HIGH-VOLUME SUPPLIER" means a Supplier whose sales of Products from the
Novation Contract Portfolio (whether purchased through the Novation Exchange or
otherwise) are at least
* Confidential treatment requested.
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* annually as evidenced by the * during the preceding 12-month period.
"HPPI EXCHANGE" means that portion of the Novation Exchange accessible
only to HPPI Members.
"HPPI MEMBER(S)" means, at any date, those organizations acting as
purchasers, renters or lessees in their respective markets that are associates
of HPPI and to which HPPI provides procurement related services, cost management
programs and other services.
"INFORMATION" means the information and data maintained by Neoforma in
the Transaction Database, which shall include, at minimum, (i) any and all
information and data collected, developed and/or stored by Neoforma relating to
Users and (ii) any and all information and data relating to use of or
transactions on the Exchange by Users.
"INTELLECTUAL PROPERTY RIGHTS" means all copyrights, patents, trade
names and trademarks (in each of the preceding cases, whether registered or not)
and trade secrets and other intellectual property rights of a person.
"INTEGRATION" means the integration of the current system of a Supplier
or Member, as applicable, with the Exchange such that such Supplier or Member,
as the case may be, may (i) conduct transactions through the Exchange and
receive confirmations of such transactions, or (ii) solely in the case of a
Supplier that conducts transactions through distributors rather than directly
through the Exchange, access information regarding transactions, in each such
case, in accordance with the functionality set forth in the then-current
Functionality Specifications.
"INTERNET" means the public, global network of computer networks and
individual computers constantly connected using standardized communications
protocols, specifically TCP/IP or any successor protocol thereof.
"MATERIAL(S)" means information on equipment, products, supplies or
services, including, without limitation, product availability and pricing
information, provided to Neoforma for display to Users of the Exchange.
"MEMBER(S)" means, at any date, those organizations that are (i) patrons
or members of VHA or UHC, or are associated therewith, or (ii) HPPI Members, and
in each case, that are listed in an electronic file supplied to Neoforma and
updated periodically by Novation.
"MEMBER DATA" means any and all Transaction Database information
relating to a specific Member.
"NEOFORMA AUCTION" means Neoforma's auction services offered on the
Exchange.
"NEOFORMA CHANGE OF CONTROL" means the occurrence of any of the
following:
(a) the direct or indirect sale, transfer, conveyance or other
disposition (other than by way of merger or consolidation), in
one or a series of related transactions, of all or
* Confidential treatment requested.
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substantially all of the properties and assets of Neoforma and
its subsidiaries taken as a whole to any "person" or "group" (as
such terms are used in Section 13(d)(3) of the Securities and
Exchange Act of 1934, as amended (the "Exchange Act")), other
than Novation or any of its Affiliates;
(b) the adoption by the Board of Directors of Neoforma of a plan
relating to the liquidation or dissolution of Neoforma;
(c) the consummation of any transaction or series of related
transactions (including, without limitation, any merger or
consolidation) the result of which is that any "person" or
"group" (as defined above), other than Novation or any of its
Affiliates, becomes the "beneficial owner" (as such term is used
in Rule 13d-3 promulgated under the Exchange Act), directly or
indirectly, of more than 50% of the capital stock of Neoforma,
measured by voting power or economic interest rather than number
of shares;
(d) the consummation of any transaction or series of related
transactions (including, without limitation, any merger or
consolidation) the result of which is that the beneficial owners
(as defined above) of the capital stock of Neoforma immediately
prior to such transaction or transactions cease to be the
beneficial owners of at least 50.1% of the capital stock,
measured by voting power or economic interest rather than number
of shares, of the surviving or resulting entity of such
transaction or transactions; or
(e) during any period of two consecutive years, individuals who at
the beginning of such period constituted the Board of Directors
of Neoforma (together with any new directors whose election by
the Board of Directors or whose nomination for election by the
stockholders of Neoforma was approved by a vote of a majority of
the directors then still in office who were either directors at
the beginning of such period or whose election or nomination for
election was previously approved) cease to constitute a majority
of the directors then in office.
"NEOFORMA INFORMATION" means Information received from non-Members.
"NEOFORMA MATERIALS" means Materials provided by Neoforma and displayed
on and available to Users of the Exchange but shall not include the Novation
Materials.
"NEOFORMA PLAN" means Neoforma's medical facility planning services
offered on the Exchange.
"NON-CONTRACT PRODUCT" means any Product available through the Exchange
that is not part of the Novation Contract Portfolio or any other GPO-specific
contract portfolio.
"NOVATION CONTRACT PORTFOLIO" means a catalog of all Products and
Novation Materials that will appear on the Novation Exchange or the HPPI
Exchange, for which Novation has contracted, for the benefit of the Members.
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"NOVATION COMPETITOR" means any person that, at the time of
determination, would reasonably be considered to be (i) a competitor of Novation
or (ii) a competitor of any Member.
"NOVATION EXCHANGE" means that portion of the Exchange accessible only
to members of VHA, UHC or HPPI which may include Contract and Non-Contract
Products.
"NOVATION EXCHANGE TRANSACTION FEE(S)" means fees to be paid by
Suppliers in respect of transactions occurring on the Novation Exchange,
excluding fees associated with Neoforma Auction and Neoforma Plan.
"NOVATION MATERIALS" means Materials provided by Novation or by Novation
Suppliers to Neoforma for display to Users of the Exchange, including to Members
on the Novation Exchange.
"NOVATION SUPPLIERS" means suppliers, manufacturers or distributors that
provide equipment, products, supplies, services, information and other content
for sale, rental or lease through the Novation Exchange and HPPI Exchange under
the Novation Contract Portfolio.
"PARTY" means each of Neoforma, Novation, HPPI, VHA and UHC and any
other person who becomes a signatory to this Agreement, unless the context
requires otherwise.
"PATRON(S)" means a person who is entitled to receive a patronage refund
from VHA or UHC.
"PERSON" means a natural person, corporation, partnership (limited or
general), limited liability company, business trust or other entity.
"PRODUCT(S)" means equipment, products, supplies, services, information
and other content provided by Suppliers and available for purchase, rental or
lease by Users through the Exchange.
"REMOTE ORDER ENTRY" means the ability of Users, including, without
limitation, persons outside of central purchasing/materials management
departments to create requisitions and to have such requisitions turned into
valid orders in accordance with the protocol agreed to by the Novation Exchange
and the User.
"RETAINED CONTRACT(S)" means those product or service contracts of VHA
or UHC that have not been transferred to Novation and which the Members may have
access to because they are Members in VHA or UHC.
"SERVICE(S)" means the services to be provided hereunder by Neoforma.
"SERVICE LEVEL(S)" means the objective criteria establishing the level
of Neoforma's required performance of the Services under this Agreement.
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"SIGN-UP" (also "SIGNS-UP" and "SIGNED-UP") means for a party to enter
into a contractual relationship with a Supplier to enable all or any portion of
that Supplier's equipment, products, supplies, services, information and other
content to be displayed on the Exchange.
"SUPPLIER(S)" means suppliers, manufacturers or distributors that
provide Products and Materials for display, sale, rental or lease through the
Exchange, including, without limitation, High-Volume Suppliers.
"SUPPLIER INTEGRATION DEADLINE" means the later of (i) * following the
date on which a Supplier is Signed-up or (ii) the * specified in the contract
between the Supplier and Neoforma, as either may be adjusted pursuant to Section
3.8.2.
"SUPPLY CHAIN MANAGEMENT SERVICES" means (i) with respect to Novation,
VHA and HPPI, operations and activities related to the evaluation, bidding,
negotiation, contracting, administering, marketing, distribution, sale,
acquisition or disposal of equipment, products, supplies, services, information
and other content by healthcare organizations from third parties and (ii) with
respect to UHC only, operations and activities related to the evaluation,
bidding, negotiation, contracting, administering, marketing, distribution, sale,
acquisition or disposal of equipment, products, supplies and services by
healthcare organizations from third parties, and in the case of each of clause
(i) and (ii), including operations and activities directly related to Neoforma
Plan and Neoforma Auction. Notwithstanding the generality of the foregoing, and
with respect to UHC only, Supply Chain Management Services do not include
outsourcing, consulting, information technology products and services (unless
related to equipment or supplies), financial products and services, insurance
products and services, education and networking and communication products and
services.
"TARGET FEE LEVELS" has the meaning specified in Section 8.2.1 of this
Agreement.
"TOOL(S)" means a program, utility or user interface that helps the user
of the program, utility or user interface analyze or search for data.
"TRANSACTION DATA" means the data maintained by Neoforma on the
Transaction Database.
"TRANSACTION DATABASE" means any and all means used to store
Information.
"TRANSACTION FEE(S)" means fees to be paid by Suppliers with whom
Novation has contracted on Neoforma's behalf in respect of transactions
occurring on the Exchange but excluding fees associated with the Novation
Exchange, Neoforma Auction and Neoforma Plan.
"USER(S)" means all Members and other users of the Exchange, including,
without limitation, participating healthcare organizations, GPOs or other
registered users that do not act as Suppliers.
* Confidential treatment requested.
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2. NOVATION OBLIGATIONS
2.1 Agency Relationship. Neoforma hereby appoints Novation to act as
Neoforma's agent to Sign-up Suppliers, and Novation accepts such
appointment, for the principal purpose of facilitating
e-commerce purchases by the patrons of VHA and UHC and by
others.
2.2 Novation Duties. In connection with Novation's appointment as
agent under Section 2.1, Novation will perform the following
obligations:
2.2.1 Neoforma and Novation shall meet to discuss and mutually
agree upon certain commercially reasonable negotiating
parameters within which Novation may negotiate with
Suppliers without seeking Neoforma's approval. While
within such parameters, Novation may negotiate with and
Sign-up any Supplier and obtain any terms and conditions
that in Novation's reasonable discretion are consistent
with its obligations under this Agreement. Novation
agrees that if it wishes to conclude any agreement (i)
upon terms and conditions outside of the agreed upon
negotiating parameters, or (ii) with respect to
Exchanges other than the Novation Exchange, at
Transaction Fee levels that are lower than the levels
agreed upon by Neoforma and Novation under Section 8.3,
it will seek Neoforma's prior consent, which consent
shall not be unreasonably withheld or delayed. Novation
shall use its diligent efforts to obtain favorable terms
from each Supplier with whom it negotiates on behalf of
Neoforma. Neoforma agrees, however, that Novation shall
have no obligation to obtain the best terms and
conditions available from any Supplier.
2.2.2 Neoforma and Novation shall meet no less frequently than
on a quarterly basis (or at any time that either
Neoforma or Novation reasonably requests such a meeting)
to review the then-current negotiating parameters. At
such meetings, Neoforma and Novation shall in good faith
review whether the negotiating parameters then in effect
are market competitive and, if not, shall adjust so that
they are market competitive. For the avoidance of doubt,
the parties agree that "market competitive" shall mean
that (i) Suppliers are reasonably likely to sign such
agreement (after negotiation) or (ii) the negotiating
parameters are commercially reasonable.
2.2.3 Novation will provide to Neoforma promptly after the
Sign-up of each Supplier agreement that Novation enters
into on Neoforma's behalf, all information concerning
such agreement that is necessary for Neoforma to fulfill
its obligations thereunder.
2.2.4 Novation will manage the Supplier relationships in
respect of each Supplier that Novation Signs-up on
Neoforma's behalf, and will use diligent efforts to
facilitate favorable commercial relationships between
Neoforma and such Suppliers.
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2.2.5 Novation shall make available a number of employees as
will be necessary to perform Novation's agency
obligations hereunder. No such employees will be
required to devote their full time to providing such
services hereunder.
2.2.6 Novation and Neoforma shall cooperate to increase the
number of Suppliers on the Exchange. Additionally, on or
before *, Novation shall Sign-up at least * additional
*. If Novation does not Sign-up at least * additional
* on or before *, then for each day after * that such *
has not been Signed-up, Novation shall pay to Neoforma
the sum of *. If Novation is subject to a penalty
pursuant to this Section 2.2.6, then the Target Fee
Level (as defined in Section 8.2.1) for the applicable
Calendar Quarter shall be reduced by the aggregate
amount of such penalty paid in such Calendar Quarter.
2.2.7 Novation will reasonably cooperate with Neoforma to
resolve performance problems with respect to any
Supplier that it has Signed-up on Neoforma's behalf and
who has become the subject of numerous User complaints.
In the resolution of such issues, Novation will act
solely as Neoforma's agent with respect to Suppliers,
and Novation shall not be required to contact any Users.
2.2.8 Subject to its obligations under Section 11.2, Novation
will bring to Neoforma's attention, reasonably promptly
after learning thereof, any fact that would reasonably
be likely to materially adversely affect the Exchange,
Neoforma or Users, including, without limitation, the
institution of litigation against Novation or any
Supplier.
2.2.9 In connection with the negotiation of Supplier
agreements, Novation will provide Suppliers with
technical information and specifications provided by
Neoforma to enable such Suppliers to effectively connect
to and interface with the Exchange. Novation shall not
independently negotiate or modify any aspects of
Neoforma's technical specifications regarding the
Exchange without Neoforma's prior written consent.
2.2.10 In performing its duties under this Section 2, Novation
shall not be required to initiate or carry on
litigation.
2.3 Certain Contracts. For the avoidance of doubt, the parties agree
that the contracts constituting the Novation Contract Portfolio
or the Retained Contracts, as now or hereafter constituted,
shall remain obligations of Novation, UHC or VHA, as the case
may be, and shall not be transferred to, or assumed by, Neoforma
in connection with this Agreement.
* Confidential treatment requested.
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3. NEOFORMA OBLIGATIONS
3.1 Service. Neoforma shall provide Services as shall be mutually
agreed upon by the parties hereto and referred to as the
"FUNCTIONALITY SPECIFICATIONS." Neoforma and Novation anticipate
that the Services will evolve and be modified or be enhanced
over time to keep pace with technological advancements and
improvements in e-commerce and shall include at least the
functionality described in the Functionality Specifications.
Once agreed upon, all modifications to the Functionality
Specifications must be in writing and agreed to by the parties
in writing.
3.2 Service Levels. Neoforma shall provide such professional and
technical personnel and other resources (including, without
limitation, hardware, software, facilities, equipment and other
assets) as shall be required to perform the Services in
accordance with service levels as shall be mutually agreed upon
by the parties hereto and referred to as the "SERVICE LEVEL
SPECIFICATIONS." Once agreed upon, all modifications to the
Service Level Specifications must be in writing and agreed to by
the parties in writing.
3.3 Cooperation with Novation. Neoforma shall cooperate with
Novation in the performance of Novation's agency obligations
under Section 2.
3.4 The First * Locations. No later than *, Neoforma shall have
completed the Integration of, and shall have made operational
for Remote Order Entry, * locations jointly identified by
Neoforma and Novation. Of the * locations, (i) * shall be *,
(ii) * shall be * and (iii) each of * of such * shall have * of
products of *, based on each location's purchasing, renting and
leasing * during the *.
3.5 Quality Assurance Program. Neoforma will administer a quality
assurance program that has been mutually agreed to by Neoforma
and Novation, among other things, to monitor Supplier
performance and order confirmation for Products ordered by
Users.
3.6 Notice of Materially Adverse Facts. Subject to its obligations
under Section 11.2, Neoforma will bring to the attention of each
of Novation, VHA and UHC, reasonably promptly after learning
thereof, any fact that would reasonably be likely to materially
adversely affect the Exchange, the Novation Exchange, the HPPI
Exchange or the Members, VHA, UHC or HPPI, including, without
limitation, the institution of litigation against Neoforma or
any Supplier.
3.7 Case Studies.
3.7.1 Within * following the completion of the currently
in-process * study of the potential economic value of
the Exchange to
* Confidential treatment requested.
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Suppliers and Members, Neoforma and Novation shall meet
and mutually agree to a methodology pursuant to which
Neoforma will conduct the studies and value assessments
contemplated by this Section 3.7.
3.7.2 During each of the * through *, Neoforma shall on *
basis (but in no event later than *) undertake to
prepare * or more User case studies documenting the
economic value that the Exchange has for each of
Suppliers and Members. After calendar year *, such case
studies shall be prepared by Neoforma from time to time
as mutually agreed by Novation and Neoforma. In
addition, during the Term, Neoforma shall measure *
provided to Members and Suppliers by the Exchange. Each
case study prepared by Neoforma will be sent to each of
Novation, VHA, and UHC for the purpose of marketing the
Exchange to other Suppliers and Members.
3.8 Supplier Sign-Up and Integration.
3.8.1 Neoforma and Novation shall meet within 30 days after
the execution of this Agreement, and at each
Cross-Functional Management Team Meeting thereafter, to
establish a plan (i) to Sign-up additional Suppliers,
(ii) to Integrate and make operational such Suppliers
for receiving and confirming orders, and (iii) to
eliminate the back-log of Suppliers, if any, that have
been previously Signed-up but not yet Integrated.
3.8.2 Neoforma shall complete the Integration and make
operational for receiving and confirming orders for each
Supplier that is Signed-up by the Supplier Integration
Deadline. In the event that a * by the applicable *,
then Neoforma shall * Notwithstanding the foregoing, if
(i) Neoforma does not * before the applicable *, as the
case may be, (ii) such * is a result of that *, and
(iii) prior to the 30th day before the applicable *,
Neoforma (A) notifies Novation in writing of such * and
the likelihood that such * by the applicable * and (B)
reasonably demonstrates to Novation's reasonable
satisfaction such * then the applicable *, as the case
may be, will be * as the * day following the date of
such *.
* Confidential treatment requested.
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3.8.3 Neoforma shall complete the Integration and make
operational for receiving and confirming orders for each
Supplier set forth on Exhibit J (each a "PRIORITY
SUPPLIER") not later than * following the date of this
Agreement (the "PRIORITY SUPPLIER INTEGRATION
DEADLINE"). In the event that a Priority Supplier is * ,
then Neoforma shall * in respect of such *.
Notwithstanding the foregoing, if (i) Neoforma does not
* before the * or any *, as the case may be, (ii) such *
is a result of that *, and (iii) prior to the 30th day
before the * or any *, as the case may be,
Neoforma (A) notifies Novation in writing of such * and
the likelihood that such * by the * or any *, as the
case may be, and (B) demonstrates to Novation's
reasonable satisfaction such *, then the * or any *, as
the case may be, will be * with respect to * as the *
day following the date of such *.
4. THE EXCHANGE
4.1 Maintenance of Exchange. Neoforma shall use its best efforts to
maintain the Exchange as a leading provider of e-commerce
services to the healthcare industry.
4.2 Consultation. Neoforma, Novation, VHA and UHC will consult
regularly (but no less frequently than on a quarterly basis) to
discuss the strategic direction of the Exchange, including the
features and functions that would provide additional value to
patrons and others.
4.3 Provision of Non-Contract Product Information. The Suppliers
will be responsible for providing Neoforma with Materials to be
located on the Exchange in respect of all Non-Contract Products.
Novation will review such Materials relating to the Non-Contract
Products, subject to Neoforma providing Novation a methodology
for previewing such Materials.
4.4 Provision of Contract Product Information. Novation shall be
responsible for providing Neoforma with pricing for Contract
Products and any unique facts and summary sheets relating to
such Contract Products that are prepared by Novation. The
Suppliers will be responsible for providing Neoforma with all
other information regarding such Contract Products. Subject to
Neoforma providing to Novation a methodology for allowing
Novation to preview Materials relating to
* Confidential treatment requested.
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Contract Products, Novation will review such information and
determine that such information is reasonably accurate, prior to
being loaded on the Exchange (e.g., correct pricing, product
numbers, description, etc.).
4.5 Independent Users. Prior to the date on which Neoforma concludes
an agreement with a GPO (other than HPPI) having its own
Supplier contracts (an "INDEPENDENT GPO") who, as a condition to
using the Exchange, contractually requires Neoforma to act in a
neutral manner, Neoforma shall refer any User who requests
access to a Customized Exchange (other than a Member entitled to
use the Novation Exchange) to the HPPI Exchange. After the date
on which an Independent GPO is on the Exchange, if a User (other
than a Member entitled to use the Novation Exchange) approaches
Neoforma requesting access to a Customized Exchange, Neoforma
shall act in a neutral manner with regard to such User and shall
not be required to recommend or otherwise refer such User to any
specific part of the Exchange, including the HPPI Exchange or
the Novation Exchange. Notwithstanding the preceding sentence,
Neoforma will at all times feature the HPPI Exchange at least as
prominently on the Exchange as any other Customized Exchange.
4.6 Multiple Memberships. If a Member is also a member of any other
GPO that has a Customized Exchange on the Exchange, that Member
will have access to all of the Exchange, including the Novation
Exchange or HPPI Exchange, as the case may be, and the
applicable Customized Exchange. Members who are also Users of
Customized Exchanges will have access rights to the Novation
Exchange or the HPPI Exchange equal to those of Members that do
not belong to Customized Exchanges. Notwithstanding the
foregoing, Neoforma shall provide favorable view and framing in
respect of the Novation Contract Portfolio to any Member
accessing the Exchange.
4.7 User Registration. Upon implementation of the Novation Exchange,
Neoforma, with Novation's assistance, will develop a Tool to
register Members on the Exchange. Neoforma will require Members
to create and use passwords as a necessary condition to
accessing the Novation Exchange. Neoforma shall be responsible
for keeping the Novation Exchange registry and the HPPI Exchange
registry current and for not allowing access to such Exchanges
by unauthorized Users.
4.8 Delivery and Order Fulfillment. Neoforma will notify Suppliers
and provide Suppliers access to the Transaction Database for
sales, rentals and leases of Products by such Suppliers, in a
form and format mutually agreed upon by Neoforma and Suppliers
and to the extent set forth in the Functionality Specifications.
4.9 Removal of Products from the Exchange. With regard to
Non-Contract Products, Neoforma shall remove Product listings
from the Exchange promptly after determining that the appearance
of such Products will, or is reasonably likely to, result in
liability to Neoforma, Novation, HPPI, VHA, UHC or any Users.
Upon
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such removal, Neoforma will promptly notify Novation of such
action and the reasons therefore. With regard to Contract
Products, Neoforma shall notify Novation promptly after becoming
aware of any problems with a Contract Product or that any such
Contract Product will, or is reasonably likely to, result in
liability to Neoforma, Novation, HPPI, VHA, UHC or any Users. In
addition and at the same time, Neoforma shall provide to
Novation all information of which it is aware regarding the
problems with such Contract Product. Neoforma will obtain
Novation's prior written consent, prior to taking any action to
remove such Contract Product listing from the Exchange.
4.10 Customized Exchanges. In accordance with the Functionality
Specifications to be agreed upon, Neoforma may create Customized
Exchanges and other customized sites for the use and benefit of
Users on the Exchange. Neoforma will not intentionally create
Customized Exchanges for the purpose of evading fees owed to
Novation under Section 8 of this Agreement.
4.11 Links. The parties will establish and maintain hypertext links
from the Novation web site, HPPI web site, VHA web site and UHC
web site to the Exchange. Each of Novation, HPPI and Neoforma
will use reasonable efforts to ensure that the respective links
that each party maintains linking Novation, HPPI and Members to
the Exchange function correctly.
4.12 Reasonable Assistance. Each party will provide the other parties
with on-going reasonable assistance with regard to technical,
administrative and service-oriented issues relating to the
Exchange.
5. NOVATION EXCHANGE AND HPPI EXCHANGE
5.1 Development. The parties shall meet from time to time to agree
to the "look and feel" and organization of the Novation Exchange
and the HPPI Exchange. In addition, they will jointly develop
and agree upon an implementation plan and schedule for
development of the Novation Exchange and the HPPI Exchange;
provided, however, that, notwithstanding anything herein to the
contrary, the Novation Exchange and the HPPI Exchange will have
at least the minimum functionality in the applicable time
periods as will be described in the Functionality
Specifications.
5.2 Hosting. Neoforma will create, host and implement the Novation
Exchange and the HPPI Exchange according to the agreed plan and
display the Novation Contract Portfolio in a manner similar to
the way in which products currently appear on the Exchange.
5.3 Delivery and Order Fulfillment. Neoforma will notify the
Suppliers of purchases, rentals and leases made by Members in a
form and format according to the terms of Neoforma's agreements
with Suppliers.
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5.4 Display of Material. In order to facilitate efficient
presentation of Product information, Neoforma will categorize,
organize and display all Products on the Novation Exchange and
the HPPI Exchange in a manner consistent with that in which it
organizes similar information on the Exchange.
5.5 Reports and Meetings.
5.5.1 Subject to obtaining the consent of the Members' in
accordance with Section 10, Neoforma will provide each
of Novation, VHA, UHC and HPPI with real-time, on-line
reports of its Members usage statistics and reports on
other reasonable matters. Such reports shall be made
available in the form of Excel(TM) files transferred via
electronic transmission to Novation, VHA, UHC or HPPI,
or in such other format as the parties agree. The
parties will mutually agree as to the scope, format and
substance of the standardized reporting system that
Neoforma will develop (at no extra charge) and that will
be available to Novation, VHA, UHC and HPPI via the
Internet.
5.5.2 Neoforma and Novation shall establish a cross-functional
management team in order to review operations of the
Novation Exchange. The cross-functional management team
shall meet (each a "CROSS-FUNCTIONAL MANAGEMENT TEAM
MEETING") no less frequently than on a quarterly basis.
The cross-functional management team shall include the
lead executive from each of Neoforma and Novation
responsible for overseeing this Agreement, and shall
also include management representatives from each of
Neoforma and Novation from each functional area,
including marketing, Member sales, Supplier relations,
implementation and development. Additionally, one or
more representatives from each of VHA and UHC shall be
invited to participate in each Cross-Functional
Management Team Meeting. In addition, Neoforma and
Novation shall establish a strategic planning team to
discuss the direction and strategy of the Novation
Exchange. The strategic planning team shall meet at
least twice in each calendar year.
5.6 Retained Contracts. Either VHA or UHC may at any time elect to
put their respective Retained Contracts on the Novation
Exchange. If the posting on the Novation Exchange is merely
informational and Members are not able to purchase, rent or
lease Products covered by such Retained Contracts through the
Exchange, no fees shall be paid for such posting. If during the
Term, Novation Signs-up the Suppliers under such Retained
Contracts, such contracts shall then become subject to Section
8.
5.7 Marketing. Novation, VHA, UHC and HPPI will use commercially
reasonable efforts to drive traffic to the Novation Exchange and
the HPPI Exchange, including, without limitation, making
appropriate introductions for Neoforma, allowing Neoforma
preferred space and visibility at Member forums, and presenting
satellite broadcasts or web casting targeted at the Members.
Novation,
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VHA and UHC will work with Neoforma to develop new initiatives
targeted toward increasing Members' participation on the
Exchange, including the Novation Exchange and the HPPI Exchange.
5.8 Neoforma Auction.
5.8.1 On the Original Effective Date, the Exchange will
include Neoforma Auction.
5.8.2 Novation, VHA, UHC and HPPI will promote the use of
Neoforma's asset management and recovery services and
related activities of Neoforma Auction to patrons and
others.
5.8.3 Any Member wishing to utilize the Neoforma Auction and
Neoforma's asset management and recovery services shall
enter into an Asset Recovery Services Agreement with
Neoforma.
5.8.4 Neoforma may delegate the performance of the asset
management and recovery services to a third party
appointed by Neoforma.
5.9 Neoforma Plan.
5.9.1 On the Original Effective Date, the Exchange will
include Neoforma Plan.
5.9.2 Novation, VHA, UHC and HPPI will promote use of the
services included in Neoforma Plan to patrons and others
in connection with their capital equipment programs.
5.9.3 Novation will inform Suppliers that they have the option
to sponsor specific "Centers of Excellence" within
Neoforma Plan. Any Supplier wishing to participate in
Neoforma Plan shall enter into a Plan Sponsorship
Agreement with Neoforma.
6. EXCLUSIVITY AND RIGHT OF FIRST OFFER
6.1 Novation, VHA, UHC and HPPI Exclusivity. Except as provided in
Section 6.3, each of Novation, HPPI, VHA and UHC agrees that it
will not directly or indirectly develop, promote, contract for
the development of, assist others to develop, or enter into any
agreement with any other person to provide to any of them, or
promote to their Members, any Internet-based exchange related to
Supply Chain Management Services by acute or non-acute
healthcare providers anywhere in the world other than the
Exchange.
6.2 Neoforma Exclusivity.
6.2.1 Except as otherwise provided in Section 6.3, neither
Neoforma nor its Affiliates will develop, promote,
contract for the development of, assist
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others to develop, or enter into any agreement with any
other person to provide, any Internet-based system
related to the acquisition or disposal of equipment,
products, supplies, services, information and other
content by acute or non-acute healthcare providers
anywhere in the world other than the Exchange.
6.2.2 Except as provided in Section 6.2.3, Novation will be
Neoforma's and Neoforma's Affiliates' exclusive agent to
Sign-up Suppliers. Neoforma will not, and will cause any
Affiliate of Neoforma not to, (i) Sign-up any Supplier
directly or (ii) contract with, or pay any financial
incentives to, any person to act as a contracting agent
of Neoforma or Neoforma's Affiliates to Sign-up any
Supplier on Neoforma's or Neoforma's Affiliates' behalf;
provided, however, that nothing herein shall be
construed to impose upon Neoforma any obligation to seek
to terminate agreements with Suppliers previously
entered into by Neoforma and existing as of the Original
Effective Date.
6.2.3 Notwithstanding the provisions of Subsection 6.2.2,
Neoforma may Sign-up any Supplier, if:
(i) Neoforma refers a Supplier to Novation for
contracting, and notwithstanding such referral,
the Supplier specifically requests to Sign-up
with Neoforma or Novation informs Neoforma that
Novation will not Sign-up that Supplier; or
(ii) a Supplier is under contract to an Independent
GPO and the Independent GPO, as a condition to
using the Exchange, contractually requires
Neoforma to Sign-up its Suppliers directly.
6.2.4 As promptly as practical after January 1, 2001, Neoforma
and Novation shall meet to discuss and mutually agree
upon certain commercially reasonable negotiating
parameters within which Neoforma may negotiate with
Suppliers as are permitted under Section 6.2.3 without
seeking Novation's approval. Neoforma and Novation shall
use commercially reasonable efforts to agree on the
negotiating parameters within 90 days after January 1,
2001. While within such parameters, Neoforma may
negotiate with and Sign-up the Suppliers permitted under
Section 6.2.3 and obtain any terms and conditions that
in Neoforma's reasonable discretion are consistent with
its obligations under this Agreement. Neoforma agrees
that if it wishes to conclude any agreement (i) upon
terms or conditions outside of the agreed upon
negotiating parameters or (ii) at Transaction Fee levels
that are lower than the levels agreed upon by Neoforma
and Novation under Section 8.3, it will seek Novation's
prior consent, which consent shall not be unreasonably
withheld or delayed. Neoforma shall use its diligent
efforts to obtain favorable terms from each Supplier
with which it negotiates pursuant to Section 6.2.3.
Novation
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agrees,however, that Neoforma shall have no obligation
to obtain the best terms and conditions available from
any Supplier.
6.3 Right of First Offer for Novation and Neoforma.
6.3.1 If either Novation or Neoforma elects to commence an
Internet-venture in any country other than the United
States or in any market that is not then served by the
Exchange (whether in the United States or otherwise),
such party (the "OFFEROR") shall offer to the other (the
"OFFEREE") the opportunity to participate in such
venture in a manner commensurate with the Offeree's role
under this Agreement (including the right of Novation to
create other contract portfolios similar to the Novation
Contract Portfolio or to recruit suppliers for such
venture). The Offeror shall provide full information to
the Offeree regarding the venture, and shall make its
senior executives available to meet with the Offeree to
discuss the venture. The Offeror shall also notify the
Offeree of such venture a reasonable time prior to
commencement of the venture (but in no event less than
60 days prior to the date on which the Offeree must
decide to participate). If after consideration the
Offeree declines to participate in such venture, then,
notwithstanding Section 6.1 or 6.2, as the case may be,
the Offeror may proceed with such venture, but solely in
that market or country, and on no less favorable terms
and conditions in the aggregate as had been offered to
the Offeree. In addition, the Offeree shall be released
from its obligations under Section 6.1 or 6.2, as the
case may be, but solely in respect of the market or
country that was the subject of such Offer. If the
Offeror subsequently does not consummate the venture,
and the Offeror wishes to commence another venture in
the same market or country, the Offeror must once again
offer such opportunity to the Offeree. The Offeror shall
have no obligation to share any fees earned in a venture
in which the Offeree has not elected to participate.
6.3.2 Business development representatives of Neoforma and
Novation shall meet on a quarterly basis to review
existing opportunities in foreign markets and countries
and to review existing opportunities in markets not then
served by the Exchange. Such representatives shall
prepare a joint plan to identify and exploit such other
opportunities in foreign markets and in other healthcare
markets. Any right of an Offeror to proceed with a
venture under Subsection 6.3.1 without the Offeree shall
be conditioned on such Offeror's compliance with this
Subsection 6.3.2.
6.4 First Offer for Non-Exclusive Services.
6.4.1 The term "NON-EXCLUSIVE SERVICE(S)" means
Internet-related services available primarily through
Neoforma that are outside the scope of Section 6.1,
including, without limitation, the products and services
excluded from the definition of Supply Chain Management
Services as applied to UHC. For purposes of
clarification, Non-Exclusive Services will not include
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Internet-related services the majority of which are
provided by an entity other than Neoforma. UHC shall
give favorable consideration to Neoforma as a
third-party provider to UHC of Non-Exclusive Services as
follows: if (i) UHC elects to provide for itself or for
the benefit of all or substantially all of UHC's Members
any new Non-Exclusive Service or (ii) UHC intends to
replace any agreement for the provision of a
Non-Exclusive Service then being provided to UHC by a
third party, then UHC shall first offer to Neoforma the
opportunity to provide such Non-Exclusive Service (the
"OPPORTUNITY"). Promptly upon becoming aware of an
Opportunity, UHC shall send notice of the Opportunity in
electronic or paper writing to the Chief Executive
Officer of Neoforma, or his or her designate. Promptly
after receiving such notification, but in no less than
15 days, Neoforma shall meet with UHC to discuss the
Opportunity and Neoforma's proposed role therein.
Neoforma and UHC shall continue to meet and discuss the
Opportunity for the 30-day period commencing upon UHC's
notification to Neoforma. Neither UHC nor Neoforma will
have any obligation to meet and to discuss the
Opportunity (i) if Neoforma does not meet with UHC
within the time required, or (ii) after the expiration
of the 30-day discussion period. The communication by
UHC to Neoforma of any Opportunity, including the ideas,
concepts or other intellectual property contained
therein, will be Confidential Information subject to
Section 11.
6.4.2 For the avoidance of doubt and notwithstanding anything to
the contrary in this Agreement, in no event, will UHC be
required to obtain any Non-Exclusive Service from
Neoforma.
7. LICENSES AND OWNERSHIP
7.1 Ownership of Marks. Each party will own and retain all right,
title and interest in and to its intellectual property,
including its trademarks, trade names, service marks and logos
("MARKS") worldwide, as specified in Exhibit A.
7.2 Novation Marks. Subject to the terms of this Agreement, Novation
grants to Neoforma, VHA, UHC and HPPI a worldwide,
nontransferable, non-exclusive, royalty-free license to use,
transmit and display Novation's Marks in connection with the
Exchange during the Term of this Agreement, provided that such
use is in accordance with Novation's then-current trademark
usage guidelines. A copy of Novation's current trademark usage
guidelines is attached as Exhibit B. Upon any change in such
guidelines, Novation will promptly provide to Neoforma a copy of
such revised usage guidelines. Neoforma will not modify the
Novation Marks or combine any of the Novation Marks with any
other ▇▇▇▇ or term. Subject to the provisions of Section 9.9,
upon termination or expiration of this Agreement, Neoforma will
cease all use of the Novation Marks.
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7.3 Neoforma Marks. Subject to the terms of this Agreement, Neoforma
grants to Novation, VHA, UHC and HPPI a worldwide,
nontransferable, non-exclusive, royalty-free license to use,
transmit and display Neoforma's Marks during the Term only in
promotional materials used to encourage participation on the
Exchange, provided that such use is in accordance with
Neoforma's then-current trademark usage guidelines. A copy of
Neoforma's current trademark usage guidelines is attached as
Exhibit C. Upon any change in such guidelines, Neoforma will
promptly provide to Novation, VHA, UHC and HPPI a copy of such
revised usage guidelines. Except as authorized under this
Agreement, Novation, VHA, UHC and HPPI will not modify any of
the Neoforma Marks or combine the Neoforma Marks with any other
▇▇▇▇ or term. Subject to the provisions of Section 9.9, upon the
termination or expiration of this Agreement, Novation, VHA, UHC
and HPPI will cease all use of the Neoforma Marks.
7.4 VHA, UHC and HPPI Marks. Subject to the terms of this Agreement,
each of VHA, UHC and HPPI grants to Novation and Neoforma a
worldwide, nontransferable, non-exclusive, royalty-free license
to use, transmit and display its Marks solely to promote the
Exchange to the Members during the Term, provided that such use
is in accordance with the then-current trademark usage
guidelines of VHA, UHC and HPPI, as the case may be. A copy of
each of VHA's, UHC's and HPPI's current trademark usage
guidelines are attached as Exhibit D. Except as authorized under
this Agreement, Neoforma and Novation will not modify any of the
Marks of VHA, UHC and HPPI or combine any of them with any other
▇▇▇▇ or term. Subject to the provisions of Section 9.9, upon the
termination or expiration of this Agreement, Neoforma and
Novation will cease all use of VHA's, UHC's and HPPI's Marks.
7.5 Ownership of Neoforma Materials and Novation Materials. Neoforma
and Novation will own and retain all worldwide right, title and
interest in and to the Neoforma Materials and Novation
Materials, respectively. Neither Neoforma nor Novation will
alter or delete any copyright or other proprietary notice that
may appear in the other party's Materials without prior written
consent of such party.
7.6 Neoforma Materials. Neoforma grants to Novation a worldwide,
nontransferable, non-exclusive, royalty-free license to use the
Neoforma Materials only in promotional materials used to
encourage participation on the Exchange.
7.7 Novation Materials. Novation grants to Neoforma a worldwide,
nontransferable, non-exclusive, royalty-free license to use the
Novation Materials on the Exchange during the Term solely to
enable Neoforma to provide the Services contemplated under this
Agreement.
7.8 Development of Tools. From time to time during the Term,
Novation may request Neoforma to design Tools for Members or
Suppliers in addition to the Tools, functions and APIs, which
will be mutually agreed upon and contained in the Functionality
Specifications. Within a reasonable time after such request,
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appropriate personnel from Novation and Neoforma will meet to
discuss and draft technical specifications for the desired
customized Tools, functions and APIs.
7.8.1 If the Tool, function or API requested by Novation will
be used by all Users of the Exchange, Neoforma will
develop such Tool, function or API promptly and at its
own expense. Neoforma will own and retain all right,
title and interest to all the intellectual property,
including the source code, object code and other
Confidential Information, in and to the Neoforma
developed Tools, functions and APIs.
7.8.2 If Neoforma does not otherwise agree to develop such
Tool, function or API for use by all Users of the
Exchange, Novation may, in its sole discretion, agree to
pay for the development of such Tool, function or API.
If Novation agrees to pay Neoforma for the development
of such Tool, function or API, Neoforma will promptly
endeavor to develop such requested Tool, function or
API, and Novation will own all right, title and interest
to all the intellectual property, including all source
code, object code and other Confidential Information, in
and to such Tools, functions and APIs. Any fees charged
to Novation for development of any Tool, function or API
shall be provided by Neoforma at the most favorable fee
Neoforma charges to any other person for such
development or integration services.
7.8.3 Nothing in this Section 7.8 shall limit Neoforma's
obligation to provide the Services as shall be set forth
in the Functionality Specifications.
7.9 Access License. Neoforma grants to Novation a non-exclusive,
worldwide, non-assignable license to members of Novation and
HPPI in order to access the Exchange. Novation and HPPI grant to
Neoforma a non-exclusive, worldwide, non-assignable license to
access the Novation and HPPI web sites and computer systems
solely to enable Neoforma to provide the services contemplated
under this Agreement.
8. FEES AND TAXES
8.1 Fees.
8.1.1 Neoforma shall use its reasonable best efforts to
collect all Transaction Fees and Novation Exchange
Transaction Fees required to be paid by Suppliers
pursuant to this Agreement with respect to sales,
rentals and leases of Products on the Exchange.
8.1.2 Novation * to Neoforma aggregate minimum Novation
Exchange Transaction Fees (the "MINIMUM FEES") on all
purchases made through the Novation Exchange. The
Minimum Fees shall be calculated as a percentage (the
"SUPPLIER TARGET PERCENTAGE") of the *
* Confidential treatment requested.
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* on a * basis as set forth on Exhibit G. Subject to
Section 3.8 and Subsections 8.1.3 and 8.2.4, Novation
shall pay to Neoforma the *, if any, in any * the *
calculated in accordance with this Section 8.1.2 and the
* recognized by Neoforma in accordance with GAAP for
such *. (Exhibit I, Example 1, sets forth a hypothetical
calculation of Novation's obligation under Subsections
8.1.1 and 8.1.2.)
8.1.3 Notwithstanding anything in this Agreement to the
contrary, Novation shall not be responsible for any *
(i) to the extent that the * in any * results from the *
by a * of its agreement with Neoforma as a result of
Neoforma's * of such *, (ii) during the period
commencing on * and ending *, to the extent that the *
in any * of * for such *, or (iii) beginning *, to the
extent that the * in any * of * for such *; provided,
however, that the * in clauses (ii) and (iii) above may
be adjusted from time to time pursuant to Section 8.5;
provided, further, that any such * adjustment shall not
result in a *.
8.1.4 In the event that Novation notifies Neoforma that its
obligations under Section 8.1.2 are limited by Section
8.1.3(ii) or Section 8.1.3(iii), Neoforma may request in
writing Novation's financial statements for the
applicable *. Novation shall provide to Neoforma
relevant financial statements in sufficient detail to
verify Novation's * for such * within a reasonable
period of time following such request from Neoforma.
8.2 Revenue Sharing.
8.2.1 The parties have agreed to the Target Fee Levels (the
"TARGET FEE LEVELS"), set forth in Exhibit H.
8.2.2 Neoforma shall pay to Novation * of any Novation
Exchange Transaction Fees recognized by Neoforma in
accordance with GAAP in excess of the Target Fee Level
for any given *, but only if Novation has fulfilled its
obligations under Subsection 8.1.2.
8.2.3 In any * in which Neoforma has not recognized in
accordance with GAAP the * specified in Exhibit G,
either from *, * or from * pursuant to Section *,
Neoforma shall retain *, including
* Confidential treatment requested.
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* that would otherwise be subject to * pursuant to
Section *.
8.2.4 For the * up to and including the *, the amount by
which the * recognized by Neoforma in accordance with
GAAP shall represent the * which Novation * in the event
of a * calculated pursuant to Subsection *. (Exhibit I,
Example 2 sets forth a hypothetical calculation of *
under this Subsection 8.2.4.)
8.3 Adjustment of Transaction Fees. Neoforma and Novation shall meet
no less frequently than on a quarterly basis (or at any time
that either Neoforma or Novation reasonably requests such a
meeting) to review the Transaction Fees then in effect. At such
meetings, Neoforma and Novation shall in good faith review
whether the Transaction Fees then in effect are market
competitive and, if not, shall adjust such Transaction Fees so
that they are market competitive. For the avoidance of doubt,
the parties agree that "market competitive" shall mean that (i)
Suppliers are reasonably likely to agree to pay such fees at
such time or (ii) such fees are competitive with similar
Transaction Fees paid by suppliers in similar e-commerce or
related industries. Until Neoforma and Novation have agreed upon
a change to the Transaction Fees, as the case may be, the
then-existing fees shall remain in effect.
8.4 Reporting and Payment of Novation Exchange Transaction Fees and
Revenue Sharing. Within 15 days of the end of each * (in
aggregated reporting for the entire *), Neoforma will provide
each of Novation, VHA and UHC, with a written report consisting
of (i) aggregate Adjusted Gross Transaction Values for all
purchases, rentals and leases of Products through the Novation
Exchange, (ii) the calculation of any Transaction Fees, (iii)
the calculation of any Novation Exchange Transaction Fees, (iv)
the calculation pursuant to the Supplier Target Percentage of
the *, (v) the *, if any, pursuant to Subsection 8.1.2, (vi) the
calculation of revenue sharing amounts under Sections 8.2, 8.9,
and 8.10, and (vii) the calculation of any other fees to be paid
by Neoforma hereunder. Novation shall pay any * within 30 days
after receipt of Neoforma's report. Any report submitted by
Neoforma to Novation, VHA and UHC shall include the information
set forth in Exhibit E and such other information as Novation
may reasonably request.
8.5 *.
8.5.1 Right to *. Beginning on * and from time to time
thereafter, either Novation or Neoforma may initiate an
* (the "* PROCESS") in order to *
* Confidential treatment requested.
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8.5.2 * Process. In the case of a general * Process, (i)
either Novation or Neoforma may select and hire a *,
which * shall be reasonably acceptable to the other
party, and the party selecting such * shall pay all
costs associated with the * Process; or (ii) Novation
and Neoforma shall mutually agree upon an independent,
third party * and Novation and Neoforma shall share all
costs associated with such shared *. In addition, in the
case of a * Process with respect to *, or if Neoforma
and Novation otherwise agree with respect to a general *
Process, Neoforma and Novation may rely on publicly
available information in carrying out the * Process, and
to carry out the * Process without the use of a
third-party *. The Parties shall cooperate to facilitate
the * Process, including by providing reasonable
information as is necessary to conduct the * Process.
8.5.3 General *. The * Process for general items shall * (i)
with respect to Neoforma, the * provided by Neoforma to
Novation, the * offered to Members, the * offered to
Suppliers, the * of the Services, and Neoforma's * its
obligations under this Agreement and (ii) with respect
to Novation, the * by Novation of its * obligations
pursuant to Section * and the * for any * in * as
provided in Subsection * and, in each case, shall be
based upon a *, including, without limitation, *. If the
* Results indicate that the * by Novation or Neoforma,
as the case may be, are not * Neoforma and Novation
shall promptly meet and enter into a good faith
negotiation to determine whether there should be an *.
8.5.4 *. The * Process with respect to * shall be based upon
review of whether such * are *. If the * Results
indicate that the * in place during the period examined
are * then Neoforma and Novation shall promptly meet and
* such * so that they are *. For the avoidance of doubt,
the parties agree that * shall mean that (i) * are
reasonably likely to agree to * at such time or (ii)
such *
* Confidential treatment requested.
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8.5.5 * Results. Within 30 days after the completion of any *
Process, the *, if any, shall deliver the results of the
* (the "* RESULTS") in a written report, including
identification of the *, to Novation and Neoforma. In
the event that the * Process does not utilize a
third-party *, the party initiating the * Process shall
be responsible for writing and delivering such report of
the * Results to the other party.
8.5.6 * Review Period. For a period of 60 days following
delivery of the * Results from the * (the "* REVIEW
PERIOD"), Novation and Neoforma shall review the *
Results, and schedule one or more meetings to address
any issues either Party may have with the * Results.
8.5.7 * Dispute. In the event Novation and Neoforma in good
faith dispute the * Results or if the Novation and
Neoforma have not reached agreement after the * Review
Period, Novation may dispute such outcome in accordance
with the provisions of Section 18 hereto.
8.6 Taxes. Neoforma and Novation shall cooperate to minimize any
local, state, national and foreign taxes (including, without
limitation, sales, use and VAT taxes which may apply), licenses,
export/import fees and any other fees or similar obligations
relating to any sale, rental or lease of a Contract Product
through the Exchange. If in the future any such taxes or similar
obligations are required to be paid by Neoforma or Novation in
respect of Contract Products, such fees shall be shared by
Neoforma and Novation proportionately based on revenues each
derives from the Exchange. In no event shall Novation be
required to share any taxes under this Section 8.6 for Products
other than Products for which Novation receives Novation
Exchange Transaction Fees.
8.7 New Markets. If Neoforma and Novation agree pursuant to Section
6.3 to enter any other healthcare market (other than the United
States acute care market) that is not then served by the
Exchange or that is in countries outside of the United States,
Neoforma and Novation shall negotiate in good faith to set the
Transaction Fees to be paid in respect of such products to be
purchased, rented and leased on such Exchange.
8.8 Product Returns. Neoforma and Novation will cooperate in good
faith to make any adjustments to the fees to be paid hereunder
to reflect Products that have been returned by Users.
8.9 Neoforma *, Neoforma *, and * and *. Beginning *, Neoforma shall
pay to Novation on a * basis * by Neoforma * from (i) Neoforma *
and Neoforma *
* Confidential treatment requested.
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*, (ii) other * (excluding *), and (iii) all * of * from *.
8.10 *. Neoforma will pay to Novation * by Neoforma * in connection
with *, whether to buyers or suppliers, but not including any *
in any way related to Neoforma * and *. For the avoidance of
doubt, the parties agree that this Section 8.10 shall not limit
the scope of Section 6.2.1.
8.11 Other Expenses. Neither Neoforma nor Novation shall be required
to pay to the other party any amounts for the performance of
their respective obligations hereunder other than those
expressly set forth in this Agreement.
8.12 VHA/UHC Allocation. VHA and UHC agree to allocate between
themselves (i) any obligation of Novation to make shortfall
payments pursuant to Section 8.1.2 and (ii) any fees received by
Novation pursuant to Section 8.2.2, 8.9, 8.10, 10.6.3, or 16.3
as follows:
(i) with respect to *, * to VHA and * to UHC;
(ii) with respect to each succeeding *, VHA's allocation
shall be a fraction (A) the numerator of which is the
sum of the aggregate dollar amount of VHA's Members'
purchases through Novation, plus * of the aggregate
dollar amount of all purchases through HPPI, and (B) the
denominator of which is the sum of the aggregate dollar
amount of both VHA's and UHC's Members' purchases
through Novation, plus * of the aggregate dollar amount
of all purchases through HPPI, in each case during the
immediately preceding calendar year and excluding
purchases through VHA's Care Continuum Program or any
similar program operated by UHC; and
(iii) with respect to each succeeding *, UHC's allocation
shall be a fraction (A) the numerator of which is the
sum of the aggregate dollar amount of UHC's Members'
purchases through Novation, plus * of the aggregate
dollar amount of all purchases through HPPI, and (B) the
denominator of which is the sum of the aggregate dollar
amount of both VHA's and UHC's Members' purchases
through Novation, plus * of the aggregate dollar amount
of all purchases through HPPI, in each case during the
immediately preceding calendar year and excluding
purchases
* Confidential treatment requested.
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through VHA's Care Continuum Program or any similar
program operated by UHC.
9. TERM AND TERMINATION
9.1 Initial Term. This Agreement commences on the Original Effective
Date and will remain in effect for an initial term of 10 years
(the "INITIAL TERM"), unless terminated earlier in accordance
with the terms of this Agreement.
9.2 Renewal and Extension of Term. This Agreement will automatically
renew for successive one-year terms after the completion of the
Initial Term (each a "RENEWAL TERM") unless Neoforma or Novation
provides written notice of its intention to terminate this
Agreement to the other at least 90 days prior to the end of the
Initial Term or any then-current Renewal Term. The Initial Term
and any and all renewals or extensions thereof and any
Termination Assistance Period are referred to herein as the
"TERM".
9.3 Termination for Cause. Each of Neoforma and Novation, after
complying with Section 18.2 hereunder, will have the right to
terminate this Agreement if the other party materially breaches
(i) its service obligations under this Agreement or (ii) its
exclusivity obligations under Section 6 of this Agreement,
unless the breaching party (x) cures such breach within 30 days
after receiving written notice or (y) if such breach is not
curable within 30 days, makes substantial progress in curing
such breach within 30 days and cures such breach within 90 days.
Any repeated or sustained failure of Neoforma to meet its
Service Level obligations hereunder shall constitute a material
breach of Neoforma's service obligations under Subsection (i)
hereunder.
9.4 Termination for Insolvency Events. If either Neoforma or
Novation is unable to obtain credit from any creditors, becomes
insolvent, makes an assignment for the benefit of its creditors,
or becomes the subject of a proceeding under Title 11 of the
United States Code, as amended, or becomes the subject of
similar state court proceedings, then in any such case, the
other party, or in the case of Neoforma, VHA, UHC or HPPI, may,
without prejudice to any other rights, immediately terminate
this Agreement or, if such termination is subject to any
statutory provision or judicial order staying such action, seek
leave to modify such stay so as to terminate this Agreement.
Each of Neoforma and Novation acknowledges and agrees that its
insolvency, the making of an assignment for the benefit of its
creditors, or its becoming the subject of a proceeding under
Title 11 of the United States Code, is "cause" for the
termination of any statutory or judicial stay of the rights of
the other party hereunder to terminate this Agreement. Each of
Neoforma and Novation acknowledges and agrees that, in such
event, it could not provide "adequate protection" to the other
party, or in the case of Neoforma, to VHA, UHC or HPPI, that the
continued imposition of a stay would likely cause irreparable
harm to the other party, and the continued imposition of a stay
would
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adversely affect the health, safety and welfare of communities
served by the parties hereto.
9.5 Termination for Rejection in Bankruptcy. Each of Neoforma and
Novation will have the right to immediately terminate this
Agreement if the other party becomes a debtor or an alleged
debtor in a case under Title 11 of the United States Code, as
amended, and in such proceeding this Agreement is rejected in
such case in accordance with Title 11 of the United States Code.
9.6 Termination Upon Neoforma Change of Control. Novation may
terminate this Agreement upon any Neoforma Change of Control.
9.7 Return of Materials. Subject to Section 9.8, upon termination or
expiration of this Agreement for any reason, each of Neoforma
and Novation shall promptly return to the other party, and shall
not take, use or disclose, all Products of any nature that
belong to the other party and all records (in any form, format
or medium) containing or relating to Neoforma Materials or
Novation Materials or the Confidential Information of the other
party.
9.8 Survival. The provisions of Sections 7.1, 7.5, 8.4, 9.7, 9.8,
9.9, 9.10, 10, 11, 15, 16, 17, 18, 19 and 20 will survive
termination or expiration of this Agreement for any reason.
9.9 Termination Assistance Services.
9.9.1 General. Upon any termination or expiration of this
Agreement, Neoforma shall provide termination assistance
and shall comply with the reasonable directions of
Novation, or, if applicable, VHA or UHC, to allow the
Services to continue without interruption or adverse
effect and to facilitate the orderly transition and
migration of all Services then being performed by
Neoforma, including any transition and migration from
Neoforma to Novation or, if applicable, VHA and UHC, (or
a third-party provider undertaking, on behalf of
Novation, VHA or UHC, to provide the Services) (the
"TERMINATION ASSISTANCE SERVICES"), all in accordance
with this Section 9. Additionally, all of Novation's,
or, if applicable, VHA's and UHC's, rights under this
Agreement (including, without limitation, the right to
license software hereunder), as such rights exist
immediately prior to any expiration or termination, but
excluding any right to share Novation Exchange
Transaction Fees with Neoforma pursuant to Section 8,
shall continue during any Termination Assistance Period
(as defined in Section 9.9.2). Novation or, if
applicable, VHA and UHC, shall cooperate in good faith
with Neoforma in connection with Neoforma's obligations
under this Section 9.
9.9.2 Termination Assistance Period. Neoforma shall commence
providing Termination Assistance Services (i) with
respect to the scheduled expiration of this Agreement,
90 days prior to such scheduled expiration
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or such earlier date as Novation may reasonably request,
and (ii) with respect to any termination of this
Agreement, upon the delivery of the notice of
termination. Neoforma shall continue providing
Termination Assistance Services through the effective
date of the expiration or termination of this Agreement
and for a period of not less than * days thereafter (the
"TERMINATION ASSISTANCE PERIOD"). Upon at least 30 days
prior written notice to Neoforma, Novation or, if
applicable, each of VHA and UHC, may extend, from time
to time, the Termination Assistance Period for an
additional * period. During any Termination Assistance
Period, Neoforma shall provide, at Novation's request,
or, if applicable, VHA's or UHC's request, as
applicable, as part of the Termination Assistance
Services, any or all of the Services being provided by
Neoforma prior to the date of the expiration or
termination of this Agreement.
9.9.3 Termination Plan. Neoforma and Novation or, if
applicable, VHA and UHC, shall cooperate in good faith
to develop a termination plan setting forth the
respective tasks to be accomplished by each party in
connection with the termination and a schedule pursuant
to which such tasks are to be completed in accordance
with the Termination Assistance Services (collectively,
the "TERMINATION PLAN").
9.9.4 Certain Licenses. As of the Original Effective Date,
Neoforma shall grant the following to Novation:
(i) a * license to all third-party software that is
required to provide the Services, to the extent
Neoforma is entitled to sublicense such
software, and to the extent Neoforma is not
entitled to sublicense such software, Neoforma
shall provide a list of all third-party software
licenses that are required to provide the
Services and shall assist Novation in licensing
a substantially similar software at a
commercially reasonable price; and
(ii) a * license, solely for Novation's internal use,
to all Neoforma-owned software that is required
to provide the Services. For the avoidance of
doubt, "internal use" as used in this Section
9.9.4 shall include the right of other Internet
exchanges or providers to use the software
solely on behalf of Novation for its Members. In
addition, Neoforma shall provide to Novation
consulting services, at no charge to Novation,
as may be reasonably required in order to
recreate the Exchange environment for Novation.
(iii) Additionally, if at any time after the Original
Effective Date Neoforma begins using any
software to provide the Services, then Neoforma
shall be deemed to have granted, as of the first
date on which such software is used to provide
the Services and for so long
* Confidential treatment requested.
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as such software is either used or required to
provide the Services, the following licenses to
Novation: (x) with respect to third-party
software, a * license to such software, to the
extent Neoforma is entitled to sublicense such
software, and (y) with respect to Neoforma-owned
software, a * license, solely for Novation's
internal use, to such software.
(iv) Notwithstanding the other provisions in this
Section 9.9.4, Novation shall not use such
licenses until the effective date of the
termination of this Agreement in accordance with
Section 9.3, 9.4, or 9.5.
9.9.5 Equitable Remedies. Neoforma acknowledges that, if it
breaches (or attempts or threatens to breach) its
obligation to provide Novation or, if applicable, VHA
and UHC, Termination Assistance Services in accordance
with this Section 9.9, Novation or, if applicable, VHA
and UHC, will be irreparably harmed. In such
circumstance, and notwithstanding the provisions of
Section 18, Novation or, if applicable, each of VHA and
UHC, may proceed directly to court. If a court of
competent jurisdiction should find that Neoforma has
breached (or attempted or threatened to breach) any such
obligations, Neoforma agrees that even without any
additional findings of irreparable injury or other
conditions to injunctive relief, it shall not oppose the
entry of an appropriate order compelling performance by
Neoforma restraining it from further breaches (or
attempted or threatened breaches).
9.10 Third Party Products. Notwithstanding anything in this Agreement
to the contrary, prior to entering any agreement with a third
party for the provision of software (other than providers of off
the shelf software) (the "THIRD PARTY PRODUCTS"), Neoforma shall
use commercially reasonable and good faith efforts to obtain the
agreement of each provider of a Third Party Product that such
Third Party Product may be assigned and/or sublicensed without
additional charge to each and any of Neoforma, VHA or UHC. If
Neoforma is not able to obtain such written agreement or, in the
event that Neoforma is informed that such provision will be made
available on at additional cost to Neoforma, Neoforma shall
promptly provide notice of such to each of Novation, VHA and
UHC, setting forth with particularity in such notice the nature
of the proposed Third Party Product, the nature of the
assignment and/or sublicense proposed, the agreement to be
signed and, if applicable, the additional cost for the required
assignment and/or sublicense provision. Each of Novation, VHA
and UHC shall have one business day after the receipt of such
notice from Neoforma to advise Neoforma as to whether Novation,
VHA or UHC, or any of them or any combination of them, agrees to
pay the additional cost involved for the proposed assignment
and/or sublicense provision. Failure of Novation, VHA or UHC to
advise Neoforma of its decision within one business day after
the receipt of notice from Neoforma shall be deemed an
affirmative refusal to pay additional amounts
* Confidential treatment requested.
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required to obtain the proffered assignment and/or sublicense
provision and, provided that the agreement is not materially
modified in a manner that might cause the sublicense and/or
assignment provision to be renegotiated in a manner more
favorable to Novation, VHA or UHC, Neoforma may proceed to enter
into the agreement for such Third Party Product without further
obligation to Novation, VHA or Neoforma under this Section 9.10.
10. USER DATA
10.1 Registration. Users who are representatives of Members will be
required to register as a representative of a Member prior to
using the Exchange. To effect such registration, Neoforma will
require that each Member or other User complete a registration
form in form and substance reasonably acceptable to Novation,
which form shall request, among other things, submission of
contact information regarding the User, including, without
limitation, the User's name, name of the Member organization,
mailing address, and email address. Neoforma will verify such
information against the on-line data base information made
available by Novation and ensure that such registration is
authorized in accordance with registration and password issuance
and protection procedures acceptable to Neoforma and in
accordance with the Functionality Specifications to be mutually
agreed upon. Neoforma will store data collected during
registration as part of the Information in the Transaction
Database.
10.2 Transaction Database. Neoforma will create and maintain the
Transaction Database relating to all activity occurring on the
Exchange in accordance with the Functionality Specifications to
be mutually agreed upon. Novation and Neoforma shall only use
Information in accordance with the provisions of this Section
10. Neoforma shall at all times make all Information available
to Novation in any manner that it is, or can reasonably be, made
available.
10.3 Member Data. Members shall own their respective Member Data.
Novation will use commercially reasonable efforts to acquire a
nonexclusive, non-transferable license from Members (or
sublicense from VHA, UHC or HPPI) to permit:
(i) Novation to access and use such Member Data for, among
other things, (A) legal compliance purposes, (B) to
track the performance of Suppliers, (C) to be able to
track payments to VHA, UHC and HPPI and cooperative
payments to the Members, (D) to consult with each of the
Members and (E) to promote utilization and
standardization among Members; and
(ii) Neoforma to use such Member Data provided that such use
is (A) solely related to the performance of Neoforma's
obligations pursuant to this Agreement and (B) in
accordance with the confidentiality provisions of
Section 11.
10.4 Aggregated Member Data. Subject to the receipt of a license or
sublicense for use of the Member Data, Novation shall own the
Aggregated Member Data.
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10.5 Transaction Database. Subject to the ownership rights of the
Members in Member Data and of Novation in Aggregated Member
Data, Neoforma shall own the derivative works created by using
the Member Data and the Aggregated Member Data, provided that no
such information may be used by Neoforma other than subject to
the following conditions:
(i) in accordance with the license or sublicense to be
obtained from Members in accordance with the provisions
of Subsection 10.3 (ii); or
(ii) Member-related Information is (a) combined with
non-Member related User Information that * and (b) the
Information is provided in such a manner that the
identity of the Member, Member Data and Aggregated
Member Data can not be discerned or identified by using
such Information in connection with any other
information.
10.6 License Grant of Information to Novation.
10.6.1 Subject to the terms and conditions of this Agreement,
Neoforma hereby grants to Novation a nonexclusive,
non-transferable license during the Term to access and
use the Information; provided, however, that (i) such
use is solely for Novation's internal use and for the
sublicensing of the use of such data to VHA, UHC and
HPPI for their use in serving the needs of their Members
(provided that a party may not license, sell or
otherwise make available the Information), (ii) such use
complies with the privacy policy in existence on the
Exchange at the time of such use and (iii) Novation,
VHA, UHC and HPPI each treat such Information as
Confidential Information subject to Section 11 of this
Agreement.
10.6.2 Subject to the terms and conditions of this Agreement,
Neoforma hereby grants to Novation a nonexclusive,
non-transferable license, as agent, to sublicense the
Information described in Section 10.5 to Suppliers.
10.6.3 With respect to the Information sublicensed by Novation
under Subsection 10.6.2, Novation will keep * of the
gross license fees and the remaining * of such license
fees shall be paid to Neoforma.
10.7 No Other Licenses or Use. Except as expressly set forth in this
▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇ of the Members, Novation or Neoforma grants any
license, express or implied, in the Member Data, Aggregated
Member Data or Information. The failure to abide by the terms
and conditions of this Section 10 shall constitute a material
default of this Agreement.
10.8 Other Data. Neoforma and Novation acknowledge that all other
data that a party gathers or develops independent of this
Agreement shall not be covered by this Agreement, provided that
Neoforma shall not solicit any information from a Member without
fully disclosing to the Member all intended uses for which such
information is being collected and will be used.
* Confidential treatment requested.
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10.9 Neoforma Information. Notwithstanding anything herein to the
contrary, Neoforma may use the Neoforma Information in any
manner that it chooses, provided that such information does not
include Member Data or Aggregated Member Data.
11. SAFEGUARDING OF DATA; CONFIDENTIALITY
11.1 Novation Data.
11.1.1 Generally. As between Neoforma and its Affiliates, on
the one hand, and Novation and its Affiliates, on the
other hand, information relating to Novation, VHA or UHC
or their respective Affiliates, Members or customers,
whether or not marked "confidential" and whether
disclosed in tangible or in intangible (e.g., oral or
visual) form, including, without limitation, (i)
information regarding the operations, affairs and
business of Novation, VHA or UHC, or their respective
Affiliates, Members or customers, (ii) Novation
Materials and (iii) all Transaction Data, except as
provided in Section 10, (collectively, the "NOVATION
DATA") is confidential and will be subject to Section
11.2. Novation Data is the property of Novation, VHA or
UHC, or their respective Affiliates, Members or
customers. Neoforma shall have access to and may make
use of Novation Data to the extent reasonably necessary
to perform its obligations under this Agreement.
Neoforma shall not, however, use Novation Data for any
purpose other than providing Services, except as
provided in Section 10. Upon termination or expiration
of this Agreement for any reason, or upon Novation's
request, Neoforma shall promptly return to Novation all
of the Novation Data in Neoforma's possession (including
backup or archival copies).
11.1.2 Safeguarding of Data. Neoforma shall maintain
appropriate safeguards, consistent with prevailing
industry standards, against the destruction,
inappropriate disclosure, wrongful access or use, loss
or alteration of the Novation Data in the possession of
Neoforma. In any event, Neoforma shall maintain
safeguards that are no less rigorous than those
maintained by Neoforma for its own information of a
similar nature and, in no event, less than a reasonable
level of safeguards.
11.2 Confidentiality.
11.2.1 Confidential Information. "CONFIDENTIAL INFORMATION"
means (i) business or technical information of any
party, including, without limitation, information
relating to a party's product plans, designs, costs,
product prices, finances, marketing plans, business
opportunities, personnel, research, development,
know-how or the pricing information available to
Members, (ii) any information communicated with respect
to an Opportunity, including the ideas, concepts or
other intellectual property contained therein, (iii) any
information designated "confidential" or
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"proprietary" or which, under the circumstances, should
reasonably have been understood to be confidential, (iv)
Novation Data and (v) the terms and conditions of this
Agreement.
11.2.2 Confidentiality Obligations. Each party agrees that (i)
it will not use or disclose to any other party or third
person including its Affiliates any Confidential
Information disclosed to it by any other party except as
contemplated by this Agreement and (ii) it will take all
reasonable measures to maintain the confidentiality of
all Confidential Information of each other party in its
possession or control, which will in no event be less
than the measures it uses to maintain the
confidentiality of its own information of similar
importance.
11.2.3 Exclusions. Subsection 11.2.2 will not prevent a party
from disclosing Information that (i) is owned by such
party or its Affiliates or is already known by the
recipient party or its Affiliates without an obligation
of confidentiality other than under this Agreement, (ii)
is publicly known or becomes publicly known through no
unauthorized act of the recipient party, (iii) is
rightfully received from a third party, provided that
the source is not known to be bound by a confidentiality
agreement or (iv) is independently developed by
employees of a party or an Affiliate of a party without
use of the other party's Confidential Information. If
Confidential Information is required to be disclosed
pursuant to a requirement of a governmental authority,
such Confidential Information may be disclosed pursuant
to such requirement so long as the party required to
disclose the Confidential Information, to the extent
possible, (i) provides the party that owns the
Confidential Information with timely prior notice of
such requirement and coordinates with such other party
in an effort to limit the nature and scope of such
required disclosure and (ii) uses commercially
reasonable efforts to ensure that, within applicable
law, such Confidential Information will not be further
disclosed. If Confidential Information is required to be
disclosed in connection with the conduct of any
arbitration proceeding conducted pursuant to Section 18,
such Confidential Information may be disclosed pursuant
to and in accordance with the approval and at the
direction of the arbitrator conducting such proceeding.
Upon written request at the termination or expiration of
this Agreement for any reason, all such Confidential
Information in tangible form (and all copies thereof)
owned by the requesting party or its Affiliates will be
returned to the requesting party or at the requesting
party's option will be destroyed, with written
certification thereof being given to the requesting
party, and subject to any rights expressly granted to
the other party under this Agreement, the other party
shall cease all further use of any Confidential
Information, whether tangible or intangible.
11.2.4 No License. Nothing contained in this Section 11.2 will
be construed as obligating a party to disclose its
Confidential Information to another party, or as
granting to or conferring on a party, expressly or
implied, any patent,
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copyright, trademark, trade name, trade secret or other
Intellectual Property Rights or any license to the
Confidential Information of the other party.
11.2.5 Loss of Confidential Information. In the event of any
breach by the recipient party of this Section 11.2 that
results in a disclosure or loss of, or inability to
account for, any Confidential Information of the
furnishing party, the receiving party shall promptly, at
its own expense, (i) notify the furnishing party in
writing, (ii) take such commercially reasonable actions
as may be necessary or reasonably requested by the
furnishing party to minimize the breach, and (iii)
cooperate in all reasonable respects with the furnishing
party to minimize the breach and any damage resulting
therefrom.
12. REPRESENTATIONS AND WARRANTIES
12.1 Representations by Neoforma. Neoforma represents and warrants to
Novation, VHA, UHC and HPPI that each of the following
statements in this Section 12.1 are true and correct as of the
Effective Date of this Agreement.
12.1.1 Due Organization. Neoforma is a corporation duly
organized, validly existing and in good standing under
the laws of the State of Delaware.
12.1.2 Authority; Non-Contravention.
(a) Neoforma has all requisite corporate power and
authority to enter into this Agreement and to
perform its obligations hereunder. The execution
and delivery of this Agreement and the
consummation of the transactions contemplated
hereby have been duly authorized by all
necessary corporate action on the part of
Neoforma. This Agreement has been duly executed
and delivered by Neoforma, and it constitutes
the valid and binding obligation of Neoforma,
enforceable against Neoforma in accordance with
its terms, except as enforceability may be
limited by bankruptcy and other similar laws
affecting the rights of creditors generally and
general principles of equity.
(b) The execution and delivery of this Agreement by
Neoforma does not, and the performance of this
Agreement by Neoforma will not, (i) conflict
with or violate the Certificate of Incorporation
or Bylaws of Neoforma, (ii) conflict with or
violate any law, rule, regulation, order,
judgment or decree applicable to Neoforma or by
which Neoforma or any of its properties is bound
or affected or (iii) result in any breach of or
constitute a default (or an event that with
notice or lapse of time or both would become a
default) under, or impair Neoforma's rights or
alter the rights or obligations
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of any third party under, or give to others any
rights of termination, amendment, acceleration
or cancellation of, or result in the creation of
an encumbrance on any of the properties or
assets of Neoforma pursuant to, any note, bond,
mortgage, indenture, agreement, lease, license,
permit, franchise or other instrument or
obligation to which Neoforma is a party or by
which Neoforma or its assets is bound or
affected, except, in the case of clauses (ii)
and (iii), for such conflicts, violations,
breaches, defaults, impairments, or rights
which, individually or in the aggregate, would
not have a material adverse effect on Neoforma.
(c) No consent, approval, order or authorization of,
or registration, declaration or filing with any
governmental entity is required to be obtained
or made by Neoforma in connection with the
execution, delivery and performance of this
Agreement.
12.1.3 Performance. All Services will be performed in a
professional and workmanlike manner, consistent with the
high professional standards and practices prevailing in
the Internet e-commerce services industry.
12.2 Representations by Novation, VHA, UHC and HPPI. Each of
Novation, VHA, UHC and HPPI, severally and not jointly,
represents and warrants to Neoforma that the following
statements made by it in this Section 12.2 are true and correct
as of the Effective Date of this Agreement.
12.2.1 Due Organization. Novation is a limited liability
company duly organized, validly existing and in good
standing under the laws of the State of Delaware; UHC is
a corporation duly organized, validly existing and in
good standing under the laws of the State of Illinois;
VHA is a corporation duly organized, validly existing
and in good standing under the laws of the State of
Delaware; HPPI is a limited liability company duly
organized, validly existing and in good standing under
the laws of the State of Delaware.
12.2.2 Authority; Non-Contravention.
(a) Each of Novation and HPPI has all requisite
limited liability company power and authority,
and each of VHA and UHC has all requisite
corporate power and authority, to enter into
this Agreement and to perform its obligations
hereunder. The execution and delivery of this
Agreement and the consummation of the
transactions contemplated hereby have been duly
authorized by all necessary limited liability
company action on the parts of Novation and HPPI
and all necessary corporate action on the parts
of VHA and UHC. This Agreement has been duly
executed and delivered by ▇▇▇▇▇▇▇▇, ▇▇▇, ▇▇▇
▇▇
▇▇
and HPPI, and it constitutes the valid and
binding obligation of each of Novation, VHA, UHC
and HPPI, enforceable against each of Novation,
VHA, UHC and HPPI in accordance with its terms,
except as enforceability may be limited by
bankruptcy and other similar laws affecting the
rights of creditors generally and general
principles of equity.
(b) The execution and delivery of this Agreement by
Novation, VHA, UHC and HPPI does not, and the
performance of this Agreement by each of
Novation, VHA, UHC and HPPI will not, (i)
conflict with or violate the limited liability
company and corporate organizational documents,
respectively, (ii) conflict with or violate any
law, rule, regulation, order, judgment or decree
applicable to Novation, VHA, UHC or HPPI or by
which Novation, VHA, UHC or HPPI, or any of
their respective properties are bound or
affected, or (iii) result in any breach of or
constitute a default (or an event that with
notice or lapse of time or both would become a
default) under, or impair Novation's, VHA's,
UHC's or HPPI's rights or alter the rights or
obligations of any third party under, or give to
others any rights of termination, amendment,
acceleration or cancellation of, or result in
the creation of an encumbrance on any of the
properties or assets of Novation, VHA, UHC or
HPPI pursuant to, any note, bond, mortgage,
indenture, agreement, lease, license, permit,
franchise or other instrument or obligation to
which Novation, VHA, UHC or HPPI is a party or
by which Novation, VHA, UHC or HPPI, or any of
their assets, is bound or affected, except, in
the case of clauses (ii) and (iii), for such
conflicts, violations, breaches, defaults,
impairments, or rights which, individually or in
the aggregate, would not have a material adverse
effect on Novation, VHA, UHC and HPPI,
respectively.
(c) No consent, approval, order or authorization of,
or registration, declaration or filing with any
governmental entity is required to be obtained
or made by Novation, VHA, UHC or HPPI in
connection with the execution, delivery and
performance of this Agreement.
12.3 Warranty Disclaimer. EXCEPT AS EXPRESSLY SET FORTH IN THIS
AGREEMENT, EACH PARTY DISCLAIMS ALL EXPRESS AND IMPLIED
WARRANTIES, INCLUDING, WITHOUT LIMITATION, ANY IMPLIED
WARRANTIES OF NON-INFRINGEMENT, MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE OR USE.
13. USE OF SUBCONTRACTORS
13.1 Generally. Neoforma may subcontract its obligations under this
Agreement subject to the limitations imposed by this Section
13.1. Neoforma shall not subcontract any of the following
without the prior written consent of Novation, such consent not
to be unreasonably withheld:
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(i) any Services involving any contact or interface with
Members, including, without limitation, sales efforts,
implementation and integration and call center services;
or
(ii) any Services to a Novation Competitor.
13.2 Novation's Right to Revoke Approval. Novation shall have the
right during the Term to revoke its prior approval of a
subcontractor and direct Neoforma to replace such subcontractor
as soon as possible if the subcontractor's performance is
materially deficient, good faith doubts exist concerning the
subcontractor's ability to render future performance because of
changes in the subcontractor's ownership, management, financial
condition, or otherwise, or there have been material
misrepresentations by or concerning the subcontractor.
13.3 Continuing Responsibility. Neoforma shall remain responsible for
obligations performed by subcontractors to the same extent as if
such obligations were performed by Neoforma's employees.
Neoforma shall be Novation's sole point of contact regarding the
Services, including with respect to payment.
13.4 Confidential Information. Neoforma shall not disclose
Confidential Information of any of Novation, VHA, UHC or HPPI to
a subcontractor unless and until such subcontractor has agreed
in writing to protect the confidentiality of such Confidential
Information as required of Neoforma under this Agreement.
14. INSURANCE
14.1 Insurance. Each of Neoforma and Novation shall determine the
types and amounts of insurance coverage it requires in
connection with this Agreement, including, without limitation,
general public liability, property damage and workers
compensation insurance. Neither Neoforma nor Novation is
required to obtain insurance for the benefit of the other,
including, without limitation, business interruption insurance.
Each of Neoforma and Novation will pay all costs and receive all
benefits under policies arranged by it, and each waives rights
of subrogation it may otherwise have regarding the other's
insurance policies.
14.2 Proof of Insurance. When requested by Neoforma or Novation, an
insurance certificate indicating the coverage described in
Section 14.1, issued by an insurance company licensed to do
business in the relevant state or states and signed by an
authorized agent, shall be furnished by the insured party to the
requesting party. Each of Neoforma and Novation shall provide
the other with at least 30 days prior written notice of any
cancellation or material modification of such insurance.
15. INDEMNITY
15.1 Neoforma Indemnity. Subject to Section 15.4, Neoforma shall
indemnify, defend and hold harmless each of Novation, VHA, UHC
and HPPI and each of their
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Affiliates, officers, directors, employees, consultants and
agents from and against any and all damages, liabilities,
claims, actions, suits, proceedings, costs, charges and
expenses, including reasonable attorneys' fees (collectively,
"LOSSES"), incurred or sustained by any of such persons as a
result of or from any third-party claim relating to (i) any
claims based on Neoforma's confidentiality obligations contained
in Section 11 or its warranties contained in Section 12; (ii)
the failure of Neoforma to perform any of its obligations under
any agreement between Neoforma and a third party (including,
without limitation, any agreements between Neoforma and a
Supplier); (iii) any claims arising out of Neoforma's breach of
this Agreement; (iv) any claim arising out of the death of or
bodily injury to any employee of any of Novation, VHA, UHC and
HPPI and each of their Affiliates (or their respective
subcontractors) to the extent caused by the negligence or
willful misconduct of Neoforma or its Affiliates; (v) the loss
of or damage to the real or tangible personal property (whether
owned or leased) of each of Novation, VHA, UHC and HPPI and each
of their Affiliates, officers, directors, employees, consultants
and agents to the extent caused by the negligence or willful
misconduct of Neoforma or its Affiliates; (vi) any third-party
claim that arises in connection with the use by any of Novation,
VHA, UHC and HPPI and each of their Affiliates of any
deliverables or services provided by Neoforma to any of
Novation, VHA, UHC and HPPI and each of their Affiliates under
this Agreement, except to the extent covered by Novation's
indemnities set forth in Section 15.2; (vii) Neoforma's failure
to pay and discharge any taxes (including interest and
penalties) for which Neoforma is responsible pursuant to the
terms of this Agreement; (viii) any claim asserted against any
of Novation, VHA, UHC and HPPI and each of their Affiliates by
an employee of Neoforma to the extent such claim arises from
decisions, acts, omissions or violations of statute by Neoforma
with respect to such employee's employee/employer relationship
with Neoforma.
15.2 Novation Indemnity. Subject to Section 15.4, Novation shall
indemnify, defend and hold harmless each of Neoforma and its
Affiliates, officers, directors, employees, consultants and
agents from and against any and all Losses awarded against or
paid in settlement by Neoforma, incurred or sustained by any of
such persons as a result of or from any third-party claim
relating to (i) any claims based on Novation's confidentiality
obligations contained in Section 11 or its warranties contained
in Section 12; (ii) the failure of Novation to perform any of
its obligations under any agreement between Novation and a third
party; (iii) any claims arising out of Novation's breach of this
Agreement; (iv) any claim arising out of the death of or bodily
injury to any employee of Neoforma or its Affiliates (or their
respective subcontractors) to the extent caused by the
negligence or willful misconduct of Novation or its Affiliates;
(v) the loss of or damage to the real or tangible personal
property (whether owned or leased) of Neoforma and its
Affiliates, officers, directors, employees, consultants and
agents to the extent caused by the negligence or willful
misconduct of Novation or its Affiliates; (vi) any third-party
claim that arises in connection with the use by Neoforma and its
Affiliates or any deliverables or services provided by Novation
to any of Neoforma or its Affiliates under this Agreement,
except to the extent covered by
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Neoforma's indemnities set forth in Section 15.1; (vii)
Novation's failure to pay and discharge any taxes (including
interest and penalties) for which Novation is responsible
pursuant to the terms of this Agreement; or (viii) any claim
asserted against Neoforma by an employee of Novation to the
extent such claim arises from decisions, acts, omissions or
violations of statute by Novation with respect to such
employee's employee/employer relationship with Novation.
15.3 Infringement Claims.
15.3.1 Each of Neoforma and Novation, at their respective
expense, shall indemnify, defend and hold harmless the
other party and its Affiliates, and their respective
officers, directors, employees, consultants, agents,
successors and assigns, from and against any and all
Losses arising from any Services, software, hardware or
the indemnitor's Materials ("ITEM(s)") provided or
delivered by the indemnitor to the indemnitee under this
Agreement, when used in conformity with all applicable
written instructions and documentation, (i) infringes
any patent in any country that is a signatory to the
Patent Cooperation Treaty, (ii) infringes any copyright
in any country that is a signatory to the Berne
Convention for the Protection of Literary and Artistic
Works, or (iii) constitutes misappropriation of any
trade secret in any country in which a trade secret
right exists such that it would be enforceable in the
United States (each such third-party claim, action, suit
or proceeding, an "INFRINGEMENT CLAIM").
15.3.2 Notwithstanding anything to the contrary herein, the
indemnitor shall have no obligation to defend or
indemnify the indemnitee for any Infringement Claim to
the extent arising out of or relating to modifications
to any Item made by or on behalf of the indemnitee where
but for such modifications there would have been no
Infringement Claim.
15.3.3 If the indemnitee's use of any Item is enjoined or
otherwise prohibited, or if the indemnitor reasonably
believes that there exists a threat of the same, the
indemnitor shall have the right, in its sole discretion
and at its expense, in addition to its indemnification
obligations above, to (i) obtain for the indemnitee the
right to continue to use the affected Item, (ii) replace
the affected Item with a non-infringing product or
service that will not degrade the performance quality of
the affected component of the Services or (iii) modify
the affected Item so that it becomes non-infringing. If
the alternatives in (i), (ii) and (iii) are not
feasible, the indemnitor shall remove the Item from the
Services and equitably adjust the charges to reflect
such removal.
15.3.4 THIS SECTION SETS FORTH THE SOLE AND EXCLUSIVE REMEDY OF
THE INDEMNITEES, AND THE ENTIRE OBLIGATION AND LIABILITY
OF THE INDEMNITOR, AS TO
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ANY INFRINGEMENT CLAIMS IN CONNECTION WITH ANY ACTIVITY
UNDER THIS AGREEMENT.
15.4 Indemnity Procedures. The party seeking indemnification under
Section 15.1 through 15.3, as the case may be (the "INDEMNIFIED
PARTY"), shall give prompt written notice to the other party
(the "INDEMNIFYING PARTY"). In addition, the Indemnified Party
shall allow the Indemnifying Party to direct the defense and
settlement of any such claim, with counsel of the Indemnifying
Party's choosing that is reasonably acceptable to the
Indemnified Party, and will provide the Indemnifying Party, at
the Indemnifying Party's expense, with information and
assistance that is reasonably necessary for the defense and
settlement of the claim. The Indemnified Party reserves the
right to retain counsel, at the Indemnified Party's sole
expense, to participate in the defense of any such claim. The
Indemnifying Party shall not settle any such claim or alleged
claim without first obtaining the Indemnified Party's prior
written consent, which consent shall not be unreasonably
withheld, if the terms of such settlement would not adversely
affect the Indemnified Party's rights under this Agreement.
16. LIMITATION OF LIABILITY
16.1 Limitations. IN NO EVENT WILL ANY PARTY BE LIABLE TO ANY OTHER
PARTY FOR ANY LOST PROFITS, SPECIAL, INCIDENTAL, INDIRECT OR
CONSEQUENTIAL DAMAGES, WHETHER BASED ON BREACH OF CONTRACT, TORT
(INCLUDING NEGLIGENCE) OR OTHERWISE, WHETHER OR NOT THAT PARTY
HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGE.
16.2 Exceptions. The limitation set forth in Section 16.1 above will
not apply to (i) Neoforma's obligations under Section 11,
Section 15.1, Section 15.3 or Section 16.3, (ii) Novation's
obligations under Section 11, Section 15.2 or Section 15.3,
(iii) Neoforma's willful misconduct or gross negligence in the
provision of Services or (iv) Neoforma's wrongful termination or
abandonment of this Agreement.
16.3 Liquidated Damages.
16.3.1 Neoforma acknowledges that proper achievement of each of
the functions and responsibilities as shall be agreed
upon and set forth in the Functionality Specifications
and the completion of each Functional Deliverable (as
shall be defined in the Functionality Specifications)
within the time frames specified pursuant to the process
set forth therein (or as otherwise agreed to by Neoforma
and Novation) are critical to the business operations of
Novation. In connection therewith, Neoforma agrees that
if any of its functions and responsibilities or any of
the functions and responsibilities with respect to any
Functional Deliverable (as shall be described in the
Functionality Specifications) are not properly achieved
by the applicable target date (a "FAILURE"), such
Failure shall be deemed to constitute a material breach
of Neoforma's service obligations
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under this Agreement. Upon such Failure, Neoforma shall
pay liquidated damages to Novation for each day past the
applicable target date in which the objective is still
not achieved in the amount of (i) * provided, however,
that any Failure by Neoforma to complete any of its
functions and responsibilities under the Functionality
Specifications or any Functional Deliverable within the
time frames to be agreed upon as described in the
Functionality Specifications shall be excused if and to
the extent (A) such Failure by Neoforma resulted
principally from a material failure by Novation to
perform its obligations in respect of such Phase (as
such obligations are set forth pursuant to the
Functionality Specifications) and (B) Neoforma used
commercially reasonable efforts to perform
notwithstanding Novation's failure to perform; provided,
further, that any Failure by Neoforma pursuant to the
preceding proviso shall only be excused for a number of
days equal to the number of days Novation failed to
perform its obligations in respect of such function,
responsibility or Functional Deliverable (as such
obligations are set forth pursuant to the Functionality
Specifications). Notwithstanding the foregoing, Neoforma
shall not be required to pay any liquidated damages
under this Section 16.3.1 until the * occurrence of
Failures in any consecutive * period. Upon the
occurrence of the * such Failure, Neoforma shall
retroactively pay liquidated damages in respect of each
Failure in such period (including the * previous
Failures) in an amount equal to the amount that would
have been paid by Neoforma if each such prior Failure
had not been subject to the exception in the penultimate
sentence of this Subsection 16.3.1.
16.3.2 Neoforma acknowledges that proper achievement of the
Service Levels as shall be set forth in the Service
Level Specifications (including those Service Levels
which will be determined after the Effective Date) are
critical to the business operations of Novation.
Accordingly, in connection with any failure to meet
Service Levels, Neoforma and Novation shall agree on a
methodology whereby Neoforma shall pay to Novation
liquidated damages up to *. Such methodology shall be
defined in the Service Level Specifications.
16.3.3 The parties agree that the damages provided in this
Section 16 apply only with respect to the failures to
perform described in Subsections 16.3.1 and 16.3.2.
Moreover, the parties agree that the damages provided in
this Section 16 are a reasonable estimate of the damages
that would be suffered by Novation as a consequence of
the failures described in Subsections 16.3.1 and 16.3.2
and do not constitute a penalty (the parties hereby
acknowledging the inconvenience and difficulty of
otherwise obtaining an adequate remedy). Notwithstanding
anything to the contrary
* Confidential treatment requested.
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in this Agreement, the aggregate amount of liquidated
damages paid by Neoforma to Novation pursuant to this
Section 16.3 (including all payments to be agreed upon
and described in the Functionality Specifications and
the Service Level Specifications) shall not exceed *
17. AUDIT RIGHTS
17.1 General. Upon 10 days prior notice from Novation, Neoforma shall
provide to such auditors as Novation may designate in writing,
subject to the limitation imposed by Section 17.3, access during
normal business hours to Neoforma's applicable facilities and to
appropriate Neoforma management personnel and subcontractors,
and to the data and records maintained by Neoforma with respect
to the Services for the purpose of (i) performing audits and
inspections of Neoforma and its businesses, (ii) to verify the
integrity of Novation Materials and Neoforma Materials, (iii) to
examine the systems that process, store, support and transmit
such Novation Materials, (iv) to verify user volume reports, (v)
to verify the accuracy of Novation Exchange Transaction Fees and
(vi) to confirm Neoforma's compliance with this Agreement. To
the extent applicable to the Services performed by Neoforma, the
scope of such audits may include, without limitation, (i)
Neoforma's practices and procedures, (ii) the adequacy of
general controls and security practices and procedures and (iii)
the adequacy of disaster recovery and back-up procedures.
Subject to Section 17.6, such audits shall be conducted at
Novation's expense.
17.2 Frequency of Audits. Operational audits, to examine the
technological aspects of Neoforma's provision of Services, may
not be conducted more than once in any 12-month period.
Financial audits, which examine Neoforma's financial records,
and other supporting records, may not be conducted more than
once in any 12-month period. Novation may, at its election,
conduct operational and financial audits concurrently.
17.3 Auditors. For the purposes of conducting financial audits,
Novation may designate any internal auditor who customarily
audits contract compliance issues for Novation or any nationally
recognized accounting firm. For the purposes of conducting
operational audits, Novation may designate any party to act as
its auditor, subject to Neoforma's consent, which shall not be
unreasonably delayed or withheld.
17.4 Record Retention. In order to document the Services and the
Novation Exchange Transaction Fees paid or payable by Novation
under this Agreement, Neoforma shall retain its standard records
and supporting documentation for at least seven years.
17.5 Cooperation. Neoforma shall use commercially reasonable efforts
to assist such auditors, inspectors, regulators and
representatives in connection with such audits and inspections.
* Confidential treatment requested.
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17.6 Overcharges. If, as a result of any such audit, Novation
determines that Neoforma has overcharged Novation, Novation
shall notify Neoforma of the amount of such overcharge and
Neoforma shall promptly pay to Novation the amount of the
overcharge, plus interest at a rate of 1.5% per month or the
maximum rate permitted by law, whichever is less, calculated
from the date of receipt by Neoforma of the overcharged amount
until the date of payment to Novation. If any such audit reveals
an overcharge to Novation during any 12-month period exceeding
5% of all Novation Exchange Transaction Fees in the aggregate
paid by Novation during such period, Neoforma shall reimburse
Novation for the out-of-pocket costs and expenses incurred for
such audit.
18. DISPUTE RESOLUTION
18.1 Resolution of Disputes. Except as otherwise provided in this
Section 18, any and all disputes arising out of or in connection
with the execution, interpretation, performance or
nonperformance of this Agreement (each such dispute, a "DISPUTED
MATTER") will be resolved by the procedures established in this
Section 18.
18.2 Negotiations and Escalation. Each party shall use commercially
reasonable efforts expeditiously to resolve any Disputed Matter
which arises from time to time between it and any of the other
parties on a mutually acceptable negotiated basis. In connection
therewith, any party involved in a Disputed Matter may deliver a
notice to each of the other parties (an "ESCALATION NOTICE")
demanding an in-person meeting of the senior level management
representatives of the parties involved (and providing, as a
courtesy, notice to the parties not involved). Any agenda,
location or procedures for such discussions or negotiations may
be established by the parties to the Disputed Matter, but such
parties shall, in any event, meet within 10 days after the
delivery of the Escalation Notice. The parties to a Disputed
Matter may, if they mutually so desire, retain a mutually agreed
upon mediator to assist in resolution of the Disputed Matter,
but (i) all statements and opinions of such mediator shall be
only advisory and shall be inadmissible in any subsequent
proceedings between the parties concerning the Disputed Matter,
(ii) the parties thereto shall bear the costs of any such
mediation equally (but each party to the mediation shall be
responsible for its own expenses) and (iii) mediation is not a
prerequisite to arbitration. If the parties to the Disputed
Matter are unable to resolve it by the earlier of (i) 30 days
after the delivery of the Escalation Notice or (ii) the
conclusion of the meeting held pursuant to the applicable
Escalation Notice, then any party thereto may institute
arbitration, as provided below, concerning the Disputed Matter.
18.3 Appointment of Arbitral Body. Except as provided in Section
18.11, any Disputed Matters not resolved pursuant to Section
18.2 or otherwise settled between the parties will be finally
resolved solely by arbitration, by a single arbitrator appointed
in accordance with the rules and procedures (the "RULES") of
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the American Arbitration Association, or if the American
Arbitration Association is no longer conducting such
arbitrations, a successor organization thereto or such other
private arbitration service as the parties shall mutually agree
(the actual authority involved, the "ARBITRAL BODY"). Except as
set forth below in Sections 18.10 and 18.11, the parties
renounce all recourse to litigation to resolve Disputed Matters
and agree that the Award of the arbitrator will be final and
subject to no judicial review.
18.4 Qualifications of Arbitrator. The arbitrator shall be selected
pursuant to the rules and procedures of the Arbitral Body, but
shall be (i) impartial and will not have been employed by or
affiliated with any of the parties to this Agreement or any of
their respective Affiliates, (ii) experienced in commercial
dispute resolution and (iii) familiar with commercial business
practices in the medical supplies procurement business or the
business involved in the Disputed Matter. If the Arbitral Body
is unable to provide an arbitrator with the qualifications set
forth in this Section 18.4, the Arbitral Body will consult with
the parties and consider their recommendations for the
arbitrator.
18.5 Initiation of Arbitration and Procedures. After the expiration
of the 30-day period referred to in Section 18.2, arbitration
procedures may be initiated concerning a Disputed Matter by any
of the parties thereto by giving written notice to the other
parties thereto and in compliance with any of the applicable
Rules. If not specified by the Rules, such notice shall be given
to the parties to the Disputed Matter in the manner provided
generally for notices in this Agreement. Any notice will specify
in reasonable detail the dispute being submitted to arbitration
and comply with all other Rules concerning commencement of
arbitration.
18.6 Procedures. The arbitrator will conduct the proceedings,
including arguments and briefs, in accordance with the Rules;
provided that the provisions of this Section 18 will prevail in
the event of any conflict between the Rules and its provisions.
Within five days after his or her appointment, the arbitrator
shall contact the parties to the Disputed Matter and arrange an
initial conference with them, to be conducted within 30 days
after his or her appointment, at which conference (the "HEARING
CONFERENCE") the arbitrator and the parties will establish
procedures (based on a brief written plan submitted in letter
form by each party to the Disputed Matter in advance of such
Hearing Conference concerning expected measures to prepare for
hearing on the merits) and a schedule for the resolution of the
Disputed Matter by hearing on the merits in a timely and
efficient manner, giving due consideration to the nature and
extent of the Disputed Matter, the apparent complexity of
preparations for, and complexity of, hearing on its merits and
other factors (such as third-party litigation pending against
one of the parties on the same subject-matter as raised in the
Disputed Matter). In the event of a dispute concerning such
procedures at the Hearing Conference, the arbitrator shall have
the power to impose the schedule upon the parties to the
Disputed Matter, giving due consideration to resolution of the
Disputed Matter by a full and fair hearing on the merits. The
arbitrator shall include in procedures established at the
Hearing Conference provisions which permit the parties to engage
in reasonable,
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limited discovery in preparation for hearing on the merits and
which protect and preserve privileges and shield confidential
proprietary information from disclosure. The hearing on the
merits will be held within 60 days after the Hearing Conference,
and evidentiary matters at such hearing will be determined in
accordance with the Federal Rules of Evidence as applied at the
place of arbitration.
18.7 Governing Law; Jurisdiction. The arbitrator will decide the
issues submitted in accordance with the provisions and
commercial purposes of this Agreement, provided that all
substantive questions of law will be determined under the laws
of the State of New York. The parties consent to venue in the
State in which the principal place of business of the party
initiating arbitration regarding a Disputed Matter is located.
18.8 Arbitration Award. All decisions of the arbitrator will be in
writing and submitted to the parties, and the decision after
hearing on the merits which announces resolution of the Disputed
Matter (the "AWARD") shall, in addition, set forth findings of
fact and conclusions of law to support the arbitrator's
resolution of the merits of the Disputed Matter. The arbitrator
will issue the Award within 30 days after completion of the
hearing on the merits.
18.9 Cooperation of the Parties. The parties to the Disputed Matter
will facilitate the arbitration by (i) making available to one
another and to the arbitrator for examination, inspection and
extraction all documents, books, records and personnel under
their control if determined by the arbitrator to be relevant to
the dispute, (ii) conducting arbitration hearings to the
greatest extent possible on successive days and (iii) observing
strictly the time periods and procedures established by the
Rules or by the arbitrator for submission of evidence or briefs,
conduct of the hearing on the merits and preparations therefor.
18.10 Costs. All costs of the arbitration shall initially be borne
equally by the parties thereto as incurred, but upon completion
of the arbitration, the arbitrator shall award to the prevailing
party, as determined by the arbitrator in accordance with
principles of New York law for determining prevailing parties in
litigation, all reasonable costs, fees and expenses related to
the arbitration, including reasonable fees and expenses of
attorneys, accountants and other professionals or experts
incurred by the prevailing party.
18.11 Judgment on the Award; Enforcement. Judgment on the Award may be
entered in any court having jurisdiction and procedures
therefor. Each party agrees that any Award of an arbitrator
against it and on which judgment is entered may be executed
against the assets of any party which is a judgment debtor or
otherwise enforced in any jurisdiction pursuant to the
procedures in and protections of such jurisdiction which are
generally applicable to enforcement of judgments, including
provision in such jurisdiction for the enforcement of equitable
remedies provided in the Award.
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18.12 Preservation of Equitable Relief; Third-Party Litigation.
Notwithstanding any provision of this Section 18 to the
contrary, any party will be entitled (i) to seek a temporary
restraining order or injunctive or other equitable relief in any
court of competent jurisdiction with respect to a breach (or
attempted or threatened breach) of this Agreement by any party
(including, without limitation, the matters referred to in
Subsection 9.9.5) or (ii) to institute litigation or other
formal proceedings to the extent necessary (A) to enforce the
award of the arbitrator, (B) to avoid the expiration of any
applicable limitations period or (C) to preserve a superior
position with respect to other creditors. Nothing in this
Section 18 shall prevent parties to this Agreement who become
involved in a Disputed Matter and who have become parties to
litigation instituted by a third party concerning facts involved
in such Disputed Matter from resolving disputes between them
arising in connection with such Disputed Matter through such
litigation in lieu of arbitration under this Section 18.
18.13 Continued Performance. Each party agrees to continue performing
its obligations under this Agreement during the pendency of any
dispute resolution process conducted in accordance with this
Section 18.
19. GUARANTY OF PERFORMANCE
19.1 VHA and UHC Guarantees. Subject to Section 19.4, VHA and UHC
agree, severally but not jointly, that they will be responsible
for the obligations and liabilities of Novation under this
Agreement, as follows:
(i) to the extent that any such obligation or liability
relates primarily to any action or omission by UHC or an
UHC Member, UHC shall be responsible;
(ii) to the extent that any such obligation or liability
relates primarily to any action or omission by VHA or a
VHA Member, VHA shall be responsible; and
(iii) to the extent that the allocations set forth in (i) and
(ii) are not applicable, VHA and UHC shall be
responsible in accordance with the allocation provisions
set forth in Section 8.12.
19.2 VHA and UHC Waivers. Each of VHA and UHC hereby waives the
following with regard to its guaranty obligations under this
Section 19:
(i) any right to require Neoforma to pursue any other remedy
in Neoforma's power whatsoever, other than Neoforma
proceeding exclusively against VHA or UHC with respect
to a liability described in Section 19.1 (iii)
(ii) any defense resulting from the absence, impairment or
loss of any right of reimbursement, subrogation or
contribution of VHA or UHC against Neoforma, or against
one another;
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(iii) any defense of discharge, relief or stay of the
principal's obligations hereunder based upon a filing of
or against Novation under the U.S. Bankruptcy Code or
Novation's request for any relief of its obligations
under this Agreement based on laws for the relief of
debtors generally;
(iv) any right to be informed by Neoforma of the financial or
other condition of Novation or of VHA or UHC or any
change therein or any other circumstances bearing upon
the risk of nonperformance by Novation; and
(v) any defense of exoneration or release based on amendment
of this Agreement.
Each of VHA and UHC agrees that its guarantee, as set forth in
Section 19.1, constitutes a guarantee of payment when due and
not of collection.
19.3 Scope of Liability. Neither VHA's nor UHC's obligations and
liabilities under this Agreement shall be subject to any
set-off, reduction, limitation, impairment or termination for
any reason, including, without limitation, compromise, and shall
not be subject to any defense or termination whatsoever by
reason of the invalidity, illegality or unenforceability of any
of its obligations and liabilities under this Agreement;
excluding, however, any defenses based upon Neoforma's failure
to perform any of its obligations under this Agreement.
19.4 Continued Performance by Neoforma.
19.4.1 In the event that the Operating Agreement, dated October
21, 1997, as amended from time to time, between VHA and
UHC is terminated (and not replaced by any successor
document) (the "NOVATION DISSOLUTION"), Neoforma agrees
that it shall continue to perform its obligations under
this Agreement for a period of no less than * following
the date of such termination (and any additional
Termination Assistance Period required by this
Agreement). Additionally, during such * period, Neoforma
shall offer to enter into separate agreements with each
of VHA and UHC upon substantially similar terms and
conditions and pursuant to which Neoforma will provide
services substantially similar to the Services provided
hereunder at the time of such termination and create
separate proprietary exchanges for each of VHA and UHC.
The price for the aggregate services to be rendered
under the new separate agreements shall be substantially
similar to the price paid by Novation hereunder at the
time of such termination; provided, however, that with
respect to each of the separate agreements, (i) VHA and
UHC (in their separate agreements) will provide services
substantially similar to those being provided by
Novation hereunder (or, if either VHA or UHC elects not
to provide such services, Neoforma and the party so
electing will negotiate in good faith to adjust the cost
of the services to be provided by Neoforma to such
party), and (ii)
* Confidential treatment requested.
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Neoforma may charge VHA or UHC, as applicable,
incremental costs associated with the transition of
services provided by Neoforma from the Novation Exchange
to the separate exchanges, including, without
limitation, incremental costs relating to establishing a
separate "look and feel" to the proprietary exchanges
and creating separate exchanges.
19.4.2 Notwithstanding the foregoing, neither VHA nor UHC shall
be obligated to enter into an agreement with Neoforma as
described in Subsection 19.4.1. In the event that either
VHA or UHC elects not to enter into such an agreement
with Neoforma, then that party's obligations to Neoforma
shall be limited to its guarantee under Section 19.1
hereunder.
20. GENERAL PROVISIONS
20.1 No Waiver. The delay or omission by any party to exercise or
enforce any right or power of any provision of this Agreement
shall not be construed as a waiver or relinquishment to any
extent of such party's right to assert or rely upon any such
provision or right in that or any other instance. A waiver by
any party hereto of any of the covenants to be performed by any
other or any breach thereof shall not be construed to be a
waiver of any succeeding breach thereof or of any other covenant
herein contained.
20.2 Entire Agreement. This Agreement, the Exhibits attached hereto,
and all other agreements contemplated by this Agreement to be
agreed upon by the parties hereto pursuant to the terms of this
Agreement (the "CONTEMPLATED AGREEMENTS"), together constitute
the complete and exclusive agreement between the parties hereto,
and supersede any and all prior agreements of the parties with
respect to the subject matter hereof. Except in the case of
Section 8.12 (which may be amended with the approval of VHA and
UHC only), this Agreement, the Exhibits attached hereto and the
Contemplated Agreements may be amended or modified, or any
rights under it waived, only by a written document executed by
all parties. For the avoidance of doubt, the term "AGREEMENT",
as used throughout this document, shall include the Contemplated
Agreements.
20.3 Publicity. Except as required by law or provided in this
Agreement, no party will make any public statement, press
release or other announcement relating to the terms of or
existence of this Agreement without the prior written approval
of all other parties. The parties will cooperate prior to the
filing of any public document which may require the filing of
this Agreement as an exhibit or the filing of a description
thereof in order to preserve the confidentiality and proprietary
information contained herein.
20.4 Covenant of Good Faith. Each party agrees that, in its
respective dealings with all other parties under or in
connection with this Agreement, it shall act in good faith.
20.5 Compliance with Laws and Regulations. Each of Neoforma and
Novation shall perform its respective obligations under this
Agreement in a manner that complies
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with applicable law, including, without limitation, identifying
and procuring required permits and approvals.
20.6 Assignment; Successors and Assigns. This Agreement will be
binding on the parties hereto and their respective successors
and permitted assigns. No party may, or will have the power to,
assign this Agreement without the prior written consent of all
other parties. For the purposes of this Section 20.6, any
assignment by operation of law, under an order of any court, or
pursuant to any Neoforma Change of Control, plan of merger,
consolidation, reorganization, or liquidation or will be deemed
an assignment for which prior consent is required, and any
assignment made without such consent will be void and of no
effect as between the parties. Notwithstanding the forgoing, no
assignment made in respect of or as a result of any dissolution
of Novation will be deemed an assignment for which prior consent
is required, and such assignment will be valid.
20.7 Governing Law. This Agreement will be governed by and construed
in accordance with the laws of the State of New York, without
regard to or application of conflicts of law rules or
principles.
20.8 Notices. Any notice required or permitted by this Agreement
shall be in writing and shall be deemed given if sent by prepaid
registered or certified United States mail, return receipt
requested, overnight mail with a nationally recognized overnight
mail courier, or sent by facsimile or similar communication, and
confirmed by such mail, postage prepaid, addressed to another
party at the address shown below or at such other address for
which such party gives notice hereunder. Notices will be deemed
given five business days after deposit in the U.S. Mail, two
business days after deposit with an overnight mail courier, or
when confirmation of receipt is obtained if sent by facsimile or
similar communication, or if by personal delivery, when
received, as applicable:
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IF TO NOVATION: WITH A COPY TO:
Novation, LLC ▇▇▇▇▇ ▇▇▇▇▇ L.L.P.
125 East ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Freeway ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: General Counsel Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
IF TO VHA: WITH A COPY TO:
VHA, Inc. Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
Irving, Texas 75039-5500 ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: Chief Financial Officer Attn: C. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
IF TO UHC: WITH A COPY TO:
University HealthSystem Consortium ▇▇▇▇▇▇▇▇▇, Will & ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: Executive Vice President Attn: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
General Counsel
IF TO NEOFORMA: WITH A COPY TO:
▇▇▇▇▇▇▇▇.▇▇▇, Inc. Fenwick & West LLP
▇▇▇▇-▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: General Counsel Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
20.9 No Agency. The parties are independent contractors and will have
no power or authority to assume or create any obligation or
responsibility on behalf of each other, except as expressly
provided herein. This Agreement will not be construed to create
or imply any partnership, agency or joint venture.
20.10 Force Majeure.
20.10.1 Subject to 20.10.2, no party shall be liable for any
default or delay in the performance of its obligations
under this Agreement if and to the extent such default
or delay is caused, directly or indirectly, by: flood,
earthquake, elements of nature or acts of God, riots,
civil disorders, rebellions or revolutions in any
country, or any other cause beyond the reasonable
control of such party, provided that (i) the
non-performing party is without fault in failing to
prevent or causing such default or delay and (ii) such
default or delay cannot reasonably be circumvented
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by the non-performing party through the use of alternate
sources, workaround plans or other means (including with
respect to Neoforma, by Neoforma executing its disaster
recovery plans).
20.10.2 In such event, the non-performing party shall be excused
from 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. With respect to
Neoforma's performance, such efforts shall be no less
than the efforts used for any other customer of
Neoforma. Any party so delayed in its performance shall
immediately notify the party to whom performance is due
by telephone (to be confirmed in writing within two days
after the inception of such delay) and describe at a
reasonable level of detail the circumstances causing
such delay.
20.10.3 Notwithstanding anything in this Section 20.10 to the
contrary, upon the occurrence of an event described in
Subsection 20.10.1 that substantially prevents, hinders
or delays performance of services necessary for the
performance of "critical functions" of such party for
more than *, such party to whom such affected or delayed
performance is due will have the right to immediately
terminate this Agreement. For the purposes of this
Subsection 20.10.3, "critical functions" means with
respect to a party, those business functions that are
reasonably and in good faith determined by that party to
be essential and critical to its business operations or
the business operations of its Members.
20.11 Interest. Any payment under this Agreement which is not paid
when due, shall accrue interest at the lower of a monthly rate
of 1.5% or the highest amount allowed by law.
20.12 Program Management. Neoforma and Novation shall meet to develop
a program management plan to manage the delivery of Services
hereunder. Such plan shall have features similar to those
illustrated in Exhibit F.
20.13 Severability. If for any reason a court of competent
jurisdiction finds any provision or portion of this Agreement to
be unenforceable, that provision of the Agreement will be
enforced to the maximum extent permissible so as to effect the
intent of the parties, and the remainder of this Agreement will
continue in full force and effect.
20.14 Counterparts. This Agreement may be executed in counterparts,
each of which will be deemed an original, but all of which,
together, will constitute one and the same instrument.
20.15 Headings. Section headings are included for only convenient
reference and do not describe the sections to which they relate.
* Confidential treatment requested.
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20.16 Section 365(n) Matters. Neoforma acknowledges that if Neoforma
as a debtor-in-possession or a trustee in bankruptcy in a case
under the U.S. Bankruptcy Code rejects this Agreement, the
Contemplated Agreements, or any agreement supplementary hereto
or thereto, Novation may elect to retain its rights under this
Agreement, the Contemplated Agreements, or any agreement
supplementary hereto or thereto, as and to the extent provided
in Section 365(n) of the U.S. Bankruptcy Code. Upon the written
request of Novation to Neoforma or the bankruptcy trustee,
Neoforma or such bankruptcy trustee, as provided in Section
365(n) of the U.S. Bankruptcy Code, (i) shall provide to
Novation the intellectual property for the Services as described
in this Agreement, including all third-party software and all
Neoforma-owned software, and (ii) shall not interfere with the
rights of Novation as provided in this Agreement or any
agreement supplementary hereto, including the Functionality
Specifications, the Service Level Specifications, or any escrow
agreement that may be entered, to obtain such intellectual
property from the bankruptcy trustee.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
▇▇▇▇▇▇▇▇.▇▇▇, INC. NOVATION, LLC
By: By:
------------------------------- -------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ Name: ▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------- -----------------------------
Title: Chief Financial Officer Title: President
---------------------------- ----------------------------
Date: January 25, 2001 Date: January 25, 2001
----------------------------- -----------------------------
VHA, INC. UNIVERSITY HEALTHSYSTEM CONSORTIUM
By: By:
------------------------------- -------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------- -----------------------------
Title: Chief Financial Officer Title:
---------------------------- ----------------------------
Date: January 25, 2001 Date: January 25, 2001
----------------------------- -----------------------------
HEALTHCARE PURCHASING
PARTNERS INTERNATIONAL, LLC
By:
-------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------
Title: Chief Executive Officer
----------------------------
Date: January 25, 2001
-----------------------------
[SIGNATURE PAGE TO SECOND AMENDED AND RESTATED
OUTSOURCING AND OPERATING AGREEMENT]
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EXHIBIT G
SUPPLIER TARGET PERCENTAGES
The * shall be determined by multiplying the * in any * by the
applicable * set forth below:
*
* Confidential treatment requested.
G-1
62
EXHIBIT H
TARGET FEE LEVELS
*
* Confidential treatment requested.
H-1
63
EXHIBIT I
EXAMPLES
Example 1
*
Example 2
*
* Confidential treatment requested.
J-1
64
EXHIBIT J
PRIORITY SUPPLIERS
*
* Confidential treatment requested.
J-1