INFORMATION MANAGEMENT AGREEMENT
THIS AGREEMENT is entered into as of this first day of April, 1996, by and
between Candler Health System located at PO Box 9787, Savannah, Georgia
("Client") and DAOU Systems, Inc., a California corporation ("DAOU").
RECITALS
(A) DAOU is in the business of furnishing Information Management
Services in order to better align Client's organization leadership vision
with their operating practices through the applications of technology, and is
capable of providing trained personnel to perform management services,
consultation engagements, operational management functions and to staff
technical information processing activities of clients and has agreed to do
so in accordance with the terms of this Agreement;
(B) The Client desires to contract with DAOU to plan, manage, improve,
and operate the Management Information Services functions through the
application of DAOU's trained employees
(C) The Client has specific need for information management services
including management, operations, system administration, application support,
programming support, network management, and software acquisition and
development support, and currently identified in Exhibit A, Scope of Service
and Exhibit B, Level of Services, to this Agreement;
(D) DAOU and the Client are entering into this Agreement on the
understanding that the price for DAOU's services under this Agreement has
been set to reflect the fact that the legal and equitable remedies available
to each party under this Agreement are strictly limited to those remedies set
forth in this Agreement and neither party has undertaken and neither party
can undertake any liability for indirect, incidental, consequential or
punitive damages including but not limited to any loss of revenues, loss of
income, loss of profits or other financial remedies not expressly set forth
in this Agreement; and
(E) DAOU and the Client desire to avoid litigation and to fully and
finally resolve any disputes and all other disagreements pursuant to the
mediation and arbitration provisions of this Agreement.
In consideration of the foregoing and mutual promises contained herein, the
Client and DAOU agree as follows:
IT IS AGREED THAT:
SECTION 1. DEFINITIONS
The following definitions shall apply to the terms used in this Agreement:
1.1 AGREEMENT
The term "Agreement" means this Agreement and any Addendum, supplement
or other written amendment hereto signed by the parties to this Agreement.
1.2 CONFIDENTIAL INFORMATION
The term "Confidential Information" means all business, financial,
statistical, medical, personnel and technical data in tangible and/or
intangible form which is clearly and conspicuously marked "CONFIDENTIAL" or
as defined as confidential by law, or provided or disclosed, by one party to
the other, with notice of its confidential nature.
* CONFIDENTIAL TREATMENT REQUESTED
1.3 CONTRACT ADMINISTRATOR
The term "Contract Administrator" means that person. or his or her
replacement, designated by Client under Paragraph 3.2 of this Agreement.
1.4 EXCLUSIVE REMEDIES
The term "Exclusive Remedies" shall mean those remedies which are the
sole and exclusive remedies of each party under this Agreement as set forth
in Paragraph 9.
1.5 EXISTING SYSTEMS
The term "Existing Systems" shall mean those computer hardware and
software configurations set forth on Exhibit A hereto.
1.6 INFORMATION MANAGEMENT SERVICES
The term "Information Management Services" means the Services to be
provided to Client by DAOU as described in Exhibit A.
1.7 CHIEF INFORMATION OFFICER
The term " Chief Information Officer" means the individual designated by
DAOU to be responsible for the Services to be provided to the Client under
the terms of this Agreement.
1.8 LEVEL OF SERVICE
The term "Level of Service" means the level of services and during the
hours described in Exhibit B for which DAOU shall provide Client with
Information Management Services in accordance with the terms hereof.
1.9 PERFORMANCE STANDARDS
The term "Performance Standards" shall mean the standards to be
developed in Exhibit C for those services described in Exhibit A herein, at
the Level of Service described in Exhibit B.
1.10 SERVICE FEE
The term "Service Fee" shall mean the fees set forth in Exhibit B for
those services described in Exhibit A herein, at the Level of Service
described in Exhibit B.
1.11 SERVICES
The term "Services" means collectively the services described in Exhibit
A of this Agreement and the Level of Service described in Exhibit B of this
Agreement to be provided by DAOU to the Client
1.12 SUPPLEMENTAL SERVICES
The term "Supplemental Services" means those additional and separately
billable Information Management Services, software development or other
services which are beyond the Level of Service defined by this Agreement or
which are in addition to the items set forth in Exhibits A and B.
* CONFIDENTIAL TREATMENT REQUESTED
1.13 SYSTEM
The term "System" shall mean the Existing Systems, including but not be
limited to all replacements thereof and additions thereto, and the software,
operating together as a system.
1.14 TRANSITION SERVICES
The term "Transition Services" means the services described in Exhibit D
provided by DAOU at the termination of this Agreement.
SECTION 2. SERVICE
2.1 SCOPE OF SERVICE
DAOU agrees to furnish Client Information Management Services, Level of
Service, Performance Standards, and Transition Services as specifically
described in Exhibits A, B, C and D respectively. DAOU and Client may only
expand Services provided by DAOU by execution of amended exhibits signed by
both parties.
2.2 LEVEL OF SERVICE
The Level of Service, as described in Exhibit 8, is the basis for the
monthly fees provided for in Section 6. If, during the term of this
Agreement, or any renewals, the Level of Service to Client shall change, the
total monthly fee shall change as described in Exhibit B.
2.3 SUPPLEMENTAL SERVICES
Upon the written consent of Client and DAOU, DAOU shall provide
Supplemental Services, in addition to that listed in the attached exhibits,
at either the DAOU current published or negotiated rates between the parties.
Any such Supplemental Services shall be in accordance with all terms and
conditions of this Agreement. Nothing in this Agreement shall require that
either Client or DAOU agree to any Supplemental Services.
2.4 THIRD PARTY VENDORS
Client represents that the Existing System includes software of third
party vendors, which software is property owned by or property subject to
licensing or similar agreements between the Client and such vendors and
includes the rights of the Client for maintenance, upgrades and enhancements.
The Client shall, as soon as is practicable after the execution hereof,
deliver copies of all such agreements to DAOU. DAOU shall use reasonable
efforts to act on the Client's behalf with respect to such third party
agreements.
SECTION 3. PERSONNEL
3.1 CHIEF INFORMATION OFFICER
DAOU will designate , after consultation with client, a Chief
Information Officer who shall be responsible for coordinating DAOU's efforts
thereunder and for communicating with Client's Contract Administrator with
regard to the proper execution of this Agreement and the obligations and
duties thereunder.
3.2 CONTRACT ADMINISTRATOR
* CONFIDENTIAL TREATMENT REQUESTED
Client shall designate the CFO or his or her designee as its Contract
Administrator. The Contract Administrator shall be responsible for
communicating with DAOU's Information Services Manager with regard to the
proper execution of this Agreement and the obligations and duties thereunder.
The Contract Administrator shall have complete authority to make decisions
on behalf of Client with regard to all matters relating to this Agreement.
3.3 DAOU/CLIENT REPORTING RELATIONSHIP
(a) DAOU shall provide written status reports to the Contract
Administrator on a monthly basis Such status reports shall provide the
information reasonably necessary to evaluate DAOU's performance.
(b) DAOU shall report to Client regarding an event or circumstance
which has occurred which shall materially impair DAOU's performance under
this Agreement and DAOU's proposed response to such event or circumstance.
3.4 CONTINGENCY SERVICES
DAOU personnel may occasionally perform services for the Client at other
locations or for others using the resources located on Client's premises for
which DAOU is responsible and DAOU may do so as long as the DAOU Services
under this Agreement shall not be adversely affected.
3.5 [*]
SECTION 4. TERM
The initial term of this Agreement shall be for a period of [*] Both
parties agree that the fees outlined in Exhibit B are in consideration of the
entire initial term and that any adjustments to those fees within the Term of
this Agreement, other than those identified in Paragraph 6.3 below, must be
mutually agreed to and incorporated as an addendum.
4.1 CHANGE OF CONTROL
In the event that Client merges with St. Joseph's Hospital (Savannah,
GA) or otherwise becomes controlled by or in common control with any entity
which also controls St. Joseph's Hospital, [*]
[*] Client shall pay the sum of six hundred thousand dollars ($600,000)
upon early termination due to the Change in control as provided herein. [*]
* CONFIDENTIAL TREATMENT REQUESTED
SECTION 5. TERMINATION
5.1 EVENTS OF TERMINATION
This Agreement may be terminated:
(a) By either party, to the extent permitted under applicable law, if
the other ceases to function as a going concern becomes insolvent, makes an
assignment for the benefit of creditors, files a petition in bankruptcy,
permits a petition in bankruptcy to be filed against it (which is not
dismissed within sixty (60) days) or admits in writing its inability to pay
its debts as they mature; or if a receiver is appointed over a substantial
part of its assets (which is not dismissed within sixty (60) days);
(b) By DAOU for the non-payment of any monthly fees or charges to
Client and which nonpayment continues for a period of thirty (30) days from
the date of invoice; provided, however, that if Client has a bona fide
dispute regarding a specific invoice, then such non-payment shall not be
grounds for a termination hereof if Client pays to DAOU the entire invoiced
amount whether or not disputed and continues to pay fully in accordance with
Paragraph 9.3 while submitting the dispute to the dispute resolution
procedures as set forth in Paragraph 9.2;
(c) By either party in event of a material breach or nonperformance by
the other of any provision of this Agreement, provided however, that written
notice of the alleged breach shall have been given to the allegedly breaching
party who shall not have remedied or cured the alleged breach within thirty
(30) days after delivery of such notice; or if remedy or cure requires more
than thirty (30) days, who shall not have actively commenced and diligently
continued efforts to remedy or cure the alleged breach, provided further,
that this Agreement shall not be terminated by such alleged breach if such
alleged breach is submitted to the dispute resolution procedures set forth
herein; or
(d) [*]
5.2 TRANSITION PLAN
Upon a proper notice of termination given by Client in accordance with
Paragraph 5.1, at the request of Client, DAOU shall make available to Client,
the personnel necessary to carry out a mutually agreed to transition plan to
be executed within the remaining term of the Agreement. The topics to be
included in the transition plan include, but are not limited, to those
outlined in attached and incorporated Exhibit D.
Each party will cooperate fully with the other and/or its designees, so
that the transition of Services rendered under this Agreement shall be timely
and efficient and implemented in a manner so as to least interfere with the
orderly conduct of Client's business and so as not to unduly interfere with
DAOU's other operations.
5.3 PERSONNEL TRAINING
Upon a proper notice of termination given by Client in accordance with
Paragraph 5.1 for any reason other than breach by Client for non-payment by
Client, Client, after notice and preceding termination date, shall have the
right to assign a reasonable number of Client's employees to participate with
the employees of DAOU in the performance of their remaining services. DAOU
shall cause its employees to acquaint and instruct the employees of Client
regarding the work, to facilitate a smooth transition according to the
Transition Plan, and to continuously operate all data processing functions
5.4 EQUIPMENT
Upon expiration or termination of this Agreement, or any extension or
renewals thereof, all office furniture, equipment, documents, records, books,
tapes, disks and files provided by Client or DAOU shall be returned to Client
* CONFIDENTIAL TREATMENT REQUESTED
or DAOU in substantially the same condition as received, ordinary wear and
tear expected. Neither Client nor DAOU shall dispose of the other party's
property without the prior consent of the other party.
SECTION 6. FEES FOR SERVICES AND TERMS OF PAYMENT
6.1 FEES FOR SERVICE
The monthly fees for Services provided thereunder are described in
Exhibit B.
6.2 PAYMENT
Monthly fees shall be due and payable the first day of each month.
Fractional months shall be prorated. Payment for Supplemental "Services
shall be invoiced monthly and due ten (10) days from the receipt of invoice.
Balances past due in excess of thirty (30) days from receipt of invoice shall
bear overdue service charges at one and one-half (1-1/2) percent per month or
the highest rate permitted by law, whichever is less.
6.3 ANNUAL ADJUSTMENT OF MONTHLY FEES
Annually, on the anniversary date of this Agreement, the Fees for
Services set forth in Exhibit B shall be adjusted, equal to the adjustment
provided by Client to Client employees during the most recent 12 month
period.. This adjustment shall apply only to the personnel portion of this
Agreement.
SECTION 7. INSURANCE AND TAXES
7.1 INSURANCE
DAOU shall procure and maintain public liability insurance in the amount
of [*] errors and omissions insurance in the amount of [*] per occurrence on
a claims made basis with a total of [*] aggregate on an annual claims made
basis, and workers' compensation insurance on its own employees. DAOU shall
provide Client with at least thirty (30) days' advance written notice prior
to any cancellation or reduction in coverage.
7.2 TAX AND LICENSES
Taxes, other than income taxes, applicable business taxes and license
fees, imposed by any taxing authority based upon any Services furnished under
this Agreement shall be the responsibility of Client and shall be payable in
addition to other fees or charges. Each party may provide the other, in lieu
of paying any such tax, with a certificate of exemption in form reasonably
satisfactory to the other party.
SECTION 8. PERFORMANCE UNDER THIS AGREEMENT
8.1 IN GENERAL
The parties acknowledge and agree that performance under this Agreement
will require the availability of their respective representatives for the
continued definition and setting of priorities, the balancing of competing
tasks and schedules, and the adjustment of priorities over different tasks
and different schedules so as to address, on a daily basis, the needs of the
Client within the scope of this Agreement.
* CONFIDENTIAL TREATMENT REQUESTED
8.2. COOPERATION
DAOU and the Client agree that they will each use good faith and
reasonable efforts to define, plan and coordinate the different priorities
and schedules agreed to by the parties within the scope of this Agreement.
8.3 FULL DISCLAIMER OF WARRANTIES
DAOU HEREBY DISCLAIMS ALL WARRANTIES OF ANY KIND, INCLUDING BUT NOT
LIMITED TO, ANY EXPRESS WARRANTIES NOT INCORPORATED INTO THIS AGREEMENT OR
ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE
IMPOSED BY LAW OR WHICH COULD OTHERWISE ARISE IN CONNECTION WITH DAOU'S
OBLIGATIONS UNDER THIS AGREEMENT. DAOU'S SOLE AND EXCLUSIVE OBLIGATION
THEREUNDER IS TO USE REASONABLE EFFORTS AND ITS BEST BUSINESS JUDGMENT IN
PERFORMING THE TASKS SET FORTH IN THIS AGREEMENT, IN ACCORDANCE WITH THE
RESOURCE ASSUMPTIONS AND PARAMETERS SET FORTH HEREIN.
8.4 PROBLEMS IN PERFORMANCE
In the event of any failure of the parties mutually to agree on any
matters under this Agreement or in the event that either party believes that
the other has failed to satisfactorily perform or otherwise is in breach of
the Agreement and if the parties are unable to resolve such matter through
their respective representatives then the parties shall submit the matter to
resolution in accordance with the procedures set forth in Section 9 below.
SECTION 9. REMEDIES
9.1 LIMITATION OF LIABILITY; INDEMNIFICATION BY CLIENT
Except for the Service Fees and other amounts expressly due and payable
to DAOU, in no event shall either party be liable to the other for any
damages arising in any manner under this Agreement including but not limited
to indirect, incidental, consequential, special, exemplary or other damages
or loss of revenues, loss of income, loss of profits, other financial
remedies except those remedies for direct damages set forth as follows. To
the extent any claim is made and fully covered by insurance provided in
Paragraph 7.1 of this Agreement, the limitations of liability of this
Paragraph 9.1 shall not apply, but, if a claim by one party to this Agreement
against the other is not covered or is only partly covered by insurance
provided in Paragraph 7.1, then in no event shall either party's liability to
the other if there be any for any claims whatsoever or for any reason
whatsoever) exceed [*]
9.2 Dispute Resolution Procedure
In the event that the parties have any disagreement, dispute, breach or
claim of breach, or nonperformance or repudiation arising from, in relation
to or in connection with this Agreement or any of the terms or conditions
hereof, or any transaction thereunder including but not limited to either
party's failure or alleged failure to comply with any of the provisions of
this Agreement (hereinafter collectively the "Dispute"), the parties shall
first promptly provide in writing to the other a general written statement of
their respective claims. This statement need not be complete and will not
limit the claims of either party in any further procedure with respect to
this Agreement. The statement shall indicate that it is the first statement
of a formal dispute resolution process under this Agreement. If the parties
are unable to resolve the dispute within ten (10) business days of receipt of
such written statement, the claimant may proceed as otherwise contemplated by
this Agreement.
(a) INTERNAL RESOLUTION PROCEDURES
* CONFIDENTIAL TREATMENT REQUESTED
(i) Within ten (10) working days of the time that one party
informs the other of a Dispute, the Client's Contract Administrator and
DAOU's Chief Information Officer shall conduct a meeting to reach an
agreement to use their best efforts to either (a) resolve the matter and set
forth such resolution in writing or (b) define the Dispute in writing
including a description of the position of each party and the other projects
and tasks which would be affected by the proposed resolution submitted by the
Client's Contract Administrator and by the proposed resolution submitted by
DAOU's Chief Information Officer,
ii) If the Client's Contract Administrator and DAOU's Chief
Information Officer are unable to reach an agreement pursuant to Subparagraph
(i), then within ten (10) working days of such failure to agree, at least one
knowledgeable representative of DAOU management and at least one
knowledgeable representative of the Client shall meet in Savannah, GA, to
attempt to reach a resolution of the matter in light of the description of
the Dispute submitted by the parties and further discussion among and between
the parties and their respective representatives.
(b) MEDIATION RESOLUTION PROCEDURE
If the procedure set forth in Subparagraph (a) is unsuccessful in
resolving the Dispute, the parties shall, within fifteen (15) working days,
commence a mediation session by notice of selection of a third party, neutral
mediator and a proposed time and date for the mediation. If the other party
does not propose an alternative mediator then the mediation shall occur
before the first person proposed. If the other party does propose an
alternative mediator, then the two proposed shall promptly jointly select a
third party, neutral to act as the sole mediator. The mediation shall take
place in Savannah, Georgia, and all mediator fees shall be equally shared by
the parties. If the parties are able to reach a resolution of the Dispute,
the resolution so reached shall be memorialized in writing and shall, upon
the mutual written consent of both parties, become part of this Agreement.
If the parties are unable to resolve the Dispute through mediation, either
party has the option to terminate mediation and upon doing so, the parties
shall continue under this Agreement in accordance with Section 9.3 and the
parties shall submit any disputes to binding arbitration under subsection (c)
below.
(c) BINDING ARBITRATION
If the parties are unable to reach an agreement pursuant to
subparagraphs (a) and (b) above, the Dispute shall be resolved by
mandatory, binding expedited arbitration in Savannah, Georgia in accordance
with the following terms and conditions:
(i) AAA Rules Apply. Any dispute relating to or arising out of
the interpretation or performance of this Agreement (other than claims for
which injunctive relief is sought) and which have not been resolved pursuant
to the procedures set forth in Section 9.2 (a) shall be resolved at the
request of either party through binding arbitration pursuant to and under the
then existing commercial arbitration rules of the American Arbitration
Association. The decision of the arbitrators(s) shall be limited by those
Exclusive Remedies set forth herein, including but not limited to the
Limitation on Liability set forth in Section 9.1 herein.
(ii) Discovery. The parties shall be permitted to obtain discovery
from each other of documents and other tangible evidence at a time reasonably
prior to the arbitration hearing. No depositions shall be allowed.
(iii) Hearing. The arbitration hearing shall be conducted in
Savannah, Georgia The parties shall agree on a single arbitrator with
computer industry or data processing expertise or if they cannot so agree,
they shall each name one arbitrator and the two arbitrators shall jointly
name a third neutral arbitrator who has expertise in information management
and/or data processing services, and a decision of any two of the three
arbitrators shall bind the parties in all matters thereunder,
* CONFIDENTIAL TREATMENT REQUESTED
(iv) Award. The arbitrators award shall be final and judgment upon
any award by the arbitrator may be entered by the state or federal district
courts in Savannah, Georgia
(v) Binding Obligation. Failure to meet any of the timelines in
this Section shall not be considered default in performance, nor shall it
affect the enforceability of the resolution procedures under this Section.
9.3 PERFORMANCE DURING DISPUTES
DAOU shall be under the obligation to continue to provide Services to
the Client while the parties are seeking to resolve any Dispute so long as
the Client shall continue to pay DAOU all Service Fees, both past due and as
they come due, with or without Client's reservation of rights.
SECTION 10. CONFIDENTIALITY
10.1 CONFIDENTIAL INFORMATION
Subject to Paragraph 10.2 below, both parties agree that:
(a) Each party shall not disclose any Confidential Information of the
other party to any third party without first obtaining written consent;
(b) Each party shall limit dissemination of the other party's
Confidential Information only to those employees, contractors and agents who
require access thereto to perform their functions under this Agreement;
(c) Each party agrees to return the Confidential Information to the
disclosing party upon receipt of written request therefor,
(d) Each party agrees that the standard of care to be applied in the
performance of the obligations set forth above shall be the standard of care
applied by the receiving party in treating its own Confidential Information,
but at least reasonable care to prevent unauthorized copying, use,
publication or disclosure; and
(e) The term of the provisions of this Section shall survive
termination of the Services or any determination that this Agreement or any
portion hereof or Exhibit hereto is void or voidable.
10.2 EXCEPTIONS TO CONFIDENTIALITY
The obligation of confidentiality set forth in Paragraph 10.1 shall not
apply to any data or information that the receiving party proves:
(a) Was already rightfully in the possession of the receiving party or
any of its related companies prior to disclosure;
(b) Was independently developed by employees having no access to
Confidential Information;
(c) Was publicly disclosed by a person other than the receiving party
or its employees or agents without restrictions;
(d) Was rightfully received from a third party without restrictions on
disclosure or use;
(e) Was approved for unrestricted release or unrestricted disclosure by
the disclosing party;
* CONFIDENTIAL TREATMENT REQUESTED
(f) Was available by inspection of products or services marketed
without restrictions, offered for sale or leased in the ordinary course of
business by either party hereto or others; or
(g) Was required to be produced or disclosed pursuant to applicable
laws, regulations or court order, provided the receiving party has given the
disclosing party the opportunity to defend, limit or protect such production
or disclosure.
10.3 [*]
SECTION 11. GENERAL
11.1 NOTICES
Any notice required or permitted by this Agreement shall be in writing
and accomplished by registered or certified mail. Such notice shall be
deemed to have been delivered five (5) days after it has been mailed
If to DAOU: President
DAOU Systems, Inc.
5120 Shoreham Place
San Diego, CA 92121
If to Client: Chief Financial Officer
Candler Health System
P. O. Box 9787
Savannah, GA 31405
* CONFIDENTIAL TREATMENT REQUESTED
11.2 WAIVER
Waiver of breach or failure to perform any provision of this Agreement
shall not be deemed a waiver of future performance nor shall it prejudice the
waiving party's right to require strict performance of the same provision or
any other provision in the future. No term or condition of this Agreement
shall be waived, modified or deleted except by an instrument, in writing,
signed by the parties hereto.
11.3 ASSIGNMENT
Neither this Agreement, nor any of either party's obligations under this
Agreement, shall be assignable by operation of law or otherwise, without the
prior written consent of both parties.
11.4 NO AUTHORITY
The parties are and shall remain independent contractors. Neither party
shall have any authority, and neither party shall represent that it has any
authority, to assume or create any obligation, express or implied, on behalf
of the other party, except as provided in this Agreement. This Agreement
shall not be construed as creating a partnership, joint venture, franchise,
agency or employment relationship between the parties or as creating any
other form of legal association that would impose liability on one party for
the act or failure to act of the other party.
11.5 EXHIBITS
All exhibits referred to in this Agreement are hereby incorporated by
reference as though fully set forth in the text of this Agreement; in the
event of any conflict between the body of this Agreement and any Exhibit to
this Agreement, the body of this Agreement shall control over any conflicting
provision in any Exhibit to this Agreement.
11.6 GOVERNING LAW
This Agreement shall be interpreted by the laws of the State of Georgia.
11.7 ATTORNEY'S FEES
Subject to Paragraphs 11.10 and 11.11 below, in the event any action is
instituted to enforce any right granted herein, neither party shall be
entitled to recover attorneys' fees or other costs incurred except for such
costs, if any, (excluding attorneys' fees) awarded by arbitration.
11.8 TIME TO SUE
All actions by either party arising out of this Agreement shall be
commenced within twelve (1 2) months after the party has knowledge of the
claim or within six (6) months of the expiration or earlier termination of
this Agreement, whichever first occurs. No action may be brought by either
party more than one (1) year after the cause of action has arisen.
11.9 SEVERABILITY
If any part of this Agreement found to be invalid by a court of
competent jurisdiction, all other provisions shall remain in full force and
effect and the provisions found invalid shall be enforced by the court to the
maximum enforceable by law.
11.10 INDEMNITY BY DAOU.
* CONFIDENTIAL TREATMENT REQUESTED
DAOU will defend Client against a claim that the licensed programs or
licensed materials furnished by by DAOU and used within the scope of this
Agreement by DAOU infringe a U.S. patent or copyright or another proprietary
right of a third party. DAOU will pay resulting costs, damages and attorney
fees finally awarded provided that: a) Client promptly notifies DAOU in
writing of the claim, and b) DAOU has sole control of the defense and of all
related settlement negotiations. If such claim has occurred or in DAOU's
opinion is likely to occur, Client agrees to permit DAOU, at its option and
expense, either to procure for Client the right to continue using the
licensed programs or licensed materials or to replace or modify the same with
functionally equivalent programs so that they become non-infringing.
11.11 INDEMNITY BY CLIENT
Client will defend DAOU against a claim that the licensed programs or
licensed materials fumished by Client and used within the scope of this
Agreement by Client infringe a U.S. patent or copyright or another proprietary
right of a third party. Client will pay resulting costs, damages and attorney
fees finally awarded provided that: a) DAOU promptly notifies Client in writing
of the claim, and b) Client has sole control of the defense and of all related
settlement negotiations. If such claim has occurred or in Client's opinion is
likely to occur, DAOU agrees to permit Client, at its option and expense, either
to procure for DAOU the right to continue using the licensed programs or
licensed materials or to replace or modify the same with functionally equivalent
programs so they become non-infringing.
11.12 FORCE MAJEURE
Neither party shall be liable for any delay or failure to perform its
obligations thereunder to the extent that such delay or failure is caused by a
force or event beyond the control of such party, including without limitation,
war, embargoes, strikes, governmental restrictions, riots, fires, floods,
earthquakes, or other Acts of God (the "Force Majeure") provided that DAOU shall
use its best efforts to assist Client in establishing necessary Services
elsewhere, in the event of the occurrences of a Force Majeure which:
(a) Materially prevents DAOU from providing any of the Services for more
than ten (10) business days, and DAOU has not successfully transferred Client's
data processing to a backup facility under terms and conditions reasonably
acceptable to the Client, or
(b) Causes the normal operations of the site to be interrupted for more
than forty-five (45) days, and in Client's reasonable business judgment it is
necessary to pursue alternative means of meeting Client's data processing
needs. DAOU shall use its best efforts to assist Client in establishing
necessary Services elsewhere.
11.13 AFFIRMATIVE ACTION
DAOU certifies that it is in compliance with the Equal Employment
Opportunity Requirement of Executive Order 11246 as amended by Executive Order
11375, Section 503 of the Rehabilitation Act of 1973 as amended and 38 U.S.C.
4212 (the Vietnam Era Veterans Readjustment Assistance Act of 1974 as amended),
Title VIl of the Civil Rights Restoration Act of 1987, the California Fair
Employment Practices Act, and any other federal or state laws pertaining to
equal employment opportunity, and that it will not discriminate against any
employee or applicant for employment on the basis of race, color, religion,
handicap, age, sex, national origin or ancestry in matters pertaining to
recruitment, hiring, training, upgrading, transfer, compensation or termination.
11.14 MEDICARE ACCESS TO BOOKS AND RECORDS
Until four (4) years following the completion of this Agreement, DAOU
shall make available to the Secretary of Health and Human Services, the
Inspector General, or their designees, any and all such books and records as
are necessary to substantiate the Services provided under this Agreement.
Should DAOU fulfill any part of the Services
* CONFIDENTIAL TREATMENT REQUESTED
rendered under this Agreement via subcontract with fees of ten thousand
dollars ($1 0,000) or more, DAOU shall require such access to subcontractors'
books and records as a condition of entering subcontract.
SECTION 12. ENTIRE AGREEMENT
THIS AGREEMENT SIGNED BY BOTH PARTIES, AND SO INITIALED
BY BOTH PARTIES IN THE MARGIN OPPOSITE THIS SECTION,
CONSTITUTES A FINAL WRITTEN EXPRESSION OF ALL OF THE
TERMS OF THIS AGREEMENT AND IS A COMPLETE AND EXCLUSIVE
STATEMENT OF THOSE TERMS. CLIENT WAS NOT INDUCED TO -------------
ENTER THIS AGREEMENT BY ANY STATEMENTS OR Client
REPRESENTATIONS NOT CONTAINED IN THIS AGREEMENT. ANY
AND ALL REPRESENTATIONS, PROMISES, WARRANTIES OR
STATEMENTS BY DAOU'S OFFICERS, EMPLOYEES, OR OTHER
AGENTS THAT DIFFER IN ANY WAY FROM THE TERMS OF THIS
WRITTEN AGREEMENT SHALL BE GIVEN NO FORCE OF AFFECT. -------------
THIS AGREEMENT SHALL BE CHANGED, AMENDED OR MODIFIED DAOU
ONLY BY WRITTEN INSTRUMENT SIGNED BY BOTH CLIENT AND
DAOU. This Agreement shall not be modified or altered
by any course of performance by either party or usage of
the trade or otherwise except through an instrument
signed by both Client and DAOU.
Candler Health System DAOU Systems, Inc.
By: /s/Kenneth W. Wood By:
--------------------------------- ------------------------------
Title: President Title:
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Date: April 19, 1996 Date:
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* CONFIDENTIAL TREATMENT REQUESTED
EXHIBIT A THROUGH EXHIBIT D
[CONFIDENTIAL TREATMENT REQUESTED]