[DAOU logo]
ATLANTIC HEALTH SYSTEM
325 COLUMBIA TURNPIKE
FLORHAM PARK, NJ
5120 Shoreham Place
San Diego, California 92122
619.452.1338 fax
619.452.2221
800.578.3268
* CONFIDENTIAL TREATMENT REQUESTED
TABLE OF CONTENTS
EXECUTIVE SUMMARY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
SCOPE OF MASTER AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . .3
1. CONSIDERATION: . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
2. QUOTATION OF PRICES: . . . . . . . . . . . . . . . . . . . . . . . . . .3
3. CHARGES AND PAYMENT: . . . . . . . . . . . . . . . . . . . . . . . . . .3
4. OUT OF POCKET EXPENSE: . . . . . . . . . . . . . . . . . . . . . . . . .3
5. TAXES: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
6. TITLE AND SECURITY INTEREST: . . . . . . . . . . . . . . . . . . . . . .3
7. RISK OF LOSS:. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
8. MODIFICATIONS: . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
9. CANCELLATION:. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
10. RESTOCKING FEES:. . . . . . . . . . . . . . . . . . . . . . . . . . . .4
11. CONTACT PERSON: . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
12. DELIVERY/INSPECTION:. . . . . . . . . . . . . . . . . . . . . . . . . .4
13. INSTALLATION/TRAINING/SUPPORT:. . . . . . . . . . . . . . . . . . . . .4
14. NETWORK ACCEPTANCE/PRODUCT DELIVERY:. . . . . . . . . . . . . . . . . .4
15. PERSONNEL PERFORMANCE GUARANTEE:. . . . . . . . . . . . . . . . . . . .4
16. WARRANTIES: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
17. DISCLAIMER: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
18. INDEMNIFICATION:. . . . . . . . . . . . . . . . . . . . . . . . . . . .5
19. CONFIDENTIALITY:. . . . . . . . . . . . . . . . . . . . . . . . . . . .5
20. DEFAULT/BREACH BY CUSTOMER: . . . . . . . . . . . . . . . . . . . . . .5
21. DEFAULT/BREACH BY DAOU: . . . . . . . . . . . . . . . . . . . . . . . .6
22. PROBLEMS IN PERFORMANCE:. . . . . . . . . . . . . . . . . . . . . . . .6
23. DISPUTE RESOLUTION. . . . . . . . . . . . . . . . . . . . . . . . . . .6
24. INSURANCE AND LIABILITY:. . . . . . . . . . . . . . . . . . . . . . . .7
25. FORCE MAJEURE:. . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
26. THIRD PARTIES:. . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
27. RELATIONSHIP OF PARTIES:. . . . . . . . . . . . . . . . . . . . . . . .7
28. SURVIVAL CLAUSE:. . . . . . . . . . . . . . . . . . . . . . . . . . . .7
29. WILLINGNESS TO WORK WITH ALL PARTIES. . . . . . . . . . . . . . . . . .7
30. INTERPRETATION: . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
31. NOTICES FROM DAOU TO CUSTOMER:. . . . . . . . . . . . . . . . . . . . .8
32. NOTICES FROM CUSTOMER TO DAOU:. . . . . . . . . . . . . . . . . . . . .8
33. ENTIRE MASTER AGREEMENT:. . . . . . . . . . . . . . . . . . . . . . . .9
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
* CONFIDENTIAL TREATMENT REQUESTED
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DAOU SYSTEMS, INC.
5120 Shoreham Place
San Diego, California 92122
(619) 452-2221
Master Agreement
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CUSTOMER NAME :ATLANTIC HEALTH SYSTEM
ADDRESS :325 COLUMBIA TURNPIKE
CITY/STATE/ZIP :FLORHAM PARK, NJ
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This Master Agreement, the term effective 04 - JUN 1996, [*] by and between DAOU
Systems, Inc., (hereinafter referred to as "DAOU"), and ATLANTIC HEALTH SYSTEM,
with its principal place of business, defined above, hereinafter referred to as
("CUSTOMER") sets forth the promises of the parties with respect to the products
and services of DAOU which are described in the Master Agreement. The parties
hereto agree as follows:
EXECUTIVE SUMMARY
In accordance with this agreement DAOU has designed and will manage an
enterprise wide communications infrastructure for CUSTOMER. The network
consists of cabling for each of the CUSTOMER sites, active network electronic
components, network operating system software and related software for office
automation related tasks. This network will enable CUSTOMER to implement
existing and new applications such as electronic mail, remote physician access
and integrated voice video and data for such applications as telemedicine,
across the institution. This network structure will allow any user at a
personal computer station secure access to any information located on any host
or server connected to the network. Any user at a personal computer station
will also be able to share files and schedules with, and send email to any other
user who is granted the same capabilities on the network. DAOU will supervise
the installation of the cabling infrastructure; acquire, test, integrate and
install the active network electronic components; network operating software and
office automation software into an integrated enterprise wide communication
infrastructure. DAOU will further coordinate all activities of third party
vendors related to the acquisition of said products and services, including but
not limited to, application software companies, suppliers of telecommunications
* CONFIDENTIAL TREATMENT REQUESTED
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services, hardware and software vendors, necessary to the success of the overall
project. DAOU will further manage, support and otherwise assume complete
responsibility for the day to day ongoing operation of the enterprise wide
communications infrastructure. This partnership will result in an information
system delivery system capable of supporting the Customer well into the next
century.
SCOPE OF MASTER AGREEMENT
CUSTOMER and DAOU agree that CUSTOMER shall be entitled to procure the products
and services made available under the Master Agreement.
CUSTOMER and DAOU 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.
This Master Agreement will serve as the basis by which all projects will be
agreed to and specifics to Scope. Deliverables. Milestones, Payment, etc. will
be treated separately with Attachments & Schedules. This document supersedes
all said Attachments & Schedules.
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1. CONSIDERATION:
In consideration of the Products and Services to be provided in writing by DAOU
to CUSTOMER, as set forth in relevant Attachments and Schedules ,. CUSTOMER
agrees to pay DAOU's charges. Any modifications or additions must be approved
in writing by both parties.
2. QUOTATION OF PRICES:
All prices quoted shall remain valid only if CUSTOMER purchase order (including
any change orders) is issued within sixty (60) days of the date on which the
final quotation was submitted.
Network implementation services are based on a fixed price referenced in
Attachments and Schedules, should additional equipment be required pricing of
the equipment will be identified in an Attachment or Schedule change order and
the equipment will be the responsibility of the CUSTOMER.
3. CHARGES AND PAYMENT:
CUSTOMER shall be invoiced for products and services as described in Attachments
and Schedules. All fees to be paid by CUSTOMER, as identified in payment
milestones in Attachments and Schedules payments, will be invoiced by DAOU to
CUSTOMER with payment due net thirty (30) days.
4. OUT OF POCKET EXPENSE:
[*]
5. TAXES:
CUSTOMER shall pay all sales, use and excise taxes, unless CUSTOMER furnishes
DAOU with a certificate of exemption from payment of such taxes which is in a
form reasonably acceptable to DAOU.
6. TITLE AND SECURITY INTEREST:
DAOU reserves, and CUSTOMER grants, a security interest in the products which
shall remain in effect for as long as the purchase price of the remains unpaid.
7. RISK OF LOSS:
Risk of loss of the Products shall pass to the CUSTOMER upon Product Acceptance
by CUSTOMER as defined in paragraph twelve (12).
* CONFIDENTIAL TREATMENT REQUESTED
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8. MODIFICATIONS:
All modifications of Attachments and Schedules must be approved in writing by
both parties for any additional products or services not part of the original
attachments. Cost of any additional products required to complete installation
will be paid for by responsible party. Attachments and Schedules to this Master
Agreement will be initiated by DAOU and signed by CUSTOMER prior to ordering of
additional products or providing additional services requested.
9. CANCELLATION:
This Master Agreement may be canceled up to five (5) days after contract
signature without cause or penalty. After five (5) days, this contract cannot
be canceled, except by mutual agreement or upon the breach hereof by one of the
parties hereto.
10. RESTOCKING FEES:
Hardware or Software Products accepted by DAOU for credit or exchange may be
subject to a restocking fee as charged to DAOU by the manufacturer or
distributor. CUSTOMER may be denied credit or exchange on Hardware or Software
products that are unacceptable for return by manufacturer. Opened software
licenses are generally unacceptable for return by manufacturer.
11. CONTACT PERSON:
CUSTOMER will appoint a Project Manager who will assist DAOU Project Manager in
coordinating delivery and installation of products and services described in
schedules and attachment of the Master Agreement. CUSTOMER will identify a key
contact person for each site scheduled project.
12. DELIVERY/INSPECTION:
DAOU will notify CUSTOMER in advance of all Product Deliveries and installation
dates. DAOU shall not be liable for losses or consequential damages resulting
from delays in delivery due to causes beyond its control. CUSTOMER agrees to
verify bill of lading for the products as soon as practical after delivery and
to notify DAOU in writing within 7 days of delivery any shipping discrepancies
(wrong product, incorrect quantity, etc.). DAOU will take responsibility for
resolving discrepancies in shipping as reported by CUSTOMER.
13. INSTALLATION/TRAINING/SUPPORT:
[*] A detailed workplan is referenced in Attachments and Schedules for all
projects, including initial installation and training plans. Scheduled
installation or training dates shall not be modified without the written
consent of both parties.
14. NETWORK ACCEPTANCE/PRODUCT DELIVERY:
Network Acceptance is defined as when DAOU has demonstrated and documented to
the CUSTOMER that the network is functional per the acceptance criteria defined
and included in the Attachment for each project.
Product Delivery is defined as when the CUSTOMER has verified the bill of lading
for the product after on-site delivery at the CUSTOMER site and has notified
DAOU in writing within 7 days of any delivery discrepancies. If no such notice
is provided by the CUSTOMER, DAOU and the CUSTOMER will consider Product
Delivery to be complete.
15. PERSONNEL PERFORMANCE GUARANTEE:
DAOU guarantees the personnel assigned will meet the CUSTOMER's expectations of
project management. The Project Manager will supervise all personnel
responsible for implementation and training at CUSTOMER site. CUSTOMER may
request personnel change in writing to which DAOU will accommodate within 30
days. DAOU guarantees the same for any work and services provided to CUSTOMER
by any sub-contractor contracted by DAOU to provide services to CUSTOMER.
16. WARRANTIES:
DAOU will repair or replace any defective Products sold in Attachments and
Schedules for a period of 30 days from Network Acceptance as identified in
paragraph 14. In the case of product only purchases, sold in Attachments and
Schedules for a period of 30 days from product delivery. .DAOU gives no
warranty, expressed or implied, other than manufacturer's warranty on any
hardware or software products sold to CUSTOMER. Implied warranties of
* CONFIDENTIAL TREATMENT REQUESTED
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merchantability or fitness for a particular purpose are hereby disclaimed by
DAOU and excluded by this Master Agreement and shall not extend manufacturer's
or supplier's warranty. Any alterations, additions, improvements or attachments
on the products which are not authorized in writing by DAOU, or by the products'
manufacturer, producer, or supplier, shall be solely at CUSTOMER's expense and
risk. Every warranty provided by this Master Agreement shall be void to the
extent operation of the products are affected by any alteration, addition,
improvement or attachment.
17. DISCLAIMER:
CUSTOMER understands and agrees that, with the exception of the warranties in
Section 16, his/her sole remedy, and only in the case of failure of products to
perform, shall be limited to repair, replacement, or refund, of purchase price
of products sold, and DAOU shall not be liable for consequential damages whether
foreseeable or otherwise. DAOU maximum liability to CUSTOMER shall in no event
exceed the contracted purchase price. CUSTOMER reserves the right to terminate
this Agreement, in the event of any such claim.
18. INDEMNIFICATION:
a. INDEMNITY BY DAOU. DAOU shall indemnify, defend and hold harmless
CUSTOMER, its trustees, officers, employees, agents, and students from any loss,
claim, damage or liability of whatsoever kind or nature, arising out of or in
connection with the performance by DAOU, its agents or employees, of this
Agreement. DAOU shall indemnify and hold CUSTOMER harmless form any and all
violation of software copyright laws and license infringements by DAOU.
b. INDEMNITY BY CUSTOMER. CUSTOMER shall indemnify, defend and hold harmless
DAOU, its directors, officers, employees, agents, and students form any loss,
claim,damage or liability of whatsoever kind or nature, arising out of or in
connection with the performance by CUSTOMER, its agents or employees, of this
Agreement. CUSTOMER shall indemnify and hold DAOU harmless from any and all
violation of software copyright laws and license infringements by CUSTOMER.
19. CONFIDENTIALITY:
DAOU agrees to protect the confidentiality of CUSTOMER's proprietary information
including but not limited to financial information, patient information,
clinical practice or management at CUSTOMER's facility. DAOU shall not divulge
or disclose to any third parties any information concerning the affairs of the
CUSTOMER which may be received by DAOU at any time, unless such information
becomes publicly available through no cause of DAOU.
CUSTOMER agrees to protect the confidentiality of DAOU's proprietary information
including but not limited to all drawings, design techniques, contract prices,
and improvements provided by DAOU. CUSTOMER will not divulge any portion of the
contract, Master Agreement, or design, not already in the public domain that are
deemed confidential at any time unless required by law or unless such
information becomes publicly available through no fault of the CUSTOMER.
CUSTOMER agrees that for a period of this agreement from the date of this Master
Agreement and CUSTOMER will not directly solicit for employment any employee of
DAOU with whom CUSTOMER has had contact or who became known to CUSTOMER in
connection with CUSTOMER consideration of the Master Agreement. DAOU also
agrees that for the period of this Agreement, from the date of this Master
Agreement and DAOU will not directly solicit for employment any employee of
CUSTOMER with whom DAOU has had contact or who became known to DAOU in
connection with DAOU's consideration of the Master Agreement, or as otherwise
outlined throughout this Master Agreement. CUSTOMER retains the right, at its
sole discretion to hire the DAOU employees stationed at CUSTOMER provided that
CUSTOMER remits to DAOU the sum of $100,000.00 per each DAOU employee that
CUSTOMER successfully hires. Should either party terminate this Master
Agreement with cause prior to the end of the Master Agreement's initial term, or
any successive term thereafter, CUSTOMER shall remit to DAOU $100,000.00 for
every DAOU employee CUSTOMER successfully hires. DAOU shall not use CUSTOMER
name in any publication, promotional or written material without the prior
written approval of an officer of CUSTOMER.
* CONFIDENTIAL TREATMENT REQUESTED
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20. DEFAULT/BREACH BY CUSTOMER:
In the event of default by CUSTOMER on any payment described in the attached
proposal, CUSTOMER shall pay interest at the rate of eighteen percent (18%) per
annum on each such obligation from the day it is due until it is received by
DAOU, which is not in dispute. CUSTOMER payment will not be subject to interest
if DAOU authorizes in writing a change in payment due date in the event of
incomplete installation or delivery by DAOU. The occurrence of any of the
following shall constitute a breach and material default of this Master
Agreement:
a. The failure of CUSTOMER to pay or cause to be paid by the due date any
moneys or charges required by this Master Agreement to be paid by
CUSTOMER when such failure constitutes for a period of forty-five (45)
days after written notice thereof from DAOU to CUSTOMER, unless under
dispute;
b. DAOU's failure to adhere to proposal, as defined in Attachments, also
constitutes a material default under this Master Agreement,
c. Any act of bankruptcy caused, suffered or permitted by CUSTOMER or
DAOU.
21. DEFAULT/BREACH BY DAOU:
In the event of default by DAOU delivered or as otherwise defined herein, DAOU
shall not invoice or charge CUSTOMER for any product or service not delivered or
as defined in attached proposal. CUSTOMER has a right to terminate the
Agreement in the event of a breach by DAOU.
22. 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 23 below.
23. DISPUTE RESOLUTION
For as long as this Master Agreement is in effect, all disputes, claims and
controversies between the parties arising out of or related to this Master
Agreement including but not limited to, any claim of misrepresentation, of
breach, or of nonperformance (disputes), shall be determined in the following
manner:
Informal Procedure:
The following personnel of the parties shall make every reasonable mutual
attempt to resolve the Dispute:
1. If such representative do not resolve the dispute within ten (10) business
days after the date upon which the breaching party receives notices of the
breach, the dispute shall be referred for resolution to the following personnel
of the parties:
(a) if relating to a CUSTOMER prior to network acceptance of the network for
such CUSTOMER, Director of Technical Services and CUSTOMER Director; or
(b) if relating to a CUSTOMER subsequent to network acceptance of the software
for such CUSTOMER, Director of Technical Services and CUSTOMER Director.
2. If the individuals to whom the matter is referred under subsection a or b,
immediately above do not resolve the Dispute within (10) business days after the
date of referral, the dispute shall be referred for resolution to the following
personnel of the parties:
(a) if relating to a CUSTOMER prior to network acceptance of the network for
such CUSTOMER, DAOU's Sr. Vice President and CUSTOMER Vice President; or
(b) if relating to a CUSTOMER after network acceptance of the software for such
CUSTOMER DAOU's Sr. Vice President and CUSTOMER Vice President.
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23.1 Any dispute not remedied as set out in the above sections and subsections
between and arising out of or in connection with this Master Agreement as to the
negotiation, existence, construction, validity, interpretation or meaning,
performance, nonperformance, enforcement, will then be pursuant to the then
existing Commercial Arbitration Rules of the American Arbitration Association.
23.2 Either party may demand such arbitration in writing within one (1) year
after the expiration of the cure period set out in the first section above this
Master Agreement, but not thereafter, which demand shall include a statement of
the matter in controversy.
23.3 Each party shall select one disinterested arbitrator from a list submitted
by the American Arbitration Association, and the two select a third arbitrator
from the list.
23.4 Each party shall bear its own cost of arbitration.
23.5 The parties expressly agree that all trade secrets, proprietary or
confidential information of either party shall be disclosed during arbitration
only upon the issuance of appropriate protective orders.
24. INSURANCE AND LIABILITY:
At all times while this Master Agreement is in effect, DAOU shall maintain (or
cause to be in effect), liability insurance covering itself, with limits of not
less than [*] per incident and [*] aggregate. Such insurance shall be obtained
from an insurance carrier admitted to do business in the state of New Jersey or
from a duly established and funded self-or pooled- insurance program. Any
insurance carrier providing such coverage shall give CUSTOMER at least thirty
(30) days advance notice of cancellation or material change in any such
coverage. DAOU shall not commence performance under this Master Agreement until
it has obtained, at its own expense, all insurance required under this Master
Agreement. DAOU warrants that all required insurance shall be maintained until
its work under this Master Agreement is complete, provided that, if DAOU
fulfills any of the insurance requirements set forth herein by the use of
claims-made policies. DAOU warrants that these policies shall be kept in effect
for at least [*] following completion of its work under this Master Agreement,
and, if its claims-made policies are canceled during [*] DAOU will purchase tail
coverage for the remainder thereof.
25. FORCE MAJEURE:
Neither DAOU nor CUSTOMER shall be responsible for any delay or failure of
performance resulting from causes beyond its control without its fault or
negligence. If a force majeure even occurs the party being delayed or failing
to perform shall promptly notify the other party of the nature of such cause and
its reasonably anticipated duration and if either party declares a force majeure
event, the parties shall meet as soon, thereafter, as possible to determine the
nature and extent of the event, the expected impact of the event on CUSTOMER's
processing capabilities, and a recommended course of action intended to enable
CUSTOMER to process its data in the operation of the Facility.
26. THIRD PARTIES:
This Master Agreement is between DAOU and CUSTOMER and is not for the benefit
of, nor does it vest any rights in, any third party. Neither party may delegate
any duty under this Master Agreement without the prior written consent of both
parties, which shall not be unreasonably withheld. Id DAOu subcontracts out any
of its duties, the subcontracted will perform under the supervision of DAOU and
will meet DAOU's contracted level of performance. Neither this Master Agreement
nor any of either party's obligations under this Master Agreement shall be
assignable by operation of law or otherwise without prior written consent of
both parties, which shall not be unreasonably withheld.
27. RELATIONSHIP OF PARTIES:
DAOU is performing its services and obligations hereunder as an independent
contractor. Neither party shall have any rights or authority to create any
obligation or responsibility, expressed or implied, on behalf of, or in the name
of, the other party, or to bind the other party contractually in any manner
whatsoever. Under no circumstances, as a result of
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this Agreement, shall any employee, agent, or representative of one party be
considered an employee, agent, or representative of the other party.
28. SURVIVAL CLAUSE:
The provisions of this Master Agreement pertaining to warranties, disclaimer and
confidentiality shall continue in full force and effect, notwithstanding the
fact that the CUSTOMER has accepted and paid for any work, services provided or
products purchased thereunder.
29. WILLINGNESS TO WORK WITH ALL PARTIES:
DAOU will be required to work with other vendors contracted with the CUSTOMER
and may on occasion seek advise and or support to work with those parties.
Customer shall provide every means possible to promote a spirit of willingness
have the organizations work together and agrees to intervene if necessary.
30. INTERPRETATION:
This agreement shall in all respects be governed by and construed in accordance
with the laws of the State of New Jersey. The parties hereto shall submit to
the jurisdiction of the federal and state courts located in Morris County, New
Jersey State, for the resolution of disputes arising thereunder.
31. NOTICES FROM DAOU TO CUSTOMER:
All written notifications will be sent by DAOU to the CUSTOMER to the attention
of the following at the address identified below.
Customer
Attention: Contract Administrator
ATLANTIC HEALTH SYSTEM
325 Columbia Turnpike
Florham Park, NJ
32. NOTICES FROM CUSTOMER TO DAOU:
DAOU Systems, Inc.
Attention: Contract Administrator
5120 Shoreham Place
San Diego, CA 92122
33. ENTIRE MASTER AGREEMENT:
This Master Agreement executed by CUSTOMER contains the entire Master Agreement
of the parties relating to its subject matter. There are no promises,
representations or undertakings other than as expressly provided herein, and no
modification of this Master Agreement will be binding unless in writing and
signed by both parties.
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SIGNATURES
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I have read, understand, and agree to all the terms and conditions of sale in
this MASTER AGREEMENT. I also certify that I have the legal authorization to
sign on behalf of the owners/Masters of the business entity I am representing.
DAOU SYSTEMS, INC. ATLANTIC HEALTH SYSTEM
5120 SHOREHAM PLACE 325 COLUMBIA TURNPIKE
SAN DIEGO, CA 92122 FLORHAM PARK, NJ
/s/ Daniel J. Daou
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Signature Signature
/s/ Richard P. Oths
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Daniel J. Daou Richard P. Oths
DANIELS J. DAOU
PRESIDENT
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President Chief Executive Officer
6/7/96 6/4/96
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Date Date
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[Schedule A and B of the Master*]
[Confidential Treatment Requested]