EXHIBIT 10.29
CONTRACT WITH APPROVED ENTITY PURSUANT TO SECTIONS 1860D-1 THROUGH 1860D-42 OF
THE SOCIAL SECURITY ACT FOR THE OPERATION OF A VOLUNTARY MEDICARE PRESCRIPTION
DRUG PLAN
Between
Centers for Medicare & Medicaid Services (hereinafter referred to as "CMS")
And
HEALTHSPRING, INC. D/B/A/ HEALTHSPRING OF ILLINOIS
(S5578)
(a Prescription Drug Plan Sponsor, hereinafter referred to as the "PDP Sponsor")
CMS and the PDP Sponsor, an entity that has been determined eligible to
operate a Voluntary Medicare Prescription Drug Plan by the Administrator of CMS
under 423 CFR Section 423.503, agree to the following for the purposes of
sections 1860D-1 through 1860D-42 (with the exception of sections 1860D-22(a)
and 1860D-31) of the Social Security Act (hereinafter referred to as "the Act").
ARTICLE I.
MEDICARE VOLUNTARY PRESCRIPTION DRUG BENEFIT
A. PDP Sponsor agrees to operate one or more Medicare Voluntary Prescription
Drug Plans (hereinafter referred to as a "PDP"), as described in its
application and related materials, including but not limited to all the
attestations contained therein and a supplemental guidance, for Medicare
approval and in compliance with the provisions of this contract, which
incorporates in its entirety the Solicitation For Applications from
Prescription Drug Plans released on January 21, 2005 (as revised on March
9, 2005) (hereinafter collectively referred to as "the contract"). The PDP
Sponsor also agrees to operate in accordance with the regulations at 42 CFR
Section 423.1 through 42 CFR Section 423.910 (with the exception of
Subparts Q, R and S), sections 1860D-1 through 1860D-42 (with the exception
of sections 1860D-22(a) and 1860D-31) of the Social Security Act, and the
solicitation, as well as all other applicable Federal statutes, regulations
and policies. This contract is deemed to incorporate any changes that are
required by statute to be implemented during the term of this contract and
any regulations or policies implementing or interpreting such statutory
provisions.
B. CMS agrees to perform its obligations to the PDP Sponsor consistent with
the regulations at 42 CFR Section 423.1 through 42 CFR Section 423.910
(with the exception of Subparts Q, R and S), sections l860D-1 through
1860D-42 of the Social Security Act (with the exception of
sections 1860D-22(a) and 1860D-31) and the solicitation, as well as all
other applicable Federal statutes, regulations and policies.
C. CMS agrees that it will not implement, other than at the beginning of a
calendar year, regulations under 42 CFR Part 423 that impose new,
significant regulatory requirements on the PDP Sponsor. This provision does
not apply to new requirements mandated by statute.
D. This contract is in no way intended to supersede or modify 42 CFR Part 423.
Failure to reference a regulatory requirement in this contract does not
affect the applicability of such requirements to the PDP Sponsor and CMS.
ARTICLE II.
FUNCTIONS TO BE PERFORMED BY THE PDP SPONSOR
A. ENROLLMENT
1. PDP Sponsor agrees to accept new enrollments, make enrollments
effective, process voluntary disenrollments and limit involuntary
disenrollments, as described in 42 CFR, Part 423, Subpart B.
2. PDP Sponsor agrees to comply with the prohibition in 42 CFR 423.104(b)
on discrimination in beneficiary enrollment.
B. PRESCRIPTION DRUG BENEFIT
1. PDP Sponsor agrees to provide the basic prescription drug coverage as
defined under 42 CFR Section 423.100 and, to the extent applicable,
supplemental benefits as defined in 42 CFR Section 423.100 and in
accordance with Subpart C of 42 CFR Part 423. PDP Sponsor also agrees
to provide Part D benefits as described in the PDP Sponsor's bid(s)
approved each year by CMS (as referenced in Attachment A, to be
replaced each year upon renewal of the contract to reflect the
Sponsor's approved bids for the succeeding contract year).
2. PDP Sponsor agrees to calculate and collect beneficiary premiums in
accordance with 42 CFR Sections 423.286 and 423.293.
C. DISSEMINATION OF PLAN INFORMATION
1. PDP Sponsor agrees to provide the information required in 42 CFR
Section 423.48.
2. PDP Sponsor agrees to disclose information to beneficiaries in the
manner and the form specified by CMS under 42 CFR Sections 423.128,
423.50 and in the "Marketing Materials Guidelines for Medicare
Advantage-Prescription Drug Plans (MA-PDs) and Prescription Drug Plans
(PDPs)," and to comply with requirements in 42 CFR Section 423.50
requiring certain approvals of marketing materials prior to
distribution.
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3. PDP Sponsor certifies that all materials it submits to CMS under the
File and Use Certification authority described in the Marketing
Materials Guidelines are accurate, truthful, not misleading and
consistent with CMS marketing guidelines.
D. QUALITY ASSURANCE/UTILIZATION MANAGEMENT
PDP Sponsor agrees to operate quality assurance, drug utilization
management and medication therapy management programs, and to support
electronic prescribing in accordance with Subpart D of 42 CFR Part 423.
E. APPEALS AND GRIEVANCES
PDP Sponsor agrees to comply with all requirements in Subpart M of 42 CFR
Part 423 governing coverage determinations, grievances and appeals, and
formulary exceptions.
F. PAYMENT TO PDP SPONSOR
1. PDP Sponsor and CMS agree that payment under this contract will be
governed by the rules in Subpart G of 42 CFR Part 423.
2. If the PDP Sponsor is participating in the Part D Reinsurance Payment
Demonstration, described in 70 FR 9360 (Feb. 25, 2005) it affirms that
it will not seek payment under the demonstration for services provided
to employer group enrollees.
3. PDP Sponsor agrees that it is bound by all applicable federal laws and
regulations, guidance, and authorities pertaining to claims and debt
collections. In the event that the government determines that the PDP
Sponsor has been overpaid, the PDP Sponsor agrees to return those
overpaid monies back to the federal government.
G. BID SUBMISSION AND REVIEW
If the PDP Sponsor intends to participate in the Part D program for the
next program year, PDP Sponsor agrees to submit the next year's bid,
including all required information on premiums, benefits and cost-sharing,
by the applicable due date, as provided in Subpart F of 42 CFR Part 423 so
that CMS and the Part D plan sponsor may conduct negotiations regarding the
terms and conditions of the proposed bid and benefit plan renewal.
H. STATE LAW AND LICENSURE REQUIREMENTS
1. PDP Sponsor agrees to comply with State law to the extent that it is
not preempted by Federal law as described in Subpart I of 42 CFR Part
423.
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2. PDP Sponsor agrees that where it is operating in a State using a
waiver granted pursuant to 42 CFR Section 423.410, such waiver shall
be valid for three consecutive program years. PDP Sponsor agrees that
expiration of the licensure waiver (and the failure to obtain a
license from the relevant State) may be the basis for CMS deleting
from the PDP Sponsor's service area those PDP Regions affected by the
waiver expiration. CMS may terminate or non-renew the PDP Sponsor's
contract where the expiration of the waiver results in the PDP Sponsor
not being qualified to offer a PDP plan in any PDP Region.
3. PDP Sponsor agrees that where it is operating in a State using a
waiver granted pursuant to 42 CFR Section 423.415, such waiver shall
be valid for the period that the Secretary of the Department of Health
and Human Services determines is appropriate for timely processing of
the PDP Sponsor's license application by the State, but in no case no
more than one year only, beginning on January 1 of the contract year
for which CMS granted the waiver.
I. COORDINATION WITH OTHER PRESCRIPTION DRUG COVERAGE
1. PDP Sponsor agrees to comply with the coordination requirements with
State Pharmacy Assistance Programs (SPAPs) and plans that provide
other prescription drug coverage as described in Subpart J of 42 CFR
Part 423.
2. PDP Sponsor agrees to comply with Medicare Secondary Payer procedures
as stated in 42 CFR Section 42.462.
J. SERVICE AREA AND PHARMACY ACCESS
1. The PDP Sponsor agrees to provide Part D benefits in the service area
for which it has been approved by CMS utilizing a pharmacy network and
formulary approved by CMS that meet the requirements of 42 CFR Section
423.120.
2. The PDP Sponsor agrees to provide Part D benefits through
out-of-network pharmacies according to 42 CFR Section 423.124.
3. PDP Sponsor agrees to provide benefits by means of point of service
systems to adjudicate prescription drug claims in a timely and
efficient manner in compliance with CMS standards, except when
necessary to provide access in underserved areas, I/T/U pharmacies (as
defined in 42 CFR Section 423.100), and long-term care pharmacies (as
defined in 42 CFR Section 423.100).
4. PDP Sponsor agrees to contract with any pharmacy that meets the PDP
Sponsor's reasonable and relevant standard terms and conditions.
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K. COMPLIANCE PLAN/PROGRAM INTEGRITY
1. PDP Sponsor agrees that it will develop and implement a compliance
plan that applies to its Part D-related operations, consistent with 42
CFR Section 423.504(b)(4)(vi).
2. The PDP sponsor agrees to provide notice based on best knowledge,
information and belief to CMS of any integrity items related to
payments from governmental entities, both federal and state, for
healthcare or prescription drug services that would have been reported
as part of 3.1.4 of the PDP application. These items include any
investigations, legal actions or matters subject to arbitration
brought involving the sponsor (or sponsor's firm if applicable) and
its subcontractors (excluding contracted network providers), including
any key management or executive staff or any major shareholders (5% or
more), by a government agency (state or federal) on matters relating
to payments from governmental entities, both federal and state, for
healthcare and/or prescription drug services. In providing the notice,
the sponsor shall keep the government informed of when the integrity
item is initiated and when it is closed. Notice should be provided of
the details concerning any resolution and monetary payments as well as
any settlement agreements or corporate integrity agreements.
3. The PDP Sponsor agrees to provide notice based on best knowledge,
information and belief to CMS in the event the Sponsor or any of its
subcontractors is criminally convicted or has a civil judgment entered
against it for fraudulent activities or is sanctioned under any
Federal program involving the provision of health care or prescription
drug services.
L. LOW-INCOME SUBSIDY
PDP Sponsor agrees that it will participate in the administration of
subsidies for low-income individuals according to Subpart P of 42 CFR Part
423.
M. COMMUNICATION WITH CMS
PDP Sponsor agrees that it shall maintain the capacity to communicate with
CMS electronically in accordance with CMS requirements.
N. BENEFICIARY FINANCIAL PROTECTIONS
The PDP Sponsor agrees to afford its enrollees protection from liability
for payment of fees that are the obligation of the PDP Sponsor in
accordance with 42 CFR Section 423.505(g).
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O. RELATIONSHIP WITH RELATED ENTITIES, CONTRACTORS AND SUBCONTRACTORS
1. The PDP Sponsor agrees it maintains ultimate responsibility for
adhering to and otherwise fully complying with all terms and
conditions of this contract with CMS.
2. The PDP Sponsor shall ensure that any contracts or agreements with
subcontractors or agents performing functions on the PDP Sponsor's
behalf related to the operation of the Part D benefit are in
compliance with 42 CFR Section 423.505(i).
3. The PDP Sponsor agrees to act in accordance with 45 CFR Part 76 and
agrees that it will not contract with or employ entities or
individuals that are excluded by the Department of Health and Human
Services, Office of the Inspector General or included on the Excluded
Parties List System maintained by the General Services Administration.
P. CERTIFICATION OF DATA THAT DETERMINE PAYMENT
PDP Sponsor must provide certifications in accordance with 42 CFR Section
423.505(k).
Q. ENROLLMENT RELATED COSTS
PDP Sponsor agrees to payment of fees established by CMS for cost sharing
of enrollment related costs in accordance with 42 CFR Section 423.6.
ARTICLE III.
RECORD RETENTION AND REPORTING REQUIREMENTS
A. RECORD MAINTENANCE AND ACCESS
PDP Sponsor agrees to maintain records and provide access in accordance
with 42 CFR Sections 423.504(d), and 423.505(d) and (e).
B. GENERAL REPORTING REQUIREMENTS
The PDP Sponsor agrees to submit information to CMS according to 42 CFR
Sections 423.505(f), 423 .514 and the "Final Medicare Part D Reporting
Requirements," a document issued by CMS and subject to modification each
program year.
C. LICENSURE-RELATED REPORTING REQUIREMENTS
1. If the PDP Sponsor is operating under a CMS-granted licensure waiver
in any State, the PDP Sponsor agrees to notify CMS in writing of the
State's disposition
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of the Sponsor's license application within ten (10) business days of
the date that it receives notice of the State's action.
2. For those States where the PDP Sponsor is operating under a
risk-bearing license, the Sponsor agrees to provide written notice to
CMS of the State's non-renewal of the Sponsor's license within ten
days of receiving notice of the State's action.
3. In the event that a State regulator imposes a sanction against the PDP
Sponsor or requires the implementation of a corrective action plan,
the Sponsor agrees to provide written notice to CMS of such sanction
or corrective action requirement (including basis for the sanction
and/or timeline for corrective action) within ten days of receiving
notice of the State's action.
4. In the event that there is a change in the status of the PDP Sponsor's
risk-bearing license in any State (e.g., suspension, revocation), the
Sponsor agrees to provide written notice to CMS of the change in
status (including basis for the change in status and effective date)
within ten (10) days of receiving notice of the State's action.
5. If the PDP Sponsor is operating a Part D benefit under a CMS-granted
waiver in every State in its service area, and the Sponsor is
terminating or reducing the amount of an existing letter of credit
obtained for the purposes of funding projected losses, the Sponsor
shall provide written notice to CMS of such action thirty (30) days
prior to its effective date. The PDP Sponsor agrees that it must
obtain CMS approval prior to terminating or reducing the amount of a
letter of credit obtained for the purposes of funding projected losses
under Appendix X of the PDP Solicitation.
D. CMS LICENSE FOR USE OF PLAN FORMULARY
PDP Sponsor agrees to submit to CMS each plan's formulary information,
including any changes to its formularies, and hereby grants to the
Government [, and any person or entity who might receive the formulary from
the Government,] a non-exclusive license to use all or any portion of the
formulary for any purpose related to the administration of the Part D
program, including without limitation publicly distributing, displaying,
publishing or reconfiguration of the information in any medium, including
www.medicare.gov, and by any electronic, print or other means of
distribution.
ARTICLE IV.
HIPAA PROVISIONS
HIPAA TRANSACTIONS/PRIVACY/SECURITY
A. PDP Sponsor agrees to comply with the confidentiality and enrollee record
accuracy requirements specified in 42 CFR Section 423.136.
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B. PDP Sponsor agrees to enter into a business associate agreement with the
entity with which CMS has contracted to track Medicare beneficiaries' true
out-of-pocket costs.
ARTICLE V.
REQUIREMENTS OF OTHER LAWS AND REGULATIONS
The PDP Sponsor agrees to comply with (a) applicable Federal laws and
regulations designed to prevent fraud, waste and abuse, including, but not
limited to applicable provisions of Federal criminal law, the False Claims Act
(31 U.S.C. Sections 3729 et seq.), and the anti-kickback provision of section
1128B of the Act; (b) applicable HIPAA Administrative Simplification Security
and Privacy rules at 45 CFR parts 160, 162 and 164; and (c) all other applicable
Federal statutes and regulations.
ARTICLE VI.
CONTRACT TERM AND RENEWAL
A. TERM OF CONTRACT
This contract is effective from the date of CMS' authorized
representative's signature through December 31, 2006. This contract shall
be renewable for successive one-year periods thereafter according to 42 CFR
Section 423.506. PDP Sponsor shall not conduct Part D-related marketing
activities prior to October 1, 2005 and shall not process enrollment
applications prior to November 15, 2005. PDP Sponsor shall begin delivering
prescription drug benefit services on January 1, 2006.
B. QUALIFICATION TO RENEW A CONTRACT
1. In accordance with 42 CFR Section 423.507, the PDP Sponsor will be
determined qualified to renew its contract annually only if:
(a) CMS informs the PDP Sponsor that it is qualified to renew its
contract; and
(b) The PDP Sponsor has not provided CMS with a notice of intention
not to renew in accordance with Article VII of this contract.
2. Although PDP Sponsor may be determined qualified to renew its contract
under this Article, if the PDP Sponsor and CMS cannot reach agreement
on the bid under Subpart F of 42 CFR Part 423, no renewal takes place,
and the failure to reach agreement is not subject to the appeals
provisions in Subpart N of 42 CFR Part 423.
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ARTICLE VII.
NONRENEWAL OF CONTRACT
A. NONRENEWAL BY THE PDP SPONSOR
1. The PDP Sponsor may elect not to renew its contract with CMS,
effective at the end of the term of the contract for any reason as
long as PDP Sponsor provides proper notice of the decision according
to the required timeframes.
2. If the PDP Sponsor does not intend to renew its contract, it must
notify:
(a) CMS in writing by the first Monday of June in the year in which
the current contract period ends;
(b) Each Medicare enrollee, at least ninety (90) days before the date
on which the nonrenewal is effective. This notice must include a
written description of alternatives available for obtaining
qualified prescription drug coverage within the PDP region,
including Medicare Advantage-Prescription Drug plans, Medicare
cost plans offering a Part D plan, and other PDPs, and must
receive CMS approval prior to issuance; and
(c) The general public, at least ninety (90) days before the end of
the current calendar year, by publishing a notice in one or more
newspapers of general circulation in each community or county
located in the Part D plan sponsor's service area.
3. If the PDP Sponsor does not renew a contract, CMS cannot enter into a
contract with the organization for two (2) years unless there are
special circumstances that warrant special consideration, as
determined by CMS.
4. If the PDP Sponsor does not renew a contract, it must ensure the
timely transfer of any data or files in accordance with CMS
instructions.
B. NONRENEWAL BY CMS
1. CMS may determine that the PDP Sponsor is not qualified to renew its
contract for any of the following reasons:
(a) The reasons listed in 42 CFR Section 423.509(a) that also permit
CMS to terminate the contract.
(b) The PDP Sponsor has committed any of the acts in 42 CFR Section
423.752 that support the imposition of intermediate sanctions or
civil money penalties under 42 CFR Section 423.750.
2. CMS will provide notice of its decision whether the PDP Sponsor is
qualified to renew its contract as follows:
(i) To the PDP Sponsor by May 1 of the current contract year.
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(ii) If CMS decides that the PDP Sponsor is not qualified to
renew its contract, to the PDP Sponsor's Medicare enrollees
by mail at least ninety (90) days before the end of the
current calendar year.
(iii) If CMS determines that the PDP Sponsor is not qualified to
renew its contract, to the general public at least ninety
(90) days before the end of the current calendar year, by
publishing a notice in one (1) or more newspapers of general
circulation in each community or county located in the PDP
Sponsor's service area.
(iv) CMS will provide the notice described in (B)(2)(ii) and
(iii) of this Article where a non-renewal results because
CMS and the PDP Sponsor are unable to reach agreement on the
bid under 42 CFR Part 423, Subpart F.
3. CMS shall give the PDP Sponsor written notice of its right to appeal
the decision that the sponsor is not qualified renew its contract in
accordance with 42 CFR Section 423.642(b).
ARTICLE VIII.
MODIFICATION OR TERMINATION OF CONTRACT
A. CONTRACT MODIFICATION OR TERMINATION BY MUTUAL CONSENT
1. This contract may be modified or terminated at any time by written
mutual consent of the parties.
2. If this contract is terminated by mutual consent, the PDP Sponsor must
provide notice to its Medicare enrollees and the general public in
accordance with CMS's instructions.
3. If the contract is modified by mutual consent, the PDP Sponsor must
notify its Medicare enrollees of any changes that CMS determines are
appropriate for notification according to the process and timeframes
specified by CMS.
4. If a contract is terminated under section A of this Article, the PDP
Sponsor must ensure the timely transfer of any data or files.
B. TERMINATION OF CONTRACT BY CMS
CMS may terminate the contract in accordance with 42 CFR Section 423.509.
C. TERMINATION OF CONTRACT BY THE PDP SPONSOR
The PDP Sponsor may terminate the contract only in accordance with 42 CFR
Section 423.510.
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ARTICLE IX.
INTERMEDIATE SANCTIONS
Consistent with Subpart O of 42 CFR Part 423, the PDP Sponsor shall be
subject to sanctions and civil money penalties.
ARTICLE X.
SEVERABILITY
Severability of the contract shall be in accordance with 42 CFR 423.504(e).
ARTICLE XI.
MISCELLANEOUS
A. DEFINITIONS
Terms not otherwise defined in this contract shall have the meaning given
to such terms in 42 CFR Part 423.
B. ALTERATION TO ORIGINAL CONTRACT TERMS
The PDP Sponsor agrees that it has not altered in any way the terms of the
PDP contract presented for signature by CMS. PDP Sponsor agrees that any
alterations to the original text the PDP Sponsor may make to this contract
shall not be binding on the parties.
C. ADDITIONAL CONTRACT TERMS
The PDP Sponsor agrees to include in this contract other terms and
conditions in accordance with 42 CFR Section 423.505(j).
D. CMS APPROVAL TO BEGIN MARKETING AND ENROLLMENT ACTIVITIES
PDP Sponsor agrees that it must complete CMS operational requirements prior
to receiving CMS approval to begin Part D marketing and enrollment
activities. Such activities include, but are not limited to, establishing
and successfully testing connectivity with CMS systems to process
enrollment applications (or contracting with an entity qualified to perform
such functions on PDP Sponsor's behalf) and successfully demonstrating
capability to submit accurate and timely price comparison data. To
establish and successfully test connectivity, the PDP Sponsor must, 1)
establish and test physical connectivity to the CMS data center, 2) acquire
user identifications and passwords, 3) receive, store and maintain data
necessary to perform enrollments and send and receive transactions to and
from CMS, and 4) check and receive transaction status information.
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IN WITNESS WHEREOF, the parties hereby execute this contract.
FOR THE PDP SPONSOR:
JEFF ROTHENBERGER SR. VP & CORPORATE COO
- --------------------------------------------------------------------------------
Printed Name Title
/s/ Jeff Rothenberger 9/7/05
- --------------------------------------------------------------------------------
Signature Date
HEALTHSPRING, INC. D/B/A HEALTHSPRING OF ILLINOIS
- ----------------------------------------------------
Organization
9701 WEST HIGGINS RD., SUITE 360, ROSEMONT, IL 60018
- -----------------------------------------------------
Address
FOR THE CENTERS FOR MEDICARE & MEDICAID SERVICES:
/s/ Robert Donnelly 10/11/05
- --------------------------------------------------------------------------------
Robert Donnelly Date
Director Medicare Drug Benefit Group
Center for Beneficiary Choices
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ATTACHMENT A
PART D BENEFIT PLAN(S) -- DESCRIPTION
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Prescription Drug Plan Attestation of Benefit Plan and Price
HEALTHSPRING, INC.
S5578
Date: 09/06/2005
I attest that the following plan numbers as established in the final Plan
Benefit Package (PBP) will be operated by the above-stated organization and made
available to eligible Medicare beneficiaries In the approved service area during
program year 2006.
<Table>
<Caption>
- ------------------------------------------------------------------------------------------------------------------------------
PLAN SEGMENT VERSION PLAN NAME PLAN TYPE TRANSACTION PART D CMS EFFECTIVE
ID ID TYPE PREMIUM APPROVAL DATE
DATE
- ------------------------------------------------------------------------------------------------------------------------------
HealthSpring Medicare
001 0 4 Prescription Prescription Initial 24.78 09/06/2005 01/01/2006
Drug Plan Drug Plan
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
/s/ Randy Fike 10/5/05
- ---------------------------------------- ---------------------------
CEO: DATE:
Randy Fike
President
9701 West Higgins Road Suite 360
Chicago, IL 60018
847-993-1900
/s/ Randy Fike 10/5/05
- ---------------------------------------- ---------------------------
CFO: DATE:
Randy Fike
CFO
9701 West Higgins Road Suite 360
Chicago, IL 60018
847-993-1900
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