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EXHIBIT 10.1
PROCESSING AND SERVICE AGREEMENT
This Agreement ("this Agreement") entered into as of September 10, 1993
(hereinafter called the "Execution Date") is made and entered into by and
between National Electronic Information Corporation (hereinafter called "NEIC"),
a Delaware corporation having its principal offices at 500 Plaza Drive,
Secaucus, New Jersey 07094, and GTE Data Services Incorporated (hereinafter
called "Processor"), a Delaware corporation having its principal offices at One
East Telecom Parkway, Post Office Box 290152, Temple Terrace, Florida 33687.
WITNESSETH:
For convenience, certain capitalized terms are defined below, while
other capitalized terms are defined in the text of this Agreement.
This "Agreement" shall mean the entire body of this agreement,
including any and all exhibits hereto.
"Commencement Date" shall mean February 1,1994.
"Contract Documents" shall mean the RFP, the Processor's Proposal, and
the terms and conditions of this Agreement. Any direct conflict between or among
this Agreement, the RFP and the Processor's Proposal shall be resolved by giving
precedence first to the provisions of this Agreement, second to the Processor's
Proposal and finally to the provisions of the RFP.
"CPS Services" shall mean the services and deliverables described in
the RFP, subject to any modification expressly stated in this Agreement or the
Processor's Proposal.
"CPS System" shall mean the network system which Processor uses to
perform the CPS Services.
"NEIC CPS Services" shall mean NEIC's currently marketed Health Claims
Distribution System, Medical Claims Distribution System and Dental Claims
Distribution System, including NEIC Claims Status Check and all enhancements,
changes and supplements to such services from time to time.
"Processor's Proposal" shall mean the documents identified on
Exhibit A.
The "Processor's Services" shall mean all aspects of the services and
related deliverables to be furnished by Processor pursuant to this Agreement.
"RFP" shall mean Section II of the Request for Proposal for processing
and related services regarding NEIC CPS Services issued by NEIC on March 29,
1993.
"Service Levels" shall mean the Service Levels set forth in Exhibit B
attached hereto.
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1. Scope of Services
1.1 Subject to the terms and conditions of this Agreement and for the
term of this Agreement, Processor hereby agrees to provide the CPS Services and
furnish the deliverables to and for the benefit of NEIC in support thereof as
required by the Contract Documents.
1.2 Without limiting the foregoing:
1.2.1 Processor shall take all action necessary in order to
enable the Processor to perform the CPS Services to the Service Levels
commencing on February 1, 1994 (the "Commencement Date").
1.2.2 Commencing on the Commencement Date, Processor shall
perform the CPS Services to the Service Levels.
1.2.3 As further set forth in Article 7, in the event of any
failure or defect in the CPS Services, Processor shall immediately implement the
escalation procedures for correction as set forth on Exhibit C attached hereto
("Escalation Procedures").
1.2.4 In the event of a CPS System disruption due to a
catastrophic event, Processor shall perform the recovery service set forth on
Exhibit D attached hereto ("Disaster Recovery Program").
1.2.5 Processor shall use its best efforts to assist NEIC in
developing clients among the Processor's network of customers and affiliates and
shall otherwise perform all of its obligations regarding the Joint
Marketing/Alliance Program set forth in Exhibit E ("Alliance Program").
1.3 Processor shall be fully responsible for the content and quality of
the services performed and the deliverables presented by Processor hereunder
whether or not provided by subcontractors or consultants retained by Processor
with the consent of NEIC hereunder. Processor shall ensure that its hardware,
operating system software, telecommunications network and customer service
procedures supporting the CPS Services are maintained, operated and managed so
as to cause the CPS Services to meet or exceed the Service Levels, and will, at
its own expense, correct any deficiency related thereto which causes
noncompliance with the Service Levels.
Processor shall not, however, be responsible for any failure of the CPS
Services if such failure is caused by a defect in the software furnished by NEIC
to Processor hereunder.
2. Account Management
2.1 Processor and NEIC shall each, at its own expense, assign a project
executive for the subject matter of this Agreement (the "Project"). Processor's
initial project executive shall be C. Edward Stephens. Such project executive
may be replaced from time to time during the term
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of this Agreement by a person of equivalent authority within Processor by notice
given by Processor to NEIC. NEIC's initial project executive shall be Joseph P.
Sullivan. Such project executive may be replaced from time to time during the
term of this Agreement by a person of equivalent authority within NEIC by notice
given by Processor to NEIC.
2.2 The Processor's project executive shall be based at the Processor's
operating site and responsible for and have authority over all aspects of the
Processor's Services. Without limiting the foregoing, he shall be responsible
for the issuance of periodic status reports to NEIC, coordination of Processor
resources to satisfy Processor's obligations hereunder, coordination of
responses to all claims and problems regarding Processor's Services hereunder,
and generally responding to all issues relating to the Project. The Processor's
project executive or his designee shall be available during normal business
hours, 8:30 A.M. to 5:30 P.M. Eastern Time, Monday through Friday, except on
Processor established holidays, and shall respond to NEIC inquiries within four
work hours.
2.3 The NEIC project executive shall be responsible for and shall have
authority over all aspects of NEIC's obligations under this Agreement. Without
limiting the foregoing, he shall be responsible for coordinating NEIC's
activities in connection with Processor's Services, communicating priorities to
the Processor's project executive and responding to all subsequent actions
required of NEIC with respect thereto, resolving outstanding items with the
Processor's project executive, and generally responding to all issues relating
to the Project.
2.4 The Processor and NEIC project executives shall meet at a mutually
agreed upon time and place promptly after the Execution Date to create and
document in writing a list of key personnel of NEIC and Processor assigned to
work (and their designated alternates) for the Project.
2.5 The parties shall designate appropriate management personnel to
serve on a Management Review Board ("MRB").
2.5.1 The MRB shall consist of two members designated by
Processor and two members designated by NEIC. The initial members of the MRB
representing Processor shall be C. Edward Stephens and Douglas B. Hill and the
initial members of the MRB representing NEIC shall be Joseph P. Sullivan and
Kenneth O'Donnell. Each member of the MRB may be replaced by the party which
designated him from time to time during the term of this Agreement by a person
of equivalent authority, such replacement to be effected by notice given to the
other party. Each MRB representative from a party shall be authorized to
represent such parry with regard to all matters to be considered by the MRB.
2.5.2 The primary purpose of the MRB is to review the status
of the Project, including coordination and maximization of the benefits of the
Project, assessing the performance of the Processor with respect to the Project
and resolving outstanding issues between the parties as required or as otherwise
set forth in this Agreement.
2.5.3 From the Execution Date until six months following the
Commencement
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Date, the MRB shall meet on a monthly basis at such times as are mutually agreed
upon. Thereafter, the MRB shall meet quarterly at such times as are mutually
agreed upon. Meetings may also be held upon the written request of either
project executive specifying the issues requiring MRB involvement and shall be
called promptly as required elsewhere in this Agreement.
2.5.4 The first meeting of the MRB will be held at NEIC's
facility in Secaucus, New Jersey. The MRB meeting site will alternate between
NEIC's facility and Processor's facility. Each party shall bear the cost and
expense of the participation of its MRB members in all such meetings.
3. Proprietary Rights
3.1 Processor hereby acknowledges and agrees that NEIC is the owner of
the NEIC CPS Services including all software and related documents ("NEIC
Materials') and all patent, trademark, copyright and other proprietary rights
associated with such Services and Materials ("NEIC Proprietary Rights"). NEIC is
hereby granting to Processor the right to use the NEIC Materials and NEIC
Proprietary Rights without charge solely for the purpose of enabling Processor
to perform the CPS Services hereunder. NEIC hereby certifies that it has the
right to grant such license to Processor and the grant of such license does not
infringe on the rights of any other entity. Processor hereby acknowledges that,
except for the limited rights granted to Processor pursuant to this Section 3.1,
Processor shall have no rights to any NEIC Materials or NEIC Proprietary Rights.
3.2 NEIC acknowledges that all concepts, information and materials
developed by Processor prior to the commencement and independent of any of
Processor's Services hereunder shall remain Processor's property. Further, NEIC
acknowledges that during the course of providing services to NEIC, Processor may
implement or develop modifications in its methods of providing services to NEIC
and the tools, utilities, and other programs and applications it utilizes to
provide the services, provided that any such modification shall not (i) diminish
or interrupt Processor's Services or (ii) increase NEIC's burdens or expenses in
performing the NEIC CPS Services. Such methods, tools, utilities, and other
programs and applications, while they may be developed and implemented, as a
result of providing services to NEIC, shall be deemed to be improvements in
Processor's data center operations and shall be and remain the property of
Processor if they are not created specifically for the NEIC CPS Services,
provided that NEIC shall have, at NEIC's request, a perpetual royalty free
license to use any or all of such methods, tools, utilities and other programs
and applications for the NEIC CPS Services after the term of this agreement,
subject to any reasonable restrictions imposed by Processor to protect such item
from use by a then competitor of Processor other than for the NEIC CPS Services.
3.3 NEIC shall be deemed the owner from inception of all software,
systems and other creative materials (and all modifications of the foregoing)
created by Processor specifically for the NEIC CPS Services (the "NEIC Owned
Work"). Processor hereby assigns to NEIC any and all ownership rights it may
have in any NEIC Owned Work. Processor shall promptly deliver to NEIC upon the
completion of any NEIC Owned Work one copy of all documentation and related
materials for all such NEIC Owned Work and, if such Work is in the form of
software (the "NEIC
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Owned Software"), the source code and documentation related thereto. NEIC shad
have the right to use all NEIC Owned Work and make improvements thereon from the
effective date of NEIC's ownership of such Work and, except for the limited
purpose of using such Work in connection with Processor's Services hereunder,
Processor shall have no rights to such Work.
3.4 From and after the effective date of NEIC's ownership of any NEIC
Owned Work, NEIC shall have the exclusive right to copyright any aspect of such
Work at any time and Processor shall furnish NEIC all cooperation in connection
with such copyright ownership matters, including, without limitation,
cooperation in filing copyright registration applications and the execution of
all documents confirming NEIC's ownership of NEIC Owned Work.
3.5 NEIC is hereby granted any and all licenses to the extent required
for the utilization by NEIC of the CPS Services.
4. Exclusivity
Processor shall be the sole supplier to NEIC for the NEIC CPS Services
from the Commencement Date until the termination or expiration of this
Agreement. However, in the event that a renewal or extension to this Agreement
has not been executed between the parties by July 31, 1996, this provision shall
have no further force or effect as of August 1, 1997.
5. Non-Compete.
5.1 In recognition of the exclusivity obligation of NEIC under Article
4, the exchange of highly confidential and proprietary material between the
parties and the commitment by the parties to participate in the Alliance Program
pursuant to Exhibit E attached hereto, Processor hereby agrees that it shall not
during the term of this Agreement and for one year thereafter either, directly
or indirectly, compete with NEIC in connection with any of the NEIC CPS Services
nor shall Processor provide any services to any other entity to assist in any
way such entity to compete with NEIC in connection with any NEIC CPS Services;
provided, however, that the "and one year thereafter" shall not apply in the
event this Agreement is terminated by Processor pursuant to either Section 9.4
or Section 9.5 hereof or if for any reason NEIC ceases to conduct its business
which is the subject of this Agreement. Notwithstanding anything to the contrary
set forth in this Section 5.1, in the event of any conflict or inconsistency
between the terms and conditions of this Agreement and those of the Alliance
Program, the terms and conditions of the Alliance Program shall prevail.
5.2 During the term of this Agreement and for one year thereafter, each
party covenants and agrees that it shall not solicit the hiring or retention of
services or in fact hire or retain the services of any employee of the other
party or, directly or indirectly, induce, or participate or conspire in inducing
such employee to terminate his/her employment with the other party, without the
prior written consent in each such case of the other party, which consent shall
not be unreasonably delayed or withheld.
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6. Compensation to Processor
6.1 As full consideration and payment for all of Processor's Services
and any and all of the related services and deliverables which may be furnished
by Processor in connection therewith (including any and all Processor Services
and deliverables with respect to the Project performed or delivered prior to the
Execution Date) and all rights granted by Processor to NEIC hereunder, Processor
shall be paid the amounts and at the times set forth in Exhibit F attached
hereto.
6.2 Any service performed or license granted by Processor or document
or other deliverable furnished by Processor which is not subject to a separate
agreement for additional compensation shall be deemed to have been furnished
under the terms of this Agreement and, unless expressly set forth herein to the
contrary, shall be deemed to be effected without further compensation.
6.3 All expenses incurred by Processor in connection with the
performance of its services hereunder shall not be chargeable to NEIC, unless
otherwise expressly set forth in Exhibit F attached hereto.
6.4 All charges hereunder to NEIC shall be based on an invoice issued
by Processor and shall be payable by NEIC within 30 days from the date of
receipt by NEIC of such invoice. NEIC shall have the right to set off against
any moneys due on any invoice issued by Processor hereunder the value of any
claim by NEIC against Processor then outstanding. Processor reserves the right
to assess a late payment charge equal to 0.5% (one half percent) per month or
the maximum permitted by applicable law, whichever is less, on any balance of
any amount which is not disputed by NEIC and which is past due.
6.5 Processor shall, upon request of NEIC, provide from time to time
any documents which NEIC may reasonably request to verify the accuracy of any
invoice submitted by Processor to NEIC hereunder and no invoice shall be deemed
submitted to NEIC until such request is satisfied.
6.6 All charges by Processor are exclusive of duties or federal, state
or local excise, sales, use and similar taxes (excluding any such taxes imposed
on Processor' income) imposed on the services performed and deliverables
presented by Processor hereunder, regardless of whether or not such taxes or
duties are stated on an invoice. NEIC shall pay for such taxes or duties
pursuant to an invoice from Processor.
7. Default of Services
7.1 In the event of any failure of the CPS Services to perform to any
Service Level under Exhibit B attached hereto, which failure comes to
Processor's attention or is reported by NEIC, Processor shall immediately put
into effect the Escalation Procedures set forth on Exhibit C attached hereto. In
the event that the failure to satisfy Service Levels is not a Material Failure
Divergence as defined in Exhibit B-1, NEIC shall present the problem promptly to
the project
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executives for resolution. In the event that the project executives cannot
successfully resolve the problem within ten business days, NEIC shall present
the problem for resolution at a specially requested meeting of the MRB, which
meeting shall occur within ten business days of NEIC's request for such meeting.
If such meeting does not resolve the problem and the failure of the CPS Services
is not corrected within 30 days after such failure first comes to Processor's
attention or is reported by NEIC, the failure shall be deemed a Material Failure
Divergence and Section 7.2 shall apply.
7.2 In the event that Processor has failed to provide services in
accordance with the Service Levels and such failure is a Material Failure
Divergence as defined in Exhibit B-l attached hereto or Section 7.1, NEIC shall
furnish to Processor by notice a demand that Processor correct the problem
within 30 days. On or before the end of such 30-day period, Processor shall give
NEIC notice that either the problem is resolved or that Processor cannot resolve
the problem. If Processor gives notice to NEIC that the problem is resolved,
then Processor shall have an additional 30 days to demonstrate compliance with
the Service Levels. If Processor either has failed to give timely notice that
the problem is resolved or fails to timely demonstrate compliance with the
Service Levels after such notice, then NEIC may within 20 days thereafter give
notice of termination of this Agreement to Processor, such termination to be
deemed a termination for cause and to be effective on the date so specified in
NEIC's notice. The remedies provided to NEIC hereunder shall not be exclusive,
and NEIC shall have the right to seek any other remedies available to it by law
or equity.
7.3 Processor shall furnish to NEIC upon demand performance, capacity
and other measurement information and shall furnish reasonable access to
Processor's facilities, records and personnel as NEIC may reasonably require in
order to enable NEIC to identify, analyze, monitor or evaluate any suspected
problem in the performance by Processor of any of its services under this
Agreement.
8. Warrants and Liabilities
8.1 Processor warrants that its hardware, operating system, software,
network customer service procedures and other systems and deliverables furnished
hereunder will be operated and managed to achieve the Service Levels.
8.2 Processor shall at all times during the term of this Agreement
satisfy the insurance obligations set forth on Exhibit G hereto.
8.3 Neither party will be responsible for delays or failures in
performance resulting from acts or events beyond its control, whether
foreseeable or not, including, but not limited to acts of nature, governmental
actions, fire, labor difficulties or shortages, civil disturbances,
transportation problems, interruptions of power, supply or communications or
natural disasters ("Force Majeure Events"), provided such party takes reasonable
efforts to minimize the effect of such acts or events. Nothing contained herein
shall relieve Processor from performing the Disaster Recovery Program pursuant
to Section 1.2.4, unless the failure or delay in performance of such
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Program is itself the result of a Force Majeure Event, provided Processor uses
its best efforts to minimize the effect of such Force Majeure Event.
8.4 Processor warrants that the use by NEIC of the services and
deliverables of Processor hereunder shall not infringe on the patent, trademark,
copyright, trade secret or other proprietary right of any other entity. It is
understood however that (i) the assertion of a claim of infringement by another
entity shall not alone constitute a breach of this warranty and (ii) Processor
shall not be deemed to have breached this warranty, if Processor effects any of
the actions set forth in (i), (ii), or (iii) of the last sentence of this
section in response to an assertion of a claim of infringement. Processor shall
defend, at its expense, any action or claim brought against NEIC to the extent
that it is based upon a breach of such warranty or a claim that any system or
creative component or material furnished as part of Processor's Services or used
by Processor in connection therewith or any portion of the foregoing, when used
as contemplated by the Agreement infringes a United States patent, trademark or
copyright or violates any third party trade secret or other proprietary right
and Processor shall pay all costs and damages (including reasonable attorneys
fees and expenses) incurred by NEIC in connection with or resulting from such
action or claim, including a settlement or final award against NEIC in
connection therewith, provided that Processor is given prompt notice of such
action or claim and is given all applicable information in NEIC's possession,
reasonable assistance (at Processor's expense) from NEIC in connection therewith
and sole authority to control, defend or settle the matter. Without limiting the
foregoing, if any such action is brought or claim asserted, or in Processor's
opinion is likely to be brought or asserted, then Processor may, at its election
(i) obtain for NEIC the right to continue using such infringing item, (ii)
replace or modify such infringing item so that it becomes noninfringing, or
(iii) if such remedies are not reasonably available, discontinue the use of such
infringing item, provided any such action shall not relieve Processor of any of
its performance obligations hereunder. Notwithstanding the foregoing, Processor
shall have no obligation to defend, or assume any expenses, or pay any
settlement or damages that result from, or would not have occurred but for,
NEIC's use (other than a use disclosed in the Contract Documents) of the
infringing item(s) in combination with any service, program, system, creative
component or material not furnished by Processor or in a manner for which they
were not designed.
8.5 NEIC shall defend, at its expense, any action or claim brought
against Processor to the extent that it is based upon a claim that any software
or creative component or material furnished by NEIC to Processor for use by
Processor hereunder in connection with the CPS Services or any portion of the
foregoing, when used as contemplated by this Agreement infringes a United States
patent, trademark or copyright or violates any third party trade secret or other
proprietary right, and NEIC shall pay all costs and damages (including
reasonable attorney's fees and expenses) incurred by Processor in connection
with or resulting from such action or claim, including a settlement or final
award against Processor in connection therewith, provided that NEIC is given
prompt notice of such action or claim and is given all applicable information in
Processor's possession, reasonable assistance (at NEIC's expense) from Processor
in connection therewith and sole authority to control, defend and settle the
matter. Without limiting the foregoing, if any such action is brought or claim
asserted, or in NEIC's opinion is likely to be brought or asserted, then NEIC
may, at its election (i) obtain for Processor the right to continue using such
infringing item, (ii) replace or modify such infringing item so that it becomes
non-
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infringing, or (iii) furnish a replacement for such infringing item to perform
the function of such item. If such remedies are not reasonably available, NEIC
shall permit Processor to discontinue the use of such infringing item and any
portion of the CPS Services dependent thereon and Processor shall be relieved of
its obligations with respect to such portion of the CPS Services.
8.6 Processor shall indemnify and hold NEIC harmless from any damage,
liability, cost or expense, including reasonable attorneys fees and expenses,
resulting from any and all suits, claims or demands of or by any of Processor's
employees, agents or consultants or resulting from any and all suits, claims and
demands based upon any negligent or other wrongful act or omission on the part
of Processor, its subcontractor, consultants, employees, servants or agents.
NEIC shall indemnify and hold Processor harmless from any damage, liability,
cost or expense, including reasonable attorneys' fees and expenses, resulting
from any and all suits, claims or demands of or by any of NEIC's employees,
agents or consultants or resulting from any and all suits, claims and demands
based upon any negligent or other wrongful act or omission on the part of NEIC,
its subcontractor, consultants, employees, servants or agents.
8.7 NEITHER PARTY WILL BE LIABLE FOR ANY SPECIAL, INDIRECT, INCIDENTAL
OR CONSEQUENTIAL DAMAGES (INCLUDING WITHOUT LIMITATION LOST PROFITS OR LOST
SAVINGS OF SUCH PARTY OR ANY THIRD PARTY) HOWEVER CAUSED (OR ON ANY THEORY OF
LIABILITY) UNLESS AS A RESULT OF WILLFUL MISCONDUCT BY SUCH PARTY, INCLUDING
WITHOUT LIMITATION, INTENTIONAL FRAUD. NOTHING CONTAINED HEREIN, HOWEVER, SHALL
LIMIT PROCESSOR'S LIABILITY TO NEIC FOR NEIC'S LIABILITY, COST OR EXPENSE
(INCLUDING WITHOUT LIMITATION, NEIC'S REASONABLE ATTORNEY'S FEES AND EXPENSES)
RESULTING FROM A CLAIM OR ACTION BY A CUSTOMER OF THE NEIC CPS SERVICES AGAINST
NEIC FOR THE DIRECT DAMAGES OF SUCH CUSTOMER FROM SUCH SERVICES.
8.8 IN NO EVENT SHALL THE LIABILITY (OTHER THAN LIABILITY FOR DAMAGE TO
PERSON OR TANGIBLE PROPERTY) OF EITHER PARTY ARISING OUT OF THIS AGREEMENT
EXCEED THE GREATER OF SIX MILLION DOLLARS ($6,000,000) OR THE TOTAL REVENUES
RECEIVED BY PROCESSOR FROM NEIC HEREUNDER DURING THE TWO (2) YEARS PRECEDING THE
ASSERTION OF THE CLAIM ON WHICH THE LIABILITY IS BASED.
8.9 THE WARRANTIES AND SERVICE LEVELS SET FORTH IN THIS AGREEMENT ARE
IN LIEU OF ALL OTHER WARRANTIES, EXPRESSED OR IMPLIED, INCLUDING, WITHOUT
LIMITATION, WARRANTIES OF MERCHANTABILITY, USE, AND FITNESS FOR A PARTICULAR
PURPOSE.
9. Term, Termination and Termination Rights
9.1 Subject to earlier termination as set forth elsewhere in this
Agreement, the terms of this Agreement and the rights and obligations of the
parties hereunder shall commence on the Execution Date (it being understood
however that the obligations of Processor to perform actual
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processing Services shall not commence until the Commencement Date) and shall
end at the close of business on January 31,1997. For all purposes of this
Agreement, the "term" of this Agreement shall mean the period this Agreement is
in effect, including any extensions hereof.
9.2 During the period commencing February 1, 1996 through July 31,
1996, the parties will meet to negotiate an extension or renewal of this
Agreement, provided this Agreement is then in effect. Nothing contained herein,
however, shall obligate either party to extend or renew this Agreement.
9.3 If this Agreement is not extended or renewed by July 31, 1996 or
upon notice of the earlier termination of this Agreement for any reason,
Processor shall (i) provide accurately, efficiently and promptly at NEIC's
request, all reasonable support, information and assistance (including use of
all software, software tools, material and assistance) at the then applicable
Time and Materials Rate determined pursuant to Exhibit F attached hereto (but in
no event for an aggregate charge in excess of $100,000, provided that if
Processor reasonably determines that the services required of Processor under
this Section 9.3 ("Processor's Migration Services") will result in a charge in
excess of $100,000, Processor shall promptly after reaching such determination
give notice to NEIC of such determination which notice shall include an estimate
of the then proposed charge for Processor's Migration Services and Processor
shall then not be obligated to perform such Services of a value in excess of
$100,000 and Processor shall not charge NEIC for such Services in excess of
$100,000, unless NEIC shall have authorized such charge in writing in advance)
as requested by NEIC to effect the conversion from Processor to a replacement
processing source and to enable NEIC or such source to operate the NEIC CPS
Services with any NEIC Owned Work, (ii) assign, transfer and deliver to NEIC
title to all NEIC Owned Work and all documentation, materials and source code(s)
related thereto which had not previously been assigned or delivered to NEIC and
(iii) promptly return to NEIC any and all software, materials and documentation
which NEIC may have furnished to Processor pursuant to this Agreement. Upon the
expiration or termination of this Agreement for any reason, NEIC shall return to
Processor any and all Processor confidential and proprietary information in
NEIC's possession, including but not limited to those items described in Section
3.2 as being the property of Processor, and NEIC shall remain obligated to
compensate Processor pursuant to the terms of this Agreement for all of
Processor's Services provided to the date of termination.
9.4 Subject to any applicable provisions of bankruptcy law, either
party may terminate this Agreement (which termination shall be deemed for cause)
in the event of suspension of the other's business, insolvency, institution of
bankruptcy (voluntary or involuntary) or liquidation proceedings, appointment of
a trustee or receiver for such party's property or business, or any assignment,
reorganization or arrangement for the benefit of creditors.
9.5 Except for termination based on failure to meet Service Levels
which is governed by Section 7.2, if either party shall at any time commit any
material breach of any covenant, warranty or agreement herein contained and
shall fail to set remedy such material breach within 30 days after notice
thereof, or if such breach is not capable of such remedy within such 30 day
period, shall fail to promptly commence such remedy and pursue it diligently,
the other party may at its option, and in addition to any other remedies that it
may be entitled to, terminate this
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Agreement for cause by notice to such effect with the effective date of such
termination to be the date set forth in such notice but with respect to such
termination by Processor (unless such termination is the result of a default in
payment by NEIC of any undisputed amounts hereunder) in no event earlier than
six months from the date of such notice.
10. Confidentiality
10.1 Each party shall retain in confidence the terms of this Agreement
and any and all confidential or proprietary information delivered or owned by or
regarding the other party, which information is marked confidential (all of
which are hereinafter called "Confidential Information"). For this purpose,
NEIC's Confidential Information hereunder shall include confidential or
proprietary information delivered or owned by or regarding any customer of NEIC
which information is marked "Confidential." Each party shall make no use of
Confidential Information of the other party except pursuant to the terms of this
Agreement. Such Confidential Information shall not be disclosed to any person
other than one for whom such knowledge is reasonably necessary for the proposes
of this Agreement and then only to the degree such disclosure is so necessary
and only if the recipient has agreed to be bound by the provisions of
confidentiality set forth herein. Such Confidential Information shall be
protected by each party in a manner which shall be no less protective than the
manner in which such party protects its own Confidential Information. This
subsection is in addition to the obligations imposed by law and by the Contract
Documents on Processor to prevent unauthorized disclosure of transaction
information processed hereunder.
10.2 Notwithstanding the foregoing, this Agreement imposes no
obligations of confidence and nondisclosure or restrictions of use with respect
to any Confidential Information to the extent such Confidential Information (i)
is in the public domain, (ii) is known to the recipient as evidenced in writing
without an obligation of confidence prior to the time of release to the
recipient, (iii) is required to be disclosed pursuant to an order of a United
States court or other duly constituted administrative tribunal within the United
States, provided that the party subject to such order gives reasonable advance
notice of such order and a reasonable opportunity to contest such order to the
party which disclosed the Information subject to such order, (iv) is rightfully
received from a third party without a duty of confidentiality, or (v) as
evidenced in writing, is independently developed by the recipient.
10.3 The parties hereby acknowledge that any breach by either of them
of their respective obligations under Section 10.1 will cause irreparable harm
to the other party for which its remedies at law will be inadequate and that in
the event of any such breach or threatened breach, the party harmed by such
breach or threatened breach shall be enticed to equitable relief (including,
without limitation, injunctive relief and specific performance) in addition to
other remedies provided under this agreement or available at law.
11. Dispute Resolution
11.1 Any controversy arising out of, or relating to, this Agreement
(other than a termination for breach or breach of confidentiality pursuant to
Sections 7.2, 9.5 or 10.1) shall be
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referred to the respective NEIC and Processor project executives who will
endeavor to resolve the controversy. If the project executives do not reach
resolution within ten (10) business days from the date of referral, the
controversy shall be referred to the Presidents of the respective parties who
will endeavor to resolve the controversy within ten (10) business days.
11.2 Subject to the provisions of Section 11.1, if either party
concludes in good faith that amicable resolution through continued negotiation
as aforementioned does not appear to be likely in a timely manner, then such
party may demand, with at least fifteen (15) business days notice to the other
party, that the controversy be settled by arbitration in accordance with the
then current Commercial Arbitration Rules of the American Arbitration
Association ("Association") to the extent that such rules do not conflict with
any provisions of this Agreement. The arbitration shall be held before a panel
of three arbitrators selected pursuant to the rules of the Association. Meetings
of the arbitrators shall be at such place or places as they may reasonably
select. The fees and expenses of filing a dispute with the Association shall be
shared equally by the parties, subject to final apportionment by the
arbitrators. Any award, order or judgment pursuant to arbitration shall be
deemed final and may be entered and enforced in any state or federal court of
competent jurisdiction. Each party agrees to submit to the jurisdiction of any
such court for purposes of the enforcement of such award, order or judgment. The
arbitrators shall not have the authority or power to amend, add to or subtract
from the terms and conditions of this Agreement. Nothing contained in this
Section 11.2 however shall foreclose either party from seeking court action
immediately for equitable relief as available pursuant to this Agreement or
applicable law.
12. General Provisions
12.1 This Agreement and any interest herein shall inure to the benefit
of, and be binding upon, the successors, legal representatives and permitted
assigns of the parties hereto. Notwithstanding the foregoing, this Agreement may
not be assigned, subcontracted or transferred (by operation of law or otherwise)
by either party without the prior written consent of the other.
12.2 All notices required by or relating to this Agreement shall be in
writing and shall be sent to the parties to this agreement at the addresses set
out below, as such addresses may be changed from time to time in accordance with
the notice procedures set forth in this section, and all such notices shall be
in writing signed by an officer of the notifying party and delivered personally
or by overnight courier service or sent by registered or certified mail, charges
prepaid, to the address then prevailing:
If to NEIC: National Electronic Information Corporation
500 Plaza Drive
Secaucus, New Jersey 07094
Attn: President and Chief Executive Officer
If to Processor: GTE Data Services Incorporated
One East Telecom Parkway
Post Office Box 290152
Temple Terrace, Florida 33687
13
Attn: Vice President - Commercial Services DC B3-E
With a courtesy copy to the attention of the
Law Department DC B3-E
All such notices shall be deemed given when so delivered or four days after the
date of mailing, whichever occurs first.
12.3 The failure of any party to exercise any of its rights hereunder
or to enforce any of the terms or conditions of this Agreement on any occasion,
shall not constitute or be deemed a waiver of that party's right to exercise any
rights hereunder or to enforce each and every term of this Agreement. No waiver
of any of the provisions of this Agreement shall be effective unless in writing
and signed by an executive officer of the party charged with such waiver, and
such waiver shall be strictly limited to the terms of such writing.
12.4 A determination that any portion of this Agreement is
unenforceable or invalid shall not affect the enforceability or validity of any
of the remaining portions of this Agreement. To the extent that the applicable
law which makes any provision of this Agreement invalid or unenforceable may be
waived, such applicable law is hereby waived to the end that this Agreement be
deemed to be a valid and binding agreement enforceable in accordance with all of
its terms. In any event, the parties hereby agree to use their best efforts to
replace any unenforceable or invalid provision with a provision incorporating
the substance of said unenforceable or invalid provision but which would be
enforceable under the laws of the applicable jurisdiction.
12.5 Each party shall comply with any applicable law or any industry
practice and shall secure any authorization required by applicable law, industry
practice, or otherwise in connection with the activities for which it is
responsible under this Agreement. Without limiting the foregoing, Processor
shall comply with all obligations (including the execution of any and all
amendments hereto) imposed by an applicable governmental regulatory authority on
subcontractors to the extent this Agreement is deemed to be under the
jurisdiction of such authority. The parties understand that software, associated
documentation and technical data which may be provided by either party to the
other hereunder may be regulated by the Government of the United States, and
each party shall abide by all relevant laws and regulations relating to same.
Each party shall furnish to the other party, upon request, any certification or
other evidence reasonably required by such other party to confirm compliance
with the obligations of this subparagraph.
12.6 If either party issues a purchase or sales order or invoice
pursuant to this Agreement, it is agreed that such document shall not amend, add
to or otherwise alter or detract from the terms and conditions of this
Agreement. All standard terms, conditions, or provisions which may appear on any
such order or invoice issued pursuant to this Agreement shall, to the extent
inconsistent with the terms and conditions of the Contract Documents, be of no
force or effect.
14
12.7 In addition to any other liability of a party hereunder as a
result of a breach of any of such party's obligation hereunder, such party shall
also be liable for all reasonable attorneys fees and expenses incurred by the
other party as a result of such breach
12.8 Except as expressly otherwise set forth in this Agreement,
Processor shall have no rights or interests in the NEIC CPS Services or any
materials, documentation or proprietary information related thereto and NEIC
shall have full and complete authority and responsibility in its sole discretion
with respect to the development, marketing, promotion and sale of the NEIC CPS
Services.
12.9 The employees and agents of Processor and NEIC shall each, while
on the site of the other or of a customer of NEIC hereunder, comply with all
rules and regulations of such site then in effect.
12.10 The parties acknowledge and agree that they are acting hereunder
as independent contractors and thus neither party is authorized to or shall bind
or make any commitment on behalf of the other party, except as may be expressly
authorized in writing in advance by such other party. Without limiting the
foregoing, NEIC shall have no responsibility for the payment of employee related
obligations with respect to persons performing any of Processor's Services
hereunder, including, but not limited to, federal and state unemployment
insurance, federal and local payroll taxes, and any similar levies now or
hereafter imposed by any federal, state, county or local government.
12.11 The Equal Employment Opportunity Clause in Section 202,
Paragraphs 1 through 7, of Executive Order 11246, as amended, relative to Equal
Employment Opportunity, and the implementing Rules and Regulations of the Office
of Federal Contract Compliance, are incorporated herein by specific reference.
12.12 Without limiting Section 10.1 and except for intracompany
bulletins and communications, neither Processor nor NEIC shall make or authorize
any news release, advertisement, or other disclosure which shall deny or confirm
the existence of this Agreement, including any information contained within this
Agreement, without the prior written consent of the other party, except that
NEIC shall have the right to make any such disclosure without Processor's
consent as is reasonably required for the performance of the NEIC CPS Services.
12.13 Captions to Articles of this Agreement are for convenience only
and shall not be used for interpretation of this Agreement. Words in the
singular shall also mean the plural and words in neutral, masculine or feminine
genders shall also mean the other genders.
12.14 The validity, enforcement and interpretation of this Agreement
shall be in accordance with the laws of the State of New Jersey (excepting its
conflicts of laws principles).
15
13. Entire Agreement
This Agreement, together with the Contract Documents, constitute the
entire agreement between the parties with respect to its subject matter, and
shall supersede all prior agreements, representations, negotiations, submitted
documents or drafts and discussions (whether written or oral) between the
parties with respect to said subject matter. This Agreement shall not be varied
or terminated (other than as expressly set forth herein) except by an instrument
in writing of subsequent date executed by an executive officer of NEIC and an
executive officer of Processor.
BY WITNESS WHEREOF, the parties hereto have executed this Agreement or
have caused it to be executed in their names and on their behalf by their duly
authorized representatives at Secaucus, New Jersey, on this 10th day of
September, 1993.
GTE DATA SERVICES INCORPORATED NATIONAL ELECTRONIC
INFORMATION CORPORATION
BY: /s/ Douglas B. Hill By: /s/ Kenneth J. O'Donnell
------------------------------- ---------------------------------
Name: /s/ Douglas B. Hill Name: Kenneth J. O'Donnell
----------------------------- -------------------------------
Title: V.P. Commercial Services Title: President and CEO
---------------------------- ------------------------------
16
EXHIBIT A
PROCESSOR'S PROPOSAL NOTES
Claims Processing System (CPS) Proposal April 26, 1993
Proposal Update May 14, 1993
Proposal Update with Processor's Service Level June 17, 1993
Agreement Document
NEIC Final Response July 30, 1993
Proposal Update August 24, 1993
Proposal Update August 26, 1993
Processor Proposal document on end user September 10, 1993
telecommunications software
17
*CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION.
EXHIBIT B
SERVICE LEVELS
1. Network and Telecommunications: Processor shall incur no more than [ ]*
busy signals/blocked calls during the Scheduled Hours of Availability.
The overall dial-in performance criteria is for [ ]* of all calls to be
successfully completed.
The network availability criteria is [ ]* of the time for the
telecommunications circuits used in support of NEIC CPS Services.
2. System Availability: The CPS System is scheduled to be available 24
hours a day, seven-days a week, except during (i) time when Processor
is performing emergency hardware or software maintenance and (ii) time
when Processor is performing operating system maintenance or
implementing major hardware or software reconfigurations and in either
case has given NEIC at least forty-eight (48) hours advance notice.
The CPS System shall incur no more than [ ]* downtime during the
Scheduled Hours of Availability. NEIC may request that the CPS System
be made available at times outside the scheduled Hours of Availability.
Requests for such additional services will (i) be made at least forty
eight (48) hours in advance, (ii) be provided to the extent that they
do not interfere with Processor's other commitments pursuant to this
Agreement or other commercial operations and (iii) not be included in
the determination of associated downtime.
*3. TSO Response Time: All interactive response times are "queue-to-queue"
times within the servicing CPU and shall be determined by Processor
using industry standard measurement facilities technically suited to
each type of service. Processor shall provide a response within [ ]*
seconds for at least [ ]* of the TSO transactions run.
*4. MVS Batch Response Time: NEIC shall supply a list (Exhibit B-2) of
on-going job names that are used in the production version of the NEIC
CPS Services. This list will be reviewed at each MRB. Processor will
provide at each MRB a report demonstrating the response time for those
MVS batch jobs on the list supplied by NEIC. Response time shall be
determined by the amount of elapsed time from entry into the input
queue to, but not including, execution on the selected host processor.
Processor shall provide the following response times for at least [ ]*
of the MVS Batch jobs run: five (5) minutes for jobs requiring no setup
and fifteen (15) minutes for jobs requiring a setup.
* All measurements under Sections 1, 2, 3 and 4 above shall be measured,
documented and reported to NEIC on a monthly basis.
18
*CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION.
EXHIBIT B (cont.)
SERVICE LEVELS
5. Non-Catastrophic Component Failure: For each of the critical components
NEIC has identified, Processor shall perform a recovery of each of
these components within the specified time frames listed below:
A. DASD Failure
In the event of a failure of a single DASD, the DASD recovery
shall have NEIC switched to an alternative DASD within [ ]*.
The [ ]* window will begin at the time of the failure.
B. CPU Failure
In the event of a total CPU failure, the CPU recovery shall
have NEIC switched to an alternative CPU within [ ]*. The [ ]*
window will begin at the time of the failure. The processing
will be moved only in the event that the total outage is
expected to exceed [ ]*.
C. FEP Failure
In the event of an FEP failure, the FEP recovery shall have
NEIC switched to an alternative FEP within [ ]*. The [ ]*
window will begin at the time of the failure. The processing
will be moved only in the event that the total outage is
expected to exceed [ ]*.
6. Disaster Recovery as described in Section III.4.2.A.6(e) in the
Processor's Proposal dated April 26, 1993, with the exception that the
Service Level for Disaster Recovery is modified such that Processor
shall complete Stage 4 (Business Functions Restoration) within [ ]* of
the declaration of a disaster in Stage 1 (Damage Assessment) as
indicated in Figure II-21 of the Processor's Proposal dated April
26,1993.
7. Migration Services: Processor shall complete migration of CPS Services
from EDS to GTEDS no later that February 1, 1994. Processor agrees to
pay NEIC for all of NEIC's expenses and liabilities resulting from
delays in meeting the migration deadline to the extent that such delay
is caused by Processors failure to perform.
19
*CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
EXHIBIT B-1
SERVICE LEVELS
BASIC SERVICE LEVEL MATERIAL FAILURE DIVERGENCE
------------------- ---------------------------
Busy Signal/Block calls [ ]* [ ]*
Overall dial-in Performance of
all calls to be successfully [ ]* [ ]*
completed
Network Availability [ ]* [ ]*
CPU Availability [ ]* [ ]*
TSO Response Time [ ]* [ ]*
MVS Batch Response Time:
No Setup Required [ ]* [ ]*
Setup Required [ ]* [ ]*
Non-Catastrophic Failure
Recovery Time:
DASD Failure [ ]* [ ]*
CPU Failure [ ]* [ ]*
FEP Failure [ ]* [ ]*
20
EXHIBIT B-2
CLAIM
HCDS MCDS/DCDS STATUS
---- --------- ------
#NEH1035 #NEM2005 #NECINIT
#NEHDALY #NEMDALY #NEHCSUP
#NEHSUBM #NEMSUBM #NEMCSUP
#NEHCARR #NEMCARR #NEHCLMS
#NEHRPTS #NEMRPTS #NEMCLMS
#NEHMOND #NEMMOND
$NEHSUBO $NEMSUBO
$NEHNRPT $NEMNRPT
$NEHRPT1 $NEMRPT1
$NEHRPT2 $NEMRPT2
$NEHRPT3 $NEMRPT3
$NEHRPT4 $NEMTRAV
#NEHTAPE #NEMTAPE
$NEH1111 $NEM1111
$NEHSMS1 $NEMKEPA
21
EXHIBIT C
ESCALATION PROCEDURES
The parties agree to adhere to the problem reporting and escalation
procedures described in Sections V and Vl of Processor's "NEIC Service Level
Agreement," document dated June 17, 1993.
22
EXHIBIT D
DISASTER RECOVERY PROGRAM
The parties agree to adhere to the Disaster Recovery procedures and
actions described in Section III.4.2.A.6 (e) of the Processor's Proposal dated
April 26,1993 with the modification described in EXHIBIT B. (Service Levels) of
this agreement.
23
EXHIBIT E
JOINT MARKETING/ALLIANCE PROGRAM
The parties agree to develop by November 1, 1993, a "GTEDS/NEIC Joint
Marketing Plan for 1994" that will be based on but not limited to Processor's
responses dated July 30, 1993 to questions 1 and 2 of the RFP Final Round
Questionnaire. This plan will obligate both parties to specific actions to
identify, develop and implement projects to increase business volume for both
parties.
The parties agree to develop and implement equally aggressive plans for
1995,1996 and any additional year during an extension of this agreement, if any.
24
*CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
EXHIBIT F
PROCESSOR CHARGES INCLUDING TIME AND MATERIAL RATES
1. CHARGES FOR PROCESSOR'S SERVICES
Charge per Claim* Schedule
Volume Level
Within Each Contract Year Charge per Claim**
------------------------- ------------------
[ ]* [ ]*
[ ]* [ ]*
[ ]* [ ]*
[ ]* [ ]*
[ ]* [ ]*
* Claims are counted as they enter the validation programs of NEIC's
system for the NEIC CPS Services. In the event of a rerun of any
portion or all of such system, for whatever reason, claims are counted
only once for each processing cycle.
** The Charge Per Claim covers all telecommunications and data center
services required to process the NEIC CPS Service claims and Claim
Status transactions associated with such claims. It also includes the
Non-Transaction Services falling within the average usage projections
in the NEIC RFP for such Services. Only in the event Non Transaction
Services exceed such average will the charges set forth in Item 2 below
apply. In addition, NEIC agrees to pay a start up surcharge of [_____]*
per claim for each of the first [ ]* claims processed through the CPS
System under this agreement.
2. CHARGES FOR NON-TRANSACTION COMPUTER PROCESSING SERVICES CPU Processing
(include associated telecommunications usage for NEIC CPS Service
users)*
Prime Time* $[ ]*
Non-prime Time $[ ]*
Direct Access Storage $[ ]*
Magnetic Tape/Cartridge Storage $[ ]*
Magnetic Tape/Cartridge Mounts $[ ]*
Magnetic Tape/Cartridge Purchase $[ ]*
Printing at GTEDS
Printer Utilization $[ ]*
* Prime time is defined as 9.00 a.m. to 4:00 p.m. at the Processor's
Data Center, Monday through Friday.
25
*CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
EXHIBIT F (cont.)
PROCESSOR CHARGES INCLUDING TIME AND MATERIAL RATES
3. CHARGES FOR SERVICES OTHER THAN CPS SERVICES OR NON-
TRANSACTION PROCESSING SERVICES
Dial Access
Prime Time Connect Hour [ ]*
Non-prime Time Connect Hour [ ]*
Communication Ports - 9,600 Baud [ ]*
- 56,000 Baud [ ]*
Outsourcing
Systems Programing [ ]*
Systems Consulting [ ]*
26
Exhibit G
INSURANCE REQUIREMENTS
Workers Compensation: Coverage equal to statutory limit in the
state where business is conducted.
General Liability:
Bodily Injury $3,000,000 per occurrence
Property Damage $3,000,000 per occurrence
NEIC shall be named as an additional insured. The insurance will provide that it
may not be canceled or changed without ten (10) days prior notice to NEIC. A
certificate evidencing the above insurance shall be presented from time to time
at NEIC's request.
27
Exhibit H
ADDITIONAL PERFORMANCE TERM
1. IMPROVEMENT AND GENERAL ADMINISTRATION: Processor may, upon reasonable
notice to NEIC, designate and make changes in rules to operation,
teleprocessing protocols, accessibility periods, customer
identification procedures, type of terminal equipment, type and
location of system and service equipment, system programming languages,
and designation of the particular Processor's Data Processing Center
serving the NEIC at any particular address, provided that any such
change shall not (i) diminish or interrupt Processor's Services or (ii)
increase NEIC's burdens or expenses in performing the NEIC CPS
Services.
2. FILE SECURITY: Processor will provide security, back-up, and recovery
services to protect NEIC's data to the extent that Processor normally
protects its own stored files and those of its other commercial
customers. Processor reserves the right to issue and change regulations
and procedures from time to time to improve such protection provided
that such issuance or change shall not (i) diminish or interrupt
Processor's Services or (ii) increase NEIC's burdens or expenses in
performing the NEIC CPS services. NEIC assumes full responsibility for
selection and use of any code or password as may be permitted or
required by the particular service involved. Processor shall not be
required to reconstruct any files, data, or programs which may, for any
reason, have to be re-entered into the system, unless reconstruction is
required due to a negligent or other wrongful act or omission on the
part of Processor.
28
Second Amendment to the Processing and
Service Agreement between
National Electronic Information Corporation
and GTE Data Services Incorporated
The Processing and Service Agreement entered into as of September 10,
1993 (hereinafter called the "Agreement") by and between National Electronic
Information Corporation (hereinafter called "NEIC") and GTE Data Services
Incorporated (hereinafter called "GTEDS"), the November 18, 1994 Letter
Amendment to the Processor Proposal letter of September 10, 1993 forming part of
the Agreement (hereinafter called the "Letter Amendment"), the First Amendment
to the Agreement executed as of January 4, 1995 (hereinafter called the "First
Amendment") and Supplement No. 1 to the First Amendment dated as of June 28,
1995 (hereinafter called the "Supplement"), all hereinafter called the
"Contract", are hereby modified, as applicable, by the following:
1. Term of Agreement
The term of the Agreement as set forth in Section 9.1 thereof
is hereby extended through the close of business on December 31, 1998, provided
that NEIC shall have the right in its sole discretion by notice to GTEDS given
no later than October 1, 1997 to effect premature termination of the Agreement
and the rights and obligations of the parties under the Agreement effective at
the close of business on June 30, 1998. In the event NEIC effects such premature
termination, NEIC shall pay GTEDS upon the effective date of such termination
$50,000 per month for each month or portion thereof from the date of actual
termination through December, 1998.
2. Exclusivity
Section 4 of the Agreement regarding exclusivity is hereby
changed so that such Section shall have no force or effect during the last six
months of the term of the Agreement as set forth in Section 1 of this Amendment,
i.e. January 1, 1998 through June 30, 1998 if a premature termination is
effected by NEIC pursuant to Section 1 of this Amendment or July 1, 1998 through
December 31, 1998 if no such premature termination is effected by NEIC.
3. Non-Competition
The obligations of non-competition imposed on GTEDS pursuant
to Section 5.1 of the Agreement are hereby modified such that GTEDS may provide
services to or assist in any way an entity which competes with NEIC provided,
however, that GTEDS shall ensure that any information, expertise or other
capabilities acquired by GTEDS solely through its performance of the Contract in
connection with NEIC CPS Services shall not be utilized for services or
assistance to such entity.
29
*CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION.
4. Right of Refusal
In the event that NEIC intends to outsource the CPS Services
upon the termination of the Agreement, NEIC shall allow GTEDS to participate in
the bid process. In the event that GTEDS presents a proposal in conformity with
such bid process and an alternative proposal is preliminarily selected for award
by NEIC, NEIC shall furnish to GTEDS the business terms and conditions of the
preliminarily selected proposal and GTEDS shall have 15 days within which to
match such proposal by notice to NEIC. If GTEDS matches such proposal, it shall
be awarded the contract. If GTEDS fails to give timely notice to NEIC that it
shall match the preliminarily selected proposal or fails within a reasonable
time to conclude a contact with NEIC pursuant to its terms, the restrictions of
this Section 4 shall automatically expire. Furthermore, the restrictions of this
Section 4 shall not apply in the event that NEIC decides to have the CPS
Services following termination of the Agreement performed by NEIC, Envoy
Corporation, or any affiliate thereof.
5. Pricing
A. Item 1 of Exhibit F of the Agreement is hereby deleted in
its entirety and replaced with the following:
"1. CHARGES FOR PROCESSOR'S SERVICES
The per claim/encounter fee shall be as follows for transactions
submitted to GTEDS for processing under the Agreement during the
following calendar years:
Calendar Year Charge Per Claim/Encounter
------------- --------------------------
1996 [ ]*
1997 [ ]*
1998 [ ]*
The foregoing prices shall be further discounted by [____]* for each
[____]* reduction in the amount of GTEDS data center and
telecommunications resources required to process claim/encounter
transactions as such reduction is determined pursuant to the
measurement criteria and Base Line Resources Usage Ratio set forth in
Exhibit A (hereinafter called the "Base Line"). Subject to Section 6B
of this Amendment, the measurement period for 1996 will be the actual
Usage Ratio as defined in Exhibit A (hereinafter called "Usage Ratio")
for the period of April through December 1996, the measurement period
for 1997 will be the Usage Ratio for that full year and the measurement
period for 1998 will be the actual Usage Ratio for that full-year.
Discounts will be awarded retroactively for all claims/encounter
transactions of the applicable year as soon as the amount of such
discount can be calculated and the full value of the aggregate discount
so calculated shall
30
*CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION.
be applied as a credit to the next invoice(s) issued to NEIC hereunder.
Notwithstanding the foregoing, the maximum discount applied to
claims/encounters of 1996 shall be [ ]*, the maximum discount applied
to claims/encounters of 1997 shall be [ ]* and the maximum discount
applied to claims/encounters of 1998 will be [ ]*.
If the actual Usage Ratio determined for claims/encounters of any year
exceeds the Base Line, the price for claim/encounter transactions of
the following year shall be surcharged by [ ]* for each [ ]* of such
Usage Ratio increase, provided that such surcharge shall be limited to
a maximum of [ ]* for claims/encounters of 1997 and [ ]* for
claims/encounters of 1998. In the event that the actual Usage Ratio in
1998 exceeds the Base Line and NEIC has not renewed the Agreement or in
any way retained GTEDS for like services beyond 1998, NEIC will, within
90 days of the actual termination date, pay GTEDS a surcharge equal to
[ ]* for each [ ]* of increased actual Usage Ratio over the Base Line
up to a maximum of [ ]* of the 1998 price per claim/encounter times the
actual number of claims/encounters processed in 1998.
Claims/encounters are counted as a claim subject to fee hereunder as
they enter the validation programs of NEIC's system for the NEIC CPS
Services. In the event of a rerun of any portion or all of such system,
for whatever reason, the applicable claims/encounters shall be counted
only once for each pricing processing cycle.
The charges set forth in this Section cover all telecommunications and
data center services required to process the NEIC CPS Service
claims/encounters and Claim Status transactions associated with such
claims/encounters, including, without limitation, Tymnet surcharges
referenced in Exhibit A to the Letter Amendment which shall no longer
be imposed commencing January 1, 1997. These charges also include the
Non Transaction Services falling within the Monthly Threshold in
Exhibit B attached to this Amendment. Only in the event Non Transaction
Services exceed such Threshold will the charges set forth in Item 1 of
Exhibit B to the Second Amendment to the Agreement below apply."
B. Items 2 and 3 of Exhibit F of the Agreement are hereby
deleted in their entirety and replaced with the charges set forth in Items 1 and
2 of Exhibit B attached to this Amendment.
C. The pricing set forth in this Section 5 shall be effective
retroactively to January 1, 1996. GTEDS shall provide to NEIC on the next
invoice(s) issued under the Agreement a credit for the aggregate difference
between the amounts charged previously by GTEDS for 1996 claim/encounters and
the amounts to be charged for 1996 claim/encounters pursuant to this Amendment.
31
6. Changes in GTEDS' Performance Obligations
The GTEDS services to be produced under the Agreement are
hereby changed as follows:
A. Telecommunications Capabilities
GTEDS shall continue to provide all existing
telecommunications capabilities currently in use or in test by NEIC including
the new TCP/IP 800 service that supports up to 28.8 KBPS dial up. In addition,
on or before June 30, 1996, GTEDS shall add ISDN and Frame Relay access using
the TCP/IP protocol. Capabilities and support for the additional ASYNC protocols
of XMODEM, YMODEM, YMODEM-G and ZMODEM plus the ability to dial out for file
transfers using these protocols and BISYNC 3780 shall also be provided by GTEDS.
A sufficient subset of such capabilities shall be provided by GTEDS in a timely
fashion to effect the cutover of customers from ENVOY-NEIC's Palm Harbor, FL
facility to GTEDS no later than August 31, 1996. The complete version of such
capabilities shall be provided by GTEDS no later than October 31, 1996.
B. Telecommunications Alternative
GTEDS shall provide to NEIC, no later than October
31, 1996, a full functioning version of NEIC CommLink (i.e. the NEIC Product
pursuant to the First Amendment and Supplement) that utilizes an ASYNC protocol
other than Kermit or Relay Gold. In addition, GTEDS shall provide to NEIC, no
later than October 31, 1996, a full functioning version of said NEIC Product
that interfaces with the TCP/IP capability provided by GTEDS Pursuant to Section
6A of this Amendment. GTEDS acknowledges that the timely performance by GTEDS of
its obligations under this Section 6B is essential to NEIC's ability to reduce
telecommunications resources associated with the processing of its
claims/encounters. Accordingly, the 1996 measurement period of
telecommunications resources for purposes of determining price discounts or
surcharges pursuant to Section 5A of this Amendment shall be delayed by one
month for each month or portion thereof of a delay in GTEDS' performance of
either obligation under this Section beyond the due date for such performance.
C. Performance Monitoring Reports
By the date of execution by both parties of this
Amendment, GTEDS shall provide NEIC performance monitoring reports on a weekly
and monthly basis containing sufficient detail to enable NEIC to determine the
changes in the Usage Ratios for each batch job, data set in storage,
telecommunications user, and TSO user for both processing of transactions under
Section 5A of this Amendment (hereinafter called "Production Transactions") and
Non Transaction Processing Services under Exhibit B Item 1 of this Amendment
(hereinafter called "Non-Transaction Processing").
32
D. Mailboxing
Effectively immediately, GTEDS shall support the
access of users of the NEIC CPS Services who prefer to use third party
mailboxing, provided, however, that GTEDS shall not be responsible for the
character and usage costs for transferring information to and from such
mailboxes.
E. Advantis/Frame Relay Usage
Effectively immediately, GTEDS shall be responsible
for all costs from the service provider to the GTEDS facility with respect to
Advantis and Frame Relay usage, but GTEDS shall have no other obligation for the
costs of such usage.
F. Dial up to Dedicated Line Conversion Threshold
The requirement of Section IIB.5 of the NEIC RFP
imposing on GTEDS the obligation to provide a dedicated circuit to each user of
the NEIC CPS Services that routinely transmits 5,000 or more transactions per
day is hereby altered to allow GTEDS to reduce such user's transmission times
through the use of more efficient telecommunications methods, provided, however,
that each affected user agrees to accept such alternative solution.
G. Alternative Communications
The "alternative facilities" identified in Section
IIB.4 of the NEIC RFP is hereby modified to include (i) a facility which
requires an access method not yet supported by GTEDS, (ii) a facility all of
whose volume is considered Non-Transaction Processing and (iii) a facility that
has no anticipated Production Transactions.
7. Audits of Product Code
An audit of product codes requested by either party at any
time in order to confirm the proper identification of transactions as
Non-Transaction Processing or Production Transactions shall be performed by the
parties pursuant to mutually agreed upon conventions for naming programs.
8. Disaster Recovery
The disaster recovery obligations of GTEDS pursuant to
Sections 5 and 6 of Exhibit B of the Agreement are hereby modified as follows:
A. Section 5.B of Exhibit B is hereby deleted in its
entirety and replaced with the following:
"5.B In the event of a CPU failure, GTEDS shall,
within two hours
33
*CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION.
of such failure, determine whether the NEIC CPS
Services must be switched to the backup CPU and GTEDS
shall within four hours of such determination fully
restore the NEIC CPS Services on the backup CPU."
B. GTEDS shall restore the NEIC CPS Services functionality
within 24 hours of the declaration of a disaster at the GTEDS data center and
shall restore the test and development functions within 48 hours of such
declaration.
C. In the event that NEIC shall propose to add additional
transactions or services pursuant to the Agreement which are to be performed or
processed at the GTEDS data center, NEIC shall as part of the proposal propose
disaster recovery (including without limitation redundancy) requirements for
such services or transactions, which if agreed to by GTEDS shall be included in
the agreement between the parties with respect to such services or transactions.
9. NEIC Volume Commitments
A. The pricing set forth under this Amendment has been
furnished by GTEDS with the understanding that the actual claim/encounter volume
for 1996 shall be [ ]* million plus or minus [ ]*, for 1997 [ ]* million plus
or minus [ ]*, and for 1998 [ ]* million plus or minus [ ]*. In the event
that the actual claim/encounter volume for any such year fails to fall within
the permissible range of volume set forth in this paragraph for such year, the
parties agree that the pricing listed in Section 5A herein may be negotiated in
good faith at the request of either party.
B. NEIC shall, by the fifth business day in November of each
year during the term of this Amendment, provide to GTEDS an update of NEIC's
estimate of the monthly transaction (i.e. claim/encounter, ERA, rosters and
other transactions then processed pursuant to the Agreement by GTEDS) volume for
the following year. NEIC shall, by the fifth working day of each quarter during
the term of the Agreement as extended by this Amendment, provide to GTEDS an
update of such volume estimates for the remainder of the then current year. NEIC
shall use reasonable efforts to notify GTEDS of any anticipated deviations in
such monthly volume projections reasonably promptly following NEIC's
determination of any such deviation.
10. General Terms
A. The parties acknowledge and agree that, except as expressly
modified herein, all of the provisions of the Contract shall be applicable to
this Amendment to the extent that by the sense and context of such provisions,
such provisions are applicable to the subject matter of this Amendment, for
which purpose the word Processor under the Agreement shall mean GTEDS or
Processor under this Amendment.
B. In the event of any conflict between a provision of this
Amendment and a provision of the Contract, the provision of this Amendment shall
govern.
34
C. The definitions of terms appearing in the Agreement shall
apply to such terms as used in this Amendment, except when such terms have been
expressly defined otherwise herein.
D. Except as explicitly amended by this Amendment, all of the
terms and conditions of the Contract remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the 6th day of May, 1998.
NATIONAL ELECTRONIC INFORMATION
CORPORATION
By: /s/ Joseph P. Sullivan
--------------------------------------
Name: Joseph P. Sullivan
Title:V/. P. Product Management
Date: 4/25/96
-------------------------------------
GTE DATA SERVICES INCORPORATED
By: /s/ Elizabeth A. Edwards
--------------------------------------
Name:
Title:
Date: 5/6/96
35
*CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION.
EXHIBIT A
Usage Ratio Baseline and Measurement
The Baseline and Measurement Usage Ratio for this discount/increase program will
be a factor derived from resource utilization categories determined by GTEDS to
be major components in providing GTEDS' overall service. The resource categories
consist of [____]* computer processing related areas and [____]*
telecommunications network usage areas. The process is as follows:
1) GTEDS applies a weighting factor to each resource usage category.
2) For each period the total units used (in standard 168 units) in each
category are multiplied by the weighting factor to get a weighted unit
total per category.
3) This weighted unit total per category for the period is divided by the
number of transactions processed for the period (in 1000s) to get the
usage ratio for each category. The six processing categories currently
use the claim/encounter total as the divisor. The divisor for the three
network categories is the sum of claim/encounter activity, plus half
the number of claims processed within ERA transactions, plus the number
of members on eligibility roster transactions electronically
transmitted within the period.
NOTE: At such time that ERAs, eligibility rosters, or other
transactions are moved to production product code
areas, the processing category divisor will be
adjusted accordingly.
4) [____]*
5) For each period a year-to-date summary line will display the
year-to-date totals for weighted units and for transactions processed.
The summary line will also display the year-to-date Usage Ratios: The
year-to-date total Usage Ratio will be the sum of the year-to-date
processing usage ratio and the year-to-date network usage ratio. This
will serve as an interim check to determine performance to date.
6) The Annual Usage Ratio will be the year-to-date Total Usage Ratio
through December of that year or through the last month of the
contract) equal to:
1. Annual weighted processing units divided by annual processing
transactions equals annual processing usage ratio.
2. Annual weighted network units divided by annual network
transactions equals annual network usage ratio.
36
*CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION.
3. Annual processing usage ratio plus annual network usage ratio
equals Annual Usage Ratio to be measured against the Baseline.
7) The Annual Usage Ratio is divided by the Baseline to obtain the annual
resource usage growth/decrease percent(rounded to the nearest percent).
This percentage is used as the final measure for the incentive program.
8) The Baseline against which the Annual Usage Ratios for each contract
year are measured to determine the results of the discount/increase
program is [____]*. This Baseline is derived from the Total Usage Ratio
for December, 1995.
NEIC will provide GTEDS' account management the total count for
claims/encounters processed, ERA claims transmitted, and members within
eligibility rosters transmitted for the completed calendar month by the
fifteenth of the following month.
GTEDS will provide NEIC by the end of the following month a Usage Ratio Report
(EXHIBIT A-1) and a Processing Unit Report (EXHIBIT A-2). The Processing Unit
Report will display actual units used in each resource usage category(in 168
units). The Usage Ratio Report will be used for the actual measurement against
the incentive program.
Standard rounding practices are used in all calculations.
37
*CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION.
EXHIBIT A-1
Usage Ratio Report
PROCESSING
-----------------------------------------------------------------------------------------------------------
CPU TAPE DASD DASD PAGES TAPE TOTAL CLAIM USAGE
BATCH Bytes STORAGE EXCP Printed MOUNTS PROCESS COUNT RATIO
Xfrd
-----------------------------------------------------------------------------------------------------------
PROCESSING FACTORS
Transaction Base DEC 96
JENX TELE
JENY HCDS-PD
JENZ MCDS-PD
JEOS HCDS-CL
JEOC MCDS-CL
JEOH CICS
JGEX AFTU
NETWORK
-----------------------------------------------------------------------------------------------------------
Total Weighted Units
% of Total Resources
Usage Ratio
===========================================================================================================
NETWORK
-----------------------------------------------------------------------------------------------------------
CPU NETWORK NETWORK TOTAL ERA RSTR TOTAL USAGE
INTER MCI ATT NETWORK TRANS RATIO
-----------------------------------------------------------------------------------------------------------
PROCESSING FACTORS
Transaction Base DEC 96
JENX TELE
JENY HCDS-PD
JENZ MCDS-PD
JEOS HCDS-CL
JEOC MCDS-CL
JEOH CICS
JGEX AFTU
NETWORK
-----------------------------------------------------------------------------------------------------------
Total Weighted Units
% of Total Resources
Usage Ratio
===========================================================================================================
TOTAL
--------------------
RESOURCE USAGE
USAGE RATIO
--------------------
PROCESSING FACTORS
Transaction Base DEC 96
JENX TELE
JENY HCDS-PD
JENZ MCDS-PD
JEOS HCDS-CL
JEOC MCDS-CL
JEOH CICS
JGEX AFTU
NETWORK
--------------------
Total Weighted Units
% of Total Resources
Usage Ratio
====================
ALL NUMBERS IN THE ABOVE TABLE HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT
38
*CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION.
EXHIBIT A-2
Processing Unit Report
CPU TAPE DASD DASD PAGES TAPE CPU NETWORK
BATCH Bytes Xfrd STORAGE EXCP Printed MOUNTS INTER MCI
-----------------------------------------------------------------------------------------------------------
Transaction
Base DEC 96
JENX
TELE
JENY
HCDS-PD
JENZ
MCDS-PD
JEOB
HCDS-CL
JEOC
MCDS-CL
JEOH
CICS
JGEX
AFTU
NETWORK
-----------------------------------------------------------------------------------------------------------
Total Base Units
===========================================================================================================
ROSTERS
NETWORK TOTAL CLAIMS ERA ----------------------
ATT UNITS PROCESSED PROCESSED PROCESSED TRANSMTED
-----------------------------------------------------------------------------
Transaction
Base DEC 96
JENX
TELE
JENY
HCDS-PD
JENZ
MCDS-PD
JEOB
HCDS-CL
JEOC
MCDS-CL
JEOH
CICS
JGEX
AFTU
NETWORK
-----------------------------------------------------------------------------
Total Base Units
=============================================================================
ALL NUMBERS IN THE ABOVE TABLE HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT
39
*CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION.
EXHIBIT B
GTE Data Services NEIC Contract Renewal Proposal
- --------------------------------------------------------------------------------
April 10, 1996
ITEM 1
Monthly
Non-Transaction Services 1996 1997 1998 Threshold
- ----------------------------------------------------------------------------------------------------------------------------------
TSO Prime Minutes [____]* [____]* [____]* [____]*
- ----------------------------------------------------------------------------------------------------------------------------------
TSO Non-Prime Minutes [____]* [____]* [____]*
- ----------------------------------------------------------------------------------------------------------------------------------
CPU Batch [____]* [____]* [____]* [____]*
- ----------------------------------------------------------------------------------------------------------------------------------
DASD Storage/Megabytes per Day [____]* [____]* [____]* [____]*
- ----------------------------------------------------------------------------------------------------------------------------------
Tape Mounts [____]* [____]* [____]* [____]*
- ----------------------------------------------------------------------------------------------------------------------------------
NOTE: TSO and CPU Batch Minutes are priced at 3033U units.
40
*CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION.
EXHIBIT B
GTE Data Services NEIC Contract Renewal Proposal
- --------------------------------------------------------------------------------
April 10, 1996
ITEM 2
- --------------------------------------------------------------------------------
Other Non-Transaction Services (Current contract rates in
effect through December 31, 1996.)
- --------------------------------------------------------------------------------
Magnetic Tape/Cartridge Storage [____]*
- --------------------------------------------------------------------------------
Magnetic Tape/Cartridge Purchase [____]*
- --------------------------------------------------------------------------------
Printing at GTEDS (Printer Utilization) [____]*
- --------------------------------------------------------------------------------
Dial Access
Prime and Non-Prime [____]*
Communication Ports - 9,600 Baud [____]*
19,200 Baud [____]*
56,000 Baud [____]*
- --------------------------------------------------------------------------------
Systems Programming [____]*
- --------------------------------------------------------------------------------
Systems Consulting [____]*
- --------------------------------------------------------------------------------
41
*CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION.
EXHIBIT B
GTE Data Services NEIC Contract Renewal Proposal
- --------------------------------------------------------------------------------
April 10, 1996
ITEM 2
- --------------------------------------------------------------------------------
Other Non-Transaction Services
effective January 1, 1997.
- --------------------------------------------------------------------------------
Magnetic Tape/Cartridge Storage [____]*
- --------------------------------------------------------------------------------
Magnetic Tape/Cartridge Purchase [____]*
- --------------------------------------------------------------------------------
Printing at GTEDS (Printer
Utilization) [____]*
- --------------------------------------------------------------------------------
Dial Access
Prime and Non-Prime [____]*
Communication Ports - 9,600 Baud [____]*
19,200 Baud [____]*
56,000 Baud [____]*
- --------------------------------------------------------------------------------
Systems Programming [____]*
- --------------------------------------------------------------------------------
Systems Consulting [____]*
- --------------------------------------------------------------------------------