EXHIBIT 10.9
TRANSACTION PROCESSING AND DEVELOPMENT AGREEMENT
AGREEMENT (the "Agreement"), dated as of July 21, 1998, by and between MedE
America Corporation, a Delaware corporation ("MedE"), and Medic Computer
Systems, Inc., a North Carolina corporation ("Medic").
WHEREAS, Medic provides electronic data interchange ("EDI") services to
certain hospitals, physicians and other health care service providers; and
WHEREAS, Medic wishes to engage MedE to provide transaction or claims
processing services via EDI for transmitting claims to insurance carriers;
NOW, THEREFORE, in consideration of the promises and the mutual
covenants herein contained, and other good and valuable consideration, the
parties hereto hereby agree as follows:
Section 1. Definitions.
"Medic/MedE System" shall mean the system currently used by MedE to
process transactions with Payors and other entities providing claims coverage
via EDI on behalf of its customers as such system shall be customized and
otherwise altered and modified in accordance with the terms of this Agreement
for use by MedE, Medic and the Payors in connection with the MedE Services under
this Agreement, and used on communications and data server hardware (existing or
newly acquired), together with separate data storage systems, that are
server-integrated into MedE's network, all as further defined in Schedule 1
(Medic/MedE System).
"Medic Subscribers" shall mean any individuals or group "providers" or
other organizations that have licensed Medic software products for submission of
claims or other transactions to Payors. The term "Medic Subscribers" shall not
include any third party claims clearinghouses.
***** This material has been omitted pursuant to a request for confidential
treatment and filed separately with the Securities and Exchange Commission.
"Payor" shall mean any insurance company or other organization
providing health care coverage, including Blue Cross/Blue Shield, Medicare,
Medicaid, HMOs and commercial health insurance companies.
Section 2. MedE Services; Transaction Information. (a) Subject to and
in accordance with the terms and conditions of this Agreement, MedE will provide
claims and transaction processing services (the "MedE Services") to Medic in
accordance with Schedule 2(a) (Medic/MedE Transaction Processing Relationship
Guidelines).
(b) Medic and MedE shall transmit claims, remittance, transaction and
other information to each other in the standard data format (the "Data Format")
set forth on Schedule 2(b) (Standard Data Format). MedE shall be responsible for
configuring the Medic/MedE System, including the electronic link with Medic's
system, to the Data Format and updating the Medic/MedE System to accommodate any
changes in such Data Format that the parties may mutually agree upon. Medic
shall be responsible for configuring its own system to the Data Format.
(c) MedE shall have no responsibility to verify, check or otherwise
inspect any claims, transaction or other information transmitted by Medic,
except as may be necessary to keep an accounting of the number of records, the
number of claims and transactions and the total dollar amount of the claims and
transactions transmitted for processing.
(d) Medic shall use all reasonable efforts to ensure that any data
submitted to MedE shall be correct and complete, and in the Data Format (as set
forth in Schedule 2(b)). MedE shall notify Medic promptly of any claims or
transactions that are rejected by any Payor or if MedE discovers or learns of
any errors in any claims, transaction or other data transmitted by Medic. If any
data supplied by Medic is in error because it is not correct or complete or in
the proper format, Medic shall have sole authority to make any corrections of
such errors and, upon making any such corrections, shall retransmit such
corrected data to MedE unless, upon Medic's written request, Medic engages MedE
to correct any such data, such as in the case of formatting errors, for a
reasonable service charge as MedE may propose and the parties may agree upon.
Section 3. Payor Arrangements. (a) MedE shall add and integrate Payors
to the MedE Services by (i) using its best efforts to enter into agreements with
each of the Payors listed on Schedule 3(a) (Payor Schedule) for the submission
of claims and other transactions via EDI (each such agreement, a "Payor
Agreement") and (ii) upon entering into any such Payor Agreement, establishing
electronic links, in accordance with Section 4, with each such Payor. MedE shall
furnish to Medic copies of its standard form(s) of "payor agreement," including
any revised versions thereof.
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(b) MedE shall have primary responsibility for negotiating such Payor
Agreements. MedE shall use its best efforts to negotiate with each Payor the
most favorable terms possible, including as to the amount of revenues per claim
or transaction (the "Revenue Rates") to be paid by such Payor, subject to
Schedule 3(b) (Revenue Rates) in respect of any Revenue Rates in the amounts
described therein. MedE shall consult with Medic regarding any terms proposed to
be included in such Payor Agreements which differ from any of MedE's standard
form(s) of "payor agreement" as previously furnished to Medic. Medic shall use
its best efforts to cooperate with MedE in establishing agreements with Payors.
(c) MedE shall use its best efforts to cause each Payor with whom MedE
enters into a Payor Agreement to enter into a Recognition and Nondisturbance
Agreement substantially in the form of Exhibit A. MedE shall not enter into any
Payor Agreement with any Payor which refuses to enter into such Recognition and
Nondisturbance Agreement simultaneously with such Payor Agreement without
Medic's prior written consent (which consent shall not be unreasonably
withheld).
Section 4. Development Milestones. MedE shall perform its obligations
under Section 3(a) in accordance with the development milestones (each, a
"Development Milestone") set forth in Schedule 4 (Development Milestones). If,
upon reaching the date on which any Development Milestone is scheduled to be
met, the aggregate transaction volumes represented by any Payors that have been
added to date is ***** then Medic shall have the right to terminate the
Agreement without further obligation to MedE, provided, however, that in order
to avoid termination, MedE may propose, for Medic's approval (which approval
shall not be unreasonably withheld), a plan of action for prompt cure of its
failure to achieve such Development Milestones within a commercially reasonable
period of time, provided, further, that Medic may condition its acceptance of
such plan of action and waiver of its right to terminate upon payment of a
reasonable estimate of what is likely to be the shortfall at July 1, 1999 into
escrow, to be released (x) to Medic in the event of any failure to meet the July
1, 1999 Processing Milestone or, if earlier, upon the termination by Medic as a
result of any Termination Event set forth in clauses (i), (ii), (iii), (v),
(vii) or (ix) of Section 18(a) or (y) to MedE if the July 1, 1999 Processing
Milestone is met or, if earlier, upon any termination by MedE due solely to any
Termination Event set forth in clauses (iv), (vi) or (viii) of Section 18(a).
For the purposes of this Section 4, the "aggregate transaction volumes" of any
Payors shall be calculated by reference to the transaction volumes set forth in
Schedule 3(a) with respect to each of the Payors.
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Section 5. Medic/MedE System; Development. (a) MedE will, in a
professional and diligent manner, develop, operate, maintain and support the
Medic/MedE System (including but not limited to any and all electronic links to
Medic or any of the Payors) in accordance with the development specifications
set forth in Schedule 5(a) (Development Specifications). Without limiting the
foregoing, MedE shall be responsible for any and all development, maintenance
and support of any electronic links to Medic and each Payor to ensure that any
and all transactions processed via EDI over any such electronic links are, and
shall continue to be, processed in a timely, accurate and error free manner.
Medic shall provide all reasonably necessary cooperation to enable MedE to
perform its duties hereunder.
(b) Any electronic links established with any Payor shall be
established in accordance with the procedures set forth in Schedule 5(b) (Payor
Implementation Guide).
(c) Medic and MedE acknowledge that the Medic/MedE System, including
any electronic links to Medic and to each Payor, shall be tested by Medic and
MedE in accordance with Section 6 to the satisfaction of both MedE and Medic.
(d) MedE shall ensure that the Medic/MedE System shall conform with the
performance and scalability criteria set forth in Schedule 5(d) (Medic/MedE
System Performance and Scalabilty Criteria) throughout the Term.
(e) Medic and MedE acknowledge that MedE shall have no responsibility
for, and shall be provided no access to, any of Medic's systems or the systems
of any Medic Subscriber.
(f) Medic may request in writing from time to time (the "Medic
Request") that MedE provide a service not heretofore provided or proposed to be
provided by MedE to Medic of establishing an electronic link to a Payor not
covered by Schedule 3(a) with whom Medic may want to have a link to process
commercial claims (each an "Additional Service"). ***** Any such Additional
Service to be provided by MedE pursuant to this Section 5(f) shall be deemed to
be a part of the
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"MedE Services" and shall be developed, commercially implemented, tested and
provided by MedE in accordance with and subject to the terms of this
Agreement*****
Section 6. Testing. Upon completing any stage of development of the
Medic/MedE System, establishing any electronic link to Medic or any Payor or
commencing live operation of the Medic/MedE System or upon the reasonable
request of MedE or Medic at any time, MedE and Medic shall run, as and when
appropriate, such in-house tests, live tests or client tests set forth in
Schedule 5(b) or such other tests as either Medic or MedE may deem reasonably
necessary or appropriate to determine if the Medic/MedE System operates without
any material incorrect functioning, material incorrect results or other material
errors (each, an "Error"). If upon running such tests Medic or MedE determines
that the Medic/MedE System contains Errors, MedE shall, as soon as commercially
reasonable (but in any event within five (5) business days), correct any and all
such Errors. Medic and MedE shall conduct further tests on any corrected
Medic/MedE System. Medic shall, as soon as commercially reasonable (but in any
event within five (5) business days), correct any Errors caused by Medic or
within Medic's control.
Section 7. Processing Milestones. (a) MedE shall perform the MedE
Services in accordance with each of the claims and transaction processing
milestones (each, a "Processing Milestone") set forth on Schedule 7(a)
(Processing Milestones).
(b) If MedE exceeds any Processing Milestone, Medic shall pay MedE
***** .
(c) If MedE fails to meet any Processing Milestone, as a result of its
failure (i) to enter into agreements with or connect to Payors or (ii) to
perform MedE Services to standard, MedE will pay such damages to Medic as
provided in Schedule 7(c) (Damages Relating to Processing Milestones).
Section 8. Payments. (a) Each party shall pay the other party, in
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accordance with Section 8(b), any and all amounts owing to such other party as
set forth in Schedule 8(a) (Payment Schedule).
(b) Within twenty (20) days after the end of each month during the Term
(each such month, a "Commission Period"), MedE shall
(i) provide Medic with (A) a statement of accounting (each, a
"Statement of Accounting") of all transactions and claims processed through
the MedE Services for Medic Subscribers during, and through the end of,
such Commission Period just completed and (B) an invoice (each, an
"Invoice") of any and all transactions processed by the MedE Services
during, and through the end of, such Commission Period in respect of which
Medic owes MedE any transaction fees in accordance with Schedule 8(a) or as
otherwise agreed in writing by the parties; and
(ii) pay to Medic, by wire transfer to an account or accounts
designated by Medic from time to time, the amount equal to (A) Medic's
commissions owing or payable by any Payors, in accordance with the relevant
Revenue Rates, for any and all transactions and claims required to be set
forth in the Statement of Accounting for Medic Subscribers, less (B) any
amounts retained by MedE as payment for any undisputed and unpaid
transaction fees for which an Invoice has been submitted to Medic pursuant
to Section 8(b)(i)(B); provided that, notwithstanding the foregoing, if
MedE manages the cash flow from Payors such that significant revenues are
received from any Payors prior to such twentieth day following the end of
each Commission Period, MedE shall make reasonable arrangements to pay to
Medic such commissions owing to Medic in a timely manner.
Section 9. Medic/MedE System; Use and Maintenance. (a) MedE shall
grant, and hereby grants, to Medic a nonexclusive, non-transferable (except as
provided in Section 28), worldwide, perpetual (subject to the terms hereof),
irrevocable, royalty-free, fully paid-up right and license to use (i) the
software comprising the Medic/MedE System and (ii) upon any Termination Event
(other than any termination due solely to any Termination Event set forth in
Sections 18(a)(iv) and 18(a)(vi)), the source code of the Medic/MedE System and
any other Escrowed Materials relating to the Medic/MedE System, solely for the
purpose of enabling Medic to provide claims and transaction processing services
directly to the Medic Subscribers (in the case of any source code, such use
shall include the creation of derivative works thereof to be used solely for the
aforementioned purpose). In certain circumstances, as provided in Section
18(b)(i),
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Medic shall pay an additional one-time fee upon delivery of such Escrowed
Materials
(b) MedE shall make any upgrade, update, correction or other
modification to the Medic/MedE System that becomes necessary or appropriate due
to (i) any changes in applicable laws, rules or regulations, (ii) any changes in
a Payor's system or interface, (iii) any change in the preferred data
communications medium used by MedE or any Payor or (iv) any corrections of any
Errors, provided that in the case of clause (iv), MedE shall use its best
efforts to correct any Errors which impact the ability to accurately process
claims as promptly as possible (but in any event within two (2) business days)
after becoming aware of such Error. Prior to undertaking any such upgrade,
update, correction or other modification, MedE shall consult with Medic. If
Medic wishes to modify the preferred data communications medium used by it, or
wishes for MedE to otherwise modify the Medic/MedE System, Medic shall so inform
MedE. If such modification does not require that MedE implement any unique or
proprietary operating methods, and can be effected without unreasonable cost,
MedE shall use its best efforts to accommodate such requests. MedE shall respond
to any other requests for modifications by providing in good faith an estimate
of the time and cost involved in such modifications (which costs, if the
modifications are undertaken, shall be borne as MedE and Medic shall in good
faith agree).
(c) Except for (and only to the extent of) the limited license to use
the software comprising the Medic/MedE system set forth in Section 9(a) above,
Medic acknowledges and agrees that MedE owns and retains all right, title and
interest of any sort whatsoever in and to the Medic/MedE System and all elements
thereof (excluding, however, the "Medic Data" (as defined herein)), including
the software and hardware used in the system. Medic further confirms its
understanding that the Medic/MedE System and all specifications, manuals, other
documentation and materials (other than the Medic Data), and all improvements,
corrections and modifications related thereto to the extent developed by MedE
(or its developers), are and shall remain the sole substantial proprietary
interests and valuable trade secrets of MedE.
(d) MedE shall be solely responsible for any and all internal and
external costs, expenses and disbursements incurred in connection with
development, operation, support and maintenance of the Medic/MedE System.
Without limiting the foregoing, MedE shall be responsible for any and all
license fees, royalties and other payments to third parties for development
platforms or software used in connection with or incorporated in the Medic/MedE
System.
(e) Medic shall pay to MedE a service fee in the amount of *****
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provided that, without limiting Medic's rights under Section 9(a), upon any
termination of this Agreement prior to September 30, 2000 (except a termination
due solely to a Termination Event set forth in Section 18(a)(iv)), there shall
be no further obligation on the part of Medic to pay any subsequent installment.
(f) During the Term, Medic shall not attempt to obtain the source code
to the Medic/MedE System except as expressly permitted under Section 9(a)
hereof, including without limitation by means of decompilation, disassembly or
other means, and shall make no copies of the software other than archival or
back-up copies or as otherwise specifically authorized.
(g) Medic may export any part of the software comprising the Medic/MedE
System, directly or indirectly, to any country outside the United States or
Canada so long as Medic complies with all applicable laws (including the
International Traffic in Arms Regulations (ITAR 22 CFR 1-130) of the U.S.
State Department, Office of the Defense Trade Controls as and to the extent
applicable).
Section 10. Medic Subscriber Database. (a) All right, title and
interest in and to any and all information relating to Medic Subscribers
(including any claims, transactions and other information submitted by Medic for
processing by the MedE Services and any claims remittances and other information
provided by any Payors upon adjudication of any claims and transactions)
(collectively, the "Medic Data") are and shall be owned exclusively by Medic.
MedE shall not have the right to use, license, rent, sell or otherwise make
available any such information for any purpose (other than to the relevant Payor
or otherwise for the benefit of Medic as specifically provided in this
Agreement).
(b) MedE shall develop and maintain a database of the Medic Data (to be
built on an Informix database platform or such other platform as the parties may
mutually agree) (the "Medic Database") that shall at all times be segregated and
secure from any database or information of any other vendors and customers of
MedE. MedE will give Medic direct electronic remote access as may be reasonably
necessary or desired to conduct searches, queries and generate reports of the
Medic Data between the hours of 7 A.M. and 9 P.M. (EST) for database queries and
reporting. If Medic requires access outside these hours, MedE and Medic will
cooperate in good faith to work out a mutually agreeable solution to provide
Medic with additional access. Further, at the end of each quarter during the
Term, MedE shall provide Medic with a complete copy, in its entirety, of the
Medic Database. From time to time, upon Medic's request, MedE will provide
documentation of the schema details in a format indicating both table structures
and
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relationships, including updates as and when changes to the schema are made.
(c) MedE shall provide, at MedE's cost, for ten (10) concurrent users
licenses of the Medic Database as is currently permitted by the Informix
licenses between Informix and MedE. Should Medic need to increase the number of
concurrent users, MedE will acquire any additional Informix licenses as needed
to accommodate the additional number of concurrent users specified by Medic,
provided, however, that MedE shall only be responsible to pay any costs thereof
up to $15,000 in the aggregate (i.e., for the ten concurrent user licenses
provided above plus any additional concurrent user licenses) and if such costs
exceed $15,000, Medic and MedE shall negotiate in good faith to determine which
party shall bear any additional costs in excess of $15,000. Medic and MedE shall
work together to negotiate appropriate license fee rates with Informix.
Section 11. Resources; Project Manager. (a) MedE will commit adequate
resources (including technically competent personnel) to ensure timely and
satisfactory performance of its obligations hereunder. MedE (and its development
personnel) shall deal exclusively (except for those minor development efforts
currently underway pursuant to existing contractual obligations of MedE) with
Medic with respect to ******* for the longer of (a) ******* years or (b) ******
following the expiration of such ******* year period.
(b) MedE will designate one member of its personnel to serve as the
project manager for the performance of the MedE Services and MedE's other
obligations hereunder (the "Project Manager"). Such Project Manager will serve
as the primary contact person at MedE for Medic. MedE shall in good faith take
into account any comments raised by Medic in the event that Medic is
dissatisfied with such Project Manager's performance.
(c) Medic will designate one member of its personnel to serve as the
project manager to be the primary contact for MedE in relation to the
performance of the MedE Services (the "Medic Project Manager").
Section 12. Responsibilities of Medic. (a) Medic represents and agrees
that it will not use the Medic/MedE System as a conduit to provide services to
any third party clearinghouse or company engaged in a business substantially
similar to that of MedE absent the express prior written consent of MedE.
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(b) Medic represents and agrees that it will use the Medic/MedE System
in accordance with the reasonable conditions, rules, and regulations which are
established or specified by MedE in writing from time to time for all of MedE's
customers and as are set forth in any manuals, materials, documents, or
instructions furnished by MedE in advance of their effectiveness to its
customers (including Medic), provided that Medic shall not be required to comply
with any conditions, rules or regulations that conflict with any provisions of
this Agreement or materially adversely affect the ability of Medic to use the
Medic/MedE System as contemplated herein.
Section 13. Training; Customer Service. (a) MedE shall provide training
to Medic personnel in the use of the Medic/MedE System and the Medic Database
(including operation of any electronic access, as well as use of any search,
query and reporting functions). The duration and nature of this training shall
be pursuant to terms to be mutually agreed upon.
(b) MedE and Medic acknowledge that MedE shall not provide customer
service directly to any Medic Subscriber (including any customer of any Medic
Subscriber). MedE shall provide first-line support (e.g., telephone, on-site and
other support) to the Payors and second-line support to Medic, who shall be
responsible for providing first-line support to Medic Subscribers (including
their customers). In order to insure that Medic will be able to provide customer
service to Medic Subscribers and their customers, MedE will provide the support
services set forth on Schedule 13(b) (Customer Service).
Section 14. Disaster Recovery. Within forty-five (45) days prior to the
date that MedE commences processing transactions hereunder, MedE shall
establish, purchase or lease, and thereafter maintain at its own expense and to
the satisfaction of Medic, a fully redundant system which may be in the form of
MedE's main non-Medic server and system, coupled with a geographically-remote
secondary fully redundant system, as well as daily off-site back-up of the Medic
Database (the "Disaster Recovery System") to be made available to Medic in event
of a natural disaster, hardware failure, data communications problem or other
unplanned interruption of, or inaccessibility to, the Medic/MedE System, such
that MedE will be able to process 100% of Medic's then current EDI transaction
volume within twenty-four (24) hours of such disaster or problem. MedE shall be
responsible for, subject to Medic's approval, the development, testing and
implementation of a viable contingency plan for accessing and using the Disaster
Recovery System in the event of a disaster.
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Section 15. Representations and Warranties. (a) Each of MedE and Medic
represents and warrants to the other party that it has full legal right and
authority to enter into this Agreement and perform its respective obligations
contained herein, and that no agreement or understanding with any other person
or entity exists or will exist which would interfere with such party's
respective obligations hereunder.
(b) Further, MedE hereby represents and warrants and covenants to Medic
that:
(i) the Medic/MedE System (which includes any communications
and data servers and other hardware installed and any software portions
used by MedE and any software portions delivered by MedE for use by Medic
or any of the Payors) is, and will be, capable of performing in all
material respects the functions for which the Medic/MedE System is
intended as contemplated herein;
(ii) the Medic/MedE System has been screened for, and does not
contain any virus, back door, drop lock or similar or other programming
code or instruction that is intentionally constructed to (x) damage,
interfere or otherwise adversely affect the operations of the Medic/MedE
System or any systems of Medic, any of the Payors or any of the Medic
Subscribers or (y) permit unauthorized electronic, remote or other access
by any person or entity through modem or other means or medium, in each
case without the consent or intent of the party utilizing any portion of
such Medic/MedE System;
(iii) except for such third party software or other rights
disclosed by MedE on Schedule 15(b)(iii) (Third Party Software and Other
Rights), (x) MedE owns or will own the entire Medic/MedE System,
including any modification, upgrade, enhancement and customization
thereof or thereto, (y) no license or other right to use any third party
software or other intellectual property is or will be required to
develop, operate, maintain or support the Medic/MedE System, and (z) the
delivery, installation and use of the Medic/MedE System as a whole does
not and will not infringe or otherwise conflict with the rights of any
other person or entity;
(iv) the Medic/MedE System, together with the rest of MedE's
network system, or any part thereof that contains or calls on a calendar
function, including but not limited to any function that is indexed to a
computer processing unit clock, provides specific dates or calculates
spans of dates, is and will be able to
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record, store, process and provide true and accurate dates and
calculations for dates and spans of dates including and following January
1, 2000; and
(v) assuming the assignment or sublicense of the third party
software listed on Schedule 15(b)(iii) in accordance with Section
18(b)(i) and when used in connection with any telecommunications and data
lines used by MedE to make any physical links with Medic and the Payors
(which are being retained by MedE), the software portions of the
Medic/MedE System and the other Escrowed Materials, together with the
data and communications servers included in the Medic/MedE System,
comprise all of the software and hardware necessary to operate the MedE
Services, including without limitation on a standalone basis, in the
manner contemplated by this Agreement.
(c) THE FOREGOING WARRANTIES ARE EXCLUSIVE AND ARE IN LIEU OF ALL OTHER
WARRANTIES, AND MEDIC HEREBY WAIVES ALL OTHER WARRANTIES, EXPRESSED, IMPLIED, OR
STATUTORY, INCLUDING ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE, RELATING TO MEDIC/MEDE SYSTEM AND THE PROVISION OF THE MEDE
SERVICES.
Section 16. Escrow. Within sixty (60) days after the date hereof, Medic
and MedE, together with an escrow agent located in the United States to be
selected by Medic, shall negotiate in good faith to agree upon an escrow
agreement (the "Escrow Agreement") containing commercially reasonable terms and
conditions that are standard in the industry. Such Escrow Agreement shall
provide for deposit of the materials relating to the Medic/MedE System that are
described on Schedule 16 (Escrowed Materials) and ------ shall provide for the
release of such Escrowed Materials upon the occurrence of a Termination Event in
accordance with Section 18, other than a Termination Event solely declared by
MedE pursuant to clause (iv) or (vi) of Section 18(a).
Section 17. Term. The term (the "Term") of this Agreement shall
commence upon the date hereof and, unless terminated sooner pursuant to Section
18, shall continue in effect until June 30, 2003 (the "Initial Term"), provided
that the Term shall continue for additional one-year periods (each, a "Renewal
Period") unless either party notifies the other party in writing at least twelve
(12) months prior to the expiration of the Initial Term or any Renewal Period,
as applicable, of such party's desire to terminate the Agreement.
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Section 18. Termination. (a) This Agreement may be terminated upon
written notice upon the occurrence of any of the following (each, a "Termination
Event"):
(i) upon mutual agreement of Medic and MedE;
(ii) by MedE, upon not less than six (6) months prior written
notice, if for reasons beyond MedE's control, the project fails to meet the
Processing Milestones and MedE processes in any year less than ***** of the
total transaction volume that would have been processed had the timetable
been met;
(iii) by Medic, upon any failure by MedE (through no fault of
Medic) to meet any Processing Milestone by ***** or more of the transaction
volumes corresponding to such Processing Milestone;
(iv) by MedE, upon a material breach of any representation,
warranty, covenant or agreement by Medic (other than as provided by Section
18(a)(viii)), which breach is not cured within thirty (30) days after
receipt of notice of such breach, provided that for the purposes of this
Agreement, a "material breach" shall include, but shall not be limited to,
(x) Medic fails or refuses to pay any amount due hereunder to MedE, except
any amount which is being disputed in good faith by Medic, (y) Medic fails
to substantially perform any obligation contained herein which, by its
terms, is required to be performed by a certain deadline or within a
certain time period (notwithstanding Medic's best efforts to do so) or (z)
a series of breaches each of which individually may have been cured or are
not material, but in the aggregate, constitute a material breach or
indicate a pattern of breaches;
(v) by Medic, upon a material breach of any representation,
warranty, covenant or agreement by the other party which is not cured
within thirty (30) days after receipt of notice of such breach, provided
that for the purposes of this Agreement, a "material breach" shall have
occurred if, without limitation, (w) MedE fails or refuses to pay any
amount due hereunder to Medic, except any amount which is being disputed in
good faith by MedE, (x) the Medic/MedE System or any material component
thereof continues to exhibit Errors, or the Medic Database continues to be
unable to be accessed or searched, in either case causing disruptions in or
repeated periods of downtime of the MedE Services or customer service of
Medic or Medic Subscribers (notwithstanding MedE's remedial or maintenance
efforts) during any 45-day period (which shall include the 30-day notice
period), (y) MedE fails to substantially perform any
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obligation contained herein which, by its terms, is required to be
performed by a certain deadline or within a certain time period
(notwithstanding MedE's best efforts to do so) or (z) a series of breaches
each of which individually may have been cured or are not material, but in
the aggregate, constitute a material breach or indicate a pattern of
breaches;
(vi) by MedE, if Medic becomes insolvent, makes a general
assignment for the benefit of creditors, suffers or permits the appointment
of a receiver for its business or assets, becomes subject to any proceeding
under any bankruptcy or insolvency law, whether domestic or foreign, or has
wound up or liquidated, voluntarily or otherwise;
(vii) by Medic, if MedE becomes insolvent, makes a general
assignment for the benefit of creditors, suffers or permits the appointment
of a receiver for its business or assets, becomes subject to any proceeding
under any bankruptcy or insolvency law, whether domestic or foreign, or has
wound up or liquidated, voluntarily or otherwise;
(viii) by MedE, if Medic materially breaches its obligations
contained in Section 20, unless Medic cures such breach within thirty (30)
days after receipt of notice thereof; or
(ix) by Medic, upon any "change of control" of MedE, which
shall be defined to have occurred if a non-financial buyer acquires,
directly or indirectly, beneficial ownership of 35% or more of the then
outstanding voting shares or share equivalents of MedE, provided that
Medic's termination right in this Section 18(a)(ix) may be exercised upon
and at any time within eight (8) months after the occurrence of such change
of control of MedE during which such non-financial buyer continues to be a
shareholder, provided, further, that prior to the occurrence of such
"change of control" event, MedE and Medic may agree upon a notice period of
such termination.
(b) Upon any termination or expiration of the Agreement (subject to
Section 18(d) below):
(i) MedE shall deliver (or allow to be delivered out of
escrow), and Medic shall receive, (x) the software portions of the
Medic/MedE System, together with good and merchantable title to, and the
manufacturers' warranties on and any support arrangements relating to, the
data and communications servers,
14
and any and all Escrowed Materials (whether out of escrow or otherwise), in
each case, free and clear of any liens, security interests and other
encumbrances, provided that such software portions thereof shall be subject
to the limited license granted under Section 9(a) hereof, and (y)
assignment or sublicense of any and all third party software components
used as part of or in connection with the development, operation,
maintenance and support of the Medic/MedE System, so long as (i) the owner
of such software shall have consented to such assignment or sublicense and
(ii) Medic agrees to assume and perform any ongoing obligations in respect
of any such assigned or sublicensed third party software. If, and only to
the extent that, the Medic/MedE System relies on any third party software
to be so assigned or sublicensed, and either (i) the owner of such software
does not consent to such assignment or sublicense or (ii) Medic does not
agree to assume the ongoing obligations with respect to such software as
aforesaid, then MedE makes no representations of any nature whatsoever
relating to the Medic/MedE System and Medic accepts the Medic/MedE System
"AS-IS, WHERE-IS" in respect of those portions of such Medic/MedE System
that depend upon the use of such third party software. The delivery of the
Medic/MedE System and other Escrowed Materials to Medic in accordance with
this Section 18(b)(i) shall be at no additional cost to Medic, except that
if any such termination or expiration is due to (A) either (x) the
nonrenewal or nonextension of the Initial Term or, if applicable, any
Renewal Period or (y) a Termination Event as set forth in Section
18(a)(ix), Medic shall pay to MedE a one-time payment of ***** to be paid
upon satisfactory delivery of the items to be delivered by MedE in
accordance with this Section 18(b)(i), or (B) a Termination Event pursuant
to Section 18(a)(viii), Medic shall be required to purchase the items to be
delivered by MedE in accordance with this Section 18(b)(i) for a one-time
payment of ***** to be paid upon satisfactory delivery of such items.
(ii) MedE shall provide Medic with (x) reasonable support,
training and assistance that is mutually agreed upon in effecting a smooth
transition and assisting Medic personnel in the use of the Medic/MedE
System, for a period not to exceed six (6) months, consisting of certain
periods of support, training and assistance for free and thereafter at
rates to be agreed and (y) cooperation in conversions to new providers for
a period of six months on terms that are reasonable. - -
(iii) Any residual transactions that remain to be processed by
MedE upon the termination of this Agreement will be processed upon terms
that will be mutually agreed to, but that shall not be less favorable than
those that were
15
in effect immediately prior to the termination of this Agreement.
(iv) MedE shall provide reasonable assistance at no additional
cost to Medic in connection with effecting a smooth transition to Medic or
a new provider.
(c) Notwithstanding anything to the contrary contained herein, Sections
8(b), 9(a), 9(c), 10(a), 15, 16, 18(b), 18(c), 18(d), 19, 21, 23, 24, 25, 31, 32
and 33 shall survive any expiration or termination of this Agreement.
(d) Notwithstanding anything to the contrary set forth herein, in the
event of a termination solely due to a Termination Event set forth in clause
(iv) or (vi) of Section 18(a), (1) Medic shall have no entitlement to possess or
use the Medic/MedE System for any purpose whatsoever, (2) Medic shall promptly
return to MedE and/or delete all elements of the Medic/MedE System in its
possession or control, and (3) Medic shall not be entitled to any of the
benefits set forth in Section 18(b) hereof.
Section 19. Indemnification. (a) MedE shall indemnify, defend and hold
harmless, and shall pay and reimburse, Medic, Medic Subscribers and its and
their respective employees, officers, directors, representatives, customers and
agents for any and all suits, proceedings, claims, actions, judgments,
settlements, losses, damages, liabilities, debts, costs and expenses (including
attorneys' fees and disbursements) resulting from or arising out of (i) any
alleged or actual infringement of or other conflict of the Medic/MedE System
with any third party's intellectual property, proprietary or other rights, (ii)
any breach of any representation and warranty contained in Section 15(b)(iii),
or (iii) any breach of any other representation or warranty or any covenant or
other obligation of MedE hereunder, provided, however, that MedE's
indemnification obligation hereunder shall continue during the Term and
thereafter (x) in the case of the foregoing Section 19(a)(iii), for one
additional year following any expiration or termination of the Term and (y) in
the case of the foregoing Section 19(a)(i) or Section 19(a)(ii), for five
additional years following any expiration or termination of the Term.
(b) Except as provided in Section 19(a), Medic shall indemnify, defend
and hold harmless, and shall pay and reimburse, MedE and its respective
employees, officers, directors, representatives, customers and agents for any
and all suits, proceedings, claims, actions, judgments, settlements, losses,
damages, liabilities, debts, costs and expenses (including attorneys' fees and
disbursements) resulting from or arising out of (i) any claim by any Medic
Subscriber relating to Medic's performance of its obligations to any Medic
Subscriber or (ii) any breach of any representation, warranty,
16
covenant or other obligation of Medic hereunder.
Section 20. Exclusivity. (a) Scope of Exclusivity. During the Term,
subject to Section 20(b) and 20(c), MedE will be the exclusive EDI processor for
Medic in respect of claims and transactions that can be processed by the MedE
Services, including, without limitation, in respect of any Payors which have
been added and integrated into the MedE Services (i.e., a Payor with which MedE
has established a Payor Agreement and EDI link) and to which Medic shall submit
any and all claims and transactions of Medic Subscribers covered by such Payor
for processing by the MedE Services.
(b) Medic and MedE Obligations. ***** With respect to competitiveness
as to price and other terms (i) MedE shall have the opportunity to match bona
fide, written independent third-party offers received by Medic, provided that
Medic shall have the right ro give such transaction processing business to such
relevant independent third party if MedE fails to match the terms of such
independent third party's offer (including as to price, service standards and
other terms); and (ii) MedE shall give Medic the benefit of any terms (including
as to price, service standards and other terms) which MedE has agreed with any
other similarly situated customer or third party which are more favorable than
the terms agreed with Medic.
(c) Certain Exceptions to Exclusvity. Notwithstanding anything to the
contrary contained herein, the parties acknowledge that Medic shall not be bound
by, or be deemed to have breached, any obligations of exclusivity or otherwise
hereunder if: *****
Section 21. Limitation of Liability. (a) In no event shall either party
be liable for indirect, special, or consequential damages (including loss of
profits or damage to business reputation), even if such party has been advised
of the possibility of such damages, except as specifically provided in Section 4
and 7(c).
(b) During the Initial Term, such penalties and damages payable
pursuant to Sections 4 and 7(c) shall not exceed ***** in the aggregate. No such
limit on the amount of damages and penalties payable during any Renewal Period
shall apply unless mutually agreed upon by the parties.
(c) Notwithstanding anything to the contrary contained herein, each
party's total cumulative liability to the other party under this Agreement shall
be limited to ***** and each party releases the other party from any and all
obligations, liability, claims or demands in excess of such limitation.
Section 22. Compliance with Laws. Each of Medic and MedE agrees that,
with respect to its respective performance hereunder, it shall comply with any
and all applicable laws and regulations (including without limitation any
confidentiality requirements established by the Health Care Financing
Administration and any state health care authorities).
Section 23. Confidentiality. (a) Each party shall, and shall cause
their respective affiliates and any of its and their respective officers,
consultants, principals, agents, employees and directors to, use all reasonable
efforts to (a) protect the other party's confidential information and (b) not
disclose, nor permit unauthorized access to, the other party's confidential
information, without the prior written consent of such other party.
17
(b) In the event that either party (the "Disclosing Party") is required
under applicable law to disclose any confidential information of the other party
(the Non-Disclosing Party"), including in connection with any filings to be made
with the Securities Exchange Commission pursuant to the U.S. Securities Act of
1933, as amended, or the U.S. Securities Exchange Act of 1934 as amended, such
Disclosing Party shall give the Non-Disclosing Party prompt written notice of
such requirement so that the Non- Disclosing Party may seek an appropriate
confidential treatment or protective order of such confidential information or
portions thereof. If in the absence of a protective order the Disclosing Party
is compelled to disclose such confidential information, such Disclosing Party
may disclose such portion of such confidential information that in the opinion
of the Disclosing Party's counsel such Disclosing Party is compelled to
disclose, without liability under this Agreement, provided, however, that such
Disclosing Party shall give such Non-Disclosing Party written notice of the
confidential information to be disclosed as far in advance of its disclosure as
is practicable and shall use reasonable efforts to obtain assurances that
confidential treatment, if available, will be accorded to such confidential
information.
(c) The parties acknowledge that the term "confidential information" as
used herein will include the terms of this Agreement (including any Schedules
hereto) and the Medic/MedE System, the Medic Data and Medic Database, and all
specifications, manuals, other documentation and materials, and all
improvements, corrections and modifications related thereto.
(d) The obligations of each party hereto under this Section 23 shall
not apply to any information that: (i) was known to such party prior to the
disclosure by the other party; (ii) is or becomes generally available to the
public (other than by a breach of this Agreement); or (iii) otherwise becomes
available on a non-confidential basis by a third party who is not under an
obligation of confidence to either party hereto. Section 24. Maintenance of
Records; Audit. (a) Each of Medic and MedE agrees that it shall maintain a copy
of this Agreement and any books, documents, records and other data of such party
as may be required to be maintained by applicable law, for such periods as such
laws may require.
(b) During the Term and for three (3) years thereafter, MedE shall
maintain on its premises all usual and proper records and books of account and
all usual and proper entries to substantiate the number of claims and
transactions processed in connection with the MedE Services. In order to verify
statements issued by MedE and MedE's compliance with the terms of this
Agreement, Medic may audit, or cause an audit to be made of, MedE's books and
records. Any audit
18
shall be conducted during regular business hours at MedE's facilities upon five
(5) days' prior written notice. Any audit shall be conducted by Medic or an
independent certified public accountant selected by Medic (other than on a
contingent fee basis), provided that, if Medic elects to use an independent
certified public accountant, such accountant shall be reasonably acceptable to
MedE. MedE agrees to provide Medic or its designated auditors, as the case may
be, access to all relevant records and facilities of MedE, and Medic agrees to
take such actions as are reasonable to minimize any disruption to MedE's
business. Prompt adjustment shall be made to compensate for any errors or
omissions disclosed by such audit. Any such audit shall be paid for by Medic
unless material discrepancies are disclosed. "Material" shall mean at least 10%
(in Medic's favor) of the amount that was reported. If material discrepancies
are disclosed, MedE agrees to pay Medic for the reasonable costs associated with
the audit. In no event shall audits be made more frequently than semi-annually
unless the immediately preceding audit disclosed a material discrepancy.
Section 25. Non-Solicitation. (a) During the Term and for a period of
one (1) year following the expiration or termination of the Term, neither MedE
nor any of its affiliates, nor any of its or their employees, officers or
directors, will, directly or indirectly, solicit or endeavor to entice away from
Medic or any of its affiliates or otherwise intentionally interfere with Medic's
relationship with, any person or entity who or which (i) is at the time employed
by or otherwise engaged to perform services (other than clerical or routine
administrative services) for Medic or any of its affiliates or (ii) is, or has
been within the two-year period ending on the date of such expiration or
termination, a Medic Subscriber or other customer or client of Medic or any of
its affiliates.
(b) During the Term and for a period of one (1) year following the
expiration or termination of the Term, neither Medic nor any of its affiliates,
nor any of its or their employees, officers or directors, will, directly or
indirectly, solicit or endeavor to entice away from MedE or any of its
affiliates or otherwise intentionally interfere with Medic's relationship with,
any person or entity who or which (i) is at the time employed by or otherwise
engaged to perform services (other than clerical or routine administrative
services) for MedE or any of its affiliates or (ii) is, or has been within the
two-year period ending on the date of such expiration or termination, a customer
or client of MedE or any of its affiliates.
Section 26. Force Majeure. Neither Medic nor MedE shall be held liable
for failure to fulfill its respective obligations hereunder if such failure is
caused by strikes, acts of God, flood, extreme weather, fire, or other natural
calamity, or similar causes beyond the control of such party (each a "Force
Majeure Event"). Notwithstanding the
19
foregoing, a Force Majeure Event will not excuse MedE from performance of its
obligations hereunder if and to the extent a Disaster Recovery System (as
provided in Section 14) would have mitigated any such failure on the part of
MedE to perform such obligations. During the pendency of a Force Majeure Event,
each of the parties shall take all reasonable steps to furnish the services
required hereunder by other means, and, in any event, shall, upon termination of
such Force Majeure Event, forthwith resume obligations under this Agreement.
Section 27. Relationship of Parties. Nothing contained in this
Agreement shall be construed as creating a joint venture, partnership or
employment arrangement between the parties hereto, nor shall either party have
the right, power or authority to create any obligation or duty, expressed or
implied, on behalf of the other party hereto.
Section 28. Assignment. Notwithstanding anything to the contrary
contained in this Agreement, each party hereto may assign, or provide the
benefit of, this Agreement or any rights hereunder to any parent, subsidiary,
affiliate or successor in interest (including a successor in interest to
substantially all the assets of such party). Notwithstanding anything to the
contrary contained in this Agreement, Medic may subcontract or sublicense any
rights granted to it under this Agreement to any third party person or entity
for use for the benefit of Medic or any of its affiliates (such as in an
outsourcing arrangement), except any third party person or entity who is a
direct competitor of MedE unless MedE gives its prior written consent (which
consent shall not be unreasonably withheld), provided, however, that all
obligations for performance under this Agreement shall remain with Medic
following such subcontract or sublicense. Except as provided in the foregoing,
this Agreement may not be assigned by either party without the other party's
prior written consent, which consent shall not be unreasonably withheld, and any
attempted assignment without such consent shall be null and void.
Section 29. No Waiver. No failure on the part of either party to
exercise and no delay in exercising any right or remedy hereunder shall operate
as a waiver thereof or modify the terms of this Agreement. The exercise of any
one remedy shall not be deemed to waive or preclude the exercise of any other
remedy.
Section 30. Entire Agreement, Amendments. This Agreement, including all
the Schedules hereto, constitutes the entire agreement, understanding, and
representations, express or implied, between MedE and Medic regarding the
subject matter hereof and supersedes all prior communications between the
parties including all oral or written proposals. No representation, warranty,
promise, inducement, or statement of intention has been made by either party
which is not embodied in this Agreement, and
20
neither MedE, on the one hand, nor Medic, on the other hand, shall be bound by,
or be liable for, any alleged representation, warranty, promise, inducement, or
statement of intention not embodied herein. Any amendments to this Agreement
must be in writing signed by both parties hereto.
Section 31. Severability. In the event that any provision hereof is
found to be invalid or unenforceable pursuant to judicial decree or decision,
the remainder of this Agreement shall remain valid and enforceable according to
its terms. It is expressly understood and agreed that each provision of this
Agreement that provides for a disclaimer of warranties, limitation on liability,
or exclusion of damages is intended by the parties to be severable and
independent of any other provision and to be enforced as such.
Section 32. Applicable Law; Dispute Resolution. (a) This Agreement
shall be governed by and construed in accordance with the laws of the State of
New York without regard to conflicts of law principles.
(b) (i) Any dispute, controversy or claim arising out of, relating to,
or in connection with, this Agreement or any breach, termination or validity
thereof shall be finally settled by arbitration. The arbitration shall be
conducted in accordance with the Commercial Arbitration Rules of the American
Arbitration Association in effect at the time of the arbitration, except as they
may be modified herein or by mutual agreement of the parties. The seat of the
arbitration shall be New York, and it shall be conducted in the English
language.
(ii) The arbitration shall be conducted by three arbitrators. The party
initiating arbitration ("the Claimant") shall appoint its arbitrator in its
request for arbitration (the "Request"). The other party ("the Respondent")
shall appoint its arbitrator within thirty (30) days of receipt of the Request
and shall notify the Claimant of such appointment in writing. If the Respondent
fails to appoint an arbitrator within such 30-day period, the arbitrator named
in the Request shall decide the controversy or claim as a sole arbitrator.
Otherwise, the two arbitrators appointed by the parties shall appoint a third
arbitrator within thirty (30) days after the Respondent has notified Claimant of
the appointment of the Respondent's arbitrator. When the arbitrators appointed
by the Claimant and Respondent have appointed a third arbitrator and the third
arbitrator has accepted the appointment, the two arbitrators shall promptly
notify the parties of the appointment of the third arbitrator. If the two
arbitrators appointed by the parties fail or are unable so to appoint a third
arbitrator or so to notify the parties, then the appointment of the third
arbitrator shall be made by President of the American Arbitration Association
21
which shall promptly notify the parties of the appointment of the third
arbitrator. The third arbitrator shall act as Chairman of the panel.
(iii) The arbitral award shall be in writing and shall be final and
binding on the parties. The award may include an award of costs, including
reasonable attorneys' fees and disbursements. Judgment upon the award may be
entered by any court having jurisdiction thereof or having jurisdiction over the
parties or their assets. This Section 32 shall in no way affect the right of
either party hereto to seek interim relief in any court of competent
jurisdiction, and a request for such interim relief shall not be deemed
incompatible with, or a waiver of, the agreement to arbitrate contained herein.
Section 33. Notices. Notices required to be given pursuant to this
Agreement shall be in writing and shall be deemed to have been duly given if
delivered personally, transmitted by confirmed fax, or sent by a nationally
recognized overnight courier service, or by registered or certified mail,
postage prepaid, as follows:
If to MedE, send to:
MedE America Corporation
90 Merrick Avenue, Suite 501
East Meadow, NY 11554
Attn: David Goldwin, Esq.
Phone (516) 542-4500 ext. 108
Fax: (516) 542-4508
If to Medic, send to:
Medic Computer Systems, Inc.
8601 Six Forks Road, Suite 300
Raleigh, North Carolina 27615
Tel: (919) 847-8102
Fax: (919) 847-7110
Attention:
with a copy to:
Misys plc
Burleigh House
Chapel Oak
22
Salford Priors 23
Evesham, England WORCS
WR11 5SH
Tel: 011 44 138 687-1373
Fax: 011 44 138-687-1045
Attention: Ross K. Graham
or to such other address as either party shall have designated by notice to the
other.
Section 34. Execution in Counterparts. This Agreement may be executed
in one or more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
23
IN WITNESS WHEREOF, MedE and Medic have duly executed and delivered this
Agreement as of the date first above written.
MEDIC COMPUTER SYSTEMS, INC.
By:
-------------------------------
Name:
Title:
MEDE AMERICA CORPORATION
By:
-------------------------------
Name:
Title:
24
EXHIBIT A
RECOGNITION AND NONDISTURBANCE AGREEMENT
RECOGNITION AND NONDISTURBANCE AGREEMENT (the "Agreement"), dated as of
__________by and among MedE Corporation, a Delaware corporation ("MedE"), Medic
Computer Systems, Inc., a North Carolina corporation ("Medic") and [PAYOR], a
____________corporation ("Payor").
BACKGROUND
WHEREAS, MedE and Payor are parties to the [Payor Agreement], dated as
of [____], (the "Payor Agreement");
WHEREAS, MedE and Medic are parties to the Transaction Processing and
Development Agreement, dated as of [July _, 1998] (the "Transaction Agreement"),
whereby MedE has agreed to process, via electronic data interchange ("EDI"),
claims or other transactions of Medic's subscribers and customers (such
services, the "MedE Services"); and
WHEREAS, the parties hereto desire to assure Medic of its ability to
continue submitting claims to Payor, upon the terms and conditions substantially
similar to the Payor Agreement, irrespective of termination of the MedE Services
or Medic's arrangement with MedE;
NOW THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto hereby agree as follows:
Section 1. Recognition and Nondisturbance.
(a) Medic shall immediately notify Payor in writing upon the occurrence
of any Termination Event (as defined below).
(b) Upon occurrence of any Termination Event:
(i) The Payor Agreement will continue as a direct agreement
between the Payor and Medic upon the terms and conditions of the Payor
Agreement, but only with respect to the claims and transactions of Medic
subscribers and customers being processed with such Payor, and with such
changes as Payor and Medic may thereafter mutually agree in writing are
appropriate under the circumstances.
(ii) Medic will perform all of the obligations of MedE under
the Payor Agreement from and after the date of such Termination Event, but
Medic shall have no liability to the Payor for acts or omissions of MedE
on, prior to or after the date of such Termination Event;
(iii) the Payor acknowledges that Payor shall have to
cooperate with Medic to establish an EDI electronic link between Medic's
systems and the Payor's system as promptly as commercially practicable in
accordance with and as contemplated by the terms of the Payor Agreement;
and
(iv) Payor will (i) not disturb the rights granted to Medic to
process claims and transactions of Medic subscribers and customers via an
EDI link with the Payor, (ii) grant to Medic rights and benefits
substantially similar to those granted to MedE under its Payor Agreement,
including the rate of commissions paid by Payor in connection with
processing claims and transactions via EDI and (iii) perform Payor's
obligations under the Payor Agreement from and after the date of such
Termination Event.
(c) The provisions of this Agreement shall be effective and
self-operative as of the date of such Termination Event without execution of any
further instrument on the part of MedE, Payor or Medic.
(d) Upon the reasonable written request of either Payor or Medic,
Payor, Medic and MedE shall execute and deliver promptly to the requesting party
such other documents or instruments (in recordable form, if so requested)
reasonably necessary to effectuate or evidence the intent of the parties
hereunder.
(e) For purposes of this Agreement, "Termination Event" shall mean the
occurrence of any of the following events:
(1) MedE becomes insolvent, makes a general assignment for the
benefit of creditors, suffers or permits the appointment of a receiver for
its business or assets, becomes subject to any proceeding under any
bankruptcy or insolvency law, whether domestic or foreign, or has wound up
or liquidated, voluntary or otherwise; or
(2) the receipt by Medic of any portion of the Medic/MedE
System (as the same is defined and referred to in the Transaction
Processing Agreement) to be received by it, including any of the items
deposited by MedE into escrow in accordance with the Transaction Agreement,
whether such termination is due to notice of termination by Medic or MedE
or otherwise.
2
Section 2. Consent of Payor. Payor consents to, and shall give Medic
the benefit of, Medic's assumption and performance of terms and obligations
substantially similar to the duties of MedE under the Payor Agreement.
Section 3. Assignment. Notwithstanding anything to the contrary
contained in this Agreement , each party hereto may assign this Agreement or any
rights hereunder to any parent, subsidiary, affiliate or successor in interest
(including a successor in interest to substantially all the assets of such
party). Notwithstanding anything to the contrary contained in this Agreement,
Medic may subcontract or sublicense any rights granted to it under any Agreement
to any third party person or entity for use for the benefit of Medic (such as in
an outsourcing arrangement), provided, however, that all obligations for
performance under this Agreement shall remain with Medic following such
assignment. Except as provided in the foregoing, this Agreement may not be
assigned by either party without the other party's prior written consent, which
consent shall not be unreasonably withheld, and any attempted assignment without
such consent shall be null and void.
Section 4. No Waiver. No failure on the part of either party to
exercise and no delay in exercising any right or remedy hereunder shall operate
as a waiver thereof or modify the terms of this Agreement. The exercise of any
one remedy shall not be deemed to waive or preclude the exercise of any other
remedy.
Section 5. Entire Agreement, Amendments. This Agreement, together with
the Payor Agreement, constitutes the entire agreement, understanding, and
representations, express or implied, among the Payor, MedE and Medic regarding
the subject matter hereof and supersedes all prior communications between the
parties including all oral or written proposals. No representation, warranty,
promise, inducement, or statement of intention has been made by either party
which is not embodied in this Agreement, and neither MedE, on the one hand, nor
Medic, on the other hand, shall be bound by, or be liable for, any alleged
representation, warranty, promise, inducement, or statement of intention not
embodied herein. Any amendments to this Agreement must be in writing signed by
both parties hereto.
Section 6. Severability. In the event that any provision hereof is
found to be invalid or unenforceable pursuant to judicial decree or decision,
the remainder of this Agreement shall remain valid and enforceable according to
its terms. It is expressly understood and agreed that each provision of this
Agreement that provides for a disclaimer of warranties, limitation on liability,
or exclusion of damages is intended by the parties to be severable and
independent of any other provision and to be enforced as such.
3
Section 7. Applicable Law; Dispute Resolution. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York
without regard to conflicts of law principles.
Section 8. Notices. Notices required to be given pursuant to this
Agreement shall be in writing and shall be deemed to have been duly given if
delivered personally, transmitted by confirmed fax, or sent by a nationally
recognized overnight courier service, or by registered or certified mail,
postage prepaid, as follows:
If to Payor, send to:
If to MedE, send to:
MedE America Corporation
90 Merrick Avenue, Suite 501
East Meadow, NY 11554
Attn: David Goldwin, Esq.
Phone (516) 542-4500 ext. 108
Fax: (516) 542-4508
If to Medic, send to:
Medic Computer Systems, Inc.
8601 Six Forks Road, Suite 300
Raleigh, North Carolina 27615
Tel: (919) 847-8102
Fax: (919) 847-7110
Attention:
with a copy to:
Misys plc
Burleigh House
Salford Priors
Evesham, England WORCS
WR11 5SH
Tel: 011 44 138 687-1373
Fax: 011 44 138-687-1045
Attention: Ross K. Graham
4
or to such other address as either party shall have designated by notice to the
other.
Section 9. Execution in Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
5
IN WITNESS WHEREOF, each of MedE, Medic and the Payor have duly executed and
delivered this Agreement as of the date first above written.
[PAYOR]
By:
-----------------------------
Name:
Title:
MEDIC COMPUTER SYSTEMS, INC.
By:
------------------------------
Name:
Title:
MEDE AMERICA CORPORATION
By:
-----------------------------
Name:
Title:
6
Transaction Processing Agreement
List of Schedules
-----------------
Schedule 1 Medic/MedE System
Schedule 2(a) Medic/MedE Transaction Processing Relationship
Guidelines
Schedule 2(b) Standard Data Format
Schedule 3(a) Payor Schedule
Schedule 3(b) Revenue Rates
Schedule 4 Development Milestones
Schedule 5(a) Development Specifications
Schedule 5(b) Payor Implementation Guide
Schedule 5(d) Medic/MedE System Performance and Scalability Criteria
Schedule 7(a) Processing Milestones
Schedule 7(c) Damages Relating to Processing Milestones
Schedule 8(a) Payment Schedule
Schedule 13(b) Customer Service
Schedule 15(b)(iii) Third Party Software and Other Rights
Schedule 16 Escrowed Materials
Schedule 1
Medic/MedE System
The "Medic/MedE System" shall include, but not be limited to, (a) any and all
electronic links established to Medic and to any Payors, including any software
provided and licensed thereto, (b) hardware including but not limited to
servers, equipment for receiving and transmitting data communications and any
other hardware used by MedE to provide the MedE Services, (c) any and all
documentation, third party software or other rights (whether incorporated as a
component or used in connection with development of the Medic/MedE System), and
(d) upon the occurrence of any Termination Event (other than a Termination Event
declared by MedE under clauses (iv) or (vi) of Section 18(a)), the source code
and other Escrowed Materials (as defined in Section 16).
2
Schedule 2(a)
Medic/MedE Transaction Processing Relationship Guidelines
- -- Medic will make multiple transmissions throughout the day
- -- MedE will be able to receive claims 24 hours-a-day, 7 days-a-week, 365
days-a-year, except for scheduled maintenance and down times.
- -- The cutoff for claims transmission will be *****
- -- MedE will provide dial backup of claims transmission.
- -- MedE will provide daily control totals for incoming and outgoing claim
transmission
- -- MedE will forward to Medic any status or other messages from any Payor
with respect to any claims or transactions of any Medic Subscriber.
- -- Medic shall be responsible for implementing an enrollment process to
enroll any Medic Subscribers with the Payors.
- -- MedE will assign to each claim or transaction a tracking number.
- -- MedE shall have the right to change the passwords used by Medic to
access the Medic/MedE System every 90 days; provided, however, that
MedE shall inform Medic in advance of any such password changes.
- -- MedE will provide Medic with five (5) business days' prior written
notice of all scheduled down time for maintenance and system upgrade,
provided, however, that in the case of an emergency, MedE shall provide
Medic with such notice as soon as is reasonably possible.
3
Schedule 2(b)
Standard Data Format
--------------------
The "Data Format" for communications for transactions between Medic and MedE
will be Medic National Standard Format (NSF) for claims and Medic NSF
remittance.
4
Schedule 3(a)
Payor Schedule
--------------
June 1998 list of commercial and governmental Payors as provided to MedE on or
prior to the date hereof.
5
Schedule 3(b)
Revenue Rates
-------------
*****
6
Schedule 4
Development Milestones
----------------------
- *****
- MedE shall provide Medic with development services to support the
development and implementation of ***** . MedE and Medic shall mutually
agree further on the schedule for such remittance development and
implementation.
7
Schedule 5(a)
Development Specifications
--------------------------
- -- The Medic/MedE System shall have the capability to transmit
transactions and claims processed by Medic via EDI to Payors, obtain a
result set for each such transaction and/or claim, act on the result
set and transmit the result set via EDI to Medic.
- -- MedE will furnish a weekly status report to the Medic Project Manager,
which report shall include the status of all active projects with
respect to each Payor and each MedE developer. These reports will also
include "Actual Project Status versus Goals," "Time Spent versus
Allocated," and potential problem areas in the development of the
Medic/MedE System.
- -- Development cycle for establishing an electronic link with any Payor
shall start with receipt of specifications, contact person information
and signed Payor Agreement with such Payor.
- -- Development does not include claim referral and eligibility.
- -- On a monthly basis MedE will furnish to the Medic Project Manager a
status report in respect of each MedE developer and any Payor then
being linked, as well as forward looking plans for the next 90 days,
claims and transaction volumes versus established goals, and projected
claims and transaction volumes for the next 90 days.
- -- Medic will supply test claims to MedE within an appropriate time frame
after signing any Payor Agreement as the parties may mutually agree
upon.
8
Schedule 5(b)
Payor Implementation Guide
--------------------------
See attached "Payer Implementation Guide"
Commercial Claims
- -- Each electronic link to a Payor shall be considered completed and
tested only if it has tested in accordance with one of the following:
*****
Government Claims
- -- Each electronic link to a Payor shall be considered completed and
tested only if it has either been: *****
9
Payor Implementation Guide
- - INITIAL PAYOR CONTACT
1. Obtain Contact Name and Numbers for EDI Testing, Production,
Billing, and Provider Support
2. Order Claim, Communication, Report and Remittance Specifications
3. Obtain all Vendor and Provider Enrollment Forms with Instructions
4. Negotiate and agree upon a Payor Agreement
5. Agree upon procedures to establish link
- - DEVELOPMENT
1. Fill out and submit Vendor Enrollment
2. Review specifications
3. Create Electronic Format and Map
4. Write initial Payor specific edits
5. Obtain or create test claims
- - IN-HOUSE TESTING
1. Obtain test data
2. Run test data through Payor specific edits on MedE Claim
3. Run test data through electronic format and map
4. Validate output file
10
- - PAYOR TESTING
1. Set up communication (obtain modem number, submitter ID and login)
2. Transmit test claims to Payor (notify Payor of transaction)
3. Contact Payor for test results
4. Make corrections if errors are found
5. Send out a second test for claim validation (more detailed)
6. Contact Payor for test results from second file
7. Set up router for Electronic Reports (if available)
- - LIVE CLIENT TEST
1. Obtain sample of live claims for client
2. Follow up on Provider Enrollment (must be completed before first
live file is sent)
3. Set up Live Communication
4. Process and transmit claims to Payor
5. Pick up Electronic Reports
6. Route reports to Providers' directory for pick up with their next
submission
7. Review reports on a daily basis, making changes when needed until
the accept rate is ***** or above
11
- - REMITTANCE (IF REQUESTED)
1. Work with Provider and Payor to set up Electronic Remittance
Advice
2. Follow up with details of the contract
3. Create Map to read input file then export the file based on the
Providers' needs
4. If applicable, test with Payor and Provider
5. Pick up Electronic Remittance from Payor
6. Run through conversion map
7. Route to Provider
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Payor Implementation Time Line
- ------------------------------
*****
13
Remittance Implementation Guide
Implementation is per Payor
- - Initial Provider Contact (2-3 Days)
1. Obtain Contact Name and Numbers for EDI Testing, Production
Provider Support
2. Develop Report and Remittance Specifications with Provider
- - Initial Payor Contact
(this is done in cooperation with the claim processing development)
1. Obtain Contact Name and Numbers for EDI Testing, Production
Provider Support
2. Obtain Report and Remittance Specifications from Payor
3. Negotiate and agree upon a Payor Agreement
4. Agree upon procedures to establish link
- - Development *****
14
- - In-house Testing *****
1. Obtain test remittance
2. Validate test data format
3. Run test data through maps
4. Validate output file
5. Make changes as necessary
- - Testing *****
(This time frame can vary depending on the medium used to obtain and
deliver the remittance, i e. tape, electronic, etc., and the remittance
cycle of the Payor)
1. Set up communication with Payor
(this will be in place for all but new Payors)
2. Set up communication with Provider
(this will be in place for most providers who submit claims)
3. Receive test remittance from Payor
4. Transmit remittance (in Provider format) to Provider
5. Contact Provider for test results
6. Make corrections per Provider requests
- - Automate Process *****
1. Write scripts to automate communication and processing
2. Activate automated process after testing phase is complete
15
Remittance Implementation Guide
- - Initial Provider Contact - *****
- - Negotiate and agree upon a Payor Agreement
- - Agree upon procedures to establish link
- - Initial Payor Contact - ******
- - Development - *****
- - In-house Testing - *****
- - Live Testing - ongoing
- - Automate Process - *****
Total development time is *****.
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Schedule 5(d)
Medic/MedE System Performance and Scalability Criteria
------------------------------------------------------
The Medic/MedE System shall meet the following standards of performance and
scalability:
(1) Claims submitted by Medic for processing by the MedE Services must be
(i) processed within ***** of transmission of such claims, or (ii) if
such claims are not processed within ***** of transmission, such claims
must be processed *****
(2) The MedE system contains no limitations in Field Lengths, Counters,
etc. that will negatively impact the ability to efficiently handle
Medic's current and future volumes (including, without limitation,
***** .
(3) Medic intends to exercise its right to query the Medic Database for
analysis and reporting purposes on a regular basis. MedE warrants that
the production environment will provide adequate response times to the
reasonably necessary or desirable number of on-line queries without
negatively impacting the transaction processing system in violation of
(1) above. In the event that the transaction processing system does not
complete its tasks within the allotted times set forth in (1) above,
MedE agrees to enhance the environment to bring the transaction
processing times into compliance.
(4) Bandwidth provided by MedE to Medic must be sufficient to ensure that
the communication links between Medic and MedE are not a constraining
factor in the times required to process claims and other EDI
transactions.
17
Schedule 7(a)
Processing Milestones
---------------------
Milestone Dates Processing Milestone
- --------------- --------------------
*****
18
Schedule 7(c)
Damages Relating to Processing Milestones
-----------------------------------------
Damages for failure to meet any Processing Milestone shall be the amount equal
to ***** .
19
Schedule 8(a)
Commission Payment Schedule
---------------------------
MedE Payment Obligation
- -----------------------
Medic and MedE agree to pay to Medic *****
Medic Payment Obligation
- ------------------------
Medic shall pay to MedE *****
20
Schedule 13(b)
Customer Service
----------------
- - MedE will provide second-level telephone support to Medic between the
hours of 7:00 a.m. to 6:00 p.m., Eastern standard time, and will
provide an average call response time of no greater than 2 hours from
their Help Desk.
- - MedE will provide a dedicated person for Medic's questions and
inquiries
21
Schedule 15(b)(iii)
Third Party Software
--------------------
The following is a list of third party software used in or in connection with
the Medic/MedE System:
Solaris Operating system
Informix database license and software
Mercator Data Mapping software
Procomm Communications software
NT Back Office
22
Schedule 16
Escrowed Materials
------------------
- - Appropriate product related information for all electronic links to
Payors will be placed into escrow with an escrow agent designated by
Medic within 30 days of closing. This will include but not be limited
to:
- Data Communications Source Code and Specifications
- Business Logic
- Data Element Mapping
- End User Documentation
- Technical Specifications and Documentation
- - A backup copy of all MedE executable programs required to run the
Medic/MedE System and operate the MedE Services successfully.
- - All documentation required to effectively install, prepare, execute,
and maintain the Medic/MedE System and operate the MedE Services.
- - Escrowed Materials will be updated every 30 days until and including
July 1, 1999. After July 1, 1999, Escrowed Materials will be updated
every 60 days.
23