EXHIBIT 10.20
HEALTHEON SERVICE
EMPLOYER GROUP DISTRIBUTION AGREEMENT
This Healtheon Service Employer Group Distribution Agreement ("Agreement")
is entered into by and between Healtheon Corporation, a corporation organized
under the laws of Delaware, with principal offices at 0000 Xxxxxxx Xxxxx Xxxxx,
Xxxxx Xxxxx, XX 00000 ("Healtheon"), and Network Management Services, Inc.
("NMS"), effective as of September 30, 1999 (the "Effective Date").
1. Definitions. For purposes of this Agreement, the following terms shall
have the following meanings:
(a). "NMS Accounts" shall mean those customers that entered into a contract
with NMS to obtain the Healtheon Service and that are enrolled to access and use
the Healtheon Service.
(b). "Benefits Carriers" shall mean any benefit carrier which is designated
by NMS Account and/or NMS to receive enrollment data from NMS.
(c) "Employee" shall mean an employee of a NMS Account who is eligible for
benefits under the terms of a NMS Account's benefit plan who is enabled by NMS
and/or NMS Account to access and use the Healtheon Service or whose enrollment
or other benefit data is entered into and resides on the System.
(d). "End User" shall mean any person who is eligible for benefits under
the terms of a NMS Account's benefits plan who is enabled by NMS and/or a NMS
Account to access and use the Healtheon Service or whose enrollment or other
benefit data is entered into and resides on the System.
(e). "Healtheon Service" shall mean Healtheon's Internet-based benefit
enrollment service, as described on Exhibits A-1 and A-2 hereto, as well as all
updates, improvements, and modifications thereto. The Healtheon Service may not
include new or additional applications, services, or features that may be
offered by Healtheon in connection with Healtheon Service in the future.
(f). "System" shall mean the entire system, including all related hardware
and software, now or hereafter developed by or for Healtheon which enables NMS
Accounts and End Users to obtain access to, and use of, the Healtheon Service,
including all updates, improvements, and modifications thereto.
2. Licenses.
(a). Distribution of Healtheon Service. Subject to the terms and conditions
of this Agreement, during the Term (as defined herein), Healtheon hereby grants
and NMS hereby accepts, a nonexclusive and nontransferable right and license to
distribute to NMS Accounts headquartered in North America the Healtheon Service,
in each case for the purpose of permitting NMS Accounts to offer the Healtheon
Service to End Users. NMS shall not sublicense or otherwise distribute the
Healtheon Service except to NMS Accounts and pursuant to a written agreement
which contains the provisions substantially in the form set forth in Exhibit B
(the "Service Terms"). The written agreement of any NMS Account to the Service
Terms may be included as part of the service or administration agreement
obtained by NMS from a NMS Account. NMS shall have no right to distribute the
Healtheon Service directly to End Users or to distribute the Healtheon Service
in any other manner except as expressly stated herein. The Service Terms may be
changed by Healtheon upon prior written notice to NMS. NMS agrees to implement
the modified Service Terms for prospective or renewal NMS Accounts as soon as
possible after such notification, and in no event later than ninety (90) days
after Healtheon provides such notice. Implementation of the modified Service
Terms for
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existing NMS Accounts shall be mutually agreed to by the parties, with such
agreement not to be unreasonably withheld.
(b). Intellectual Property License. Healtheon hereby grants and NMS hereby
accepts, a nonexclusive and nontransferable right and license, exercisable only
within the United States and only in conjunction with providing the
Implementation Services (as defined in Section 6(b) below), to use all elements
of Healtheon's Intellectual Property (as defined in Section 8(a) below) which
are necessary in order for NMS to perform the Implementation Services to enable
NMS Accounts and their End Users to have access to the Healtheon Service and to
perform any related maintenance and support services. NMS shall have no right to
use Healtheon's Intellectual Property for any purpose other than limited purpose
expressly stated herein.
3. Restrictions.
(a). Source Code Restrictions. NMS agrees not to copy, modify, translate,
decompile, reverse engineer, disassemble, or otherwise determine or attempt to
determine source code from the System, the Healtheon Service and the
Intellectual Property pertaining thereto or to create any derivative works based
upon the System, the Healtheon Service and/or the Intellectual Property
pertaining thereto, and agrees not to permit or authorize anyone else to do so.
Notwithstanding the foregoing, Healtheon acknowledges and agrees that this in no
way prohibits NMS from independently developing a system, software, application
or tool that is similar in feature and functionality to the Healtheon Service
without using any of Healtheon's Confidential Information or Intellectual
Property. Healtheon acknowledges that NMS asserts that it began a development
project that may have included similar features and functionality to the
Healtheon Service, and that such project has been suspended. NMS agrees to
provide Healtheon with written notice at least thirty (30) days prior to NMS (i)
committing resources to develop a Web-based benefits enrollment application or
service with a project plan and deliverables; (ii) making a written or oral
commitment to an existing or prospective customer that it is developing and/or
will provide a non-Healtheon Web-based benefits enrollment application or
service; or (iii) communicating in its sales and marketing program or materials
that NMS is developing or will provide a non-Healtheon Web-based benefits
enrollment application or service. Healtheon has the right to terminate this
Agreement immediately upon receipt of such notice or the discovery of any of the
foregoing events. Healtheon acknowledges that NMS, on a regular basis, enhances
its capabilities to provide employer/broker self-service capabilities to its
existing benefits administration systems and that these types of enhancements
are not subject to this Section.
(b). Other Restrictions. NMS shall comply with all applicable laws, rules
and regulations to preclude the acquisition of unlimited rights to technical
data, software and documentation provided with the Healtheon Service to a
governmental agency, and to ensure the inclusion of the appropriate "U.S.
Government End Users" notice required by the U.S. Government agencies or other
applicable agencies. Each party hereto shall comply with all legal requirements
applicable to it with respect to the offering of the Healtheon Service, and
access to and use of the Healtheon Service, to NMS Accounts and End Users as
contemplated herein.
(c). Nonsolicitation of Employees. During the Term and for one year
thereafter, neither party may solicit or employ, directly or indirectly, the
employees of the other party for employment or engagement (as an independent
contractor or otherwise) by such party, or otherwise induce or recommend any
employee of the other party to terminate their employment with such party.
4. NMS Training Services and Qualification of NMS Personnel.
(a). Training Services. If NMS requires additional training sessions,
Healtheon will use commercially reasonable efforts to accommodate such requests.
The cost of any such additional training is set
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forth in Exhibit A. All travel and living expenses of NMS's personnel to attend
any off-site training and/or other start up sessions shall be the responsibility
of NMS.
(b). Qualification of Personnel. NMS shall ensure that (i) the
Implementation Services and all other services performed by NMS under this
Agreement, including any Legacy Information Systems Integration Services,
(collectively, "NMS Services") will be performed by persons who are employees or
authorized personnel of NMS, each of whom will have entered into a proprietary
rights assignment and confidentiality agreement with NMS; (ii) each person
assigned to perform the NMS Services shall have the proper skill, training and
background so as to be able to perform the such services in a competent and
professional manner; and (iii) all work product and any other materials,
documentation and other items delivered under this Agreement shall have been
completed in a thorough and professional manner in conformance with any
specifications applicable thereto.
(c). Co-branding of Healtheon Service User Interface. Healtheon agrees that
NMS may Co-brand the Healtheon Service with one or more NMS Marks (or the Marks
of NMS Accounts), and may market and sell the Co-branded Healtheon Service to
NMS Accounts. "Co-branding" means the placement of NMS's trade names,
trademarks, logos, service marks, and/or such other business identifiers ("NMS
Marks") on certain areas of the Healtheon Service using the Customizer service
and on Information Materials. Co-branding shall be subject to the "Healtheon
Co-branding Guidelines", which Healtheon may modify from time to time. Except as
expressly permitted in this Agreement, NMS shall not delete, remove, or
otherwise disable the Healtheon Marks from the Healtheon Service or co-brand the
Healtheon Service in any other way. NMS shall not offer NMS Accounts the option
of removing the Healtheon Marks from the Healtheon Service, and shall use all
reasonable commercial efforts to convince any prospective NMS Account that makes
such a request to accept Healtheon's standard co-branding strategy and to
communicate the advantages of such strategy. Under special circumstances,
Healtheon agrees that it will accommodate a particular NMS Account's demand to
remove the Healtheon Marks from the Healtheon Service for that NMS Account if
there are compelling business reasons.
5. Development. NMS may request custom development of the System and the
Healtheon Service to meet NMS's particular requirements. Healtheon may, in its
sole discretion, provide or agree to perform such custom development work on
terms as may be mutually agreed upon by the parties. All such custom development
work shall be described in a written Statement of Work ("SOW") signed by
authorized representatives of both parties. The SOW shall specify each party's
responsibilities, the intellectual property rights with respect to such custom
development work, any other special terms applicable to the SOW, and a reference
to this Agreement. Unless otherwise agreed to by the parties, NMS will pay
Healtheon's then current time and materials rates, plus reasonable and necessary
expenses for the custom development work. The terms of this Agreement will apply
to the SOW. If there is a conflict between the SOW and this Agreement, the SOW
will control.
6. Implementation of the Healtheon Service at NMS Accounts.
(a). Initiation of Healtheon Service. NMS shall provide written notice to
Healtheon at least ten (10) business days prior to distributing the Healtheon
Service to a NMS Account. Such notice shall contain the name of the NMS Account,
and the anticipated "go live" date. Healtheon will use commercially reasonable
efforts to accommodate any reasonable request made by NMS with respect to the
anticipated "go live" date. NMS shall provide Healtheon with assurances that
each NMS Account has executed an agreement that contains the Service Terms
within thirty (30) business days of the execution of such agreement. Healtheon
shall have the right to terminate the Healtheon Service for a NMS Account if NMS
does not provide Healtheon with assurance that each NMS Account has executed
such agreement within one hundred fifty (150) days of the "go live" date for the
NMS Account.
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(b). Implementation Services. NMS shall be solely responsible for providing
and/or coordinating all services necessary to implement the Healtheon Service
with the appropriate benefit plan options, including but not limited to Legacy
Information Systems Integration described on Exhibit A-4 and customization of
the Healtheon Service using Healtheon's Customizer application, at each NMS
Account (collectively, the "Implementation Services"). In the event that NMS
needs the assistance of Healtheon in performing any such Implementation
Services, then, subject to Healtheon's other commitments and priorities,
Healtheon will use commercially reasonable efforts to make appropriate Healtheon
personnel available to assist NMS. NMS shall pay Healtheon the fees set forth in
Exhibit A for such services, in addition to reimbursement of all reasonable
expenses incurred by Healtheon in performing such services.
(c). Access to the Healtheon Service. Subject to NMS's compliance with the
terms of this Agreement, Healtheon will provide each NMS Account and its End
Users specified by NMS with access to and use of the Healtheon Service during
the term of this Agreement and the "runoff" period described in Section 11(e)
below.
(d). Responsibilities. Additional relative responsibilities of NMS, each
NMS Account, and Healtheon, relating to the System, the Healtheon Service, and
Implementation Services are set forth in Exhibit C. NMS shall be solely
responsible for providing customer support to the NMS Accounts and their End
Users, as described in Exhibit C. At the request of NMS, Healtheon may, at its
sole discretion, provide customer support directly to NMS Accounts and End
Users.
(e). Enforcement of Service Terms. NMS shall use commercially reasonable
efforts to enforce the Service Terms with at least the same degree of diligence
used in enforcing its own similar agreements with others. NMS shall be
responsible for enforcing the on-line End User agreements for the Healtheon
Service ("End User Agreement"), a copy of which is attached hereto as Exhibit B.
NMS shall not modify, delete or otherwise remove or disable such End User
Agreement, and shall provide reasonable assistance to Healtheon in the
enforcement of any such End User Agreement. NMS shall use commercially
reasonable efforts to protect Healtheon's intellectual property rights, and NMS
shall notify Healtheon of any breach of a material obligation under a Service
Terms and/or End User Agreement which comes to the attention of NMS, and will
use commercially reasonable efforts to cooperate with Healtheon in any legal
action pertaining thereto.
(f). NMS's Relationship with NMS Accounts. NMS shall have the sole right to
charge NMS Accounts for any fees for the Healtheon Service at NMS Accounts,
including but not any fees for Implementation Services. Healtheon shall not be
allowed to charge or assess any fees directly against any NMS Accounts or End
Users unless otherwise agreed to by the parties. NMS's payment obligations under
this Agreement are independent of any fee arrangement between NMS and NMS
Accounts, and NMS shall pay Healtheon for all fees incurred under this Agreement
as set forth herein.
7. Fees and Payment.
(a). Fees. NMS will pay Healtheon the fees specified in Exhibit A for the
services obtained by NMS (collectively referred to as the "Fees"). The Fees
shall be paid as follows:
(i) Service Fees. NMS will pay Healtheon Service Fees at the rates
specified in Exhibit A (the "Service Fees") for providing the NMS Accounts
(and all of their End Users) designated by NMS with access to and use of
the Healtheon Service. This Service Fee includes the basic support services
provided by Healtheon as described in Exhibit A-5. The Service Fee will be
computed on a monthly basis based on the number of Employees for each NMS
Account eligible to receive the Healtheon Service as of the 15th day of the
preceding month. Service Fees shall be due and payable by NMS within thirty
(30) days after receipt of the invoice, and Healtheon will invoice NMS each
month for such Service Fees. An Employee shall be deemed "eligible" for the
purposes of calculating the monthly Service Fees when Healtheon enables
NMS,
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NMS Account and/or the Employee to access and use the Healtheon Service.
Irrespective of the number of actual Employees eligible for the Healtheon
Service, NMS agrees that it shall pay to Healtheon at least the minimum
Service Fees identified in Exhibit A.
(ii). Miscellaneous Fees. NMS shall pay Healtheon the Miscellaneous
Fees set forth on Exhibit A for the additional implementation, maintenance,
and support services which may be provided to NMS, as set forth in Exhibit
A (the "Miscellaneous Fees") as compensation for additional services
hereafter requested by NMS and provided by Healtheon.
(b). Changes to the Fees. The Service Fees set forth in Exhibit A may not
be changed by Healtheon during the Term of the Agreement. Thereafter, Healtheon
may change the Service Fees upon sixty (60) days prior written notice. Healtheon
may change all other fees annually during the Term (and any renewal term) upon
sixty (60) days prior written notice to NMS, with such fee changes to become
effective on January 1 of the applicable calendar year.
(c). Taxes. All Fees are exclusive of all taxes, duties or levies, however
designated or computed, excepting any tax measured on the net income of
Healtheon. NMS shall be responsible for and pay all taxes based upon NMS's
distribution of the Healtheon Service to NMS Accounts or upon payments due under
this Agreement including, but not limited to, sales, use, or value-added taxes,
duties, withholding taxes and other assessments now or hereafter imposed on or
in connection with this Agreement, exclusive of taxes based upon Healtheon's net
income.
(d). Records. During the Term and for a period of three (3) years
thereafter, NMS shall keep and maintain full, true, and accurate records
pertaining to each NMS Account using the Healtheon Service, including the name,
address of each NMS Account and containing all data reasonably required for the
calculation and verification of the Fees.
(e) Late Fees. If NMS fails to pay any Fees when due, the unpaid balance of
the Fees shall bear interest at the lower of (x) one and one-half percent (1.5%)
per month, or (y) the maximum lawful rate.
8. Proprietary Rights.
(a). Proprietary Rights. NMS acknowledges and agrees that Healtheon and/or
its suppliers own all right, title and interest in the Healtheon Services, the
related System, and any invention or confidential or other information contained
therein (other than data supplied by NMS, NMS Accounts, Employees or End Users),
including, but not limited to all software, in both machine-readable and printed
form, and all derivative works thereof other than as may be expressly set forth
in a SOW, and any copyrighted material which resides on the System or which is
incorporated as part of the Healtheon Services or which is distributed in
conjunction therewith, and all related technical know-how and all rights
therein, including, without limitation, rights in patents, copyrights, and trade
secrets applicable thereto, (collectively, the "Intellectual Property").
Accordingly, NMS hereby assigns and shall assign to Healtheon all right, title
and interest it may have in and to the Intellectual Property and all inventions
that may be embodied therein, and all copyrights, patent rights, trade secret
rights, or other intellectual property rights therein. All right, title and
interest in and to the Intellectual Property shall remain in Healtheon and its
suppliers. All such Intellectual Property is protected by copyright, trade
secret and other intellectual property laws and treaties. NMS may not reverse
engineer, decompile, disassemble, modify in any way or create derivative works
of the Intellectual Property. NMS shall not knowingly take any actions, to
jeopardize, limit or interfere in any manner with Healtheon's ownership of and
rights with respect to any Intellectual Property, the Healtheon Service, the
System and any related documentation. NMS shall require that each NMS Account
agree to the Service Terms. NMS shall have only those rights in and to the
Healtheon Service and the related Intellectual Property granted to it pursuant
to this Agreement.
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(b). Trademarks; Proprietary Notices. Healtheon's trademarks or trade names
are the property of Healtheon and NMS agrees that it shall not use any of
Healtheon's trademarks or trade names without Healtheon's prior written consent.
NMS agrees not to register any Healtheon trademarks or trade names without
Healtheon's express prior written consent. Subject to the provisions of Section
10(a) relating to private labeling of marketing materials for the Healtheon
Service, (i) NMS shall not remove or alter any trademark, trade name, copyright,
or other proprietary notices, legends, symbols, or labels appearing on or in
materials pertaining to the Healtheon Service and the documentation related
thereto delivered to NMS by Healtheon, and (ii) Each portion of the Healtheon
Service documentation reproduced by NMS shall include the intellectual property
notice or notices appearing in or on the corresponding portion of such materials
as delivered by Healtheon hereunder, if any.
(c). Data. Healtheon acknowledges and agrees that NMS and/or its NMS
Accounts and/or End Users own all right, title and interest in the data that is
entered into the System. Healtheon shall be entitled only to store such data on
the System, to enable NMS-designated NMS Accounts and their End Users to access
and use the data, and to otherwise use the data in connection with providing the
Healtheon Service hereunder, or as otherwise may be agreed to in writing by the
parties. Notwithstanding the foregoing, nothing herein shall prohibit Healtheon
from using aggregate data for any purpose whatsoever.
9. Confidential Information.
(a). Confidential Information. The parties acknowledge that in the course
of performing under this Agreement, each party may be exposed to or acquire
information, which is proprietary to or confidential to the other party, its
suppliers or customers. Any and all such information of one party in any form
obtained by the other party or its employees, agents, or representatives in the
performance of this Agreement (including but not limited to the Intellectual
Property and any and all health care data of End Users) shall be deemed to be
confidential and proprietary information of such party. The parties agree to
hold such information in strict confidence and in conformance with all
applicable legal requirements, to only permit use of such information by its
employees and agents having a need to know in connection with performance under
this Agreement, and not to copy, reproduce, sell, assign, license, market,
transfer, give or otherwise disclose such information to third parties or to use
such information for any purposes whatsoever, without the express written
permission of the other party and to advise each of their employees, agents, and
representatives of their obligations to keep such information confidential. All
such confidential and proprietary information described herein in whatever form
is hereinafter collectively referred to as "Confidential Information."
(b). Exceptions to Confidential Information. Notwithstanding the
obligations set forth in Section 9(a), above, the confidentiality obligations of
Healtheon and NMS shall not extend to information that (i) was, as of the time
of its disclosure, or thereafter becomes part of the public domain through a
source other than the receiving party; (ii) the receiving party can demonstrate
was known to the receiving party as of the time of its disclosure; (iii) the
receiving party can demonstrate was independently developed by the receiving
party without use of the Confidential Information; or (iv) the receiving party
can demonstrate was subsequently learned from a third party not under a
confidentiality obligation to the providing party. In the event that a receiving
party is required to disclose certain Confidential Information of a disclosing
party pursuant to court order or government authority, the receiving party shall
provide reasonable notice to the disclosing party prior to such disclosure and
shall cooperate with the disclosing party in an attempt it may make to obtain
protection from such disclosure.
(c). Additional Confidentiality Commitments. Notwithstanding the provisions
of this Section 9, neither party shall have the right to disclose the other
party's Confidential Information to third parties without written permission
from the other party and subject to such party obtaining from such third parties
a confidentiality agreement reasonably acceptable to the other party and
protecting the Confidential Information
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in accordance with the terms of this Agreement, except as otherwise required by
law or legal process. Neither party shall disclose the terms and conditions of
this Agreement with any person or entity, without the other party's prior
written consent, except for disclosure to such party's employees who have a need
to know the terms of this Agreement or as otherwise required by law or legal
process. In the event a party is required by law or legal process to disclose
the Confidential Information of the other party, it shall provide reasonable
notice to the disclosing party prior to such disclosure and shall cooperate with
the disclosing party in any attempt it may make to obtain protection from such
disclosure.
10. Marketing.
(a) Marketing Materials. Healtheon will provide NMS with information
materials to use in creating brochure(s) describing the Healtheon Services and
the System. NMS may modify such materials to make them consistent with its other
material but may not substantially change the content of such materials without
Healtheon's prior written approval. NMS may (but is not required to) "co-brand"
(i.e., market the Healtheon Service under NMS's own name or brand, as opposed to
Healtheon's) the marketing materials in accordance with guidelines to be
mutually agreed upon by the parties. Pre-production samples of any advertising,
merchandising, promotional or display materials containing all or a portion of
the marketing materials or describing the Healtheon Service and/or the System
(collectively referred to as "Information Materials") shall be submitted by NMS
to Healtheon, for Healtheon's timely approval as to quality, style, appearance,
usage of any Healtheon trademarks and accuracy of the information, prior to any
actual production, use or distribution of any Information Materials by NMS or on
its behalf. Subject to Healtheon's prior written approval, NMS shall have the
right to distribute such approved Information Materials to NMS Accounts and End
Users.
(b) Publicity. Any public announcement regarding the parties' relationship
and the nature of this Agreement shall be coordinated between the parties and
shall be in a form, which is mutually agreeable to the parties.
11. Term and Termination.
(a). Term. The initial term of this Agreement (the "Term") shall commence
on the Effective Date and shall end on (i) January 31, 2003 unless the parties
mutually agree to extend the term ("renewal term"), or (ii) such earlier date
upon which this Agreement may be rightfully terminated in accordance with the
provisions of this Section 11.
(b). Default. Subject to the cure periods contained herein, either party
has the right to terminate this Agreement if the other party breaches or is in
default of any material obligation hereunder, which default is incapable of cure
or which, being capable of cure, has not been cured within forty-five (45) days
after receipt of notice of such default from the non-defaulting party or within
such additional cure period as the non-defaulting party may authorize. In the
event NMS breaches Section 2, 3, 8 or 9 of this Agreement, Healtheon may
terminate this Agreement upon ten (10) days prior written notice. In the event
Healtheon breaches Section 3, 6(g), 8 or 9 of this Agreement, NMS may terminate
this Agreement upon ten (10) days prior written notice.
(c) Right to Terminate with Notice. Each party has the right to terminate
this Agreement upon one hundred eighty (180) days prior written notice to the
other party. In the event Healtheon terminates this Agreement without cause, the
applicable terms and conditions of this Agreement shall continue to apply, at
NMS's option, to existing NMS Accounts in accordance with the "runoff"
procedures described in Section 11(e) below, provided that NMS remains in
material compliance with this Agreement during the runoff period.
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(d). Insolvency. Either party may terminate this Agreement by written
notice to the other, and may regard the defaulting party as in default of this
Agreement, if the defaulting party 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, which is not dismissed within sixty (60) days,
whether domestic or foreign, or has wound up or liquidated, voluntarily or
otherwise. Any event described in the immediately preceding sentence shall be
deemed a breach of this Agreement that is incapable of cure for purposes of
Section 11.
(e) Rights and Obligations of the Parties on Termination. Upon the
expiration or earlier rightful termination of this Agreement, the provisions of
this Agreement shall continue to apply and be enforceable to allow for the
orderly runoff of all NMS Accounts and End Users, on a NMS Account basis, until
the next annual anniversary or renewal date of such NMS Account's contract with
NMS occurring immediately after the expiration or termination of this Agreement
but not to exceed twelve (12) months from the effective date of expiration or
termination. Upon the expiration or earlier rightful termination of this
Agreement: (i) at the end of the last runoff period, NMS shall forthwith return
to Healtheon all papers, materials, and other properties of Healtheon then in
its possession or under its control, including but not limited to any elements
of the System, the related documentation and any Intellectual Property,
including any copies which have been distributed to any third parties; (ii) at
the end of each applicable runoff period, Healtheon shall return to NMS all data
(in such format and on such media as may be reasonably required by NMS) or other
property of NMS, NMS Accounts, Employees or End Users relating to the foregoing,
and shall thereafter delete or otherwise destroy any copies of such data and
property, except to the extent such information is contained in Healtheon's
backup systems, and (iii) thereafter each party shall furnish to the other party
an affidavit signed by an officer of such party certifying that, to the best of
his or her knowledge, such delivery or destruction has been fully effected.
Notwithstanding the foregoing, Healtheon shall not be obligated to provide NMS
Accounts access to and use of the Healtheon Service during the applicable runoff
periods if NMS defaults on its material obligations under this Agreement and
fails to cure such default within fifteen (15) days after such written notice
thereof from Healtheon. This Agreement, and each Healtheon Service Agreement and
all related End User License Agreements granted hereunder shall terminate upon
the effective termination date of this Agreement or at the end of the applicable
runoff period, whichever is later.
(f). Effect on Rights. Termination of this Agreement by either party shall
not act as a waiver of any breach of this Agreement and shall not act as a
release of either party from any liability for breach of such party's
obligations under this Agreement. Within thirty (30) calendar days of
termination of this Agreement with respect to any particular NMS Account and
following the return of all NMS Account data as aforesaid, NMS shall pay to
Healtheon all sums then due and owing. Upon termination of this Agreement (or at
the end of applicable runoff periods for NMS Accounts, if any), all licenses for
Healtheon Service and Intellectual Property granted under this Agreement shall
terminate. The respective rights and obligations of Healtheon and NMS under the
provisions of Sections 3(a), 3(b), 6(g), 7, 8, 9, 11, 13, 14 and 15 shall
survive any termination of this Agreement.
(g) Nonsolicitation of NMS Accounts. During the Term of this Agreement,
Healtheon agrees that it will not directly solicit or service (other than
pursuant to this Agreement) any then currently active NMS Account to access and
use the Healtheon Service through a direct contract with Healtheon, instead of
through such NMS Account's existing contract with NMS. Nothing herein prohibits
Healtheon from providing the Healtheon Service to any NMS Account (active or
inactive) through the competitive efforts of another distributor or other third
party.
12. Representations and Warranties.
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(a). The System and Services. NMS acknowledges that complex computer
systems and software, such as the System, and on-line services such as the
Healtheon Service are rarely free of defects, perform without interruption and
provide complete security, and Healtheon does not warrant the same. However,
Healtheon does warrant that during the Term, the System shall function in
conformance with the specifications in all material respects and that the
Healtheon Service will provide the functions described on Exhibit A-2, excepting
only temporary (not to exceed up to four (4) consecutive hours per occurrence)
interruptions in service, except for Scheduled Downtime, unavailability excused
under Section 16(i) (Force Majeure) or interruptions resulting from problems
with the software, hardware, and other equipment of third parties including NMS,
NMS Account, or End User. As used herein, "Scheduled Downtime" refers to that
period of time when the Healtheon Service is unavailable to End Users to allow
Healtheon to perform any necessary maintenance, repair, upgrades, and updates.
Healtheon shall, at its sole cost and expense, make all corrections necessary to
correct any "High Priority Errors" which cause the System not to function in
accordance with the specifications in any material respect and the Healtheon
Service to remain unavailable for more than four (4) consecutive hours between 4
a.m. and 6 p.m. PST and Healtheon shall update the System to include any
required maintenance modifications as soon as commercially practicable. A "High
Priority Error" shall mean an error resulting in a catastrophic failure, system
down, data corruption or loss of data, or a major loss of functionality without
a known work around. Errors that are not High Priority Errors will be addressed
in conformance with assessment, prioritization and scheduling criteria to be
mutually agreed upon by Healtheon and NMS. NMS further acknowledges and agrees
that certain information which is provided to NMS Accounts and End Users as part
of the Healtheon Service is provided by third parties, such as health plans,
other Benefits Carriers and the NMS Accounts themselves (the "Third Party
Material"), and that Healtheon has not reviewed any such material for its
accuracy or appropriateness and Healtheon makes no representations or warranties
of any nature whatsoever regarding any Third Party Material and Healtheon
assumes no liability of any kind with respect to any Third Party Material.
(b). Healtheon Ownership. Healtheon represents and warrants (i) Healtheon
has full and sufficient rights to grant the rights and license granted to NMS in
this Agreement; and (ii) that the elements of the System developed by Healtheon
(i.e., excluding third party hardware and software) does not infringe any U.S.
issued patent, copyright, trademark or trade secrets or rights of any third
party of which, after due inquiry, Healtheon is aware, nor has any claim
(whether or not embodied in an action, past or present) of such infringement
been threatened or asserted, and no such claim is pending against Healtheon or,
insofar as Healtheon is aware against any entity from which Healtheon has
obtained such rights. Healtheon's sole obligation to NMS, for a breach by
Healtheon of the foregoing representations and warranties shall be Healtheon's
obligations under Section 13.
(c). NMS's Services and Warranty. NMS represents and warrants that (i) the
Implementation Services and all other NMS Services which relate to the Healtheon
Service will be performed by persons who are employees or other authorized and
trained personnel, each of whom will have entered into a proprietary rights
assignment and confidentiality agreement with NMS; (ii) each person assigned to
perform the NMS Services shall have the proper skill, training and background so
as to be able to perform such services in a competent and professional manner
and (iii) all work product and any other materials, documentation and other
items delivered under this Agreement shall have been completed in a thorough and
professional manner in conformance with any specifications applicable thereto.
NMS further warrants that its provision of the NMS Services hereunder will be in
compliance with all applicable laws, rules and regulations. NMS warrants that
for a period of one hundred eighty (180) days following each Implementation (or
any part thereof) performed by NMS, such Implementation (or any part thereof)
shall function in conformance with any applicable specifications and
requirements in all material respects. NMS shall, at its expense, make or have
an authorized integrator make all reasonable corrections requested by Healtheon
or the applicable NMS Account to correct any errors which cause the
Implementation to fail to function in accordance with the specifications or
requirements in any material respect.
9
(d). Compliance with Applicable Laws. NMS acknowledges that the information
conveyed through the Healtheon System and Service may constitute confidential or
proprietary information of End Users or other persons or entities, and NMS
agrees that it (and not Healtheon) is solely responsible at all times for
obtaining all End User and any other legally or contractually required consents
or permissions necessary or advisable to disclose, transmit and process such
information through the Healtheon System and Service. NMS represents and
warrants that all information that it or its NMS Accounts and End Users provide
through NMS and any consents required for such information shall be in
compliance with all applicable laws, rules and regulations and contractual
obligations that may now or hereafter govern. NMS further represents and
warrants that its offer and sale of the employee benefits enrollment through the
Healtheon Service hereunder will be in compliance with all applicable laws,
rules and regulations.
(e). Authority. Healtheon and NMS each hereby represents and warrants to
the other that it is duly organized and validly existing under the laws of the
jurisdiction in which it is organized, in good standing therein, and has the
power to enter into this Agreement and to perform its obligations hereunder and,
furthermore, that the performance by it of its obligations under this Agreement
has been duly authorized by all necessary corporate or other action and will not
violate any provision of law or regulation or of any corporate charter or
bylaws.
(f). Back-up. Healtheon warrants that it shall maintain reasonable
safeguards against the destruction, loss and alteration of software and data
that is in the possession of Healtheon. In the event that additional safeguards
for NMS data are reasonably requested by NMS, Healtheon shall provide such
additional safeguards, and NMS shall reimburse Healtheon for any reasonable
additional fees and costs incurred by Healtheon. Healtheon, at no additional
cost to NMS, shall perform (i) incremental daily backups and (ii) weekly full
backup of all NMS and NMS Account data in its possession. In the event of loss
of data by Healtheon, Healtheon shall regenerate the lost data at Healtheon's
sole cost and expense as soon as practicable within ten (10) business days from
notification of the loss.
(g) Y2K Compliance. Healtheon hereby certifies that it has made reasonable
inquiry and investigation into whether the Healtheon Service and System are Year
2000 ("Y2K") Compliant (as defined below) such that the availability and
provision of the Healtheon Service will continue in accordance with the
requirements of this Agreement into the year 2000. Should Healtheon become aware
of any Y2K compliance issue that would or could have a material negative impact
on its ability to provide the Healtheon Service as contemplated herein, it shall
diligently work to minimize such negative impact on the Healtheon Service and
NMS (and its End Users). In case of breach of the foregoing, Healtheon promptly
shall correct the problem and provide NMS (and its End Users) with access to and
use of a corrected Healtheon Service. "Year 2000 Compliant" means that the
ability to calculate and compare date data between the twentieth and
twenty-first centuries (including calendar dates for the Leap Year), without
impairment in the functioning of the Healtheon Service, when used in accordance
with any documentation provided by Healtheon, but only if all associated
products, such as hardware, software and firmware, used in combination with the
Healtheon Service properly exchange date data with the Healtheon Service and
System.
(h) Representations Regarding the Healtheon Service. NMS represents and
warrants that it will not, directly or indirectly, make any representations to
any third parties, including NMS Accounts, of the services provided under this
Agreement in any manner which is inconsistent with Healtheon's specifications or
representations and warranties provided hereunder.
(i). No Other Representations or Warranties. EXCEPT AS EXPRESSLY PROVIDED
HEREIN, HEALTHEON MAKES NO REPRESENTATIONS OR WARRANTIES OF CONDITION OF ANY
KIND WHETHER EXPRESS, IMPLIED OR STATUTORY (EITHER IN FACT OR BY OPERATION OF
LAW) WITH RESPECT TO THE HEALTHEON SERVICE, THE SYSTEM AND THE DOCUMENTATION
10
RELATED THERETO. TO THE EXTENT PERMITTED BY APPLICABLE LAW, HEALTHEON EXPRESSLY
DISCLAIMS ALL IMPLIED WARRANTIES OR CONDITIONS OF MERCHANTABILITY OR FITNESS FOR
A PARTICULAR PURPOSE. HEALTHEON DOES NOT WARRANT THAT THE HEALTHEON SERVICE, THE
SYSTEM OR THE DOCUMENTATION ARE ERROR-FREE OR THAT OPERATION OF THE HEALTHEON
SERVICE OR THE SYSTEM WILL BE SECURE OR UNINTERRUPTED AND HEALTHEON HEREBY
DISCLAIMS ANY AND ALL LIABILITIES ON ACCOUNT THEREOF EXCEPT FOR SUCH LIABILITIES
EXPRESSLY ASSUMED PURSUANT TO THIS AGREEMENT.
(j). EXCLUSIVE REMEDIES. NMS' EXCLUSIVE REMEDY FOR ANY DEFAULT OR BREACH OF
THE WARRANTIES PROVIDED IN SECTIONS 12(a), 12(f), AND 12(g), OR ANY OTHER
EXPRESS OR IMPLED WARRANTY RELATING TO THE HEALTHEON SERVICE (EXCLUDING THE
WARRANTIES SPECIFIED IN SECTION 12(b)) OR THE HEALTHEON SYSTEM SHALL BE LIMITED
TO INVOCATION, AT HEALTHEON'S EXPENSE, OF THE ERROR CORRECTION PROCEDURES SET
FORTH IN THOSE SECTIONS (E.G., CORRECTION OF HIGH PRIORITY ERRORS, REGENERATION
OF LOST DATA, AND CORRECTION OF Y2K COMPLIANCE ISSUES), AND IN THE EVENT THE
ERROR IS NOT CORRECTED WITHIN NINETY (90) DAYS, TERMINATION OF THIS AGREEMENT
AND A PRO-RATA REFUND OF THE ONE-TIME START UP FEES STATED IN EXHIBIT A OF THIS
AGREEMENT PRORATED BASED UPON A FIVE (5) YEAR STRAIGHT LINE DEPRECIATION METHOD.
Healtheon may deduct from any such payment all other sums due Healtheon from
NMS.
13. Indemnification.
(a) Intellectual Property Indemnification by Healtheon. Healtheon will, at
its expense, defend or settle any claim, action or allegation brought against
NMS by a third party, other than a NMS Account, that the System and/or Healtheon
Service infringes any patent, copyright, trademark or trade secret or other
intellectual property right of any third party excluding NMS Accounts, and will
pay any final judgments awarded or settlements entered into, provided that NMS
gives prompt written notice to Healtheon after it receives notice of such claim,
action or allegation of infringement and gives Healtheon the authority to
proceed as contemplated herein. The failure to xxxx such notice shall not affect
NMS' indemnification rights hereunder unless the failure to prompt notice has
materially and adversely affected Healtheon's ability to successfully defend
against such claim, action or allegation. NMS may, at its own expense,
participate in the defense of any such claim with counsel reasonably acceptable
to Healtheon. However, Healtheon will have the exclusive right to control the
defense of any such claim, action or allegation and make settlements thereof at
its own discretion, and Distributor may not settle or compromise such claim,
action or allegation, except with prior written consent of Healtheon. NMS will
give such assistance and information as Healtheon may reasonably require to
settle or oppose such claims, at Healtheon's expense.
In addition, Healtheon may, at its sole option and expense: (i) provide NMS and
its Company Accounts access to a system and service which is functionally
equivalent to the System and Healtheon Service, without additional charge; (ii)
modify the System and/or the Healtheon Service to avoid the infringement; or
(iii) obtain a license for NMS to continue use of the Healtheon Service for the
Term of this Agreement and pay for any additional fee required for such license.
In the event that, in Healtheon's reasonable judgment, none of the foregoing
options are feasible, Healtheon shall have the right to terminate this
Agreement. [MOVED FROM BELOW
(b). Limitations on Infringement Indemnities. Healtheon shall have no
indemnity obligation for claims resulting from the Implementation Services
performed by NMS which results or which is alleged to result from (i)
development work performed by Healtheon in compliance with NMS' specifications
where Healtheon's method of compliance has been compelled by the terms of NMS'
specifications; (ii) NMS' use of the System and/or Healtheon Service in
combination with any hardware or software not furnished by,
11
authorized by, or generally approved by Healtheon hereunder or any modifications
which have been made by Distributor; or (iii) for any claims which relate to any
Third-Party Material or any other information or data which has been supplied by
Distributor or its affiliates, including NMS Accounts and , End Users or which
has been provided by any health plans and/or other Benefits Carriers, which is
incorporated into the System and/or the Healtheon Service. In addition,
Healtheon shall have no indemnity obligation for claims of infringement
resulting from NMS' failure within a reasonable time frame to implement any
replacement or modification of the System which conforms to the requirements of
Section 13(d) herein. Healtheon's obligations under this Section 13 are
Healtheon's entire liability with respect to any third-party claim, action or
allegation infringement of any patent, copyright, trade secret or other
proprietary right by the System and/or Healtheon Service.
(c). Indemnification by NMS. NMS agrees to indemnify and hold harmless and
defend Healtheon and its suppliers from and against any and all claims,
liabilities, losses, damages expenses and costs (including reasonable attorneys'
fees and costs) arising out of, in connection with or relating to (i)
Distributor's breach of any representation or warranty to a third party
(including NMS Accounts) relating to the Healtheon Service or System; (ii) any
use of the Healtheon Service by NMS Accounts or End Users (excluding patent and
copyright infringement claims resulting from such use in accordance with
Healtheon documentation); (iii) any data or information provided by NMS which
was incorrect (excluding all such information provided to NMS by Healtheon) or
was not delivered in a timely manner or which violates any rights of any third
party or any claim based on NMS' noncompliance with any law, regulation or other
government requirement (other than resulting from its noncompliance); (iv) the
use of or the failure of NMS' proprietary benefits administration system, if
applicable, in conjunction with the System and/or the Healtheon Service; (v) any
modifications to the System or Healtheon Service which were requested by NMS and
performed by Healtheon in accordance with NMS' specifications and/or any
unauthorized modifications made by NMS to the Healtheon Service or System or the
use of the Healtheon Service or System in combination with any hardware or
software not authorized by Healtheon.
(d) Method of Asserting Claims; Payment of Claims. As used herein, an
"Indemnified Party" shall refer to a "Healtheon Indemnified Party" or a "NMS
Indemnified Party," as applicable, the "Notifying Party" shall refer to the
party hereto whose Indemnified Parties are entitled to indemnification
hereunder, and the "Indemnifying Party" shall refer to the party hereto
obligated to indemnify such Notifying Party's Indemnified Parties.
In the event that any of the Indemnified Parties is made a defendant in or party
to any action or proceeding, judicial or administrative, instituted by any third
party (any such third party action or proceeding being referred to as a
"Claim"), the Notifying Party shall give the Indemnifying Party prompt notice
thereof. The failure to give such notice shall not affect any Indemnified
Party's ability to seek reimbursement unless such failure has materially and
adversely affected the Indemnifying Party's ability to defend successfully a
Claim. The Indemnifying Party shall be entitled to control, contest and defend
such Claim; provided, that the Indemnifying Party (i) has a reasonable basis for
concluding that such defense may be successful and (ii) diligently contests and
defends such Claim. Notice of the intention so to contest and defend shall be
given by the Indemnifying Party to the Notifying Party within 20 business days
after the Notifying Party's notice of such Claim (but, in all events, at least
five business days prior to the date that an answer to such Claim is due to be
filed). Such contest and defense shall be conducted by reputable attorneys
employed by the Indemnifying Party. The Notifying Party shall be entitled at any
time, at its own cost and expense (which expense shall not constitute an
indemnifiable loss), to participate in such contest and defense and to be
represented by attorneys reasonably acceptable to Indemnifying Party of its or
their own choosing. If the Notifying Party elects to participate in such
defense, the Notifying Party will cooperate with the Indemnifying Party in the
conduct of such defense. . If a party is entitled to indemnification hereunder,
such party's costs and expenses that are reimbursable pursuant to this Section
shall be promptly reimbursed by the Indemnifying Party following the receipt of
notice with respect to such costs and expenses by the Indemnifying Party.
12
14. Disclaimer; Limitation of Liabilities.
(a). Limitation of Liabilities. TO THE EXTENT ALLOWED BY APPLICABLE LAW, IN
NO EVENT SHALL EITHER PARTY BE LIABLE FOR ANY LOSS OF PROFITS, LOSS OF BUSINESS,
LOSS OF USE OR DATA, INTERRUPTION OF BUSINESS, OR FOR INDIRECT, SPECIAL,
INCIDENTAL OR CONSEQUENTIAL DAMAGES OF ANY KIND, EVEN IF SUCH PARTY HAS BEEN
ADVISED OF THE POSSIBILITY OF SUCH DAMAGES AND NOTWITHSTANDING ANY FAILURE OF
ESSENTIAL PURPOSE OF ANY LIMITED REMEDY, OR FOR ANY CLAIM AGAINST A PARTY BY ANY
THIRD PARTY, INCLUDING ANY NMS ACCOUNTS. In addition, in no event will Healtheon
or any of its suppliers be liable for (i) any representation or warranty made to
any third party by NMS or any agent of NMS; (ii) the failure of the Healtheon
Service to perform except as, and solely to the extent, otherwise expressly
provided herein; or (iii) the failure of the Healtheon Service to provide
security; (iv) any use of the Healtheon Service or the related documentation or
the results or information obtained or decisions made by End Users of the
Healtheon Service; or (v) any claims based on or arising from Third-Party Data.
Notwithstanding anything in this Agreement to the contrary, Healtheon's entire
liability to NMS for damages concerning the performance or nonperformance by
Healtheon or in any way related to the subject matter of this Agreement, and
regardless of whether the claim for such damages is based in contract or tort,
shall not exceed the amount received by Healtheon from NMS during the six (6)
months immediately preceding the day the act or omission occurred that gave rise
to the claim. Either party may obtain equitable or injunctive relief in addition
to the other remedies available under this agreement.
15. Dispute Resolution. Any disputes between the parties under this
Agreement that cannot be resolved by direct negotiations between the parties
shall be submitted to and determined by binding arbitration. The arbitration
shall be conducted under the commercial arbitration rules of the American
Arbitration Association then in effect. The arbitrator will be chosen from a
panel of persons with knowledge of industry practices in the health care data
information processing and admitted to practice law in at least one state. In
connection with any arbitration hearings, the parties shall be entitled to
submit written legal briefs for consideration by the arbitrator in accordance
with a schedule to be negotiated by the parties or to be established by the
arbitrator if the parties are unable to agree. The parties agree that the
arbitrator may award any remedy consistent with the commercial arbitration
rules; provided that the arbitrator will not have the authority to award any
punitive, exemplary or other non-compensatory damages, or any penalties relating
to any dispute arbitrated or litigated. The arbitrator may award reasonable
attorneys' fees and costs to the prevailing party. The arbitration will be held
in Santa Clara, California or any other mutually agreeable location. The parties
will be entitled to discovery to the same extent provided for civil actions in
the federal district court of the jurisdiction in which the arbitration is held.
The parties agree to endeavor in good faith to select an arbitrator within (30)
days after either party provides written notice to the other of its demand for
arbitration and to endeavor in good faith to complete the arbitration within
ninety (90) days following such notice. If the parties cannot mutually agree
upon an arbitrator within such 30-day period, one will be selected in accordance
with the rules of the AAA.
16. Miscellaneous.
(a). Entire Agreement. This Agreement, together with all appendices or
other attachments referenced herein, constitutes the entire agreement between
Healtheon and NMS regarding the subject matter of this Agreement and supersedes
any memorandums of understanding, written proposals, terms sheets and any other
oral discussions or agreements.
(b). Severability. Any invalidity, in whole or in part, of any provision of
this Agreement shall not affect the validity of any other of its provisions.
13
(c). Notices. Wherever under this Agreement one party is required or
permitted to give notice to the other party, such notice shall be deemed given
when delivered by hand, when telecopied or faxed and receipt confirmed, when
sent by overnight courier service to the address set forth above, or on the
third business day after mailing when mailed by United States Registered or
Certified Mail, Return Receipt Requested, postage prepaid, and addressed
attention: President with a copy attention: General Counsel. Either party hereto
may from time to time change its address for notification purposes by giving the
other party prior written notice of the new address and the date upon which such
new address will become effective.
(d). Insurance. During the Term of this Agreement, each party shall
maintain, either through external insurance coverage or internal self insurance,
such capability to bear the risks associated with the performance of this
Agreement as is reasonable, prudent and advisable under the circumstances.
(e). Assignment. This Agreement and the licenses granted hereunder are to
NMS as a specific legal entity , and are not assignable by NMS, nor are the
obligations imposed on NMS delegable without Healtheon's prior written consent.
Any attempt to sublicense (except as expressly permitted herein) assign or
transfer any of the rights, duties or obligations under this Agreement in
derogation hereof by either party shall be null and void.
(f). Amendment. No alteration, amendment, waiver, cancellation or any other
change in any term or condition of this Agreement shall be valid or binding on
either party unless mutually agreed to in a writing signed by both parties.
(g). Governing Law. This Agreement shall be governed by and interpreted in
accordance with the laws of the state of California, without reference to
conflict of laws principles.
(h). Independent Contractors. The parties hereto are independent
contractors. Nothing contained herein or done in pursuance of this Agreement
shall constitute either party the agent of the other party for any purpose or in
any sense whatsoever, or constitute the parties as partners or joint venturers.
(i). Force Majeure. Either party shall be excused from any delay or failure
in performance hereunder, except for the payment of monies, caused by reason of
any occurrence or contingency beyond its reasonable control, including but not
limited to, acts of God, earthquake, riots, war, actions or decrees of
governmental bodies or communications line or power failures. The obligations
and rights of the party so excused shall be extended on a day-to-day basis for
the period of time equal to that of the underlying the cause of the delay,
provided that Healtheon shall exercise commercially reasonable efforts to resume
the provision of the Healtheon Services and the availability of the System as
quickly as is practicable under the circumstances.
14
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
and do each hereby warrant and represent that their respective signatory whose
signature appears below has been and is on the date of this Agreement duly
authorized by all necessary and appropriate corporate action to execute this
Agreement.
Healtheon Corporation NMS
By: /s/ Xxxxxx Xxxxxxxxxxxxx By: /s/ Xxxx Xxxxxxx
------------------------------- ----------------------------------
Name: Xxxxxx Xxxxxxxxxxxxx Name: Xxxx Xxxxxxx
------------------------- ---------------------------
Title: Title: Senior Vice President
------------------------- ---------------------------
15
EXHIBIT A
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HEALTHEON SERVICES AND FEES
1. Service Fees
The Service Fees described below in this part 1 constitute compensation for the
distribution by Distributor, and the access and use, by any Company Account and
its respective End Users, of the Healtheon Service, and specifically for the
functionality described on Exhibits A-1 attached hereto (the "Core Benefits
Administration Module" and "Data Distribution"), being all three components (the
Web Employee Self-Service, Administrator and Data Distribution)
For the term of the contract, the Service Fee will be calculated:
* At $*** Per eligible Employee Per Year (PEPY) for eBenX Accounts that use
the Healtheon Service for one a one-time open enrollment only use and
* At $*** Per eligible Employee Per Year (PEPY) for all other eBenX Accounts
2. Miscellaneous Fees (See Exhibit A-2)
The Miscellaneous Fees described below in this part 2 constitute compensation
for any services to be provided by Healtheon in connection with the
miscellaneous services described on Exhibit A-2 attached hereto.
Implementation Services- as requested $*** per hour
Refresher Training $***
Miscellaneous Technical Support $*** per hour
4. Support Services (See Exhibit A-3)
The Support Services described on Exhibit A-3 attached hereto are included in
the Service Fees.
5. Travel & Other Expenses
In addition to the other fees provided in this Exhibit A, Distributor shall be
responsible for Healtheon's travel and related expenses and other reasonable and
customary out-of-pocket expenses, which are incurred by Healtheon personnel in
performing any of the foregoing services.
1
*** Pursuant to Rule 406 of the Securities Act of 1933, as amended, confidential
portions of Exhibit 10.20 have been deleted and filed separately with the
Securities and Exchange Commission pursuant to a request for confidential
treatment.
Exhibit A-1
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Core Benefit Administration Module Description
Healtheon provides a suite of Internet-based applications that are accessible by
employees, human resource (HR) managers, external administrators and benefits
providers. Release 3.1 of this service includes the following components:
BenefitCentral(TM)
Web Employee Self-Service
Self-service on-line benefits enrollment and administration that presents
employees with a customized presentation of their personal benefits options with
a decision-support environment to aid in their benefits selection. Employees go
through a point-and-click process to enroll in their benefits. Employees can
make yearly benefits selections during open enrollment, make benefits changes as
the result of qualifying events and can review and update personal and benefit
information as needed anytime during the benefit year. Benefits which can be
supported include: medical plans, prescription drug plan, mental
health/substance abuse plan, vision plan, dental plan, basic life, supplemental
life, long term disability, short term disability, AD&D, 401 (k), employee
savings and retirement accounts, vacation sell/purchase, dependent care flexible
spending accounts, health care flexible spending accounts, group legal, long
term care, and other benefits. Specific functional capabilities include:
On-line employee communications - including summary plan descriptions and
benefit comparison charts for health care benefits
Personalized presentation - the presentation of benefit choices for each
participant is specific to the benefits for which they are eligible, based
on their unique dependent, demographic and employment information
Dynamic enrollment workflow - the workflow a participant is led through is based
upon business rules and options associated with benefit plan, benefit
provider and employer requirements as well as their unique situation of
open enrollment/new hire/change enrollment
Real time calculations - eligibility rules and cost calculations are based on
real-time evaluations of customized business rules
Personal information - entering and managing demographic and dependent
information
Beneficiaries - choosing primary and contingent beneficiaries and itemizing
percentages for different beneficiaries across benefits
Coordination of Benefits - supplying coordination of benefits information
regarding other health policies that may cover the participant.
Administrator
An on-line application which provides access to perform the day-to-day
activities required to effectively administer a benefits program. Some of the
features of the Administrator are:
2
Data Maintenance - Ability to review and update personal, dependent, employment,
benefits elections, and benefit plan data. This includes the capability to
enter new hires directly into the system.
.Multi Year Support - Ability to manage both current year and next year's
enrollments and enrollment activities though one interface.
Improved Query Capabilities - Ability to perform quick and complex searches to
support efficient and more flexible queries. Results of queries will remain
available for repetitive references.
EventMonitor - Full control over the events, activities, and all associated
parameters for each participant in an easy to use interface.
Viewing History - Ability to view person, employment, and election history at a
specific point in time or on a sequential basis. To support this, effective
dating has been added to the participants demographic and employment data.
Overrides - Multiple levels of overrides to manage different types of exception
processing on a participant's enrollment records.
Approvals - Approval service for handling EOI, Student, HMO forms, and other
back-office follow-up
Defaults Assignments - Ability for administrator to assign the default benefit
elections to participant(s) if the participant(s) do not make elections
through BenefitCentral(TM).
Reporter (part of Administrator)
An on-line application which allows administrators to select, configure,
schedule, run, view, download, and print standard or custom reports. Some
of the features of Reporter are:
Configurability - Reports can be configured through parameters which allow
users to broaden or minimize the scope of the data that is display on
the report, thus retrieving data that better meet their needs.
Scheduler - Once configured, reports can be scheduled to run once at a
specific time, or on a repetitive basis.
Internet Report Viewer - Viewing a report is through a viewer plug in that
the user downloads for free from Healtheon. This viewer supports
demand paging, pagination, searches, extracts, and printing.
Customizer (provided to Distributor only)
An on-line application which allows for the setup and definition of the end-user
environment for online benefits enrollment. Customer supports the setup of
company information, business rules, benefit plan details and presentation,
including :
Benefit Packages - Ability to categorize benefit plans by benefit groups if
necessary. For example, the benefits for union employees may be different
than the benefits for non-union employees.
MultiYear Support - Ability to setup the next enrollment period rules
independent of the current year rules. The Customizer can access through
one interface, both the current year and the subsequent year's rules for
easier setup and implementation.
Components - Ability to perform setup on components (i.e. rules, costs, events,
assets, etc.) and subsequently map those components to the desired
customized benefits. This allows components to be used across benefits.
Asset Management - Ability to consolidate graphics, text, marketing pages, etc.
in one location for easy reference when creating the Web content for the
overall presentation as well as the specific benefit presentation.
Rule Templates - The ability to create rules (i.e. eligibility rules) from a set
of comprehensive rule templates which provide for point and click
completion. This results in a more user friendly interface with less rules
creation and more point and click functionality.
3
Cost Tables - Easier setup and maintenance of costs through new costs tables.
These cost tables provide the ultimate flexibility in calculating a
participant's specific cost.
Event Customization - Benefit related events are customizable with an option to
allow each company to specify system behavior and the allowable options a
participant has as a result of the determined event.
Standard and Default Benefits - Ability to customize the standard and default
benefits that can be assigned by the administrator to the appropriate
participants.
Effective Dating - Rules are effective dated to ensure the appropriate rule for
the time is used for the transaction being processed.
Signoff - Provides the Customizer with a validation mechanism to ensure
customization was performed accurately and consistently within
predetermined boundaries.
4
Exhibit A-2
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Miscellaneous Services
Implementation Services
For the stated hourly fee, Healtheon can assist Distributor in performing the
Implementation Services including:
Account set up customization
Healtheon can provide optional account set up services which may include
any activities related to customizing a Company Account on the Healtheon
Service.
Legacy Information Systems Integration
Through a one-time set-up process that is a separate option for the Company
Account, certain legacy information systems (LIS's) at the Company Account,
such as human resources information systems (HRIS) or payroll systems, can
transmit data to and receive data from the Healtheon Service. This file
exchange process can allow data to be synchronized between the LIS and
Healtheon. File exchange can be processed manually through the use of
Healtheon's Administrator.
Worksheet and report design
Healtheon can provide optional consultation services to custom design the
necessary End User benefit enrollment worksheet, confirmation report and
other forms necessary for the enrollment process.
Refresher Training
For the stated flat rate fee, Healtheon will also provide a Refresher Training ,
which includes up to *** hours of additional/refresher training of the following
processes:
Deployment
----------
Project Planning
Data Gathering
Using the Healtheon Customizer
Data Distribution
Testing
Sales & Marketing
-----------------
Target Market Definition
Sales Strategies
Client Qualification
Presentation Materials
Product Demonstrations
Administrative & Maintenance Processes
--------------------------------------
Using the Healtheon Administrator
Using the Healtheon Customizer
5
*** Pursuant to Rule 406 of the Securities Act of 1933, as amended, confidential
portions of Exhibit 10.20 have been deleted and filed separately with the
Securities and Exchange Commission pursuant to a request for confidential
treatment.
The Refresher Training sessions will occur at locations to be mutually decided
by the parties. No more than 8 of Distributor's personnel may attend such
sessions.
Miscellaneous Technical Support
-------------------------------
Healtheon may perform, at additional cost based on time and material rates, the
following additional services, in accordance with a mutually agreeable schedule:
* For the systems and data integration portion of a project, Healtheon can
review implementation plans, schedules and provide general counseling and
support while researching the nuances of the interface details.
* For Company Account setup, Healtheon can provide "sanity" checks on
customization activities and help in implementing complex rules within the
Healtheon environment.
* For the each end-to-end Company Account solution, Healtheon can provide a
technical review of implementation.
* Perform QA "sanity" checks on customization modifications. Help with
implementing complex rules within the Healtheon environment.
* Aid Distributor in researching the nuances of the interface details.
* Provide support to designated Distributor personnel to confirm that access
problems are within the employer's network or ISP connection. Aid in
managing Company Account's ISP connection. Trace source of exact problem
causing access problem potentially resident in desktop (e.g., inadequate
memory), LAN (e.g., security proxy not set or packet loss), ISP connection.
Develop trouble-shooting guides.
* Healtheon can provide marketing and pre-sales support in Company Account
presentations for business development opportunities initiated by
Distributor.
* For systems and data integration, Healtheon can provide project management
of system and data integration activities.
* For Account Customization, Healtheon can provide analysis and processing of
data to ensure consistency with coded rules. Turnkey customization
projects, including dedicated personnel to perform analysis of
requirements.
* Provision of technical assistance for data mapping and other generic SI
issues.
* Review interface changes to ensure proper overall data management.
* Develop new custom reports not available in standard offering.
* Develop and manage billing system for Distributor to xxxx their Company
Accounts.
6
Exhibit A-3
-----------
Support Services Description
Basic Technical Support:
2nd Tier Support to Distributor for systems and data integration, account
customization, and all end-to-end Activities involved in deploying a
Company Account solution. Maintain integration documentation, customization
documentation, and requirements and implementation specifications.
Healtheon will provide 2nd tier Company Account support to Distributor. If
Distributor cannot answer questions posed by Company Accounts, Healtheon
will aid Distributor in deriving the answer. Distributor will then
communicate the necessary resolution with the Company Account.
Resolve questions arising from initial training provided by Healtheon to
Distributor personnel
Resolve questions regarding customization guidelines and tools. Move modified
rules, logos or text from test area to production area. Maintain copies of
customization documentation
Provide reports with detailed transaction statistics regarding data file
transfers. Maintain copies of legacy interface documentation.
Provide 7x24 access support to ensure that the Healtheon Service is available
and accessible from the Internet and operating properly.
Resolve questions associate with on-going enhancement/release. Receive and
document requests for feature enhancements in future releases. Provide
"key" Distributor personnel aid in their Healtheon account management
(e.g., forgotten passwords, access privilege changes, etc.). Provide all
necessary support and assistance in connection with any upgrades or System
enhancements.
On a semi-annual basis or in conjunction with major releases, provide updated
documentation and release implementation.
7
EXHIBIT B
SERVICE TERMS
Company acknowledges that by subscribing to utilize the [System Name to
Come] Service, Company has agreed to the following terms and conditions for the
Term of the Company's subscription of the Service.
1. Proprietary Rights. Company acknowledges and agrees that the Administrator's
vendor and/or the Administrator and/or their suppliers (and not the
Company)(collectively, the "Providers"), own all right, title and interest in
the System, the benefit enrollment and administration services included in the
System (collectively, the "Service") and any invention or confidential or other
information contained therein, including, but not limited to the software and
any copyrighted material which resides on the System and/or the Services and all
trademarks which pertain thereto (the "Intellectual Property"). Accordingly,
Company hereby assigns and shall assign to the Providers, as appropriate, all
right, title and interest it may have in and to the Intellectual Property and
all inventions that may be embodied therein, and all copyrights, patent rights,
trade secret rights, or other intellectual property rights therein. All right,
title and interest in and to the Intellectual Property shall remain in the
Providers. All such Intellectual Property is protected by copyright, trade
secret, trademark and other intellectual property laws and treaties. Company may
not reverse engineer, decompile, disassemble, modify in any way or create
derivative works of the Intellectual Property.
2. Confidential Information. Company acknowledges that, in receiving the
Service, Company may be exposed to or acquire information which is proprietary
to or confidential to the Providers. Any and all such information in any form
obtained by Company or its employees or agents shall be deemed to be
confidential and proprietary information of the Providers, as appropriate.
Company agrees to hold such information in strict confidence and to only permit
use of such information by its employees and agents having a need to know in
connection implementing the Service, and not to copy, reproduce, sell, assign,
license, market, transfer, give or otherwise disclose such information to third
parties or to use such information for any other purpose whatsoever. The
confidentiality obligations of Company shall not extend to information that (i)
is part of the public domain through a source other than Company; (ii) was known
to Company as of the time of its disclosure; or (iii) is independently developed
by Company. In the event that Company is required to disclose any of such
information pursuant to court order, Company shall provide reasonable notice to
the Administrator, prior to such disclosure and shall cooperate with
Administrator to obtain protection from such disclosure.
3. Service Warranty. Company acknowledges that complex computer systems and
software, such as the System, and on-line services such as the Service, are
rarely free of defects, perform without interruption and provide complete
security, and neither Administrator nor its vendor warrants the same. However,
Administrator and its vendor do warrant that the Service shall function in
conformance with the applicable specifications in all material respects and they
shall promptly respond to "high priority errors" reported by Company to
Administrator in accordance with the terms of the agreement between
Administrator and its vendor.
4. Third Party Material. Company acknowledges and agrees that information which
is provided to Company and its end users as part of the Service is provided by
third parties, such as health plans, other benefit carriers and the Company (the
"Third Party Material"), and that neither the Administrator nor its vendor has
reviewed any such material for its accuracy or appropriateness and neither
Administrator nor its vendor makes any representations or warranties of any
nature whatsoever regarding any Third Party Material, nor assumes any liability
of any kind with respect to any Third Party Material.
8
5. Company's Acknowledgment and Warranty. Company acknowledges that the
information conveyed through the System and Service may constitute confidential
or proprietary information of plan participants or other persons or entities,
and Company agrees that it (and not Administrator or its vendor) is responsible
at all times for obtaining all end user and any other legally or contractually
required consents or permissions necessary or advisable to disclose, transmit,
and process such information through the System and Service. Company represents
and warrants that all information that it and, to the best of its knowledge, its
end users provide through Company to be incorporated into the Service and stored
on the System, and any consents required for such information, shall be in
compliance with all applicable laws, rules and regulations and contractual
obligations. Company acknowledges and agrees that Administrator and its vendor
shall have the right to remove any material which is put on the Service or
System which they reasonably believe infringes the rights of a third party or
which in violation of any applicable law.
6. Disclaimer of Warranties and Limitation of Liability. TO THE EXTENT PERMITTED
BY APPLICABLE LAW, NEITHER ADMINISTRATOR NOR ITS VENDOR MAKES ANY WARRANTY,
EITHER EXPRESS, IMPLIED OR STATUTORY, WITH RESPECT TO EITHER THE SYSTEM OR THE
SERVICE AND ALL IMPLIED WARRANTIES, INCLUDING THE IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, ARE HEREBY DISCLAIMED.
NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED HEREIN, NEITHER ADMINISTRATOR
NOR ITS VENDOR SHALL BE LIABLE TO COMPANY FOR ANY CONSEQUENTIAL, INDIRECT,
INCIDENTAL, OR SPECIAL OR ANY OTHER DAMAGES, INCLUDING LOST PROFITS OR LOST
DATA, EVEN IF ADMINISTRATOR AND/OR ITS VENDOR HAS BEEN APPRISED OF THE
LIKELIHOOD OF SUCH DAMAGES OCCURRING. IN NO EVENT SHALL ADMINISTRATOR, ITS
VENDOR, OR ANY OF THEIR RESPECTIVE SUPPLIERS BE HELD LIABLE FOR AMOUNTS IN
EXCESS OF THE TOTAL AMOUNT OF CONSIDERATION WHICH VENDOR RECEIVED FROM
ADMINISTRATOR DURING THE PREVIOUS SIX (6) MONTHS FOR THE SERVICES PROVIDED WHICH
GAVE RISE TO SUCH CLAIM.
7. Intellectual Property Indemnification. (a) Administrator will cause its
vendor, at its expense, to defend or settle any claim, action or allegation
brought against Company that the System and/or Service infringes any patent,
copyright, trademark or trade secret of any third party excluding Administrator
and Company, and to pay any final judgments awarded or settlements entered into,
provided that Company gives prompt written notice to Administrator within ten
(10) days after it receives notice of such claim, action or allegation of
infringement and gives Administrator and its vendor the authority to proceed as
contemplated herein. Company may, at its own expense, participate in the defense
of any such claim with counsel reasonably acceptable to Administrator's vendor.
However, Administrator's vendor will have the exclusive right to control the
defense of any such claim, action or allegation and make settlements thereof at
its own discretion, and Company may not settle or compromise such claim, action
or allegation, except with prior written consent of Administrator's vendor.
Company will give such assistance and information as Administrator or its vendor
may reasonably require to settle or oppose such claims, at Administrator's
expense.
(b). Limitations. Administrator's vendor shall have no idemnity obligation for
claims resulting from any implementation services performed by Administrator.
Neither Administrator nor its vendor shall have any indemnity obligation for
claims resulting from or which results or which is alleged to result from (i)
development work performed by them in compliance with Company's specifications
where their method of compliance has been compelled by the terms of Company's
specifications; (ii) Company's use of the System and/or Service in combination
with any hardware or software not furnished by or authorized by Administrator
hereunder or any modifications which have been made by Company; or (iii)
9
for any claims which relate to any third-party material or any other information
or data which has been supplied by Company, end users or which has been provided
by any health plans and/or other benefit carriers, which is incorporated into
the System and/or the Service. In addition, neither shall have any indemnity
obligation for claims of infringement resulting or alleged to result from
Company's failure within a reasonable time frame to implement any replacement or
modification of the System which conforms to the requirements of paragraph 7(c)
herein.
(c) Infringement Remedy. In the event of any infringement claim, action or
allegation is brought or threatened by a third party other than Company,
Administrator and its vendor may, at their sole option and expense: (i) provide
Company access to a system and service which is functionally equivalent to the
System and Service, without additional charge; (ii) modify the System and/or the
Service to avoid the infringement; or (iii) obtain a license for Company to
continue use of the Service for the term of this Agreement and pay for any
additional fee required for such license. In the event that, in Administrator's
reasonable judgment, none of the foregoing options are feasible, Administrator
shall have the right to terminate this Agreement.
8. Source Code Restrictions. Company agrees not to copy, modify, translate,
decompile, reverse engineer, disassemble, or otherwise determine or attempt to
determine source code from the System, the Service and the Intellectual Property
pertaining thereto or to create any derivative works based upon the System, the
Service and/or the Intellectual Property pertaining thereto, and agrees not to
permit anyone under Company's control or to authorize anyone else to do so.
9. Third Party Beneficiary. Administrator's vendor of the Service is an express
and intended third party beneficiary of any agreements between Company and
Administrator relating to the System or Service.
[Insert Signature Block]
10
EXHIBIT C
---------
CLARIFICATION OF COSTS AND RESPONSIBILITIES
The purpose of this Exhibit is to help clarify costs and responsibilities which
may or may not have been explicitly stated in the body or other Exhibits of this
Agreement.
Costs/Responsibility of Distributor
-----------------------------------
The Distributor is fully responsible for the following:
Integration of the Healtheon System with Distributor's legacy system
Maintenance/support costs not specified as a deliverable
Providing Healtheon with reasonable access to Distributor personnel appropriate
to support Healtheon's implementation, deployment and operation of the
Service, which will include designating business and/or information systems
staff members responsible for expediting and coordinating the project
interactions with Healtheon.
Costs/Responsibility of Each Company Account
--------------------------------------------
Each Company Account is fully responsible for providing enrollment information
to Healtheon. When the Company Account uses the Healtheon Service, the Company
Account is also responsible for the following:
Providing the initial load of employee and enrollment information.
Providing information to enable the Distributor to customize the Healtheon
Service including their benefits, plan descriptions, eligibility criteria,
etc.
Providing Internet access to Members
Providing Healtheon and/or Distributor with reasonable access to information and
Company Account personnel reasonably necessary or appropriate to support
the implementation, deployment and operation of the Service, which will
include designating business and/or information systems staff members
responsible for expediting and coordinating the project interactions with
Healtheon.
Integration of the Healtheon System with their own HRIS and/or payroll system,
if desired
Communications to Employees on use, initiation and termination of System
Providing front-line support to Company Account's end users of the Healtheon
Service, unless designated by Company
11
