EX-10.20 SERVICES AGREEMENT, EFFECTIVE JANUARY 1, 2008, BY AND BETWEEN SPHERIS OPERATIONS LLC AND SP

Exhibit 10.20

SERVICES AGREEMENT
EFFECTIVE JANUARY 1, 2008

BETWEEN

SPHERIS OPERATIONS LLC

AND

SPHERIS, INDIA PRIVATE LIMITED

SERVICES AGREEMENT

This Services Agreement (the “Agreement”) is effective as of the 1 ^st day of January, 2008 and is by and between:

Spheris Operations LLC, a Tennessee limited liability company with its principal office at 9009 Carothers Parkway, Suite C-3, Franklin, Tennessee 37067, USA acting by and through its affiliates and subsidiaries (hereinafter collectively referred to as “Spheris”)

And

Spheris, India Private Limited, a company registered under the Indian Companies Act, 1956, having its office at One HealthScribe Plaza, Koramangala Block 8, Bangalore — 560 008, India (hereinafter referred to as “SIPL”).

WHEREAS, Spheris wishes to engage SIPL to provide transcription services and priming activity (the “Services”) on an as-requested contract, work-for-hire basis, according to the terms herein;

WHEREAS, SIPL has agreed to provide the Services on the terms herein and its board of directors has determined that the provision of such Services will be in the best interests of SIPL; and

WHEREAS, Spheris and SIPL wish to enter into this Agreement to establish the terms and conditions upon which SIPL will provide the Services to Spheris at its facility located on Plot 17 of the Vega Building, the V, Software Units Layout, Madhapur, Serilingampally Municipality, Ranga Reddy District, Hyderabad, India.

NOW, THEREFORE, in consideration of the foregoing premises and the mutual promises, covenants, and undertakings set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which the parties acknowledge, and intending to be legally bound, the parties agree as follows:

For purposes of this agreement, the following definitions shall apply:

“Capacity” shall mean the number of Lines that SIPL can complete in a given month, which SIPL shall advise Spheris in accordance with the provisions of Clause 8.3.

“Client” shall mean any entity that has entered into a contract with Spheris for the transcription of Voice Files into Transcribed Lines.

“Committed Capacity” shall mean the minimum transcription capacity of SIPL necessary to transcribe the Committed Lines.

“Committed Lines” shall mean the minimum volume of Lines committed by Spheris as specified under Part A of Exhibit A .

“Employees” shall mean employees of SIPL.

“Force Majeure” shall mean any interruptions to the business of either party caused as a result of any acts beyond their control including: war, acts of internal aggression, violence, arson, vandalism, acts of wanton destruction, fires, storms, hurricanes, floods, earthquakes, or other natural disasters or acts of God, strikes, lockouts, or other labor disputes, disruption of constant power supply for more than 48 hours, disruptions to the satellite linkage with Spheris, software and hardware crashes, and changes in law that limit or prohibit the Services to be provided hereunder.

“HIPAA” shall mean the Health Insurance Portability and Accountability Act of 1996 and the regulations promulgated thereunder, all as amended and in effect.

“Job” whether in the singular or plural, shall mean Transcription or Priming Activity, as the case may be, and any other activity as agreed between the Parties.

“LIBOR” means London Inter Bank Offered Rate.

“Line” whether in the singular or plural, shall mean a line of 65 characters including spaces between words but excluding system generated template characters not required to be typed by the transcriptionist or any other standard line, the definition of which may be agreed by the parties during the term of this Agreement. In case of failure to agree to any other definition, the foregoing definition of “Line” shall prevail. The parties may agree to a different definition of “Line” for different Jobs.

“Non Stat Jobs” shall mean those jobs other than Stat Jobs

“Parties” shall mean Spheris and SIPL.

“Priming Activity” shall mean the process of entry of the patients’ as well as the doctors’ and clinics’ demographic data in text files for each Job prior to transcription of the Voice File.

“QA Proofreading” shall have the meaning ascribed to it in Clause 6.2 hereunder.

“Services Fee” shall have the meaning ascribed to it in Clause 3.1.

“Software” shall have the meaning as ascribed to it in the Software License Agreement.

“Software License Agreement” shall mean the software license agreement executed between Spheris and SIPL dated July 10, 2000.

“Stat Jobs” shall mean those specific jobs which, regardless of the TAT stipulated by Spheris in respect of that Client or Work Type, are identified by Client as one that must be completed as soon as possible and these jobs will be routed to the next available transcriptionist and/or editor for immediate processing.

“Transcription” shall mean the electronic document created from Voice Files dictated by a doctor.

“Transcribed Lines” shall have the meaning ascribed to it in Clause 2.1 hereunder.

“Turnaround Time” or “TAT” shall mean the time specified in respect of each Job and Work Type of a given Client, within which SIPL must convert a job into Transcribed Lines, which time shall be stipulated by Spheris prior to assigning the Jobs of a Client or Work Type to SIPL.

“Voice Files” shall mean digital recordings of dictated voice that can be understood by playing these files on a computer matching the hardware and software specifications prescribed by Spheris.

“Work Type” shall mean and refer to distinct categories of Jobs that shall be classified depending on the respective departments of a Client from which such Jobs emanate.

2.1

During the term of this Agreement and for the service fee referenced in Clause 3, SIPL agrees to provide Transcription and services relating to Priming Activity to Spheris, through SIPL’s employees, agents, subcontractors, and representatives. The Services to be provided by SIPL to Spheris shall include the following:

	(i)		the Transcription of the Voice Files forwarded to SIPL by Spheris into Lines of typewritten text (the “Transcribed Lines’’). Spheris may require that the Transcribed Lines be subsequently proofread by Spheris in order to bring them to a level of quality required by Clause 6 of this Agreement. Transcribed Lines that meet the quality as provided in Clause 6 shall be forwarded by Spheris to its Clients.
	(ii)		to carry out the Priming Activity of the Transcription for the Voice Files forwarded to SIPL by Spheris prior to the entry of the Transcribed Lines.

2.2

SIPL acknowledges that Spheris is under a contractual obligation to provide Transcribed Lines to its Clients at the level of accuracy and within the Turnaround Time already agreed to between Spheris and its Client and as set forth in Clauses 5 and 6 of this agreement. Consequently, SIPL acknowledges that the provision of the Services to the level of accuracy and within the time specified by Spheris with regard to each Job is the essence of this Agreement.

2.3

SIPL agrees that it will not perform any services for any third party (without the written consent of Spheris) unless (a) SIPL is in compliance with the terms of this Agreement (including without limitation the quality and TAT requirements of Clauses 5 and 6) for each of four consecutive quarters and (b) Spheris thereafter refuses to provide additional Lines to SIPL even though SIPL provides reasonable evidence showing that it has additional capacity. If SIPL meets the conditions set forth in the previous sentence, it may perform transcription services for third parties provided that (i) any such third party agreements, in Spheris’s sole opinion, do not interfere with SIPL’s ability to provide Services to Spheris and (ii) such third party contracts are terminable by SIPL upon 30 days’ notice to such third party or parties. So long as Spheris accounts for 60% or more of SIPL’s revenue, if SIPL is unable to provide Services in compliance with the TAT and quality requirements hereof during a period that SIPL is performing transcription services for third parties (as permitted by this Agreement), SIPL will terminate such third party contracts until it can provide reasonable assurances to Spheris that it can and will comply with the TAT and quality requirements of this Agreement.

3.1		For the Services , Spheris shall pay to SIPL a fee to be calculated as set out in Part A of Exhibit A (the “Services Fee”).
3.2		The Services Fee shall be invoiced to Spheris on a monthly basis and shall be due sixty (60) days from the receipt by Spheris of the invoice therefore.
3.3		Spheris will also pay to SIPL a man-month rate to be mutually agreed upon by the parties based on arms-length negotiations per primer deployed for Priming Activity for jobs not being transcribed by SIPL for the calendar year 2008. This man-month rate may increase each year after 2008, as agreed to by the parties.

4.1		SIPL shall train the Employees to perform Services under this Agreement in accordance with the terms of this Agreement including the use of the technology and equipment and the transcription of Voice Files into Transcribed Lines.
4.2		SIPL shall indicate to Spheris the details and number of Employees who are, in its opinion and based on the training imparted by SIPL to the Employees, sufficiently qualified to carry out the Services in respect of Job and Work Type.

5.1		If the Client is using Spheris voice dictation system, TAT is measured from the time a dictation is ended (phone is hung up) until the finished document is delivered back to the Client, ready for printing. If Spheris is extracting from a Client-owned dictation device, TAT is measured from the time the dictation is extracted into the Spheris system until the finished document is delivered back to the Client, ready for printing. Dictation that is unintelligible (other than that due to system failure at SIPL’s end) resulting in the work being sent to a collaborator or technical service personnel is exempt from TAT requirements. Dictation that is not properly signed off, multiple dictations, refusal of dictator to make proper use the system or other dictator errors are exempt from TAT requirements.
5.2		Each Job must be returned to the Client within the Turnaround Time specified in respect of the Client and the Work Type. SIPL shall also complete the Stat Jobs within the Turnaround Time stipulated by the Client in respect of each Stat Job. SIPL agrees to route the Stat Jobs to the next available transcriptionist and/or editor for immediate processing. Furthermore, should a Job, whether a Stat Job or otherwise, require proofreading in the US, then the Job must be delivered back to Spheris with sufficient time remaining so that Spheris can proofread the Job and still return the Job to the Client within the required TAT. SIPL and Spheris shall mutually agree upon the required time for delivery for each Client. Unless otherwise mutually agreed, the Transcription TAT for Jobs requiring proofreading by Spheris shall be one half of the Job TAT specified by the Client.

5.3

SIPL commits to deliver Transcribed Jobs to Spheris within its contracted time requirements with the Client not less than 95% of the time (measured monthly as a percentage of Lines delivered within the time periods required by the terms of this Agreement), with no greater than 1% of all reports being delivered more than 24 hours overdue. This is a standard with adjustments for the following factors:

	1)		Edits do not count in the return times
	2)		Dictation issues caused by the Client or its dictation system supplier
	3)		Force Majeure
	4)		Clients that allow more turn-around-time will have their TAT adjusted

Notwithstanding the foregoing, the parties may agree to more stringent TAT terms where TAT requirements of any applicable Client are more stringent than identified above. In such cases, Spheris agrees to provide SIPL with 30 days notification of such additional TAT requirements.

6.1

SIPL commits to deliver Transcribed reports to Clients that exceed 98% accuracy 95% of the time, with no reports less than 95% accurate. The percentage accuracy shall be based upon the applicable percentage point system or scoring method that Spheris has with the applicable Spheris customer, and shall be measured monthly, with adjustments for the following factors:

	1.		Edits do not count in the quality standards
	2.		Dictation issues caused by the Client or its dictation system supplier
	3.		Force Majeure

		Notwithstanding the foregoing, the parties may agree to more stringent quality requirements where quality requirements of any applicable Client are more stringent than identified herein. In such cases, Spheris agrees to provide SIPL with 30 days notification of such additional quality requirements.
6.2		Spheris shall from time to time, at its sole discretion, proofread a random sample comprising up to 1% but in no event less than 1 / 2 % of the Lines produced by each of the Employees of SIPL to determine the level of accuracy of the respective Employees (“QA Proofreading”). All costs incurred in respect of QA Proofreading shall be borne by Spheris.

7.1		The term of this Agreement shall commence on the date hereof, and unless terminated pursuant to Clause 7.2 hereof shall continue to be in force through December 31, 2011. This Agreement shall automatically renew for successive one year periods, unless either party provides the other with six (6) months’ notice of its intent to terminate this Agreement at the end of the then current term.
7.2		This Agreement may be terminated by either party (“Non-Defaulting Party”) upon written notice thereof in the event the other party (“Defaulting Party”) is in material breach of the terms of this Agreement and if such breach is not remedied by the Defaulting Party within six (6) months from the Non-Defaulting Party’s notice to the Defaulting Party to this effect. In the event of a termination of this Agreement, Spheris shall promptly pay SIPL any Services Fee payable to SIPL for Services rendered prior to the effective date of such termination and SIPL shall promptly pay any amount payable to Spheris under this Agreement.
7.3		For the avoidance of doubt, unless otherwise specifically set forth herein, the parties agree that Spheris can only be in material breach of this Agreement for failure to pay amounts due hereunder (provided that following the payment of any disputed amounts hereunder by Spheris into escrow, SIPL shall not be permitted to so terminate).

8. Covenants of Spheris. Spheris, for itself, hereby covenants as follows:

8.1

Confidential Agreement. Unless Spheris has obtained SIPL’s prior written consent (which consent may be given or withheld in SIPL’s sole and absolute discretion), Spheris shall keep the terms and conditions of this Agreement confidential and prevent disclosure thereof to any Person other than its employees and advisors for purposes directly related to Spheris’s operation of its business. Spheris’s obligation of confidentiality shall not apply to information which:

	(i)		is obtained from a third party that did not make a disclosure of such information (whether to Spheris, to a third party, or to the general public) in violation of a non-disclosure obligation,
	(ii)		is in the public domain not as a result of action by Spheris,
	(iii)		is required to be disclosed by applicable law or an order issued by a court of competent jurisdiction; provided, however, that in the event of any such required disclosure, Spheris shall immediately notify SIPL thereof and shall cooperate with SIPL in any attempt to quash, limit or otherwise prevent or limit disclosure, or
	(iv)		in so far as it is disclosed to Spheris’s employees, directors, bankers, potential financiers or professional advisors as confidential, provided that it shall ensure that such persons treat such information as confidential.

8.2

Notice. Except as otherwise mutually agreed between the Parties, Spheris agrees that it shall give SIPL at least thirty (30) days notice before requ