“Affiliate” shall mean, with respect to a Party, any entity controlling, controlled by or under common control with, such Party.  The terms “control”, “controlling” and “controlled”, as used in this definition, shall mean the legal, beneficial or equitable ownership, direct or indirect, of more than 50 percent of the aggregate of the voting equity interests in such entity.

 

“Agreement Date” shall have the meaning set forth in the introduction.

 

“Allowances” shall mean the reserve that represents the difference between the value of the Accounts Receivable and the anticipated cash value of the Net Accounts Receivable.

 

“ASA” or “Average Speed to Answer” shall mean the time it takes for a customer service phone call to be answered by OUTSOURCER after call is connected to the OUTSOURCER system.

 

“Assumptions” shall mean the assumptions that substantially form the basis for the Fees and are summarized on Exhibit F.

 

“Batching” shall mean aggregating daily PPAs.

 

“Bill Date” shall mean the date in which an Accounts is first billed, on paper or electronically, to a Third Party Payer.

 

“Cash Receipts”, as used herein, includes, without limitation, all payments received, transferred in or posted to, regardless of source and without exception, which apply to the Accounts, whether by cash, check, wire transfer, credit card, receipt by CLIENT, CLIENT’s bank, lender, agent, or lock box, or payment off-set with or by a Third Party Payer. Cash Receipts exclude payments received by the CLIENT’s Collection Agency after an Account has been written off from OUTSOURCER’s Systems.

 

“Change in Scope of Service(s)” shall mean any service that is (a) outside the scope of the Required Services, (b) requires staffing, technology, software changes, or other resources in addition to or different than those required for performance of the Required Services or (c) requires additional start-up expenses not otherwise required for performance of the Required Services.

 

“Change in Scope of Service Levels” shall mean any service levels established by OUTSOURCER and CLIENT in connection with the Change in Scope of Services.

 

“Change Order” shall have the meaning set forth in Section 3.2.

 

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“Charge” shall mean the invoice value of a PPA at CLIENT’s non discounted pricing (i.e., gross revenue before contractual allowable).

 

“Claim” shall mean any civil, criminal, administrative or investigative action or proceeding against a Party.

 

“CLIENT Agents” shall mean the agents, subcontractors and representatives of CLIENT, including CLIENT’s employees, distributors and their agents and employees and/or CLIENT’s independent sales agents or sales representatives.

 

“CLIENT Collection Agency” shall mean a third party collection agency hired by CLIENT for purposes of collecting Accounts that have remained open for 15 months and have been written off in OUTSOURCER Systems as set forth on Exhibit A.

 

“CLIENT Contract Executive” shall have the meaning set forth in Section 4.1.

 

“CLIENT Data” shall mean all data and information submitted to OUTSOURCER or OUTSOURCER Agents in tangible form (including electronic form) by CLIENT or obtained, developed or produced by OUTSOURCER or OUTSOURCER Agents on behalf of CLIENT.

 

“CLIENT Event of Default” shall have the meaning set forth in Section 18.1(a)(ii).

 

“CLIENT Intellectual Property” shall have the meaning set forth in Section 8.2.

 

“CLIENT Service Location” shall mean CLIENT’s facility located at 2980 Scott Street, Vista, CA.

 

“Closed Account” shall mean a zero balance Account.

 

“Confidential Information” shall mean the terms and conditions of this Agreement and all information, data (including CLIENT Data) knowledge and know-how (in whatever form and however communicated) relating directly or indirectly to the disclosing party (or to its Affiliates or contractors, or to its or their businesses, operations, properties, products, markets or financial positions) that is delivered or disclosed by such party or any of its officers, directors, partners, members, employees, agents, Affiliates or shareholders to the other party in writing, electronically, orally or through visual means, or that such party learns or obtains aurally, through observation or analyses, interpretations, compilations, studies or evaluations of such information, data, knowledge or know-how.

 

“Contract Year” shall mean each 12-month period commencing on the Effective Date during the Term.

 

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“Date of Entry” shall mean the date when all or part of the PPA information is entered into the Systems

 

“Date of Receipt” shall mean the date in which OUTSOURCER receives the PPAs from CLIENT.

 

“Date of Service” shall mean the date in which the CLIENT’s product was prescribed/ordered for the Patient, as recorded on the PPA.

 

“Default Cure Period” shall mean the cure periods set forth on Exhibit E.

 

“Delinquent Account” shall mean an Account which remains unpaid in part or in full until the earlier to occur of (i) the date on which OUTSOURCER’s reasonable collection efforts (as outlined in Exhibit A) have been expended, or (ii) the date which is 15 months after Date of Entry in respect of such Account.

 

“DME” shall mean Durable Medical Equipment and/or supply.

 

“Effective Date” shall mean March 1, 2006

 

“ERP System” shall mean CLIENT’s JD Edwards ERP system, the functional replacement of such system, or its then current financial systems in use.

 

“Event of Default” shall mean, with respect to OUTSOURCER, an OUTSOURCER Event of Default and, with respect to CLIENT, a CLIENT Event of Default.

 

“Fees” shall mean the fees for the Services as described on Exhibit B and any other amounts payable by CLIENT to OUTSOURCER pursuant to this Agreement in respect of the Services provided hereunder.

 

“Force Majeure Event” shall have the meaning set forth in Section 11.2.

 

“HIPAA” has the meaning set forth in Section 3.5.

 

“Imaging System” shall mean a system with the capability to store and retrieve digital images of such documents as PPAs, explanation of benefits/payments, checks and correspondence.

 

“Improved Technology” shall mean new information processing technology developments, including new software and hardware developments and project implementation techniques, that could reasonably be expected to have an impact on CLIENT’s business.

 

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“Insurance Business” shall mean the business of CLIENT in which CLIENT provides an inventory of DME and orthopedic braces to CLIENT Agents who in turn furnish DME and orthopedic braces to Patients of Physician Practices as prescribed by Physicians as part of an office visit.

 

“JD Edwards” or “JD Edwards ERP system” shall mean CLIENT’s JD Edwards ERP system.

 

“Management Committee” shall have the meaning set forth in Section 7.1.

 

“Measurement Period” shall mean the 90 day period that precedes the Termination Period.

 

“Measurement Touches” shall mean the number of Account Touches recorded during the Measurement Period.

 

“Medicare Account” shall mean an account where the primary payer is the Medicare program.

 

“Month End Process” shall mean the end of month updating and reporting of all Accounts reflecting Services provided during the month just ended.

 

“Net Accounts Receivable” shall mean the aggregate expected cash value of all Accounts.

 

 “Net Revenue” shall mean the anticipated cash value of Charges (net of CLIENT and Patient adjustments and write-offs and Third Party Payer contractual discounts, adjustments and write-offs).

 

“Official Action” shall mean any action of a governmental or regulatory authority or any court or tribunal of competent jurisdiction restraining or enjoining the transition with respect to the Services at a CLIENT Service Location, or any particular part of such transition, or the performance of either Party’s obligations hereunder.

 

“OfficeCare” shall mean the business of CLIENT in which CLIENT provides an inventory of DME to Physician Practices which practices, in turn, furnish to their Patients as part of an office visit.

 

“Open Account” shall mean an Account with an open balance.

 

“Order” shall mean a PPA that has been entered into the Systems.

 

“OUTSOURCER Agents” shall mean the agents, subcontractors, suppliers and representatives of OUTSOURCER.

 

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“OUTSOURCER Collection Agency” shall mean OUTSOURCER’s Affiliate responsible for sending out letters to Patients in respect of Delinquent Accounts or Open Accounts.

 

“OUTSOURCER Contract Executive” shall have the meaning set forth in Section 6.1.

 

“OUTSOURCER Event of Default” shall have the meaning set forth in Section 18.1(a)(i).

 

“OUTSOURCER Intellectual Property” shall have the meaning set forth in Section 8.1.

 

“OUTSOURCER Service Location” shall mean OUTSOURCER’s processing centers in Wilkes Barre, Pennsylvania and/or in Jaipur, India

 

“Parties” shall mean CLIENT and OUTSOURCER, collectively.

 

“Party” shall mean either CLIENT or OUTSOURCER, as the case may be.

 

“Patient” shall mean patients of Physician Practices who receive OfficeCare or Insurance Business products and supplies for which CLIENT bills Third Party Payers or Patients.

 

“Physician” shall have the meaning set forth in the definition of “Physician Practices”.

 

“Physician Practices” shall mean the independent practices of orthopedic physicians (“Physicians”) that have agreed to stock CLIENT’s products for the benefit of Patients.

 

“Pre-Termination Accounts” shall have the meaning set forth in Section18.2(b)

 

“Prime Rate” shall mean the United States of America prime rate as recorded in the New York edition of the Wall Street Journal the day of such receipt or payment, as the case may be.

 

“Proprietary Processes” shall mean those processes that the CLIENT and OUTSOURCER agree are proprietary to CLIENT and as such subject to the same protections applied to confidential information and CLIENT Intellectual Property as described in Section 8.2.

 

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“Protected Health Information” shall have the meaning set forth in 14.5.

 

“PPA” shall mean the Patient Procedure Authorization forms issued by the Physician Practice which indicates the OfficeCare and/or Insurance Business Product prescribed to the Patient as well as the Patient’s insurance and demographic information.

 

“Required Services” shall mean the services described on Exhibit A as such services apply to OUTSOURCER or on Exhibit D as such services apply to CLIENT.

 

“Residuals” shall have the meaning set forth in Section 15.4.

 

“Self Pay” shall mean an Account where the Patient is responsible for the open balance.

 

“Service Levels” shall mean those performance standards set forth on Exhibit B and the performance standards established by OUTSOURCER and CLIENT in connection with any Change in Scope of Services.

 

“Service Location” shall mean the CLIENT Service Location, the OUTSOURCER Service Location or any Additional OUTSOURCER Service Location.

 

“Services” shall mean the Required Services and the Change in Scope of Services, collectively.

 

“Systems” shall mean MaxPro (OUTSOURCER’s proprietary workflow management system) and Medical Manager (OUTSOURCER’s licensed order entry, patient accounting and cash posting system) and/or their functional replacements.

 

“Term” shall have the meaning set forth in Section 2.1.

 

“Termination Date” shall mean the date when OUTSOURCER ceases to provide services under this Agreement.

 

“Termination Period” shall mean the 90 day period preceding the Termination Date.

 

“Termination Touches” shall mean the number of Account Touches recorded during the Termination Period.

 

“Third Party Payers” shall mean third party payers, including Medicare, Medicaid, auto accident insurance carriers, commercial insurance carriers, Worker’s Compensation, health maintenance organizations and preferred provider organizations.

 

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Section 1.2                                    References; Exhibits

 

In this Agreement and the Exhibits to this Agreement: (i) the Exhibits to this Agreement shall be incorporated into and deemed part of this Agreement and all references to this Agreement shall include the Exhibits to this Agreement; (ii) references to any law or regulation shall mean references to the law or regulation in changed or supplemented form or to a newly adopted law or regulation replacing a previous law or regulation; and (iii) references to the word “including” or the phrase “e.g.” in this Agreement shall mean “including, without limitation”.

 

The following Exhibits are the Exhibits to this Agreement:

 

Exhibit		Description
A		OUTSOURCER Required Services
B		Service Levels, Penalties, and Bonuses
C		Fees
D		CLIENT Required Services
E		Events of Default and Cure Periods
F		Assumptions
G		Schedule of Unamortized Implementation Costs

 

Section 1.3                                    Headings.

 

The article and section headings and the table of contents are for reference and convenience only and shall not be considered in the interpretation of this Agreement.

 

ARTICLE II TERM

Section 2.1                                    Term.

 

The term of this Agreement (the “Term”) shall be from the Agreement Date through the date which is five years after the Effective Date (such date, the “Expiration Date”), unless terminated earlier pursuant to Article XVIIII.  This Agreement will automatically be extended for two additional terms of 12 months each unless OUTSOURCER or CLIENT gives written notice to the other at least 180 days prior to the expiration of the Term or any subsequent term.

 

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ARTICLE III SERVICES.

 

Section 3.1                                    Generally.

 

Subject to the time periods for certain Required Services set forth on Exhibit B, during the Term, OUTSOURCER shall be responsible for providing to CLIENT the Required Services as specified on Exhibit A and such additional Change in Scope of Services that may be from time to time mutually agreed upon in writing among the Parties in the manner set forth in Section 3.2.  The responsibilities of CLIENT with respect to the Required Services are set forth on Exhibit D.

 

Section 3.2                                    Change in Scope of Services.

 

CLIENT may from time to time during the Term request (1) on going additions or changes to the scope of the individual component tasks included in the Required Services and/or (2) new or additional on going services, collectively a “Change in Scope of Services”. Within 15 business days of receipt of such a request from CLIENT, if OUTSOURCER elects to perform such Change in Scope of Services, OUTSOURCER shall provide CLIENT with (1) a written description of the work OUTSOURCER anticipates performing in connection with such Change in Scope of Service, (2) a schedule for commencing and completing the Change in Scope of Service, (3) (a) the price for such Change in Scope of Service, if CLIENT has requested a fixed price for such Change in Scope of Service, or (b) an estimate of the time, resources and prices for such Change in Scope of Service, if CLIENT has requested a time and materials quotation for such Change in Scope of Service, and (4) when appropriate, the resources necessary to provide the Change in Scope of Service.  OUTSOURCER shall not begin performing any Change in Scope of Service until CLIENT Contract Executive has provided OUTSOURCER with written authorization to perform the Change in Scope of Service.  The document (the “Change Order”) evidencing each agreed upon Change in Scope of Service shall reference Exhibit A and be deemed an amendment thereto.

 

Section 3.3                                    Service Locations.

 

(a)           The Services shall be provided at the OUTSOURCER Service Locations; provided, however, OUTSOURCER, upon written notice to CLIENT, may provide Services from Additional OUTSOURCER Service Locations at its sole discretion at no additional cost to CLIENT.

 

Section 3.4                                    Provision of Technology.

 

In connection with the provision of the Services hereunder, during the Term:

 

(a)           OUTSOURCER shall use the most current (or within one release of the current) release of its Systems;

 

(b)          OUTSOURCER shall provide interfaces from OUTSOURCER Systems to CLIENT’s JD Edwards ERP system

 

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(c)           OUTSOURCER shall be responsible for all costs associated with maintaining the communication pipeline (including redundancy systems) between the CLIENT Service Location and OUTSOURCER Service Locations; and

 

(d)          CLIENT shall obtain the necessary approvals, if any, to enable the OUTSOURCER Systems to interface with CLIENT’s JD Edwards ERP system.

 

Section 3.5                                    HIPAA Compliance.

 

The Parties agree to comply with all applicable federal and state laws and/or regulations regarding the security, integrity and confidentiality of patient health information and any subsequent amendments thereto, including any regulations, standards or rules promulgated under the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”).  In the event any state or federal laws or regulations, now existing or hereinafter enacted, are interpreted by either Party to require amendment of this Agreement and/or require OUTSOURCER to perform Out of Scope Services, the Parties shall negotiate in good faith to amend this Agreement to comply with such law or regulation.

 

Section 3.6                                    Compliance With Disclosure Law.

 

Subject to and in accordance with Section 952 of the Omnibus Budget Reconciliation Act of 1980, the Parties shall, until the expiration of four (4) years after the termination of this Agreement, upon written request, make available to the Secretary of the Department of Health and Human Services (HHS) or the Secretary’s duly authorized representatives, this Agreement and such books, documents, and records as are necessary to certify the nature and extent of costs under this Agreement.  This provision shall apply only if the value or cost of this Agreement equals Ten Thousand Dollars ($10,000) or more over a twelve (12) month period.

 

Section 3.7                                    Changes in Law and Regulations.

 

(a)           OUTSOURCER and CLIENT shall work together to identify the impact of any legislative enactments and regulatory requirements that may relate to how CLIENT uses, and OUTSOURCER delivers, the Services.  OUTSOURCER shall be responsible for any fines and penalties arising from any noncompliance by OUTSOURCER or OUTSOURCER Agents with the laws relating to the delivery of the Services, to the extent that such noncompliance was not caused by CLIENT.  CLIENT shall be responsible for any fines and penalties arising from any noncompliance by CLIENT with the laws relating to its use of the Services, to the extent that such noncompliance was not caused by OUTSOURCER or OUTSOURCER Agents.

 

(b)          OUTSOURCER shall use commercially reasonable efforts to perform the Services regardless of changes in legislative enactments or regulatory requirements.  If such changes prevent OUTSOURCER from performing its obligations under this Agreement, OUTSOURCER shall develop and, upon CLIENT’s approval, implement a suitable work around until such time as OUTSOURCER can perform its

 

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obligations under this Agreement without such work around.  Upon the implementation of such work around, the Parties shall, if applicable, agree upon and implement an equitable adjustment to the Fees.

 

Section 3.8                                    Non-Solicitation.

 

Except as otherwise expressly provided in this Agreement or with OUTSOURCER’s prior written consent, during the Term and for two years after termination or expiration of this Agreement, CLIENT agrees not to solicit or hire any of OUTSOURCER’s or its Affiliates’ and contractors’, partners, employees and agents that become known to CLIENT as a result of the Services provided under this Agreement.  Except as otherwise expressly provided in this Agreement or with CLIENT’s prior written consent, during the Term of this Agreement and for two years after termination or expiration of this Agreement, OUTSOURCER agrees not to solicit or hire any of CLIENT’s, or its Affiliates’ and contractors’, partners, employees and agents that become known to OUTSOURCER as a result of providing the Services under this Agreement.  Notwithstanding the foregoing either Party may at any time hire any contractor, partner, employee or agent of the other Party that responds to a general solicitation to the public.

 

Section 3.9                                    Non Compete.

 

(a)           During the Term of this Agreement and for three years thereafter, OUTSOURCER shall not engage in any business in direct competition of OfficeCare and Insurance Business (a “Competing Business”).  Nothing in this Section 3.9 shall prohibit OUTSOURCER from (a) providing services (including services of the type set forth on Exhibit A) to a Person engaged in a Competing Business, or (b) owning capital stock or other equity or voting interest of a Person not Controlled by OUTSOURCER engaging in a Competing Business.

 

(b)          For purposes of this Section 3.9:

 

(i)                                      “Controlled” shall mean (x) in respect of a Person, direct or indirect beneficial ownership of a majority of the profits or voting interest of such Person, or the direct or indirect power to elect a majority of the directors, managers, trustees or persons holding positions with such Person with different names but comparable responsibilities, or (y) in respect of a business, beneficial ownership of a majority interest in the assets and properties thereof or Control (as defined in clause (x) of this definition) of a Person having direct or indirect beneficial ownership of a majority interest in the assets and properties of such business.

(ii)                                   “Person” shall mean any individual, corporation, partnership (general, limited or limited liability), limited liability company, association, firm, trust or other entity or organization.

 

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Section 3.10                             Cooperation.

 

During the Term each Party shall provide to the other Party reasonable cooperation and assistance in connection with its performance of its obligations under this Agreement.

 

ARTICLE IV CLIENT RESPONSIBILITIES.

 

In addition to any specific obligations for which CLIENT is given responsibility in this Agreement, CLIENT shall perform the following responsibilities during the Term of this Agreement.

 

Section 4.1                                    CLIENT Contract Executive.

 

CLIENT shall appoint an individual (the “CLIENT Contract Executive”) who from the Agreement Date shall serve as the primary CLIENT representative under this Agreement.  The CLIENT Contract Executive shall (1) have overall responsibility for managing and coordinating the performance of CLIENT’s obligations under this Agreement, (2) be authorized to act for and on behalf of CLIENT with respect to all matters relating to this Agreement, (3) define and communicate the CLIENT’s business priorities to OUTSOURCER, (4) make timely decisions that would impact the OUTSOURCER’s ability to perform under this Agreement; and (5) facilitate the implementation of this Agreement throughout CLIENT’s entire organization.  OUTSOURCER may rely upon the representations and agreements of the CLIENT Contract Executive as lawfully binding on the CLIENT; provided, however, the CLIENT Contract Executive shall not have the authority to enter into written agreements to modify or supersede this Agreement.

 

Section 4.2                                    Billing and Collection.

 

(a)           CLIENT represents and warrants that neither CLIENT or CLIENT Agents nor any other service provider will perform, as of the Effective Date and during the Term, the Services outlined on Exhibit A on behalf of CLIENT’s OfficeCare and Insurance Businesses.

 

(b)          CLIENT shall promptly notify the OUTSOURCER of any and all notices received by CLIENT or CLIENT Agents from a Patient regarding an outstanding invoice in respect of an Account, or regarding OUTSOURCER’s collection efforts regarding any outstanding Patient invoice.

 

(c)           CLIENT shall in good faith work with OUTSOURCER so OUTSOURCER can efficiently and effectively perform the Services. In particular, CLIENT agrees that it will work with each Physician Practice and CLIENT Agents to provide OUTSOURCER with accurate and timely Patient insurance and demographic information necessary to bill each account on the CLIENT’s behalf.

 

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ARTICLE V SERVICE LEVELS.

 

Section 5.1                                    Service Levels.

 

As of the Effective Date, OUTSOURCER shall perform the Services in accordance with generally accepted industry standards and in accordance with the specifications and representations made in this Agreement, including the Service Levels set forth in Exhibit B.

 

Section 5.2                                    Adjustment of Service Levels.

 

Either Party may, at any time upon notice to the other Party, initiate negotiations to review and, upon agreement by the Management Committee (See Section 7.1), adjust any Service Level which such Party in good faith believes is inappropriate at the time.  Any decision by the Management Committee to adjust any Service Level must be made by a vote that includes the affirmative vote of at least one representative of each Party.

 

Section 5.3                                    Root-Cause Analysis.

 

Within five days of receipt of a notice from CLIENT with respect to OUTSOURCER’s failure to provide the Services in accordance with the Service Levels, OUTSOURCER shall (1) initiate a root-cause analysis to identify the cause of such failure, (2) provide CLIENT with a report detailing the cause of, and procedure for correcting, such failure, (3) develop a plan to correct such failure, (4) provide CLIENT with assurance satisfactory to CLIENT that such failure will not recur after the procedure has been completed, and (5) subject to Section 18.1(a), OUTSOURCER shall have 30 days to cure service level deficiencies unless otherwise specified in Exhibit E.

 

Section 5.4                                    Measurement and Monitoring Tools.

 

OUTSOURCER shall implement the necessary measurement and monitoring tools and procedures required to measure and report OUTSOURCER’s performance of the Services against the applicable Service Levels.  Such measurement and monitoring shall permit reporting at a level of detail sufficient to verify compliance with the Service Levels and shall be subject to audit by CLIENT in the manner set forth in Article XIV.  OUTSOURCER shall provide CLIENT and CLIENT Agents with reasonable amounts of information and access to such tools and procedures upon request, for verification purposes.

 

Section 5.5                                    Continuous Improvement and Best Practices.

 

OUTSOURCER shall:  (1) on a continuous basis, as part of its total quality management process, identify, as appropriate, ways to improve the Service Levels; and (2) identify and apply proven techniques and tools from other installations within its operations that would benefit CLIENT either operationally or financially.

 

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ARTICLE VI PROJECT TEAM.

 

Section 6.1                                    OUTSOURCER Contract Executive.

 

OUTSOURCER shall appoint an individual (the “OUTSOURCER Contract Executive”) and designate his/her backup who from the Agreement Date shall serve as the primary OUTSOURCER representative under this Agreement.  OUTSOURCER’s appointment of any OUTSOURCER Contract Executive shall be subject to CLIENT’s reasonable approval.  The OUTSOURCER Contract Executive shall (1) have overall responsibility for managing and coordinating the performance of OUTSOURCER’s obligations under this Agreement and (2) be authorized to act for and on behalf of OUTSOURCER with respect to all matters relating to this Agreement. CLIENT may rely upon the representations and agreements of the OUTSOURCER Contract Executive as lawfully binding on the OUTSOURCER; provided, however, the OUTSOURCER Contract Executive shall not have the authority to enter into written agreements to modify or supersede this Agreement, except to the extent this Agreement is modified by Change Orders executed by the OUTSOURCER Contract Executive.

 

Section 6.2                                    Subcontractors.

 

(a)           OUTSOURCER shall have the right at its sole discretion to use subcontractors to assist OUTSOURCER in performing work related to the Services, subject, however, to such subcontractor(s) entering into appropriate agreements requiring such subcontractor(s) to adhere to the HIPAA, confidentiality and non-disclosure provisions of this Agreement.

 

(b)          OUTSOURCER shall be responsible for the work and activities of each of its subcontractors, including compliance with the terms of this Agreement.  OUTSOURCER shall be responsible for all payments to its subcontractors.

 

ARTICLE VII MANAGEMENT AND CONTROL.

 

Section 7.1                                    Management Committee.

 

Upon execution of this Agreement, the CLIENT and the OUTSOURCER shall each appoint two representatives to serve on a management committee (the “Management Committee”).  The Management Committee shall be authorized and responsible for (1) overseeing the provision of the Services and each Party’s performance under this Agreement and (2) monitoring and resolving disagreements regarding the provision of the Services and the Service Levels and each Party’s performance under this Agreement.  A Party may change any of its representatives on the Management Committee upon notice to the other Party.

 

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ARTICLE VIII INTELLECTUAL PROPERTY RIGHTS.

 

Section 8.1                                    OUTSOURCER Intellectual Property.

 

(a)           For purposes of this Agreement, “OUTSOURCER Intellectual Property” shall mean all software or other intellectual property (including any writings, discoveries, inventions or other materials covered by any rights of copyright, trademark or patent or any rights similar thereto, whether registered or unregistered, or otherwise protectible as trade secret, proprietary or confidential information) owned or developed by, or otherwise proprietary to, OUTSOURCER.  OUTSOURCER Intellectual Property shall also include all programs and documentation therefor and the tangible media on which such programs are recorded, as well as all reports, technology, training materials, forms, specifications, and other intellectual property owned or developed by or proprietary to OUTSOURCER, for use in providing the Services hereunder or otherwise in its business.

 

(b)          Subject to Section 18.2(e)(ii), all OUTSOURCER Intellectual Property is and will remain the property and confidential information of OUTSOURCER or its third party licensors, and CLIENT shall have no right, title or interest therein except to the extent of such limited right to use such particular portions thereof as are necessary to enable the Parties to perform their respective obligations hereunder or except as may otherwise be provided in any separate license agreements.  No use of OUTSOURCER Intellectual Property at or in connection with any Service Location or equipment containing OUTSOURCER Intellectual Property shall confer any rights in such OUTSOURCER Intellectual Property on CLIENT.

 

Section 8.2                                    CLIENT Intellectual Property.

 

(a)           For purposes of this Agreement, “CLIENT Intellectual Property” shall mean all software or other intellectual property (including any writings, discoveries, inventions or other materials covered by any rights of copyright, trademark or patent or any rights similar thereto, whether registered or unregistered, or otherwise protectible as trade secret, proprietary or confidential information) owned or developed by, or otherwise proprietary to, CLIENT.  CLIENT Intellectual Property shall also include all programs and documentation therefore and the tangible media on which such programs are recorded, as well as all reports, technology, training materials, forms, specifications, and other intellectual property owned or developed by or proprietary to CLIENT.

 

(b)          All CLIENT Intellectual Property is and will remain the property and confidential information of CLIENT or its third party licensors, and OUTSOURCER shall have no right, title or interest therein except to the extent of such limited right to use such particular portions thereof as are necessary to enable the Parties to perform their respective obligations hereunder or except as may otherwise be provided in any separate license agreements.  No use of CLIENT Intellectual Property at or in connection with any Service Location or equipment containing CLIENT Intellectual

 

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Property shall confer any rights in such CLIENT Intellectual Property on OUTSOURCER.

 

(c)  CLIENT Intellectual property will include processes that CLIENT and OUTSOURCER agree are CLIENT proprietary processes.  CLIENT from time to time will request OUTSOURCER to consider processes proprietary.  Such requests will be in writing.  OUTSOURCER will evidence its consent in writing.  Such consent will not be unreasonably withheld.  To the extent there is a disagreement between CLIENT and OUTSOURCER regarding proprietary processes, disputes will be processed in accordance with Article VI Dispute Resolution.

 

ARTICLE IX

 

Section 9.1                                    Improvements.

 

Each Party shall communicate to the other party any Improvements (defined below) which that Party makes during the term of this Agreement to the CLIENT Intellectual Property or the OUTSOURCER Intellectual Property as it applies to the Services promptly after the Party has substantially completed each such Improvement.  Any Improvements to the CLIENT Intellectual Property shall belong to and be the sole property of the CLIENT, irrespective of whether developed by CLIENT or OUTSOURCER, and any Improvements to the OUTSOURCER Intellectual Property shall belong to and be the sole property of OUTSOURCER, irrespective of whether developed by OUTSOURCER or CLIENT, and each Party shall execute such consents and assignments as may be necessary to effectuate the transfer of the ownership of such Improvements as contemplated herein.  Subject to Section 18.2(e)(ii), each Party hereby grants the other party, while this Agreement is in effect, a nonexclusive license to use the Improvements of the CLIENT Intellectual Property or the OUTSOURCER Intellectual Property, as the case may be, solely in connection with the Services and the performance of this Agreement.  For purposes of this Agreement, the term “Improvements” means improvements, upgrades, enhancements, revisions, new versions or models or releases, adaptations, and other modifications of the CLIENT Intellectual Property or the OUTSOURCER Intellectual Property, as the case may be, which are, in majority part, either derived directly from or dependent on and which produce other versions of or new uses for the CLIENT Intellectual Property or the OUTSOURCER Intellectual Property, as the case may be, but “Improvements” shall not mean new inventions, discoveries, ideas, concepts, designs or products which are either developed independently of the CLIENT Intellectual Property or the OUTSOURCER Intellectual Property, as the case may be, or whose essential principles, features, composition or qualities are derived, in the majority part, from sources other than the CLIENT Intellectual Property or the OUTSOURCER Intellectual Property, as the case may be.

 

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ARTICLE X DATA AND REPORTS.

 

Section 10.1                             Ownership of CLIENT Data.

 

All CLIENT Data is, or will be, and shall remain the property of CLIENT.  CLIENT Data shall not, without CLIENT’s written approval, be (1) used by OUTSOURCER or OUTSOURCER Agents other than in connection with providing the Services, (2) disclosed, sold, assigned, leased or otherwise provided to third parties by OUTSOURCER or OUTSOURCER Agents or (3) commercially exploited by or on behalf of OUTSOURCER or OUTSOURCER Agents.

 

Section 10.2                             Errors.

 

Except to the extent OUTSOURCER is required by Exhibit A to identify errors, or an error otherwise becomes actually known to OUTSOURCER:  (i) OUTSOURCER may accept as correct, accurate, and reliable, without any further inquiry, all information, data, documents, and other records delivered, supplied, or made available to OUTSOURCER hereunder by CLIENT or at the direction or under the authority of CLIENT in connection with the performance by OUTSOURCER of the Services, and may assume that CLIENT has provided it with all information in the possession or control of CLIENT which is necessary for the performance of the Services; and (ii) OUTSOURCER shall have no responsibility or liability for any error, inadequacy, or omission which results from untimely, inaccurate or incomplete information, data, documents, or other records delivered, supplied, or made available to OUTSOURCER by CLIENT or at the direction or under the authority of CLIENT, except to the extent such liability is caused by OUTSOURCER’s failure to perform Services in accordance with the terms of this Agreement.

 

ARTICLE XI CONTINUED PROVISION OF SERVICES.

 

Section 11.1                             Business Continuity Plan.

 

OUTSOURCER has made its Business Continuity Plan available to CLIENT and CLIENT acknowledges and agrees that CLIENT has read and understands the terms of such Business Continuity Plan.

 

Section 11.2                             Force Majeure.

 

(a)           If and to the extent that either Party’s performance of any of its obligations pursuant to this Agreement is prevented, hindered or delayed by fire, flood, earthquake, elements of nature or acts of God, acts of war, terrorism, riots, civil disorders, rebellions or revolutions, third party strikes, third party lockouts or labor difficulties or any other cause beyond the reasonable control of such Party (each, a “Force Majeure Event”) and such non-performance could not have been prevented by reasonable precautions, then the non-performing Party shall be excused from any further

 

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performance of those obligations affected by the Force Majeure Event for as long as such Force Majeure Event continues and such Party continues to use its commercially reasonable efforts to recommence performance whenever and to whatever extent possible without delay, including through the use of alternate sources, work around plans or other means.

 

(b)          The Party whose performance is prevented, hindered or delayed by a Force Majeure Event (“the Notifying Party”) shall immediately notify the other Party by telephone (or other means as may be available if telecommunication is unavailable), to be confirmed in writing within 24 hours of the occurrence of the Force Majeure Event and describe in reasonable detail the nature of the Force Majeure Event and the Notifying Party shall be excused from any further performance of those of its obligations affected by the Force Majeure Event until normal performance can be recommenced.

 

(c)           The occurrence of a Force Majeure Event does not limit or otherwise affect OUTSOURCER’s obligation to provide either normal disaster recovery procedures or any other disaster recovery services described in Section 11.1.

 

Section 11.3                             Service Level Adjustment.

 

Upon the occurrence of a Force Majeure Event, CLIENT acknowledges and agrees that the Service Levels will need to be adjusted for a period of time to account for the Services affected by the Force Majeure Event.  The Parties agree to negotiate in good faith to determine a time frame and plan for lowering the Service Levels during the pendency of such Force Majeure Event.  In the event that the Parties are unable to agree on such adjusted Service Levels, the matter shall be resolved through the dispute resolution process set forth in Article XVII.

 

ARTICLE XII PAYMENTS TO OUTSOURCER.

 

Section 12.1                             Fees.

 

In consideration of OUTSOURCER providing the Services, CLIENT shall pay to OUTSOURCER the Fees.  OUTSOURCER’s invoicing calculation(s), price elements and price data shall be provided to CLIENT in sufficient detail to substantiate calculation of the Fees charged to CLIENT.  Except as expressly set forth in this Agreement, there shall be no charge or fees payable by CLIENT in respect of OUTSOURCER’s performance of its obligations pursuant to this Agreement.

 

Section 12.2                             Adjustment to Fees, Services and Service Levels.

 

The Fees, Services and Service Levels are based on Assumptions that the Parties believe fairly represent the current conditions under which the Services will be delivered during the Term. Starting one year after the Effective Date and annually thereafter, the Parties agree to compare actual results for the year just ended against the

 

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Assumptions presented on Exhibit F. Each time the actual results vary from the Assumptions by more than 10%, the Parties agree to negotiate in good faith to define and mutually agree upon adjustments to Fees, Services and Service Levels that shall be consistent with the intent of the Parties.  Any such agreed adjustment shall be set forth in a Change Order.

 

Section 12.3                             Expenses.

 

All expenses relating to the Services are included in the Fees and shall not be reimbursed by CLIENT unless agreed to by CLIENT in writing.

 

Section 12.4                             Proration.

 

All periodic fees or charges under this Agreement are to be computed on a calendar month basis and shall be prorated on a per diem basis for any partial month.

 

Section 12.5                             Patient/Third Party Payer Settlements.

 

(a)           Notwithstanding anything in this Agreement to the contrary, OUTSOURCER shall have the right, on a case by case basis where there is a demonstrated need by a Patient or Third Party Payer to negotiate settlements involving payments by such Patient or Third Party Payer, as the case may be, of at least seventy percent (70%) of the invoice amount, less Allowances, without the prior approval by CLIENT.  OUTSOURCER will create a monthly report which shall provide the summary settlement information by number of Accounts affected and dollars settled.  OUTSOURCER will review report with CLIENT Contract Executive quarterly to ensure settlements are appropriate to business needs as determined by CLIENT.

 

(b)          Subject to Section 12.5(a), OUTSOURCER intends to develop a policy to give OUTSOURCER the opportunity to negotiate, with Third Party Payers and Patients, special payment terms in respect of OfficeCare and Insurance Business Accounts.  Upon approval of such plan by CLIENT, OUTSOURCER shall have the right, without CLIENT’s prior approval, to negotiate special payment terms with Third Party Payers and Patients that are consistent with such plan.

 

ARTICLE XIII PAYMENT SCHEDULE AND INVOICES.

 

Section 13.1                             Fees.

 

OUTSOURCER shall issue an invoice to CLIENT on the last day of each month for the Fees then due. The Fees shall be due and payable to OUTSOURCER by wire funds transfer or other means acceptable to OUTSOURCER, to an account specified by OUTSOURCER, within 30 days from invoice date.

 

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Section 13.2                             Time of Payment.

 

Any sum due pursuant to this Agreement, for which payment is not otherwise specified, shall be due and payable 30 days after receipt by the Party who owes such invoice of notice from the other Party in respect of such sum.

 

Section 13.3                             Detailed Invoices.

 

OUTSOURCER shall provide invoices with sufficient detail to justify the Fees.

 

Section 13.4                             Late Fees.

 

Any amount not paid within 20 days after the date due pursuant to this Agreement shall bear interest, at the Prime Rate, from the date such amount was due until the date such amount is paid.

 

 

ARTICLE XIV AUDITS.

 

Section 14.1                             Services.

 

Upon reasonable notice from CLIENT or OUTSOURCER (for purposes of this Section 14.1 the “Requesting Party”), OUTSOURCER and OUTSOURCER Agents or CLIENT and CLIENT Agents, as the case may be (for purposes of this Section 14.1, the “Other Party) shall provide Requesting Party Agents, and any of Requesting Party’s regulators, with access to and any assistance that they may reasonably require with respect to the relevant Service Location and the systems for the purpose of performing audits or inspections of the Services and the business of Requesting Party relating to the Services.  The Other Party shall, subject to its standard security requirements, provide, and shall cause its Agents to provide, such Requesting Party Agents or regulators any assistance that they may reasonably require, provided such assistance does not unreasonably interfere with Other Party’s performance of its obligations hereunder, and, with respect to OUTSOURCER, the performance of the Services in accordance with the Service Levels.  The Other Party shall not provide Requesting Party Agents or regulators with access to Other Party customers’ information or data.  Subject to Article IX and Article X, the Other Party shall provide Requesting Party Agents and regulators with access to Other Party’s proprietary data relating to the Services, to the extent required to perform audits described in this Section 14.1.  If any audit by an auditor designated by Requesting Party or a regulatory authority, results in Other Party being notified that it or Other Party Agents are not in compliance with any law, regulation or audit requirement, Other Party shall, and shall cause Other Party Agents to, take actions to comply with such audit.  Requesting Party shall bear the expense of any such compliance that is (1) required by any law, regulation or other audit requirement relating to Requesting Party’s business or (2) necessary due to Requesting Party’s noncompliance with any law, regulation or audit requirement imposed on Requesting Party.  Other Party shall bear the expense of any such compliance that is (a) required by any law, regulation or other audit requirement relating to Other Party’s

 

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business or (b) necessary due to Other Party’s or Other Party Agents’ noncompliance with any law, regulation or audit requirement imposed on Other Party or Other Party Agents.

 

Section 14.2                             Fees.

 

Upon reasonable notice, each Party shall provide the other Party and its Agents access to such financial records and supporting documentation as may be reasonably requested by the requesting Party to audit the records and documentation relating to the Cash Receipts and the Fees charged to CLIENT.  If, as a result of such audit, it is determined that OUTSOURCER has overcharged or undercharged CLIENT, the Party that determined such error shall promptly notify the other Party and promptly pay to CLIENT or OUTSOURCER the amount of the overcharge or undercharge as the case may be, plus interest at the Prime Rate per year, calculated from the date of receipt by OUTSOURCER of such incorrect amount until the date of payment to CLIENT or OUTSOURCER, as the case may be.

 

Section 14.3                             Record Retention.

 

Except as otherwise required by applicable law, OUTSOURCER shall not be required to retain any records or documentation relating to CLIENT or the Services provided under this Agreement so long as originals of such documentation have been provided to CLIENT for imaging and/or storage.

 

Section 14.4                             Facilities.

 

In the event of an audit described in this Article XIV, the Parties agree to give each other and their respective Agents reasonable access to the premises where such audit is being performed and such space (reasonably available), office furnishings (including lockable cabinets), telephone and facsimile service, utilities and office-related equipment and duplicating services as the requesting Party may reasonably require to perform the audits described in this Article.

 

 

ARTICLE XV CONFIDENTIALITY; PROTECTED HEALTH INFORMATION

 

Section 15.1                             General Obligations.

 

(a)           Each Party agrees that it shall not disclose to any third party any Confidential Information (including any information about the Fees) which it learns during the course of the performance of this Agreement, without the prior written consent of the other Party, except as necessary for OUTSOURCER’s provision of Services hereunder or as required by law, regulation, or order of a court or regulatory agency or other authority having jurisdiction thereover, provided, however, that the Party under such obligation of disclosure shall promptly notify the other Party to afford that Party, at that Party’s expense, an opportunity to object to such disclosure.  Each Party shall treat the other’s Confidential Information with the same level of care as it treats its own

 

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confidential information of like import, but not less than a reasonable level of care, shall disclose it within its own organization only on a need-to-know basis, and shall inform those to whom it rightfully discloses such Confidential Information of their obligations of confidentiality and non-disclosure hereunder.

 

(b)          Notwithstanding the foregoing,

 

(i)                                      the confidentiality obligations set forth in this Section 15.1 shall not apply to any information which the recipient party can establish to have become publicly available without its breach of this Agreement, been independently developed or obtained by the recipient party outside the scope of this Agreement and without reference to the other’s Confidential Information received under this Agreement, been already known to recipient when disclosed hereunder, or been rightfully obtained by the recipient party from third parties without an obligation of confidentiality;

 

(ii)                                   OUTSOURCER may disclose general information relating to the scope of Services and the duration of this Agreement to potential buyers of OUTSOURCER and persons or entities engaged in the valuation of OUTSOURCER or its Affiliates;

 

(iii)                                OUTSOURCER may disclose information relating to the identity of CLIENT as a client of OUTSOURCER, the scope of Services and other general terms of this Agreement to current or potential clients;

 

(iv)                               CLIENT may disclose general information relating to the scope of Services and the duration of this Agreement to potential buyers of CLIENT or any one or more Affiliates of CLIENT;

 

(v)                                  either Party may disclose the provisions of this Agreement to bankers, public accountants, auditors, and other financial institutions in the ordinary course of business;

 

(vi)                               either Party may disclose the provisions of this Agreement to the extent required by any applicable law, regulation or rules of any stock exchange; provided, however, the Party disclosing the other Party’s Confidential Information promptly notifies the other Party of such disclosure; and

 

(vii)                            CLIENT shall not (except pursuant to (iv), (v) and (vi) above)) disclose to any third party the Fees set forth in this Agreement.

 

Section 15.2                             Injunctive Relief.

 

Each Party acknowledges that the other Party may suffer irreparable damage in the event of a breach or threatened breach of any provision of this Article.  Accordingly, in such event, notwithstanding Article XVII, such Party shall be entitled to preliminary and final injunctive relief, as well as any and all other applicable remedies at law or equity, including the recovery of damages.

 

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Section 15.3                             No License.

 

The Parties acknowledge that (i) each Party maintains that the Confidential Information contains valuable trade secrets and (ii) all rights to Confidential Information are reserved by the disclosing party.  No license, express or implied, by estoppel or otherwise, under any trade secret right, trademark, patent, copyright or other proprietary right or applications that are now or may hereafter be owned by a party, is granted by the disclosure of Confidential Information under this Agreement.

 

Section 15.4                             Residuals.

 

Except (1) as may relate to CLIENT’s customer information (including customer lists), personnel information of CLIENT, financial information relating to CLIENT (except as may have been publicly disclosed by CLIENT pursuant to CLIENT’s Regulatory Requirements), product pricing information, product specifications and designs and manufacturing processes (which shall be deemed CLIENT Confidential Information subject to Section 15.1), (2) to the extent such use misappropriates the other Party’s trade secret rights (but, with respect to (1) and (2), excluding general data processing ideas, concepts, know-how and techniques) and (3) to the extent such use infringes the other Party’s copyright, patent and other proprietary rights, neither