Law Insider Neoforma Inc Outsourcing Agreement Dated As of October 10 2005 Among Novation LLC Vha Inc University Healths Filed 23-01-2006 Contract
Law Insider Neoforma Inc Outsourcing Agreement Dated As of October 10 2005 Among Novation LLC Vha Inc University Healths Filed 23-01-2006 Contract
Law Insider Neoforma Inc Outsourcing Agreement Dated As of October 10 2005 Among Novation LLC Vha Inc University Healths Filed 23-01-2006 Contract
EXECUTION COPY
OUTSOURCING AGREEMENT
among
NOVATION, LLC,
VHA INC.,
and
Page
1. DEFINITIONS 2
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TABLE OF CONTENTS
(continued)
Page
3.4.2
PROVISION OF NOVATION CONTRACT PRODUCT AND [*****] 20
3.5 Removal of Materials and Products from NPS 20
3.5.1 Removal of Materials 20
3.5.2 Removal of Products 20
3.6 Other GPOs 20
3.7 Reasonable Assistance 21
6. LICENSES 22
6.1 Marks 22
6.2 Service Provider Materials 23
6.3 Novation Materials 23
6.4 Licenses; Source Code Escrow; Proprietary Rights 23
6.4.1 Access License 23
6.4.2 License to Service Provider 24
6.4.3 Grant of Source Code License. 24
6.4.4 Third Party Technology 26
6.4.5 Source Code Escrow. 26
6.4.6 Proprietary Rights; Restrictions 28
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TABLE OF CONTENTS
(continued)
Page
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TABLE OF CONTENTS
(continued)
Page
13. INSURANCE 45
13.1 Insurance 45
13.2 Proof of Insurance 45
14. INDEMNITY 46
14.1 Service Provider Indemnity 46
14.2 Novation Indemnity 46
14.3 Infringement Claims 47
14.3.1 Indemnity 47
14.3.2 Indemnity Exclusions 47
14.3.3 Injunction or Prohibition 48
14.4 Indemnity Procedures 48
14.5 Exclusive Remedy 48
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TABLE OF CONTENTS
(continued)
Page
16.3 Auditors 49
16.4 Record Retention 50
16.5 Cooperation 50
16.6 Overcharges and Undercharges 50
16.7 Audit Reports 50
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TABLE OF CONTENTS
(continued)
Page
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OUTSOURCING AGREEMENT
RECITALS
WHEREAS, VHA and UHC are organizations whose Members are hospitals and
healthcare providers, and which view e-commerce services as an essential part of their
cooperative purchasing programs on behalf of their Members and desire to cause such
services to be available to their Members through this Agreement;
WHEREAS, VHA and UHC together own all the ownership interests in Novation and
HPPI;
WHEREAS, Novation is a contracting agent that also develops and delivers supply
chain management agreements, programs and services on behalf of VHA and UHC and
their Members;
WHEREAS, HPPI is a GPO that serves healthcare organizations that are not
members of VHA and UHC and other GPOs and which develops and delivers supply-chain
management programs and services to such healthcare organizations;
WHEREAS, Novation, VHA, UHC and HPPI are parties to the Neoforma Outsourcing
Agreement and desire to transition the services provided thereunder to Service Provider in
accordance with this Agreement; and
WHEREAS, certain of the Parties have entered into the Merger Agreement pursuant
to which Neoforma will become a wholly-owned subsidiary of Service Provider.
NOW, THEREFORE, for good and valuable consideration, the Parties agree as
follows:
1. DEFINITIONS
As used in this Agreement, the following terms shall have the respective meanings
set forth below. Other capitalized terms shall have the meanings set forth elsewhere in this
Agreement.
“Affiliate(s)” means, with respect to a specified Person, any other Person that,
directly or indirectly, through one or more intermediaries, Controls, is Controlled by or is
under common Control with such specified Person. Service Provider, on the one hand, and
Novation, VHA, HPPI and/or UHC, on the other hand, shall not be Affiliates of each other.
“Analytic Data” means all or any portion of the information and data created or
generated from the analysis of Member Data and/or [*****] in accordance with the terms
hereof.
_________________________
Confidential materials omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote such omission.
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“Charges” has the meaning set forth in Section 7.4.1.
“Content” means any text, graphics, logos, button icons, images, audio clips,
HTML code, java programs and other material used or displayed as part of or in connection
with the GHX Exchange, the Novation Marketplace or NPS, other than Product Data.
“[*****]” or “[*****]” means [*****] on Member use of the [*****] and [*****], as
more particularly described in Exhibit B.
“Effective Date” means the date on which the Effective Time occurs.
“Effective Time” has the meaning set forth in the Merger Agreement.
“GHX Exchange Software” means the software necessary to provide the GHX
Exchange, including any manuals and other available documentation therefor, and
including any Updates thereto, but not including any Third Party Technology.
_________________________
Confidential materials omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote such omission.
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“GHX Exchange Plus” or “GHXe Plus” means the services designated as such in
the Scope of Services, which shall be provided only if and to the extent that any
Participating Member elects to receive such services for an additional fee.
“GHX Exchange Standard” or “GHXe Standard” means all of the GHX Exchange
other than GHX Exchange Plus.
“GHX Formation Agreement” means that certain Third Amended and Restated
Formation Agreement among Service Provider and its members, dated as of December 30,
2002, as the same may be amended, modified or supplemented from time to time.
“GHX LLC Agreement” means that certain Fifth Amended and Restated Limited
Liability Company Agreement among Service Provider and its members, dated as of
December 30, 2002, as the same may be amended, modified or supplemented from time to
time.
“GPO(s)” means any entity in the United States that meets the definition of a
“Group Purchasing Organization” as set forth in 42 CFR Section 1001.952(j), and any entity
outside the United States performing a similar function.
“Insolvent V/U/N Party” has the meaning set forth in Section 8.4.
“Intellectual Property Rights” collectively means any and all rights in Intellectual
Property, including without limitation, copyrights, patents, patent registration rights,
business processes, data rights, mask works, Marks, trade secrets, and know-how rights
arising or enforceable under any U.S. law, foreign law, or international treaty regime.
“Internet” means the public, global network of computer networks and individual
computers constantly connected using standardized communications protocols, specifically
TCP/IP or any successor protocol thereof.
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“Marks” means all trademarks, trade names, service marks, service names and
logos, worldwide.
“Member(s)” means, at any date, those organizations that are (i) Patrons of VHA
as VHA designates from time to time, (ii) members of UHC as UHC designates from time to
time and/or (iii) HPPI Members, and in each case, that are listed in an electronic file
supplied to Service Provider and updated periodically by Novation.
“[*****]” means those [*****] contracts between any one or more [*****] and any
[*****], for the benefit of such [*****].
“[*****] Portfolio” means a catalog of all [*****] for which one or more [*****] has
contracted for the benefit of such [*****].
“[*****] Product” means any Product that is part of the [*****] Portfolio.
“Merger Agreement” means that certain Agreement and Plan of Merger by and
among Service Provider, Neoforma, and Leapfrog Merger Corporation, a Delaware
corporation, dated as of the date hereof.
“[*****]” means the [*****] [*****] (and the [*****] related thereto) that includes
[*****] information of [*****] [*****] [*****] according to a [*****] [*****] and [*****]
information that reflects the [*****], the [*****] and the [*****]. The [*****] included in
[*****] shall include [*****] [*****] thereto that are included in the [*****] to be [*****] in
the [*****] (referred to as [*****]).
“[*****] Data” means any information [*****] by [*****], any [*****] or any [*****]
to [*****] for [*****] in [*****], including without limitation information that is necessary to
[*****] [*****] (including [*****] [*****]), [*****], [*****], [*****] and [*****] information
that [*****], any [*****] or any [*****] provides to [*****] for [*****] on
_________________________
Confidential materials omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote such omission.
-5-
[*****], including, without limitation, [*****], [*****], [*****], [*****], [*****], [*****],
[*****], [*****], [*****], [*****] and other [*****].
“[*****] Period” means the period of time during which [*****] provides the
[*****].
“[*****] Services” means the services necessary to maintain and operate [*****]
during the [*****], including access to [*****] by [*****], [*****] and each [*****].
“New Participating Members” has the meaning set forth in Section 2.5.4(a).
“Non-Novation Contract Product” means any Product that is not part of the
[*****], including, without limitation, a [*****] or a [*****].
“Novation Contract” means all product or service contracts that Novation has
entered into for the benefit of the Members.
“Novation Operating Agreement” has the meaning set forth in Section 8.3.2.
“Novation Proprietary Services” or “NPS” means the [*****], [*****] and any
other services [*****] developed pursuant to a SOW for the exclusive use of Novation and
hosted or otherwise provided by Service Provider.
_________________________
Confidential materials omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote such omission.
-6-
“Novation Suppliers”means each Supplier with which Novation has an
agreement with respect to [*****] to be offered to Members.
“Participating Members” means any Member that has signed an agreement with
Service Provider (or with Neoforma if signed prior to the Effective Date and still in effect)
for use of any of the Services.
“Party” means each of Service Provider, Novation, HPPI, VHA and UHC and any
other Person that becomes a signatory to this Agreement, unless the context requires
otherwise.
“Pre-Existing GHX Agreements” has the meaning set forth in Section 2.2.2(c).
“Pre-Existing Member Agreements” has the meaning set forth in Section 2.5.3.
“Product Council” has the meaning set forth in the GHX LLC Agreement.
_________________________
Confidential materials omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote such omission.
-7-
“Retained Contract(s)” means those product or service contracts of VHA or UHC
that have not been transferred to Novation and which the Members may have access to
because they are Members in VHA or UHC.
“Retained Contract Portfolio” means a catalog of all Products for which VHA or
UHC have contracted for the benefit of their respective Members that have not been
transferred to Novation and which the Members may have access to because they are
Members in VHA or UHC.
“Retained Contract Product(s)” means any Product that is part of the Retained
Contract Portfolio.
“Service Level(s)” means the objective criteria establishing the level of Service
Provider’s required provision of the Services under this Agreement, as further described in
Exhibit C.
“Solvent V/U/N Parties” has the meaning set forth in Section 8.4.
_________________________
Confidential materials omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote such omission.
-8-
“Source Code” has the meaning set forth in Section 6.4.5(a).
“[*****]” or “[*****]” means all or any portion of data or information regarding the
[*****], [*****] or [*****] of Products by [*****] that is provided to [*****] by [*****], other
than [*****]
“Third Party Technology” shall mean software code and other technology licensed
by Service Provider for use in the GHX Exchange Software and/or the Client Software,
including Updates to such technology.
“Update” means an update to the GHX Exchange Software or the Client Software,
as applicable, licensed by Novation, UHC, VHA and HPPI hereunder, but not including any
updates to the Third Party Technology.
_________________________
Confidential materials omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote such omission.
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Suppliers that access the GHX Exchange, the Novation Marketplace or the Novation
Proprietary Services.
2.1 Migration.
2.1.3 Migration Services. Service Provider shall ensure that it has [*****]
resources and that it obtains [*****] cooperation from third parties to
develop and successfully implement the Migration Plan in accordance
with its terms. The Parties shall cooperate to encourage Participating
Members to migrate to the [*****]. Service Provider may terminate
the services provided under the [*****] for any Participating Member
that has not Migrated to the [*****] on or before [*****] after the
Effective Date, provided that Service Provider has performed all of its
obligations relating to the Migration Plan hereunder during such
[*****] period (the “Migration Deadline”).
_________________________
Confidential materials omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote such omission.
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2.2 Services. Subject to the terms of this Agreement, Service Provider shall
perform all Services itself or through its wholly-owned subsidiaries (or
through Neoforma as a subcontractor of Service Provider), unless and until
otherwise agreed in writing by Novation and each of the Alliances, which
agreement shall not be unreasonably withheld or delayed. Service Provider
may liquidate or dissolve Neoforma so that all of its assets are distributed to
Service Provider or merge or consolidate Neoforma into or with Service
Provider, or transfer all or substantially all of its assets to Service Provider or
a wholly-owned subsidiary of Service Provider, if despite such transaction,
Service Provider is able to maintain in full force and effect the Pre-Existing
Member Agreements pursuant to Section 2.5.3 unless and to the extent that
they have been replaced by an agreement with Service Provider pursuant to
Section 2.5.4. Throughout the Migration Period, all Participating Members will
continue to receive Services including at least all the functionality of the
Novation Marketplace.
_________________________
Confidential materials omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote such omission.
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2.2.3 Most Favored Nations.
(i) Pricing for the annual use of any one or more of the
GHX Exchange and GHX Exchange Plus services
offered to Members through this Agreement shall be at
least as favorable as the best subscription fee pricing
offered by Service Provider to any other customer for
the same or functionally equivalent services, except
pursuant to written agreements executed by Service
Provider prior to the Effective Date other than those
identified on Exhibit M; and
(b) Service Provider further covenants that the pricing and other
terms and conditions offered by Service Provider to Novation,
the Alliances and Members under this Agreement for the same
or functionally equivalent services shall be as good or better
than the terms and conditions offered by Service Provider to
any other customer in all material respects, other than
pursuant to those agreements described on Exhibit M.
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2.3 Service Levels; Root-Cause Analysis.
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2.4 [*****]. Service Provider shall, on a regular basis as agreed to by Service
Provider and [*****] in connection with the Service Levels, [*****] onto
[*****] as provided by [*****], including, without limitation, [*****] relating
to new [*****].
2.5 Service Provider’s Interaction with Members; Pre-Existing Data and Service
Arrangements.
2.5.2 Members Using Service Provider prior to the Effective Date. Service
Provider shall assure that any Participating Member that is currently
receiving services from Service Provider, is listed in the Migration
Plan, and desires to avail itself of the benefits of this Agreement
may, at its option and without liability, supersede the pricing terms
and any other terms that conflict with the terms of this Agreement
under its existing contract(s) or other arrangement(s) with Service
Provider for the purpose of participating in the GHX Exchange and the
Novation Proprietary Services under this Agreement. Such Member
shall be solely responsible for any and all charges due with respect to
any GHX Exchange Plus services that it may elect to receive.
_________________________
Confidential materials omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote such omission.
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2.5.4 Participation of Additional and Renewal Members.
(c) The Parties shall in good faith review and consider proposed
changes to the Form of Member Agreement based on
experiences related to negotiation of agreements with
Members. Novation and the Alliances will not unreasonably
withhold or delay their consent to changes in the Form of
Member Agreement.
(d) Unless and until the Parties have fully implemented Member-
Based Pricing, in connection with all agreements with
Members, Service Provider shall include in the Form of
Member Agreement the right to assign the user or member
agreements for participation in the GHX Exchange and the
Novation Proprietary Services to the Alliance to which such
Member belongs (or a designee) in the event that this
Agreement terminates or expires pursuant to Section 8
(“Term and Termination”) herein: (a) in all new
agreements by
_________________________
Confidential materials omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote such omission.
-15-
including appropriate assignment language in such
agreements, and (b) in all other agreements, by using
commercially reasonable efforts to obtain the applicable
Member’s agreement to appropriate assignment language at
the time of any amendment to or renewal of such agreement.
In the context of new agreements and Service Provider
renewals or amendments as contemplated above, if a
Member refuses to agree to the proposed assignment
language or proposes more limited assignment language,
Service Provider shall provide at least fourteen (14) days prior
notice to Novation and the applicable Alliance of any Member
request for such modification prior to executing a Member
Agreement with the applicable Member that includes such
modification. Unless and until the Parties have fully
implemented Member-Based Pricing and to the extent
permitted by the applicable user or member agreements,
Service Provider shall, upon written direction of the Alliance(s)
to which such Member belongs, assign such user or member
agreements to the Alliance to which each Participating
Member belongs (or its designee) upon termination or
expiration of this Agreement in accordance with Section 8.
2.6.1 [*****]. Novation shall, in its discretion, enter into agreements with
Suppliers for the receipt of [*****]. Service Provider shall work in
good faith to obtain the [*****] from such Suppliers and utilize it to
perform the Services in accordance with Exhibit B.
2.6.2 Product Data. In its negotiations with Suppliers, [*****] shall use
[*****] efforts (without any obligation to bear any expense or pay any
amount) to cause the Suppliers to provide [*****] regarding [*****] of
their [*****] to [*****] for use in the [*****]. [*****] shall, in its
discretion, obtain [*****] with Suppliers for information to be included
in [*****]. Absent a separate agreement with [*****], [*****] shall not
be entitled to [*****] [*****] in [*****].
_________________________
Confidential materials omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote such omission.
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2.8 Communications with Novation and Alliances.
2.8.2 Reports.
2.8.3 Regular Meetings. Service Provider, Novation, VHA, UHC and HPPI will
conduct regular business reviews on a quarterly basis, or as
otherwise agreed by the Parties, to discuss the strategic direction of
the Novation Marketplace, the GHX Exchange, the Novation
Proprietary Services and, as applicable, the following items: the
Member-Facing Plan, compliance
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with Service Levels, annual volume and connection targets, goals
surrounding New Participating Members, matters regarding Suppliers,
and any other matter requested by Novation or one of the Alliances.
As part of the regular business reviews, Service Provider and each of
Novation and the Alliances will review the Service Levels and discuss
in good faith any necessary revisions of the Service Levels, the GHX
Exchange, the Novation Proprietary Services, the Novation
Marketplace, Service Provider’s current products and services,
implementation and enhanced connections and planned new products
and services or Service Provider’s provision of the Services
hereunder. No changes will be made to the Service Levels unless the
parties mutually agree to the changes and execute a written
amendment to this Agreement.
2.9 Goals and Incentives. The Parties shall meet annually to establish goals with
respect to the Services to help assure success, including use of the Services
by Members. Each of the Parties shall consider achievement of such goals in
determining incentive-based compensation for its management employees.
3.2.1 NPS
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information against the on-line database information then
most-recently made available by Novation and ensure that
such registration is authorized in accordance with registration
and password issuance and protection procedures acceptable
to Service Provider and in accordance with Exhibit G
(“Registration and Password Issuance and Protection
Procedures”). Service Provider shall be responsible for
keeping the NPS registry current with the most-recent data
made available by Novation and for not allowing access to
NPS by unauthorized Users. Participating Members shall only
be allowed to view data related to their respective Member
organizations. Service Provider will allow an employee-User
of Novation or any of the Alliances to have access to
information regarding Members of one or more of VHA, UHC,
HPPI only to the extent permitted by an information feed
provided from time to time by Novation.
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software on its network, and of procedures to prevent abusive
or malicious acts or omissions against the GHX Exchange.
Except to access and make use of the GHX Exchange pursuant
to this Agreement, Novation and the Alliances may not
upload, download, modify, disassemble, decompile, or copy
Service Provider’s Intellectual Property or otherwise take any
action that may affect the use or functionality of the GHX
Exchange.
(c) Privacy. Novation and the Alliances will not breach or attempt
to breach GHX Exchange computer or software security,
attempt to access the information of any entity other than
Novation or the Alliance, as applicable, and the Participating
Members or otherwise invade the privacy of others in
connection with its use of the GHX Exchange.
_________________________
Confidential materials omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote such omission.
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3.5 Removal of Materials and Products from NPS.
3.5.1 Removal of Materials. [*****] may request that any materials or data
that [*****] or any of the [****], in each of its sole discretion, believe
are likely to result in [*****] to Service Provider, Novation, HPPI, VHA,
UHC, any Members and/or any User be [*****] removed from any part
of NPS, and Service Provider shall [*****] comply with such requests.
3.6 Other GPOs. Service Provider shall not make the [*****], [*****], [*****] or
any other information or data provided by Novation or any Alliance to
Service Provider, available to any other entity, including any GPO other than
VHA, UHC or HPPI. Service Provider shall act in accordance with its Guiding
Principles, a copy of which is attached hereto as Exhibit O.
3.7 Reasonable Assistance. Each Party will provide the other Parties with on-
going reasonable assistance with regard to technical, administrative and
service-oriented issues relating to the Services.
4.1 Novation Proprietary Services. [*****], [*****], [*****] or [*****] may each
elect, in its sole discretion, to enter into one or more Statements of Work
(“SOWs”) for Novation Proprietary Services or for changes to [*****] or for
additional [*****] or [*****] not included in the [*****]. Any SOW entered
into by [*****] shall be subject to the Change Control Procedures set forth in
Section 4.2 and other applicable provisions of this Agreement. Any SOW
entered into by [*****], [*****] or [*****] shall, unless otherwise provided
therein, (1) incorporate the terms of this Agreement except that the recipient
of services thereunder (i.e., [*****], [*****] or [*****]) shall be the party
thereto instead of [*****], (2) provide that charges pursuant to the SOW shall
be on a [*****] and [*****] and (3) will allow [*****] by [*****], [*****] or
[*****], as applicable, after [*****] without further [*****]. Each of [*****],
[*****] or [*****] shall inform the others of any SOWs that it intends to enter
into with [*****]. Any
_________________________
Confidential materials omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote such omission.
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deliverables created pursuant to a SOW (the “Deliverables”) shall be subject to the [*****]
provisions set forth in Section [*****].
4.2 Change Control for Novation Proprietary Services.
4.2.1 Change Control Procedure. In the event that (i) either [*****] or
[*****] wishes a change to the Novation Proprietary Services,
including changes in the [*****], [*****] or [*****] of the foregoing, or
(ii) [*****] requests new [*****] (each of the foregoing, a “Change”),
the requesting Party shall submit a written proposal to the other Party
describing such desired change (“Change Request”). The receiving
Party shall review the Change Request and reject or accept the
Change Request in writing within a reasonable period of time, but in
no event more than [*****] after receipt of the Change Request (the
“Response”). In the event that the Change Request is rejected, the
Response shall include the [*****] and, in the event that the Change
Request is rejected by [*****], [*****] shall wherever possible,
[*****] a [*****] to the requested Change. [*****] and [*****] shall
negotiate in good faith to agree on a Change, and its accompanying
terms, within [*****] after receipt of the Response; provided,
however, that either Party may, in its sole discretion, elect to not
agree to any Change. In the event that the Change Request is
accepted, the Parties shall mutually agree on the changes to be made
to this Agreement to reflect such Change. The changes or additional
terms and conditions (if any) shall be made only in a written Change
Order signed by an authorized representative of the Parties.
Notwithstanding the foregoing, nothing set forth in this Agreement
shall be construed to require renegotiation of existing Services.
_________________________
Confidential materials omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote such omission.
-22-
5. SERVICE PROVIDER EXCLUSIVITY
5.1 Exclusivity. Service Provider agrees that during the Term of this Agreement it
will not operate as a group purchasing organization organized for the
purpose of negotiating specific prices on products and services to be
purchased by its members.
5.2 Marketing Other Services To Members. Service Provider shall not target
market any or all of the GHX Exchange to Members through arrangements
with other group purchasing organizations. Nevertheless, nothing shall
restrict Service Provider from offering the GHX Exchange to any other group
purchasing organizations and its members and, except for the obligation not
to target market such Services as set forth above in this Section 5.2, nothing
shall restrict Service Provider from selling such Services to members of such
other group purchasing organizations under Service Provider’s agreement
with such other group purchasing organization even if such member happens
to be a Member. Notwithstanding the foregoing, under no circumstances
shall the Service Provider offer or provide Novation Proprietary Services or
any other service involving the Novation Contracts to any Person other than
to a Member in accordance with the terms of this Agreement.
6. LICENSES
6.1 Marks. Each Party hereby grants to each of the other Parties a royalty-free,
non-exclusive, non-transferable, non-sublicenseable, worldwide license to
use and display during the Term the Party’s Marks only as necessary to
perform in accordance with the Agreement and subject to the Mark owner’s
prior approval of the form of use. The Mark owner may terminate the
foregoing Mark license if, in its reasonable discretion, the licensee’s use of
the Marks tarnishes, blurs or dilutes the quality associated with the Mark or
the associated goodwill and such problem is not cured within ten (10) days
of written notice of breach; alternatively, instead of terminating the license
in total, the owner may specify that certain licensee uses may not contain
such Marks. Title to, ownership of, and all proprietary rights (including,
without limitation, Intellectual Property Rights) and interest in the owner’s
Marks will remain with the Mark owner. The licensee will use the owner’s
Marks exactly in the form provided and in conformance with the owner’s
Mark usage policies. A copy of Novation’s current trademark usage
guidelines is attached as Exhibit I (“Novation’s Trademark Usage
Guidelines”). A copy of Service Provider’s current trademark usage
guidelines is attached as Exhibit J (“Service Provider’s Trademark
Usage Guidelines”). A copy of each of VHA’s, UHC’s and HPPI’s current
trademark usage guidelines are attached as Exhibit K (“VHA’s, UHC’s,
and HPPI’s Trademark Usage Guidelines”). The licensee will not take
any action inconsistent with the owner’s ownership of its Marks, and any
benefits accruing from use of such Marks will automatically vest in the Mark
owner. The licensee will not form any combination Marks with any
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other Party’s Marks. Subject to the provisions of Section 8.8, upon
termination or expiration of this Agreement, each Party will cease all use of
all Parties’ Marks.
_________________________
Confidential materials omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote such omission.
-24-
to support the purposes of this Agreement. Accordingly, during the
Term, to the extent of their rights therein, Novation, VHA, UHC and
HPPI hereby grant to Service Provider a limited, non-transferable,
royalty-free, non-exclusive license to use and, on the terms provided
herein, to modify [*****] and any Confidential Information of
Novation, VHA, UHC and HPPI related thereto for the limited purpose
of performing Service Provider’s obligations under this Agreement.
(b) Novation’s, VHA’s, UHC’s and HPPI’s license to use the GHX
Exchange Software set forth in Section 6.4.3(a) is limited
solely to the extent necessary to enable Participating
Members to use the GHX Exchange in the state it exists as of
the date of an Activation Event, and only for such limited
purpose. Novation, VHA, UHC and HPPI will each be entitled:
(i) to modify and make derivative works of the Client
Software; (ii) to use, reproduce, transmit and copy the Client
Software, and (iii) to sublicense the Client Software to
Participating Members; provided, however, Novation, VHA,
UHC and HPPI each agrees not to use, reproduce, transmit,
copy, distribute or sublicense the Client Software until the
occurrence of an Activation Event.
_________________________
Confidential materials omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote such omission.
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Updates to the Client Software that may become available to
Participating Members. Upon such availability of Updates to
the Client Software or GHX Exchange Software, as the case
may be, Service Provider shall provide each of Novation, VHA,
UHC and HPPI with one copy of each such Update (in object
code form only) without additional charge. Additionally, every
six months during the Term of this Agreement, upon the
request of Novation, VHA, UHC or HPPI Service Provider shall
deliver to each of Novation, VHA, UHC and HPPI, at no charge,
the current version of the GHX Exchange Software (in object
code form only) being used by Service Provider in operating
the GHX Exchange at such time.
(d) The licenses set forth in Sections 6.4.3(a) and (b) shall be
activated upon the occurrence of any of the following events
(each an “Activation Event”): (i) Service Provider or its
successor in interest makes a determination that it will no
longer operate the GHX Exchange (such determination will be
evidenced by: (A) Service Provider or its successor in interest
giving written notice thereof; or (B) Service Provider or its
successor in interest ceasing to operate the GHX Exchange,
and failing to respond to a written request from Novation,
VHA, UHC or HPPI for confirmation of such cessation within
five (5) business days of Service Provider’s receipt of such
written request); (ii) Service Provider has ceased its ongoing
business operations, or has ceased the sale, licensing,
maintenance or other support of the Client Software and no
successor of Service Provider has undertaken the sale,
licensing, maintenance and/or support of the Client Software;
or (iii) the GHX Exchange is not available to at least seventy-
five percent (75%) of Participating Members or is not available
to at least seventy-five percent (75%) of the Suppliers
integrated with the GHX Exchange, where the period of
unavailability in either case is five (5) consecutive business
days or greater, and the foregoing is not due to a Force
Majeure event. For purposes of this paragraph, unavailability
of the GHX Exchange means that the designated participants
are unable to transmit and receive transaction
communications due to failure of Service Provider systems
and operations and not due to any outside factors that are
outside of Service Provider’s control.
(e) Novation, VHA, UHC and HPPI’s rights related to the GHX
Exchange Software and Client Software that are licensed to
Novation, VHA, UHC and HPPI by Service Provider under this
Section 6.4.3 shall cease upon the first to occur of following
events:
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(i) The end of the Initial Term, or if this Agreement has
been renewed prior to the Activation Event, the
Renewal Term.
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and such other changes as are approved by the Parties. None
of the Parties shall unreasonably withhold or delay its
approval of the Escrow Agreement. Service Provider further
agrees to deposit copies of the source code of any Updates or
other modifications to the GHX Exchange Software or the
Client Software (together with the Current Version, the
“Source Code”), to the extent there are Updates or other
modifications delivered to Novation, VHA, UHC and HPPI, each
six (6) months during the Term of this Agreement. Promptly
after the Effective Date and from to time to time hereafter,
Service Provider shall deposit, or cause to be deposited all
source code relating to NPS in the escrow arrangements
contemplated by the Escrow Agreement.
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(c) Service Provider shall cause Neoforma (or its successor, if
any) to maintain in full force and effect any source code
escrow in effect on the Effective Date until the Migration
Deadline. Service Provider shall also cause Neoforma (or its
successor) to promptly deposit in such escrow any and all
material revisions or modifications after the Effective Date to
the software that is the subject of such escrow. In lieu of the
foregoing, Service Provider may subject all such software to
the Escrow Agreement, in which case “Source Code” shall be
deemed to include, in addition to the GHX Exchange Software
and Client Software, all the corresponding software relating to
the Novation Marketplace.
7.1 Fees. [*****] shall pay the fees set forth as part of Exhibit B (“Scope of
Services”) for [*****], the [*****], [*****] and the [*****] (the “Service
Fees”). Fees for [*****] (other than [*****] and [*****]) shall be as set forth
in the applicable [*****]. [*****] who wish to receive the [*****] shall be
responsible for the [*****].
7.2 Taxes. Service Provider, Novation, VHA, UHC and HPPI shall take reasonable
steps to cooperate to minimize any local, state, national and foreign taxes
(including, without limitation, sales, use and VAT taxes which may apply),
licenses, export/import fees and any other fees or similar obligations relating
to any sale, rental or lease of a Product through the Novation Marketplace or
the GHX Exchange or relating to [*****].
_________________________
Confidential materials omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote such omission.
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7.3 Other Expenses. No Party shall be required to pay to any other Party any
amounts for the performance of their respective obligations hereunder other
than those expressly set forth in this Agreement.
7.4.1 Invoices. Service Provider shall issue to Novation at least thirty (30)
days prior to the beginning of a calendar month an invoice for the
Service Fees and other charges due Service Provider for such calendar
month hereunder and not otherwise invoiced (collectively,
“Charges”).
_________________________
Confidential materials omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote such omission.
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Effective Date, which Member-Based Pricing shall be subject to
Section 2.2.3.
8.1 Initial Term. This Agreement shall become effective at the Effective Time and
will remain in effect until 11:59 P.M. Central Time Zone on December 31,
2011 (the “Initial Term”), unless terminated earlier in accordance with the
terms of this Agreement.
8.2 Renewal and Extension of Term. None of the Parties shall be obligated to
renew or extend this Agreement beyond the Initial Term. However, if Service
Provider wishes to extend or renew this Agreement, then at least [*****]
prior to the expiration of the Initial Term, Service Provider shall deliver to
each of the other Parties a proposal describing the terms on which this
Agreement would be extended for an additional [*****] (“Renewal
Proposal”). The pricing in the Renewal Proposal shall be the most favorable
pricing that Service Provider provides, directly or indirectly, to any Person
that receives services that are the same as or substantially similar to any of
the Services to be provided during the Renewal Term, unless otherwise
specifically disclosed in the Renewal Proposal (such disclosure to include
how the proposed pricing differs from any more favorable pricing). At least
[*****] prior to the expiration of the Initial Term, each of Novation, VHA or
UHC shall provide notice to Service Provider and to the other Parties of its
intent to (i) accept the Renewal Proposal describing the terms on which this
Agreement will be extended, and the appropriate Parties shall promptly
begin drafting a renewal agreement including such terms; (ii) not renew this
Agreement (“Non-Renewal Notice”); or (iii) negotiate with Service Provider
the terms on which to renew the Agreement. Any statement or notice of such
intent by a Party is not binding on any other Party. In the event that all of the
Parties agree in writing on terms for a Renewal Term, the Agreement shall,
except as otherwise expressly agreed in writing, renew for one (1) [*****]
term after the completion of the Initial Term ( “Renewal Term”). The Initial
Term and any and all renewals or extensions thereof and any Termination
Assistance Period are referred to herein as the “Term”.
8.3.1 For Cause. Each of Service Provider and Novation will have the right
to terminate this Agreement if such other Party breaches any of its
obligations under this Agreement in any material respect unless the
breaching Party (x) cures such breach within [*****] after receiving
written notice of such breach or (y) if such breach is not curable
within such [*****] period, makes substantial progress in curing such
breach
_________________________
Confidential materials omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote such omission.
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within such [*****] period and cures such breach within [*****] after
receiving written notice of such breach. Novation may terminate this
Agreement (i) for Service Provider’s failure to meet its Service Level
obligations hereunder only as set forth in Exhibit C or (ii) if Service
Provider is unable to perform for more than [*****] all or a
substantial portion of the Services due to any third party claim of
infringement or misappropriation of Intellectual Property Rights
whether or not it is the subject of indemnification hereunder. Any
dispute regarding whether a breach has occurred or has been cured or
the nature of such breach shall be addressed in accordance with
Section 17.
8.3.2 Novation Dissolution. In the event that the Amended and Restated
Operating Agreement, dated January 25, 2001, as amended from time
to time, between VHA and UHC (“Novation Operating
Agreement”) is terminated (and not replaced by any successor
document) (the “Novation Dissolution”), effective as of the date
specified by either VHA or UHC in a written notice to Service Provider,
each of Service Provider, VHA and UHC shall, pursuant to good faith
negotiations, enter into separate agreements for the remainder of the
current Term with Service Provider upon the terms and conditions
hereof, with the aggregate price for the Services to be rendered under
the new separate agreements to be allocated as directed in writing
by VHA and UHC and shall not exceed the total amounts otherwise
due hereunder. Service Provider shall negotiate in good faith with
VHA or UHC if such Party wishes to reduce the Services to be
received under such a separate agreement in order to reduce Service
Provider’s costs and the amounts due for such Services; provided
that, if Service Provider agrees to reduce such Services and Fees,
Service Provider shall have no obligation to reduce fees by an
amount greater than its costs are reduced. If requested by any one or
more of VHA or UHC, Service Provider shall establish a separate
“look and feel” for the Party so requesting and charge a reasonable
fee for such service.
_________________________
Confidential materials omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote such omission.
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termination is subject to any statutory provision or judicial order
staying such action, seek leave to modify such stay so as to
terminate this Agreement.
8.4.3 VHA or UHC Insolvency Event. If UHC or VHA (the “Insolvent V/U/N
Party”) becomes the subject of an Insolvency Event, each of Services
Provider and the other Parties (excluding HPPI and the Insolvent
V/U/N Party) (the “Solvent V/U/N Parties”) shall, pursuant to good
faith negotiations, enter into separate agreements for the remainder
of the current Term with Service Provider upon the terms and
conditions hereof, with the aggregate price for the Services to be
rendered under the new separate agreements to be allocated as
directed in writing by the Solvent V/U/N Parties. Service Provider shall
negotiate in good faith with any Solvent V/U/N Party if such Party
wishes to reduce the Services to be received under such a separate
agreement in order to reduce Service Provider’s costs and the
amounts due for such Services as well as a reduction of Service
Provider’s costs and the amounts due for Services by reason of the
elimination of Services to the Insolvent Party. Such good faith
negotiations shall be conducted within the following limitations: (a)
the aggregate price for the Services to be rendered under the new
separate agreements shall not exceed the total amounts otherwise
due hereunder; (b) Service Provider shall have no obligation to reduce
fees by an amount greater than its costs are reduced; (c) Solvent
V/U/N Parties shall not be obligated to pay more than their Novation
Fee Share (as defined below) prior to the Insolvency Event; (d) no
Solvent V/U/N Party shall have the right to terminate this Agreement
as provided below if, under a new separate agreement (upon the
terms and conditions hereof) offered, it would have the right to
receive the same Services it received prior to the Insolvency Event
for an aggregate cost to both Solvent V/U/N Parties no more than their
Novation Fee Share prior to the Insolvency Event; and (e)
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Service Provider shall not have the right to terminate this Agreement
as provided below if, under a new separate agreement (upon the
terms and conditions hereof) offered, Service Provider would provide
the same Services it provided to the Solvent V/U/N Parties prior to the
Insolvency Event and have the right to receive an aggregate price for
such Services at least equal to (and no less than) the Solvent V/U/N
Parties’ Novation Fee Share prior to the Insolvency Event. In the event
that following such good faith negotiations Service Provider and the
Solvent V/U/N Parties fail to reach separate agreements for the
remainder of the current Term, than any of Service Provider or the
Solvent V/U/N Parties may terminate this Agreement. If requested by
any one or more of Solvent V/U/N Parties, Service Provider shall
establish a separate “look and feel” for the Party so requesting and
charge a reasonable fee for such service. Nothing in this Agreement
is intended to constitute a waiver or release of any claim that Service
Provider or any Solvent V/U/N Party may have against any Party that
becomes the subject of an Insolvency Event or under Section 19. In
addition, and notwithstanding anything else in this Agreement,
Service Provider may immediately take all actions reasonably
necessary to convert the Members of an Insolvent V/U/N Party to
Member-Based Pricing. “Novation Fee Share” shall mean, with
respect to Novation and the other Solvent V/U/N Party collectively,
such other Solvent V/U/N Party’s share of the aggregate price for the
Services paid by Novation hereunder prior to the Insolvency Event.
8.5 Termination Upon Service Provider Change of Control. Service Provider shall
promptly notify Novation of the effectiveness of any Service Provider
Change of Control. In the event Novation has not previously consented to a
Service Provider Change of Control, Novation shall have the right to
terminate this Agreement effective on the date specified in Novation’s notice
of termination, in the event of receipt of any such notice from Service
Provider of a Service Provider Change of Control, or upon the effectiveness of
any Service Provider Change of Control or thereafter in the event no notice is
given in accordance herewith.
8.7 Survival. All rights and obligations with regard to information disclosed or
matters occurring or arising before the effective date of termination, and all
rights
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and obligations which by their terms are intended to survive termination or
expiration of this Agreement, will survive such termination or expiration,
including, without limitation, the rights and obligations set forth in Sections
6.4.3, 6.4.5, 6.4.6, 8.6, 8.7, 8.8, 8.9, 9, 10, 11.3.2, 11.4, 14, 15, 16, 17, 18 and
19, and the final sentence of Section 2.5.4(d). The foregoing rights and
remedies shall be cumulative and in addition to all other rights and remedies
available in law and in equity.
8.9 Equitable Remedies. Each Party reserves its rights to seek equitable relief in
connection with the enforcement of any of its rights hereunder. If a court of
competent jurisdiction should find that any Party has breached (or attempted
or threatened to breach) any of its obligations hereunder, such Party agrees
that even without any additional findings of irreparable injury or other
conditions to injunctive relief, it shall not oppose the entry of an appropriate
order compelling performance by it or restraining it from further breaches (or
attempted or threatened breaches).
9.1.1 Member Data. Novation shall have the right to access and use all
Member Data as provided herein. For purposes of this Agreement,
“Member Data” shall be defined as Transaction Data with respect to
which either (i)
_________________________
Confidential materials omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote such omission.
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the applicable Participating Member or (ii) the applicable Supplier has
consented to Novation’s and the applicable Alliance’s access to and
use of such Transaction Data either pursuant to an agreement with
Service Provider or Neoforma or as separately agreed between the
Member or Supplier, as applicable, and Novation. During the Term, (i)
access of Novation or the applicable Alliance to Member Data arising
solely from the consent of a particular Participating Member shall
continue as long as the Member remains a Participating Member and
is subject to an agreement with Service Provider or Neoforma and as
long as such Participating Member’s consent to such access remains
in effect, and (ii) Novation’s access to Member Data arising solely
from a Supplier’s consent shall continue as long as the Supplier’s
consent to such access remains uncontested and in effect.
9.1.3 Aggregated GHX Data. Service Provider will not include Transaction
Data in Aggregated GHX Data without the consent of both the
Supplier and the Participating Member that are parties to the
transaction to which the Transaction Data relates. Notwithstanding
any provision of this Agreement to the contrary, (i) no Aggregated
GHX Data shall be compiled by Service Provider or any of its
Affiliates in which Members are parties to more than [*****] of the
transactions that generate the Transaction Data included in the
compilation of Aggregated GHX Data, (ii) neither Service Provider nor
any of its Affiliates, (including, without limitation, any other GPO)
shall have the right to use any Transaction Data of Members of any
Alliance to create Aggregated GHX Data that permits a recipient to
compare GPOs or to compare academic medical centers and non-
academic medical centers, and (iii) each of VHA, UHC and HPPI shall
have the right (subject to the terms of any license or other
permission of its Members) to aggregate Member Data, to prepare
Aggregated Alliance Member Data and to perform analysis using
Member Data with respect to each of their Members in each of its
sole discretion. If Service
_________________________
Confidential materials omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote such omission.
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Provider begins offering Aggregated GHX Data to third parties during
the Term, then Service Provider shall provide Aggregated GHX Data
that is based in part on the Member Data to Novation [*****] during
the [*****] period following the Effective Date and, following such
period but prior to the expiration or termination of the Term, at pricing
[*****] [*****] [*****] the [*****] [*****] [*****] by [*****] to any
[*****] [*****] in [*****] with Section [*****].
9.1.4 Aggregated Alliance Member Data. Each of VHA, UHC and HPPI
hereby grant the following licenses with respect to its Aggregated
Alliance Member Data:
Assuming that it has the requisite rights from its Members, each
Alliance may prepare (or cause a third party, including Service
Provider, to prepare on its behalf) any and all (i) Aggregated Alliance
Member Data that the Alliance deems appropriate with respect to its
Members and (ii) combinations of such data that two or more of the
Alliances may deem appropriate with respect to each of their
Aggregated Alliance Member Data, in each case without the consent
of or license from any Supplier.
9.1.5 Product Data. All Product Data provided by a Supplier shall be owned
by the Supplier of the Product which the Product Data describes.
9.2 Analytic Data. Subject to the rights of Members and Service Provider with
respect to the underlying Transaction Data, all Analytic Data shall be owned
by Novation. Novation hereby grants to each of UHC, VHA and HPPI a non-
exclusive, royalty-free license to use for any purposes whatsoever the
Analytic Data that Novation owns.
9.3 No Other Licenses or Use. Except as expressly set forth in this Section 9,
none of the Alliances, Novation or Service Provider grants any license,
express or implied, in any of the Transaction Data, Product Data, Analytic
Data, [*****]
_________________________
Confidential materials omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote such omission.
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Data or [*****]. The failure to abide by the terms and conditions of this
Section 9 shall constitute a material default of this Agreement.
9.4 Ownership by Third Parties. The GHX Exchange, the Novation Marketplace
[*****] and the AllSource® Catalog contain third party Marks and other
Intellectual Property belonging to third parties, including Product Data and
Transaction Data. All such Intellectual Property is and will remain the
property of its respective owners. The Parties acknowledge that, from time
to time, the Parties may use third parties to provide certain data for use on
or in connection with the GHX Exchange and the Novation Marketplace
pursuant to a separate agreement with a third party (e.g., supply line data
that is provided by [*****]). The Parties acknowledge that all data that a
Party gathers or develops independent of this Agreement shall not be
covered by this Agreement, provided that Service Provider shall not solicit
any such information from a Member without fully disclosing to the Member
all intended uses for which such information is being collected and will be
used.
_________________________
Confidential materials omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote such omission.
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each of (i) through (iii) Transaction Data and Product Data. With
respect to Novation, Intellectual Property includes, without limitation:
(i) Novation Materials; (ii) Intellectual Property comprising or included
in Novation Proprietary Services; but excluding in each of (i) and (ii)
Transaction Data and Product Data. As between Service Provider and
Novation on the one hand, and each of VHA, UHC and HPPI on the
other hand, each of VHA, UHC and HPPI shall own the Aggregated
Alliance Member Data with respect to its Members. Notwithstanding
the foregoing and except as expressly provided in Section 9.1.2,
nothing in this Agreement shall affect any Party’s ownership or other
rights in Intellectual Property created or arising prior to the Effective
Date.
10.1 Confidentiality.
10.1.2 Confidentiality Obligations. Each Party agrees that (i) it will not use or
disclose to any other Party or third Person including its Affiliates
(other than its wholly-owned subsidiaries) any Confidential
Information disclosed to it by any other Party except as contemplated
by this Agreement and (ii) it will take all reasonable measures to
maintain the confidentiality of all Confidential Information of each
other Party in its possession or control, which will in no event be less
than the measures it uses to maintain the confidentiality of its own
information of similar importance.
_________________________
Confidential materials omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote such omission.
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10.1.3 Exclusions. Section 10.1.2 will not prevent a Party from disclosing
Information that such Party demonstrates: (i) is owned by such Party
or its Affiliates or is already known (except via a breach of this
Agreement) by the recipient Party or its Affiliates without an
obligation of confidentiality other than under this Agreement, (ii) is
publicly known or becomes publicly known through no breach of this
Agreement or other unauthorized act of the recipient Party, (iii) is
rightfully received from a third party, provided that (A) the source is
not known to be bound by a confidentiality agreement, and (B) this
clause (iii) shall in no event apply to Transaction Data transmitted by
or to Members, or (iv) is independently developed by employees of a
Party or an Affiliate of a Party without use of the other Party’s
Confidential Information. If Confidential Information is required to be
disclosed pursuant to a requirement of a governmental authority,
such Confidential Information may be disclosed pursuant to such
requirement so long as the Party required to disclose the Confidential
Information, to the extent possible, (i) provides the Party that owns
the Confidential Information with timely prior notice of such
requirement and coordinates with such other Party in an effort to limit
the nature and scope of such required disclosure and (ii) uses
commercially reasonable efforts to ensure that, within applicable law,
such Confidential Information will not be further disclosed. If
Confidential Information is required to be disclosed in connection with
the conduct of any arbitration proceeding conducted pursuant to
Section 17, such Confidential Information may be disclosed pursuant
to and in accordance with the approval and at the direction of the
arbitrator conducting such proceeding.
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rigorous than those maintained by Service Provider for its own information of
a similar nature and, in no event, less than a reasonable level of safeguards.
Novation and each Alliance shall maintain appropriate safeguards,
consistent with prevailing industry standards, against the destruction,
inappropriate disclosure, wrongful access or use, loss or alteration of Service
Provider’s Confidential Information in the possession of Novation or such
Alliance, as the case may be. In any event, Novation and the Alliances shall
maintain safeguards that are no less rigorous than those maintained by
Novation and the Alliance for their own information of a similar nature and,
in no event, less than a reasonable level of safeguards.
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documents of Service Provider, (ii) conflict with or violate any
law, rule, regulation, order, judgment or decree applicable to
Service Provider or by which Service Provider or any of its
properties is bound or affected or (iii) result in any breach of
or constitute a default (or an event that with notice or lapse of
time or both would become a default) under, or impair Service
Provider’s rights or alter the rights or obligations of any third
party under, or give to others any rights of termination,
amendment, acceleration or cancellation of, or result in the
creation of an encumbrance on any of the properties or assets
of Service Provider pursuant to, any note, bond, mortgage,
indenture, agreement, lease, license, permit, franchise or
other instrument or obligation to which Service Provider is a
party or by which Service Provider or its assets is bound or
affected, except, in the case of clauses (ii) and (iii), for such
conflicts, violations, breaches, defaults, impairments, or rights
which, individually or in the aggregate, would not have a
material adverse effect on Service Provider.
11.1.5 Source Code Escrow. As of the Effective Time, with respect to all
Source Code owned or controlled by Service Provider immediately
before the Effective Date, Service Provider has taken all actions
required to be taken on or before the Effective Date pursuant to
Section 6.4.5.
_________________________
Confidential materials omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote such omission.
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11.1.6 Agreements.
(b) All agreements between Service Provider and any GPO that
are currently in effect are set forth on Exhibit M and complete
copies (subject to redaction of certain confidential
information) have been provided to Novation and the
Alliances. Exhibit M also sets forth any pricing policy,
understanding or arrangement that is currently in effect with
respect to any GPO that is not a party to an agreement with
Service Provider or members of such a GPO.
(c) Service Provider charges a fee for all services that it provides
to customers, except for its WebConnect product.
11.2 Representations by Novation, VHA, UHC and HPPI. Each of Novation, VHA,
UHC and HPPI, severally and not jointly, represents and warrants to Service
Provider that the following statements made by it in this Section 11.2 are
true and correct as of the date hereof and as of the Effective Time.
(a) Each of Novation and HPPI has all requisite limited liability
company power and authority, and each of VHA and UHC has
all requisite corporate power and authority, to enter into this
Agreement and to perform its obligations hereunder. The
execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have
been duly authorized by all necessary limited liability
company action on the parts of Novation and HPPI and all
necessary corporate action on the parts of VHA and UHC. This
Agreement has been duly executed and delivered by
Novation, VHA, UHC and HPPI, and it constitutes the valid and
binding obligation of each of Novation, VHA, UHC and HPPI,
enforceable against each of Novation, VHA, UHC and HPPI in
accordance with its terms, except as enforceability may be
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limited by bankruptcy and other similar laws affecting the
rights of creditors generally and general principles of equity.
11.3.1 Compliance with Laws. Service Provider represents and warrants that
throughout the Term, Service Provider and the Services shall be and
shall remain in compliance with all applicable federal, state and local
laws and regulations. Each of Novation, VHA, UHC and HPPI
represents and warrants that throughout the Term, Novation, VHA,
UHC and HPPI shall be and shall remain in compliance with all
applicable federal, state and local laws and regulations.
11.3.2 HHS and Comptroller General. Service Provider agrees that, until the
expiration of four (4) years after the furnishing of any goods and
services pursuant to this Agreement, it will make available, upon
written request of the Secretary of Health and Human Services or the
Comptroller General of the United States or any of their duly
authorized representatives, copies of
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this Agreement and any books, documents, records and other data of
Service Provider that are necessary to certify the nature and extent of
the costs incurred by Members in purchasing such goods and
services. If Service Provider carries out any of its duties under this
Agreement through a subcontract with a related organization
involving a value or cost of ten thousand dollars ($10,000) or more
over a twelve-month period, Service Provider will cause such
subcontract to contain a clause to the effect that, until the expiration
of four (4) years after the furnishing of any good or service pursuant
to said contract, the related organization will make available upon
written request of the Secretary of Health and Human Services or the
Comptroller General of the United States or any of their duly
authorized representatives, copies of this Agreement and any books,
documents, records and other data of said related organization that
are necessary to certify the nature and extent of costs incurred by
Service Provider for such goods or services. Service Provider shall
give Novation, VHA, UHC and HPPI notice immediately upon receipt
of any request from the Secretary of Health and Human Services or
the Comptroller General of the United States or any of their duly
authorized representatives for disclosure of such information.
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ALL SERVICES HEREUNDER “AS IS.” SERVICE PROVIDER HEREBY
DISCLAIMS ALL IMPLIED WARRANTIES, INCLUDING, WITHOUT
LIMITATION, WARRANTIES OF MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE, NONINFRINGEMENT, AND IMPLIED
WARRANTIES ARISING FROM COURSE OF DEALING OR COURSE OF
PERFORMANCE WITH REGARD TO THE SERVICES. EXCEPT AS
EXPRESSLY SET FORTH IN THIS AGREEMENT, SERVICE PROVIDER
MAKES NO REPRESENTATION OR WARRANTY WITH RESPECT TO
ACCURACY OF DATA. SERVICE PROVIDER DOES NOT WARRANT THAT
IT WILL BE ABLE TO CORRECT ALL REPORTED DEFECTS IN THE
SERVICES OR THAT USE OF THE SERVICES, ACCESS TO PRODUCT
DATA OR LINKS TO OTHER SUPPLIER MATERIALS WILL BE
UNINTERRUPTED OR ERROR-FREE. EXCEPT AS EXPRESSLY
PROVIDED HEREIN, SERVICE PROVIDER PROVIDES NO WARRANTIES
WITH RESPECT TO THE FUNCTIONALITY OF THE GHX EXCHANGE
SOFTWARE AND THE CLIENT SOFTWARE. EXCEPT AS EXPRESSLY
PROVIDED HEREIN, SERVICE PROVIDER MAKES NO WARRANTY
REGARDING FEATURES, SOFTWARE OR SERVICES PROVIDED BY
THIRD PARTIES.
12.1 Generally. Service Provider may subcontract its obligations under this
Agreement subject to the limitations imposed by this Section 12.1. Service
Provider shall not subcontract any Services included in the Member-Facing
Plan to a Competitor.
12.2 Right to Request Replacement. Novation and each of the Alliances shall have
the right during the Term to request that Service Provider withdraw and
replace (or cause to be withdrawn and replaced, as the case may be), as
soon as reasonably possible, an employee of Service Provider, any of its
Affiliates or subcontractors who is providing Services included in the
Member-Facing Plan. Service Provider will approve any such request if
Service Provider determines that the individual’s performance is materially
deficient, good faith doubts exist concerning the individual’s ability to render
future performance, or there have been material misrepresentations by or
concerning the individual.
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the confidentiality of such Confidential Information in all material respects as
required of Service Provider under this Agreement.
13. INSURANCE
13.1 Insurance. Service Provider, Novation and each Alliance will pay all costs and
receive all benefits under policies arranged by it, and each waives rights of
subrogation it may otherwise have regarding the other’s insurance policies.
Service Provider will maintain and keep in force during the Term general
liability insurance, workers compensation insurance and property damage
insurance with a minimum combined single limit of liability in the amount of
not less than $1,000,000 per occurrence and $3,000,000 in the aggregate and
will name Novation, VHA, UHC and HPPI, as their interests may appear, as
additional insureds. The foregoing liability limits can be satisfied through a
combination of primary and excess policies.
13.2 Proof of Insurance. On the Effective Date and when otherwise requested by
Novation, Service Provider will provide a certificate of insurance reflecting
the coverage described in Section 13.1 issued by an insurance company and
signed by an authorized agent. Service Provider will not amend, in any
material respect that affects the interests of Novation, VHA, UHC, HPPI or the
Members or terminate said insurance except after thirty (30) days’ prior
written notice to Novation. In addition, Service Provider shall provide
Novation with at least thirty (30) days prior written notice of any material
cancellation or material modification of such insurance by the insurance
company.
14. INDEMNITY
14.1 Service Provider Indemnity. Subject to Section 14.4, Service Provider shall
indemnify, defend and hold harmless each of Novation, VHA, UHC and HPPI
and each of their Affiliates, officers, directors, employees, consultants and
agents from and against any and all damages, liabilities, claims, actions,
suits, proceedings, costs, charges and expenses, including reasonable
attorneys’ fees (collectively, “Losses”), incurred or sustained by any of such
persons arising from the claim of any Person who is not a Party arising as a
result of or from (i) the failure of Service Provider to perform any of its
obligations under any agreement between Service Provider and a third party
(including, without limitation, any agreements between Service Provider and
a Supplier); (ii) any claims arising out of Service Provider’s breach of this
Agreement; (iii) any claim arising out of the death of or bodily injury to any
employee of any of Novation, VHA, UHC and HPPI and each of their Affiliates
(or their respective subcontractors) to the extent caused by the gross
negligence or willful misconduct of Service Provider or its Affiliates; (iv) the
loss of or damage to the real or tangible personal property (whether owned
or leased) of any of Novation, VHA, UHC and HPPI and any of their Affiliates,
officers, directors, employees, consultants and agents to the extent caused
by the gross negligence or willful misconduct of Service Provider or its
Affiliates; (v) Service Provider’s failure to pay and discharge any taxes
(including
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interest and penalties) for which Service Provider is responsible pursuant to
the terms of this Agreement; and (vi) any claim asserted against any of
Novation, VHA, UHC and HPPI and any of their Affiliates by an employee of
Service Provider to the extent such claim arises from decisions, acts,
omissions or violations of statute by Service Provider with respect to such
employee’s employee/employer relationship with Service Provider.
14.3.1 Indemnity. Each of Service Provider and Novation, VHA, UHC and
HPPI, at their respective expense, shall indemnify, defend and hold
harmless the other Party and its Affiliates, and their respective
officers, directors, employees, consultants, agents, successors and
assigns, from and against any and all Losses arising from the claim
of any Person who is not a Party relating to any Services, software,
hardware or the indemnitor’s Materials (“Item(s)”) provided or
delivered by the indemnitor to the indemnitee under this Agreement
that, when used in conformity with all applicable written instructions
and documentation, (i) infringes any United States patent or United
States copyright, or infringes or otherwise violates any trademark
rights under the laws of the United States or any state thereof, or (iii)
constitutes misappropriation of any trade secret that is enforceable in
the United States (each such third-party claim, action, suit or
proceeding, an “Infringement Claim”).
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indemnitee for any Infringement Claim to the extent arising out of or
relating to (i) modifications to any Item made by or on behalf of the
indemnitee where but for such modifications there would have been
no Infringement Claim, (ii) any Intellectual Property that is embodied
or otherwise included in [*****] as of the Effective Date, (iii) any use
of any Service Provider Intellectual Property not in accordance with
this Agreement, (iv) any use of the GHX Exchange in combination
with other products, equipment, software, or data not supplied by
Service Provider if the GHX Exchange can still be used and
infringement can be avoided by not using such other product,
equipment, software or data, or (v) any use of any release of the GHX
Exchange Software or Client Software other than the most current
release made available to the Parties and their Members. With
respect to Third Party Technology, only the indemnity, if any, given by
the developer or manufacturer thereof will apply, and Service
Provider shall not be obligated to provide any indemnity hereunder
for any third party claim to the extent based on such Third Party
Technology.
_________________________
Confidential materials omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote such omission.
-49-
consent, such consent not to be unreasonably withheld or delayed, and (iv)
in the event the indemnifying party elects not to assume the control granted
pursuant to clause (c) above, the indemnified party will have the right,
notwithstanding anything in the preceding clause (iii) to the contrary, to
control the defense and/or settlement of such claim, at the indemnifying
party’s expense. The indemnifying party shall not be required to indemnify
the indemnified party for the cost of the arbitrators’ fees, the allocation of
which is set forth in Section 17.
_________________________
Confidential materials omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote such omission.
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16. AUDIT RIGHTS
16.1 General. Subject to the following provisions of this Section 16, upon
reasonable prior written notice from Novation, Service Provider shall provide
to such third-party auditors as Novation may designate in writing, access
during normal business hours to Service Provider’s applicable facilities and
to appropriate Service Provider management personnel and subcontractors,
and to applicable data and records maintained by Service Provider with
respect to the Services for the purpose of confirming Service Provider’s
compliance with this Agreement. To the extent applicable to the Services
performed by Service Provider, the scope of such audits may include,
without limitation, (i) Service Provider’s practices and procedures, (ii) Service
Provider’s computer systems, (iii) the adequacy of general controls and
security practices and procedures, (iv) the adequacy of disaster recovery and
back-up procedures, (v) any matter necessary to enable Novation to meet
applicable legal or regulatory requirements, (vi) Service Provider’s
compliance with Service Levels and (vii) billing data and records relating to
the Services. Any such audit shall be conducted in a manner so as to
minimize any disruption to Service Provider’s business. Subject to Section
16.6, such audits shall be conducted at the expense of Novation.
16.2 Frequency of Audits. Novation shall not have the right to conduct more than
one audit in any 12-month period.
16.3 Auditors. The auditor conducting such audit shall be subject to the approval
of all the Parties, such approval not to be unreasonably withheld or delayed,
and shall be bound by written confidentiality provisions at least as restrictive
as those contained in this Agreement.
16.4 Record Retention. In order to document the Services and the fees and
expenses paid or payable by Novation under this Agreement, Service
Provider shall retain its standard records and supporting documentation for
the greater of (i) five (5) years or (ii) the period required by applicable law or
(iii) the period under which a claim could be asserted under applicable law
with respect to the transaction to which the records relate.
16.6 Overcharges and Undercharges. If, as a result of any such audit, the auditor
determines that Service Provider has overcharged or undercharged Novation,
Novation, VHA, UHC or HPPI shall notify Service Provider of the amount of
such overcharge or undercharge and Service Provider or Novation, as
applicable, shall promptly pay to the other the amount of the overcharge or
undercharge, plus interest at a rate of 1% per month or the maximum rate
permitted by law, whichever is less, calculated from the date of receipt by
Service Provider of the overcharged or undercharged amount until the date
of payment. If any such audit reveals an overcharge to Novation during any
12-month period exceeding seven
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percent (7%) of Novation’s aggregate fees hereunder for such period, Service
Provider shall reimburse Novation for the reasonable out-of-pocket costs and
expenses incurred for such audit.
16.7 Audit Reports. Service Provider and Novation shall meet to review each audit
report promptly after the issuance thereof and to mutually agree upon the
appropriate manner, if any, in which to respond to the changes suggested by
the audit report.
Except as provided in Section 8.9, all disputes arising out of or in connection with
the execution, interpretation, performance or nonperformance of this Agreement
will be resolved in accordance with the procedures set forth in Article VIII of the GHX
Formation Agreement, mutatis mutandis.
18.1 No Waiver. The delay or omission by any Party to exercise or enforce any
right or power of any provision of this Agreement shall not be construed as a
waiver or relinquishment to any extent of such Party’s right to assert or rely
upon any such provision or right in that or any other instance. A waiver by
any Party of any of the covenants to be performed by any other or any
breach thereof shall not be construed to be a waiver of any succeeding
breach thereof or of any other covenant herein contained.
18.2 Entire Agreement. This Agreement and the Exhibits attached hereto, and the
GHX Formation Agreement, the GHX LLC Agreement, and the Merger
Agreement to the extent specifically referred to in this Agreement, together
constitute the complete and exclusive agreement between the Parties, and
supersede any and all prior agreements of the Parties with respect to the
subject matter hereof. This Agreement and the Exhibits attached hereto may
be amended or modified, or any rights under it waived, only by a written
document executed by all of the Parties.
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description thereof in order to preserve the confidentiality and proprietary
information contained herein.
18.4 Assignment; Successors and Assigns. This Agreement will be binding on the
Parties and their respective successors and permitted assigns. No Party may,
or will have the power to, assign this Agreement without the prior written
consent of all other Parties. Notwithstanding the foregoing, no assignment
made in respect of or as a result of any dissolution of Novation will be
deemed an assignment for which prior consent is required, and such
assignment will be valid (it being understood that this provision does not
supersede the Parties’ rights and obligations under Section 8.3.2).
Notwithstanding the foregoing, nothing shall restrict Service Provider from
performing any of its obligations hereunder and/or in connection with
services provided to Participating Members through any of its wholly-owned
subsidiaries, or through subcontractors in accordance with Section 12 above,
provided that Service Provider remains liable for all performance hereunder.
If to Novation:
Novation, LLC
125 East John Carpenter Freeway
Irving, Texas 75062
Attn: General Counsel
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If to UHC: With a copy to:
University HealthSystem Consortium McDermott Will & Emery LLP
2001 Spring Road, Suite 700 227 West Monroe Street
Oak Brook, Illinois 60523 Chicago, Illinois 60606
Attn: General Counsel Attn: Dean A. Kant, Esq.
18.7 No Agency. Except as otherwise expressly provided herein, the Parties are
independent contractors and will have no power or authority to assume or
create any obligation or responsibility on behalf of each other. This
Agreement will not be construed to create or imply any partnership, agency
(except as expressly provided herein) or joint venture.
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18.8.3 Critical Functions. Notwithstanding anything in this Section 18.8 to
the contrary, upon the occurrence of an event described in Section
18.8.1 that substantially prevents, hinders or delays performance of
services necessary for the performance of “critical functions” of such
Party for more than seven (7) consecutive days, such Party to whom
such affected or delayed performance is due will have the right to
immediately terminate this Agreement. For the purposes of this
Section 18.8.3, “critical functions” means with respect to a Party,
those business functions that are essential and critical to its business
operations or the business operations of its Members.
18.9 Severability. If for any reason a court of competent jurisdiction finds any
provision or portion of this Agreement to be unenforceable, that provision of
the Agreement will be enforced to the maximum extent permissible so as to
effect the intent of the Parties, and the remainder of this Agreement will
continue in full force and effect.
18.11 Headings. Section headings are included for only convenient reference and
do not describe the sections to which they relate.
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applicable, to execute), and deliver to each of the other Parties, the letter
agreement attached hereto as Exhibit P and made a part hereof.
19.1 [*****] and [*****] [*****]. [*****] and [*****] agree, [*****] [*****] [*****]
[*****], that they will [*****] [*****] for the [*****] and [*****] of [*****]
under this Agreement, as follows:
(i) to the extent that any such [*****] or [*****] [*****] [*****] to any
[*****] or [*****] by [*****] or any [*****], [*****] shall [*****]
[*****];
(ii) to the extent that any such [*****] or [*****] [*****] [*****] to any
[*****] or [*****] by [*****] or a [*****], [*****] shall [*****] [*****];
and
(iii) to the extent that the [*****] set forth in (i) and (ii) are not applicable,
[*****] and [*****] shall [*****] [*****] in accordance with a [*****]
[*****] between [*****] and [*****].
19.2 [*****] and [*****] [*****]. Each of [*****] and [*****] hereby [*****] the
following with regard to its [*****] [*****] under this Section 19:
(i) any [*****] to [*****] [*****] to [*****] any other [*****] in [*****]’s
[*****] whatsoever, other than [*****] [*****] [*****] [*****] [*****]
or [*****] with respect to a [*****] described in Section 19.1(i) and
(ii);
(ii) any [*****] [*****] from the [*****], [*****] or [*****] of any [*****]
of [*****], [*****] or [*****] of [*****] or [*****] [*****], or [*****]
one another;
_________________________
Confidential materials omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote such omission.
-56-
Each of [*****]( and [*****] agrees that its [*****], as set forth in Section 19.1, constitutes a
[*****] of [*****] when [*****] and not [*****] [*****].
19.3 [*****] of [*****]. Neither [*****]'s nor [*****]'s [*****] and [*****] under
this Agreement shall be [*****] to any [*****], [*****], [*****], [*****] or
[*****] for any reason, including, without limitation, [*****], and shall not be
[*****] to any [*****] or [*****] whatsoever by reason of the [*****],[*****]
or [*****] of any of its [*****] and [*****] under this Agreement; excluding,
however, any [*****] based upon [*****]’s [*****] to [*****] any of its
[*****] under this Agreement.
_________________________
Confidential materials omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote such omission.
-57-
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date
first above written.
By:________________________________
By:_________________________________
Name:
Name:
Title:
Title:
Date:
Date:
By:______________________________ By:________________________________
Name: Name:
Title: Title:
Date: Date:
By:_______________________________
Name:
Title:
Date:
[SIGNATURE PAGE TO
OUTSOURCING AGREEMENT]
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Exhibit A: Migration Plan
Attached
-59-
Exhibit B: Scope of Services
Attached.
-60-
Exhibit C: Service Levels, Metrics and Performance Credits
Attached.
-61-
Exhibit D: Member-Facing Plan
Attached.
-62-
Exhibit E: Form of Member Agreement
Attached.
-63-
Exhibit F: Reports and Metrics
Attached.
-64-
Exhibit G: Registration and Password Issuance and Protection Procedures
Attached.
-65-
Exhibit H: Intentionally Omitted
-66-
Exhibit I: Novation’s Trademark Usage Guidelines
Attached.
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Exhibit J: Service Provider’s Trademark Usage Guidelines
Attached.
-68-
Exhibit K: VHA’s, UHC’s and HPPI’s Trademark Usage Guidelines
Attached.
-69-
Exhibit L: Intentionally Omitted
-70-
Exhibit M: Pre-Existing Agreements
-71-
Exhibit N: Exceptions to Section 11.1.4
Attached.
-72-
Exhibit O: Guiding Principles
-73-
Exhibit P: Letter Agreement
Attached.
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