Exhibit 10.4
AGREEMENT BETWEEN
UNITED PAYORS & UNITED PROVIDERS, INC.
AND
HEALTHEXTRAS, INC.
This Agreement is made this 22nd day of December, 1999 by and between United
Payors & United Providers, Inc. ("UP&UP"), a Delaware Corporation, and
HealthExtras, Inc. ("HE"), a Delaware corporation, and shall be deemed effective
as of January 1, 2000.
RECITALS
Whereas, UP&UP has various administrative and technical capabilities that
were utilized during 1999 to support HE operations; and
Whereas, HE utilized UP&UP administrative and technical services in the
development and operation of HE businesses during 1999; and
Whereas, HE wishes to continue to utilize the technical services in the area
of Information Technology, Communications Networking, and Internet Services; and
Whereas, HE wishes to transition the administrative services support
provided in 1999 from UP&UP to HE by March 31, 2000.
Now, Therefore, in consideration of the mutual agreements and covenants
herein contained, UP&UP and HE agree as follows:
A. GENERAL UNDERSTANDINGS
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1. HE intends to transition all administrative functions from UP&UP to HE
by March 31, 2000.
2. HE will utilize the technical support services of UP&UP in the area of
Information Technology, Communications Network and Internet Services.
These services include building and supporting a communications grid,
establishing a computer based network of hardware and application
software and the providing of such necessary day to day operations
and technical support as outlined in Exhibit A.
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B. UP&UP RESPONSIBILITIES
----------------------
1. UP&UP shall to make available, all appropriate staff as may be
necessary to support the transition of the administrative services
function by March 31, 2000.
2. UP&UP shall provide on-going technical, computer, facilities support
under the terms of this Agreement. UP&UP and HE will meet on a
quarterly basis (or more frequently if necessary) to set goals and
tasks to be accomplished during the term of this Agreement.
C. COMPENSATION AND PAYMENT
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1. UP&UP shall be compensated by HE for its efforts associated with the
provisions of the services pursuant to this Agreement on a cost plus
fee basis. Such shall be calculated based on direct cost incurred
plus overhead and general administrative rate of 30% plus a fixed fee
of 18% applicable to direct costs.
2. HE shall compensate UP&UP for access to shared computer and
communication grid infrastructure, software and maintenance. In
general, HE will be charged for such access based upon proportional
usage and total cost incurred. The compensation payable to UP&UP
shall include a margin of 18% which will be added to actual costs
allocated.
The initial year of the contract shall be based on actual allocated
costs of $364,000. This amount shall be adjusted in year one only
upon a material variance from the total allocation percentages
applicable to HE of 35% for computer infrastructure and maintenance
and 22% for the communications grid, respectively. This initial
compensation term shall commence not later than April 1, 2000.
D. PAYMENTS AND AUDIT
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1. UP&UP shall invoice HE on a monthly basis with sufficient accounting
details supporting the billing to HE.
E. TERM
----
1. This Agreement is effective January 1, 2000 and shall terminate on
December 31, 2002. Any payments due UP&UP under the terms of this
agreement shall survive the termination of this Agreement.
2. During the term of this Agreement HE may unilaterally terminate this
Agreement at any time by providing UP&UP ninety (90) days written
notice of such termination.
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3. In the event of termination, UP&UP shall support the transition of
HE's systems and communication requirements in a timely and
professional manner. All services provided during such a transition
shall be paid for by HE pursuant to Section C.1 above.
F. NON-SOLICITATION
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1. During the term of this Agreement, and for a period of one year from
the date of termination of this Agreement, HE shall not solicit, hire,
contract with or otherwise utilize, or attempt to utilize UP&UP
employees or consultants, unless otherwise mutually agreed upon.
2. During the term of this Agreement, UP&UP shall not solicit, hire,
contract with or otherwise utilize, or attempt to utilize, HE
employees or consultants unless otherwise mutually agreed upon.
G. CONFIDENTIALITY
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1. HE and UP&UP acknowledge that in fulfilling the responsibilities set
forth in this Agreement, HE and UP&UP shall exchange confidential and
proprietary information concerning business and financial affairs of
HE and UP&UP, their subsidiaries and other affiliated companies. HE
and UP&UP agree not to disclose any such information at any time,
except as necessary to employees or agents of the parties as required
by law.
2. HE and UP&UP agree that at any time, upon the request of the other,
each will promptly return any and all written or magnetic media
material containing, or reflecting, any confidential or proprietary
business or financial information and will not retain any copies,
extracts, or other reproductions in whole or in part of such material.
H. ARBITRATION
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1. HE and UP&UP shall attempt to resolve any controversy or claim
arising out of, or relating to, this Agreement by mutual cooperation.
Any controversy or claim arising out of, or relating to, this
Agreement which cannot be settled by the mutual cooperation of the
parties shall be settled by binding arbitration rendered by the
American Arbitration Association standard commercial rules of
arbitration.
2. In all cases submitted to arbitration, HE and UP&UP agree to share
equally the administrative fee, as well as the Arbitrator's fees, if
any, unless otherwise assessed by the Arbitrator. The Arbitrator's
fee shall be advanced by the initiating party subject to final
apportionment by the Arbitrator in his or her award.
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III. INDEMNIFICATION
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1. HE shall indemnify and hold harmless UP&UP and its officers,
employees, agents and affiliates against any and all claims, actions,
expenses and liabilities (including reasonable attorneys fees) related
to any breach of HE's obligations unless the claim, action, expense
or liability is found in a final judgment by a court of competent
jurisdiction (not subject to further appeal) to have resulted
directly and solely from UP&UP's performance under this Agreement.
2. UP&UP shall indemnify and hold harmless HE and its officers,
employees, agents and affiliates against any and all claims,
actions, expenses and liabilities (including reasonable attorneys
fees) related to or arising from any breach of UP&UP's obligations
unless the claim, action, expense or liability is found in a final
judgment by a court of competent jurisdiction (not subject to further
appeal) to have resulted directly and solely from HE's performance
under this Agreement.
J. MODIFICATIONS
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1. All amendments or modifications to this Agreement shall be mutually
agreed to in writing by HE and UP&UP.
K. GOVERNING LAW
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1. This Agreement shall be governed in all respects by the laws of the
State of Delaware.
L. SEVERABILITY OF INVALID PROVISIONS
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1. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under any state or federal laws
effective during this term, such provision shall be fully severable.
The Agreement shall be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised
a part hereof, and the remaining provisions shall remain in full
force and effect despite such severance, unless this Agreement is
terminated by either party in accordance with the terms of this
Agreement, provided that the invalid provision is not material to
the overall purpose and operation of this Agreement.
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M. WAIVER
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1. The waiver by HE or UP&UP of any breach of any provision of this
Agreement or warranty or representation herein set forth shall not be
construed as a waiver of any subsequent breach of the same or any
other provision.
2. The failure to exercise any right under this Agreement shall not
operate as a waiver of such right. All rights and remedies
provided for under this Agreement are cumulative.
N. HEADINGS
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1. The headings in this Agreement are for convenience of reference only
and shall not be considered in construing the provisions hereof.
O. ENTIRE AGREEMENT
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1. This Agreement contains all of the terms and conditions agreed
upon by HE and UP&UP regarding the subject matter of this Agreement.
Any prior agreements, promises, negotiations, or representations,
either oral or written, relating to the subject matter of this
Agreement that are not expressly set forth in this Agreement are
of no force and effect.
P. EMPLOYEES ON OTHER PARTY'S PREMISES
------------------------------------
1. The employees or authorized agents of HE and UP&UP shall comply
with the other party's working rules and security regulations
at such time as one party's employees may be on the premises of the
other party.
Q. NOTICE OF DEFICIENCY
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1. If either HE or UP&UP, in the opinion of the other, fails to comply
with one or more terms and conditions of this Agreement, the aggrieved
party shall give written notice of deficiency to the other party. The
party receiving such notice shall have thirty (30) days from the
receipt thereof to remedy the deficiency in order to comply with
the terms and conditions of this Agreement. In the event said
default is not cured within the thirty-day period, the non-defaulting
party may terminate the Agreement immediately.
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R. NOTICES
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1. All notices provided by this Agreement shall be in writing
and shall be sent by United States certified mail, postage prepaid,
to the address of the other party which is set forth in this Agreement,
or to such other address as the party shall designate in writing. Any
notice shall be deemed to be effective upon mailing.
If to HE, attention of: Xxxxxxx X. Xxxxxxx
Chief Financial Officer
HealthExtras, Inc.
0000 Xxxxxxxx Xxxxxxxxx, 0xx Xxxxx
Xxxxxxxxx, XX 00000
If to UP&UP, attention of: Xxxxxx X. Xxxx
Corporate Secretary
United Payors & United Providers, Inc.
0000 Xxxxxxxx Xxxxxxxxx, 0xx Xxxxx
Xxxxxxxxx, XX 00000
S. BINDING ON SUCCESSORS
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1. This Agreement shall be binding upon and inure to the benefit of HE
and UP&UP and their respective successors and permitted assigns.
T. ASSIGNMENT
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1. This Agreement may not be assigned by either party without the
prior written approval of the other party.
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U. INDEPENDENT RELATIONSHIP
------------------------
1. None of the provisions of this Agreement are intended to create,
nor shall be deemed or construed to create, any relationship between
HE and UP&UP other than that of independent entities contracting
with each other solely for the purposes of effecting the provisions of
this Agreement. The parties to this Agreement, and their respective
officers, directors, or employees, shall not be construed to be joint
ventures, or the agent, employee, or representative of the other,
except as specifically provided in this Agreement.
2. The parties to this Agreement, and their respective officers,
directors, or employees, shall not be construed to be joint ventures,
or the agent, employee, or representative of the other, except as
specifically provided in this Agreement.
IN WITNESS WHEREOF, the undersigned have executed this Agreement.
HE: HEALTHEXTRAS, INC.
December 22, 1999 By: Xxxxxxx X. Xxxxxxx
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Date Signature: /s/ Xxxxxxx X. Xxxxxxx
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Title: Chief Financial Officer
UP&UP: UNITED PAYORS & UNITED PROVIDERS, INC.
December 23, 1999 By: Xxxxxx X. Xxxx
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Date Signature: /s/ Xxxxxx X. Xxxx
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Title: Corporate Secretary
