INTERCOMPANY SERVICE AGREEMENT
This Intercompany Service Agreement ("Agreement") is entered into as
of this _____ day of _______________, 1998 ("Effective Date"), by and among Blue
Cross & Blue Shield United of Wisconsin, a service insurance corporation
organized pursuant to Ch. 000, Xxxxxxxxx Xxxxxxxx ("XXXXXX"), Xxxxxx Xxxxxxxxx
Services, Inc., an insurance holding company organized pursuant to Ch. 000,
Xxxxxxxxx Xxxxxxxx ("XXX"), and Meridian Resource Corporation, a corporation
organized pursuant to Ch. 180, Wisconsin Statutes ("Meridian Corp") on behalf of
its Investigation and Recovery Services business unit ("Meridian IRS").
RECITALS
WHEREAS, BCBSUW, UWS and Meridian Corp are affiliated corporations,
with Meridian Corp being a wholly owned subsidiary of UWS;
WHEREAS, Meridian IRS is an unincorporated business unit of Meridian
Corp;
WHEREAS, there is an existing service agreement between BCBSUW and UWS
that extends to subsidiaries of UWS (BCBSUW, UWS and its subsidiaries shall
hereinafter be collectively referred to as "BCBSUW/UWS Group"), and this
Agreement is intended to further specify the services, costs, and allocation
methods contemplated by that service agreement;
WHEREAS, Meridian IRS provides subrogation and recovery services,
fraud and abuse investigation services, and collection services to various
companies in the BCBSUW/UWS Group, and Meridian IRS also contracts with outside
entities to provide subrogation and recovery services;
WHEREAS, UWS provides the employees and BCBSUW and UWS collectively
provide the other business resources and services necessary for the continued
operation of Meridian IRS's business;
WHEREAS, by entering into this Agreement, the parties hereto wish to
establish clearly (i) an employee leasing arrangement; (ii) the services and
resources that BCBSUW and UWS will continue to provide to Meridian IRS and that
Meridian IRS will continue to provide to various companies in the BCBSUW/UWS
Group, and the compensation and cost allocations therefor; and (iii) the
respective rights and responsibilities of the parties.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing premises, and of the
mutual covenants hereinafter contained, the parties hereto agree as follows:
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1. LEASE OF EMPLOYEES
a. CLASSIFICATION OF EMPLOYEES.
i. "Direct Employees" are those UWS employees that are assigned to
perform all of their services for Meridian IRS. (Direct Employees may also be
referred to herein as "Employees.")
b. LEASE OF EMPLOYEES.
i. OBLIGATION TO PROVIDE EMPLOYEES. UWS shall provide to Meridian
IRS, to the extent requested by Meridian IRS, the entire requirement of Direct
Employees for use in Meridian IRS's business according to such job descriptions,
qualifications, experience, education, or skills (collectively "Employee
Specifications") as may be specified by Meridian IRS from time to time.
ii. INDEPENDENT HIRING. Notwithstanding Section 1.B.i and Meridian
IRS's present intent to lease Direct Employees from UWS, Meridian IRS shall have
the right, subject to Section 6, to obtain and hire directly any or all
employees from any other sources and on any terms to perform such duties as
Meridian IRS may consider appropriate from time to time. Should Meridian IRS
hire employees from other sources, it will not hire any individual who was a
BCBSUW or UWS Employee leased to Meridian IRS within three (3) months preceding
such hiring, without the written consent of BCBSUW and/or UWS.
iii. HUMAN RESOURCES DEPARTMENT. UWS's Human Resources Department
("Human Resources") shall be responsible for the implementation, management, and
operation of BCBSUW's and UWS's employee leasing obligations under this
Agreement. Employee Specifications shall be retained in the files of Human
Resources, and Meridian IRS shall notify Human Resources at any time of its
intention to change such Employee Specifications for Direct Employees, at which
time Human Resources shall promptly make the requested changes to the Employee
Specifications.
c. OFFICERS. Employment, termination, and terms of employment of all
officers shall be reserved to the full Boards of Directors of BCBSUW and UWS,
provided, however, that while any such individual is leased to Meridian IRS to
perform services as an officer, Meridian IRS will be consulted prior to all
determinations regarding the employment, or terms thereof, of such individuals;
provided, however, that Meridian IRS's input shall be of an advisory nature and
will not be binding on BCBSUW or UWS as the common law employers of such
individuals.
d. EMPLOYMENT RELATIONSHIPS. Human Resources shall establish performance
criteria or standards, which reflect the Employee Specifications supplied by
Meridian IRS, for leased Direct Employees while performing services for Meridian
IRS. Meridian IRS shall advise Human Resources on the performance of Direct
Employees, and shall have the right to request investigation, disciplinary
action, reassignment, and removal of such employees. If at any time Meridian
IRS becomes dissatisfied with the performance of a Direct Employee,
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Meridian IRS shall have the right to reject the continued lease of that
particular employee and request a replacement therefor. BCBSUW and UWS shall
have the exclusive right, however, to direct all BCBSUW and UWS employees,
respectively, as to the manner in which services are to be rendered and
performance goals are to be achieved. BCBSUW and UWS shall be, and shall
have all the privileges, rights, and responsibilities of, common law
employers of all BCBSUW and UWS employees, respectively, including, but not
limited to, establishing work and disciplinary rules, setting compensation
levels, and directing each BCBSUW or UWS Employee as to the manner in which
daily duties are completed, whether or not the employee actually performs
services for BCBSUW, UWS or another company in the BCBSUW/UWS Group.
Employees leased to Meridian IRS pursuant to this Agreement shall remain
employees of BCBSUW or UWS, and shall in no way be treated as or considered
employees of Meridian IRS.
e. NOTIFICATION OF PERSONNEL COST CHANGES. With respect to Direct
Employees performing services for Meridian IRS, if UWS adopts or implements any
change in compensation, employee benefit plans, or any other fringe benefit that
results in higher Total Personnel Costs (as defined at Section 4.a.i) than
those in existence as of the date of this Agreement, UWS shall provide Meridian
IRS with written notice at least 30 days before such change becomes effective
(unless such change is required by law, in which case Meridian IRS will be
notified as soon as possible), describing such new benefit and the projected
increase in the Total Personnel Costs.
2. SERVICES AND OTHER RESOURCES PROVIDED TO MERIDIAN IRS
a. SERVICES AND RESOURCES PROVIDED BY BCBSUW. BCBSUW shall provide to
Meridian IRS, to the extent requested by Meridian IRS and subject to Section 6,
the following services and resources (together "BCBSUW Services"). BCBSUW shall
supply BCBSUW Services only if Meridian IRS has determined not to have its own
employees or third parties furnish the BCBSUW Services, subject to Section 6.
i. OFFICE SPACE AND FACILITIES. Office space and facilities,
including, but not limited to, furniture and equipment, as shall be necessary
or appropriate for the conduct of Meridian IRS's operations.
ii. BUILDING SERVICES. Building services, including, but not
limited to, repair and maintenance of any property and facilities made
available hereunder as shall be necessary to maintain such property and
facilities in good working order, and such other building services as may be
necessary or appropriate for the conduct of Meridian IRS's business.
iii. OFFICE SERVICES. Such office services, including, but not
limited to, warehousing, transportation, stockroom, graphics, printing,
duplicating and forms management, as shall be necessary or appropriate for
the conduct of Meridian IRS's business.
iv. CENTRAL SYSTEMS. Such central systems, including, but not
limited to, management information systems, telecommunications, centralized
mailing, technology
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support and central data base maintenance, as shall be
necessary or appropriate for the conduct of Meridian IRS's business.
v. ADMINISTRATIVE SERVICES. Such administrative services,
including, but not limited to, lobbyist activities, documentation and
training, as shall be necessary or appropriate for the conduct of Meridian
IRS's business.
vi. COMPANY CAR AND TRAVEL. Availability and maintenance of
vehicles for company related travel and such other travel related services as
shall be necessary or appropriate for the conduct of Meridian IRS's business.
b. SERVICES AND RESOURCES PROVIDED BY UWS. UWS shall provide to Meridian
IRS, to the extent requested by Meridian IRS and subject to Section 6, the
following services and resources (together "UWS Services"). UWS shall supply
UWS Services only if Meridian IRS has determined not to have its own employees
or third parties furnish the UWS Services, subject to Section 6.
i. CORPORATE SUPPORT SERVICES. Such corporate support services,
including, but not limited to, corporate compliance, legal, and government
relations, as shall be necessary or appropriate for the conduct of Meridian
IRS's business.
ii. EXECUTIVE SERVICES. Such executive services as shall be
necessary or appropriate for the conduct of Meridian IRS's business.
iii. MARKETING AND COMMUNICATIONS. Such marketing and communications
services, including, but not limited to, public relations and employee community
events, as shall be necessary or appropriate for the conduct of Meridian IRS's
business.
iv. HUMAN RESOURCES. Such human resource services, including, but
not limited to, staffing, labor and employment relations, training and
development, and administration of payroll and employee benefits, as shall be
necessary or appropriate with respect to Employees utilized by Meridian IRS
under this Agreement or otherwise necessary or appropriate for the conduct of
Meridian IRS's business.
v. ACCOUNTING SERVICES. Such accounting, audit, bookkeeping and
financial statement preparation services as shall be necessary or appropriate
for the conduct of Meridian IRS's business.
vi. FINANCIAL SERVICES. Such financial services, including, but not
limited to, cash management, tax, treasury, administration of financial systems,
corporate accounting, and strategic planning/consulting, as shall be necessary
or appropriate for the conduct of Meridian IRS's business.
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vii. OTHER SERVICES. Such other services, including, but not limited
to, those provided by Compcare, Dentacare or Meridian Managed Care, as shall be
necessary or appropriate for the conduct of Meridian IRS's business.
c. STAFFING. BCBSUW and UWS shall both maintain an adequate source of
qualified employees to ensure the acceptable performance of BCBSUW and UWS
Services.
3. SERVICES PROVIDED BY MERIDIAN IRS TO THE BCBSUW/UWS GROUP
a. SERVICES PROVIDED BY MERIDIAN IRS. Meridian IRS shall provide the
following services (together "Meridian IRS Services") to companies in the
BCBSUW/UWS Group, to the extent requested by any such individual company:
i. SUBROGATION AND RECOVERY SERVICES. Such subrogation and recovery
services as shall be necessary or appropriate for the conduct of any company in
the BCBSUW/UWS Group.
ii. FRAUD AND ABUSE INVESTIGATION SERVICES. Such fraud and abuse
investigation services as shall be necessary or appropriate for the conduct of
any company in the BCBSUW/UWS Group.
iii. COLLECTION SERVICES. Such collection services as shall be
necessary or appropriate for the conduct of any company in the BCBSUW/UWS Group.
4. COST ALLOCATION METHODS
a. LEASED EMPLOYEES.
i. TOTAL PERSONNEL COSTS. The term "Total Personnel Costs" shall
include all costs or expenses of whatever nature and from whatever origin
arising out of or related to the maintenance of an Employee. Such term shall
include, but shall not be limited to, the following costs, expenses, and
obligations:
a. salaries, wages, and bonuses;
b. profit sharing;
c. benefit plans;
d. payroll taxes;
e. employee insurance.
ii. ALLOCATION OF PERSONNEL COSTS. To the extent that Direct
Employees are leased to Meridian IRS, Total Personnel Costs associated with a
Direct Employee shall be directly charged to Meridian IRS on a monthly basis.
See Schedule 1.
b. BCBSUW AND UWS SERVICES. To the extent that BCBSUW/UWS Services are
rendered on behalf of or for the benefit of Meridian IRS, costs therefor shall
be allocated to Meridian IRS as follows:
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i. DIRECT CHARGES. Costs associated with those BCBSUW/UWS Services
identified on Schedule 1 shall be directly charged to Meridian IRS on a monthly
basis.
ii. INDIRECT ALLOCATIONS. Cost allocations for those BCBSUW/UWS
Services identified on Schedule 2 ("Schedule 2 Services") shall be determined
annually for the next succeeding Fiscal Year ("Fiscal Year" shall mean January 1
through December 31) on the basis of utilization and cost studies performed by
UWS. Through the use of Indirect Allocation Methods, as described in Schedule 3
attached hereto, utilization of Schedule 2 Services shall be reduced to an
allocation percentage for each company in the BCBSUW/UWS Group. Each month all
costs associated with the utilization of Schedule 2 Services shall be multiplied
by the allocation percentage of Meridian Corp to determine Meridian Corp's
allocable share of costs for Schedule 2 Services. Notwithstanding the
preceding, (i) allocation percentages are subject to interim Fiscal Year
adjustments to allocate more accurately costs based on actual utilization by
each company in the BCBSUW/UWS Group, (ii) costs associated with Schedule 2
Services performed directly for Meridian Corp shall be allocable to Meridian
Corp only, and (iii) subject to approval by the Vice President of Finance for
the BCBSUW/UWS Group, the Indirect Allocation Method used to allocate costs to
Meridian Corp for specific Schedule 2 Services shall be subject to agreement by
the parties on an annual basis.(1) Subsequently, indirect cost allocations to
Meridian Corp shall be allocated to each individual business unit within
Meridian Corp, including Meridian IRS, each month based on the ratio of the
unit's directly charged expenses to the total Meridian Corp directly charged
expenses. Notwithstanding the preceding sentence, costs associated with those
Schedule 2 Services not actually utilized by Meridian IRS, such as cost center
104 for the Meridian Madison office, shall not be allocated to Meridian IRS.
Schedule 2, attached hereto, sets forth Meridian Corp's annual allocation
percentage for costs and expenses associated with Schedule 2 Services. Schedule
2 shall be amended annually.
III. CHARGEBACKS. Costs associated with those BCBSUW/UWS Services
identified on Schedule 4 ("Chargeback Services") either shall be (i) indirectly
allocated to Meridian IRS as discussed in Section 4.b.ii, if the cost is a
general expense for providing the Chargeback Service to all users; or (ii)
directly charged to a Meridian IRS cost center, if the cost is an expense
specific to a Meridian IRS cost center. Thus, costs associated with Chargeback
Services shall be either directly charged or indirectly allocated to Meridian
IRS on a monthly basis, depending on the nature of the cost.
c. MERIDIAN IRS SERVICES. To the extent that Meridian IRS Services are
rendered on behalf of or for the benefit of a company in the BCBSUW/UWS Group
(excluding those companies that separately enter into third party contracts with
Meridian IRS for the provision of such services) costs therefor shall be
allocated to the respective company as follows:
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(1) Before granting approval of any negotiated change to the method of
allocating costs for a particular service, the following factors should be
considered: (i) compliance with FAS rules; (ii) other federal government
contracting implications; and (iii) feasibility.
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i. RECOVERY SERVICES. Each month, the total amount of recoveries
and/or savings (the term "savings" as used in this Section 4.C, shall mean
those costs that a company is not ultimately liable for due to discovery (i) of
a responsible third party, or (ii) that the cost is not covered by the
applicable contract) generated by the subrogation, recovery, and collection
services performed for companies in the BCBSUW/UWS Group pursuant to this
Agreement shall be determined ("Total Recovery Savings"). Subsequently, all
costs and expenses associated with such monthly Total Recovery Savings ("Cost
Center 95 Expenses") shall be allocated to individual companies in the
BCBSUW/UWS Group based on the ratio of recoveries/savings actually realized by
each individual company to the Total Recovery Savings.
ii. FRAUD AND ABUSE INVESTIGATIONS. Each month, the total amount of
recoveries and/or savings generated by the fraud and abuse investigation
services performed for companies in the BCBSUW/UWS Group pursuant to this
Agreement shall be determined ("Total Fraud Savings"). Subsequently, all costs
and expenses associated with such monthly Total Fraud Savings ("Cost Center 90
Expenses") shall be allocated to individual companies in the BCBSUW/UWS Group
based on the ratio of recoveries/savings actually realized by each individual
company to the Total Fraud Savings.
iii. OTHER ALLOCATED COSTS. In addition to costs and expenses
directly attributable to recovery and investigation services, as discussed in
Sections 4.c.i and 4.c.ii, costs and expenses associated with the Director of
Meridian IRS, including general support staff therefor ("Cost Center 92
Expenses"), shall be allocated to companies in the BCBSUW/UWS Group as follows:
Each month, (i) Cost Center 95 Expenses and Cost Center 90 Expenses ("Internal
Meridian IRS Service Costs"), and (ii) costs and expenses associated with
Meridian IRS Services performed pursuant to external third party contracts
("Cost Center 108 Expenses") shall be totaled ("Total Meridian IRS Service
Costs"). Subsequently, Cost Center 92 Expenses shall be allocated to individual
companies in the BCBSUW/UWS Group based on the ratio of Internal Meridian IRS
Service Costs actually allocated to each individual company in the BCBSUW/UWS
Group to the Total Meridian IRS Service Costs.
iv. FEDERAL EMPLOYEE PROGRAM COSTS. Notwithstanding the preceding,
to the extent that Meridian IRS Services are performed with respect to the
Federal Employee Program ("FEP"), cost allocations associated therewith must be
based on specific FEP rules and regulations, and thus, FEP cost allocations
shall be subject to negotiation by the respective parties on a case by case
basis.
d. FEES IN ADDITION TO ALLOCATED COSTS. To the extent that Meridian IRS
leases or utilizes the services of Employees from BCBSUW and/or UWS, and to the
extent that Meridian IRS utilizes BCBSUW/UWS Services, BCBSUW and/or UWS may
charge Meridian IRS a reasonable negotiated fee therefor, as set forth in
Schedule 5. To the extent that Meridian IRS provides Meridian IRS Services to
any company in the BCBSUW/UWS Group pursuant to this Agreement, Meridian IRS may
charge a reasonable negotiated fee therefor, as set forth in Schedule 6.
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5. SUBSTANTIATION OF AND REIMBURSEMENT FOR ALLOCATED COSTS
a. SUBSTANTIATION OF ALLOCATED COSTS. All costs and expenses shall be
allocated in a fair and reasonable manner. BCBSUW, UWS and Meridian IRS shall
maintain reasonable and appropriate operating procedures to allocate costs and
expenses so as to enable each party's independent certified public accounting
firm to audit such costs and the allocation thereof. At the end of each month,
(i) BCBSUW and/or UWS shall provide or make available to Meridian IRS
appropriate documentation respecting the costs and expenses that are allocated,
either directly or indirectly, to Meridian IRS for that month in sufficient
detail to permit Meridian IRS to identify the sources of such charges, and (ii)
Meridian IRS shall provide or make available to the BCBSUW/UWS Group appropriate
documentation respecting the costs and expenses that are allocated to individual
companies in the BCBSUW/UWS Group for that month for Meridian IRS Services in
sufficient detail to permit the identification of the sources of such charges.
b. REIMBURSEMENT FOR ALLOCATED COSTS. At the end of each month, not
later than the 30th day of the following month, (i) Meridian IRS shall promptly
reimburse BCBSUW and/or UWS for all costs and expenses incurred by BCBSUW and/or
UWS in furnishing or obtaining the Employees and Services provided for under
Sections I and II, which amount shall be based on the total of direct charges
and indirect allocations to Meridian IRS for the preceding month, and (ii) any
company in the BCBSUW/UWS Group on whose behalf Meridian IRS Services have been
rendered in the preceding month shall promptly reimburse Meridian IRS for all
costs and expenses incurred by Meridian IRS in furnishing Meridian IRS Services
thereto. Notwithstanding the preceding, the parties reserve the right to offset
amounts due to each other under this Agreement.
6. MODIFICATIONS TO LEASED EMPLOYEES AND BCBSUW/UWS SERVICES
a. MID-CONTRACT YEAR MODIFICATIONS. Each Contract Year, Meridian IRS
shall be required to utilize Employees and BCBSUW/UWS Services budgeted to
Meridian IRS for that Contract Year, unless otherwise negotiated by the parties.
("Contract Year" shall mean January 1 through December 31.) If, at any time
during the Contract Year, Meridian IRS requires employees, services or other
resources in addition to those budgeted to Meridian IRS by BCBSUW and UWS,
Meridian IRS may obtain such employees, services or resources from a source
outside of the BCBSUW/UWS Group only if Meridian IRS's additional needs cannot
be accommodated by BCBSUW or UWS.
b. CONTRACT YEAR RENEWAL MODIFICATIONS. Meridian IRS shall provide
BCBSUW and/or UWS with at least three (3) months' written notice prior to the
next Contract Year (unless the parties mutually agree upon a shorter period) of
its intent to do any of the following:
i. Increase or decrease the number or utilization of Employees or
BCBSUW/UWS Services with respect to the next Contract Year;
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ii. Obtain employees, services or other resources, which are
available either from BCBSUW or UWS, from a party outside the BCBSUW/UWS Group
with respect to the next Contract Year.
c. PROVISION OF SERVICES BY BCBSUW/UWS GROUP. BCBSUW and UWS have the
right to provide Employees and BCBSUW/UWS Services to Meridian IRS either
directly or indirectly, through any company in the BCBSUW/UWS Group. BCBSUW and
UWS may provide employees, services and other resources to Meridian IRS
indirectly through purchase from or contract with a source outside the
BCBSUW/UWS Group ("Outside Services") only with Meridian IRS's consent. Costs
for Outside Services shall be subject to a cost structure negotiated by the
parties hereto.
7. EXECUTION OF ANCILLARY AGREEMENTS
a. RIGHT TO REQUEST EXECUTION OF ANCILLARY AGREEMENTS. In the event of
the Change of Control (as hereinafter defined in this Section) of any party
hereto and while this Agreement remains in effect, BCBSUW, UWS or Meridian IRS
may, for the sole purpose of documenting in more detail the terms and respective
rights and obligations of the parties with respect to Employees and Services
provided hereunder, request that any of the following types of ancillary
agreements be executed by any parties hereto and effected thereby:
1. Employee Lease Agreement;
2. Office and Equipment Lease;
3. Management Information Systems Agreement;
4. Service Agreement(s); or
5. Any other Agreement deemed necessary or expedient by the parties
(together "Ancillary Agreements").
The terms of any executed Ancillary Agreement shall (i) be subject to
negotiation of the respective parties, and (ii) control in case of any conflict
with Sections 1 through 6 of this Agreement. Executed Ancillary Agreements
shall be attached to this Agreement as amendments hereto. "Change of Control"
for purposes of this section shall mean an event whereby a person, group, or
entity that is not affiliated with the BCBSUW/UWS Group purchases all or
substantially all of the assets or acquires the ownership of 50% or more of the
voting stock of a party hereto.
b. EFFECT OF A REQUEST TO EXECUTE. If any party hereto requests the
execution of an Ancillary Agreement ("Requesting Party"), the parties shall have
sixty 60 days (unless the parties hereto mutually agree to a different period)
to negotiate and execute the Ancillary Agreement, during which time the parties
hereto shall remain obligated to perform in accordance with the terms of this
Agreement. If after 60 days (unless a different period is mutually agreed upon
by the parties hereto) the requested Ancillary Agreement has not been
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executed, the Requesting Party may terminate this Agreement in accordance
with Section 9.b.ii. The parties hereby agree that any negotiations subject
to this Section 7.b shall be performed in good faith and every reasonable
effort shall be made to effect the execution of a requested Ancillary
Agreement.
8. ADDITIONAL COVENANTS
a. AVAILABILITY OF RECORDS. BCBSUW, UWS and Meridian IRS shall make
available to each other, for inspection, examination and copying, all of its
books and records pertaining to the Employees, BCBSUW/UWS Services, and Meridian
IRS Services provided under this Agreement each Contract Year:
i. At all reasonable times at the principal places of business of
BCBSUW, UWS, and Meridian IRS, or at such other place as the parties hereto may
otherwise agree to and designate;
ii. In a form maintained in accordance with generally accepted
accounting principles and with any other general standards or laws applicable to
such book or record;
iii. For a term of at least five (5) years, from the end of each
Contract Year, irrespective of the termination of this Agreement.
b. CONFIDENTIALITY.
i. The parties acknowledge and agree that they may deliver to each
other information about themselves and their business which is nonpublic,
confidential or proprietary in nature. All such information, regardless of the
manner in which it is delivered, is referred to as "Proprietary Information."
However, Proprietary Information does not include information which 1. is or
becomes generally available to the public other than as a result of a disclosure
by the other party, 2. was available to the other party on a nonconfidential
basis prior to its disclosure by the disclosing party, or 3. becomes available
to the other party on a nonconfidential basis from a person other than by the
disclosing party. Unless otherwise agreed to in writing by the disclosing
party, the other party shall a. except as required by law, keep all Proprietary
Information confidential and not disclose or reveal any Proprietary Information
to any person other than those employed by the other party, or who is actively
and directly participating in the performance under this Agreement on behalf of
the other party ("Involved Persons"); b. cause each Involved Person to keep all
Proprietary Information confidential and not disclose or reveal any Proprietary
Information to any person other than another Involved Person; and c. not use the
Proprietary Information, and ensure that each Involved Person does not use the
Proprietary Information, for any purpose other than in connection with the
performance under this Agreement.
ii. Upon termination of this Agreement for any reason whatsoever,
each party shall promptly surrender and deliver to each other party all records,
materials, documents, data and any other Proprietary Information of the other
parties and shall not retain
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any description containing or pertaining to any Proprietary Information of
the other parties, unless otherwise consented to in writing by a duly
authorized officer of BCBSUW, UWS or Meridian IRS as the case may be.
c. COVENANT NOT TO COMPETE. BCBSUW and UWS agree that no company in the
BCBSUW/UWS Group (excluding Meridian Corp) will directly compete with the
products or markets of Meridian IRS during the term of this Agreement. BCBSUW
and UWS further agree that for a period of two (2) years following the
termination of this Agreement for any reason, no company in the BCBSUW/UWS Group
(excluding Meridian Corp) will directly compete with Meridian IRS in any market
in which Meridian IRS operates or does business at the termination of this
Agreement.
d. COOPERATION. The parties hereto will fully cooperate with each other
and their respective counsel, if any, agents and accountants in connection with
any action to be taken in the performance of their obligations under this
Agreement. In the conduct of their affairs and the performance of this
Agreement the parties hereto shall, unless otherwise agreed, maintain the
working relationships of the parties on substantially the same terms as before
the execution of this Agreement. Notwithstanding the preceding, the parties do
not intend, nor should this Agreement be construed, to restrict any party's
ability to contract with any other person or entity to provide services similar
to or the same as those which are the subject of this Agreement.
9. TERM AND TERMINATION
a. TERM. This Agreement shall commence on the Effective Date and shall
automatically renew annually therefrom until such time as otherwise terminated
pursuant to Section 9.b.
b. TERMINATION.
i. This Agreement may be terminated by any party at any time by
giving one (1) years advance written notice to the nonterminating parties of its
intention to terminate.
ii. This Agreement may be terminated pursuant to Section 7.b by the
Requesting Party giving three (3) months advance written notice to the
nonterminating parties of its intention to terminate.
iii. This Agreement shall terminate immediately at the election of and
upon written notice from the non-defaulting party in the event of any of the
following:
(1) A party hereto becomes incapable of fully performing
its duties and obligations according to the terms of this
Agreement for the following reason(s): insolvency, bankruptcy,
or substantial cessation or interruption of its business
operations for any reason whatsoever;
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(2) A party hereto commits fraud or gross negligence in
performing its obligations under this Agreement;
HOWEVER, if the defaulting party provides the non-defaulting parties with prompt
notice of the event of default, the defaulting party shall have 30 days to cure
the defect, during which time the non-defaulting parties may not exercise the
termination right under this Section 9.b.iii.
iv. Liabilities After Termination. The termination of this Agreement
shall not limit the obligation or liabilities of any party hereto incurred but
not discharged prior to termination.
10. INDEMNIFICATION
a. INDEMNIFICATION BY MERIDIAN IRS.
i. Notwithstanding anything to the contrary in this Agreement,
neither BCBSUW, UWS, nor any other company in the BCBSUW/UWS Group (other than
Meridian Corp), nor any person who is or was, at the time of any action or
inaction affecting Meridian IRS, a director, officer, employee or agent of
BCBSUW, UWS or any other company in the BCBSUW/UWS Group (other than Meridian
Corp) (collectively "Indemnitees") shall be liable to Meridian IRS for any
action or inaction taken or omitted to be taken by such Indemnitee; PROVIDED,
HOWEVER, that such Indemnitee acted (or failed to act) in good faith and such
action or inaction does not constitute actual fraud, gross negligence or willful
or wanton misconduct.
ii. Meridian IRS shall, to the fullest extent not prohibited by law,
indemnify and hold harmless each Indemnitee against any liability, damage, cost,
expense, loss, claim or judgment (including, without limitation, reasonable
attorneys' fees and expenses) resulting to, imposed upon or incurred by such
Indemnitee a. in connection with any action, suit, arbitration or proceeding to
which such Indemnitee was or is a party or is threatened to be made a party by
reason of the Employees and BCBSUW/UWS Services provided to Meridian IRS
hereunder; PROVIDED, HOWEVER, that such Indemnitee acted (or failed to act) in
good faith and such action or inaction does not constitute actual fraud, gross
negligence or willful or wanton misconduct, or b. by reason of, arising out of
or resulting from any breach or misrepresentation by Meridian IRS under this
Agreement.
b. INDEMNIFICATION BY BCBSUW AND UWS.
i. Notwithstanding anything to the contrary in this Agreement,
neither Meridian Corp (as used in this Section 10.b, Meridian Corp shall include
Meridian IRS), nor any person who is or was, at the time of any action or
inaction affecting the BCBSUW/UWS Group (other than Meridian Corp), a director,
officer, employee or agent of Meridian Corp (collectively "Indemnitees") shall
be liable to any company in the BCBSUW/UWS Group for any action or inaction
taken or omitted to be taken by such Indemnitee; PROVIDED, HOWEVER, that such
Indemnitee acted (or failed to act) in good faith and
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such action or inaction does not constitute actual fraud, gross negligence or
willful or wanton misconduct.
ii. BCBSUW and UWS, jointly and severally, hereby agree to indemnify
and hold harmless, to the fullest extent not prohibited by law, each Indemnitee
against any liability, damage, cost, expense, loss, claim or judgment
(including, without limitation, reasonable attorneys' fees and expenses)
resulting to, imposed upon or incurred by such Indemnitee a. in connection with
any action, suit, arbitration or proceeding to which such Indemnitee was or is a
party or is threatened to be made a party by reason of the Meridian IRS Services
provided to the BCBSUW/UWS Group hereunder; PROVIDED, HOWEVER, that such
Indemnitee acted (or failed to act) in good faith and such action or inaction
does not constitute actual fraud, gross negligence or willful or wanton
misconduct, or b. by reason of, arising out of or resulting from any breach or
misrepresentation by BCBSUW or UWS under this Agreement.
11. MISCELLANEOUS
a. ASSIGNMENT. Neither this Agreement nor any rights or obligations
hereunder may be assigned or transferred by any of the parties hereto without
the prior written consent of the other parties. A Change of Control shall be
deemed an assignment requiring the consent of the other parties hereto.
b. AMENDMENT. The parties recognize that it may be desirable to alter
the terms of this Agreement in the future to take into account such events or
conditions as may from time to time occur. Any amendments to this Agreement
shall be in writing and shall be executed by all parties; however, Ancillary
Agreements need only be executed by the parties affected thereby.
c. WAIVER; REMEDIES. No failure or delay of a party in exercising any
power or right hereunder shall operate as a waiver thereof, nor shall any single
or partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other right or power. In
addition to any rights granted herein, the parties hereto shall have and may
exercise any and all rights and remedies now or hereafter provided by law except
as may be limited by Section 11.d of this Agreement.
d. RESOLUTION OF DISPUTES.
i. INFORMAL RESOLUTION.
(1) Coordinating Committee: Any conflicts or disputes
regarding 1. occupancy, utilization or delivery of BCBSUW/UWS
Services, or scheduling, performance and utilization of
Employees necessary for the conduct of Meridian IRS's
business, or 2. utilization or delivery of Meridian IRS
Services, shall be submitted to a coordinating committee for
resolution. The coordinating committee shall consist of three
(3)
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persons, each of whom shall 1. represent the respective
interest of a party hereto, and 2. be mutually agreed upon by
the parties hereto. If the coordinating committee is unable
to unanimously resolve the dispute, then the parties hereto
may resort to the dispute resolution process provided for in
Section 11.d.ii.
(2) Audit Committee: Any conflicts or disputes
regarding allocation methods, allocated costs, offsets, fees
or any matter related thereto shall be submitted to an audit
committee for resolution. The audit committee shall consist
of three (3) persons, each of whom shall 1. represent the
respective interest of a party hereto, and 2. be mutually
agreed upon by the parties hereto. If the audit committee is
unable to unanimously resolve the dispute, then the parties
hereto may resort to the dispute resolution process provided
for in Section 11.d.ii.
ii. FORMAL RESOLUTION.
(1) Any dispute, controversy or claim between or among
the parties hereto that arises out of or relates to this
Agreement or any Ancillary Agreement entered into pursuant
hereto, and which otherwise has been unresolved by a
coordinating committee pursuant to Section 11.d.i.(1) or an
audit committee pursuant to Section 11.d.i.(2) shall be settled
by arbitration. In order to initiate an arbitration, BCBSUW,
UWS or Meridian IRS (as the case may be) shall deliver a
written notice of demand for arbitration to the other affected
party(ies). Within thirty (30) days of the giving of such
written notice, each party involved shall appoint an
individual as arbitrator (the "Party Arbitrators"). Within
thirty (30) days of their appointment, the Party Arbitrators
shall collectively select one (or two if necessary to
constitute an odd total number of arbitrators) additional
arbitrator (together the "Panel Arbitrators") and shall give
the parties involved notice of such choice.
(2) The arbitration hearings shall be held in Milwaukee,
Wisconsin. Each party shall submit its case to the Panel
Arbitrators within sixty (60) days of the selection of the
Panel Arbitrators or within such longer period as may be
agreed by the Panel Arbitrators. The decision rendered by a
majority of the Panel Arbitrators shall be final and binding
on the parties involved. Such decision shall be a condition
precedent to any right of legal action arising out of the
arbitrated dispute. Judgment upon the award rendered may be
entered in any court having jurisdiction thereof.
(3) Each involved party shall a. pay the fees and
expenses of its own Party Arbitrator, and pay its own legal,
accounting, and other professional fees and expenses, b.
jointly share in the payment of the
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fees and expenses of the other one (or two) arbitrator(s)
selected by the Party Arbitrators, and c. jointly share in the
payment of the other expenses jointly incurred by the involved
parties directly related to the arbitration proceeding.
(4) Except as provided above, the arbitration shall be
conducted in accordance with the Commercial Arbitration Rules
of the American Arbitration Association.
e. NOTICES. All notices, requests, demands, and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
delivered personally, or if mailed (by registered or certified mail, postage
prepaid, return receipt requested), or if transmitted by facsimile or e-mail,
as follows:
1. If to BCBSUW:
Xx. Xxxxx Xxxxxxxx
Blue Cross & Blue Shield United of Wisconsin
0000 Xxxxx XxxxxXxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Facsimile Telephone Number: (000) 000-0000
With copies to:
Xx. Xxxxx Xxxxxxx
Blue Cross & Blue Shield United of Wisconsin
X00X00000 Xxxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxx 00000
Facsimile Telephone Number: (000) 000-0000
2. If to UWS:
Mr. C. Xxxxxx Xxxxx
United Wisconsin Services, Inc.
000 Xxxx Xxxxxxxx Xxxxxx
X.X. Xxx 0000
Xxxxxxxxx, Xxxxxxxxx 00000-0000
Facsimile Telephone Number: (000) 000-0000
3. If to Meridian IRS:
Xx. Xxxxx Xxxxxxxxx
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Meridian Resource Corporation
000 Xxxx Xxxxxxxx Xxxxxx
X.X. Xxx 0000
Xxxxxxxxx, Xxxxxxxxx 00000-0000
Facsimile Telephone Number: (000) 000-0000
Any notice or other communication given as provided in this Section 11.e, shall
be deemed given upon the first business day after actual delivery to the party
to whom such notice or other communication is sent (as evidenced by the return
receipt or shipping invoice signed by a representative of such party or by the
facsimile confirmation or e-mail return receipt). Any party from time to time
may change its address for purpose of notices to that party by giving a similar
notice specifying a new address.
f. RELATIONSHIP OF THE PARTIES. Negotiations relating to this Agreement
have occurred and shall continue to be carried out on an arm's length basis.
Further, the employees, services and other resources contemplated by this
Agreement shall be provided to Meridian IRS on an independent contractor basis.
Nothing in this Agreement shall be construed to create an employer-employee
relationship between Meridian IRS and Employees or any of the parties hereto.
g. ENTIRE AGREEMENT. This Agreement, including the schedules and
exhibits referred to herein constitute the entire understanding and agreement of
the parties hereto and supersede all prior agreements and understandings,
written or oral, between the parties with respect to the transactions
contemplated herein. Provided, however, the foregoing shall not operate or be
construed to prohibit proof of prior understandings and agreements between or
among the parties to the extent necessary to properly construe or interpret this
Agreement. Notwithstanding the preceding, the parties acknowledge that there
are, and/or may be in the future, any number of independent third party
contracts between various companies in the BCBSUW/UWS Group for various services
and/or business arrangements, and any such contracts, whether written or oral,
shall survive the execution of this Agreement and any renewal hereof.
h. HEADINGS. The headings used in this Agreement have been inserted for
convenience and do not constitute matter to be construed or interpreted in
connection with this Agreement.
i. NO THIRD PARTY BENEFICIARIES. This Agreement is only for the benefit
of the parties hereto and does not confer any right, benefit, or privilege upon
any person or entity not a party to this Agreement.
j. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Wisconsin (without giving effect to
principles of conflicts of laws) as to all matters, including, without
limitation, matters of validity, construction, effect, performance and remedies.
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k. SEVERABILITY. If any provision of this Agreement is held to be
illegal, invalid, or unenforceable under any present or future law, and if the
rights or obligations of any party under this Agreement will not be materially
and adversely affected thereby, 1. such provision will be fully severable, 2.
this Agreement will be construed and enforced as if such illegal, invalid, or
unenforceable provision had never comprised a part hereof, 3. the remaining
provisions of this Agreement will remain in full force and effect and will not
be affected by the illegal, invalid, or unenforceable provision or by its
severance herefrom, and 4. in lieu of such illegal, invalid, or unenforceable
provision, there will be added automatically as part of this Agreement, a legal,
valid, and enforceable provision as similar terms to such illegal, invalid, or
unenforceable provision as may be possible.
l. COUNTERPARTS. This Agreement may be executed simultaneously in any
number of counterparts, each of which will be deemed an original, but all of
which will constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized representatives as of the Effective Date.
BLUE CROSS BLUE SHIELD UNITED OF WISCONSIN
By:
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Title:
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By:
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Title:
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UNITED WISCONSIN SERVICES, INC.
By:
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Title:
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ON BEHALF OF MERIDIAN IRS, MERIDIAN RESOURCE CORPORATION
By:
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Title:
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