Exhibit 10.4.1
AMENDED AND RESTATED
ADMINISTRATIVE SERVICES AGREEMENT
ADMINISTRATIVE SERVICES AGREEMENT, dated as of August 8, 1994,
is entered into by and between BLUE CROSS AND BLUE SHIELD OF
MISSOURI, a Missouri not-for-profit corporation ("BCBSMO"), and
RIGHTCHOICE MANAGED CARE, INC., a Missouri corporation
("RightCHOICE").
WITNESSETH
WHEREAS, BCBSMo, RightCHOICE and Healthy Alliance Life
Insurance Company, a Missouri corporation ("HALIC"), are parties
to that certain Reorganization Agreement, dated as of August 8,
1994 (the "Reorganization Agreement");
WHEREAS, the Reorganization Agreement provides for the
transfer of certain assets and business from BCBSMo to HALIC and
from BCBSMO to RightCHOICE upon the effective date of that
Agreement (the "Reorganization");
WHEREAS, the Reorganization will result in BCBSMo needing
certain services so as to allow it to continue to offer the
Retained Products; and the Reorganization will result in
RightCHOICE needing certain services from BCBSMo.
WHEREAS, RightCHOICE wishes to make available those
services which BCBSMo will require; and BCBSMo wishes to make
available those services which RightCHOICE will require;
WHEREAS, it is a condition precedent to the terms of the
Reorganization Agreement that the parties hereto enter into this
Agreement;
WHEREAS, the parties hereto desire to satisfy such condition
by entering into this Agreement pursuant to which the parties
will provide certain services to each other.
NOW, THEREFORE, in consideration of the foregoing premises
and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I
DEFINITIONS AND CONSTRUCTION
SECTION 1.01. Definitions. Capitalized words and terms
used herein and not otherwise defined shall have the meanings
assigned to such words in the Reorganization Agreement. In
addition, the following words and terms shall have the following
meanings:
"Agreement" means this Amended and Restated Administrative
Services Agreement, dated as of August 8, 1994, by and between
BCBSMO and RightCHOICE, together with all duly authorized
amendments hereto.
"Confidential Information" means any information, whether or
not reduced to writing, used by or belonging or relating to
BCBSMo, including, without limitation, any and all business or
trade secrets, information relating to BCBSMo's employees,
arrangements with any person, firm or company, information as to
expenses, sales, revenues and other financial information
concerning BCBSMo, and information concerning methods,
techniques, procedures and facilities employed by BCBSMO in the
development, production, distribution, marketing and sales of
BCBCMo's business, products and services, except information
which is or becomes generally available to the public other than
as a result of communication or disclosure by RightCHOICE or
RightCHOICE's Representatives.
"Person" means a partnership, a joint venture, a
corporation, a trust, a limited liability company, an
unincorporated organization and a government or any department or
agency thereof.
"Reorganization Agreement" means that certain Reorganization
Agreement, dated as of August 8, 1994, by and among BCBSMo,
RightCHOICE and HALIC, together with all duly authorized
amendments thereto.
"Representatives" means all agents, employees,
representatives, directors, officers, affiliates and financial,
Legal and other advisors of a Person, all entities affiliated
with such Person, and the agents, employees, representatives,
directors, officers, affiliates and financial, legal and other
advisors of such affiliated entities.
"Retained Products" means those services and products for
which the right to offer to individuals or groups of individuals
was not transferred from BCBSMo to RightCHOICE or HALIC pursuant
to the terms of the Reorganization Agreement.
"Subsequent Software Enhancements" means at any moment in
time during the term of this Agreement, all of the computer
software programs and procedures, and all related documentation,
in any and every form, then owned by or licensed to RightCHOICE;
provided, however, that the Subsequent Software Enhancements
shall not include either (i) the Core Software or (ii) the
Software Enhancements.
"Subsidiary" means any Person at least fifty percent of the
capital stock of any class of which shall, at the time as of
which any determination is being made, be owned by RightCHOICE
either directly or through Subsidiaries.
SECTION 1.02. Construction. In this Agreement, unless the
context otherwise requires:
(a) Articles and Sections referred to by number shall
mean the corresponding Articles and Sections of this
Agreement.
(b) The terms "hereby," "hereof," "hereto," "herein,"
"hereunder," and any similar terms, as used in this
Agreement
refer to this Agreement, and the term "hereafter" shall
mean after, and the term "heretofore' shall mean before the
date of execution of this Agreement.
(c) Words of the masculine gender shall be deemed and
construed to include correlative words of the feminine and
neuter genders. Words importing the singular singular
shall include the plural number and vice versa, and words
importing persons shall include corporations and
associations, including public bodies, as well as natural
persons.
ARTICLE II
PROVISION OF SERVICES AND SOFTWARE
SECTION 2.01. Services Provided by RightCHOICE. For the
term of this agreement, BCBSMo will engage the services of
RightCHOICE with respect to, and upon the request of BCBSMO,
RightCHOICE will or will cause its Subsidiaries to perform, the
following functions, as well as others which may be mutually
agreed upon from time to time, as necessary or appropriate to
enable BCBSMo to continue to offer the Retained Products and
conduct its other businesses, unless otherwise mutually agreed to
by the parties:
(a) Medical claims benefits administration,
(b) Utilization management services,
(c) Medical claims review,
(d) Payroll services,
(e) Electronic data processing services,
(f) Community affairs and public relations services,
(g) Financial reporting and accounting services,
(h) Cash management and investment administration,
(i) Advertising, sales promotion and publication of
reports,
(j) Employee benefits administration,
(k) Services related to employment and discharge of
personnel,
(l) Preparation of tax returns,
(m) Regulatory agency services,
(n) Purchase and delivery of supplies,
(o) Mail service,
(p) Telecommunications services,
(q) Billing and collection of premiums,
(r) Computer support and central data base
maintenance,
(s) Actuarial services,
(t) Marketing services for the various products
offered by BCBSMO,
(u) Plan performance reporting,
(v) BCBSA license services,
(w) Office and building services, and
(x) Sublease of office space, as provided for in the
Sublease attached as Exhibit 1.
SECTION 2.02. Services Provided by BCBSMo. For the term
of this Agreement, RightCHOICE will engage the services of BCBSMo
with respect to, and upon the request of RightCHOICE, BCBSMo will
perform the following functions, as well as others, as necessary
or appropriate to enable RightCHOICE to offer its products and
conduct its other businesses unless otherwise mutually agreed to
by the parties:
(a) Community Relations Program,
(b) Municipal Relations Program,
(c) Plan Reporting to BCBSA,
(d) Such additional services as nay be agreed to from
time to time.
SECTION 2 03. Software Licenses and Fees.
(a) RightCHOICE hereby grants to BCBSMo for the term
of this Agreement a nonexclusive license to use all of the
Software Enhancements and all of the Subsequent Software
Enhancements. During the term of this Agreement, BCBSMO shall pay
a software license fee to RightCHOICE in the amount of $10,000
per month for use of the Software Enhancements and the Subsequent
Software Enhancements.
(b) BCBSMo hereby grants to RightCHOICE and its
Subsidiaries for the term of this Agreement a nonexclusive
license to use all of the Core Software. During the term of this
Agreement, RightCHOICE shall pay a software license fee to BCBSMo
for the use of the Core Software in the amount of $10,000 per
month.
(c) Any amounts due under Section 2.02(a) or (b) shall
be paid. or shall be satisfied by way of offset against any
obligation of the parties to each other.
Section 2.04. No Limitations. There are no contractual
limitations on the parties' ability to perform any of the
activities set forth in sections 2.01 and 2.02 on their own
behalf, nor on each parties' ability to utilize the staff and
resources of the other or any subsidiary provided that each
party pays the other for services as provided herein. Each
party shall be responsible for determining those services it
requires the other or any Subsidiary to perform and for notifying
the other of any special requirements with regard to such
services.
SECTION 2.05. Payment For Services. BCBSMo will pay
RightCHOICE for the cost of any services rendered to BCSSMo by
employees of RightCHOICE or the Subsidiary all as discussed more
fully in Article III below. RightCHOICE shall credit from such
amount the cost of any services rendered by BCBSMo to
RightCHOICE.
SECTION 2.06. No Conflicts. Every effort will be made to ensure
that no employee of RiqhtCHOICE, any Subsidiary or BCBSMo will be
placed in the position of having conflicting interest with regard
to RightCHOICE any subsidiary and BCSSMo; provided, however, that
the Chief Executive Officer of BCBSMo (the "CEO") shall also be
permitted to serve RightCHOICE in that capacity. Subject to the
immediately succeeding sentence, RightCHOICE will pay to the
Chief Executive Officer his total compensation and BCBSMo shall
reimburse RightCHOICE for the percentage of the CEO's total time
which is spent on BCBSMo's affairs, which is initially
established at 25%, and shall be subject to revision from time to
time by mutual agreement. The Compensation Committee of
RightCHOICE and the Compensation Committee of BCBSMo shall review
and determine the compensation of the CEO at least annually. The
Benefits Plans in which RightCHOICE is designated as a
participating company do not include any bonus plans of BCBSMo,
and RightCHOICE will develop its own bonus plans in which the CEO
will be a participant. The Compensation Committee of BCBSMo and
the Compensation Committee of RightCHOICE, in applying their
respective bonus plans to the CEO, shall adjust amounts payable
to him thereunder to reflect an amount equal to an estimate of
the percentage of his total time that is dedicated to their
respective affairs.
SECTION 2.07. Right to Hire and Terminate Employees and
Consultants. BCBSMo shall have the right to hire and terminate
the employment or engagement of its own employees, professional
advisors and management consultants.
SECTION 2.08. Confidentiality. All Confidential Information
concerning BCBSMo obtained by RightCHOICE or any of its
Representatives, or concerning RightCHOICE or any Subsidiary
obtained by BCBSMo or any of its Representatives, in the course
of providing services under this Agreement shall be kept in
confidence by RightCHOICE, its Subsidiaries and Representatives,
on one hand, and by BCBSMo and its Representatives, on the other
hand, as provided in this Section 2.07. In the event that any
party (a "compelled party") to this Agreement becomes legally
compelled to communicate or disclose confidential Information,
such compelled party shall provide prompt notice of such
communication or disclosure to the other party to this Agreement.
The compelled party shall furnish only that portion of the
confidential information that is legally required and shall, in
the event that the other party is not a party to the action
pursuant to which the compelled party is required to make such
communication or disclosure, interpose a confidentiality defense
based upon this Agreement in an effort to ensure that
confidential treatment will be accorded said confidential
Information. Each party to this Agreement shall be deemed to-
have satisfied its obligation of confidentiality if it exercises
the same care with respect to information concerning the other
party that it takes with its own information of a similar nature,
provided that such care is reasonable under the circumstances.
SECTION 2.09. Books and Records. RightCHOICE shall make
available to BCBSMo upon request its books and records for the
purpose of verifying reimbursement as described in Section 3.01
and any other business information necessary for its operations.
SECTION 2.10. Standard of Service. Services provided by
RightCHOICE to BCBSMO pursuant to section 2.01 and services
provided by BCBSMo to RightCHOICE pursuant to Section 2.02 shall
be consistent with standards prevailing in the industry and shall
be of the same quality provided to its own organization.
ARTICLE III
COMPENSATION FOR SERVICES
SECTION 3.01. Amount.
(a) BCBSMo shall reimburse RightCHOICE for the direct
and indirect costs and expenses (including overhead expenses)
incurred by RightCHOICE and any Subsidiary in furnishing or
obtaining any of the services provided for under Section 2.01
hereof. Costs and expenses directly traceable shall be passed
through at cost. For the purpose of the allocation of indirect
costs and overhead expenses (collectively called "overhead"),
BCBSMo shall be treated as a cost center of RightCHOICE. Such
overhead shall be allocated at cost based upon internal cost
accounting procedures and methodologies of RightCHOICE as
consistently applied to other RightCHOICE cost centers.
RightCHOICE shall disclose to BCBSMO the details of the internal
cost accounting procedures and methodologies utilized in such
overhead allocation and shall disclose to BCBSMo supporting
documentation showing flow such overhead allocation is
consistently applied to RightCHOICE cost centers. No profit
shall be included in overhead allocation. Any disputes concerning
the consistency of allocation of overhead to cost centers shall
be resolved in accordance with Article VI of this Agreement.
(b) RightCHOICE shall reimburse BCBSMo for the direct
and indirect costs and expenses (including overhead expenses)
incurred by BCBSMo and any Subsidiary in furnishing or obtaining
any of the services provided for under section 2.02 hereof. Costs
and expenses directly traceable shall be passed through at cast.
For the purpose of the allocation of indirect costs and overhead
expenses (collectively called "overhead"), RightCHOICE shall be
treated as a cost center of BCSSMo. Such overhead shall be
allocated at cost based upon internal cost accounting procedures
and methodologies of BCBSMo as consistently applied to other
BCBSMo cost centers. BCBSMo shall disclose to RightCHOICE the
details of the internal cost accounting procedures and
methodologies utilized in such overhead allocation and shall
disclose to RightCHOICE supporting documentation shoving how such
overhead allocation is consistently applied to BCBSMO cost
centers. No profit shall be included in overhead allocation.
Any disputes concerning the consistency of allocation of overhead
to cost centers shall be resolved in accordance with Article VI
of this Agreement.
(c) Each of BCBSMo and RightCHOICE shall pay to the
other the software license fees as provided in section 2.02
hereof.
SECTION 3.02. Payment Dates. Invoices for amounts due
pursuant to Section 3.01 shall be rendered monthly. Any amounts
due shall be paid, or shall be satisfied by way of offset against
any obligation of the parties to each other, within thirty (30)
days after receipt of the applicable invoices.
ARTICLE IV
TERM AND TERMINATION
SECTION 4.01. Term. This Agreement shall have an initial
term of three (3) years and shall automatically be extended on a
year-to-year basis thereafter unless terminated as provided in
Section 4.02.
SECTION 4.02. Termination. Either party may terminate
this Agreement as of the end of the initial term or any yearly
extension thereof by giving the other party three (3) months
prior written notice of termination.
ARTICLE V
MISCELLANEOUS
SECTION 5.01. Relationship Between Parties. (a) The
parties hereto are independent contractors and are not and shall
not be deemed for any purpose to be. joint venturers. Neither
party shall hold itself out as the partner or agent of the other
party or make representations or warranties on behalf of the
other party, except as otherwise expressly agreed to.
(b) Neither party shall be obligated to make, and shall not
make, any payments to employees of the other party for services
rendered by them as employees of the other party. Employees of
one party shall not be considered as having employee status with
the other party or as being entitled to the benefits of any
employee of the other party, except that employees of one party
may be entitled to participate in one or more employee benefit
plans of the other party as agreed to between the parties.
SECTION 5.02. Notices. All notices, requests, consents and
other communications hereunder shall be in writing and shall be
deemed to have been duly given or delivered it delivered
personally or mailed by registered or certified mail return
receipt requested with first class postage prepaid as follows:
If to BCBSMo:
Blue Cross and Blue Shield of Missouri
0000 Xxxxxxxx Xxxxxx
Xx. Xxxxx, Xxxxxxxx 00000
Attn: Executive Vice President and Chief
Operating Officer
If to RightCHOICE:
RightCHOICE Managed Care, Inc.
0000 Xxxxxxxx Xxxxxx
Xx. Xxxxx, Xxxxxxxx 00000
Attn: Executive Vice President and Chief
Operating Officer
or such other address as any person may request by notice given
as aforesaid. Notices sent as provided herein shall be deemed to
have been delivered on the fifth business day following the date
on which it is so mailed.
Section 5.03. Governing Law. This Agreement shall be
governed by and construed under the laws or the State of
Missouri.
SECTION 5.04. Amendment. This Agreement, including the
Exhibits hereto and all other agreements and documents executed
in connection herewith, constitutes the entire agreement among
the parties hereto with respect to the subject hereof and no
amendment, alteration or modification of this Agreement shall be
valid unless in each instance such amendment, alteration or
modification is expressed in a written instrument duly executed
by each party hereto.
SECTION 5.05. Headings. The headings contained in this
Agreement have been inserted for the convenience of reference
only and shall in no way restrict or modify any of the terms or
provision hereof.
SECTION 5.06. No Third Party Beneficiaries. Each of the
provisions of this Agreement is for the sole and exclusive
benefit of the parties hereto, respectively, as their interests
shall appear, and shall not be deemed to be for the benefit of
any other person or entity or group of persons or entities.
SECTION 5.07. Successors and Assigns. This Agreement
shall bind and insure to the benefit of each party hereto, and to
each party's successors, assigns, agents and representatives.
SECTION 5.08. Partial Invalidity. In the event that any
term or provision of this Agreement shall to any extent be held
by a court of proper jurisdiction to be invalid or unenforceable
for any reason, the remainder of this Agreement shall not be
affected thereby and the remaining terms and provisions hereof
shall remain in full force and effect. The invalid or
unenforceable provisions shall, to the extent permitted by law,
be deemed amended and given such interpretation as will achieve
the intent of this Agreement.
Section 5.09. Counterparts. The Agreement may be executed
in two or more counterparts, each or which shall be deemed to be
an original, but all of which together shall constitute one and
the same instrument.
ARTICLE VI
RESOLUTION OF DISPUTES
Section 6.01. General. This Article VI shall govern the
resolution of any disputes arising under the provision of
services Pursuant to Article II and compensation for such
services pursuant to Article III.
Section 6.02. Procedure for Resolution of Disputes.
(a) The representatives of the parties having first hand
knowledge of the dispute shall endeavor to resolve the dispute
through good faith discussions in an effort to reach an agreement
which is fair to both parties and is consistent with the spirit
of cooperation between the parties.
(b) If the dispute is not resolved pursuant to
Subsection (a) of this Section 6.03 within 30 days, the dispute
shall be submitted to the respective Chief Operating Officers of
the parties who shall meet and engage in good faith discussions
to reach an agreement which is fair to bath parties and is
consistent with the spirit of cooperation between the parties.
(c) If the dispute is not resolved pursuant to
subsection (a) and (b) of this Section 6.02 within 60 days, the
dispute shall be submitted to the respective chief legal counsel
for the parties who shall agree upon an alternate dispute
resolution mechanism to resolve the dispute.
(d) If the respective chief legal counsel cannot, within 30
days after the dispute is referred to them, agree upon an
alternate dispute resolution mechanism to resolve the dispute,
the dispute shall be referred to the St. Louis Office of the
American Arbitration Association for binding arbitration
under the Commercial Arbitration Rules of that Association.
IN WITNESS WHEREOF, the parties have entered into this Agreement
as of the date hereinabove written.
THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION
WHICH MAY BE ENFORCED BY THE PARTIES.
BLUE CROSS AND BLUE SHIELD OF MISSOURI
By: /s/ Xxxxxx X. Xxxxx
Name: Xxxxxx X. Xxxxx
Title: Executive Vice President
and Chief Operating Officer
RIGHTCHOICE MANAGED CARE, INC.
By: /s/ Xxx X. Xxxxxxxxxx
Name: Xxx X. Xxxxxxxxxx
Title: President and Chief
Executive Officer
