MASTER INFORMATION SERVICES AGREEMENT
by and between
THE TRUSTEES OF THE UNIVERSITY OF PENNSYLVANIA,
Owner and Operator of the
UNIVERSITY OF PENNSYLVANIA HEALTH SYSTEM
and its AFFILIATES
and
FCG MANAGEMENT SERVICES, LLC
Executed as of January 23, 2001
Effective March 18, 2001
MASTER INFORMATION SERVICES AGREEMENT.............................................................................1
BACKGROUND AND PURPOSE............................................................................................1
ARTICLE 1.........................................................................................................2
DEFINITIONS....................................................................................................2
Section 1.1 Certain Definitions...............................................................................2
Section 1.2 Other Definitions.................................................................................7
ARTICLE 2.........................................................................................................7
MASTER AGREEMENT...............................................................................................7
Section 2.1 Master Agreement..................................................................................7
Section 2.2 Interpretation and Precedence.....................................................................7
ARTICLE 3.........................................................................................................8
TERM...........................................................................................................8
Section 3.1 Term and Transition Period.......................................................................8
Section 3.2 Renewal and Expiration...........................................................................8
ARTICLE 4.........................................................................................................9
SCOPE OF WORK AND RESPONSIBILITIES.............................................................................9
Section 4.1 General..........................................................................................9
Section 4.2 Scope of Work....................................................................................9
Section 4.3 Customer Responsibilities.......................................................................10
Section 4.4 Transfer of Hardware and Assignment of Agreements...............................................11
Section 4.5 Maintenance.....................................................................................12
Section 4.6 Hardware, Software and Manufacturers' Warranties and Other Agreements...........................13
Section 4.7 Staff Management................................................................................13
Section 4.8 Procedures Manual...............................................................................13
Section 4.9 Change Management...............................................................................14
Section 4.10 New Work........................................................................................15
Section 4.11 Licenses and Permits............................................................................16
Section 4.12 Services Non-Exclusive..........................................................................16
Section 4.13 Employment and Compensation of Counsel and Other Consultants....................................16
Section 4.14 Customer Office Space at Supplier Facilities....................................................17
ARTICLE 5........................................................................................................17
SERVICE LEVELS................................................................................................17
Section 5.1 Service Schedules...............................................................................17
Section 5.2 Review of Service Levels........................................................................17
Section 5.3 Measurement and Monitoring Tools................................................................18
Section 5.4 Failure to Meet Service Levels..................................................................18
Section 5.5 Performance Standards...........................................................................19
Section 5.6 Customer Satisfaction Survey....................................................................19
Section 5.7 Supplier Benchmarking...........................................................................19
ARTICLE 6........................................................................................................19
PERSONNEL.....................................................................................................19
Section 6.1 Furnishing of Supplier Employees................................................................19
Section 6.2 Supplier Employee Compensation..................................................................20
Section 6.3 Compliance with Laws Relating to Employment.....................................................20
Section 6.4 Safety and Training.............................................................................20
Section 6.5 Health Status and Injury........................................................................21
Section 6.6 Customer's Involvement in Supplier Employee Matters.............................................21
Section 6.7 Transition of Personnel.........................................................................22
ARTICLE 7........................................................................................................24
COMPENSATION..................................................................................................24
Section 7.1 Charges in General..............................................................................24
Section 7.2 Taxes...........................................................................................24
Section 7.3 Out-of-Scope Services...........................................................................25
Section 7.4 Recordkeeping...................................................................................26
Section 7.5 Most Favored Customer...........................................................................26
ARTICLE 8........................................................................................................27
INVOICING AND PAYMENT.........................................................................................27
Section 8.1 Invoices........................................................................................27
Section 8.2 Payment.........................................................................................27
Section 8.3 Proration.......................................................................................27
Section 8.4 Set-off and Withholding.........................................................................28
ARTICLE 9........................................................................................................28
PURCHASING....................................................................................................28
Section 9.1 Generally.......................................................................................28
Section 9.2 Sales and Use Taxes.............................................................................28
Section 9.3 Community, Women-Owned and Minority-Owned Business Development..................................29
ARTICLE 10.......................................................................................................30
SOFTWARE AND INTELLECTUAL PROPERTY RIGHTS AND OBLIGATIONS.....................................................30
Section 10.1 Customer Proprietary Software...................................................................30
Section 10.2 Customer Licensed Software......................................................................30
Section 10.3 Supplier Proprietary and Licensed Software......................................................30
Section 10.4 Ownership of Work Product.......................................................................31
Section 10.5 Source Code.....................................................................................33
ARTICLE 11.......................................................................................................33
CONFIDENTIALITY...............................................................................................33
Section 11.1 Definitions.....................................................................................33
Section 11.2 Rights, Restrictions and Obligations of the Receiving Party.....................................34
Section 11.3 Rights and Remedies of the Disclosing Party.....................................................36
Section 11.4 Nondisclosure Agreements........................................................................36
Section 11.5 Ownership of Customer Business Records and Data.................................................36
Section 11.6 Return of Customer Business Records and Data....................................................36
Section 11.7 Security and Privacy............................................................................37
Section 11.8 Destroyed or Lost Business Records or Data......................................................37
Section 11.9 Hardware Removed From Service...................................................................38
ARTICLE 12.......................................................................................................38
MANAGEMENT AND SUBCONTRACTING.................................................................................38
Section 12.1 Contract Executives.............................................................................38
Section 12.2 Key Personnel...................................................................................38
Section 12.3 Minimum Proficiency Levels......................................................................39
Section 12.4 Supplier Services to Third Parties..............................................................39
Section 12.5 Oversight Committee.............................................................................39
Section 12.6 Subcontracting..................................................................................39
Section 12.7 Non-Solicitation................................................................................41
ARTICLE 13.......................................................................................................41
AUDITS........................................................................................................41
Section 13.1 Audit Rights....................................................................................41
Section 13.2 Overcharges.....................................................................................42
Section 13.3 Supplier Audits.................................................................................42
Section 13.4 Survival........................................................................................43
ARTICLE 14.......................................................................................................43
INSURANCE; RISK OF LOSS.......................................................................................43
Section 14.1 Required Insurance Coverages....................................................................43
Section 14.2 General Insurance Requirements..................................................................44
Section 14.3 Risk of Loss....................................................................................44
ARTICLE 15.......................................................................................................45
CERTAIN REPRESENTATIONS, WARRANTIES AND COVENANTS.............................................................45
Section 15.1 Mutual Representations and Warranties...........................................................45
Section 15.2 Supplier Representations and Warranties.........................................................45
Section 15.3 Ethical Standards...............................................................................47
Section 15.4 RFP and Due Diligence Assistance................................................................48
ARTICLE 16.......................................................................................................48
COMPLIANCE WITH LAWS..........................................................................................48
Section 16.1 Legal Requirements Generally....................................................................48
Section 16.2 Licenses and Permits............................................................................48
Section 16.3 Customer Rules and Regulations..................................................................49
Section 16.4 Compliance with Agencies and Associations.......................................................49
Section 16.5 Compliance by Customer..........................................................................49
Section 16.6 Environmental and Safety Obligations............................................................49
Section 16.7 Affirmative Action and Equal Opportunity Programs...............................................50
Section 16.8 Access Clause...................................................................................51
ARTICLE 17.......................................................................................................52
INDEMNIFICATION...............................................................................................52
Section 17.1 Indemnification by Supplier.....................................................................52
Section 17.2 Indemnification by Customer.....................................................................52
Section 17.3 Mutual Indemnification..........................................................................53
Section 17.4 Intellectual Property Indemnification...........................................................53
Section 17.5 Indemnification Procedures......................................................................53
Section 17.6 Cooperation in the Event of Lawsuits............................................................54
ARTICLE 18.......................................................................................................54
LIABILITY AND FORCE MAJEURE...................................................................................54
Section 18.1 Liability.......................................................................................54
Section 18.2 Exclusion of Certain Damages....................................................................54
Section 18.3 Limitation of Liability.........................................................................54
Section 18.4 Force Majeure...................................................................................55
ARTICLE 19.......................................................................................................56
TERMINATION...................................................................................................56
Section 19.1 Termination for Cause...........................................................................56
Section 19.2 Termination for Convenience.....................................................................57
Section 19.3 Immediate Termination...........................................................................57
Section 19.4 Termination Upon Force Majeure Event............................................................58
Section 19.5 Effect of Termination...........................................................................58
Section 19.6 Assistance Upon Termination or Expiration.......................................................58
ARTICLE 20.......................................................................................................60
DISPUTE RESOLUTION............................................................................................60
Section 20.1 General.........................................................................................60
Section 20.2 Informal Dispute Resolution.....................................................................60
Section 20.3 Arbitration.....................................................................................61
Section 20.4 Continued Performance...........................................................................61
Section 20.5 Applicable Law..................................................................................61
Section 20.6 Jurisdiction and Venue..........................................................................61
Section 20.7 Equitable Remedies; Injunctive Relief...........................................................62
Section 20.8 Fees and Expenses...............................................................................62
ARTICLE 21.......................................................................................................62
MISCELLANEOUS.................................................................................................62
Section 21.1 Interpretation..................................................................................62
Section 21.2 Binding Nature and Assignment...................................................................63
Section 21.3 Expenses........................................................................................63
Section 21.4 Amendment and Waiver............................................................................63
Section 21.5 Further Assurances; Consents and Approvals......................................................63
Section 21.6 Publicity.......................................................................................63
Section 21.7 Severability....................................................................................63
Section 21.8 Entire Agreement................................................................................63
Section 21.9 Notices.........................................................................................64
Section 21.10 Survival.................................................................. .....................65
Section 21.11 Independent Contractors.........................................................................65
Section 21.12 Third Party Beneficiaries.......................................................................66
Section 21.13 Counterparts....................................................................................66
Section 21.14 Contingency.....................................................................................66
MASTER INFORMATION SERVICES AGREEMENT
This Master Information Services Agreement (the "Master Agreement")
is entered into this 23rd day of January, 2001, by and between the Trustees
of the University of Pennsylvania, a non-profit corporation incorporated
under the laws of the Commonwealth of Pennsylvania, owner and operator of the
University of Pennsylvania Health System and its Affiliates ("Customer"), and
FCG Management Services, LLC a Delaware limited liability company
("Supplier").
BACKGROUND AND PURPOSE
Supplier recognizes that Customer faces challenges to utilize its IT
budget in the most effective and efficient manner in order to meet an
increasingly competitive environment. To meet this objective and to maintain a
competitive position, Customer must harness the full strength of its existing IT
assets and effectively deploy new technologies. Every IT asset, from the desktop
workstation to the data center, must be integrated into an information
environment that empowers Customer's employees to be productive and creative.
Customer desires an outsource contractor that will assume full responsibility
and accountability for providing end-to-end IT operations to Customer, in
accordance with the Scope of Work, including data center, LAN, WAN, desktop,
network management, help desk, disaster recovery and applications support.
Supplier acknowledges that it is capable of fulfilling the foregoing
objectives, and desires to do so. Supplier has represented to Customer that it
is a leading and experienced outsource contractor and systems integrator with
experience serving teaching hospitals and health centers. That experience
includes, but is not limited to, configuration of computer Hardware and Software
systems, integration of data processing networks supporting remote users,
operation of data centers, desk top management, Software development and
maintenance, equipment management and maintenance, general support of the
foregoing, and help desks. Supplier further has represented that it has
established a methodology and approach that will allow Customer to sustain and
enhance its IT systems by providing better and faster service to users, while
reducing the cost of IT functions previously performed by Customer for itself.
Customer's objectives in entering into this Master Agreement include
obtaining: (i) staffing flexibility and responsibility for personnel recruiting
and training; (ii) avoidance of significant future capital investment; (iii)
operating cost reductions (iv) continuous process improvement; (v) high quality
services in the areas described in this Master Agreement and its Appendices
provided in a cost-effective manner and (vi) a flexible relationship with
Supplier under which Supplier will be highly responsive to the requests of
Customer and to changes in processes and methods for providing the Services,
including accommodation of significant changes in volume of operations, changes
in facilities served and improved methods of monitoring, measuring and achieving
increased levels of Services. Supplier fully understands Customer's objectives
in entering into this Master Agreement. Based on such review and understanding,
Supplier represents and warrants to Customer that Supplier currently has and
will maintain the capability to achieve those objectives.
On the basis of and in reliance upon the inducements described above,
and the representations and warranties made by Supplier in this Master
Agreement, Customer desires to engage Supplier to perform the services described
in this Master Agreement.
NOW THEREFORE, in consideration of the mutual promises and covenants
contained herein, the receipt, sufficiency, and adequacy of which are hereby
acknowledged, the Parties, intending to be legally bound, hereby contract and
agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.1 CERTAIN DEFINITIONS
In this Master Agreement, the following terms shall have the indicated
meanings:
"AAA" means the American Arbitration Association.
"ACS" means Affiliated Computer Services, Inc., a Delaware corporation,
Supplier's primary subcontractor for data center operations and other Services.
"AFFILIATE" means, with respect to any specified person or entity, any
other person or entity that directly, or indirectly through one or more
intermediaries, Controls or is Controlled by, or is under common Control with,
the specified person or entity.
"AGENT" means an employee, contractor or subcontractor.
"APPENDICES" means all schedules, exhibits and attachments to this
Master Agreement.
"BASELINE" means, with respect to any Service, the baseline units for
that Service listed in Attachment 19.2.
"CHANGE" has the meaning given in Section 4.9.
"CHANGE ORDER" means an authorization signed by the Customer Contract
Executive authorizing a modification of Hardware, Software, the System or
Services in accordance with Customer's applicable policies and procedures.
"COMMERCIALLY REASONABLE EFFORTS" means, with respect to any objective,
a level of effort to achieve such objective equal to or exceeding the level of
effort to achieve the same or similar objectives used by other sophisticated
outsourcing companies providing services similar to the Services, and in any
event a prompt and diligent effort, made in a professional and workmanlike
manner, using qualified individuals.
"CONFIDENTIAL INFORMATION" has the meaning given in Section 11.1.
"CONFIDENTIAL MATERIALS" has the meaning given in Section 11.1.
"CONTRACT AFFILIATE" means those certain present and future entities or
facilities (i) Controlled by Customer, (ii) participating in any joint venture
to which Customer or any entity
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referred to in the previous clause is a party, or (iii) for whom Customer
provides clinical, administrative or information services, as specified on
Exhibit C as amended from time to time, for which Services will be provided
pursuant to this Master Agreement. Offices of physicians and other caregivers
who have privileges at a Customer or Affiliate health facility may be
included within this definition of Contract Affiliate.
"CONTRACT EXECUTIVE" means the individual representatives of Supplier
and Customer who are assigned the primary responsibility of managing the Service
Schedules as described in Section 12.1.
"CONTROL" and its derivatives means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a person or entity, whether through the ownership of voting
securities, by contract, or otherwise.
"CUSTOMER" shall mean the Trustees of the University of Pennsylvania,
owner and operator of the University of Pennsylvania Health System and
Affiliates.
"CUSTOMER BUSINESS RECORDS AND DATA" means originals and copies of any
and all contracts, leases, licenses, accounting documents, invoices, checks,
statements, receipts, correspondence, vouchers and all other documents of any
kind generated or received by Supplier relating to the business operations of
Customer or the Services being performed by Supplier on behalf of Customer,
whether stored in digital format on magnetic, optical or other media.
"CUSTOMER COMPETITOR" has the meaning given in Section 12.4.
"CUSTOMER LICENSED SOFTWARE" means third party Software licensed by
Customer for use in the System.
"CUSTOMER PROPRIETARY SOFTWARE" means all computer programs,
supporting Documentation and materials, and the intellectual property rights
related thereto, that are owned by or licensed exclusively to Customer.
"DISCLOSING PARTY" has the meaning given in Section 11.1.
"DOCUMENTATION" means all technical printed materials which relate to
the System or the Services to be performed under this Master Agreement, and may
include operator's, user's and other manuals containing all written procedures
necessary for Customer personnel to understand the functionality and operation
of the System sufficiently to use the System in performance of their day-to-day
job functions as well as printed materials detailing the Services Supplier is
providing and methods for obtaining the Services.
"EFFECTIVE DATE" has the meaning given in Section 3.1.
"EMPLOYMENT DATE" has the meaning set forth in Section 6.7.1.
"EXCUSED PERFORMANCE EVENT" means the first manifestation of an
extraordinary latent error or defect in Hardware or Software used by Supplier in
providing the Services (and any related repeated instances pending Supplier's
diligent correction of the defect) if such defect was
3
(i) unknown to Supplier, (ii) not disclosed in any information distributed by
the third party licensor, manufacturer or distributor and (iii) not
preventable or discoverable through normal testing or maintenance procedures.
"FORCE MAJEURE EVENTS" has the meaning set forth in Section 18.4.
"HARDWARE" means all information and communications technology
machinery and equipment, together with all associated components, media,
firmware, and other embedded Software and instructions provided, operated or
maintained pursuant to this Master Agreement.
"HELP DESK" means the single focal point of contact for the
coordination of all IT support functions within the Scope of Work, in accordance
with the provisions of the applicable Service Schedule.
"INDEMNITEES" shall mean, with respect to a Party entitled to
indemnification hereunder, such Party and its Affiliates, trustees, officers,
directors, employees, agents, successors, and assigns.
"IT" means information and communications technology products and
services.
"KEY PERSONNEL" means the individuals identified on Attachment 12.2
whose continued employment is important for the successful delivery of the
Services and continued operation of the System.
"LAN" or "LOCAL AREA NETWORK" means the equipment, software, lines,
interconnect devices (e.g., bridges, routers, hubs, switches, gateways), wiring,
cabling and fiber that are used to create, connect and transmit data, voice and
video signals within and among Customer's local area network segments. LANs
commence with the interface to a WAN network interconnect device (e.g., router)
and end with and include the network interface points (e.g., network interface
cards "") that are in LAN-connected equipment (e.g., desktop equipment,
servers).
"LEGAL AND CONTRACTUAL REQUIREMENTS" means the requirements of all
present and future (i) laws, rules, regulations, ordinances, orders, decrees,
injunctions, restrictions, standards, guidelines and directives of any federal,
state, local or other public or private body exercising authority with respect
to Customer or any Contract Affiliate, and (ii) leases, licenses, agreements,
covenants, permits, insurance policies and other agreements, to the extent that
the applicable Party hereunder has received copies or was notified thereof, or
to the extent that such Party's employees at levels above clerical or
maintenance have knowledge thereof, or could reasonably be expected to obtain
knowledge thereof in connection with performance of the Services hereunder
(including any of the foregoing that prohibit restraints on trade or
discrimination), that are, may be or may become applicable to Customer,
Supplier, their respective Affiliates or vendors.
"LOSSES" means all losses, liabilities, damages, claims and demands,
and all related costs and expenses (including any and all reasonable legal fees
and reasonable costs of investigation, litigation, settlement, judgment, appeal,
interest and penalties) asserted against or incurred by an indemnified Party
hereunder in connection with an indemnified claim.
"MANUAL" means the procedures Manual, as contemplated in Section 4.8.
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"MASTER AGREEMENT" means this Master Information Services Agreement and
all Appendices hereto.
"MISSION CRITICAL SERVICES" has the meaning given in Section 18.4(b).
"NEW WORK" means additional tasks or services outside the then-current
Scope of Work, which materially expand or change the Scope of Work, or require
the use of Hardware or Software that is substantially dissimilar to Hardware or
Software within the Scope of Work, or require manpower or other resources
materially greater or different from those employed on an ongoing basis to
perform the then-current Scope of Work.
"OPERATING LEVEL AGREEMENTS" means those written agreements specifying
responsibilities of Customer under this Master Agreement, as contemplated by
Section 4.3.3.
"PARTIES" means Customer and Supplier, and "PARTY" means either one of
them.
"PASS-THROUGH EXPENSES" means the actual invoiced amounts (excluding
any Supplier profit, administrative fee, overhead charges or other markup) that
Customer has agreed to pay directly or for which Customer has agreed to
reimburse Supplier.
"PERFORMANCE STANDARDS" has the meaning given in Section 5.5.
"PRIVACY LAWS" means all present and future laws and regulations
relating to the privacy of individually identifiable medical, financial or other
information including, without limitation regulations implementing sections 1171
through 1179 of the Social Security Act, as amended, and section 264 of Pub. L.
104-191 (the Health Insurance Portability and Accountability Act (HIPAA)).
"RECEIVING PARTY" has the meaning given in Section 11.1.
"SCOPE OF WORK" means all of the tasks contemplated by Section 4.2 as
further described in Service Schedules One through Six, as amended from time to
time, and as supplemented by Changes authorized pursuant to Section 4.9, by New
Work authorized pursuant to Section 4.10, and by Termination Assistance.
"SERVICE SCHEDULE" and "SERVICE LEVEL" have the meaning given in
Section 5.1.
"SERVICE LEVEL CREDITS" has the meaning given in Section 5.4(a).
"SERVICE REQUEST" has the meaning given in Section 4.9(a).
"SERVICE TERMINATION DATE" means the date on which specified Services
terminate subject to the performance of Services and Termination Assistance
during the Termination Transition Term.
"SERVICES" has the meaning given in Section 4.2.
5
"SOFTWARE" means all systems and computer programs, including
application software, enhancements and bug fixes, in binary executable code,
used to perform the Services. When used herein, any type of Software shall be
deemed to include the relevant Documentation related thereto.
"SOURCE CODE" means the human readable and machine readable computer
program source listings and instructions written by computer programmers in a
high level language and the associated comments and internal documentation which
accompany it (including, but not limited to, flowcharts, programmers' notes and
such other materials as may be reasonably necessary for a competent programmer
to modify and maintain the Software).
"SUBCONTRACT" has the meaning given in Section 12.6(b).
"SUPPLIER EMPLOYEES" means individuals employed by Supplier or any of
its Affiliates for the purpose of providing Services hereunder.
"SUPPLIER LICENSED SOFTWARE" means third party Software licensed to
Supplier and used in providing Services to Customer.
"SUPPLIER PROPRIETARY SOFTWARE" means all computer programs, supporting
Documentation and materials, and the intellectual property rights related
thereto, that are owned by or licensed exclusively to Supplier, as set forth on
Attachment 10.3.
"SYSTEM" means those Software and Hardware items, components, networks
and services, all as specified or referred to in the Scope of Work, operating in
an integrated fashion to provide the processing capabilities and functional
characteristics necessary to meet Customer's intended uses.
"TERM" has the meaning given in Section 3.1.
"TERMINATION ASSISTANCE" means those tasks required to effectively
transfer back to Customer or Customer's designee all Services, assets,
agreements and know-how necessary to operate the then-current System, as
contemplated and further specified in Exhibit D.
"TERMINATION TRANSITION TERM" means the period during which Supplier
will transfer the control and responsibility for all IT functions previously
performed by or for Supplier to Customer or Customer's designees.
"THIRD PARTY PROVIDER" means any third party, other than a Supplier
Agent, that is engaged to provide IT-related services to Customer.
"TRANSFERRED EMPLOYEE" has the meaning set forth in Section 6.7.1.
"TRANSITION PERIOD" has the meaning set forth in Section 3.1.
"TRANSITION TASKS" means those tasks required to effectively transfer
operations within the Scope of Work to Supplier, as contemplated by and further
specified in Service Schedule Six.
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"WAN" or "WIDE AREA NETWORK" means the equipment, software, lines,
interconnect devices, wiring, cabling and fiber that are used to create, connect
and transmit data, voice and video signals: (i) across LAN in the Customer's
campus (excluding local area networks at affiliates offices); (ii) to provide
connectivity to affiliates offices; (iii) to non-customer locations that do
business with Customer and for which Customer is responsible for providing
connectivity. WANs commence with the WAN network interconnect equipment (e.g.,
router, CSU/DSU, dial-up modem, dial backup equipment) in the Philadelphia
metropolitan area and end with and include the WAN network interconnect
equipment (e.g., router, CSU/DSU, dial-up modem, dial backup equipment) at the
remote locations outside of the Philadelphia metropolitan area.
"YEAR 2000 COMPLIANT" means that the computer Hardware, Software and
related resources owned or used by Supplier in providing the Services will (i)
operate and produce data on and after January 1, 2000 (including taking into
effect that such year is a leap year), accurately and in a manner consistent
with their performance prior to January 1, 2000, and (ii) accept, calculate,
process, maintain, write and output, accurately, all times or dates, or both,
whether before, on or after January 1, 2000 (including taking into effect that
such year is a leap year), and any time periods determined or to be determined
based on any such times or dates, or both in a manner consistent with their
performance prior to January 1, 2000.
SECTION 1.2 OTHER DEFINITIONS
Other terms used in this Master Agreement and the Appendices hereto,
including the Service Schedules, are defined where they first appear and have
the respective meanings there indicated.
ARTICLE 2
MASTER AGREEMENT
SECTION 2.1 MASTER AGREEMENT
This Master Agreement and its Appendices contain all contractual terms
for Services to be provided to Customer by Supplier and the provisions for
payment.
SECTION 2.2 INTERPRETATION AND PRECEDENCE
This Master Agreement is to be interpreted so that all of the
provisions are given as full effect as possible. In the event of a conflict
between this Master Agreement and an Appendix hereto, the order of precedence
shall be (i) this Master Agreement, (ii) the Scope of Work (Exhibit B), (iii)
the Service Schedules (including any appendices referred to therein), (iv)
Exhibits other than Exhibit B, and (v) the Attachments to the Master Agreement.
In this Master Agreement, unless otherwise specifically provided:
(a) words importing the singular number include the plural and vice
versa and words importing gender include all genders;
(b) in the computation of a period of time from a specified date to a
later specified date, the word "from" means "from and including" and the words
"to" and "until" each mean "to but excluding;"
7
(c) the division of this Master Agreement and any Appendix hereto into
articles, sections, subsections, exhibits and schedules, and the insertion of
any captions or headings, are for convenience of reference only and shall not
affect its construction or interpretation;
(d) references to a specified article, section, subsection or other
subdivision shall be construed as references to that specified portion of this
Master Agreement, unless the context otherwise requires;
(e) references to "days" means calendar days unless "business days" are
specified;
(f) the term "including" means "including, without limitation," or
"including, but not limited to" and
(g) the terms "shall", "must" and "will" shall be construed as
requiring mandatory action, unless the context otherwise requires.
ARTICLE 3
TERM
SECTION 3.1 TERM AND TRANSITION PERIOD
(a) The term of this Master Agreement shall begin on the date selected
by mutual agreement of the Parties, but no later than sixty (60) days following
execution of this Agreement (the "Effective Date") and shall continue for a
period of five (5) years, unless earlier terminated in accordance with the
provisions of this Master Agreement (the "Initial Term"). "Term" shall refer
collectively to the Initial Term and all renewals thereof.
(b) The Transition Period, during which the Transition Tasks will be
performed, shall begin on the Effective Date and continue for a period of six
(6) months.
SECTION 3.2 RENEWAL AND EXPIRATION
Customer shall have the option to renew this Master Agreement for up to
two (2) additional periods of one (1) year each, by delivering written notice of
each such renewal to Supplier at least ninety (90) days before expiration of the
then-current Term. Following issuance of said renewal notice, Customer and
Supplier will enter good faith negotiations to establish the Service Levels and
pricing structure for the next renewal period. If Customer elects not to renew
or if the Parties fail to agree to the Service Levels and pricing structure in a
signed writing by midnight of the scheduled Service Termination Date, such
failure will trigger an automatic Termination Transition Term, at the
then-existing pricing structure and Service Levels for an additional one hundred
eighty (180) days. All Termination Assistance will be performed within such
Termination Transition Term, pursuant to the provisions of Section 19.6.
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ARTICLE 4
SCOPE OF WORK AND RESPONSIBILITIES
SECTION 4.1 GENERAL
Supplier understands and agrees that, as one of the nation's most
well-respected health care systems, Customer must operate on a safe, consistent,
continuous and timely basis. In addition, Customer operates several facilities
that must be operational during certain identified periods. Consequently,
Supplier must perform the Services in accordance with the Service Schedules and
Performance Standards, and the time periods stated therein are of the essence.
The performance of the obligations and the payment of the liabilities of
Supplier hereunder shall be guaranteed by First Consulting Group, Inc. pursuant
to the Guaranty Agreement attached hereto as Exhibit A.
SECTION 4.2 SCOPE OF WORK
Customer has engaged Supplier to undertake, on behalf of Customer and
the Contract Affiliates, specified IT management services, distributed systems
management services, data center operations, and application support services,
as specifically defined in the Scope of Work attached hereto as Exhibit B,
together with maintenance required with respect to the foregoing (the
"Services"). Supplier will also define the requirements for and develop all
interfaces necessary to enable Supplier to provide such Services. As the
provider of such Services, Supplier will act as a systems integrator enabling
Customer to reduce operating costs and improve System-wide efficiency.
Upon the written request of Customer, Supplier shall provide the
Services to those present and future Contract Affiliates as Customer may
designate from time to time, all in accordance with the terms and conditions of
this Master Agreement; provided that Customer will be responsible for any
incremental third party charges associated with making the Services available to
any such Contract Affiliates. If such a request is made by Customer, then
Customer and Supplier shall each have all of the same rights and obligations
with respect to Services provided to Contract Affiliates as they do with respect
to Services provided to Customer. Any additional financial arrangements specific
to each such Contract Affiliate shall be consistent with the unit pricing
methodology adopted by the Parties, mutually agreed upon in writing and attached
as an amendment to the Master Agreement. Supplier does not provide health care
services and will not operate the capital equipment of Customer for purposes of
providing health care services to patients.
If at any time during the Term of this Master Agreement, Customer sells
or otherwise transfers ownership or Control of a Contract Affiliate to which
Supplier is providing Services hereunder to a third party, Supplier shall
continue to provide the Services to such Contract Affiliate if requested by
Customer, and for the time period requested by Customer, not to exceed one (1)
year from the date of such sale or transfer, on the terms and conditions set
forth in this Master Agreement or on such other terms as the Parties may
mutually agree upon. Supplier shall cooperate with Customer, such Contract
Affiliate and any new service provider to ensure an uninterrupted transition to
the new service provider. Notwithstanding anything to the contrary in this
Agreement, Customer or such Contract Affiliate, as the case may be, will be
responsible for
9
any and all incremental third party charges associated with making the
Services available to any such transferred Contract Affiliate.
SECTION 4.3 CUSTOMER RESPONSIBILITIES
4.3.1 Access to Hardware and Software
During the Term, Customer will provide access to the Customer
Proprietary Software and the Hardware to Supplier and to Supplier's Agents to
the extent such access is required to perform the Services. Supplier will use
Commercially Reasonable Efforts to minimize the number of persons and entities
who require such access to reduce the associated cost and inconvenience to
Customer.
4.3.2 Facilities for Supplier's Personnel
Customer will provide designated facilities for use by Supplier and its
Agents who require such access to efficiently perform the Services for so long
as Supplier shall reasonably require the use of such facilities. The facilities
provided by Customer generally will be equivalent to the space occupied and the
telephones, office furnishings and fixtures used by Customer personnel
performing similar functions. Supplier acknowledges and agrees that such
facilities are sufficient for performing the Services and for satisfying
Supplier's responsibilities under this Master Agreement. Supplier further agrees
that all Supplier Employees using such Customer facilities will be under the
direct control of Supplier with respect to Services performed. Supplier
Employees using such facilities will be accorded reasonable access to, and the
use of, office equipment including Customer's standard desktop pc configuration,
and other services such as photocopiers, network printers, facsimile machines,
local and long distance telephone service for Customer-related calls, and
secretarial, travel and mail services, postage, parking, and conference rooms,
as were in use by Customer personnel as of the Effective Date but in no event to
a greater extent than such services were used by Customer personnel prior to the
Effective Date. If Customer upgrades, replaces or otherwise improves its
standard desktop configuration during the term of this Agreement, or upgrades or
replacements to selected desktop configurations are required in connection with
Customer-approved upgrades or replacements of other Customer Hardware or
Software, then Supplier Employees with access to Customer desktop equipment
shall have access to such equipment as upgraded, replaced or improved to the
extent necessary to perform the Services hereunder. Supplier will reimburse
Customer within thirty (30) days of receipt of Customer's invoice for any costs
associated with Supplier's excessive use (defined as costs in excess of an
annual budget agreed to between Supplier and Customer) of Customer services such
as telephone, facsimile, secretarial, mail and courier services. Such costs will
be treated as pass-through expenses paid by Supplier. Supplier will be
responsible for providing all other office and data processing equipment needed
by Supplier to provide the Services, and for appropriate upgrades, replacements
and additions to equipment.
Supplier may not use Customer facilities for the sharing of services
with other Supplier customers without the prior written consent of Customer,
which consent may be withheld in Customer's sole discretion.
10
4.3.3 Operating Level Agreements
Customer agrees to use Commercially Reasonable Efforts to perform its
obligations under Customer Operating Level Agreements set forth on Attachment
4.3.3.
If Customer or any of its representatives fails to perform any material
obligation under this Master Agreement, which failure prevents Supplier from
performing any of its obligations hereunder, Supplier's time for performance of
such obligations will be extended by that period of time during which Customer
or any of its representatives failed to perform. In addition, if as a result of
any action or failure to act on the part of Customer or any of its
representatives, Supplier's ability to perform has been rendered impossible (for
example, Supplier's obligation to repair a pc is rendered impossible by virtue
of the pc having been repaired by a third party), then Supplier will be relieved
of its responsibility to perform such obligation in that instance. However, in
all events, Supplier shall use Commercially Reasonable Efforts, commensurate
with the level of criticality of Supplier's tasks to be performed, to perform in
accordance with this Master Agreement notwithstanding a failure to perform by
Customer or any of its representatives, and Supplier shall notify the Contract
Executive of the failure to perform and Supplier's plan for completing its
performance.
Supplier agrees to make no claim for damages for delay in performance
occasioned by an act or a failure to act by Customer or any of its
representatives. In such cases, Supplier's sole compensation for delay shall be
an extension of the time required to perform the tasks delayed or appropriate
relief from the Service Level affected by the delay. Should adjustments be
required which would substantially alter the Scope of Work, the Parties will
negotiate in good faith and agree to an appropriate adjustment in the Service
Levels and compensation payable to Supplier.
SECTION 4.4 TRANSFER OF HARDWARE AND ASSIGNMENT OF AGREEMENTS
4.4.1 Transfer of Hardware
It is presently contemplated that Customer will cause the Hardware
identified on Attachment 4.4.1 to be transferred to Supplier. Such Hardware
shall be transferred AS IS, at current fair market value, without warranty of
any type other than a warranty of title and warranty that the transferred
Hardware is owned by Customer or an Affiliate free and clear of any liens or
encumbrances. Supplier will exercise termination, extension, and other rights
with respect to such Hardware after consultation with Customer, and all costs,
charges, or fees associated with the exercise of such rights shall be borne by
Supplier unless the Parties otherwise agree.
4.4.2 Assignment of Agreements
It is presently contemplated that Customer will cause the Software
identified on Attachment 4.4.2 to be transferred to Supplier. If the Parties
later determine that assignment of additional Software or operational agreements
is desirable, Customer will use Commercially Reasonable Efforts to cooperate
with Supplier to assign any right, title, or interest Customer may have in such
Software or agreements to Supplier or a Supplier Agent. Supplier will exercise
termination, extension, and other rights with respect to such Software after
consultation with
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Customer, and all costs, charges, or fees associated with the exercise of
such rights shall be borne by Supplier unless the Parties otherwise agree.
4.4.3 Supplier Management of Customer Assets
Supplier will assume administrative responsibility for all of
Customer's Hardware and Software that is not transferred pursuant to Section
4.4.1 or Section 4.4.2, and will manage and utilize such assets in the provision
of Services. The title or interest in such assets shall remain in the name of
Customer or an Affiliate of Customer. Customer will exercise termination,
extension, and other rights thereunder as Supplier reasonably directs after
consultation with Customer, and all costs, charges, or fees associated with the
exercise of such rights shall be borne by Customer unless the Parties otherwise
agree.
4.4.4 Required Consents
The Parties will cooperate with each other in seeking all consents
required for the assignment or transfer of assets and agreements, or the
granting of rights to use or access the assets and subject matters of such
agreements, as reasonably required in order to fulfill their respective
responsibilities under this Master Agreement. Subject to the provisions of
Section 4.2 above relative to charges that may be owed in order to allow
Contract Affiliates to access the Services, Supplier will pay the fees required
to obtain any consents for Software licenses or other agreements listed on
Attachment 4.4.2 and for commercial off-the-shelf Software installed as of the
Effective Date on Hardware that will be used to perform Services during the
Term. If any consent cannot be obtained, after Commercially Reasonable Efforts,
Supplier will develop and propose, at its cost and expense, alternative
strategies for the performance of the Services for review and approval by
Customer. Such alternative strategies may include the use of replacement but
functionally equivalent Software or Hardware, a reduction in the Scope of Work,
equitable adjustments in the amounts payable to Supplier, or similar adjustments
to the provisions set forth herein. The alternative strategies developed by
Supplier hereunder must be reasonably acceptable to Customer and delivered to
Customer within ninety (90) days following the Effective Date; provided,
however, that Customer may reject any alternative strategy that could result in
greater costs, expenses or potential liabilities to Customer or a degradation of
the System. After Customer has approved such an alternative strategy, Supplier
and Customer will promptly and diligently pursue the strategy to completion in
accordance with the proposal approved by Customer and the provisions set forth
herein. If it is impossible for Supplier, using its Commercially Reasonable
Efforts, to develop an alternative strategy that is acceptable to Customer
within one hundred twenty (120) days of the Effective Date (or within one
hundred twenty (120) days of subsequent identification of assets or agreements
as to which consent is required), and such asset or agreement is material to the
performance of the Services by Supplier or its Agents, or (iii) is material to
the use, operation or enjoyment of the System by Customer, Customer may elect to
terminate this Master Agreement in accordance with the provisions set forth in
Section 19.3.
SECTION 4.5 MAINTENANCE
All Hardware under Supplier control or provided by Supplier or its
Agents hereunder will be maintained by Supplier or a Supplier Agent under the
management of Supplier in good condition and repair, ordinary wear and tear
excepted, except to the extent a contrary intent is
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expressly set forth in writing by Customer. Supplier will conduct all
necessary or advisable maintenance and preventive maintenance (i) consistent
with industry practices for similar Hardware and related equipment and
materials, (ii) consistent with all manufacturer's requirements and any and
all procedures set forth in the Manual, and (iii) as contemplated by the
Scope of Work.
All Software under Supplier control or provided by Supplier or its
Agents hereunder will be maintained and supported by Supplier or a Supplier
Agent under the management of Supplier. Supplier will conduct all necessary or
advisable maintenance and support (i) consistent with industry practices for
similar Software and related Documentation, (ii) consistent with all
manufacturer's requirements and any and all procedures set forth in the Manual,
and (iii) as contemplated by the Scope of Work.
SECTION 4.6 HARDWARE, SOFTWARE AND MANUFACTURERS' WARRANTIES AND OTHER
AGREEMENTS
All Hardware provided after the Effective Date for the use of Customer
will be new and in good condition and repair, unless such Hardware was acquired
by Supplier from Customer or Supplier obtains Customer's prior written consent.
Supplier will use Commercially Reasonable Efforts to obtain the level of
warranties requested by Customer for Hardware and Software obtained for the
benefit of, or use by, Customer. With respect to the Hardware and Software to be
conveyed to Customer upon the expiration or earlier termination of this Master
Agreement as part of Termination Assistance, Supplier will verify to Customer in
writing that such warranties can be assigned to Customer prior to Supplier's
purchase of such Hardware or Software.
If Supplier provides any Hardware, Software, material or other
equipment pursuant to this Master Agreement that is manufactured by Supplier or
any of its Affiliates or any related entity, such Hardware, Software, material
or other equipment will be provided with reasonable warranties and other
reasonable terms and conditions at least as beneficial to Customer as those
provided by unaffiliated third party manufacturers and suppliers of similar
goods and services.
SECTION 4.7 STAFF MANAGEMENT
Supplier shall have the authority, discretion and responsibility to
manage, assign and deploy its employees and resources in order to meet the
Service Levels, subject to Customer's right to prior notification and comment to
the extent provided for hereunder.
SECTION 4.8 PROCEDURES MANUAL
(a) As soon as practicable, but no later than ninety (90) days
following the Effective Date, Supplier will deliver a procedures Manual to
Customer for review and comment. The Manual will also incorporate, where
feasible, Customer's procedures in effect immediately prior to the Effective
Date. The Manual will describe in detail how Supplier will perform the Services
and implement this Master Agreement. The Manual will include all procedures
necessary for implementing the Services contemplated in the Scope of Work. The
Manual will also describe the management tools and techniques that Supplier will
use to supervise, monitor, staff, report and plan the Services. The Manual will
provide specific quality assurance and quality control procedures and detailed
tests that will be performed, reviewed and approved by the Parties or their
designees prior to and during any changes to the Systems provided by or for
Supplier to Customer hereunder. The Manual will be written in clear English,
sufficiently concise and
13
clearly written to permit business and technical personnel of Customer and
Supplier to use the Manual as a beneficial reference. Supplier will
periodically update the Manual (no less frequently than once during each
calendar year of the Term) to reflect changes in the operations, policies and
procedures described therein. All updates of the Manual will be provided to
Customer for review, comment, and written approval at least thirty (30) days
prior to implementation. All Services provided or performed by or for
Supplier will be provided and performed in accordance with the procedures set
forth in the Manual.
(b) Supplier will also prepare for Customer's review and written
approval, an executive summary of its obligations under this Master Agreement
for inclusion in the Manual. This summary will not supplant or modify any
provision of this Master Agreement.
SECTION 4.9 CHANGE MANAGEMENT
The Parties may agree from time to time to revise, substitute, install,
de-install or otherwise modify the Hardware, Software, Systems or Services
("Changes"). Supplier will be responsible for using appropriate policies,
procedures, techniques and methodologies to minimize the potential adverse
impacts of any such Changes on the System or business operations of Customer.
The Manual will contain a detailed set of policies and procedures for
developing, implementing and managing all Changes, and will include the
following elements:
(a) If Customer desires to propose a Change in the Services, it shall
deliver a written notice to the Supplier Contract Executive describing the
proposal ("Service Request"). Supplier shall respond to such Service Request as
promptly as reasonably possible by preparing at Supplier's expense and
delivering to the Customer Contract Executive a good faith, written proposal
("Change Order Proposal"), indicating: (i) the effect of the Service Request, if
any, on the amounts payable by Customer hereunder and the manner in which such
effect was calculated; (ii) the effect of the Service Request, if any, on
Service Levels with a full explanation acceptable to Customer; (iii) the
anticipated time schedule for implementing the Service Request; and (iv) any
other information requested in the Service Request or reasonably necessary for
Customer to make an informed decision regarding the proposal.
(b) If Supplier desires to propose a Change in the Services or other
aspects of this Master Agreement, it may do so by preparing at its expense and
delivering a Change Order Proposal to the Customer Contract Executive, who will
be responsible for obtaining the appropriate review and, if deemed acceptable,
approval of the Change Order Proposal in accordance with Customer's applicable
policies and procedures.
(c) A Change Order Proposal, once submitted to Customer, shall
constitute an offer by Supplier to implement the Change described therein on the
terms set forth therein, and shall be irrevocable for a minimum of thirty (30)
days. Customer may accept or reject the Change Order Proposal at its sole
discretion. If the Change Order Proposal is accepted, the Customer Contract
Executive will issue a Change Order.
(d) Notwithstanding any provision to the contrary, however, Supplier
may make emergency changes on a temporary basis without obtaining the prior
consent of Customer if
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(i) such changes are necessary for the effective operation of the System in
accordance with the provisions set forth herein, and (ii) Supplier was unable
to reach the Customer Contract Executive or a designee within a reasonable
time period given the nature of the emergency despite using Commercially
Reasonable Efforts. In making any decision to conduct emergency changes
without the prior consent of Customer, Supplier will exercise its business
judgment, weighing the potential harm to the Parties and the potential that
such harm can be mitigated by prompt action.
(e) To the extent practicable, Supplier will schedule, sequence, manage
and implement all non-emergency Changes outside of Customer's normal working
hours and in a manner that will minimize potential adverse impacts on Customer.
(f) New Hardware, Software and other Changes should be appropriately
tested in accordance with acceptance procedures (including where appropriate
benchmark testing and comparisons based upon mutually accepted performance
criteria), in a controlled environment, as set forth in the Manual or otherwise
agreed upon by the Parties, before introduction into a full-scale production
environment.
SECTION 4.10 NEW WORK
(a) If Customer requests that Supplier provide any New Work, Supplier
will prepare a New Work proposal. Customer may accept or reject any New Work
proposal at its sole discretion. If Customer accepts a Supplier proposal,
Supplier will perform the New Work in accordance with the provisions set forth
herein and therein, and will be paid in accordance with the proposal submitted
by Supplier and the provisions of this Master Agreement. Upon Customer's
acceptance of a Supplier proposal for New Work, the Scope of Work will be
expanded to include the New Work. Notwithstanding any provision to the contrary,
to the extent that any Hardware, Software or Services included in the New Work
are the same or substantially similar to Hardware, Software, or Services in the
then-current Scope of Work, the terms, conditions and pricing proposed by
Supplier will be no less favorable to Customer than those set forth herein. At
any time and for any reason Customer may elect, solicit and receive bids from
Third Party Providers to perform New Work. If Customer elects such Third Party
Provider services, Supplier will cooperate with those Third Party Providers in
accordance with this Master Agreement, including the confidentiality provisions
set forth herein.
(b) The Parties acknowledge and agree that technologies will evolve and
change during the Term and that Supplier is required and agrees as part of its
provision of Services to make periodic recommendations to Customer and, subject
to Customer agreement and any necessary funding, adapt to this evolution and
such changes.
(c) The Parties acknowledge that modifications to Customer's disaster
recovery plan will be required in order to meet Service Levels. The Parties
anticipate that such modifications may involve resources that are materially
greater or different than those currently employed. In that case, the Parties
will negotiate in good faith to establish the parameters and pricing of a
revised disaster recovery plan.
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SECTION 4.11 LICENSES AND PERMITS
As part of the Services, Supplier shall be responsible for obtaining
and maintaining all applicable licenses, authorizations, and permits required of
Supplier in connection with the performance of Services and to otherwise carry
out its obligations hereunder and shall have financial responsibility for, and
shall pay, all fees and taxes associated with such licenses, authorizations, and
permits. In the case of system software licenses owned by Customer for Software
utilized by Supplier in the provision of Services (as described on Attachment
4.11), Supplier shall pay all applicable license fees at its own expense.
Supplier shall notify Customer of all applicable licenses, authorizations, and
permits required of Customer in connection with the performance of Services of
which Supplier has knowledge.
SECTION 4.12 SERVICES NON-EXCLUSIVE
(a) Customer may obtain the Services during the Term from Supplier or,
at Customer's option exercised from time to time during the Term, Customer may
obtain any or all of the Services from a Third Party Provider or provide them
internally. Customer shall have no obligation to obtain from Supplier any
services that are not included within the Scope of Work. Any Services that are
limited to specific locations under an Appendix hereto apply only to such
locations.
(b) If Customer elects to obtain any categories of Services from a
Third Party Provider, or elects to provide any categories of Services internally
in accordance with Section 4.12(a), Customer shall so notify Supplier at least
thirty (30) days in advance of the date such Third Party Provider or Customer
will begin to provide such Services. Supplier shall cooperate with Customer and
Customer's contractors to allow the proper performance of any services (whether
or not included within the Scope of Work) being provided internally by Customer
or by such Third Party Provider, subject to Supplier's reasonable requirements
regarding security and the protection and use of any Supplier Confidential
Information.
(c) The Parties acknowledge and agree that, notwithstanding the fact
that Service Levels have been prepared for New Development and Major
Enhancement, Customer is under no obligation to proceed with such work or, if it
does elect to proceed, to select Supplier to provide the necessary services.
SECTION 4.13 EMPLOYMENT AND COMPENSATION OF COUNSEL AND OTHER CONSULTANTS
Supplier shall not employ or retain any lawyers, accountants,
engineers, appraisers, planners, financial consultants, or other experts and
consultants, on behalf of Customer without having first received specific
written authorization to do so and approval for the costs and expenses
associated therewith, as more fully set forth in this Master Agreement. Customer
shall reimburse and pay all costs and expenses incurred in connection with
retaining and utilizing such professionals provided that Customer consented in
advance in writing to the terms of such retention or appointment by Supplier on
Customer's behalf. Customer reserves the right, without obligation to Supplier,
to retain and utilize the services of staff and independent counsel to perform
such services and assignments as it deems appropriate in connection with or
related to Services, whether or not such services are or could have also been
performed by Supplier. Notwithstanding anything to the contrary herein or in any
Appendix hereto, Supplier's advice to
16
Customer regarding the interpretation, application or effect of Legal and
Contractual Requirements shall be as a Services consultant and not as legal
counsel.
SECTION 4.14 CUSTOMER OFFICE SPACE AT SUPPLIER FACILITIES
Supplier shall provide to Customer, without charge, furnished office
space at each Supplier facility used to provide Services for the exclusive use
of Customer personnel when visiting such Supplier facilities. Any such visit
shall be made only with prior written notice to Supplier and shall be of scope
and duration as necessary for Customer to exercise its rights under this
Agreement. Customer shall not have the right to conduct its business or
operations from any Supplier facility. Customer employees using such office
space will be accorded reasonable access to, and the use of, office equipment
and other services such as photocopiers, network printers, facsimile machines,
local and long distance telephone service, parking, conference rooms, courier
service and secretarial support. Customer will reimburse Supplier within thirty
(30) days of receipt of Supplier's invoice for any costs associated with
Customer's excessive use of services such as telephone, facsimile, secretarial
and courier services. Customer personnel shall comply with all policies and
procedures governing access to and use of such office space.
ARTICLE 5
SERVICE LEVELS
SECTION 5.1 SERVICE SCHEDULES
Supplier shall be bound by the Service Schedules that specifically
relate to the Services and contain quantitative levels of performance ("Service
Levels") for certain specified Services. The Service Levels are identified and
defined in each of the Service Schedules attached hereto. With respect to each
Service which has an associated Service Level, Supplier shall provide such
Service throughout the Term in a manner that meets or exceeds the associated
Service Level.
At all times, Supplier's level of performance will be at least
consistent with industry standards or Customer's average level of performance
for the twelve (12) months immediately prior to the Effective Date, whichever is
higher. In cases where Customer has not provided or is not able to provide
Supplier with reasonable detail of its performance for the twelve (12) months
immediately prior to the Effective Date, Supplier's level of performance will be
at least consistent with industry standards. Supplier will provide detailed
reports sufficient to enable Customer to evaluate the effectiveness and
efficiency of the System and Services and Supplier's performance hereunder.
Access to the base data, and the management tools and techniques needed to
generate the foregoing reports will be provided by Supplier to the Customer
Contract Executive at Customer headquarters.
SECTION 5.2 REVIEW OF SERVICE LEVELS
Within six (6) months after the Effective Date (or as may be otherwise
agreed to by the Parties as part of the Transition Tasks) and every six (6)
months thereafter, the Parties shall jointly review the Service Levels to
determine whether any changes are necessary or appropriate to ensure that
Supplier provides the high quality Services required under this Master
Agreement. The Parties acknowledge that they expect the Service Levels to
generally improve continuously
17
throughout the Term. Throughout the Term, Supplier shall identify and notify
Customer of innovative and commercially reasonable methods of improving the
Service Levels.
SECTION 5.3 MEASUREMENT AND MONITORING TOOLS
As part of the Services provided, and at no additional cost to
Customer, Supplier shall implement reasonable measurement and monitoring tools
and procedures reasonably acceptable to Customer and necessary to measure its
performance of the Services, and compare such performance to that required by
the Service Levels. For any measurement and monitoring tools that involve a
satisfaction survey, Customer shall approve the form, content and scope of such
survey, the mechanism for distribution and its targeted recipients. All
completed surveys or other similar measurement or monitoring tools shall be
returned directly to the Customer Contract Executive or his or her designee.
Supplier shall provide Customer or its auditors with any information and access
to the measurement and monitoring tools necessary to verify compliance by
Supplier with the Service Levels. Supplier shall cooperate with Customer in
reconciling actual expense against budgeted expense on six (6) month intervals
beginning in the first anniversary of the Effective Date.
SECTION 5.4 FAILURE TO MEET SERVICE LEVELS
(a) If Supplier fails to meet a Service Level for reasons other than
those specified in Section 5.4(c) below, Customer may assess, in its sole
discretion, a credit ("Service Level Credit") against Supplier in the amount
specified in the Consequence Matrix set forth on Exhibit H, not to exceed twenty
percent (20%) of Supplier's total invoiced fees for the associated period.
Customer shall exercise its option to require recovery of the Service Level
Credits by providing written notice to the Supplier Contract Executive of
Supplier's obligation to credit Supplier's next monthly invoice by the amount of
the Service Level Credit. Supplier shall then offset or deduct the Service Level
Credits amount from such invoice. Regardless of whether Customer exercises its
option to recover Service Level Credits with respect to any failure, Customer
shall also have any remedies available to Customer under this Master Agreement,
at law or in equity, including the right to terminate this Master Agreement for
cause in accordance with the provisions of Section 19.1 below.
(b) Supplier shall utilize the procedures and take the appropriate
remedial action specified in the Action Matrix contained in the associated
Service Schedule to address Supplier's failure to meet service and quality
levels described in the Service Schedules. Specifically, each time Supplier
fails to meet a Service Level, Supplier shall: (i) promptly investigate the root
cause(s) of the failure and deliver to Customer a written report identifying
such root cause(s) in the form requested by Customer; (ii) use all Commercially
Reasonable Efforts to correct the problem and to begin meeting such Service
Level as soon as practicable, but in any event within thirty (30) days of such
failure; and (iii) at Customer's request, advise Customer of the status of such
corrective efforts. All Service Levels and applicable Service Level Credits
remain in effect notwithstanding Supplier's use of Commercially Reasonable
Efforts to correct any performance problem.
(c) If any failure to meet a Service Level is directly and solely
attributable to (i) a Force Majeure Event, (ii) an Excused Performance Event, or
(iii) a material breach by Customer of this Master Agreement, or (iv) Supplier's
reasonable reliance on information hereafter provided by,
18
or services performed by, Customer, its Agents or Third Party Providers
engaged directly by Customer, Customer shall not be entitled to a Service
Level Credit.
SECTION 5.5 PERFORMANCE STANDARDS
With respect to any Service or obligation which does not have an
associated Service Level, Supplier shall perform such Service or obligation as a
prudent operator and with a level of accuracy, quality, completeness,
timeliness, responsiveness and cost efficiency that meets or exceeds the
standards of other experienced outsourcing companies providing services similar
to the Services, and in any event using prompt and diligent efforts in a
professional and workmanlike manner and using qualified individuals
("Performance Standards"). Customer shall notify Supplier promptly if Customer
believes that Supplier has failed to meet applicable Performance Standards, and
the Parties shall work in good faith to promptly investigate and identify the
root cause, and use Commercially Reasonable Efforts to remediate any Performance
Standard issues. At Customer's request, Supplier shall advise Customer of the
status of the corrective efforts.
SECTION 5.6 CUSTOMER SATISFACTION SURVEY
At its option and at its expense, Customer may elect to have a Third
Party Provider conduct customer satisfaction surveys from time to time.
SECTION 5.7 SUPPLIER BENCHMARKING
Not more frequently than annually, and at its expense, Customer may
engage an independent qualified consultant (provided such consultant is not a
competitor of Supplier) for the purpose of performing a review of the costs to
Customer of the Services, Supplier's performance of the Services, and use by
Customer and Supplier of new technologies and techniques, as measured by
industry norms. Supplier shall reasonably cooperate, at its expense, with
Customer and Customer's consultant.
ARTICLE 6
PERSONNEL
SECTION 6.1 FURNISHING OF SUPPLIER EMPLOYEES
Supplier shall perform the Services through qualified and trained
Supplier Employees (and Agents, as permitted hereunder), including supervisory,
support and other personnel, in sufficient number to render the Services
properly, safely, adequately and in accordance with this Master Agreement,
within accepted industry standards and with the staffing matrix and
organizational chart submitted by Supplier to Customer. Supplier shall be solely
responsible for complying with all OSHA, CDC and JCAHO standards applicable to
Supplier's Employees to the extent that the means of compliance are within
Supplier's reasonable control. Except as otherwise expressly provided in this
Master Agreement, Supplier shall have the exclusive right and duty to hire,
direct, discipline, train, promote, demote and discharge Supplier Employees, and
shall exercise complete and exclusive control over the conduct of Supplier
Employees. It is understood and agreed that Supplier Employees shall not be
deemed to be employees of
19
Customer and that employees of Customer shall not be deemed to be employees
of Supplier, and each Party shall take all actions necessary to ensure such
result.
SECTION 6.2 SUPPLIER EMPLOYEE COMPENSATION
Supplier shall pay, and shall cause all of its Affiliates to pay, all
salaries, wage, payroll and other taxes, fees, workers' compensation insurance
and other charges or insurance levied or required by any Federal, State, or
local law, statute, regulation or ordinance relating to the employment of
Supplier Employees. Customer shall not be deemed a party to any collective
bargaining agreement which is now or hereafter may be in effect with respect to
Supplier Employees.
SECTION 6.3 COMPLIANCE WITH LAWS RELATING TO EMPLOYMENT
Supplier and its Agents shall fully comply with all applicable laws,
statutes, regulations and ordinances relating to workers' compensation, social
security, unemployment insurance, hours of labor, wages, tax withholding,
non-discrimination, safety and health, communicable and infectious diseases,
working conditions and other employer-employee matters with respect to their
employees. Documentation of compliance with JCAHO requirements shall be (i)
maintained on Customer's premises, (ii) stored in the format reasonably
requested by Customer, and (iii) available in summary report formats reasonably
requested by Customer.
Supplier shall ensure that (i) Supplier's Employees' performance of the
Services conforms to all of Customer's rules and regulations regarding safety,
security, confidentiality of information and conduct on Customer's premises, and
Customer shall provide to Supplier written copies of all such Customer rules and
regulations as in effect from time to time, and (ii) those Supplier Employees
that operate equipment or vehicles in the performance of any of the Services are
fully qualified, adequately insured and, where required by law, licensed to do
so.
To the extent applicable, Supplier and Suppliers Employees shall
participate in Customer's risk management initiatives and comply with Customer's
policies and procedures in furtherance thereof, and Customer shall provide to
Supplier written copies of all such Customer rules and regulations as in effect
from time to time. By way of illustration, and not limitation, if incident to
providing Services under this Master Agreement, Supplier Employees or Agents
become involved in an incident or event that would be reportable under
Customer's incident reporting policies, Supplier shall report such incident or
event to Customer in accordance with said policies, cooperate in any
investigation or root cause analysis, and maintain the confidentiality of such
information.
SECTION 6.4 SAFETY AND TRAINING
Supplier shall establish and maintain throughout the Term an active
safety program and training program for Supplier Employees performing Services
at Customer locations designed to minimize on-the-job injuries. Supplier shall
provide, and cause its Agents, if any, to provide, training to Supplier
Employees regarding workplace safety and other standards, shall establish
mechanisms to ensure that Supplier Employees comply with all applicable
standards, shall evaluate the performance of any Supplier Employees who are
engaged under this Master Agreement at regular intervals and shall certify that
Supplier Employees meet the requisite qualifications and competencies and are
performing such services in a safe and effective manner.
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In addition, Supplier shall ensure that all Supplier Employees successfully
complete orientation programs as required by Customer. Certification of
Supplier Employee competencies shall be performed in accordance with Service
Level 3.1.1.5.9.
SECTION 6.5 HEALTH STATUS AND INJURY
(a) Supplier shall require that Supplier Employees who will provide
Services from Customer locations provide proof of routine immunizations and
documentation of, or submit to, testing for rubella, tuberculosis, hepatitis and
such other tests as may be required by law, or reasonably requested by Customer.
Proof of immunizations may be provided by Supplier Employees' own health care
providers. Documentation regarding tuberculosis testing shall evidence testing
within three (3) months prior to the commencement of the provision of Services
under this Master Agreement. Health status information relating to such tests on
all Supplier Employees shall be promptly provided to Customer prior to the
commencement of the provision of Services under this Master Agreement, subject
to the receipt of a release from those of Supplier Employees transitioned from
Customer which provides such employees' health status information.
(b) Supplier Employees may use Customer hospital's emergency room, at
Supplier's or individual Supplier Employee's expense, for injuries that occur or
medical conditions that arise while providing Services to Customer hereunder.
SECTION 6.6 CUSTOMER'S INVOLVEMENT IN SUPPLIER EMPLOYEE MATTERS
(a) Subject to Customer's receipt of the staffing matrix and
organizational chart required under the Service Schedules hereto, and subject to
Section 6.7 below, Customer shall not participate in any decision as to hiring,
promotion, discharge, wages, benefits, hours or other working conditions of
Supplier Employees, or the means and methods by which they perform their duties.
Supplier hereby agrees, however, that all of the positions identified to provide
the Services to Customer shall, at the Effective Date, be offered to
supervisory, professional and hourly employees currently employed by Customer or
its Affiliates. In addition, if requested by the Customer Contract Executive in
his or her sole discretion, Supplier shall replace any Supplier Employee and
cause any subcontractors to replace any of its personnel, for any reason or no
reason, that does not constitute unlawful discrimination or other reason
prohibited by law. Customer may also at its option deny entry and access to
Customer's property to any such Supplier Employee.
(b) Supplier shall have the right to conduct lawful background
investigations of Transferred Employees (as defined in Section 6.7.1 below) at
Supplier's expense. Supplier shall conduct lawful background investigations of
its new employees assigned to perform Services who were not formerly employees
of Customer or its Affiliates.
(c) Supplier shall have the right to conduct lawful drug and alcohol
testing for Supplier Employees at Supplier's expense.
(d) Customer and Supplier shall provide each other with information and
documentation regarding Transferred Employees subsequently rehired by Customer,
but only to the extent that such information is needed to comply with applicable
laws and regulations.
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SECTION 6.7 TRANSITION OF PERSONNEL
6.7.1 Those Customer employees who have been offered employment by
Supplier (contingent upon the execution and delivery of this Master Agreement),
and those who have accepted such employment, are identified on Attachment 6.7.
With respect to any Customer employee identified on Attachment 6.7 who on the
Effective Date is in a leave status, including without limitation on medical,
family, disability, industrial or sick leave, such employee shall be employed
effective on return from such leave, subject to all of Supplier's standard
conditions of employment. All Customer employees who accept Supplier's offer of
employment and begin work with Supplier are herein referred to as "Transferred
Employees." Each such Transferred Employee's "Employment Date" shall be the same
date as the Effective Date or the business day following the last day of such
Transferred Employee's leave, as applicable. Except for employees performing
functions (for example, the data center) that are relocated outside of the area,
Supplier shall retain each Transferred Employee at Customer's site for at least
twelve (12) months following the Effective Date (except for terminations due to
unacceptable performance or moral turpitude). Notwithstanding the foregoing, if,
during the first twelve (12) months of the Term, Customer reduces the volume of
units purchased for any Service by more than 20% below the Baseline for that
Service for any consecutive three months then the Parties shall work in good
faith to develop a mutually acceptable alternative to address the financial
impact. Thereafter, if there are not positions available for such Transferred
Employees at Customer sites, Supplier shall offer to such Transferred Employees
the opportunity to apply for comparable available employment opportunities
within Supplier's business on the same basis as Supplier's other employees.
Nothing herein is intended to make any Transferred Employee of any Party a third
party beneficiary of this Master Agreement.
6.7.2 Supplier shall provide benefits to Transferred Employees as
follows:
(a) BASE SALARY. Each Transferred Employee shall be added to Supplier's
payroll system at a base salary no less than the base salary paid to that person
by Customer as of the close of business on the day prior to the Effective Date.
(b) YEARS OF SERVICE. In determining eligibility of Transferred
Employees to participate, or degree or extent of participation, or vesting of
rights, with regard to severance benefits and those benefit plans of Supplier
referred to in this Master Agreement, Supplier agrees to recognize all years of
service with Customer and all years of service with predecessors-in-interest of
Customer to the same extent Customer recognized such years of service under its
own benefit plans.
(c) MEDICAL AND HEALTH PLANS. Supplier represents and warrants that it
will have in effect as of the Employment Date a group insurance program under
which each Transferred Employee will be, in accordance with and subject to the
terms of the program, permitted to participate consisting of medical, hospital,
life, and dental insurance benefits. Eligibility for, the benefits of (including
the reservation by Supplier of the right to terminate or amend such program in
whole or in part at any time), and the amount, if any, of employee contributions
toward, such group insurance program will be determined by Supplier, except that
Supplier's group insurance will waive all pre-existing conditions or waiting
periods for each Transferred Employee and any covered dependents.
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(d) VACATION. Supplier represents and warrants that on the Employment
Date Supplier shall make available to all Transferred Employees vacation under
its applicable vacation plan, subject to and in accordance with the terms and
conditions of such plan in effect from time to time, and with years of service
of such Transferred Employees determined in accordance with paragraph (b) above.
In addition, Supplier agrees that each Transitioned Employee will receive
vacation time accrued while employed by Customer, up to a maximum of ten (10)
vacation days. Supplier shall invoice Customer for such vacation time
immediately following the Effective Date, and Customer shall pay such invoices.
(e) LONG-TERM DISABILITY PLAN. Supplier represents and warrants that on
the Employment Date that Transferred Employees will be eligible for and
participate in Supplier's Long-Term Disability Plan subject to and in accordance
with the terms and conditions of such plan in effect from time to time, with
service credit accorded such Transferred Employees to the extent and for the
time period that such Transferred Employees participated in Customer's Long-Term
Disability Plan prior to the Effective Date.
(f) SICK LEAVE BENEFITS. Supplier represents and warrants that on the
Employment Date that Transferred Employees will be eligible for sick leave
benefits under Supplier's applicable sick leave plan, subject to and in
accordance with the terms and conditions of such plan in effect from time to
time, with service credit accorded such Transferred Employees in accordance with
paragraph (b) above.
(g) 401(k) BENEFITS. Supplier represents and warrants that on the
Employment Date that for purposes of determining eligibility to participate in,
and vesting of any employer contributions under Supplier's 401 (k) plan,
Supplier shall recognize all years of Customer service in accordance with
paragraph (b) above.
(h) TUITION BENEFITS. Supplier agrees to provide a tuition benefit to
each Transferred Employee who continues to dedicate substantially all of his or
her professional time to the performance of Services hereunder that will be
equal to the tuition benefit the Transferred Employee would have received if the
Transferred Employee had remained an employee of Customer (the "Enhanced Tuition
Benefit"). The Parties acknowledge that the amount and structure of the tuition
benefit offered by Customer to its employees is subject to change from time to
time at Customer's sole discretion and, consequently, the Enhanced Tuition
Benefit will be subject to the same modifications. Customer shall reimburse
Supplier an amount equal to the difference between the cost of the Enhanced
Tuition Benefit and the cost of the tuition benefit offered on the Effective
Date by Supplier to Supplier's Employees, if any. With regard to dependent
tuition benefits, for Transferred Employees employed by the Hospital of the
University of Pennsylvania ("HUP"), dependents must be 10 years of age or older
on the Effective Date in order to qualify for dependent tuition benefits. For
Transferred Employees hired by HUP on or before September 1, 1978, dependents
shall continue to be eligible to receive the dependent tuition benefit of $900
per year. For Transferred Employees employed by Pennsylvania Hospital ("PAH"),
those employees with less than 5 years shall be eligible to receive a $2,500
reimbursement per year. Transferred Employees employed by PAH with 5 or more
years shall be eligible to receive $5,000 per year.
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(i) ADDITIONAL MATTERS. In addition to the matters set forth in this
Section 6.7, the matters set forth in Attachment 6.7.2 shall apply to Supplier's
employment of the Transferred Employees.
6.7.3 Supplier agrees that it shall be solely responsible and liable
for compliance with the Worker Adjustment and Retraining Act (WARN), 29 U.S.C.
Section 2101 et seq., as that Act may apply to any Transferred Employee. In the
event that any Transferred Employee becomes a party seeking damages of equitable
relief from Customer and pleads a cause of action in any court related in any
way to this Master Agreement that alleges a violation of WARN, Supplier agrees
to defend and indemnify Customer from such cause of action in accordance with
the provisions of Article 17 below.
ARTICLE 7
COMPENSATION
SECTION 7.1 CHARGES IN GENERAL
As the sole and entire consideration for all of the Services to be
performed by Supplier and for all of the other tasks, services, and obligations
of Supplier under this Master Agreement, Customer shall pay to Supplier the
amounts set forth in Exhibit E plus such additional amounts as specified in this
Master Agreement. Unless otherwise expressly stated herein, Supplier shall be
solely responsible for all of its business expenses (including travel and
lodging), and Supplier shall be solely responsible for, and shall indemnify (in
accordance with the provisions of Article 17 below) Customer against, all third
party claims for costs and expenses (including statutory or mechanics liens) of
Supplier necessary to meet Supplier's obligations arising under this Master
Agreement. The charges set forth in Exhibit E shall be guaranteed by Supplier
during the Term of this Master Agreement and, except as otherwise expressly
stated herein or as otherwise mutually agreed in writing by the Parties,
Customer shall have no responsibility for, and shall not be required to pay,
Supplier any additional fees, charges, assessments, or reimbursements under this
Master Agreement.
SECTION 7.2 TAXES
(a) Each Party shall pay any real property taxes or personal property
taxes on property it either owns or leases from a third party. Taxes payable on
the Transferred Hardware shall be prorated as of the Effective Date based on the
number of days in the applicable tax period, with Customer paying the taxes
allocable to the period before the Effective Date and Supplier paying the taxes
allocable to the period on and after the Effective Date. If Supplier owes money
to Customer pursuant to such proration, Supplier shall pay such amount to
Customer by corporate check on the Effective Date. If Customer owes money to
Supplier pursuant to such proration, Customer shall pay such amount to Supplier
by corporate check on or before the date Supplier must pay the next installment
of the applicable tax. If Customer purchases any Hardware from Supplier on the
expiration or earlier termination of the Term pursuant to Section 19.6, personal
property taxes on such Hardware shall be prorated and paid in a similar manner,
with Supplier paying the taxes allocable to the period before the date Customer
purchased the Hardware and Customer paying the taxes allocable to the period on
and after such date.
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(b) Supplier shall pay any sales, use, excise, value-added, services,
consumption, and other taxes and duties imposed on any goods and services
acquired, used or consumed by Supplier in connection with the Services. Consumer
shall pay any sales, use, excise, value-added, services, consumption and other
taxes and duties imposed on its acquisition of Hardware from Supplier on the
expiration or earlier termination of the Term pursuant to Section 19.6.
(c) Customer shall pay when due any sales, use, excise, value-added,
services, consumption, or other tax imposed by any taxing jurisdiction as of the
Effective Date on the provision of the Services or any component thereof, as the
rate of such tax may change from time to time during the Term. At Customer's
option, unless not legally permissible, Customer shall either pay such taxes
directly to the appropriate taxing authority or Customer shall pay such taxes to
Supplier as invoiced and Supplier shall remit such payments to the appropriate
taxing authority. If any taxing jurisdiction imposes after the Effective Date a
new sales, use, excise, value-added, services, consumption, or other tax on the
provision of the Services or any component thereof, the Parties shall cooperate
in attempting to reduce the amount of such tax to the maximum extent feasible.
Customer shall be liable for any such new tax which is imposed on the charges
for the provision of the Services, or any component thereof, as well as such new
tax on Pass-Through Expenses. Supplier shall be liable for any such new tax
which is imposed on any charges (other than Pass-Through Expenses) incurred in
order to provide the Services.
(d) The Parties shall cooperate with each other to enable the Parties
to determine accurately their respective tax liabilities and to reduce such
liabilities to the extent permitted by law. Supplier invoices to Customer shall
separately state the amount of any taxes Supplier is collecting from Customer.
Each Party shall provide to the other any resale certificates, exemption
certificates, information regarding out-of-state or out-of-country sales or use
of Hardware and Services, and such other similar information as the other Party
may reasonably request.
SECTION 7.3 OUT-OF-SCOPE SERVICES
Customer shall pay for any "out-of-scope services" (i.e., ancillary
services that are not a part of the Scope of Work), in accordance with the terms
and conditions stated in a written Change Order signed by the Customer Contract
Executive authorizing such services in accordance with Customer's applicable
policies and procedures. Supplier shall provide an invoice for out-of-scope
services that contains charges incurred, a description of the services
performed, and documentation of Customer's authorization of the work. No invoice
with respect to out-of-scope services will be paid unless such services were
authorized in advance in writing pursuant to an approved Service Request or
Change Order.
Notwithstanding the above or any request made to Supplier or the
submission of any proposal by Supplier pursuant to Section 4.9 or 4.10, Customer
shall have the right to contract with a Third Party Provider to perform any
out-of-scope services. If Customer contracts with a Third Party Provider to
perform any such service, Supplier shall cooperate with Customer and such Third
Party Provider to the extent reasonably required for the provision of services
by such Third Party Provider.
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SECTION 7.4 RECORDKEEPING
Supplier shall maintain complete and accurate records of, and
supporting documentation for, the amounts billed to and payments made by
Customer under this Master Agreement. Such records shall include data and
documentation of third party charges invoiced to and paid by Supplier. Supplier
shall retain such records throughout the Term and for an additional period of
five (5) years. Supplier shall provide Customer, at Customer's request, with
paper and electronic copies of documents and information reasonably necessary to
verify Supplier's compliance with this Master Agreement. Customer and its
authorized agents and representatives shall have access to such records for
audit purposes in accordance with the provisions of Article 13 below. Upon
termination or expiration of this Master Agreement, Supplier may retain one
archived copy of those records and documents mutually agreed upon by the
Parties.
SECTION 7.5 MOST FAVORED CUSTOMER
(a) Charges payable from time to time by Customer under this Master
Agreement for data processing resources and services shall not exceed those then
paid by other Similarly Situated Customers (as defined below) of Supplier. If
Supplier enters into an agreement with a Similarly Situated Customer and the per
unit fee for each element under a particular Service Agreement are lower than
the fees charged to Customer for such elements under this Agreement, Customer's
Charges shall be equitably adjusted to provide Customer the benefit of such
lower prices; however, in order to receive the benefit of such lower per unit
pricing Customer must agree to extend the Term by the number of months in the
term of such Similarly Situated Customer's agreement with Supplier. For the
purposes of this Section 7.5, a "Similarly Situated Customer" shall mean a
customer of Supplier having SIC Code and term and volume commitments similar to
Customer's. In addition, charges payable from time to time by Customer under
this Master Agreement for consulting, implementation and integration services
shall be discounted not less than 10% from Supplier's standard rates as in
effect from time to time.
Within thirty (30) days after the beginning of each Term year, a
Supplier officer shall certify in writing to Customer that Supplier's charges to
Customer comply with this Section, and shall provide to Customer's third party
auditors the information reasonably necessary for Customer to verify such
compliance, as further described under Article 13 below. The auditors shall
inform Customer and Supplier whether Supplier's charges comply with this
Section, but shall keep in strict confidence, including maintaining such in
strict confidence from Customer, all information necessary to provide such
verification.
(b) The Parties acknowledge that technologies and methods will evolve
and improve during the Term of this Master Agreement, and that Supplier will be
well situated to learn of such improvements in industry practice. Supplier will
use Commercially Reasonable Efforts to apply the best industry practices to the
performance of Services hereunder, subject to Customer consent and, where such
practices require an increase in charges, approved funding as provided for
herein.
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ARTICLE 8
INVOICING AND PAYMENT
SECTION 8.1 INVOICES
(a) Fixed Charges. Supplier shall deliver to the Customer Contract
Executive, on the first day of each month, one invoice for all fixed amounts due
with respect to Services for that month, as more particularly described in the
Compensation Exhibit.
(b) Variable Charges. Supplier shall deliver to the Customer Contract
Executive, on a monthly basis in arrears, one invoice for all variable amounts
due with respect to Services rendered in the previous month, as more
particularly described in the Compensation Exhibit. Each invoice shall
separately state charges for each category of Service, reimbursable expenses and
taxes payable, and shall otherwise be in such detail as Customer may require for
its internal accounting needs, as specified by Customer from time to time. Each
invoice shall be based on the Monthly Performance Report and shall include any
calculations used to establish the charges. If out-of-scope services are
provided, Supplier shall invoice the applicable charges in a separate invoice as
described in Section 7.3 above.
(c) Delivery of Invoices. Supplier shall deliver all invoices
hereunder to the attention of Contract Executive, University of Pennsylvania
Health System, 0000 Xxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000,
unless designated otherwise by Customer in writing pursuant to Section 21.9
hereof.
SECTION 8.2 PAYMENT
(a) Customer shall pay all Fixed Charges due with respect to Services,
including the Transition Tasks, rendered in each month, as more particularly
described in the Compensation Exhibit attached hereto as Exhibit E, by wire
transfer on or before the 15th of the month in which such Services were
rendered.
Customer shall pay all invoices for Variable Charges by wire transfer
net sixty (60) days from the date after the same are received by Customer at the
address given above.
(b) To the extent Customer is entitled to a Service Level Credit
pursuant to this Master Agreement, Supplier shall provide Customer with such
Service Level Credit on the first invoice delivered after such Service Level
Credit is earned. If the amount of any Service Level Credits on an invoice
exceeds the amount owing to Supplier reflected on such invoice, Supplier shall
pay the balance of the Service Level Credit to Customer within thirty (30) days
after the invoice date.
SECTION 8.3 PRORATION
All periodic charges under this Master Agreement (excluding charges
based upon actual usage or consumption of Services) shall be computed on a
calendar month basis and shall be prorated for any partial month.
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SECTION 8.4 SET-OFF AND WITHHOLDING
(a) Notwithstanding any other provision of this Master Agreement, a
Party who is owed any amount by the other Party may, at its option, set off that
amount as a credit against any amounts it otherwise owes to the other Party.
(b) If Customer disputes in good faith any portion of an invoice,
Customer shall pay the undisputed dollar amount of such invoice when due and
may, at its option, withhold the disputed portion pending resolution of the
dispute by mutual agreement or pursuant to Article 20 of this Master Agreement.
If Customer withholds any payment pursuant to this Section 8.4(b), Customer
shall notify Supplier of the basis for such withholding in accordance with
Section 21.9 hereof. Upon resolution of the dispute, Customer shall pay to
Supplier such portion, if any, of the disputed amount determined to be owing to
Supplier.
(c) The limitations on liability set forth in Section 18.3 shall not
apply with respect to charges otherwise owed to Supplier under Sections 8.1 and
8.2.
ARTICLE 9
PURCHASING
SECTION 9.1 GENERALLY
Unless otherwise directed by Customer, Supplier shall be responsible
for purchasing all goods and services necessary or desirable for the provision
of Services. Supplier shall develop, implement and maintain a system for
ensuring purchasing efficiency with respect to all procurement. In connection
therewith, Supplier shall (i) develop a method of indexing the cost of resources
to recognized industry standards (such as those published by the Gartner Group),
(ii) use Commercially Reasonable Efforts to obtain cost reductions with
aggressive bidding and negotiation, (iii) research vendor performance
qualifications, (iv) oversee all aspects of delivery, (v) use Commercially
Reasonable Efforts to obtain cost effectiveness and efficiency, (vi) require
that all vendors comply with work practices and standards acceptable to Supplier
and Customer, (vii) institute and implement controls designed to ensure that all
goods and services are of the highest quality, and (viii) use Commercially
Reasonable Efforts to obtain the satisfaction of all recipients of such goods
and services. In instances where Supplier is providing procurement services and
passing the costs through to Customer, Supplier shall credit all trade
discounts, rebates, refunds, credits, concessions and other incentives to
Customer's account. Supplier shall be under no obligation to utilize Customer's
existing purchasing agreements, except for those agreements identified under
Section 4.4 above.
SECTION 9.2 SALES AND USE TAXES
The Parties intend that certain purchases by Supplier on behalf of
Customer will be exempt from Pennsylvania sales and use taxation. Other
purchases by Supplier will be taxable to the extent they are used for a
non-exempt purpose. Goods and services that are taxable, non-exempt to Customer
are referred to herein as "Taxable," and goods and services that are exempt from
tax with respect to Customer (although potentially taxable to other entities)
are referred to herein as "Non-Taxable." In making purchases, Supplier shall, at
all times:
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(i) comply with all requirements of the tax exemption certificate
issued by the Commonwealth of Pennsylvania in favor of Customer, as well as with
the requirements of all applicable laws and regulations;
(ii) maintain appropriately detailed accounting records of all
purchases so that it may be discerned from such records the amounts paid for and
allocable to taxable purchases and to Non-Taxable purchases and so that such
records will constitute a readily auditable "trail" available to Customer upon
its request, and keep records of both types of purchases separate from each
other;
(iii) to the extent required by applicable laws, keep
all Taxable purchases and Non-Taxable purchases physically segregated from each
other and from other goods;
(iv) to the extent required by applicable laws, ensure that Taxable and
Non-Taxable Services are performed separately from each other, and for each
party who performs Taxable Services, maintain appropriately detailed accounting
records showing the specific services performed, the dates of performance, the
number of hours spent working on such services, the costs of such services
expressed in an hourly wage format or its equivalent, and such other information
as Customer may request;
(v) review all Supplier's procurement activities on an ongoing basis to
ensure that sales and use taxes are charged only as and when applicable;
(vi) self-assess for required sales and use taxes not charged or
incorrectly assessed by vendors, and
(vii) upon Customer's request, as directed by Customer and in
coordination with Customer's Office of the General Counsel and its Finance
Department and at Customer's cost and expense, assist Customer in contesting on
Customer's behalf any sales or use taxes assessed against Customer.
SECTION 9.3 COMMUNITY, WOMEN-OWNED AND MINORITY-OWNED BUSINESS DEVELOPMENT
Supplier shall make a good-faith effort to comply with Customer's
programs and goals, as may be identified from time to time by Customer, for
providing opportunities to businesses located in the Philadelphia area, as well
as to businesses owned by women and minorities. Such opportunities shall include
management expertise, career development opportunities, employment, and
purchases of goods and services. Supplier shall coordinate its bidding policies
and procedures to achieve such compliance. Supplier shall also provide periodic
written reports to Customer on its efforts to comply with such programs and
goals at such times and in such format as shall reasonably be determined by
Customer.
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ARTICLE 10
SOFTWARE AND INTELLECTUAL PROPERTY RIGHTS AND OBLIGATIONS
SECTION 10.1 CUSTOMER PROPRIETARY SOFTWARE
Customer Proprietary Software will remain Customer's property and
Supplier will have no ownership interests or other rights in the Customer
Proprietary Software, except as provided in this Section 10.1. To the extent
legally and contractually permitted, Customer grants to Supplier, without
charge, the limited, nonexclusive, non-transferable right to access only those
portions of the Customer Proprietary Software during the Term solely for the
purpose of, and solely to the extent necessary for, performing the Services. Any
Customer Proprietary Software will be made available to Supplier for access in
its then-current form and on its then-current media, AS IS, together with the
Documentation and other materials related to such Software, to the extent
reasonably necessary. Supplier agrees not to remove any proprietary marks,
markings, logos, copyrights or other indications of intellectual property and
proprietary rights on, in or related to any Customer Proprietary Software or
associated Documentation or materials, and will use Commercially Reasonable
Efforts to preserve the integrity of the Software and Customer's rights therein.
Supplier will cooperate fully with Customer to perfect Customer's rights in the
Customer Proprietary Software, and to enforce its rights when Customer deems it
necessary or desirable.
SECTION 10.2 CUSTOMER LICENSED SOFTWARE
To the extent legally permitted, Customer will grant to Supplier during
the Term, the same rights of access and use to Customer Licensed Software that
Customer has, for the sole purpose of performing the Services. Supplier will
comply with all obligations and responsibilities, including use and
non-disclosure restrictions, imposed on Customer by any Customer Licensed
Software license or licensor. Except as otherwise requested or approved in
writing by Customer (or the relevant licensor), Supplier will cease all use of
Customer Licensed Software upon expiration or termination of this Master
Agreement.
SECTION 10.3 SUPPLIER PROPRIETARY AND LICENSED SOFTWARE
10.3.1 Supplier shall identify all Supplier Proprietary Software and
Supplier Licensed Software to be used in the provision of Services hereunder on
Attachment 10.3, and shall keep Attachment 10.3 current throughout the Term.
Prior to the use or operation by Supplier of any Supplier Proprietary Software
or Supplier Licensed Software to provide or perform Services, the Parties will
mutually agree as to:
(a) which Party will own or be the licensee of such Software, during
the Term and following the Services Termination Date;
(b) whether Customer or Third-Party Providers will be required to pay
any fees, costs or expenses with respect to such Software during the Term and
following the Services Termination Date;
(c) if Supplier is the owner or licensee of such Software, whether and
on what terms Customer or Third-Party Providers will be entitled to access or
use such Software during the Term and following the Services Termination Date;
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(d) whether Customer's consent is required (and whether it has been
obtained) for the use or operation of such Software to provide or perform
Services;
(e) whether copies of the Source Code for such Software will be placed
in escrow in accordance with Section 10.5 below; and
(f) other terms and conditions, if any, applicable to the use,
operation and ownership and payment for such Software by the Parties, their
Agents and Third Party Providers in accordance with this Master Agreement.
Attachment 10.3 reflects the agreement of the Parties on the Effective
Date regarding the foregoing issues with respect to the Supplier Proprietary
Software and Supplier Licensed Software. Attachment 10.3 may be amended by the
Parties from time to time during the Term in accordance with the provisions set
forth herein. Supplier will not be required to obtain Customer's consent or
agreement with respect to (i) software solely for the internal use of Supplier;
(ii) software used to provide a shared service bureau function and not paid for
by Customer and (iii) software not used on an on-going basis to perform Services
but used only in the performance of special projects, such as network
optimization and modeling software. Supplier is and shall remain the owner or
licensee of such software which is the subject of (i), (ii) and (iii) above, and
Customer and Third Party Providers shall have no rights or obligations with
respect to such software.
10.3.2 If Customer's consent is required hereunder for Supplier's use
of Customer Proprietary Software or Customer Licensed Software, and Customer
does not provide such consent, and Supplier has provided prior written notice to
Customer that such Software is necessary for Supplier's attainment or
maintenance of the Service Levels, the Parties will negotiate equitable
adjustments to the Service Levels. However, no such adjustment to the Service
Levels will be made (i) to the extent that Supplier's failure to attain or
maintain Service Levels arises from or relates to a breach by Supplier of its
responsibilities set forth herein or (ii) to the extent that the Software
requested by Supplier to be used would result in a significant additional cost
to Customer or a significant change in Customer's IT procedures.
10.3.3 With respect to Supplier Proprietary Software listed on
Attachment 10.3, Supplier will and does hereby transfer title to at least one
copy of the tangible medium of expression on which each item of Software
resides, as such Software is delivered to Customer. In addition, Supplier hereby
grants to Customer during the Term and in perpetuity after the Services
Termination Date the irrevocable, royalty-free right and license to use, at no
cost, modify and reproduce such Software for internal business purpose use, and
in addition the irrevocable, royalty-free right and license as of the Services
Termination Date to access, possess, use and reproduce all Source Code for such
Supplier Proprietary Software in order to maintain and modify such Software for
Customer's internal use.
SECTION 10.4 OWNERSHIP OF WORK PRODUCT
(a) For purposes of this Master Agreement, "Work Product" shall mean
reports, plans, designs, diagrams, schematics, flow charts, source code,
studies, and all other documents prepared by Supplier expressly for Customer in
connection with Supplier's performance of Services, except as otherwise provided
in Attachment 10.4. All Work Product and the copyright
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in the Work Product, except as otherwise expressly provided herein shall be
Customer's sole property, and shall be considered a "work made for hire"
within the meaning of the Copyright Act of 1976, as amended. If and to the
extent that any Work Product may not be a "work made for hire" within the
meaning of the Copyright Act of 1976, as amended, Supplier shall assign the
copyright to Customer, and execute such documentation as may be reasonably
necessary to effect an assignment without further consideration, free from
any claim, lien for balance due, or retained right in the copyright. Customer
grants Supplier a nontransferable, nonexclusive right to use the Work Product
solely for the provision of Services to Customer. Customer shall have full
power to enforce its copyright and other rights in the Work Product, and
Supplier shall extend reasonable cooperation, at Customer's expense, in the
preparation of any copyright applications and in any legal proceedings
concerning the Work Product. Work Product shall be deemed Confidential
Information of Customer. Prior to Customer's ownership of the Work Product,
Supplier grants Customer a nontransferable license to use the Work Product.
(b) Supplier also acknowledges that Customer does not intend Supplier
to be a joint author of any Work Product within the meaning of the Copyright Act
of 1976, as amended, and in no event shall any Work Product be deemed to have
been developed with the intent that Supplier be a joint author thereof.
(c) If Supplier's performance of Services includes software development
or modification of proprietary or third party code that Customer owns or is
authorized to maintain or modify, then, unless otherwise mutually agreed by the
Parties, Customer shall own all such Software and program materials developed by
Supplier, and any modifications of Customer Proprietary Software developed
expressly for Customer shall be deemed Work Product.
(d) Notwithstanding the above, and subject to Supplier's obligations
with respect to the care and use of any Customer Confidential Information,
Supplier will be free to utilize any concepts, techniques, methods, know-how or
improvements if may develop during the course of providing the Services to
Customer for itself or other Supplier customers who are not Customer Competitors
free of any use restriction, payment or other obligation to Customer.
(e) Further, Customer acknowledges that Supplier may incorporate into
the Work Product certain proprietary methodologies, content, forms or models
developed by Supplier outside of this Master Agreement and the Services provided
hereunder (the "Supplier Proprietary Materials"). Such Supplier Proprietary
Materials, even if incorporated into any Work Product, shall remain the
exclusive property of Supplier. Supplier hereby grants Customer a nonexclusive,
fully paid, perpetual license to use, execute, reproduce, display, perform,
distribute internally and make modifications and improvements to Supplier
Proprietary Materials incorporated into any Work Product for the internal use of
Supplier only; however, Customer may not disclose any Supplier Proprietary
Materials to any third party or license, sub-license, resell, transfer or
otherwise make commercial use of such Supplier Proprietary Materials or any
portion thereof without Supplier's prior written consent. The disclosure of such
Supplier Proprietary Materials to a subsequent outsourcing vendor upon
termination of this Agreement is hereby approved.
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SECTION 10.5 SOURCE CODE
10.5.1 To protect Customer in the event of a default by Supplier,
Supplier shall place certain Source Code and related Documentation (the
"Escrowed Code") into escrow with a professional third party escrow company,
such as Data Securities International, or a similar mutually agreeable company,
using an escrow agreement substantially in the form of Exhibit F attached. The
Escrowed Code shall be placed into escrow by Supplier within ninety (90) days of
its use in providing the Services. The terms of the escrow agreement shall
provide that Customer may receive the Escrowed Code from the escrow agent upon
the insolvency of or filing of a petition in bankruptcy by Supplier or the
expiration or earlier termination of this Master Agreement.
10.5.2 Escrowed Code shall include (i) Source Code created by Supplier
to Customer's specifications and (ii) Source Code for Supplier Proprietary
Software so identified on Attachment 10.3, Supplier will provide escrow agent
with full, complete, accurate and correct copies of fully commented and
annotated Source Code for such Software and will periodically update such
Escrowed Code as enhancements and new releases are made available. The Source
Code provided will be sufficiently clear and presentable to enable a programmer
with ordinary skills in the art to maintain the Software sufficiently to sustain
the performance of such Software and the System in accordance with this Master
Agreement. Notwithstanding any provision to the contrary, Supplier will not be
required to add additional comments to Source Code associated with Customer
Software existing prior to the Effective Date. Supplier will use Commercially
Reasonable Efforts to cause Third Party Providers to escrow source code for
Software that is not generally available and supported on a commercial basis.
ARTICLE 11
CONFIDENTIALITY
SECTION 11.1 DEFINITIONS
(a) "Disclosing Party" means the Party furnishing Confidential
Information and "Receiving Party" means the Party receiving the Confidential
Information disclosed by the Disclosing Party.
(b) "Confidential Information" means information designated as
confidential or which ought to be considered as confidential from its nature or
from the circumstances surrounding its disclosure. Confidential Information
includes, without limiting the generality of the foregoing, Customer Business
Records and Data, information subject to Privacy Laws, Work Product, the terms
of this Master Agreement, and information:
(i) relating to the Disclosing Party's software or hardware
products or services, or to its research and development projects or plans;
(ii) relating to the Disclosing Party's business, policies,
strategies, operations, finances, plans or opportunities, including patient care
information and patient data; or
(iii) marked or otherwise identified as confidential, restricted,
secret or proprietary, including, without limiting the generality of the
foregoing, information acquired by
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inspection or oral disclosure provided such information was identified as
confidential at the time of disclosure or inspection.
(c) Notwithstanding the foregoing, Confidential Information does not
include information which is:
(i) known to the recipient at the time of its disclosure;
(ii) in the public domain at the time of disclosure to recipient,
or subsequently thereafter becomes part of the public domain without the fault
of recipient;
(iii) independently developed by an individual or individuals not
having direct involvement with the relationship between the Parties contemplated
by this Agreement; or
(iv) acquired by recipient from a third party having no obligation
of confidentiality with respect to such information.
(d) "Confidential Materials" means the part of any tangible media upon
or within which any part of the Confidential Information is recorded or
reproduced in any form. References to "Confidential Information" in this Master
Agreement shall include all Confidential Materials.
SECTION 11.2 RIGHTS, RESTRICTIONS AND OBLIGATIONS OF THE RECEIVING PARTY
(a) During the Term, the Receiving Party may:
(i) disclose Confidential Information received from the
Disclosing Party only to its employees, trustees, officers, directors, Agents
and Affiliates who have a need to know such information exclusively for the
purpose of executing its obligations or exercising its rights under this Master
Agreement; provided that the Disclosing Party, on a case by case basis, may
require that the Receiving Party obtain its written consent prior to any further
disclosure of certain categories of Confidential Information to such parties;
(ii) reproduce the Confidential Information received from the
Disclosing Party only as required to execute its obligations or exercise its
rights under this Master Agreement;
(iii) disclose Confidential Information as required by law,
provided the Receiving Party gives the Disclosing Party prompt notice prior to
such disclosure to allow the Disclosing Party to make a Commercially Reasonable
Effort to obtain a protective order or otherwise protect the confidentiality of
such information; and
(iv) disclose Confidential Information which pertains to the
terms of this Master Agreement or Customer's business operations which may be
necessary in order for potential bidders to respond to any future Customer
request for proposal for all or part of the Services.
(b) Except as otherwise specifically provided in this Master Agreement,
the Receiving Party shall not during the Term, during any suspension and after
expiration or earlier termination hereof:
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(i) disclose, in whole or in part, any Confidential Information
received directly or indirectly from the Disclosing Party; or
(ii) sell, rent, lease, transfer, encumber, pledge, reproduce,
publish, transmit, translate, modify, reverse engineer, compile, disassemble or
otherwise use the Confidential Information in whole or in part.
(c) The Receiving Party shall exercise the same care in preventing
unauthorized disclosure or use of the Confidential Information that it takes to
protect its own information of a similar nature, but in no event less than
reasonable care. Reasonable care includes, without limiting the generality of
the foregoing:
(i) informing its trustees, directors, officers, employees, Agents
and Affiliates and, where applicable, their trustees, directors, officers and
employees, of the confidential nature of the Confidential Information and the
terms of this Master Agreement, directing them to comply with these terms, and
obtaining their written acknowledgment that they have been so informed and
directed, and their written undertaking to abide by these terms; and
(ii) notifying the Disclosing Party immediately upon discovery of
any loss, unauthorized disclosure or use of Confidential Information, or any
other breach of this Article by the Receiving Party, and assisting the
Disclosing Party in every reasonable way to help the Disclosing Party regain
possession of the Confidential Information and to prevent further unauthorized
disclosure or use.
(d) The Receiving Party acknowledges that:
(i) the Disclosing Party possesses and will continue to possess
Confidential Information that has been created, discovered or developed by or on
behalf of the Disclosing Party, or otherwise provided to the Disclosing Party by
third parties, which information has commercial value and is not in the public
domain;
(ii) unauthorized use or disclosure of Confidential Information is
likely to cause injury not readily measurable in monetary damages, and therefore
irreparable;
(iii) subject to the rights expressly granted to the Receiving
Party in this Master Agreement, the Disclosing Party and its licensors retain
all right, title and interest in and to the Confidential Information, including
without limiting the generality of the foregoing, title to all Confidential
Materials regardless of whether provided by or on behalf of the Disclosing Party
or created by the Receiving Party; and
(iv) any disclosure by the Subcontractors, Agents,
representatives, advisors, directors, officers and employees and Affiliates of
the Receiving Party and, where applicable, their trustees, directors, officers
and employees shall be deemed to be disclosure by the Receiving Party and the
Receiving Party shall be liable for any such disclosure as if the Receiving
Party had disclosed the Confidential Information.
(e) Receiving Party shall comply with any and all applicable laws
relating to the use, disclosure, copying, dissemination and distribution of any
Confidential Information or
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Confidential Materials of the Disclosing Party (including, but not limited
to, confidentiality requirements imposed by federal, state or local law), all
policies of Disclosing Party which may reasonably be imposed with respect to
the confidentiality of Confidential Information or Confidential Materials as
it pertains to patient-specific and provider-specific content, any and all
laws relating to the Disclosing Party's proprietary rights.
(f) The Disclosing Party may visit the Receiving Party's premises, upon
reasonable prior notice and during normal business hours, to review the
Receiving Party's compliance with the terms of this Section.
SECTION 11.3 RIGHTS AND REMEDIES OF THE DISCLOSING PARTY
In the event of an unauthorized use or disclosure of Confidential
Information, the Disclosing Party shall be entitled, without waiving any other
rights or remedies, to such injunctive or equitable relief as may be deemed
proper by a court of competent jurisdiction without the necessity of posting
bond.
SECTION 11.4 NONDISCLOSURE AGREEMENTS
At Customer's request made from time to time during the Term, Supplier
shall cause Supplier personnel designated by Customer to sign nondisclosure
agreements in the form of Exhibit G attached or in such other form as may be
reasonably proposed by Customer from time to time.
SECTION 11.5 OWNERSHIP OF CUSTOMER BUSINESS RECORDS AND DATA
Customer Business Records and Data are the exclusive property of
Customer. Supplier is authorized to have access to and make use of Customer
Business Records and Data solely as necessary and appropriate for the
performance by or for Supplier of its obligations under this Master Agreement.
Neither Supplier nor its Agents will use Customer Business Records and Data for
any purpose other than for providing the Services. Archival tapes containing any
Customer Business Records and Data shall be used by Supplier solely for back-up
purposes.
SECTION 11.6 RETURN OF CUSTOMER BUSINESS RECORDS AND DATA
At no cost to Customer, upon the termination or expiration of this
Master Agreement, Supplier will:
(i) promptly return to Customer or Customer's designee, including
a successor outsource contractor, all Customer Business Records and Data in all
of Supplier's then-existing machine-readable formats and media types together
with any notes, comments or software necessary for Customer to efficiently use
its Customer Data with the System;
(ii) destroy all copies of Confidential Information in its
possession, power or control, which are present on magnetic media, optical disk,
volatile memory or other storage device, in a manner that assures the
Confidential Information is rendered unrecoverable;
(iii) keep such Confidential Information and Confidential
Materials confidential and shall so instruct its agents, employees and
independent contractors; and
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(iv) discontinue use of all Customer trademarks, service marks and
logos.
Upon completion of those tasks, an officer of the Receiving Party shall
provide written confirmation to the Disclosing Party that the requirements of
this Section have been complied with. The use of any Confidential Information or
Confidential Materials (or charges assessed for the use thereof) by the
Receiving Party shall not affect the Disclosing Party's ownership thereof or the
confidential nature of such Confidential Information or Confidential Materials.
SECTION 11.7 SECURITY AND PRIVACY
(a) Supplier shall establish and comply with commercially reasonable
security procedures during the Term of this Master Agreement for the security of
Customer's Confidential Information, Business Records and Data. The procedures
established by Supplier shall include, at a minimum, performing reasonable
background checks on all applicants for employment at Supplier who will have
access to Customer's Confidential Information, Business Records and Data.
Customer may periodically inspect Supplier's facilities to ensure compliance
with this Section.
(b) Each Party shall be responsible for ensuring that performance of
its obligations and exercise of its rights under this engagement complies with
all applicable Privacy Laws. In the event that this engagement or any practices
which could be, or are, employed in performance of this engagement are
inconsistent with or do not satisfy the requirements of any Privacy Laws, (i)
the Parties shall agree in good faith upon an appropriate amendment to this
engagement to comply with such laws and regulations and (ii) the Parties agree
to execute and deliver any documents required to comply with such Privacy Laws
including, without limitation, any "business partner agreements" and Chain of
Trust Agreements pursuant to HIPAA.
SECTION 11.8 DESTROYED OR LOST BUSINESS RECORDS OR DATA
Supplier will take all steps to protect Customer Business Records and
Data within the standards of care used in the IT industry. Supplier shall not
delete or destroy any Customer Business Records or Data without prior written
authorization from Customer. Supplier shall maintain and provide to Customer one
or more reports that identify the Customer Business Records or Data that have
been destroyed. In the event any Customer Business Records or Data is lost or
destroyed Supplier shall be responsible for the prompt regeneration or
replacement of such Customer Business Records or Data at its expense. Supplier
shall prioritize this effort so that the loss of Customer Business Records or
Data will not have any material adverse effect upon Customer's business or the
Services. Customer agrees to cooperate with Supplier to provide any available
information, files or raw data needed for the regeneration of the Customer
Business Records or Data. If Supplier fails to regenerate the lost or destroyed
Customer Business Records or Data within the time reasonably set by Customer,
then Customer may obtain services from a Third Party Provider to reconstruct the
Business Records or Data, and Supplier shall cooperate with such Third Party
Provider as requested by Customer. In addition to any other damages incurred by
Customer, Supplier shall be responsible for the actual costs incurred by
Customer for the reconstruction of Customer Business Records or Data by a Third
Party Provider. In the event it is determined that Customer Business Records or
Data has been lost or destroyed as a result of the willful conduct of Supplier
or its employees, contractors or agents, Customer may terminate this Master
Agreement for cause pursuant to Section 19.1.
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SECTION 11.9 HARDWARE REMOVED FROM SERVICE
After assuring that Customer has complete copies, Supplier will
securely erase (i.e., delete, reformat and securely overwrite) all Confidential
Information from any Hardware, media or other material that is removed from the
System. Supplier shall perform the same procedures upon the termination of this
Master Agreement.
ARTICLE 12
MANAGEMENT AND SUBCONTRACTING
SECTION 12.1 CONTRACT EXECUTIVES
A single Contract Executive for Customer and a single Contract
Executive for Supplier are identified in Exhibit I hereto. The Customer Contract
Executive shall have the authority to act on behalf of Customer with respect to
all matters relating to the Services, including the Transition Tasks and
Termination Assistance. The Supplier Contract Executive shall have the authority
to act on behalf of Supplier with respect to all matters relating to the
Services. Supplier represents that the Supplier Contract Executive is an
experienced manager who is, or shall endeavor to become, knowledgeable as to
Customer's business activities and the Service Levels and who shall act as the
primary liaison between Supplier and the Customer Contract Executive. Customer
shall have the right to interview, as Customer deems necessary, and participate
in the selection of the Supplier Contract Executive, and Supplier shall not
designate a Contract Executive without providing prior written notice to
Customer. Supplier shall not replace the Supplier Contract Executive during the
Term of this Master Agreement without prior written notice to Customer, except
for just cause or said Contract Executive's nonperformance, including
nonperformance of Supplier responsibilities, or Contract Executive's separation
of employment from Supplier for any reason. The Supplier Contract Executive
shall (i) act as the primary liaison between Supplier and the Customer Contract
Executive, (ii) respond to Customer requests for information, reports and
project participation related to Customer's commitment to highest quality
patient care and the Services hereunder, (iii) have overall responsibility for
directing Supplier's activities under the applicable Service Agreement, and (iv)
be vested with necessary authority to fulfill that responsibility.
SECTION 12.2 KEY PERSONNEL
(a) Supplier shall also identify all of Supplier's management and other
key personnel assigned to various functions hereunder on the premises of
Customer, as well as the individuals who will be responsible for HIPAA
compliance and measurement and metrics (the "Key Personnel").
(b) The assignment of such Key Personnel shall be subject to the mutual
agreement of Supplier and Customer. During the Term of this Master Agreement,
including the Termination Transition Term, Supplier shall not reassign or reduce
the participation of any of Supplier's Key Personnel assigned solely to Customer
to other functions without the prior written consent of Customer, if doing so
would require the alteration or reduction of such Key Personnel's contribution
to, or involvement with, the Services. If any one of Supplier's Key Personnel
resigns from his or her employment with Supplier, or is terminated and therefore
becomes unable to perform the functions or responsibilities assigned to him or
her, Supplier shall promptly
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replace such person with another person at least as well qualified and
acceptable to Customer, in Customer's sole discretion.
SECTION 12.3 MINIMUM PROFICIENCY LEVELS
Supplier's Key Personnel assigned by Supplier or its subcontractors to
perform Supplier's obligations hereunder shall have experience, training, and
expertise at least equal to good commercial standards applicable to such
personnel for their responsibilities in the business in which Supplier, or its
subcontractors, as the case may be, are engaged and shall have sufficient
knowledge of the relevant aspects of the Services and shall make Commercially
Reasonable Efforts to promptly obtain sufficient knowledge of Customer's
practices and areas of expertise to enable them to properly perform the duties
and responsibilities assigned to them in connection with the Services. In
addition, the Services shall conform to good commercial standards applicable to
such Services in the business in which Supplier, or its subcontractors, as the
case may be, are engaged.
SECTION 12.4 SUPPLIER SERVICES TO THIRD PARTIES
Customer recognizes that Supplier personnel providing Services to
Customer under this Master Agreement may perform similar services from time to
time for other persons, including competitors of Customer. This Master Agreement
shall not prevent Supplier from using such personnel for the purpose of
performing such similar services for such other persons provided that: (i)
Supplier complies with its obligations concerning Customer's Confidential
Information; and (ii) neither the Supplier Contract Executive assigned to
Customer's account nor any Key Personnel perform or otherwise participate in the
planning or performance of such similar services for any of Customer's business
competitors within the ten county Philadelphia metropolitan area (including New
Castle County in Delaware; Xxxxx Xxxxxx, Xxxxxxx Xxxxxx, Xxxxxxxx Xxxxxx,
Xxxxxxxxxx Xxxxxx and Philadelphia County in Pennsylvania; and Atlantic County,
Burlington County, Camden County, and Gloucester County in New Jersey) (each a
"Customer Competitor").
SECTION 12.5 OVERSIGHT COMMITTEE
The Parties shall establish and maintain an Oversight Committee, which
shall be composed of the Contract Executives and the senior administrative
officers of their respective organizations. The Customer Contract Executive
shall be the Chair of the Committee unless specified otherwise by Customer. The
Oversight Committee shall meet no less than quarterly and at these meetings
shall discuss reports prepared by the Contract Executives with respect to the
status of the performance of Services and significant events that have occurred
since the previous meeting.
SECTION 12.6 SUBCONTRACTING
(a) Supplier shall not delegate or subcontract any of the Services to
be performed under this Master Agreement without Customer's prior written
consent, which may be withheld in Customer's sole discretion. Customer consents
to the subcontracting of minimal or incidental elements of the Services, and to
the subcontracting of maintenance services for Supplier Hardware and Software.
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Notwithstanding any other provision in this Section 12.6, all
subcontractors shall be required to execute documents binding the subcontractor
to the requirements of Sections 6.3, 6.4 and 6.5, and confidentiality and
non-disclosure agreements that are at least as protective as this Master
Agreement with respect to confidentiality of Customer Confidential Information
and Confidential Materials.
(b) If Supplier desires to enter into a subcontract with an entity
other than a subcontractor approved pursuant to paragraph (a) above, it shall
submit to Customer in writing a proposal specifying (i) the specific tasks
Supplier proposes to subcontract, (ii) the reason for having a subcontractor
perform such tasks instead of Supplier, (iii) the identity and qualifications of
the proposed subcontractor and (iv) any other information reasonably requested
by Customer or relevant to Customer's approval of the subcontractor. If Customer
approves of the use of such subcontractor, Supplier shall include in such
subcontract (the "Subcontract") provisions (A) naming Customer as an intended
third party beneficiary, (B) substantially similar to Article 5 (Service
Levels), Section 6.3 (Laws Relating to Employment), Section 6.4 (Safety and
Training), and Section 6.5 (Health Status and Injury), Article 11
(Confidentiality), Section 12.3 (Minimum Proficiency Levels), Article 13
(Audits), Articles 14 (Insurance; Risk of Loss) and Article 17
(Indemnification), and (C) any other provisions necessary for Supplier to
fulfill its obligations under this Master Agreement and provide Customer with a
copy of each such Subcontract. Such Subcontract provisions shall also include
the option of Customer to assume each Subcontract upon termination of this
Master Agreement for any reason. In addition, Supplier shall not disclose any
Customer Confidential Information to such subcontractor until such subcontractor
has agreed in writing to assume the obligations described in Article 11
(Confidentiality). Customer hereby consents to the subcontracting of Services to
ACS, subject to the provisions of this paragraph (b).
(c) Customer may revoke approval of a subcontractor previously approved
if a subcontractor is acquired or otherwise becomes affiliated with a Customer
Competitor, the subcontractor's performance has been materially deficient, good
faith doubt exists concerning the subcontractor's ability to render future
performance, or there have been material misrepresentations by or concerning the
subcontractor. Upon such revocation or objection, Supplier shall remove such
subcontractor from performing the Services.
(d) Supplier shall remain liable for obligations performed by
subcontractors to the same extent as if a Supplier Employee had performed such
obligations, and for purposes of this Master Agreement such work shall be deemed
work performed by Supplier. If a subcontractor breaches a Subcontract, or is
alleged to have breached a Subcontract, Supplier shall notify Customer and
provide Customer with such information relating to the alleged breach as
Customer may reasonably request. Any breach of a Subcontract shall constitute a
breach of this Master Agreement.
(e) Supplier will not file, or by its action or inaction permit, any
mechanics or materialman's liens to be filed on or against any Customer property
or realty. In the event that any such liens arise as a result of Supplier's
action or inaction, Supplier will remove such liens at its sole cost and expense
within thirty (30) days.
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SECTION 12.7 NON-SOLICITATION
Both Parties acknowledge that each has invested considerable amounts of
time and resources in training its supervisory employees in its systems and
operations and in providing other valuable information which is proprietary and
unique to their respective manner of conducting their businesses. Therefore,
each Party agrees that the other's employees having direct involvement with the
provision or receipt of Services under this Agreement (other than the
Transferred Employees) shall neither be solicited for employment nor hired by
the other Party or its Affiliates during the Term of this Master Agreement and
for a period of twelve (12) months thereafter, whether as an employee,
independent contractor, partner, stockholder, owner, officer or director of such
Party or its Affiliates. The only exceptions to the foregoing provision shall be
(i) that if Customer recommends an individual to Supplier as a candidate for
employment, and that person is hired by Supplier, Customer may solicit and hire
such person after one (1) year of employment with Supplier and (ii) Customer may
hire personnel in accordance with Section 19.6(b)(i) below.
ARTICLE 13
AUDITS
SECTION 13.1 AUDIT RIGHTS
Supplier shall maintain records and supporting documentation of all
financial and non-financial transactions under this Master Agreement sufficient
to permit a complete audit thereof in accordance with this Section 13.1. At no
additional cost to Customer, Supplier shall provide to Customer, Customer's
internal and external auditors, inspectors, regulators and such other
representatives as Customer may designate from time to time access during
regular business hours and after not less than three (3) business days' notice
(unless circumstances reasonably preclude such notice) to (i) the parts of any
facility at which Supplier is providing the Services, (ii) Supplier personnel
providing the Services, and (iii) all data and records relating to the Services
(including, without limitation, Supplier's time accounting system and detailed
time accounting at personnel and task levels), as necessary for the purpose of
performing audits and inspections of Customer and its business, to verify the
integrity of Customer Business Records and Data, to examine the systems that
process, store, support and transmit that data, and to examine Supplier's
charges and performance of the Services under this Master Agreement. The
foregoing audit rights shall include, without limitation, and when applicable,
audits (A) of practices and procedures, (B) of systems, (C) of general controls
and security practices and procedures, (D) of disaster recovery and backup
procedures, (E) of costs (only to the extent Services may be being provided by
Supplier on a Pass-Through Expense basis) and procurement practices of Supplier
in performing the Services, (F) of charges hereunder, (G) necessary to enable
Customer to meet applicable regulatory requirements, and (H) to verify any
certification made by Supplier and (I) for any other reasonable purpose as
determined by Customer. Supplier shall provide full cooperation to such
auditors, inspectors, regulators and representatives, including the installation
and operation of audit software.
Supplier shall provide Customer on an annual basis a Report on the
Processing of Transactions by Service Organizations, as contemplated by the
Statement of Auditing Standards (SAS) No. 70. Such Report shall be prepared by
an independent accounting firm of national reputation.
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Customer will have full and unrestricted access to, and the right to
review and retain the entirety of, all electronic or other files containing,
summarizing or analyzing Customer Business Records and Data. At no time will any
of such files or other materials or information be stored or held in a form or
manner not immediately accessible to the Customer Contract Executive or
designated representatives. Supplier will provide to the Customer Contract
Executive and designated representatives all passwords, codes, comments, keys,
Documentation and the locations of any such files and other materials promptly
upon the request of Customer, including Hardware and Software keys and such
information as to format, encryption (if any) and any other specification or
information necessary for Customer to retrieve, read, revise and maintain such
files and information. Upon the request of the Customer Contract Executive,
Supplier will confirm that, to the best of its knowledge, all files and other
information provided to Customer are complete and that no material element,
amount, or other fraction of such files or other information to which Customer
may request access or review has been deleted, withheld, disguised or encoded in
a manner inconsistent with the purpose and intent of providing full and complete
access to Customer as contemplated by this Master Agreement.
Notwithstanding the foregoing, if Customer has reason to suspect any
malfeasance or dishonest acts on the part of Supplier, or other significant or
non-routine problems, Customer shall be entitled to undertake such audit of
Supplier as Customer reasonably deems appropriate without the foregoing notice
or other restrictions. If in any audit Customer determines that material
operational problems or financial issues exist, Supplier shall reimburse
Customer for any costs incurred in such audit and Customer may conduct a
follow-up audit when reasonably deemed appropriate by Customer.
Supplier shall provide responses within thirty (30) days with regard to
any conclusions and recommendations reported as part of an audit, indicating
planned actions and proposed timeframes for each action. The Customer Oversight
Committee members will establish and monitor Supplier's schedule for
implementation of such recommendations.
SECTION 13.2 OVERCHARGES
If an audit reveals that Supplier has overcharged Customer in an amount
equal to or in excess of three percent (3%) of the payments that should have
been made to Supplier during the period examined, Supplier shall reimburse
Customer for the cost of the audit and refund the amount of all overcharges to
Customer. If an audit reveals that Supplier has overcharged Customer in an
amount equal to or in excess of ten percent (10%) of the payments that should
have been made to Supplier during the period examined, Supplier shall reimburse
Customer for the cost of the audit, refund the amount of all overcharges, and
pay Customer interest on the overcharged amount at the lesser of twenty-four
percent (24%) per annum or the maximum amount permitted by law. Supplier shall
pay such amounts to Customer within thirty (30) days following Customer's
written request. Repetitive overcharging will be a basis for termination of this
Master Agreement in accordance with Article 19 below.
SECTION 13.3 SUPPLIER AUDITS
Supplier shall provide promptly to Customer, at no additional charge,
the results of any internal or external review or audit conducted by Supplier,
its Affiliates, or their respective
42
contractors, agents or representatives, relating to Supplier's operating
practices and procedures to the extent relevant to the Services.
SECTION 13.4 SURVIVAL
This Article shall survive the expiration or earlier termination of
this Master Agreement, and shall continue to the fifth (5th) anniversary of the
Service Termination Date.
ARTICLE 14
INSURANCE; RISK OF LOSS
SECTION 14.1 REQUIRED INSURANCE COVERAGES
Throughout the Term Supplier, at its sole cost and expense, shall
maintain in force the insurance coverages described below. All subcontractors
must comply with required insurance requirements as set forth in this Section
14.1. Any exceptions must be approved in writing by Customer. Additional
insurance coverage(s) may be required under a Service Schedule.
(a) Commercial General Liability Insurance, including
Products/Completed Operations, Personal Injury, and Advertising Injury coverage,
on an occurrence basis, with a combined single limit of not less than $1 million
per occurrence;
(b) Umbrella Liability Insurance, including Products/Completed
Operations and Advertising Injury coverage, on an occurrence basis, with a limit
of not less than $25 million per occurrence;
(c) Worker's Compensation Insurance or any alternative plan or coverage
as permitted or required by applicable law and employers liability insurance
with a minimum occurrence limit of not less than $500,000;
(d) Automotive Liability Insurance in combination with Excess/Umbrella
Liability Insurance covering use of all owned, non-owned and hired automobiles
with a combined single limit of not less than $3 million per occurrence for
bodily injury and property damage liability;
(e) "All Risk" Property Insurance (including coverage of property in
transit) in an amount equal to the replacement value of the equipment used to
provide the Services, including equipment owned or leased by Supplier and
equipment of Customer which is in Supplier's care, custody and control, and,
with respect to ACS only, Business Interruption insurance with a limit of not
less than $25 million per occurrence;
(f) Employee Dishonesty and Computer Theft of Money/Merchandise
Insurance for loss arising out of or in connection with fraudulent or dishonest
acts committed by Supplier Employees, acting alone or in collusion with others,
in an amount of $10 million per loss;
43
(g) Fiduciary Liability Insurance covering claims arising under the
Employee Retirement and Income Security Act, 29 U.S.C. Section 1001 ET SEQ.
(ERISA), or pursuant to the administration of employee benefits plan with a
limit of not less than $5 million per occurrence;
(h) Errors and Omissions Insurance, including Professional Liability
coverage with a combined single limit of not less than $10 million per
occurrence and in the aggregate; and
(i) Employee Practices Liability Insurance with limits of liability of
not less than $5 million in the aggregate.
SECTION 14.2 GENERAL INSURANCE REQUIREMENTS
All insurance policies Supplier is required to carry pursuant to this
Article shall: (i) be primary as to Supplier's negligence and non-contributing
with respect to any other insurance or self-insurance Customer may maintain;
(ii) with the exception of those coverages set forth in Sections 14.1(c),
14.1(f) and 14.1(g), name Customer, its Affiliates and their respective
officers, trustees and employees as additional insureds or loss payees, as
appropriate, to the extent that such parties are liable, directly or indirectly,
for losses arising out of Supplier's negligent or other wrongful acts or
omission in performing the Services; (iii) be provided by reputable and
financially responsible insurance carriers with a Best's minimum rating of "A"
(or any future equivalent) and minimum Best's financial performance rating of
"6" (or any other future equivalent); and (iv) require the insurer to notify
Customer in writing at least thirty (30) days in advance of cancellation,
termination or non-renewal. Supplier shall cause its insurers to issue to
Customer on or before the Effective Date and each policy renewal date
certificates of insurance evidencing that the coverages and policy endorsements
required by this Article are in effect. Such certificates shall be sent to
Customer at the address set forth in Section 21.9 below.
Supplier will use a Commercially Reasonable Effort to cause its insurer
to provide Customer with fifteen (15) days' notice of any cancellation. Supplier
will not permit any such insurance policy to lapse. If Supplier cancels such
insurance policy, it will provide fifteen (15) days' notice to Customer prior to
canceling such insurance policy and will promptly replace such insurance policy
in accordance with this Section, without lapse in coverage.
SECTION 14.3 RISK OF LOSS
Each Party will be responsible for the risk of loss of, and damage to,
any tangible property under its control. Supplier and Customer will promptly
notify the other Party whenever it has actual knowledge of any damage to
Hardware, Software or other tangible Services. Supplier will be responsible for
the cost of any necessary or prudent repair or replacement of any damaged,
defective or missing Hardware, Software or other tangible Services arising from
or related to the negligence or intentional misconduct of Supplier, provided
that Customer will be responsible for the cost of any necessary repair or
replacement of damaged, defective or missing Hardware, Software or other
tangible Services arising from or related to the negligence or intentional
misconduct of Customer (a "Customer Event of Loss"). Supplier will not be
responsible within the scope of its maintenance obligations for maintenance
necessary due to a Customer Event of Loss. To the extent Supplier is requested
by Customer to repair or replace Hardware, Software or other tangible Services
arising from a Customer Event of Loss, Supplier
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will prepare a proposal for the performance of such Services as New Work
under Section 4.10, which may be accepted or rejected by Customer in its
discretion.
ARTICLE 15
CERTAIN REPRESENTATIONS, WARRANTIES AND COVENANTS
SECTION 15.1 MUTUAL REPRESENTATIONS AND WARRANTIES
Each Party represents and warrants that, as of the Effective Date:
(a) It is a corporation duly incorporated, validly existing and is in
good standing under the laws of the state in which it is incorporated, and is in
good standing in each other jurisdiction where the failure to be in good
standing would have a material adverse effect on its business or its ability to
perform its obligations under this Master Agreement.
(b) It has all necessary corporate power and authority to own, lease
and operate its assets and to carry on its business as presently conducted and
as it will be conducted pursuant to this Master Agreement.
(c) It has all necessary corporate power and authority to enter into
this Master Agreement and to perform its obligations hereunder, and the
execution and delivery of this Master Agreement and the consummation of the
transactions contemplated thereby have been duly authorized by all necessary
corporate actions on its part.
(d) This Master Agreement constitutes a legal, valid and binding
obligation of such Party, enforceable against it consistent with its terms.
(e) It is not a party to, and is not bound or affected by or subject
to, any instrument, agreement, charter or by-law provision, law, rule,
regulation, judgment or order which would be contravened or breached as a result
of the execution of this Master Agreement or consummation of the transactions
contemplated by this Master Agreement.
SECTION 15.2 SUPPLIER REPRESENTATIONS AND WARRANTIES
As of the Effective Date and continuing throughout the Term, Supplier
represents and warrants to Customer that:
(a) Supplier shall exercise due care and diligence, shall use
Commercially Reasonable Efforts and shall follow the highest professional
standards and best industry practices of similar firms of nationally recognized
knowledge, skill and reputation in the performance of the Services. It shall
perform the Services in a professional and workmanlike manner, and its
facilities shall conform to industry standards of fire prevention, access
control, electrical surge protection and flood damage minimization.
(b) Supplier recognizes that Customer conducts its business according
to the highest standards of stewardship for the assets it controls and business
it conducts as a world-class
45
medical and research center. Supplier agrees that in its role as manager for
Customer, including any interaction with any employee of Customer or any
vendor, it shall not:
(1) receive from any such employee or vender or give or offer
to such employee or vendor any gift or benefit;
(2) solicit or accept any information, data, services,
equipment, or commitment from said employee unless same is (i) required
under a contract between Supplier and Customer, (ii) made pursuant to a
written disclosure agreement between Supplier and Customer, (iii)
specifically approved by Customer's Contract Executive, or (iv)
required by the terms of this Master Agreement;
(3) solicit or accept favoritism from said employee;
(4) enter into any outside business relationship with said
employee without full disclosure to, and prior approval of Customer's
Contract Executive;
(5) violate or circumvent Customer's established policies and
procedures for bidding and awarding contracts and completing "arm's
length" purchasing decisions, including as these contracts or decisions
relate to members of Supplier's Board of Directors; or
(6) intentionally disadvantage or seek to disadvantage
Customer in any manner in Supplier's dealings with vendors.
As used in this paragraph, "employee" includes members of the employee's
immediate family and household, plus any other person who is attempting to
benefit from his or her relationship to the employee, "Supplier" includes all
employees and Agents of Supplier, "gift or benefit" includes money, goods,
services, discounts, favors and the like in any form, but excluding low value
advertising items such as pens, pencils and calendars, and "favoritism" means
partiality in promoting the interest of Supplier over that of other vendors.
Such activity by Supplier shall constitute breach of contract by Supplier.
(c) Supplier has not violated and it shall not violate any applicable
laws or regulation or any Customer policies regarding the offering of unlawful
inducement in connection with this Master Agreement.
(d) Supplier shall perform its obligations in a manner that does not
infringe, or constitute an infringement or misappropriation of, any patent,
copyright, trademark, trade secret or other proprietary rights of any third
party. Supplier represents and warrants that the Services performed by Supplier
do not, and shall not, infringe any patent, copyright, trade secret or any other
intellectual property interest owned or controlled by any other person.
(e) All administrative information systems provided or used by
Supplier to provide the Services are and shall remain Year 2000 Compliant. In no
event shall Customer incur additional costs or increased charges as a result of
Supplier's Year 2000 Compliance efforts with respect to the administrative
information systems provided or used by Supplier to provide the Services.
46
(f) Supplier has all necessary licenses, authorizations, permits and
registrations required by applicable law, rule and regulation to permit it to
undertake the Services and to carry out its obligations set forth in this Master
Agreement.
(g) Neither Supplier nor, to Supplier's knowledge, any of the personnel
of Supplier provided pursuant to this Master Agreement, either directly or
indirectly through subcontractors, has been suspended, excluded from
participation in or penalized by Medicaid, Medicare or any other state or
federal reimbursement program, including any personnel who have defaulted on
student loans.
(h) From and after the Effective Date, the System maintained and
monitored by Supplier as part of the Services will be suitable for performance
of all tasks and functions contemplated by the Scope of Work and by any Service
Level.
(i) Unless otherwise agreed to by the Parties, any Software designed,
produced or developed by Supplier or its Agents for use by Customer or in the
performance of this Master Agreement will operate on and be compatible with the
equipment in the technical architecture of Customer.
(j) All Supplier provided Software shall be Year 2000 Compliant, and
all Supplier developed Software shall be free of any and all "time bombs,"
computer viruses, copy protect mechanisms or any disclosed or undisclosed
features which may disable the Software (or other components of Customer's data
processing systems) or render it incapable of operation (whether after a certain
time, after transfer to another central processing unit, or otherwise).
(k) By at least one hundred eighty (180) days from the Effective Date,
Supplier will prepare Documentation in accordance with the Scope of Work, and
such Documentation will be current to within thirty (30) days of any Services
Termination Date. All Documentation delivered to Customer by Supplier for
Customer's use will be complete and sufficient to provide an employee of
ordinary skill commensurate with performance of the duties of such employee's
position, a prompt and complete understanding of the System and the procedures
for obtaining Services. Supplier further represents and warrants that such
Documentation is current, will be kept current, and will at all times be fully
available both electronically and in hard copy format and is produced using
non-proprietary software protocols or other elements.
(l) To the best of Supplier's knowledge, it has received sufficient
information to perform the Services in accordance with the terms of this Master
Agreement.
SECTION 15.3 ETHICAL STANDARDS
None of Supplier, Supplier Employees, Agents or any third parties
acting on behalf of Supplier shall make any bribe, kickback, or other payment
regardless of form, whether in money, property or services, directly or
indirectly, to or for the benefit of any government official or employee,
domestic or foreign, whether on the national level or a lower level such as
state, county or local (in the case of foreign government also including any
level inferior to the national level) and including regulatory agencies or
governmentally controlled business, corporations, companies or societies, for
the purpose of affecting his or her action or the action of the government he or
she represents to obtain special concessions or to pay for business
47
secured or special concessions obtained in the past. No funds or property of
Customer shall be donated, loaned or made available, directly or indirectly,
to or for the use or benefit of, or for the purpose of opposing any
government or subdivision thereof, political party, candidate, or committee,
either domestic or foreign. Nothing in this Section 15.3 shall be construed
so as to prohibit a Supplier Employee from making a lawful, private political
contribution.
SECTION 15.4 RFP AND DUE DILIGENCE ASSISTANCE
If at any time during the Term Customer elects to issue a request for
proposals to one or more Third Party Providers for the provision of all or any
part of the Services, Supplier shall cooperate with Customer by (i) providing to
Customer and such Third Party Provider reasonable access to personnel and
information relevant to such request for proposals, and (ii) participating in a
reasonable due diligence process for the benefit of Customer and such Third
Party Providers in connection with the request for proposals. Supplier's
obligations pursuant to this Section 15.4 are subject to (x) the agreement of
Customer and such Third Party Providers to reasonable security and
confidentiality restrictions, generally in accordance with Article 11
(Confidentiality) of this Master Agreement, and (y) the condition that such
activities shall not disrupt or adversely affect Supplier's normal business.
ARTICLE 16
COMPLIANCE WITH LAWS
SECTION 16.1 LEGAL REQUIREMENTS GENERALLY
(a) Supplier shall comply, shall cause its Supplier Employees and
Affiliates to comply, and shall require its subcontractors and vendors to comply
with all present and future Legal and Contractual Requirements. In the event of
any notice of a violation of any such Legal and Contractual Requirements, or an
investigation into an alleged violation, Supplier shall promptly notify Customer
in writing of such notice. Supplier shall take all measures necessary to
promptly remedy any violations(s) of any Legal and Contractual Requirements.
Supplier shall be responsible for the payment, at its expense, of all fines,
levies and financial penalties caused by Supplier's failure to follow or comply
with any applicable Legal and Contractual Requirements.
(b) At the request of Customer, Supplier shall make a Commercially
Reasonable Effort to contest or assist in contesting, by appropriate legal
proceedings, conducted in good faith, in the name of Supplier, Customer, or
both, the validity or application of any Legal and Contractual Requirements;
provided, however, that (i) proceedings may be brought in the name of Supplier
only with Supplier's prior written consent, which shall not be unreasonably
withheld, and (ii) all legal fees and costs incurred in connection therewith
shall be paid by Customer.
SECTION 16.2 LICENSES AND PERMITS
Within the scope of the Services to be rendered by Supplier under this
Master Agreement, Supplier shall require that all licenses, permits and consents
necessary to provide the Services are held by all Supplier Employees, as
required by all Legal and Contractual Requirements. Upon Customer's request and
at Customer's cost and expense, Supplier shall assist Customer in obtaining, or,
if applicable, in obtaining consent to the assignment of, any of the foregoing
licenses, permits or consents that Customer may elect to obtain in its own name
or
48
in the name of its designee. Upon request, Supplier shall take all actions
necessary and shall cooperate with Customer in connection with assignment by
Supplier to Customer of all right, title and interest of Supplier in the
licenses, permits and consents described above. Supplier shall cause its
Affiliates and shall require its subcontractors and vendors to maintain all
licenses and permits required to be maintained by them in connection with the
rendering of the Services.
SECTION 16.3 CUSTOMER RULES AND REGULATIONS
Supplier agrees to comply, shall cause its Supplier Employees and
Affiliates to comply, and shall require its subcontractors and vendors to comply
with all applicable rules, regulations, directives, policies and procedures of
Customer, as they exist now and as they may be amended from time to time,
including, but not limited to, Customer's compliance and quality assurance
programs and all policies and procedures relating to ingress and egress to and
from Customer campus and premises, parking, security, confidentiality of
information, smoking, safety and health, waste disposal and infection control.
Customer shall provide to Supplier Customer's compliance program for Supplier's
review written copies of all rules, regulations, directives, policies and
procedures with which Supplier must comply from time to time during the term of
this Agreement.
SECTION 16.4 COMPLIANCE WITH AGENCIES AND ASSOCIATIONS
Within the scope of the Services to be rendered by Supplier under this
Master Agreement, Supplier shall at all times comply with the procedures,
standards and requirements (including audits and the issuance of citations for
failure to comply with said standards) of all agencies, associates, boards and
other entities, public or private, with which Customer interacts in connection
with the Services, to the extent applicable to Supplier in performing the
Services. Such entities include but are not limited to the Joint Commission for
the Accreditation of Healthcare Organizations ("JCAHO"), the Pennsylvania
Department of Health and the Pennsylvania Department of Public Welfare.
SECTION 16.5 COMPLIANCE BY CUSTOMER
Customer shall comply with all Legal and Contractual Requirements
applicable to Customer with respect to the rendering of the Services. This
Section 16.5 shall not relieve Supplier from any obligation under this Master
Agreement with respect to rendering the Services and otherwise complying with
all Legal and Contractual Requirements.
SECTION 16.6 ENVIRONMENTAL AND SAFETY OBLIGATIONS
Without limiting anything else in this Master Agreement, Supplier shall
perform all Services in compliance with all applicable federal and state
environmental, safety and other laws, including maintaining a safe workplace and
the prevention of the transmission of bloodborne pathogens. Supplier shall
promptly notify Customer as soon as Supplier becomes aware of any noncompliance
with any environmental law or other Legal and Contractual Requirement, and shall
advise Customer as to the course of action Supplier believes Customer should
pursue, provided that Supplier shall not be required to conduct any
environmental investigation to determine compliance.
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SECTION 16.7 AFFIRMATIVE ACTION AND EQUAL OPPORTUNITY PROGRAMS
In connection with the performance of Services under this Master
Agreement, Supplier agrees as follows:
(a) Neither Supplier nor its Affiliates, Agents or subcontractors shall
discriminate against any employee or applicant for employment because of race,
color, religion, ancestry, age (except where age is a bona fide occupational
qualification), marital status, sex, sexual orientation, national origin,
non-job related handicap or disability or possession of a diploma based on a
person's passing a general education test, because he or she is a special
disabled veteran or veteran of the Vietnam Era or because of any characteristic
protected by applicable law. Supplier shall take affirmative action to ensure
that applicants are employed, and that employees are treated during employment,
without regard to any of the aforementioned factors. Such action shall include,
but not be limited to, the following: employment, upgrading, demotion or
transfer; recruitment or recruitment advertising; layoff or termination; rates
of pay or other forms of compensation; and selection for training, including
apprenticeship. Supplier agrees to post in conspicuous places, available to
employees or applicants for employment, notices to be provided setting forth the
provisions of this nondiscrimination clause.
(b) Supplier shall, in all solicitations or advertisements for
employees placed by or on behalf of Supplier, state that all qualified
applicants will receive consideration for employment without regard to any of
the factors described in Section 16.7(a).
(c) Supplier shall send to each labor union or representative of
workers with which it has a collective bargaining agreement or other contract or
understanding, a notice to be provided advising the labor union or workers'
representative of Supplier's commitments under this subsection and shall post
copies of the notice in conspicuous places available to employees and applicants
for employment.
(d) Supplier shall comply with all provisions of Executive Order 11246,
as amended, with both Section 503 of the Rehabilitation Act of 1973 as amended
and Section 402 of the Vietnam Era Veterans Readjustment Assistance Act of 1974
as these articles make reference to Executive Order 11246, as amended, and with
the rules, regulations, and unless otherwise exempt, the rules, regulations and
orders of the Secretary of Labor or pursuant to Federal Procurement Regulations
(FAR 1-12.803) or the Armed Services Procurement of the Equal Employment
Opportunity clauses as set forth in FAR 1-12.803-2 and SPR 12-802(a), said
clause being herewith incorporated into this Master Agreement by reference.
(e) Supplier shall furnish all information and reports required by
Executive Order 11246, as amended, by both Section 503 of the Rehabilitation Act
of 1973 as amended and Section 402 of the Vietnam Era Veterans Readjustment
Assistance Act of 1974 as these articles make reference to Executive Order
11246, as amended, and by the rules, regulations, and orders of the Secretary of
Labor, or pursuant thereto, and shall permit access to its books, records and
accounts by the administering or compliance agency and the Secretary of Labor
for purposes of investigation to ascertain compliance with such rules,
regulations and orders.
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(f) Supplier's noncompliance with the nondiscrimination clauses of this
Master Agreement or with any of the aforesaid rules, regulations or orders shall
constitute a breach of this Master Agreement by Supplier.
(g) Unless otherwise directed by Customer, Supplier shall include
Sections 16.7(a) through (e) in every vendor agreement, subcontract and purchase
order, unless exempt by rules, regulations or orders of the Secretary of Labor
issued pursuant to Section 204 of Executive Order 11246, as amended, or to
Section 503 of the Rehabilitation Act of 1973 as amended and Section 402 of the
Vietnam Era Veterans Readjustment Assistance Act of 1974 as these articles make
reference to Executive Order 11246, as amended, so that such provisions will be
binding upon each vendor. Supplier shall take such action with respect to any
subcontract or purchase order as the administering agency may direct as a means
of enforcing such provisions, including sanctions for noncompliance provided,
however, that in the event Supplier becomes involved in, or is threatened with,
litigation with a vendor as a result of such direction by the administering
agency, Supplier may request the United States to enter into such litigation to
protect the interests of the United States.
(h) Anything herein elsewhere contained to the contrary
notwithstanding, Supplier shall submit to the jurisdiction of one of the
following concerning alleged violations of the terms of this Master Agreement
relating to discrimination or of the President's Executive Order No. 11246, as
amended:
Philadelphia Human Relations Commission
Philadelphia, Pennsylvania
Pennsylvania Human Relations Commission
Harrisburg, Pennsylvania
Equal Employment Opportunity Commission
Philadelphia District Office
Philadelphia, Pennsylvania
Secretary of Labor
Washington, DC
(i) In construing this Section 16.7, the term "compliance agency" shall
mean any governmental agency or agencies administering grant funds for Customer.
(j) No person not a Party to this Master Agreement shall have any
right, title or interest hereunder, in connection herewith, or by reason hereof,
except as otherwise expressly provided.
SECTION 16.8 ACCESS CLAUSE
If Section 1861 (v)(1)(I) of the Social Security Act applies to this
Master Agreement, then, until the expiration of four (4) years after the
furnishing of Services pursuant to this Master Agreement, Supplier shall make
available upon written request of the Secretary of Health and Human Services or
the U.S. Comptroller General, or their duly authorized representatives, this
Master Agreement, and records of Supplier that verify the nature and extent of
costs incurred
51
under this Master Agreement. If Supplier carries out any of the duties of
this Master Agreement with a value of $10,000 or more over a twelve (12)
month period through a subcontract with a related organization, such contract
must contain a clause to the effect that until the expiration of four (4)
years after the furnishing of services under the subcontract, the related
organization shall make available, upon written request of the Secretary of
Health and Human Services, the U.S. Comptroller General or any of its
authorized representatives, the subcontract, and books, documents and records
of the related organization that are necessary to verify the nature and
extent of costs. Supplier shall inform Customer of such written request.
ARTICLE 17
INDEMNIFICATION
SECTION 17.1 INDEMNIFICATION BY SUPPLIER
Supplier, at its own expense, shall indemnify, defend and hold harmless
Customer, the Contract Affiliates, and their respective Indemnitees, from and
against all Losses arising from, in connection with or relating to, third party
allegations of any of the following relating to Services provided hereunder:
(a) Supplier's failure to perform any obligations required to be
performed by it under any Subcontracts or contracts with other third parties
relating to the Services;
(b) Supplier's breach of its obligations with respect to Customer's
Confidential Information;
(c) any claims of Supplier's subcontractors or vendors;
(d) any claims of Supplier Employees;
(e) any claims of patent, copyright or trademark infringement by
Supplier or any misappropriation by Supplier of confidential information or
trade secrets owned by any third party;
(f) any theft or other misappropriation of Customer's property or
funds by Supplier or any of Supplier Employees; and
(g) any fines, levies, and financial penalties caused by Supplier's
failure to follow or comply with any applicable Legal and Contractual
Requirements.
SECTION 17.2 INDEMNIFICATION BY CUSTOMER
Customer, at its own expense, shall indemnify, defend and hold harmless
Supplier and its Indemnitees, from and against all Losses arising from, in
connection with or relating to, third party allegations of any of the following
relating to Services provided hereunder:
(a) Customer's failure to perform any obligations required to be
performed by it, respectively, under any subcontracts or contracts with third
parties;
52
(b) Customer's breach of its obligations with respect to Supplier's
Confidential Information;
(c) any theft or other misappropriation of Supplier's property or funds
by Customer; and
(d) any fines, levies, and financial penalties caused by Customer's
failure to follow or comply with any applicable Legal and Contractual
Requirements.
SECTION 17.3 MUTUAL INDEMNIFICATION
Each Party, at its own expense, shall indemnify, defend and hold
harmless the other Party and the other Party's Indemnitees, from and against all
Losses arising from any actions or omissions which result in: (i) death of or
personal or bodily injury to any agent, employee, invitee, visitor or other
person to the extent caused by the conduct of the indemnitor, its Affiliates, or
their respective agents, employees or contractors; (ii) damage to, or loss or
destruction of, any real or tangible personal property to the extent caused by
conduct of the indemnitor, its Affiliates, or their respective agents, employees
or contractors; (iii) any violation of law by the indemnitor, whether before, on
or after the Effective Date; or (iv) any breach of a Party's representations,
warranties, covenants or other terms and conditions of this Master Agreement.
SECTION 17.4 INTELLECTUAL PROPERTY INDEMNIFICATION
If any Software or Confidential Information becomes the subject of a
claim under this Section, or in the indemnitor's opinion is likely to become the
subject of such a claim, then the indemnitor may, at its option, (a) modify the
Software or Confidential Information to make it noninfringing or cure any
claimed misuse of another's trade secret, provided such modification does not
adversely affect the functionality of the Software, or (b) procure for the
Indemnitee the right to continue using the Software or Confidential Information,
or (c) replace the Software with substantially equivalent Software that is
noninfringing or that is free of claimed misuse of another's trade secret. Any
costs associated with implementing any of the above alternatives shall be borne
by the indemnitor.
SECTION 17.5 INDEMNIFICATION PROCEDURES
(a) Promptly after receipt by an Indemnitee of any written claim or
notice of any action giving rise to a claim for indemnification by the
Indemnitee, the Indemnitee shall so notify the indemnitor and shall provide
copies of such claim or any documents relating to the action. No failure to so
notify an indemnitor shall relieve the indemnitor of its obligations under this
Master Agreement except to the extent that the failure or delay is prejudicial.
Within thirty (30) days following receipt of such written notice, but in any
event no later than ten (10) days before the deadline for any responsive
pleading, the indemnitor shall notify the Indemnitee in writing (a "Notice of
Assumption of Defense") if the indemnitor elects to assume control of the
defense and settlement of such claim or action.
(b) If the indemnitor delivers a Notice of Assumption of Defense with
respect to a claim within the required period, the indemnitor shall have sole
control over the defense and settlement of such claim; provided, however, that
(i) the Indemnitee shall be entitled to participate in the defense of such claim
and to employ counsel at its own expense to assist in the handling of such
53
claim and (ii) the indemnitor shall obtain the prior written approval of the
Indemnitee before entering into any settlement of such claim or ceasing to
defend against such claim. After the indemnitor has delivered a timely Notice
of Assumption of Defense relating to any claim, the indemnitor shall not be
liable to the Indemnitee for any legal expenses incurred by such Indemnitee
in connection with the defense of such claim; provided, that the indemnitor
shall pay for separate counsel for the Indemnitee to the extent that
conflicts or potential conflicts of interest between the Parties so require.
In addition, the indemnitor shall not be required to indemnify the Indemnitee
for any amount paid by such Indemnitee in the settlement of any claim for
which the indemnitor has delivered a timely Notice of Assumption of Defense
if such amount was agreed to without prior written consent of the indemnitor,
which shall not be unreasonably withheld or delayed in the case of monetary
claims. An indemnitor may withhold consent to settlement of claims of
infringement affecting its proprietary rights in its sole discretion.
(c) If the indemnitor does not deliver a Notice of Assumption of
Defense relating to a claim within the required notice period, the Indemnitee
shall have the right to defend the claim in such a manner as it may deem
appropriate, at the cost and expense of the indemnitor. The indemnitor shall
promptly reimburse the Indemnitee for all such costs and expenses upon written
request therefor.
SECTION 17.6 COOPERATION IN THE EVENT OF LAWSUITS
In the event that any claim, demand, suit or other legal proceeding
arising out of any matter relating to this Master Agreement is made or
instituted by any person against Customer or any Contract Affiliate, Supplier,
at its own cost and expense, shall provide Customer with all reasonable
information and assistance in Customer's defense or other disposition thereof.
ARTICLE 18
LIABILITY AND FORCE MAJEURE
SECTION 18.1 LIABILITY
Subject only to the limitations set forth in this Article, a Party who
breaches any of its obligations under this Master Agreement shall be liable to
the other for any Loss incurred by the other as a result of such breach.
SECTION 18.2 EXCLUSION OF CERTAIN DAMAGES
IN NO EVENT, WHETHER IN CONTRACT OR IN TORT (INCLUDING BREACH OF
WARRANTY, NEGLIGENCE AND STRICT LIABILITY IN TORT), SHALL A PARTY BE LIABLE FOR
INDIRECT OR CONSEQUENTIAL, EXEMPLARY, PUNITIVE OR SPECIAL DAMAGES EVEN IF SUCH
PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES IN ADVANCE.
SECTION 18.3 LIMITATION OF LIABILITY
Subject to the second paragraph of this Section 18.3, each Party's
total liability to the other, whether in contract or in tort (including breach
of warranty, negligence and strict liability in tort) shall be limited to an
amount equal to the total Charges payable to Supplier pursuant to
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this Agreement for the nine (9) months prior to the month which the event
giving rise to the liability occurred; provided that if the event giving rise
to liability occurs during the first nine (9) months after the Effective
Date, liability shall be limited to an amount equal to the total Charges that
would have been payable to Supplier pursuant to this Agreement during such
nine (9) month period.
The limitations set forth in Subsection 18.2 and Subsection 18.3 shall
not apply with respect to: (i) damages occasioned by the willful misconduct or
gross negligence of a Party; (ii) claims that are the subject of indemnification
pursuant to Article 17 (but not including under clause (iv) under Section 17.3);
and (iii) damages occasioned by abandonment of the work by Supplier.
Each Party shall have a duty to mitigate damages for which the other
Party is responsible.
SECTION 18.4 FORCE MAJEURE
(a) Subject to paragraph (d) below, neither Party shall be liable for
any failure or delay in the performance of its obligations under this Master
Agreement, if any, to the extent such failure or delay both:
(i) is caused, directly or indirectly, without fault by such
Party, by: fire, flood, earthquake, elements of nature or acts of God;
labor disruptions or strikes of third parties; acts of war, terrorism,
riots, civil disorders; quarantines, embargoes and other similar
governmental action; or any other similar cause beyond the reasonable
control of such Party; and
(ii) could not have been prevented by reasonable precautions
and cannot reasonably be circumvented by the non-performing Party
through the use of alternate sources, work-around plans or other means
(including, in the case of Supplier, compliance with Supplier's
obligations with respect to the provision of any disaster recovery
services).
Events meeting both of the criteria set forth in clauses (i) and (ii)
above are referred to collectively as "Force Majeure Events." The Parties
expressly acknowledge that Force Majeure Events do not include third party
non-performance or the failure of an individual component or group of components
(including but not limited to, Hardware and Software) used in delivery of the
Services. The Parties further agree that Force Majeure Events do not include
those events, circumstances or constraints that prevent a contracted product or
service from qualifying as Year 2000 Compliant.
(b) Subject to paragraph (d) below, upon the occurrence of a Force
Majeure Event, the non-performing Party shall be excused from any further
performance or observance of the affected obligation(s) for as long as such
circumstances prevail and such Party continues to attempt to recommence
performance or observance whenever and to whatever extent possible without
delay. Any Party so delayed in its performance will immediately notify the other
by telephone or by the most timely means otherwise available (to be confirmed in
writing within two (2) Business Days of the inception of such delay) and
describe in reasonable detail the circumstances causing such delay. As part of
the Disaster Recovery Plan to be developed by
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Supplier and Customer, Parties shall mutually agree upon the Mission Critical
Services (as hereinafter defined), the related costs and the Service Levels
to be performed during the term of the Force Majeure Event. As used herein,
the term "Mission Critical Services" shall mean those Services which are
essential to ensuring the health, safety or welfare of Customer's patients,
visitors or employees, and those services which effect the billing,
collection and financial reporting of Customer.
(c) If a Force Majeure Event causes a material failure or delay in the
performance of any Mission Critical Services for more than two (2) consecutive
days and the Parties cannot mutually agree upon the provision of Services under
Section 18.4(b) hereof, Customer may, at its option, and in addition to any
rights Customer may have pursuant to Section 19.4 (Termination Upon Force
Majeure Event), procure such Services from an alternate source until Supplier is
again able to provide such Services, and Supplier shall be liable for all
payments made and costs incurred by Customer required to obtain the Services
from such alternate source during such period. Customer shall continue to pay
Supplier the charges established hereunder during such period for the Services
performed, but Supplier shall not be entitled to any additional payments as a
result of the Force Majeure Event.
(d) Notwithstanding any other provision of this Section, a Force
Majeure Event shall not relieve Supplier of its obligation to use its best
Commercially Reasonable Efforts to implement successfully all of the Services
relating to disaster recovery services within the prescribed time period.
ARTICLE 19
TERMINATION
SECTION 19.1 TERMINATION FOR CAUSE
(a) Customer may terminate this Master Agreement, or one or more
Service Schedules or one or more categories of Services under a Service Schedule
for cause: (i) for repetitive overcharging, (ii) for a material breach of any
provision of this Master Agreement by Supplier that is not cured by Supplier
within thirty (30) days of the date on which Customer provides written notice of
such breach or (iii) in the event of a Service Level Termination Event as
defined in a particular Service Agreement. Customer shall exercise its
termination option by delivering to Supplier a written notice of such
termination identifying the scope of the termination and the Service Termination
Date. For purposes of this Agreement, "repetitive overcharging" shall mean
overcharging by an aggregate of ten percent (10%) or more in any four (4) months
of a rolling twelve (12) month period.
(b) Supplier may terminate this Master Agreement for cause for a
material breach of any provision of this Master Agreement that is not cured by
Customer within thirty (30) days of the date on which Supplier provides a
written notice of such breach. Supplier shall exercise its termination option by
delivering to Customer a written notice of such termination identifying the
scope of the termination and the Service Termination Date.
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SECTION 19.2 TERMINATION FOR CONVENIENCE
(a) Customer may terminate for convenience this Master Agreement or one
or more Service Schedules, or one or more categories of Services under a Service
Schedule hereunder. Customer shall exercise its termination option by delivering
to Supplier written notice of such termination identifying the scope of the
termination and the Service Termination Date (which shall be at least ninety
(90) days after the date of such notice). In connection with any such
termination, Customer shall reimburse Supplier for costs and expenses in
accordance with Attachment 19.2.
(b) A termination due to a change in Control of Supplier or ACS shall
be deemed a termination for convenience pursuant to paragraph (a) above. With
respect to Supplier and ACS (or their respective controlling Affiliates, if
any), Supplier shall give Customer prompt written notice of (i) a change in the
legal, beneficial or equitable ownership of a majority or controlling interest
in the voting stock of the corporation, (ii) the sale of all or substantially
all of its assets, or (iii) a merger, consolidation or reorganization in which
the corporation is not the surviving entity.
(c) If a purported termination for cause by Customer under Section 19.1
is determined not to be a proper termination for cause, such termination shall
be deemed a termination for convenience subject to this Section.
SECTION 19.3 IMMEDIATE TERMINATION
Customer may terminate this Master Agreement or one or more Service
Schedules, or one or more categories of Services under a Service Schedule,
immediately if:
(a) Supplier is suspended, excluded from participation in, or
sanctioned by Medicare, Medicaid or any other state or federal reimbursement
program, or causes Customer to be so suspended, excluded from participation in,
or sanctioned by any such program;
(b) Supplier causes Customer to lose its license or JCAHO
accreditation, or to be sanctioned by Medicare, Medicaid or any other state or
federal reimbursement program;
(c) Supplier becomes insolvent or is unable to meet its debts as they
mature;
(d) Supplier's action or inaction causes a material adverse impact on,
or otherwise jeopardizes, the health, safety and welfare of Customer's patients,
visitors, employees or members of the general public;
(e) Supplier fails to maintain any material license, authorization,
permit or registration required by law to permit it to provide the Services
under this Master Agreement and such failure is not cured within ten (10) days
(or such longer period as may be reasonably required to effect a cure thereof);
(f) Supplier's insurance coverage required under Article 14 is
canceled, terminated or reduced by carrier for cause; or
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(g) There is any Service Level Termination Event, as described in the
Service Credit Exhibit attached hereto as Exhibit H.
SECTION 19.4 TERMINATION UPON FORCE MAJEURE EVENT
Customer may terminate this Master Agreement or, from time to time, one
or more Service Schedules or categories of Services therein, in the event of a
Force Majeure Event, subject to the provisions of 18.4 above.
SECTION 19.5 EFFECT OF TERMINATION
Except as otherwise set forth in Article 19 hereof, termination of this
Master Agreement or any Service Schedule or category of Services under a Service
Schedule for any reason under this Article shall not affect (i) any liabilities
or obligations of either Party arising before such termination or out of the
events causing such termination, or (ii) any damages or other remedies to which
a Party may be entitled under this Master Agreement, at law or in equity,
arising from any breaches of such liabilities or obligations.
SECTION 19.6 ASSISTANCE UPON TERMINATION OR EXPIRATION
(a) Supplier will provide, upon Customer's request and at Customer's
sole cost and expense in accordance with the pricing methodology approved by the
Parties, the Termination Assistance to Customer in accordance with the
provisions set forth herein in the event of a termination of this Master
Agreement or any portion thereof, for any reason. Supplier will perform the
Termination Assistance set forth in Exhibit D, during the period between the
notice of termination and the Service Termination Date and during the
Termination Transition Term, which shall not exceed twelve (12) months. During
such periods, Supplier will timely transfer the control and responsibility for
all IT functions previously performed by or for Supplier to Customer or
Customer's designees by the execution of any documents reasonably necessary to
effect such transfers. Additionally, Supplier will provide any and all
reasonable assistance requested by Customer to allow:
(i) the Systems associated with the Services to operate
efficiently;
(ii) the Services to continue without interruption or adverse
effect; and
(iii) the orderly transfer of the Services to Customer or its
designee(s).
(b) In addition to the Termination Assistance, Supplier will provide
the following assistance on the Services Termination Date or during the
Termination Transition Term, at Customer's direction:
(i) Customer or its designee will be permitted to undertake,
without Supplier interference and with Supplier's cooperation, efforts
to hire any Supplier Employees whose primary responsibility was to
perform Services hereunder during the preceding twelve (12) months. If
Customer or its designee desires to hire a Supplier Employee who is
bound by any employment agreement or other arrangement precluding or
hindering such employee's ability to be recruited or hired by Customer
or its designee, Supplier agrees that it will not seek to enforce such
restriction or to otherwise preclude or hinder
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such Supplier Employee from being recruited or hired by Customer or its
designee. Supplier will provide Customer and its designees with
reasonable access to such Supplier Employees for the purposes of
interviews, evaluations, and recruitment.
(ii) If Customer is entitled to access and use any Supplier
Proprietary Software or Supplier Licensed Software then being utilized
by Supplier in performing the Services, Supplier will promptly provide
appropriate licenses and delivery to Customer or its designee in
accordance with this Master Agreement. Attachment 10.3 attached hereto
reflects such Software and any other fees which Customer shall pay on
termination in order to effectively access and use such Software.
(iii) Supplier will provide Customer and its designees with
access to any Hardware owned or leased by Supplier that is
substantially used to perform the Services or to provide the Services,
pursuant to reasonable terms and conditions. Customer or its designee
may purchase such Hardware owned by Supplier at Supplier's then-current
net book value, or at no additional charge if the repurchase of such
Hardware is already included in Supplier's termination amounts.
Customer or its designee may assume Supplier's rights and obligations
with respect to leases and third party contracts.
(iv) Supplier will use Commercially Reasonable Efforts to
cause all third party services then being utilized by or for Supplier
in the performance of the Services or the provision of the Services to
be available to Customer or its designee pursuant to reasonable terms
and conditions for a period of at least one (1) year.
(v) Upon request by Customer, Supplier will continue to
provide the Services requested by Customer during the Termination
Transition Term. All Services and Termination Assistance provided by or
for Supplier will be provided or performed in accordance with the
provisions set forth in this Master Agreement.
(c) To the extent Customer elects to have Supplier perform any of the
Services or any Termination Assistance in accordance with paragraphs (a) and (b)
above during the Termination Transition Term, Customer will pay to Supplier the
amounts that Customer would have been obligated to pay to Supplier with respect
to such Services if this Master Agreement were not yet terminated.
(d) If Supplier has utilized a Supplier proprietary communications
network to provide Services or other Services to Customer, then for a period of
no more than two (2) years following the Service Termination Date, Customer may
request that Supplier continue to provide such network services and other
Services at the rates, and subject to the terms and conditions, set forth in
this Master Agreement.
(e) Supplier acknowledges that, if it were to breach, or threaten to
breach, its obligation to provide Customer with Termination Assistance, Customer
would be irreparably harmed. In such circumstances, Customer shall be entitled
to proceed directly to a court of competent jurisdiction and obtain such
injunctive, declaratory or other relief as may be reasonably necessary to
prevent such breach, without the requirement of posting any bond.
During the
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Termination Transition Term, Customer may hold back up to ten percent (10%)
of the amounts invoiced by Supplier as security for the successful completion
of the Termination Assistance.
ARTICLE 20
DISPUTE RESOLUTION
SECTION 20.1 GENERAL
Any dispute or controversy between the Parties with respect to the
interpretation or application of any provision of this Master Agreement or the
performance by Supplier or Customer of their respective obligations here under
shall be resolved as provided in this Article.
SECTION 20.2 INFORMAL DISPUTE RESOLUTION
The Parties, by mutual agreement, may attempt to resolve their dispute
informally in the following manner:
(a) Either Party may submit the dispute to the Oversight Committee,
which shall meet as often as the Parties reasonably deem necessary to gather and
analyze any information relevant to the resolution of the dispute. The Oversight
Committee shall negotiate in good faith in an effort to resolve the dispute.
(b) If the Oversight Committee determines in good faith that resolution
through continued discussions by such Oversight Committee does not appear
likely, the matter shall be referred to the Chief Executive Officers (or the
equivalent) of Customer and Supplier for resolution. If the respective Chief
Executive Officers determine in good faith that they can not resolve the
dispute, the matter may be submitted to binding arbitration or litigation in
accordance with this Article 20.
(c) During the course of negotiations, all reasonable requests made by
one Party to the other for non-privileged information, reasonably related to the
dispute, shall be honored in order that each of the Parties may be fully advised
of the other's position.
(d) The specific format for the discussions shall be determined at the
discretion of the Oversight Committee, but may include the preparation of agreed
upon statements of fact or written statements of position.
(e) Proposals and information exchanged during the informal proceedings
described in this Article between the Parties shall be privileged, confidential
and without prejudice to a Party's legal position in any formal proceedings. All
such proposals and information, as well as any conduct during such proceedings,
shall be considered settlement discussions and proposals, and shall be
inadmissible in any subsequent proceedings.
(f) Unless otherwise mutually agreed by the Parties, neither Party may
commence formal dispute resolution proceedings pursuant to Section 20.3 without
first observing the procedures set forth in this Section, in good faith, for
fifteen (15) days.
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SECTION 20.3 ARBITRATION
(a) Except as set forth in paragraph (b) below, any monetary
controversy or claim arising out of or relating to this Master Agreement, or any
alleged breach hereof, involving less than $100,000 shall be settled at the
request of either Party by binding arbitration in Philadelphia, Pennsylvania
before and in accordance with the then existing Commercial Arbitration Rules of
the American Arbitration Association (the "Rules"). In any such dispute there
shall be three (3) arbitrators, one (1) of whom shall be selected by Customer
within ten (10) days after demand for arbitration is made, one (1) of whom shall
be selected by Supplier within ten (10) days after demand for arbitration is
made, and one (1) of whom shall be selected by the two Party-appointed
arbitrators within thirty (30) days after their selection. If one or more
arbitrator(s) is not selected within the time period stated in the preceding
sentence, such arbitrator(s) shall be selected pursuant to Rule 13 of the Rules.
Any arbitrator(s) proposed by the American Arbitration Association shall have at
least ten (10) years of experience in complex, commercial engagements in the
area that is generally the same as the issue that is the subject of the dispute.
Each Party shall pay its own attorneys' fees and expenses and one-half (1/2) of
the other arbitration costs, subject to final apportionment by the arbitrators.
The arbitrators shall apply the law set forth herein to govern this Master
Agreement and shall have the power to award any remedy available at law or in
equity except to the extent excluded by the terms of this Master Agreement;
provided, however, that the arbitrators shall have no power to amend this Master
Agreement. Any award rendered pursuant to such arbitration shall be final and
binding on the Parties, and judgment on such award may be entered in any court
having jurisdiction thereof.
(b) Notwithstanding paragraph (a) above, either Party may (i) request a
court of competent jurisdiction to grant provisional injunctive relief to such
Party in order to maintain the status quo until an arbitrator can render an
award on the matter in question and such award can be confirmed by a court
having jurisdiction thereof, and (ii) pursue in a court of competent
jurisdiction any other controversy or claim arising out of or relating to this
Master Agreement, or any alleged breach hereof, that is not encompassed within
Section 20.3(a) above.
SECTION 20.4 CONTINUED PERFORMANCE
Both Parties shall continue performing their respective obligations and
responsibilities under this Master Agreement while any dispute is being resolved
in accordance with this Article, unless and until such obligations are
terminated or expire in accordance with the provisions of this Master Agreement.
SECTION 20.5 APPLICABLE LAW
All questions concerning the validity, interpretation and performance
of this Master Agreement shall be governed by and decided in accordance with the
laws of the Commonwealth of Pennsylvania, as such laws are applied to contracts
between Pennsylvania residents and without regard to the choice of law rules of
the Commonwealth of Pennsylvania.
SECTION 20.6 JURISDICTION AND VENUE
The Parties hereby submit and consent to the exclusive jurisdiction of
any state or federal court located within Philadelphia, Pennsylvania and
irrevocably agree that all actions or proceedings relating to this Master
Agreement, other than any action or proceeding required by
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this Article to be submitted to arbitration, shall be litigated in such
courts, and each of the Parties waives any objection which it may have based
on improper venue or FORUM NON CONVENIENS to the conduct of any such action
or proceeding in such court, and further waives trial by jury. Nothing in
this Section shall affect the obligation of the Parties with respect to the
arbitration of disputes pursuant to Section 20.3.
SECTION 20.7 EQUITABLE REMEDIES; INJUNCTIVE RELIEF
The Parties agree that in the event of any breach or threatened breach
of any provision of this Master Agreement concerning (i) Confidential
Information, (ii) intellectual property rights or (iii) other matters for which
equitable rights may be granted, money damages would be an inadequate remedy.
Accordingly, such provisions may be enforced by the preliminary or permanent,
mandatory or prohibitory injunction or other order of a court of competent
jurisdiction.
The Parties agree that the only circumstances in which disputes between
them will not be subject to the arbitration provisions of this Master Agreement
are instances where the damages to a Party resulting from a breach will be so
immediate, so large or severe, and so incapable of adequate redress after the
fact that a temporary restraining order or other immediate injunctive relief is
the only adequate remedy. If a Party files a pleading with a court seeking
immediate injunctive relief and the injunctive relief sought is not awarded in
substantial part, the Party filing the pleading seeking immediate injunctive
relief shall pay all of the costs and attorneys' fees of the other Party.
SECTION 20.8 FEES AND EXPENSES
If any legal action or other proceeding is brought by a Party for the
enforcement of an arbitration award granted pursuant to the procedures set forth
herein, the prevailing Party will be entitled to recover reasonable attorneys'
fees and expenses and other associated costs incurred in that action or
proceeding, in addition to any other relief to which it may be entitled.
ARTICLE 21
MISCELLANEOUS
SECTION 21.1 INTERPRETATION
The Parties are sophisticated and have been represented by counsel
during the negotiation of this Master Agreement. As a result, the Parties
believe the presumption of any laws or rules relating to the interpretation of
contracts against the drafter thereof should not apply, and hereby waive any
such presumption.
SECTION 21.2 BINDING NATURE AND ASSIGNMENT
Neither Party may assign, voluntarily or by operation of law, this
Master Agreement or any of its rights or obligations under this Master Agreement
without the prior written consent of the other Party; provided, that Customer
may assign this Master Agreement or its rights and obligations hereunder to an
Affiliate or successor in interest. Subject to the foregoing, this Master
Agreement shall be binding on the Parties and their respective successors and
assigns.
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SECTION 21.3 EXPENSES
In this Master Agreement, unless otherwise specifically provided, all
costs and expenses (including the fees and disbursements of legal counsel)
incurred in connection with this Master Agreement, and the completion of the
transactions contemplated by this Master Agreement shall be paid by the Party
incurring such expenses.
SECTION 21.4 AMENDMENT AND WAIVER
This Master Agreement may not be modified, amended, or in any way
altered except by written document duly executed by both of the Parties hereto.
No waiver of any provision of this Master Agreement, nor of any rights or
obligations of any Party hereunder, will be effective unless in writing and
signed by the Party waiving compliance, and such waiver will be effective only
in the specific instance, and for the specific purpose, stated in such writing.
No waiver of breach of, or default under, any provision of this Master Agreement
will be deemed a waiver of any other provision, or of any subsequent breach or
default of the same provision, of this Master Agreement.
SECTION 21.5 FURTHER ASSURANCES; CONSENTS AND APPROVALS
Each Party shall provide such further documents or instruments required
by the other Party as may be reasonably necessary or desirable to give effect to
this Master Agreement and to carry out its provisions. Whenever this Master
Agreement requires or contemplates any action, consent or approval, such Party
shall act reasonably and in good faith and (unless the Agreement expressly
allows exercise of a Party's sole discretion) shall not unreasonably withhold or
delay such action, consent or approval.
SECTION 21.6 PUBLICITY
Each Party shall submit to the other all advertising, written sales
promotion materials and materials containing Confidential Information relating
to this Master Agreement or materials in which the other Party's name or xxxx is
mentioned, and shall not publish or use such advertising, written sales
promotion materials, or materials containing Confidential Information or such
name or xxxx without the other Party's written consent.
SECTION 21.7 SEVERABILITY
Any provision in this Master Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions or affecting the validity or enforceability of such
provision in any other jurisdiction.
SECTION 21.8 ENTIRE AGREEMENT
This Master Agreement, including the Appendices hereto, constitutes the
entire agreement between the Parties pertaining to the subject matter hereof and
supersedes all prior and contemporaneous agreements, understandings,
negotiations and discussions, whether oral or written, of the Parties pertaining
to the subject matter hereof.
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SECTION 21.9 NOTICES
Except as expressly otherwise stated herein, all notices, requests,
consents, approvals, or other communications provided for, or given under, this
Master Agreement, shall be in writing, and shall be deemed to have been duly
given to a Party if delivered personally, or transmitted by facsimile to such
Party at its telecopier number set forth below, or sent by first class mail or
overnight courier to such Party at its address set forth below, or at such other
telecopier number or address, as the case may be, as shall have been
communicated in writing by such Party to the other Party in accordance with this
Section. All notices shall be deemed given when received in the case of personal
delivery or delivery by mail or overnight courier, or when sent in the case of
transmission by facsimile upon electronic confirmation of receipt.
Notices to Customer shall be addressed as follows:
Chief Executive Officer
University of Pennsylvania Health System
21 Penn Tower
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, Xx. 00000
Telephone No.: (000) 000-0000 and (000) 000-0000
Telecopier No.: (000) 000-0000 and (000) 000-0000
With a copy to the attention of Customer's counsel at:
Vice President and
General Counsel
Office of the General Counsel
University of Pennsylvania Health System
000 Xxxxx 00xx Xxxxxx, Xxxxx 000
Xxxxxxxxxxxx, Xx. 00000
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
And a copy to the attention of the Customer Contract Executive at:
Chief Information Officer
0000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxxxx, Xx. 00000
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
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Notices to Supplier shall be addressed as follows:
President
000 X. Xxxxx Xxxx., 0xx Xxxxx
Xxxx Xxxxx, XX 00000
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
with a copy to the attention of Supplier's counsel at:
General Counsel
000 X. Xxxxx Xxxx., 0xx Xxxxx
Xxxx Xxxxx, XX 00000
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
And a copy to the attention of the Supplier Contract Executive at:
FCG Management Services Contract Executive
0000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxxxx, Xx. 00000
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
SECTION 21.10 SURVIVAL
All provisions of this Master Agreement which contemplate performance
or observance following the expiration or earlier termination of this Master
Agreement, will survive any such expiration or earlier termination, and the
expiration of the Term. Additionally, all provisions of this Master Agreement
will survive the expiration or earlier termination of this Master Agreement to
the fullest extent necessary to give the Parties the full benefit of the bargain
expressed herein.
SECTION 21.11 INDEPENDENT CONTRACTORS
This Master Agreement will not be construed to constitute either Party
as a representative, agent, employee, partner, or joint venturer of the other.
Supplier will be an independent contractor for the performance under this Master
Agreement. Supplier will not have the authority to enter into any agreement, nor
to assume any liability, on behalf of Customer, nor to bind or commit Customer
in any manner. Supplier Employees who provide Services pursuant to this Master
Agreement hereunder or who are located on Customer's premises shall remain
Supplier Employees, and Supplier will have sole responsibility for such Supplier
Employees including responsibility for payment of compensation to such
personnel. Notwithstanding the foregoing, however, Supplier shall owe a
fiduciary duty to Customer with regard to the preservation and protection of all
Customer funds, Business Records and Data, and Confidential Information that may
be in Supplier's possession or control for purposes of facilitating the
provision of Services under this Master Agreement.
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SECTION 21.12 THIRD PARTY BENEFICIARIES
Except as specifically provided for in this Master Agreement, nothing
in this Master Agreement, express or implied, is intended to confer any rights,
benefits, remedies, obligations or liabilities on any person (including, without
limitation, any employees of the Parties) other than the Parties or their
respective successors or permitted assigns.
SECTION 21.13 COUNTERPARTS
This Master Agreement may be executed in one or more counterparts, each
of which shall be deemed an original but all of which taken together shall
constitute one and the same instrument.
SECTION 21.14 CONTINGENCY
The effectiveness of this Master Agreement is conditioned upon
Customer's receipt of an opinion of bond counsel satisfactory to Customer that
the financial arrangements of this Master Agreement are in compliance with the
provisions of Revenue Procedure 97-13, 1997-5 I.R.B. 18 and other applicable
provisions of law not later than March 1, 2001.
IN WITNESS WHEREOF the Parties have executed this Master Agreement as
of the day and year first above written.
TRUSTEES OF THE UNIVERSITY OF PENNSYLVANIA,
Owner and Operator of the
THE UNIVERSITY OF PENNSYLVANIA HEALTH SYSTEM
and its AFFILIATES
By: /s/ Xxxxxx X. Xxxxxx
---------------------------
Name: Xxxxxx X. Xxxxxx
-------------------------
Title: Interim CEO
--------------------------
FCG MANAGEMENT SERVICES, LLC
By: /s/ Xxxxxx Xxxx
---------------------------
Name: Xxxxxx Xxxx
-------------------------
Title: President
--------------------------
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