Pilot Agreement - Professional Claim Services Inc. d/b/a WellPoint Pharmacy Management and Cybedix Lynx Corp.
PILOT AGREEMENT This Pilot Agreement is entered into as of the 28th day of December 1999 by and between Professional Claim Services, Inc., a New York corporation doing business as WellPoint Pharmacy Management ("WPM"), and Cymedix Lynx Corporation, a Colorado corporation ("Cymedix") RECITALS A. Cymedix is the developer of Cymedix.com, a proprietary software product (the "Cymedix Software") designed to enable healthcare industry participants to effectively communicate vital medical, financial and administrative information over the Internet on a secure basis and to execute standard administrative transactions, with a view to simplifying communications, improving patient care and reducing the cost of that care. B. WPM and Cymedix are parties to a binding letter of intent dated September 8, 1999 (the "LOI"), providing for the general terms of a pilot program (the "Pilot Program") to integrate the pharmacy management component of the Cymedix Software the (the "RX Software") under contract with Blue Cross of California, an affiliate of WPM ("BCC") and/or other Health Plans. C. The LOI also summarizes the general terms of the production programs (the "Production Programs") that Cymedix will seek to implement with BCC, Unicare and other health plans (collectively, "Health Plans") to expand the use of the TX Software and other special functionality modules of the ("Cymedix Software Modules") among physicians and healthcare industry service providers under contract with the Health Plans. D. In accordance with the LOI, Medix Resources, Inc., the parent company of Cymedix ("Medix"), has issued to WPM warrants to purchase up to 6 million shares of Medix common stock, or an amount equal to 19.9%, on a fully diluted basis, calculated as of the date of issue, of the total number of outstanding shares of Medix Common Stock, and has agreed to nominate a designee of WPM for appointment to the Medix board of directors. E. The parties desire to enter into this Agreement to memorialize their respective responsibilities for implementing, conducting and monitoring the Pilot Program and to establish objective criteria for determining its success (the "Pilot Criteria"). Accordingly, the parties hereby agree as follows: AGREEMENT 1. Objectives of the Pilot Program. The Pilot Program will establish an electronic communication link between WPM and the Pilot Providers, enabling WPM to evaluate the viability of the link and the value of the RX Software to BCC and/or Health Plans, WPM and the Pilot Providers. During the course of the Pilot Program, Cymedix will also complete and validate its data interface technology included in the Cymedix Software to automate the process of acquiring relevant data from legacy medical management systems maintained by the Pilot Providers (the "Universal Interface") 2. Pilot Criteria. 2.1 Objective Standards. The Pilot Criteria shall be deemed to be satisfied upon (a) the establishment of an electronic communication link between WPM's pharmacy management information system and at least 25 Pilot Providers ("Core Providers") and (b) the processing of administrative transactions by the Core Providers through the RX Software. 2.2 Functionality of WPM Message Specifications. To achieve the level of functionality necessary for satisfying the Pilot Criteria, the WPM Message Specifications, when properly input by the Pilot Provider, will provide the Pilot Provider with data consisting of (a) patient medication history, (b) formulary data and compliance recommendations, (c) drug to drug interactions (DUE), (d) prior approval form selection and printing and (e) prescription form printing and data storage. 2.3 Role of Universal Interface. Completion of the Universal Interface is an objective of the Pilot Program but shall not be treated as a Pilot Criteria. 3. Pilot Period. The Pilot Program shall be conducted for a period (the "Pilot Period") commencing on the date of this Agreement (the "Commencement Date") and ending (the "Termination Date") upon the earlier of (a) the parties' mutual determination that the Pilot Criteria have been satisfied or (b) 180 days after the Commencement Date. The Pilot Period will be subject to extension in accordance with the provisions of Section 7. 4. Pilot Responsibilities of WPM. During the Pilot Period, WPM shall use commercially reasonable efforts to complete the following tasks during the time frames specified below: 4.1 Equipment Requirements. On or before the Commencement Date, WPM will return to Cymedix all computer equipment utilized by Cymedix at WPM's offices in preparation for the Pilot Program and will obtain, at its own expense, a faster Internet connection and the computer equipment specified on Schedule B (the "WPM Equipment Requirements"). At the election of WPM, Cymedix will arrange for the delivery of the items comprising the WPM Equipment Requirements at the unit costs indicated on Schedule B. WPM will ensure that the items comprising the WPM Equipment Requirements remain dedicated to the Pilot Program throughout the Pilot Period. 4.2 Delivery of Data Tables. On or before the Commencement Date, WPM will deliver to Cymedix all data tables required by the WPM Message Specifications, to the extent then available without additional software programming. WPM will complete the software programming required for delivery of the remaining data tables within 30 days after the Commencement Date. At the election of WPM, Cymedix will make its technical personnel available to assist in completing those tasks at its standard per diem rates for those personnel, together with reimbursement of their related expenses. 4.3 Appointment of Project Manager. On or before the Commencement Date, WPM will appoint a qualified project manager from its professional staff (the "WPM Manager") to coordinate WPM's participation in the Pilot Program throughout the Pilot Period. Cymedix will make its personnel available to provide sufficient training to enable the WPM Manager to demonstrate all functions of the RX Software. Throughout the Pilot Period, the WPM Manager will be reasonably available to assist Cymedix in answering any questions raised by the Pilot Providers about the utilization of the RX Software. WPM acknowledges that the availability and responsiveness of the WPM Manager throughout the Pilot Period will be critical to the success of the Pilot Program. 4.4 Coordination with Pilot Providers. Upon identification of the Pilot Providers, WPM will use commercially reasonable efforts to assist Cymedix in making arrangements for (a) installation of the RX Software by Cymedix on site at the offices of the Pilot Providers. 4.5 Participation in Presentations. Upon reasonable prior notice from Cymedix, the WPM Manager or a member of the public relations staff of WPM appointed by the WPM Manager will participate in field presentations organized by Cymedix during the Pilot Period to familiarize Pilot Providers or other health care industry participants with the benefits of the Cymedix Software. 5. Pilot Responsibilities of Cymedix. During the Pilot Period, Cymedix shall use commercially reasonable efforts to complete the following tasks during the time frames specified below: 5.1 Systems Analysis. Upon receipt from BCC and/or Health Plans of information on physician practice groups under contract with Clients, Cymedix will perform a technical analysis of the hardware, software and platforms maintained by each prospective Pilot Provider. The results of that analysis will be used by Cymedix in selecting Pilot Providers for inclusion in the Pilot Program. 5.2 Software Installation. As soon as practicable after completion of the analysis contemplated by Section 5.1, Cymedix will provide a list of the Pilot Providers to WPM. In conjunction with the coordinating activities contemplated by Section 4.4, Cymedix will install and test the RX Software on site at the offices of the Pilot Providers. 5.3 Technical Assistance. Throughout the Pilot Period, Cymedix will make its technical personnel reasonably available to address any questions raised by the Pilot Providers about the utilization of the RX Software. Cymedix acknowledges that the availability and responsiveness of its technical personnel throughout the Pilot Period will be critical to the success of the Pilot Program. 5.4 Additional Cymedix Software Modules. At any tie during the Pilot Period, if required by WPM or BCC and/or Health Plans, Cymedix will install and test additional Cymedix Software Modules on site at the offices of the Pilot Providers. 6. Marketing Undertakings. 6.1 Use of RX.net Trademark. During the Pilot Period and throughout the continuation of any Production Programs, WPM shall have the right and license to market and promote the RX Software under the private label "RX.net", provided that the foregoing license shall not entitle WPM to any proprietary rights in the technology or intellectual property underlying the RX Software or any other Cymedix Software Modules. 6.2 Website Links. During the Pilot Period and throughout the continuation of any Production Programs, (a) Cymedix shall have the right and license to display the WPM logo, with written prior approval from WPM, on the home page of Cymedix.com, the website maintained by Cymedix, (b) Cymedix will maintain, on the home page of its website, a brief description of the Pilot Program (or any Production Programs then in effect) as well as the capability for the hyperlink to the WPM website, (c) WPM shall have the right and license to display the Cymedix logo on the home page of the website maintained by WPM and (d) WPM may also maintain, on the home page of its website, a brief description of the Pilot Program (or any Production Programs then in effect). 6.3 Client Newsletters. During the Pilot Period, applicable client newsletters published by WPM will have space reserved for promotional material about Cymedix, with client consent. The content will be provided by Cymedix, subject to editorial modifications by WPM and clients, as appropriate. 6.4 Industry Conferences. During the Pilot Period and throughout the continuation of any Production Programs, Cymedix will have the right to participate as a co-exhibitor at industry conferences and other events where WPM is an exhibitor, as determined by WPM. 7. Fees for the Pilot Program. During each month of the Pilot Period, WPM will pay Cymedix a fee of $10,000, commencing on the Commencement Date, in consideration for which Cymedix shall waive all transaction fees. In the event that WPM fails to timely satisfy any of its undertakings under Section 4 and the resulting delays impair the ability of Cymedix to demonstrate its satisfaction of the Pilot Criteria by the Termination Date, the Pilot Period will be extended for a period approximating the length of those delays (the "Extension Period"). In that event, WPM will continue to pay Cymedix the foregoing monthly fees throughout the Extension Period. However, if Cymedix fails to timely satisfy any of its responsibility in Section 5 and delays occur, WPM will not be responsible for any monthly fees during the Pilot Extension Period. 8. Representation and Warranty of Cymedix. Cymedix represents and warrants to WPM that the RX Software and any other Cymedix Software Modules installed at the request of WPM or BCCA for the Pilot Program and, if implemented, the Production Programs, meet or exceed the requirements for encryption of authentications and identifications as set forth in the HCFA Internet Security Policy issued on November 24, 1998. 9. Indemnification. Each party (an "Indemnifying Party") shall indemnify and hold harmless the other party and its officers, directors and other affiliates (each, an "Indemnitee") from and against any and all judgments, penalties, fines and amounts paid in settlement, including any interest assessments or other charges payable in connection therewith, and all reasonable expenses, including attorneys' fees, retainers and disbursements, court costs, experts' fees and travel expenses incurred by the Indemnitee in connection with any threatened, pending or completed action, claim, suit, investigation, hearing or other proceeding, whether civil, criminal, administrative, arbitrative or investigative, any appeal therein or any inquiry or investigation that could lead thereto, to which the Indemnitee is, was or at any time becomes a party, arising from the breach by the Indemnifying Party of its representation and warranty under Section 8, in the case of Cymedix, or Section 9, in the Case of WPM. 10. Production Programs. 10.1 Implementation of Production Payment. Prior to or at the end of the Pilot Period, if the Pilot Criteria are satisfied, WPM will provide reasonable assistance to Cymedix in securing definitive agreements with Health Plans for the implementation of Production Programs (the "Production Program Agreements") 10.2 Transaction Fees for Production Programs. During the continuation of each Production Program, Cymedix will seek to implement with each Health Plan a fee structure under which the sponsoring Health Plan or, at its election, each healthcare service provider under contract with that Health Plan ("Production Providers"), will undertake to pay monthly fees to Cymedix for the use of the Cymedix Software in an amount equal to the greater of (a) $100 for each Production Provider location covered thereunder or (b) the total of all transactions by those Production Providers at $.50 per transaction (collectively, the "Production Fee Target"). 11. Confidentiality. 11.1 Confidentiality Undertaking. The parties acknowledge that their discussions and implementation of the Pilot Program may entail the exchange of confidential information, including technical specifications for the Cymedix Software and information about business methods, operations and prospects, costs, markets, pricing policies, technical processes and applications and confidential patient records ("Information"). Each party agrees that, subject to the exceptions set forth below, for five years after the Commencement Date hereof, it will (a) keep all Information confidential, (b) refrain from disclosing any Information to any person or firm, other their respective employees and agents having a need to know and (c) refrain from using any Information, directly or indirectly, for its own benefit or the benefit of any affiliate. 11.2 Exceptions. For purposes of this undertaking, Information shall not include information that (a) is in the public domain at the time of disclosure to a party, (b) becomes part of the public domain after disclosure to a party through no fault, act or failure to act, error or breach of this undertaking by the recipient, (c) is known to the party at the time of disclosure, (d) is discovered by the party independently, (e)is required by order, statute or regulation of any government authority to be disclosed to any court or other body, provided that the party shall notify the other party thereof to provide or afford it the opportunity to obtain a protective order or other relief, or (f) is obtained from a third party who has acquired a legal right to disclose the specific information. 11.3 Remedies. In addition to any other remedies for breach of the foregoing confidentiality undertakings, the parties will be entitled to equitable relief in the event of any breach of threatened breach thereof. In the event of litigation relating thereto, the prevailing party shall be entitled to recover the reasonable legal fees incurred in connection therewith, including any appeal therefrom. 12. Publicity. Neither party shall use the name of the other party in any marketing, advertising or other public announcement about the subject matter of this letter without the other party's written consent. A party desiring to make a public disclosure shall submit a draft thereto for prior approval by the other party, which will be deemed to have been given if comments thereon are not provided within 72 hours. 13. Independent Contracts. Each party shall act as an independent contractor hereunder, with sole responsibility for its own operations, personnel and operating expenses, and nothing contained in this Agreement shall be construed to create a partnership or joint venture between parties. 14. Assignability. This Agreement and a party's rights and obligations hereunder may not be assigned for any reason without the written consent of the other party. 15. Waive of Provisions. The waiver of compliance at any time with any of the provisions, terms or conditions contained in this Agreement shall not be considered a waiver of the provision, term or condition itself or of any of the other provisions, terms or conditions hereof. Any waiver hereunder must be express and in writing by the party agreeing to waive any right hereunder. 16. Integration. This Agreement contains the entire agreement of the parties with respect to the subject matter hereof. 17. Amendment. This Agreement shall not be amended or modified except by a written instrument signed by both parties. 18. Governing Law. This Agreement and the rights and obligations of the parties shall be governed by and construed in accordance with the laws of the State of California, excluding any conflict of laws rules of that State or other principle that might refer the governance or construction of this Agreement to the laws of another jurisdiction. 19. Binding Effect. The terms, conditions and provisions of this Agreement and all obligations of the parties shall inure to the benefit of, and be binding upon, the parties hereto and their respective successors and permitted assigns. 20. Notices. Any notice given under this Agreement shall be made in writing and shall be deemed to have been duly given or made if delivered personally, or mailed (postage prepaid by registered or certified mail), or sent by facsimile to the parties at their respective addresses set forth below. Any notice so sent shall be deemed to have been given or delivered at the time that it is either (i) personally delivered or (ii) within two business days after the date deposited in the United States mail or one business day after delivery to an overnight courier, if sent by mail or courier, or (iii) when receipt is acknowledged, if sent by facsimile, as the case may be. Any party may change its address by giving notice in writing, stating its new address, to the other party. If to WPM: with a copy to: Wellpoint Pharmacy Management WellPoint Health Networks, Inc. 4553 La Tienda Drive 1 WellPoint Way Thousand Oaks, CA 91362 Thousand Oaks, CA 91362 Attention: Michael Nameth, Attention: General Counsel General Manager If to Cymedix: with a copy to: Cymedix Corporation Medix Resources, Inc. One Boardwalk - Suite 200 7100 E. Belleview Avenue - Suite 301 Thousand Oaks, CA 91360 Englewood, CO 80111 Attention: David Pfeil, Attention: John P. Yeros, Vice President President 21. Counterparts. This Agreement may be executed in any number of separate counterparts that together shall constitute but one and the same Agreement. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date and year first above written. CYMEDIX LYNX CORPORATION By: /s/ John P. Yeros John P. Yeros President By: /s/ Michael A. Nameth, Michael A. Nameth, General Manager Schedule A INITIAL PILOT TASKS FOR WELLPOING PHARMACY MANAGEMENT WellPoint Pharmacy Management ("WPM") will be responsible for completing the following tasks as soon as practicable after acceptance of the accompanying letter agreement. Capitalized terms used in this Schedule A and not otherwise defined shall have the respective meanings ascribed to them in the letter of intent. 1. WPM will provide a secured, non-dial up Internet access to the Cymedix host PC located on site at WPM, within WellPoint security policy. 2. WPM will replace current pilot equipment from Cymedix with equivalent or better equipment to serve as the WPM PC and Cymedix host PC dedicated to the Pilot Program. 3. WPM and Cymedix will create a task plan (Project Plan) outlining the remaining information systems issues to be resolved for the Pilot and Production Programs, Both parties will work together to resolve those issues to meet the time schedule and responsibilities outlined in the Project Plan. Schedule B WPM EQUIPMENT REQUIREMENTS Quantity Description Unit Cost Total Cost --------- ----------------------------------------------- --------- ---------- Apollo Series PC, or equivalent, Mid-tower case, P3 550 mhz, 125 megs ram, 8.4 gigs, 3c905b, Windows 98, PCI modem, with monitor 2 to be supplied by WPM $ 1,635 $ 3,270 Apollo Series PC, or equivalent, Mid-tower case, P3 550 mhz, 125 megs ram, 8.4 gigs, 2x3c905b, Windows 98, PCI mode, with monitor 2 to be supplied by WPM 1,700 3,400 4 2 gig Jaz Drives with extra 3 pack of disks 654 2,616 4 Pc Anywhere Host Only Version 120 480 2 Cat 5 X-Over Cable 20 40 2 Watchdog PCI Card 200 400 2 Set up fee 150 300 -------- --------- Total $ 10,506 ========= Dial-up modem Internet connection monthly fee 1 (for test system) 20 DSL Internet connection (minimum of 128KB upstream and downstream) modem and 1 installation fees 700 1 Estimated monthly DSL service fee 99