Agreement - MedStrong Corp. and Discount Development Services LLC
AGREEMENT
THIS AGREEMENT is made with an effective date of January 29, 2001 between
MEDSTRONG CORPORATION, a corporation organized under the laws of the State of
Deleware and its affiliates, (herein referred to as "COMPANY"), and DISCOUNT
DEVELOPMENT SERVICES, L.L.C., a Limited Liability Company organized under the
laws of the State of Illinois (herein referred to as "DDS").
WHEREAS, COMPANY desires to establish and maintain a discount health
benefit program for COMPANY'S members and their families (hereinafter
collectively referred to as the "Members"); and
WHEREAS, COMPANY desires that DDS provide services as the
Provider/Administrator of COMPANY'S discount health benefit program to be known
as the Best Benefits Program (the "Program") offered by DDS, which COMPANY will
offer to its Members; and
WHEREAS, COMPANY desires that DDS develop other benefits to be offered to
Members as may be mutually agreed to by the parties; and
WHEREAS, DDS has agreed to provide and administer COMPANY's Program; and;
WHEREAS, the Program referred to in this Agreement is identified in
Exhibit "A" attached hereto and by this reference incorporated herein.
NOW, THEREFORE, in consideration of the mutual covenants set forth herein,
the parties mutually agree to the following:
1. DUTIES AND RESPONSIBILITIES OF DDS:
a. DDS shall provide the Program as described in Exhibit A on the terms
set forth therein. DDS agrees that the fees provided in Exhibit B
will not be changed for a twelve month period. Future changes in
fees will require a six-month notification period to COMPANY. DDS
shall provide customer service support with a toll-free telephone
number to help assure quality of service by providing a direct and
immediate point of contact and a source of information for Members.
DDS shall, on average, in any calendar month, maintain an abandoned
call rate of 7% or less.
b. DDS shall assist the COMPANY with the development of materials
necessary to promote the Program and enroll membership in the
Program.
c. Periodically, review with COMPANY the Program presently being
offered to Members and recommend to COMPANY any changes in the
program which DDS deems desirable and in the best interest of
COMPANY and its Members.
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d. DDS shall comply with all federal, state and local statutes,
ordinances, laws, rules, and regulations applicable to the services
provided by DDS under this Agreement.
e. DDS shall, within 14 working days of receipt of membership
information from COMPANY, personalize and issue a membership card
and materials evidencing an individual's membership.
2. DUTIES AND RESPONSIBILITIES OF COMPANY:
a. COMPANY shall enroll Members in the Program and shall bill and
collect from Members the appropriate fee for such enrollment.
b. COMPANY shall, as requested by DDS, provide DDS with a list of
enrolled Members, for use by DDS, in a media and format agreed upon
by the parties, which shall include the name, address, phone number
and identification number, if any, of each member to be included in
the Program.
c. Pay DDS the fees indicated in Exhibit B by the 30th day of the month
following the month for which the Member was eligible.
3. CONFIDENTIALITY
Except in the performance of this Agreement or as authorized in writing by
COMPANY, DDS shall not disclose to any person, institution, or company not
authorized by COMPANY, any information directly or indirectly related to
Members; including, but not limited to, membership lists or the names of
Members under the Program sponsored by COMPANY for the duration of this
Agreement and for a period of two years following termination.
4. OWNERSHIP AND INSPECTION OF BOOKS AND RECORDS
All documents, books, and records furnished to DDS by COMPANY shall remain
the property of COMPANY, and all documents, books and records of DDS
pertaining to the Program, membership activities or services, whether
original records of DDS or furnished by COMPANY, shall be open for
inspection at DDS's principal place of business at reasonable times. DDS
may store any or all documents, books, and records in microfilm or other
similar medium.
5. EXCLUSIVITY
COMPANY agrees that during the term of this Agreement, and for a period of
two years after the termination of this Agreement, unless terminated for
material breach, it shall not contract directly or indirectly with the
vendors utilized by DDS to fulfill its obligations under this Agreement.
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6. INDEMNIFICATION
Each party agrees to indemnify and hold the other harmless with respect to
any and all losses, damages, or expenses (including reasonable attorney's
fees) which either party shall sustain by reason of the other's negligence
or willful misconduct in carrying out the respective responsibilities in
the Agreement.
7. REPRESENTATIONS AND WARRANTIES:
a. Each of the parties hereto represents and warrants that:
(i) It has all necessary power and authority to execute and
deliver this Agreement and to carry out its obligations
hereunder; and
(ii) That this Agreement constitutes the valid and legally binding
obligation of such party and is enforceable against each of
them in accordance with its terms, except as may be limited by
bankruptcy, reorganization, insolvency, and similar laws of
general application relating to or affecting the enforcement
of rights of creditor; and
(iii) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby does not
and shall not result in or constitute a default, breach or
violation of any agreement, contract or instrument to which it
or any of its officers, directors, employees or shareholders
is or has been a party or by which any of them may be bound or
a violation of any statute, ordinance, judgment, order,
decree, regulation or rule of any court, or governmental
authority applicable or relating to its or their business.
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8. TERM AND TERMINATION:
a. This Agreement shall be effective for one three (3) year term
commencing on January 29, 2001 and ending on January 29, 2004 and
shall automatically be renewed for successive twelve (12) month
terms unless either party to this Agreement gives written notice of
termination to the other party to this Agreement not less than one
hundred twenty (120) days prior to the expiration date of the
initial term or any renewal term.
b. This Agreement may be terminated by either party by giving a thirty
(30) day written notice to the other party of a material breach of
this Agreement, giving the other party a thirty (30) day opportunity
to cure said breach.
c. The obligation, if any, of COMPANY to pay the fees as specified in
Exhibit B, shall survive the termination of this Agreement unless
otherwise mutually agreed to by the parties.
9. COMPLIANCE WITH LAW
The parties agree to comply with all applicable federal, state or local
laws or regulations that apply to their business operations, and to
maintain all federal, state or local licenses or permits required by law
and necessary to carrying out the provisions of this Agreement.
10. ASSIGNMENT
This Agreement may not be assigned by any of the parties hereto without
the prior written reasonable consent of the others. DDS's use of discount
providers in the performance of certain functions shall not be deemed to
be an assignment nor shall it relieve DDS of any responsibility to COMPANY
under the terms of this Agreement. Any merger, consolidation or
reorganization of COMPANY or DDS shall not be deemed an assignment
requiring approval of the other party.
11. ENTIRE AGREEMENT
This Agreement represents the complete agreement of the parties concerning
the subject matter hereof, and all prior or contemporaneous negotiations,
covenants, promises or agreements are merged herewith. This Agreement may
not be modified except by a written document executed by all parties
hereto.
12. BINDING EFFECT
This Agreement shall inure to the benefit of and be binding upon the
parties hereto, their successors and assigns.
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13. RELATIONSHIP OF PARTIES
Nothing contained herein shall be construed to create the relationship of
employer and employee between COMPANY and DDS. DDS is acting as an
independent contractor only and not as an employee or agent of COMPANY.
DDS may exercise its own judgment as to the time and manner of performance
of its services.
14. NOTICES
Any notice or other communications required or which may be given pursuant
to this Agreement shall be in writing, and shall be delivered personally
or sent by facsimile with a copy sent contemporaneously by mail, or sent
by certified or registered, return receipt requested, or express mail,
postage prepaid, to the relevant address as set forth below or such other
address as may be designated from time to time by a party hereto and
delivered to the other party. Any such notice or communication shall be
deemed given when so delivered personally, sent by facsimile, or if
mailed, on the earlier of the date of receipt or two (2) days after the
date of mailing.
If to COMPANY: MEDSTRONG CORPORATION
500 Silver Spur Rd., Suite 303
Rancho Palos Verdes, CA 90274
Attn: President
to DDS: DISCOUNT DEVELOPMENT SERVICES, L.L.C.
8420 W. Bryn Mawr, Suite 700
Chicago, IL 60631
Attn: President
15. CAPTIONS
The captions and headings of paragraphs and subparagraphs are inserted for
convenience of reference only and are not a part hereof and shall not
affect the construction or interpretation of any of the provisions in this
Agreement.
16. COUNTERPARTS
This Agreement may be executed simultaneously in several counterparts,
each of which shall be an original, and all of which shall constitute but
one and the same instrument.
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17. SEVERABILTY
In the event that any paragraph, subparagraph or provision of this
Agreement shall be determined to be contrary to governing law or otherwise
unenforceable, all remaining portions of this Agreement shall be enforced
to the maximum extent permitted by law; the unenforceable paragraph,
subparagraph or provision shall first be construed or interpreted, if
possible, to render it enforceable, and, if that is not possible, then the
provision shall be severed and disregarded, and the remainder of this
Agreement shall be enforced to the maximum extent permitted by law.
18. CONSTRUCTION
Whenever any words are used in this Agreement in the masculine gender,
they shall be construed as though they were also used in the feminine or
neuter gender in all situations where they would so apply, and wherever
any words are used in this Agreement in the plural form, they shall be
construed as though they were also used in the singular form in all
situations where they would so apply.
19. DISPUTE RESOLUTION:
a. Governing Law. This Agreement and the relations between the parties
under it shall be construed in accordance with the substantive law
of the State of Illinois.
b. Informal Negotiation. The parties shall attempt to resolve any
dispute arising under or relating to this Agreement informally
before resorting to any tribunal. With the exception of cases where
irreparable harm is imminent, each party shall first identify an
individual to negotiate in good faith with the representative of the
other party. In the event a dispute is identified, the identifying
party must notify the other party in writing, specifically
identifying the dispute and listing the remedy(s) sought. Within ten
(10) days of such notice being provided, the representatives
identified shall begin to negotiate a settlement and shall have an
ongoing responsibility to continue to negotiate in order to achieve
a mediated settlement during the next thirty (30) day period.
c. Arbitration. If the parties to this Agreement do not voluntarily
settle any dispute within sixty (60) calendar days after the
initiation of negotiation, then all disputes and claims arising out
of or relating to this Agreement and the transaction contemplated
hereunder to which the Agreement relates, including any amendment or
extension thereof and also including any breach, termination,
interpretation, validity or enforcement thereof, shall be resolved
by arbitration in accordance with the procedures of the American
Arbitration Association ("AAA"). The arbitration shall be conducted
by one arbitrator skilled in the business, legal and technical
aspects of this Agreement.
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The arbitrator shall allow each party to conduct limited discovery
regarding the dispute, including a complete exchange of relevant
documents and oral depositions under oath of key witnesses. The
arbitrator is not empowered to award punitive damages. The
arbitration award shall be final and binding upon the parties to the
arbitration and judgment thereon may be entered in any court having
jurisdiction. Costs and expenses of arbitration shall be determined
by the arbitrator, but in no event shall either party be required to
post security. Nothing herein contained shall in any way deprive
either party of its right to seek a temporary restraining order,
preliminary or permanent injunction or other equitable relief in a
court of competent jurisdiction. Arbitration shall take place in
Chicago, Illinois.
IN WITNESS WHEREOF, the parties have affixed their hands and seals as of
the date first above written.
MEDSTRONG CORPORATION
ATTEST:
By: /s/ Jerry R. Farrar
------------------------------------
--------- Name: JERRY R. FARRAR
----------------------------------
Title: CEO
---------------------------------
DISCOUNT DEVELOPMENT SERVICES, L.L.C.
ATTEST:
By: /s/ V. S. Benedetto
------------------------------------
--------- Name: V. S. Benedetto
----------------------------------
Title: President
---------------------------------
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Exhibit A
The Best Benefits Program
DDS shall provide a program that contains each of the below listed benefits.
Benefits shall be provided by reputable suppliers of such services. DDS will
advise Company of any changes in suppliers of the benefits described. Changes in
suppliers shall not result in a substantial change in the benefit itself or the
availability of that benefit. Vendors selected to provide benefits under the
program shall be competent, reliable and provide the benefits in a manner that
equals or exceeds the goods and services provided by suppliers of similar
benefits.
1. DENTAL. The Dental Benefit will provide nationwide coverage through a
network of credentialled practitioners. Participating dentists must be
licensed, insured under an appropriate malpractice policy and agree to
abide by OSHA and CDC Guidelines on sterilization and disinfectant
protocols. Although discounts may vary based on geographic region, fees in
any geographic region will be at least 10% less than average dental
charges in that geographic area. Those fees will be applicable to most
dental services.
2. VISION. The Vision Benefit will provide nationwide coverage for purchase
of corrective eyewear, contact lenses and related sundries. Network
providers will be appropriately licensed and certified or otherwise
qualified under state law. Network locations will include several
nationwide retail outlets. Members will have an unlimited right to
purchase the products they desire from any provider in the network.
Members will receive discounts on eyewear products of at least 10% and
substantial discounts on mail order replacement contact lenses and
designer sunglasses.
3. HEARING. The Hearing Benefit will provide nationwide coverage through a
network of licensed audiologists. All network providers will have
appropriate malpractice insurance. The Benefit will include:
o Basic Audiologic Testing at base prices under $65.00, including air
conduction, bone conduction and word recognition tests.
o Hearing Aids. 20% discount from providers ordinary and customary
fees for hearing aids. 10% discount on programmable hearing aids.
Warranty on hearing aids.
o Maintenance. Free annual cleaning and check of hearing aids
purchased through the program.
4. PRESCRIPTION DRUGS. The Prescription Drug Benefit will be offered through
a nationwide network of pharmacies, including major chains. The benefit
will provide an average of 15% discount on most branded and generic
prescription drugs at those pharmacies. In addition, a mail order
prescription drug service will be available, offering up to 50% discount
on most prescription drugs.
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5. CHIROPRACTIC. The Chiropractic Benefit will provide nationwide coverage
through a network of licensed and insured chiropractors. The Benefit
includes:
o Fifty percent (50%) savings on consultation and diagnostic services.
o Fifty percent (50%) savings on X-rays.
o Twenty percent (20%) savings on other services.
o No limit on the number of visits.
6. VITAMINS AND NUTRITIONAL SUPPLEMENTS. The Vitamin and Nutritional
Supplement Benefit will be offered nationwide through a mail order
service. Discounts will be at least twenty percent (20%) on vitamins,
non-prescription medications, beauty supplies and nutritional supplements.
7. HOME MEDICAL EQUIPMENT. The Home Medical Equipment Benefit will provide a
nationwide network of independent providers of medical equipment. Network
firms will provide equipment and services at a 15% discount off of retail
prices.
8. LEGAL AND FINANCIAL REFERRAL SERVICE. Provides referral to qualified
attorneys, CPA's and financial planners who provide their services at a
25% discount from their usual fees.
9. MEDICAL INFORMATION TELEPHONE SERVICE. 24-hour toll-free access for non
directive medical information. This information center is staffed by
Registered Nurses currently averaging more than 15 years experience.
Counseling protocols used are continuously reviewed by the College of
Physicians and Surgeons at Columbia University.
10. HOTEL AND AUTO RENTAL. Provides a 50% discount at over 5,000 hotels and
motels across the United States and a 20% discount on car rentals from
several national rental agencies. There is also a travel club, which
provides substantial discounts on vacation packages, which are booked
through local travel agencies.
11. EMERGENCY TRAVEL. Provides 24-hour access to multilingual representatives
to assist members with a wide variety of travel related situations such as
emergency air evacuation and assistance in obtaining medical care both
within the United States and abroad. The program also includes services
such as emergency legal assistance, emergency message service, insurance
coordination, lost baggage, passport assistance, and travel agency
services.
12. PHYSICIAN SERVICES. Provides referral to qualified, credentialled
physician through a network of over 310,000 general practitioners and
specialists with fee reductions of 15 to 30%.
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13. MEDICAL RECORDS STORAGE AND RETRIEVAL SERVICE. Provides a "safe deposit
box" for vital health information and documents including medical
conditions, allergies, medications, emergency contacts, physician
contacts, insurance information and advanced directories such as living
will and organ donation authorizations. Information can be updated at
anytime. Information will be released to member or qualified health care
provider via a 24-hour toll-free number.
14. COMPLEMENTARY/ALTERNATIVE MEDICINE REFERRAL SERVICE. Provides referral to
qualified, credentialled alternative medicine practitioners including
acupuncturists, herbologists, massage therapists, nutritionists.
15. EXTENDED HOME HEALTH CARE. Provides access to over 3,000 high quality
medical providers of long term services. Network providers offer a minimum
of 5% savings from their usual and customary fees.
16. PODIATRY. Provides a 50% discount on the initial exam and 20% discounts on
all other services and products. The network is comprised of over 3,000
podiatrists.
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Exhibit B
MEDSTRONG CORPORATION
Pricing Information
The following pricing is based on the "Basic" package of five products
consisting of: Dental, Vision, Hearing, Prescription Drugs, and Chiropractic
services.
Purchase stated quantity with all cards effective as of the date of purchase.
COST PER CARDHOLDER PER MONTH
--------------------------------------------------------------------------------
Quantity 5 Products 4 Products 3 Products 2 Products 1 Products
--------------------------------------------------------------------------------
1 - 50,000 1.35 1.22 1.15 1.07 1.00
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50,000 - 200,000 1.25 1.17 1.10 1.05 .95
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200,000 & Greater 1.20 1.12 1.05 1.00 .90
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o Due to regulatory requirements:
The Program is currently not available in Washington State or California.
o Pricing includes response to customer service inquiries via a single
toll-free telephone number, the personalization and distribution of
fulfillment material. A private label program would require a set-up fee
of $10,000.
o Pricing excludes all marketing expenses, commissions, billing and
collecting.
OPTIONAL GROUP PRODUCTS & COSTS
AVAILABLE WITH PACKAGES OF 2 OR MORE BENEFITS
Product Monthly Cost
---------------------------------------------------
Vitamins $.05
Durable Medical Equipment .07
Emergency Travel Benefit .22
Medical Information Telephone Service .51
Hotel/Auto Rental .22
Legal/Financial Referral Service .26
Medical Records Storage & Retrieval .30
Physician Referral Program 5.10
Podiatry .22
Complementary/Alternative Medicine .73
Extended Care/Home Health Care .73