AGREEMENT BETWEEN THE COUNTY OF SAN MATEO AND
WEBMEDX, INC.

THIS AGREEMENT, entered into this _____ day of _______________ , 2006, by and between the COUNTY OF SAN MATEO, hereinafter called "County," and WEBMEDX, INC. hereinafter called "Contractor";

W I T N E S S E T H:

WHEREAS, pursuant to Government Code, Section 31000, County may contract with independent contractors for the furnishing of such services to or for County or any Department thereof;

WHEREAS, Contractor has been selected through a Request For Proposal (RFP) dated September 30, 2005 to be the sole provider to County for the medical dictation and transcription services described in the RFP using its dictation and transcription proprietary software applications (“Software”).

NOW, THEREFORE, IT IS HEREBY AGREED BY THE PARTIES HERETO AS FOLLOWS:

Exhibits and Attachments

The following exhibits and attachments are included hereto and incorporated by reference herein:

Exhibit A—Services

Exhibit B—Payments and rates

Attachment H—HIPAA Business Associate requirements

Attachment I—§ 504 Compliance

Services to be performed by Contractor

In consideration of the payments set forth herein and in Exhibit “B,” Contractor shall perform services for County in accordance with the terms, conditions and specifications set forth herein and in Exhibit “A.”

Payments

In consideration of the services provided by Contractor in accordance with all terms, conditions and specifications set forth herein and in Exhibit "A," County shall make payment to Contractor based on the rates and in the manner specified in Exhibit "B." The County reserves the right to withhold payment if the County determines that the quantity or quality of the work performed is unacceptable. In no event shall the County’s total fiscal obligation under this Agreement exceed THREE MILLION NINE HUNDRED FIFTY THOUSAND DOLLARS ($3,950,000).

Term and Termination

Subject to compliance with all terms and conditions, the term of this Agreement shall be from May 1, 2006 to April 30, 2009.

Either party may terminate this Agreement, with cause, if during the Term either party fails to perform its respective responsibilities as specified in this Agreement. In such cases the non-defaulting party will notify the other party and the party in default will have thirty (30) days after receipt of such notice to complete appropriate corrective action. If the party in default fails to correct such deficiencies by the end of the thirty (30) day cure period, then the non-defaulting party, at its discretion, may terminate this Agreement immediately.

This Agreement may be terminated by Contractor, the San Mateo Medical Center or his/her designee at any time without a requirement of good cause upon thirty (30) days’ written notice to the other party.

In the event of termination, all finished or unfinished documents, data, studies, maps, photographs, reports, and materials (hereafter referred to as materials) prepared by Contractor under this Agreement shall become the property of the County and shall be promptly delivered to the County. Upon termination, the Contractor may make and retain a copy of such materials. Contractor will return all data previously acquired and stored at its Data Center in a standard HL-7 format. Should the County request the data in a custom or proprietary file format other than HL-7, Contractor will comply with the conversion specification, and transfer the data at a cost based upon the time-and-materials required to complete the conversion project.

Subject to availability of funding, Contractor shall be entitled to receive payment for work/services provided prior to termination of the Agreement. Such payment shall be that portion of the full payment which is determined by comparing the work/services completed to the work/services required by the Agreement.

Availability of Funds

The County may terminate this Agreement or a portion of the services referenced in the Attachments and Exhibits based upon unavailability of Federal, State, or County funds, by providing written notice to Contractor as soon as is reasonably possible after the county learns of said unavailability of outside funding.

Software License

Contractor grants to County a non-exclusive, non-transferable, non-sublicensable limited license to access and use the Software through Contractor’s Internet Website. The license granted shall not be deemed to authorize County to change or modify the Software in any way. Nothing herein grants any rights to County to resell, remarket, or to sublicense the Software or access to Contractor’s Website to any third party.

Ownership

County acknowledges that the structure, organization, and code (both source code and object code) of the Software are proprietary to Contractor and that Contractor retains exclusive ownership of the Software, documentation, trademarks, and any other Intellectual Property Rights relating to the Software, including all modifications, enhancements, derivatives, and other software and materials developed hereunder by Contractor, and all copies thereof. County shall not sell, transfer, publish, disclose, display or otherwise make available the Software including any modifications, enhancements, derivatives, and other software and materials developed hereunder by Contractor, or copies thereof to others in violation of this Agreement. Further, Software will be deemed to be Confidential Information, and any such confidentiality restrictions shall apply accordingly. Except as otherwise expressly permitted hereunder, County agrees not to copy or otherwise reproduce the Software including any modifications, enhancements, derivatives, and other software and materials developed hereunder by Contractor in whole or in part. County shall not remove any proprietary, copyright, trademark, or service mark legend from any Software.

Contractor represents that it has title to and the unrestricted right to license its proprietary software and will indemnify County and hold it harmless against any infringement claims.

“Webmedx," and any other trademarks and service marks adopted by Contractor, to identify the Software and other Contractor products and services belong to Contractor. County has no rights in such marks except as specified in writing between the parties. County agrees not to use the "Webmedx, Inc." trademark or any other mark likely to cause confusion with such trademarks as any portion of County’s trade name, trademark for County’s services, trademark for any other products of County, or trademark for any portion of County’s Internet addresses or domain names.

County agrees not to decompile, disassemble, reverse engineer, transfer electronically, modify, enhance, or create any derivative works with the Software or any other Contractor proprietary or confidential information.

County agrees not to rent, electronically distribute, or timeshare the Software or market the Software by interactive cable, internet, or remote processing services or otherwise distribute the Software other than as specified in this Agreement.

Contractor agrees that County’s patient data shall be and remain County’s Proprietary Information. Contractor understands and agrees that County’s patient data is subject to applicable state and federal laws and regulations pertaining to confidentiality of patient data and information and prohibiting disclosure of it.

Relationship of Parties

Contractor agrees and understands that the work/services performed under this Agreement are performed as an independent Contractor and not as an employee of the County and that Contractor acquires none of the rights, privileges, powers, or advantages of County employees.

Hold Harmless

Contractor shall indemnify and save harmless County, its officers, agents, employees, and servants from all claims, suits, or actions of every name, kind, and description, brought for, or on account of: (A) injuries to or death of any person, including Contractor, or (B) damage to any property of any kind whatsoever and to whomsoever belonging, (C) any sanctions, penalties, or claims of damages resulting from Contractor’s failure to comply with the requirements set forth in the Health Insurance Portability and Accountability Act of 1996 (HIPAA) and all Federal regulations promulgated thereunder, as amended, or (D) any other loss or cost, including but not limited to that caused by the concurrent active or passive negligence of County, its officers, agents, employees, or servants, resulting from the performance of any work required of Contractor or payments made pursuant to this Agreement, provided that this shall not apply to injuries or damage for which County has been found in a court of competent jurisdiction to be solely liable by reason of its own negligence or willful misconduct.

The duty of Contractor to indemnify and save harmless as set forth herein, shall include the duty to defend as set forth in Section 2778 of the California Civil Code.

County shall indemnify and hold harmless Contractor against all actions, claims, and demands resulting from any unintentional or negligent acts or omissions by County, its employees or independent contractors engaged in the work upon which such actions, claims or demands are based. County also agrees to indemnify Contractor for any actions, claims or demands by third parties arising from any breach of County’s obligations under this Agreement.

10.

Assignability and Subcontracting

Contractor shall not assign this Agreement or any portion thereof to a third party or subcontract with a third party to provide services required by contractor under this Agreement without the prior written consent of County. Any such assignment or subcontract without the County’s prior written consent shall give County the right to automatically and immediately terminate this Agreement.

11.

Insurance

The Contractor shall not commence work or be required to commence work under this Agreement unless and until all insurance required under this paragraph has been obtained and such insurance has been approved by Risk Management, and Contractor shall use diligence to obtain such issuance and to obtain such approval. The Contractor shall furnish the Department/Division with certificates of insurance evidencing the required coverage, and there shall be a specific contractual liability endorsement extending the Contractor's coverage to include the contractual liability assumed by the Contractor pursuant to this Agreement. These certificates shall specify or be endorsed to provide that thirty (30) days' notice must be given, in writing, to the Department/Division of any pending change in the limits of liability or of any cancellation or modification of the policy.

(1)

Worker's Compensation and Employer's Liability Insurance The Contractor shall have in effect during the entire life of this Agreement Workers' Compensation and Employer's Liability Insurance providing full statutory coverage. In signing this Agreement, the Contractor certifies, as required by Section 1861 of the California Labor Code, that it is aware of the provisions of Section 3700 of the California Labor Code which requires every employer to be insured against liability for Worker's Compensation or to undertake self-insurance in accordance with the provisions of the Code, and will comply with such provisions before commencing the performance of the work of this Agreement.

(2)

Liability Insurance The Contractor shall take out and maintain during the life of this Agreement such Bodily Injury Liability and Property Damage Liability Insurance as shall protect him/her while performing work covered by this Agreement from any and all claims for damages for bodily injury, including accidental death, as well as any and all claims for property damage which may arise from contractors operations under this Agreement, whether such operations be by himself/herself or by any sub-contractor or by anyone directly or indirectly employed by either of them. Such insurance shall be combined single limit bodily injury and property damage for each occurrence and shall be not less than the amount specified below.

Such insurance shall include:

(a)

Comprehensive General Liability . . . . . . . . . . . . . . . . . .

$1,000,000

(b)

Motor Vehicle Liability Insurance . . . . . . . . . . . . . . . . . .

$1,000,000

(c)

Professional Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$1,000,000

County and its officers, agents, employees and servants shall be named as additional insured on any such policies of insurance, which shall also contain a provision that the insurance afforded thereby to the County, its officers, agents, employees and servants shall be primary insurance to the full limits of liability of the policy, and that if the County or its officers and employees have other insurance against the loss covered by such a policy, such other insurance shall be excess insurance only.

In the event of the breach of any provision of this section, or in the event any notice is received which indicates any required insurance coverage will be diminished or canceled, the County of San Mateo at its option, may, notwithstanding any other provision of this Agreement to the contrary, immediately declare a material breach of this Agreement and suspend all further work pursuant to this Agreement.

12.

Confidentiality

Contractor agrees, on behalf of itself and its employees and independent contractors, that it shall not disclose during the term of this Agreement and thereafter, any business, technical or health care information, including, without limitation, any information concerning patient identity, diagnosis or treatment ("Health Care Information") of County for any reason whatsoever, to any person, firm, corporation, or other entity, either directly or indirectly, unless specifically authorized in writing by an officer of County, or unless required by law. The transmission of Reports via facsimile to a telephone number provided by County, its employees, contractors, or agents shall be considered delivered to County and any access to such Health Care Information by others shall be the sole responsibility of County.

13.

Compliance with laws; payment of Permits/Licenses

All services to be performed by Contractor pursuant to this Agreement shall be performed in accordance with all applicable Federal, State, County, and municipal laws, ordinances and regulations, including, but not limited to, the Health Insurance Portability and Accountability Act of 1996 (HIPAA), and the Federal Regulations promulgated there under, as amended, and will comply with the Business Associate requirements set forth in Attachment “H,” and the Americans with Disabilities Act of

1990, as amended, and Section 504 of the Rehabilitation Act of 1973, as amended and attached hereto and incorporated by reference herein as Attachment “I,” which prohibits discrimination on the basis of handicap in programs and activities receiving any Federal or County financial assistance. Such services shall also be performed in accordance with all applicable ordinances and regulations, including, but not limited to, appropriate licensure, certification regulations, provisions pertaining to confidentiality of records, and applicable quality assurance regulations. In the event of a conflict between the terms of this Agreement and State, Federal, County, or municipal law or regulations, the requirements of the applicable law will take precedence over the requirements set forth in this Agreement.

Contractor will timely and accurately complete, sign, and submit all necessary documentation of compliance.

14.

Non-Discrimination and Other Requirements

Section 504 applies only to Contractors who are providing services to members of the public. Contractor shall comply with § 504 of the Rehabilitation Act of 1973, which provides that no otherwise qualified handicapped individual shall, solely by reason of a disability, be excluded from the participation in, be denied the benefits of, or be subjected to discrimination in the performance of this Agreement.

General non-discrimination. No person shall, on the grounds of race, color, religion, ancestry, gender, age (over 40), national origin, medical condition (cancer), physical or mental disability, sexual orientation, pregnancy, childbirth or related medical condition, marital status, or political affiliation be denied any benefits or subject to discrimination under this Agreement.

Equal employment opportunity. Contractor shall ensure equal employment opportunity based on objective standards of recruitment, classification, selection, promotion, compensation, performance evaluation, and management relations for all employees under this Agreement. Contractor’s equal employment policies shall be made available to County of San Mateo upon request.

Violation of Non-discrimination provisions. Violation of the non-discrimination provisions of this Agreement shall be considered a breach of this Agreement and subject the Contractor to penalties, to be determined by the County Manager, including but not limited to

termination of this Agreement;

ii)

disqualification of the Contractor from bidding on or being awarded a County contract for a period of up to 3 years;

iii)

liquidated damages of $2,500 per violation;

iv)

imposition of other appropriate contractual and civil remedies and sanctions, as determined by the County Manager.

To effectuate the provisions of this section, the County Manager shall have the authority to examine Contractor’s employment records with respect to compliance with this paragraph and/or to set off all or any portion of the amount described in this paragraph against amounts due to Contractor under the Contract or any other Contract between Contractor and County.

Contractor shall report to the County Manager the filing by any person in any court of any complaint of discrimination or the filing by any person of any and all charges with the Equal Employment Opportunity Commission, the Fair Employment and Housing Commission or any other entity charged with the investigation of allegations within 30 days of such filing, provided that within such 30 days such entity has not notified Contractor that such charges are dismissed or otherwise unfounded. Such notification shall include the name of the complainant, a copy of such complaint, and a description of the circumstance. Contractor shall provide County with a copy of their response to the Complaint when filed.

Compliance with Equal Benefits Ordinance. With respect to the provision of employee benefits, Contractor shall comply with the County Ordinance which prohibits contractors from discriminating in the provision of employee benefits between an employee with a domestic partner and an employee with a spouse.

F. E.

The Contractor shall comply fully with the non-discrimination requirements required by 41 CFR 60-741.5(a), which is incorporated herein as if fully set forth.

Compliance with Contractor Employee Jury Service Ordinance. Contractor shall comply with the County Ordinance with respect to provision of jury duty pay to employees and have and adhere to a written policy that provides that its employees shall receive from the contractor, on an annual basis, no less than five days of regular pay for actual jury service in San Mateo County. The policy may provide that employees deposit any fees received for such jury service with the contractor or that the contractor deduct from the employees regular pay the fees received for jury service.

15.

Retention of Records, Right to Monitor and Audit

(a) CONTRACTOR shall maintain all required records for three (3) years after the COUNTY makes final payment and all other pending matters are closed, and shall be subject to the examination and/or audit of the County, a Federal grantor agency, and the State of California.

(b) Reporting and Record Keeping: CONTRACTOR shall comply with all program and fiscal reporting requirements set forth by appropriate Federal, State and local agencies, and as required by the COUNTY.

(c) CONTRACTOR agrees to provide to COUNTY, to any Federal or State department having monitoring or review authority, to COUNTY's authorized representatives, and/or their appropriate audit agencies upon reasonable notice, access to and the right to examine all records and documents necessary to determine compliance with relevant Federal, State, and local statutes, rules and regulations, and this Agreement, and to evaluate the quality, appropriateness and timeliness of services performed.

16.

Merger Clause

This Agreement, including the Exhibits attached hereto and incorporated herein by reference, constitutes the sole Agreement of the parties hereto and correctly states the rights, duties, and obligations of each party as of this document's date. Any prior agreement, promises, negotiations, or representations between the parties not expressly stated in this document are not binding. All subsequent modifications shall be in writing and signed by the parties.

17.

Controlling Law

The validity of this Agreement and of its terms or provisions, as well as the rights and duties of the parties hereunder, the interpretation, and performance of this Agreement shall be governed by the laws of the State of California.

18.

Notices

Any notice, request, demand, or other communication required or permitted hereunder shall be deemed to be properly given when deposited in the United States mail, postage prepaid, or when deposited with a public telegraph company for transmittal, charges prepaid, addressed to:

In the case of County, to:

Deborah Pines, Manager

San Mateo County

San Mateo Medical Center

Medical Records Department

222 West 39^th Avenue

San Mateo, California 94403

In the case of Contractor, to:

Lance J. Fusacchia

Chief Financial Officer

Webmedx, Inc.

564 Alpha Drive

Pittsburgh, PA 15238

IN WITNESS WHEREOF, the parties hereto, by their duly authorized representatives, have affixed their hands.

COUNTY OF SAN MATEO

By:

Jerry Hill, President

Board of Supervisors, San Mateo County

Date:

ATTEST:

By:

Clerk of Said Board

WEBMEDX, INC.

Contractor’s Signature

Date:

Long Form Agreement/Business Associate v 1/09/06

Exhibit “A”

In consideration of the payments set forth in Exhibit “B”, Contractor shall provide the following services:

Dictation and Transcription Services

Transcription of dictated medical reports (the “Reports”) for County will be provided by Contractor 365 days per year. Contractor will provide turnaround times on the Reports as depicted in Exhibit B.

Provide corrections to Reports where errors in transcription are made by Contractor’s transcriptionists at no charge to County. Amendments and addenda to Reports (“Report Modifications”) can be made by caregivers from time to time. Report Modifications will be charged at the same rate as the original Report. Charges for Report Modifications will only apply to those lines associated with such modifications to the original Report.

Contractor will make sufficient initial training of 40 hours available to County caregivers and personnel to promote the continued, effective use of its services under this Agreement. Additional training will be provided upon County written request.

Contractor will provide County certain access to and use of the Software during the term of this Agreement. Detailed information on the Reports will be provided to County through on-line reporting tools (the “Management Reports”).

Contractor shall be permitted to perform scheduled maintenance on its system. Scheduled maintenance will not exceed four (4) hours per scheduled event, and written notice will be given at least seven days prior to performing such maintenance.

Contractor will provide County caregivers sufficient backup toll-free telephone access and support to Contractor’s dictation system as to allow for its obligations to be met under this Agreement.

Contractor will provide a transcription accuracy level of 98% and will provide reports necessary for County to verify the level of accuracy. The County may perform random audits to verify the level of accuracy.

Other Professional and Support Services

Implementation, Installation and Training, as defined and agreed to in the Workplan, of which the Workplan will be reviewed and agreed to within 30 days of contact signing.

Siemens ADT Interface

Optional Softmed Chartscript Interface

Software technology and related data hosted at Contractor’s Tier 1 Data Center facility, which has 24x7x365 physical security and surveillance, access control and operations monitoring and support, providing 99.9% system availability. Contractor also has a secondary Data Center location as part of its disaster recovery plan.

Solutions Center unlimited telephone support available 24x7x365 at no charge.

Dedicated Account Management and Project Engineering support.

Optimization Review - within 90 days of Go-Live, defined as the first day dictated medical reports are transcribed and delivered to County from Contractor’s production environment, and one year from Go-Live, Contractor will perform an on-site review, at no cost to County, focused on any recommendations to increase the effectiveness of County in its use of the Software.

Problem Resolution – Contractor agrees to the following problem resolution timeframes

Level 1 (system unavailable, no workaround) – Begin work within 30 minutes; issue to be resolved within 4 hours.

Level 2 (system issues, but workaround in place) – Begin work within 2 hours; issue to be resolved within 24 hours.

Level 3 (issues with minimal or no system impact) – Begin work within 24 hours; issue to be resolved within 72 hours.

Project Manager – Contractor shall provide an experienced Project Manager. County shall review Project Manager’s qualifications and approve of Project Manager prior to assignment.

Workplan – Within 30 days of the effective date of this Agreement, Contractor and County shall agree upon and approve in writing a project Workplan. Implementation will be performed in accordance with the project Workplan.

10.

Account Manager – Contractor shall provide an Account Manager who will be responsible for the ongoing relationship with County. The Account Manager shall review the service and support status with the Director of Medical Records on a regular basis.

11.

Response to RFP – Contractor’s response to the functional requirements (sections 7 through 14) in the RFP is incorporated into this Agreement.

12.

Change Orders – Any changes to the scope of the project or requests by County for additional services shall be in writing and approved by both parties.

Exhibit “B”

In consideration of the services provided by Contractor in Exhibit “A”, County shall pay Contractor based on the following fee schedule:

Dictation and Transcription Service Pricing

County will pay Contractor, as its sole source vendor of such outsourced services, at the rate of $0.0027 per Black Character. Also, when practical in terms of efficiency and productivity, Contractor will employ its Automated Speech Recognition (ASR) technology on select dictations, for which it will charge at the rate of $0.00256 per Black Character. When deployed, ASR will have no impact or additional requirements on County.

A Black Character is defined as the counting of any letter, number, symbol, and/or punctuation mark excluding any/all formatting (e.g., bold, underline, italics, table structure, and formatting codes). Each Black Character is counted once, even if formatted. Black characters for headers, footers and formatting on all pages, consistent with the sample reports included with the County’s Request For Proposal, are also included.

Contractor will be eligible for annual increases (that is, only once in 12 months) in its fees beginning on the first anniversary of the Go-Live date, as determined by multiplying the then current rate plus the percentage increase in the Consumer Price Index, Urban Wage Earners and Clerical Workers (CPI-W), U. S. City Average, Medical Care as published by the U. S. Department of Labor, Bureau of Labor Statistics ("MPI"). The MPI will be determined by comparing the most recently published rate to the rate one-year earlier. Under no circumstance will the increase exceed three percent (3%).

Contractor will submit invoices to County on a bi-weekly basis. The invoice shall cover the preceding two-week period for services rendered. Each billing period starts on Monday at 12:00 midnight and ends on the Sunday two weeks following at 11:59 P.M. The invoice will give detailed information of usage of each individual type category and dollar amount of each individual work type category. For any undisputed amounts which remain unpaid by the 30th day following the invoice date, County shall be assessed a late payment charge of one and one-half percentage (1 1/2%) of the unpaid amount for each succeeding thirty (30) day period or portion thereof in which the invoice remains unpaid. Amounts disputed in good faith shall not be subject to late charges and shall not be considered a breach by County. Contractor reserves the right to discontinue services to County if any invoice has not been paid within sixty (60) days following the invoice date. Contractor agrees to expend reasonable and customary effort to notify County if compensation for services rendered is owed but not paid within the terms and conditions of this Agreement.

Professional Fees

County will also pay Contractor for the following Professional Services:

Implementation and Installation - $5,000, of which 50% is payable upon completion of the Workplan and 50% upon Go-Live.

Siemens ADT Interface - $10,000, payable upon Go-Live.

Optional Softmed Chartscript Interface - $5,000, payable upon Go-Live.

Initial On-site Training - 40 hours at a fixed price of $2,500, to include travel & living expenses, payable upon completion. County will pre-approve all travel and living expenses.

Additional Training – If requested by County, at the rate of $125 per hour, plus reasonable travel & living expenses.

Software Upgrades and New Versions – no additional cost.

On-site Hardware – no additional cost to County. Other than workstations, on-site hardware will be the property of Contractor.

800 Telephone Line for emergency backup dictation in the event the primary on-site dictation service is unavailable, and Solutions Center support – no additional cost to County.

Expected Volumes, Turnaround Times and Penalties

County could provide, and Contractor will have the capacity to transcribe 10,000,000 lines per year with the expected turnaround times (“TAT”) for all reports;

STAT Reports – 3 hours

H&P, Pre-op, and ED Reports – 12 hours

All otrher reports except clinic notes – 24 hours

Clinic Notes – 48 hours

Turnaround time for work dictated into the Contractor’s dictation system will be defined as the time between the completion of the dictation process by the caregiver and the time of the availability of a transcribed document to County. Turnaround time for work dictated into a dictation system other than Contractor’s will be defined as the time between the receipt of the dictation file into the Contractor’s transcription system and the time of the availability of the transcribed document to County.

Reports not received within the above turnaround times will be subject to a price reduction as follows:

Worktype

Expected TAT

If greater than

% credit

STAT *

3 hours

4 hours

6 hours

H&P, Pre-op, ED

12 hours

18 hours

24 hours

All other except clinic notes

24 hours

48 hours

72 hours

Clinic Notes

48 hours

72 hours

96 hours

* if STAT Reports exceed 2% of the total volume of reports in a given billing period, no credit will be applied to the related invoice.

NOTE: No credits will be incurred by Contractor for the first 60 days after Go-Live.