TRANSITION SERVICES AGREEMENT
by and between
LAKEWOOD REGIONAL HEALTH PARTNERS, LLC as Service Provider
and
CRESTLINE PACKAGING SOLUTIONS LLC as Service Recipient
Dated as of ______________, 2025
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RECITALS
WHEREAS, Crestline Packaging Solutions LLC, a Delaware limited liability company ("Buyer" or "Service Recipient"), CPS Holdings, Inc., a Delaware corporation, Lakewood Regional Health Partners, LLC, a New York limited liability company ("Seller" or "Service Provider"), Dr. Raymond Alcott, and Dr. Nadia Petrosian are parties to that certain Asset Purchase Agreement, dated as of June 16, 2025 (as may be amended, supplemented, or otherwise modified from time to time, the "Purchase Agreement");
WHEREAS, the Purchase Agreement contemplates the acquisition by Buyer of substantially all of the assets of Seller relating to Seller's multi-site healthcare practice operating eleven (11) clinic locations across the States of New York and Pennsylvania (the "Acquired Business");
WHEREAS, as a condition to and in connection with the Closing (as defined in the Purchase Agreement), the Parties agreed to enter into this Transition Services Agreement (this "Agreement") to facilitate an orderly transition of certain business operations, administrative functions, and information technology systems from Service Provider to Service Recipient following the Closing;
WHEREAS, Service Provider possesses institutional knowledge, existing vendor relationships, system access, and personnel familiar with the Acquired Business that are necessary to provide transitional support in revenue cycle management, billing operations, information technology migration, provider credentialing, and general administrative services during the post-Closing transition period; and
WHEREAS, capitalized terms used but not defined herein shall have the meanings ascribed to such terms in the Purchase Agreement.
NOW, THEREFORE, in consideration of the foregoing recitals, the mutual covenants and agreements set forth herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
ARTICLE 1 — DEFINITIONS
Section 1.1 — Defined Terms.
As used in this Agreement, the following terms shall have the meanings set forth below:
"Agreement" means this Transition Services Agreement, including all Schedules and Exhibits attached hereto and incorporated herein by reference, as may be amended, supplemented, or otherwise modified from time to time in accordance with the terms hereof.
"Closing Date" has the meaning set forth in the Purchase Agreement. The Parties anticipate that the Closing Date will occur on or about August 15, 2025.
"Dispute" means any controversy, claim, or disagreement arising out of or relating to this Agreement, the interpretation, performance, or enforcement hereof, or the Transition Services provided or to be provided hereunder.
"Extension Fee" means the per-diem surcharge applicable to any extension of a Transition Service beyond its Initial Service Period, calculated at one hundred fifteen percent (115%) of the applicable at-cost Service Fee rate for such Transition Service, as more particularly described in Section 4.2 and Schedule B.
"Force Majeure Event" means any event or circumstance beyond a Party's reasonable control that prevents or materially delays the performance of such Party's obligations under this Agreement, including, without limitation, acts of God, natural disasters (including earthquakes, floods, hurricanes, and severe weather events), epidemics, pandemics, or public health emergencies, fire, explosion, war (whether declared or undeclared), terrorism, civil unrest, riots, insurrection, governmental orders, sanctions, embargoes, quarantine restrictions, labor strikes or lockouts (other than those involving the affected Party's own employees), cyberattacks (including ransomware, distributed denial-of-service attacks, and other malicious intrusions), widespread utility or telecommunications failures, and any similar event or circumstance beyond such Party's reasonable control.
"Initial Service Period" means, for each Transition Service, the period beginning on the Closing Date and ending on the date specified for such Transition Service on Schedule A, which in no event shall exceed one hundred eighty (180) calendar days following the Closing Date (i.e., no later than February 11, 2026, assuming a Closing Date of August 15, 2025).
"Losses" means all losses, damages, liabilities, claims, demands, judgments, settlements, fines, penalties, interest, costs, and expenses (including reasonable attorneys' fees and expenses, expert witness fees, and costs of investigation and litigation), whether or not involving a third-party claim.
"Migration Completion Certificate" means a written certification delivered by Service Recipient to Service Provider, in substantially the form to be agreed upon by the Service Coordinators prior to the Closing Date, confirming the satisfactory completion of migration for a particular Transition Service and Service Recipient's assumption of responsibility for such Service.
"Monthly Service Fee" means the aggregate at-cost fee for all Transition Services provided in a given calendar month (or partial calendar month), as calculated in accordance with Article 5 and the cost methodology set forth on Schedule B.
"Outside Date" has the meaning set forth in Section 4.1.
"Party" means Service Provider or Service Recipient, individually, and "Parties" means Service Provider and Service Recipient, collectively.
"Purchase Agreement" means the Asset Purchase Agreement, dated as of June 16, 2025, by and among Crestline Packaging Solutions LLC, CPS Holdings, Inc., Lakewood Regional Health Partners, LLC, Dr. Raymond Alcott, and Dr. Nadia Petrosian, as may be amended, supplemented, or otherwise modified from time to time in accordance with its terms.
"Service Coordinator" means the designated representative of each Party responsible for day-to-day management, oversight, and communication regarding the Transition Services, as identified in Section 2.4.
"Service Level" means the minimum performance standards for each Transition Service, as set forth on Schedule C attached hereto.
"Service Period" means, with respect to any Transition Service, the Initial Service Period for such Service, as may be extended pursuant to Section 4.2.
"Service Provider Personnel" means the employees, independent contractors, consultants, and agents of Service Provider (or its Affiliates) who perform or assist in performing the Transition Services.
"Third-Party Consents" means any consents, licenses, permits, approvals, or authorizations from third parties (including software vendors, payors, governmental authorities, and landlords) that are required for Service Provider to lawfully provide any Transition Service or for Service Recipient to receive or benefit from any Transition Service.
"Transaction Documents" has the meaning set forth in the Purchase Agreement.
"Transition Services" or "Services" means the services to be provided by Service Provider to Service Recipient as described in Article 3 and as more particularly detailed on Schedule A attached hereto.
Section 1.2 — Interpretation.
(a) Unless the context otherwise requires, references in this Agreement to "Articles," "Sections," "Schedules," and "Exhibits" are to articles, sections, schedules, and exhibits of and to this Agreement.
(b) The headings and captions contained in this Agreement are included for convenience of reference only and shall not affect in any way the meaning or interpretation of this Agreement.
(c) Whenever the words "include," "includes," or "including" are used in this Agreement, they shall be deemed to be followed by the words "without limitation."
(d) The words "hereof," "herein," "hereunder," and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provision of this Agreement.
(e) Words in the singular shall be deemed to include the plural, and vice versa, and words of one gender shall be deemed to include the other gender, as the context requires.
(f) All references to "dollars" or "$" in this Agreement shall mean United States dollars.
(g) All references to "business days" shall mean any day other than a Saturday, Sunday, or day on which commercial banks in New York, New York are authorized or required by Law to remain closed.
(h) All references to "calendar days" shall mean consecutive days, including Saturdays, Sundays, and holidays.
(i) The Parties have participated jointly in the negotiation and drafting of this Agreement, and in the event of an ambiguity or question of intent or interpretation, this Agreement shall be construed as if drafted jointly by the Parties, and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any provision of this Agreement.
(j) Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the Purchase Agreement, which definitions are incorporated herein by reference.
ARTICLE 2 — APPOINTMENT AND ENGAGEMENT
Section 2.1 — Engagement of Service Provider.
Subject to the terms and conditions of this Agreement, Service Recipient hereby engages Service Provider, and Service Provider hereby accepts such engagement and agrees, to provide the Transition Services to Service Recipient commencing on the Closing Date and continuing for the applicable Service Period for each Transition Service. Service Provider shall devote such time, attention, and resources to the performance of the Transition Services as are reasonably necessary to perform the Transition Services in accordance with the standards set forth herein.
Section 2.2 — Independent Contractor Status.
Service Provider shall perform the Transition Services as an independent contractor and not as an employee, agent, partner, or joint venturer of Service Recipient. Nothing in this Agreement shall be construed to create an employer-employee relationship, a partnership, a joint venture, or an agency relationship between the Parties. Service Provider shall have sole control over the manner and means by which the Transition Services are performed, subject to the Service Levels and other requirements of this Agreement. All Service Provider Personnel shall remain employees or independent contractors of Service Provider (or its Affiliates) for all purposes, including federal, state, and local tax withholding and reporting, employee benefits, workers' compensation insurance, unemployment insurance, and all other employment-related obligations. Service Provider shall be solely responsible for the payment of all compensation, benefits, and employment taxes relating to Service Provider Personnel.
Section 2.3 — Non-Exclusivity.
This Agreement is non-exclusive. Service Recipient may, at any time during the term of this Agreement, engage third-party service providers to perform services that are the same as or similar to the Transition Services, and Service Provider shall reasonably cooperate with any such third-party providers as reasonably requested by Service Recipient. Service Provider's obligation to perform a Transition Service shall continue until such Transition Service is properly terminated or has expired in accordance with Article 4, notwithstanding Service Recipient's engagement of any third-party provider with respect to similar services.
Section 2.4 — Service Coordinators.
(a) Service Provider hereby designates Gretchen Unger, Chief Operating Officer of Lakewood Regional Health Partners, LLC, as its Service Coordinator. Service Recipient hereby designates Patricia Hsu, Chief Financial Officer of Crestline Packaging Solutions LLC, as its Service Coordinator.
(b) Each Party may change its designated Service Coordinator upon not less than five (5) business days' prior written notice to the other Party, provided that any replacement Service Coordinator shall be a senior operational or financial officer of the designating Party with sufficient authority to manage the day-to-day administration of the Transition Services.
(c) The Service Coordinators shall serve as the primary points of contact between the Parties for all matters relating to the Transition Services. The Service Coordinators shall hold bi-weekly status calls (or more frequently as either Service Coordinator may reasonably request) to discuss the status of the Transition Services, identify and resolve any issues or concerns, and coordinate upcoming activities and milestones.
(d) The Service Coordinators shall jointly prepare and circulate written status reports on a monthly basis (to be delivered no later than the tenth (10th) business day of each calendar month for the preceding month), which reports shall include, at a minimum: (i) a summary of the Transition Services performed during the preceding month; (ii) the status of key milestones and deliverables; (iii) any known or anticipated issues, risks, or delays; (iv) a summary of Service Level performance; and (v) such other information as either Service Coordinator may reasonably request.
ARTICLE 3 — TRANSITION SERVICES
Section 3.1 — General Description.
Service Provider shall provide to Service Recipient the categories of Transition Services described in Sections 3.2 through 3.5 of this Article 3 and as more particularly described on Schedule A, in each case at a level of quality, timeliness, and care that is substantially consistent with the manner in which such services were provided by Service Provider in the operation of the Acquired Business during the twelve (12) months preceding the Closing Date. The Transition Services are intended to support an orderly transition of the Acquired Business from Service Provider to Service Recipient and to enable Service Recipient to develop and implement its own capabilities with respect to the functions covered by the Transition Services. Service Provider shall cooperate in good faith with Service Recipient's efforts to assume responsibility for the Transition Services on a service-by-service basis as promptly as reasonably practicable.
Section 3.2 — Revenue Cycle Management and Billing Services.
Service Provider shall provide the following revenue cycle management and billing services to Service Recipient during the applicable Service Period:
(a) Claims Submission and Processing. Continued claims submission, coding support, charge capture review, and electronic and paper claims processing for professional and facility services rendered at the eleven (11) clinic locations during the transition period, utilizing Service Provider's existing billing staff, billing workflows, and claims processing systems.
(b) Denial Management. Ongoing denial management services, including identification, tracking, appeal preparation, and resubmission of denied or rejected claims, utilizing Service Provider's established denial management protocols and staff.
(c) Pre-Closing Accounts Receivable. Processing of accounts receivable collections related to pre-Closing patient encounters, as between the Parties, in accordance with the allocation provisions set forth in the Purchase Agreement, including identification of pre-Closing versus post-Closing accounts receivable and appropriate remittance handling.
(d) Payor Coordination. Coordination with Meridian Shield Health Plans, Inc., the largest managed care payor for the Acquired Business (representing approximately $17,248,000 in annual revenue), and all other contracted commercial, governmental, and managed care payors, including submission of claims under existing payor contracts during the transition period, to ensure claims processing continuity and minimize disruption to revenue flows.
(e) Medicare Claims Continuity. Coordination with Keystone MAC Services, LLC (Medicare Administrative Contractor for the applicable jurisdictions) regarding Medicare claims processing continuity, including communication of any changes in billing entity, tax identification numbers, or provider enrollment information necessitated by the Closing.
(f) Payor Contract and Enrollment Transition. Assistance with the transition of payor contracts and provider enrollment to Service Recipient's tax identification number(s) and National Provider Identifiers, including preparation of payor notification letters, completion of enrollment applications and credentialing packets, and follow-up with payor representatives to expedite the transition process.
(g) Payment Posting and Reconciliation. Continued electronic remittance advice (ERA) and explanation of benefits (EOB) processing, payment posting, and reconciliation of payments received from all payors.
(h) Reporting. Provision of monthly revenue cycle management reports, including claims submission volumes, clean claim rates, denial rates and trends, accounts receivable aging, collections performance, and such other metrics as are consistent with historical reporting practices.
The expected Initial Service Period for Revenue Cycle Management and Billing Services is one hundred eighty (180) calendar days following the Closing Date.
Section 3.3 — Information Technology Migration Services.
Service Provider shall provide the following information technology migration services to Service Recipient during the applicable Service Period:
(a) EHR Migration Support. Support for the migration from the Clearpath Health Systems, Inc. electronic health records platform (License Agreement No. CP-ENT-2022-0487; current annual license fee: $840,000; license term expires December 31, 2027) to Service Recipient's designated electronic health records system, including planning, coordination, and execution of migration activities in accordance with a mutually agreed project plan.
(b) Data Extraction, Mapping, and Conversion. Data extraction, mapping, conversion, and validation assistance for patient records, billing data, clinical documentation, scheduling data, and other operational data across all eleven (11) clinic sites. Service Provider shall cooperate with Service Recipient and its designated EHR vendor to develop data mapping specifications, execute data extracts, perform data quality assurance testing, and validate converted data for accuracy and completeness.
(c) Ongoing EHR and Infrastructure Support. Maintenance and operational support for the existing Clearpath EHR system and related network infrastructure (including servers, workstations, switches, routers, wireless access points, and peripheral devices) during the migration period, to ensure uninterrupted clinical and administrative operations at all clinic locations.
(d) Clearpath Coordination. Coordination with Clearpath Health Systems, Inc. regarding any required consents, data export utilities, application programming interfaces, interface specifications, or technical support necessary to effectuate the data migration and system transition, including facilitation of meetings between Service Recipient's IT team and Clearpath representatives.
(e) IT Helpdesk Support. IT helpdesk support for Acquired Business end users during the transition period, including troubleshooting, password resets, hardware support, application support, and escalation management, at service levels substantially consistent with those provided by Service Provider during the twelve (12) months preceding the Closing Date.
(f) Telecommunications and Network Transition. Support for the transfer or re-establishment of internet services, voice-over-IP telephony, fax services, and network connectivity at all eleven (11) clinic locations, including coordination with incumbent and successor telecommunications providers.
(g) Hardware and Equipment. Assistance with the inventory, tagging, and handoff of information technology hardware and equipment included in the Acquired Assets, including servers, workstations, laptops, printers, scanners, and network equipment.
The expected Initial Service Period for Information Technology Migration Services is one hundred eighty (180) calendar days following the Closing Date.
Section 3.4 — Credentialing Services.
Service Provider shall provide the following credentialing services to Service Recipient during the applicable Service Period:
(a) Provider Re-Credentialing. Assistance with the re-credentialing of thirty-eight (38) physicians and twenty-four (24) nurse practitioners and physician assistants with all governmental and commercial payors, including preparation and submission of credentialing applications, supporting documentation, and follow-up correspondence.
(b) CMS Provider Enrollment. Coordination of Centers for Medicare & Medicaid Services (CMS) provider enrollment applications for updated ownership information, reassignment of Medicare benefits, and updates to the Provider Enrollment, Chain, and Ownership System (PECOS), including updates to CMS Certification Numbers 33-7021 through 33-7028 (for New York facilities) and 39-6011 through 39-6013 (for Pennsylvania facilities).
(c) State Facility License Transfers. Assistance with New York Article 28 Operating Certificate transfers (Operating Certificate Numbers D&TC-4821 through D&TC-4828) and Pennsylvania facility license transfers (License Numbers OPC-20140892 through OPC-20140894), as applicable, including preparation of applications, coordination with the New York State Department of Health and the Pennsylvania Department of Health, and response to agency inquiries.
(d) CAQH Profile Maintenance. Maintenance and updating of Council for Affordable Quality Healthcare (CAQH) provider profiles for all credentialed providers during the transition period, including re-attestation activities and document uploads.
(e) Credentialing File Management. Maintenance of current provider credentialing files and tracking of all expirable documents (including state medical licenses, board certifications, DEA certificates, controlled substance registrations, malpractice insurance certificates, and continuing medical education documentation) during the transition period, with timely notification to Service Recipient of upcoming expirations.
(f) Medicaid Enrollment. Coordination of Medicaid provider enrollment applications and updates with the New York State Medicaid program (eMedNY) and the Pennsylvania Medical Assistance program (PROMISe), as applicable.
The expected Initial Service Period for Credentialing Services is one hundred eighty (180) calendar days following the Closing Date.
Section 3.5 — Administrative and General Support Services.
Service Provider shall provide the following administrative and general support services to Service Recipient during the applicable Service Period:
(a) Human Resources Transition Support. Human resources transition support, including transfer of employee personnel records and files for approximately four hundred ten (410) full-time equivalent employees, coordination with Service Recipient's human resources department regarding employee onboarding and orientation, and assistance with the transition of employee benefit plans, including health insurance, dental and vision coverage, retirement plans, and other employee benefits.
(b) Benefits Transition Coordination. Coordination with Stonebridge Actuarial & Benefits Consulting, Inc. for benefits plan transition analysis, COBRA administration support, and communication of benefits changes to affected employees.
(c) Payroll Processing Support. Payroll processing support through Service Provider's existing payroll system during the transition period, including timekeeping, payroll calculation, direct deposit processing, tax withholding and reporting, and year-end W-2 preparation for the period during which Service Provider's payroll system continues to be used for Acquired Business employees.
(d) Facilities Management Support. Facilities management support for owned real property, including the Rochester Main facility (appraised value: $6,900,000) and the Syracuse facility (appraised value: $4,900,000), as well as the nine (9) leased clinic locations (aggregate annual base rent: $2,740,000), including coordination of routine maintenance, vendor management, and lease administration support during the transition.
(e) Equipment Lease Coordination. Coordination regarding assumed imaging equipment leases with Marlowe Asset Management Medical Equipment Finance, LLC (Lease Schedule Nos. VML-2023-1140, VML-2023-1141, and VML-2024-0219; aggregate outstanding balance: $2,870,000), including facilitation of lease assumption documentation and lender communications.
(f) Laboratory Services Transition. Coordination regarding the transition of laboratory services provided by Redstone Diagnostics, Inc. (annual spend: approximately $1,600,000), including facilitation of introductions between Service Recipient and Redstone representatives, support with contract novation or assignment documentation, and assistance with any required account setup activities.
(g) General Accounting and Financial Reporting. General accounting support, including accounts payable processing, vendor payment management, bank account reconciliation, and preparation of monthly financial reports and supporting schedules for the Acquired Business during the transition period, in a format substantially consistent with historical practices.
(h) General Administrative Assistance. Such other general administrative support services as may be reasonably requested by Service Recipient and mutually agreed upon by the Service Coordinators, to the extent such services were historically provided by Service Provider in connection with the operation of the Acquired Business.
The expected Initial Service Period for Administrative and General Support Services is one hundred twenty (120) calendar days following the Closing Date.
Section 3.6 — Excluded Services.
Notwithstanding anything to the contrary in this Agreement, Service Provider shall not be required to:
(a) provide any service that would violate any applicable Law, including, without limitation, the Health Insurance Portability and Accountability Act of 1996 ("HIPAA"), the Health Information Technology for Economic and Clinical Health Act ("HITECH"), the federal Anti-Kickback Statute (42 U.S.C. § 1320a-7b(b)), the Stark Law (42 U.S.C. § 1395nn), the False Claims Act (31 U.S.C. §§ 3729–3733), or any applicable state healthcare fraud or abuse statutes;
(b) provide any service not described on Schedule A or not historically provided by Service Provider in connection with the operation of the Acquired Business during the twelve (12) months preceding the Closing Date;
(c) hire additional personnel or acquire additional resources, equipment, software, or infrastructure beyond those available to Service Provider as of the Closing Date, except as the Parties may mutually agree in writing (including with respect to the allocation of any associated costs);
(d) provide legal advice, tax advisory services, investment advisory services, or any service that would constitute the practice of law or the rendering of professional opinions for which Service Provider is not licensed or qualified; or
(e) take any action that would conflict with or breach the non-competition covenants, consulting arrangements, or other restrictive covenants set forth in the ancillary agreements to the Purchase Agreement, including the Non-Competition Agreements and Consulting Agreements entered into by Dr. Raymond Alcott and Dr. Nadia Petrosian.
Section 3.7 — Standard of Care.
Service Provider shall perform each Transition Service: (a) in good faith; (b) with the same degree of care, skill, and diligence as Service Provider applied when performing such services for its own account in the operation of the Acquired Business prior to the Closing Date, but in no event less than the degree of care and diligence that a reasonably prudent person would exercise under comparable circumstances; and (c) in compliance with all applicable Laws, including HIPAA, HITECH, applicable state health information privacy laws, CMS Conditions of Participation, applicable professional licensing requirements, and all other federal, state, and local laws, rules, regulations, and ordinances applicable to the performance of the Transition Services.
Section 3.8 — Third-Party Consents.
(a) Service Provider shall use commercially reasonable efforts to obtain, at the earliest practicable date, any Third-Party Consents that are necessary or advisable for Service Provider to provide the Transition Services or for Service Recipient to receive the benefit thereof. Service Provider shall promptly notify Service Recipient of any Third-Party Consent that Service Provider reasonably believes may be required and shall keep Service Recipient informed of the status of efforts to obtain such consent.
(b) If, notwithstanding Service Provider's commercially reasonable efforts, a Third-Party Consent cannot be obtained on commercially reasonable terms, the Parties shall cooperate in good faith to develop and implement a commercially reasonable alternative arrangement (a "Workaround") that provides Service Recipient with substantially the same benefit as the applicable Transition Service to the maximum extent practicable.
(c) Unless otherwise specified on Schedule A, the costs of obtaining Third-Party Consents (including any additional license fees, transfer fees, or consent fees charged by third parties) shall be borne by Service Recipient. Service Provider shall not incur any such costs in excess of $25,000 individually or $100,000 in the aggregate without the prior written approval of Service Recipient.
ARTICLE 4 — TERM AND TERMINATION
Section 4.1 — Term.
This Agreement shall become effective as of the Closing Date and shall continue in full force and effect until the earlier of: (a) the date on which all Transition Services have expired or been terminated in accordance with this Article 4; or (b) the date that is one hundred eighty (180) calendar days after the Closing Date (the "Outside Date," estimated to be February 11, 2026, assuming a Closing Date of August 15, 2025), unless extended as provided in Section 4.2. For the avoidance of doubt, the expiration or termination of any individual Transition Service shall not affect the continued effectiveness of this Agreement with respect to any other Transition Service that has not yet expired or been terminated.
Section 4.2 — Extension of Individual Services.
(a) Service Recipient may request an extension of the Service Period for any individual Transition Service for up to two (2) additional periods of thirty (30) calendar days each (for a maximum total extension of sixty (60) calendar days beyond the applicable Initial Service Period, but in no event beyond two hundred forty (240) calendar days following the Closing Date) by delivering written notice to Service Provider not less than twenty (20) calendar days before the expiration of the then-current Service Period for such Transition Service.
(b) Any such extension shall be subject to Service Provider's prior written consent, which consent shall not be unreasonably withheld, conditioned, or delayed. Service Provider shall respond to any extension request within five (5) business days of receipt thereof. If Service Provider does not respond within such five (5) business day period, Service Provider shall be deemed to have consented to the requested extension.
(c) During any extension period, the applicable Transition Service shall be provided at the Extension Fee rate (i.e., one hundred fifteen percent (115%) of the at-cost Service Fee rate applicable to such Transition Service during the Initial Service Period), and all other terms and conditions of this Agreement shall continue to apply to such extended Transition Service.
(d) Each extension request shall specify the Transition Service(s) to be extended, the requested extension period, and the reasons for the requested extension. Service Recipient shall use commercially reasonable efforts to minimize the duration and scope of any extension.
Section 4.3 — Early Termination by Service Recipient.
Service Recipient may terminate any individual Transition Service, in whole (but not in part, unless otherwise agreed in writing by Service Provider), at any time upon not less than thirty (30) calendar days' prior written notice to Service Provider. Upon such termination, Service Recipient shall pay all accrued and unpaid Service Fees for the terminated Transition Service through the effective date of termination. No early-termination penalty, break-up fee, or similar charge shall be payable by Service Recipient in connection with any such early termination.
Section 4.4 — Termination for Cause.
Either Party may terminate this Agreement in its entirety, or any individual Transition Service, immediately upon written notice to the other Party if the other Party:
(a) materially breaches any provision of this Agreement and fails to cure such breach within fifteen (15) calendar days after receipt of written notice from the non-breaching Party specifying the breach in reasonable detail (provided that if such breach is not reasonably capable of cure within such fifteen (15) calendar day period, the breaching Party shall have such additional time as is reasonably necessary to effect a cure, not to exceed thirty (30) calendar days, so long as the breaching Party commences cure efforts promptly and diligently pursues such cure to completion); or
(b) becomes the subject of a voluntary or involuntary petition in bankruptcy or any proceeding relating to insolvency, receivership, liquidation, or composition for the benefit of creditors, if such petition or proceeding is not dismissed within sixty (60) calendar days of filing, or makes a general assignment for the benefit of creditors.
Section 4.5 — Termination upon Purchase Agreement Termination.
This Agreement shall automatically and immediately terminate, without any action by either Party and without liability to either Party (other than obligations accrued prior to such termination), if the Purchase Agreement is terminated in accordance with its terms prior to the Closing.
Section 4.6 — Effect of Termination.
Upon the expiration or termination of any Transition Service (whether by expiration of the applicable Service Period, early termination, termination for cause, or delivery of a Migration Completion Certificate):
(a) Service Provider shall reasonably cooperate with Service Recipient to effect an orderly wind-down and transition of the affected Transition Service, including knowledge transfer, documentation of processes and procedures, and introduction to successor service providers, for a period of not less than fifteen (15) calendar days following the effective date of termination (the "Wind-Down Period"), unless otherwise agreed by the Service Coordinators;
(b) Service Provider shall promptly deliver to Service Recipient all data, records, files, reports, work product, and deliverables relating to the terminated Transition Service, in electronic format where available, and in a format reasonably usable by Service Recipient;
(c) the obligations of the Parties under Article 8 (Confidentiality and Data Protection), Article 9 (Indemnification), Section 9.3 (Limitation of Liability), Article 10 (Representations and Warranties), and Article 13 (General Provisions) shall survive the expiration or termination of such Transition Service and this Agreement, in each case in accordance with their respective terms; and
(d) Service Recipient shall pay all accrued and unpaid Service Fees for the terminated Transition Service (including fees attributable to the Wind-Down Period) within thirty (30) calendar days of the effective date of termination.
Section 4.7 — Migration Completion.
For each Transition Service, upon Service Recipient's reasonable determination that it has successfully assumed responsibility for such Transition Service and no longer requires Service Provider's performance thereof, Service Recipient shall deliver a Migration Completion Certificate to Service Provider. The delivery of a Migration Completion Certificate shall constitute the termination of the applicable Transition Service effective as of the date stated therein. The delivery of a Migration Completion Certificate shall not release Service Provider from any obligations or liabilities that accrued prior to the effective date of such certificate, including any obligations under Article 8 and Article 9 of this Agreement.
ARTICLE 5 — FEES AND PAYMENT
Section 5.1 — Service Fees.
All Transition Services shall be provided at Service Provider's actual cost, without markup (except as provided in Section 4.2 with respect to Extension Fees), as calculated in accordance with the cost methodology set forth on Schedule B. For purposes of this Agreement, "actual cost" shall include: (a) allocated salary and benefits costs of Service Provider Personnel devoted to the Transition Services, based on actual time spent (calculated using the loaded hourly or daily rates set forth on Schedule B); (b) reasonable out-of-pocket third-party costs directly incurred by Service Provider in providing the Transition Services, including software license fees, vendor charges, travel expenses, postage, courier charges, and similar disbursements; and (c) a proportionate allocation of overhead and shared facilities costs (including office space, utilities, telecommunications, office supplies, and equipment depreciation), calculated using the methodology set forth on Schedule B. For the avoidance of doubt, the Parties intend that the fees charged hereunder reflect fair market value for the Transition Services rendered.
Section 5.2 — Estimated Monthly Fees.
Schedule B sets forth the estimated Monthly Service Fee for each category of Transition Service, based on anticipated resource utilization levels. The Parties acknowledge that the estimated Monthly Service Fees are good-faith estimates only and that actual fees may vary based on actual utilization, the complexity of issues encountered, and other factors. Deviations from estimated fees in excess of ten percent (10%) in any calendar month shall be promptly communicated by the applicable Service Coordinator, with a reasonable explanation for such deviation.
Section 5.3 — Invoicing.
Service Provider shall deliver to Service Recipient an itemized invoice within fifteen (15) calendar days after the end of each calendar month (or partial calendar month) during the term of this Agreement. Each invoice shall set forth in reasonable detail: (a) a description of the Transition Services provided during the applicable period, organized by Service category; (b) the Service Provider Personnel hours incurred, identified by individual or role and applicable cost rate; (c) a summary of out-of-pocket expenses, with supporting documentation for any individual expense exceeding $1,000; (d) the applicable overhead allocation; and (e) the total amount due for the period. Invoices shall be delivered to the attention of Service Recipient's Service Coordinator at the address (or email address) specified in Section 13.1 or as otherwise directed by Service Recipient in writing.
Section 5.4 — Payment Terms.
Service Recipient shall pay each undisputed invoice (or undisputed portion thereof) within thirty (30) calendar days of receipt of such invoice, by wire transfer of immediately available funds to the bank account designated by Service Provider on Schedule B (or such other account as Service Provider may designate from time to time by written notice). Any undisputed amounts not paid when due shall bear interest from the due date until paid at the lesser of (a) one percent (1.0%) per month (twelve percent (12.0%) per annum), compounded monthly, or (b) the maximum rate permitted by applicable Law.
Section 5.5 — Invoice Disputes.
Service Recipient may dispute any invoice or any portion of an invoice in good faith by delivering written notice to Service Provider within fifteen (15) calendar days of receipt of such invoice, specifying in reasonable detail the nature and amount of the dispute and the basis therefor. Undisputed portions of any disputed invoice shall be paid in accordance with Section 5.4 when due. The Parties shall use good faith efforts to resolve any invoice dispute within fifteen (15) business days following Service Provider's receipt of the dispute notice. If the Parties are unable to resolve the dispute within such period, the dispute shall be escalated to the Service Coordinators for resolution. If the Service Coordinators are unable to resolve the dispute within ten (10) additional business days, either Party may submit the dispute to the dispute resolution procedures set forth in Article 12. Upon resolution of a dispute, any amounts determined to be owing shall be paid within ten (10) business days, together with interest calculated in accordance with Section 5.4 from the original due date.
Section 5.6 — Taxes.
(a) Service Recipient shall be responsible for, and shall pay or reimburse Service Provider for, all sales, use, value-added, goods and services, and similar transactional taxes imposed on or with respect to the Transition Services or the fees payable therefor, regardless of which Party is legally obligated to remit such taxes to the applicable taxing authority.
(b) Service Provider shall be solely responsible for all income taxes, franchise taxes, and similar taxes imposed on Service Provider with respect to fees received under this Agreement.
(c) Each Party shall cooperate reasonably with the other Party in connection with the preparation and filing of any tax returns, claims for exemption, or other tax documentation relating to the Transition Services, including the provision of exemption certificates, resale certificates, or similar documentation as reasonably requested.
Section 5.7 — Records and Audit Rights.
(a) Service Provider shall maintain complete and accurate books, records, and supporting documentation for all amounts invoiced under this Agreement, in accordance with generally accepted accounting principles and Service Provider's customary record-keeping practices, for a period of three (3) years following the date of the applicable invoice.
(b) Upon reasonable prior written notice of not less than ten (10) business days, Service Recipient (or its designated representative, including Hargrove & Whitaker LLP, certified public accountants, or such other qualified auditor as Service Recipient may designate) may audit and inspect such books and records during normal business hours at Service Provider's offices for the purpose of verifying the accuracy of invoiced amounts. Such audit rights may be exercised no more than once per calendar quarter and shall not unreasonably interfere with Service Provider's business operations.
(c) If any audit reveals that Service Provider has overcharged Service Recipient by more than five percent (5%) for any invoiced period, Service Provider shall (i) promptly refund the overcharged amount, together with interest thereon at the rate specified in Section 5.4 from the date of overpayment, and (ii) reimburse Service Recipient for the reasonable out-of-pocket costs of such audit. If the audit reveals an undercharge, Service Recipient shall promptly pay the undercharged amount to Service Provider.
(d) The audit rights set forth in this Section 5.7 shall survive the expiration or termination of this Agreement for a period of three (3) years.
ARTICLE 6 — SERVICE LEVELS AND REMEDIES
Section 6.1 — Service Levels.
Service Provider shall perform each Transition Service in accordance with the Service Levels set forth on Schedule C attached hereto. The Service Levels are intended to reflect performance that is materially consistent with the historical operations of the Acquired Business during the twelve (12) months preceding the Closing Date, and are not intended to impose standards that exceed those historically achieved by Service Provider. The Parties shall cooperate in good faith to establish baseline metrics for any Service Level that references historical performance, which baselines shall be documented by the Service Coordinators within thirty (30) calendar days of the Closing Date.
Section 6.2 — Service Level Reporting.
Service Provider shall include in each monthly status report delivered pursuant to Section 2.4(d), and concurrently with each monthly invoice delivered pursuant to Section 5.3, a summary of Service Provider's performance against the applicable Service Levels for each Transition Service during the preceding calendar month. Such summary shall include sufficient detail to enable Service Recipient to assess compliance with each measurable Service Level metric, including actual performance data, identified exceptions, and explanations for any variances from the applicable Service Level.
Section 6.3 — Service Level Failures.
If Service Provider fails to meet a Service Level for any Transition Service in any calendar month:
(a) Prompt Notification. Service Provider shall promptly notify Service Recipient of the failure and its root cause, to the extent then known, and shall provide a preliminary assessment of the anticipated duration and impact of such failure.
(b) Remediation Plan. Service Provider shall develop and implement a remediation plan within five (5) business days of the Service Level failure (or such shorter period as may be required for critical failures), designed to restore performance to the applicable Service Level as promptly as reasonably practicable. Service Provider shall keep Service Recipient informed of the progress of any remediation efforts.
(c) Persistent Failures. If the same Service Level failure occurs in two (2) consecutive calendar months, Service Recipient shall have the right, at its election and upon written notice to Service Provider, to pursue any or all of the following remedies:
(i) require Service Provider to develop and implement an enhanced remediation plan, in form and substance reasonably acceptable to Service Recipient, within ten (10) business days of Service Recipient's request, which enhanced remediation plan may include additional resource allocation, process redesign, or other measures reasonably calculated to cure the persistent failure;
(ii) reduce the Monthly Service Fee for the affected Transition Service by an amount proportionate to the severity and duration of the deficiency, calculated in accordance with the Service Level credit methodology set forth on Schedule C; or
(iii) terminate the affected Transition Service immediately, without regard to the thirty (30) calendar day notice period otherwise required by Section 4.3, and without payment of any early-termination penalty.
Section 6.4 — Sole Remedies for Service Level Failures.
The remedies set forth in Section 6.3 shall constitute Service Recipient's sole and exclusive remedies for Service Level failures. Notwithstanding the foregoing, nothing in this Section 6.4 shall limit or impair (a) Service Recipient's rights under Article 9 (Indemnification) for Losses arising from Service Provider's gross negligence, willful misconduct, or breach of applicable Law in the performance of the Transition Services; (b) Service Recipient's termination rights under Section 4.4 (Termination for Cause) in the event of a material breach of this Agreement; or (c) any other right or remedy of Service Recipient that is expressly stated in this Agreement to be in addition to, and not in lieu of, the remedies set forth in this Section 6.
ARTICLE 7 — PERSONNEL
Section 7.1 — Service Provider Personnel.
(a) Service Provider shall assign qualified personnel to perform the Transition Services who possess the skills, experience, and professional qualifications necessary to perform the applicable Transition Services in accordance with the standards and Service Levels set forth in this Agreement.
(b) The key Service Provider Personnel for each category of Transition Services are identified on Schedule D attached hereto. Service Provider shall not reassign, replace, or materially reduce the time commitment of any key personnel identified on Schedule D without providing Service Recipient with at least ten (10) business days' prior written notice (or such shorter notice as may be practicable in the case of an involuntary departure) and a reasonable transition period during which both the departing and replacement personnel are available to Service Recipient. Any replacement for key personnel shall be of comparable skill, experience, and qualifications, and Service Recipient shall have a reasonable opportunity to interview and provide input on any proposed replacement.
(c) Service Provider shall maintain adequate staffing levels to perform the Transition Services throughout the applicable Service Period. If Service Provider becomes aware of any circumstance that may materially impair its ability to maintain adequate staffing (including voluntary or involuntary departures, leave of absence, or reassignments), Service Provider shall promptly notify Service Recipient and the Parties shall cooperate in good faith to develop a plan to address any resulting resource gaps.
Section 7.2 — No Hiring Restriction.
Nothing in this Agreement shall restrict Service Recipient from making offers of employment to, or hiring, any employee of Service Provider, whether or not such employee is a member of Service Provider Personnel, upon the expiration or termination of the applicable Transition Service or this Agreement, subject in all cases to the terms of the Purchase Agreement and any applicable non-solicitation provisions set forth therein or in the ancillary agreements contemplated thereby. For the avoidance of doubt, the Parties acknowledge that the Purchase Agreement contains certain provisions regarding the hiring of Transferred Employees and the treatment of employees who are not Transferred Employees, and this Section 7.2 is not intended to modify or supersede any such provisions.
Section 7.3 — Service Recipient Cooperation.
(a) Service Recipient acknowledges that the timely and effective performance of the Transition Services requires the active cooperation of Service Recipient. Service Recipient shall provide Service Provider Personnel with reasonable access to Service Recipient's facilities, systems, data, personnel, and other resources as are reasonably necessary for the proper performance of the Transition Services.
(b) Service Recipient shall designate internal points of contact for each category of Transition Services, who shall be available on a reasonable basis to respond to inquiries, provide information, and make decisions necessary for the performance of the Transition Services.
(c) Service Recipient shall provide Service Provider with any information, documentation, authorizations, or approvals reasonably requested by Service Provider in connection with the performance of the Transition Services in a timely manner. Service Provider shall not be liable for any failure to meet a Service Level or any delay in the performance of a Transition Service to the extent such failure or delay is directly caused by Service Recipient's failure to cooperate in accordance with this Section 7.3.
ARTICLE 8 — CONFIDENTIALITY AND DATA PROTECTION
Section 8.1 — Confidential Information.
Each Party acknowledges that, in connection with the performance and receipt of the Transition Services, it may receive, have access to, or otherwise become aware of Confidential Information of the other Party. As used in this Agreement, "Confidential Information" has the meaning ascribed to such term in the Purchase Agreement, and additionally includes: (a) patient health information, including Protected Health Information (as defined under HIPAA); (b) proprietary billing methodologies, revenue cycle management processes, and coding guidelines; (c) payor contract terms, fee schedules, and reimbursement rate information; (d) provider compensation information; (e) patient lists and referral source information; (f) information technology system configurations, security protocols, and network architecture; and (g) any other information that is designated as confidential by the disclosing Party or that a reasonable person would understand to be confidential given the nature of the information and the circumstances of disclosure.
Section 8.2 — Use Restrictions.
The receiving Party shall: (a) use the disclosing Party's Confidential Information solely for the purpose of performing or receiving the Transition Services, as applicable, and for no other purpose; (b) not disclose the disclosing Party's Confidential Information to any third party, except (i) to the receiving Party's officers, directors, employees, agents, professional advisors, and contractors who have a need to know such information in connection with the Transition Services and who are bound by confidentiality obligations no less restrictive than those contained herein, or (ii) as required by applicable Law, regulatory request, or legal process, subject to the receiving Party's obligation to provide prompt notice to the disclosing Party (to the extent legally permissible) and to cooperate with the disclosing Party in seeking a protective order or other appropriate remedy; and (c) protect the disclosing Party's Confidential Information with the same degree of care that it uses to protect its own confidential information, but in no event less than a reasonable degree of care.
Section 8.3 — HIPAA Compliance.
The Parties acknowledge that the performance of the Transition Services may involve access to, creation of, use of, or disclosure of Protected Health Information ("PHI") as defined under HIPAA (45 C.F.R. Parts 160 and 164). In connection with the foregoing:
(a) The Parties shall enter into a Business Associate Agreement, substantially in the form attached hereto as Schedule E (the "BAA"), which is incorporated herein by reference and shall be effective as of the Closing Date. In the event of a conflict between the terms of this Agreement and the terms of the BAA with respect to the use, disclosure, or protection of PHI, the terms of the BAA shall control.
(b) Each Party shall comply with all applicable requirements of HIPAA, HITECH, and the implementing regulations thereunder (including the HIPAA Privacy Rule, the HIPAA Security Rule, and the HIPAA Breach Notification Rule), as well as applicable New York and Pennsylvania state health information privacy laws, including the New York State Information Security Breach and Notification Act (N.Y. Gen. Bus. Law § 899-aa) and the Pennsylvania Breach of Personal Information Notification Act (73 Pa. Stat. § 2303).
(c) Neither Party shall use or disclose PHI in a manner that would violate the requirements of HIPAA or the BAA if done by the other Party.
Section 8.4 — Data Security.
Service Provider shall maintain administrative, technical, and physical safeguards for the protection of Confidential Information and PHI that are: (a) no less rigorous than those maintained by Service Provider as of the Closing Date; (b) in compliance with all applicable Law, including the HIPAA Security Rule (45 C.F.R. Part 164, Subpart C); and (c) consistent with industry best practices for healthcare organizations of comparable size and complexity. Without limiting the foregoing, Service Provider shall implement and maintain access controls, encryption (at rest and in transit), audit logging, intrusion detection, and incident response capabilities for all systems used in connection with the Transition Services that access, store, or transmit PHI or other Confidential Information of Service Recipient.
Section 8.5 — Security Incidents.
Service Provider shall notify Service Recipient within twenty-four (24) hours of discovering any Security Incident (as defined under the HIPAA Security Rule, 45 C.F.R. § 164.304) or breach of unsecured PHI (as defined under the HIPAA Breach Notification Rule, 45 C.F.R. § 164.402) involving data accessed, created, maintained, or transmitted in connection with the Transition Services. Such notification shall include, to the extent then known: (a) a description of the incident, including the nature and scope of the data affected; (b) the date of discovery and the estimated date of occurrence; (c) the identity of any individuals whose PHI may have been compromised; (d) the corrective actions taken or proposed; and (e) such other information as Service Recipient may reasonably request. The Parties shall cooperate fully in investigating and remediating any such incident, including cooperating with law enforcement, regulatory authorities, and forensic investigators, and in providing any notifications required by applicable Law.